BUSINESS COUNCIL of MONGOLIA NewsWire

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Issue 166, May 6 2011

NEWS HIGHLIGHTS: Business:

GE opens office in Mongolia;

Market analysts downgrade Ivanhoe Mines shares;

Sharyn Gol announces major strategic review as it plans expansion;

Winsway's S&P rating and outlook unaffected by Mongolian transport ban;

AIDD wins large contract in Kazakhstan;

Three Anod Bank officials sentenced;

GTSO has nothing to show for its spectacular headlines;

Hunnu Coal’s quarterly report highlights progress in several areas;

Drill results confirm prospectivity of Shavdal project of Haranga Resources;

Aspire Mining reports confirmation of quality and yield potential at Ovoot;

Mongolian investments help Origo Partners' NAV jump;

Lucky Strike to acquire 75% of NKAK coal properties;

Petro Matad encounters live oil in DT-4 well's first target reservoir;

Mongolia Growth Group to invest USD5 million in insurance venture;

Initial assay results “encouraging”, reports Voyager Resources;

Prophecy acquires prospective claims near Ulaan Ovoo;

Korea’s sovereign fund buys small Noble Group stake;

Guildford Coal intersects 8 meters of net coal in South Gobi Project;

Centerra declares special dividend as profit rises;

Eurasia Capital sets up subsidiary to target Gulf investors;

Turner's top channels in Mongolia on Univision's IPTV platform;

Ulusnet set to expand Mongolia 4G broadband network;

bd's Mongolian Grill gets new media planner.

Economy: Mongolia wins case against Altandornod Mongol;

Moody's says outlook for Mongolia's ratings is stable;

Moody’s report outlines risks for Mongolia;

Ministry hopes to have single-digit inflation until 2014;

Central Bank signs swap agreement with China, eyes one with Russia;

MPs want shares for businesses to go to citizens instead;

Stamp fees under revision to give relief to business;

MP asks for expansion of Shivee-Ovoo operations;

Free trade zones to open in 2013, assures working group;

Development Bank funds cannot be diverted to Government use;

MPs propose using HDF allowance to directly repay some bank loans;

Construction official optimistic about apartment project;

Central Bank blames excess liquidity for inflation;

Russian petroleum export ban does not apply to Mongolia, but prices rise;

Map of new railway prepared;

MNCCI to cooperate with Mongol 999;

Scholars focus on value addition in mining;

Death stalks Mongolia’s oldest mine at Nalaikh;

Mongolia is awakening, but lot more left to be done;

Asia's manufacturing growth slows, but dip seen as temporary;

U.S. Treasury pushes back default timing;

U.S. becomes net exporter of fuel after 20 years.

Politics: Supreme Court rejects new group’s claim to be known as MPRP;

People’s Assembly adopts new protocol, stays put in Sukhbaatar Square;

President feels politicians not serious about amending Constitution;

Why MPs support the President’s populism;

Perform or quit, MP tells officials;

MPs blame media for its own lack of independence;

Website editors meet to improve quality of work;

Mongolia can store nuclear waste safely, feels scholar;

Sons of D.Enkhbat demand compensation of 3 million euro;

Report recommends overhaul of Australian vocational training system.

*Click on titles above to link to articles.

BUSINESS GE OPENS OFFICE IN MONGOLIA General Electric Company (GE) this week opened a representative office in Ulaanbaatar to further explore business opportunities in Mongolia. The office is in the headquarters of GE‘s Mongolian partner, Newcom Group, one of the largest private enterprises in Mongolia with a diversified portfolio of businesses in telecommunications, airline, real estate and clean energy industries. GE‘s presence in the market will allow for better consolidation of resources to capture local growth in industries including clean energy, mining, healthcare and lighting. Minister of Mineral Resources and Energy D. Zorigt, U.S. Ambassador Jonathan Addleton, and Newcom CEO B. Bold were among those present at the office opening ceremony. GE was represented by Vice Presidents, Mr. Mark Hutchinson and Mr. Jack Wen, and Mr. Ts. Tumentsogt who will be the Chief Representative of the Mongolia office. Mr. B. Bold, Newcom‘s CEO, welcoming GE‘s permanent representation in Mongolia, stressed the importance of the intangible values and merits the company was bringing into Mongolia – innovation, green technologies and smart solutions for business pursuits to lead to a meaningful engagement. GE operates in more than 100 countries.

Source: General Electric

MARKET ANALYSTS DOWNGRADE IVANHOE MINES SHARES Equities research analysts at BMO Capital Markets downgraded shares of Ivanhoe Mines Ltd. from an ―outperform‖ rating to a ―market perform‖ rating in a research note to investors on April 27. Separately, analysts at Zacks Investment Research had reiterated a ―neutral‖ rating on shares of Ivanhoe Mines Ltd. in a research note to investors on April 6. Ivanhoe Mines has a 52-week low of USD12.15 and a 52-week high of USD30.03. The stock‘s 50-day moving average is USD26.68 and its 200-day moving average is USD25.9. The company has a market cap of USD16.972 billion.

Source: ABMN

SHARYN GOL ANNOUNCES MAJOR STRATEGIC REVIEW AS IT PLANS EXPANSION Sharyn Gol JSC has plans for a major strategic review of present policies and strategy. The key points in a company announcement to this effect include: A review of existing operations and investigating the potential for an accelerated production expansion to access new domestic, regional and seaborne export markets Major production expansion supported by the recent resource upgrade, to more than triple the pre-existing resources, with further exploration upside identified Planning for phased development of a large, long life, open cut and underground mining operation that will help transform Sharyn Gol JSC into a major international mining company.

The Directors have clarified that these efforts form part of a broader ongoing revitalization program seeking to stabilize, optimize, and expand the existing open cut coal mining operation. Sharyn Gol's total coal resource now stands at an estimated 374 Mt thermal coal, more than triple the pre-existing (non-JORC) resource. The company has engaged a suite of Australian consultancy firms to investigate the potential for an expansion in stages. Chairman B. Batmunkh has said Sharyn Gol ―offers an extremely rare combination in the Mongolian coal mining sector: having a current mining operation, existing dedicated and expandable rail infrastructure, a large workforce, and now a major resource." During the past 12 months, Sharyn Gol has received two awards: as the most transparent company listed on the Mongolian Stock Exchange, and as one of Mongolia's Top-100 enterprises. ―These accolades reflect our commitment and dedication to operational excellence‖ and the present initiatives ―reflect our continuing focus on delivering shareholder value, as also our desire to contribute to the success and bright future of all our stakeholders and to the Mongolian national economy," he said. Source: Sharyn Gol

WINSWAY‟S S&P RATING AND OUTLOOK UNAFFECTED BY MONGOLIAN TRANSPORT BAN Standard & Poor's Ratings Services has said that its rating and outlook on Winsway Coking Coal Holdings Ltd. (BB-/Stable/--) are not immediately affected by the suspension of trucking on the sole access road to a mining area in Mongolia where the company sources at least 50% of its coal in the country. The Government has suspended trucking to Tavan Togol for safety and environmental reasons, and it is currently unclear when the ban will be lifted. S&P believes that a prolonged ban could have a material impact on Winsway's coking coal supply. It estimated that the company has sufficient inventory for one or two months. Winsway could source coal from overseas sources, although margins on seaborne supplies are materially lower. The credit rating agency does not believe the company's debt servicing will be affected in 2011 even if the ban is prolonged. It believes Winsway's liquidity is adequate as it recently raised USD500 million from the bond market.

Source: ETNet

AIDD WINS LARGE CONTRACT IN KAZAKHSTAN AIDD, the Mongolian mining services group, has signed a large long-term drilling services contract with an international conglomerate in Kazakhstan. The contract could be one of the largest standalone contracts awarded in the international exploration drilling market in 2011. The AIDD Group‘s subsidiary was selected as the international drilling service provider for a two-year multiple drilling rig exploration and mine site drilling contract after taking part in a contract renewal tender process in line with the stringent open tender laws that were put in place in Kazakhstan in 2010. AIDD LLP, the Group‘s Kazakhstan subsidiary, competed against two of the largest global drilling services companies to win the bid. It believes that its success was because of its ability to build and show its international clients that there are regional service providers with the ability and local commitment to deliver a quality product to some of the largest projects the industry has to offer.

Source: AIDD

THREE ANOD BANK OFFICIALS SENTENCED A court sentenced on Monday three members of the Representatives‘ Managing Council (RMC) of the Anod Bank, Mr. N.Davaa, Mr. E.Gur-Aranz and Mr. U.Enkhtur, to terms in prison for cheating share holders of the bank and misappropriating the money in savings accounts. Two more members of the RMC are already under investigation. There are reports that charges will be leveled against a former Vice President of the Central Bank, Mr. B.Enkhkhuyag, and a former Chief of the Financial Regulatory Authority, Mr. D.Bayarsaikhan, for their role in the Anod Bank case. Both are suspected of conspiring with managing officials of the bank and of deliberately lax monitoring to help them defraud those who bought new shares. Investigations have been going on for years and the Chief of the Economic Crimes section has said all charges will be submitted to the court in May.

Source: Ardiin Erkh

GTSO HAS NOTHING TO SHOW FOR ITS SPECTACULAR HEADLINES One hopeful rare earth company that has been in the news with spectacular headlines is Green Technology Solutions, based out of San Jose, California. Some of the company's press releases state

that it has partnered with a Mongolian rare earth exporter called Rare Earth Exporters of Mongolia that is looking to develop REE properties in Mongolia. The GTSO has stated that it is shipping its first wave of rare earth oxides to South Korea. Recently, the company announced it had acquired the rights to a rare earth deposit in Arizona. The company recently issued a press release stating it has a deal to develop gold, diamond, and rare earth mining properties in the Democratic Republic of Congo. However, looking at the company's financial statements and management team has made this GTSO unbelievable and far less than appealing, and almost certainly a scam. In multiple attempts to interview its CEO John Shearer, he was not able to be reached, nor was any date of when he would be in the office provided. An attempt to speak with the Director of its Mongolian Operations failed when the receptionist at GTSO was unaware of the person's affiliation with the company. A closer look at the company's 10-K SEC filing showed less than promising data for a company with so many eye popping headlines. First, Green Technology Solutions changed its name from ‗Sunrise Energy' in October of 2010. Sunrise Energy was ―engaged in the exploration and development of oil and gas in the Ukraine.‖ Shortly after the name change, in November 2010, the company purchased Bio Pulp Works, a company that makes recycled paper products. The company's ‗risk factors' under the SEC filing testify to a lack of management experience. The following is taken from the company's 10-K document. ―The independent auditor's report on our financial statements contains explanatory language that substantial doubt exists about our ability to continue as a going concern. The report states that we depend on raising additional equity to continue our operations. If we are unable to obtain sufficient financing in the near term, then we would, in all likelihood… we may be placed into bankruptcy or undergo liquidation… For the year ended December 31, 2010, the company's net loss was USD715,871 and our accumulated deficit was USD7,799,363… Our management has limited experience in our proposed areas of operation. It is unlikely that any of our officers or directors will have any direct experience in the business of any target company.‖ The company, as of December 31, 2010 had only USD2,613 in the bank. The company's only listed employee, management, or board of directors is CEO John Shearer. Read more… According to the statement above, he has no experience in the rare earth mining industry, and his main experience is working for investment banking firms. He has no expertise in overseeing mining operations. Mr. Shearer is featured on a site called Beijing Bullion, which shares an IP address with GTSO, on the site there are links to ―BUY GTSO‖. Green Technologies Solutions headquarters in San Jose, California, is a ‗virtual office' in which the address listed is not as GTSO, but to a company called HQ Global Workplaces. When pressing those available for comment at HQ Global, no email address was able to be given, no physical address for the company was available, nor was anyone at the company able to give validity to GTSO. They are simply a phone call center and voicemail service company. Whether the repeated attempts to speak with CEO John Shearer are ever met with a response is doubtful at best. Before buying shares of a company in the rare earth market, or any market for that matter, practice due diligence to be sure that the company is valid and worthy of your hard earned money. Many of the companies in the rare earth space are still in the early developmental stages, however, can still be good investments. Just be weary of those with spectacular headlines and little to show for it. Source: Resource Investing News

HUNNU COAL‟S QUARTERLY REPORT HIGHLIGHTS PROGRESS IN SEVERAL AREAS Hunnu Coal has highlighted the following in its January-March 2011 quarterly report released last week. 30 million shares placed to Banpu PCL for AUD45 million at a 20.1% premium to the transaction date market price. Initial Coal Resource for the Tsant Uul Coking Coal Project of approximately 90Mt, with 61Mt in the Measured and Indicated JORC categories (34Mt Measured, 27Mt Indicated). A mining license application for Tsant Uul Coking Coal Project has been lodged and is being processed by the Mineral Authority of Mongolia. Mining is expected to commence in the second half of 2011. 35,089 meters of drilling for 237 holes has been completed on the Tsant Uul Coking Coal Project. A total of seven drilling rigs are still operating on site. 24,500 meters of drilling for 273 holes has been completed on the Unst Khudag Project with an upgrade of the JORC Resource due imminently.

Acquisition of 20,000m2 of land at the Choir rail head. Commenced construction of a rail spur at Choir depot to the Trans-Mongolian Railway. Commenced feasibility study into construction of a rail line from Choir to Unst Khudag. Drilling commenced at Tsokhio and Khuree-2 Coal Projects. Drilling schedule to commence in May at Ar Zuun Gol and Zuun Gol in the Gobi Altai to test coking coal targets previously identified. Appointment of Beijing-based General Manager of Marketing.

Source: Hunnu Coal

DRILL RESULTS CONFIRM PROSPECTIVITY OF SHAVDAL PROJECT OF HARANGA RESOURCES In its Quarterly Activities Report released last week, Haranga Resources says drill results from the Shavdal project have been encouraging, as they confirm the prospectivity of the discovery. It has also received ―excellent‖ magnetic survey results from its flagship Selenge project. Scout drilling program and magnetic survey have commenced at the Sumber iron ore project and over the Tumurtei Khudag project area respectively, while ground checking and geological surveying have started at both Selenge and Tumurtei Khudag in advance of planned drilling. In the corporate area, the company has appointed a Chief Operating Officer to oversee all Mongolian operations, and final acquisition payments have been completed to secure 75% of both the Shavdal and Sumber projects. The Company continues to assess prospective iron ore and manganese opportunities in Mongolia, and holds AUD21 million in cash reserves. Source: Haranga Resources

ASPIRE MINING REPORTS CONFIRMATION OF QUALITY AND YIELD POTENTIAL AT OVOOT Aspire Mining has listed the following as highlights of its activities in the first quarter of 2011: Raw coal analysis results confirm the high quality of the bituminous coking coal at Ovoot Washing yield analysis confirms high yield potential 2-D seismic interpretation has identified additional coal targets to the east and south of the Ovoot Coal Resource area Noble Group builds 8.6% shareholding interest in Aspire 2011 Ovoot drilling program has commenced with two drill rigs on site Scoping Study for the Ovoot DSO Project has commenced.

Source: Aspire Mining

MONGOLIAN INVESTMENTS HELP ORIGO PARTNERS‟ NAV JUMP Beijing-based private equity investment firm Origo Partners was able to grow its net asset value (NAV) by 49% in 2010, helped by strong economic growth in China and an increased weighting in the Mongolian market. The group said it had invested heavily in the metals and mining sector of Mongolia during the year, "a country which has the potential to become a significant supplier of raw materials to China over the coming years." As a result, the sector now represents around half of the total portfolio, up from 45% in 2009. Source: Origo Partners

LUCKY STRIKE TO ACQUIRE 75% OF NKAK COAL PROPERTIES The TSX Venture Exchange-listed Lucky Strike Resources Ltd. has signed a letter agreement with a private Mongolian company that represents the owner of two exploration licenses covering an area of 8,736 hectares within the eastern boundary 3 km west of the Olonbulag coking coal deposits in Khovd province, known as the Nariin Khargait and Ar Khadnii Ovoo (NKAK") coal properties. It is contemplated in the Letter Agreement that the properties will be transferred to a joint venture company and all transportation licenses and contracts will be vested in it. Lucky Strike has the option to acquire up to a 75% interest in the JV. Lucky Strike plans to develop additional transportation logistics operations including fleets of trucks, truck shop, station facilities, warehouse and office for the coal transportation of numerous deposits across Mongolia. Source: Lucky Strike Resources Ltd.

PETRO MATAD ENCOUNTERS LIVE OIL IN DT-4 WELL‟S FIRST TARGET RESERVOIR Petro Matad has encountered live oil shows in the DT-4 well just a week after its specially winterized rig resumed work after the 2011 drill program had been suspended, at 1,271 meters, in early December as the Mongolian winter closed in. It entered the Lower Tsagaantsav sandstone reservoir on May 2 at 1,798 meters and coring operations have now begun to allow for further

analysis. Two lengths of core have been recovered to date. The length of core, from 1,807 to 1,814 meters, has not been completely logged yet. According to Petro Matad the Lower Tsagaantsav formation is estimated to be around 210 meters thick at this location, based on the latest reprocessed 3D seismic data. It said that drilling operations are continuing and the company will decide on the amount of coring to be carried out as the well progresses. Once the well has reached the target depth at 2,020 meters it will be prepared for down-hole wireline logging.

Source: Proactive Investors

MONGOLIA GROWTH GROUP TO INVEST USD5 MILLION IN INSURANCE VENTURE In his most recent monthly letter to shareholders, sent from Ulaanbaatar, Mr. Harris Kupperman, Chairman & CEO of Mongolia Growth Group Ltd. has said the ―young company is making rapid progress‖. The ―natural growing pains of any new venture‖ are passing and ―we can now focus on building our business‖. The company is ―focused on deploying‖ its capital ―in an intelligent manner‖ and, upon receiving regulatory approval, intends to invest USD5 million in a new insurance venture. ―Based on our research, we will be the best capitalized insurance company in Mongolia following this capital injection. If insurance is about strength, between our management team and our capitalization, we are off to a very strong start.‖ The company has also been deploying capital into real estate and has so far ―evaluated dozens of opportunities and acquired 11 residential apartments, over 1,000 meters of prime commercial space and 250 meters of leasable office space‖. Source: Mongolia Growth Group Ltd.

INITIAL ASSAY RESULTS “ENCOURAGING”, REPORTS VOYAGER RESOURCES Voyager Resources says in its March Quarter Activities Statement that 24 diamond core drill holes were completed during the quarter at its Khongor Copper Gold Porphyry Project located in the South Gobi arc terrain that hosts the Oyu Tolgoi copper gold deposit. Initial assay results received from the first 12 core holes have been encouraging, as they expand the porphyry copper mineralised zone to double the size of the target previously reported. Geophysical surveys have begun at Khongor to identify additional and deeper targets for drill testing. Source: Voyager Resources

PROPHECY ACQUIRES PROSPECTIVE CLAIMS NEAR ULAAN OVOO Prophecy Resource Corp. has entered into an Option Agreement with a private Mongolian company holding an exploration license near Prophecy's Ulaan Ovoo mine, pursuant to which Prophecy has been granted the right to acquire 100% ownership for USD2 million within the first year, or USD4 million in the second year of the execution of the agreement. The 4,773-hectare property has an existing, fully transferable exploration license located 17 km northeast of Prophecy's producing Ulaan Ovoo coal mine. It is contiguous to Prophecy's existing exploration license covering 7,392 hectares. These exploration licenses are located in the same structural basin as the Ulaan Ovoo Mine. Recent reconnaissance programs including geophysical work to date indicates the presence of shallow sedimentary rocks up to 100 meters in thickness, which demonstrates the potential for coal discovery. Prophecy plans to commence drilling operations on the 4,773 hectare property in June 2011.

Source: Prophecy Resource

KOREA‟S SOVEREIGN FUND BUYS SMALL NOBLE GROUP STAKE Korea Investment Corp., Korea‘s sovereign wealth fund, took a minority stake in Hong Kong-based commodity supplier Noble Group Ltd. as the two said they seek to jointly develop infrastructure projects. KIC bought 59.3 million shares worth about USD108 million at current market prices, and equal to about 0.9 percent of Noble‘s outstanding shares. ―The decision is part of the fund‘s effort to diversify its investment portfolio,‖ said Mr. Kwon Yong-sung, a spokesman for KIC. KIC and Noble‘s interests converge in Mongolia, which plans to quadruple its rail network over the next decade to speed up development of coal, copper and rare earth deposits that target commodity buyers in Korea, Japan and China. Noble has opened an office in Mongolia and is shipping coal from the region as it looks to make further investments in the nation‘s deposits. Lotte Engineering & Construction is leading a Korean group‘s bid to build the first 1,100 kilometers of rail that Mongolia needs to connect its biggest coal deposit, Tavan Tolgoi, with the existing network. State-run Korea Resources Corp. is also part of a Russo-Japanese-Korean group bidding to develop one sector of Tavan Tolgoi, which would include adding rail links to connect the deposit

with Russia‘s Far East ports. Noble last month more than doubled its stake in Aspire Mining, which is developing the Ovoot coking coal project in western Mongolia, to 8.6 percent. The investment is the second by an Asian sovereign wealth fund in the commodities supplier. China Investment Corp. bought a 14.7 percent stake in 2009 to become Noble‘s second-largest share holder.

Source: Korea JoongAng Daily

GUILDFORD COAL INTERSECTS 8 METERS OF NET COAL IN SOUTH GOBI PROJECT Guildford Coal has reported that Terra Energy LLC, in which it has a 20% stake, has intersected eight meters of net coal contained within three seams at the company‘s South Gobi Project in Mongolia. Terra holds six exploration licenses that are prospective for thermal and coking coal in the South Gobi and Middle Gobi regions. Guildford has an option to increase its stake in Terra to 70%. Guildford has two drill rigs operating at South Gobi and one drill at operating within the Middle Gobi Project. A mining licence application is being prepared for the project with expected lodging in the third quarter of this year.

Source: Proactive Investors

CENTERRA DECLARES SPECIAL DIVIDEND AS PROFIT RISES Centerra Gold increased first quarter earnings by 10%, after higher bullion prices more than offset a decline in gold sales. The company also announced a special dividend of CAD0.30 a share, in addition to an annual dividend of CAD0.10 a share. "The decision of Centerra's board to declare the special dividend was based on our strong operating performance and the high gold price, which have created substantial operating cash flow, and, even after significant capital investment, is resulting in growing cash balances,‖ CEO Steve Lang said in a statement. Centerra owns the Kumtor mine, in Kyrgyzstan, and the Gatsuurt project in Mongolia. The firm ended mining operations at another Mongolian mine, Boroo, in November. The average realized gold price in the quarter, at USD1,385/oz, was 25% higher than in the same period a year earlier. Gold production was lower because of the lower-grade stockpile material being processed at Boroo. The company had planned to replace the production from Boroo with ore from its Gatsuurt project, which is located about 50 km away. However, it is still waiting to hear how the project will be affected by a new water and forests law enacted in Mongolia and the final permission for Gatsuurt will not be approved until the uncertainty under the new law is dealt with.

Source: Mining Weekly

EURASIA CAPITAL SETS UP SUBSIDIARY TO TARGET GULF INVESTORS Eurasia Capital has set up Eurasia Capital Gulf Limited, its new subsidiary incorporated in the United Arab Emirates (UAE), to help it attract investors from countries of the Gulf Cooperation Council (GCC) into Mongolia and Central Asia. GCC members include Saudi Arabia, the UAE, Kuwait, Qatar, Oman and Bahrain, and GCC countries have a total GDP of over USD1 trillion. They have accumulated over USD1.5 trillion in various sovereign wealth funds (SWFs), which represent 35% of the total assets held by SWFs globally. The visit of Prime Minister S. Batbold to Kuwait and the UAE in January 2011 is expected to become a catalyst for expanding relationships between Mongolia and the Gulf countries. Eurasia Capital plans to establish relationships with sovereign wealth funds, financial institutions, family offices and private investors in the Gulf region. It will also organize a Mongolia Investment Conference in Abu Dhabi in the second half of 2011.

Source: Eurasia Capital

TURNER‟S TOP CHANNELS IN MONGOLIA ON UNIVISION‟S IPTV PLATFORM Turner Broadcasting System Asia Pacific has launched a suite of its top channels in Mongolia, after a groundbreaking agreement with the country‘s first IPTV operator, Univision. The multi-year deal will see a mixed genre package of Turner‘s premium channels, CNN International, Cartoon Network, Boomerang and truTV, offered as part of Univision‘s triple-play service to its network covering Ulaanbaatar and other major cities, using high-speed fiber-optic technology. Univision CEO N. Naranbat calls the deal ―a significant milestone‖. The new IPTV service means that Mongolian subscribers can stay on top of CNN‘s breaking-news stories and world headlines at all times; and enjoy the best in animated entertainment from the world‘s largest cartoon library of Warner Bros, MGM and Hanna Barbera titles as well as Cartoon Network‘s original series including popular favorites Ben 10, Generator Rex, Chowder, and The Powerpuff Girls. Univision will offer

high-speed Internet and phone service to its subscribers, with the core 70-channel Internet TV service starting at USD9 per month.

Source: Asia Pacific Broadcasting

ULUSNET SET TO EXPAND MONGOLOA 4G BROADBAND NETWORK Airspan Networks Inc., a leading provider of broadband wireless access networks, has announced the expansion by Ulusnet, Mongolia, of their 4G broadband network. Ulusnet launched its WiMAX network in 2007 and has been serving residential, business and government customers with high-speed broadband services since then. With a successful business in place, Ulusnet is meeting the growing demand for broader coverage, as well as faster and more mobile services by expanding its existing network with Airspan infrastructure. Most of the network is in Ulaanbaatar, but the expansion will target some of the more rural countryside. "Airspan has served us well for several years," commented Ulusnet CEO D. Byambatseren. "Mongolia is one of the fastest growing economies in Asia and with a growing economy comes a higher demand for high-speed connectivity. Ulusnet is well positioned to continue to serve Mongolian resident and commercial customers with 4G data and voice services."

Source: Airspan

bd‟s MONGOLIAN GRILL GETS NEW MEDIA PLANNER The Hocking Media Group, a media buying and planning agency, will from now on handle media planning and buying for bd's Mongolian Grill, a leading restaurant chain with 35 locations in 13 U.S. states and one franchise in Ulaanbaatar. Hocking will create and execute integrated plans that combine new and traditional media strategies to build awareness, drive traffic and increase business for the restaurants. Source: Hocking Media Group

SPONSORS

Khan Bank Eznis Airways

Kempinski Hotel Khan Palace Mongolian National Broadcasting

Mongolian Star Melchers

ECONOMY MONGOLIA WINS CASE AGAINST ALTANDORNOD MONGOL The International Arbitration Court last week decided in favor of the Government of Mongolia and rejected the claim of Altandornod Mongol LLC and Vostokneftgas LLC that they were not liable to pay USD1.6 billion in tax. The news was revealed by Minister for Justice and Internal Affairs Ts.Nyamdorj at a press conference. He noted this was the third time Mongolia has been vindicated

in a major dispute since its transition to a market economy. That the court upheld Mongolia‘s right to impose the 68% windfall profit tax, and asked Altandornod Mongol to pay it is a message to foreign companies and investors to follow the country‘s laws. The dispute started three years ago. Source: Ardiin Erkh

MOODY‟S SAYS OUTLOOK FOR MONGOLIA‟S RATINGS IS STABLE Moody's says outlook for Mongolia's ratings is stable.

Source: Reuters

MOODY‟S REPORT OUTLINES RISKS FOR MONGOLIA Mongolia may be the darling of the mining world and a hotspot for investors in developing Asian economies. However as far as the credit markets are concerned, it might as well be a Greece or a Belarus. That‘s according to Moody‘s, which outlined the risks facing this young, resource-rich democracy in its recent annual report. In some ways Mongolia‘s finances would be the envy of many countries in the West: government gross debt was 43 per cent of GDP in 2010 and according to the International Monetary Fund this will fall to 20 per cent of GDP by 2015. But Mongolian sovereign debt is still risky because the country is so vulnerable to global commodities prices. ―The key thing about Mongolia is that it is subject to these boom and bust cycles,‖ explains the author of the Moody‘s report. ―In the last cycle a couple years ago we saw reserves being run down, there was runaway inflation, a loss of confidence in the system and Mongolians fleeing the tugrik [local currency]. This was very destabilizing.‖ The prospect of falling copper prices would be particularly damaging to the economy, according to Moody‘s. Extremely harsh winters known as ―dzud‖ also pose economic risk. Then there is the question of governance. While Mongolia has seen several successful transitions of power since it became a democracy in 1990, there are concerns that governance may be deteriorating. Moody‘s notes: ―The World Bank‘s governance indicators had previously placed Mongolia in a relatively favorable position for a country undergoing a transition from socialism and poverty. However, these indicators have deteriorated in past years and continue to trend downwards. Read more… These factors, along with other considerations, support our assessment of Mongolia‘s institutional strength at low. . . the country‘s institutional development has not kept pace with its rapid economic growth in recent years. ―Mongolia‘s economy is still set to grow strongly this year, with Moody‘s forecasting GDP growth at 9-10 per cent in 2011 and 2012. But that is not to say that it will always be smooth sailing as Moody‘s decision to maintain its B1 rating on the government‘s bonds suggests. Source: Financial Times blogs

MINISTRY HOPES TO HAVE SINGLE-DIGIT INFLATION UNTIL 2014 The Ministry of Finance has submitted to Parliament a note on next year‘s budget along with outlines of the budgets of 2013 and 2014. The Ministry expects the economy to grow 11.8% this year, with the mining sector growing 10.6% and other sectors 12%. The economy showed substantial recovery in 2010, with money supply increasing 62% and household consumption also rising. Inflation stood at 13%, but the Ministry hopes to keep this between 8% and 9% until 2014.

Source: Udriin Soniin

CENTRAL BANK SIGNS SWAP AGREEMENT WITH CHINA, EYES ONE WITH RUSSIA The People‘s Bank of China and the Central Bank signed a currency swap agreement on Thursday in Ulaanbaatar, paving the way for more yuan-based trade settlements. The Central Bank did not disclose the amount or duration of the contract but said the deal would help ensure the stability of its local currency. Exploratory talks have already been held with Russian officials for a similar agreement with the Bank of Russia. That meeting was attended by President Ts.Elbegdorj, Speaker D.Demberel, officials from several Ministries and State organizations, as well as representatives of private companies that have trade relations with Russia. The informal system of swap agreements provides a mutual arrangement between central banks for standby credits designed to see countries through difficulties on the occasions of large movements of funds. These are intended only to offset private international flows of capital on precautionary

or speculative account, not to finance even temporary deficits in countries‘ balance of payments. Source: Montsame

MPS WANT SHARES FOR BUSINESSES TO GO TO CITIZENS INSTEAD Some MPs led by Mr. Ya.Batsuuri and Mr. D.Odbayar have asked the Government to scrap the scheme to sell 10% of Erdenes-Tavan Tolgoi shares to business entities. They want the shares so earmarked to be added to those to be distributed free to all citizens. Parliament will discuss this new proposal later in the present session. The MPs made the demand after the Government had told Parliament that it had expected to sell the shares to 50,000 domestic businesses, but the number stood at just 2,700 after all eligibility documents had been checked.

Source: Ardiin Erkh

STAMP FEES UNDER REVISION TO GIVE RELIEF TO BUSINESS Finance Minister S.Bayartsogt has revealed that registration fees, also known as stamp duties, for several businesses are proposed to be reduced. For example, permits to sell beverage with high alcohol content within Ulaanbaatar will be MNT 300,000 (MNT1 million), in province capitals MNT200,000 (MNT600,000), and in district centers MNT100,000 (MNT300,000). These are first-time fees and the figures in brackets are the rates now in force. Corresponding fees for permits to sell low-alcohol beverage are likely to be MNT100,000 within Ulaanbaatar (MNT300,000), MNT 70,000 in province capitals (MNT200,000), and MNT40,000 in district centers (MNT100,000). Places serving alcohol until midnight will pay MNT1.5 million instead of MNT20 million at present. Changes are also sought to be made in fees for import/export and transportation of toxic substances. The import license fee will be MNT3 million in place of MNT75 million now, while export fees will be MNT20,000, usage fees MNT25,000, and trading fees MNT500,000. Combustible production license fees have been reduced from MNT50 million to MNT50,000 for certain articles. More views and suggestions on the revised fees are being collected, and the final Government proposal will be submitted to Parliament before long.

Source: Zuunii Medee

MP ASKS FOR EXPANSION OF SHIVEE-OVOO OPERATIONS The Chief of the Standing Committee on Security and Foreign Policy, Mr. Ya.Batsuuri, has sent a letter to the Minister for Mineral Resources and Energy, Mr. D.Zorigt, on the State-owned Shivee-Ovoo coal mine. The mine has a license over 91 hectares or just 0.3% of a coal deposit spread over 29,500 hectares. State-owned Erdenes MGL owns 4,199 hectares or 14.2%, and a private company Shine Shivee 22,300 hectares or 75.6%. Shivee-Ovoo has leased another 200 hectares from Erdenes MGL on payment. Exploration of the deposit had been done with state funds and mining was begun with USD67 million from foreign sources Mr. Batsuuri thinks division of a strategic deposit hampers efficient exploitation and also says several such areas under special license elsewhere have not been registered as strategic mines. He wants the law on mineral resources to be amended to stop this practice. He has urged the Ministry to consider awarding Shivee-Ovoo the special license over the entire deposit, so that it can both improve efficiency and increase output. That would help repay the foreign loans. Also, a power plant can be set up using the coal will be able to meet domestic energy demand.

Source: English.news.mn

FREE TRADE ZONES TO OPEN IN 2013, ASSURES WORKING GROUP Both the Altanbulag and the Tsagaan Nuur free trade zones will be opened in 2013, according to assurances given by the working group in the Mayor‘s Office with responsibility for the matter. Parliament passed the law on such zones in 2002 and the working group began work the next year. MNT4.5 billion was allocated for development of Altanbulag in 2011, after MNT4.3 billion had been spent in 2010, and there has been criticism of the slow pace of work. The infrastructure plan for Tsagaan Nuur is being prepared.

Source: Unuudur

DEVELOPMENT BANK FUNDS CANNOT BE DIVERTED TO GOVERNMENT USE Mr. Ch.Khashchuluun, Chairman of the Development Bank Executive Board, has made it clear that the MNT800 billion expected to be raised through bond sales will be strictly for use of the bank as its loan fund corpus. ―It will most certainly not be used to pay off any debts or to plug the budget deficit,‖ he has said. Mongolia does not have a burdensome foreign debt level, and Mr. Khashchuluun feels it is always macroeconomically sensible to keep it under a certain percentage of

the domestic GDP, but it is the Government‘s responsibility, and not the bank‘s. He also revealed that the list of projects the bank is expected to finance is already there. It includes projects in construction, energy, infrastructure, roads and development of heavy industry.

Source: Zuunii Medee

MPs PROPOSE USING HDF ALLOWANCE TO DIRECTLY REPAY SOME BANK LOANS A group of MPs led by Mr. P.Altangerel and Mr. J.Sukhbaatar have submitted to the Government a set of amendments to the Law on the Human Development Fund. One of the amendments proposed seeks to use the HDF allowance to elderly people and herders directly to pay back their bank loans. There are 214,000 elders in the state, 166,200 of whom have taken pension loans from commercial banks. Herders owe banks MNT45.2 billion in loans. Source: Unuduur

CONSTRUCTION OFFICIAL OPTIMISTIC ABOUT APARTMENT PROJECT The Chairman of the Department of Construction and Industry has said that six areas of Ulaanbaatar are to be redeveloped as part of the 100,000 Apartments project. The redevelopment costs will come from the MNT800 billion the Government has earmarked for the development of infrastructure in Mongolia, of which MNT32 billion will be spent on railways, MNT330 billion on roads and MNT447 billion on general construction and infrastructure. The official assured people that the price of apartments will be affordable. However, since almost all materials used in construction are imported, there is not much the Government can do to keep prices particularly of cement and steel down, but it will ensure that the importers charge fair prices. All help will be given to local construction material factories, so that national production can meet 70% of domestic demand by 2017. According to him, two other priorities are to train enough Mongolians in construction work so that there is no need to employ Chinese workmen, and to impose a strict quality control regimen. He says the Government decision to let buyers pay only 6% interest on apartment loans may be restricted to only low-income people who will be assigned 15,000 of the 100,000 apartments. The Ministry of Social Welfare and Labor will decide on the criteria to identify low-income citizens. The official feared acquisition of land for apartment projects would become a complicated problem. Ironically, the same department that privatized state land will now have to buy back the same lands for the state.

Source: GOGO.mn

CENTRAL BANK BLAMES EXCESS LIQUIDITY FOR INFLATION Mr. B.Javkhlan, Vice President of the Central Bank, has said inflation at present is the result of excess money supply, rather than of product supply. If the present rise in liquidity were allowed to continue, inflation could rise to 15%-20% by the end of the year. Mr. Javkhlan hoped the recently announced increase in the policy interest rate of the Central Bank will have the expected results.

Source: Zuunii Medee

RUSSIAN PETROLEUM EXPORT BAN DOES NOT APPLY TO MONGOLIA, BUT PRICES RISE The Russian decision to restrict petroleum product export for an indefinite period from May 1 will not affect Mongolia, which receives all its petrol and diesel products from there. The Ministry of Mineral Resources and Energy and the Mineral Resources and Petroleum Authority have reassured people that the Russian Government has officially clarified that Mongolia has been kept outside the purview of the decision. News of the Russian move to halt export led to importers increasing all petrol and diesel prices by MNT80 a liter on April 29 evening. Earlier, Russian Prime Minister Vladimir Putin ordered a big rise in export tariffs for petrol after fuel shortages hit the world‘s largest oil producer. The increase is expected to force the country‘s oil companies to provide more fuel to domestic markets by making petrol exports prohibitively expensive. Russia‘s oil groups began hoarding petrol and shipping more abroad after Mr. Putin in February ordered price controls on domestic sales to shield local consumers from soaring global oil prices as the government battles to curb inflation in a pre-election year. ―We became the world‘s biggest oil producer last year and we cannot allow there to be a deficit of oil or oil products in our country,‖ Mr. Putin told a senior cabinet meeting. He also ordered a delay to a ban on the sale of lower grade Euro-2 standard petrol and its replacement with Euro-3 standard products, which many companies, reluctant to invest in refining, were struggling to meet, and told

the government to consider cutting oil extraction taxes to compensate companies for lost revenues. Read more… The energy ministry had earlier called for a complete ban on petrol exports. Analysts criticised the measures as little more than a sticking plaster that failed to deal with deeper problems, such as oil industry regulation and boosting investment. There was a ―collapse of regulation‖, one said, caused by oil companies‘ abuse of regional monopolies, lack of transparency and incompetence in the federal anti-monopoly service. Russia‘s oil chiefs have been pressing for a root and branch revamp of the tax system for years, claiming the ad hoc revenues-based system of export duties on oil and oil products does not allow them to make predictable forecasts and invest in developing new fields or upgrading refineries. They say that without a deeper review of the system, Russia could lose its position as the world‘s number one oil producer and face decline as existing fields in west Siberia start to run dry.

Source: News.mn, The Financial Times

MAP OF NEW RAILWAY PREPARED Private geodesy companies have prepared a map on a scale of 1:1000 of the proposed 1160-km long railway from Dalanzadgad to Bayantumen, meant to help carry coal from Tavan Tolgoi. Earlier, the Agency of Land Affairs, Construction and Geodesy had prepared a drawing of the railway route as described in the railway policy of the Government. Its way to Bayantumen from Dalanzadgad goes via Tavan Tolgoi, makes a detour to Tsagaansuvarga and then carries on to Sainshand, Baruun-Urt, and Choibalsan.

Source: News.mn

MNCCI TO COOPERATE WITH MONGOL 999 The Mongolian National Chamber of Commerce and Industry has concluded a memorandum of cooperation with Mongol 999 LLC to collaborate in helping domestic businesses buy shares of Erdenes-Tavan Tolgoi LLC. The two will also cooperate to develop SMEs, to establish an SME fund, and to get state support to give the private sector a predominant role in economic development. The two will join hands in a campaign to ensure that mining companies in Umnugobi province worked for environmental rehabilitation.

Source: Undesnii Shuudan

SCHOLARS FOCUS ON VALUE ADDITION IN MINING Several scholars and analysts presented their views at a conference on Friday on ―How to make mining the pivotal force of development‖. The event was organized by the Ministries of Mineral Resources and Energy, of Nature, Environment and Tourism, the Mineral Resources Authority, and the Mongolian National Mining Association. The focus was on developing value added production in the sector, and altogether 30 papers had been submitted on Government policy, on development of scientific mining, on technical aspects of end product processing, on ensuring use of environment-friendly technology in mining, and on using findings of academic research in mining operations. Participants greatly appreciated Dr. B.Purevtogtokh‘s paper on use of technology in Shivee-Ovoo, Dr. J.Dugarjav‘s treatise on developing a coal-based chemical industry, and Dr. B.Elbegzaya‘s assessment of techniques and technologies now used in mining. Three others that dealt with specifics included one on viability of value added production, another on liquefaction of coal, and another on ways to neutralize the sulfur dioxide emission from a copper smelter.

Source: English.news.mn, MNMA

DEATH STALKS MONGOLIA‟S OLDEST MINE AT NALAIKH Mongolia‘s mining sector may be thriving, but Nalaikh, a town once famed as the country‘s industrial hub and the site of its first coal mine, has become synonymous with mining disasters. Yet, with little government oversight, hundreds of informal miners continue to excavate coal there. The former state-run site has claimed 47 lives since 2009, according to an official count. The victims are mostly young men between the ages of 23 and 35. Nalaikh‘s thermal coal, found deep underground, attracts little international or government interest these days. Though the site is large, it pales in comparison with new, easier-to-access finds in the resource-rich country. Today, only informal miners and small companies continue to scrape away at the Nalaikh deposit, working under precarious conditions. Mining at Nalaikh, about 35 kilometers southeast of the Mongolian capital Ulaanbataar, dates back to 1920. And as late as the 1950s, Nalaikh was still the only mine in the country, employing as many as 1,500 people. As the most industrialized town in Mongolia back then, it drew migrants from all

over the country. A fatal methane gas explosion in 1990 killed 21 and forced the government to shut down the mine. ―With the breakdown of Soviet support, we couldn‘t afford the technology required for large scale underground mines anymore,‖ said Mr. Ch. Luvsang, a former employee at the mine and currently chief inspector at the local Geological and Mining Inspection Agency. The government additionally focused its attention and resources on developing less expensive open pit mine sites. Nalaikh still holds about 30 million tons of coal, he says. As the work is informal, the exact number of workers is difficult to pinpoint, but Mr. Luvsang estimates about 2,500 people work at Nalaikh during the peak season from September to May. Read more… After the formal closure of the site and surrounding industries, masses of freshly unemployed and skilled miners turned to illegal mining. By 1994, the government attempted to regain some control by issuing licenses for operations at Nalaikh. ―There are 36 small companies with licenses now, but they all operate the same way -- with minimal safety standards,‖ says Mr. Luvsang. He can do little except issue warnings and provide safety training, he added. Shafts at Nalaikh these days are dug haphazardly and with little coordination among the various mining teams; cave-ins are becoming more frequent as shafts stray too close together and go deeper than ever before. In many instances, miners don‘t bother setting up safety beams, considering them an unnecessary expense. Concern over the increasing number of accidents has the government mulling whether to declare a freeze on all mining at Nalaikh. But miners are unlikely to abandon the site, unless they are presented with a viable alternative to earn a living. ―There are about 200 shafts and each shaft has a minimum of 10 workers -- not to forget all the drivers, middlemen and resellers dependent on this. It would be catastrophic for all of us if the mines are shut,‖ insists Mr. Musa Tuluu, a second-generation ethnic Kazakh miner whose father migrated to Nalaikh in the 1960s. For most workers at Nalaikh, speculation on a mining boom in Mongolia and the Tavan Tolgoi contract stirs little excitement. ―They‘ll most probably get Chinese workers and I‘m too old to dream now,‖ says 47-year-old Quad Byek, a former digger who now runs his own operation at a shaft employing nine men. Though worried about the safety of the team working underground, he admits their main concern is to dig as much coal as possible before the weather warms and the frozen earth thaws. That‘s when the risk of cave-ins increases significantly. Beneath a layer of cynicism, many miners hope for a better life, at least for their families. ―I hope my children don‘t continue the family tradition of mining, but if they do, I hope they find work in big companies where work is easier and safer,‖ said Tuluu, the Kazakh. (A longer version of this article was written by Ms. Pearly Jacob.)

Source: EurasiaNet.org

MONGOLIA IS AWAKENING, BUT LOT MORE LEFT TO BE DONE There are not too many capital cities where you can still see a nomadic herdsman pull up on horseback, in full traditional costume, at the traffic lights not far from the country's parliament and within sight of a Louis Vuitton boutique. Mongol horsemen conquered large regions wearing this traditional garb, but even in Ulaanbaatar the beloved steed is giving way to the 4x4. "Mongolia is awakening. The industry is about to take off. We are just starting out to help the Mongolians find what they've got," says Mr. Robert Wrixon, managing director of Haranga Resources, one of the scores of companies rushing to the capital that people tend to refer to as UB. The new finds keep on coming, but the problem is finding enough qualified locals to staff the mines. "There is a lot of exploration still to be done," says Mr Wrixon. "We have acquired some good-looking iron-ore projects. Now it is the summer, so the next six months will be drilling and exploring. Then we delineate a mine plan and then we try to get it to the market." Haranga raised USD25 million when it listed on the Australian Securities Exchange in December, which gives it a war chest for funding acquisitions. "The price for iron ore has gone up six- or seven-fold in the last few years. Chinese steel mills are predominantly built on domestic iron ore. Mongolian iron ore needs to be exported. Coal is more or less the same story," says Mr. Wrixon. Read more… Mongolia was a province of China until 1911, and again from 1919 to 1921, and a strong dislike of the Chinese lingers in the country. However, the Mongolians have been forced to bury this resentment because China is set to be the prime customer for the country's resources and is Mongolia's largest trading partner. "The resources have to go to China, despite historical antipathies. Mongolia is happy to sell China commodities but is less comfortable about China having majority stakes in resource projects," says Mr. Wrixon.

"This is a frontier town. The positives are that the government is good — the Prime Minister, S. Batbold, is a professional businessman — and commodity prices don't look like they will crater," says Mr. Edward Rochette, a larger than life American who has worked in 56 countries. "The Mongolian government is trying very hard to make things work. The overseas Mongolians are coming back. They make one-tenth of what they were making in Chicago or wherever they were before, but they come back anyway." The country also has one of the highest literacy rates in Asia. These are educable, trainable people. And as for the next stage, the outlook is very positive, and there will be more focus on mining services and infrastructure," says Mr. Rochette. He points out how the number of cars has risen dramatically. Today there are 150,000 cars on the streets; 10 years ago there were 10,000.

Source: The National Conversation

ASIA‟S MANUFACTURING GROWTH SLOWS, BUT DIP SEEN AS TEMPORARY Economic data from around Asia confirm that the region's breakneck growth is slowing, but analysts say there will not be a hard landing and that growth should pick up again in the second half of the year as Japan's post-quake reconstruction spending boosts the whole region. Purchasing managers' indexes from South Korea on Monday and China over the weekend showed growth slowing in April, while a similar gauge from Australia showed an outright contraction for a second-straight month. Meanwhile, price pressures continued to ease in South Korea and Indonesia, perhaps blunting the urgency to tighten monetary policy. The data come amid two conflicting worries: One is that rapid growth in China and other parts of developing Asia is getting out of control and pushing those economies dangerously close to overheating; the second is that in their haste to tighten monetary policy, authorities will overreact and bring their economies thudding to a hard landing, with dire consequences for a developed world relying on Asia for much of its growth impetus. Read more… Two different indexes from China showed the slowing growth momentum. The official index, issued Sunday, fell to 52.9 from 53.4 in March, the China Federation of Logistics and Purchasing said. Any reading above 50 indicates growth, but it was the fourth month of five that growth slowed. A similar index from HSBC and Markit, issued Friday, was at 51.8, unchanged from March but below the long-run average of 52.3. Only India showed stronger manufacturing growth, buffered from global economic developments by its huge and vibrant domestic market. HSBC's PMI for India rose to 58.0 in April, its highest level in five months, from 57.9 the month before. Other data Monday also suggested that the intensity of Asia's growth was easing. Consumer inflation in South Korea decelerated for the first time in five months as fresh food prices stabilized and a stronger currency curbed imported inflation. The CPI rose 4.2% on-year in April, a sharp fall from March's 4.7% increase and below analyst expectations. Core inflation fell in both in on-year and on-month terms.

Source: The Wall Street Journal

U.S. TREASURY PUSHES BACK DEFAULT TIMING The U.S. Treasury department pushed back its estimate for a potential US default to the beginning of August, announcing it would begin taking ―extraordinary measures‖ to protect the country‘s creditworthiness amid a political impasse over fiscal policy. The move will give feuding members of Congress more breathing room to negotiate an increase in America‘s USD14,300-billion debt ceiling, which is expected to be reached by May 16. Republicans have been insisting that a higher limit needs to be tied to strict caps on government spending, while many Democrats and the White House believe that a debt ceiling increase should be approved without any conditions. With little prospects for a deal to be struck by May 16, the Treasury has been ramping up its efforts to delay a potential default for as long as possible. Last month, the U.S. had estimated that in the absence of congressional action, a default could come by July 8. On Monday, it moved that deadline to August 2, on the back of better tax receipts generated by the improving economy, as well as new cash-management measures it is implementing. Treasury Secretary Tim Geithner said that on May 16 he would declare a ―debt issuance suspension period‖ allowing the government to redeem debt held in a civil service retirement and disability fund. He also said it might become necessary to suspend the reinvestment of Treasuries held in the Exchange Stabilisation Fund, a tool used in currency interventions. Mr. Geithner cautioned against any further delays in raising the debt limit. ―The economy is still in the early stages of recovery, and financial markets here and around the world are watching the U.S.

closely,‖ he warned. Source: The Financial Times

U.S. BECOMES NET EXPORTER OF FUEL AFTER 20 YEARS The U.S. has become a net exporter of fuel for the first time in nearly 20 years. Energy department data show the world‘s largest oil consumer in February shipped out 54,000 barrels more petroleum products each day than it purchased on the global market. After a five-year decline in net imports, the U.S. became a net exporter in late 2010, a trend analysts say is confirmed by the latest data. The American Petroleum Institute, an industry group, reported U.S. refined product exports rose 24.4 per cent in the first quarter of 2011 from a year ago, to 2.49 million barrels per day. Imports declined 14.4 per cent to 2.16m b/d. The export increase is led by diesel and finished petrol, data from the Energy Information Administration show. For years the U.S. was not only a net importer of crude oil but also of refined fuels. But oil demand of 19m b/d, while on the rebound, remains 2m b/d below pre-recession levels. Roads are also carrying less traffic than in 2007 and refiners have boosted fuel output. The leading customers for U.S. oil products are in Latin America, where refineries often cannot keep up with fuel consumption. Mexico relies heavily on U.S.-made fuel. Ecuador, a member of the OPEC oil cartel, is also a buyer. U.S. refineries on the Gulf of Mexico are near these markets.

Source: The Financial Times

POLITICS SUPREME COURT REJECTS NEW GROUP‟S CLAIM TO BE KNOWN AS MPRP Following the Supreme Court ruling that Article 15.6 of the Law on Political Parties does not allow the recent political group formed under the leadership of former President N.Enkhbayar to use the name MPRP, MP and Deputy Chief of the group, Mr. Ts.Shinebayar, submitted on Wednesday a plea to the Constitutional Court to strike down the article as it ―violates citizens‘ rights to form a group and to freely elect their representatives‖. The group pleading to be registered as the MPRP comprises mostly of people who were members of the MPRP before it decided to rename itself as MPP. The Supreme Court cited Article 15.6 to rule that breakaway members of a political party could not use the name, symbol, flag, seal or assets of the party if it decided to reorganize itself or change its name. Source: English.News.mn

PEOPLE”S ASSEMBLY ADOPTS NEW PROTOCOL, STAYS PUT IN SUKHBAATAR SQUARE The cold took the People‘s Assembly to UB Palace on Saturday, but it was back in Sukhbaatar Square as the working week began. Former President and Chief of the ―MPRP‖, Mr. N.Enkhbayar, addressed the Assembly on Saturday before it passed Protocol III. Motherland – Independence – Justice, the movement behind the Assembly, later complained that the Mongolian National Public Radio and Television had not broadcast news of the protocol, ―under pressure from people in power who are all guilty of betraying the state and the people‖, and MP Ts.Shinebayar said they would complain to a court about this. He also said when the Assembly will disperse from the Square will depends on the Government‘s response to Protocol III and the demands made in it.

Source: English.news.mn

PRESIDENT FEELS POLITICIANS NOT SERIOUS ABOUT AMENDING CONSTITUTION President Ts.Elbegdorj told some 800 citizens at a meeting in Government House on Saturday that all the talk about amendments to the Constitution was just a ploy to divert public attention from other issues and that the present Parliament had neither the time nor the inclination to discuss the matter seriously with a view to taking a decision. This was the second such annual meeting where citizens asked the President his views on recent events and developments, as part of the participatory democratic process that Mr. Elbegdorj supports and encourages. As he replied to questions on whether Parliament would be more effective with two chambers and other such proposed amendments, the President made it clear that he spoke in his personal capacity and not necessarily as head of state. The issue at stake was politicians concentrating power in their hands, at the cost of the people they ostensibly represented. People must be allowed to participate in the decision making process at all levels, from the remotest local government to Parliament. He wanted politicians to share power with the people, instead of grabbing more authority for themselves. Interestingly, former Prime Minister S.Bayar expressed

similar opinion during a TV interview on the same evening. Source: Undesnii Shuudan

WHY MPs SUPPORT THE PRESIDENT‟S POPULISM The previous Parliament rejected a proposal to provide State support for institutes of higher education amidst whispers that some MPs wanted their private businesses to benefit from state largesse. Public memory being short, today‘s MPs, focusing on the election next year, are racing with one another to press the button to support the President‘s proposal for financial aid from the state budget to all who are enrolled at universities and institutes. There is no provision for the beneficiary to show how he deserves the support, nor any indication where the money is going to come from. Giving MNT70,200 per month to 160,000 students places an annual burden of MNT132 billion on the Ministry of Finance. There is no surprise that support for the President‘s extravagant populism is led by MPs D.Lundeejantsan, D.Oyunkhorol, N.Ganbyamba, and B.Bat-Erdene who are, not so coincidentally, directors of Shikhikhutag, Otgontenger, Jonon, and Avarga universities.

Source: Undesnii Shuudan

PERFORM OR QUIT, MP TELLS OFFICIALS Mr. Z.Altai has demanded the Government‘s resignation for its general inaction, especially over air pollution. Taking part in an open discussion on ―Smokeless Ulaanbaatar‖, the DP MP said there has been no visible result from all the talk over many years about reduction of smoke over the capital. The spirit of work is missing from all programs taken up by the related Ministries and that is why nothing concrete ever emerges from them. ―If the officials cannot achieve results, maybe it is time to give their work to people who can,‖ he said, adding, ―Maybe we shall be here next winter also, talking about the same problem and seeking solutions.‖ One reason why officials take no initiative, he said, is that they prefer to wait for foreign aid agencies such as the World Bank and the Millennium Challenge Corporation ―to give us money and tell us what to do‖. There would not be popular demonstrations, such as the People‘s Assembly, if state officials delivered the goods they promise. The meeting was attended by President Ts.Elbegdorj, Mayor G.Munkhbayar, MPs, and senior officials. The Governor of Chingeltei district, Mr. D.Ganbold, said pollution on the ground is as much a problem as air pollution, though it receives far less attention. Most speakers said work on reducing air pollution should continue in summer also, and not only in winter when it is more acute.

Source: Udriin Sonin

MPs BLAME MEDIA FOR ITS OWN LACK OF INDEPENDENCE Asked as part of the observance of the World Press Freedom day on May 3 about media independence, or the absence of it, in Mongolia, some Members of Parliament said of the two sides in the equation, media organizations were more responsible for the state of affairs than politicians. Mr. D.Enkhbat said political pressure on media organizations was highly exaggerated. In any case, ―politicians have nothing much to do with this because it is the people who work in media organizations who make sure their own interests are not betrayed‖. Media organizations bear the main responsibility for the perception that they are dependent on pressures and patronage from politicians, he said. Mr. Kh.Jekei said ―the media‘s own integrity can keep it immune to pressure‖. Readers will stop patronizing a media publication that is seen to be working to further some special interests. Mr. D.Odbayar was blunter as he blamed media organizations for agreeing to curbs on their freedom. ―They run after politicians, looking for a job when politicians establish their own TV channels and newspapers,‖ he said, adding that this is how ―they make themselves dependent on politicians‖. This can be halted if journalists had better professional training so as not to depend on favors. He also urged media to reveal which politician is behind which group, information that is closely guarded now. ―Politicians should also let it be known which media organization they control, but since they don‘t, the media can take the first step,‖ Mr. Odbayar felt.

Source: News.mn

WEBSITE EDITORS MEET TO IMPROVE QUALITY OF WORK The first meeting of the Websites Union of Mongolia on Tuesday was attended by representatives of 60 organizations, most of which provide news on their sites. This type of journalism is new in Mongolia and the participants discussed their work and problems. They agreed on the need for their sites to be more professionally run, to improve journalists‘ skills, to be more techno savvy, and to pay more attention to respecting intellectual property rights.

Source: Unuudur

MONGOLIA CAN STORE NUCLEAR WASTE SAFELY, FEELS SCHOLAR Academician B.Chadraa has said, in reference to recent reports of Mongolia being approached to allow storage of regional nuclear waste, that while he had no opinion on the political aspects of the decision, he felt, purely on a theoretical level, that ―our country is a good choice for such protected dumping‖. He also favored work to begin on a nuclear power plant without delay. Mongolian uranium will have to be taken to ―reasonably close‖ Irkutsk to be processed, and a plant with 4,800 megawatt capacity will need ―only a truck of coal in a year‖, while a coal plant producing 1,000 megawatts less will need more than 6 million tons annually. The waste can be buried in an area unconnected to groundwater elsewhere. There are many such areas in the country, which is a reason where dinosaur fossils in so good condition are still found here. Besides, nuclear waste is recyclable. Also, allowing other countries to use Mongolian territory to bury their waste reactor fuel would mean huge revenues.

Source: Zuunii Medee

SONS OF D.ENKHBAT DEMAND COMPENSATION OF 3 MILLION EUROs The Chief of Administration at the National Security Council, Mr. B.Khurts, now in a British jail, prepares for the next court hearing on May 13 on his appeal against extradition to Germany, issues related to his role in the abduction of Mr. D.Enkhbat from France in 2003 continue to crop up in Mongolia. The lawyer for Mr. Enkhbat at his trial, and Mr. Enkhbat‘s brother have written to the Human Rights Sub Council of Parliament about how various authorities had acted then. Its chief, Mr. Kh.Temuujin, has forwarded their complaint to the Prosecutor General to consider if any case under the Criminal Law was called for. In another development, the two sons of Mr. Enkhbat, who were young boys when their father died soon after release from prison, have repeated their request to the President that their father‘s name be cleared of any link to the murder of the leader of the democracy movement, S. Zorig, and to take action against officials who violated laws. They have also demanded 3 million euro as compensation for their father‘s death.

Source: News.mn

REPORT RECOMMENDS OVERHAUL OF AUSTRALIAN VOCATIONAL TRAINING SYSTEM The Western Australian Chamber of Minerals and Energy has welcomed the recommendation of a sweeping overhaul of the country‘s vocational education and training (VET) system by skills advisory body Skills Australia. In nationwide review of the Australian VET system, Skills Australia has recommended a series of reforms designed to produce a more flexible and market-orientated education and training system, capable of addressing projected skills shortages arising from demographic and structural changes in the economy. ―Australia‘s VET system has served the nation well, but we now need to take some large strides along a path of reform that will help position the sector to meet the needs of individuals and enterprises in the future,‖ said Skills Australia chairperson Philip Bullock. ―The simple fact is that we need more people with higher level skills. Without significant reform, we risk missing out on many of the opportunities presented by the resources boom, and face the prospect of becoming less competitive in the global economy,‖ he said. Read more… The key recommendations contained in the report include a full public subsidy for those undertaking vocational courses or foundation skills courses, as well as the extension of student start-up scholarships to VET students on youth allowance, Austudy and Abstudy. The report also calls for the creation of an industry-led enterprise skills investment fund that would consolidate a number of existing funding streams and be available to enterprises on a shared-cost basis for skills and workforce development. The report further recommends better targeting and prioritizing of financial incentives for employers, apprentices and trainees so that funds were linked to sustainable careers, as well as a work force development program to lift the professionalism and skills of the VET work force.

Source: Mining Weekly

ANNOUNCEMENTS CHRISTA HASENKOPF‟S LECTURE ON AIR POLLUTION, MAY 12 Dr. Christa Hasenkopf of the University of Colorado and a Fulbright Research Fellow will speak at the American Center of Mongolian Studies at 5:30 PM on May 12 on ―Air Pollution Studies in Ulaanbaatar: First Steps‖ Ulaanbaatar, the engine of Mongolia‘s developing economy, is a prime example of a city that is experiencing rapid population and economic growth but is suffering negative environmental consequences. Due to this growth as well as its geography and climate, Ulaanbaatar has some of the world‘s most polluted air in terms of particulate matter (PM) levels. This talk will paint the current picture of air pollution in Ulaanbaatar, as well as lay out the framework for atmospheric scientist Hasenkopf‘s upcoming yearlong study measuring PM in Mongolia‘s capital. _________________________________________________

RUNGE‟S COURSE ON „MINING FOR NON-MINERS‟, ULAANBAATAR, MAY 19-20 Runge is planning a course on ‗Mining for Non-Miners‘ in Ulaanbaatar, designed for people of a non-mining background who interact with mining personnel. Runge is a world class mining consulting, software and training company with an office in Ulaanbaatar with expat and local staff. The tentative dates are May 19 and 20, with one day focusing on coal mining and the other on metal mining. The course is aimed at providing those from a non-mining background with a comprehensive understanding of the mining industry. After attending it, participants will have a greater understanding of the operational practices pivotal to the mining industry, and will be able to interpret essential terminology and feel more comfortable interacting with core mining staff. The course fee for non-members is USD2,000, but Runge is offering a massive 50% discount to BCM members who pay USD1,000. Response has been extremely positive. The number of participants is limited. Please send your expression of interest via return email by Thursday, May 12, if you are interested in attending this course to saruul@bcmongolia.org, or telephone 332345. _________________________________________________

GLOBAL ALLIANCE PARTNERS CONFERENCE, MONGOLIA INVESTMENT CONFERENCE, ULAANBAATAR, MAY 24-26 Eurasia Capital is hosting the Global Alliance Partners Conference and the Mongolia Investment Conference on May 24-26 in Ulaanbaatar. Through these back-to-back events, Eurasia Capital seeks to draw attention of international and regional investors to Mongolia and its diverse range of investment opportunities. Mongolia has recently experienced impressive economic growth, become the best-performing stock market globally and received record levels of foreign investments. As a result of pro-business reforms pursued by the Government, this resource-rich country has emerged as an attractive investment destination for global strategic and portfolio investors. The two events are intended to increase the awareness of the international investor community about emerging opportunities in this new Asian resource powerhouse. High level government officials, representatives of local business groups, international financial institutions, CEOs of mining and non-resource companies will be among the speakers at the 2nd Annual Mongolia Investment Conference on May 25. They will: provide information on the current market environment and outlook for the Mongolian economy offer insight into industries that are attracting growing interest assess the risks and rewards evaluate the comparative advantages of various business opportunities present a clear understanding of opportunities worth investing in. To download the preliminary agenda please click here http://enews.eurasiac.com/cgi-bin19/DM/t/hIEW0CUnT0Ddg0PLK60EM. For more information and applications please contact: Ms. Zhyldyz Sadyralieva by email: zhyldyz.sadyralieva@eurasiac.com or phone: +976 9906 1673 ___________________________________________ “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 BTV (Business TV) now telecasts a 10-minute English-language news program called BSPOT every evening from Monday to Friday at 21:30, taking most of the stories from the BCM NewsWire. ___________________________________________ NEW POSTINGS ON BCM WEBSITE'S 'PRESENTATIONS' AND 'MONGOLIA REPORTS' Presentations from BCM‘s 4 monthly meetings held in 2011, several from the very successful Mines and Money Hong Kong‘s ‗Mongolia Investment Summit Morning‘ on March 25, by Voyager Resources‘ CEO in both English and Mongolian at a March 16 MICC-sponsored gathering, and Mongolia Reports including the U.S. Embassy Mongolia‘s Commercial Section‘s ―2011 Mongolia Investment Climate Statement‖ are among the items posted on BCM's website (www.bcmongolia.org) in the "Resource, Presentations" and ―Resource, Mongolia Reports‖ sections for your review. We are now posting some news stories and analyses relevant to Mongolia on the BCM website's ‗Mongolian Business News‘ as they come, instead of waiting until Friday to put them all together in the weekly NewsWire. The NewsWire will, however, continue to be issued on Friday, and will incorporate items that are already on the home page, so that it presents a consolidated account of the week‘s events.

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]

March 31, 2011 *8.0% [source: NSOM] *Year-over-year (y-o-y)

CENTRAL BANK POLICY LOAN RATE December 31, 2008 9.75% [source: IMF]

March 11, 2009 14.00% [source: IMF]

May 12, 2009 12.75% [source: IMF]

June 12, 2009 11.50% [source: IMF]

September 30, 2009 10.00% [source: IMF]

May 12, 2010 11.00% [source: IMF]

CURRENCY RATES – May 5, 2011 Currency Name Currency Rate US dollar USD 1,266.63

Euro EUR 1,885.19

Japanese yen JPY 15.78

British pound GBP 2,094.06

Hong Kong dollar HKD 162.99

Chinese Yuan CNY 195.04

Russian Ruble RUB 46.48

South Korean won KRW 1.17

Disclaimer: Except for reporting on BCM‘s activities, all information in the BCM NewsWire is selected from various news sources. Opinions are those of the respective news sources.