BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 243 – October 12, 2012

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NEWS HIGHLIGHTS:

Business

Peabody offered contract to develop TT's West Tsankhi;

TT is priority Number 1, says foreign minister;

Enebish steps down as Erdenes-TT CEO for “some rest”;

Erdenes-TT has three choices to move forward, says outgoing CEO;

Oyu Tolgoi CEO defends OT investment agreement;

Power lines ready at OT;

Erdene restarts drilling at Altan Nar;

Berkh Uul receives USD 1.06 billion estimate for fluorspar deposit;

Environmental groups request suspension of Areva operations;

S&P rates Mongolian Resources “B-”;

Bloomberg launches Bloomberg TV Mongolia;

EBRD funds Mongolyn Alt copper mine;

EBRD delegation arrives in Mongolia;

Oxfam turns investor with loan to Xac Leasing;

Inspectors suspend construction at Adobe Properties site;

MCA-Mongolia seeks new CEO;

Rio speeds up cost cuts to cope with Chinese slowdown.

Economics

Central Bank no longer to accept low-interest mortgage applications;

Higher fuel tax raises gas prices from Rosneft;

BPI introduces supplier development program;

Market share for compliant traders on MSE reaches 95 percent;

Japanese university opens rep office at MUST;

Agency says reports of plague false;

Get your tugrug here!;

Mongolia’s white-hot growth slows on China woes;

Cementing growth;

Mongolia, Australia aim to partner for mining boom;

Environment pays price for infrastructure shortfalls;

Asia becomes world's wealthiest region;

Global recession risk rises.

Politics

DP plots out 2013 budget;

Mining minister sees new policy for mining sector;

Batshugar appointed as Mongol Bank VP;

Temporary head of UB Railway JSC appointed;

Government officials refuse to report incomes;

Parties and candidates prepare as local elections near;

U.N. delegation to observe human rights in business activities;

Norwegian Premier arrives in Ulaanbaatar;

Boom or Bust: The Foreign Investment Law;

The impact from Parliament's revision of environmental laws;

Minister of Justice receives threats;

Capitalists bid farewell to Lenin statue;

Canada, too, fears acquisition from Chinese state owned enterprise.

*Click on titles above to link to articles.

SPONSORS

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BUSINESS

PEABODY OFFERED CONTRACT TO DEVELOP TT'S WEST TSANKHI

Erdenes Tavan Tolgoi JSC has approached Peabody Energy Corp. with the proposal to contract the

latter to develop the West Tsankhi coal field at Tavan Tolgoi.

The contract would last for the term until a final solution is made for the west block project.

According to the government, the decision does not affect Peabody Energy's ability to participate in

a consortium and does not signal a change to the intended plan of its development. Parliament had

decided before Erdenes-TT's approach to Peabody Energy that it would allow for a single contractor

to operate at the site until there is resolution to the issue of who should develop the site.

If given a positive response, operations could begin as early as next week. Officials said Peabody

Energy was chosen because it is the world's largest coal company in the private sector and is a

leader in environmental responsibility.

Source: Udriin Sonin

TT IS PRIORITY NUMBER 1, SAYS FOREIGN MINISTER

Mongolia's new government will focus on attracting overseas investors to the country's biggest coal

field instead of renegotiating the Oyu Tolgoi copper-gold mine, the foreign minister said in Japan.

The four-party ruling coalition hopes to name ―within months‖ who will develop part of the six

billion metric ton Tavan Tolgoi coal field, L. Bold said. Bold is the first official from Mongolia's new

government to visit Japan, which offers the best new economic partnership in the Asia region, he

said. An ex-defense minister and a former chairman of Golomt Bank of Mongolia LLC, the nation's

second-largest lender, Bold is a member of the Democratic Party (DP).

―Our priority is third-neighbor relations,‖ Bold said, referring to landlocked Mongolia's efforts to

develop ties with nations outside of its two main neighbors China and Russia. ―We expect our

cooperation with Japan to go up a level. We want to broaden it, especially with Japanese banks and

companies.‖

The first sign of how Mongolia balances its foreign relations between China, Russia, and Japan, as

well as South Korea and the United States, may come in the way the country splits the Tavan Tolgoi

coal project, which also needs new rail lines and roads, as well as power plants. Mongolia first

announced and then said it would review an accord in July 2011 that planned to give China's

Shenhua Group a 40 percent stake in the coking-coal-rich West Tsankhi area of Tavan Tolgoi, with

Peabody Energy Corp. of the United States taking 24 percent and a Russian-Mongolian group the

rest. The initial shortlist of companies seeking to develop West Tsankhi includes South Korean

steelmaker Posco, and the trading houses of Japan led by Itochu Corp.

Mongolia would like to see Japanese companies making more investments and also bringing their

technology to Asia's most sparsely populated nation, Bold said. Japan has invested in Mongolia

outside of mining. Trading house Sumitomo Corp. and Japan's second-largest telephone operator

KDDI Corp. joined with local partner Newcom Group in 1996 to set up Mobicom Corp., Mongolia's

first mobile operator.

Source: Bloomberg

ENEBISH STEPS DOWN AS ERDENES-TT CEO FOR “SOME REST”

The head of the state-owned Tavan Tolgoi coal project resigned on Thursday, raising hopes that a

new chief executive officer may hasten the launch of the massive mine's western block project.

B. Enebish, chief executive of Erdenes-Tavan Tolgoi resigned because of personal reasons, he told

Reuters.

―After four years of hard work, I am a little bit tired and needed some rest,‖ he said.

Enebish will be replaced by Ya. Batsuur, a former member of Parliament with the ruling Democratic

Party. A new chief may help jumpstart the launch of the much coveted 7.5 billion-ton coal deposit,

situated around 300 kilometers from the Chinese border, which has been repeatedly delayed as a

result of financing problems.

The change of government following June parliamentary elections have also have hastened

Enebish's departure.

―Given the recent change of political power in Mongolia, the departure of Enebish is not a

surprise,‖ said Nick Cousyn of BDSec. ―We hope the government appoints a replacement who is

capable of getting the Tavan Tolgoi IPO to market in a timely manner, while balancing the interests

of Mongolia and its foreign partners.

Source: Reuters

ERDENES-TT HAS THREE CHOICES TO MOVE FORWARD, SAYS OUTGOING CEO A string of missteps have made Erdenes Tavan Tolgoi JSC look inept compared to the likes of

Mongolia Mining Corp. But the announcement that the state-owned coal miner has begun

exploration at the Western block has added a bit more luster to its flagging reputation.

Former Chief Executive Officer B. Enebish who resigned this week has offered three ways to finance

the Tavan Tolgoi mine. He proposed that the initial plan to give control to a consortium of strategic

investors would stabilize project financing and offer cheaper transportation, but would not help

benefit shareholders, namely the Mongolian government and the Mongolian citizens who hold

shares. The second option is for the government to operate the mine on its own, while bartering

off-take agreements with foreign companies for transportation and sales. Enebish said that the

shareholders would realize the highest stock prices, and that the highest initial public offering (IPO)

valuation would result from this option because the company would begin mining and exporting

much sooner. However, dropping strategic investors would run the risk of unstable project

development as well as poor deals on prices.

A third option would be to sell up to 49 percent of Erdenes-TT's equity to foreign investors, and is

considered middle ground between the other schemes. Enebish said he prefers this third option, as

it allows strategic investment from foreign countries, and therefore brings the associated benefits.

He also mentioned that the participation of many countries would promote higher transparency and

counterbalance, which would translate into higher confidence on the international equity markets

and better IPO valuations.

The sudden start of excavation is due to the state-owned coal miner's obligations. Erdenes-TT is

responsible for supplying the promised amount of coal to Aluminum Corp. of China (Chalco) Ltd., as

per its USD 250 million offtake agreement. The opening of the West Tsankhi would allow Erdenes-TT

to produce the one to two million tons in 2013 it currently targets and ramp up to 20 million tons by

2017. The sudden production ramp-up is likely intended as a remedy for the budget shortfall, which

is due in part to missing mining revenues according to statements from Parliament.

Source: MICC, Udriin Sonin

OYU TOLGOI CEO DEFENDS OT INVESTMENT AGREEMENT

Oyu Tolgoi LLC's chief executive officer spoke on the benefits of its current investment agreement

during a commemoration of its third-year anniversary.

Chief Executive Officer Cameron McRae told media Oyu Tolgoi has paid USD 803 million to the

government in taxes in the months leading up to autumn this year, and that Rio Tinto PLC had seen

no revenues thus far from the project.

The miner currently employs about 3,000 Mongolians at Oyu Tolgoi, and that between 80 to 90

percent of its workforce was already Mongolian.

―I can only tell you one thing in confidence,‖ said McRae, ―that the Oyu Tolgoi investment

agreement is a profitable agreement for Mongolia, with 71 percent of the project's cash flow going

to Mongolia.‖

He explained that the 71 percent figure, which is currently being discredited by members of

Parliament, was determined by the International Monetary Fund (IMF).

McRae added that price swings in copper would impact Oyu Tolgoi's investors, but the company

would continue to pay its taxes and the government would not lose a single cent.

He added that dividends paid to shareholders, another benefit to the government, may be bumped

up from 2020 to sometime this year.

Source: Udriin Sonin

POWER LINES READY AT OT

Toronto-listed Turquoise Hill Resources Ltd. on Tuesday said construction of power lines to its

flagship Oyu Tolgoi copper-gold project was complete and had been successfully tested with full

power loads and was ready for use.

The company, which is controlled by diversified miner Rio Tinto PLC, said it had now entered into

negotiations with Chinese authorities for a power purchase agreement. The mine, which is located

out 80 kilometers from the Chinese border, was expected to be the only new copper mine coming

on line in the medium-term that counted among the world‘s top ten largest copper mines.

The miner said power from Inner Mongolia was required for the full commissioning of the project

and to start production. First concentrate production was expected to follow within a month and

commercial production was expected to start three to five months earlier.

Source: Mining Weekly

ERDENE RESTARTS DRILLING AT ALTAN NAR

Erdene Resource Development Corp. (ERD) has commenced further drilling at its Altan Nar gold

project in southwestern Mongolia.

―Results from the Altan Nar gold project continue to surpass our expectations with recently

completed surveys having identified multiple new drill targets,‖ said Peter Akerley, President and

Chief Executive Officer.

The drilling program began on 7 October and is expected to include up to 20 shallow holes, totaling

approximately 2,500 meters. Fifteen exploration targets have been identified over a 5 kilometer by

1.5 kilometer area following the completion of a detailed soil test and other tests. Most of these

drill targets lie outside the 1 square kilometer area of drill-tested to date, which means greater

potential for identifying additional gold mineralization at Altan Nar. The objective of this new

phase of drilling is to identify which targets would require further drilling.

Previous drilling at the ―Discovery Zone‖ intersected multiple shallow mineralized zones greater

than 30 meters grading more than 1 gram per ton of gold. Results at the south end include 29

meters averaging 4.3 grams per ton and 24.1 grams per ton of silver from hole TND-19. Drilling at

the northern end of the Discovery Zone intersected a broad mineralized zone that includes 29

meters of 1.1 grams per ton of gold and higher grade zones including four meters of 10.5 grams per

ton of gold and 56 grams per ton of silver.

Source: Erdene Resource Development Ltd.

BERKH UUL RECEIVES USD 1.06 BILLION ESTIMATE FOR VALUE OF FLUORSPAR DEPOSIT

An evaluation of Berkh Uul JSC's Delgerkhan fluorspar project resulted in an estimated total

indicated and inferred resource of 9.64 million tons, with an estimated value of USD 1.06 billion for

the deposit.

Between September and November 2011, Berkh Uul took on the consulting services of CBM LLC,

which operates exclusively for Berkh Uul shareholder Firebird Management LLC, to assist in the

design and implementation of a 1,800-meter drilling program over the Delgerkhan mining license

under the guidance of international resource consultancy firm Micromine Pty. Ltd.

The drilling program focused on confirming historical joint Mongolian-Russian drilling to bring the

resource into compliance. In addition, the drilling targeted deeper, unexplored veining to extend

the down-dip depth of the deposit. Three-dimensional wireframe modeling was undertaken, taking

the historical mining there into account.

―This resource verification makes Berkh Uul‘s Delgerkhan ore body the largest in Mongolia and is

triple that of previous estimates," said Nick Cousyn, chief operating officer at BDSec JSC. ―The

indicated resource of 6.6 million tons would place Delgerkhan within the top 10 single largest

resources in the world, a real game changer.‖

Berkh Uul produced fluorspar until 2008, when operations were shut down. The company is moving

on the prefeasibility stage of the project, which it hopes to complete in the first quarter of 2013.

Source: Berkh Uul JSC, BDSec JSC

ENVIRONMENTAL GROUPS REQUEST SUSPENSION OF AREVA OPERATIONS

Environmental groups have called for the end of uranium exploration by Areva SA subsidiary

Kojegobi LLC.

The Citizens Council for Mongolia's Environment and non-government organization Bayansharga,

both of which oppose nuclear activity in Mongolia, complain that the Mongolian government is

allowing the development of sites for uranium excavation without enough knowledge in the area

and the effect it could have on future generations.

The petitioners have requested a reply by 15 October.

Source: Zuunii Medee

S&P RATES MONGOLIAN RESOURCES “B-”

Standard and Poor's (S&P) Ratings Services has awarded Mongolian Resources Corp. (MRC) a rating of

"B-" with a "Stable" outlook.

MRC's liquidity is "less than adequate," as defined in our criteria. The company's liquidity is sensitive

to iron ore prices, sales volumes, and fluctuations in working capital requirements. We expect MRC's

liquidity sources to cover its liquidity needs by about 1.05x over the next 12 months. Liquidity

sources include proceeds of up to US$300 million from the proposed notes and about US$22 million

in committed bank working capital facilities.

The stable outlook reflects our expectation that MRC's financial risk profile will remain "highly

leveraged" in the next 12 months, despite higher sales volumes. The stable outlook is also

contingent on the company issuing the proposed notes.

Source: Standard & Poor's Rating Services

BLOOMBERG LAUNCHES BLOOMBERG TV MONGOLIA

Bloomberg Television has announced the official launch of Bloomberg TV Mongolia.

The launch of Bloomberg TV Mongolia, which is in partnership with Trade and Development Bank

(TDB) of Mongolia LLC, signifies the introduction of the first international broadcast news

organization in Mongolia, one of the fastest-growing stock markets and investing environments in

Asia today.

Over the last year, Bloomberg has trained over 30 logical journalists who are now working at BTV

Mongolia, and built a state-of-the-art high television studio in the heart of downtown Ulaanbaatar.

Bloomberg TV Mongolia will deliver international, market-moving business and financial news to the

local community, and insightful coverage of Mongolia to the rest of the world, providing a unique

edge for viewers.

"With the economic growth of Mongolia, decision makers and business leaders here have an

increasing need for market-moving, accurate and international business and financial news.

Likewise, global audiences are becoming ever more intrigued by what is happening in Mongolia,"

said O. Orkhon, First Deputy Chief Executive Officer of TDB.

With Executive Producer Todd Baer at the helm, Bloomberg TV Mongolia launched on 8 October

with its flagship evening newscast Money Flow. The weekly program includes five hours of locally

produced content, combined with simultaneous and taped translated Bloomberg content. Weekend

programming schedule includes 12 hours of taped translated Bloomberg programs, supplemented by

Bloomberg TV's pan-Asian feed. Bloomberg TV Mongolia will be available on all of Mongolia's major

cable providers.

Source: Bloomberg

EBRD FUNDS MONGOLYN ALT COPPER MINE

In its largest investment in Mongolia to date, the European Bank for Reconstruction and

Development (EBRD) is raising the standards in the country's mining industry with a USD 250 million

loan for the development of the Tsagaan Suvarga copper mine located in Dornogobi Aimag.

Through the project, the bank is aiming to help develop a sustainable mining sector in Mongolia.

The project also has a strong demonstration effect, as it introduces high environment and social

standards in the Mongolian copper industry, as well as supporting the further growth of a

domestically grown company. Another USD 100 million is expected to be syndicated by the EBRD on

the international market.

Mongolian-owned mining company Mongolyn Alt (MAK) and the EBRD have been established business

partners since 2007. The bank's first project with MAK financed the first development phase of the

company and the creation of a clean-coal production facility. This project was launched in 2011 and

has been instrumental in reducing air pollution in Ulaanbaatar.

The proceeds of the new loan will finance the development of an open-pit copper and molybdenum

deposit in south-eastern Mongolia. With the EBRD's financing, MAK will diversify its business by

beginning production of these two commodities. The project enables a domestic company to

produce a value-added product and boosts its competitiveness in both international and domestic

markets.

Source: European Bank for Reconstruction and Development

EBRD DELEGATION ARRIVES IN MONGOLIA

A delegation of officials from the European Bank of Reconstruction and Development (EBRD) visited

Mongolia from 6 to 10 October, on a country strategy mission.

The delegation came to hold consultations on the bank's new 2013-2016 country strategy for

Mongolia, which is expected to be approved in April 2013 by the EBRD's board of directors. Led by

First Vice President Varel Freeman, the delegation met with senior government ministers and

officials as well as local government, private sector representatives, diplomats, international

finance institutions, banks and civil society.

In addition to Ulaanbaatar, the delegation traveled to the south Gobi region to visit the Oyu Tolgoi

mining complex, where the bank is considering providing financing.

Since the beginning of its operations in Mongolia in 2006, the EBRD has invested USD 600 million in

45 projects in different sectors of the economy, mobilizing an additional USD 1.1 billion from other

sources of financing. To date, all of EBRD's investments in Mongolia have been in the private sector.

EBRD operations in Mongolia focus on the development of the corporate and financial sector and on

providing support for developing critical infrastructure.

Source: FinChannel

OXFAM TURNS INVESTOR WITH LOAN TO XAC LEASING

British anti-poverty charity Oxfam has made its first venture into corporate finance with a EUR 1

million (USD 1.29 million) loan to a Mongolian machinery and equipment leasing company, Xac

Leasing. The loan is being made by the Small Enterprise Impact Investing Fund—a joint initiative

between Oxfam, the City of London Corporation and Symbiotics, a Swiss micro-finance specialist.

The fund aims to support social projects and provide financial returns for its investors.

The idea of charities engaging with the commercial sector is gaining ground. The development of

micro-finance was an important driver, with the Graemeen Bank in Bangladesh raising most of its

original funding form donor agencies. Charities such as WorldVision have followed suit, raising and

using money for micro-finance investments, but Oxfam said it was the first U.K. charity to establish

and advise a fund aimed at impact investing on this scale.

Oxfam said that lending to Xac Leasing, part of Mongolia's Tenger Financial Group, fits the fund's

mandate of investing in financial intermediaries supporting small and medium-sized enterprises in

Africa and Asia. Based in Ulaanbaatar, Xac Leasing LLC lends to some 260 small-medium

enterprises, and in line with Social Enterprise Investment Fund (SEIF) requirements, it includes

social and environmental considerations into its lease appraisal process.

―In particular, SEIF has been designated to meet the needs of the 'missing middle,'‖ said Barbara

Stocking, chief executive of Oxfam. ―These are the countless small businesses in developing

countries which have the potential to thrive but are completely stifled by limited access to credit.

The fund is also intended to have a symbolic role for the rest of the asset management industry, she

added.

Source: Financial Times

INSPECTORS SUSPEND CONSTRUCTION AT ADOBE PROPERTIES SITE

A 13-story construction project has been closed following the failed inspection that had

Ulaanbaatar's mayor as one of the inspectors.

Ulaanbaatar Mayor E. Bat-Uul led a delegation visiting various construction sites in the Khan-Uul

District in Ulaanbaatar. The inspection team banned any further work at the Adobe Properties-

owned project because it lacked necessary permits. The mayor said construction would be

suspended, the building demolished, and the construction company would face fines.

Bat-Uul said a number of construction companies are currently operating at construction sites

without the necessary permits.

Source: Zuuni Medee

MCA-MONGOLIA SEEKS NEW CEO

The Millennium Challenge Account-Mongolia (MCA-Mongolia) is seeking to fill its chief executive

position.

The U.S. financing agency has posted the vacancy, requesting that candidates apply before 17

October. The appointed chief executive officer would be responsible for overseeing the agency's

secretariat and reporting directly to the board of directors.

Source: NAMBC

RIO SPEEDS UP COST CUTS TO COPE WITH CHINESE SLOWDOWN

Global miner Rio Tinto PLC said on Tuesday it would step up cost cuts because of an uncertain near-

term outlook that includes lower growth this year in China, which absorbs over 90 percent of

Mongolia's mining commodities in addition to being the largest consumer in the world.

Rio Tinto said it had already made annual costs cuts of USD 500 million so far in service and support

roles, and would now trim in operations, project studies and elsewhere, cutting an unspecified

number of jobs. It has imposed a hiring freeze for support staff early this year.

The world's second largest iron-ore miner is widely seen as the diversified producer most exposed to

China and its industrial recovery. Rio Tinto is counting on Chinese infrastructure spending plans to

drive a pickup in steel demand, but it may have to wait until after the once-in-a-decade power

transition takes place.

―There is some good news coming. The question is when will all of this flow through, ultimately, to

our markets,‖ Chief Executive Tom Albanese said. ―Overall, I'd say that we are more cautious on

the outlook for the next few quarters for our business than we would have been a couple months

ago.‖

Rio Tinto said it saw positive signs in China and the ―deceleration is probably bottoming out,‖ but

the company cut its forecast for China's economic growth in 2012 to ―just below‖ 8 percent, from 8

percent, in line with the International Monetary Fund (IMF).

The company's copper business has a brighter near-term outlook than iron ore, but Rio Tinto flagged

potential delays at its newest project, the massive Oyu Tolgoi copper-gold mine in Mongolia, due to

prolonged talks with China over power supply. Analysts have fretted as talks with Chinese

authorities have dragged on. Lengthier talks could affect the ramp-up timetable at the mine, unless

a deal is reached before the end of the year.

According to Rio Tinto's statement, once a power deal with China is signed, the first ore would be

processed within six weeks and first concentrate production would start a month later. Commercial

production could take up to eight months from the point at which power is received, its analysts‘

presentation said.

Source: Reuters

ECONOMY

CENTRAL BANK NO LONGER TO ACCEPT LOW-INTEREST MORTGAGE APPLICATIONS

The Bank of Mongolia has officially suspended its acceptance of applications for low-interest loans

as part of the 100,000 Homes housing project.

Before applications finished, Mongolian citizens had the opportunity to apply for 6 percent

mortgages. Housing Finance Corp. said it had already received 3,664 applications, of which it had

approved 850 for a total of MNT 35 billion.

The Central Bank has already received financing of MNT 30 billion from the Development Bank of

Mongolia, but said it will not resume accepting applications until it receives an additional MNT 20

billion in financing owed to it by the Development Bank.

Source: News.mn

HIGHER FUEL TAX RAISES GAS PRICES FROM ROSNEFT

Russian oil exporter Rosneft has introduced an increase to its prices with a 6.4 percent increase in

fuel taxes.

The company now sells A-80 gasoline at USD 23 per ton and A-92 at USD 44 per ton. The price of A-

95 remains unchanged, however. Diesel prices have grown by MNT 90 for a price of MNT 1,061.

Source: Zuuni Medee

BPI INTRODUCES SUPPLIER DEVELOPMENT PROGRAM

USAID's Business Plus Initiative has launched a supplier development program to help ensure large

companies use local sources to meet their supply and service needs.

The supplier development program will help Mongolian businesses buy markedly higher volumes of

quality goods and services from local sources. The program aims to increase jobs and heighten

Mongolia's economic growth. Experience in other countries suggests that a program applying this

buyer-led approach can generate at least three dollars in sales for every dollar invested.

The program will work first by securing the commitment of buyers to purchase from suppliers, and

then provide the know-how and support required to ensure the supplier meets that order. BPI plans

to open Supplier Development Centers serving Selenge, Bulgan, Umnugobi, and Tuv Aimags.

Source: Business Plus Initiative

MARKET SHARE FOR COMPLIANT TRADERS ON MSE REACHES 95 PERCENT

The number of broker-dealer companies eligible to participate in trading on the Mongolian Stock

Exchange (MSE) has grown to 47.

The growth is a sign that the MSE is successful implementing its activities aimed at developing the

sector. This latest figures shows that 95 percent of the market has become compliant for trade.

New regulations were made for trading after the MSE installed its Millennium IT trading software.

Source: Mongolian Stock Exchange

JAPANESE UNIVERSITY OPENS REP OFFICE AT MUST

Japan's Akita University has opened a representative office at the Mongolian University of Science

and Technology (MUST).

The two institutions have partnered since 2003 when a Japanese professor lectured at MUST. Last

year two students were admitted to Akita and two lectures and one student this year, said Professor

B. Damdinsuren.

The new office opens the possibility of brining Japanese technology for mining education and

establishing a cooperative effort for a student exchange program.

Akita vice head E. Kasuhiko said that the representative office has been opened for information

purposes. He added whether or not Japanese professors would lecture at MUST was a matter being

discussed.

Source: Unuudur

AGENCY SAYS REPORTS OF PLAGUE FALSE

A Mongolian agency for infectious diseases has refuted claims by a Russian website that Mongolia

has declared a nationwide quarantine due to twenty reported cases of the Bubonic plague.

The Baikal Daily website made the report on 26 September, saying that plague had spread from

marmots which reside in Mongolia's countryside. The article went on to say that the disease was

spreading quickly and could reach Russia.

However Mongolia's National Center for Infectious Diseases reported there have been no reports of

plague registered in Mongolia for over 10 months. The agency did, in fact, receive a report of one

possible case in August, but testing proved it was not the plague.

Source: News.mn

GET YOUR TUGRUG HERE!

Minister of Finance Ch. Ulaan has set forth a number of standards for the country's monetary and

fiscal policy that could help the tugrug fare better against hard currencies.

While the minister has no actual influence on monetary policy, his support for tighter liquidity may

give the Bank of Mongolia the needed political cover in its fight against inflation. The directives the

ministry would like to see implemented into the policy are maintaining balanced budget income,

supporting reduced dependency on commodity exports, limiting budget deficits to 2 percent of

gross domestic product and establishing maximum budget increases year-to-year through to 2014.

"Given that Ch. Ulaan is a member of the Mongolian People's Revolutionary [MPRP] Party, it would

appear that the coalition between the [Democratic Party (DP)] and MPRP is 'working,'‖ said Nick

Cousyn, chief operating officer at BDSec JSC. ―In the past, the MPRP has been less supportive of

tight budgets and more in favor of social welfare. Should this sentiment translate into tighter

budgets, Mongolia will take its first meaningful step to deal with recent inflationary pressures.‖

If the DP, MPRP and Central Bank can agree on lower liquidity and tighter budgets, then we have

likely seen the lows for the tugrug versus popularly traded foreign currencies. With the United

States and Japan printing historic amounts of currency, any sign that Mongolia is serious about

dealing with its inflation problem should result in a much higher tugrug.

Source: BDSec JSC

MONGOLIA‟S WHITE-HOT GROWTH SLOWS ON CHINA WOES

Mongolia's white-hot economic growth has cooled this year as the ripple effects of the global

economic downturn—and especially slowing Chinese growth—start to hit home.

Growth eased to 13.2 percent in the first half of this year, and while that is still among the world's

highest rates, questions are being asked about its heavy dependence on coal exports to China,

where economic growth is slowing. Mongolian coal exports have leaped in recent years on voracious

Chinese demand, and grew 27.5 percent in 2011 to 21.3 million tons, according to government

figures, nearly all of it going across its southern frontier to China. But China's usually turbo-charged

growth rates have slowed significantly this year, sapping coal demand, contributing to a 10 to 15

percent decline in Mongolian coal prices this year and trimming the country's coal export

projections.

―We are now hoping that we can equal last year's export numbers, but it's unlikely that we'll be able

to beat those figures,‖ said D. Damba, President of the Mongolian National Mining Association.

Ninety-two percent of the country's total exports go to China, according to Mongolian government

data, and nearly all of that consists of coal. But economic growth in China slowed to 7.6 percent in

this year's second quarter, the weakest performance in three years.

David Paull, managing director of Australia-based Aspire Mining, said Mongolia has been squeezed

by seasonal weakness, softer Chinese demand and a pending leadership change in Beijing. Some

analysts have said the coming leadership transition is delaying expected Chinese economic stimulus

moves.

Landlocked Mongolia is sandwiched between Russia and China, and its proximity to the fast-growing

Chinese economy has been a huge plus when coal markets are bullish. But the slowdown is stoking

discussion over how to spur development of other industries such as wool production and tourism in

order to diversify.

Coal can be susceptible to seasonal and other cyclical swings, while copper demand typically

remains steady, said Eric Zurrin, director of Resource Capital.

Source: Michael Kohn

CEMENTING GROWTH

The government's approval of a bond offering over the next two years to help fund major

infrastructure projects should provide a much needed boost to the construction housing and

transport sectors, with affordable housing and road connectivity cited as the top policy concerns.

The government has confirmed the planned issuance of bonds worth USD 5 billion from the

Development Bank of Mongolia to fund ―large-scale‖ projects. It has identified 5,572 kilometers of

roads and 900 kilometers of highway that require restoration under the umbrella of a MNT 4.9

trillion development program.

Additionally, there are plans to overhaul rail links with Russia and China. In total, the government

plans to invest MNT 30.9 trillion in infrastructure, as well as a number of sectors, including mining,

construction and energy, between 2010 and 2015.

As part of its development plans, Ulaanbaatar also wants to build 100,000 affordable family homes

across the country by 2016 as part of the Development Bank-funded Homes for 100,000 Households

program, with 75,000 of these to be built in 17 different locations in and around the city. The

project will require approximately 2.3 million cubic meters of concrete mortar in the coming five

years.

As development plans forge ahead, concerns over the supply of construction materials have eased

with the announcement in September that FLSmidth, a Denmark-based cement and engineering

firm, had been awarded a contract worth approximately USD 111.2 million from Mongolyn Alt Group

(MAK) to build a greenfield cement plant with a capacity of 3,000 tons per day. Domestic firm

Remicom JSC also confirmed earlier this year that it was planning to build an USD 8 million cement

production facility with a 250,000-to 300,000-ton capacity.

Another major issue facing the industry is human resources. In a June 2012 update, the World Bank

reported, ―capacity constraints are likely to prove a significant impediment to the massive road-

building and social housing plans announced by the government, as well as to housing development

planned by the private sector.‖

The labor market is currently dependent on Chinese labor, but officials have complained that this

raises nationalist tensions.

Source: Oxford Business Group, UB Post

MONGOLIA, AUSTRALIA AIM TO PARTNER FOR MINING BOOM

President Ts. Elbegdorj has encouraged Mongolian-Australian cooperation in Mongolia's mining

boom.

Elbegdorj, noting that Mongolian-Australian relations have moved forward in various fields since the

countries established diplomatic ties 40 years ago, said his country's emerging mining sector

represents an opportunity for the countries to improve bilateral ties, Xinhua News Agency reported.

The president's comments were made during a meeting in Mongolia with Australian Foreign Minister

Bob Carr.

Carr, in an interview with Australian Broadcasting Corp. (ABC) from Mongolia, addressed concerns

that Mongolia's rising mining sector poses a challenge to Australia's dominance of the export trade

to China for coal and Iron ore.

―Whatever we do, they're going to have a mining boom anyway,‖ Carr said. ―They've got a very

strong mining sector.‖

Carr said he presented Mongolia with a guide on sustainability in mining, produced as an Australian

aid project and written in Mongolian.

He pointed out that Mongolia's biggest mine—the Oyu Tolgoi copper-gold mine— is owned by Anglo

Australian miner Rio Tinto PLC and that 54 Australian companies are operating in Mongolia.

Source: UPI

ENVIRONMENT PAYS PRICE FOR INFRASTRUCTURE SHORTFALLS

With poor infrastructure in Mongolia's south Gobi mining belt, companies have resorted to building

their own paved roads that lead to the border with China.

The law allows builders to treat roads as their own for 10 years, greenlighting hefty private tolls

that have caused other companies to forgo the new highways, or start building their own alongside.

Energy Resources LLC built the one existing road from its coal mine in Tavan Tolgoi—the world's

largest untapped coking coal deposit—some 245 kilometers to the Chinese border at Gashuun

Sukhait. When it opened in 2011, herders welcomed the promised relief from dust stirred up by the

constant traffic of coal trucks. But many trucks still tread over bare earth and there is no end in

sight for construction alongside the new road, making air worse.

The road was built on a 10-year build-operate-transfer concession agreement with the government,

permitting Energy Resources to charge tolls to third-party users until handing the rights over to the

state in 2021. But drivers working for neighboring mines say the toll of MNT 180,000 per load is

exorbitant, and to avoid them they detour onto dirt tracks.

Running parallel to the Energy Resources road is a yet-unpaved road being built by a subsidiary of a

private Mongolian company called Ajnai Corp. A 2011 report published by USAID raised concerns

about Ajnai's intention to build the road to avoid the Energy Resources toll. One problem, the

report said, is that "local governments have the authority to construct their own roads, so there is

no coordination."

The Oyu Tolgoi copper mine is building yet another road, which will run alongside the Energy

Resources road, at times crisscrossing, to the same border checkpoint at Gashuun Sukhait.

The roads also bisect wildlife corridors between two adjacent national parks, the Small Gobi Special

Protected Areas. The roads are small compensation to herders as well and many who wonder how

the new roads can benefit land already destroyed.

Source: Eurasianet

ASIA BECOMES WORLD'S WEALTHIEST REGION

For the first time, Asia is the wealthiest region in the world, according to a new study by Credit

Suisse Group.

The bank's Global Wealth Report 2012 found that the region surpassed Europe in terms of household

wealth in the 12-month period ending June. While total global household wealth fell 5.2 percent,

Europe took the biggest hit due to its debt crisis and the global economic slowdown, with its wealth

dipping 14 percent to USD 69.3 trillion. Asia's wealth proved more resilient, shrinking only 1.9

percent over the same period to USD 74.1 trillion.

Europe's steep drop allowed the Asia-Pacific region (which includes Asia and Australia) to overtake

it in terms of total wealth, an unprecedented development. What's more, the report projects that

Asians will get rich at a faster pace than any other region in the next few years. Asia's millionaire

population is expected to grow 70 percent over the next five years to 11.7 million, with Japan and

China minting the most new millionaires.

Source: Wall Street Journal

GLOBAL RECESSION RISK RISES

The global economy risks skidding back into recession just three years after pulling out of the

previous one, the International Monetary Fund (IMF) warned.

―Risks for a serious global slowdown are alarmingly high,‖ said the IMF's World Economic Outlook

report. It was its bleakest assessment of global growth prospects since the 2009 recession. The fund

expects the world economy to expand just 3.3 percent this year and 3.6 percent in 2013, as growth

slows in nearly every major nation and political uncertainties threaten recoveries in the United

States and euro zone. That is a revision downward of 0.2 percentage point for 2012 and 0.3 percent

point for 2013 from its July forecast.

Under the IMF's definition, global gross domestic product does not have to shrink for the world to be

in recession. Before the 2009 contraction, the IMF identified three other ―global recessions‖ in the

postwar period, and the shortest gap between them was seven years. They were in 1975, 1982, and

1991. The IMF defines recession as a decline in real per-capita GDP, along with weakness in other

indicators including industrial production, trade, capital flows and joblessness.

The IMF says global efforts to slash deficits and debt (which it had recommended broadly) may have

hurt growth because they occurred too quickly and too widely. Since the 2009 recession, the IMF

said it had underestimated the negative effects on growth by fiscal consolidation.

China, the top consumer of Mongolia's mining exports, is expected to see growth slow to 7.8 percent

this year, rather than hit its customary 10 percent-plus pace. Growth in China is expected, however

to pick up to 8.2 percent next year, helping commodity exporters such as Mongolia.

The uncertainty and weak growth from advanced economies are spilling over into emerging

economies, knocking down trade and the flow of capital into nations that were already struggling

with their own problems.

A key question hanging over the latest run in the recovery: Is it merely a bump in the road,

triggered by policy makers' inaction? Or are the troubles pulling the world toward a new recession?

Source: Wall Street Journal

POLITICS

DP PLOTS OUT 2013 BUDGET

The Democratic Party named increased royalties on Oyu Tolgoi as one of its aims for the 2013

budget.

The party worked within the limitation of a budget deficit of no more than 2 percent of gross

domestic product (GDP) or MNT 360 billion, and set a maximum budget of 7.4 trillion. It took into

account MNT 100 billion for planned salary increases and affirmed the intention to release USD 5

billion worth of bonds through the Development Bank of Mongolia.

The government plans to raise taxes on petroleum next year and boosting the portion of the budget

allotted to Mongolia's provinces from 9 percent to 20.7 percent.

Source: Udriin Sonin

MINING MINISTER SEES NEW POLICY FOR MINING SECTOR

Minister of Mining D. Gankhuyag said new policy for the mining sector will be implemented during

the fall session of Parliament.

―The draft was reviewed and supported at the cabinet meeting last year, and as the new

government's 2012-2016 Action Plan was recently approved by Parliament, our ministry has

withdrawn this document for further revision,‖ said Gankhuyag.

Source: Mongolyn Medee, Boroo Gold LLC

BATSHUGAR APPOINTED AS MONGOL BANK VP

The government made a series of appointments to the courts and government agencies, which

includes the confirmed appointment of E. Batshugar, 25 year old son of former President N.

Enkhbayar, as vice president of the Bank of Mongolia. Enkhbayar is currently serving a four-year

sentence in prison for corruption.

Currently up for judge appointment are Kh. Soninbayar and Kh. Batsuren, who have each worked

between 20 to 25 years in the legal sector. While discussing whether or not their appointments

should be confirmed, MPs noted that the judicial sector is in need of reform to ensure that judges

remain impartial.

Ch. Sodnomsteren, former secretary general of the General Election Committee (GEC), was

appointed as the agency's head. B. Altanjargal was appointed as secretary general and D.

Delgertsogt as an agency official.

Batshugar's confirmation came last with 84.5 percent approval. The GEC had rejected Batshugar's

campaign application for the parliamentary elections last June.

Source: Zuuni Medee

TEMPORARY HEAD OF UB RAILWAY JSC APPOINTED

The government has appointed T. Sereenendorj as temporary head of state-owned UB Railway.

In addition, Minister of Roads and Transportation A. Gansukh proposed that the Railroad Institute be

renamed the Transportation Institute to reflect the aim to prepare professionals in air, auto, and

marine traffic as well as rail.

Source: Zuuni Medee

GOVERNMENT OFFICIALS REFUSE TO REPORT INCOMES

Ninety-six officials have refused to submit the income statements required by law.

Over 45,000 public officials throughout the nation have been asked to submit income statements to

the Anti Corruption Authority (ACA). Eighty of the 96 public officials who refused to disclose their

income are local representatives of Khuralaimag Soum, six are state administrators, another six are

from government-owned entities, two are project coordinators, and one is an official appointed by

the prime minister.

The Anti-Corruption Authority has ordered that officials who fail to submit their income statement

should be charged with a violation of the law.

Source: News.mn

PARTIES AND CANDIDATES PREPARE AS LOCAL ELECTIONS NEAR

Preparations are underway as Mongolia prepares for its nationwide local elections this month, said

newly appointed Chairman of the General Election Committee N. Luvsanjav.

The chairman said thus far 1,988 election units have been established for the local election

compared with 1,905 for parliamentary election, due to an amendment to the local elections law.

Currently, two coalition and five political parties have submitted applications to the General

Election Committee to participate in the election. The Justice Coalition, the political pact between

the Mongolian People's Revolutionary Party (MPRP) and Mongolian National Democratic Party

(MNDP), has split for the local election, and the two parties will campaign separately.

Campaigning will begin two weeks before the election day or once a candidate has received his or

her election card. Some candidates are still being considered by the Election Committee to decide

whether they should be permitted to run for election.

Additionally, the government is prepared to hold run-off votes on the same day as the initial

election.

Source: News.mn

U.N. DELEGATION TO OBSERVE HUMAN RIGHTS IN BUSINESS ACTIVITIES

A group of independent experts on business and human rights from the United Nations will

undertake its first country mission to Mongolia from 8 to 18 October to assess the impacts of

business activities on human rights in the country.

―Mongolia has one of the fastest growing economies in the world, and is expected to continue

growing at this very fast pace in the coming decade,‖ noted Margaret Jungk, a member of the U.N.

Working Group on the issue of human rights in business enterprises who will visit the country. ―The

tremendous amount of business activity lying behind this dramatic economic growth may have

equally dramatic impacts on the human rights of the population living there. These impacts can be

both positive and negative,‖ she said.

The U.N. Human Rights Council unanimously endorsed new guiding principles on business and human

rights in 2011, which established for the first time an authoritative global standard to address

negative impacts on human rights of business activities. This is the first time that a mission by U.N.

Experts will be conducted around the guiding principles.

Jungk and Sulyandziga, who visit the country at the invitation of the government, will travel to

Ulaanbaatar and Umnugobi Aimag to visit mining sites and to meet with senior government officials,

MPs, the National Human Rights Commission, and relevant stakeholders.

Source: OHCHR

NORWEGIAN PREMIER ARRIVES IN ULAANBAATAR

President Ts. Elbegdorj met with Jens Stoltenberg, Prime Minister of Norway, during his official visit

to Norway.

The president opened the meeting with a brief introduction of Mongolia's economy and its social

and political conditions. He asked Norway's premier how Norway was able to successfully develop a

pension fund using revenue from its natural resources while involving its state-owned companies.

He also expressed interest in learning from Norway's experiences developing a water power station

as a renewable energy source.

In response, Stoltenberg said, ―Most resource-rich countries cooperate with foreign companies, but

all of our largest companies are state-owned. Many of these companies face problems, such as

political influence and corruption. Despite this, we could potentially develop our country by

providing high accountability and transparency.‖

The state officials told journalists they were able to share ideas on developing bilateral cooperation

between their respective countries, in addition to issues of human rights. Elbegdorj noted that

Norway has never resorted to distributing cash allowances, as Mongolia has.

Source: News.mn

BOOM OR BUST: THE FOREIGN INVESTMENT LAW

Mongolia has seen its economy grow at a blistering rate. However, a new foreign investment law

and continuing political uncertainty could potentially derail foreign investment in the industry.

The most momentous development by far, however, has been the recently implemented Foreign

Investment Law that came into effect in June this year. Hastily pushed through Parliament, specific

regulations have yet to be issued, yet the general tenor of the law specifically targets foreign

investors‘ control over the mining industry. Key features of the law include capping foreign

investment into strategic sectors of the economy, unless a deal receives approval from government.

Potential investors are required to notify the government beforehand for any transactions under

which they would acquire between 5 percent and a third of the shares in a strategic company.

Further, if the foreign investor intends to hold more than 49 percent of the shares, and the amount

invested exceeds USD 75 million, then approval from Parliament must be given based on a

submission from the Cabinet ministers.

Worryingly, at the moment the law does not specify the processes for how the request for approval

should be submitted, what information should be contained in that submission and in what way, and

how quickly Parliament will respond. The law has created a chilling effect on new investment

because people are not exactly sure how it is going to be implemented. The law is vaguely drafted,

but one of the effects is to specifically target state-owned enterprises that aim to gain control of

key strategic sectors, said Chris Melville, partner at Hogan Lovells.

Besides the new investment law, practitioners highlight a few other obstacles when it comes to

doing business in Mongolia. Firstly, corruption: There are concerns that it may lead to additional

corruption which is a serious problem in terms of people trying to get projects through the system

there.

Overall, lawyers highlight that the process on the ground in terms of doing business is relatively

complex, but par for the course for what you would find in other developing countries.

Source: Asia Legal Business

THE IMPACT FROM PARLIAMENT'S REVISION OF ENVIRONMENTAL LAWS

The adoption of a new set of environmental laws will have consequences for companies operating

within Mongolia's mining sector. The new environmental legislation replaces 18 environmental laws

with 8 laws and introduces two entirely new laws.

The Law on Environmental Protection introduces the ―polluter pays‖ principle, which makes

polluters liable to pay compensation for damage caused to the environment and natural resources.

Natural resources are all given intrinsic values that translate into fines for offenders. Amendments

to the Law on Environmental Impact Assessment (―EIA Law‖) mandate that anyone proposing a

project will have to report on an environmental management plan and submit it to the Ministry of

Environment. Additionally banks and financial institutions will be barred from providing any funding

to those who fail to meet their obligations, and project developers will have to meet with local

communities.

The Law on Water Use has also been revised and consolidated so that a new Law on Water stands

along with the introduction of a Law on Fees for Use of Water and Mineral Water, which

consolidates past laws. The Law on Water Pollution fees is new and introduces fees payable for

pollution to water resources.

The Mongolian government is clearly making an attempt to ramp up environmental protection in

Mongolia, and this round of revisions does reduce legislative duplication, indicating the direction

government plans to take in this area. However, much of the drafting is vague or undeveloped. As is

common, a ―wait and see‖ approach will need to be adopted by operations in terms of

implementation.

Source: Hogan Lovells

MINISTER OF JUSTICE RECEIVES THREATS

Minister of Justice and MP Kh. Temuujin received a threatening letter this week.

The letter came anonymously and warned Temuujin that his security ―could not protect you.‖

―We are the many, you are poor and have no friends,‖ says the letter. ―Food poisoning or an

accident will be next to you and we will be next to you to watch,‖

The next day Temuujin announced legal reforms for the 2013-2014 period, as well as a hospital for

civil workers.

Source: News.mn

CAPITALISTS BID FAREWELL TO LENIN STATUE

The bronze statue of Bolshevik revolutionary Vladimir Lenin, at the heart of Ulaanbaatar and once a

prized symbol of relations with the Soviet Union, is to be removed.

The decision to part with the four-meter relic of Soviet propaganda was made by the mayor of

Ulaanbaatar, E. Bat-Uul, known as one of the ―original 13 Democrats‖ who helped overthrow

communism in a 1990 bloodless revolution.

―I think the Communists are big criminals not only to the outside world, but in front of their own

people. So I believe we should take down this Lenin statue because it represents repression,‖ Bat-

Uul, a founding member of the Democratic Party, said.

Bidding for the statue, erected 58 years ago, will start at MNT 400,000 and Bat-Uul said two

companies had already expressed interest, including a tourist ger camp outside Ulaanbaatar which

already owns a statue of Soviet dictator Josef Stalin.

Thousands of Lenin statues were erected across the former Soviet bloc after his death in 1924, but

most were torn down, melted for scrap, or re-purposed as retro-Soviet decor in cafes and nightclubs

following the collapse of the Soviet Union in 1991. The Lenin statue in Ulaanbaatar managed to

survive, largely because many older Mongolians still revere the Russian leader for supporting

Mongolia in its fight for independence in 1921.

―If Russia did not exist and Lenin did not help us, then Mongolia would not exist either,‖ said 55-

year old D. Erdenbileg, a driver. ―The Russians saved us in 1921 and then again during World War II

when the Japanese invaded our country. We owe them a lot.‖

Bat-Uul said he hoped a new monument would eventually replace Lenin, and some have already

proposed a memorial dedicated to five people murdered in political violence in 2008. Bat-Uul

prefers a statue of former Prime Minister Amar, executed in 1941 in the Russian city of Omsk.

―He defied the Communists until the end and it cost him his life.‖

Source: Michael Kohn

CANADA, TOO, FEARS ACQUISITION FROM CHINESE STATE OWNED ENTERPRISE

Canada admitted on Thursday that a Chinese bid for domestic oil company Nexen raises difficult

policy questions, but the government gave no sign it would bow to an opposition demand to veto

the deal. Mongolia is having similar reservations for investment into resources of strategic

importance, which has resulted in widespread nationalist sentiment and a hastily passed Foreign

Investment Law.

Speaking hours after the main opposition party demanded a veto on CNOOC Ltd.'s USD 15.1 billion

bid, Prime Minister Stephen Harper said the government would look at a range of issues as it

determines whether the transaction, the largest foreign takeover ever launched by a Chinese firm,

is of net benefit to Canada. The deal has also raised rare public signs of unrest among Conservative

legislators, some of whom fret about the idea of a Chinese State-owned enterprise buying Canadian

energy assets.

―This particular transaction raises a range of difficult policy questions, difficult and forward-looking

issues. Those things will all be taken into account,‖ Harper told reporters in Ottawa, when asked

about the bid.

Fund managers and market analysts say they expect Ottawa will ultimately approve the deal, but

not before reaching a series of conditions. These could include seeking guarantees on employment

and investment, requiring that CNOOC promise to follow Canadian laws and practices, and

demanding that a certain number of Canadians be appointed to the board of directors.

The government is trying to balance concerns over the CNOOC bid with the energy patch's huge

need for human investment, much like the Mongolian government attempted to do when Aluminum

Corp. of China Ltd. (Chalco) made a bid for majority control of SouthGobi Resources Ltd—ultimately

Chalco rescinded its offer.

Nexen shareholders have already voted overwhelmingly to accept the bid and the Alberta

government is in favor. Harper says Ottawa will take public opinion into account before making a

decision. Polls have shown most Canadians oppose China buying Nexen.

Source: Reuters

ANNOUNCEMENTS

15TH ANNUAL NAMBC INVESTORS CONFERENCE, 16-18 OCTOBER

The 15th Annual North America-Mongolia Business Council‘s Investors Conference will be held in

Ulaanbaatar from 16 to 18 October. The usual late registration fee has been waived for members of

BCM and NAMBC.

The conference opens with a reception at the Zanabazar Museum on Tuesday, 16 October, followed

by two full days of speakers and panels on 17 October and 18 at the Kempinski Khan Palace Hotel.

Full simultaneous interpretation in Mongolian and English is available for all sessions.

Send registration forms to NAMBC directly, not BCM. Find the registration form here.

___________________________________________

MONGOLIA INVESTMENT SUMMIT 2012, HONG KONG, 30-31 OCTOBER

The Mongolia Investment Summit 2012 will be held from 29 to 30 October at the Four Seasons Hotel

in Hong Kong to once again bring the best of Mongolia's investment opportunities to Asia's leading

investment hub.

Now in its third year, the summit has strongly cemented its position as the largest Mongolian

investment event outside of Ulaanbaatar, providing foreign investors with the most comprehensive

overview of Mongolia's key economic growth sectors all under one roof.

Speakers to the event include Altai Khangai, Chief Executive Officer of the Mongolian Stock

Exchange (MSE), Cameron McRae, President and Chief Executive Officer of Oyu Tolgoi LLC, and

James Passin, Co-founder and Manager of Firebird Mongolia Fund.

BCM is again a Supporting Association for the event. For more information, find a brochure to the

event by logging on to the website: mongoliainvestmentsummit.com.

___________________________________________

MONGOLIA INVESTMENT CONGRESS 2012 IN SHANGHAI, 10 DECEMBER

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

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

Association, and INBC Global.

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

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

development opportunities at every turn.

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

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

___________________________________________

CLEAN COAL ASIA SUMMIT 2012 IN SHANGHAI, 11-12 DECEMBER

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

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

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

gasification and liquefaction.

___________________________________________

REGISTER NOW FOR MONGOLIAN MINING DIRECTORY - 2013

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

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

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

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

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

investors.

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

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

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

+976-7011 5590.

___________________________________________

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

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

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

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

content and use of information technology opportunities.

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

Database. Please visit here for registration.

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

or 317027.

___________________________________________

“MM TODAY” on MNB-TV, Friday‟s at 19:00

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

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

scheduled for 19:00 tonight. Tune in to watch this program that reports stories from today‘s BCM

NewsWire.

BCM WEBSITES

MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS

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

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

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

Ulaanbaatar.

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

government website Open-Government.mn are regularly updated.

___________________________________________

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

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

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

2012. The ―Mongolia Reports‖ section includes Taxes for Expatriates in Mongolia from

PricewaterhouseCoopers and the 2012 Mongolia Investment Climate Statement by the Economic and

Commercial Section of the U.S. Embassy.

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

Parliament and Government is available for download.

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

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

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

a consolidated account of the week‘s events.

___________________________________________

SOCIAL NETWORK WITH BCM

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

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

improving each day with BCM.

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

business environment in Mongolia today.

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

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

the NewsWire with the community.

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

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

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

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

BCM WORKING GROUP MEETINGS:

The BCM Tax Working Group met Wednesday, October 10, with 15 members attending. Co-chairs

Arthur Cookson, OT, and Onch, Deloitte Onch, moderated the session.

New members Pierre Montpeyroux, /Petrovis LLC/, Aaron Schneider /Monrusconsulting LLC/, John

Henriksen /Petro Matad/, Oyunbayar Tserendorj, /International SOS LLC/ were welcomed.

Speakers and topics were:

Gurdeep Singh, /PWC/ - Withholding Tax;

Onchinsuren D, /Deloitte Onch/ - Review of tax impacts of draft Laws.

Next meeting: Leymlim Mizamkhan/Tax consultant of PWC/ - ―Permanent Establishment‖.

___________________________________________

The BCM Risk Management Working Group met Thursday, October 11, with 12 members attending.

Co-chairs Ganzorig U, UMC, and John Henriksen, Petro Matad, moderated the session.

New members Steven Forster /Wagner Asia Equipment/, Colin Brown /Deloitte Onch/, Tumentsogt

Ts /General Electric/ were welcomed.

Meeting discussion was on the following topics:

- Risk Survey results;

- PRMIA local chapter;

- Risk Forum III in Feb 2013.

Next meeting - Wednesday, October 24, American University of Mongolia

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]

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

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

Note: 13.4% y-o-y, Ulaanbaatar city, September 30, 2012

CENTRAL BANK POLICY LOAN RATE

December 31, 2008 9.75% [source: IMF]

March 11, 2009 14.00% [source: IMF]

May 12, 2009 12.75% [source: IMF]

June 12, 2009 11.50% [source: IMF]

September 30, 2009 10.00% [source: IMF]

May 12, 2010 11.00% [source: IMF]

April 28, 2011 11.50% [source: IMF]

August 25, 2011 11.75% [source: IMF]

October 25, 2011 12.25% [source: IMF]

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

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

CURRENCY RATES – OCTOBER 11, 2012

Currency Name Currency Rate

US dollar USD 1,379.05

Euro EUR 1,774.42

Japanese yen JPY 17.61

British pound GBP 2,208.62

Hong Kong dollar HKD 177.95

Chinese Yuan CNY 219.62

Russian Ruble RUB 44.28

South Korean won KRW 1.24

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.