19.02.2010, newswire, issue 106

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BUSINESS COUNCIL of MONGOLIA NewsWire www.bcmongolia.org [email protected] Issue 106 February 19 2010 NEWS HIGHLIGHTS: Business: Leighton confident of winning Tavan Tolgoi contract; MNCCI names SouthGobi Sands „Local Job Creator of the Year‟; Gobi holds first-ever Mongolian cashmere exhibition in Europe; Entree Gold ready to explore Shivee West; Audit of investment in Oyu Tolgoi to finish by March 15; Mines suffer as the buck gets passed around, says coal specialist; Micro Technologies-India enters Mongolia; Hong Kong-listed firm to buy 3 Mongolian coal mines; Major Drilling employees donate money to snowbound herders; Best Mongolian-run business in the USA honored; Rio may spend up to USD6 billion on capital expenditures this year; Revived Rio not fully fit; BHP Billiton 'cautious' on global recovery; How Rio Tinto trials may play out; Russia's Deripaska eyes power unit listing in Hong Kong. Economy: Social, economic figures for January released; Outstanding loans rise marginally, non-performing increase 130 percent; Handouts not the answer to poverty, says MP; 40 attend meeting of National Council on Vocational Training; Prudent and productive use of promised revenues prime necessity; Labor leader warns against risky investment of mining revenues; Mongolia aims for wealth without „Dutch Disease‟; Minister urges use of locally produced cement in Oyu Tolgoi; A booming Mongolia needs an international clearing bank; Mongolia to take part in Shanghai Expo; Ready to supply, Mongolia tells coal-hungry nations; Copper hits 3-week high, outlook brightens; Global gold demand down 11% in 2009; Mining heading for larger-scale projects: BHP Billiton; China commodity trade slumps after December surge; Zambia‟s copper output rose 14% in 2009; China's bank moves jolt markets. Chinese lending soared in January; Politics: Mongolians follow traditions as they usher in New Year; Few crimes and no deaths in Ulaanbaatar during holidays; MPRP “rebels” want to replace Bayar, ill in the USA;

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Page 1: 19.02.2010, NEWSWIRE, Issue 106

BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org

[email protected]

Issue 106 February 19 2010

NEWS HIGHLIGHTS:

Business:

Leighton confident of winning Tavan Tolgoi contract;

MNCCI names SouthGobi Sands „Local Job Creator of the Year‟;

Gobi holds first-ever Mongolian cashmere exhibition in Europe;

Entree Gold ready to explore Shivee West;

Audit of investment in Oyu Tolgoi to finish by March 15;

Mines suffer as the buck gets passed around, says coal specialist;

Micro Technologies-India enters Mongolia;

Hong Kong-listed firm to buy 3 Mongolian coal mines;

Major Drilling employees donate money to snowbound herders;

Best Mongolian-run business in the USA honored;

Rio may spend up to USD6 billion on capital expenditures this year;

Revived Rio not fully fit;

BHP Billiton 'cautious' on global recovery;

How Rio Tinto trials may play out;

Russia's Deripaska eyes power unit listing in Hong Kong.

Economy:

Social, economic figures for January released;

Outstanding loans rise marginally, non-performing increase 130 percent;

Handouts not the answer to poverty, says MP;

40 attend meeting of National Council on Vocational Training;

Prudent and productive use of promised revenues prime necessity;

Labor leader warns against risky investment of mining revenues;

Mongolia aims for wealth without „Dutch Disease‟;

Minister urges use of locally produced cement in Oyu Tolgoi;

A booming Mongolia needs an international clearing bank;

Mongolia to take part in Shanghai Expo;

Ready to supply, Mongolia tells coal-hungry nations;

Copper hits 3-week high, outlook brightens;

Global gold demand down 11% in 2009;

Mining heading for larger-scale projects: BHP Billiton;

China commodity trade slumps after December surge;

Zambia‟s copper output rose 14% in 2009;

China's bank moves jolt markets.

Chinese lending soared in January;

Politics:

Mongolians follow traditions as they usher in New Year;

Few crimes and no deaths in Ulaanbaatar during holidays;

MPRP “rebels” want to replace Bayar, ill in the USA;

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MPRP has internal democracy, claims MP;

Government reports on its first 100 days;

Move to grant MNT20 million reward to initiators of good laws;

Number of migrating workers to be restricted;

Former envoy urges Mongolians to access Chinese developments;

Scholar says Russia is the debtor, not Mongolia;

UNICEF appeals for USD750,000 as children die;

Labor leader chosen best manager;

Mongolian throat singers defend tradition against China‟s claim;

China's water pollution level two times higher than estimated in 2007.

*Click on titles above to link to articles.

MEETING NOTICE TO BCM MEMBERS

The next BCM monthly meeting for Members will be Monday, February 22, 2010 at 5 PM at the Open Society Forum.

Our bilingual meeting will feature two presentations, by State Specialized Inspection Agency (SSIA) Director, Ya. Sodbaatar and by South Gobi Sands Executive Director, David Bartel.

Mr. Sodbaatar‘s will address the ―Policy on specialized inspection in Mongolia― Mr. Bartel will review ―Recent developments and expansion plans for SGS―

An update on the work of BCM‘s Legislative Working Group will be provided by its Chairman, Mr. Bayar Budragchaa.

We will again conclude the business part of the meeting by asking BCM members in the audience to briefly comment on specific problems, solutions, risks, opportunities and/or strategies affecting their businesses. BCM members can learn from one another by sharing good news and bad. Teleconferencing will again be available for Members not able to attend. The call number is (1-218) 936-7979, access code 771358 to be connected. The cost will be only that of the long distance call to the above U.S. number.

BUSINESS LEIGHTON CONFIDENT OF WINNING TAVAN TOLGOI CONTRACT

Leighton Holdings, the world's biggest contract miner, is confident it will eventually be chosen to develop the Tavan Tolgoi deposit in Mongolia, its chief executive Wal King said last week. Mongolia recently scrapped plans to sell 49 percent of Tavan Tolgoi, snubbing bidders like BHP Billiton and Vale in order to keep the whole deposit for itself and develop it with a contract miner. Mr. King said he did not expect any action on Tavan Tolgoi anytime soon and did not mind the delay as Leighton already had plenty of work in Mongolia. He said it would take time for the Government to work through all the decisions needed to go ahead. ―It'll probably suit us if it's a bit slower,‖ he said. Mongolia is a huge growth market for Leighton, which got its foot in the door with a USD428 million-a-year contract to develop the Ukhaa Khudag mine next to Tavan Tolgoi in southern Mongolia, which started producing last year. It is slated to double annual production there to 5 million tons by end-2010 and build a railroad across the Gobi desert to transport the coal, now trucked to Chinese steel mills. Leighton, controlled by German construction group Hochtief, is also in line to develop a coal mine in western Mongolia, expected to produce 3 million tons a year, Mr. King said. ―They expect in the next few months to announce that that mine will go ahead, and we will be the contractor,‖ he said. The big prize, however, would be winning the Tavan Tolgoi contract. The mine is estimated to hold 6.5 billion tons of high-quality coking coal, with potential annual production of 20-40 million tons. Mr. King said its size was "staggering". Asked whether he expected Leighton to win the deal, he

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said, ―We're always confident.‖ Source: Reuters.com

MNCCI NAMES SOUTHGOBI SANDS „LOCAL JOB CREATOR OF THE YEAR‟

The Mongolian National Chamber Of Commerce and Industry has selected Southgobi Sands LLC, a wholly-owned subsidiary of SouthGobi Energy Resources, as the "Local Job Creator of the Year" for 2009. The purpose of this commemorative prize is to encourage and support the hiring of local residents in remote areas of Mongolia. ―We are very proud to have received this distinguished award, which recognizes our commitment to transforming natural resources into jobs, prosperity and sustainable development,‖ said Mr. Dave Bartel, Executive Director of Southgobi Sands LLC. SouthGobi currently employs 337 people in Mongolia, over 97% of them Mongolian nationals. In addition, 105 employees are from the Gurvantes soum near the company's flagship coal mine, Ovoot Tolgoi - double the number of local employees from last year and representing 31% of total employees. Added Mr. Bartel, ―We not only hire local citizens, but also provide professional and special training and opportunities to advance professional skills.‖ In addition to providing employment to local citizens, Southgobi Sands also sponsors scholarships for local citizens to attend university in mining-related fields of study. Upon graduation, students are offered a one-year internship with the company. Source: www.southgobi.com

GOBI HOLDS FIRST-EVER MONGOLIAN CASHMERE EXHIBITION IN EUROPE

Gobi, Mongolia‘s largest cashmere garments manufacturer, earned a ―first‖ for itself by organizing a four-day exhibition of its products in Berlin earlier this month. Altogether 100 representatives from 30 establishments, including department stores, boutiques, and retailers, from 27 EU countries visited ―Gobi in Europe – Gobi in the World‖, and talked business and cut deals. Mongolians who live and work in Europe are expected to play a major role in helping Gobi find new markets in Europe.

Source: Udriin Sonin

ENTRÉE GOLD READY TO EXPLORE SHIVEE WEST Entree Gold, with its treasury currently standing at over USD38 million, has announced its 2010 exploration budgets for initial work programs in Mongolia and elsewhere, totaling approximately USD7 million. It has budgeted approximately USD4.0 million for first phase 2010 exploration on Shivee West. The program includes detailed geophysics and approximately 5,000 meters of drilling to test deep geophysical targets and copper, molybdenum, gold soil geochemical targets within a belt of prospective Devonian rocks identified in earlier programs. On the company's 100% owned Togoot exploration license, Entree is working with a Mongolian consulting team to prepare a resource estimate for the Nomkhon Bohr coal deposit. This resource estimate will be used in support of a mining license application prior to exploration license expiry at the end of March 2010. The Manlai exploration license, located approximately 120 km north of Oyu Tolgoi, has been surrendered. Source: Entree Gold Inc.

AUDIT OF INVESTMENT IN OYU TOLGOI TO FINISH BY MARCH 15

The Government meeting on Wednesday reviewed the progress of work on the Oyu Tolgoi project. Minister for Minerals and Energy D.Zorigt said 7 of the 12 issues to be resolved in the six months before implementation begins have been resolved. The working group set up by the Prime Minister has sought clarification from the investors on certain points raised by the Professional Council of Minerals and the reply is expected soon. An international firm is auditing the reported USD1 billion worth of investment and will finish their work by March 15. Tax exemption claims are being assessed by the Tax Authority. The work should be finished within February. Talks are continuing on the formation of the Administrative Board of the joint company and its modus operandi. The Mongolian side will have three members on the board. Source: en.News.mn

MINES SUFFER AS THE BUCK GETS PASSED AROUND, SAYS COAL SPECIALIST

Mr. B.Altsukh, senior specialist at the Fuel Policy Department in the Ministry of Mineral Resources

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and Energy, thinks it was a good decision to have one ministry for both mineral resources and energy, but it was anomalous to have a fuel policy department which does not have anything do with either mining or energy. He also regrets that people with professional qualifications have been largely marginalized in recent days, with important posts going to those with active party affiliation. ―They have little interest in developing long-term policy, as political appointees know they will stay in the job only as long as the Minister who appointed them remains one,‖ he says, adding, ―This has had a very bad impact on both efficiency and morale.‖ Mr. Altsukh blames the present predicament of the State-run coal sector on the Government‘s refusal to raise coal prices for fear of becoming unpopular. The two mines that supply most of the coal to the power stations, Baganuur and Shivee Ovoo, are forced to work with old and outdated machinery because they have no money for new ones. After paying employees‘ wages they have just enough left to cover running costs. After repeated remonstrations, some money has recently been allotted for such use, but this is much less than what is necessary. He finds it ―unusual‖ that the Energy Coordination Department, instead of exercising its legal authority to decide on mines‘ pleas for a price rise, involved the Government. He argues, ―Perhaps there was politics involved or perhaps one was afraid of taking an unpopular decision. Why is Government approval being sought for what should be purely administrative decisions? The Government cannot take a quick decision as it is burdened with political considerations.‖ Read more… Revealing that the Cabinet asked the Ministry of Finance to review the issue and the Ministry ―just cut MNT1,000 from each request without any proper calculation‖, Mr. Altsukh said, ―Every individual case should have been reviewed separately, for different mines work under different conditions.‖ Saying that ―such serious matters cannot be left pending indefinitely‖, the official said the mines are being punished for no fault of theirs. No one wants to bell the cat and the buck keeps being passed around. The mines‘ woes are compounded by the fact that the power and heating plants, even as they receive coal at less than the cost of production, allow debts to pile up, knowing the Government will never allow the mines to cut off supply. Source: The Mongolian Mining Journal

MICRO TECHNOLOGIES-INDIA ENTERS MONGOLIA

Micro Technologies (India) Ltd. has expanded its IT-based business to Mongolia, planning to provide highly advanced security products in the domestic market. The company said it would offer its various products for vehicle, mobile security and tracking, premises security, including other products to the business partners with a strong back-end of technical support. Source: RTTNews.com

HONG KONG-LISTED FIRM TO BUY 3 MONGOLIAN COAL MINES

Hong Kong-listed Kiu Hung Energy Holdings will be buying three mines in a western province of Mongolia from First Dean Holdings on payment of between HKD1 billion and HKD1.4 billion in cash or by issuing bonds or notes. The three mines together have coal reserves of around 360 million tons. Source: www.chinaknowledge.com

MAJOR DRILLING EMPLOYEES DONATE MONEY TO SNOWBOUND HERDERS Major Drilling Mongolia LLC has donated more than MNT18 million to assist herders of Gurvan Saikhan soum, Dundgobi aimag who are reeling under severe weather conditions. The money came from employees donating their salaries for one day and the company contributing the rest. Major Drilling Group International Inc (MDI) is one of the world‘s largest drilling service companies, primarily serving the mining industry, and has worked in Mongolia since 2002. Source: The UB POST

BEST MONGOLIAN-RUN BUSINESS IN USA HONORED The Mongolian-American Chamber of Commerce has recently selected Pyramid Granite as the best Mongolian-run company in the USA in 2009. This is the third year the award has been announced. Some 50 companies were nominated, and 22 of them were put on a shortlist. Finally Mr. B. Delgertsogt‘s Pyramid Granite was chosen. Among the criteria for the choice were how many Mongolians are employed in a company and social commitment. Source: Undesnii Shuudan

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RIO MAY SPEND UP TO USD6 BILLION ON CAPITAL EXPENDITURES THIS YEAR

Rio Tinto plans to spend at least USD5 billion on capital expenditure during 2010, with the potential for a further USD1 billion for new investments. ―Following the recapitalization of the balance sheet, we are bringing forward some of our premier growth options through a disciplined program of investment,‖ said CEO Tom Albanese in the company‘s 2009 annual results. Mr. Albanese stated that during the year under review, the group delivered ―exceptional‖ operational performance, either meeting or exceeding its production targets, and its rigorous cost reduction program, which delivered USD2.6 billion in savings, beat its target one year in advance. He added that while trading conditions were tough in the first half, the second half was much improved. ―Despite the volatility of the past year, we still believe that we are experiencing a secular uplift in demand for commodities. Our long-term outlook remains strong as China, followed by India, continues to urbanize and industrialize over the next two decades. We have emerged from the past year a leaner and more flexible business. We will maintain our rigorous focus on operational excellence in 2010, and start the year with enhanced options for value-adding growth.‖ Mr. Albanese said. Underlying earnings of USD6.2 billion and net earnings of USD4.8 billion in 2009 were respectively USD4 billion below and USD1.1 billion above the comparable figures for 2008. Source: www.miningweekly.com

REVIVED RIO NOT FULLY FIT

Rio Tinto is a very different company from a year ago: deleveraged, streamlined, and back to paying dividends. But lingering indigestion from the USD38 billion acquisition of aluminum group Alcan in 2007 remains a drag on returns after nearly sinking the company during the financial crisis. Even after outperforming other London-listed mining groups in the past six months, Rio's shares look vulnerable to any global economic sluggishness and commodity-price weakness. The flip side is that Rio is nicely geared to any sustained commodity rebound as its strong second-half performance showed. Rio has a way to go before aluminum profitability improves to the 30%-plus EBITDA margins of the iron-ore, coal, and copper divisions. Improving aluminum efficiency is vital because it is hard to be as bullish about aluminum prices as iron ore, copper or coal. Shareholders will only really thank new Chairman Jan du Plessis when Rio starts delivering on its pipeline of growth projects. Rio expects to get a near USD6 billion equalization payment from partner BHP Billiton as soon as their Pilbara joint venture closes, most likely late this year, which will restore more financial flexibility. But, for now, BHP is out-investing its rival by more than two to one. Until that changes, Rio's share price may remain more of a hostage to commodity prices. Source: The Wall Street Journal Asia

BHP BILLITON „CAUTIOUS‟ ON GLOBAL RECOVERY

The world's biggest mining company, BHP Billiton, remains ‗cautious‘ about the speed and strength of the global economic recovery across the developed world in the short term, despite the positive momentum in developing countries, CEO Marius Kloppers told reporters last week. However, the longer-term outlook is still robust, driven by ―the continued industrialization and urbanization of China and other developing economies‖, he said. BHP Billiton reported a 7% decline in first-half earnings before exceptional items, although net income more than doubled, when taking into account one-off accounting charges recorded in the year-earlier period. It earned USD6.1 billion in the six months ended December 31, compared with USD2.6 billion a year ago. However, excluding exceptional items, profit slid to USD5.7 billion, from USD6.1 billion a year earlier, which was still above analyst forecasts.

Source: www.miningweekly.com

HOW RIO TINTO TRIALS MAY PLAY OUT

China has indicted four employees of Rio Tinto on charges of bribery and stealing commercial secrets, in a case that has unnerved foreign investors in China. If convicted, the men could face up to 7 years in jail on a commercial secrets charge, and up to 20 years for bribery. Foreign businesses and Chinese industry will be watching to see if they get the short or long end of those ranges. So far, China has stuck strictly to its own laws in moving from stage to stage in this investigation. It is likely to continue to do so. That means the trial at the Shanghai No. 1 Intermediate People's Court is likely within the legal timeframe of one month, or around March 11. The date may be extended by two weeks, but higher court approval is needed for further delays. Actual trials are usually very short, lasting a day or two.

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The men might get a relatively light sentence, including time already spent in detention, to reduce diplomatic fallout. Chinese analysts say the Government may be eager to clear this case. In the past, ethnic Chinese with foreign passports have often been released early. That could benefit one of the Rio employees, Australian citizen Stern Hu, but would not help his three Chinese colleagues. A light sentence would also remove pressure on the Chinese steel industry, which was vastly relieved when China removed the charge of 'stealing state secrets'. About 1,000 Chinese steel executives were questioned in line with the case. A full sentence would send the message that China is trying to prove that the arrest and investigation was fully justified. China also does not like to be seen to bend to diplomatic pressure. A harsh sentence could increase business perceptions of the risks of China's legal and regulatory environment. The Rio case already spurred many foreign businesses to take a closer look at China's murky secrets laws, train staff and institute precautions to avoid a similar fate. Read more… A harsh sentence would also strengthen the state-backed China Iron and Steel Association against the steel mills, and further undermine private, more market-oriented mills, after it lost credibility by mismanaging the talks for several years in a row. The four men are unlikely to be acquitted in a court system that would not want to embarrass the police or the ruling Communist Party in a case that has taken on national importance. Even if they are acquitted, Rio Tinto has already lost valuable commercial information and its communications with the Chinese Government and Chinese steel industry could be damaged for a long time.

Source: Reuters.com

RUSSIA‟S DEBT-LADEN DERIPASKA EYES POWER UNIT LISTING IN HONG KONG Debt-laden Russian tycoon Oleg Deripaska is planning to list a power firm in Hong Kong, banking sources said, weeks after his aluminum company RUSAL's initial public offering (IPO) left investors nursing hefty losses. January's IPO in Hong Kong of around a tenth of RUSAL -- the world's top aluminum firm in which Deripaska holds a major stake -- raised USD2.2 billion to pay down debts of USD4.2 billion. But its shares have since dropped around 22 percent from the IPO price because of global market jitters, and renewed investor aversion to risky assets. RUSAL was the first non-Asian company to float in Hong Kong, and now Mr. Deripaska, Russia's most indebted oligarch, is looking to list En+ Power -- currently called EuroSibEnergo -- aiming to raise USD1 billion. One Moscow-based fund manager said a second attempt by Mr. Deripaska at a Hong Kong listing after the performance of the first would be "absurd". ―The optimism once held by Russian companies - fueled by investment banks -- that they can list in Hong Kong and get a premium has been rendered moot,‖ he said. ―The RUSAL price and relative lack of liquidity should have woken the market up to that fact.‖ Separately, Mr. Viktor Vekselberg, another key RUSAL shareholder, has said he would target Hong Kong for an IPO of his Kamchatka Gold later this year. The RUSAL IPO was expected to trigger a stampede of Russian companies to Hong Kong, but recent events have made investors more skeptical. Source: Reuters.com

ECONOMY SOCIAL, ECONOMIC FIGURES FOR JANUARY RELEASED

The National Statistics Office has released figures related to the economic and social sectors. All figures are for January 2010 and all comparisons are with the same month in 2009, unless otherwise stated: Unemployment

The number of registered unemployed stood at 36,300, a rise of 4,936 persons or 15.7 percent. Women constitute 54.5 per cent of the total. Of the 1,500 who found a job, 20.5 percent are employed in government or state-owned enterprises, while the rest have joined private companies, cooperatives or small-scale businesses. Births, deaths The number of births was 6,127, an increase of 13.5 percent. The number of women giving birth was 6,097, an increase of 13.3 percent. Infant mortality stood at 137, an increase of 15.1 percent, and maternal mortality stood at 6, an increase of 2. Mortality among children under 5 reached 30, an increase of 12. Passenger, freight

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The railway carried 251,300 passengers and 1,260.7 tons of freight, an increase by 0.2 percent and 21.8 percent respectively. The airlines transported 24,100 passengers and 130.7 tons of freight, an increase of 30.3 percent and 19.1 percent respectively. The total revenue of railway and air transportation increased by 25.2 percent to reach MNT 23.9 billion. The total revenue of the hotels and restaurants sector was MNT50.6 billion in 2009, showing a 6.6 percent fall from that in 2008. Industrial output

Total industrial output reached MNT142.6 billion, an increase of 15.4 percent at 2005 constant prices. Of the MNT2 billion worth construction and installation work carried out, 86.8 percent were executed by domestic entities. Foreign trade

Total turnover of trade with 70 countries reached USD295.5 million, an increase of 1.9 percent. This showed a surplus of USD31.5 million, 38.1 percent less than in January, 2009. Export worth USD163.5 million fell by 4.0 percent, while imports, totaling USD132.0 million, fell by10.4 percent. Budget

The General Government budget showed a deficit of MNT65.5 billion, MNT36.7 billion higher than in January, 2009. Revenue this January increased 11.1 percent less than expenditure. The current balance showed a deficit of MNT67.7 billion. Tax revenue rose 64.8 percent over January, 2009. The corresponding rise in non-tax revenue was 92.4 percent. Stock market In 20 trading days 1.0 million shares worth MNT646.1 million were traded. The number was 7.5 percent less than in December 2009, and 56.5 percent less than in January, 2009. The value of the traded stocks increased by 12.3 percent over December, 2009, and by 36.7 per cent over January last year. CPI

The national consumer price index rose 2.3 percent over December, 2009 and 5.7 percent over January, 2009.

Source: Montsame

OUTSTANDING LOANS RISE MARGINALLY, NON-PERFORMING INCREASE 130 PERCENT

According to the Central Bank, money supply (broad money or M2) at the end of January, 2010 was MNT2871.0 billion, 0.3 percent less than in December, 2009, but 30.4 percent more than in January, 2009. Currency issued in circulation was 5.6 percent less than in December, 2009 but 1.2 percent more than in January, 2009. The amount of loans outstanding at the end of January, 2010 rose 0.7 percent over the figure for December, 2009, and was 0.1 percent more than in January, 2009. Principals in arrears were 4.6 percent of total loans outstanding. Their total amount increased 0.6 percent over December, 2009, but was 1.0 percent less than in January, 2009. Non-performing loans accounted for 17.1 percent of the total loans outstanding, and their amount fell 0.8 percent against December, 2009, but was 2.3 times more than in January, 2009. Source: www.mongolbank.mn

HANDOUTS NOT THE ANSWER TO POVERTY

Mrs. S. Oyun, the Civil Will MP, has noted that percentage of poor people in the nation has remained the same since 1990 but the absolute number now stands at a huge 950,000. The budget is twice as big as it was 20 years ago, GDP has increased 50%, but the poverty percentage remains constant. This is despite the fact 11 percent of the increased GDP is now spent on welfare allowances, rising from 7% some years ago. This shows the need to change the approach to poverty reduction. She urged the Government to adopt other measures to improve people‘s life, seeing that cash handouts have failed to produce sustainable results.

Source: Zuunii Medee 40 ATTEND MEETING OF NATIONAL COUNCIL ON VOCATIONAL TRAINING The second meeting of the National Council on Vocational Education and Training (NCVET) was held earlier this month. It was organized by the Millennium Challenge Account-Mongolia (MCA-M) Technical and Vocational Education and Training Project in cooperation with the Policy and Operational Framework Reform project.

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The meeting, following an earlier one in September last, was attended by 40 participants, including NCVET members, nominated chairs of the Sector Councils for Construction, Mining and Food Processing, the project team and representatives of MCA-M. They discussed rules and procedures for the NCVET and Sector Councils, their financing needs, work plans for 2010 and issues related to the National Agency for Vocational Education and Training (NAVET). Views were exchanged on best practices related to private-public partnership, cooperation between NCVET and other key vocational education and training institutions such as the NAVET, the Ministry of Education, Culture and Science, and the Ministry of Social Welfare and Labor. NCVET was established to help develop the TVET system to meet market demands and support public-private partnership. Source: Montsame

PRUDENT AND PRODUCTIVE MANAGEMENT OF PROMISED REVENUES PRIME NECESSITY

It is time to start some serious thinking on how Mongolia is going to manage the flow of mining revenues so that most people benefit in the best way. That these revenues must be used to boost the national economy is obvious, but how exactly will the bags of money labeled ―from copper‖, ―from coal‖, ―from gold‖ be utilized to generate a regular, long-term and steady flow of revenue from other sources? Several resource-rich countries appear to have found more productive uses for their wealth than just distributing it among the people. We in Mongolia still do not have any clearly defined list of purposes for which money from the Human Development Fund can be used. We could not carry our discussion beyond whether the distribution of the allowance would start before or after the Lunar New Year and beyond which sections of the population would get it first. The whole thing was like giving away prizes after a noisy and crowded festival. A major, if unspoken, consideration was certainly how much would, could, or should be distributed before the next general election. Quite funny how the Human Development Fund is being used for nothing to do with development, individual or national! Economic growth can come only if stringent regulations are enforced on how the money can be spent. Funds are not trees that flower automatically. Nor are they magical barrels of honey that never empty. We must quickly disabuse the public mind of its perception that the Human Development Fund is a cash vending machine, a kind of ATM, so to say. Some areas of priority spending suggest themselves automatically. The infrastructure in our country is not well developed, undermining our competitive advantage and stifling economic growth. We need to decide how much to spend on infrastructure development and how much on human development. The two are not mutually exclusive and we shall have enough for both, with prudent management. Source: The Mongolian Mining Journal

LABOR LEADER WARNS AGAINST RISKY INVESTMENT OF MINING REVENUES

Mr. S.Ganbaatar, President of the Confederation of Mongolian Trade Unions (CMTU), feels that the anticipated rush of mining revenues is to be zealously held on trust for the people, and not be squandered away on risky investments. Calling for the ―repeal without delay‖ of the Human Development Fund law, he has expressed the hope that Parliament will realize the folly of the present plans to invest mining revenues in international securities to get easy returns. ―This is gambling, even if legitimized, and cannot be national policy, particularly when we do not have a single expert in our country who really knows about investing and trading in securities,‖ he has said. He also noted the ―total silence about apportioning responsibility for losses through unwise investments in the international market‖. Using the mining revenue to give each citizen MNT70,000 to celebrate the Lunar New Year was ―a real waste‖, he said, recalling the saying ―Don‘t give fish to the poor; instead, teach them how to fish.‖ Hand-outs ―destroy our people‘s ambition to live independent lives by encouraging them to believe that it is possible to live without doing anything‖, he said, fearing that this sort of populism ―will gradually kill national initiative, a disastrous prospect‖. Calling for a government policy on using mining revenues to send young people abroad to train as mining professionals, Mr. Ganbaatar said, ―If we cannot provide our own manpower, naturally technicians and engineers from other countries will come here to work in large mining projects, while our young people will have only unskilled and menial jobs.‖ He clarified that his emphasis on education and training does not mean the Government will withdraw support from the really poor, but ―skilled and educated people not only support themselves but also create jobs for others‖, he said.

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Source: The Mongolian Mining Journal

MONGOLIA AIMS FOR WEALTH WITHOUT „DUTCH DISEASE‟

Mongolia‘s billions of dollars worth of copper, gold, uranium and coal reserves promise the greatest influx of wealth for the country since Chinggis Khaan conquered much of the known world in the 13th century. They also may spawn a crisis. Sudden prosperity can overwhelm an economy, exposing it to commodity-price swings. Mongolia‘s leaders, some educated at Harvard and Cambridge, say they are determined to avoid this syndrome, known as ―Dutch Disease‖ -- a sudden surge in wealth that ultimately hampers expansion. Working with the Washington-based World Bank, they are dispatching officials to nations such as Chile, which successfully harnessed its copper resources to help drive growth. They are also leveraging their democratic system to build support for policies including greater investment in transportation and a new budget law aimed at curbing the impact of volatile metals prices. ―If you go to most developing countries, they‘ll tell you, ‗We‘re saved; we‘ve found uranium,‘‖ said Mr. Hernando de Soto, a Peruvian free-market economist. Mongolia has ―a president who says, ‗We are in grave danger because we have discovered we have a lot of natural resources.‘‖ The fact that ―they are forewarned gives you hope‖. Mr. de Soto was interviewed in Ulaanbaatar where he met with President Ts. Elbegdorj and Prime Minister S. Batbold. Mr. Elbegdorj graduated from Harvard‘s Kennedy School of Government and helped translate Mr. de Soto‘s 2000 book, ―The Mystery of Capital‖, into Mongolian. To beat the resource curse, Mongolia‘s government has proposed a law based on a Chilean measure that will save surplus revenue from mineral royalties when prices are high to stabilize the budget when they fall. In 2009, it set up a Human Development Fund modeled on an Alaskan program that distributes some royalties to citizens. The country is overhauling its social-welfare system to target aid only to the poor. It also plans to improve roads and railroads, creating access to new mines and helping herders bring cattle and sheep to market. Read more… ―Dutch Disease‖ was first applied to a surge in income from new natural-gas fields in the Netherlands during the 1960s, which caused the currency to appreciate, making exports less competitive and reducing manufacturing companies‘ profitability. Mr. Batbold has said Mongolia‘s new wealth will cause gross domestic product to rise ―several fold in a fairly quick period of time.‖ GDP was USD5.3 billion in 2008, the World Bank estimated. Sudden prosperity may not improve living standards. Nigeria, Africa‘s biggest oil exporter, has seen almost no growth in real GDP per capita in three decades. Venezuela, South America‘s biggest oil exporter, had a higher GDP per person in 1977 than in 2008, according to the World Bank. Mongolia is the world‘s least densely populated country, with 2.6 million people spread across an area the size of western Europe, two-fifths in rural areas on windswept steppes. Twenty-two percent lived on USD1.25 a day or less in 2005, and 29 percent were undernourished, according to the latest United Nations data. Mongolia‘s leaders say democracy will help smooth the adjustment to new wealth. Sandwiched between China and Russia, which have dominated the country in the past, Mongolians freely criticize their government, as evidenced at the Mongolian Economic Forum. Activists, journalists and parliamentarians complained officials are not doing enough to alleviate poverty and unemployment. ―We are trying to build a bridge and a mechanism between the Government and public and private sector so that we hear each other,‖ Mr. Batbold said in an interview. One initiative is a push to make mining contracts available on the Government‘s Web site to help spur public debate, he said. If he and other leaders do not keep their promises on openness and transparency, ―that will be a big problem‖ and ―they may lose‖ the next parliamentary election in 2012, said Mr. D. Jargalsaikhan, an economist who helped organize the forum and founder of the advocacy group Mongolians for Fair Taxes, Wise Spending. Mrs. S. Oyun, a 12-year parliamentary veteran with a doctorate in earth sciences from Cambridge University in the U.K., said she is pushing the Government to avoid politically popular cash dividends for citizens and focus on infrastructure improvements and job growth. ―Because poverty and unemployment are still the most pressing issues in this country, it is easy to win the vote by promising cash,‖ Mrs. Oyun said in an interview. ―But members of both parties in Parliament are saying that in the future, these promises should not be made.‖ Source: Bloomberg.com

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MINISTER URGES USE OF LOCALLY PRODUCED CEMENT IN OYU TOLGOI

Oyu Tolgoi LC has started receiving numerous enquiries from Mongolian companies wishing to work with the project. The investment agreement on Oyu Tolgoi specifies the percentage of the labor force that must be Mongolian, and the choice of suppliers will be made on the basis of the information database prepared by the Business Council of Mongolia. The investors and the Government have jointly established a committee to monitor implementation of the investment agreement. This meets once every month and resolves issues that crop up. For example, Minister of Minerals and Energy D. Zorigt has proposed that domestic industries be asked to supply all the cement and some other components needed in construction of the project and Oyu Tolgoi LC is accordingly reviewing the capacity and quality of Mongolian companies.

Source: Udriin Sonin

A BOOMING MONGOLIA NEEDS AN INTERNATIONAL CLEARING BANK

The Mongolian Stock Exchange is up 39.5 percent from November and 9 percent for the year. And it remains so undervalued that there are some companies that have a P/E of 2. One oil company would have to rise by more than 40 times to equal the fair value of its peers, based simply on its proven oil reserves. When the flood of foreign cash hits the local market, those who have already bought will make a fortune. The world is starting to wake up to the promise of Mongolia. Reports that it plans to sell as much as USD1.2 billion of sovereign bonds overseas later this year are all the more interesting because the total GDP of Mongolia was USD5 billion last year. In relative terms, USD1.2 billion is huge. And the bonds will pay between 8% and 11% — not too shabby. Not only does the bond issue lend credibility to the Mongolia story, but it will also make it happen. Oyu Tolgoi marks the beginning of the boom, not the end. There are between 15 and 32 other major mineral, oil, and coal deposits that will rival this deal, making Mongolia the fastest growing country on earth. But time is running out for the ground-floor buyers. Emerging market funds need an international clearing bank before they can invest on the local exchange. The new money coming in will simply swamp the local exchange. There is even talk about an ETF. Read more… Deutsche Bank wants to become a "strategic partner" of Mongolia. It is the biggest bank in Germany, and one of the few western banks that did not get a bailout from the EU. Mongolia offers extremely compelling values, strong demand, and a clear catalyst for share price appreciation. But most importantly, Mongolia is a treasure trove of the resources neighboring China needs in order to maintain its status as the world's factory: gold, copper, coal, uranium; sizable quantities of oil, molybdenum, tin, tungsten, fluorspar, and other vital raw materials. Source: www.wealthdaily.com

MONGOLIA TO TAKE PART IN SHANGHAI EXPO

The Ministry of Foreign Affairs and Trade, the Mongolian National Chamber of Commerce and Industry and the Foreign Investment and Foreign Trade Agency have begun preparations for Mongolia's participation in Expo-2010 in Shanghai from May 1 to October 31. So far, over 100 countries and 50 International organizations have confirmed participation in the Expo with the theme, "Better City, Better Life". Source: Odriin Shuudan

READY TO SUPPLY, MONGOLIA TELLS COAL-HUNGRY NATIONS

While most countries at a recent coal market conference in Singapore talked about coal demand, given their rising power needs, Mongolia was alone in saying its coal reserves of 162.3 billion tons would enable it to increase supply to the international market. The conference focused on two main issues –— the demand for coal as a source of energy, and coal pricing. Spokespersons from different countries, including Thailand, South Korea, India and China highlighted their domestic demand for power generation, with coal as their main source of energy, thereby limiting coal exports. Demand for coal as a source of energy is growing faster than for other sources. In 2000-2008, the average annual demand growth rate for coal was 4.7 percent, higher than for gas at 2.7 percent and 1.4 percent for oil. A World Energy Agency analyst says long-term demand for coal will rise most in absolute terms. Source: The Jakarta Post

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COPPER HITS 3-WEEK HIGH, OUTLOOK BRIGHTENS

Copper prices hit a three-week high on February 17 as the demand outlook brightened following upbeat economic data from the USA and as investors eyed bullish inventory data. Benchmark copper on the London Metal Exchange ended at USD7,213/t from a close of USD7,144 on Tuesday. The metal, used in power and construction, rallied to USD7,240, its highest since January 27, but retreated in afternoon trade as the dollar strengthened, making metals more expensive for holders of other currencies. Sentiment has this week been boosted by U.S. data, which on Wednesday included housing starts and industrial production for January, both of which beat expectations. ―We're looking for more upside in base metals, though there will be volatility,‖ said an analyst at Standard Chartered. ―Chinese demand is strong ... the number of construction projects will be a powerful influence.‖ Analysts expect to see Chinese demand start to strengthen next week after the Lunar New Year holidays. China, the world's largest consumer of industrial metals, has started slowly pulling in the reins on loans and liquidity to stave off price pressures, but analysts say growth will remain strong. Also helping to boost sentiment were cancelled warrants on LME stocks, or material already earmarked for delivery. The markets have got so used to stocks build-ups over the last year that any trend reversing that will be taken as a sign that the economy is on the mend. Source: www.miningweekly.com

GLOBAL GOLD DEMAND DOWN 11% IN 2009

Global gold demand fell by 11% to 3,385.8 tons in 2009, but dollar demand for the precious metal remained above the USD100 billion mark as prices remained strong. In its ‗Gold Demand Trends' report, the World Gold Council (WGC) reported on Wednesday that fourth-quarter gold demand fell by 24%, when compared with the final three months of 2008, but noted that demand had risen by 2,6%, when compared with the third quarter of 2009. WGC CEO Aram Shishmanian commented that 2009 provided a ―clear illustration‖ of the diversity inherent in the global gold market. ―As the year progressed, a rebalancing of gold market fundamentals occurred, ensuring that as investment demand came off from the exceptional levels seen in the first quarter, total demand for the year remained robust thanks to a rebound in jewelry and industrial demand,‖ he said in a statement. Industrial demand recorded its third consecutive quarter-on-quarter improvement in the fourth quarter and its first annual gain in more than two years, benefiting from a rebound in electronics demand, reflecting improved economic conditions, the WGC noted. However, total industrial demand fell by 16% in 2009, when compared with 2008. Read more… Recovery in jewelry demand from a "very weak" first quarter was largely driven by a rebound in the Indian market enabling it to maintain its position as the world's largest gold consumer. However, China was the only gold jewelry market to grow in 2009, by 6%. Gold supply rose by 11% in 2009, with the first three months of the year comprising the majority of the increase. The single biggest contributor to the first-quarter rise was recycled gold as consumers took advantage of the metal's higher trading range. However, supply was supportive for the gold price over the remainder of the year. Source: www.miningweekly.com

MINING HEADING FOR LARGER-SCALE PROJECTS: BHP BILLITON

The mining industry was heading for larger-scale projects, BHP Billiton CEO Marius Kloppers has said. The company's own focus was on tier-one assets and "a tier-one asset is never small. A tier-one asset is like the Messiah, you can't define it, but you know it when you see it," he said. ―The industry is heading for larger-scale projects in general. Our focus is on creating tier-one assets where you have multiple mines in one basin, multiple investment opportunities in one basin. If you look at what we project onwards, we see multiple iron-ore expansions, multiple coking-coal expansions, and such," Mr. Kloppers said. Source: www.miningweekly.com

CHINA COMMODITY TRADE SLUMPS AFTER DECEMBER SURGE

China's commodity imports slumped in January after a surprising surge in December, as sea ice disrupted shipping and the country began to tighten monetary policy, spooking markets that had relied on its largesse in 2009. For many copper traders, a fall of 20.9% in imports to 292,096 tons was a shock, as China had been expected to suck in more cargoes thanks to high local prices that allowed arbitrage trading.

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Uncertainty about China's appetite for most raw materials may continue to worry traders as they try to figure out if January's slowdown was simply a retreat to pre-December levels or a major turning point after record demand across the board in 2009. But analysts are in for a data drought which will make it hard to draw firm conclusions for at least a month. The Lunar New Year holiday may further distort trade and the National Bureau of Statistics will not issue data on China's own output in January and February until early March, making assessments of overall demand trickier than usual. Source: www.miningweekly.com

ZAMBIA‟S COPPER OUTPUT ROSE 14% IN 2009 Copper output in Zambia, Africa's top producer, rose 14% last year, but it was hampered by the closure of some mines after the global financial crisis unfolded. The general manager of the Chamber of Mines of Zambia has said that to boost output quicker, the Government should restore investor confidence, which was eroded by the introduction of higher taxes in 2008. The taxes included a 15% profit variable tax, an increase in mineral royalties to 3% from 0.6% and a rise in corporate tax to 30% from 25%. Copper mining is Zambia's economic lifeblood and the mines are a major employer in the country of 12 million people. Source: www.miningweekly.com

CHINA‟S BANK MOVES JOLT MARKETS

China signaled last week it is acting more quickly than expected to rein in its booming economy, jolting international shares and fueling concerns over the challenges Beijing faces as it seeks to rein in one of the world's biggest economies. China's central bank moved on February 12 to further restrain bank lending by raising the share of deposits banks must hold as reserves. It marks Beijing's latest attempt to rein in last year's stimulus programs—a spree of bank lending that fueled Chinese growth and undergirded a weak global economy but now threatens to inflate dangerous asset bubbles. Investors remain concerned about whether authorities can strike the right balance. "This is creating some concern here that they might slow down their economy so much that it impacts the global rebound," said a market strategist in New York. In European trading shortly after China's announcement, the U.S. dollar rose and oil prices fell, a pattern that typically indicates investors are scaling back bets on economic growth. The dollar hit an eight-month high against the euro. The People's Bank of China said it will raise the reserve-requirement ratio for banks by half a percentage point from February 25, the second increase this year. That will make it standard for major banks to keep 16.5% of their deposits on reserve, though rates can vary by bank. Read more… Economists had expected such an increase, but not this soon. Some analysts said the latest move was less of a shock than last month's. Others argue that such moves are necessary, and better done sooner rather than later. Compared with European central banks and the U.S. Federal Reserve, which adjust interest rates to stoke or rein in growth, China's central bank relies heavily on its reserve-requirement policy, most recently raising its reserve mark as high as 17.5% in mid-2008. The Fed's reserve requirement—which hasn't been used lately as a tool of monetary policy, but has been in the past—is 10%. Domestic growth is important for China amid slow recovery in its markets in the U.S. and Europe. Should Europe's debt woes drag down the Continent's recovery, demand for Asian goods would be damped. A weak euro, meanwhile, will make it more expensive for Europeans to buy Asian products. The strength of China's economy, now among the world's largest, influences the global prices of the commodities it buys and the quantities of raw materials and goods that it imports from abroad. But the direct impact of the Chinese central bank's moves is muted because China doesn't allow them to influence the value of its currency. There are indications that China's domestic run-up is far from slowing. Data from the country's electricity providers showed China's power demand rose 40% in January, suggesting the economy is growing so fast that it could be pushing the limits of existing infrastructure. But many investors are skeptical that China's economy can effectively use all of its new investment. Businesses are warning that massive increases in new industrial capacity in sectors such as steel and chemicals could crimp profits for years to come. Source: The Wall Street Journal Asia

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CHINESE LENDING SOARED IN JANUARY

China reported a surge in bank lending and sharply rising property prices for January, figures that reinforced growing worries that the world's fastest-growing major economy risks inflating a new bubble. Easy credit has been a key driver of China's economic recovery, and banks kept up their lending in January, extending USD203.6 billion of new loans in the month. That is more than in the last three months of 2009 combined, and nearly a fifth of the Government's target for all of 2010. The central bank also reported that the M1 measure of money supply surged 39% in January, its fastest increase in at least a decade. Economists say that shows households are moving money out of long-term deposits in preparation for spending it, a signal of future inflation. At the same time, property prices are now rising at their fastest pace since early 2008. Loose money has enabled developers to build more housing while encouraging households to buy now. The average price of new residential property in 70 cities rose 11.3% from a year earlier in January, the National Bureau of Statistics said, accelerating from December's 9.1% gain. The recovery in China's housing market has underpinned the nation's return to double-digit economic growth, and will become increasingly crucial this year as Beijing winds down its two-year stimulus program. The growing fear of many officials and analysts is that a property bubble that leads to a bust could derail that expansion. How China handles this real-estate boom will have broad ramifications, since its strong demand for the raw materials and equipment needed to build out new housing, infrastructure and factories has been one of the few bright spots in the world economy. Read more… With restrictive government policies widely blamed for triggering the collapse in housing sales in 2008, officials have been cautious in changing tack this time. They have mostly targeted speculation: Purchases of second homes, for instance, are now subject to higher taxes and tighter financing. But there has also been a broader effort to contain risks in the banking system. In mid-January, regulators pressed banks to curb lending. While inflationary pressures are strongest in property, broader price measures are also rising. The consumer-price index rose 1.5% in January from a year earlier, slowing from a 1.9% rise in December. But that moderation was driven by slower gains in food prices, and nonfood prices rose 0.5% last month, picking up from 0.2% in December and a 0.7% decline in November. Source: The Wall Street Journal Asia

POLITICS MONGOLIANS FOLLOW TRADITION AS THEY USHER IN NEW YEAR

Snow and sub-zero temperatures were not enough to keep Mongolians indoors on Sunday, the first day of the Lunar New Year, when the first step out the door determines the path for the rest of the year. Thus begins the Year of the Iron Tiger for Mongolians, which is also celebrated by their cultural kin, the Tibetans. For land-locked Mongolians, preserving traditions that stem from nomadic practice and Buddhist beliefs is important in keeping their cultural independence. Mongolians call the Lunar New Year the white month, or Tsagaan Sar, partly because of the thick snow covering the steppes but also to keep a clean and pure heart at the beginning of the year. Modern Mongolians in the capital often wear lighter colors for the white month. Authorities frowned upon Tsagaan Sar celebrations and tried to stamp out the practice during the country's Communist era, when Mongolia was a satellite of the Soviet Union, but it is once again widely practiced. Hundreds of men and women greeted the sun on the New Year by climbing to a sacred cairn or 'ovoo' at the top of a hill near Ulaanbaatar, circling it three times and giving offerings before the sun rises. Rituals observed, the festivities began with families gathering to eat mountains of dumplings in the warm indoors.

Source: The New York Times

FEW CRIMES AND NO DEATHS IN ULAANBAATAR DURING HOLIDAYS

Four deaths have been reported over the Tsagaan Sar holidays. In Khuvsgul, a man died when he was hit by a car. Two people died in accidents caused by carelessness, and a girl of ten died in a fire at her home in Dundgobi. The Police have said the number of serious crimes was relatively low during the holidays. Altogether 127 cases were reported over the four days, most of them small thefts or traffic violations. Many of the thefts were in the big stores, where crowds of shoppers made things easy for shoplifters.

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Five cases of breaking into homes were reported when families were away visiting relatives. Altogether 458 people were brought to police stations for excessive alcohol consumption. They could not say where they lived or where they could be taken and were taken into custody to prevent them from freezing to death. Source: Ardiin Erkh

MPRP “REBELS” WANT TO REPLACE BAYAR, ILL IN THE USA

A section in the MPRP is becoming vocal in demanding the appointment of a new party chairman in place of Mr. S.Bayar, who has been ill for some time. He is now in the USA for treatment, but since he does not take Government money, neither the Health Minister nor Mr. Bayar‘s doctor here has any news of his progress. The MPRP Secretary General, Mr. U.Khurelsukh, is in touch with Mr. Bayar but he does not give any information beyond saying the former Prime Minister is doing well. Many in the party are concerned that important decisions cannot be taken in the absence of the chairman. MP Ts.Davaasuren, and two young members, Mr. J.Enkhbayar and Mr. S.Byambatsogt, are the leaders of those demanding a new chairman. The present Secretary General and all members of the Administrative Board were handpicked by Mr. Bayar and are stalling. Observers worry that Mr. Bayar‘s departure could see the end of the coalition government. Source: Ardiin Erkh

MPRP HAS INTERNAL DEMOCRACY, CLAIMS MP

Chairman of the Parliamentary Standing Committee on the Budget Ts. Davaasuren is also the Chief Coordinator of a wing in his party, the MPRP, called ―Democracy, Reform, and Justice‖. It was established in 2005 following demands for reform in the country‘s political groupings. A survey of citizens found that 80% of them favored such reforms. Among their principal objectives, said Mr. Davaasuren, was ―appointing the most qualified people, the best specialists, to senior positions‖. Asked how his wing had reacted to Parliament‘s choice of Mr. N. Zoljargal as Vice President of the Central Bank in the face of his group‘s opposition to him, Mr. Davaasuren said they always deferred to the principle of the supremacy of Parliament. Indeed, when the mood among MPs was clear, ―some in our wing also voted for him‖. Mr. Davaasuren claimed there was much more internal democracy in the MPRP than in the DP. This is borne out by the fact that only 6 of the DP‘s 27 members of Parliament are first-time MPs, while 50% of the MPRP members are new. This is possible as the MPRP encourages people to come up through internal democracy.

Source: Udriin Sonin

GOVERNMENT REPORTS ON ITS FIRST 100 DAYS

Prime Minister S.Batbold last week reported to the media the highlights of the first 100 days of the present Government. Several of his Cabinet colleagues later answered questions from journalists. Head of the Cabinet Secretariat Ch.Khurelbaatar said the Government believed in continuity but is also offering new ideas, and implementing new programs. From the very first day the Prime Minister has been emphasizing the need to provide every person with a job and education; increasing the competitive capacity of taxes; improving laws; manufacturing final products; and pressing for reforms under the slogan "Together we can". The Prime Minister's success ―has been appreciated by his counterparts in Russia, China, USA, Germany, Japan, UK, the Republic of Korea, India and other countries‖. Mr. Khurelbaatar did not agree that the distribution of the Human Development Fund allowance had led to any price rise, saying that a 5-10 percent increase before Tsagaan Sar was nothing unusual. Minister for Minerals and Energy D.Zorigt refused to make any comment on the Government‘s policy on individual companies in the uranium sector. He justified the move to raise money in the financial markets for strategic mines by saying that at present commercial banks determine Mongolia‘s economic development as all investments are made through them. This can be changed only by developing the domestic financial market, and at the same time entering the world financial markets with strategic mines. Source: en.News.mn

MOVE TO GRANT MNT20 MILLION REWARD TO INITIATORS OF GOOD LAWS A move is afoot to award MNT20 million to the initiator of every good law. What is ―good‖ has not been spelt out, but those that are approved without much dissent will certainly be favored. The money will come from some present allocation under a flexible head, but what the move essentially means is that people will be paid extra for doing what they are already paid to do.

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It is very likely that MPs or other initiators will hire good lawyers as advisers and share the spoils with them. Even if the lawyer claims most of the money, the MP alone will have the fame. This reminds one of the old saying, ―The sheep is alive but the wolf is full.‖ There are serious concerns that this monetary incentive will see an increase in the present practice where MPs are persuaded to vote for a law on the assurance of a quid pro quo. The end of Parliament‘s Autumn session saw MPs trying to include over 200 draft laws in the agenda for the Spring session. They were unhappy with the Speaker‘s choice of only 28 drafts. Can it be that the lure of the MNT20 million has suddenly made MPs so active? And if good laws are rewarded, what awaits initiators of bad laws? Source: Ardiin Erkh

NUMBER OF MIGRATING WORKERS TO BE RESTRICTED

The Ministry of Social Welfare and Labor has prepared a draft law governing the migration of Mongolians for employment abroad as also the terms of foreign nationals working in Mongolia. The draft favors imposing a limit on the number of Mongolians going to work abroad, and also indicates certain eligibility restrictions. It is also proposed that those returning home after working in any foreign country will be counted as skilled workers. Efforts are on to procure certificates for those with work experience in South Korea so that they can be considered for employment in foreign invested companies in Mongolia. The number of foreign employees working in the mining and minerals sector will be determined after a review of the supply and demand situation in the country. The draft is slated to be discussed during the Autumn session of Parliament. Source: Udriin Sonin

FORMER ENVOY URGES MONGOLIANS TO ACCESS CHINESE DEVELOPMENTS

Reminiscing about his days in Beijing as Ambassador to China, Mr. G. Batsukh has said the first day of Tsagaan Sar would find Mongolians and people of Chinese nationalities of Mongolian origin gather at the Embassy to welcome the lunar new year in the traditional way. This is in keeping with the Confucian tenet of ―a harmonized society‖, which is reflected in the present-day Chinese state ideology. The General Secretary of the Communist Party of China, Mr. Hu Jintao, has asserted that ―our policy of friendly relations with our neighbors‖ cannot be achieved if young people in any two countries do not develop ―mutual understanding of each other‘s customs and culture‖. Last year 60 young Mongolians went to China on a special invitation from the Government of China. Mr. Batsukh urged more and more young Mongolians to learn Chinese to take advantage of Chinese advances in information technology, and various other areas of science and the economy. Source: Undesnii Shuudan

SCHOLAR SAYS RUSSIA IS THE DEBTOR, NOT MONGOLIA

Dr. J. Bayasakh, of the School of International Relations at the National University of Mongolia, feels that historically speaking, Russia owes Mongolia money, and not vice versa. During the days of the Soviet Union, of which Russia is the successor, countless objects of inestimable value were taken away from Mongolia. More important than individual loot was the Bogd Khan‘s treasury worth USD500 million that was forcibly entrusted to Russia in 1927 to be kept in the Trade and Industrial Bank.

Source: Udriin Sonin

UNICEF APPEALS FOR USD750,000 AS CHILDREN DIE

UNICEF last week issued its own appeal for nearly USD750,000 to help Mongolia face a crisis that is already seeing youngsters die and threatens scores of thousands more. ―The UN is acutely aware of the need to reach increasingly isolated populations with fuel and medicines, to get those in need out to trained medical care and to provide hygiene kits to stem the spread of disease, to ensure safe delivery and newborn care and to prevent the deepening of chronic malnutrition,‖ UNICEF country representative Rana Flowers said. ―This is an unfolding emergency. Of most recent and most urgent concern is evidence that babies and young children are dying because they cannot access the medical treatment from trained personnel that they need,‖ she added, noting that nine children had died in recent days in just one province according to the Health Ministry. Over 22,000 children in 265 dormitories are in need of urgent aid due to insufficient food and fuel for heating and cooking, and nearly 500 other dormitories with more than 41,000 youngsters will need assistance as severe conditions spread across the vast country of some 3 million people. Some

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villages only have enough fuel for three or four more days. UNICEF, which is working with the UN Population Fund (UNFPA), the UN Development Program (UNDP) and the UN Food and Agriculture Organization (FAO) to gear up a significant and coordinated response, faces a ―critical need‖ for an additional USD400,000 for medical supplies, equipment, micronutrients and hygiene kits, and USD322,000 to reach a growing number of affected communities with life-saving interventions. Source: UN News Center

LABOR LEADER CHOSEN BEST MANAGER

The Mongolian Management Association has named the President of the Mongolian Confederation of Trade Unions, Mr. S.Ganbaatar, the Best Manager of the Year. The citation refers to Mr. Ganbaatar‘s success in setting up sub-committees in provinces, districts and in Ulaanbaatar to solve labor disputes locally, and to his struggle on issues of social insurance. It was largely because of his agitation that the Government agreed to allocate MNT236 billion to social insurance payers within 2011.

Source: Onoodor

MONGOLIAN THROAT SINGERS DEFEND TRADITION AGAINST CHINA‟S CLAIM

Bitonal humming is not a common form of patriotic protest, but for traditional Mongolian singers, it was the best way to lay claim to an art form they say has been usurped by China. Many Mongolian throat singers recently held a meeting at the Central Cultural Palace where speaker after speaker defended their claim that the art has neither been lost nor ―the heritage passed down to us by our ancestors‖ forgotten. One of them, Mr. S. Zagd-Ochir, asserted, ―For years, this art has been performed and handed down to the younger generations. It has a very high standard of development and it will develop more.‖ The meeting symbolized the national outrage following reports that in November UNESCO had listed Mongolian throat singing as an art native to China. China is the sole country named on the UNESCO representative listing for throat singing, although the brief explanation says Mongolian communities in Inner Mongolia in China, western Mongolia and Russia all practice the art. Mongolia's Minister of Education, Culture and Sciences has already sent a letter to the Director of the World Heritage Center of UNESCO expressing his ―deep concerns‖ over the listing. Eight centuries ago, Mongol clans under Chinggis Khaan controlled the steppes stretching from Beijing to Poland. One of their legacies is throat singing, also performed by people in Tuva, a Russian republic bordering Mongolia and Siberia. Mongolia and China already share one art form recognized by UNESCO. Urtiin duu, a Mongolian folk song, is listed as a multinational art with elements from both China and Mongolia. Read more… Throat singers can simultaneously produce two different notes. A hum in the throat harmonizes with the melody. China has 500 times Mongolia's population. Han Chinese outnumber ethnic Mongolians in Inner Mongolia, and dominate the regional government as well as heavy industry and mining. This is not the first time a UNESCO designation has caused controversy. North Korea opposed China's attempts to register the royal tombs of the ancient Koguryo kingdom with UNESCO, on the grounds that the kingdom was an ethnic Korean kingdom. UNESCO in 2004 listed Koguryo-era tombs in both countries. Source: Reuters.com

CHINA‟S WATER POLLUTION LEVEL TWO TIMES HIGHER THAN ESTIMATED IN 2007 A new Government survey of China's environmental problems has shown that water pollution levels in 2007 were more than twice the official estimate, largely because agricultural waste was ignored. The data presented last week revives questions about the quality of China's official statistics and the effectiveness of a government push for cleaner growth after decades of unbridled expansion. The first national census on pollution sources found that discharge of chemical oxygen demand, or COD -- a measure of water pollution -- in wastewater was 30.3 million tons. The Government had said in an official paper published two years ago that 2007 was the first year it managed to reduce water pollution, with COD falling 3 percent to 13.8 million tons. The census has taken so long, in part because it was extremely comprehensive but possibly also because the contents include painful revelations such as this one. Figures for other pollutants did not suggest widespread fiddling of data. Source: Reuters.com

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NEW MONGOLIAN LAWS AND RESOLUTIONS

The following Government resolution was published in a recent weekly Government bulletin. Unless otherwise decided by Parliament, the resolution takes effect (10) days after publication.

Date Resolution

2/12/2010 For water use, reset the percentage and amount of fee

Please visit BCM‘s website, Legislative Working Group, for a summary of new Mongolian laws and resolutions. BCM members who wish complete versions of the laws and resolutions in Mongolian language are welcome to call or email the BCM office (332345; [email protected])

ANNOUNCEMENTS

2nd ANNUAL MONGOLIA-ASIA INVESTMENT FORUM, MARCH 25, THE WESTIN BEIJING

Euromoney Conferences invites you to apply for your free place at the 2nd Annual Mongolia-Asia Investment Forum at the Westin Beijing on March 25.

The Panels: Investing in Mongolia‘s Mining Assets; Investing in Infrastructure to support the mining industry; Developing Mongolia‘s capital markets; Mining Supply Chain Management; Investing in Mongolia‘s property market. Click here for a copy of the latest agenda.

BCM will again partner with Euromoney on organizing this Forum, to be held in Beijing for the first time, to strengthen cooperation and trade relationships between Mongolia and the rest of Asia.

Attendance is free for investors and qualified companies. All applications are subject to confirmation. YES, I would like to apply for a FREE place

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MINEX CENTRAL ASIA MINING FORUM

Organized by a partnership of international and Kazakhstan companies, the Minex Central Asia Mining Forum will be held in Astana, Kazakhstan from 16-18 March. Eurasia Capital Mongolia is a co-organizer of the event.

The forum will provide a platform to facilitate international dialogue between companies, investors and government to encourage investment, sustainable development and improvement of efficiency of mining in the Central Asian region.

For more information, please contact:

Ms. Haliunaa Chimgee, Email: [email protected], Phone: +976 7012 9949,

Mobile: +976 91156879

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“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.

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SPONSORS

ECONOMIC INDICATORS

MSE WEEKLY REVIEW

For the week ended February 12, 2010, trading activity on the Mongolian Stock Exchange (MSE) totaled 328,400 shares with 37 companies traded. Total market value of transactions was MNT 136.7 million. Total market capitalization of the 358 stock companies listed on the MSE was MNT 651.4 billion, and increased by MNT 3.4 billion or 0.5% from Feb 5, 2010. The Top-20 Index increased by 30.44 points or 0.5% compared to the previous week, closing at 6640.79 points. Most active stocks traded were: Khukh gan (180,500 shares), Jenco tour bureau (50,900 shares), and Apu (19,500 shares). Major share price percentage gainers were: Atar urguu (23.3%), Erdenet khivs (20.2%), and Mongol shines (14.7%). Major share price percentage losers were: Suu (14.9%), Hai bi oil (13.0%), and Tavilga (11.5%).

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]

January 31, 2010 *5.7% [source:NSOM]

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

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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]

CURRENCY RATES – February 18, 2010

Currency name Currency Rate

US dollars USD 1,437.80

Euro EUR 1,980.50

Japanese yen JPY 15.93

British pound GBP 2,271.87

Hong Kong dollar HKD 85.06

Chinese yuan CNY 210.41

Russian ruble RUB 48.00

South Korean won KRW 1.26

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.