BUSINESS COUNCIL of MONGOLIA NewsWire

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Issue 144, November 12 2010

NEWS HIGHLIGHTS:

Business: NEA rejects Khan Resources’ claim on appeal court’s ruling;

Hunnu Coal chairman launches iron ore venture in Mongolia;

Mining at Boroo to end this month, with 250 laid off;

Work on Oyu Tolgoi ahead of schedule, reports Ivanhoe;

Petro Matad to drill up to two more wells on Block XX;

Manas Petroleum completes seismic acquisition on Block 14;

Meritus gets good results from ongoing drill program;

Centerra Gold earnings down as output falls;

Khushuut is where MEC begins its way to global recognition; MP lauds policies and progress of Energy Resources;

State Secretary latest to be detained in Zoos Bank probe;

XacBank offers apartment loan to Trade Union members;

GE taps veteran Rice to lead global operations.

Economy: Mongolia drops 11 places in “Doing Business 2011”;

Mongolia receives USD12.5 million from global food fund;

Mongolia to lease land in Laos to grow rice;

Central Bank refuses to buy USD5.5 million at currency auction;

Central Bank expects gold reserves to go up;

Government asked to revise draft budget;

MPs fight for bonus to herders;

170,000 herders owe banks MNT64.1 billion;

MP against speculating on what Tavan Tolgoi shares might be worth;

Former mining minister certain TT has more coal than feasibility study says;

Proposal to raise import duty on cars;

Mongolia: Gearing up for the boom years;

Global copper output rise still far behind demand;

China to use 20% of global energy by 2035;

Emerging markets win more voting power in IMF;

Watch out for emerging-market inflation;

Asia puts up tepid fight against inflation;

Asia braces for flood of foreign cash;

World Bank chief seeks gold standard debate;

China consumer price index jumps;

China to accelerate domestic mining exploration;

Peru reports 40% increase in value of minerals exports.

Politics: Mongolia climbs 14 places in Human Development Index report;

MPRP not “Revolutionary” any longer;

Case against anti-corruption boss goes to prosecutors;

MPRP stalls approval of President’s choice of Deputy Prosecutor-General;

Mongolia's spy chief, arrested at Heathrow, was on way to official meeting;

People urged to register themselves even after due date is over;

Wind farm project could help turn Ulaanbaatar green;

1,892 state officials get loans for apartments;

Stand up and be counted, Mongolians told;

TV channels object to state media accepting advertisements;

Foot and mouth deaths cause food shortage and price rise;

MPs turned away from donating blood.

*Click on titles above to link to articles.

BUSINESS

NEA REJECTS KHAN RESOURCES’CLAIM ON APPEAL COURT’S RULING Contradicting the claim of Khan Resources in late October that a Mongolian Appeal Court has ruled in favor of it, and upheld an administrative court decision against the cancellation of its licenses by the Nuclear Energy Agency (NEA) of Mongolia, the NEA lawyer, Mr. Sugarsuren told a press conference last week that the ruling on October 13 had in fact justified the invalidation of the mining license held by Khan‘s subsidiary, Central Asian Uranium Co LLC.

Source: The UB Post

HUNNU COAL CHAIRMAN LAUNCHES IRON ORE VENTURE IN MONGOLIA Hunnu Coal chairman Matthew Wood is seeking to capitalize on his company‘s success in Mongolia this year, launching another company focused on the minerals-rich nation this week. Hunnu has been one of the big success stories in the minerals sector this year after closing a AUD20-million initial public offering (IPO) in early February. The company has delivered a more than five-fold return to its initial investors and, unlike the majority of this year‘s resource floats, has never traded below its launch price. Mr. Wood‘s latest venture, Haranga Resources, is seeking to repeat the Mongolian success of Hunnu - this time focused on iron ore. The company filed documents launching a AUD25-million IPO with the Australian Securities and Investments Commission earlier this week, seeking to issue 125 million shares at 20c each. The Haranga prospectus says the company has signed deals to acquire a controlling interest in five iron ore projects in Mongolia. While the company doesn‘t yet have a clearly defined resource at any of the projects, Mr. Wood said in the Haranga prospectus he believes the ―favorable geology, political stability, improving infrastructure and a fast developing mining sector makes Mongolia an outstanding destination for investment‖. Haranga plans to spend AUD10.6 million exploring for iron ore on its tenements in the first two years of operations, if the IPO is fully subscribed. The offer opens on November 17, and will close on December 6. If the offer is fully subscribed Haranga will have a market capitalisation of around AUD37.4 million when it lists on the Australian Securities Exchange. Read more… Mongolia is rapidly emerging as one of the go-to destinations for resource companies looking for high-value projects. According to a recent report by resource intelligence company Intierra, there are more than 300 mining and exploration projects on the go in Mongolia, including the massive Oyu Tolgoi copper-gold project owned by Ivanhoe. There has been only limited exploration for iron ore, however. Haranga says there are three significant locally owned iron ore mines in Mongolia, all exporting directly to China, along with a handful of smaller operations. In 2009 the China Investment Corporation invested USD500 million to acquire a minority stake in the largest of these, the Eruu Gol mine, which is located in the same region as Haranga‘s newly acquired assets.

Source: PerthNow

MINING AT BOROO TO END THIS MONTH, WITH 250 LAID OFF Centerra Gold cannot say how long it might be before the company gets permission to start

commissioning its Gatsuurt project in Mongolia, spokesperson John Pearson said last week. It will cut about 250 jobs when mining at its Boroo operation ends later this month, as the plan had been for those workers to be redeployed at the now-delayed Gatsuurt, about 50 km away. The company is waiting to hear how the project will be affected by a new water and forests law, which has been approved in Mongolia, but has yet to be implemented. The final permission for Gatsuurt will not be approved until the uncertainty under the new law is dealt with. "It is very hard to predict" how long that might take, Mr. Pearson said. The company plans to keep capital spending on the Gatsuurt project "minimal" until the approvals are received, CEO Steve Lang said earlier. However, once the green light is received, production from Gatsuurt should start up reasonably quickly, he said. "It's really a very short timeline. I think we would immediately look to rehire the employees, I suspect we could be mining within a week," Mr. Lang said. Even including the accumulation of some stockpile material at both the mine and plant, production from Gatsuurt ore could begin "in just a few weeks", he said. In the meantime, Centerra will continue to process stockpiled ore at Boroo after mining ends at the end of this month."I believe we have enough stockpiled ore at Boroo to take us through at least mid-next year," Mr. Lang said. Other options include the processing of refractory and low-grade ore which has been stockpiled. In a statement, Boroo Gold LLC President and Executive Director, Mr. John Kazakoff, has said that the decision to end mining ―was a difficult one to take but we had no real choice‖. The company ―understands the difficulties to be faced by the retrenched employees and their families, as also by contractor and supplier companies, and by citizens benefiting from our local development projects‖. Source: www.miningweekly.com, News.mn

WORK ON OYU TOLGOI AHEAD OF SCHEDULE, REPORTS IVANHOE Ivanhoe Mines has reported a narrower third-quarter loss and said full-scale construction at the Oyu Tolgoi copper and gold mine is progressing ahead of schedule. For the quarter, the company posted a loss of USD24.9 million versus a net loss of USD69.8 million a year ago. The Vancouver-based company reported quarterly revenue of USD6.6 million, mainly from its Ovoot Tolgoi coal mine in southern Mongolia. It expects to begin initial production of copper and gold at Oyu Tolgoi in late 2012. The company said discussions with a group of international financial institutions on a separate debt financing package are progressing and are expected to close in the first half of 2011.

Source: Reuters

PETRO MATAD TO DRILL UP TO TWO MORE WELLS ON BLOCK XX Petro Matad has signed an initial contract with DQE International (DQE) to drill up to two exploration wells on the company's Block XX. DQE is the drilling and oilfield services subsidiary of CNPC Daqing Petroleum, and has extensive experience of drilling in the Tamsag basin, of which Block XX is a part. The drilling rig to be used is currently in the locality and is being mobilized to Block XX, with spudding of the first well to occur as soon as is possible. The DQE rig is partially winterized and, under normal Mongolian weather conditions, is expected to allow drilling to continue until mid-December. The first well to be drilled is Davsan Tolgoi 4 (DT-4). This will test a four-way fold closure that is part of a fault block prospect named Davsan Tolgoi West. The Davsan Tolgoi West prospect is separate from the Greater Davsan Tolgoi prospect, where DT-1, DT-2, and DT-3 (the "Three Well Program") were drilled by Petro Matad earlier this year. By drilling DT-4, the company will evaluate a second prospect within the current inventory of 14 leads and prospects in Block XX. DT-4 is scheduled to be completed before mid-December, but mid-winter conditions in Mongolia are unpredictable and can be severe. Accordingly, the company is reluctant to forecast the possibility of commencing what would be a fifth well, DT-5, in calendar year 2010 although the contract with DQE extends to drill a further well using the same rig.

Source: Petro Matad

MANAS PETROLEUM COMPLETES SEISMIC ACQUISITION ON BLOCK 14 Manas Petroleum Corporation has announced that the seismic acquisition on Block 14 has been completed without incident. The Chinese contractor DQE International Tamsag (Mongol) LLC acquired 162.4 km of 2D seismic, representing 54.1% of the total seismic program on blocks 13 & 14. All equipment and crew have been moved to Block 13, where seismic acquisition has

commenced. Manas anticipates that the seismic survey will be completed by the end of November 2010. Manas will then decide whether it is ready to drill one or more exploration wells or that it needs to acquire 3D seismic to define the drill prospects in better detail. Depending on this decision, Manas hopes to spud the first well in 2011.

Source: Manas Petroleum

MERITUS GETS GOOD RESULTS FROM ONGOING DRILL PROGRAM Meritus Minerals Ltd. has received additional analytical results from its diamond drilling program, at an early stage at the moment, on the Toordogiin Shil Prospect, Gutain Davaa Project in northern Mongolia. Two of the holes reported have substantial intersections of strong gold mineralization. Both holes contain very high grade zones within the broader mineralized zones.

Source: Meritus Minerals

CENTERRA GOLD EARNINGS DOWN AS OUTPUT FALLS Centerra Gold reported net income of USD17.7 million for the third quarter, down from USD20.2 million a year ago, after gold production declined year-on-year. The net earnings figure also included a USD34.9 million gain on the sale of an asset. Revenue declined to USD115.5 million, compared with USD158.8 million in the third quarter of 2009. Centerra, which produces gold from the Kumtor mine in Kyrgyzstan and the Boroo operation in Mongolia, said that gold production of 96,308 oz was in line with guidance, and the firm has maintained its annual production forecast of 640,000 oz to 700,000 oz in 2010. Source: www.miningweekly.com

KHUSHUUT IS WHERE MEC BEGINS ITS WAY TO GLOBAL RECOGNITION Mongolia Energy Corporation Limited (MEC) is an energy and resources developer that has global brand recognition aspirations. With current operations and investments over Mongolia and Xinjiang in North-western China, Mongolia Energy looks to acquire, explore and develop additional energy and mineral resources with related projects. The first project on MEC‘s path to become a global energy leader is its current and primary project, the Khushuut coking coal mine, a 600-hectare site on MEC‘s 330,000 hectares of concession areas in Western Mongolia. ―A deal was cut; the assets were worthwhile and the acquisition was completed,‖ says Mr. James J. Schaeffer, CEO. ―I was brought on to take this company from the various businesses that it had in the past—and make the transition to an energy company.‖ After the initial 34,000 hectares acquisition, MEC completed a second transaction for an additional 32,000 hectares and a third transaction for 263,000 hectares, all totalling 330,000 hectares in Western Mongolia of various coal and mineral licenses. Finally, MEC completed a fourth transaction, acquiring 3,000 hectares of an iron ore deposit. ―Those properties are all run by our Mongolia subsidiary, known as MoEnCo LLC,‖ says Mr. Schaeffer. ―The headquarters for those operations are in Ulaanbaatar. In addition to that, we took a 20 per cent interest in a Mongolian oil and gas company, MoOiCo. We are a passive investor in that, which is moving along slowly. Our main emphasis is on the Khushuut mine and other licenses.‖ Read more... Mining the resources is not enough in Mongolia, a region where a strong infrastructure network is absent. As such MEC must invest in periphery projects as well. The company has constructed a 340-km, two-lane paved highway to transport the coal to the Chinese border. Upon completion, the road will be a USD200-million asset on MEC books. Other planned infrastructure projects include a wash plant, which is being designed by Taggart Global LLC. MEC is working on the preliminary design of an initial 12-mw power generation facility assisted by Shenyang Design Institute. These projects will benefit the community as will additional schoolhouses, scholarships and 400 local jobs. ―We will basically be managing a series of contract operators. Even if the projects go to joint venture partnerships, it is our objective to retain control,‖ says Mr. Schaeffer. ―The ability to organize a project and move on to the next one is our competitive strength.‖

Source: Business Review Australia

MP LAUDS POLICIES AND PROGRESS OF ENERGY RESOURCES Mr. Kh. Badamsuren, leader of the working group charged with ensuring that work in the minerals sector proceeds in compliance with government policy and follows the terms of investment agreements, feels that joint venture companies will have to ensure that they employ more Mongolian people and that ―the wage differences between our people and foreign specialists‖ are not exorbitantly high. Both will be facilitated by quicker progress in training the local workforce to

perform specialized duties. The Energy Resources Company is giving the lead in this, showing that with proper planning and policies, and good corporate governance, national companies can work at global levels. Most of the coal will be mined in Umnugovi province. Some processing units will also come up there. With its three pillars of livestock herding, mining, and tourism, the province is certain to become a development model, the MP was sure.

Source: Onoodor

STATE SECRETARY LATEST TO BE DETAINED IN ZOOS BANK PROBE Big names continue to be detained for interrogation as The State Investigation Board carries on with its probe into the affairs of the erstwhile Zoos Bank. The latest to be lodged in the Gantskhudag prison was the State-Secretary of the Ministry of Finance, Mr. Kh.Purevsuren. This was on November 3. Two others taken there earlier were the former Director of the bank, Ms. Sh.Chudanj, and the Chief of the Representative Managing Council, Mr. D.Bat-Erdene. They continue to be suspects, but Ms. Chudanj was released after two weeks on health grounds. The charges against both her and Mr. Bat-Erdene relate to violating the law on bank deposits for personal gain and also for causing loss to others. The charge against Mr. Purevsuren has not been announced.

Source: Ardiin Erkh, XacBank OFFERS APARTMENT LOAN TO TRADE UNION MEMBERS The Mongolian Confederation of Trade Unions (MCTU) has signed a Memorandum of Understanding with XacBank to help provide low- and middle-income citizens with concessional bank credit to buy apartments. Beginning with apartments under construction in Baganuur district, the loan program is envisaged to be gradually extended to all MCTU members nationwide. XacBank feels even people with not much income can own apartments with proper financial planning, and is willing to offer help in this.

Source: Onoodor

GE TAPS VETERAN RICE TO LEAD GLOBAL OPERATIONS General Electric Co. is reassigning a top executive to a new job aimed at spurring overseas sales, which the company is counting on heavily to drive its growth. Vice Chairman John G. Rice will be responsible for all non-U.S. markets, with particular emphasis on high-growth areas such as China, India, the Middle East and Brazil. GE wants its international operations to account for 60% of its sales and is near that mark, but the conglomerate has fallen short of ambitious targets set for its operations in China and India. Mr. Rice visited Mongolia and met with top Government officials in late October in connection with GE's Memorandum of Understanding with the Newcom Group. Currently based in Atlanta, he will relocate to Hong Kong and start his new job January 1. The switch "moves GE from U.S.-centered decision-making to a faster, decentralized model", spokeswoman Anne Eisele said.

Source: The Wall Street Journal Asia

ECONOMY MONGOLIA DROPS 11 PLACES IN “DOING BUSINESS 2011” Mongolia has fallen 11 places in the ranking in the World Bank Group‘s ―Doing Business 2011: Making a Difference for Entrepreneurs‖, released on November 4. The annual report tracks the state of business regulation in 183 economies and puts Mongolia at 73rd, down from the 62nd spot it held last year. The drop comes in the year being observed as ―The year to reform the business environment‖ in the country. The report allots scores on nine aspects of doing business in a country. These and Mongolia‘s score are given below: Starting a business - 86; Dealing with construction permits -104; Registering property – 27; Getting credit -72; Protecting investors - 28; Paying taxes – 66; Trading across borders - 158;

Enforcing contracts - 35; and Closing a business - 119.

Source: English.News.mn

MONGOLIA RECEIVES USD12.5 MILLION FROM GLOBAL FOOD FUND The World Bank Group has welcomed a decision to allocate Mongolia, Ethiopia, and Niger a total of USD97 million in grants from a multi-donor trust fund set up to help the world‘s poor developing countries to help themselves boost agricultural productivity and tackle hunger on a sustained basis. The grants were awarded by an independent panel set up under the Global Agriculture and Food Security Program (GAFSP). The World Bank is trustee of the fund, created at the request of a previous G20 leaders‘ summit. World Bank Managing Director Ngozi Okonjo-Iweala said, ―We still face significant challenges in ensuring the world‘s poorest people are fed. To achieve food security in the long run, we must help poor countries to invest more and better in their futures. Since mid-June, global grain prices have been rising. The risks of food price spikes in poor countries cannot be underestimated. We look forward to working with donors to fulfill promises to boost country-led agriculture in developing countries.‖ The World Bank will help Mongolia to implement a USD12.5-million project to assist the country‘s livestock sector. It seeks to improve the quality of livestock and support producer groups and cooperatives and boost access to regional and domestic markets for livestock commodities. To date, a total of USD923 million has been pledged to GAFSP by the United States, Canada, Spain, South Korea, Australia, the Bill & Melinda Gates Foundation and Ireland, with funds then going to countries demonstrating, strategic, innovative and credible plans already in place to boost agricultural productivity and improve food security.

Source: The FINANCIAL

MONGOLIA TO LEASE LAND IN LAOS TO GROW RICE Mongolia will lease 10,000 hectares of land in Laos to grow rice, according to a decision taken at the last meeting of the Mongolia-Laos intergovernmental commission in Vientiane. This will help Mongolia meet its domestic demand and reduce imports.

Source: Montsame

CENTRAL BANK REFUSES TO BUY USD5.5 MILLION AT CURRENCY AUCTION The Central Bank refused to buy USD5.5 million offered for sale by commercial banks at the weekly currency auction sale last week. It explained its action by saying that it intervenes in the auctions strictly to ensure stability in the foreign currency market and there was no such need in the present case as it did not foresee any drastic fluctuation in the currency rates.

Source: Onoodor

CENTRAL BANK EXPECTS GOLD RESERVES TO GO UP Senior Central Bank officials have said that a part of its foreign currency reserve is always in the form of gold. A decision to buy more gold, or to dispose of the stock, is taken on the basis of the movement in the global price of gold, but the bank takes long-term projections. Increased export earnings from other mineral resources have also contributed to the foreign currency reserve. Less gold accrues to the Central Bank as long as the 68% windfall profit tax is in force, but this is expected to change as the tax is repealed from January 1 next, and gold reserves are likely to increase.

Source: Undesnii Shuudan

GOVERNMENT ASKED TO REVISE DRAFT BUDGET The meeting of the Parliament Speaker‘s Council decided on November 5 to return to the Government for clarification and amendments the draft combined budget for 2011 it had submitted to Parliament. The DP group in Parliament followed suit on Monday. The group‘s leader, Mr. Ch.Saikhanbileg, told media they were aware of the need to get the budget passed by December 1, and felt this should be possible if the Minister of Finance finishes the revision early, and submits the new draft to a special meeting of the Government, after which it can be forwarded to Parliament for discussion. ―We MPs will have to work hard to pass the budget in time, but it can be done,‖ he said. Asked why they were returning the draft, Mr. Saikhanbileg said the sources of the estimated revenue should be clearly identified. The first draft includes income from some Tavan Tolgoi

contracts that have not yet been signed. Projected income from such sources has no place in the budget. There is also no indication of where the money will come from for the large constructions planned for the beginning of next year. ―We cannot estimate the budget deficit without such information,‖ he said. The DP group also felt too much was being made of the compulsion to keep the budget deficit within predetermined limits. ―There are international precedents where budget deficits were allowed to be 30%-40% of GDP at the start of a rapid development program and this was brought down after 10 years or so,‖ h3 said. ―We cannot do anything big if we always have to keep the budget deficit at 5%. The Government and Parliament will have to decide if they wish to develop slowly and keep the budget deficit low or if they plan to begin the work with urgency. We want rapid development even if that means a higher budget deficit, but within manageable limits.‖

Source: Ardiin Erkh

MPs FIGHT FOR BONUS TO HERDERS The Standing Committee on Nature, Environment, Food and Agriculture has expressed disappointment that the Finance Ministry did not include the proposed provision to pay herders MNT200 as bonus for every liter of milk and MNT500 for a kilo of meat. Rejecting the explanations offered by the State Secretary of the Finance Ministry, they pointed out that agriculture production had increased after promise of incentives to farmers, and similar measures are needed if the Government‘s plans to make 2011 a year to develop farming and herders are to succeed. Herders are 30% of the population and do not stand to directly benefit from the expansion in the mining field. The MPs feared the Mongol Livestock Program was heading the way of most of the 420 national programs adopted in recent years that were then quietly abandoned because of lack of money.

Source: English.News.mn

170,000 HERDERS OWE BANKS MNT64.1 BILLION The Government does not favor a proposal from a group of MPs led by Mr. S. Byambatsogt and Mr. J. Sukhbaatar to adjust the outstanding amounts owed by herders to banks against the MNT1.5 million the Government is committed to distributing to citizens. Mr. Byambatsogt told media that herders‘ debts now stand at MNT64 billion and they are suggesting that the Government sells bonds to the creditor banks to clear the dues, redeeming the bonds when it is ready to distribute MNT1.5 million to every citizen, who will include the indebted herders. He is surprised at the government‘s lack of support this as the debts keep increasing with every passing day. According to official figures computed by the National Emergency Management Authority, 6,400 herder households in 21 provinces have totally lost their livestock. This has made it impossible to repay their loans. Of the total MNT64.1 billion that 170,000 herders owe to banks, MNT58.3 billion is due to Khan Bank, MNT4.9 billion to Mongol Shuudan bank, and MNT0.4 billion to XacBank.

Source: Onoodor

MP AGAINST SPECULATING ON WHAT TAVAN TOLGOI SHARES MIGHT BE WORTH MP and former Central Bank Governor, Mr. O. Chuluunbat, has said he is concerned at how the people are being misled about the monetary worth of the free shares they will get in the Erdenes Tavantolgoi LLC. ―Misinformed media speculation and irresponsible statements from individuals‖ are raising expectations among ordinary people ―who understand little or nothing about these things‖. Mr. Chuluunbat says there is no way anyone can say what any shares may be worth months hence. ―What a citizen gets can be worth only MNT500 just as it can be USD 500 or 5,000,‖ and references to what MMC shares fetched at its recent IPO are ―irrelevant‖, he said. An IPO conducted ― too soon, and without adequate homework‖ will not yield desired results and Mr. Chuluunbat feels a lobby might persuade the Government into doing just that ―so they could gobble up shares at a low price, paying USD10 for what should be worth USD1000‖. He said the Mongolian public ―should not be cheated this way‖.

Source: Zuunii Medee

FORMER MINING MINISTER CERTAIN THAT TT HAS MORE COAL THAN FEASIBILITY STUDY SAYS A former Minister of Geology and Mining, Dr. Ch. Khurts, has said that he has been disappointed by the purported figures revealed in the recent feasibility study of the Tavan Tolgoi deposit by the Canadian Norwest company. This puts the reserve at 7.4 billion tons, just marginally more than the 6.4 billion tons determined some 20 years ago. Excavation technology has improved so much in the intervening years that it should now be possible to mine much more coal than was considered

feasible two decades ago and the Norwest study does not reflect this. Productivity will also increase, according to Dr. Khurts, as ―a Mongolian worker‘s output will be 4-5 times more than that of a Japanese or Chinese miner‖.

Source: Zuunii Medee

PROPOSAL TO RAISE IMPORT DUTY ON CARS Car prices are on the rise following indications that import duties might soon be increased. A proposal tagged to the budget draft calls for changes in the tax depending on the years of manufacture and import, and engine and cylinder capacity. More than 80% of the cars on the road are more than seven years old, and no longer in the best condition for traffic security. The draft wants higher taxes for cars more than 3 years old. It also wants to replace the present tax category of cars between 4-9 years old with two categories, one for cars 4-6 years old, and the other for 7-9 years old.

Source: Ardiin Erkh

MONGOLIA: GEARING UP FOR THE BOOM YEARS 783 years after the death of Genghis Khan, and 20 years after the Democratic Revolution which heralded a system of multi-party democracy and a market economy, Mongolia is about to be catapulted back onto the international scene. Why? Because Mongolia is going to be the fastest growing economy in the world in the next decade, and we want to tell everybody about it. When you look at the facts, you can hardly disagree with this assessment. Mongolia has massive resources, with some of the world‘s biggest untapped reserves of copper, gold, coal, uranium and a host of others. Many of these are right next to the world‘s most populous country, and its most compelling consumer story: China. What is more, Mongolia is a functioning parliamentary democracy, which I think makes it a far safer bet over a multi-year time horizon than most other commodity plays. Finally, following the abolition of the windfall tax on the profits of foreign companies in 2009, the business environment suddenly looks a whole lot more attractive. And make no mistake about it, this is a boom which has already started. Aside from a mining boom, I think there will be major opportunities for investors in other areas of Mongolia. Power and infrastructure are highlighted as particularly attractive. Given the low base that Mongolia is starting from, it is not hard to see how these sectors will benefit as major investment into the mining sector starts to arrive. Real estate should also get a major boost, as rapidly expanding domestic and foreign firms look for increased office and living space. True, the Mongolian growth story is not without its risks. The banking sector still looks shaky, with banks‘ capital bases having taken a massive hit during the global financial crisis, and asset quality only slowly improving (NPLs were above 17% of the total in late 2009). Inflation is also a concern, with rising global food prices likely to ensure this remains the case into 2011. Finally, although the government is fairly investor friendly, it has shown itself capable of making things difficult at certain times in the past. Over the long run, though, the rewards for those willing to take the plunge now are likely to be huge.

Source: Business Monitor International

GLOBAL COPPER OUTPUT RISE STILL FAR BEHIND DEMAND Some of the world's top copper miners raised production by 4 percent last quarter, suggesting growth may fail to meet booming global demand. The companies reported represent about one-tenth of global mined copper production. Codelco, which accounts for around 11 percent of the world's mined copper, has yet to report third-quarter results. Slow to bring capacity back on line after 2008's economic downturn, some of the largest copper producers turned more aggressive in the quarter, reopening idled mines and ramping up production in response to a China/developing world-led global economic recovery. "Mines are going to continue to strive to bring improvements on the supply side, but it's just now a question of whether or not that's going to be able to outpace demand," said a base metals analyst, questioning the strength of the supply-side response. Operational constraints and cutbacks initiated in 2009 are projected to constrain mine production to 16.2 million tonnes in 2010, the International Copper Study Group (ICSG) said. Looking to 2011, increased economic activity is expected to boost end-user demand for the metal much faster than production, pushing the global market deeper into deficit of about 400,000 tons.

Source: www.miningweekly.com

CHINA TO USE 20% OF GLOBAL ENERGY BY 2035 China will drive a global surge in energy demand over the next two decades, with the country expected to account for more than a fifth of world demand by 2035, according to the International Energy Agency. In its annual World Energy Outlook report released on Tuesday, the global energy watchdog predicted that China‘s demand would jump 75 per cent between 2008 and 2035, contributing 36 per cent to the projected growth in global energy use. Global demand would reach 16.74 billion metric tons of oil equivalent by 2035. ―It is hard to overstate the growing importance of China in global energy,‖ said Mr. Nobuo Tanaka, executive director of the IEA. ―How the country responds to the threats to global energy security and climate posed by rising fossil-fuel use will have far-reaching consequences for the rest of the world.‖ The greatest driver for oil demand will come from the transportation sector, according to Mr. Fatih Birol, the IEA‘s chief economist. Demand for cars in China is set to increase about tenfold by 2035, he added. The country is also investing heavily in clean energy technologies, as well as electric cars, and could become a big exporter, he said. This would have implications for the world‘s main car manufacturing countries such as Germany, Japan and the US. Global oil demand will increase 18 per cent to 99 million barrels a day in 2035, from 84 million a day in 2009, the report states. Oil supply, including production of oils not classified as crude, ―comes close‖ to reaching a peak by 2035, driving prices up to USD113 a barrel in 2009 terms, from around USD86 a barrel today, according to the watchdog. In nominal terms, prices will more than double to USD204 a barrel, it predicted. Read more… OPEC, the producers‘ cartel, will see its power increase over the decades, accounting for about 52 per cent of the world‘s oil supply by 2035. OPEC currently accounts for some 40 per cent of global supply. More supply will come from Saudi Arabia and Iraq. The watchdog expects Iraq to increase production to about 7 million barrels a day in 2035, surpassing Iranian levels by around 2015. The IEA predicted that the current global oversupply of gas could last for another 10 years. ―The glut of global gas supply capacity that has emerged as a result of the economic crisis . . . the boom in US unconventional gas production and surge in liquefied natural gas capacity could persist for longer than we expect,‖ the report said. Cheap gas ―may not be good news for some competing fuels such as renewables‖, said Mr. Birol. Government financial support for renewables amounted to about USD57 billion in 2009 and could be more than USD200 billion in 2035.

Source: The Financial Times

EMERGING MARKETS WIN MORE VOTING POWER IN IMF The International Monetary Fund board last week boosted voting power of big emerging economies and made China the third leading voice of the global lender. ―This historic agreement is the most fundamental governance overhaul in the Fund‘s 65-year history and the biggest ever shift of influence in favor of emerging market and developing countries to recognize their growing role in the global economy,‖ IMF Managing Director Dominique Strauss-Kahn told a news conference. Under the deal, first clinched by finance ministers of Group of 20 leading economies in South Korea last month, 6 percent of IMF voting shares will be transferred to ―dynamic‖ emerging market countries from industrial economies. The move vaults China over European powers Germany, France and Britain into third spot under the United States and Japan. It also lifts other large emerging powers India, Brazil and Russia into the top 10 ranks of the 187-member institution. Emerging economies have slowly gained more clout in the IMF, but the present shift is by far the most significant and amounts to an overhaul of the global economic order established when the IMF was set up after World War II.

Source: Reuters WATCH OUT FOR EMERGING-MARKET INFLATION Although the IMF expects headline inflation in emerging markets to fall to 5% in 2011 from around 5.75% now, pressures are building in some developing countries. India's inflation rate hit double digits earlier this year. In Brazil, economists have increased their 2010 inflation forecasts for six straight weeks, according to the central bank. Investors may want to consider some protection. There are three main sources of inflationary pressure: first, commodity prices. The United Nations' Food and Agriculture Organization's food price index is at its highest since August 2008, driven by gains in cereals. This has a big impact on emerging-market inflation: in emerging Asia, food

accounts for 40% of the average CPI basket. Second, emerging market efforts to prevent currency appreciation may prove inflationary. The cost of sterilizing currency market interventions—issuing bonds to mop up excess local currency—has become very costly given the extremely low yields on U.S. bonds relative to local-currency debt. That raises the risk of unsterilized interventions, leading to inflationary increases in the money supply. Meanwhile, emerging-market central banks may also hold off on rate hikes for fear of acting as a magnet for capital flows. Third, emerging-market output gaps are closing and labor markets may be tightening. Many countries are quickly making up for the loss of growth in 2009; in India and China, in fact, there was only a modest slowdown. In Brazil, average wages rose more than 11% in September, or just over 6% in real terms, HSBC Global Asset Management notes; in Korea, Poland and Chile, the unemployment rate has fallen to previous cycle norms. How can investors protect themselves? One option is inflation-linked bonds, although liquidity in emerging-market issues is relatively low. Breakeven inflation rates in countries such as Brazil, Turkey and South Korea show investors may be under-pricing the risk of higher inflation. Emerging market property and consumer stocks could offer an attractive hedge against inflation, particularly given growing domestic demand. As investors plow cash into emerging markets, a little insurance could come in handy.

Source: The Wall Street Journal Asia

ASIA PUTS UP TEPID FIGHT AGAINST INFLATION While the U.S. Federal Reserve has taken flak for embarking on a new round of bond buying to get the U.S. economy moving again and avoid deflation, in Asia the worry is that central banks aren't doing enough to fight the opposite problem: inflation. Despite strong growth rates, most of Asia's biggest economies have taken only limited steps to tighten monetary policy. The International Monetary Fund estimates emerging Asian economies will grow 9.3% this year. China has raised interest rates a quarter of a point and reined in bank lending. South Korea has raised its interest rates once, but economists don't expect it to move again until 2011. Indonesia hasn't moved at all since it slashed rates during the global financial crisis a couple of years ago. Core inflation, which excludes volatile food and energy, has stayed tame in the region with the exception of India, which has had to raise interest rates several times but has now signaled it is taking a breather. Examples of prices moving higher than central bankers would like, such as South Korea's 4.1% year-on-year increase in October, were blamed on temporary factors, in this case a surge in the price of kimchi, the pickled-cabbage staple of Korean diets. Economists there figure that headline inflation will cool in coming months as food prices moderate, thanks to better harvests. But looking ahead, there are reasons to worry that interest rates are too low across much of developing Asia. Unlike in the U.S. and Europe, output gaps, which measure whether economies are growing at full potential, have closed everywhere but in Japan. That indicates pricing pressure is building as demand for goods and services outstrips supply. Also, commodity prices are rising, and massive flows of capital attracted to Asia puts pressure on asset prices, especially housing. The worry is that while the focus is on these narrow asset price bubbles, inflation could quickly materialize, eliciting fast and furious rate increases that would whipsaw growth and sink markets. Source: The Wall Street Journal Asia

ASIA BRACES FOR FLOOD OF FOREIGN CASH Officials in Asia warned of possible moves to brace their economies against an expected flood of money into the region stemming from the Federal Reserve's latest plan to rekindle growth in the U.S. Fast-growing economies in Asia have been inundated with cash in recent months as investors bet they can make more money in countries that have higher growth rates. The Fed's USD600-billion asset-purchase plan, known as quantitative easing, is expected to increase that flow, as it depresses interest rates in the U.S. and increases the amount of cash available to investors to deploy in other markets. The influx of cash has already put pressure on currencies in Asia and other emerging markets to rise. That is something export-dependant economies are reluctant to allow, especially when the world's largest exporter, China, is tightly controlling a slow appreciation of its currency. Chinese officials didn't comment publicly on the Fed's action. They are thought to be skeptical of Fed intentions, worried that the added money supply will mostly serve to depress the value of the dollar. Mr. Li Deshui, a Chinese political adviser who doesn't set economic policy but whose views top decision makers may consider when forming policy, has written that China could team up with

other countries dissatisfied with the U.S. dollar's fall to prevent excessive depreciation of the currency. Mr. Li said the Fed's quantitative-easing program wouldn't stimulate the U.S. economy but would boost the country's fund outflows, "affecting the stability of the global economy".

Source: The Wall Street Journal Asia

WORLD BANK CHIEF SEEKS GOLD STANDARD DEBATE Leading economies should consider readopting a modified global gold standard to guide currency movements, argues the president of the World Bank. Writing in the Financial Times, Mr. Robert Zoellick, the bank‘s president since 2007, says a successor is needed to what he calls the ―Bretton Woods II‖ system of floating currencies that has held since the Bretton Woods fixed exchange rate regime broke down in 1971. Mr. Zoellick calls for a system that ―is likely to need to involve the dollar, the euro, the yen, the pound and a renminbi that moves towards internationalization and then an open capital account‖. He adds: ―The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values.‖ His views reflect disquiet with the international system, where persistent Chinese intervention to hold down the renminbi is blamed by the US and others for contributing to global current account imbalances and creating capital markets distortions. Although there are occasional calls for a return to using gold as an anchor for currency values, most policymakers and economists regard the idea as liable to lead to overly tight monetary policy with growth and unemployment taking the brunt of economic shocks. The original Bretton Woods system, instituted in 1945 and administered by the International Monetary Fund, the World Bank‘s sister institution, comprised fixed but adjustable exchange rates linked to the value of gold. Controls to restrict destabilizing shifts of capital from one economy to another buttressed it. ―The scope of the changes since 1971 certainly matches those between 1945 and 1971 that prompted the shift from Bretton Woods I to II,‖ Mr. Zoellick writes. ―Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today.‖

Source: The Financial Times

CHINA CONSUMER PRICE INDEX JUMPS China's consumer price index rose 4.4%, and the country ordered its major lenders to park more cash at the central bank, showing its renewed concern about inflation. The move came Wednesday just after China reported its second-largest monthly trade surplus this year. China and some other emerging markets are increasingly concerned that their strong economic rebound from last year's global slowdown will result in inflation and asset bubbles, while the U.S. and other developed economies are expanding weakly if at all. Requiring banks to keep more money at the central bank will drain funds from the financial system, helping relieve some of the inflationary pressures. Those policies have led to some moderation in China's growth, and China's Customs agency reported separately Wednesday that the nation's merchandise trade surplus rose to USD27.15 billion in October from USD16.9 billion in September, as imports, particularly of commodities, cooled down. China was running much smaller surpluses earlier this year, when imports were growing by more than 50%, but its trade surplus started to grow again in May as those gains tailed off.

Source: The Wall Street Journal Asia

CHINA TO ACCELERATE DOMESTIC MINING EXPLORATION China plans to spend USD4.48 billion over the next five years to explore for minerals in 21 provinces to reduce its reliance on imported mineral products. Mr. Wang Min, vice minister of China's Land and Resources Ministry, told the official state news agency Xinhua the Chinese government wants to reduce its reliance on imports. Five deposits in five provinces may hold up to 5 billion tons of iron ore. However, several of these deposits are of low-grade ore, requiring China to still import large quantities of higher-grade iron ore. As much as 38.5 million tons of copper ore reserves were discovered in Tibet, Xinjiang and Yunnan last year. Mr. Chen Renyi, director of the China Geological Survey's Department of Mineral Resources Assessment, said imports of copper ore, iron ore and sylvite (potassium chloride), should account for, respectively, less than 75%, 50% and 60% of minerals' consumption in China over the next five years. Meanwhile, Xinhua also reported that China may also tighten environmental regulations on rare

earth mining, which will increase production costs and may raise the cost of China's rare earth exports. China now mines 97% of global rare earths.

Source: Mineweb.com

PERU REPORTS 40% INCREASE IN VALUE OF MINERALS EXPORTS Peru's Ministry of Energy and Minerals has reported mineral product exports valued at USD13.4 billion from January to August of this year, a 39.6% increase over the same period last year. The ministry attributed the growth mainly to higher average prices of some metals such as copper, gold and zinc. Minerals exports represented 61.1% of Peru's total exports in the first nine months of the year.

Source: Mineweb.com

POLITICS MONGOLIA CLIMBS 14 PLACES IN HUMAN DEVELOPMENT INDEX REPORT Mongolia has climbed 14 places from last year‘s rank of 114th to end up at the 100th place in this year‘s Human Development Index (HDI) report on 169 countries released on November 7 by the UN Development Program. The indicators are life expectancy at birth, expected years of schooling, mean years of schooling and gross national income per capita.

Source: English.News.mn

MPRP NOT “REVOLUTIONARY” ANY LONGER At a party conference that wrapped up last week, the Mongolian People‘s Revolutionary Party (MPRP) voted to retake the name it used in the early 1920s. The party will henceforth be known as the Mongolian People‘s Party. Education Minister Yo.Otgonbayar, who is also a member of the party‘s governing council, said only six delegates voted against the measure. The conference sat until Saturday 5 am and 85 percent of delegates voted in favor of Prime Minister S.Batbold continuing as party chairman. The names of Parliament Speaker D.Demberel and MP U.Enkhtuvshin had also been proposed for the post, but Mr. Demberel refused to contest and Mr. Enkhtuvshin got 15 percent of the votes. Losing the MPRP label is however not something the party is willing to do overnight. According to Mr. Otgonbayar, the MPP will also use the acronym MPRP in its literature, at least until the next election, scheduled for 2012. ―MPRP is like JVC - it‘s a brand name that everyone knows, even if some people don‘t know what the letters stand for,‖ he said. ―We had many revolutions during the 20th century. We had the People‘s Revolution, an educational revolution, an agricultural revolution and a democratic revolution. So the word revolution fit our party during that era,‖ he said. ―But now we are in the 21st century and we have a new vision - not of revolution, but of development and social harmony.‖ The newly-christened MPP was the country‘s first political party, founded in 1921. The word ―revolutionary‖ was added three years later. After a decade of trying to modernize the party, the MPP - which formally abandoned its communist ideology following the events of 1990 - now calls itself a centre-left democratic formation. Elder cadres have been retired and the party has worked hard to lure fresh blood into its ranks.

Source: News.mn, Australia Network News

CASE AGAINST ANTI-CORRUPTION BOSS GOES TO PROSECUTORS The State Prosecutor General‘s Office last week transferred the case of Mr. Ch.Sangaragchaa, Chief of the Anti-Corruption Authority, from investigators to prosecutors. They will now prepare a case against him to be submitted to a court. Parliament is yet to take a decision on the Prosecutor General‘s request, sent more than three months ago, for dismissal of Mr. Sangaragchha and his deputy, on charges of corruption and misuse of power.

Source: English.News.mn

MPRP STALLS APPROVAL OF PRESIDENT’S CHOICE OF DEPUTY PROSECUTOR-GENERAL The MPRP group in Parliament has requested the Standing Committee on Justice to defer its discussion of President Ts.Elbegdorj‘s nomination of Mr. Ts.Byambatsogt as Deputy Prosecutor-General. The Committee is scheduled to debate the issue, along with appointment of a new Chief of the National Human Rights Commission (NHRC). It is believed the MPRP group would oppose the appointment of Mr. Byambatsogt as it feels his predecessor, Mr. B.Tserenbaltav, was pressurized

into resigning even though he still had a year left of his term. The Parliament Speaker nominates the NHRC head, and then Parliament approves it. After Ms.D.Solongo finished her term last winter, Speaker Demberel nominated Ms. D.Altai to succeed her. She is a member of the MPRP and a former leader of the party‘s women‘s wing, and now heads the Mongolian Democratic Socialist Women‘s Committee. The DP group in Parliament has not yet approved the nomination on the ground that the NHRC should be headed by a non-political person and preferably one with experience of work in the human rights field.

Source: English.News.mn

MONGOLIA’S SPY CHIEF, ARRESTED AT HEATHROW, WAS ON WAY TO OFFICIAL MEETING When Mongolia's spy chief stepped off an Aeroflot flight into Heathrow a few weeks ago, he expected a welcome befitting a foreign dignitary arriving for high-level talks with the British government on a new era of intelligence co-operation. After all, preparations for his visit had included an invitation to meet Downing Street's National Security Adviser. But rather than being ushered through Heathrow's VIP lounge for talks in Whitehall's inner sanctum, the chief executive of Mongolia's National Security Council and the one-time head of its security service was met by Scotland Yard detectives armed with an international warrant for his arrest. Bat Khurts, Mongolia's most senior intelligence officer, is currently languishing in a cell in London's Wandsworth prison while awaiting extradition proceedings. It is an extraordinary twist to a tale of alleged trans-border kidnap and skullduggery that began seven years ago in a McDonald's car park in a French port – and has led to a diplomatic row. Mr. Khurts, publicly known as the head of administration in the National Security Council, was arrested for the alleged drugging and rendition of a refugee who was later tortured in a Mongolian prison. Lawyers for Mr. Khurts accuse Foreign Office officials of "misusing ordinary diplomatic courtesies" to facilitate the Mongolian father-of-three's arrest. Court papers allege that the Foreign Office contacted the UK Serious and Organised Crime Agency (Soca) with full details of Mr. Khurts' arrival date to enable his detention on an outstanding European arrest warrant. Certainly, the reception received by the Mongolian intelligence chief bore little resemblance to what seems to have been originally envisaged by the Foreign Office when he was put forward in November last year as the best person to liaise with British officials about "establishing ties" between the security services in both countries. Mongolia, traditionally regarded as a geo-political backwater, is increasingly seen by London and Washington as a strategic ally, not least because of its geographical position, sandwiched between Russia and China. The opportunity for a closer relationship with the Mongolian intelligence services was quickly grasped by British diplomats and the intelligence services. Read more… Papers presented to the High Court last week in a failed attempt to secure bail allege that a senior FCO official suggested that Mr. Khurts meet Sir Peter Ricketts, the National Security Adviser, during a meeting with the Mongolian Ambassador to London on 31 August – nearly three weeks before the senior spy arrived. The documents claim that the Foreign Office contacted a Soca agent to say that Mr. Khurts was travelling to Britain and passed on details of his flight from Mongolia. FCO officials in London only became aware of the arrest warrant against Mr. Khurts after the initial agreement for his visit had been reached. Lawyers for the spy chief, who was travelling on a diplomatic passport, claim his status means he is immune from prosecution and was the victim of double-dealing by the British government. A statement to the High Court on behalf of Mr. Khurts said: "There has been an abuse of process of the court based on the premise that officials representing the UK in Mongolia and London misused the ordinary diplomatic courtesies shown to a high representative of a friend state to facilitate his arrest." The reason for the current predicament of Mr. Khurts, the son of a prominent Mongolian architect, dates back to the events that unfolded at 2:30 pm on 14 May 2003 when D Enkhbat, a refugee from Ulaanbaatar, arrived in the car park of a branch of McDonald's in the Normandy port of Le Havre. Enkhbat, 43, who was wanted in Mongolia for the assassination in 1998 of S.Zorig, a government minister, and had been living in Caen after applying for refugee status in France under a false name, thought he was meeting a female Mongolian dissident. But, upon his arrival at the restaurant, witnesses saw him being jumped upon by four Mongolian men carrying electric batons who beat him and dragged him by his hair. German police believe he was then forced to drink a sedative before being bundled unconscious into a car. Over the next four days, the kidnap victim was driven across France to the Mongolian consulate in Brussels and on to Germany before being accompanied on to a Mongolian Airlines flight from Berlin to Ulaanbaatar. It

is alleged by the German authorities that Mr. Khurts was the driver of that car and a key member of a snatch squad. Prosecutors in Berlin issued a European arrest warrant for Mr. Khurts in 2006, which was activated by his arrival at Heathrow. Enkhbat later told his lawyers that he was tortured by General Intelligence Agency interrogators who repeatedly cocked and fired a handgun pressed to his head to try to force him to confess to the murder of the minister (a claim he continued to deny until his death). Enkhbat was eventually released from prison in 2006 but died five days later. A member of his family said the injuries he suffered during his torture had played a "key role" in his death. Mr. Enkhbat‘s former lawyer, Mr. L. Sanjaasuren, has said his client had been tortured into confessing to a crime he did not commit. Mr. Sanjaasuren said he himself had been jailed for nine months on the charge of revealing state secrets merely for the act of protesting Mr. Enkhbat‘s abduction. The Mongolian government concedes that Mr. Khurts‘ actions were illegal but argues that he was travelling with a diplomatic passport. Diplomats are normally shielded from prosecution when travelling abroad. The government has sent an official note of apology to the governments of France, Belgium and Germany. ―It was an illegal decision and action to kidnap and bring the person from Europe under diplomatic cover and in violation of international laws and treaties,‖ said Mr. Monkhoon, a spokesman with Mongolia‘s Foreign Ministry. Lawyers for Mr. Khurts dismissed claims that his links to the Mongolian secret service made him a flight risk. They have presented a letter from Mongolia's Deputy Prime Minister providing assurances that he would not abscond, along with an offer for the intelligence chief to wear an electronic tag and reside at the Mongolian embassy in Kensington if he is released on bail. But, for the moment, the master spy, diplomatic emissary and alleged kidnapper must remain in Her Majesty‘s Prison Wandsworth after Mr. Justice McCombe sitting in the High Court ruled on Tuesday last week that there was a risk he would flee the country. In a statement, the Foreign Office said: "Mr. Khurts was arrested under a European arrest warrant issued by the German judicial authorities. His extradition is now before the courts and it would be inappropriate for us to offer further comment at this stage." A spokesman for the Mongolian embassy declined to comment, saying the matter was "too delicate" to discuss. Meanwhile in Ulaanbaatar, Mr. D.Bayaraa, brother of D.Enkhbat who was abducted, said on Monday he had been attacked by unknown people on the night of October 25 and forced to drink something poisonous. Mr. Bayaraa said he wanted to submit certain documents the dead Enkhbat had left with him to the German Embassy on the day of the attack. These could be important in the ongoing trial of Mr.Khurts in Britain. Someone must have got to know about his plan and so attacked him to stop him from going. If his condition improves, he will attend the trial on November 15.

Source: The Independent, London; AP; Ardiin Erkh

PEOPLE URGED TO REGISTER THEMSELVES EVEN AFTER DUE DATE IS OVER Officials at the State General Registration Office have said 83.5% of the adult population got themselves registered under the new system between July 1 and November 1. Even though the work is formally over, citizens will be allowed some more time to come forward and be registered free. It is important that they do so as, among other things, the allowance from the Human Development Fund will reach only those registered under the new system.

Source: Undesnii Shuudan

WIND FARM PROJECT COULD HELP TURN ULAANBAATAR GREEN Despite Mongolia‘s nearly limitless coal, the country recently approved plans to set up its first commercial wind farm. The decision is fueling a public debate that aims to strike the right balance between Mongolia‘s near-term and long-term economic development interests. Sparsely inhabited, with vast steppes and ample wind, Mongolia‘s potential for harnessing renewable energy is huge. In 2005, the government passed the Renewable Energy Program, mandating that green energy sources account for 20-25 percent of Mongolia‘s needs by 2020. ―This is a very ambitious target, but achievable with large scale wind farms and solar power plants,‖ says Mr. N. Enebish, Executive Director of the National Renewable Energy Center. Approximately 2 percent of the country‘s power needs are currently met with household solar systems and small hydro-electricity projects. The wind farm could significantly boost this figure, he said. Newcom Group, the country‘s largest Mongolian-owned private mobile telecom provider, is helping finance the USD80 million joint venture with the European Bank for Reconstruction and Development (EBRD). The project is to be situated on Salkhit Mountain, 78 km south of

Ulaanbaatar. Newcom has already signed a power-purchase agreement with the government for the proposed 50-megawatt project. Construction is slated to start in early 2011. ―Extensive wind mapping data have shown Mongolia has the wind capacity to generate enough electricity to supply all of China‘s electric needs,‖ says Mr. B. Byambasaikhan, head of the Clean Energy Division of Newcom Group, stressing wind‘s vast potential. Read more… The cost has decreased rapidly in recent years, making wind harvesting the most suitable renewable energy for commercial operation in Mongolia, he said. But it is still more expensive than coal, critics contend. And coal is a much better bet to bring in much-needed revenue in the coming year and meet the country‘s power needs, they emphasize. Mining experts believe the need to exploit Mongolia‘s coal resources to generate near-term revenue outweighs the need to focus on expensive renewable energy solutions. ―It will be extremely difficult for Mongolia to find alternative energy sources which can come even remotely close to competing with coal as a primary energy source for many years to come,‖ contends Mr. Graeme Hancock, senior mining specialist at the World Bank. Apart from the higher investment costs, wind power is unable to provide nearly enough power to heat homes during Mongolia‘s bitterly cold winters when total heat demand from the country‘s Combined Heat and Power (CHP) Plants exceeds the level of electricity production. ―Cost-wise, coal wins clearly, both in capital and operating terms,‖ he says. Stakeholders in the Salkhit Wind Farm are under no illusion that renewable resources will replace coal any time soon. ―Of course if you‘re sitting on the largest untapped coal deposit in the world, it puts the whole renewable energy issue a little in the background,‖ admits EBRD resident head Philip ter Woort. But with mounting environmental problems in Mongolia, it makes sense to examine renewable options, as that could help mitigate the increased CO2 emissions the country is expected to generate with the mining boom, he added. Most of Mongolia‘s energy needs ―will be supplied by coal, there‘s no doubt about that. But there is incremental capacity that can be supplied by clean energy sources and that has to be developed for a more sustainable growth,‖ says Mr. Byambasaikhan at Newcom. The question now is how to pay for an investment that many say is redundant in a developing country. According to Mr. Enebish of the National Renewable Energy Center, some of the capital can be generated from eco-taxes on dirty industries and channeling a portion of mining revenue towards financing renewable energy. But this remains a risky political decision for a country that has been wooing investors with a favorable low-tax climate. Green activists are concentrating on the big picture, however: ―We‘re not looking at short-term goals. We‘re very patient,‖ says Mr. Byambasaikhan, who believes that regardless of present day economics, renewable energy is a key part of Mongolia‘s future.

Source: Eurasia.net

1,892 STATE OFFICIALS GET LOANS FOR APARTMENTS Altogether 1,892 state officials have so far been issued loans totaling MNT61.9 billion to help them buy apartments under the 4000 Apartments project for state employees. Of this, MNT48.5 billion has been paid to 134 construction companies. Ownership certificates have been issued in the name of 1,493 state officials. It is expected that 490 more loans will be issued this year and the remaining 1,600 loan requests would be processed in the first half of 2011.

Source: News.mn

STAND UP AND BE COUNTED, MONGOLIANS TOLD The Chief of the National Statistics Office, Mr. S.Mendsaikhan, told a press conference on Monday that altogether 16,000 enumerators and inspectors have been trained to run the population census from November 11 to 17 and that 14,000 temporary appointments have been made to work for the census board. Forms and manuals weighing 45.7 tons have been delivered to the primary census centers. Mr. Mendsaikhan also said no Mongolian will be allowed to leave the country if they cannot show evidence that they have been enumerated. He appealed to all citizens to make sure they are included in the census because the data it collects will provide the basis for all administrative planning at all levels. Mongolians in the Czech Republic are actively participating in the census via the Internet, but the response from those in South Korea has been tepid. Mr. Mendsaikhan assured those living abroad without proper papers that they need fear no penal action if they register themselves via the Internet for the census.

Source: Durian Sonin

TV CHANNELS OBJECT TO STATE MEDIA ACCEPTING ADVERTISEMENTS The Mongolian Televisions Channels Union has charged the Mongolian National Public Television with consistently flouting a provision in the law that prohibits commercial advertising on state-owned radio and television. This has affected the revenue of privately run TV channels and thus violated the media‘s right to free speech. Lack of action from the monitoring authorities has surprised and confused the general public. The Union has urged immediate stop to the practice and has said it is ready to seek judicial redress.

Source: English.News.mn

FOOT AND MOUTH DEATHS CAUSE FOOD SHORTAGE AND PRICE RISE The failure to stamp out the foot and mouth disease during the warmer days is of considerable concern as the virus responsible is likely to prove more resilient during the winter. Of the 24,000 animals affected so far, 99.7% have had to be destroyed and the highly contagious disease keeps spreading to newer areas. Coming on the heels of the loss of livestock in the recent dud, this may lead to a shortage of meat. This has already happened in the quarantined areas where prices have gone up, even though the local administration does not want to go public on any of this. Media representatives were kept away from the epicenter in Dornod province, but reports from drivers of vehicles that transported coal and firewood there paint a frightful picture. The Governor of Dornod had ordered that media be not allowed to enter and refused to talk about this when he was in Ulaanbaatar for the General Assembly of the MPP.

Source: News.mn

MPs TURNED AWAY FROM DONATING BLOOD The National Center for Blood Analysis continues to be in need of blood. Following the lead of President Ts.Elbegdorj and an Olympic champion and a music star, 15 DP members of Parliament went to donate blood last week but 13 of them had to be turned away, for not meeting the condition that a donor must not have drunk alcohol in 72 hours before giving blood and should not eat any oily breakfast on the morning of the donation day.

Source: Ardiin Erkh

ANNOUNCEMENTS

MONGOLIA INVESTMENT SUMMIT, NOVEMBER 23-25, LONDON The Mongolia Investment Summit on 23-25 November in London will be bringing together companies operating in Mongolia with the Mongolian government to discuss the opportunities and challenges surrounding investing in this frontier economy.

Delegates will:

• Learn the best entry strategies into Mongolia • Access partnership and investment opportunities • Gain first hand insights into regulations and policies affecting foreign investment • Understand how frontier market investment can work for you • Get a clear picture of how the government is working to improve Mongolia's business environment. Among the speakers will be: • Andrew Harding, Chief Executive, Copper, Rio Tinto on the importance of emerging markets in meeting global commodity demands. • Robert Friedland, Executive Chairman, Ivanhoe Mines on how they worked with the Mongolian government to come to an agreement on the Oyu Tolgoi mine, and how the mine will be developed. • Kevin Bortz, Director, Natural Resources, EBRD about Mongolia's economic outlook and what remaining reforms need to be made. • G. Tsogtsaikhan, Director, MonAtom LLC about where the opportunities for Mongolia's uranium mining are found. • T. Amarzul, Executive Director, Petro Matad LLC on the development of Mongolia's petroleum resources, and why they chose to list with LSE AIM. • Daniel Broby, Chief Investment Officer, Silk Invest about their appetite for Mongolian investment,

what type of projects they are seeking and what restrictions and risk perceptions they have. BCM is a Supporting Organization. More information can be had at www.terrapinn.com/mongolia. ________________________________________________

ACMS RESEARCH FELLOWSHIPS 2011 The American Center for Mongolian Studies (ACMS) is pleased to announce the fourth year of the ACMS Research Fellowship Program funded by the Luce Foundation. The program supports in-depth research in Mongolia by scholars whose projects will enhance knowledge of Mongolia and the Mongols within relevant academic disciplines or fields of study. Projects that link research conducted in Mongolia to research in other parts of Eurasia or across academic fields are especially encouraged. Up to three Fellowship awards will be made, for a maximum award of USD27,000 per award (depending on the time spent conducting research in the region). Fellows will also organize an academic conference in Mongolia that brings together international, regional and local scholars and students. Research work under this program must begin between September 2011 and March 2012, and last for a continuous 6-12 months. Fellowship recipients must be based in Mongolia for the duration of their fellowship, but research travel in the broader region is encouraged. The deadline for receiving applications is February 15, 2011. For further details visit: www.mongoliacenter.org/doctorate. ___________________________________________

“HOW THEY SEE US” ON BTV ON SATURDAY, NOVEMBER 13, AT 19:40 Saturday, November 13 is the next date for ―How they see us‖, BTV‘s fortnightly program in Mongolian started in cooperation with BCM. Tomorrow‘s 15-minute program will be from 19:40, and will cover reports on Mongolia in international media, featured in the BCM NewsWire. ___________________________________________

“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. ___________________________________________

NEW POSTINGS ON BCM WEBSITE'S 'PRESENTATIONS' AND 'MONGOLIAN BUSINESS NEWS' The speaker presentations which were presented at the Mining Investment Summit 2010 in Hong Kong, October 14, 2010, are now posted on BCM's website (www.bcmongolia.org) in the "Resource, Presentations " section for your review. There are 17 new presentations made by Mongolian and foreign officials to the more than 200 attendees at the highly successful conference. 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.

SPONSORS

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] Oct 31, 2010 *11.3% [source: NSOM] *Year-over-year (y-o-y)

CENTRAL BANK POLICY LOAN RATE

December 31, 2008 9.75% [source: IMF]

March 11, 2009 14.00% [source: IMF]

May 12, 2009 12.75% [source: IMF]

June 12, 2009 11.50% [source: IMF]

September 30, 2009 10.00% [source: IMF]

May 12, 2010 11.00% [source: IMF]

CURRENCY RATES – November 11, 2010

Currency name Currency Rate

US dollars USD 1,280.46

Euro EUR 1,764.99

Japanese yen JPY 15.65

British pound GBP 2,047.20

Hong Kong dollar HKD 165.18

Chinese yuan CNY 193.36

Russian ruble RUB 41.74

South Korean won KRW 1.15

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.