27.03.2009, newswire, issue 62

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BUSINESS COUNCIL of MONGOLIA NewsWire www.bcmmongolia.org [email protected] Issue 62, March 27, 2009 SPECIAL ISSUE: EUROMONEY MONGOLIA-ASIA INVESTMENT FORUM HONG KONG NEWS HIGHLIGHTS: Business: Western announces CAD31 million tender offer by CNNC International; Working Group on OT draft adopts plan of action; Official urges clear policy on private sector; Rio deal clears one hurdle, but a low one; Market upturn may deflate Rio-Chinalco deal; Chinalco to get two Rio Tinto board seats, Rio spokesman says; Vale says it welcomes sovereign wealth fund investment; Erdene to cut molybdenum production; Denison CEO Farmer to step down end-April; One Russian company pulls out of consortium for Tavan Tolgoi; Hyundai mulls opening factory in Mongolia; German auditors examining accounts of Anod Bank; Tax on imported tobacco hits local manufacturer; Mongolia sells less coal to China, earns less; Veerhuis concept gets a hearing. Economy: Euromoney Investment Forum on Mongolia meets in Hong Kong on March 31; First ever auction of foreign currency held; UNCTAD holds seminar on trade facilitation; Mongolia attends travel trade show in Berlin; Draft amendments to fair competition law submitted; Less trade recorded through Los Angeles; China buys Mongolian crude at USD44 per bbl; Fake vegetable oil seized in Khovd points to Erlian. Politics: Mongolia a “model country”, French Premier tells Bayar; Chinese delegation calls on Deputy PM Enkhbold;Mongolian MPs hold talks in Washington; Russian railway wagons ready to arrive; Tourists will be asked to plant trees at camps; MPs submit draft law limiting use of plastic bags; Officials study Australian land management practices. RECAP OF BCM MONTHLY MEETING There was a full house at the BCM monthly meeting on March 23, with 76 in attendance. Mr. Laurenz Melchers was in the chair, and Executive Director Jim Dwyer reported that BCM had finalized a contract with Ivanhoe Mines to create a comprehensive database of potential suppliers to the mining sector. The four BCM working groups involve about 40 participants. The one on vocational training (TVET) has met for the second time as it begins to formulate a strategy to best obtain trained Mongolian workers, and those on legislation, tax, and food and beverages were also busy. BCM will play an active role in the next meeting of the National Consultative Council on Investment Climate and Private Sector Development. Three proposals from the Association of Mongolian Air Carriers will be submitted to the council, one calling for separation of commercial and regulatory authority so that decisions can be more objectively taken, another asking for other sources of jet fuel, and the last urging subsidized fares so that more flights can reach remote areas. Mr. Do.Ganbold, President, Mongolian National Mining Association (MNMA), provided an update on key developments in the mining sector. The draft Oyu Tolgoi investment agreement was to be a priority item on Parliament’s agenda for the spring session, and “with Parliament and the (coalition) Government being actually the same, there should be no opposition to it, and we hope it will be approved”, he said. There was nothing much to report on the progress of the agreement on Tavan Tolgoi. On uranium mining, the “Government policy was very unclear”, he said and added that repeal or revision of the windfall profits tax would be taken up only after the Oyu Tolgoi agreement was disposed of. The political imperatives of a presidential election campaign might affect discussions on the Oyu Tolgoi agreement, but Mr. Ganbold saw “no chance of it being rejected”.

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Page 1: 27.03.2009, NEWSWIRE, Issue 62

BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmmongolia.org

[email protected]

Issue 62, March 27, 2009

SPECIAL ISSUE: EUROMONEY MONGOLIA-ASIA INVESTMENT FORUM – HONG KONG

NEWS HIGHLIGHTS:

Business: Western announces CAD31 million tender offer by CNNC International; Working Group

on OT draft adopts plan of action; Official urges clear policy on private sector; Rio deal clears one hurdle, but a low one; Market upturn may deflate Rio-Chinalco deal; Chinalco to get two Rio Tinto board seats, Rio spokesman says; Vale says it welcomes sovereign wealth fund investment; Erdene to cut molybdenum production; Denison CEO Farmer to step down end-April; One Russian company pulls out of consortium for Tavan Tolgoi; Hyundai mulls opening factory in Mongolia; German auditors examining accounts of Anod Bank; Tax on imported tobacco hits local manufacturer; Mongolia sells less coal to China, earns less; Veerhuis concept gets a hearing.

Economy: Euromoney Investment Forum on Mongolia meets in Hong Kong on March 31; First ever

auction of foreign currency held; UNCTAD holds seminar on trade facilitation; Mongolia attends travel trade show in Berlin; Draft amendments to fair competition law submitted; Less trade recorded through Los Angeles; China buys Mongolian crude at USD44 per bbl; Fake vegetable oil seized in Khovd points to Erlian.

Politics: Mongolia a “model country”, French Premier tells Bayar; Chinese delegation calls on

Deputy PM Enkhbold;Mongolian MPs hold talks in Washington; Russian railway wagons ready to arrive; Tourists will be asked to plant trees at camps; MPs submit draft law limiting use of plastic bags; Officials study Australian land management practices.

RECAP OF BCM MONTHLY MEETING

There was a full house at the BCM monthly meeting on March 23, with 76 in attendance. Mr. Laurenz Melchers was in the chair, and Executive Director Jim Dwyer reported that BCM had finalized a contract with Ivanhoe Mines to create a comprehensive database of potential suppliers to the mining sector. The four BCM working groups involve about 40 participants. The one on vocational training (TVET) has met for the second time as it begins to formulate a strategy to best obtain trained Mongolian workers, and those on legislation, tax, and food and beverages were also busy. BCM will play an active role in the next meeting of the National Consultative Council on Investment Climate and Private Sector Development. Three proposals from the Association of Mongolian Air Carriers will be submitted to the council, one calling for separation of commercial and regulatory authority so that decisions can be more objectively taken, another asking for other sources of jet fuel, and the last urging subsidized fares so that more flights can reach remote areas.

Mr. Do.Ganbold, President, Mongolian National Mining Association (MNMA), provided an update on key developments in the mining sector. The draft Oyu Tolgoi investment agreement was to be a priority item on Parliament’s agenda for the spring session, and “with Parliament and the (coalition) Government being actually the same, there should be no opposition to it, and we hope it will be approved”, he said. There was nothing much to report on the progress of the agreement on Tavan Tolgoi. On uranium mining, the “Government policy was very unclear”, he said and added that repeal or revision of the windfall profits tax would be taken up only after the Oyu Tolgoi agreement was disposed of. The political imperatives of a presidential election campaign might affect discussions on the Oyu Tolgoi agreement, but Mr. Ganbold saw “no chance of it being

rejected”.

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Mr. James Polson, Chief Executive Officer of Australasian Independent Diamond Drilling (A.I.D.D.), gave a presentation on his company and how the drilling industry operates. This is a foreign-invested Mongolian company and has been obviously affected by the slowdown in the mining sector, but “we are here to stay,” he asserted. Answering a question about his claim that the company plowed back money into the Mongolian economy, he said almost all of A.I.D.D.’s suppliers were

local, it leases local trucks, employed some 600 Mongolians in 2008, and pays taxes.

Mr. B.Enhhuyag, First Deputy Governor of the Central Bank, spoke on the State monetary policy, and said expenses had to be trimmed to lower the budget deficit. The cuts have so far come in two ways. There was to be no new State investment, and all new capital expenses were to be deferred. Later in the year, measures are likely to be taken to stop all wage increases and social allowance payments are also likely to be revised. A new law on fiscal responsibility was scheduled to be discussed and passed in the near future. This would draw on the lessons learnt in the past years, “when we did not save enough during the boom years, and our policies to distribute the money were also flawed”. He justified the more than 50% increase in the Central Bank’s policy rates by saying that in the prevailing circumstances, when deposits were being withdrawn and “dollarization of deposits” was rampant, this was “the lesser of two evils” open to the Bank. Inflation has been decelerated, and the bank lending systems streamlined. The “economic situation was clearly deteriorating”, and with no funds for a stimulus package, “painful adjustments” will have to be

made. The spring session of Parliament was likely to pass a comprehensive banking law.

The last speaker of the afternoon was Dr. Vittorio Mattiuzzi, TAM Team Country Coordinator and BAS Program Regional Director, EBRD-TAM and BAS Programs. He described the main features of the two programs and how they can help, and are helping small and medium enterprises in Mongolia improve their business.

For a fuller report on the meeting, please visit BCM website, BCM News & Press.

AN ANNOUNCEMENT

PETER LEAMAN LEAVING MONGOLIA

Mr. Peter Leaman, Managing Director, BHP Billiton Mongolia and a founding member of the organizing Board of BCM, will soon be leaving for Zambia to manage an advanced minerals exploration project for BHP Billiton. During his three years in Mongolia, he was most generous in giving his time to BCM and few could have known that Monday’s monthly meeting would be his last. His regular inputs and sound advice have helped BCM along the way. The BCM Board wishes Peter all the best, both personally and professionally.

He has tendered his resignation as a Director from the Board of the Business Council of Mongolia, effective immediately. Mr. Leaman will be sorely missed.

BUSINESS WESTERN ANNOUNCES CAD31 MILLION TENDER OFFER BY CNNC INTERNATIONAL

Western Prospector Group Ltd. and CNNC International Limited announced on Wednesday the execution of a definitive agreement whereby CNNC will offer to acquire all of the common shares of Western for CAD0.56 per share in cash, valuing Western's equity at approximately CAD31 million. "The Offer represents excellent value for Western shareholders," said Mr. Eric Bohren, President and CEO. "In addition to representing a substantial premium to trading price, the Offer is all cash and is supported by a well-established company in the international uranium marketplace."

CNNC Intl is a public company listed on the Hong Kong Stock Exchange. CNNC Overseas Uranium Holding Ltd., a wholly owned unit of China National Nuclear Cooperation (CNNC) holds 74% of the outstanding shares of CNNC Intl. CNNC is China's leading uranium development and nuclear fuel company. Majority shareholder approval is required for this transaction. CNNC Overseas, as the majority shareholder of CNNC Intl, has agreed to vote its shares in favor of the transaction. In addition, the Offer will be subject to certain customary conditions and relevant regulatory

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approvals, including those required by the TSX Venture Exchange and Hong Kong Stock Exchange. The Offer represents a 51% premium to Western's closing price of CAD0.37 on March 24, 2009, and a 75% premium to Western's 20-day volume weighted average price for the period ending March 24, 2009.

The Offer will be in the form of a takeover bid. The definitive agreement provides for customary board support and non-solicitation covenants subject to customary "fiduciary out" provisions entitling Western to consider and accept an unsolicited superior offer. Based on the recommendation of Western's Special Committee and advisors, the Board of Directors unanimously recommends acceptance of the Offer. National Bank Financial Inc., the financial advisor to Western's Special Committee, has provided an opinion that the consideration to be offered to Western's shareholders is fair, from a financial point of view. After an extensive review of potential strategic partners and other interested parties, the Offer was determined to be the most attractive option for Western's shareholders.

Source: www.westernprospector.com

WORKING GROUP ON OT DRAFT ADOPTS PLAN OF ACTION

The Working Group set up to finalize the draft investment agreement on Oyu Tolgoi in the light of the suggestions and demands made by MPs held its third meeting last Friday and adopted its plan of work. It decided to make suggestions on the need to improve regulations and laws relating to the minerals, geological and mining sectors; to comment on the Oyu Tolgoi investment agreement; to study the prospects of starting immediate work on the Tavan Tolgoi coal deposits; to include the views and comments of NGOs and social organizations; and to ensure compliance with the terms of international conventions to which Mongolia is a signatory. Mr. H. Badamsuren, MP and head of working group, told media that adoption of the action plan will lead to quicker progress. The group is expected to submit the revised draft to Parliament for discussion in the spring session.

Source: Onoodor

OFFICIAL URGES CLEAR POLICY ON PRIVATE SECTOR

A meeting of the Consultative Council on Investment Climate and Private Sector Development was held at Government House on Tuesday to discuss ways of developing the private sector and encouraging investment in Mongolia. With the Prime Minister out of the country, First Vice Prime Minister N.Altankhuyag presided over the meeting attended by representatives of private companies, international organizations and financial institutions. The Business Council of Mongolia was represented by its Chairman, Mr. Laurenz Melchers.

Admitting that investments have fallen and some companies in certain sectors are closing down, Mr. Altankhuyag expressed his confidence that the crisis would pass before long. The Government wants to improve the investment climate and better regulate the operation of the private sector so that it could end sooner.

The Director of the National Development and Renewal Bureau, Mr. Ch.Khashchuluun, stressed the importance of clearly identifying Government policy on the private sector.

The meeting discussed several issues relating to the civil aviation policy, including raising standards in the sector to international norms, lowering prices, and also generally improving the competence of airlines in business here.

Some private organizations called for creation of an environment that would attract investments in the renewable energy sector. Mr. Altankhuyag instructed related ministers and officials to review the suggestions and concerns expressed at the meeting and take appropriate action.

Source: www.news.mn

RIO DEAL CLEARS ONE HURDLE, BUT A LOW ONE

Australia's competition watchdog has cleared Rio Tinto Ltd's USD19.5 billion tie-up with China's state-owned Chinalco, clearing one obstacle to a deal that still needs the approval of the finance minister. Treasurer Wayne Swan has the final decision and will base that on the national interest after he receives a recommendation from the Foreign Investment Review Board (FIRB), which has extended its review of the deal by 90 days to late June.

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The Australian Competition and Consumer Commission (ACCC) rejected local politicians' argument that Rio might push down global iron ore prices in a move to favor Chinese steel mills, but which would hurt Australia.

ABN AMRO analyst Warren Edney said there were no competition issues for the ACCC to consider. "This really provides little insight into what the FIRB is thinking ... The critical path continues to be FIRB approval, which is based on a more opaque 'national interest' test," said analyst Michael Rawlinson at Liberum Capital in London.

Source: Reuters.com

MARKET UPTURN MAY DEFLATE RIO-CHINALCO DEAL

Prospects may dim for Rio Tinto's USD19.5 billion proposed link-up with Chinalco if strong markets boost the attraction of a rights issue and investors believe a new chairman is more willing to consider alternatives. A buoyant share price could embolden disgruntled shareholders to vote down the deal that would see China's top aluminum maker double its Rio stake and buy portions of key mines.

Although political opposition has grown in Australia to the prospect of Rio linking up with a Chinese state-owned firm, a more serious threat might be a recovery in metals markets, analysts and shareholders say. A higher share price would make dilution from a rights issue less painful while an upturn could mean that Rio has more chance to sell non-core assets and raise cash to trim its heavy debt. Rio shares have gained 37 percent so far this year, outperforming the UK mining index FTNMX1770 by a quarter and making dilution from any rights issue less onerous.

Investors also have more time to mull alternatives since Australia's Foreign Investment Review Board has extended their review of the deal by three months. Mr. Jan du Plessis, current chairman of British American Tobacco, takes over as Rio chair next month and some investors expect him to be more open to possible alternatives. Options include revisiting a deal with arch-rival BHP Billiton, which last November dropped a hostile all-share takeover bid for Rio worth USD66 billion. Rio's new chair is South African and might be more comfortable with BHP's South African Chief Executive Marius Kloppers than other Rio executives, analysts said.

Stronger markets could also help Rio's divestment program. The firm had hoped last year to slash its debt by selling non-core operations, but the effort stalled amid the downturn. Investors were reminded of the potential for asset sales when Rio said on March 9 that it had sold its U.S. Jacobs Ranch coal operation for USD761 million and was pressing forward with other asset sales.

Source: Reuters.com

CHINALCO TO GET TWO RIO TINTO BOARD SEATS, RIO SPOKESMAN SAYS

Aluminum Corp. of China, known as Chinalco, will get two seats on the board of Rio Tinto Group, according to Rio spokesman Nick Cobban. One director will be Chinalco’s choice while the other will be an independent and will be approved by the board, Mr. Cobban said. The Sunday Times has reported that Chinalco would appoint three directors and would be represented on the key audit, remuneration and appointments committees. Mr. Cobban declined to comment on Chinalco’s membership of board committees, saying that the transaction has not yet been completed.

Source: Bloomberg.com

VALE SAYS IT WELCOMES SOVEREIGN WEALTH FUND INVESTMENT

Brazil's Vale, the world's biggest iron ore miner, wants sovereign wealth funds to invest much more in its business, a senior executive said on Tuesday. From Singapore to the Middle East, sovereign wealth funds still flush with cash are showing signs of picking up bargain priced mining assets, with China's USD200-billion fund making its interest clear earlier this month and Singapore appointing BHP Billiton's former top executive to run one of its funds. "We will ask them to invest more in our business, they have been very modest investors in mining," Mr. Fabio Barbaso, chief financial officer at Vale, said at a conference in Singapore.

China has been a leading buyer of overseas mining assets through state-owned firms, but it hasn't always been welcomed by governments anxious about resource control or by investors wary of selling at the bottom or ceding influence to a major customer. The world's top consumer of a range

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of metals has been keen to secure supplies of raw materials to feed its booming economy, especially when some metals are trading at less than half their peaks of last year. "You should not demonize this trend, it is part of the natural change of the world scene where we will be less Western centric, where we will interact more intensively with players like sovereign wealth funds, governments," Mr. Barbaso said at the 5th Annual Asia Mining Congress 2009. "Today, cash is no longer king, cash is God, if you don't have cash flow...you won't be able to sell your project to investors," he said.

Source: Reuters.com

ERDENE TO CUT MOLYBDENUM PRODUCTION

Steelmakers will struggle to secure supplies of molybdenum, used to toughen the metal, in 2011 as the economic crisis spurs producers to shelve 100 million pounds of new supply, according to Erdene Resource Development Corp. Erdene has cut its planned initial output of concentrate to between 5 million and 6 million pounds down from 20 million pounds, Chief Executive Peter Akerley said today in an interview in Singapore. The company is seeking to build Mongolia’s first molybdenum mine and start production in 2012. The Erdene molybdenum mines are at its Erdene site in northeast Mongolia.

Molybdenum prices have fallen 73 percent since November as the global recession curbed stainless-steel demand for kitchenware and building decorations. Erdene is seeking partners to help fund its mine, Mr. Akerley said. “We would be looking at somebody who would help with investing in the project through” supply agreements, he said while attending the Asian Mining Congress. It has held preliminary talks with a number of Chinese partners including China Molybdenum Co., he said. The talks have not advanced yet, he said.

Source: Bloomberg.com

DENISON CEO FARMER TO STEP DOWN END-APRIL

Toronto-based uranium miner Denison Mines has begun searching for a new CEO, after incumbent Peter Farmer announced he would step down at the firm's annual shareholders' meeting, scheduled for April 30. Mr. Farmer “has indicated that it is time for a change in leadership at Denison”, the company said in a statement on Monday. Candidates for the position of CEO have been identified and a search for further candidates is under way.

Denison has uranium mining assets in the US and Canada, as well as exploration properties in Zambia and Mongolia. It has a 70 percent interest in the Gurvan Saikhan Joint Venture in the South Gobi including uranium deposits at sites covering 750,000 hectares. However, the firm has been hard hit by recent falls in prices for the nuclear fuel, prompting it to close some higher-cost mines in the US. "There is no point for us to be producing uranium today and selling it at a loss," Mr. Farmer recently said.

Mr. Farmer last week warned that as a result of the production curtailments, Denison might have to sell assets to keep it from violating a debt covenant. It had also reported a steep quarterly loss of CAD56.8 million as opposed to a CAD23.54 million profit in 2007. It has begun a process of considering potential transactions, including selling a stake in itself or some assets.

Source: www.miningweekly.com, Montsame

ONE RUSSIAN COMPANY PULLS OUT OF CONSORTIUM FOR TAVAN TOLGOI Severstal, one of the three Russian companies that formed a consortium and submitted a bid for Tavan Tolgoi, has pulled out of the partnership, according to the Russian newspaper Kommersant. The other two, Renova and En+ are, however, still pursuing the USD2 billion deal.

Source: Business-Mongolia.com

HUYNDAI MULLS OPENING FACTORY IN MONGOLIA

Hyundai Vice President Cho Hai Young was in Mongolia recently to explore the feasibility of setting up a factory in the country. He met with senior Government officials to find out how much and what help they could offer. The proposal has been under consideration for the last 10 years, but

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this was the first time something concrete has been discussed. Hyundai plans to operate and manage the unit under direct supervision from the company in South Korea.

Mr. Cho also met with city officials to learn about the state of the current demand for buses and heavy machinery that Hyundai can supply. He promised improved after-sales services and help in maintenance.

Source: Odriin sonin

GERMAN AUDITORS EXAMINING ACCOUNTS OF ANOD BANK

A German auditing team has begun examining documents for 2008 and the first two months of this year to decide on Anod Bank’s profitability, loan quality, and general accounting practices. The results of the audit will help the Central Bank decide how much more has to be invested in the bank. The report of the team is planned to be made public.

The Central Bank issued an international tender and made a shortlist of companies that included KPMG and Ernst and Young for auditing Anod Bank. The final choice was based on criteria such as whether the company had previously audited the bank, its credentials, and the amount of fees demanded. KPMG had audited Anod Bank’s accounts in 2004 and 2005.

Source: Zuunii medee

TAX ON IMPORTED TOBACCO HITS LOCAL MANUFACTURER

Parliament’s recent approval of the Government proposal to double taxes on imported cigarettes and tobacco is causing concern to Mongol Tamhi So which imports the tobacco it uses to make cigarettes in Mongolia. The company is believed to be exploring possibilities of the President granting it a reprieve by restricting the scope of the new tax. The Government hopes to earn MNT2.2 billion a year from the tax which has already come into effect.

Source: Ardiin Erkh

MONGOLIA SELLS LESS COAL TO CHINA, EARNS LESS

Mongolia was the third biggest coal supplier to China throughout 2008, but dropped down to the 5th place in January 2009, according to figures released by www.coalworld.net research. Last year’s Mongolian export of 4,043,000 tons of coal for USD243.4 million was an all-time record.

The January fall might be explained as the result of Chinese factories being shut for the New Year holidays, and Mongolian Customs authorities also restricting their working hours. However, official Chinese foreign trade statistics reveal that both the volume and cost of imported coal were considerably less in January.

Source: Business-Mongolia.com

VEERHUIS CONCEPT GETS A HEARING

The recent Ulaanbaatar visit of Veerhuis officials from the Netherlands to spread their EPS (Expanded Polystyrene)-based housing concept was fruitful. Mr. Bat-Erdene, State Secretary of the Ministry of Roads, Transport, Construction and Urban Development, heard in detail how the concept would fit in the framework of construction laws of Mongolia and how it offers a safe fire retarding and earthquake resistant solution. The Ministry also expressed interest in the fact that the high insulation quality of the concept would be of help in areas where there is no connection to central heating.

Source: www.ganymedes.mn

ECONOMY

EUROMONEY INVESTMENT FORUM ON MONGOLIA MEETS IN HONG KONG ON MARCH 31

The Euromoney Mongolia-Asia Investment Forum, to be held in Hong Kong on March 31, will bring together top level government officials, world class economists, some of the biggest investors investing in Mongolia and multilateral companies as speakers to help participants identify where the

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best investment opportunities are in the country and how best to access these opportunities. More than 300 are registered as delegates.

Some of the topics the conference will discuss are:

• Mongolia’s economic outlook in the face of a global economic turmoil.

• Work in progress: political, economical and legal reforms: what changes need to be made?

• Financing Mongolia’s infrastructure needs.

• Developments and reforms in the mining sector.

Source: www.euromoneyconferences.com

FIRST EVER AUCTION OF FOREIGN CURRENCY HELD The Central Bank organized its first ever auction of USD on Tuesday. Meeting the press after the auction, the Bank President L.Purevdorj and Director of the Monetary Department Delgermaa said the auction was restricted to the Central Bank and commercial banks. The latter bought USD876,000 and sold USD1.4 million. With the surplus in supply the Central Bank did not need to buy any more.

The auctions will be held twice a week, with the next one fixed for Thursday. Individuals and organizations may also be allowed to take part in later auctions.

USD prices have started to fall. Mr. Purevdorj attributed this to the increase in USD supply in the past two weeks and to the strict monetary policy of the Central Bank. He said the decision to carry out trade in foreign currency only through auctions was aimed at stabilizing the exchange rate so that the price level is kept steady. Earlier measures had not led to desired results. The regular auctions would maintain the equilibrium between demand for and supply of foreign currencies and bring the real supply of foreign currencies to the targeted level. The value of MNT will be determined by the market under transparent trading.

Source: Ardiin Erkh, Business-Mongolia.com

UNCTAD HOLDS SEMINAR ON TRADE FACILITATION

The Ministry of External Relations and the UN Conference on Trade and Development (UNCTAD) jointly organized a seminar on trade facilitation in Ulaanbaatar on March 16-18. The main items of discussion were the application of the results of the Doha round of negotiations to trade facilitation, and the different proposals submitted by Mongolia and other countries, to exchange views, to promote Mongolia's participation in the Geneva negotiations and help ensure the preparation for "Needs assessment" meeting scheduled in May in Mongolia. This meeting is expected to review some 40 documents pertaining to "needs assessment" and evaluate their application in Mongolia.

Source: Montsame

MONGOLIA ATTENDS TRAVEL TRADE SHOW IN BERLIN Mongolia was represented at the recently concluded ITB Berlin-2009, the largest travel trade show in the world, by officials from the Ministry of Environment and Tourism, the Mongolian Tourism Association, 10 tourism companies and MIAT, the Mongolian civil airlines. Mongolia's pavilion covered 125 square meters of area at the annual event.

The ITB covered pretty much every aspect of tourism, with trade visitors from all sectors of the industry exchanging notes. Exhibitors included government tourism offices, national and regional tourism organizations, tour operators, hotels, airline carriers, insurance companies, communication and information systems, travel agencies, publishing, and dot com companies. The ITB also had days when visitors were allowed in to see what the world's travel industry had to offer.

Source: Montsame

DRAFT AMENDMENTS TO FAIR COMPETITION SUBMITTED

Nine MPs have submitted to the Speaker of Parliament draft amendments to the present law on fair competition in business that has been in force since 1993. The draft is likely to be discussed in the spring session.

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The draft law has six sections and 35 articles. It classifies organizations according to their area of operation, and then lists them according to their share of the market. Separate regulations are recommended for companies at each level of market share. The draft revises the present structure and work procedures of the organization in charge of implementing the law. It also proposes to establish a Competition Regulation Authority to oversee that the law is followed. Penalties for violators have been raised, at times quite drastically. It is proposed that companies will have to pay a fine amounting to 3-10 percent of their revenue in the previous year and goods found to have been obtained illegally will be confiscated.

Source: www.news.mn

LESS TRADE RECORDED THROUGH LOS ANGELES

Mongolian trade through the port of Los Angeles fell by 21.8 percent in 2008. Total trade with Mongolia through Los Angeles last year was USD42.32 million with U.S. exports valued at USD20.12 million and imports at USD22.20 million. The total volume was USD8 million less than in 2007.

Source: Montsame

CHINA BUYS MONGOLIAN CRUDE AT USD44 PER BBL

Chinese companies produce around 300 tons of crude every day from the Dornod oil fields, and around 2,000 barrels more at Tamsag. The quality of the oil is medium. It is sold to China at USD44 per barrel.

Source: Undesnii Shuudan

FAKE VEGETABLE OIL SEIZED IN KHOVD POINTS TO ERLIAN

During inspection in Khovd province several samples of the Aravana brand of vegetable oil, widely used in restaurants all over the country, were found to be fake and were seized. Some had harmful bacteria. The oil seems to have been manufactured in Erlian and a request has been sent to the Mongolian Embassy in China to take up the matter with authorities there.

Source: en.News.mn

POLITICS

MONGOLIA A “MODEL COUNTRY”, FRENCH PREMIER TELLS BAYAR

Prime Minister S.Bayar is in the last leg of his European tour, holding talks with German leaders before returning home. He left on March 15 for Russia and from there went on to France, Luxembourg, and Belgium. At his meeting with the French Prime Minister Mr. Bayar expressed Mongolia’s wish to develop bilateral trade beyond the MNT60 million recorded in 2008. He also proposed wider cooperation in education, requesting more French Government scholarships for bachelor’s and master’s degree students. Mr. François Fillon, who had welcomed Mr. Bayar as the leader of “a model country in Central Asia”, and referred to himself as a Mongolian man with the blood of the Khunnus in his veins, promised to favorably consider the proposal.

At a meeting with business people, where Mr. Bayar invited investment in the mining sector, an official of the French nuclear energy company Areva, which has been working for 10 years in Mongolia, said investments in Mongolia have a bright future. “Mongolians have a high level of education and are remarkably adaptable,” its president said. Mr. Bayar urged participation in new areas, too. “Think what can be achieved if French fashion and technology were combined with Mongolian quality cashmere,” he said.

In Luxembourg Mr. Bayar signed an agreement on cultural cooperation with his counterpart Jean Claude Juncker. It was agreed to raise to 600 the number of Mongolians going there to train in banking. Mr. Bayar also attended a ceremony to mark the opening of the Mongolian Honorary Consulate in Luxembourg.

In Brussels, Mr. Bayar told Mr. Javier Solana, High Representative for the Common Foreign and Security Policy (CFSP) and the Secretary-General of the EU, that Mongolia considers the EU as its third neighbor. He lent full support to the proposal to establish a Permanent Representative Office

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of the EU in Mongolia. "We border two giant powerful states but have managed to successfully develop democracy," he said. Mr Solana underlined the importance of Mongolia's increased cooperation not only with the individual EU member States but also with the EU in general. Mrs. Benita Ferrero-Waldner, EU Commissioner for Foreign Affairs and European Neighborhood Policy, said negotiations would begin next month on establishing an agreement of bilateral partnership and collaboration between Mongolia and the EU. “The EU is willing to finally revise its present policy and delete Mongolia from the list of countries with a non-market economy," she said.

Source: www.infomongol.com, Montsame

CHINESE DELEGATION CALLS ON DEPUTY PM ENKHBOLD

A Chinese delegation, headed by Vice Minister of Commerce Yi Xiaozhun in Mongolia to attend a meeting as part of a UNDP program, called on Deputy Prime Minister M.Enkhbold on Tuesday. Mr Xiaozhun expressed satisfaction at the progress of trade and economic cooperation between Mongolia and China and underlined the importance of economic collaboration among nations in the Northeast Asian zone. He presented to Mr. Enkhbold a list of subjects to be discussed at the meeting of the Intergovernmental Commission in April in Beijing and hoped they would help resolve some problems facing China and Mongolia. "In these times of a world crisis we should deepen and widen our spheres of collaboration, and become an example for the developed countries,” he said.

Source: Montsame

MONGOLIAN MPs HOLD TALKS IN WASHINGTON

A group of US Congressmen told a visiting Mongolian Parliamentary delegation earlier this month that Mongolian democratic achievements served as a model in the region and reassured them of continued US support to Mongolia. The Mongolian team was led by Deputy Speaker G.Batkhuu and included Mr. Ch.Saikhanbileg, MP and Head of the Mongolia-US Inter-parliamentary Group in the Mongolian Parliament, and Mr. D.Odbayar, MP.

They held several meetings on Capitol Hill between March 10 and 12, and those they met included Senator R.Lugar, Representatives Joe Pitts, Joe Wilson, Jim McDermott, D.Rohrabacher, and D.Rehberg. Mr. Saikhanbileg expressed their gratitude for the US legislature’s support to the democratic transition in Mongolia.

The Mongolian delegation also met with Congressman David Price, Chairman of the House Democracy Assistance Commission, and discussed details of the upcoming visit of a US Congressional delegation to Mongolia this summer. The visitors also held meetings with State Department officials and with people at the Mike and Maureen Mansfield Foundation to discuss US policy in the NEA region.

Source: The Mongolian Embassy in the USA

RUSSIAN RAILWAY WAGONS READY TO ARRIVE

According to an official in the Ministry of Roads, Transportation, Construction and Urban Development, the first lot of the 1,000 transport wagons to be imported from Russia has already arrived at Naushik in Russia near the border of Mongolia. The sales agreement was signed during the recent Transit Mongol forum in Ulaanbaatar. The wagons will be bought by private companies and will be used to carry freight on Ulaanbaatar Railway.

The Railway is also buying four locomotives from Russia. The latest Mongolia-Russia intergovernmental commission meeting decided to set up a working group to review the terms of the 1949 cooperation agreement that governs the working of the Railway, so that the process of strategic development can be intensified.

Source: Odriin sonin

TOURISTS WILL BE ASKED TO PLANT TREES AT CAMPS

Every tourist who visits any of five camps in Mongolia will be expected to plant at least one tree there. The Mongolian Tourism Union and the Ministry for Nature, Environment and Tourism will start the program One-Tourist-One-Tree soon. A tourist will have to pay USD10 for a plant.

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The camps in Umnugobi, Dundgobi, Uvurkhangai, Tuv and Khentii provinces have been chosen on the basis of their assurance that they would take care that the trees survive.

Source: www.news.mn

MPs SUBMIT DRAFT LAW LIMITING USE OF PLASTIC BAGS

According to a survey, Mongolia uses 180,000 plastic bags in all sizes every day, at great ecological cost. Now four MPs have presented to the Speaker of Parliament a draft law about limiting the use of plastic bags. Mongolia imported 65 million plastic bags and 228,000 tons of raw materials for plastic bags in 2008. This was 32 percent more than in the year before. The draft law proposes to use ecologically friendly cloth and paper bags. Brown paper bags from Russia cost MNT100 each and those from China MNT120 each. Cloth bags made locally by Ongi Tur LLC and Gurvan Temee cost MNT800-1,100 each. Such bags can be used for a year and a half on an average.

Source: en.News.mn

OFFICIALS STUDY AUSTRALIAN LAND MANAGEMENT PRACTICES

A group of 15 senior Mongolian Government officials visiting Australia to study land management practices feel that these can be applied in Mongolia to arrest the degradation of its grassy plains. Mongolia's state-owned steppes have been damaged by years of neglect as nomadic tribesman and about 43 million grazing animals share the little arable land between the country's mountains and deserts.

Source: Montsame

NEW MONGOLIAN LAWS

The following new law and amendments to current Mongolian laws were published in the latest weekly Government Bulletin. Unless decided otherwise by Parliament, the laws take effect ten (10) days after publication.

Bulletin Date Law

12.03.2009 "Law on vocational education, training" (revised version) Amendments to “Law on education” Amendments to “Law on special authorization of corporate activity” Amendments to “Law on Government’s special fund” Amendments to “Law on Corporate Income Tax” (Economic Entity) Amendments to “Law on VAT” Please visit BCM website, Legislative Committee, for a summary of new Mongolian laws. BCM members who wish complete versions of the laws in Mongolian language are welcome to call or email the BCM office (11-332-345; [email protected]) to arrange for a convenient pickup.

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SPONSORS

ECONOMIC INDICATORS

MSE WEEKLY REVIEW

For the week ended March 20, 2009, trading activity on the Mongolian Stock Exchange (MSE) totaled

101,900 shares with 23 companies traded. Total market value of transactions was MNT 27.4 million.

Total market capitalization of the 358 stock companies listed on the MSE was MNT 446.6 billion, and

decreased by MNT 0.06 billion or 0.01 % from the previous week.

The Top-20 Index increased by 77.21 points or 1.6% compared to the previous week closing at

4,939.42 points. The MSE Composite Index decreased by 0.60 points or 0.02% compared to the

previous week, closing at 2,494.58 points.

Most active stocks traded were: Khuh Gan (31,200 shares), NIC (25,400 shares), Genco Tur Buro

(18,600 shares), Moningbar (11,500 shares), and Olloo (7,700 shares).

Major share price percentage gainers were: Gobi (19.9%) and Monnoos (14.9%). Major share price percentage losers were: UB Hotel (13.2%), Mongol Savkhi (13.0%), APU (6.7%), NIC (3.4%), and Eermel (1.1%).

INFLATION

Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)] Year 2007 *15.1% [source: NSOM] Year 2008 *22.1% [source: NSOM] February 28, 2009 *18.2% [source: NSOM] * year over year (yoy)

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CURRENCY RATES – March 26, 2009

Currency name Currency Rate

US dollars US 1574.35

Euro EUR 2117.58

Japanese yen JPY 16.11

British pound GBP 2304.22

Hong Kong dollar HKD 203.14

Chinese yuan CNY 230.44

Russian ruble RUB 46.61

South Korean won KRW 1.16

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.