BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 225 – June 8, 2012

NEWS HIGHLIGHTS:

Business:

Erdenes-TT valued at USD 10.6 billion;

Energy Resources signs concession agreement for rail construction;

Mongolia Airlines expands international routes;

Eznis Airways acquires new Boeing 737-700;

FRC suspends Tengri Securities trading;

CLSA expects trading to surge on MSE;

Aspire Mining delivers positive pre-feasibility for Ovoot;

Mongolia Energy CEO retires;

MoveOne delivers to OT from Texas;

Trimble invests in new lab at MUST;

Mongolia: democratization and Rio Tinto.

Economy:

EU and EBRD target diversification;

EU provides EUR 7 million for technical and vocational training;

E-filing could save taxpayers MNT 12 billion;

German center to lead wastewater plant project;

Hazy days: Berkeley tackles pollution;

Herders caught between cashmere and climate change;

For falcons’ sake;

Government’s salary raises bring 36 percent tuition hike at MUST;

Universities set tougher requirements for entrance;

Airline service to soar;

Investors wary ahead of polls;

New Zealand delivers new safety features to quadbikes for miners;

Mining shares plunge despite record profits;

Chinese manufacturing index falls;

China coal: piling high as growth slows;

Heavy tax could sink Indonesia’s coal industry, says industry analyst.

Politics:

General Election Committee bars Enkhbayar's candidacy;

Enkhbayar trial postponed;

Enkhbayar lashes out from hospital;

Ban on new licenses to continue over next 5 years, says Minerals minister;

Meeting with S. Korean finance officials brings talk of liberalized air travel;

Election regulations has UB mayor take temporary leave;

Balancing investor and public interests;

Setting the tone for investment;

Elbegdorj awarded U.N. environmental prize;

Azerbaijan, Russia, Mongolia to cooperate on rail management;

S. Korea, Mongolia agree to streamline visa process;

Mongolia, Japan launch EPA talks;

Migrant workers face discrimination in Korea;

New IDs to be sent beginning 25 June;

Finance ministry lays out development agenda for next 10 years;

Government reviews enforcement of law on mining near rivers and trees;

Dinosaur hearing postponed.

ECONOMIC INDICATORS:

MSE Top 20 Index by Market Capitalization;

Foreign-listed Companies with Mongolian Assets;

Inflation;

Central Bank policy rate;

Currency rates.

*Click on titles above to link to articles.

SPONSORS

Khan Bank Eznis Airways

Kempinski Hotel Khan Palace Mongolian National Broadcasting

Breakthrough PR Oxford Business Group

BUSINESS

ERDENES-TT VALUED AT USD 10.6 BILLION

Erdenes Tavan Tolgoi may be worth as much as USD 10.6 billion, according to Frontier Securities.

The value of each Erdenes-TT share is MNT 933, Frontier Securities said in an emailed report, citing

a 30 May statement on the government's website. Frontier calculated the value of the company

based on Erdenes-TT having 15 billion shares. Erdenes-TT Chief Operating Officer Graeme Hancock

confirmed a value had been set without giving further details.

The company last month delayed its planned initial public offering (IPO) until February or March,

citing a decline in global market conditions. It had planned to raise USD 3 billion from the share sale

in Hong Kong, London, and Ulaanbaatar before the delay.

―The valuation is reasonable and is in line with that of Mongolian Mining Corp.‖ Helen Lau, an

analyst at UOB-Kay Hian Ltd. in Hong Kong. ―But market sentiment is poor right now and investors

may not have the appetite.‖

Mongolian Mining Corp., the nation's biggest coking coal exporters, is worth HKD 19.8 billion (USD

2.5 billion) based on a recent share price. It has 3.7 million shares outstanding. Mining companies

have lost 32 percent of their market value in the past year. Companies including Sany Heavy

Industry Col and China Nonferrous Mining Corp. canceled or reduced share sales planned last month

in Hong Kong.

Companies have raised USD 3.1 billion selling new shares in Hong Kong so far in 2012, down 65

percent on a year earlier. The IPO is set to be Mongolia's first listing of a state-run miner overseas.

Source: Bloomberg

ENERGY RESOURCES SIGNS CONCESSION AGREEMENT FOR RAIL CONSTRUCTION

The government has finalized its agreement with Energy Resources LLC for the construction of a

railway between Ukhaa Khudag coking coal mine and the Gashuun-Sukhait border check point.

The government has signed a concession agreement with Energy Resources, the Mongolian

subsidiary of Mongolian Mining Corp. (MMC), and its subsidiary Energy Resources Rail LLC (ERR) to

build and operate the railway base infrastructure. The major terms under the concession agreement

relate ERR has been granted a right to construct the 1,520-meter railway over a period of up to 19

years from the date of commissioning.

Upon expiration of the concession term, Energy Resources would transfer 51 percent of its

shareholding in ERR to the government. Upon transfer, Energy Resources has the option to trade

remaining shares in ERR for 10 percent of shares in a state-owned company that would own an

integrated railway base structure network between Sainshand, Tavan Tolgoi, Ukhaa Khudag, and

Gashuun Sukhait.

Source: Mongolian Mining Corp.

MONGOLIA AIRLINES EXPANDS INTERNATIONAL ROUTES

Mongolian Airlines Group is planning to add Hong Kong as one of its regular destinations.

The airline will expand its routes to include regular flights from Ulaanbaatar to Haneda Airport in

Hong Kong, in addition to flights to Shanghai, Cheju, and Chongju in China.

The entrance of Mongolian Airlines and others has created greater competition in Mongolia‘s airline

market and could allow cheaper prices for air fare.

Source: Udriin Sonin

EZNIS AIRWAYS ACQUIRES NEW BOEING 737-700

Eznis Airways will lease a new Boeing 737-700 from the International Lease Finance Corp. (ILFC) in

the United States. The plane will be used to extend the airline‘s international‘s routes.

In the first quarter of 2012, international transportation traffic increased by 30 percent compared

to a year ago. The ILFC takes first place in the world with prices, and second place with its fleet.

The new Boeing aircraft is due to touch down in Ulaanbaatar for the first time in the first half of

this month.

Boeing 737 is a middle-distance jet able to make non-stop flights from Ulaanbaatar to Beijing,

Seoul, Tokyo, and Hong Kong.

Source: Montsame

FRC SUSPENDS TENGRI SECURITIES TRADING

The Financial Regulatory Committee (FRC) has suspended the trading activity of Tengri Securities

LLC on the Mongolian Stock Exchange. The suspension took effect on 26 May due to license

expiration.

Source: MSE

CLSA EXPECTS TRADING TO SURGE ON MSE

In anticipation of increasing cross-border investment into Mongolia-listed securities, CLSA has

agreed to become an introducing broker for BDSec JSC, the nation‘s biggest brokerage firm.

―Given the natural resources and direct foreign investment going into Mongolia, most notably from

Korea, China and Australia, there is obviously ongoing speculation that the government will sell

stakes in publicly held vehicles, particularly those of the coal operators,‖ said Andrew Maynard,

global head of trading and execution at CLSA in Hong Kong.

The partnership with BDSec, which covers 47 percent of foreign account holders and 17 percent of

domestic account holders, is ―advantageous for us to be able to talk about this country with a bit

more conviction, a country that will rise in importance in years to come,‖ added Maynard.

At the same time, it is also true that Mongolia has fallen down Transparency International‘s annual

rankings of in-country corruption, standing now at 120 from over 180 nations. With a total of 150

stocks and trading over two boards—A and B—the Mongolia exchange‘s total market capitalization

stands at 1.45 billion. Board A, on which 36 stocks are listed, accounts for 90 percent of market

value. But secondary market trading volume remains small, at USD 250,000 a day, said M. Ganbold,

who works on institutional sales for BDSec.

Read more…

BDSec already has a U.S. representative after it clinched a partnership agreement with New York-

based agency brokerage Auerback Grayson & Co. in 2007. Of the new collaboration with CLSA,

Ganbold points to the brokerage‘s strong brand in Asia. Although trading volume is still thin, there

are expectations that its two-hour trading window could be extended as more foreign investors

participate.

While Maynard has not yet seen many institutional orders on the local bourse, he sees potential for

growing interests as clients increasingly look to hold frontier-market exposure with Mongolia,

Cambodia, Vietnam, and Sri Lanka standing out as favorites.

Source: Asian Investor

ASPIRE MINING DELIVERS POSITIVE PRE-FEASIBILITY FOR OVOOT

Aspire Mining Ltd announced a pre-feasibility study for the Ovoot coking coal project that has

defied naysayers with positive parameters, delivering an internal rate of return of 43 percent.

Xstract Mining Consultants Pty. Ltd. confirmed that Ovoot is financially robust and commercially

feasible.

The first stage of project development would involve production of six million tons of coal a year

delivered by 191 kilometers via road to a new railhead at Moron before being transported to end

markets from 2016. The study was based on probable coal reserves of 178 million tons, which ranks

Ovoot as the third-largest coking coal deposit in Mongolia, by reserves. Aspire has only explored 20

percent of the Ovoot Basin. The study assumes completion of the multi-user rail line extending the

trans-Mongolian railway at Erdenet through to Moron Soum by 2016. A separate rail pre-feasibility

study for this line has been approved by the Mongolian Rail Authority.

Source: MENAFN

MONGOLIA ENERGY CEO RETIRES

Mongolia Energy Corp.‘s Chief Executive Officer, James Schaeffer, has retired. He will continue to

provide strategic and technical advice to Mongolia Energy as an advisor.

Schaeffer confirmed that he has no disagreement with the board. Schaeffer joined Mongolia Energy

in 2007 to oversee the technical and business development of the newly acquired Khushuut coal

mine during its inception stage. The Khushuut project has since gone into commercial production.

The company has set up a professional team in Hong Kong and Mongolia led by Yvette Ong to cover

the mining and exploration operations. Ong, executive director since 1999, will be appointed as

managing director of Mongolia Energy. Ong is responsible for providing leadership for the

management, implementing strategies and overseeing the operations of the company.

Source: Mongolia Energy Corporation

MOVEONE DELIVERS TO OT FROM TEXAS

MoveOne recently transported mining equipment cargo from the United States to the Oyu Tolgoi

copper mine, a joint venture between British Columbia's Ivanhoe Mines Ltd., Melbourne-based Rio

Tinto PLC, and the government of Mongolia.

Cargo was picked up from a supplier in Dallas, Texas and loaded in Houston on a breakbulk ship. A

pair of 14.5-meter cylinders that was too long to fit in the vessel's hold was secured on the deck. In

addition to the sea cargo, MoveOne was also responsible for lithium batteries transported by air.

After arriving in Beijing, goods were consolidated and transported via rail to Oyu Tolgoi.

In China, special steel frames were made to support the cylinder loads and prevent shifting during

the rail transport.

Source: Breakbulk.com

TRIMBLE INVESTS IN NEW LAB AT MUST

Trimble Navigation Ltd., a U.S. firm for geodesic solutions, has provided for a new laboratory for

the Mongolian University of Science and Technology (MUST).

The project is part of a larger project to provide new technology for activity within earth studies

and cartography worked done in the Mongolia. Trimble will provide USD 220,000 of investment for

the laboratory.

The university has graduated 800 specialists in these studies since 1980.

Source: Undesnii Shuudan

MONGOLIA: DEMOCRATIZATION AND RIO TINTO

Having had to face giants such as the Soviet Union and China in the last few hundred years,

Mongolia is now embarking on a new journey with one of the world's mining giants, Rio Tinto PLC.

It is said that even during Chinggis Khan's time, the outcropping rocks in Oyu Tolgoi were smelted

for copper. The mine was originally explored by Canadian company Ivanhoe Mines Ltd. and is now

being developed by Rio Tinto.

When the Soviet Union left in 1991 after occupying the country for 70 years, all critical mining

exploration data on the country was taken back to Moscow. The Russians refused to share any of

this mineral mapping data with the Mongolians. One senior Mongolian official jokingly said: "You

know how these mining investors started investing here? One of our bureaucrats who knew the

mineral mapping data by heart said to the investor, just dig here and trust me, I know the stomach

of Mongolia by heart and there is good stuff in the ground."

The multinational mining corporation Rio Tinto operates in more than 50 countries and can be

likened to a state of its own. It is a commercial company, but in many ways it operates like a state

with a well-thought out public affairs policy for different countries. If anything, it is perhaps run

much better than many states in the world. It has no option because it has to deliver profit to its

shareholders.

The good news is that Rio Tinto has had a long journey in democratization, which began with its

Bougainville mine in Papua New Guinea in the late 1980s. It is still facing legal challenges seeking to

hold Rio Tinto responsible for human rights violations and the thousands of deaths linked to the

Bougainville copper and gold mine it once ran. Rio Tinto today has a global code of business

conduct, where human rights and doing business democratically are its center piece. The company

has learned its lesson.

As Mongolia tries to translate its economic growth into prosperity, democratization in Rio Tinto has

helped sustain profits. There may be many weaknesses in Rio Tinto, but it is in Mongolia's interest

to ensure that like Rio Tinto, Mongolia can also produce profit while adhering to human rights,

business integrity and accountability—all of which are pillars of democracy.

Source: Jakarta Post

ECONOMY

EU AND EBRD TARGET DIVERSIFICATION

The European Union and European Bank for Reconstruction and Development (EBRD) are combining

their efforts to help Mongolia diversity its economy with a new EUR 3.8 million (USD 4.7 million)

program dedicated to small-and medium-sized enterprises (SMEs), launched in Ulaanbaatar.

―This is the right project at the right time with the right focus,‖ said Philip ter Woort, head of the

EBRD‘s resident office in Mongolia. He added, ―It is important that the growth of Mongolia‘s mining

sector is complemented by strong efforts to diversify the economy and we expect the SME sector to

play a leading role here.

According to the EBRD, the five-year project includes a series of integrated activities aimed at

strengthening the capacity of Mongolia‘s SME agency and promoting reforms that would facilitate

the access of SMEs to financing. The new initiative will also focus on developing business support

and consultancy services in Mongolia. In addition, the project will work with individual companies,

helping them to improve their operational efficiency with support from Mongolian management

consulting firms.

Source: Fin Channel

EU PROVIDES EUR 7 MILLION FOR TECHNICAL AND VOCATIONAL TRAINING

The head of the Development Financing and Cooperation Department at the Ministry of Finance,

signed a financing agreement with the European Union for a EUR 7 million project to bring

assistance for technical and vocational training.

The project aims to support the economic and human development of Mongolia, enabling key

stakeholders to provide training in a way that is responsive to the needs of a rapidly changing labor

market. The project will begin in 2013 and last for five years.

The project adds to the European Union‘s EUR 25 million worth of commitments, mostly in rural

development, access to basic social services, and support to small-medium enterprises. A

partnership and cooperation agreement (PCA) between the European Union and Mongolia is

expected for 2012.

Source: European Union

E-FILING COULD SAVE TAXPAYERS MNT 12 BILLION

Research shows that electronic tax filing could result in MNT 12 billion in savings. Electronic filing

was introduced on 1 June.

The elimination of paper records would save businesses MNT 4.7 billion and more than 80,000 tax

payers MNT 1.5 million each.

―We are working to enter Mongolia as one of the top 10 countries in the world for tax renovation,‖

said USAID development consultant Olin McGill.

Source: Zuunii Medee

GERMAN CENTER TO LEAD WASTEWATER PLANT PROJECT

Researchers from the Helmholtz Centre for Environmental Research (UFZ) have opened a pilot

decentralized wastewater plant with integrated wood production in Mongolia. They have

collaborated with their partners in Germany and Mongolia to address three critical issues facing

Mongolia—deforestation, water scarcity and sanitation.

The Germany Ministry of Education and Research has provided funds for the Integrated Water

Resource Management in Central Asia: Model Region Mongolia (MoMo) project. This project aims to

find suitable water management solutions for the country. The Mongolia University of Technology in

Darkhan has been put in charge of the pilot decentralized wastewater plant.

In the second phase of the MoMo project, the director of the Mongolian University of Science and

Technology (MUST), Professor D. Lkhanag, and Momo-project leader at UFZ Professor Dietrich

Borchardt, have commenced a research pilot plant. They aim to devise an integrated water

resources management concept for the Kharaa Basin in northern Mongolia. Deforestation has

occurred due to continued grazing and logging.

The infrastructure has faced difficulties with sanitation due to changes in the Mongolian population

pattern. The existing systems are unreliable and pose a risk to human health and the environment.

Treatments may require heating frozen infrastructure, which may not be economically feasible for

the country.

Source: AZO Clean Tech, Helmholtz Centre for Environmental Research

HAZY DAYS: BERKELEY TACKLES POLLUTION

Scientists are working with the Millennium Challenge Corp. (MCC), a U.S. foreign aid agency, to

improve air quality in the capital city by lowering emissions from outdated stoves and boilers. MCC

has a five-year project in Mongolia to reduce poverty and promote sustainable economic growth.

In 2010 the agency approached Berkeley Lab's Ashok Gadgil, the driving force behind the Berkeley-

Darfur stoves, to lend vision and technical expertise to solving Mongolia's air quality problem.

Through an interagency agreement between MCC and the Department of Energy, a small team of

Berkeley Lab scientists has been providing technical guidance and support to MCC. Their focus has

been on the coal-burning stoves found in every ger.

Ulaanbaatar's concentrations of particulate matter, a mixture of solid particles and liquid droplets,

are among the highest in the world. And the highest concentrations have been measured in the ger

districts, on the outskirts of the capital, inhabited largely by formerly nomadic families. The

negative health impacts of the matter can be serious, including adverse birth outcomes, irregular

heartbeat, nonfatal heart attacks, development of chronic bronchitis, and premature death due to

heart or lung disease.

To monitor and evaluate the new stoves, a separate team went to Ulaanbaatar to collect data from

20 households. They also imported the Turkish Silver Mini to Berkeley and set it up in the lab to

replicate local conditions. He found potential challenges associated with consumers' lighting and

refueling the new stove compared to the traditional stoves.

The next project for the implementation support team is overseeing the replacement of eight heat-

only boilers, which are large boilers for heating schools and office building outside the central core

of the city where steam heat from power plants is not available. The project will also research

commercially available low-pressure boilers for heating homes and gers.

Source: Phys.org, Lawrence Berkeley National Laboratory

HERDERS CAUGHT BETWEEN CASHMERE AND CLIMATE CHANGE

Cashmere wool is one of Mongolia‘s most prized animal product exports. The second-largest

cashmere producer (after China), Mongolia accounts for 28 percent of the world‘s total supply. The

wool brings about USD 180 million annually into the country, and for the 36 percent of Mongols still

living nomadic lifestyles, cashmere is often an integral part of their livelihood.

―Eighty percent of our income is from cashmere. It‘s the money we earn now [in the spring] that we

rely on for the entire year—to send our kids to school, to stock food, repair things,‖ said B. Dorj, a

nomad herder.

It was not always so. The reliance on cashmere is a market-driven phenomenon that first gained

momentum after communism‘s collapse in 1991. Cut off from milk and meat buyers in the former

Soviet Union, the herders turned to raising cashmere as one of the only profitable activities

available. And without collective farms to manage the animals, individuals began keeping larger

flocks, causing the goat population to swell from 5 million in 1990 to almost 20 million by 2009.

Goats now comprise almost half of Mongolia‘s total livestock population, and the population

explosion has caused environmental stress, evidenced by overgrazing, pastureland degradation, and

desertification. At the same time, volatile international cashmere prices have pushed many herders

to keep larger flocks as a hedge against falling prices. This year prices dropped 29 percent to MNT

50,000 a kilogram.

Temperatures seem to be rising steadily, with the national average having risen 2.1 degrees Celsius

over the last 70 years. Additionally, the country has experienced a 30 percent decline in surface

water over the past 15 years, and 90 percent of Mongolia is at risk of becoming a desert compared

with its current 17 percent of desert landmass.

Source: Eurasianet

FOR FALCONS’ SAKE

The cabinet has decided to permit the export of 150 valuable saker falcons in 2012.

Mongolia has exported 2,700 saker falcons from 2000 to 2010, and sales in the past five years have

earned the country USD 11 million, said the government in a statement. The saker falcon is

classified as endangered on the International Union for Conservation of Nature Red List, with a 2010

population estimate of 6,800.

Mongolia began exporting a limited number of the falcon in 1994, mainly to Gulf Arab countries

such as Saudi Arabia, the United Arab Emirates, Kuwait, and Qatar. Every year falconers from Gulf

countries come to Mongolia to catch them. Local people and environmentalists often complain the

exports are reducing their numbers in Mongolia. Saker falcons are the most commonly used raptor

by Arab falconers. They are the most well-suited falcon to Arab falconry due to their adaptability to

desert climates, resilience, and their size in relation to the traditional quarry.

Source: Live Trading News

GOVERNMENT’S SALARY RAISES BRING 36 PERCENT TUITION HIKE AT MUST

Government‘s decision to increase the salaries of state workers by 53 percent may effect higher

tuition fees next fall.

Every spring there are reports of tuition hikes at universities. But this year is a particular problem

because public schools do not have the budget to afford the 53 percent increase in teacher salaries

mandated by government.

The total MNT 40 billion budgeted to the Mongolian University of Science and Technology (MUST)

falls short of covering all the school‘s costs, said B. Damdinsuren, a professor and the president of

the university. He said the school employs some 1,300 lecturers whose salaries vary, but some can

comprise up to 70 percent of the budget of a school under the university‘s umbrella.

―The expenses are beginning to grow larger than our income. We need to increase tuition,‖ said

Damdinsuren. He later added, ―If the state would provide some of the expenses, at least for things

like a new laboratory for our school of engineering and technology, it would be a big help.‖

He said joint efforts by the student union and workers union resulted in the decision that tuition

could rise by 36 percent. As a state school, however, MUST is responsible for basing tuition

increases on the lowest figure for inflation. In the end, the decision will be up to the school‘s

governing board. Recently government has begun to provide for expenses for renovations to

university buildings and dorms. After the two salary increases introduced this year, the average

salary of lecturers is MNT 800,000.

Source: Udriin Sonin

UNIVERSITIES SET TOUGHER REQUIREMENTS FOR ENTRANCE

Entrance into Mongolian universities is becoming more competitive as they set new minimum scores

for entrance exams.

Entrance exams will be held 8 to 10 June this year, with this year seeing some of the highest

minimum scores at the nation‘s top universities. The Institute of Finance and Economics leads the

pack with a minimum score of 620 needed for acceptance. Not far behind are the Academy of

Management with 600 and the National University of Mongolia with 560.

Tuition, too, is due to change this autumn. School boards of directors will meet later this year to

decide on tuition fees.

Source: Udriin Sonin

AIRLINE SERVICE TO SOAR

While Mongolia‘s tourism industry continues to grow, it will have to wrestle with the gap in airline

capacity.

Mongolia‘s transportation services are perhaps a trial for some tourists more accustomed to

comfortable trips, and some tourist services are lacking. Now, however, competition is growing in

Mongolia‘s airline services. Laying the foundation is the Khushigiin Khundi International airport,

planned for commissioning in 2016. Having an airport that meets international service

requirements and standards means huge opportunities for tourism in Mongolia.

Developers have planned for a 3,600-by 45-meter runway at the new airport, with two lanes each

for landing and takeoff. The airport will have six gates total. By 2019, according to plans, the

airport will have served 1.6 million passengers annually and transported 11,900 tons of cargo.

The number of international flights has grown with new competitors entering the arena and airlines

expanding their fleets. MIAT Mongolian Airlines plans to purchase a new Boeing 767-300 next year

and Boeing 737-800 in 2015 for international flights. There are also plans to expand the number of

routes, including direct flights to both of the United States‘ coasts.

Source: Mongolian Economy

INVESTORS WARY AHEAD OF POLLS

Mongolia‘s mining boom has transformed the former Soviet state into one of the world‘s hottest

economies, but an uncertain political outlook before parliamentary polls is making foreign investors

wary.

―The laws here are still forming, so for now, Mongolia is on watch mode,‖ Sardor Koshnazarov, head

of research for Eurasia Capital, told AFP at a recent coal mining conference in Ulaanbaatar. ―After

elections we should have more clarity on laws and the [foreign investment law].‖

The government, led by the Mongolian People‘s Party (MPP), is slightly behind in the latest polls to

the Democratic Party—both support the law—and the vote promises to be close. The victors will

inherit a government that is seeing increased revenues from mining and foreign investment and will

need to steer the country through a critical period when its biggest ever infrastructure projects

come online.

As government faces mounting pressures to grab a larger stake of its vast resources ahead of

parliamentary polls on 28 June, a new law that requires parliamentary approval for all foreign

investments worth more than USD 76 million within select sectors has added to the uncertain

conditions for overseas companies seeking work in Mongolia. The foreign investment law is untested

still, and foreign miners are eager to see how it might affect business arrangements.

The new government will also need to juggle an increasingly complex geopolitical role as Mongolia‘s

regional neighbors and allies in Europe and the United States vie for a slice of its resources. Last

year, Mongolia overtook Australia as the leading supplier of coal to its resource-hungry neighbor

China.

Source: Michael Kohn

NEW ZEALAND DELIVERS NEW SAFETY FEATURES TO QUADBIKES FOR MINERS

Miners in Mongolia will soon be using new quadbike safety bars designed by a team of Wairarapa

engineers in New Zealand.

Loader Construction Engineering Ltd. has already sold six models of it rear-fitted frames to a

Mongolian-based mining company and is now hoping to get feedback from New Zealand quadbike

users. Loader Construction has secured intellectual property rights for its twin-frame design, which

it says will slow or stop rolling quadbikes, reducing the risk of riders being pinned underneath.

Each year about five people die and 850 others are injured on New Zealand farms, causing

enthusiasts to look for added safety. The bars provide a gap between the bike and the ground in

cases of rolling. After talking about the idea to an Australian mine worker in Mongolia, an order for

six of the frames came.

However, New Zealand‘s labor department remains ―neutral‖ on the matter of what it calls ―roll-

over-protection-devises‖ (Rops). Its website states: ―These attachments have not been approved by

manufacturers of the vehicles, and manufacturers have openly expressed concern that the presence

of Rops increases the likelihood of serious harm if a quadbike should roll.‖

Source: The Dominion Post

MINING SHARES PLUNGE DESPITE RECORD PROFITS

The global mining industry is facing a growing disconnect with a significant decline in market

capitalization, an increase in commodity prices and a lack of shareholder confidence,

PricewaterhouseCoopers (PwC) said.

Although the mining industry started the 2011 year strongly, with the world's 40 largest miners

reaching record profits, company stocks significantly underperformed in the broader equity

markets, losing value by year-end as a result of continuing fears stemming from the recent

economic uncertainty, PwC stated in its ninth yearly review of global trends in the mining industry.

The survey further stated that a lack of confidence in the sector's growth prospects saw market

values plunge 25 percent by year-end to about USD 1.2 trillion, with only six of the world's top 40

miners seeing an increase in market value. The survey analyzed companies by market capitalization

in several significant economies, including the United Kingdom, the United States, Canada,

Australia, China and Hong Kong, South Africa, Russia, India, Brazil, Peru, and Mexico. Nineteen of

the top 40 companies were either from or primarily concentrated on emerging markets, with iron-

ore showing a significant growth spurt.

As the mining industry battles against a backdrop of the market's demands for heightened capital

discipline, the report showed that supply would be the story for the future. Some companies would

look to develop a tailored portfolio of projects to secure supply and increasingly look to locate new

mines in remote areas.

The study found that in 2011, revenues increased by 26 percent year-on-year to over USD 700

billion. Net profits were up 21 percent to USD 133 billion. The top 40 returned 156 percent more to

shareholders than in 2010. However the top four companies—BHP Billiton, Vale SA, Rio Tinto PLC,

and China Shenhua Energy Co., lost a total of almost USD 175 billion in market capitalization last

year. The top 40 companies' total assets remained about USD 1 trillion and grew a further 13

percent in 2011.

Source: Mining Weekly

CHINESE MANUFACTURING INDEX FALLS

A key measure of Chinese manufacturing activity fell more than analysts expected on Friday,

underscoring the economy's weakness and raising expectations that the government will step up a

stimulus program to revive it. Mongolia depends on Chinese activity as its production and growth

results in greater demand for Mongolia's metals and energy products.

The government's purchasing managers' index dropped to 50.4 points in May, down from 53.3 in

April. The decline ended five straight months in which the index had risen. Economists had

predicted that the government index would drop to 52.2.

A separate index compiled by HSBC and geared more to Chinese export activity fell to 48.4 in May,

down from 49.3 HSBC said the decline reflected weakness in both domestic and export markets. In

general, a reading of either index over 50 indicates manufacturing is growing, while a number

below suggests contraction. The logistics and purchasing federation cited that manufacturing

activity has continued to expand, albeit at a slower pace. Private economists said, however, that

the numbers showed manufacturing was stalling.

The government and Chinese economists close to it have played down the scope of any effort to

resuscitate the economy, but a spate of new infrastructure projects and subsidies for consumer

auto purchases last month indicate a stimulus program already is underway. However, economists

warned that government spending and subsidies can only prop up China's economy for so long, and

that only an economic overhaul that shifts activity more to consumers and private businesses will

improve the nation's long-term growth outlook.

Source: New York Times

CHINA COAL: PILING HIGH AS GROWTH SLOWS

To the growing list of data that demonstrates how China‘s economic growth is slowing down, add

this: At China‘s largest coal port, thermal coal inventories—a major export commodity for

Mongolia—have built up so much that the port is almost out of coal storage space, according to

Bernstein Research.

Summer is China‘s peak electricity season because the heat prompts people to turn on their air

conditioners. But instead of the normally brisk trading, coal stockpiles are building up at Chinese

ports, putting further pressures on domestic Chinese coal prices that have already slid more than 10

percent since late last year.

China is the world‘s biggest consumer of thermal coal—which is burned in power plants and provides

more than 70 percent of China‘s electricity—and is one of the world‘s biggest net importers of coal.

So the building in port stockpiles is significant in the near term because it could reduce demand for

coal imports, weighing on global coal prices at a time when commodities across the board grapple

with the impact of the Chinese slowdown.

And in the longer term, the high inventories point to an even more significant truth: China actually

has plenty of coal under the ground, it only imports coal now because it does not have the railways

and infrastructure in place to efficiently get enough coal from the mines to the power plants

thousands of kilometers away where the coal is needed. This situation will shift as China builds

more railways, and more ultrahigh-voltage power lines that will transport power mines to distant

cities. Because of those changes, in the long run China may not be a net importer of thermal coal at

all, some analysts believe.

The long-term dynamics behind falling coal prices are structural: power and steel consumption

growth are slowing; coal production capacity and transport capacity are continuing to increase.

This process of becoming more self-sufficient in coal could be accelerated by Beijing‘s recent push

to accelerate infrastructure projects. The outlook for coal, in Bernstein Research‘s analysis, is

looking a bit sooty.

Source: Financial Times

HEAVY TAX COULD SINK INDONESIA’S COAL INDUSTRY, SAYS INDUSTRY ANALYST

Indonesia‘s plan to introduce an export tax could devalue the country‘s coal business by some USD

11 billion, research and consultancy firm Wood Mackenzie warned on Tuesday. Politicians in

Mongolia are considering similar tax hikes with President Ts. Elbegdorj proposing legislation that

would bring taxes on miners as high as 40 percent on profits.

Speaking at the Coaltrans Asia conference, senior coal research analyst Rohan Kendall said that the

introduction of an export tax could cause Indonesia to lose competitiveness when compared with

other major supply regions, and could put at risk some 68 million tons a year of coal exports.

―Indonesian cash costs have doubled since 2006. This was not an issue while coal prices were rising

but now that prices have softened it is important to constrain costs to keep projects viable, said

Kendall. He added producers might find it difficult to avoid losses even without the tax due to

difficulties with developing new projects.

Kendall said that Indonesia was already one of the highest tax and royalty rates for coal-exporting

countries, with around 20 percent of coal producer‘s revenue flowing to the government.

Comparatively, the tax proposed to Mongolian Parliament would be double that. Kendall said that

an export tax would have a larger effect than the combined impact of Australia‘s minerals resource

rent tax and carbon tax, which Wood Mackenzie estimated would devalue Australia‘s coal industry

by 9 billion.

―China and India will continue to ensure strong growth in coal demand. But for Indonesia to

maintain its position as the world‘s largest coal exporter it will need to ensure cost increases are

manageable. An export tax on top of already increasing costs will jeopardize the viability of

significant volume, low-rank coal exports,‖ Kendall said.

Source: Mining Weekly

POLITICS

GENERAL ELECTION COMMITTEE BARS ENKHBAYAR'S CANDIDACY

The General Election Committee decided it would not allow former President N. Enkhbayar to run

for office in the upcoming parliamentary election on 28 June. The former president is in the midst

of a corruption case he says is a ploy to keep him from returning to power.

Enkhbayar planned to run as a candidate under the Justice Coalition, a political pact between the

Mongolian People's Revolutionary Party and the Republican Party. The Election Committee ruled

that Enkhbayar could not run under the terms of the Law on Elections as well as the Law on Central

Election Organizations.

One clause directly attributed to the Enkhbayar case: ―devotion of one‘s mind, labor and strength

for homeland and people, ethics to respect justice and law, ability to adhere to norms and ethics of

Member of Parliament.‖

Enkhbayar's son, E. Batshugar, was also denied his registration. Batshugar could not qualify on the

grounds that he had never fulfilled his military service, compulsory for all Mongolian males.

Dale Choi, chief investment strategist of Frontier Securities, saw the news as negative for

investment into Mongolia, citing ―increasing political risks due to intensification of political

confrontation.‖

Source: News.mn, Frontier Securities

ENKHBAYAR TRIAL POSTPONED

The corruption trial of N. Enkhbayar has been postponed until 12 June. The trial was set to begin on

Monday, but the judge granted Enkhbayar‘s request for a delay so that his lawyers could have more

time to prepare the case, said Enkhbayar's son.

The trial is Mongolia's highest-level corruption case and is seen as a bellwether of how the young

democracy will handle graft accusations. Enkhbayar, who had been planning to run for Parliament

at the end of this month, insists the charges are politically motivated and the timing is designed to

exclude him from the election.

Lady Ashton, the European Union foreign policy chief, said over the weekend that the European

bloc was closely following the case.

―We trust that this case will be treated transparently and with full respect for democratic

principles, the rule of law and human rights. The EU reiterates its full support to the strengthening

of democratic processes in Mongolia,‖ said a statement from Lady Ashton's office.

Source: Financial Times

ENKHBAYAR LASHES OUT FROM HOSPITAL

In room 304 of Hospital No. 2, former President N. Enkhbayar lies hooked up to a drip after a 10-day

hunger strike that doctors say nearly killed him. Enkhbayar, whose trial was expected to begin on

Monday before being delayed for a second time, insists the corruption charges against him are

fabricated by opponents who want him sidelined during parliamentary elections he planned to

contest this month.

If his own administration failed to contain corruption, Enkhbayar said, then Elbegdorj's government

has let it run wild. As money has started to gush into Mongolia, a treasure house of coal, copper and

rare earth's on China's doorstep, its institutions face the danger of corrosion.

Enkhbayar's image has been tarnished by the recently broadcast of footage in which he was seen

lambasting doctors and seemingly in better heath than many had imagined. Some Mongolians are

scornful of foreign media reports that, they say, portray Enkhbayar as a victim and his arrest as a

blow to Mongolia's fragile democracy.‖

Enkhbayar was arrested in April after representatives of the Independent Agency Against Corruption

(IAAC) said he refused to submit to questioning. In prison, he said he only had restricted access to

family and lawyers, and was never questioned. After 14 days, he was charged and subsequently

began his hunger strike. Ten days into his hunger strike, and after his transfer to the hospital,

doctors say his organs began to fail. It was his anger after officials proposed force-feeding him that

was filmed and broadcast.

Enkhbayar sees his treatment as the culmination of a campaign against him by President Ts.

Elbegdorj, who he claims stole the 2009 presidential election although it was declared fair by

international observers. He also alleges that the anti-corruption agency is stuffed with presidential

appointees, though the government says official are approved by Parliament.

Elbegdorj presents himself as a strong democrat leading the campaign against graft. Legal

authorities, he insists, act independently. Lord Goldsmith, the former U.K. Attorney-general

representing Enkhbayar, said there was insufficient time to prepare, given the unseemly rush to

trial‖ and the volume of documents—no fewer than 50 binders. Government said swift action

became necessary before Enkhbayar won parliamentary immunity.

Source: Financial Times

BAN ON NEW LICENSES TO CONTINUE OVER NEXT 5 YEARS, SAYS MINERALS MINISTER

The minister of mineral resources said he did not see the issuance of any new licenses within the

next five years. Many miners have waited anxiously for the ban on new mining licenses to be lifted,

which has been in effect since 2010.

Minister D. Zorigt said government has committed to keeping up to 20 percent of Mongolia's

previously licensed areas for mining under its protection. Instead there will be geological study at

these areas. Any extraordinary findings would have to be discussed by Parliament, he added.

―This is a huge and historical decision,‖ said Zorigt.

The government has introduced many changes to its regulations, including the reduction of the

amount of land it would license from 44.5 percent of Mongolia's territory to 14 percent and the

number of active licenses permitted from 7,000 to 4,000, he said. The government also passed a

resolution that it must receive exploration results from all companies in Mongolia for its greater

observation over mining activities.

The government has already canceled 242 licenses where there were operations in areas needing

protection. It currently has plans to revoke 1,400 licensees.

Source: Zuunii Medee

MEETING WITH S. KOREAN FINANCE OFFICIALS BRINGS TALK OF LIBERALIZED AIR TRAVEL

Representatives from the finance ministries of Mongolia and South Korea met this week for their

annual meetings to discuss how they can better coordinate their respective policies.

Mongolia and Korea tightened their political ties and expanded communications after the visit of

Korean President Lee Myung-Bak in May 2011. It was then that the governments decided that the

secretaries of their respective ministries of foreign relations would meet annually.

This year‘s meeting resulted in agreements that include a reduction on passenger requirements and

loosened air communication regulations. There has been greater demand for travel to Korea for

business trips and medical treatment.

Agreements made include a no-fee visa made available to Korean citizens. Currently Koreans must

pay USD 30 per head for entrance into the country. It has also been suggested that the time needed

to issue a visa be reduced from 14 to five days.

Greater freedom for air traffic was another issue up for compromise. Korea would like to involve

more airline carriers in the profitable Ulaanbaatar-Seoul route. In addition to MIAT Mongolian

Airline and Korean Air, the only two airlines providing this service, Asiana Air, Eznis Airways and

Mongolian Airlines Group would also like permission to fly that route.

Allowing more airlines access to the route would decrease ticket prices and improve service quality,

said B. Ganbold, a director of the Department of Asian Affairs of the Ministry of Foreign Affairs. It

would also encourage investment into Mongolia, as it would allow a greater number of passengers to

travel to Mongolia. Estimates indicate that the changes would double the number of passengers

traveling to Mongolia.

Among developing and tertiary countries, Korea is Mongolia‘s third partner in foreign trade and

fourth for foreign direct investment. Korea has about 30,000 Mongolians living and working there.

Source: Undesnii Shuudan

ELECTION REGULATIONS HAS UB MAYOR TAKE TEMPORARY LEAVE

Ulaanbaatar Mayor G. Munkhbayar will temporarily step down from his position to comply with new

regulations to the election law.

Various clauses within the election law state that government officials should give up their public

duties before registering as a candidate.

In addition to the mayor, 16 other candidates will step down, including seven government officials,

eight individuals holding office in the capital, and one member of a non-government organization

(NGO).

Source: Udriin Sonin

BALANCING INVESTOR AND PUBLIC INTERESTS

New developments in Mongolia‘s new foreign investment law demonstrate some of the concerns

about the protecting of foreign direct investment in Mongolia‘s mining sector.

It is important in this context to emphasize that states have the sovereign right to regulate foreign

investment, which should be subject to certain conditions as stipulated by their domestic laws and

the states‘ obligations under international law. At the same time, it is important to ensure a

balance between investors‘ and public interests.

―I welcome the proposal by the president of Mongolia to engage with the international community

and combine efforts to further improve investment legislation in creating a level playing field for

domestic and foreign investors in regards to important aspects related to dangers associated with

mineral wealth, which is known as ‗Dutch disease‘. I consider it would be important to promote

international dialogue and experience sharing with the ECT constituency, where a number of oil and

gas producing countries have similar challenges,‖ said Urban Rusnak, Secretary General of the

Energy Charter Secretariat in Brussels, Belgium.

Source: Financial Times

SETTING THE TONE FOR INVESTMENT

Concerns that a new foreign investment law would severely impact Mongolia‘s natural resource

sector and economy as a whole are beginning to ease, as industry players now see that reformed

legislation is necessary for the country‘s economic evolution.

Reports that the government planned to set limits on foreign ownership led to speculation over an

investor exodus. However, in a nod to foreign interests, the law‘s provisions were significantly

diluted before its approval on 17 May. Projects worth more than USD 76 million will not be required

to have majority Mongolian ownership. Additionally, the number of strategic sectors that were

previously required to be 51 percent state-controlled was also significantly reduced. The legislation

is also not retroactive.

Indeed, some investors believe these regulatory changes will eventually improve the long-term

prospects of the country. Officials from Aspire Mining, which owns the Ovoot coking coal mine and

rail project in northern Mongolia, said the new law would provide more certainty for investors in

Mongolian resources and that it would not limit potential funding sources for Aspire Mining‘s

mineral and rails project, which is expected to cost a total of USD 2 billion.

―It is a good law for Mongolia and provides stability and clarity for investors,‖ said Eric Zurrin, the

chief executive officer of ResCap, a boutique investment bank in Ulaanbaatar. ―This brings Mongolia

more in line with mature, resource-rich economies, such as Australia and Canada.‖

The introduction of this law is likely to be viewed as political posturing before elections on 28 June,

with the ruling party seeking to reassure Mongolian voters that foreign entities will not enjoy the

spoils of the country‘s hoard of coal, copper, gold, and other natural resources on their watch.

However, it can also be argued that the legislation seeks to put interests of future generations of

Mongolians ahead of foreign investors.

Source: Business-Mongolia, Oxford Business Group

ELBEGDORJ AWARDED U.N. ENVIRONMENTAL PRIZE

President Ts. Elbegdorj was among the six winners of the United Nations' Champions of the Earth

2012 award. The award is given to those whose actions and leadership have had a positive impact

on the environment.

―This is a great honor, not only for me but for our nation,‖ said Elbegdorj. ―As president, I have a

green policy. It has two pillars: one is our people, the other is our environment.‖ He added, ―One

day I will give up my presidency, but I will continue as a Champion of the Earth.‖

President Elbegdorj won the award in the ―Policy Leadership‖ category for his delivery on promises

to put the environment at the forefront of policies. The awards are meant to inspire attendees at

Rio+20, the United Nation's conference on sustainable development taking place in Rio later this

month, 20 years after the U.N. Earth Summit that set many of today's environmental programs in

motion.

―As the world heads to Brazil for Rio+20, these six individuals deservedly named as champion,

demonstrate that committed, concrete action can have a transformative effect on countries,

communities and businesses,‖ said Achim Steiner, head of the UN Environment Program.

Champions of the Earth, which was launched in 2005, is the United Nation's flagship environmental

award. To date, it has recognized 51 individuals and organization for their leadership, vision,

inspiration, and action on the environment. The remaining five 2012 Champions of the Earth

winners are Fabio Barbosa of Brazil and Sultan Ahmed Al Javer of the United Arab Emirates,

Bertrand Piccard of Switzerland, Sander Van der Leeuw of The Netherlands, and Samson Parashina

of Kenya.

Source: ENS

AZERBAIJAN, RUSSIA, MONGOLIA TO COOPERATE ON RAIL MANAGEMENT

The Railway authorities of Azerbaijan, Russia, and Mongolia signed a cooperation agreement in

Sochi for improving passenger services.

The signed document envisages exchanges of experience and cooperation for the pricing policy, the

development of a ticket sales system, and improving the legal framework. Each side agreed to

cooperate on repairs, maintenance and the leasing of rolling stock, the reduction of delays to

passenger trains at the border.

Source: Trend

S. KOREA, MONGOLIA AGREE TO STREAMLINE VISA PROCESS

South Korea and Mongolia signed an agreement last week to streamline the visa process for each

other's citizens in a bid to boost people-to-people exchanges and economic cooperation between

them, officials said.

The agreement was signed after talks between South Korean Foreign Minister Kim Sung-hwan and

his Mongolian counterpart G. Zandanshatar, who arrived in Seoul earlier in the day for a three-day

visit.

"The agreement will grant the nationals of the two countries multiple-entry visas valid for a

maximum of five years if they meet the required conditions, and exempt them from visa fees," said

Korean ministry spokesperson Cho Byung-jae.

In addition, South Koreans who are long-term residents of Mongolia will no longer have to obtain an

exit visa for a temporary trip out of the country, Cho said.

Source: Yonhap

MONGOLIA, JAPAN LAUNCH EPA TALKS

Mongolia and Japan launched the first round of negotiations for an Economic Partnership Agreement

(EPA) on Monday.

During the four-day talks, the two countries will discuss issues relating to trade in goods and

services, rules of origin, customs procedures and investment. Mongolian Foreign Minister G.

Zandanshatar said at the opening of the negotiations that Japan has been the largest provider of

development assistance to Mongolia since the 1990s, and is also a major trading partner of

Mongolia.

He emphasized that concluding the agreement with Japan is one of the top priorities in bilateral

relations, saying that by doing so Mongolia is seeking to boost greater economic integration

between the two economies. Shinichi Nishimiya, Deputy Foreign Minister of Japan, said Japanese

companies are becoming increasingly interested in investment opportunities in Mongolia.

Source: Xinhuanet

MIGRANT WORKERS FACE DISCRIMINATION IN KOREA

Many Mongolian migrant workers bring their children when they move to South Korea to work.

Culturally, it is more important for Mongolian children to live with their parents than to continue

their education in their country. Many Mongolian children in South Korea have limited access to

public services, including free education.

Yoo Hyung Geum, a pastor, opened Mongol School to educate the children of migrant workers from

Mongolia and to restore their hope and future.

"Compared to late 90s, the employers treat their migrant workers much better," said Yoo. "At least

the workers are compensated and the law protects them from employers' confiscation of their

passports."

However, when it comes to the rights of migrant workers' children, Yoo said Korean society has a

long way to go to improve their rights. One Mongolian student, Batmong, recalls his unpleasant

memory about Korean students.

"During our lunch break, we like to play on the playground near by the Korean school right next to

our school. But whenever we passed by the school building, Korean students threw milk, erasers, or

garbage at us from their classroom on the second floor." He later added, "I don't think they respect

us as individuals because our country is poor."

Another student, 19-year-old Oorie, explained how she felt lucky to attend Korean school, as it was

much larger and only a few select migrant workers can attend. That was until one day she was

pushed down a flight of stairs. She broke her front teeth and injured the muscles on her upper lips.

She cannot completely close her mouth still and receives treatment.

Despite rapid economic development, South Korea remains tragically stunted in terms of civil

rights. Rights for marginalized populations are virtually non-existent in South Korea. Children of

illegal immigrants from developing countries face even greater discrimination. Yoo hopes that will

change sooner in South Korea rather than later.

Source: Washington Times

NEW IDS TO BE SENT BEGINNING 25 JUNE

Distribution of new electronic identification cards will begin just before the 28 June parliamentary

election.

Less than 40,000 of those who lost their identification cards between 26 December and 1 May

received a new one. Voters will need their identification to participate in the election.

The General Registration Office intends to finish printing by 10 June and begin distribution on 25

June.

Source: News.mn

FINANCE MINISTRY LAYS OUT DEVELOPMENT AGENDA FOR NEXT 10 YEARS

The Ministry of Finance presented its accomplishments from the last 10 years as well its plans for

the next 10 at the Central Asia Regional Economic Cooperation (CAREC) forum held last May.

Presented items included more than 10 projects in four fields that totaled USD 15 billion as well as

10 capacity-building training seminars. Additionally, the government has invested USD 274 million

into eight projects for road infrastructure, customs services, and the urban development of

Umnugobi Aimag.

At the seminar the ministry laid out its plans for the next ten years, which include its plan to direct

USD 20 million for a variety of projects concerning roads and customs infrastructure. One project

mentioned was the introduction of customs processing via an electronic screen. It will be the

energy sector, however, which will be the main focus of development.

Source: Zuunii Medee

GOVERNMENT REVIEWS ENFORCEMENT OF LAW ON MINING NEAR RIVERS AND TREES

Cabinet members have acquainted themselves for its enforcement of law on banning mineral

exploration at areas near rivers and trees.

The government has suspended 242 licenses for gold deposits at sites near riverheads, reserved

areas with ponds, and forestry. Sixty-nine of those licenses have been cancelled completely, while

36 have been only partially annulled.

Boundaries for the areas, comprising 1,400 licenses, have been set. At the next Cabinet meeting the

final boundaries are expected for approval. Issues such as suspending and cancelling licenses as well

as compensation will also be debated.

Mongolia has licensed 14 percent of its territory through the issuance of special licenses, and

approximately 20 percent of that land has been put under government protection. That land will be

used for geological study and research.

Source: Montsame

DINOSAUR HEARING POSTPONED

A hearing set for Friday regarding dinosaur fossils the president believes were illegally taken from

Mongolian soil was canceled after a Dallas court extended a temporary restraining order.

The Mongolian government and Dallas-based Heritage Auctions have agreed to cooperate to try and

resolve their dispute over the sale of a Tyrannosaurus baatar skeleton. In the spirit of cooperation,

President Ts. Elbegdorj has vowed not to go further with the claim that Heritage Auctions violated

the restraining order when it sold the skeleton in New York for more than USD 1 million on 20 May.

Mongolian experts will inspect the fossil in New York on Tuesday.

Source: News.mn

NEW MONGOLIAN LAWS The following amendments and addenda to laws were published in the latest weekly Government bulletin. Unless otherwise decided by Parliament, they will take effect ten (10) days after publication. Date Laws 05.06.2012 Amendments to Law on Education Amendments to Law on Primary, secondary education Addendum to Law on Pre-school education Addendum to Law on Special permits for business Please visit BCM's website, Legislative Working Group, for a summary of new Mongolian laws. BCM members who wish to access complete versions of the laws and regulations in Mongolian language are welcome to email the BCM office: info@bcmongolia.org.

ANNOUNCEMENTS

MINExpo INTERNATIONAL 2012, LAS VEGAS, 24-26 SEPTEMBER

The Business Council of Mongolia (BCM) and the Mongolian National Mining Association (MNMA) with

the support of the U.S. Embassy‘s Commercial Section in Ulaanbaatar are now registering a

Mongolian business delegation to participate in ―MinExpo International 2012‖ which will be

organized at the Las Vegas Convention Center on September 24-26, 2012.

MinExpo International 2012 is the world's largest and most comprehensive exposition dedicated to

mining equipment, products and services. More than 1,400 exhibitors in eleven exhibit halls will

display the latest technology, equipment, components, parts and services for exploration,

extraction, safety, environmental remediation and preparation and processing of metallic ores,

coal, industrial minerals and more!

Registration deadline is 5 pm, 15 June. Please contact BCM at 70114442, tugi@bcmongolia.org or

MNMA at 314877, enkhbold@miningmongolia.mn for registration and additional information about

the event.

___________________________________________

REGISTER NOW FOR MONGOLIAN MINING DIRECTORY-2013

Mongolian Mining Directory-2013 which provides information database for Mining companies,

investors, suppliers, service companies, government and non government organizations will be

published for the fourth year to commemorate the 90th anniversary of the Mongolian mining

industry. The MMD is distributed free of charge to international and domestic mining companies,

international conferences and exhibition, embassy offices in Mongolia and foreign countries to

investors.

BCM is a Supporting Organization of the MMD and welcomes Mongolian mining industry participants

who are interested in advertising their products and services in Mongolian Mining Directory-2013.

For more information please visit: www.mining.mn, www.mongolianminingdirectory.mn or call

+976-7011 5590.

___________________________________________

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

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

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

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

content and use of information technology opportunities.

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

Database. Please visit here for registration.

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

at undral@bcmongolia.org or 317027.

___________________________________________

POSTINGS ON MONGOLIAN WEBSITE ‘PRESENTATIONS’ AND ‘NEWS’ SECTIONS

The new ‗Presentations‘ section on BCM‘s Mongolian website can be reached via link to

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

23-24 in UB.

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

―Open-Government.mn‖ site are regularly posted.

___________________________________________

POSTINGS ON ENGLISH WEBSITE 'PRESENTATIONS', 'MONGOLIA REPORTS' AND ‘MONGOLIAN

BUSINESS NEWS’

On BCM‘s English website, ‗Resource, Presentations‘ section, for your review are 12 presentations

from the 2nd Coaltrans on May 23-24 in UB; 5 presentations from BCM‘s May 28 monthly meeting; 3

speeches from ―Corporate Governance Training for Directors‖ on April 27-28; 12 presentations on

Mongolian entities at Mines and Money Hong Kong 2012 on March 21-23; 11 presentations from Coal

Mongolia 2012 on February 9-10; and speeches from all BCM‘s monthly meetings in 2011-12.

Also on BCM‘s English website, ‗Resource, Mongolia Reports‘ section, please note the Polit

Barometer, April 2012 by Sant Maral Foundation (Mongolian and English versions); ―Preliminary

estimates of staggering costs of inefficient trade regulation in Mongolia‖ by Olin McGill, consultant

to USAID BPI; ADB‘s Asian Development Outlook, April 2012; detailed results of BCM‘s NewsWire

survey of March 2012; World Bank‘s Mongolia Quarterly Economic Update, February 2012; and

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

We are now posting some news stories and analyses relevant to Mongolia to BCM website's

‗Mongolian Business News‘ as they come, instead of waiting until each Friday to put them all

together in the weekly NewsWire. The NewsWire will, however, continue to be issued on Friday,

and will incorporate items that are already on the home page, so that it presents a consolidated

account of the week‘s events.

___________________________________________

SOCIAL NETWORK WITH BCM

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

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

improving each day with BCM.

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

business environment in Mongolia today.

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

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

the NewsWire with the community.

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

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

Of course for news information, interviews, and announcements regarding our organization, visit

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

ECONOMIC INDICATORS

INFLATION

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

Year 2007 *15.1% [source: NSOM]

Year 2008 *22.1% [source: NSOM]

Year 2009 *4.2% [source: NSOM]

Year 2010 *13.0% [source: NSOM]

Year 2011 *10.2% [source: NSOM]

April 30, 2012 *16.0% [source: NSOM]

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

Note: 17.8% y-o-y, Ulaanbaatar city, April 30, 2012

CENTRAL BANK POLICY RATE

December 31, 2008 9.75% [source: IMF]

March 11, 2009 14.00% [source: IMF]

May 12, 2009 12.75% [source: IMF]

June 12, 2009 11.50% [source: IMF]

September 30, 2009 10.00% [source: IMF]

May 12, 2010 11.00% [source: IMF]

April 28, 2011 11.50% [source: IMF]

August 25, 2011 11.75% [source: IMF]

October 25, 2011 12.25% [source: IMF]

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

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

CURRENCY RATES – June 7, 2012

Currency Name Currency Rate

U.S. dollar USD 1,318.40

Euro EUR 1,654.39

Japanese yen JPY 16.61

British pound GBP 2,037.13

Hong Kong dollar HKD 169.52

Chinese yuan CNY 207.28

South Korean won KRW ` 1.12

Russian ruble RUB 40.88

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.