BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 197, December 9, 2011

NEWS HIGHLIGHTS: Business

Ivanhoe confident energy deal with China will come;

Government establishes state-owned firm for its Oyu Tolgoi interest;

Mongolian Resource makes gold find at Sujigtei;

Modun reports 489 tons of coal at Nuurst;

Xanadu reports total coal supplies of 497 million tons;

Haranga reports high-grade iron deposit find;

Manas completes 2011 seismic campaign;

Xanadu receives Khar Tarvaga exploration license;

Coal Mongolia conference to open in Ulaanbaatar;

Private sector gets a course on risk management;

GE to train workforce for Salkhit wind farm;

Peabody buys interest in Winsway;

MCS to borrow USD 150 million;

Entrée Gold raises USD 12.5 million;

Standard Chartered receives higher marks from credit raters;

Erdenes TT appoints vice directors;

FLSmidth enters Mongolian market;

Blina exits BSI deal;

Golomt Bank named best in Mongolia;

Rio sells of the last of its U.S. Coal assets.

Economy

Inner Mongolia places import tax on coal products;

Tugrug bottoms out at 16-month low;

Mongolia due for heavy snowfall this winter;

Development Bank to issue USD 600 million bonds;

Cabinet establishes emergency oil reserve;

Ninja population reaches 73,000;

Connecting for growth;

Real estate guide made available to investors;

Will investors buy Mongolian politics?;

Friedland derides Australian politics in favor of Mongolia;

Environmentalists hold out hopes to protect world's oldest nature reserve;

The miners' quandary: to buy or build;

Asian loans high on European “axe sheets”;

Copper weakens further as European debt crisis lingers on;

Will China Stumble? Don't bet on it.

Politics

Parliament passes final budget for 2012;

Mongolia still among world's most corrupt nations;

Elbegdorj exchanges ideas for development with Kuwaiti Emir;

Mongolia expands its diplomatic influences;

Foreign affairs minister attends OSCE meeting;

OSCE struggles to retain its posture in Central Asia;

DP celebrates its creation and democracy;

Mongolia confirms ninth Bogd Khan;

Photo exhibition reveals 8,000 hectares of destroyed land;

Putin's problems.

*Click on titles above to link to articles.

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BCM MONTHLY MEETING NOTICE

BCM‘s next monthly meeting for members will be Monday, December 12, at 5 PM at the KEMPINSKI HOTEL KHAN PALACE, 2nd floor, Altai Ballroom. Parking will be reserved in front of the hotel for BCM Members. The bilingual meeting will feature the following presentations:

- Call to Order/Business Council of Mongolia: Laurenz Melchers, Chairman, BCM - BCM Report: Jim Dwyer, Executive Director, BCM - Scott Hansen, Internal Audit Manager, Oyu Tolgoi – ―Internal Audit – Role and Functions in Corporate Governance‖ - Lkhagvasuren.R, Researcher and Urtnasan.E, Researcher, EPCRC – ―Competitiveness Capability of Mongolia‖ - Barrie Evans, Managing Director, Churchill‘s – ―Training & System Development Implemented by Churchill‘s – Quality Assurance Training Program‖ A networking reception will be held for all attendees immediately following the business portion of the meeting in ―Oasis‖ Restaurant, 1st floor, Kempinski Hotel.

BUSINESS IVANHOE CONFIDENT ENERGY DEAL WITH CHINA WILL COME Ivanhoe Mines said there was only a small chance of delay for a power contract with China. The mine needs power by the third quarter of 2012 in order to start commercial production of copper concentrate by its 2013 target and is counting on a China-Mongolia pact to do so. Construction of a coal-fired plant in Mongolia would be the next best option. ―The reason the electricity will be developed on time is that the Chinese are extremely anxious to buy our copper,‖ said Robert Friedland, chief executive officer. ―There is a very, very small probability of a delay,‖ he said. He said the move on Wednesday by six major central banks to make cheap debt available to European lenders was encouraging for the USD 4 billion in project financing that the company was in the midst of negotiating. Two European banks, BNP Paribas and Standard Chartered, are the lead commercial banks working on the project financing.

Source: Reuters

GOVERNMENT ESTABLISHED STATE-OWNED FIRM FOR ITS OYU TOLGOI INTEREST The government has decided to establish the state-owned firm Erdenes Oyutolgoi at a cabinet meeting this week. The company's main responsibility will be to implement ownership of state stocks of the Oyu Tolgoi LLC. The State Property Committee (SPC) has been commissioned with transferring funds from Erdenes MGL to raise capital for the Erdenes Oyutolgoi and to approve its rules. A conglomerate companies from the Erdenes MGL will be set up for each strategically important deposit in Mongolia, the first of which is Erdenes Tavan Tolgoi. Recently, the government has also discussed the possibility of distributing stocks to the populace as it will do for Erdenes Tavan Tolgoi.

Source: Montsame

MONGOLIAN RESOURCE MAKES GOLD FIND AT SUJIGTEI Mongolian Resource Corporation uncovered high-grade gold from its first nine holes drilled at its Sujigtei gold mine project. The mine was opened and mined to 180 meters between 1980 and 1991, but was suddenly closed when the Russians left Mongolia in 1991. Mongolian Resource is currently examining the remaining deposits and is planning to reach new depths. The mine's close proximity to the Gatsuurt Deposit has encouraged the company of a similar resource capacity. At 11 meters deep, the company discovered 5.6 grams per ton of gold. A second underground drill rig capable of 500 meters of diamond drilling will be used during winter for more exploration. Surface contact drilling, however, will be suspended during winter due to water constraints. Mongolian Resource Corporation explores for gold at the company's Blue Eyes and Sujigtei Projects, which are both located in Northern Mongolia.

Source: Proactive Investors

MODUN REPORTS 489 TONS OF COAL AT NUURST Modun Resources has established a significant maiden JORC coal resource of 489 tons for its wholly-

owned Nuurst Project. The resource, compiled by consultancy CSA Global, exceeds initial expectations and provides potential for a large scale thermal mine. The Resource has been defined within six months of Modun acquiring Nuurst. Modun now has one of the largest supplies of coal resources of the Australian-Securities-Exchange (ASX)-listed companies currently operating in Mongolia. The company plans to immediately begin a scoping study and apply for a mining license. The 2012 exploration program will target more coal resources, with 84 percent of its license left unexplored thus far. Nuurst is located six kilometers from existing rail infrastructure, only 120 kilometers south of Ulaanbaatar, and comprises a 34.5 square-kilometer license area. Modun said the project significant resource and coal seam thickness should translate into a low stripping ratio, which lends itself to a large scale, low cost mining operation.

Source: Proactive Investors

XANADU REPORTS TOTAL COAL SUPPLIES OF 497 MILLION TONS Xanadu Mines reported an initial JORC Indicated and Inferred Resource of 170 million tons of coal. The new resource at Galshar, combined with its Khar Tarvaga thermal coal project is a 51 percent increase in the company's JORC coal resource inventory to 497 million tons. Independent geological consultants McElroy Bryan Geological Services estimated and Indicated JORC Resource of 70 million tons and an Inferred JORC Resource of 100 million tons, all a depth less than 120 meters. The Galshar Coal Project comprises three contiguous exploration licenses, covering more than 131 square-kilometers in the Choir-Nyalga Basin. The project is located within 65 kilometers of a rail line at the Bor Undor fluorite mine, which connects to the Trans Mongolian Rail system to China. Xanadu is a Mongolian exploration company with three coking coal projects in joint venture with Noble Group: Nuurstei, Javkhalant, and Khavtsgait. It also has the thermal coal project Galshar in addition to Khar Tarvaga.

Source: Proactive Investors

HARANGA REPORTS HIGH-GRADE IRON DEPOSIT FIND Haranga Resources Limited has interesected high-grade iron mineralization at 29 of its 33 drill holes at its Bayantsogt prosepect within the Senlenge iron ore project. Explorers have identified five major iron lodes within Bayantsogt hill, each averaging approximately 20 meters, and up to 13 meters in width. The company has already begun metallurgical tests of samples from the site. Haranga is targeting the release of a maiden JORC Code compliant resource for Bayantsogt by March 2012. It has also made a new discovery at the nearby Dun Bulag prospect, having uncovered extremely wide zones of magnetite iron mineralization. It is an Australian-listed company focused on developing high quality iron ore projects in Mongolia.

Source: Haranga Resources Limited

MANAS COMPLETES 2011 SEISMIC CAMPAIGN Gobi Energy Partners, a subsidiary of Manas Petroleum Corp. and the operator of its exploration project has completed its 2011 seismic program. The seismic contract with Sinopec provided for a firm program consisting of 532 kilometers full fold data and an optional program of up to an additional 1,106 kilometers full fold data. The program consisted of eight phases and acquisition began 25 August 2011. Gobi planned to its most important phases for winter for completion in 2012. However, after completing the first seven phases and key line of the last phase, Manas finished the seismic program after having acquired more data than initially planned (1,311 kilometers full fold data) and in the face of winter conditions. The firm is using the winter months to interpret the data. Any additional data needed will be a focus in 2012. Final seismic processing and interpretation has already begun. Gobi is currently focusing on six areas for its goal of entering into a drilling contract by the end of the first quarter of 2012 and spud the first well before end of the second quarter. Manas is an international oil and gas company with a primary focus on exploration and development in

south-eastern Europe, Central Asia and Mongolia. Source: Manas Petroleum Corp.

XANADU RECEIVES KHAR TARVAGA EXPLORATION LICENSE The Mineral Authority has granted a mining license for the Khar Tarvaga Coal Project to Xanadu Mines Ltd. The license covers a total area of approximately 84 square-kilometers and has an initial term of 30 years with the option to extend for another twenty years. Khar Tarvaga is in Tuv Aimag, approximately 150 kilometers southeast of Ulaanbaatar. It is also within the proximity of both a rail and roads, in addition to power infrastructure. Exploration at Khar Tarvaga has resulted in the discovery of over 327 million tons sub-bituminous coal resources suitable for power generation and possibly coal to liquid (CTL) fuel or synthetic natural gas (SNL) production. Xanadu has identified three coal seams at the sight, well situated supply a mine power station and domestic coal market. ―We have completed an extensive technical scoping study as part of our development strategy and to assist in identifying potential developers and end users of this significant, well located coal resource,‖ said Brian Thornton, Xanadu chairman. ―A study by Nexant Inc. concluded that the KT coal deposit was ideally suited to the production of liquid hydrocarbon fuels, i.e. clean diesel, petrol and avgas via the proven indirect liquefaction route.‖ Xanadu is a Mongolian exploration company with three coking coal projects in joint venture with Noble Group: Nuurstei, Javkhalant, and Khavtsgait. It also has the thermal coal project Galshar in addition to Khar Tarvaga.

Source: Xanadu Mines Ltd.

COAL MONGOLIA CONFERENCE TO OPEN IN ULAANBAATAR The Coal Mongolia Conference will be held to attract technical and financial investments into the coal sector of Mongolia. The conference will cover topics for both extractive and mineral processing industries. Presenters will introduce advanced environmental and technical practices they believer Mongolia should embrace. The producers also hope the conference can be used to build corporate ties to ultimately strengthen Mongolia's competitiveness in the region and develop personal networks.

Source: Mining.mn

PRIVATE SECTOR GETS A COURSE ON RISK MANAGEMENT Mandal Insurance and BCM co-organized the recent ―Risk Forum II‖ on 30 November. The event had 285 registered attendees and received coverage from 10 different television channels, five different daily newspapers, and two magazines. At the event was a discussion presented by numerous speakers on how risk assessment can be best developed in Mongolia. According to U. Ganzorig, president of Mandal Insurance, adequate risk management is one of the biggest threats Mongolia faces today. John Wheadon of Oyu Tolgoi explained how risk managment can be used as a key management device to reach organization objectives, while Mark Bailey of Leighton Asia advocated the use of risk management to discover new market opportunities. However, risk assessment is not just the focus of the private sector. D. Tumendemberel, of the State Inspection Agency, discussed her agency's role in macro societal risk management and how they are undertaking ambitious risk assessment programs on mining and other some 90,000 organization. During the financial panel, D. Ganbold of the Financial Regulatory Commission discussed the regulatory frameowrk and its role in risk managment. At the Mongolian Stock Exchange, its operators are working to reduce risks in the capital market though a brand new IT and regulatory infrastructure.

Source: Mandal General Insurance

GE TO TRAIN WORKFORCE FOR SALKHIT WIND FARM General Electric (GE) is determined to pick up where others have failed with its Salkhit wind turbine plant, said its Mongolian representative. ―Mongolia has a great resource in wind power, but we are not using it. I think it is totally wrong,‖ said Mongolian Chief Representative Ts. Tumentsogt. ―Due to wrongdoings of some inexperienced companies in Mongolia, people tend to have negative opinions about wind power usage. Using coal to create

electricity is utterly and 100 percent wrong.‖ Tumentsogt went on to say that GE will provide Newcom Group with technical assistance in power stations at Salkhit for five years and train its engineers. He also said his company hopes to work in Mongolia in other sectors in the future.

Source: UB Post

PEABODY BUYS INTEREST IN WINSWAY Peabody Energy has acquired a 5.1 percent equity interest in Winsway Coking Coal Holdings Ltd. In a series of purchases of Winsway's shares. Peabody and Winsway currently operate a joint venture in Mongolia that holds coal and uranium licenses in Mongolia and is conducting an active exploration program in the South Gobi region and throughout the country. In addition, Peabody and Winsway have recently entered into a non-binding memorandum of understanding to establish a joint venture to market coal in China and the Asia-Pacific region. Deutsche Bank served as a broker in the purchase.

Source: Peabody Energy

MCS TO BORROW USD 150 MILLION MCS Holding LLC has attracted three banks in syndication for a USD 125 million loan that will increase to USD 150 million, said someone familiar with the matter. Standard Bank Group Ltd., which funded the original USD 125 million portion in June before syndication, is arranging the three-year loan. Commitments from the three new lenders take Standard Bank down to its target hold level, the amount of a loan a bank will retain on its balance sheet rather than selling to other banks in syndication. The facility included an option MCS to increase the deal size by USD 25 million to USD 150 million. MCS is choosing to exercise that option and is seeking additional banks for the increase. Another four lenders may still join the USD 25 million portion. MCS is a major holding company whose assets include partial ownership of Mongolian Mining Corp.

Source: Bloomberg

ENTRÉE GOLD RAISES USD 12.5 MILLION Entrée Gold Inc. recently closed its offering of 10 million shares at USD 1.25 each, after Rio Tinto Exploration Canada Inc. pre-emptively purchased approximately 1.5 million shares. The consortium of underwriters for the offering included National Bank Financial Inc., TD Securities Inc., Knight Capital Group, and Trapeze Capital Corp.; and was led by Desjardins Securities Inc. ―This financing puts Entrée in a strong position at a time of global economic uncertainty, and allows us to continue to advance our projects in Mongolia and Nevada,‖ said Greg Crowe, president and chief executive officer. The company plans to use its earning to fun ongoing exploration on its Shivee West project in Mongolia and Ann Mason project in Nevada, and for general corporate purposes.

Source: NASDAQ

STANDARD CHARTERED RECEIVES HIGHER MARKS FROM CREDIT RATERS Standard Chartered Bank received higher marks from both Moody's and Fitch and has placed the bank on a stable outlook. The bank's long-term counterparty credit rating was upgraded 1 notch ‖ ―to AA-‖ with a stable outlook. At the same time the bank's short-term rating was upgraded one notch to ―A-1+‖ Standard Chartered is the only international bank to be upgraded by all three major ratings agencies since the financial crisis in 2008. StanChart opened its Ulaanbaatar representative office in May 2011.

Source: Standard Chartered Bank

ERDENES TT APPOINTS VICE DIRECTORS Erdenes Tavan Tolgoi LLC has made three appointments to vice directorial positions. Gren Henkog will serve as the new vice director of mining, Ch. Batbayar as vice director of infrastructure, and N. Munkbal as vice director of administration. Ch. Batbayar's membership to the Democratic Party's (DP's) National Consulting Committee and N. Munkbal to the Mongolian People's Party (MPP) reportedly may have some political implications.

Source: News.mn

FLSMIDTH ENTERS MONGOLIAN MARKET Attracted by the strong potentials at the Mongolian marketplace, FLSmidth established in Mongolia with an office in the capital and plans to open a second in the Gobi Desert. ―Mongolia is a promising future market, since Mongolia has a large amount of mineral reserves and only a fraction of the reserves have been exploited,‖ said Dennis French, country head of FLSmidth Mongolia. ―Along with the development in mining, the development of the country's infrastructure will require a lot of cement.‖ Before now, French had been the managing director of FLSmidth Krebs, China. Since 2005 French has been traveling extensively in the area, building up a strong network while managing the company's sales and profits for all products concerning the Chinese and Mongolian markets. FLSmidth Mongolia has already established an office Ulaanbaatar. A main hub to support the many activities between both the Chinese and Mongolian offices for cement and minerals in Mongolia will also be established by mid 2012 in the South Gobi Desert.

Source: FLSmidth

BLINA EXITS BSI DEAL Blina Minerals will not pursue the company's Mongolian copper and gold project any longer, following an independent expert's review. The company signed a binding term sheet to explore the property with the Mongolian firm BSI in May this year. Based on a review of the exploration results, current geological theory and the best evidence available, the expert recommended against pursuing further work at the project. Blina intends to continue to pursue exploration opportunities in Mongolia.

Source: Proactive Investors

GOLOMT BANK NAMED BEST IN MONGOLIA Banker magazine has named Golomt Bank the best bank in Mongolia for 2011. The magazine also named Golomt the best bank in 2010. Earlier this year, Euromoney magazine named Golomt a leading bank in Mongolia. In naming Golomt the best bank, Banker cited Golomt's leading position, financial indicators, results, and stable growth. Golomt Bank's profits increased by 52.3 percent in 2010, reaching MNT 20 billion. Other indicators the magazine considered are new initiatives, advanced use of technology, and dissemination of new products. Banker magazine also noted that Golomt Bank has improved corporate governance and risk management in high levels, and these achievements have contributed to the bank's success. For example, professional bankers sit on the bank's Representative Managing Council. Golomt Bank has also become the first commercial bank in Mongolia to meet the requirements of Moody's and Standard & Poor's.

Source: News.mn

RIO SELLS OF THE LAST OF ITS U.S. COAL ASSETS Rio Tinto has sold the last of its U.S. thermal coal operations off. Western Fuels-Colorado has bought the Colowyo Mine in western Colorado for an undisclosed sum. Rio is a 49 percent stakeholder in Ivanhoe Mines and will likely purchase a majority stake in the Oyu Tolgoi majority-interest holder 2012. The London-based miner started exiting the U.S. coal mining business in earnest back in 2009, when it sold a stake in Cloud Peak Energy, and listed the company. It completed that sale in December last year. Western Fuels-Colorado, a not-for-profit cooperative that supplies coal and transportation services to consumer owned cooperative a municipal electric utilities, first announced the purchase in September. Rio said it had now sold more than 20 investments raising more than USD 11 billion since the global financial crisis and its badly timed purchase of Alcan in 2007 forced it to rebuild its balance sheet.

Source: Mining Weekly

ECONOMY INNER MONGOLIA PLACES IMPORT TAX ON COAL PRODUCTS The Inner Mongolia autonomous region of China announced to coal producers that it has instituted a

new tax on coal imports. The tax by the Society of Coal and the Bayannuur provincial government of Uurd Dund Hoshuu amounts to CNY 60 per ton of raw coal (USD 9.43) and CNY 120 for washed coal. In addition to the tax, the government has demanded that firms negotiate a new price with Mongolian firms for a new price for its imported coal. Although the decision is officially targeted at Chinese importing firms, some feel it may actually be intended for Mongolian exporters. Chinese importers said they will raise their export coal prices by 1 January, a loss of around USD 400 million for Mongolian exporters. Apparently the decision has much more to do with the Bayannuur government than Beijing since it has very little presence near the Mongolian border. Coal exports from Mongolia are likely to double in 2012, adding more pressure on Mongolian companies trying to compete with one another. This event seems to be an example of China's great influence on the Mongolian economy. China has begun to make it its policy to buy Mongolia's cheaper coal products. Experts believe the tax and price renegotiations are preemptive measures by China for next year's jump in Mongolian coal exports and could be possibly connected to the Chinese firm Shenhua Coal's stake in the Tavan Tolgoi western block coal project.

Source: Unuudur

TUGRUG BOTTOMS OUT AT 16-MONTH LOW The official exchange rate of the dollar against the tugrug stood at MNT 1,346.48 last Friday, marking the lowest point for the Mongolian currency since 5 August 2010. Mongolia's high trade deficit and surging inflation were considered the main causes for the devaluation. During the last 10 months, Mongolia's trade deficit was about USD 1.57 billion, more than five times the figure of the same period in 2010.

Source: Shanghai Daily

MONGOLIA DUE FOR HEAVY SNOWFALL THIS WINTER Seven minor provinces may suffer from a lack of pasture land, said weather forecaster Ch. Tuya. She has predicted 20 to 30 centimeters of snow in these areas. According to her weather forecast, Mongolia will experience much more than average snowfall in December, January and March. Excessive precipitation can make herding more difficult, especially for those lacking experience. An especially cold winters with a great deal of snowfall known as a zud, can devastate the herding community as it did in 2010 and years past since 2000.

Source: Unuudur

DEVELOPMENT BANK TO ISSUE USD 600 MILLION BONDS Although the state owned Mongolian Development Bank was formed only five months ago, it announced last Friday it is issuing the 600 million U.S. dollars equivalent of medium-term euro bonds with a guarantee by the Mongolian government. The bank used the services of that in cooperation with ING, Deutsche Bank and HSBS Bank for the release. ―It is a sign of Mongolia's contribution to the world economy,‖ said Prime Minister S. Batbold. ―I believe this will greatly speed up our infrastructure projects ahead. Mongolian development ban representatives said it was able to strike a deal with a ―relatively low ―interest rate‖ despite the worries to the world economy—the debt crisis in Europe, and slow growth in the United States and fears of the same in China. Bonds worth USD 20 million have been issued and in the later months they will be issued by the capital market in Singapore in several stages. The funding will be used in the primary stages of new building projects, including the building of new railroads, roads, and power plants. Some of those projects are intended specifically for the exportation of coking coal to China.

Source: M.A.D. Investment Solutions, Xinhuanet

CABINET ESTABLISHES EMERGENCY OIL RESERVE Government decided to put MNT 5 billion towards an oil reserve that would provide enough fuel for public transport for 15 days. This summer Mongolia experienced high costs for petroleum after Russia cut its exports. The Ministry of Resources and energy reported a sufficient oil reserve thus far and a stable supply of fuel. The cabinet has already taken extra measures to create a reserve for two to three months of oil in

addition to the 15-day emergency reserve. Source: Montsame

NINJA POPULATION REACHES 73,000 The Mineral Resources Authority of Mongolia reported that 73,000 people in Mongolia operate as independent artisan miners. These so-called ninja miners have become a controversy because they lack the skills or the motivation to mine responsibly. Mining communities are often a magnet for social problems as well.

Source: Unuudur

CONNECTING FOR GROWTH With only a population of 3 million, Mongolia has faced formidable challenges in its computerization, e-literacy, and Internet access programs. However, the industry has seen rapid progress in the past five years. The number of Internet uses has risen 16 percent year-on-year to an estimated 390,000 in 2011, while broadband users have increased from just 3,500 in 2006 to 85,000 this year. Meanwhile the government's ―One Home One PC‖ program, providing low-cost computers, increased nationwide PC use by 60 percent in 2009. Also helping Mongolians connect is a 13,000 kilometer long fiber optic cable that links more than 50 percent of all provinces and 151 communities. There are over 70 internet service providers, sharing 11.2 gigabytes per second of bandwidth and providing services such as xDSL, fiber optic, 3G, and GPRS connections. The white paper—a special edition to commemorate 90 years since the installation of the country's first telegraphic equipment connecting Mongolia with the rest of the world—pledged a number of initiatives in the health sector, Hospitals will offer online appointment systems and a national system for the early warning of infectious diseases by the National Center for Communication Diseases. Ulaanbaatar is also planning an ―intelligent transport system‖ for the capital using an integrated circuit card and an emergency management information system, and a land and property system is also under way. Increased access and a proliferation of Internet cafes nationwide have made Mongolia the home of 1,823 blogs and 236,520 Facebook pages. Social networking site Biznetwork, developed in the Mongolian language, al now boasts over 70,000 users. To extend availability across the country's vase size, the government plans to launch a communications satellite by 2015. Firms bidding to participate in the project can bid online with a system developed by the Communications Technology and Post Authority (ICPA). In e-governance, Mongolia was praised in the U.N.'s ―E-Government Survey‖ 2010 for a ―dramatic rise due primarily by efforts to enhance its national portal and ministry websites to offer more e-services and more on-line content.‖ The survey ranked Mongolia 29 places higher than 2010 at 53.

Source: Oxford Business Group

REAL ESTATE GUIDE MADE AVAILABLE TO INVESTORS M.A.D. Investment Solutions has released a comprehensive Mongolian real estate report focused on the potential for investment on the property market. Marketed as a ―truly comprehensive, unbiased, in-depth market report,‖ the Mongolian Real Estate Report 2012 is based on over 5,000 records to discuss the strengths of the Ulaanbaatar property market and Mongolia's second tier cities. More than a tome of data, the report features the analyses an interpretation of the firm's real estate specialists based in Mongolia to help investors understand the scope, challenges, and opportunities in the market. The report also contains information investors will need to participate in the market with its detailed how-to guides, extensive directories, and its sample agreement.

Source: M.A.D. Investment Solutions

WILL INVESTORS BUY MONGOLIAN POLITICS? Political uncertainty ahead of Parliamentary election in June 2012 has some investors worried. The attempt to renegotiate Ivanhoe 2009 investment agreement for the Oyu Tolgoi copper deposit has some thinking policy makers will do anything for reelection. Although the priority for Mongolia is the development of its tiny economy, foreign investors are wondering if the government can create a stable legal environment while handling the pressures exerted by impatient citizens as well as its to giant

neighbors, Russia and China. Foreign investors worried a renegotiation of the Oyu Tolgoi agreement so soon after its inception demonstrated a poor ability to stand by its agreements. Some politicians have called for the prime minister to resign over his handling of the Oyu Tolgoi contract. The controversy has spilled over to the Tavan Tolgoi coal deposit, for which Mongolia hopes to complete its investor agreement before the end of 2011. Its chief financial officer said in November it would list the initial public offering for the company to run the project, Erdenes Tavan Tolgoi, in Hong Kong, London, and Ulaanbaatar; but the date was unclear. Investors will follow the progress of new laws that pass through Parliament and they will have to decide for themselves if they can tolerate Mongolia's less-than-transparent approval procedures. Mongolia also must try to side step the ―resource curse‖ and ―Dutch disease,‖ which have plagued many nations before it. Mongolia is already showing signs of trouble with soaring inflation and high interest rates. Finally, Mongolia must perform an impressive balancing act as it deals with both China and Russia. Many of Mongolia's 2.7 million citizens worry about growing Chinese and Russian influence. Mongolia's growing dependence on its neighbors for fuel, power, and transportation poses a major risk to its mining sector. Investors will have to watch to see if Mongolia's efforts to ease dependence from China only increases Russia's strong hold, or vice versa. Growing nationalist sentiment will also factor in, as fears grow about the role of foreign firms and workers.

Source: Reuters

FRIEDLAND DERIDES AUSTRALIAN POLITICS IN FAVOR OF MONGOLIA Mining in Mongolia is less politically risky than mining in Australia, said mining billionaire and Ivanhoe Mines Chief Executive Officer Robert Friedland. Ivanhoe Mines has a 66 percent stake in the Oyu Tolgoi copper and gold project—ownership recently reaffirmed by the Mongolian government after certain MPs demanded a larger stake for the government. ―You have so much inherent wealth, it's hard to kill it,‖ said Friedland. ―You can beat it with a mallet and it will still look better than anything else.‖ Friedland derided Australian Prime Minister Julia Gillard, referring to her only as ―your redhead,‖ and said she was one of the worst cases of politicians ―who bribed you with your own money.‖ He called the carbon tax a bizarre form of self punishment,‖ especially Australia's decision to tax coal gas emitted into the atmosphere from open-pit mines. ―If you really want to tax things that emit methane, first you have to start by killing the family dog and then killing all the cows, so in Mongolia they will not be taxing its coal.‖ The entrepreneur's views on man-made climate change are held by many in the mining industry but few are prepared to go on the record. He said global temperature change is normal and he much prefers ―global warming to global colding,‖ referring to large glaciers that once covered the United States.

Source: Telegraph

ENVIRONMENTALISTS HOLD OUT HOPES TO PROTECT WORLD'S OLDEST NATURE RESERVE Protecting the world's oldest nature reserve from the planet's most polluted capital was never going to be easy. However, a major push by the World Bank and officials to conserve the nearby forests, mountains and globally important biodiversity of the Bogd Khan protected area has been on hold for more than a year. A breakthrough is possible if authorities can be transparent about the property deals encroaching on the reserve. Bogd Khan sits on the southern flank of the capital and is considered sacred by many Mongolians. It was designated as a protected reserve in 1778 and has been recognized as a UNESCO biosphere reserve. Despite this status, Mongolian authorities have permitted a growing number of construction sites under a ―limited use‖ clause that should only apply to research sites and tourist information centers. However, parts of the reserve are becoming suburbs of the capital with apartment blocks, fences, and an international school. A major driver is luxury homes for people who want to escape the sulfurous smog caused each winter by hundreds of thousands of wood and coal burning stoves. ―The court is being built to rule on laws, but it is breaking them itself. It's kind of funny,‖ said Kirk Olson, a biologist based in Ulaanbaatar. ―A lot of steam comes out of people's ears when you talk about Bogd Khan. They have rules that they are not following because they are not convenient. They put short-term profits about public good.‖ Although the public is unhappy about the construction, many feel it is too late to do anything about

existing developments. The World Bank wants to halt new projects until information regarding the approval process becomes available on the Internet. Very few projects are thought likely to qualify if the system becomes more transparent. Government officials have hesitated to publicly disclose details about land deals in Bogd Khan, though disclosure is a key condition for a nearly USD 2 million project funded by the Global Environment Facility to make the reserve into a national model.

Source: The Guardian

THE MINERS' QUANDARY: TO BUY OR BUILD? Large mining compares are generating so much cash that a new round of consolidation is likely. However, the largest miners have preferred small, targeted deals. Last time deals included a merger of Glencore with Xstrata; a break-up of Anglo America; the merger of Anglo and Xstrata; and the combination of Rio Tinto and BHP Billiton. None of these game-changing, blockbuster deals appear to be one the horizon. In the year since BHP's failed in its USD 40 billion bid for PotashCorp, an expected second tier of takeovers has mostly failed to materialize, with exception to the takeover of Australia's Macarthur Coal by Peabody Energy. The reason is caution. While balance sheets are healthier than they were in the 2004-08 round of consolidation, the outlook for commodities demand has become less certain. When they have ventured into the markets to buy—rather than build—growth, they have used their firepower cautiously on assets they already know, or new assets that look compelling, but will not break the bank. Rio's slow acquisition of Ivanhoe Mines is noteworthy. In the past six months, Rio rapidly bought tranches of Ivanhoe shares, building a near-majority position (49 percent) and struck a deal that gives Rio operation control of Oyu Tolgoi despite its minority interest. This is a targeted, relatively low-cost move on an asset that Rio both knows and likes. A comparison of cash flows to deal making activity might suggest that the big miners are hoarding cash. That is not always the case. Miners always face the choice of buy or build to replace wasting assets. Build—a safer choice—has been preferred this year. Yet the preference may be changing. So many multinationals are building that the price of labor, raw materials and equipment continues to rise. Meanwhile, mining companies de-rated sharply in August, making the average takeover target less expensive. While takeover activity may pick up, few experts are expecting the same kind of massive takeovers that characterized the last period when the big miners were this cash rich. The next wave maybe be in the three billion to seven billion range.

Source: Financial Times

ASIAN LOANS HIGH ON EUROPEAN “AXE SHEETS” An unprecedented volume of Asian loans that European lenders have put up for sale in the secondary markets is threatening to drive up pricing on new deals. European banks, especially French institutions, are circulating longs lists of Asia loans they are willing to offload, or so-called ―axe sheets,‖ as they look to boost their capital ratios. ―What you're seeing is evidence of what one is hearing—that the European banks are deleveraging and selling assets,‖ said Philip Cracknell, Hong Kong-based global head of capital markets at Standard Chartered. Major lenders typically circulate ―axe‖ sheets to participating banks, mirroring primary syndications. Some French lenders, however, are now sending these sale lists to their major competitors, hoping to offload bigger individual positions. As lenders become more selective and liquidity shrinks, the small-and mid-size companies that do not enjoy deep banking relationships are likely to take the hardest hit from rising funding costs. However, top-tier credits feature heavily on recent axe sheets. That has increased the risks of underwriting new financings even for frequent borrowers in the primary markets. Read more… In recent weeks, Europe's biggest banks, including BNP Paribas and Society General, have pledged to sell assets. Together, European lenders are expected to shrink their balance sheets by as much as EUR 5 trillion over the next three years. Analysts, however, believe the French banks may struggle in secondary sales because their offers are close to par or at marginal discounts. The sellers want to avoid big write-downs on these assets, while potential buyers are holding out for bigger reductions. A package sale of multiple loans may be a more practical solution to avoid over exposure, if the loans are offered at a steeper discount. The difficulty in getting the needed consent from several borrowers may

hinder a package sale, and could lead to unforeseen consequences as pressures mount from all directions. Whether or not the French banks achieve their objectives and how long it takes them to do so is anyone's guess, but one thing is certain—their participation in primary loans will go down, adding to the retreat of European lender to their home markets.

Source: IFR Asia

COPPER WEAKENS FURTHER AS EUROPEAN DEBT CRISIS LINGERS ON Copper fell last week as a rally sparked by the surprise injection of liquidity into the financial system by central banks ran out of steam although the decline was limited by upbeat data in the United States. Copper is a major commodity export of Mongolia that largely dictates the health of the economy. Benchmark three-month copper on the London Metal Exchange was at USD 7,811.25 a ton at 1541 GMT from USD 7,885 at the close. It hit a four-week high last Wednesday and trade volumes shot up to almost double the 50-day moving average, amplified by short covering. ―After such a sharp move on what [the central bank action] was basically an item out of the blue, you're always going to get profit taking,‖ said Stephen Briggs, analyst at BNP Paribas. ―Also people are thinking this is positive but in itself it doesn't solve euro zone problem. Key for the near-term economic outlook will be whether European leaders are able to agree on credible action to tackle the debt crisis at a European Union Summit on 9 December. The European Central Bank signaled it was ready to take stronger action to fight Europe's debt crisis if political leaders agree next week on much tighter budget controls in the 17-nation euro zone. However, fundamentals played some part in copper and tin's losses on Thursday. Workers at Chile's giant Collahuasi mine ended a two-day labor stoppage that disrupted output. Tin was the biggest loser among base metals after breakaway Indonesian smelters shipped metal in contravention of the industry's self-imposed ban on shipments from the world's top exporter. Inventories of lead fell 575 tons to 369,250 tons as canceled warrants, or new orders, jumped to nearly 6,000 tons into Singapore and 7,000 in Johor. Three-month lead was at USD 2,104.25 a ton from USD 2,110. Aluminum was at USD 2,140 a ton from USD 2,110 at the close; nickel was at USD 16,945 from USD 17,500; and zinc was at $2,045.25 from $2,072.

Source: Mining Weekly

WILL CHINA STUMBLE? DON'T BET ON IT Hardly a day goes by without news of yet another economic problem facing China. But after a recent visit to China, I remain optimistic. While developed countries continue with little growth, China's gross domestic product should increase by 9.2 percent in 2011 and an equally astonishing 8.5 percent next year. China's ability to grind out costs by combing high labor efficiency with wages that remain extraordinarily low illustrates China's great strength. At Foxconn's largest plant, in Shengzhen, 420,000 Chinese earning about USD 188 per month assemble electronic components for megacustomers like Apple, Hewlett-Packard, and Dell. Often criticized for just being a nation of ―assemblers,‖ China has been increasing the value it adds to exports as more components are produced there. Although China reveres brands, especially luxury ones, it has yet to give birth to its first. Lenovo, one of the best-known Chinese companies, has achieved limited success with its 2005 acquisition of IBM's personal computer business. Astonishingly, Chinese companies have the lowest share of their home market of any major country. So China has emphasized building products like ships, where brands don't matter. China's economic success is colored by its repressive and corruption-riddled political system. But the unusual mix of authoritarianism and free enterprise should continue to work because of its ability to deliver rising incomes. While total government debt in China is high—possibly greater than United States'—much of Chinese debt was for investment rather than consumption. Antipathy toward personal debt has resulted in a savings rate of nearly 40 percent of income. Underpinned by a reverence for entrepreneurship, China has made starting new businesses easier. A gradual move toward reform appears evident as control over the economy is loosened. The frustrating mercantilist approach taken by China has served it well. It has accumulated vast foreign currency reserves while blocking access to its market and gaining competitive advantages internationally. Congressional saber rattling notwithstanding, China is likely to continue to get away

with reforming only slowly. Steven Rattner, a contributing writer for Op-Ed, was a counselor to the Treasury secretary and lead auto adviser. He is a longtime Wall Street executive.

Source: New York Times

POLITICS PARLIAMENT PASSES FINAL BUDGET FOR 2012 Parliament submitted a report last week on the final budget it approved for 2012. After numerous amendments and revisions, Parliament passed a budget for next year that meets the limitations in spending it set for itself. A number of budget cuts were made to protect the country from rising inflation, as recommended by the Bank of Mongolia, and global economic crisis. MPs cut MNT 900 billion from its total expenditures of its first draft, and MNT 600 billion from revenue spending. Estimates indicate that the budget will reach a total of MNT 5.83 trillion, and expenditures from revenue MNT 6.31 trillion. Government expects the country's gross domestic product (GDP) to reach 16.1 trillion. Parliament approved a receipt of MNT 630.71 billion of budgetary expenditures of MNT 865.91 billion. MPs said the budget could be further amended, however, if the financial crisis exacerbates conditions further in Mongolia. MP D. Khanyankhyarvaa said the budget was created in the country's best interests while others declared it to be a historical budget. Initial expenditures have been cut by 13 percent, said MP N. Batbayar. MPs also advised citizens to deal with their allotted Tavan Tolgoi stocks, worth MNT 1 million, with prudence. ―Citizens can receive their stocks in cash, but since the stock prices may soar, people should choose the stocks,‖ said one MP. ―If everyone wants to take the stocks in cash, the government will issue further provisions in this regard.‖

Source: Montsame

MONGOLIA STILL AMONG WORLD'S MOST CORRUPT NATIONS Mongolia fell four places at 120th of the 183 countries on the latest Transparency International Corruption Index. The global anti-graft watchdog compiles an annual list of countries based on their ranking on a scale of 0 (highly corrupt to 10 (very clean). Mongolia's score is 2.7. Transparency International said the results of the Corruption Index show that no region or country in the world is immune to the damages of corruption. The vast majority of the 183 countries and territories assessed scored below five. New Zealand, Denmark, and Finland top the list, while North Korea and Somalia are at the bottom. ―This year we have seen corruption on protestors' banners be they rich or poor,‖ said Huguette Labelle, chair of the group. ―Whether in a Europe hit by debt crisis or an Arab world starting a new political era, leaders must heed the demands for better government.‖

Source: The Guardian

ELBEGDORJ EXCHANGES IDEAS FOR DEVELOPMENT WITH KUWAITI EMIR President Ts. Elbegdorj arrived in Kuwait on Monday to meet with Emir Sheikh Sabah IV Al-Ahmad Al-Jaber Al-Sabah, at the Bayan Palace in Kuwait City. The president plans to visit Qatar for a United Nations forum in Doha to deliver a speech on expectations for development goals and chair a meeting on democracy. In addition to the emir, he has met with the prince, prime minister, and foreign affairs minister to discuss mutual relations. The trip is a culmination of the developing relations between Mongolia, now beginning to reap the benefits of its mineral wealth, and Kuwait, which has enjoyed tremendous prosperity from its oil reserves. The president noted that large infrastructure projects have been made possible with support from the Kuwait Fund and spoke in support of an investment agreement currently being negotiated between the two nations. He also spoke about the achievements the Mongolian embassy in Kuwait and the Kuwaiti embassy in Mongolia have made toward the further development of mutual relations and cooperation. The emir said Kuwait is ready to finance projects, and will meet international standards in doing so. Both also discussed development opportunities for Mongolia. They talked about the financing of

processing factories and infrastructure projects, and ideas on how to develop Mongolia's petroleum supply. They also shared methods for developing infrastructure in desert regions and the construction of settlements Afterwards, the two state heads moved to topics concerning matters of governance. Elbegdorj requested more scholarships awarded to Mongolians to study in Kuwaiti institutes and universities, with approval from the emir. They also discussed methods to fairly distribute resource wealth to a population. The emir made his own visit to Ulaanbaatar in August, when the two nations first committed to closer relations.

Source: Montsame

MONGOLIA EXPANDS ITS DIPLOMATIC INFLUENCES Mongolia formally established diplomatic relations with the Union of Comoros and Tuvalu in New York on 5 December. In observance of this year's centennial of Mongolia's establishment of its diplomatic services, the Ministry of Foreign Affairs and Trade is working towards establishing relations with U.N. Member nations Mongolia has not yet made. The permanent U.N. representative from Mongolia signed a joint official note of diplomatic relations with his counterparts from Tuvalu and Comoros. The two sides have agreed to follow the lead of the Vienna Convention on diplomatic relations, UN rules, and international law in managing the development of their cooperation in politics, economics, humanitarian efforts, and other areas. Mongolia currently has diplomatic relations with 157 U.N. member nations.

Source: News.mn

FOREIGN AFFAIRS MINISTER ATTENDS OSCE MEETING Mongolian Foreign Affairs Minister G. Zandanshatar recently took part in the 18th annual ministerial consul meeting of the Organization for Security and Cooperation in Europe (OSCE) in Vilnius, Lithuania. Zandanshatar joined Foreign affairs ministers from OSCE member nations, OSCE partner nations, the United Nations, and the European Union for the event. He met with delegates from Kazakhstan, Lithuania, and Ireland, in addition to secretary generals of the OSCE. Mongolia, currently and OSCE partners, recently applied for membership to the organization as a participating state. The OSCE said it was interested in expanding its membership to the Euro-Asian region of the world.

Source: News.mn

OSCE STRUGGLES TO RETAIN ITS POSTURE IN CENTRAL ASIA U.S. And E.U. Diplomats hoped to reinvigorate the Organization for Security and Cooperation in Europe (OSCE) when a Ministerial Council meeting convenes in Lithuania. Mongolia recently applied to join as a state participant to the organization, to which the group will soon debate. During the past few years, the OSCE has seen its reputation as Europe's foremost democratization organization slip significantly. A sub-group of member states, at the center of which is Russia, has pushed to neutralize the OSCE's human rights and election monitoring capabilities. The OSCE also has been exposed as ineffectual as a vehicle for conflict resolution, underscored by its tentative performance in response to Kyrgyzstan‘s social upheaval in 2010, as well as by the stalemated Nagorno-Karabakh peace process. The withdrawal of U.S. Forces from Afghanistan in 2014 will likely be one of many future challenges for it to face. ―I anticipate some problems with this,‖ said an unnamed OSCE official. ―We want this kind of rapid deployment. We have to empower the chair in office and the [Conflict Prevention Center].‖ Russia is reportedly opposed to the rapid-response initiative, currently at the top of the OSCE's agenda, because it doesn't want to see any new, outside sources meddling in the situations of Georgia or Trans-Dniester. Read more… Amid the violence and displacement in southern Kyrgyzstan during the summer of 2010, then-interim President Roza Otunbayeva begged the international community to help protect civilians. However, OSCE officials found the mood on the ground to be unreceptive, even hostile. The OSCE belatedly attempted to send a 52-person policy advisory group to Osh, but local authorities resisted accepting even unarmed advisors on the ground. In the end the effort crumbled into a series of training visits.

Despite its flaws, the OSCE is seen as the go-to venue for advancing both democratization and security. There are also indications that the quiet diplomacy it conducts still yields results.

Source: Eurasianet

DP CELEBRATES ITS CREATION AND DEMOCRACY The Democratic Party (DP) observed the anniversary of a 1989 protest in support of democracy and the creation of its party this week. The DP is organizing several events to mark the anniversaries, including a meeting at the Culture palace held this week. DP Chairman. Various officials delivered speeches reflecting on Mongolia's history of democracy. In addition were the distribution of books on the topic of the Democratic Revolution and a Mongol Citizen 2020 Ulaanbaatar forum. On 10 December, 1989, a gathering of young Mongolian citizens met outside the Youth Culture Center demanding democracy. This event eventually culminated in the 1990 Democratic Revolution and Mongolia's Independence. In 2000 five political parties joined together to form the DP.

Source: M.A.D. Investment Solutions

MONGOLIA CONFIRMS NINTH BOGD KHAN Mongolia confirmed the ninth Bogd Jebttsundamaba Khutughtus in a ceremony at the Gandantegchinlin Monastery in Ulaanbaatar. As the spiritual leader of Mongolian Buddhism, the ninth Bogd is the equivalent of the Dalai Lama in Tibet, although ranking below him in Title. ―Bogd Khan‖ loosely translates as ―High King.‖ Mongolia's Bogd Khan dates back to the 1600s, when the first Bogd, renowned artist monk Zanabazar, was recognized as such by the Panchen Lama and Dalai Lama of Tibet of that time. Bogd Khans operated as defacto kings of Mongolia as well as the most senior cleric up until 1924. By then, Mongolia had been under the control of the Soviet Union, who had banned any further reincarnations of the linage. The ceremony to reinstall the Bogd Khan as the ninth incumbent was carried out last month, and he was presented with the ancient and traditional golden seal of religion and confirmation papers. Although now aged 79, his return marks the end of an 87-year-old gap of Bogd Khans residing in Mongolia. The new Bogd Khan has already suggested his reincarnation will be discovered in the country.

Source: 2point6billion.com

PHOTO EXHIBITION REVEALS 8,000 HECTARES OF DESTROYED LAND The non-government environmental group Green SOS recently unveiled a photo exhibition displaying the destruction mining has had on Mongolia at the Zanabazar Museum ―In our country rehabilitation is not good,‖ said M. Ariunbayar, deputy chairman and head of geology at the Mining and Mineral Resources Authority. ―We have identified 8,000 hectares of dug land with no one claiming responsibility. An additional 17,000 hectares of land has been destroyed through mining activities.‖ The exhibition's producers said they intend to educate people on the destruction to Mongolia's environment through mining and how rehabilitation can be done.

Source: Unuudur

PUTIN'S PROBLEMS The Kremlin has some problems, about 77 million to be precise. That is the number of Russian registered voters who did not vote for Vladimir Putin and his United Russia Party in Sunday's elections. Despite allegedly unprecedented efforts by the authorities to fix the vote, United Russia managed to scrape just 49.5 percent of the vote, down from 64 percent in 2007's elections. Although this result is a dismal performance, a Russian Arab Spring this is not. The number of Russian who shows up at protests and register their opposition by getting themselves arrested is still tiny. In government, the opposition is still weak and divided. The ―official‖ opposition allowed by the Kremlin to participate in elections—consisting of the Communists, who attracted a babushka vote of 20 percent, the Kremlin-created pseudo-liberal A Just Russia, which polled 13 percent, and the ultra nationalist Liberal Democratic Party of Russia, which got 11 percent—has long since been co-opted and in practice almost always votes with United Russia. Yabloko, the only liberal, pro-Western opposition party allowed to run in Sunday's election, polled just 3 percent, less than the 7 percent threshold

required to get in Parliament. The rest of the opposition was refused registration by the Kremlin-controlled Election Commission—but in any case has ratings in the low single figures. The problem for most ordinary Russians is that while small elite becomes ridiculously rich, not much of the prosperity has tricked down to them. Access to health care, education, and good exam results are blocked with thickets of bribery. Sunday's results shows that Russians are unhappy with Putin but do not support any alternative candidate. When Putin came to power in 2000, handpicked by a clique of powerful businessmen and courtiers, Russians were willing to give up the freedoms they won under Yeltsin for the stability Putin promised. A boom in oil and metal prices in the following years allowed Putin to deliver apparently effortless prosperity as Russia's average come rose by more than three times of the decade. However, the stability Putin has brought comes at the cost of outside checks and balances on the government and its servants—either from the press, Parliament, or the courts. Since Putin took power in 2000, corruption has grown to a staggering one third of Russia's GDP, or USD 300 billion a year. Although Sunday's elections may be a protest against six more years of Putin, these are the good times for Russia. Thanks to the Stability Fund set up at the height of the oil boom, the Kremlin has been able to balance the nation's budget without going into crippling debt (unlike Europe). And the Kremlin has spent large chunks of its oil wealth on pensions, schools, hospital, housing projects, and military.

Source: The Daily Beast

NEW MONGOLIAN LAWS AND REGULATIONS The following amendments to laws and an exemption were published in the latest weekly Government bulletin. Unless otherwise decided by Parliament, they will take effect ten (10) days after publication. Date Amendments to Laws and Exemption

05.12.2011 Law on Loan information Addendum to Law on Cooperative Addendum to Law on State registration of property possession rights, other property

rights related to it Addendum to Law on Special permits for economic activity Addendum to Law on Central Bank /Mongolbank/ Addendum to Law on Bank Regulation to abide law on amendments to law on pension, allowance to military servant Amendments to Law on Regulation of foreign trade of rare animal, plant, good made from

them 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 PMESSENTIALS PROJECT MANAGEMENT WORKSHOP, 22-23 DECEMBER The American University of Mongolia's Center for Executive Education has partnered with Coffey Projects to organize a two day Project Managment essentials (pmEssentials) workshop in Ulaanbaatar from 22 to 23 December. This two day workshop will be delivered by an experienced, practicing project manager and academic to introduce project management concepts, and principles and procedures from the Project Management Body of Knowledge (PMBOK). Participatns will learn to identify project aims, objectives, deliverables, outcomes, and boundaries; write a project plan; define the project scope and decompose the project into manageable work packages and activities; monitor progress and take corrective actions; effectively manage changes; and understand the project closeout process. Participants will also learn to become more familiar with using key project management techniques such as critical path analysis, work breakdown structures, scheduling, as well as cost, risk, and change management

Enrollment is open to only 15 participants and will be based on a first-come-first-served basis. For more information, visit aum.mn for a detailed flyer and enrollment form; or contact the program manager at munkjargal@newcom.mn or by phone at 9911 7429. ___________________________________________ FINANCIAL REPORTING TRAINING, 19-20 DECEMBER Pricewaterhouse Coopers Audit LLC and the Institute of Finance and Economics will hold a Accounting and Financial Reporting training session on 19, 20, and 21 December. The training will provide participants with the practical understanding of the requirements under IFRS to enable them to prepare compliant financial statements. The training will be highly interactive to allow participants to practice key concepts. Day one will cover financial statements under the IFRS, critical IFRS disclosure requirements, and producing cash flow statements; day two will teach about accounting for tax and deferred tax, and accounting for groups; and day three will teach key issues to revenue, methods to identify and measuring liabilities, and asset accounting. Each day will start from 9:30 A.M. To 12; and from 1 to 5 P.M. Lunch will be provided to all who attend. Attendance is MNT 800,000 per student. One free placement will be provided for any single company with four paid students. For more information or to attend, contact Solongo Enebish at solongo.enebish@mnpwc.com. ___________________________________________ “MM TODAY” ON MNB-TV, FRIDAYS AT 21:15 BCM is pleased to announce that Mongolian National Broadcasting continues its cooperation with BCM on ―MM Today‖. This English news program is aired every Friday for 10 minutes and is scheduled for 21:15 tonight. Tune in to watch this program that reports stories from today‘s BCM NewsWire. ___________________________________________ “BSPOT” ON B-TV, MONDAY TO FRIDAY AT 21:30 B-TV (Business TV) now telecasts a 10-minute English-language news program called BSPOT every evening from Monday to Friday at 21:30, taking most of the stories from the BCM NewsWire. ___________________________________________ POSTINGS ON BCM‟S ENGLISH WEBSITE 'PRESENTATIONS' AND 'MONGOLIA REPORTS' AND BCM‟S MONGOLIAN WEBSITE „NEWS‟ SECTIONS As a key component of BCM‘s Mongolian website, ‗News‘ section, articles from the Government‘s ―Open-Government.mn‖ site is regularly posted. Also several draft laws, still to be discussed in Parliament, are posted on BCM‘s English website in the Legislative Working Group section. On BCM‘s English website - ‗Resource, Presentations‘ section for your review are several speeches at the Risk Management Forum co-organized by BCM and Mandal, speeches at Discover Mongolia 2011, speeches from BCM‘s 9 monthly meetings in 2011, and the address by Peter Nicholls, OT‘s VP-Operations, at Global MInES in Sydney on July 4. Also on BCM‘s English website, ‗Resource, Mongolia Reports‘ section please note "Blitz and Lead" by Sant Maral Foundation, August 2011, Z. Batbayar, Deputy Director of the Water Authority, at BCM‘s Environmental Working Group‘s recent meeting, the Polit Barometer-May 2011 from Sant Maral Foundation and the U.S. Embassy Mongolia‘s Commercial Section‘s ―2011 Mongolia Investment Climate Statement‖ - www.bcmongolia.org. We are now posting some news stories and analyses relevant to Mongolia on the BCM website's ‗Mongolian Business News‘ as they come, instead of waiting until 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. ___________________________________________ NETWORK WITH BCM The Business Council of Mongolia (BCM) is expanding 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. 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 with the community. Hear breaking news and announcements as they happen when you follow BCM on Twitter at http://twitter.com/#!/bcmongolia. Connect with BCM on Linked-in to join the diverse group of professional contacts creating a better business environment in Mongolia today. Of course for news information, interviews, and announcements regarding our organization, visit the official BCM website at bcmongolia.org and 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]

October 31, 2011 *10.9% [source: NSOM]

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

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]

CURRENCY RATES – December 8, 2011 Currency Name Currency Rate U.S. dollar USD 1370.70

Euro EUR 1838.66

Japanese yen JPY 17.67

British pound GBP 2152.14

Hong Kong dollar HKD 176.29

Chinese yuan CNY 215.44

Russian ruble RUB 43.87

South Korean won KRW 1.21

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.