BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org

info@bcmongolia.org

Issue 173, June 24 2011

NEWS HIGHLIGHTS: Business:

Government suspends PetroChina’s crude oil transport along gravel road;

Erdene takes investors on tour of operation sites;

Mongolia Growth Group gets insurance license as Mandal General;

Voyager signs service contracts to facilitate exploration;

Output from MEC’s Khusuut mine found to be “high quality coking coal”;

Petro Matad gets to grips with complex geology as well campaign yields mixed results;

Energy Resource produced 24% of Mongolia’s total coal export in 2010;

MIAT buys 3 Boeing planes for USD245 million;

Mongolia Energy gains most in 2 years as coal deposits rise;

MEC unaware of reasons for unusual price and trading volume movement;

2010 was “an eventful year” for Petro Matad, says CEO McGay;

IFC gives USD20 million loan to Khan Bank;

SUU gets USD2 million from Belgium to expand;

Rio to exercise warrants to increase stake in Ivanhoe;

MRC focused on defining high grade gold resources;

Wedge Energy agrees to reverse takeover by Undur Tolgoi Minerals;

Mongolia Investment Group issues profit warning;

Erdene provides project updates and issues Q1 financial results;

First Director of Baganuur appeals to OT to build township;

Chambers 2011 list includes 6 law firms in Mongolia.

Economy: Central Bank discusses dollar bond sale with New York banks;

Final decision on Tavan Tolgoi “very close”, says Batbold;

Elbegdorj prefers multilateral trade agreements to FTAs;

Not enough crude to justify big refinery, Minister says;

Mongolia’s coal exports to hit 25 million tons this year;

Every province now has an SME brick factory;

MPs favor idea of bank borrowers’ database;

Energy Ministry prefers Tavan Tolgoi as site for power plant;

USD6.5 million German equity investment in Mongolian SME Fund;

FAA signs agreement with Mongolia to develop aviation safety;

Disabled miners to receive MNT280,800 each;

Mining students to attend U.S. university in Alaska;

Ferrous Metal Factory officials under investigation;

Medicine prices up by 70%, more fake drugs come in;

Chinese official predicts excess global rare earth supplies in 5 years;

Corrupt officials took USD124 billion out of China;

China investors believe Australia discriminates;

Trades reveal China shifting from dollar.

Politics: Batbold signs strategic partnership deal with Chinese Premier;

Reports of Chinese truck drivers being expelled;

Mongolia, U.S. join hands on democracy, energy;

Mongolia’s mining two-step with U.S., China;

Mongolia could use North Korea's ports, hints Batbold;

PM’s remarks on North Korea have more to do with China;

DP, MPP polarized on how MPs are to be elected;

Law on right to information passed after five-year wait;

Constitutional Court ruling blow to group’s claim to MPRP name;

This time, joint ventures will execute Chinese loan projects;

No consensus on law draft on parliamentary election;

Elbegdorj has lessons for USA from Mongolia’s past;

U.S. Ambassador sees 2012 as “a pivotal moment” in bilateral relations;

Elbegdorj decorates two NAMBC officers;

ACA officials appeal to Supreme Court;

Ganbaatar re-elected CTU head unopposed;

Prosecutor General explains decision on Altan Dornod chief;

No case against Saikhansambuu for claiming he bribed MPs;

2,880 flood-prone households to be relocated;

Draft seeks to bar foreigners from owning guns.

*Click on titles above to link to articles.

BCM MONTHLY MEETING NOTICE

BCM‘s next monthly meeting for members will be Monday, June 27, at 5 PM at the KEMPINSKI HOTEL KHAN PALACE, 2nd floor, Altai Ballroom. Parking will be reserved in front of the hotel for BCM Members. The bilingual meeting will feature the following presentations: - Onchinsuren Dendevsambuu, General Director, Onch Audit – ‗Update on General Tax Authority‘s working group‖; - David Lawson, Trade Commissioner, Australian Trade Commission – "Austrade: Enhancing Business between Australia and Mongolia"; - Andrew Orgill, Director of International Office, Santis Educational Services/President of Inlingua - "Recent Developments in Education"; - Achit-Erdene Darambazar, President, Mongolian Investment Capital Corporation (M.I.C.C.) – ―The Mongolian Investment Banking Landscape‖. A networking reception will be held for all attendees immediately following the business portion of the meeting.

BUSINESS GOVERNMENT SUSPENDS PETROCHINA’S CRUDE OIL TRANSPORT ALONG GRAVEL ROAD The Road Transportation Authority is reported to have suspended the transportation rights of Petrochina Daqing Tamsag Mongol until the time it takes suitable action on 10 instances where the company has been found to have breached the law. These include failure to enter into agreements with authorized auto transportation organizations; creation of about 20 subtracks by deviating from approved transportation routes; and causing environmental damage. Petrochina uses 25-30 vehicles to export about 2mtpa of crude. With each vehicle carrying 25-30 tons of load, the transportation road is in bad shape, and the stretch between Tamsag valley and Bichigt border crossing has become so narrow that it is now impossible for vehicles to pass each other. Some drivers are also believed to work without the appropriate driving license. There have also been instances where transportation vehicles did not have proper documents.

The current closure is another instance where the Government of Mongolia is targeting to get paved roads constructed to carry mining products for export, instead of their transportation along gravel roads. The cost of the closure to Mongolian crude exports can be computed only after its duration is known.

Source: Frontier Securities

ERDENE TAKES INVESTORS ON TOUR OF OPERATION SITES Senior executives of Erdene Resource Development Corp. took 10 visitors representing banks and securities firms from Canada, Australia, Mongolia and Hong Kong on a tour from June 17 to 20 of the company‘s Mongolia operations. They saw drilling that had commenced on the Nomin copper-gold prospect on June 12 and upon completion, will continue on the Khuvyn Khar copper-silver prospect. Drilling on the Nomin prospect will initially include 1,500 meters in three to five holes targeting this new copper-gold discovery in southwestern Mongolia, and focus on geochemical, structural and geophysical targets in the vicinity of ancient shallow pits from which multiple grab samples returned an average of 2.2% copper and 1.7g/t gold. Erdene has completed a preliminary drill program and a deep penetrating induced polarization geophysical survey over the Khuvyn Khar copper discovery in the northern portion of the Zuun Mod license. An interpretation of the drilling results and the new deep geophysics indicates that the copper mineralized zone appears to be structurally controlled in a zone of dacite porphyry in fault contact with granodiorite. In 2011, Erdene will continue to expand its detailed program of regional exploration to identify areas, principally in southern Mongolia, with the potential to host porphyry related copper-gold-molybdenum mineralization.

Source: Erdene Resource

MONGOLIA GROWTH GROUP GETS INSURANCE LICENSE AS MANDAL GENERAL Mongolia Growth Group Ltd. has received a license from the Financial Regulatory Authority (FRA) to underwrite property and casualty insurance in Mongolia. The newly formed insurance company will be named Mandal General. "I want to thank everyone who helped us on the application process. In particular, I want to thank FRA for their help in expediting our license request," said Mrs. M. Davaanyam, CEO of Mandal General. "We recognize the responsibility of insuring others and feel confident in our ability to live up to the high expectations set by FRA." "We have an aggressive roll out plan that has been pushed forward by the early receipt of our insurance license," said Mr. U. Ganzorig, President of Mandal General. "Our recruitment efforts continue and we currently have 17 employees dedicated to insurance. Within days we will begin our marketing program with the goal of underwriting our first policy by July 1. I want future policy holders to know that we shall soon have MNT6 billion of equity capital making us the best capitalized insurance company in Mongolia. Our conservative underwriting policy and use of re-insurance ensures that we will be able to pay all legitimate claims."

Source: Mongolia Growth Group

VOYAGER SIGNS SERVICE CONTRACTS TO FACILITATE EXPLORATION Voyager Resources has entered into a number of service contracts to facilitate the exploration of its key projects in Mongolia. The focus of this is two initial drill contracts for 20,000 meters of diamond core drilling and a further 5,000 meters of Reverse Circulation (RC) drilling to be completed at the Khul Morit Copper Porphyry Project and the high grade Daltiin Ovor Gold Copper Project. In addition to this, a number of geophysical and geochemical programs are under way at Khongor and Khul Morit. It is anticipated that these surveys will extend the currently planned drill meters.

Source: Voyager Resources

OUTPUT FROM MEC’S KHUSUUT MINE FOUND TO BE “HIGH QUALITY COKING COAL” The CEO of Mongolia Energy Corporation has recently issued a Technical Summary which says the company commenced trial production during Q4 of 2010 and has since continued to ship batches of raw coking coal to Xinjiang Bayi Steel International Trade Co Ltd (Baosteel Bayi). The buyer processed MEC‘s Khushuut coal in its existing wash plant facilities and is pleased with the coal quality. The test results show that MEC‘s coal is a high quality coking coal with medium ash, low sulfur content and low volatile matter that can be used for coke production. MEC will continue to ramp up its production of prime coking coal for coke production at Khushuut. Since the initial exploration program in 2007, the company has completed several additional exploration programs in 2008, 2009 and in 2010. The primary purpose of all these was to improve

the understanding of the geological structure and expected coal quality. The updated resource estimate for in-place coal shows a 5.4% increase from the original estimate in June 2008.

Source: Mongolia Energy Corp.

PETRO MATAD GETS TO GRIPS WITH COMPLEX GEOLOGY AS WELL CAMPAIGN YIELDS MIXED RESULTS After a run of four successful wells it was perhaps inevitable that Petro Matad, the AIM-quoted explorer focused on the little-drilled emptiness of Mongolia, would drill a less-than convincing hole. The company‘s fifth well, DT-5, was drilled to test a portion of the paleovalley-filling Uvgan Gol horizon on Block XX in Eastern Mongolia. Disappointingly, the horizon consisted of non-reservoir shales and tight sandstones, which is a blow given the company‘s excitement about this new stratigraphic play in the wake of the latest seismic review in March. This is only the company‘s first attempt to deliberately drill this section, however, and future wells may prove more successful. But DT-5 also failed to put in a convincing performance in the known Lower Tsagaantsav formation, finding just three meters of net pay. This zone will be tested later but because of low porosity and permeability will require stimulation to flow. Chief executive Douglas McGay took the positive view that this the fifth well in the program to yield a testable zone but investors were disappointed by the result, which shows the Uvgan Gol paleovalley fill varies from the high porosities and permeabilities seen in DT-1 and DT-2 to the low porosity and permeability seen in DT-5. Yet this is no surprise. Mr. McGay pointed out that the block immediately to the north, Block XIX operated by Chinese oil company Daqing Oilfields, which has been aggressively drilling up the acreage, has also shown that the reservoirs in the Tamsag Basin are not uniform. ―We have always expected to see variations in well results during the exploration phase,‖ said Mr. McGay. ―It is gratifying to see the presence of hydrocarbons in the Lower Tsagaantsav formation continuing to be relatively predictable." Isle of Man-headquartered Petro Matad has now spudded the DT-6 well, which is being drilled to a TD of 2,100 meters some 2.3 km south-southeast of DT-1. The well will test a very thick section of the Tsagaantsav formation, including 234 meters of the Uvgan Gol horizon and 364 meters of the underlying Lower Tsagaantsav formation. Source: oilbarrel.com

ENERGY RESOURCES PRODUCED 24% OF MONGOLIA’S TOTAL COAL EXPORT IN 2010 Energy Resources LLC, which held an IPO in the Hong Kong Stock Exchange in the name of its parent company Mongolian Mining Corporation, has published its report for 2010. It produced 3.9 million tons of coal in the year and accounted for 24% of the total coal exported by Mongolia in 2010. This year‘s output target is 7 million tons, of which 5.5 million tons will be sold after washing.

Source: News.mn

MIAT BUYS 3 BOEING PLANES FOR USD245 MILLION MIAT Mongolian Airlines has placed an order with Boeing for two Next-Generation 737-800 airplanes and one 767-300ER (extended range) airplane. The order, valued at USD245 million at list prices, marks the first time in more than two decades that MIAT will extend its route network by purchasing Boeing airplanes instead of leasing them. The agreement was signed at the U.S. State Department in Washington, D.C., in the presence of President Ts. Elbegdorj and U.S. Secretary of Commerce Gary Locke. "We are making a tremendous step forward with this order, and the Next-Generation 737-800 and 767-300ER airplanes are the ideal airplanes for us to expand our existing fleet to offer more scheduled and charter services from Mongolia to major cities in Asia and Europe," said Mr. O. Tseyen-Oidov, president and CEO of MIAT. "The Next-Generation 737-800 has already proved to be a great success with us through its advanced technology and high operating efficiency, and we look forward to realizing the benefits of the 767-300ERs comfort, range and increased payload capabilities for our long-haul flights." Boeing Flight Services will provide pilot and technician training for MIAT‘s' Next-Generation 737 and 767 crews.

Source: Boeing

MONGOLIA ENERGY GAINS MOST IN 2 YEARS AS COAL DEPOSITS RISE Mongolia Energy Corp., a mineral and energy explorer, advanced the most in more than two years in Hong Kong trading after announcing a 5.4 percent increase in its coal deposits. Its shares rose 27 percent to HKD1.18, the biggest gain since May 20, 2009. That compares with the 1.2 percent

increase in the benchmark Hang Seng Index. The energy explorer, which operates in Mongolia and China‘s western Xinjiang province, said in a statement dated June 17 that coal resources rose to 141,456 metric tons as of last month from 134,170 tons in June 2008. Shares of the company have fallen 51 percent this year, compared with the 6.7 percent decline in the Hang Seng Index. Mongolia Energy said on June 1 that it may report a loss for the year ended March 31 because of increased staffing, financing costs and losses from trading investments. The energy explorer reported a loss of USD41 million in the previous year.

Source: Bloomberg

MEC UNAWARE OF REASONS FOR UNUSUAL PRICE AND TRADING VOLUME MOVEMENTS In a statement made at the request of the Stock Exchange of Hong Kong, Mongolia Energy Corporation has said it has noted the recent increase in the trading price and volume of its shares but is not aware of any reasons for such increase. The company has been in discussion with an independent third party relating to possible co-operation for developing the concession areas of MEC in Mongolia other than the Khushuut Coking Coal Project which may include a possible subscription of new shares of MEC by this party. No forms or terms have been agreed with the party so far. Apart from this, MEC is also considering other potential resources projects ―which may have synergy to our existing business operation‖. The MEC board of directors advises investors to exercise caution in dealing with the shares and securities of the company as the matters referred above may or may not materialize.

Source: Mongolia Energy Corporation

2010 WAS “AN EVENTFUL YEAR” FOR PETRO MATAD, SAYS CEO McGAY Petro Matad listed the following highlights as it released the company's annual report for the financial year ended December 31, 2010. - 5 wells to-date drilled on Davson Tolgoi each of which has encountered hydrocarbons - Full drilling and testing program scheduled for Davson Tolgoi during 2011 - Exploration continues elsewhere on Block XX and on Blocks IV and V - Headcount increased from 26 to 80 including in-house exploration and engineering expertise - Broadened shareholder register with an aggregate of around USD54 million raised since last Annual Report. Speaking on the occasion, CEO Douglas J. McGay said it had been ―an eventful year‖. The company welcomed the European Bank for Reconstruction and Development to its share register in February 2010. A further, larger placing in September ―has provided the funding to enable an acceleration of our exploration efforts‖. The ―most significant event for the company was the discovery of oil in our first exploration well‖ in Davsan Tolgoi, on Block XX in July 2010. The Company completed a further two wells in 2010 and made significant progress on a fourth during 2010. Well testing is scheduled to commence shortly on the five wells drilled to date. The workover rig and testing equipment have been contracted to the end of calendar year 2011, and testing will continue on successive wells through the year. The logistics of importing and operating the workover rig are well advanced, Mr. McGay said. Operationally, the company made ―great strides‖ with the recruitment of its exploration and engineering teams. ―We now have an in-house capability that would be the envy of oil exploration companies many times our size, with longer history and operating in more developed countries, he said. Petro Matad's ―prime focus since inception has been to progress the company's assets towards petroleum discovery, so as to add real value to the company. To that end we have maintained our main office in Ulaanbaatar and recruited the aforementioned technical team to live and operate in country alongside their Mongolian colleagues,‖ said Mr. McGay. Read more… The Corporate Division has been strengthened with the addition of three appropriately qualified Mongolian personnel. An international-standard environmental team has been established, with a Mongolian manager. A Community Relations Manager supervises a very active and meaningful Social Action Program, ensuring that Petro Matad interacts positively with local communities. Referring to ―our flourishing relationship with our partner‖, the Government of Mongolia, through the good offices of both the Ministry of Energy and Resources and the Petroleum Authority of Mongolia, Mr. McGay hoped the proposed amendments to the Petroleum Law at some time in 2011 ―will improve the industry and attract more investment and development‖.

Source: Petro Matad

IFC GIVES USD20 MILLION LOAN TO KHAN BANK IFC, a member of the World Bank Group, will provide USD20 million to Khan Bank LLC, Mongolia‘s biggest bank by assets, to help strengthen its capital position and increase lending to small and medium enterprises. The seven-year subordinated loan will allow the bank to offer up to 14,000 new loans to small and medium enterprises by the end of 2015. IFC‘s investment will also help the bank maintain adequate capital and support its sustainability and development. IFC is the third-largest shareholder in Khan Bank, owning a 9.1 percent stake. ―IFC‘s investment demonstrates its continued commitment as a shareholder of the bank and reaffirms its intention to provide long-term support to Mongolia‘s banking sector,‖ said Mr. Simon Morris, Chief Executive Officer of Khan Bank. ―A strong banking system is essential to support the country‘s economy and Khan Bank is becoming a role model for reform in Mongolia‘s banking system,‖ said Mr. Hyun-Chan Cho, IFC‘s Country Manager for China and Mongolia. ―IFC‘s continued partnership with Khan Bank will help provide access to finance for small and medium enterprises to create more jobs and support Mongolia‘s transition to a stable market economy.‖ Source: Media-Newswire.com

SUU GETS USD2 MILLION FROM BELGIUM TO EXPAND Belgian Investment Company for Developing Countries (BIO) recently committed USD2 million to Suu, a dairy processor based in Ulaanbaatar. The investment aims at increasing and modernizing Suu‘s processing capacity and extending its raw milk supply chain. As a result, 2,500 existing and 1,500 new herders involved in the milk supply chain will obtain a higher and sustainable income, quality standards will be raised and the country‘s self-sustainability for domestic milk product supply will be improved. Suu has a current processing capacity of 150t/day, producing 51 different products including milk, yoghurt, butter, curd and ice cream. Presently, milk supply is sourced via 19 milk collection points, where more than 2,000 herders delivered their production in 2009-2010. As herder households selling milk have an average income three times higher than households that do not, herders‘ welfare depends on their ability to sell milk. BIO‘s commitment will allow the company to increase and upgrade its existing processing/packaging capacity, extend the raw milk supply chain, including the establishment of 22 milk collection points, 13 cooling units, 2 milking parlors and working capital to fund additional milk purchases. In addition it will improve the quality standards, including health and safety. Source: Microfinance Focus

RIO TO EXERCISE WARRANTS TO INCREASE STAKE IN IVANHOE Rio Tinto said on Tuesday it would raise its stake in Ivanhoe Mines to 46.5 percent from 42 percent after exercising outstanding warrants, a move that will allow it to name an extra board member. The warrants entitle Rio to acquire 55.1 million shares in Ivanhoe at USD9.10 each, for a total cost of USD502 million. Ivanhoe is developing the Oyu Tolgoi project with Rio. The project is 66 percent owned by Ivanhoe, with the remainder owned by the Mongolian government. Rio Tinto can increase its ownership in Ivanhoe further to 49 percent on or before 18 January 2012 by exercising options. "Depending upon its assessment of Ivanhoe's business, prospects and financial condition, the market for Ivanhoe's securities, general economic and tax conditions, and other factors, Rio Tinto will consider availing itself of its rights to acquire additional securities of Ivanhoe," Rio said.

Source: Reuters

MRC FOCUSED ON DEFINING HIGH GRADE GOLD RESOURCES In an update to its recent operational activities, Mongolian Resource Corporation says it is currently targeting a maiden resource at the Blue Eyes and Sujigtei Gold Deposits, as well as proceeding with development of key infrastructure for the commencement of underground mining. Mongolian Standard Resource and Reserve Feasibility Studies for development of these high grade gold deposits have commenced. Two mining licenses have been granted and the statutory approvals process to enable the resumption of mining is at an advance stage. MRC is a newly formed Mongolia-based diversified resource company engaged in the acquisition, development and operation of resource properties in Mongolia. Its major assets include the Blue Eyes (85%) and Sujigtei (90%) gold projects, the Bargilt magnetite iron project (100%), the Doshin coal project (100% interest), and alluvial gold projects in Berleg, Selenge, Ovorhangai, Omnogovi, Dornogovi, Bulgan. MRC‘s immediate focus is on achieving its core objective of defining and validating the high grade gold resources at the Blue Eyes and Sujigtei Gold Deposits and to upgrade

the gold processing facilities at Blue Eyes. Source: Mongolian Resource Corporation

WEDGE ENERGY AGREES TO REVERSE TAKEOVER BY UNDUR TOLGOI MINERALS Wedge Energy International has entered into a non-binding letter of intent (LOI) with respect to a proposed business combination with Undur Tolgoi Minerals, Inc. (UTMI), a private company registered in British Columbia. Under the terms of the LOI, the shareholders of UTMI would receive approximately 25 million shares of a newly created class of common shares of Wedge in exchange for all the securities of UTMI. Through its wholly owned subsidiaries, UTMI owns a 100% interest in Mineral Exploration License Number 8573X granted by the Department of Geological Cadastre of the Minerals Resources Authority of Mongolia. The licensed property is situated approximately 100 km from the Oyu Tolgoi mine and covers approximately 9,620 hectares. The license allows for exploration of all minerals with the exception of uranium, petroleum, gas and also water. A National Instrument 43-101 compliant technical report on the Undur Tolgoi Project has been completed. This transaction would constitute a reverse takeover of Wedge by UTMI.

Source: Wedge Energy International

MONGOLIA INVESTMENT GROUP ISSUES PROFIT WARNING Mongolia Investment Group has made an announcement to inform shareholders of the company and potential investors, pursuant to Hong Kong Stock Exchange Listing Rules, that it is expected that the consolidated results of the Group for the year ended 31 March 2011 may experience a significant decline as compared to the results of the same period last year.

Source: Mongolia Investment Group

ERDENE PROVIDES PROJECT UPDATES AND ISSUES Q1 FINANCIAL RESULTS The following are among the highlights of the update provided by Erdene Resource Development Corp. on its principal projects in conjunction with the release of its first quarter 2011 financial results. - Zuun Mod 30 year Mining License Issued - Zuun Mod NI 43-101 Resource Estimate Issued - Initial Drilling Program completed on the Khuvyn Khar copper discovery - Ends quarter with $7.5 million in cash and cash equivalents. In 2011, the Corporation will continue to expand its program of regional exploration to identify areas, principally in southern Mongolia, with the potential to host porphyry related copper-gold-molybdenum mineralization. Source: Erdene Resource Development Corp.

FIRST DIRECTOR OF BAGANUUR APPEALS TO OT TO BUILD TOWNSHIP Mr. D.Dondov, State Honored Miner who also served as a minister, continues to be involved in the mining sector as a lecturer at the Mining institute, as an independent member of the Board of Directors of Erdenes-Tavan Tolgoi and of the Professional Council of Mineral Resources. Recalling his experience as the first Director of the Baganuur mine, he has appealed to Oyu Tolgoi LLC to reconsider its present practice and stated policy of ferrying their workers by plane and hiring local people as housekeepers or guards. He wants the company to, instead, provide all workers with comfortable conditions where they can live with their family. Otherwise, ―when the deposit is exhausted, there will be little to show for the decades of mining except for some growth in Khanbogd district and some buildings, and there will be nothing permanent like Erdenet and Baganuur,‖ he says. Even if the company cannot build complete townships as in the Soviet era, there should be a living area for the staff, with schools and kindergartens. Family life should not be disrupted. Shops, restaurants and such services will make their appearance because of demand for them. Maybe private construction companies should be allowed to build apartments to be sold to or rented by OT staff. If OT provides water and electricity, the construction business will naturally flourish there. He feels ―sending staff by plane, giving them gers to live in, feeding them nice meals, washing their clothes free while it exploits our mineral resources is just cheating‖, and adds, ―OT hires our young people at high salaries, makes them work extremely hard, almost like soldiers, for 14 days and then sends them back to UB where they spend their money in night clubs. It would be different and much more productive if, instead, they lived in Khanbogd with their family. They will spend their money sensibly, instead of blowing it up. Their life will also be stable if they stopped living like migratory

birds.‖ Mr. Dondov praises the way Energy Resources is focusing on Mongolia‘s future and doing things for long-term social development, and hopes Erdenes-Tavan Tolgoi will set an example of development through mining, building both new townships and processing plants. The most important thing to come out of the mining boom should be substantial improvement of people‘s living standards. Source: The Mongolian Mining Journal

CHAMBERS 2011 LIST INCLUDES 6 LAW FIRMS IN MONGOLIA The recently released Chambers Asia-Pacific 2011, an independent and research-based survey of legal practitioners that covers the entire Asian continent, has listed six law firms in Mongolia for their reliability and competence. They are, alphabetically arranged, Anand & Batzaya Advocates; Arlex Consulting Services; GTs Advocates in association with Hogan Lovells; Lehman, Lee & Xu; Lynch & Mahoney; and Tsets Law Firm.

Source: Udriin Sonin

SPONSORS

Khan Bank Eznis Airways

Kempinski Hotel Khan Palace Mongolian National Broadcasting

Mongolian Star Melchers Breakthrough PR

ECONOMY CENTRAL BANK DISCUSSES DOLLAR BOND SALE WITH NEW YORK BANKS Mongolia plans to sell its debut dollar-denominated bond ―in the near future‖, to finance expansion of the mining industry and build roads and bridges, President Ts. Elbegdorj said during his visit to the USA. ―Mongolia is in good shape in terms of issuing bonds and paying back those things. Our economic growth is good,‖ he said. Mr. N. Zoljargal, Central Bank Deputy Governor who was with the president, added that the Government was talking to investment banks in New York about underwriting the planned USD500-million debt sale. The Government is also negotiating with Russia to secure currency swaps, according to Mr. Elbegdorj. He said he expects trade in local currency with Mongolia‘s two neighbors, Russia and China, to increase. A currency swap agreement signed with China last month paved the way for the planned five-year bond because the ―safety belt‖ will boost investors‘ confidence in its debt market, Mr. Zoljargal said. The planned bond sale would open the international capital markets for the Government and local companies to raise funds to finance USD50 billion of investment projects in the next decade, said Mr. Zoljargal. Mongolia‘s B1 rating at Moody‘s is four levels below investment grade, while S&P ranks it a step higher at BB-. ―We are watching the market carefully,‖ said Mr. Zoljargal. ―The Government really wants to have this. The benchmark itself is a very important thing for private

companies to go to the market.‖ Read more… Mr. Jeremy Brewin, a fund manager, said he is interested in Mongolian dollar debt because of the nation‘s debt levels and commodities-driven economy. ―We‘re quite keen as it has very little debt outstanding and the resources, the declared resources, suggest that Mongolia is asset rich,‖ he said. ―Until proven otherwise, we like idea of investigating the credit with prospects for participating in the deal.‖ Mr. Elbegdorj said he is concerned about how to ―manage‖ the surge of foreign investment and ensure the windfall spreads among the nation‘s citizens. ―One of the biggest challenges is how to manage the money flowing from the mining to the benefit of our people. Our best interest is to balance investments and trade between our two neighbors, Russia and China, and other parts of the world,‖ Mr. Elbegdorj said. ―I‘m trying to encourage investment from the United States.‖

Source: Bloomberg

FINAL DECISION ON TAVAN TOLGOI “VERY CLOSE”, SAYS BATBOLD; Mongolia may share its Tavan Tolgoi coal mining project between a majority of the six bidders shortlisted by the government and ask them to work together, Prime Minister S. Batbold told Bloomberg Television in Beijing on June 17, concluding his three-day state visit to China. ―There are going to be about three or four of the major ones to create one consortium,‖ he said, adding that the final decision is ―very close‖. Mongolia is trying to seek a ―balance of interests‖ in its relations with neighbors like Russia and China and Western countries, he said. ―This balance has to be kept not by squeezing somebody, but increasing‖ the opportunities from cooperation, he said. ―We would like to make this happen as soon as possible because the more quickly it can generate revenue the better will it be for the country,‖ Mr. Batbold said. Source: Bloomberg

ELBEGDORJ PREFERS MULTILATERAL TRADE AGREEMENTS TO FTAs Receiving the "International Statesman Award" from the Asia Society on June 15, to a standing ovation from the 400 guests, President Ts. Elbegdorj said he accepted the award "not for myself, but as your recognition of the courageous embrace of democracy and free market reform by the Mongolian people." Delivering the keynote address at the annual dinner of the Society, the President said that strengthening the WTO was an important means of dealing with the world's need for water, food and energy through more liberalized international trade and that FTAs were no substitute for a strong WTO. He noted that small nations prefer the security of multilateral institutions, like the WTO, and praised the WTO's successful record of trade dispute resolution. He called for the start of a new round of WTO negotiations that would especially engage the BRIC nations and encourage them to take their "full and rightful responsibility" for making the WTO and the multilateral trading system work as it should. At the US Chamber of Commerce luncheon co-sponsored by the NAMBC earlier on the day, President Elbegdorj said in response to a question that he expected the Mongolian Government to make a decision on the Tavan Tolgoi coal field by the Naadam holiday in July. Parliament is scheduled to adjourn in the first week in July. Source: NAMBC

NOT ENOUGH CRUDE TO JUSTIFY BIG REFINERY, MINISTER SAYS Facing flak from the media and some MPs for ―deliberate and criminal inaction‖ in not setting up an oil refinery in Mongolia, Minister of Mines and Energy D.Zorigt has reported to the Government that Mongolia‘s confirmed crude reserves do not justify investment in a refinery with production capacity of 2mtpa. A more viable option is to build a mini-refinery to supply three eastern provinces. This can be constructed on a PPP basis and can be commissioned within 18 months of starting work. The Chairman of the Petroleum Authority, Mr. D.Amarsaikhan, said at the same meeting of the Government that confirmed crude reserves were available only in July 2010. He estimated that 1 million tons of crude would be extracted by 2015. He had issued a very optimistic statement to the media on February 24 last year that ―geological reserves of 119.02 million tons (892.65 million barrels) of crude and 2.5 billion cubic meters of natural gas have been found by Daching Tamsag Mongolia in the Tamsag valley of Dornod province. This is the minimum confirmed reserve, amounting to 0.12 percent of world reserves and making Mongolia No.33 in the world and a major player in the petroleum industry.‖

A representative of the Industrial Corporation of Mongolia reports that they have been cooperating with Thyssen for two years on a CTL project and a feasibility study was prepared in 2010 for a plant to produce 1 million tons of gasoline, diesel and liquid gas per annum. Its site could be Baganuur,Shivee Ovoo or Tugrug Nuur and total costs would amount to USD1.5 billion. Mr. Zorigt expressed full support for the project.

Source: Frontier Securities

MONGOLIA’S COAL EXPORTS TO HIT 25 MILLION TONS THIS YEAR Mongolia's coal exports are expected to keep posting exponential gains and reach some 50 million ton by 2015, though infrastructure constraints are likely to obstruct the growth of the booming mining sector. Total coal exports are expected to jump 50 percent from a year ago to 25 million tons this year and rise further to between 30-35 million ton in 2012, Mr. A. Erdenepurev, General Director of the Fuel Policy Department at the Ministry of Mineral Resources and Energy, said on the sidelines of Coaltrans Mongolia, an industry conference in Ulaanbaatar. "Looking at our production growth over the past few years, these short-term forecasts can be quite conservative," he said. A severe lack of roads, rail lines, electricity, water and skilled workers in the nation of 2.7 million people poses formidable challenges to Mongolia's mining boom. "There are 5,000 trucks per day on the road linking the southern Gobi region to the Chinese border right now and that number is going to grow and cause congestion," Mr. Erdenepurev said. "There is a serious need for new infrastructure, but it also demands huge investments."

Source: Reuters

EVERY PROVINCE NOW HAS AN SME BRICK FACTORY The Chief of the SME Office, Mr. Ts.Nyam-Osor, has said every district in the country will be allocated between MNT50 million and MNT265 million, depending on its population, to set up and strengthen SMEs. The loans will carry 3% interest and will be for three years. Mr. Nyam-Osor said some 1,200 organizations have benefited from the exemption from customs duty and VAT for equipment imported by SMEs for their use. All provinces now have brick factories, and bread and 20 other types of goods are now extensively produced in the countryside. More vegetables are also being grown. The SME Office has a list of 256 items that can be produced by SMEs in the provinces, and it has helped set up 196 factories in the last two years. Repayment rates have been very good and many entrepreneurs who took loans between MNT10 and 20 million are clearing their dues quickly so that they can apply for fresh loans of up to MNT70 million.

Source: Uls Turiin Time

MPs FAVOR IDEA OF BANK BORROWERS’ DATABASE The Standing Committee on the Economy last week discussed a draft law on creating a loan database and decided to submit it to Parliament for further discussion. The draft seeks inclusion of details of all bank borrowings in a central database so that banks can check the background of individuals and organizations who apply for a loan. It would also give information on the status of collaterals relating to previous borrowings. A working group to review the draft amended some original provisions. One of them calls for loan details to be deleted after six years to protect borrowers‘ interests. After deletion, such details will be in the archives of the Central Bank, which would also hold the active database.

Source: Ardiin Erkh

ENERGY MINISTRY PREFERS TAVAN TOLGOI AS SITE FOR POWER PLANT Mr. T. Tserenpurev, Director General of Energy Policy Department at the Ministry of Mineral Resources and Energy, recently explained to media why the Government has decided to build a power plant in the South Gobi region ahead of schedule. He said development work on the Oyu Tolgoi project has been faster than expected and the power would be needed much earlier than earlier thought. For this, the Government has given the company permission to make arrangements to import power from China for the time. ―However, since we shall build a plant, it makes no sense to delay it until 2016, because the earlier Mongolia produces power, the sooner the need for imports will go,‖ he said. Now that construction of the plant has been brought forward, he hoped the election would not delay matters. He was also asked where the plant would come up. The original decision was taken on the basis of recommendations made by the Minerals Ministry and the National Development and Innovation Committee but further studies revealed that adequate water could be a problem in Tavan Tolgoi.

There is underground water, but this will be needed for the coal washing plant. There may still be enough for the power plant and ―we have not taken any firm decision to shift it from Tavan Tolgoi,‖ he said, adding, ―Indeed, we would like to stick to the original plan of having the power station in the TT deposit area, but the whole water issue needs careful re-evaluation. We have called in experts from Singapore and will compare our views with what they say.‖ Source: The Mongolian Mining Journal

USD6.5 MILLION GERMAN EQUITY INVESTMENT IN MONGOLIAN SME FUND The German Investment and Development Company DEG has made an equity investment worth USD6.5 million in Mongolian Opportunities Fund to support small and medium sized enterprises in the Mongolia‘s mining, infrastructure and agribusiness sector. The World Bank‘s IFC and the European Bank for Reconstruction and Development are other investors in the fund. With a total fund size of USD75 million, The Mongolian Fund is a private equity fund which makes equity investments in Mongolian companies ranging from USD2.5 million up to USD7.5 million. DEG is a member of Germany‘s KfW banking group. In the last five decades, its financing commitments have grown to more than 11 billion Euros and contributed to providing an investment volume of 70 billion euros.

Source: Microfinance Focus

FAA SIGNS AGREEMENT WITH MONGOLIA TO DEVELOP AVIATION SAFETY The U.S. Department of Transportation‘s Federal Aviation Administration (FAA) and the Civil Aviation Authority of Mongolia intend to develop civil aeronautics and air commerce safety through technical assistance and training through a Memorandum of Agreement (MOA) signed on June 16. This formal bilateral relationship, the first of its kind between the two countries, is an opportunity to enhance safety and improve system capacity in Mongolia. Aviation is an important element of the Government of Mongolia‘s efforts to broaden ties within the region and around the world for the landlocked country. The FAA may provide technical and managerial expertise to assist Mongolia in developing, modernizing, operating and maintaining its civil aviation infrastructure, standards, procedures, policies, training and equipment, as well as provide training to personnel from Mongolia under the MOA.

Source: Federal Aviation Administration

DISABLED MINERS TO RECEIVE MNT280,800 EACH The Government has allocated MNT486 million to pay compensation to 1,700 disabled miners. The money should be distributed before Naadam. The miners were rendered incapable of further work either because of some occupational disease or following an accident. They worked in 16 mines, including Nalaikh and those in Bor-Undur and Berkh, and in the glass factory. Each would receive MNT280,800 or twice the amount of minimum wages.

Source: Undesnii Shuudan

MINING STUDENTS TO ATTEND U.S. UNIVERSITY IN ALASKA Following an agreement signed last week, 20-25 students of mining, after attending courses in the Mongolian University of Science and Technology for two years, will go for further studies at the University of Alaska, Fairbanks. The cooperation agreement between the Mongolian and the U.S. universities will be in force for five years.

Source: Undesnii Shuudan

FERROUS METAL FACTORY OFFICIALS UNDER INVESTIGATION The Anti-Corruption Authority will conduct further investigation against seven present and former senior officials of Ferrous Metal Factory of Darkhan as the Ulaanbaatar Prosecutors Office feels it needs more evidence to initiate criminal proceedings against them. The charge against them is misuse of position to embezzle MNT149.6 million from the factory funds. There were complaints during the tenure of the former Chief D.Ganbold that the factory was buying raw material at prices higher than in the market.

Source: Unuudur

MEDICINE PRICES UP BY 70%, MORE FAKE DRUGS COME IN The Chief of the State Specialized Inspecting Agency, Mr. R.Sodkhuu, has said that they have found many drug stores selling medicines over the counter and without proper medical prescription or state authorization. Also, the price of many medicines has gone up by as much as 70% in the last

one year. Mongolia imports medicine from 40 countries of Europe and Asia, apart from illegal import of mostly spurious drugs. The result has been a steady increase in the number of drug poisoning cases every year. Most of the 1,588 cases recorded between 2003 and 2009 were children between 0 and 4. Mongolia does not record drug poisoning as a cause of death, so there is no knowing whether any of these cases was fatal.

Source: Unuudur

CHINESE OFFICIAL PREDICTS EXCESS GLOBAL RARE EARTH SUPPLIES IN 5 YEARS Chinese industrial executives say the world's supply of rare earth minerals will outstrip demand within five years, ending reliance on China's exports. Mr. Wang Hongquain, general manager of China Nonferrous Metal Industry's Foreign Engineering and Construction Company (NFC), told China Daily more nations with large rare earth deposits will resume exploration, which will lead to a global reallocation of the minerals. While China only controls 36% of the world's deposits, countries with large reserves, such as the U.S. and Australia, have yet to unfreeze exploration of the minerals. Late in May, China's Minister of Land and Resources Xu Shaoshi revealed government plans to maintain tight control over the rare earth sector. The first of its kind in more than a decade, the guideline is designed to enhance industrial consolidation, crack down on smuggling and illegal mining practices, and set up a national strategic stockpile system for heavy rare earth metals. Mr. Mark Watts, online news editor for the publication Industrial Minerals, has said heavy rare earths prices have surged since the Chinese announcement. The price of most has more than doubled, while dysprosium oxide, used in plasma TVs, smart phones and energy saving light bulbs, has increased 142% to USD3,400/kg. Editor Mike O'Driscoll said the lack of alternative REE supply outside of China, coupled with a forecast of a 48% increase in world REE demand to 185,000 tons in 2015 and shortages of dysprosium and neodymium, have contributed to the rapid price increases.

Source: Mineweb.com

CORRUPT OFFICIALS TOOK USD124 BILLION OUT OF CHINA Corrupt Chinese officials smuggled an estimated USD123.6 billion of ill-gotten gains out of the country over a 15-year period, according to a report released by China‘s central bank. Around 17,000 Communist party cadres, police, judicial officers and state-owned enterprise executives fled the country between the mid-1990s and 2008, the 67-page report said. For higher-ranking officials who managed to abscond with large amounts of money, the US was the favorite destination, while Canada, Australia and the Netherlands were also popular. Those who could not immediately secure visas for western countries often chose to stay in small countries in eastern Europe, Latin America and Africa while they waited for a chance to move to their final intended destination. Lower-ranking officials tended to escape to countries bordering China, the report said. The independently administered Chinese territory of Hong Kong was also a popular transit point. The report, stamped ―internal materials, store carefully‖ and compiled in June 2008, was published on the website of the central bank‘s anti-money laundering bureau last week. The bureau took the report down after it generated a public outcry. The report provided a fascinating insight into the mechanisms behind the corruption by identifying eight ways that officials funneled their illicit funds offshore. Overseas casinos were commonly used to launder money out of the country in collusion with gaming operators. Many officials carried large amounts of cash across the border or disguised money transfers to relatives, mistresses and other confidantes abroad, while more sophisticated cadres relied on fake trade documents and overseas investments. Others used credit cards to buy large amounts of luxury goods overseas and then used illicit funds to pay back the fees in China. Read more… Chinese capital controls are supposed to limit individuals to annual remittances of just USD50,000 in or out of the country. The sectors that were most at risk of having corrupt officials abscond with stolen funds were ―sensitive industries‖ like finance, state-owned monopolies, construction, transport and tax, investment and trade departments of the government, the report said. Anecdotal evidence suggests the number of officials absconding abroad with stolen assets is increasing, in part because of a senior leadership transition scheduled for late next year. Many officials fear they will be losers in the power struggles that are expected to accompany the transition.

Source: The Financial Times

CHINA INVESTORS BELIEVE AUSTRALIA DISCRIMINATES Australia is China's top direct foreign investment destination, but Chinese investors believe it discriminates against them because of media-driven nationalism and a suspicion of communism and China's growing geopolitical clout. A new report on China-Australia investment relations also found that Australians were suspicious of Chinese investors, believing their motives are not always commercial but geopolitical. The report by the Lowy Institute for International Policy in Sydney, based on a series of interviews with Chinese investors, said Australia needed to better communicate its foreign investment guidelines to Beijing. It warned that with access to food and water becoming of global concern, future flashpoints in Australia-China investment ties would likely centre on China's food security objectives and the intersection with Australian FDI policies. China's negative perception of Australia stems largely from the failure of a series of high-profile Chinese deals in Australia's resource sector, said the report. "Official Australian pronouncements repeatedly emphasize that Chinese investment is welcome. Despite this, however, some Chinese investors and officials perceive that Australia discriminates against Chinese investors, although that perception is generally not one that is shared by their investment advisers." Australia has been the biggest target for Chinese outward foreign direct investment over the past five years, excluding Hong Kong and tax havens, with direct investments worth more than AUD16 billion, according to Australia's Treasury. The overwhelming focus of Chinese investor and official complaints was investment in Australia's natural resources. Read more… China has become a major source of global Foreign Direct Investment, or FDI. China FDI in 2009 accounted for 4.4 percent of total global FDI outflows, putting China in fifth place behind the United States, France, Japan, Germany and Hong Kong. Unofficial estimates for 2010 indicate China's proportion of total global FDI outflows increased to 5.3 percent. Australia's planned 30 percent profit tax on mining projects had hurt the country's reputation with Chinese investors, with less sophisticated investors or ones with existing projects being the most aggrieved, said the report. In contrast, it said Chinese banks operating in Australia had no perception of discrimination. One way for Foreign Investment Review Board officials to build more trust in China would be through a more regular presence in China, building greater exposure to investors, advisers and officials. "Would this be a special arrangement for China? Sure. But that could be justified given the huge importance of the bilateral economic relationship in general," the report said.

Source: Reuters

TRADES REVEAL CHINA SHIFTING FROM DOLLAR China began diversifying away from the US dollar in earnest in the first four months of this year, most likely by buying far more European government debt than US dollar assets, according to estimates from Standard Chartered Bank. China‘s foreign exchange reserves expanded by around USD200 billion in the first four months of the year, with three-quarters of the new inflow invested abroad in non-US dollar assets, the bank estimated. ―It certainly appears that China‘s finally following through on its policy to diversify its foreign reserve holdings away from the US dollar,‖ said Mr. Stephen Green, the bank‘s chief China economist. For over six years, Beijing has continued to accumulate US government debt even as officials insisted they wanted to reduce the weighting of US dollar assets in foreign exchange reserves. Between December 2007 and March this year, China‘s foreign exchange reserves doubled to USD3,044 billion and over that time most analysts believe the proportion of US dollar assets remained relatively steady at between 60 and 70 per cent of the total. Beijing, however, routes purchases through custodian banks and overseas financial centers, such as London and Hong Kong, to disguise its offshore dealings. Standard Chartered compared China‘s inflow of new foreign exchange reserves to net purchases of US government debt by buyers in China, Hong Kong and London. These purchases fell dramatically in the first four months of this year to USD46 billion – equivalent to just 24 per cent of the USD196 billion in foreign exchange that China accumulated over the same period. Mr. Green said it was possible that China had found a way to disguise its purchases of US government debt – or could be buying riskier US assets that do not show up in monthly data. In recent months, Chinese leaders have repeatedly pledged to aid European countries struggling with sovereign debt crises. ―Even if Beijing were not concerned about the US fiscal situation and/or the US dollar, the yields on offer in the euro market would likely be attractive enough for it to diversify into Europe at the margin,‖ Mr. Green said. There is no sign China is reducing its existing holdings

of US dollar assets, remaining the largest foreign owner of US securities, with USD1,611 billion by June 30 2010, according to the US Treasury.

Source: The Financial Times

POLITICS BATBOLD SIGNS STRATEGIC PARTNERSHIP DEAL WITH CHINESE PREMIER Prime Minister S.Batbold and Chinese Premier Wen Jiabao signed a strategic partnership deal in Beijing on Thursday while China agreed to provide a USD500-million loan to Mongolia. They signed the partnership agreement and oversaw the signing of eight other deals, which included economic and technological cooperation, the protection of cultural relics, and education. ―China is a good neighbor and a strategic partner,‖ Mr. Batbold said. Cooperation will benefit both countries as Mongolia has resources China needs, while China can provide the ―markets and potential‖ for Mongolia‘s economic development, he said. However, Mongolia doesn‘t want to be only a supplier of raw materials, Mr. Batbold said. ―We would like to direct the financing opportunities to the industries to create more value, more technology and more environmentally friendly approaches.‖ Mongolia has been looking to sell its minerals and Mr. Batbold welcomed foreign investment in his landlocked country's resources and real estate sectors. He said Mongolia would try to provide a fairer and more transparent environment for foreign investors, who have been falling over each other to get a stake in Mongolia's coal, copper and iron sectors. He also said Mongolia and China should pay more attention to their bilateral trade structure, noting Mongolia's exports to China mainly consist of heavy raw materials, which is bad for the environment. He also said Mongolian companies had started to invest in China, and hoped Beijing would support these firms.

Source: News.mn, Bloomberg

REPORTS OF CHINESE TRUCK DRIVERS BEING EXPELLED There are unconfirmed reports from Mongolia‘s South Gobi region, home to much of the nation‘s mining industry, that hundreds of Chinese truck drivers have been turned back to the China border. The development is believed to be linked to three main aspects concerning cross border transport and China-Mongolia relations. At the heart of the matter is the current status of both nations concerning their recognition of cross-border transport protocols as determined by the international organization Transports Internationaux Routiers (TIR) or International Road Transport. TIR is an international customs transit system and is the only universal transit system that allows goods to transit from a country of origin to a country of destination in sealed load compartments with customs control recognition along the supply chain. This minimizes administrative and financial burdens and customs duties, and taxes that may become due are covered by an international guarantee. The crux of the matter relates to the key fact that Mongolia is a member and China is not. One aspect of the treaty relates to haulage operators and the drivers of such trucks. Mongolia permits access to Mongolia‘s road system by licensed foreign drivers, while China does not. To date, goods vehicles from China have been using Mongolian facilities with local Chinese drivers, while Mongolian vehicles and drivers are denied direct access to China past a certain point. The situation has also flared up due to the perception that allowing Chinese drivers to transport haulage across Mongolia is damaging Mongolians‘ employment chances. That is fast becoming a political issue as Mongolia has national elections next year. Read more… Also impacting on the issue is the ―general attitude‖ of Chinese drivers in Mongolia, many of whom apparently seem to regard the nation as a vassal state to China and have been known to treat the Mongolians poorly. This is a side effect of the Chinese education system which has often claimed Mongolia as Chinese territory. Additionally, the incident in China‘s Inner Mongolia Autonomous Region last month, in which a Chinese truck driver ran over a killed a Mongolian herder, has again impacted on the way in which Chinese drivers are seen to behave towards ethnic Mongolians. While there is no doubt that the current status, if correct, of Chinese truck drivers being expelled from Mongolia is undeniably politically motivated, it does call into question the failure of China to join organizations such as the TIR that seek to better manage and monitor cross-border trade. China‘s refusal to cooperate with such entities may now start to come under pressure from other nations that in the past have turned a blind eye to Chinese drivers operating overseas. The spirit of reciprocity has yet to extend to permitting foreign drivers to operate in Chinese territory, and that

stance may now come under pressure. Source: www.2point6billion.com

MONGOLIA, U.S. JOIN HANDS ON DEMOCRACY, ENERGY Mongolia promised to give US companies a role in its booming energy sector as President Barack Obama reached out to the young democracy that is also being courted by neighboring China. President Ts. Elbegdorj capped a trip to Washington with a White House meeting with Mr. Obama on June 16, the very day that the country's Prime Minister held talks in Beijing and received loan guarantees. In a joint statement released by the White House, the United States and Mongolia "emphasized their two countries' common interest in protecting and promoting freedom, democracy and human rights worldwide". The two nations also promised to expand economic ties. During Mr. Elbegdorj's trip, MIAT Mongolian Airlines said it would buy three aircraft from the Chicago-based Boeing Co. at a value of USD245 million. "Mongolia noted the important role that US companies," the statement said, "will play in the development of the country's coal, other mineral resource, infrastructure, agriculture, energy and tourism industries." US-based Peabody Energy is among bidders to develop part of the Tavan Tolgoi mine, one of the world's largest coal fields. "We regard the USA as our first 'third neighbor' and we would like to improve that relation," Mr. Elbegdorj said at the Brookings Institution think-tank shortly before his summit with Mr. Obama. "We have a peaceful foreign policy," he said. "Some call it a tough neighborhood. But we have existed next to each other for centuries and we know how to get along with the People's Republic of China and the Russian Federation." Read more… Mongolia next month takes the helm of the Community of Democracies, an international initiative. He voiced hope Mongolia would serve as a "regional beacon", but stopped short of commenting directly about the state of democracy in China. In sometimes colorful language, Mr. Elbegdorj saluted protesters who toppled authoritarian regimes in the Middle East, but warned them that democracy takes time. "Today I see joyful demonstrations on the streets of the Middle East. I think they will go through very hard times for years -- maybe 20 years -- to achieve today's level of Mongolia," he said. "The beauty of freedom is that there is always space to correct our mistakes," he said. "When there is criticism from the public, we are forced to change and to make better decisions. Democracy is not a one-day, one-week, one-year, 20-year issue. I think you have to care for that every morning, like changing the diapers of a baby," he said.

Source: AFP

MONGOLIA’S MINING TWO-STEP WITH U.S., CHINA On opposite sides of the world last week, Mongolian leaders were illustrating the diplomatic balancing act their country faces as it divvies up a trove of mineral wealth – and the contracts to get it out of the ground. President Ts. Elbegdorj was in Washington on Thursday pumping the flesh with President Obama after a multi-stop visit to the U.S. Hours earlier Prime Minister S. Batbold was completing a swing through Asia with a call on China‘s premier, Mr. Wen Jiabao. For decades, Mongolia‘s vast expanse has served as a buffer – sometimes contested – between Russia and China. In bargaining, Mongolian leaders had little to offer than fine cashmere. Mongolia‘s land today is no less strategically valuable, including for the U.S., which seeks a foothold in the fast-developing region. But these days, Ulaanbaatar‘s diplomatic pouch is bursting with commodities that boast a bit more geopolitical heft than goat hair: copper, coal and rare earth minerals. Known for its nomadic herders, Mongolia now has money to buy Boeing airliners, but it is not rich enough to turn down USD500 million in aid from Beijing. In the past week, Mongolia opened new consulates in both Hong Kong and San Francisco, illustrating its desire to maintain balance in dealing with the world‘s two largest economies and attracting their investment. The President dropped into the Asia Foundation and dined with Michelle Obama, while the Prime Minister talked about investment options with Hong Kong financiers. The country that ruled an enormous empire 800 years ago is determined to be no one‘s patsy. Yet the decisions Mongolian leaders are weighing about which operators to bring into its mine development projects are tough ones. Strong bidders hail both from big powers, China and the U.S., as well as Russia, South Korea and Australia. ―This is very delicate work,‖ Mr. D. Jargalsaikhan, an Ulaanbaatar banker and noted commentator, says. He thinks timing of the diplomatic visits to Beijing and Washington is mostly coincidence, adding that he is more immediately worried about

the price of fuel imported from Russia than the U.S.-China diplomatic dance. Read more… Nevertheless, Mongolia‘s challenge is huge. ―Dealing with China and Russia is hard work, and we are dealing with them at the same time,‖ he said. Mr. Jargalsaikhan said democratic ideals make Mongolia more flexible than in the past, and better suited to satisfy its own interests through diplomacy. ―We are not under one ideology,‖ he said. Neither official statement released in Beijing nor Washington referred very directly to the upcoming contractual decisions about mineral development. Nor was mining ignored. ―Mongolia noted the important role that U.S. companies, with their internationally leading management, technical, safety, environmental, and sustainable mining practices, will play in the development of the country‘s coal, other mineral resource, infrastructure, agriculture, energy and tourism industries,‖ the joint U.S.-Mongolian statement said. The Xinhua news agency summarized the Chinese meetings by noting that the two sides ―reiterated that priority will be given to natural resources and infrastructure in their economic cooperation.‖ Mongolia‘s head appears to be with China, since its populous next-door neighbor is the natural market for its resources and the primary reason expectations are growing about the country‘s impending windfall. But Mongolia‘s heart may be closer to the U.S., the nation that inspired its democratic system, which President Elbegdorj refers to as the freest ―in this part of the world‖. The shuttle diplomacy by Mongolian officials, meanwhile, is a reminder of how rarely Ulaanbaatar has had a chance to host presidents of the country‘s suitors. George W. Bush became the first and only U.S. president to visit Mongolia when he traveled to the capital in 2005, Chinese President Hu Jintao made his only stop in 2003, an overnight trip during his first overseas travel as president.

Source: The Wall Street Journal blogs

MONGOLIA COULD USE NORTH KOREA’S PORTS, HINTS BATBOLD Mongolia sees North Korea's ports as the gateway for shipping its mineral resources, taking advantage of "very good relations" between the two countries, Prime Minister S. Batbold said in an interview with Bloomberg Television in Beijing last week. "We will keep the channel warm with North Korea," Mr. Batbold said. "We could have further cooperation in the access to the sea and seaports." Landlocked Mongolia needs to secure access to the sea as it pursues mining projects, he said. "Basically we are trying to engage North Korea, keep them engaged with other countries. We don't want them to be isolated," Mr. Batbold said. "We would like peace, stability and security in our region." Mongolia may also supply North Korea with meat and foodstuffs, Mr. Batbold said. The two countries could cooperate in agriculture because of Mongolia's "vast land", he said. Mongolia is trying to seek a "balance of interests" in its relations with neighbors such as Russia and China and Western countries, Mr. Batbold said. "This balance has to be kept not by squeezing somebody, but increasing" the opportunities for cooperation, he said.

Source: Gulf News

PM’S REMARKS ON NORTH KOREA HAVE MORE TO DO WITH CHINA Prime Minister S.Batbold‘s remarks on Mongolia‘s possible use of North Korea‘s ports for shipping its mineral resources are politically in line with China-North Korea friendship and Mongolia‘s old socialist ties with North Korea. Economically, the issue is substantially under Chinese control as Mongolia needs Chinese rail allocation to get to North Korea. For Mongolia, any diversification of ocean access routes would be beneficial. Also, mineral rich North Korea could be next frontier after Mongolia, and, interestingly, North Korea does business in Mongolia. A reputable mining analyst in Hong Kong has said North Korea‘s northern areas are very rich in gold, zinc and coking coal, plus copper, lead and industrial minerals. It just has no infrastructure or capital. A port in north-eastern North Korea would help develop its own mineral wealth. North Korea could offer opportunities for Mongolia and Mongolia-based companies. The remarks have more to do with China and are possibly supported to certain degree by the USA, Japan and South Korea who want to engage and not isolate North Korea. Access to North Korean ports, however, has little geopolitical viability although there appears to be significant economic sense for both Mongolia and North Korea.

Source: Frontier Securities

DP, MPP POLARIZED ON HOW MPs ARE TO BE ELECTED The fate of the proposed reform of the election system seems uncertain, with the two partners in the coalition sticking to their radically different stands. All parties in Parliament have accepted

that the system should combine proportional representation with the presently followed first-past-the-post method, but they are polarized on how many MPs are to be elected through which method. The DP group favors 50 MPs to be elected on the proportional method and the remaining 26 to be directly elected. The MPP, however, does not want to carry reforms so far. It has called for 26 MPs to be elected on the basis of total votes cast for parties and the 50 others to be chosen as they are now, in direct election with the candidate polling the majority vote the winner. The Civil Will-Green Party has said it supports the DP view and its leader, Mr. D.Enkhbat, has accused the MPP of going back on its promise made in 2008 to reform politics. First, some of its MPs submitted a draft law calling for total proportional representation in Parliament. Then they said this might not be sensible and prepared a fresh draft law that combined both systems. Then the party said technical issues have to be decided before political ones. Now they say 50 MPs should be elected directly, which means very little is changed. Mr. Enkhbat felt this was ―cheating the people‖ and the MPP, ―in forgetting its promise, was also acting irresponsibly‖. The Chief of the MPP group in Parliament, Mr. D.Lundeejantsan, reacted strongly to the accusation of backtracking and said his party was as committed as ever to its pledges of reform. However, they want reforms to come in stages and feel that as of now the people favor direct election of MPs.

Source: News.mn

LAW ON RIGHT TO INFORMATION PASSED AFTER FIVE-YEAR WAIT Parliament last week passed the draft law on transparency and right to information that had been submitted in 2007. The head of the working group that worked on the draft, Mr. Su.Batbold, and DP leader E.Bat-Uul later explained to the media why the passage of the law after five long years was of great significance. They said Government organizations and also those run with money from the state budget would now be legally obligated to open their activity to individuals and groups and also to provide them with information they may seek. Mr. Bat-Uul said that the law has come at the right time as the Government is spending a lot more money than before and people must know that this is being done in a proper way. The law provides for a fine equal to five times the minimum wages for any official who prevents a subordinate from revealing information, while a repeat offense would lead to dismissal. The state organizations under the ambit of the law would also have to post details of their work on their websites.

Source: Ardiin Erkh

CONSTITUTIONAL COURT RULING BLOW TO GROUP’S CLAIM TO MPRP NAME The Constitutional Court last week ruled that Article #15 of the Law on Political Parties does not violate the Constitution. It says that in the event a party changes its name, members who do not agree to the change will not have the right to use the previous name. This is a blow to the claim of the political grouping under ex-President N.Enkhbayar that it should be known as MPRP, after a majority in the old party decided on MPP as its new name. However, the Constitutional Court made no remarks about the merits of that claim, leaving it to the Supreme Court, where the new group has applied for registration as MPRP, to decide on it. The claimants to the ―MPRP‖ name claimed that the Article violated the Constitutional guarantees of free association and free political choice. Asked about their reaction to the present decision, Mr. Ts. Shinebayar, secretary of the group, said their claim before the Supreme Court had several other aspects and hence the Constitutional Court conclusion did not mean that their case is lost. Another leader, Ms. N.Udval said the Court ―decision was taken under orders from elsewhere‖. She found it significant that MPP representatives were present at the court proceedings but there was nobody from the Democratic Party, ―which means Parliament was not adequately represented‖. She said they are ―ready for a struggle before grabbing state power under our party‘s name‖.

Source: News.mn

THIS TIME, JOINT VENTURES WILL EXECUTE CHINESE LOAN PROJECTS Minister for Finance S.Bayartsogt has said that of the 10 agreements signed during Prime Minister S.Batbold‘s official visit to China between June 13 and 17, six were related to the economy. One of these was on a Chinese Government soft loan of USD500 million that would be spent in the agriculture, education, health and infrastructure sectors. It was agreed that all work to be implemented with the loan would have to be undertaken by Mongolia-China joint ventures. Projects executed with previous Chinese loans were always implemented by Chinese companies. The Chinese Government has also given a grant of 60 million yuan to be spent on repairing Beijing Street in Ulaanbaatar, the address of the Chinese embassy. It will also be used to build accommodation for students in Nalaikh district and other apartments.

Source: Unuudur

NO CONSENSUS ON LAW DRAFT ON PARLIAMENTARY ELECTION The Standing Committee on State Structure last week completed the first reading of the draft law on parliamentary election. One proposal that came in for extensive discussion calls for civil servants or those having to do with state owned enterprises to give up such jobs if they wish to seek election to Parliament. That would mean many wielding power being off base for six months or so. Will MPs agree to such clipping of wings? Some MPs, including Mr. Z.Enkhbold, Mr. D.Enkhbat and Mr. E.Munkh-Ochir, wanted money from the state budget to be used to print and distribute the action plan of all candidates. Mr. D.Lundeejantsan, leader of the MPP group in Parliament, was very much against the idea. If, he said, the 17 registered political parties together nominated 1,000 candidates, the money needed to implement the proposal would be a huge amount. ―A budgetary grant would mean picking the taxpayers‘ pocket,‖ he said. Mr. Enkhbold defended the suggestion by saying this was one way to reduce the influence of money in an election. ―Basic state support to help every candidate knock on every family door would make the field level,‖ he said, adding that in any case, what parties spend are also ultimately money from the people and hence no different from that from the state budget. His argument received wide support, and Mr. Lundeejantsan found himself in a minority.

Source: English.News.mn

ELBEGDORJ HAS LESSONS FOR USA FROM MONGOLIA’S PAST As the leader of a diminished land that was once an invincible superpower, President Ts. Elbegdorj has some advice for Americans fatigued by the burdens of global power: Remember Genghis Khan, and stick with your friends. ―It is tough, but Mongolia was the biggest power in the world, and we had the same responsibility,‖ Mr. Elbegdorj said in an interview in Ulaanbaatar, before leaving for a U.S. visit where he met with President Obama and pitched his country as a stable, pro-American democracy deserving of more attention. Sandwiched between a rising, authoritarian China and an often pugnacious and, in these parts, still very powerful Russia, Mongolia is the only nation in the vast expanse of territory conquered by Genghis Khan in the 13th century that holds regular elections and lets power pass peacefully between rival parties. The United States, like Mongolia in its heyday, ―has a responsibility to help those who are trying to follow in its steps,‖ Mr. Elbegdorj said in the interview in a felt-lined tent outside his official residence in the Mongolian capital. Genghis Khan‘s warriors killed lots of people, to be sure, but according to the president, a Soviet-trained former military journalist who helped lead Mongolia‘s democratic revolution in 1990, it was done in a good cause. ―Do you think we just went to places and killed?‖ Mr. Elbegdorj said. ―No.‖ Mongolia, he said, used its muscle to keep trade along the Silk Road flowing and to enforce a written law. And ―when there was a killer, or in today‘s expression, a terrorist nation,‖ he said, ―we were God‘s will to make them peaceful... When there was a poor nation, we helped them.‖ Today, too, Mr. Elbegdorj said, ―Sometimes you have to pay attention to your friends.‖ Read more… Mr. Kurt Campbell, assistant secretary of state for East Asian and Pacific affairs, said that the Obama administration is ―committed to developing a broader, deeper and more strategic relationship with Mongolia, including expanded commercial, political and cultural ties‖. The meeting in the Oval Office, he said, ―is testament to that, as will be other high-level American visits and engagements in the months to come‖. Vice President Biden and Secretary of State Hillary Rodham Clinton are both due to visit Mongolia. So far, however, only one U.S. leader has trekked to Ulaanbaatar, the world‘s coldest capital city in winter: President George W. Bush stopped off for a few hours in 2005. Efforts to secure a free-trade agreement have gone nowhere, and U.S. investment in Mongolia is tiny, despite the country‘s bountiful natural resources and a big push by other countries, particularly China and Canada, to join what looks set to be a minerals-driven economic boom. The World Bank in a recent report described Mongolia‘s prospects for growth as ―excellent‖. Mongolia has sent troops to support U.S. forces in Afghanistan and Iraq, and unlike China, Russia and the former Soviet lands of Central Asia, it has a vibrant free press, allows street protests and does not routinely harass critics. Some local leaders are bullies, and the national parliament is heavily influenced by Mongolia‘s version of Russian oligarchs, but Mongolia is far freer than its neighbors. ―Maybe if we caused problems, if we hid bin Laden or atom bombs, America would pay

more attention,‖ joked Mr. Elbegdorj, sipping from a coffee mug decorated with an American flag and the words ―Washington, D.C‖. Over the past 20 years, U.S. assistance to Mongolia, which has only 2.8 million people, has averaged USD10 million a year. That is a substantial amount on a per-capita basis — roughly equivalent to that given Pakistan — but a drop in the ocean in a country the size of Western and Central Europe combined and one struggling to shake off the legacy of 70 years as an effective colony of the Soviet Union. Mr. Jonathan S. Addleton, the U.S. ambassador in Ulaanbaatar, said U.S. assistance has been highly effective ―dollar for dollar‖ but added that ―Mongolia will be in a better place when it moves from an aid relationship to commercial relationships, as it is doing now.‖ American companies, however, have so far mostly stayed on the sidelines, though General Electric recently opened an office here, and Peabody Energy, a big coal company, is in the running to develop an enormous Mongolian coal deposit in the Gobi Desert. The United States accounts for only 2.4 percent of foreign investment in Mongolia, compared with China‘s 51 percent, according to official Mongolian statistics. Mr. Elbegdorj said Mongolia has to balance competing interests in deciding who should develop Tavan Tolgoi, the world‘s largest untapped coal reserve, and suggested that instead of choosing a single bidder, it will probably select companies from China and Russia as well as St. Louis-based Peabody. The United States is faring better selling aircraft: Mongolia wants to buy only Boeing, the president said. A three-plane deal will be announced soon. Mongolia may be small and long past its global prime, but ―people who believe in democracy in China and Russia look to us as an example‖, said the president, who added that he ―could give a great lecture‖ in the Middle East to help people there understand that once they topple a dictatorship, ―they will suffer for at least 10 years‖ but should still avoid the temptation to go back. A recent opinion poll showed that while most Mongolians admire the United States, only 3.5 percent of respondents chose it as the country with which Mongolia has the best cooperation and communication. Ten times as many chose Russia. ―America is too far away,‖ sniffed Mr. K. Battulga, a former champion wrestler and now the Minister of Transport, Construction and Urban Development. Mr. Elbegdorj, who studied at Harvard‘s Kennedy School of Government, still thinks a shared commitment to democracy can shrink that distance. ―The values connection is very important,‖ he said. ―We have to strengthen that connection. If America invests in that, America will have many friends who live on their own, not with bombs or American troops.‖

Source: The Washington Post

U.S. AMBASSADOR SEES 2012 AS “A PIVOTAL MOMENT” IN BILATERAL RELATIONS Speaking at an Asia Society breakfast meeting in Washington, DC just before President Ts. Elbegdorj‘s official visit to Washington, U.S. Ambassador to Mongolia, Mr. Jonathan Addleton, said he believed that in future years 2011 may be viewed as ―a pivotal moment‖ in the two countries‘ relationship on many fronts. Recalling the events leading to Mongolia‘s proclamation in 1921 as the first socialist state in Asia, with direct backing and support from Moscow, Mr. Addle ton said, ―To this day, Mongolia seeks cordial and productive relations with China and Russia, its ‗first‘ and ‗second‘ neighbors. But its foreign policy is also built on strengthening ties with a wide range of ‗third neighbors‘, including not only the United States but also Korea, Japan, India and various European countries. From a Mongolian standpoint, robust relations with these ‗third neighbors‘ ensures a ‗three dimensional‘ foreign policy, one that involves not only strengthened bilateral ties but also a deepening engagement with the UN and other multilateral actors. ― Next year marks the 25th anniversary of the launch of formal diplomatic relations between Mongolia and the United States. Mr. Addle ton highlighted five areas ―where our relations have become especially strong‖ in these areas: development, commercial ties, democracy, security, and people-to-people relationships. In 2010, for the first time, US exports to Mongolia surpassed $100 million, a 180 percent increase over the 2009 figure. Early reports for 2011 suggest that this year the figure may double again. There are also a number of quality investment opportunities for U.S. companies, including in the mining sector. At this point, nearly 1,000 Mongolians are studying in the US under various programs, and over the last two decades, the US Embassy in Ulaanbaatar has issued well over 50,000 visas to Mongolian citizens to visit the United States for business, cultural, tourist or study purposes. Read more… Mr. Addleton said a US diplomat and trade envoy to China named AWE Ferric, who first visited

Ulaanbaatar some 90 years ago, had urged his superiors in Washington to open a diplomatic presence in Mongolia. As he made the case for commercial opportunity, he also stated his strong personal belief that the United States could well prove to be, in his words, ―a most helpful factor in the development of a wonderful country‖. Looking ahead to next year, ―when we join with Mongolia in celebrating our 25 years of formal diplomatic ties – and more than a century of informal encounters – I too share this long-standing hope that Mongolia‘s connections with the United States will prove to be mutually beneficial. I also sincerely hope that our encounters in a wide range of areas will indeed make a useful contribution as we continue to aspire to become ‗a most helpful factor in the development of a wonderful country‘‖, the Ambassador concluded.

Source: U.S. Embassy in Mongolia

ELBEGDORJ DECORATES TWO NAMBC OFFICERS At a farewell dinner in Washington, DC, hosted by the North America-Mongolia Business Council (NAMBC) Board of Directors on June 16, shortly after his White House meeting with President Obama, President Ts. Elbegdorj awarded decorations to two members of the NAMBC Board of Directors. He presented the Order of the Polar Star to Vice Chairman Jim Wagenlander and the Medal of Friendship to Board Member Myrna Ann Adkins. Of all the American recipients of the Polar Star medal, Mongolia‘s highest decoration, over half are NAMBC officers. Mr. Wagenlander has served as Honorary Consul of Mongolia for Colorado since 1999. He and his law firm started working in Mongolia in 1989. In addition to representing North American and European companies in Mongolia and Mongolian companies in the US, he has also handled legal work for Mongolian governmental agencies. He was co-founder of the Colorado-Mongolia Project and the Ulaanbaatar Denver Sister Cities Committee. Ms. Adkins is the President/CEO of the Spring Institute for Intercultural Learning, a cross-cultural training organization headquartered in Denver. She and the Institute have provided training for thousands of Mongolians since 1996, including a significant percentage of MPs and the senior ranks of the Mongolian government.

Source: NAMBC

ACA OFFICIALS APPEAL TO SUPREME COURT Both the Chief of the Anti-Corruption Authority, Mr. Ch.Sangaragchaa, and the Deputy Chief, Mr. D.Sunduisuren, have submitted appeals to the Supreme Court in a final effort to overturn their conviction. Their advocates claim that the primary and appeals court judges misinterpreted the Criminal Law and did not follow the Law of Criminal Procedure.

Source: Undesnii Shuudan

GANBAATAR RE-ELECTED CTU HEAD UNOPPOSED The 230 delegates from the capital and the countryside at last week‘s 23rd regular meeting of the Confederation of Trade Unions reelected S.Ganbaatar as President for a fresh 4-year term. There was no other candidate.

Source: Zuunii Medee

PROSECUTOR GENERAL EXPLAINS DECISION ON ALTAN DORNOD CHIEF Prosecutor General D.Dorligjav last week sent a note to Speaker D.Demberel explaining why he had decided against pursuing charges of tax evasion against Altan Dornod Mongol Director S.V.Paushok. He says he had acted on the recommendation of the Ulaanbaatar Prosecutors Office which decided on May 17, 2010 not to proceed further in investigating the charges against Mr. Paushok, a Russian citizen, as the Criminal Law would not have been of help in prosecuting him.

Source: News.mn

NO CASE AGAINST SAIKHANSAMBUU FOR CLAIMING HE BRIBED MPs The Ulaanbaatar Prosecutors Office has concluded there can be no case against Mr. Sh.Saikhansambuu. The MP had said in some media interviews that he had bribed State officials including some MPs. The Anti-Corruption Authority felt the matter could lead to prosecution against him, but the Prosecutors‘ Office reviewed the material sent to it by the ACA and decided there was no need to proceed on that assumption.

Source: Zuunii Medee

2,880 FLOOD-PRONE HOUSEHOLDS TO BE RELOCATED Khan-Uul and Songinokhairkhan districts of Ulaanbaatar have taken up a project to quickly relocate

2,880 households to areas free from threat of flooding. MNT34.87 billion will be spent on their removal, payment of compensation, and establishing the new settlement. The district administrations also plan to repair protective embankments, dig drainage canals, and place warning signs at the right places. Flash floods have been a feature of the rain this year.

Source: Undesnii Shuudan

DRAFT SEEKS TO BAR FOREIGNERS FROM OWNING GUNS A draft law on firearms calls for some new restrictions on gun ownership and some new inspection regulations. Foreign citizens and stateless people will not be allowed to own firearms, and the draft also seeks to regulate their use by legal bodies such as security and sports training organizations. The law on firearms was passed in 2001 and has been amended three times since then. Altogether, licenses for 40,894 firearms were issued in 2010 and police discovered 540 more that were held without license.

Source: Unuudur

NEW MONGOLIAN LAWS AND REGULATIONS

The following addendum to a law was published in the latest weekly Government bulletin. Unless otherwise decided by Parliament, it will take effect ten (10) days after publication.

Date Law 17.06.2011 Addendum to Law on Rewarding mothers who gave birth to many children and raised them

Please visit BCM's website, Legislative Working Group, for a summary of new Mongolian laws. BCM members who wish to access complete versions of the laws and regulations in Mongolian language are welcome to email the BCM office: info@bcmongolia.org.

ANNOUNCEMENTS GLOBAL MINING INVESTORS “N” EXPLORERS SHOW, SYDNEY JULY 4-6 The Global Mining Investors 'n' Explorers Show Sydney 2011 (Global MInES Sydney 2011 for short), will bring together investors and mining companies from around the world, making this a truly unique networking and business development opportunity on the international mining investment calendar. Investors will: • Hear about the hottest global investment opportunities in the mining sector all under one roof • Forecast commodity prices to ensure one makes the best investment choice • Maximize investment returns and minimize investment risk through key learning and insight not found anywhere else • Learn about regulatory developments impacting investment decisions, including mining taxes • Be offered a special discount rate to attend. Mining companies will get a chance to: • Raise the profile of their project within the investor community • Gain perspectives from investors on the criteria they use to assess projects • Network with financiers and investors, including investors from US, Europe and Asia, including countries of increasing outbound investment, such as China, India, Japan and Korea • Assess project financing options, including which stock exchange to list on • Learn how to raise finance for their project and access hidden sources of capital. All others will be able to: • Network and position their business at the heart of the mining investment community • Raise their profile among mining companies and investors alike • Demonstrate their capabilities to a broad cross section of existing and potential clients through high value event exhibition and sponsorship opportunities. BCM is an Endorser of the event and Executive Director Jim Dwyer will moderate a panel discussion "Why Mongolia is an increasingly attractive destination for mining investment". More information is available at www.acevents.com.au/mines2011.

________________________________________________

MINER & SUPPLIER FORUM AND EXHIBITION, ULAANBAATAR, JULY 6 Mongolian Mining Exchange, a non-Governmental organization, is organizing its first Miner & Supplier Forum and Exhibition on July 6 at Chinggis Khaan Hotel. It aims at improving the quality of mining sector supplies by reaching correct information to engineering and mining companies, and by facilitating increased interaction between suppliers and mining businesses. BCM is the official supporting organization of the event and its Vice Director Ser-od Ichinkhorloo will speak about mining cluster/supply chain development. More information can be had from Tel/Fax: 976-70116009, Mobile: 976-99081050, 91927088, 88097675, Mail: info@ infomine.mn, buyanaa@infomine.mn, and Web: www.mas.infomine.mn, www.infomine.mn. ________________________________________________

2011 CHINA CLEAN COAL TECHNOLOGY CONFERENCE, BEIJING, JULY 12-13

Organized by CBI Energy and supported by the coal sector of Mongolia, the Mongolian National Mining Association and the Indonesian Coal Mining Association, the 2011 China Clean Coal Technology Conference will be held in Beijing on July 12-13. China‘s clean coal technology innovations will continue during the 12th Five-year Plan period (2011-2015). In 2010, China‘s demand for ethylene equivalent was 24.84 million tons, larger than its domestic production; the demand for propylene equivalent was 19.05 million tons, 5.90 million tons more than the national output. This indicates a significant demand-supply gap in China‘s ethylene and propylene markets. While the edge of petroleum to low-carbon olefin was blunted by the rising oil prices, the MTO technology using coal as the raw material will give the Chinese producers more advantages. The conference will discuss all aspects of the issue. _________________________________________________

“MM TODAY” on MNB-TV, Fridays at 21:15 BCM is pleased to announce that Mongolian National Broadcasting continues its cooperation with BCM on ―MM Today‖. This English news program is aired every Friday for 10 minutes and is scheduled for 21:15 tonight. Tune in to watch this program that reports stories from today‘s BCM NewsWire. ____________________________________________ “BSPOT” on B-TV, Monday to Friday at 21:30 B-TV (Business TV) now telecasts a 10-minute English-language news program called BSPOT every evening from Monday to Friday at 21:30, taking most of the stories from the BCM NewsWire. ____________________________________________ NEW POSTINGS ON BCM WEBSITE'S 'PRESENTATIONS' AND 'MONGOLIA REPORTS' Several draft laws, still to be discussed in Parliament, are posted on our website, in the Legislative Working Group section. ‗Presentations‘ from BCM‘s 5 monthly meetings in 2011, summaries of the key addresses at Eurasia Capital‘s Mongolian Investment Conference on May 25, Jim Dwyer of BCM‘s interview on Mongolia National Broadcasting‘s ―Face to Face‖ on May 16, and the very successful Mines and Money Hong Kong‘s ‗Mongolia Investment Summit‘ morning on March 25 are posted in BCM website‘s "Resource, Presentations" for your review. ‗Mongolia Reports‘ including Z. Batbayar, Deputy Director of the Water Authority, at BCM‘s Environmental Working Group‘s recent meeting, the Polit Barometer-May 2011 from Sant Maral Foundation and the U.S. Embassy Mongolia‘s Commercial Section‘s ―2011 Mongolia Investment Climate Statement‖ are among the reports posted on BCM's website (www.bcmongolia.org) in the ―Resource, Mongolia Reports‖ section. 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.

ECONOMIC INDICATORS

INFLATION Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]

Year 2007 *15.1% [source: NSOM]

Year 2008 *22.1% [source: NSOM]

Year 2009 *4.2% [source: NSOM]

Year 2010 *13.0% [Source: NSOM]

May 31, 2011 *4.2% [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]

April 28, 2011 11.50% [source: IMF]

CURRENCY RATES – June 23, 2011 Currency Name Currency Rate US dollar USD 1,266.57

Euro EUR 1,806.57

Japanese yen JPY 15.72

British pound GBP 2,030.38

Hong Kong dollar HKD 162.60

Chinese Yuan CNY 195.80

Russian Ruble RUB 45.09

South Korean won KRW 1.18

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.