BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 268 – April 5, 2013

NEWS HIGHLIGHTS:

Business

OT gets continued funding through April;

Government has second thoughts on canceling Chalco agreement;

Government to establish power plant JV at Tavan Tolgoi;

Mongolia, Rio Tinto both have reasons to settle OT dispute;

MSE Top 20 falls 10 percent in March;

Areva denies charges that uranium exploration caused cattle deaths;

Transneft seeking alternative routes for Chinese crude supplies;

Modun Resources receives positive environmental assessment for Nuurst;

Changi Airport proposes direct flight between Singapore and UB;

Russia calls for technical upgrade to Ulaanbaatar Railway;

Canadian firms introduce development solutions for Ulaanbaatar's ger districts;

Global X to launch Central Asia and Mongolia ETF;

Peabody-Winsway, SouthGobi sue Umnugobi government;

Akica Group heads sued over bad business deal;

Khan receives unfavorable decision in ARMZ litigation;

Relocation firm opens UB office;

UK renewable energy trade mission to Mongolia;

SouthGobi head steps down from Aspire board;

Winsway appoints new CEO;

Coaltrans Mongolia in UB on 25-26 June;

Rio starts copper exploration in Uzbekistan;

Anglo American cancels $555m Mozambique coal acquisition;

Areva CEO says Japan may restart two-thirds of nuclear reactors.

Economy

CTU proposes increase in minimum wage;

TT power plant to get greater power output capacity;

Highways to link Russian and China borders;

JICA leads project for new UB bridge;

Government to relocate tannery plants now in UB;

MNT 95 billion of Chinggis bonds to go to cashmere sector;

Mongol Bank holds foreign-exchange auction;

Metro planners to undertake feasibility study for subway project;

Real estate market update - Q2 2013;

Ongoing mining disputes hurt growth;

Mongolia needs schools and hospitals: why talk about savings?;

Liquid economics;

Air pollution linked to 1.2 million premature deaths in China.

Politics

Deputy speaker expected to resign after revelation of secret off-shore account;

MPP electoral wins approved by Supreme Court;

Spring session begins with incomplete Parliament;

2013 spring session agenda released;

Ganbaatar to file suit against Rio Tinto in Hague Court;

Mining Minister continues push for changes to OT investment agreement;

Bill to restrict certain uses of Chinggis Khan’s name and image;

Japanese premier moves to boost ties with Mongolia;

Fourth India-Mongolia cooperation meeting held in Delhi;

Mongolia to ease visa process for Turkish citizens;

Elbegdorj calls for support to “reindeer people” culture.

ECONOMIC INDICATORS

MSE Top 20 Index by market Capitalization;

Foreign-listed Companies with Mongolian Assets;

Inflation;

Central bank policy rate;

Currency rates.

*Click on titles above to link to articles.

SPONSORS

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Breakthrough PR

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BUSINESS

OT GETS CONTINUED FUNDING THROUGH APRIL

The board of Mongolia's Oyu Tolgoi copper and gold mine agreed to continue funding the project

through April, Mining Minister Davaajav Gankhuyag said in mobile phone text message.

The mine is operating on a month-to-month budget and requires approval from the board of

directors. International investors currently cash fund the entire project.

Putsag Tsagaan, an Oyu Tolgoi board member, said earlier this month that Mongolia will not

approve the budget for the entire year until the company produces a feasibility study for phase two

of the project.

Source: Bloomberg

GOVERNMENT HAS SECOND THOUGHTS ON CANCELING CHALCO AGREEMENT

Mongolian politicians have changed their tone on the Tavan Tolgoi offtake agreement with

Aluminum Corp. of China Ltd. (Chalco), indicating they may be able to resolve their disagreements

without canceling it.

At a recent press conference Prime Minister Norov Altankhuyag suggested that canceling the

contract might not be in Mongolia's best interest. Furthermore, in a 2 April interview with

newspaper Udriin Shuudan, both Mining Minister Davaajav Gankhuyag and Erdenes Tavan Tolgoi LLC

Chief Executive Officer Yaichil Batsuuri echoed the prime minister's remarks. They said ministry

officials had met with their Chinese counterparts to discuss the issue and that Chalco

representatives would arrive in Mongolia on Thursday for discussion.

―At the Cabinet level, we are assessing whether we should pay our debt back with coal or with

cash,‖ said Gankhuyag.

Source: Mongolia International Capital Corp.

GOVERNMENT TO ESTABLISH POWER PLANT JV AT TAVAN TOLGOI

The Cabinet of Ministers has agreed to pursue a joint venture with private investors for a 450-

megawatt power plant at Tavan Tolgoi.

The government plans to hold at least a 34-percent stake in the project, but the Ministry of Energy

has the authority to modify that expectation. Energy Minister M. Sonompil will act as project

coordinator of the company.

Source: News.mn

MONGOLIA, RIO TINTO BOTH HAVE REASONS TO SETTLE OT DISPUTE

A cost overrun of a couple of billion bucks at Oyu Tolgoi is no doubt significant even to a big

company such as Rio Tinto PLC, with sales last year topping USD 50 billion. But to a small economy

such as Mongolia's, it's a staggeringly large sum. It accounts for fully a fifth of last year's gross

domestic product (GDP).

Parliament signed on in 2009 to borrow a third of the money to fund the USD 4.2 billion project,

said Parliament Speaker Zandaakhuu Enkhbold, who was in Vancouver last week at the end of a

cross-Canada visit.

―If at the time they had told us the cost will be USD 6.2 billion, then we would have thought

twice,‖ he said. Now that the costs have escalated so steeply, ―We want to know how it happened.

How much? Spent where?‖

The dispute and related issues have colored both the performance of Turquoise Hill Resources Ltd.'s

stock and the international view of Mongolia as a place to invest in recent months. The company's

stock is trading in the mid-USD 6 range, down from a peak of about USD 28 in early 2010 and about

USD 15 a year ago. And foreign investment in Mongolia nosedived last year, plunging 17 percent to

USD 3.9 billion, in response to what was seen as heavy-handed legislation concerning foreign

investment.

Enkhbold conceded that the law hurt his country's business reputation, but adds that investors' fears

will be eased now that the Strategic Entities Foreign Investment Law (SEFIL) has been revised and

clarified. He said the threshold approval for foreign investment will be lifted and that it applies

only to state-owned investments. Enkhbold said mining has come to dominate the country's

economy, and the revenue from it is urgently needed to give the government the means to invest in

other sectors—mainly agriculture, tourism and services.

―Mining doesn't employ a lot of people. It employs a lot of big machines,‖ he said. ―We have very

high unemployment, and without diversification of the economy it will stay high.‖

Source: Vancouver Sun

MSE TOP 20 FALLS 10 PERCENT IN MARCH

The MSE Top 20 Index declined by 0.06 percent to sit at 15,542.24 points on the last trading day of

the month. For the month, the MSE Top 20 lost 10.1 percent.

Remicon jumped 2.1 percent to close at MNT 195, following the news about the trilateral

agreement between the Ministry of Construction and Urban Planning, the Authority for Fair

Competition and Consumer Protection (AFCCP) and over 50 construction, steel, and cement

producers signing for a soft loan of MNT 370 billion.

Source: BDSec JSC

AREVA DENIES CHARGES THAT URANIUM EXPLORATION CAUSED CATTLE DEATHS

Areva Mongol LLC formally denied accusations that its operations had led to the death of nearby

cattle.

―The exploration has no risk or danger for citizens and animals,‖ reads the statement.

The company listed reasons that its exploration operation could not have caused the deaths,

including the fact that it is operating in a ―region with low radiation.‖ They added that the heavy

metal found by laboratory test could not have come from its operations as it has not extracted

heavy metals.

The company said that the prime minister has ordered a working group be established to investigate

the reasons for the deaths. It added that it has complied with government regulations and has led

its own inspections as well as that of permitted third parties into its facilities.

―We constantly make environmental controls and tests in the region where the company operates

including radiation and chemical characteristics of ground water,‖ says the statement.

―Independent investigations by other organizations are constant. They have still not revealed any

faults.‖

Source: Areva SA

TRANSNEFT SEEKING ALTERNATIVE ROUTES FOR CHINESE CRUDE SUPPLIES

Russian oil giant Transneft is eyeing Mongolia as a possible transit shortcut for crude oil supplies for

China. The current Kazakhstan route could lose Russia up to USD 2.6 billion a year in export levy.

Transneft is looking for new efficient ways to transport additional volumes of Russian crude oil to

China, company spokesman Igor Demin told Vedomost. The agreement to ramp up crude exports

was signed by Rosneft Chief Executive Igor Sechin and CNPC President Zhou Jiping on 22 March.

―Kazakhstan so far has been merely talking about the possibility of transferring export tax to the

Russian budget as applied to crude swap deals.‖ With seven million tons at stake Russia could incur

losses in the region of RUB 80 billion (some USD 2.6 billion), he said. The Russian export tax on

crude stood at USD 420.6 per ton in March 2013.

DLA Piper counsel Marine Kyakisheva said the export tax is not charged on commodities being sold

within the Customs Union (which unites Belarus, Russia and Kazakhstan), but that it has to be paid

if the commodity in question is being re-exported to a third country.

Infranews news agency Director General Alexei Bezborodov said the Mongolian route from Meget is

currently being used to just 20 percent of its overall capacity, which means Mongolia would be

happy to offer a discount. Demin said another Russian oil giant, Rosneft, once planned to supply

crude oil to China via Kazakhstan from its Samotlor field. On the other hand, the current decline in

pipeline loads may cause Transneft to hike transit rates along its pipelines by up to 25 percent, he

noted.

No deadline has been set for deciding on a possible alternative route, Demin said.

Source: Russia Beyond the Headlines

MODUN RESOURCES RECEIVES POSITIVE ENVIRONMENTAL ASSESSMENT FOR NUURST

Coal explorer Modun Resources Ltd. reported a positive environmental impact assessment from the

Ministry of Environment and Green Development for the Nuurst thermal coal project.

On the strength of the assessment, Modun has submitted all the relevant documentation to the

Mineral Resources Authority for the final review of its mining license application.

―The progress towards obtaining the mining license for the Nuurst project continues,‖ said Rick

Dalton, managing director. ―As we enter the final stage of the process, we remain on track to

achieve project development and first mining of coal in the next 12 to 18 months.‖

Modun also announced the appointment of Darambazar Achit-Erdene as a director of Modun

Resources Ltd.'s Mongolian subsidiary, Modun Resources LLC Mongolia. Achit-Erdene is the founder

and president of Mongolia International Capital Corp. (MICC), a leading investment banking firm in

Mongolia.

―Achit-Erdene is a welcome addition to Modun's in-country Mongolian team as we change our focus

from exploration to development of the 100 percent-owned Nuurst coal project in central

Mongolia,‖ said Dalton. ―Achit-Erdene's local experience and expertise has been and will continue

to be invaluable as we work in conjunction with the Mongolian government and business partners to

advance the Nuurst coal project and pursue several other local opportunities that are arising as we

move towards production.‖

Source: Modun Resources Ltd.

CHANGI AIRPORT PROPOSES DIRECT FLIGHT BETWEEN SINGAPORE AND UB

The chief executive of Singapore's Changi Airport Group suggested a direct flight between

Ulaanbaatar and Singapore in a meeting with Ulaanbaatar's chairman of tourism.

Chief Executive Officer Wong Woon Liong suggested the flight to encourage tourism and promote

mutual collaboration between the two nations. Singapore and Mongolia see an exchange of 8,000

passengers a year. Changi Airport is a major hub of Asia and considered the world's seventh busiest

for air traffic.

Source: Info Mongolia

RUSSIA TO COOPERATE FOR TECHNICAL UPGRADE TO ULAANBAATAR RAILWAY

Russia has agreed to cooperate with Mongolia to upgrade the facilities of Ulaanbaatar Railway JSC.

At a meeting between Deputy Prime Minister and Chairman of Russia-Mongolia Intergovernmental

Committee, Dendev Terbishdagva, spoke about the need for technical improvement with Russian

Ambassador Viktor Samoilenko on 29 March. Samoilenko noted that although Mongolia and Russia

discussed the need for technical renovation for the Mongolian-Russian joint venture rail company

three years ago, no progress had been made. Meanwhile, railway traffic has grown annually.

Terbishdagva agreed, but noted there were many other Russian-Mongolian matters that need

attention following the 16th Russia-Mongolia Intergovernmental Committee meeting on Trade,

Economy, Science and Technical Cooperation held last December.

Russian and Mongolian officials are expected to discuss this and more on April 15 when they will

discuss jointly held assets. From 18 to 20 April officials from both countries will meet again for the

Erdenet Mining Corp. board of directors meeting.

Source: Info Mongolia

CANADIAN FIRMS INTRODUCE DEVELOPMENT SOLUTIONS FOR ULAANBAATAR'S GER DISTRICTS

Parliament Speaker Zandaakhuu Enkhbold visited Colombia, Canada in an effort to seek out

development strategies for Ulaanbaatar's ger districts.

Enkhbold visited the factories of wood-processing firms Linwood Homes Ltd. and Interex Canada

Inc. to observe their production and implementation techniques. He found that Linwood, who is

partnered with the Mongolian University of Science and Technology, has model homes that are

guaranteed to last 80 to 100 years.

Linwood has conducted studies specifically targeting the development of the Gandan ger districts.

The company found that one to three families could live in one of the Canadian-developed homes.

The homes were proven to withstand Mongolia's harsh winters and could be used outside of

Ulaanbaatar, too, in places such as Uvurkhangai Aimag.

―It is not only helping each other but also competition for the market,‖ said Enkhbold. ―The

entrance of Canadian companies in Mongolia means the market would expand, whereas the

choosing of Canadian standards among others from throughout the world is one area for

cooperation.‖

Source: Unuudur

GLOBAL X TO LAUNCH CENTRAL ASIA AND MONGOLIA INDEX ETF

NYSE Euronext has announced that two new Global X ETFs would begin trading on Wednesday, 3

April: The Global X Nigeria Index ETF (NGE) and the Global X Central Asia & Mongolia Index ETF.

Both funds will track indexes comprised of 25 stocks drawing from Kazakhstan, Kyrgyzstan,

Tajikistan, Turkmenistan, and Uzbekistan, along with Mongolia.

Source: Barron's

PEABODY-WINSWAY, SOUTHGOBI SUE UMNUGOBI GOVERNMENT

Peabody-Winsway Resources JV and SouthGobi Resources Ltd. have filed suits against the Umnugobi

government for its suspension of mining licenses covering 22,000 hectares of land until 2014.

SouthGobi and Peabody-Winsway saw government protections placed on land licensed to them for

exploration until 2041 and 2014, respectively. The Umnugobi Citizens‘ Representative Council

declared 32,000 hectares of land about 200 kilometers from Dalanzadgad Soum on November 26 last

year under state protection. Prior to that, on 24 December 2010 the council declared 10,000

hectares of land near Ulaan Nuur protected land also.

The companies are now suing Umnugobi's provincial government for MNT 3.6 billion for placing

protections over land they say are in violation of federally granted licenses. They are seeking to

have the locally passed resolution canceled and their licenses recognized. SouthGobi is also

reportedly considering a MNT 40 billion lawsuit, but no official decision has been made.

―Although the resolution was made after the licenses were issued, the land was registered as

protected in 2005. However, they were released from protection in 2007, giving foreigners the

chance to attain it,‖ said a statement from Umnugobi authorities.

The Umnugobi governor‘s office has lost two court cases regarding the matter and is now expecting

another court date before the Supreme Court.

Source: Zuunii Medee

AKICA GROUP HEADS SUED OVER BAD BUSINESS DEAL

Head officials of Akica Group in Mongolia were hit with a suit on Wednesday for allegedly defrauded

the owners of a European communications holding company who partnered with them to invest in

the launch of a Mongolian business.

Andrew Bain and David Stewart, the owners of the Atlantic Group Ltd., said they provided financial

backing for what was supposed to be a surefire business opportunity in Mongolia, but that attorney

Ed Winfrey and his business partner, Michael Plue, lied about securing government licenses and

used the investment money for personal and family expenses. The suit alleges fraud, breach of

fiduciary duty and breach of contract, seeking punitive damages and the return of an initial USD

900,000 stake in the proposed business. Both did work at Akica Group in Mongolia, Winfrey as the

head of overseas development and Plue as chief operations officer.

―Winfrey and Plue represented that, due to Winfrey's contacts with the Mongolian government, the

business could have any project desired from a list of 114 construction and social services

contracts,‖ the suit said. ―The representations were patently false.‖

According to the suit, Stewart and Bain agreed to invest in a company as Plue claimed that

Winfrey's extensive contacts with the Mongolian government would allow them to pick up a plum

government contract that would net the company 50 percent profits on those projects. Winfrey also

allegedly promised the company would earn a steady income from a lottery business in Mongolia.

But Winfrey and Plue falsified financial records showing they had completed work on government

projects and Winfrey falsified the transaction with the Mongolian government to make it appear he

had secured a gaming license that would allow them to operate the lottery, the suit says. Winfrey

allegedly used the money for personal expenses and an unrelated business and made direct

payments to some of his family members. Plue came clean about the misdeeds in October to Bain, a

Colorado native living in Austria, and Stewart, who lives in Scotland, but by then it was too late to

recover their money according to the suit.

Source: Law 360

KHAN RECEIVES UNFAVORABLE DECISION IN ARMZ LITIGATION

The Court of Appeals for Ontario has dismissed Khan Resources Inc.'s USD 300 million lawsuit against

Atomredmetzoloto (ARMZ) JSC.

Khan has pursued the lawsuit on ARMZ since late 2010. After following the necessary procedures in

Russia to serve ARMZ, Khan's attempts at service were stymied when the Russian Ministry of Justice

refused to effect service. The Ministry of Justice cited Article 13 of the Hague Convention that

provides that the state address may refuse to effect service ―only if it deems that compliance

would infringe its sovereignty or security.‖

―We are disappointed by the outcome of the decision,‖ said Khan's president and chief executive

officer, Grant Edey. ―We find it highly regrettable that ARMZ, a business with substantial interests

in Canada, can engage in business with a Canadian company and then be sheltered by its

shareholder, the government of Russia, from being held accountable in a Canadian court for the

wrongdoing and the damages inflicted on Khan and its shareholders.‖

Source: Market Wire

RELOCATION FIRM OPENS UB OFFICE

The Sante Fe Group, a relocation and moving firm, has opened a new office in Ulaanbaatar.

The company has appointed Thomas Morocz as general manager. He has experience in the

relocation industry since 2007, when he first worked in Seoul, Korea.

Source: The Sante Fe Group

UK RENEWABLE ENERGY TRADE MISSION TO MONGOLIA

The Mongolian British Chamber of Commerce is organizing a renewable energy and sustainable

mining trade mission.

―British companies lead the world in many areas of renewable energy, and there are huge business

opportunities in Mongolia,‖ said John Grogan, a trade mission organizer and chairman of the

Mongolian British Chamber of Commerce. He added, ―The trade mission will give companies working

in these fields the opportunity to showcase their technology and knowledge to an eager

marketplace.‖

Glasgow firm Sgurr Energy is already working on the Salkhit wind farm project.

David Scott, Mongolian honorary consul in Ulaanbaatar, has helped organize the trade mission to run

from 2 to 9 June, coinciding with Ulaanbaatar's hosting of the United Nations' World Environment

Day on 5 June.

―Scotland leads the world in many areas of renewable energy and there are huge business

opportunities in Mongolia.‖ The trade mission will give companies working in the fields the

opportunity to showcase their technology and knowledge to an eager marketplace.‖

Source: Herald Scotland, Renewable Energy Focus

SOUTHGOBI HEAD STEPS DOWN FROM ASPIRE BOARD

Aspire Mining Ltd. announced the resignation of non-executive director Ross Tromans from its

board.

Tromans currently acts as president and chief executive officer of SouthGobi Resources Ltd. His

resignation follows the recent announcement of a re-commencement of operations at SouthGobi's

Ovoot Tolgoi mine in Mongolia.

―We fully understand Ross' decision to focus his attention on the performance of SouthGobi

Resources,‖ said Aspire's chairman, David McSweeney.

Source: Aspire Mining Ltd.

WINSWAY APPOINTS NEW CEO

Winsway Coking Coal Holdings Ltd. announced the appointment of Ma Li as executive director

following the resignation of Apolonius Struijk.

Li is a member of the Health and Safety and Environmental Committee. Also appointed was Ng Yuk

Keung and George Hambro as members of the Remuneration Committee and Health and Safety and

Environment Committee.

Source: Winsway Coking Coal Holdings Ltd.

COALTRANS MONGOLIA IN UB ON 25-26 JUNE

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

Conference highlights include an assessment of elections, descriptions of how groundbreaking

projects are enabling Mongolia to add value to its coal assets, discussions of how regional dynamic

are evolving, and an array of networking opportunities.

Speakers will include Batsuuri Yaichil, chief executive officer of Erdenes Tavan Tolgoi LLC, Graeme

Hancock, president and chief representative of Anglo American Development, and Bayanjargal

Byambasaikhan, chairman of the Business Council of Mongolia.

Source: Coaltrans

RIO STARTS COPPER EXPLORATION IN UZBEKISTAN

The lead mining partner of Oyu Tolgoi, Rio Tinto PLC, has started exploration work for copper in the

Gava area in Uzbekistan's Namangan region.

The exploration work is being carried out by Gava Exploration, a wholly owned subsidiary of Rio

Tinto set up in Uzbekistan. The company has drawn up a work program for 2013 in cooperation with

State Committee of the Republic of Uzbekistan on Geology and Mineral Resources (Goscomgeology),

UzDaily reported.

Rio Tinto received a five-year license to carry out geological studies at Gava in December 2012. The

company announced in October 2011 that it may invest as much as USD 100 million into copper

exploration in Uzbekistan. Speaking at a conference in Tashkent, the company's head of exploration

for Central Asia, Chris Welton, said Rio Tinto may invest up to USD 100 million if the results of

exploration work at Gava are positive.

Around 900 copper deposits have been discovered, but as of 2011 just three were being developed,

all by the Almalyk Mining and Metallurgical Complex, Interfax reported. According to UzDaily, Rio

Tinto is also looking at other opportunities in Uzbekistan's mining sector.

Source: BNE

ANGLO AMERICAN CANCELS $555M MOZAMBIQUE COAL ACQUISITION

Diversified miner Anglo American PLC, who recently opened an office in Ulaanbaatar, will not

proceed with its USD 555 million acquisition of a 58.9 percent stake in the Revuboè metallurgical

coal project in Mozambique.

The global miner announced in July last year that it would buy the stake in the 1.4 billion ton hard

coking and thermal coal project from the Talbot Estate. However the deal had been subject to

various conditions precedent, which had not been satisfied. Anglo American said it would continue

with its objective of establishing a position in the emerging metallurgical coal basin in Mozambique.

Source: Mining Weekly

AREVA CEO SAYS JAPAN MAY RESTART TWO-THIRDS OF NUCLEAR REACTORS

Areva SA, the French maker of nuclear reactors, wants to boost safety-equipment sales as the

company expects Japan to restart two-thirds of its atomic plants that were idled after the 2011

Fukushima accident.

Half a dozen reactors may restart by the end of this year in addition to the two that resumed

operations in 2012, Areva Chief Executive Officer Luc Oursel said. ―I think two-thirds of reactors

will restart,‖ within several years.

Safety authorities are reviewing each site and the work carried out by operators, Oursel said. Areva

expects EUR 200 million (USD 260 million) in orders for safety equipment and services this year, up

from EUR 1500 million in 2012, as nuclear operators worldwide respond to demands for higher

security from regulators, the chief executive said.

Prime Minister Shinzo Abe said he would reopen Japan's reactors, which once supplied about a third

of the country's electricity, even as the approaching second anniversary of the 11 March quake and

subsequent tsunami stir memories of the worst nuclear accident in a quarter of a century. Areva,

which used to supply fuel for Japanese plants before the Fukushima accident, has since sold

equipment that transform hydrogen into water to prevent explosions in case of a severe accident,

Oursel said. Areva and its partner Kobe Steel Ltd. have sold storage casks for spent fuel from the

Fukushima reactors to Tokyo Electric Power Co.

―If the plants restart as we hope, Japan will recoup a significant place‖ in Areva's revenue, Oursel

said.

Source: Bloomberg

ECONOMY

CTU PROPOSES INCREASE IN MINIMUM WAGE

The Confederation of Trade Unions (CTU) is proposing a raise in the minimum wage in Mongolia to

MNT 239,400.

CTU Vice President Kh. Amgalanbaatar appealed to the Ulaanbaatar mayor's office and Mongolian

Employers' Federation for the wage rise. He said that food prices for staples such as bread, meat,

and vegetables had risen by 70 percent and are likely to rise further.

The proposal included 29 other related initiatives that together would help improve employment

and develop the nation's small businesses, said Amgalanbaatar. He added that a campaign for

improved labor safety and hygiene was scheduled to begin 1 May.

Source: Unuudur

TT POWER PLANT TO GET GREATER POWER OUTPUT CAPACITY

Mongolia will increase the size of a planned thermal power plant in the Gobi desert by 50 percent

to meet the needs of its biggest project, the Oyu Tolgoi copper and gold mine.

The Tavan Tolgoi power station will generate 450 megawatts, compared with an earlier capacity of

300 megawatts, Minister of Energy Mishig Sonompil said in a phone interview today. The plan was

approved by the government at a meeting on 30 March. The generator will run on fuel from the

Tavan Tolgoi coking coal deposit, which has 6.4 billion metric tons of reserves.

Mongolia will fund 30 percent of the power station through its USD 1.5 billion Chinggis bond. The

rest will come from private investors and loans. Mongolia will own at least 34 percent of the plant,

according to a 30 March statement.

Former Prime Minister Mendsaikhan Enkhsaikhan was appointed head of the power plant.

Source: BusinessWeek

HIGHWAYS TO LINK RUSSIAN AND CHINA BORDERS

The Mongolian government is planning to build a USD 3.5 billion cross-country highway stretching

from its border with Russia to Zamyn-Uud on the Chinese frontier.

The 628-mile long highway is expected to be completed by late 2015 and will see foreign investors

provide up to 70 percent of the initial funding while a Mongolian investment group called

Chinggisland Development will bear the remainder.

Construction of the road will start in May and will see North American and Italian companies

involved in the project, the agency reported, without identifying specific firms. Meanwhile the

Mongolian government is also seeking a non-state partner to build a 160-mile railway from the

Tavan Tolgoi coal field to the Chinese border. The government has accepted bids from 20

companies, including 14 from overseas, and the partners will take a 49 percent stake in the project.

Prime Minister Norov Altankhuyag said that more than one bidder may be chosen, raising the

possibility of a joint venture. The state-controlled Development Bank of Mongolia LLC will also

contribute USD 200 million to the project, Altankhuyag said.

Source: Economy Watch

JICA LEADS PROJECT FOR NEW UB BRIDGE

The Japan International Cooperation Agency has completed its pre-feasibility study of the Ajilchin

bridge connecting the Narny street with the Gurvaljingin bridge.

The 828-meter extension would bring the bridge to a total length of 2,265 meters, three times

larger than the Narny bridge completed last fall.

The new bridge will be made from steel and concrete and is expected to reduce traffic congestion

by 30 percent. The government is expected to reveal the investors and construction company of the

project after it has fully discussed the proposal. Prime Minister Shinzo Abe spoke of interest in

supporting this project.

Source: Unuudur

GOVERNMENT TO RELOCATE TANNERY PLANTS NOW IN UB

Government authorities are ordering the closure of tanneries in Ulaanbaatar by 2017 to make room

for new areas for settlement.

The Ministry of Industry and Agriculture invited inspectors to visit leather processing factories in

Ulaanbaatar. The investigative team wrote a follow-up report that recommended plants and

factories be located in a single central location as opposed to the haphazard placement the city

now has.

The government ordered feasibility studies for the removal of the tanneries to be drawn up for

relocation in Emeelt. The government, however, is taking proper measures to prevent the spread of

animal disease from western provinces in the process.

Source: News.mn

MNT 95 BILLION OF CHINGGIS BONDS TO GO TO CASHMERE SECTOR

The Cabinet of Ministries has given approval to spend MNT 95 billion from last year's USD 1.5 billion

Chinggis bond toward introducing improved facilities in the cashmere industry.

The ministry of economic development received approval to fund a plan for modern processing

machinery to cashmere producers in 2013 for value-added production. The initiative would cut raw-

material exports, instead replacing them with the finished goods, and create 20,000 new jobs. The

proposal also projects the creation of 200 textile factories throughout the country.

In 2012, 40 percent of the 3,000 tons of raw cashmere was processed into finished goods by

domestic producers. Another 40 percent was most likely shipped to China for manufacturing. The

government has previously issued a resolution to support cashmere processing with soft loans for

herders and manufacturers. The government hopes to establish a strong supply chain, developing

the cashmere sector from the bottom up.

Source: Business Mongolia

MONGOL BANK HOLDS FOREIGN-EXCHANGE AUCTION

The Bank of Mongolia has refused bids from commercial banks of USD 47.3 million and CNY 107

million placed on 28 March.

The Central Bank received tugrik swap agreement offers worth USD 87 million from Mongolia's

domestic commercial banks and sold USD 75 million through the swap agreement. Swaps obligate

banks to deliver dollars back to the Central Bank by a specific date and at a specific exchange rate.

The bank holds the auction on Tuesdays and Thursdays for domestic commercial banks. The

auctions are a tool of the bank to stabilize the foreign exchange rate for the Mongolian tugrik.

Source: Bank of Mongolia

METRO PLANNERS TO UNDERTAKE FEASIBILITY STUDY FOR SUBWAY PROJECT

Ulaanbaatar city authorities have ordered a feasibility study for a new metro subway station

targeting completion in 2020.

The Japan International Cooperation Agency (JICA) will draw up a feasibility study for the public

transportation project following the approval of a pre-feasibility study. The pre-feasibility report

projects Ulaanbaatar's population to grow to 1.7 million by 2030, increasing demand of roads and

transportation threefold. The project also expects to cut pollution from auto emissions by 30

percent while reducing accidents on the road.

According to the pre-feasibility study, travel would cost from MNT 500 to MNT 600 per ride and

would reduce travel time by 30 minutes.

Project planners are targeting project development to begin in 2014, with construction to begin in

2016 and completion in 2020. The plans are for a 17.7 kilometer track underground running east to

west along Peace Avenue. Another line will run 6.6 kilometers from north to south from Baruun 4

Road to Zuun 4 Road. JICA has projected a total cost of USD 1.5 billion. JICA and other international

organization would provide USD 600 million while the Mongolian government would cover USD 700

million for the project.

Source: News.mn

REAL ESTATE MARKET UPDATE - Q2 2013

As spring arrives in Mongolia, so does the normally busy construction season. However, this year

cranes stand still and construction sites are deserted.

The government initially canceled all construction licenses to verify their legality. A considerable

number of construction projects already underway were canceled and future developments were

put in jeopardy, as the government is actively seizing land that has been owned for two years, but

was not developed by the owner. The city has also warned about the impending collapse of the

public utilities sector for the 2013-2014 winter, the lack of drinkable water to supply the city and

the constant delays in the start of construction for the essential new power plant.

There is considerable amounts of ―grade A‖ ―and grade B‖ office supply coming online in the next

two months, but investors' uncertainty in Mongolia means most large-scale hotel projects are facing

cancellations or delays. Uncertainty within the real estate industry is expected until the

presidential elections are over.

While the approval for construction of a new metro system is laudable, it is unrealistic. Ulaanbaatar

lacks the space to build exit and entry points, the city has no idea where the pipes lay underneath

the ground and it does not have the expertise to undertake such a large-scale project, let alone the

machinery. Almaty, Kazakhstan took 23 years to build a single metro line of 8.5 kilometers for USD

11 billion compared with government expectations to build 50 kilometers for USD 1.5 billion in four

years.

But one saving grace for construction companies may come from the city's renewed desire to re-

develop the ger districts. If those various projects do go ahead, they will provide construction work

of a considerable scale for a number of years. This is of course dependent on the government

managing the re-development carefully and learning from the lessons of the failures of the 100,000

homes project.

2013 is not all doom and gloom. Such market corrections are essential and a slowdown in Mongolia's

real estate sector could be beneficial. It should be of particular interest to investors looking to

make a fundamental play on the market.

Source: M.A.D. Investment Solutions

ONGOING MINING DISPUTES HURT GROWTH

It has proven difficult for the government to convince interested parties that disputes reported in

the media are not indicative of a deeper conflict building between the present leadership and the

foreign firms that are extracting minerals.

In March government officials said a disagreement with multinational firm Rio Tinto PLC on key

points related to costs overruns, the feasibility study for phase two of the Oyu Tolgoi copper-gold

mine and the employment of Mongolian workers would not delay the start of production, expected

in June.

―The Mongolian government and the investor both [want to] highlight the importance of production

starting on time,‖ Dorjsuren Javkhlanbold, a senior official at the ministry of mining, told Reuters.

Ulaanbaatar also announced in March that it will ease limits on foreign investment, specifically

concerning the MNT 100 billion threshold for deals involving the transfer of more than 49 percent of

a Mongolian company to a foreign group be referred to parliament for approval, Luvsanvandan Bold,

the minister of foreign affairs, said that figure would be raised to MNT 1 trillion.

Meanwhile the coal sector has also fallen victim to a dispute between the government and mining

firms. Aluminum Corp. of China Ltd. (Chalco) said in January that it would seek legal redress if the

Mongolian government followed through with a decision to try to alter an agreement signed in 2011.

State-owned Erdenes Tavan Tolgoi LLC, the mining unit operating at the mine, wanted to

renegotiate the deal with Chalco. The agreement had Chalco lend Erdenes TT some USD 350

million, which the Mongolian company would then repay with coal from Tavan Tolgoi.

―There is a significant need for techno-economic based capacity building and associated technology

awareness training to be provided, covering the efficiency and environmental impacts of clean coal

and alternative technologies,‖ Andrew Minchiner, the principle associate at the IEA Clean Coal

Center, wrote in March 2013. ―This is necessary both to assist the nation in its near-term

development plans and also to build up the national capacity from a longer-term sustainable

perspective.

Source: Oxford Business Group

MONGOLIA NEEDS SCHOOLS AND HOSPITALS: WHY TALK ABOUT SAVINGS?

Mongolia's mining revenues are set to soar in the coming years, but here people talk about the need

to save for the future. To prevent boom-bust cycles, saving some of the revenues in good times is

part of effective natural resources management.

―If natural resource booms are well managed they can be a blessing,‖ said Eric Parrado, former

head of Chile's Economic and Social Stabilization Fund, adding, ―an important general lesson is that

governments should avoid temptation to spend significant temporary surpluses.‖

There are four challenges Mongolia will surely have to face. The first is natural resource revenues

are volatile and uncertain. They are also exhaustible, so the benefits must be made to last by

transferring some (and not all) for future generations. The export of commodities such as coal and

copper will have direct implications to the domestic economy to sectors other than mining. Finally,

the country will have to keep corruption in check as mineral wealth often is tempting for officials

looking to climb to the top.

In good years government should run a fiscal surplus for savings. That saved money can be used in

the tough years preventing cuts to important areas of expenditure such as education, health and

infrastructure while reducing the need to borrow and incur interest costs. Mongolia has a

stabilization account and a Fiscal Stability Law limiting budget deficits, but improvements are

needed. In 2012 and 2013 the government bypassed the stability law and procedures by spending

off-budget.

Chile is joined by Norway, Timor-Leste, Botswana, Trinidad and others in utilizing savings for

success in natural resource management. No story is perfect and in each instance policy makers

muddled through, enhancing the design of their savings instruments and improving institutions in an

iterative and incremental manager. Short-term and unsustainable gains versus medium-to long-term

sustainable benefits are optimal, but it is up to Mongolians to decide on the trade-off: which way is

best for Mongolia?

Source: World Bank Blogs

LIQUID ECONOMICS

As Mongolia continues to strive toward the manufacturing of finished goods, it will have to consider

proper water management for its pursuit of green development

Water in Mongolia means sustenance for its people, grass for its grazing herds, and a key ingredient

for a variety production processes. Mongolia's cannot develop a brand, as it set out to do in the

Mongolian Economic Forum, without its livestock.

To give some perspective into how much water is consumed during production, one study shows

that production of just a single pair of jeans requires 11,000 liters of water. According to G.

Dolgorsuren of the Tuul River Basin Administration, international organizations operating in Asia say

Mongolia has the largest water footprint—the representation of water consumed by a nation. It is

also third in the world for its size of its water footprint.

One concern for many in Mongolia is the management of the Tuul River, a key source of water for

Ulaanbaatar and the source of water of the area responsible for 60 to 70 percent of Mongolia's gross

domestic product (GDP). The State Inspection Agency found in 2011 that the river met the fifth tier

of pollution criteria. The River Basin Organization was established by the Ministry of Environment to

help identify who is polluting the country's water sources, but it has had difficulty enforcing its

regulations and collecting on the fine it administers.

―It is important that large organizations such as those for mining use water efficiently. They should

reuse their water,‖ said G. Munkh-Erdem, director of watering and coordination at the

environmental ministry.

As the city continues to develop, it will face increasing difficulty in this area. However, if the

government can implement plans such as those for the development of Ulaanbaatar's ger districts it

will be able to improve efficiency. Another challenge will be instilling good habits for water

management in households, as those who live in apartments consume between 100 and 120 liters of

water compared with eight to nine liters for ger-dwelling households. With about 60 percent of

Ulaanbaatar's population living in gers, the increased consumption could be drastic.

Source: Mongolian Economy

AIR POLLUTION LINKED TO 1.2 MILLION PREMATURE DEATHS IN CHINA

Outdoor air pollution contributed to 1.2 million premature deaths in China in 2010, nearly 40

percent of the global total, according to a new summary of data from a scientific study on leading

causes of death worldwide. This occurs just as Mongolia is grappling with its own battle with air

pollution.

Figured another way, the researchers said, China's toll from pollution was the loss of 25 million

healthy years of life from the population. The data on which the analysis is based was first

presented in the ambitious 2010 Global Burden of Disease Study, which was published in December

in the Lancet, a British medical journal.

―We have been rolling out the India-and China-specific numbers, as they speak more directly to

national leaders than regional numbers,‖ said Robert O'Keefe, the vice president of the Health

Effect Institute, a research organization that is helping to present the study. The organization is

partly financed by the United States Environmental Protection Agency and the global motor vehicle

industry. What the researchers called ―ambient particulate matter pollution‖ was the fourth-

leading risk factor for deaths in China in 2010, behind dietary risks, high blood pressure, and

smoking. Air pollution ranked seventh on the worldwide list of risk factors, contributing to 3.2

million deaths in 2010.

Calculations of premature deaths because of outdoor air pollution are politically threatening in the

eyes of some Chinese officials. According to news reports, Chinese officials cut out sections of a

2007 report called ―Cost of Pollution in China‖ that discussed premature deaths. The report's

authors had concluded that 350,000 to 400,000 people die prematurely in China each year because

of outdoor air pollution.

There has been growing outrage in Chinese cities over what many say are untenable levels of air

pollution. Cities across the north hit record levels in January, and official Chinese newspapers ran

front-page articles on the surge—what some foreigners call the ―airpocalypse‖—despite earlier

limits on such discussion by propaganda officials.

Source: New York Times

POLITICS

DEPUTY SPEAKER EXPECTED TO RESIGN AFTER REVELATION OF SECRET OFF-SHORE ACCOUNT

Millions of internal records have leaked from Britain's offshore financial industry, exposing for the

first time the identities of thousands of holders of anonymous wealth from around the world,

including MP Sangajav Bayartsogt.

The leak of two million emails and other documents, mainly from the offshore haven of the British

Virgin Islands (BVI), has the potential to cause a seismic shock worldwide to the booming offshore

trade, with a former chief economist at McKinsey estimating that wealthy individuals may have as

much as USD 32 trillion stashed in overseas havens.

The former finance minister and Parliament's current deputy speaker, Bayartsogt, said he may have

to resign from politics as a result of this investigation.

"I shouldn't have opened that account. I should have included the company in my declarations," said

Bayartsogt. "I don't worry about my reputation. I worry about my family. I probably should consider

resigning from my position."

Bayartsogt said his account at one point contained more than USD 1 million.

Source: Business Insider, The Guardian

MPP ELECTORAL WINS APPROVED BY SUPREME COURT

The Uvs parliamentary candidates accused of lawful campaigning have had their elections approved

and will be able to participate in Parliament.

The issue was first initiated when the Democratic Party (DP) and 13 citizens from Tarialan Soum of

the 15th electoral district accused two Mongolian People's Party candidates, Ch. Khurelbaatar and

B. Choijilsuren, of violating the election law, which should have disqualified their candidacy. An Uvs

court decided on 11 November that their wins in the election were invalid and disqualified them

from acting in Parliament. An appellate court overturned that ruling on 17 January, and then, on 1

April, an administrative legal branch of the Supreme Court ruled in favor of their electoral wins.

Source: Udriin Sonin

SPRING SESSION BEGINS WITH INCOMPLETE PARLIAMENT

The first year anniversary of the current parliament is fast approaching. However two seats remain

vacant due to ongoing disputes.

Disputes arose over the Uvurkhangai Aimag and Songinokhairkhan District seats due to conflicts with

the new election law passed before last year's parliamentary election. In Songinokhairkhan, where

three seats represent the district, one of the seats was unable to secure the 28 percent vote

threshold required in order to be elected, so a new election is expected. In Uvurkhangai the

election campaigns of two winners from the Mongolian People's Party were questioned due to

accusations of employing minors for campaigning purposes. The accusations were proven and the

candidates were found guilty by a local court and the General Election Committee in October.

The resultant decision for the Uvurkhangai seat was that the second-place winners, candidates from

the Democratic Party (DP), should be sworn in, however, one candidate, Zorigt, has yet to be sworn

in. Another election between the MPP and DP candidates will take place. The local election

committee has proposed that the run-off election take place during the presidential election.

If these loose ends are taken care of, Parliament could become complete by June. But there is also

cases pending in Uvs Aimag, where the election MPP members were found guilty of unlawful

campaign practices by two levels of district courts. The Independent Agency Against Corruption

(IAAC) is also investigating MPP caucus members Khayankhyarvaa and Sodbileg.

Currently the DP has 33 seats, the MPP has 25 seats, the Justice Coalition has 11, the Civil Will-

Green Party has two, and there are three independents, bringing the total to 74 MPs. If the

pending court decisions on re-elections are won by the DP, it could move up to 37 seats. While this

could increase their voice, it would still be two seats short of a majority.

Source: Mongolian Investment Banking Group

2013 SPRING SESSION AGENDA RELEASED

Parliament announced its agenda for the spring 2013 session.

The agenda includes 18 issues for discussion. The first is the presidential election date and its

financing scheme. Behind that is the amendment to the Strategic Entities Foreign Investment Law

(SEFIL) and the latest revision of the Securities Market Law. Other laws needing consideration are

the citizens' health insurance bill, a bill concerning the transfer of shares from Erdenes Mongol LLC

to Bayanmongol and the Human Development Fund, a state service bill, and revisions to the draft

Law on Lands.

The agenda included some analytical and forward-looking budgetary initiatives, including a financial

report on the 2012 budget, a proposed resolution for a program for investment for the 2014-2016

budgets, and an initial plan for the 2015-2016 budget. Time will also be made for the

implementation of Parliament's 2012 ―socio-economic priorities‖ and ―socio-economic main

directives‖ for 2014.

Regarding infrastructure, this session's agenda includes matters related to the development of

Ulaanbaatar's ger districts.

Source: Cover Mongolia

GANBAATAR TO FILE SUIT AGAINST RIO TINTO IN HAGUE COURT

MP Sainkhuu Ganbaatar announced at a press conference on 2 April his intention to sue Rio Tinto

PLC in the International Court of Justice in Hague.

Ganbaatar said his cased is based on Resolution 1803 of the United Nations, which guarantees the

sovereignty of countries developing their economies through mineral extraction. The resolution,

established in 1962, states that the natural resources of a country belongs to the people, not to any

single company

―ICJ has jurisdiction over the enforcement of this resolution,‖ said Ganbaatar. ―Therefore we are to

submit a claim to the ICJ. We will also deliver a notice to the secretary general of the United

Nations.‖

He also added the Rio Tinto's operations greatly threaten the water supply of the Gobi desert.

Research by Mongolia's water experts found that 35.4 million milliliters is to be consumed by Oyu

Tolgoi's processing plants in a year, which Ganbaatar says breaches the limits of the Gobi's inferred

water resources. Oyu Tolgoi is permitted consumption of 27.4 million milliliters, said Ganbaatar.

Source: News.mn

MINING MINISTER CONTINUES PUSH FOR CHANGES TO OT INVESTMENT AGREEMENT

Mining Minister Davaajav Gankhuyag has issued a decree to amend the Oyu Tolgoi investment

agreement.

―The decree says, based on the discussion with investors, changes have to be made to the

agreement,‖ said Gankhuyag. ―In my opinion, this agreement is not a good one.‖

The minister said the issue of taxes should be considered first. All parties have agreed to work

towards greater transparency in investment expenses to identify where greater-than-expected costs

may have originated. He claimed that development had exceeded the costs stated in the original

play by USD 80 million.

The Minister added that all these factors have made it obligatory that the government implement

his decree.

Source: Zuunii Medee

BILL TO RESTRICT CERTAIN USES OF CHINGGIS KHAN‟S NAME AND IMAGE

MPs D. Ganbat and G. Bayarsaikhan submitted a draft law on 28 March that puts restrictions on the

use of Chinggis Khan's name and image.

―The possibility of using Chinggis Khan's name and portrait is open, but commercial products and

packages that use the great conqueror's name and image are popularly seen in streets as trash,‖

said a statement from the MPs. ―Therefore, we need to initiate a draft law to try for proper use of

the name, limit commercial use, and hold it as a form of national pride for Mongolia.‖

The bill is made up of three articles and 12 acts outlining the use of Chinggis' name and image.

Source: News.mn

JAPANESE PREMIER MOVES TO BOOST TIES WITH MONGOLIA

Japanese Premier Shinzo Abe moved to boost ties with another Chinese neighbor last weekend,

visiting Mongolia where he offered increased foreign aid and referred to the countries' ―shared

democratic values.‖

It was the first visit to Mongolia by a Japanese prime minister in seven years. The trip underscored

the two priorities of the foreign policy that Abe and his center-right government have pursued since

winning power in December: gaining access to natural resources, and building alliances to counter

the rising regional clout of China. Abe drew criticism from some in China in January during his first

trip abroad as leader—to Vietnam, Thailand and Indonesia—for laying out a vision for a coalition of

Asian democracies that would cooperate in what appeared to be unspoken but obvious opposition to

China.

Abe persisted with similar language in Mongolia. In an opinion piece published in a Mongolian

newspaper, he called the two countries ―partners with shared values of freedom and democracy.‖

In an allusion to territorial disputes involving China—including Japan's stand-off with it over the

ownership of the Senkaku Islands in the East China Sea—as well as militant signals from North Korea,

he added that international problems ―should be solved by peaceful means and not by force.‖ In

meetings with Mongolian President Tsakhia Elbegdorj and Prime Minister Norov Altankhuyag, Abe

agreed to provide JPY 4.2 billion (USD 45 million) in low-interest loans to fit coal-fired electric

power plants in Mongolia with pollution-reducing technology.

Japan is already Mongolia's biggest foreign-aid donor and is negotiating a trade agreement with the

country. The government of Mongolia, a landlocked country sandwiched between China and Russia,

has been focusing on developing closer ties with countries such as Japan and the United States to

help counterbalance occasionally strained ties with Moscow and Beijing. A big target for Japan is

the Tavan Tolgoi coal deposit. Japan's demand for fossil fuels has jumped since the March 2011

Fukushima disaster all but shut down its nuclear-power sector. Abe urged Mongolian leaders to

consider allowing Japanese trading companies and other groups to participate in developing the

field.

Source: Financial Times

FOURTH INDIA-MONGOLIA COOPERATION MEETING HELD IN DELHI

Education and Science Minister L. Gantumur met with India's minister of state for external affairs at

a India-Mongolia Join Committee meeting in Delhi.

The meeting with Gantumur and Minister E. Ahamed covered a broad range of issues related to

India-Mongolia relations. Indian companies are interested in playing a larger role in Mongolia's

mineral processing and extraction activities and have requested attention brought to creating a

favorable environment for them to open operations in Mongolia. Ahmed also said there was interest

in establishing a milk processing plant in Mongolia.

Ahamed noted India's continued support of Mongolia's development and reaffirmed their intention

to renovate the Rajiv Gandhi Polytechnic College of Production and Art in Ulaanbaatar. India is also

looking to loan USD 20 million for an India-Mongolia Joint Information Technology Education and

Outsourcing center in Ulaanbaatar.

Also discussed were diplomatic matters including the continuation of joint military exercises, the

proposed visit of an Indian business delegation to Mongolia this summer, the possibility of launching

air services between India and Mongolia and the establishment of an India-Mongolia Joint School.

Next year's Joint Committee on Cooperation meeting is expected to be held in Mongolia.

Source: World Bulletin

MONGOLIA TO EASE VISA PROCESS FOR TURKISH CITIZENS

Turkish Deputy Prime Minister Bulent Arinc and Mongolian Defense Minister Dashdemberal Bat-

Erdene said they were expecting to begin talks on dropping visa requirements for Turkish citizens

traveling to Mongolia.

The officials made their announcement during a signing ceremony for the Turkey-Mongolia Joint

Economic Commission Seventh Term Meeting memorandum in Ankara, Turkey's capital. Arinc said

that after talks were finished Turkish citizens would be able to travel to Mongolia more frequently.

Bat-Erdene said the memorandum they signed demonstrated the will of the two countries to boost

cooperation.

Source: World Bulletin

ELBEGDORJ CALLS FOR SUPPORT TO “REINDEER PEOPLE” CULTURE

President Tsakhia Elbegdorj issued a decree for the protection of the livelihood and identity of

Mongolia's Tsaatan ethnic group, the country's smallest, on 2 April.

The decree for the group commonly referred to as Mongolia's ―reindeer people‖ was the first time

the president spoke out for the protection and support of an ethnic group in Mongolia. The

president has initiated monthly allowances to all Tsaatan children up to age 18 and a Tsaatan

language program for them to study in school. The president also asked that the government

provide employment for Tsaatan people and purchase for them first-rate reindeer to improve the

quality of their herds.

Government statistics show that Mongolia has 500 to 670 Tsaatan living in Khuvsgul Aimag. The

livelihood of most is based on herding about 1,500 reindeer in total in the deep forest.

Source: News.mn

ANNOUNCEMENT

FOREIGN INVESTMENT IN MONGOLIA CONFERENCE, APRIL 19, UB

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

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

19, 2013 at the Kempinski Hotel.

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

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

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

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

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

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

previous years.

Speakers include:

- S. Bold, Chief Economist, Central Bank

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

Economic – Development of Mongolia

- B. Amarsanaa, Academic Secretary of National Legal Institute

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

- D. Achit-Erdene, CEO, MICC

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

317027.

___________________________________________

NEW YORK INTERNATIONAL FRANCHISE EXPO, June 20 – 22, New York City, USA

The Business Council of Mongolia in collaboration with the U.S. Embassy‘s Commercial Section is

now registering a Mongolian business delegation to participate in ―NEW YORK INTERNATIONAL

FRANCHISE EXPO‖ which will be organized in New York City, USA at Jacob K. Javits Convention

Center, from June 20 to 22, 2013.

Join thousands of entrepreneurs and business owners at the International Franchise Expo, the

largest franchise expo in the country. Meet hundreds of proven franchise opportunities. Every

industry. Every investment level. Full-time and part-time.

Benefits will be:

• Meet over 400 of the top franchises.

• Take advantage of 70 free Seminars and in-depth Symposia.

• Get the help you need in deciding which franchise is right for you.

• Find out what you need to know as a new franchisee.

• Discover industries that are new, or that you might not have considered.

• Get advice on the wide range of financial options from experts.

• Talk face-to-face with hundreds of the best franchise opportunities expanding in our area!

Please contact 317027, 99131377 or saruul@bcmongolia.org for registration or for additional

information. Registration deadline is 6:00PM, April 19, 2013.

___________________________________________

MONGOLIA INVESTMENT SUMMIT 2013, APRIL 16-18, LONDON

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

London 2013 and receive a 15 percent discount on their registration fee.

Mongolia Investment Summit London has over 200 delegates registered to attend in April. With

significant amounts of investment in Mongolia traditionally coming from Asia there are new

opportunities to be explored in the Western Hemisphere. Investor interest is high from the west and

fund managers, private investors and financiers want to gain exposure to Mongolian growth.

Mongolia Investment Summit London in April will provide an important opportunity to meet these

investors, raise the profile of Mongolia and promote your business.

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

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

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

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

provides an opportunity not to be missed.

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

bird discount plus an additional 15 percent off.

___________________________________________

3RD RISK MANAGEMENT FORUM, 1 MAY, ULAANBAATAR

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

Sky Tower.

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

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

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

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

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

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

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

For more information, visit RiskForum.mn.

___________________________________________

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

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

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

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

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

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

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

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

Speakers include Chuluunbat Orchirbat, Vice Minister of the Ministry of Economic Development,

Battsengel Gotov, Chief Executive Officer of Mongolian Mining Corp., and Jim Dwyer, Executive

Director of BCM.

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

___________________________________________

MONGOLIA ENERGY AND INFRASTRUCTURE SUMMIT, 15-16 MAY, ULAANBAATAR

Business Council of Mongolia members are invited to attend the Mongolia Energy and Infrastructure

Summit and receive a 15 percent discount on registration fees.

On the 15th and 16th May 2013, the Mongolia Energy and Infrastructure Summit will bring together

independent power providers, asset management firms, local and international banks, law firms,

and government officials to discuss the business opportunities and challenges facing the Mongolian

energy and infrastructure sector.

Key coverage includes:

- Renewable energy and the future of clean energy in Mongolia

- Infrastructure needs for the mining industry

- Insurance and political risk considerations for investors and developers

- Power and infrastructure projects for Ulaanbaatar‘s urbanization

- Financing challenges and the role of ECAs and multilaterals

For more information, please visit the event website: www.euromoneyseminars.com/MEI13

Enter the discount code ―MEI_BCM‖ when you register online to receive 15 percent off.

___________________________________________

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

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

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

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

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

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

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

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

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

___________________________________________

FUTURE MONGOLIA, 19-22 JUNE, ULAANBAATAR

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

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

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

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

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

responses to the present needs of Mongolia and its population.

For more information, visit Future-Mongolia.com.

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

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

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

scheduled from 18:50 to 19:00 tonight. Tune in to watch this program that reports stories from

today‘s BCM NewsWire.

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BCM‟S MINING SUPPLY CHAIN DATABASE

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

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

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

content and use of information technology opportunities.

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

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

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

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

Database. Please visit here for registration—FREE!

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

or 317027.

BCM WEBSITES

MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS

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

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

government website Open-Government.mn are regularly updated.

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

„PHOTO GALLERY‟

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

added from BCM‘s monthly meeting on March 25:

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

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

meeting, March 25, 2013

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

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

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

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

Other recently added presentations:

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

Kempinski Hotel, March 18, 2013, Ulaanbaatar

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

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

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

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

Working Group meeting, March 14, 2013

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

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

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

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

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

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

Convention Center, Ulaanbaatar, Mongolia.

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

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

Hotel.

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

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

presentations from Discover Mongolia 2012.

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

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

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

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

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

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

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

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

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

for Expatriates in Mongolia‖ by PricewaterhouseCoopers.

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

Parliament and Government is available for download.

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

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

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

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

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

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SOCIAL NETWORKS WITH BCM

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

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

improving each day with BCM.

Connect with BCM on Linked-in to join the diverse group of professional contacts creating a better

business environment in Mongolia today.

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

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

the NewsWire with the community.

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

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

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

648 followers on Twitter.

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

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

BCM WORKING GROUP MEETINGS

BCM`s Tax Working Group met on 26th of March 2013. During the meeting discussion the Working

Group decided to proceed with a letter to S. Purev, Vice Minister of Finance, on the subject of VAT.

The final letter is available on BCM`s Tax Working Group Web Page or please click on the direct link

in Mongolian official version: http://bcmongolia.org/images/files; In English, unofficial translation:

http://bcmongolia.org/images/files/en/Working-group/tax/purev-eng.pdf

Please contact erka@bcmongolia.org.

ECONOMIC INDICATORS

INFLATION

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

Year 2007 *15.1% [source: NSOM]

Year 2008 *22.1% [source: NSOM]

Year 2009 *4.2% [source: NSOM]

Year 2010 *13.0% [source: NSOM]

Year 2011 *10.2% [source: NSOM]

February 28, 2013 *11.3% [source: NSOM]

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

Note: 11.1% y-o-y, Ulaanbaatar city, February 28, 2013

CENTRAL BANK POLICY LOAN RATE

December 31, 2008 9.75% [source: IMF]

March 11, 2009 14.00% [source: IMF]

May 12, 2009 12.75% [source: IMF]

June 12, 2009 11.50% [source: IMF]

September 30, 2009 10.00% [source: IMF]

May 12, 2010 11.00% [source: IMF]

April 28, 2011 11.50% [source: IMF]

August 25, 2011 11.75% [source: IMF]

October 25, 2011 12.25% [source: IMF]

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

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

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

CURRENCY RATES – APRIL 4, 2013

Currency Name Currency Rate

US dollar USD 1,410.63

Euro EUR 1,804.20

Japanese yen JPY 15.06

British pound GBP 2,126.38

Hong Kong dollar HKD 181.42

Chinese Yuan CNY 227.47

Russian Ruble RUB 44.45

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.