BUSINESS COUNCIL of MONGOLIA NewsWire

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Issue 140, October 15 2010

NEWS HIGHLIGHTS:

Business: With IPO done, Mongolia Mining is on M&A trail;

TDB plans USD150 million, 3-year bond sale;

Mongolian workers building Energy Resource power station, coal washing plant;

SharynGol completes drilling, discovers new coal seams;

Petro Matad issues EBRD and option shares;

Eurasia Capital becomes member of the world's leading M&A alliance;

Cameron McRae named new Oyu Tolgoi CEO;

TDB, “pioneer not by choice but leader by hard work and determination”;

North Asia CEO finds Mongolia mining-friendly;

New monetary service for MobiCom clients;

Petro Matad gives up 20.7% of Block XX;

SharynGol gets 2009 accounts audited by Ernst & Young;

Claimants vie for Mongolia's crown jewels;

The battle for Oyu Tolgoi;

French minister visits L’Occitane store;

Polo Resources disposes of Mongolian assets;

Mining companies stay way from labor fair;

Winsway shares fall after IPO;

Oyu Tolgoi cultural heritage team busy preparing work plan.

Economy:

Central Bank asked to improve internal monitoring and to be more open;

Inflation has to be risked for growth: Ch.Khashchuluun;

Mongolia confident MMC IPO will ease doubts;

Economic and social data released;

SPC chief says Russia wants Canadians out of uranium sector:

Money supply up 45.2 percent year-on-year;

How Batbold pitched Vancouver business community;

Canada could be an example in mining development, says Ambassador Goldhawk;

MRAM chief wants laws to be clear and unequivocal;

Dun and Bradstreet to form JV with Credit Information Bureau;

Meeting hears of dangers of indiscriminate fluoride mining;

MCA money to build roads;

Mongolia has the resources, and the buyers; the trick is to get the first to the second;

Rise in Mongolia's stocks as deceptive as it is impressive;

The poor still to benefit from Mongolia's riches;

Copper hits 27-month high, as industry players gather in London;

Copper price to stay strong into 2011, says Rio Tinto official;

IMF says 'few signs' metals supply can keep pace with demand;

China’s monthly trade surplus narrows;

China's rich make their money at home;

China set to outrank Japan on global wealth;

China's best-laid plans;

Emerging Asia feels currency strain;

Chilean government reaches agreement on controversial mining tax.

Politics:

Differences over period of validity stall transit tariff agreement;

Committee keeps ACA chief in post, refuses to vote openly;

Government defends not revealing news of Khurts’s arrest;

Action to be recommended against 2 province governors;

Politicians should stay away from what is work for professionals;

Onon river safe from chemical pollution from Russia;

Mayor orders better petrol storage practices;

Mongolia asks for Finnish reindeer semen;

Chinese dominate list of richest women;

Wine at 1,000 euros a bottle sells in Mongolia;

Bolivia deploys troops to curb illegal gold mining.

*Click on titles above to link to articles.

BUSINESS

WITH IPO DONE, MONGOLIA MINING IS ON M&A TRAIL Mongolia Mining Corp. is looking out for acquisition targets in the Mongolian resources sector following an initial public offering in Hong Kong raising USD650 million, according to its top executive. Executive Chairman J. Odjargal said the company "will focus more on coal and iron ore" in identifying potential targets. "A major criterion will be proximity to the Mongolian-Chinese border," he said. Mongolia Mining is the first Mongolian company to list its shares in Hong Kong, though several other companies doing business with Mongolia have already raised funds on the exchange. Mongolia Mining shares were around HKD7.44 (95.9 US cents) in early afternoon trading on Wednesday, up about 6% from their listing price of HKD7.02. Earlier this week, shares of Beijing-based Winsway Coking Coal Holdings Ltd., which purchases coal from Mongolia, processes it and distributes it in China, fell 8.6% on their first day of trading in Hong Kong, though they have recovered some ground since then. On Wednesday afternoon, the shares were trading at HKD3.58, flat from the previous day and down about 3% from their listing price of HKD3.70. Mongolia's ability to deliver goods to China is hampered by poor transportation links. Mr. Odjargal said that there are plans for two new rail lines already approved by Mongolia's parliament, including a direct link from the company's Ukhaa Khudag deposit in the southern Gobi desert to the Chinese border that would cut its transport costs in half. Currently, all of the company's coal is delivered to the border by truck. "The railway will help increase our margins significantly," he said. However, the timing of construction for the two projects won't be known until the first quarter of 2011, he said.

Source: The Wall Street Journal Asia TDB PLANS USD150-MILLION, 3-YEAR BOND SALE Trade & Development Bank plans to sell USD150 million of three-year notes, according to a person familiar with the matter who asked not to be identified as details are private. The lender hired ING Groep NV to help it organize meetings with credit investors in Asia and London, another person familiar with the matter said.

Source: Bloomberg MONGOLIAN WORKERS BUILDING ENERGY RESOURCE POWER STATION, COAL WASHING PLANT Energy Resource LLC began exploiting coal in the Tavan Tolgoi deposit in April, 2009 and last year

paid the state MNT18 billion and the local government MNT1.8 billion. The company initially owned six licenses but has transferred five of these to the Government and now has just one special license over 2,959 hectares in Ukhaakhudag. The mine life is expected to be 30 years. Much construction is in progress, among them a coal washing factory and a power station, with Mongolian young people doing all the work. The first should be operational in 2011 and will wash five million tons of coal in the first year, ten million tons in the second, and 15 million tons from 2013 onward. The blueprint has been prepared by Sedgman of Australia but it is Mongolians who are building it. Washing adds value to the raw coal that is lifted from 35-60 meters deep. It is sold at a higher price after it is cleaned of much of the ash and other waste matter. The latest technology to be used in the plant will require less water for the work, and the used water will be recycled. International standards are being followed in arrangements for labor safety. The equipment is being brought from Australia, the USA and China and the plant will employ 110 people, after training them for 2-3 months. At present the average salary is about MNT900,000, plus free food and accommodation. The power plant is also being built by Mongolian workers and engineers. It will have a capacity of 18 megawatts and would recycle both the water and the coal to be used. The plant will cost MNT35 billion and will employ 130 workers. The first phase of the work should be finished by the end of the year and the electricity finally generated will serve not only the needs of the mine but also of nearby areas. Power stations in the provinces have a capacity of 3-4 megawatts.

Source: English.News.mn SHARYNGOL COMPLETES DRILLING, DISCOVERS NEW COAL SEAMS SharynGol JSC has successfully completed a 16,000-meter diamond drilling program, with the aim of establishing a JORC standard resource over the company's mining lease. The drilling has proved all of the coal seams identified by historic Soviet drilling, as well as encountered several previously undiscovered coal seams, representing an important new discovery. An international mining consultancy has been engaged to produce a three dimensional model of the coal seams. The consultant's report, which will include a revised resource estimate, is expected to be released later in the year. Management anticipates that the report will demonstrate a significant increase in coal resources for the project.

Source: SharynGol JSC PETRO MATAD ISSUES EBRD AND OPTION SHARES Petro Matad has completed issue of 3,367,003 new ordinary shares of USD0.01 each in the company at a price of 135 pence per share to the European Bank for Reconstruction and Development. It has also issued 490,500 new ordinary shares of USD0.01 each following exercise of options by certain directors and employees pursuant to the Company's Long Term Equity Incentive Plan. EBRD now holds 17.34% of the company‘s shares, J. Oyungerel 3.53%, Douglas McGay 2.17%, and D. Sarangua 0.04%.

Source: Petro Matad EURASIA CAPITAL BECOMES MEMBER OF THE WORLD‟S LEADING M&A ALLIANCE Eurasia Capital became 45th member of M&A International Inc, the world's leading M&A alliance, at its Annual General Meeting held last week in Istanbul. Earlier, its presentation on opportunities in Mongolia and Central Asia generated strong interest among the over 200 M&A professionals attending the meeting. Members unanimously voted for Eurasia Capital‘s includion in the alliance, with Mr. Scott Hardman, President of M&A International, saying the admission ―represents a major step forward in its ability to advise clients on a global basis, extending its reach across Central Asia, in particular to resource-rich Mongolia". "We are proud to be the first member of the world's leading M&A alliance representing Mongolia and Central Asia," stated Mr. Alisher Ali Djumanov, Chairman of Eurasia Capital, a pan-regional investment bank that assists local and international companies with operations in Mongolia (primarily in resource area) to raise capital both locally and internationally.

Source: Eurasia Capital CAMERON McRAE NAMED NEW OYU TOLGOI CEO Mr. Cameron McRae will take over as CEO of Oyu Tolgoi LLC on December 1, in succession to Mr. Keith Marshall who moves to the Rio Tinto head office in London. Mr. McRae has beern president of the Oyu Tolgoi project for three years.

Source: Montsame

TDB, “PIONEER NOT BY CHOICE BUT LEADER BY HARD WORK AND DETERMINATION” Mr. B. Medree, Executive Director of Trade and Development Bank, which is celebrating the 20th anniversary of its establishment as the first commercial bank in Mongolia in the real sense of the term, has recalled in an interview that the MNT50 million in capital it had at the time it was launched has now grown to over MNT80 billion. Several banks were established when Mongolia came out of the socialist system in 1990, of which only the TDB survives. Mr. Medree has led the bank all these years, and thinks the TDB‘s success in the face of great odds is due to its ability to face the reality of circumstances, however unpleasant it might have looked, its determination to find a way out and then proceed on that path unitedly. Hard work also contributed to the growth. Mr. Medree recalled that it was possible to have competent management and proper governance as the bank always valued the worth of its human resource. ―We sought out bright students in banking and finance, took them in for internship, watched their performance and then offered jobs to the best among them, to continuously add fresh energy and strength to our existing and experienced team,‖ he said. The bank was pioneer by accident but became a leader by choice, introducing appropriate products and technology, and placing customers‘ interests first whenever some change was considered. A bank‘s success depends on its customers being good, and the TDB has always followed the principle that they develop together. Loans were once limited to USD200,000 but now a reliable customer with a viable project can get credit up to USD20 million. The TDB has so far disbursed a total of MNT3.6 trillion in loans, and has paid MNT65.4 billion in taxes and to the social insurance fund.

Source: Udriin Sonin NORTH ASIA CEO FINDS MONGOLIA MINING-FRIENDLY Meet Mr. Joseph King Jun-chih, an accounting graduate from the State University of New York, who entered the world of minerals five years ago when he invested in a mine in mainland China. Mr. King, 43, and a friend founded North Asia Resources, which was acquired by Green Global Resources in July last year. Green Global, which used to be an agricultural and information technology firm, appointed King chairman in March. A month later it reverted to the name North Asia Resources, focusing on mining. Since Green Global's acquisition, North Asia has been busy in Mongolia which has large reserves of minerals. North Asia owns and operates an iron ore and copper mine and two gold mines in Mongolia. The Oyut Ovoo iron and copper mine in south-central Mongolia has already produced 20,000 tonnes of iron ore for trial production, Mr. King said, while 1,200 grams have been dug out from the gold mines. North Asia has big ambitions.It is aiming to position itself as the BHP Billiton of Mongolia, and be the gateway for the transfer of resources from Mongolia to China. "No pain, no gain" is Mr. King's motto as he tries to steer the firm into a leadership role.To achieve this the management team has to be on its toes. So two of the three executive directors - deputy chairman Chan Kwan-hung and executive director Michael Tse Nam - are based in Mongolia to keep a firm grip on supervision and management. Read more… "We have to be there to learn about the local environment, law, local conditions and customs," Mr. King said. "We want to send a strong signal to our partners that our management team is not there for sightseeing. We are committed." The firm has an advisory board, packed with world-class mining experts.They include Mr.Sean Hinton, Mongolia's honorary consul general in Australia. Mr. Hinton's experience in Mongolia spans 22 years during which he established a good relationship with the government. Also on board is Mr. David Owens, who has been in the industry for 32 years. Mr. Owens founded Asia Gold, which was acquired by a company later known as SouthGobi Resources. Although Mongolia is a developing country, it will be a mega resources producer in 20 to 30 years, the World Bank predicts. "It is a golden opportunity for us," Mr. King noted, "considering that Mongolia is next to China." North Asia has an office in Ulaanbaatar, and Mr. King said he is satisfied with the mines' operations. "Oyut Ovoo is an open-pit mine, easy for exploitation and the cost is low too." North Asia is looking to expand production starting next spring. "It took us only six months, from the acquisition to the initial blasting. We have legal and government approval to proceed," Mr. King said, noting that in Australia, the same process could take years. Mr. King said projects can get off the ground quickly in Mongolia because of the government's keen interest in foreign investment.

"Mongolia is a mining-friendly country with laws that allow co- production and joint ventures for mining projects," he said. Mr. King said Mongolia also has geographical advantages. "The Gobi desert, which covers 33 percent of the country, is three times larger than France, which is good for the mining industry." But not all is rosy. The biggest problem for doing mining business in Mongolia is transportation, Mr. King said. "Most of the country is uninhabited and there used to be only one railway built by the Russians decades ago." The gauge of the track in Mongolia is wider than in China, "so the iron ore couldn't go anywhere if we did not solve the transportation problem." North Asia then decided to team up with China Railway Mongolia, a subsidiary of China Railway. Under their agreement, China Railway Mongolia will purchase 1.5 million tonnes of iron ore from North Asia at the prevailing market price each year and transport at least 2.5 million tonnes for North Asia to Erenh on the Mongolian-China border every year. Mr. King is glad that North Asia had the foresight to list on the Hong Kong stock exchange. Many Mongolian resource firms are now trying to follow suit because of the growing interest in the country's bountiful resources. Mr. King said North Asia will focus on developing its business in Mongolia by acquiring several more iron mines in the future. China needs large quantities of iron to feed its growing industries. "That's why I am so bullish about our future," Mr. King said. The North Asia chairman is also full of praise for his staff, but admits that when it comes to salaries, his firm cannot compete with mining giants such as BHP Billiton or Brazil's Companhia Vale do Rio Doce. But North Asia makes up for this through its corporate culture and care for employees. "Besides a bonus, our employees can travel overseas." Whenever an employee has to go on a long business trip, his wife gets a fruit basket as a token of appreciation for his dedication. Mr. King was born in Taiwan but came to Hong Kong when he was three or four years old with his father, King Yeo- chi, a former vice chancellor at the Chinese University. The younger King picked up Cantonese from watching television as his father made him speak Putonghua at home. He and his three brothers lived with their parents at Chinese University quarters until he moved to the United States at the age of 17. He started his career in New York at Ernst & Young, and later became an investment banker at Blackstone Group and Nikko Securities in Tokyo. "I was raised in a traditional family," Mr. King said. "My father was strict, he went straight to his study room to smoke his pipe and read books after work. The family had dinner together no more than once or twice a month, but my father had a big influence on me." Mr. King said he learned to be hard working and aimed high. But the "most important thing is to be honest".

Source: The Standard, Honk Kong NEW MONETARY SERVICE FOR MOBICOM CLIENTS MobiFinance has introduced its Most Money mobile monetary service to MobiCom customers, based on the most recent technology. This allows subscribers to open an online monetary account which can be used for transactions like transferring money among themselves, recharging their own and others‘ mobile phones with units, payment of monthly call bills, paying at commercial and service stores, adding to mobile monetary accounts, etc.

Source: Udriin Sonin PETRO MATAD GIVES UP 20.7% OF BLOCK XX Petro Matad has relinquished 20.7% of the original area of Block XX, as required by Mongolian law. Block XX is now 10,343.15 km² in area. Surface geology, 2D seismic, gravity, and magnetic surveys confirm that the relinquished areas are un-prospective for hydrocarbons, and are underlain by "basement" rocks and areas of shallow sedimentary fill above basement rocks.

Source: Petro Matad SHARYNGOL GETS 2009 ACCOUNTS AUDITED BY ERNST & YOUNG SharynGol JSC has announced that the just received report of the Ernst & Young audit of its 2009 accounts will not replace the year‘s accounts already approved by the board and shareholders, but is an important milestone in the management's continued efforts to bring the company into compliance with global business practices, in line with the company‘s policy of transparency. To the best of the management's knowledge, this is the first instance of a Mongolian Stock Exchange listed company making available to shareholders audited financial statements by a Big Four international accounting firm.

SharynGol JSC owns and operates 100% a coal mine in Northern Mongolia. It was privatised and listed on the Mongolian Stock Exchange in 2003. The company has been mining coal at SharynGol for over 45 years, supplying domestic and export customers with coal for thermal and semi-coking (smokeless fuel) uses.

Source: Sharyn Gol JSC CLAIMANTS VIE FOR MONGOLIA‟S CROWN JEWELS A feeling of expectation hung in the air early one September morning as a group of bankers emerged from the aging, Soviet-era chic of Ulaanbaatar's Chinggis Khaan Hotel en route to a two-hour flight deep into the Gobi Desert, which blankets Mongolia's southern frontier. Their destination, about 80 km from China's northern border, was Oyu Tolgoi, which bankers, geologists, journalists, and the mine's main developer Ivanhoe Mines Ltd routinely describe as one of the world's largest untapped copper and gold deposits. Ivanhoe, led by the colorful American-born billionaire Robert Friedland, owns 66 percent of the mine, and the Mongolian government the rest. "This is going to be among the top five mines in size around the world," Mr. Keith Marshall, president and CEO of Oyu Tolgoi LLC told a recent conference in Ulaanbaatar. "The only way to describe it is that it is just an awesome deposit. I have been 30 years in the mining industry and I haven't seen anything quite like this." Oyu Tolgoi, or "Turquoise Hill," is named after the color of the copper oxide leaching to the surface. The project is Mongolia's crown jewel, a massive ore body with a lifespan of 40-50 years that Ivanhoe says contains approximately 81 billion pounds of copper and 46 million ounces of gold -- not including estimates from a new vein discovered late last month. The mine will have a major impact on the supply of global copper. The copper reserves alone would be second only to Chile. Much of the mine's treasure will be sold to China to satisfy the Middle Kingdom's voracious appetite for natural resources. Read more… Mongolia's emergence as one of Asia's premier frontier markets is rarely discussed without reference to the Oyu Tolgoi site, a modern-day El Dorado that analysts say could account for roughly 30 percent of the country's GDP once it is fully operational. Bankers and fund managers from Citi, ING, Morgan Stanley, Aberdeen Asset Management and other financial powerhouses flew in on September 6 to take a closer look at the famous mine. "Obviously, people wanted to know what would drive Mongolia's economy going forward and (Oyu Tolgoi) is a testament to where it is heading," Mr. Alisher Ali Djumanov, chairman of Hong Kong-based investment bank Eurasia Capital, which organized the trip, said. "We felt it important for foreign investors to see for themselves the transformations taking place so they feel more confident about the entire Mongolian story." The visit came at a challenging time for Ivanhoe. The Canada-based miner is trying to fend off a possible takeover by its biggest shareholder, global mining giant Rio Tinto -- a deal that could be as compelling for Rio as its Australian rival BHP Billiton's USD39-billion pursuit of Canada's Potash Corp. Analysts say Mr. Friedland is maneuvering to prevent Ivanhoe from being acquired too cheaply by the much bigger Rio, which posted a profit of USD5.8 billion for the first half of 2010 on earnings of USD25 billion. "Ideally, Robert (Friedland) wants to be bought out and he wants a fair price," said UBS analyst Glyn Lawcock. Rio ultimately wants to swap its Ivanhoe stake for a direct holding in Oyu Tolgoi and bring in one of its largest shareholders, China's Chinalco, as a partner. "At the end of the day, you're dealing with one of the shrewdest investors in the mining space," said James Bruce, portfolio manager at Perpetual Investments, which owns a stake in Rio Tinto. "It's a very difficult negotiation, but one that, presumably, Rio Tinto are keen to have."

Source: Reuters THE BATTLE FOR OYU TOLGOI Global miner Rio Tinto has set out to control another Canadian company, Ivanhoe Mines. And just as with the BHP-Potash feud, this battle looks heated… and with good reason. Relations between Rio Tinto and Ivanhoe Mines started out well enough. In 2006, they signed an agreement to jointly develop the massive Oyu Tolgoi copper and gold mine. Ivanhoe already owned 66% of the Mongolian jackpot, so Rio gave financing in return for shares in Ivanhoe. And everything went just fine for a while. But then Rio began building up its position to the 35% it now holds in its partner. In addition, a standstill agreement between the two – capping Rio‘s investment at 47% – expires next October. Rio, of course, likes how this makes it easy to eventually take full control of both its partner and

their shared mine. But Ivanhoe founder and chairman Robert Friedland feels very differently. A legend in his industry, he has a Steve Jobs-like knack for telling investors a great story. And over the summer, he did make Ivanhoe sign a shareholder rights plan, or poison pill, to protect his company from ―coercive and creeping takeovers‖. If effective, that would extend the standstill agreement indefinitely. But ultimately, a Canadian arbitrator will decide the contract‘s validity in the situation. Ivanhoe Mines also engaged investment bankers to assess ―strategic options‖. And investors seem to be banking on Mr. Friedland, as his company‘s shares hit an all-time high a few weeks ago. It‘s easy to see why both Ivanhoe and Rio Tinto want the mine so badly. Earlier this year, BMO Capital Markets listed Oyu Tolgoi as the best new copper project for long-term profits. It also ranked the mine as the second best new source of copper in terms of production capacity. Read more... Because of its location, Ivanhoe could find a white knight in a state-owned Chinese company. But even then, Rio has a signed right of first refusal over any third party offer. So should Ivanhoe offer its shares to a bidder, Rio could not only deny the bid but also move to take immediate control of the entire company. Ivanhoe can really only hope to find an interested party with a high enough offer that Rio can‘t counter it. Speculation says that would have to amount to about CAD40 per share. Some think that China‘s state-owned mining company, Chinalco, which wants to diversify out of aluminum, could offer that much. But Chinalco is also Rio Tinto‘s largest shareholder, so it would be much more likely to join teams with Rio if it really wants Ivanhoe. In the end, no third-party offer really exists, which shouldn‘t come as any surprise. Oyu Tolgoi is a multi-billion dollar project, and not too many players can handle that. So shareholders in Ivanhoe Mines have to trust solely in Mr. Friedland‘s ability to woo one of the few that can afford such a price tag. Right now, with all due respect to his skills and savvy, that seems like a tall order.

Source: Investment U Research FRENCH MINISTER VISITS L‟OCCITANE STORE Visiting French Minister of State for Foreign Trade Anne-Marie Idrac took time off her busy schedule to drop in at the recently opened store of the French cosmetic brand L‘Occitane in Central Tower. The Tavan Bogd Group is the official distributor of L‘Occitane products in Mongolia and B.Gantuya, its Director of Business Development, said the minister‘s visit was ―evidence of the brand‘s reputation and of her faith in us‖. The group presented to the Minister a Gobi cashmere scarf with Sharav‘s famous picture ―Mongolia‘s one day‖. Ms. Idrac was so impressed that she planned to go the Gobi store on her way to the airport. The Tavan Bogd Group is a major shareholder in Gobi.

Source: News.mn POLO RESOURCES DISPOSES OF MONGOLIAN ASSETS Polo Resources has received a USD20-million deferred cash consideration from Winsway relating to the disposal of Polo's 50% stake in the Peabody-Polo Resources JV formed to hold coal and uranium assets in Mongolia. The total consideration received from Winsway for Polo's interest in the joint venture is USD35 million. Co-chairman and Managing Director Neil Herbert said, ―Polo Resources has now disposed of its Mongolian assets apart from a 0.5% royalty of the future producing asset.

Source: Polo Resources MINING COMPANIES STAY AWAY FROM LABOR FAIR Almost all mining companies, except Energy Resources LLC, decided to stay away from the two-day labor fair at the Central Culture Palace last week, held to bring together those offering jobs and those seeking them. More than 60 companies advertised 1,080 vacancies. The organizer of the fair, The Central Labor Exchange, said they had sent several invitations to mining companies such as Oyu Tolgoi LLC but had received no response. Many job seekers were disappointed as, according to the Millennium Challenge Account research, the most lucrative jobs now are in mining and as drivers of heavy weight vehicles. Surveys had predicted that permanent jobs in agriculture will increase 22.5%, 6.5% in construction, and 9.4% in trade this year. The demand for temporary jobs in these sectors was expected to rise 34.7%, 5.8%, and 10.5% respectively. But this has not happened as the salaries offered have not attracted most of the unemployed. Most of those enquiring about jobs at the fair were middle aged or older people but there was not much demand for them.

Source: News.mn WINSWAY SHARES FALL AFTER IPO Shares of Chinese coking coal logistics company Winsway Coking Coal Holdings Ltd fell 5 percent on their Hong Kong trading debut on Monday, following a USD473 million initial public offering. Hong Kong's appeal for Mongolian mining companies is its diversified investor base, proximity to mainland China and China's hunger for Mongolia's copper, iron ore, gold and coal. However, investors are still cautious about Mongolia-related resources companies as earnings growth and profitability are vulnerable to fluctuations as the domestic industry develops. In addition, the supply of coal from Mongolia to China may be limited by the availability and stability of transport services and border crossing handling capacity. "Transport bottlenecks are preventing cheaper Mongolian coking coal from entering China," according to a Bank of America Merrill Lynch research report. Read more… Winsway is a logistics company, specializing in the import and distribution of coking coal, so procurement is highly dependant on the ability of suppliers to maintain production levels and their willingness to honor supply contracts. As suppliers grow, they may set up their own facilities to reach customers in China and rely less on logistics companies. "Winsway is not a miner. Investors prefer buying into miners, due to commodities price surges against the weak U.S. dollar," an analyst said. Winsway accounted for about 65 percent of total Mongolian coal imports into China in 2009, based on SXcoal import data.

Source: Reuters OYU TOLGOI CULTURAL HERITAGE TEAM BUSY PREPARING WORK PLAN A joint US-Mongolian team, selected from among 13 bidders, has been busy preparing the work plan of a program to protect the country‘s cultural heritage in areas covered by the Oyu Tolgoi project. The advertisement was published last December and the choice fell on a team from the Mongolian Academy of Science, the Centre of Paleontology, the Institute of History from the Mongolian side, and the Statistical Research Center of Arizona University in the USA. The team began work in July and hope to finish work on the plan within a year. Mr. O. Tserennadmid, chief specialist of the team, says their main objective is preservation and protection of cultural heritage, both tangible and cultural, and also generating popular awareness of the need to cooperate. Mr. Ch. Amartuvshin of the Archeological Institute said several sites dating to the Bronze Age have been discovered in the southern region where copper was manually extracted and then smelted. Now, with funding from the Oyu Tolgoi project, more detailed studies can be undertaken.

Source: Undesnii Shuudan

ECONOMY CENTRAL BANK ASKED TO BE IMPROVE INTERNAL MONTORING AND TO BE MORE OPEN An audit was recently made of the status, quality, and effect of the implementation of the Central Bank‘s 2009 Financial Report, and of the information the Bank provides to Parliament and the public. The report of the audit, as presented at a recent meeting of the Monitoring Council of the Central Bank, makes the following points, among others.

1. Internal monitoring is superficial, with no definite study or analysis. Discrepancies are not pursued or reconciled. Both the management and methodology have to be improved.

2. Substantive measure should be taken immediately to recover MNT27.7 billion from four gold mining companies -- Mongol Gazar, Erdes, Monpolimet, and Khailaast.

3. The recommendations contained in the audit report must be fully implemented. by the first quarter of 2011.

4. More detailed, accurate, relevant and meaningful information has to be provided to both Parliament and the public.

5. A quarterly report on status of debts and receivables, identifying officials responsible for recovery of loans, must be submitted to the Monitoring Council.

Source: Undesnii Shuudan INFLATION HAS TO BE RISKED FOR GROWTH: CH. KHASHCHULUUN The head of the National Development and Innovation Committee, Mr. Ch. Khashchuluun, feels it would be difficult to reduce expenses in the draft 2011 budget. If the economy has to grow, there

must be adequate investment in infrastructure, even if that means a budget deficit. It is natural at times of growth to have bigger budgets. State expenditure will rise also because of higher salaries and because more will be distributed from the Human Development Fund (HDF). This accumulation of cash in people‘s hands could lead to high inflation, as in 2007, but this is an unavoidable risk. Once infrastructure and industry are developed, and revenue from mineral resources starts being put into the Stability Fund and the HDF, expenses will be reduced and budget deficits checked. He expects this to happen after 2013. He has mixed feelings about the distribution of mineral resources revenue to the people and says there is no easy and simple solution to the problem. The flow of cash will lead to price raise and may very well encourage laziness. On the other hand, part of the revenue will actually go to the people, the ultimate owner of the nation‘s underground wealth. The important thing is to ensure productive use of the rest of the revenue, in improving standard of living, and education and health services. Read more... Mining resources revenue would be generated for at least 50-60 years, but the country‘s development policy should be for a longer term, say for 60 years after these 60 years of mining growth. Mineral resources development must be supplemented with human resources development. Asked how the projected rise in GDP will impact individual lives, Mr. Khashchuluun said GDP indicated the total value of goods produced in a country so those not involved in the production process do not directly benefit. However, everything produced has to be sold, and all the stages between production and sale will create money for individuals. For instance, increased production will mean an increased demand for transportation, and those who provide that service will benefit.

Source: Ardiin Erkh MONGOLIA CONFIDENT MMC IPO WILL EASE DOUBTS Mongolia‘s pitch to become the new frontier for metals and mining is facing renewed scrutiny from investors around the world as Mongolian Mining Corp (MMC) raises USD650 million at its IPO in Hong Kong after pricing its shares in the middle of a target range set by advisers JPMorgan and Citi. The IPO represents 20 per cent of the company‘s equity, and creates the first homegrown, multibillion-dollar miner in a country that possesses little capital or infrastructure, but vast deposits of coal, copper and gold. The arrival of this young ―state champion‖, as Mr. D. Zorigt, Mongolia‘s mining minister calls MMC, came as the country‘s prime minister and top officials completed a global tour intended to raise the country‘s investment profile. Referring to MMC‘s deposits of coking coal, which is used to make steel and which lie close to the border with China, a banker involved in MMC‘s IPO said: ―Here you have high-quality mineralization sitting next to the biggest consumer of those minerals.‖ The statement applies to all large mineral projects in Mongolia, including Oyu Tolgoi, the copper-gold mine that defines the country for international investors. The proximity to China created investor euphoria about Mongolia a year ago. But the momentum slackened as investors looked more closely at the country‘s dire lack of infrastructure, in spite of the government‘s promises of a big building programme of roads, railways and power plants. Read more... Investor interest in MMC is one sign that Mongolia‘s minerals-led development is regaining momentum. ―MMC is an important test case for outbound IPOs from Mongolia, where a success will form precedent for many more IPOs to come,‖ an analyst said. The government has clarified plans for Tavan Tolgoi, the enormous coking coal deposit that ranks with Oyu Tolgoi as one of the best undeveloped mineral areas in the world. Tavan Tolgoi will be half-owned by the government, Mr Zorigt said in an interview. The half earmarked for privatization will be split 20:30 between Mongolian and international investors respectively. The concession, however, will be split into two blocks. Erdenes, the state-owned mining group, is considering international applications to operate one of these blocks. MMC has been dubbed ―mini-TT‖, after Tavan Tolgoi. The company‘s principal mine – which aims to produce 15m tonnes of coking coal by 2013 – comprises one-sixth of the original Tavan Tolgoi license area. As part of the development programme, MMC is building a road to China and is expecting a rail line to follow as part of the government‘s plans for an east-west arterial railway to intersect the Soviet-era trans-Mongolian line. It is also building its own coal-washing plant and claims that there is enough water in the bleak south Gobi desert to do so. Worries about the country‘s basic water and rail infrastructure, as well as its lack of equipment, have weighed on the shares of a Mongolian company that pioneered a Hong Kong listing earlier this year. SouthGobi Energy, a thermal coal miner, has seen its shares fall

36 per cent since its debut in January. Mr Zorigt is confident that MMC will help dispel investor doubts about the future of Mongolia and he promises that other national champions will be emerging over the next decade. ―We are strong believers in national champions,‖ he says. ―In our experience, in our part of the world, Japan and Korea have succeeded in part because of these large corporations. The next step of our industrialisation requires this more sophisticated type of business.‖

Source: The Financial Times ECONOMIC AND SOCIAL DATA RELEASED The National Statistics Office has released figures for the first nine months of 2010 or, in some cases, for September. The comparison in all cases is with the corresponding period in 2009, unless otherwise stated. Consumer price index The national consumer price index in September of 2010 fell 0.7 percent from the previous month, but was 8.3 percent higher than at the end of last year, and 10.6 percent higher than in the same period of 2009. Unemployment The number of unemployed people registered at labor exchanges all over the nation was 3.6 percent less at the end of September than in the same period last year. Government Budget The budget deficit in the first 9 months was 16.9 times less. The current account showed a surplus. Tax receipts rose 68.6 percent. Receipts from the windfall profits tax rose 3.0 times, from corporate income tax 2.1 times and from value added tax 65.0 percent. GDP Gross domestic product (at 2005 constant prices) in the first 3 quarters of 2010 increased 6.3 percent. Foreign trade Total turnover of trade with 122 countries in the first 9 months of 2010 reached USD4,273.9 million, recording a 53.8 percent rise. Exports stood at USD 2,025.6 million, an increase of 56.6 percent, while imports accounted for USD2,248.3 million, up 51.5 percent. The balance showed a deficit of USD222.6 million, rising 16.9 percent against the same period of 2009. Industrial output Total industrial output in the first nine months increased by 15 percent (at 2005 constant prices). Construction and installation Domestic entities carried out 91.1 percent of the total construction and installation work worth MNT143.7 billion in the first 9 months. Freight and passenger traffic The volume of freight rose 15.5 percent and the number of passengers 12.8 percent in the first 9 months. The figures include traffic by all types of transport. Social insurance Of the 516,600 people registered under social insurance, 60.7 percent worked at Government establishments, and the remaining 39.3 percent in the private sector. Retirement pension accounted for 73.4 percent of the total amount of pensions paid in the first 3 quarters, pension for the disabled for 12.7 percent, breadwinner loss pension for 7.2 percent, and military pension for 6.7 percent.

Source: Montsame SPC CHIEF SAYS RUSSIA WANTS CANADIANS OUT OF URANIUM SECTOR The State Property Committee (SPC) used to be called the Commission of Property Privatization and while that has been its principal function even after reorganization, in recent months the SPC has

found itself saddled with new responsibilities. According to the chief of the committee, Mr. D.Sugar, these include better management of state owned companies, so that they do not run at loss, preparing to sell their shares in the capital market, arranging for public private partnership, and implementation of the Concession Law. Mr. Sugar said deciding on a foreign company to restructure the Mongolian Stock Exchange is not easy as it must primarily serve Mongolia‘s long-term interests. All bids are being reviewed, and he was hopeful that a partner team will be announced ―in the near future‖. It is not enough that some big Mongolian companies have an IPO in a foreign market. ―Strategic deposits will bring investment to our country, but it is as important to get shares of general domestic companies sold to Mongolians in the country,‖ Mr. Sugar said, revealing that Mongol Post is ready to offer 30% of its shares to the market. Calling the dispute around Khan Resources ―a complicated situation‖, Mr. Sugar said Mongolia needs foreign help to mine and process the uranium it has and Russia is a natural choice, as ―it is closest to us, and has the right technology and long experience‖. He said the SPC planned to ―involve Toshiba and also the Canadians, but our Russian partner wants Canadian companies out so that Russia and Mongolia can cooperate 51:49,‖ he said.

Source: Zuunii Medee MONEY SUPPLY UP 45.2 PERCENT YEAR-ON-YEAR The Central Bank reports money supply (broad money or M2) at the end of September was 5.3 percent more than at the end of August 2010, and 45.2 percent more than in the same period in 2009. Loans outstanding at the end of September were 2.1 percent more than at the end of August, and 17.3 percent more than a year ago. Principals in arrears at the end of September fell 11.3 percent from what they were at the end of August 2010, and 61.8 percent year-on-year. Non-performing bank loans at the end of September rose 0.2 percent over the end of August, and 3.4 percent over the end of September, 2009.

Source: The Central Bank HOW BATBOLD PITCHED VANCOUVER BUSINESS COMMUNITY Fewer exploration companies are looking to the country these days as the government struggles to streamline its bureaucracy, but that did not stop Mongolian Prime Minister S. Batbold from pitching Vancouver‘s mining sector when he was there earlier this month as part of a Canadian tour to advertise his country as a source of untold mineral wealth. Following a speech at Simon Fraser University Harbour Centre, Mr. Batbold told reporters his government has adopted an agenda to deal with deficiencies that cause investors to think twice about investing in the nation. He said, ―We need to create not only heavy debate and discussions, transparent discussions [within our government], but more importantly we need to create a stable and predictable business environment and a competitive business environment for domestic and international investors.‖ In the past, critics have accused the Mongolian government of taking too large a stake in mineral projects and complained its permitting process is unduly long. In addition to mining, Mr. Batbold also said his country presents a wealth of wind power and forestry opportunities. On October 1, he agreed to build 96 regional government centers using British Columbia lumber and Canadian wood technology.

Source: Business in Vancouver CANADA COULD BE AN EXAMPLE IN MINING DEVELOPMENT, SAYS AMBASSADOR GOLDHAWK The Canadian Ambassador to Mongolia, Mr. Gregory Goldhawk, who accompanied Prime Minister S.Batbold when he recently visited Canada, has said in an interview that he believes when Mr. Batbold said that Canada could be ―our model for development‖, he was referring to Canada‘s similarities to Mongolia in having a sparsely populated and large territory and enormous natural resources, and that the example of Canada would mostly relate to development of mining and mineral resources and the use of appropriate technology. ―We are ready to provide assistance in these,‖ he said. The Ambassador said there is scope to raise investment in mining and in agriculture. The other possible fields are construction, urban planning, infrastructure, road and transportation, and technology. Asked for his comments on the Khan Resources issue, he would only say, ―I do not know much about the particular dispute because I am still quite new here, but both sides are trying to resolve the matter amicably.‖ In answer to another question, he said, ―Every country has its own legal environment and I am sure Canadian companies do and will work strictly within it. Mining

companies should also pay attention to environmental protection as an expression of social responsibility. I think Canadian companies are good in these respects.‖

Source: News.mn MRAM CHIEF WANTS LAWS TO BE CLEAR AND UNEQUIVOCAL Mr. D.Batkhuyag, Chairman of the Mineral Resources Authority of Mongolia (MRAM), has said that the popular notion that ―all the land in Mongolia is being dug up and exploited and given away to foreigners‖ is not supported by facts. In fact, only 17.1% of the territory is under exploration license and 0.3% under mining license. ―If anything, Mongolian territory is underexplored,‖ he says. The MRAM is not concerned with whether a law is right or not, its obligation being to implement it in the best and most effective way. Still, he says, ―given the primacy of the mining sector, both in attracting foreign investment and in ensuring development, the rules of the game should at all times be very clear‖, and laws and regulations should be clear and unequivocal. Unfortunately this is not always so, and as an example of what happens when laws are carelessly and thoughtlessly worded he cites instances when which do explore, but are not able to spend the minimum stipulated amount, get their license revoked, while others, who do nothing, get away with a fine. Calling the law banning mining work near river basins and forests ―good, in both concept and content, Mr. Batkhuyag felt ―it is a mistake to assume that we shall reach the the peak of development only if we allow indiscriminate expansion of the geological and mining sectors‖. It is true that implementation of the law can be a complicated process and the compensation liability will be huge but the law has also yielded good and unexpected benefits. For one, the country now has a clear map of forest areas and of water sources and flow. He feels many complications related to its implementation could have been avoided if ―all small details, all likely fall-outs‖ had been thoroughly considered when the law was made. Many feel it would have been better to allow existing holders to keep their license, and to stop issuing new ones. . Mr. Batkhuyag‘s term as chairman of the MRAM will be marked by the start of operations in two major strategic deposits. On Oyu Tolgoi, he says, ―I do not belong to either of the extreme camps, to say the agreement was the best we could expect, or the worst we could fear. It was a landmark for our geological and mining sectors, and only time will tell if several details in the agreement will work or not.‖ That the Tavan Tolgoi reserves are still somewhat unclear is not an important issue as the usual practice is to start work on a deposit with a fair idea of its reserves and then determine their exact extent as work continues.

Source: The Mongolian Mining Journal DUN AND BRADSTREET TO FORM JV WITH CREDIT INFORMATION BUREAU Dun & Bradstreet, USA, and the Credit Information Bureau LLC (CIB), Mongolia, have signed a Memorandum of Understanding (MoU) to establish the first private credit information service provider in Ulaanbaatar. The joint venture company (JVC) will initially provide consumer and commercial credit information services but intends to add other credit risk management services in the Mongolian market. Mr. Bold, chairman of the CIB, said: "The signing of the MoU with D&B culminates three years of efforts of banks and non-bank financial institutions in Mongolia to build a high-class financial institution, the CIB of Mongolia. The agreement is a milestone in the process." The Credit Information Bureau LLC, Mongolia was established in 2009 by the Mongolian Bankers Association with support from the USAID-funded Economic Policy Reform and Competitiveness (USAID/EPRC) and the International Finance Corporation (IFC). CIB selected D&B as a strategic and equity partner from a field of six highly qualified bidders through a competitive tender process. The new joint venture company will provide both credit information services and other much needed credit risk management services in the Mongolian market. Effective information sharing is essential in the credit market, especially for microfinance development and the stability of the financial sector. The company will use D&B‘s state of the art credit bureau software to support the operation of the JVC. Dun & Bradstreet is the world's leading source of commercial information and insight on businesses. Its commercial database contains more than 170 million business records.

Source: Credit Information Bureau LLC MEETING HEARS OF DANGERS OF INDISCRIMINATE FLUORIDE MINING A recent discussion on issues related to mining of fluoride, and semi-precious and ornamental stones was told how illegal extraction was affecting later prospects and the environment. Mr. D. Munkhtamir, a chief inspector at the State Specialized Inspection Agency (SIA), said there are

around 50 active fluoride mines but most of them operate without any proper survey and plan, digging haphazardly to most easily reach the best deposit, and following neither mine reinforcement nor safety procedures. This means future extraction will be more dangerous and costly. Artisanal miners add to the damage and their number is increasing. Mr. Munkhtamir revealed the SIA has asked Mongolrostsvetmet, a Russian and Mongolian joint venture, to start reclamation work in all areas where it has mined. Another participant said the use of unauthorized explosives in the mines was increasing, leading to deaths and injuries that are covered up. He urged more effective Customs checks on import of explosives from China. Mr. B. Saran of the Ministry of Nature, Environment, and Tourism said more than 600 hectares of land in Dornogovi, Dundgovi and Khentii provinces have been abandoned after fluoride and semi-precious stones extraction without any reclamation. Traders who buy gold from artisanal miners can now cover 500 km in one day and the Ministry does not have the resources to follow them. He said there are reports that prolonged fluoride extraction in Bor-Undur in Dornogovi province has led to the water level in the area dropping by over 20 meters. This is of great concern in the Gobi.

Source: Onoodor MCA MONEY TO BUILD ROADS A memorandum of understanding has been signed between the Ministry of Road, Transportation, Construction and Urban Development and the Millennium Challenge Account-Mongolia to provide funds to build a 176.4-km paved road connecting Sainshand, Choir and the 35th railroad junction, to repair and re-lay a 17.5-km road from Ulaanbaatar to Nalaikh, and to construct a new bridge in Bayanzurkh. Money will also be provided for capacity building in the transport sector, and to offer technical assistance to road repair companies.

Source: Montsame MONGOLIA HAS THE RESOURCES, AND THE BUYERS; THE TRICK IS TO GET ONE TO THE OTHER The new gold rush to develop Mongolia's resources could make it the world's fastest-growing economy over the next five years. To profit from its untapped iron ore, coal, copper, uranium, silver, and gold deposits, the government needs to build a vast network of roads and railways to ship the minerals out of the country's vast interior. More than 10 "strategically important" deposits are in development including the Dornod uranium deposits, the Asgat silver deposit, and the massive Tavan Tolgoi coal site. Tavan Tolgoi, like Oyu Tolgoi, inspires awe among resources investors. It is a deposit of approximately 7.5 billion tons -- believed to be the world's largest untapped coking coal site. Most of its projected 50 million tons of production will go to China. The trick is getting it there. To that end, Mongolia aims to build a massive industrial park in Sainshand, capital of Dornogovi Province, to help transport metals and coal to customers around the world. The facility will include copper smelting and coal processing plants, as well as railroads to and from the park. Much like the debate around Oyu Tolgoi, controversy has dogged the government's infrastructure plans from the beginning. In April, Prime Minister S. Batbold threw his support behind an east-west railway plan, connecting the Tavan Tolgoi coal deposit to the eastern city of Choibalsan via Sainshand, at a cost of around USD2 billion, according to one estimate. Some experts say it would be far more sensible, and half the cost, to build the railway south towards China, which bought 70 percent of the country's exports last year. Read more… Feeding into the debate is Mongolia's determination to shed its historical vulnerability as a landlocked country sandwiched between Russia and China. Mongolia needs both geopolitical giants as investors and customers, but wants to be beholden to neither, preferring to be "the mortar between two BRICs". "Mongolia has been quite careful about its sovereignty -- we don't want to be too dependent on one country," Mrs. S. Oyun, an MP and former foreign affairs minister, said at a conference in Ulaanbaatar in June. "Theoretically, we want to have a one-third, one-third, and one-third balance," Mrs. Oyun added, referring to China, Russia and a third country such as Japan or the United States. China's emergence as the region's dominant superpower has been accompanied by unpredictable swings in Mongolia's foreign investment policies. The government originally planned to sell as much as 49 percent of the Tavan Tolgoi coal deposit to a foreign bidder, and hired JPMorgan and Deutsche Bank to handle the sale. But in February, they canceled the auction in favor of 100

percent state ownership, with plans to sign a development contract without giving any equity away. The government's decision to cancel the Tavan Tolgoi equity stake sale to a foreign company frustrated dealmakers, but was seen by some analysts as an astute political calculation -- a move to avoid some of the popular anger that followed the Oyu Tolgoi investment agreement. Corruption may also prove to be a long-term problem. Transparency International rated Mongolia 120th in its 2009 corruption perception index, a fall from 102nd in 2008. Already whispers persist in Mongolia's business community that many workers at Oyu Tolgoi are in fact more experienced Chinese miners, instead of Mongolian nationals as promised in the investment agreement. Ivanhoe, however, says it is adhering to an agreement that calls for 60 percent of the jobs to go to Mongolians during the mine's development phase." As of 30 August, we have 4,200 people at site," Mr. Keith Marshall, the Oyu Tolgoi CEO, said, adding that 2,536 on site were Mongolian. Environmentalists are concerned that large-scale mining in southern Mongolia would increase desertification. "Both Oyu Tolgoi and Tavan Tolgoi will require huge amounts of water, and from the environmental impact assessment, and from their plans and their feasibility studies, we know they have not demonstrated availability of water for the life of this project," said S.Dugersuren, executive director of an NGO called Oyu Tolgoi Watch. "Mongolia is experiencing higher degree of climate change -- over 70 percent of Mongolia's territory is suffering desertification. That is a big concern." The discovery of a new vein at Oyu Tolgoi is bound to offer even more jobs and riches for Mongolia. Ivanhoe said on September 28 the discovery, named the Heruga North deposit, contains an estimated 10.2 billion pounds of copper and 15 million ounces of gold. "It's possible that Heruga and Heruga North eventually could be developed together as one of the world's largest underground gold mines," Ivanhoe said in a statement. The government hopes to channel some of that wealth to its citizens by privatizing a moribund state-run stock exchange, a move that would finally plug the landlocked nation into the grid of global finance, and channel capital to Mongolian entrepreneurs. The London Stock Exchange is the front-runner to run the new exchange, "building it from scratch", Prime Minister Batbold recently said. The government is making plans to take public a portion of Oyu Tolgoi mine. It's all part of Mongolia's plans to privatize assets -- it is committed to handing a tenth of all proceeds to its citizenry -- and to give Mongolians a way to cash in on the dream. That could go some way toward soothing any leaden feelings over Ivanhoe's golden deal at Oyu Tolgoi.

Source: Reuters RISE IN MONGOLIA‟S STOCKS AS DECEPTIVE AS IT IS IMPRESSIVE One hundred and ten per cent is the gain this year in the Mongolia Stock Exchange Top 20. It is a stellar index of companies that you've almost certainly never heard of and which mostly have something to do with coal. The story behind this breathless advance is one of depth and proximity, of mammoth metal and energy reserves sitting on the doorstep of mineral-hungry China. If you believe that China's appetite will only swell from here, runs the argument, Mongolia should be a sure thing. Chinese imports of coking coal more than quadrupled in 2009 from a year earlier. Much of that came from Australia: Mongolia's promise lies in being the nearer, cheaper supplier of choice in the future. Quoted with all the excitable touting of Mongolia is its exposure to "a world where China is growing at 8 per cent a year". Read more... Last month in Hong Kong, a gathering of the world's biggest investors was encouraged to relish the "monster" prospects of Mongolian shares listed on the exchange that will be celebrating only its twentieth birthday next year and is run from a pink, recently refurbished children's cinema in Ulaanbaatar. But the rise in Mongolia's stocks is as deceptive as it is impressive. Despite owning 10,000 years of coal (based on current output), rich seams of gold and uranium and copper reserves to rival Chile's, the investment and infrastructure to make it boom remains elusive. The combined market value of all companies listed on the Mongolian Exchange is just over AUD800 million, and outside Ulaanbaatar, investment views on Mongolia's prospects are mixed. Low price and proximity to China is no advantage so long as transport links remain feebly financed and rife with bottlenecks. The mines need huge capital expenditure before they start producing the goods. The big 20 Mongolian companies may be enjoying their domestic rally now, but know that they need

to raise billions to set the right projects in motion, and they will not find those billions at home. The bid for investment has recently taken several Mongolian companies - or companies with exposure to its fortunes - to Hong Kong and into a more severe market environment.

Source: The Australian THE POOR STILL TO BENEFIT FROM MONGOLIA‟S RICHES ―Our leaders are getting richer and richer. But for us, everything is getting more expensive,―, says Altangerel, who works in a beauty salon in Ulaanbaatar. ―A few years ago a liter of milk was still MNT700 (USD0.53), but now I have to pay twice that much.‖ Many Mongolians are skeptical if the country's newfound geological wealth is being shared with its citizens. The benefits of recent payout schemes have been questioned, as politicians argue over what to do with the new money, and economists warn of the negative effects of cash handouts. Altangerel, who like many Mongolians goes by only one name, cannot share the enthusiasm of her country's politicians and foreign corporations for the expected mining boom. ―The cost of rent, heating and electricity are also rising. My income hasn't been able to keep up for a long time‖ she says. Significant deposits of coal, gold, silver, uranium, zinc and fluoride have been identified under the arid steppes of Mongolia, putting the country in 14th place globally for natural resources. Many more uncharted mineral resources are thought to be awaiting discovery, potentially enough to put Mongolia in third place. Such prospects are enticing for China or South Korea, where raw materials are in high demand from the manufacturing industries.But the question of how to share the benefits of the country's mineral rights has stirred up controversy. Read more… With multinationals' money pouring into state coffers, each of the estimated 2.7 million Mongolians was promised a payment as 'erdeniin khuv', or share of the treasure, of between MNT1 and 1.5 million. Earlier this year, each citizen received MNT70,000, with another MNT50,000 payout planned for the end of the year, and the rest was scheduled for disbursement by the end of 2012. Many dreamt of following in the footsteps of Kuwait, where immigrant wage-earners do the heavy lifting while the citizens cash in on the income from the extraction industries, and the knock-on benefits to the rest of the economy. But the reality in Mongolia has fallen short of such high hopes. With its 2009 decision to implement the handouts, the government also axed child benefit payments and subsidies for young couples. For many Mongolians, around 20 per cent of whom live on less than USD1.25 per day according to the UNDP, child benefit had been their only source of income. The cash injection also caused a spike in inflation, in line with economists' unheeded warnings, hitting Mongolia's poorest even harder. Opposition leaders have argued against the handouts, citing their negative impact on the economy, calling instead for the money to be invested in education, health and other social services. And the burgeoning mining industry has hardly created any jobs for Mongolians. Many school leavers have little other option than the illegal gold mines, often hotbeds of prostitution and other criminal activities. Local livestock farmers are involved in frequent violent clashes with both legal and illegal mining companies, as they defend their lands against degradation from the heavy machinery and contamination of the waterways. International financial institutions may have praised Mongolia for stabilizing its financial markets and reining in public sending, but ground-level research has shown that improvement for the country's poor is slow. A report compiled by the national authorities and local UNDP representatives said that the UN Millennium Development Goal of halving poverty by 2015 is now out of reach, with 47 per cent of the rural population officially under the poverty line, and 27 per cent in the capital. Unless more effective solutions are found to share the country's abundant natural riches, Mongolia's wealth alone is unlikely to earn it a place among developed nations, but the rising value of copper and gold and recent oil discoveries mean a change in policy is unlikely in the near future.

Source: Earth Times COPPER HITS 27-MONTH HIGH, AS INDUSTRY PLAYERS GATHER IN LONDON Copper hit its highest level in more than two years on Monday, buoyed by expectations of more quantitative easing (QE) in the United States that could erode the dollar plus potential new investment demand. News of the planned launch of exchange-traded products (ETF) for base metals was supportive as easier access to those commodities seen boosting investment interest, traders

said. Benchmark copper was at USD8,308 a ton, a 27-month high, as metals and mining industry players met for the London Metal Exchange (LME) Week, their annual gathering. Copper, used extensively in construction and wiring, earlier hit high at $8,388 a tonne. LME Week, which gathers miners, smelters, consumers and investors for meetings, seminars, receptions and cocktail parties in London, historically generates volatility and tends to set the tone for the final quarter. "In most LME Weeks you tend to see prices moving higher particularly when you have a fairly bullish environment as we have now," an analyst said. Despite a small rise on Monday, copper stocks have been dwindling for months, with the total standing at 372,475 tons. Some analysts raised concern over the ETFs saying they could trigger violent price swings.

Source: www.miningweekly.com COPPER PRICE TO STAY STRONG INTO 2011, SAYS RIO TINTO OFFICIAL Rio Tinto sees strong copper prices continuing into next year due to supply pressures and a good demand outlook, while output is shifting to emerging regions. Rio expects volatility will remain a key feature in markets, however, due to macroeconomic conditions, Mr. Matthew Holcz, general manager of business development in Rio Tinto's copper division, said. "Due to the constraints to supply and the good outlook for demand we're pretty confident of a strong copper price going forward," he said, adding that challenges in terms of current supply, including issues such as industrial action, natural disasters and constraints to input such as power and water are set to persist. "We expect a lot of those delays to continue," he said. "In emerging regions there are a lot of challenges," he said, citing matters such as developing transport, improving the security of tenure and building a skilled workforce. "These are all challenges that will need to be overcome for supply to meet demand."

Source: www.miningweekly.com IMF SAYS „FEW SIGNS‟ METALS SUPPLY CAN KEEP PACE WITH DEMAND An era of scarcity and rising prices for base metals is likely to continue for some time, as there have been "few convincing signs" that supply would catch up with demand, the International Monetary Fund (IMF) reported. ―Analysis suggests that base-metal prices are only about halfway through the current period of trend price increases," the IMF stated in its World Economic Outlook (WEO). The organisation said that concern had continued to build, even in the aftermath of the global economic recession, about the ability of supply to keep pace with future consumption growth. This was attributed to a lack of capital investment but also, in the case of copper and tin, to declining mine productivity as a result of technological and geological constraints. The impact of environmental policies is also constraining supply, especially lead, and to a lesser extent, aluminum. The IMF said that inventory-to-use ratios, which increased during the recession and provided some buffer for shocks, had begun to decline and would experience sustained falls in the event of physical market deficits. "The medium-term balance of risks for prices should thus remain tilted toward the upside, particularly for copper," it noted. But the IMF noted that two developments could restrain short-term metals demand growth. These included moderating growth in China as the impact of the stimulus waned and efforts to slow credit growth affected investment. Also, the IMF said that end-users might choose to run down inventories built up during 2009 to support increased investment activities.

Source: www.miningweekly.com CHINA‟S MONTHLY TRADE SURPLUS NARROWS China‘s trade surplus narrowed in September but the moderation is unlikely to relieve pressure on Beijing from trade partners demanding greater currency reform to address global imbalances. The surplus hit USD16.9 billion for the month of September, below August‘s USD20 billion but still uncomfortably high for deficit countries like the US which accuse China of intentionally undervaluing its currency to support domestic industry. Last month, the US House of Representatives passed legislation that would impose heavy import tariffs on countries deemed to be intentionally undervaluing their currencies. The proposal is now pending action in the US Senate. Many of China‘s other trade partners have also weighed in amid accusations that Beijing‘s intervention to support the renminbi could set off a ―currency war‖ of competitive devaluations around the world. Under intense pressure from the US, China reacted in mid-June by loosening a de facto peg to the

US dollar that was introduced after the onset of the global financial crisis. But although the renminbi has appreciated slightly faster in recent weeks, Beijing has still only allowed the currency to rise 2.3 per cent against the dollar since June 19, prompting calls in the US for punitive measures even from those who previously favoured a softer approach. Chinese exports increased 25.1 percent from September last year, while imports increased 24.1 percent. In August, imports had grown 35.2 percent from a year earlier while exports had expanded by 34.4 percent. China‘s overall trade surplus for the first three quarters fell 10.5 percent from the same period last year, but the USD120.6 billion surplus for the first nine months is still seen as far too high and as one of the most serious structural imbalances in the global economy today.

Source: The Financial Times CHINA‟S RICH MAKE THEIR MONEY AT HOME China's economy is frequently criticized for not being oriented enough to domestic consumption. You won't hear that complaint coming from the country's most well-off. Among the 1,363 individuals worth over USD150 million in China, only 5% have made their fortunes from export-focused businesses. Instead, the richest Chinese are making money from sectors reliant on the Chinese consumer: Zong Qinghou, the head of drinks company Wahaha, heads the table with a cool USD12 billion fortune. Such entrepreneurs are often able to benefit from the lack of a state-owned monopoly dominating their particular industry. It's no coincidence, either, that some of the sectors represented on the list, such as food & beverages, IT or pharmaceuticals, are proving attractive to stock analysts right now as well. Not only are China's rich getting richer, they're also seemingly ever more out of the reach of mere mortals. There were only six new entrants to the top 100 wealthiest Chinese this year, following only two new faces in 2009. Meanwhile, 12% of the list's members have some form of government advisory post. The present report follows recent research backed by Credit Suisse estimating that China's wealthiest 10% of households are now 26 times as rich as the bottom 10%, when hidden income such as bribes or backhanders are taken into account. No wonder wealth inequality is a central concern for China's leaders, now formulating the country's next five-year plan.

Source: The Wall Street Journal Asia CHINA SET TO OUTRANK JAPAN ON GLOBAL WEALTH With China set to overtake Japan as the world's second largest economy this year, the Chinese consumer could also eventually dethrone Japan in another key category, according to a new report by Credit Suisse. In its first Global Wealth Report, Credit Suisse predicts that total household wealth in China could more than double to USD35 trillion by 2015 from USD16.5 trillion now. China is third in terms of the total share of global wealth after the U.S. and Japan, at USD54.6 trillion and USD21 trillion respectively, and is 35% ahead of France, the wealthiest European country. A decade ago, China stood at seventh place in the global share of wealth. In the same period, Japan's wealth rose by 5%, largely because its adult population growth increased at a negligible 3% while equities and house prices stagnated. China has the largest proportion of what Credit Suisse calls the "middle segment"—individuals with USD10,000 to USD100,000, or 60% of the global total of 1.05 billion people. This group comprises 23.5% of the global population and holds 16.5% of total wealth. Credit Suisse said this group will be key in "reshaping the global economy" in the future, particularly as wealthier consumers in emerging markets shift spending from food to discretionary items. While food made up 34% of Chinese consumption in 2005, that number is expected to fall to 25% in 2015.

Source: The Wall Street Journal Asia CHINA‟S BEST-LAID PLANS China's economy lacks "balance, coordination and sustainability". Not the words of some perennial China-basher, but those of Premier Wen Jiabao himself in a recent interview. It's not the first time Mr. Wen has been disarmingly open about the structural issues China faces. Nonetheless, it adds to the sense Beijing is becoming more concerned about quality, not quantity, when it comes to economic growth. That, in turn, will inform the Chinese government's next five-year plan, due in outline this month ahead of formal adoption in spring 2011. The plan could see Beijing target a lower annual growth rate over the medium term while setting out reforms needed to rebalance China's economy toward more reliance on domestic consumption, rather than exports. Doing so will involve challenging strong vested interests, however. A lower growth target—potentially down to 7% per year for the next five years—doesn't necessarily

portend a sharp slowing for China's economy. China has grown at 11.4% per year on average over the last five years, according to UBS, way above the last five-year plan's projection for 7.5% annual growth. Read more... Still, Chinese growth will likely be closer to target in the future, primarily because of a weaker contribution from net exports, as major Chinese trading partners remain in the economic doldrums. Investment, China's other key economic driver, should remain strong, as inland provinces increase manufacturing capacity and industries upgrade equipment. But there should also be a sharper focus on encouraging domestic consumption—which has fallen to around 35% of GDP, very low by the standards of large economies—as the major force in China's economy. Reforms here, though, may prove easier to plan than enact. Take plans to bolster China's social security system, giving consumers more confidence to spend. That could be funded by asking China's state-owned enterprises to pay higher dividends. Fine in theory, but it's hard to get SOE chiefs, keen to protect their fiefdoms, to part with their cash. Reform of China's household registration system is also in the cards, helping grease the wheels of urbanization by making it easier for people to change residence, hopefully leading to higher household wealth. Resistance here may come from local governments facing increasingly congested cities with inadequate social housing. Further liberalization of interest rates is another possible target for the five-year plan, to reflect market forces. Initially it's thought this could result in higher deposit rates: good for boosting the income of Chinese savers, but not so good for China's powerful banks, which will suffer from narrower net interest margins. Fast growth may, in retrospect, come to be seen as the easy part for China's economic policy makers. Encouraging sustainable growth is going to require some heavy policy lifting.

Source: The Wall Street Journal Asia EMERGING ASIA FEELS CURRENCY STRAIN Upward pressure on emerging Asian currencies is triggering increasing talk of more intervention by the region‘s governments and central banks. Senior Thai and Indian central bank officials have been the most aggressive, voicing complaints that significant inflows of western funds in search of higher returns are pushing up currencies and, in India‘s case, fueling inflation. The growing concerns in Asia about the strength of regional currencies against the US dollar and the renminbi come amid warnings that the world is in danger of entering a currency war as nations intervene to depress their currencies. The Thai baht, which reached a 13-year high of 29.92 to the dollar last week, has appreciated 4 per cent over the past month and 11.3 per cent this year. The Indian rupee touched a two-year high of 44.15 to the dollar before retreating to trade at around 44.3 to the dollar. The rupee is up by 14.5 per cent since March 2009, when it hit a 10-year low of 51.82 to the dollar, but has risen by only 3.9 per cent since the collapse of Lehman Brothers in September 2008. However, signals from both countries have been mixed. Economists confidently expect Thailand to resort to capital controls unless currency pressures weaken, but the Indian finance minister has said that there is no need for intervention to take the steam out of the rupee, or for capital controls on fund flows. The Malaysian, Indonesian and Philippine central banks have indicated they might intervene to reduce fluctuations or smooth sudden surges, although Malaysian bank officials have also said there is no need for action to cool the currency.

Source: The Financial Times CHILEAN GOVERNMENT REACHES AGREEMENT ON CONTROVERSIAL MINING TAX Chile's government has reached an agreement with opposition lawmakers on a divisive bill that would hike taxes on miners operating in the world's top copper producer, Mining Minister Laurence Golborne has said. The compromise would reduce the period of fixed tax rates to six years and increase the range of applicable rates as high as 14 percent for companies covered under the new royalty scheme. The government aims to raise USD1 billion via the royalty change over the next three years for reconstruction after a massive February earthquake. The new royalty cannot be forced on companies currently covered under a 12-year tax invariability clause signed in 2005, though the government hopes many major miners will adopt the new scheme.

Source: Reuters

POLITICS DIFFERENCES OVER PERIOD OF VALIDITY STALL TRANSIT TARIFF AGREEMENT Minister of Road, Transportation, Construction and Urban Planning Kh.Battulga has revealed that while Mongolia wants the proposed transit tariff agreement with Russia to be valid for 25 years, Moscow prefers a far shorter term, not longer than 3 or 4 years. He was talking to media after the Government meeting yesterday authorized the working group on the matter to continue with the talks. The two sides have so far met three times. Mr. Battulga said favorable transit transport terms are vital to ensure that the price of coal is competitive in the export market. They were not a major need for Mongolia as it did not produce goods to take to sea ports. Tavan Tolgoi and Oyu Tolgoi have changed all that. Mongolia wants international conventions on reduced tariff for landlocked countries to be observed by its neighbors. He also indicated that the Russian side has agreed that the new Chief of the Ulaanbaatar Railway should be a Mongolian, though it is the turn of a Russian. A final decision will be taken when the next round of talks is held.

Source: Ardiin Erkh COMMITTEE KEEPS ACA CHIEF IN POST, REFUSES TO VOTE OPENLY With a majority of its members refusing to vote openly, the Standing Committee on Justice meeting on Wednesday did not discuss the issue of the dismissal of the Chief of the Anti-Corruption Authority (ACA) and his deputy. It will now be discussed in Parliament. The committee had last week voted to reject the Prosecutor-General‘s request for the dismissal of the ACA chief but the Speaker had ruled that its secret voting violated rules of Parliament. He had ordered Parliament to decide on the issue but the Standing Committee chief had said they would meet again and have an open vote. This is why yesterday‘s meeting was called, but 9 of the 14 members present still refused to vote openly. The head of the committee, Mr. B.Bat-Erdene, later told media that he did not agree with the criticism of the secret voting as his priority was an early settlement of the dispute. His position now was that the earlier expressed opposition of the committee to the dismissal remained valid. The committee had discussed the issue three times before the parliamentary recess, and the members felt the ACA chief could continue in his position. It is believed that former Prime Minister S. Bayar had sided with the DP members of the committee in the secret voting and supported the ACA chief‘s removal on charges of corruption and misuse of power and authority.

Source: English.News.mn GOVERNMENT DEFENDS NOT REVEALING NEWS OF KHURTS‟S ARREST The Chief of the Consular Section at the Ministry of Foreign Affairs, Mr. D. Gankhuyag, told media that the Government had received news of the arrest of Mr. B.Khurts, Chief of Administration at the National Security Council, in London on September 17 soon after the event. Asked why the media had not been told of this for more than 10 days, he said the Government felt there was no need for the general public to know of the arrest of a high official. ―It is our decision when to reveal such information,‖ he said. The case against Mr. Khurts is now being heard at a British court. He is charged with abducting a Mongolian citizen from France in 2003. The Foreign Ministry has said it has received no reply from the British Government to its request for the immediate release of Mr. Khurts, who holds a diplomatic passport.

Source: English.News.mn ACTION TO BE RECOMMENDED AGAINST 2 PROVINCE GOVERNORS Deputy Prime Minister M.Enkhbold, who is also head of The National Emergency Commission (NEC), has said he will recommend action against the Governors of Dornod and Sukhbaatar provinces for their failure to arrest the spread of the foot and mouth disease in their areas. The NEC has so far spent MNT2.6 billion on controlling the spread but since its last meeting on October 1, the disease has spread from 14 soums in these two aimags to 16. Latest reports say that 768 households in the 16 soums had 31,400 animals, 20,550 of which were infected, and 20,346 have been destroyed. The intensity of the spread has, however, come down, with around 200 new cases being reported daily, instead of the 600 earlier. Russia has promised to supply 600,000 units of vaccine, and China 100,000. The NEC will ask the Government to pay for these, and to bear the cost of their transportation to the aimags, after exempting them from paying

custom and VAT. Source: Ardiin Erkh

POLITICIANS SHOULD STAY AWAY FROM WHAT IS WORK FOR PROFESSIONALS The Government‘s decision to have an international legal consultant firm to advise on drafting agreements on major projects is significant as showing that the Government wants to proceed carefully if slowly, so that deals on projects worth USD8 billion are beyond debate. It has also become clear that the Prime Minister and his Cabinet colleagues will not be involved in work on the feasibility studies for these projects. It seems experience and study of global norms have taught them that such work is better left to specialist professionals than to all-purpose politicians. In its Spring session, Parliament gave the Prime Minister the responsibility to complete a feasibility study of a copper smelter in six months‘ time. A busy political leader getting such a brief period of time to prepare a feasibility study of a major facility worth USD300-400 million is the perfect example of how such work should not be done. There are another 25 major projects approved by the Government. Their total worth will not be less than USD200 million. One hopes Ministries and Agencies will stay away, or be kept away, from working on their feasibility study.

Source: The Mongolian Mining Journal ONON RIVER SAFE FROM CHEMICAL POLLUTION FROM RUSSIA Russian Ambassador V.V.Samoilenko has reassured the Ministry of Nature, Environment, and Tourism that detailed studies and tests in Russia have found no presence of chemical and other dangerous substances in the Ashinga River in Russia which flows into the Onon River in Mongolia. Earlier, the Mongolian Government had sought information on reports that heavy rain in the area had led the reservoir of water used in a gold mine in the Inner Baikal region to over flow and pollute the Ashinga. The Ambassador has clarified that the mine recycles the water it uses and does not use any toxic chemicals in its mining work so what has been deposited in the river is only harmless slime.

Source: Udriin Sonin MAYOR ORDERS BETTER PETROL STORAGE PRACTICES The Mayor has ordered all 174 fuel distribution centers in Ulaanbaatar to store petroleum products in containers that follow security standards. Four such centers flouting norms have been asked to suspend operation until they bring storage facilities up to the desired and legal standard.

Source: Onoodor MONGOLIA ASKS FOR FINNISH REINDEER SEMEN President Ts. Elbegdorj has asked Finland for help in revitalising the country‘s waning reindeer herding livelihood. Reindeer have been raised in Mongolia for about 3,000 years, but their numbers have dwindled to just over 1,000 animals. During a meeting with Prime Minister Mari Kiviniemi, President Elbegdorj asked if Finland could provide Mongolia with Finnish reindeer semen to be used for artificial insemination, to bring more genetic diversity to the largely in-bred national herd. Ms. Kiviniemi referred Mr.Elbegdorj to Minister of Agriculture and Forestry Sirkka-Liisa Anttila, who promised both reindeer semen and embryos to help diversify the gene pool. However, Mr. Mauri Nieminen, head of the Finnish Game and Fisheries Research Institute, told President Elbegdorj that sending semen is possible but it is not easy. It is usually done only for research purposes. It is theoretically possible to artificially inseminate reindeer, but there are complications involved. ―Reindeer are semi-wild animals,‖ Mr. Nieminen pointed out. ―It is not easy to determine when a reindeer is in heat, and especially when it reaches the climax, which is when the semen should be collected.‖ This autumn‘s period of heat is already over, which means that new reindeer sperm would not be available until next year. The semen would be frozen for transport. Read more… Mr. Nieninen notes that it might actually be easier to deliver live reindeer to Mongolia than reindeer semen. Russia has sent reindeer to Mongolia in past years, and Finnish reindeer have travelled to European countries and to Japan. Finnish reindeer are considered quite suitable for Mongolia, and should breed well. There is only one reindeer species in the world, and seven subspecies, one of which is the Finnish forest reindeer, and another is the North American caribou. They can all breed with each other. Reindeer have been raised in Mongolia for thousands of years. The population is currently so small

that inbreeding is inevitable. There are many reasons for the decline, but the reindeer herding culture has remained. People ride them, they give milk, they are used in fishing and hunting. Only a third of the Mongolian reindeer population are female, while in Finland females account for 80 per cent of reindeer. ―Artificial insemination does not help if there are no female reindeer,‖ Mr. Nieminen points out. ―Perhaps we should first go to Mongolia to check out the structure of the population.‖ Finland is seeking Mongolia‘s support in its bid to become a rotating member of the UN Security Council.

Source: Helsingin Sanomat

CHINESE DOMINATE LIST OF RICHEST WOMEN More than half the world‘s richest self-made women are Chinese, thanks in large part to Mao and cheap childcare. The world‘s three richest women are Chinese – as are 11 of the top 20 – according to the Hurun List of Self-Made Women Billionaires, which compiles information on the wealthiest Chinese. Zhang Yin, 53, the Chinese head of a recycled paper company, Nine Dragons Paper, ranks as the wealthiest self-made woman on earth with an estimated personal fortune of USD5.6 billion. Wu Yajun, 46, of Longfor Property, comes in second with USD4.1 billion and Chen Lihua, 69, of Fuhua International, a Hong Kong conglomerate, ranks third with USD4 billion. The richest non-Chinese is Spaniard Rosalia Mera of Zara, the fashion house, with USD3.5 billion, and two others who made their fortunes in fashion: Doris Fisher for Gap is eighth and Giuliana Benetton of Benetton is 11th. Oprah Winfrey, the US television show host, ranks ninth with USD2.3 billion. Nandani Lynton, of the China Europe International Business School in Shanghai, identified political and social factors for making a scrap paper lady from China richer than the doyennes of Zara, Gap, Benetton and Ebay. ―Mao made an incredible difference when he said women hold up half the sky. Since then it has been assumed that all women in China will work,‖ Ms Lynton said. Chinese women are also among the most ambitious on earth, according to a study from the Centre for Work-Life Policy in New York, which found 76 per cent of women in China aspired to top jobs, compared with 52 per cent in the US. Read more… Working mothers in China and other BRIC countries ―are able to aim high, in part because they have more shoulders to lean on than their American and European peers when it comes to childcare‖, the center noted. With an average work week of 71 hours for Chinese women, cheap childcare is essential, and in China is often provided by grandparents – four for every only child. Still, compared to Chinese men, women lag behind. According to Hurun, only 11 per cent of the richest people in China are women and the average wealth of China‘s top 50 richest women is only a third that of the top 50 richest men.

Source: The Financial Times WINE AT 1,000 EUROS A BOTTLE SELLS IN MONGOLIA The recent international exhibition ―Ulaanbaatar Partnership 2010‖ presented an award to Noyon Uul Co., which owns the World Wine store, for its ―success in meeting consumer demand with quality import products‖. Accepting the award, Mr. Ts. Tuvshinbayar, Director of the company, said demand for wine is increasing rapidly in the country and consumers have become much more knowledgeable and demanding. The company has been opening new outlets regularly, including one on the second floor of Central Tower. It imports 200 kinds of wines, some of them directly from wineries in France and Italy. People are ready to pay good money for what they drink, and the company stocks and sells a brand that is 1000 euros a bottle.

Source: Udriin Sonin

BOLIVIA DEPLOYS TROOPS TO CURB ILLEGAL GOLD MINING Bolivia's government has sent some 2 000 soldiers to stop wildcat miners from illegally mining gold in remote areas near the Brazilian border, where there are some 24 small illegal gold mines. Mining Minister Jose Pimentel said 23 people, including some foreigners, had been arrested as part of the operation. "They committed a crime and therefore they have to face legal sanctions, because these mines don't have the necessary permits, they don't have environmental papers, they don't pay taxes," Mr. Pimentel said. "From the beginning of the year we have been taking steps to combat illegal gold exports, to ensure that (gold) is mined for the good of the country," he added. Mineral-rich Bolivia is a big producer of zinc, silver, tin and lead, but mines little gold.

Source: Reuters

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. More information can be had at www.terrapinn.com/mongolia. ___________________________________________ “BSPOT" on B-TV

BTV (Business TV) now telecasts a 10-minute English-language news program called BSPOT every evening from Monday to Friday at 21:30, taking most of the stories from the BCM NewsWire.

___________________________________________ “MM TODAY” on MNB-TV

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 „MONGOLIAN BUSINESS NEWS‟ The draft Tavan Tolgoi Investment Agreement which was submitted by the Government to Parliament is posted in both languages to BCM‘s Mongolian websites, (www.bcmongolia.org) and (www.bcm.mn), ‗Mongolian Business News‘ for your review. 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] September 30, 2010 *10.6% [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 – October 14, 2010

Currency name Currency Rate

US dollars USD 1,311.44

Euro EUR 1,835.23

Japanese yen JPY 16.01

British pound GBP 2,082.24

Hong Kong dollar HKD 168.98

Chinese yuan CNY 196.62

Russian ruble RUB 43.55

South Korean won KRW 1.17

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.