BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 250 – November 30, 2012

NEWS HIGHLIGHTS

Business

Further delays to selection of West Tsankhi consortium;

No clear direction on West Tsankhi project, says MNMA;

Erdenes MGL appoints executive director;

Mining Ministry prepares amendment making Khushuut a strategic deposit;

Sanko Solar begins exporting to Japan;

Beef 'O' Brady's expanding to Mongolia;

Guildford takes full control of Terra Energy;

Erdene confirms gold mineralization trend;

Anod Bank trials begin;

Scottish firm to introduce automated maintenance for rail network;

Boroo hosts safety training for ninja miners;

Mongolian Growth Group to present in Los Angeles;

American University of Mongolia appoints COO;

BDSec's new COO sees bright future for Mongolian investment;

Major Drilling Q2 profits declined as projects cancelled, deferred;

Sedgman to buy MDM Engineering for USD109 million;

Former SouthGobi head finds a new home in Kyrgyzstan.

Economy

Mongolia hits it big with USD 1.5 billion international bond offering;

Breaking down the budget;

Banks see major growth in savings;

Mongolia to bolster its welfare payments;

Czech real estate firm to cooperate with government for affordable housing;

The battle to meet energy needs;

Market place risks;

Poverty in the blood;

UB mayor partners with Korea on road development strategy;

Selbe River area declared protected land;

Mongolia's protection of national bird lacking;

Copper, again, is all about China;

Chile's president pins hopes on copper.

Politics

MPs take to the podium on OT investment agreement;

Parliament swears in last five new members;

Preliminary election results show strong win by DP;

Constitutional Court affirms invalidating MPP wins in Uvurkhangai;

Guarantee on bank savings limiting insurance to MNT 20 million nears passage;

UB hosts SEACEN conference;

Ambassadors to China convene in Ulaanbaatar;

Japan looks to Mongolia for environmental pact;

MPs rage against uranium exploration;

Mongolia boosts Third Neighbor policy;

Justice lost in prisons.

ECONOMIC INDICATORS

MSE Top 20 Index by market Capitalization;

Foreign-listed Companies with Mongolian Assets;

Monthly Macroeconomic Overview – October 2012;

Supermarket Price Comparison – October 2012;

Inflation;

Central bank policy rate;

Currency rates.

*Click on titles above to link to articles.

SPONSORS

Khan Bank Eznis Airways

Kempinski Hotel Khan Palace Mongolian National Broadcasting

Breakthrough PR Oxford Business Group

BUSINESS

FURTHER DELAYS TO SELECTION OF WEST TSANKHI CONSORTIUM

Mongolia may delay the selection of companies to develop part of the nation's biggest coal field to

the middle of 2013 from the end of this year, a government mining official said.

Bidders for the West Tsankhi area of the Tavan Tolgoi deposit ―have proposed very attractive offers

that the government will discuss with each of them in detail and decide which offer has higher

value,‖ N. Enkhbayar, head of the economy, finance and investment division in the Ministry of

Mines, said in Hong Kong today. ―We have to take the geographical situation into account and

Chinese companies have big advantages on this.‖

Companies such as Peabody Energy Corp., China's Shenhua Group Corp. and Japan's Mitsui & Co.

have expressed an interest in developing the field. Mongolian President Ts. Elbegdorj set an end-of-

year deadline for picking the successful bidders in July. Successful bidders will have to promise

―maximum returns‖ and no company, including Shenhua, is guaranteed participation, Enkhbayar

said.

Source: Bloomberg

NO CLEAR DIRECTION ON WEST TSANKHI PROJECT, SAYS MNMA

According to the executive director of the Mongolian National Mining Association (MNMA), the

government is showing mixed signals as to how it would like to pursue the West Tsankhi project at

Tavan Tolgoi.

N. Algaa said former Erdenes Tavan Tolgoi (Erdenes-TT) JSC Chief Executive B. Enebish could have

pursued a partnership with Peabody Coal Corp. before his resignation. The government's attempt at

cobbling together a consortium with so many geopolitical interests has failed, he said, so they may

be searching for an international investor.

―It is unclear what policy the Government of Reform will pursue in terms of that and with whom to

cooperate,‖ said Algaa.

Algaa pointed to reports that said Erdenes-TT had to hand over all of its capital to the government

to finance its welfare payments. This has left the company unable to move further in the project

before it selects its investors.

―Our view regarding Oyu Tolgoi and Tavan Tolgoi is we should operate these projects as soon as

possible in order to make shares distributed to the people come alive. We have to take advantage

of this golden time in which natural resources have relatively fair prices on the international

market.‖

Algaa added that the announcement Erdenes-TT had begun development of the west block on its

own caused a stir in the media, as happened when development began at the east block. However,

he said, this is mostly a ―show‖ to attract the interest of foreign investors.

―But how will it proceed if there is absence of investments?‖

Source: Undesnii Shuudan

ERDENES MGL APPOINTS EXECUTIVE DIRECTOR

The Erdenes MGL JSC board of directors has replaced Ya. Dolgorjav with O. Sainbuyan as executive

director.

Sainbuyan was appointed after Ya. Dolgorjav vacated his post last week. Dolgorjav had been the

chief executive of Erdenes MGL since last February. Sainbuyan was a candidate in the parliamentary

elections held last June for Uvs Aimag.

Erdenes MGL is the state-owned holding company that holds interests in projects such as the Oyu

Tolgoi copper and gold mine and Tavan Tolgoi coal mine.

Source: News.mn

MINING MINISTRY PREPARES AMENDMENT MAKING KHUSHUUT A STRATEGIC DEPOSIT

The Minister of Mining is preparing an amendment to present to Parliament that would add the

Khushuut coal mine to the list of strategically important deposits in the Minerals Law.

The minister received the order following the Cabinet of Ministries decision on 17 November that

Mongolian Energy Corp.'s Khushuut mine in Hovd Aimag should be included on the list of strategic

deposits. According to the Minerals Law, such deposits must have a potential impact to the national

security, economic and social development of the country or has the potential to produce or is

already producing 5 percent of annual gross domestic product (GDP). The current list includes 15

strategic deposits, which include Oyu Tolgoi, Tavan Tolgoi, Baganuur, Shivee Ovoo, Boroo and

Tsagaan Suvarga.

The current projection for the Khushuut mine has it producing some 4.3 percent of GDP in its first

year of operations, and has the potential to reach 5 percent in coming years. The mine reportedly

meets all other requirements set by the Minerals Law.

Source: Business News

SANKO SOLAR BEGINS EXPORTING TO JAPAN

Mongolian firm Sanko Solar Mongolia has sent its first batch of solar panels to Japan this week with

the label "Made in Mongolia."

With the slogan "Better than Japan and cheaper than China," the firm has a contract to sell 230-

watt solar panels.

"We have completed the ISO 9001 requirements and International Electricity Committee's TUV

Rheinland Japan standards. So, for the first time in Mongolia, we signed a contract with a Japanese

firm to export 2,500 solar panels monthly until February 2013. Furthermore, we aim to export solar

panels to other Asian countries and Europe."

The firm also produces 65-watt solar panels made to meet the challenges of the Mongolian climate.

Source: Unuudur

BEEF 'O' BRADY'S EXPANDING TO MONGOLIA

Beef 'O' Brady's signed a master franchise agreement with the Cedars Group to open restaurants in

Mongolia over the next few years.

The first unit in the agreement will open in Ulaanbaatar, according to a written statement. Beef

has previously signed a deal for international franchises in Saudi Arabia and Kuwait, which are set

to open in the first quarter of 2013, the statement said.

The Tampa, Florida-based company is also bringing restaurants to Qatar, Oman, Morocco, Jordan

and Lebanon.

Source: Biz Journals

GUILDFORD TAKES FULL CONTROL OF TERRA ENERGY

Guildford Coal Ltd. agreed to purchase the remaining stake of Terra Energy Ltd. for a 100 percent

interest in the Mongolian coal explorer.

The agreement values the 25 percent shareholding at AUD 50 million (USD 52.3 million). Under the

agreement, Guildford will acquire all of the share capital in Terra Energy currently held by Terra

Holdings, making Terra Energy a wholly-owned subsidiary of Guildford Coal. In return Guildford Coal

has paid AUD 3 million in addition to an AUD 2 million payment upon completion of the transaction.

Also, there will be exchanged 40 million fully-paid ordinary shares of Guildford Coal valued at USD

0.76 a share.

There will also be a payment of AUD 15 million via Guildford Coal shares a year after the

transaction, at Guildford Coal's option. Terra holdings will also have the right to appoint one board

member to Guildford Coal.

Source: Guildford Coal Ltd.

ERDENE CONFIRMS GOLD MINERALIZATION TREND

Erdene Resource Development (ERD) Corp. released it final assays from the Altan Nar polymetallic

project in southwest Mongolia.

Six holes were drilled at the ―Discovery Zone.‖ As previously reported, assay results from two 50-

meter step-out holes confirmed the lateral extension of the Discovery Zone to the northeast, with

the intersection of a broad zone of gold-polymetallic mineralization over a 94-meter interval. This

zone averaged 0.45 grams per ton of gold and a 4.5 meter interval at the bottom of the hole

averaging 2.4 grams per ton, 18.8 grams per ton of silver, an 2.8 percent lead and 0.86 percent

zinc.

The remaining four holes intersected mineralization and extended the gold-polymetallic zones to

depths between 160 and 234 meters. Gold mineralization averages included 31 meters of 0.49

grams per ton and five meters of 4.77 grams per ton. Assay results also had been received for the

11 shallow reconnaissance holes, with eight of these holes returning intervals (one to 19 meters) of

0.6 grams per ton or higher.

―The results from the recent drill program are considered excellent, with multiple new gold targets

now firmly established, along with confirmation of the depth continuity and northern lateral

extension of the Discovery Zone,‖ said Peter Akerly, president and chief executive officer.

Source: Erdene Resource Development Corp.

ANOD BANK TRIALS BEGIN

The trials for the directors of Anod Bank on fraud charges began this week at the Bayanzurkh

District Court.

The directors are charged with deceiving the bank's 1,200 shareholders by issuing false stocks. The

Economic Crime Investigation Department at the State Investigation Office arrested head of the

bank's management board E. Guar-Aranz, Chief Executive D. Enkhtur and Secretariat Office

Chairman N. Davaa in 2008. The case against them has been ongoing since their arrest.

Source: News.mn

SCOTTISH FIRM TO INTRODUCE AUTOMATED MAINTENANCE FOR RAILWAY NETWORK

A Scottish engineering firm is in talks with Mongolian authorities to supply robots that could be used

to cut the cost of maintaining the famed Trans-Siberian Railway.

QTS hopes to clinch a deal under which it will supply rail robots to automatic work involved in

keeping the hundreds of miles of track that cross the country in good shape. Developed by QTS, the

remote-controlled robots straddle the rails on treads. They can be used for tasks such as

transporting tracks so the side of the rail that gets worn by the wheels of trains is switched to the

outside.

The firm is in the early stage of talks which are being facilitated by the honorary consul for

Mongolia in Scotland, David Scott. Owned by Alan McLeish, a qualified tree surgeon, the company

plans to move into exports to help maintain the rapid growth rates it has achieved in recent years.

Source: Herald Scotland

BOROO HOSTS SAFETY TRAINING FOR NINJA MINERS

Boroo Gold Co. recently hosted a training session on occupational safety for artisanal miners.

The training was one of several Boroo Gold has held on similar topics. This event allowed the so-

called ―ninja‖ miners to learn about safe methods for mining at the Boroo Gold site in Selenge

Aimag, said B. Tuya, head of the Duush Mandal Khairkhan non-government organization (NGO). She

said that activities such as these were necessary as artisanal miners need regulations and training.

―Artisanal gold miners should be regulated. We have noticed an improvement in the living

conditions of micro miners because they organized into cooperatives,‖ said Tuya.

The NGO head said the fact that artisanal miners could afford to purchase vehicles, apartments and

contribute to local development were indications of improved living conditions.

Source: Boroo Gold Co.

MONGOLIAN GROWTH GROUP TO PRESENT IN LOS ANGELES

Mongolia Growth Group Ltd. will attend the LD Micro Conference in Los Angeles, California in the

U.S. from 5 to 6 December.

The real-estate focused investor's chief executive, Harris Kupperman, will present the company to a

group of investors at the conference. The conference's organizers have invited 144 companies and

over 200 institutions focused on small and micro-cap names. Last year, a record 580 people

attended the event.

Source: Mongolia Growth Group Ltd.

AMERICAN UNIVERSITY OF MONGOLIA APPOINTS COO

American University of Mongolia Chairman J. Peter Morrow announced the appointment of Ts. Bujin

as chief operating officer.

Bujin is a management expert with more than 15 years of experience in the public sector, health

management, and financing, both in government and non-government organizations. Since 1999 she

has been actively involved in public and social sector reform initiatives in Mongolia with a focus on

public sector performance, strategic planning, health management and financing.

Bujin's appointment will allow executive director R. Bat-Erdene to focus his attention on external

affairs, with particular focus on AUM's relationship with Mongolian and U.S government entities and

other educational institutions.

Source: American University of Mongolia

BDSEC'S NEW COO SEES BRIGHT FUTURE FOR MONGOLIAN INVESTMENT

Nick Cousyn has joined BDSec JSC as its first native English-language speaking employee to help

bolster its research department.

―For those who follow Mongolia closely, they know BDSec is the dominant broker in the country, to

say the least. BDSec's market share of traded volume on the MSE is now 85 percent, up from 68

percent in 2011,‖ said Cousyn. ―However, we did not have a research product that was up to

international standards, that's where I came in.‖

With 10 years of experience selling research to institutions, Cousyn hit the ground running at BDSec,

publishing 12 reports in the four months since he joined the team. He said he was excited by the

opportunities Mongolia posed due to the enormous growth being experienced in the capital

markets.

Cousyn also commented that there seemed to be signs that life was improving for Mongolians

compared to when there was communism and parents had to work in other countries to provide for

their families. He cited the fact that Mongolia was aiming to double the gross domestic product

(GDP) per capital average within five years. There also seems to be a genuine preference for the

capitalist system that has since been put in place, he added.

―They want nothing to do with socialism, corruption, or large government,‖ said Cousyn talking

about the Mongolian people, in general. ―And if politicians don't recognize this, then they will be

voted out by these young people who are a huge part of the electorate.

Source: Seeking Alpha

MAJOR DRILLING Q2 PROFITS DECLINED AS PROJECTS CANCELLED, DEFERRED

Canadian mine drilling equipment and services provider Major Drilling Group International has

reported a 29 percent decline in second-quarter earnings, saying mining companies did not extend

drilling activities beyond original budgets and projects were deferred or cancelled.

The company also warned it expected to generate a seasonal loss in the current third quarter as is

had historically been the company's weakest quarter of the financial year, as mining and

exploration companies shut down, often for extended periods over the holiday season.

"Holiday breaks are expected to be longer this year and November will not have the benefit of the

program extensions that we had last year," Major Drilling's Chief Executive Officer, Francis McGuire,

said.

The company expected operations would recover to second-quarter levels during the fourth

quarter. However, McGuire said he felt the second quarter was in general a very good quarter,

being its fourth-best quarter ever. He pointed to the significant free-cash flow the company

achieved in the period, improving the company's net cash position by USD 43 million-to end the

period at USD 30 million.

The company's consolidated revenue declined by 7 percent to USD 199.6 million, compared with

USD 213.9 million recorded for the same quarter last year. Net earnings were USD 22.3 million, or

USD 0.28 a share, for the quarter, compared with net earnings of USD 31.6 million, or USD 0.43 a

share, for the comparable period in 2011. Analysts had expected earnings of 33 cents a share.

McGuire said Major Drilling intends to grow its global market share in the coming year by focusing

on specialized drilling.

"Specialized drilling is difficult and there are significant barriers to enter the market. As all the

"easy" deposits in the world have by this time been found, we are asked to drill deeper into the

ground, at higher altitudes, in colder places and in other more inhospitable places," he said.

Source: Mining Weekly

SEDGMAN TO BUY MDM ENGINEERING FOR USD 109 MILLION

The contractor who built Energy Resources LLC's first two coal washing plants, Sedgman Ltd., has

agreed to buy South Africa-based minerals process engineering and project management company

MDM Engineering for USD 109 million.

ASX-listed Sedgman and London-listed MDM entered into a merger agreement, which would see

Sedgman's wholly owned subsidiary Sedgman Africa Investments merge with MDM Engineering. MDM

Engineering Chief Executive Officer Martin Smith said the proposed merger, which would position

MDM Engineering within the larger Sedgman consolidated group, would boost the firm's ability,

support, and resources in the undertaking or targeting of increasingly complex and larger-scale

projects in Africa.

―The MDM board views the merger with Sedgman as providing MDM shareholders with the certainty

of 100 percent cash consideration for independent shareholders at a significant premium and

immediate liquidity for their MDM shares,‖ MDM chairperson Bill Nairn said.

The merger would also depend on an undisclosed minimum working capital, surplus cash and order

book requirement.

Source: Mining Weekly

FORMER SOUTHGOBI HEAD FINDS A NEW HOME IN KYRGYZSTAN

Alexander Molyneux, the former president and chief executive of SouthGobi Resources Ltd., has

taken a top position at an Australian firm exploring for coal in Kyrgyzstan.

Celsius Coal Ltd. appointed Molyneux as executive chairman, citing his experience overseeing

growth at SouthGobi Resource's projects in Mongolia and time spent working in the region.

―Under his leadership, SouthGobi grew to become the largest foreign operator in Mongolia's coal

sector,‖ said Managing Director Grant Thomas. ―He was also instrumental in SouthGobi completing a

sovereign wealth fund financing and main board listings on the Toronto Stock Exchange and then

subsequently Hong Kong Stock Exchange.‖

Source: Celsius Coal Ltd.

ECONOMY

MONGOLIA HITS IT BIG WITH USD 1.5 BILLION INTERNATIONAL BOND OFFERING

Mongolia, a country that has been rescued five times in 22 years by the International Monetary Fund

(IMF), sold USD 1.5 billion in debt Wednesday in its first government bond offering.

The sale, equal to nearly one-fifth of the size of Mongolia's economy, is akin to the U.S. government

borrowing USD 2.5 trillion in one bite.

"This is a big-bang entry into global capital markets," said Jan Dehn, co-head of research for

Ashmore Investment in London, which manages USD 68 billion and had planned to buy the bond.

Mongolian officials, who have been visiting investors this week to drum up demand, sold more than

80 percent of the two-part deal. A USD 500 million, five-year bond sold at its launch price of 4.125

percent yield. A USD 1 billion, 10-year bond sold at 5.125 percent, according to people familiar with

the deal. The interest was a sign of the hunger among global bond buyers for any investment that

offers a relatively high yield.

Buyers defied nagging worries about whether Mongolia, a country wedged between China and

Russia, is a good investment. The nation's foreign-exchange reserve is shrinking, inflation is at

double digits and the stock market has fallen 30 percent this year. The government also has made

several decisions seems as unfriendly to business.

By comparison, Italy's benchmark 10-year bond trades with a yield of about 4.75 percent and

Zambia's 10-year bond, sold in September, yields 5.625 percent. Standard & Poor's Ratings Services

rates Mongolia BB-, a noninvestment grade rating, similar to Bangladesh and Georgia. Moody's

Investors Service rates Mongolia B1.

The attraction is the mining boom in Mongolia, but the country has run into unanticipated speed

bumps. Growth is expected to "slow" to 12.7 percent this year, according to the IMF. The

government's deficit is expected to rise to almost USD 650 million, or 7 percent of GDP. Falling

global commodity prices have hit Mongolia's mining industry hard. Meantime, government spending

increased 42 percent in the first eight months of the year, according to the World Bank. To cover a

drop in tax receipts, the government borrowed USD 145 million from the Central Bank, while giving

civil servants pay increases of more than 50 percent. Inflation is running at 15 percent.

Robert Abad, manager of the USD 516 million Western Asset Emerging Markets Debt fund, said he

didn't participate in the Mongolia bond issue. He said a first-time sovereign issuer with rapid growth

but an unstable fiscal history needs to provide higher premiums to justify the risk. "That premium

was there in this issue," he said.

A weakening currency could also hamper Mongolia's ability to pay back the bond. The Mongolian

Central Bank has spent USD 800 million in currency markets to prevent the tugrug from losing value

against the dollar. Net currency reserves have dropped to USD 1.4 billion, a two-year low, according

to the IMF. Government moves haves soured the foreign-investment climate. Foreign direct

investment is expected to be around USD 3 billion this year, said a Mongolian government official,

down from USD 4.6 billion last year.

Source: Wall Street Journal

BREAKING DOWN THE BUDGET

A close inspection of next year‘s budget has shown poor development and overly optimistic

projections.

The 2013 budgets totaled some MNT 7.1 trillion, 28 percent greater than last year's budget, with 99

percent growth coming from increased taxes. Total expenditures were 7.45 trillion, 18 percent

higher than 2012. Revenue generated from taxes comprised 24 percent of total revenue, with 80.4

percent of that to come from renegotiated terms to the Oyu Tolgoi copper and gold mine.

There was some confusion over whether or not the added taxes were present in the budget, as it

was placed under "Other Tax Items" in the "Other Revenue" category of the budget, making it

difficult for some analysts to spot. The current budget will bear the risks of weakening coal prices

and softened demand. Although there are signs of economic recovery in China on the horizon, with

the new government expected to stimulate growth, the poor performance of the coal market is

expected to adversely affect tax income. Another risk is import growth projections of 17 percent in

2013, which will likely be lower and would affect income from value-added tax (VAT).

Renegotiations of the Oyu Tolgoi agreement would bring an addition MNT 445 million to the

government. The current budget deficit of more than MNT 1 trillion is considered a worst-case

scenario, showing that regardless of the outcome of the investment agreement, the budget was not

planned well and "looks unfeasible," said Analyst Vidur Jain.

"We think there are two possible ways things could go forward from here,‖ said Jain. ―One is the

government will change the budget; the 2012 budget was amended three times throughout the

year. Or the government could strike a deal with OT (public or non-public), where they offer some

other future benefits in return for the renegotiated IA (perhaps similar to what the Chilean

government offered their copper mining companies in 2010).

Source: Monet Capital

BANKS SEE MAJOR GROWTH IN SAVINGS

Total savings in banks has grown by 24.5 percent from last year, reported the Bank of Mongolia.

Total savings growth reached MNT 917 billion, with personal savings growing by MNT 373.6 billion to

MNT 2.8 trillion. U.S. dollars constituted 32 percent of all savings, with the remaining savings

denominated in Mongolian tugrug. Total savings denominated in the tugrug fell by 7.8 percent

compared with a year ago, showing more interest in holding dollars.

Source: Zuunii Medee

MONGOLIA TO BOLSTER ITS WELFARE PAYMENTS

The government has decided to once again step up its welfare efforts with larger welfare payments.

Greater financial assistance would be granted to the 23,300 citizens requiring constant care,

doubling payments to MNT 60,000. Assistance to households with three or more children, too, would

see payments double to MNT 120,000. One time payments to families whose homes were destroyed

in disasters and to children under 18 years old would amount to MNT 180,000 rather MNT 120,000.

Families with twins or triplets will have payments boosted from MNT 120,000 and MNT 180,000 to

MNT 1 million or MNT 3 million, respectively.

The disabled will receive MNT 20,000 compared with 10,000 before. Disabled children will receive

MNT 200,000 compared with MNT 90,000 for annual transportation costs.

Individuals recognized by the nation for extraordinary achievements will also see greater

compensation from the state. Award recipients and aged revolutionary activists are set to receive

MNT 150,000 compared with MNT 100,000 before.

Source: Zuunii Medee

CZECH REAL ESTATE FIRM TO COOPERATE WITH GOVERNMENT FOR AFFORDABLE HOUSING

A Czech real estate development company signed a contract last Friday for the construction of

affordable housing.

Apartments will sell at USD 550 per square meter. As the government has acknowledged the need

for affordable housing, it has promised to support the project to ensure that building standards are

met, despite the cheap price for sale. The Czech firm has experiencing implementing similar

projects in Kazakhstan.

In a related effort to help provide more housing to citizens, the government has established the

National Housing Committee, which must report to the prime minister and a working group based at

the Ministry of Urban Development.

Source: Unuudur

THE BATTLE TO MEET ENERGY NEEDS

Mine-golia, the nicknamed coined for Mongolia since its resource boom, is feeling the effects of its

aging power grid.

Locals in Khanbogd Soum lack access to the country's central heating system, instead using

traditional coal-fired stoves to stay warm in the winter months—which can see temperatures drop

as low as minus 40 degrees Celsius. Meanwhile, in the capital, coal-fired power plants built during

the Soviet era fail to meet the daily energy capacity during peak morning and evening times, and

electricity has to be imported from Russia.

With limited domestic fuel resources, Mongolia—a former Soviet satellite—is almost 100 percent

dependent on former ―big brother‖ for imports of petroleum products.

―Dependency on Russia for oil products, and the Central Energy System's frequency regulation

dependency are the two main factors impacting on Mongolia's energy independence,‖ said G.

Yondongombo from the National Society for the Development of Energy Industry. ―A third factor has

emerged, however, and that is the deficit of energy production and supply to domestic needs.

Forty kilometers from Khanbogd is Rio Tinto PLC's USD 6 billion gold and copper project, Oyu Tolgoi.

The mine alone requires 450 megawatts—a huge proportion given Mongolia's entire generating

capacity is 850 megawatts. Infrastructure shortcomings forced the company into negotiations with

China to supply electricity to the mine for its 2013 start date. Importing electricity from China is

only a short-term fix, while the company builds an onsite power plant.

There is also a battle against fuel dependency on Russia. The capital is planning to build an oil

refinery in an effort to meet domestic demand and reduce reliance on Russia; but this may not be

the best solution, according to industry experts.

―The country is well endowed with coal resources, which must be exploited in order to enhance

energy independence,‖ said Yondongombo. ―The most prospective and efficient solution to

domestic oil product needs is the exploitation of coal-bed methane and production of liquid from oil

shale via in-situ technology.‖

This year, the newly elected government signed a memorandum of understanding with Germany's

ThyssenKrupp Uhde to build a coal-to-liquid plant.

Source: South China Morning Post

MARKET PLACE RISKS

Today‘s bleak perspective of the world has led one economist to call for greater accounting for risks

in the market place.

B. Erdenbat, a professor at the School of Economics at the National University of Mongolia, found

that the financial market currently stands at a starting point for new development. However,

before that can happen national debt, individually held debt, and inflation must be addressed. The

volume of debt has double over the last two years. Yet, according to Erdenbat‘s report, nearly none

of the money borrowed has been used to improve national industry, which would provide

employment and added value to exports.

The Central Bank is currently the target of criticism because it has failed to live up to its promise to

keep inflation within the single digits. If it could manage to reduce inflation, interest rates could

fall as well. Developed nations perhaps provide more accountability to their Central Bank than

Mongolia does. For example, Great Britain must deliver a statement to citizens explaining its

policies and why it might have missed targets.

The current levels of inflation are much higher than in 2000, with real inflation having doubled

since then. This leads to less tourism and more expensive exports. This has led to growth driven

mainly by inflation, said Erdenbat.

Mongolia has what is called a ―raw material currency‖ because the strength of the tugrug is directly

related to commodity prices. In 2008, when commodity prices experienced a sharp fall, the

currency sank with it. The country should learn from what happened next when it spent 50 percent

of its reserves selling U.S. dollars that year. So much was spent trying to keep the tugrug at a target

level that eventually it led to disaster in 2009 when reserves became too small. Now that the Bank

of Mongolia has been able to build up its reserves once again, it should not make the same mistake.

Source: Mongolian Economy

POVERTY IN THE BLOOD

Skyscrapers surround Sukhbaatar Square. One of those is Central Tower, home to luxury shops such

as Louis Vuitton and a restaurant that serves fine French wine and tenderloin steak. Outside the

city center, however, is a very different picture where some make a living selling scraps of meat,

often as dog food, for a mere MNT 650 a kilogram.

According to S. Davaasuren, one of the few experts in poverty in Mongolia, poverty is climbing

alongside growth. She said poverty has grown to 30 percent in Mongolia, with 30 percent living in

―deep poverty‖—with salaries MNT 25,600 less than that of the average poor. Policy makers have

promised to address poverty, but so far those promises have been little more than lip service.

Ignoring the issue puts the future of children in jeopardy, as they are likely to inherit their parents‘

poverty conditions.

―I‘m afraid that poverty will continue to be inherited. If you have a poor life, your children will live

poor as well,‖ said MP B. Bat-Erdene.‖

According to the National Statistical Office (NSO), one of every two citizens in the country side and

one of every three people in the city are poor. The place someone is born and lives has a huge

effect on the opportunities that person is afforded—including quality of life, education, and job

opportunities. This has led to a mass exodus to Ulaanbaatar. Nationwide jobs have become too few.

Worse still, Davaasuren said that the cash handouts from government have given little incentive to

find work.

―For some families, a cash allowance [from the government] is the only income. When people earn

money just by sitting at home, they lose their desire to work,‖ she said.

Perhaps Mongolia can learn from countries such as the Netherlands, which provides government

assistance only to citizens who need it rather than to everyone. It also targets unemployment as a

major priority.

As for Mongolia, it needs to spend a little more time focusing on creating a sustainable middle class,

rather than policies that only exacerbate the gap between the rich and poor.

Source: Mongolian Economy

UB MAYOR PARTNERS WITH KOREA ON ROAD DEVELOPMENT STRATEGY

Ulaanbaatar Mayor E. Bat-Uul met with South Korean Delegates to discuss the development of the

city's road network.

Bat-Uul met with the chairman of the Transport Institute of South Korea last week where a

memorandum was signed for experience sharing and cooperation. The development of Ulaanbaatar's

roads and garbage management were two problems of chief concern for Mongolia. The lead

delegate, who has experience in reducing heavy traffic in Seoul, suggested the distribution of

identification cards for public transportation and moving the bus lane to the middle of the road.

Source: News.mn

SELBE RIVER AREA DECLARED PROTECTED LAND

The Citizens' Representative Parliament has confirmed a petition by the Environmental Protection

Agency (EPA) for the protection of the Selbe River area.

The Selbe River, situated between the southern Khenti Mountains, covers an area of 2,071.5

hectares and is the most densely populated area by ger camps. The agency observed that the level

of soil contamination of the river increases as it nears the city center.

The biggest impact of the decision is the canceling of the 70-hectare license for an unfinished ski

resort, held by Safe Field LLC. The decision was made on the grounds that construction was never

permitted for the ski resort and it is the site of seven species of plant life. The area is also the

habitat for hedgehogs, hares, squirrels, foxes, and wolves.

The area would be under the protections of the Office of the Mayor.

Source: News.mn

MONGOLIA'S PROTECTION OF NATIONAL BIRD LACKING

Although Mongolia saw fit to honor the saker falcon by naming it the national bird, it has done little

in its measure to actually protect the species.

The saker falcon has been one source of revenue for the Mongolian government, as it allows its

trade to certain countries with expressed permissions. However, the real threat to the animals, said

S. Gombobaatar, a professor at the Omithological Laboratory and School of Biology and

Biotechnology at the National University of Mongolia (NUM) is that the construction of new

infrastructure has not been planned for the bird's habits. This is a much larger concern.

―Currently Mongolia won't prohibit the trade of falcons and when there is enough reserves of the

falcon, it wouldn't' be wrong to allow falcon trade with proper management... the falcon, our

national bird, is perishing by the thousands through electrocution from high voltage power lines,‖

said Gombobaatar.

The researcher suggested the construction of protective barriers to protect birds from flying into

the power lines for that specific problem. There is also need for further study of the falcon's

population size and if trade is sustainable and if the species' number has been affected by rapid

economic growth in Mongolia.

Source: UB Post

COPPER, AGAIN, IS ALL ABOUT CHINA

The global copper market is counting on China's once-in-a-decade leadership change to turn the

tide for prices.

Since hitting a record USD 4.6495 a pound early last year, futures prices for the industrial metal

have sunk 25 percent as the global economy has sagged. Particularly worrying is that growth has

slowed in China, which consumes 40 percent of the world's copper output. China this year

announced a series of infrastructure projects that would require massive amounts of copper, which

is widely used in construction and manufacturing. Yet the latest push to spend on new railroads,

power grids and other projects has not yet translated into shovels in the ground.

Now, with the transition of government power complete, market participants believe Chinese

officials will flip the switch on copper-intensive construction—and are forecasting higher prices for

the metal. At the weeklong 18th Communist Party Congress, Xi Jinping was selected to take over as

Communist Party chief last week and president in the spring, as expected. One of his challenges

will be the economy, which has growth heading for below 8 percent for the first time in a decade.

―Many observers felt [China's] current leadership held off on more dramatic stimulus packages so as

not to saddle the new regime with huge financial commitments,‖ said Jason Hughes, head of

premium client management at IG Markets Singapore. ―But when the change in leadership happens,

the policy-easing button could be pushed again.‖

Although 2012 is not likely to see any fresh stimulus announcements, new measures should be

launched in 2013, said Li Yusheng, senior copper market analyst at Chinese state-owned metals

consultancy Beijing Antaike. Beijing Antaike expects Chinese copper demand should grow 5.3

percent next year compared to just under 5 percent in 2012, he said.

Source: Wall Street Journal

CHILE'S PRESIDENT PINS HOPES ON COPPER

President Sebastián Piñera of Chile, one of the world's fastest-growing economies with many

parallels to Mongolia, puts more stock in China's continued rise than in Europe and the United States

returning to strong growth.

―It will not be a joyous 2013 for the world economy,‖ Piñera said.

Despite a strong record of about 6 percent annual growth in domestic product during his two and a

half years in office, he said: ―We are very dependent on the international economy... We will be

affected if [the global crisis] gets worse or lasts too long.‖

Piñera is confident, however, in the mainstay of the Chilean economy—copper exports. China's

planned shift from investment to consumption-driven growth will not significantly reduce the

demand for Chilean copper, he said.

Much of Chile's trade involves commodity exports to China. In Chile (like Mongolia) ―everything is

vulnerable to China—it is our largest customer,‖ said Piñera.

While he expects China to continue decelerating, he does not worry that the power transition in his

largest trading partner and an expected rebalancing of the Chinese economy will bring an end to

the copper export boom. His government has lowered its expectations for the mining sector, but

said he thought copper would ―stay above USD 3 a pound.‖

Source: Financial Times

POLITICS

MPS TAKE TO THE PODIUM ON OT INVESTMENT AGREEMENT

A debate on the future of the Oyu Tolgoi investment agreement has borne mixed results from the

populace.

A televised debate held last Friday evening between MPs S. Ganbaatar and S. Bayartsogt had the

two contenders battling it out with their words over whether Mongolia should be pursuing any

amendments to the terms of the Oyu Tolgoi investment agreement. An editorial in Udriin Sonin

commented that Bayartsogt presented an investment agreement that was fair and that 51 percent

ownership by Turquoise Hill Resources Ltd. prevented government from restructuring management

every time it changed hands. Also, a mining company leading decisions was in the best interest of

the project. However, whether or not viewers were convinced of this is unclear.

A final opinion poll from News.mn found that 51 percent were in favor of Bayartsogt, 46 percent

favored Ganbaatar, and 3 percent were undecided, reported BDSec. Both BDSec and a second

investment bank, Monet Capital, sent their teams to look at various data compiled from Facebook.

Monet reported that another poll found 57 percent of viewers voted on the page for News.mn that

the current agreement should stay intact. However, after combing through comments, BDSec found

that some 90 percent of comments on the same page were in praise of Ganbaatar. The relevance or

accuracy of such data is debatable, admitted both banks.

―The fact that these voters have had access to Internet would imply that they are the wealthier

demographic benefiting in some way from the mining wealth and likely to be more educated. Thus

there is likely a sampling bias, and we think the overall consensus is still most likely to be skewed

towards renegotiating the contract.‖

Source: BDSec JSC, Monet Investment

PARLIAMENT SWEARS IN LAST FIVE NEW MEMBERS

Five new members were sworn into Parliament on Wednesday.

The newest MPs to join Parliament are Ts. Oyunbaatar (Mongolian People's Revolutionary Party

(MPRP)) and D. Sarangerel (Mongolian People's Party (MPP)) and D. Arvin (party unspecified). Also,

G. Batkhuu and D. Zorigt join Parliament as the two Democratic Party (DP) members to take the

seats representing Uvurkhangai Aimag. Those seats were taken away from the MPP and awarded to

the DP after the General Election Committee found there was voter fraud in the June Election.

A newcomer to the political arena, Oyunbaatar's swearing in was originally postponed due to the

incarceration of former President and MPRP leader N. Enkhbayar. This election makes D. Arvin's

fourth time elected into office. Originally she was elected to represent her home province of Kentia

Aimag, but now she represents the Bayanzurkh District of Mongolia in her campaign against the

former governor of the district. Sarangerel is a former journalist at TV-5 and is a former secretary

general for the MPP. Sarangerel replaced U. Khurelsukh who resigned on 2 November.

Arvin and Sarangerel bring the number of female MPs to 11.

Source: News.mn

PRELIMINARY ELECTION RESULTS SHOW STRONG WIN BY DP

Preliminary tallies of last week's election awarded 12 provinces to the Democratic Party (DP) and 9

to the Mongolian People's Party (MPP).

The preliminary results were released on 27 November, showing that the DP won the Khan-Uul,

Chingeltei, Nalaikh, Bagakhangai districts in Ulaanbaatar. The MPP only managed to take Baganuur.

The winner of the remaining four districts will be decided by run-off elections.

Results have still not shown which parties won in how many of the total 363 towns in Mongolia. By

some analysts‘ estimates, the DP won some 200 towns.

Source: Udriin Sonin

CONSTITUTIONAL COURT AFFIRMS INVALIDATING MPP WINS IN UVURKHANGAI

The Constitutional Court affirmed the ruling that Mongolian People Party (MPP) Parliament

candidates N. Tumurkhuu and S. Chinzorig broke the Election Law and their wins were invalid.

The court decision was the last word on the case, with no other opportunities for appeal. Soon

Mongolian Parliament will begin with full attendance, with all disputes and run-off elections now

resolved.

Source: Udriin Sonin

GUARANTEE ON BANK SAVINGS LIMITING INSURANCE TO MNT 20 MILLION NEARS PASSAGE

The Bank of Mongolia's proposed law to extend the guarantee on savings accounts in banks has been

pushed forward closer to passage by Parliament.

The law extends the government guarantee on bank deposits while limiting insurance only to MNT

20 million in the event a bank declares bankruptcy. The extension will add the guarantee for

another year.

Mongolia has a total of MNT 5 trillion in bank deposits, 40 percent of which are covered by the

insurance fund. Also, between 80 and 90 percent of bank deposits are owned by 2 or 3 percent of

all deposit holders.

The vast majority of Parliament approved the proposal with some opposition coming from MP G.

Uyanga of the Mongolian People's Revolutionary Party (MPRP).

Source: Unuudur

UB HOSTS SEACEN CONFERENCE

The 48th Conference of the Governors' of the South East Asian Central Banks (SEACEN), High Level

Seminar and 32nd Meeting of the SEACEN Board of Governors were held recently in Ulaanbaatar.

The principle objectives of this seminar were to provide a forum for exchanging views and sharing

experiences among the SEACEN countries about the regional and international financial issues,

financial contagion and volatility capital flow, regional and global liquidity arrangement, responses

to external shocks and rethink the new financial architecture. The keynote speaker at the

conference was Prime Minister N. Altankhuyag.

Ajith Nivard Cabraal, governor of the Central Bank of Sri Lanka chaired the high-levels seminar of

the Conference on the subject ―Regional and Global Liquidity Arrangement: Responses to External

Shocks‖ where a discussion was had by Choongsoo Kim, governor of South Korea 's Central Bank, and

Yi Gang, deputy governor of China's.

Source: Sunday Observer

AMBASSADORS TO CHINA CONVENE IN ULAANBAATAR

Fifteen European ambassadors to China and representatives of the Mongolian government gathered

in Ulaanbaatar during the past week for an annual fact-finding visit.

The delegation also had high-level meetings with officials from the Mongolian government,

including President Ts. Elbegdorj and Prime Minister N. Altankhuyag. As part of their three-day

visit, the envoys also attended the opening of the third EU Film Festival in Mongolia.

Source: Business Mongolia

JAPAN LOOKS TO MONGOLIA FOR ENVIRONMENTAL PACT

Japan is seeking agreements with Indonesia and Mongolia to help offset its greenhouse gas emissions

by the end of the year, a government official said.

Japan wants to sign the technology-transfer pacts with the countries by the end of this year,

Masaya Okuyama, an environment ministry official in charge of climate change, said. Japan is also

trying to get similar agreements with Vietnam and Bangladesh by early next year, he added. Tokyo

is developing a bilateral offset-credit mechanism to cut carbon dioxide output by setting up energy

management systems and forest protection projects in developing countries with Japanese

technologies. Japan has conducted feasibility studies in 30 countries, according to the foreign

ministry's website.

Japan aims to use the mechanism to complement the Clean Development Mechanism, a United

Nations-backed program that is one of the pillars of the global carbon market. At U.N. Climate talks

in Doha, Japan will promote the bilateral program as a way to reduce greenhouse gases,

Environment Minister Hiroyuki Nagahama said.

―If Japan's technologies provided to other countries can reduce the impact of carbon dioxide, that

means Japan plays an important role as a developed nation,‖ he said.

Source: Business Week

MPS RAGE AGAINST URANIUM EXPLORATION

MP J. Batzandan has submitted a request to Prime Minister N. Altanhuyag for a new policy on

radioactive minerals.

―Our country has only a population of 2.8 million, and, yet, 94 licenses of radioactive minerals have

been granted.‖

Batzandan said the number of licenses issued was a sign of ―widespread corruption and bribery‖

within the sector. He recommended an investigation be enacted and that licenses for sites in

Dornogobi and Sukhbaatar Aimags be suspended.

―We Mongolians are perfectly able to live safely without digging our soil,‖ he said.

MP. M. Batchimeg chimed in on Batzandan's criticisms, saying government has been inactive in this

area since passing introducing policy to the sector and creating the Atomic Energy Agency.

Building a nuclear power plant may have many risks and dangers. The decision to establish this

plant must be concluded only after detailed research and complex planning.

Source: News.mn

MONGOLIA BOOSTS THIRD NEIGHBOR POLICY

Mongolia's entry to the Organization for Security and Cooperation in Europe is its latest effort to

implement the ―third neighbor‖ policy, which is to strengthen cooperation with Western countries

and major international bodies other than its neighbors China and Russia, analysts said.

Mongolia last week on Wednesday was ratified to become the 57th member of the world's largest

regional security organization. It has been the Vienna-based OSCE's Asian partner since 2004.

Analysts said developing ties with the West has been the priority of Ulaanbaatar's diplomacy since

the end of the Cold War due to the landlocked country's concerns about the influence of

neighboring powers and the West's increasing attention to the Asia-Pacific region.

But the Mongolia that suffered historically from external control is unlikely to lean totally toward

any party. While trying to get rid of lingering influence of Russia, it also worries a great deal about

the possibility of being economically controlled by China, its largest trader partners and foreign

investor, said Na Lin, a researcher at the School of Mongolian Studies at the Hohhot-based Inner

Mongolia University. The unique geopolitical opportunity Mongolia presents makes it an essential

partner for those wanting to hedge against the influence of either China or Russia, or both, J.

Berkshire Miller, a political analyst on the Asia Pacific for the Tokyo-based Diplomat, said in a blog

earlier.

Burgeoning relations between Mongolia and the West were underlined by Ulaanbaatar's participation

in the 2012 NATO summit in Chicago this May, with Individual Partnership and Cooperation Program

Status. Both sides in March also signed their first bilateral cooperation program under NATO's new

policy of developing more flexible partnerships with countries that engage significantly with

international security affairs.

Mongolia has provided troops for the NATO-led International Security Assistance Force in

Afghanistan since 2010. It sent two contingents to support NATO's mission in Kosovo from 2005 to

2007. However, Mongolia is not likely to join NATO—it mainly wants the Western backup to shield it

from the possibly overwhelming influence of its neighbors and to yield enough diplomatic space

when engaging with any sides, Na said.

Source: China Daily

JUSTICE LOST IN PRISONS

Tucked away from the scrutiny of civil society, Mongolia's jails epitomize the limits of democracy in

Mongolia where marginalized members of society often bear the brunt of a corrupt and under-

resourced justice system.

"Mongolia is a democratic country and has been for 22 years," Geleg Baasan, a human rights activist

who heads the Centre for Protection of Breaches on Human Rights (CPBHR), said. "But this

democratic transition has not yet [extended] to the jails," she said.

Having been arrested five times during the course of her decades-long career as an activist, she

speaks from firsthand experience of a discriminatory and corrupt legal apparatus. According to

Baasan, the most marginalized in Mongolian society tend to slip through the cracks and get lost in

the country's many ―detention centers‖—pre-trial chambers that are even more dangerous than

post-conviction facilities.

―People who have committed a horrible crime can pay [to avoid detention], but people who have

committed a petty crime go to jail because they don't have any connections," said Baasan.

―Ultranationalist groups" seemed to be above the law "due to police complacency and unwillingness

to apprehend the offenders. They target LGBT persons and foreigners with threats, violence and

extortion.

In an attempt to tackle the problem of helping prisoners deal with the life that goes on without

them and social needs, Cyril Jaurena, from the Czech non-government organization (NGO) Caritas,

began a partnership with the Prosecutor's Office, which has thus far been unsuccessful in compiling

a comprehensive record of prisoner' grievances. Prisoners seldom bring serious complaints—such as

reports of abuse at the hands of prison guards—to the Prosecutor's Office, making it difficult for

prison officials to verify and document human rights violations. Now the Prosecutor's Office is

preparing to conduct a survey and hold a conference to discuss its results.

"We are trying to establish international standards," T. Munkhbayar, of the Prosecutor's Office said.

"This is the first time civil society has worked with the government in the prison system."

Source: IPS News

NEW MONGOLIAN LAWS

The following amendments and annulments to laws were published in the latest weekly Government bulletin. Unless otherwise decided by Parliament, they will take effect ten (10) days after publication. Date Laws 26.11.2012 Amendments to Law on Tobacco Monitoring Amendments to Law on Parliament elections of Mongolia Annulment of Law on Negotiation Ratification Annulment of Law on Negotiation Ratification Annulment of Law on Negotiation Ratification Annulment of Law on Negotiation Ratification Amendments to Law on Public holidays and commemorative days Amendments to Law on Labor Please visit BCM's website, Legislative Working Group, for a summary of new Mongolian laws. BCM members who wish to access complete versions of the laws and regulations in Mongolian language are welcome to email the BCM office: info@bcmongolia.org.

ANNOUNCEMENTS

COAL MONGOLIA 2013, 21-22 FEBRUARY, SS CLUB

It is a great pleasure to announce that we are organizing the International Coal Investors

Conference and Exhibition ―COAL MONGOLIA-2013‖ on February 21-22, 2013, for the third time.

The International Conference and Exhibition ―Coal Mongolia‖ has become the biggest Conference in

Mongolia and it has been a great opportunity to explore the Mongolian coal industry. Mongolia‘s

total coal resource is 162.3 billion tons with 300 deposits and is one of the world‘s top 15 coal rich

countries. We had over 700 delegates from over 300 foreign and domestic companies, NGOs, and

Government officials in our last Conference.

BCM is supporting this event. BCM members will get special discount.

WHAT IS NEW THIS TIME

- New investment opportunities in coal exploration, production and processing projects in Mongolia

- the fastest growing economy in the world

- Partnerships – bringing Mongolian Coal Miners to the International Market

- Mongolian New Government Position, Investment policy and Environment

- Environmentally friendly, new and efficient technologies in Coal Industry

We invite you to participate in the conference and we hope that the conference theme will be the

source of knowledge and inspiration in your further activities. Please contact Oyun at

oyun@mining.mn or at 70115590. www.coalmongolia.mn

___________________________________________

THIRD RISK FORUM, 27-28 FEBRUARY, BLUE SKY TOWER

BCM is hosting the third annual Risk Forum of Mongolia from 27 to 28 February at the Blue Sky

Tower.

The forum is co-organized by BCM and Mandal Insurance. It is the most focused and informative risk

management event in Mongolia. This year, the forum will feature excellent participation of key

stakeholders of risk management and aims to become the catapult of change in Risk Management

practice of Mongolia.

For more information call 11 317 027.

___________________________________________

REGISTER NOW FOR MONGOLIAN MINING DIRECTORY-2013

Mongolian Mining Directory-2013 which provides information database for mining companies,

investors, suppliers, service companies, government and non government organizations will be

published for the fourth year to commemorate the 90th anniversary of the Mongolian mining

industry. The MMD is distributed free of charge to international and domestic mining companies,

international conferences and exhibition, embassy offices in Mongolia and foreign countries to

investors.

BCM is a Supporting Organization of the MMD and welcomes Mongolian mining industry participants

who are interested in advertising their products and services in Mongolian Mining Directory-2013.

For more information please visit: www.mining.mn, www.mongolianminingdirectory.mn or call

+976-7011 5590.

___________________________________________

REGISTER FOR BCM‟S MINING SUPPLY CHAIN DATABASE AT NO COST

The new version of BCM‘s Mining Supply Chain Database is in use. Following the initiative of Oyu

Tolgoi LLC, the BCM has maintained the Mining Supply Chain Database since March 2009. It is an

honor to introduce you to the new version of the database which is totally upgraded as to its

content and use of information technology opportunities.

At November 30, suppliers registered on the database totaled 1,402 and 20 buyers were also

registered. During October and November, 72 tender announcements were posted.

We are inviting all Mongolian mining suppliers and buyer companies to join the Mining Supply Chain

Database. Please visit here for registration.

If you have any questions regarding the database, please contact Undral at undral@bcmongolia.org

or 317027.

___________________________________________

“MM TODAY” on MNB-TV, Friday‟s at 18:50

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 from 18:50 to 19:00 tonight. Tune in to watch this program that reports stories from

today‘s BCM NewsWire.

BCM WEBSITES

MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS

The new ‗Presentations‘ section on BCM‘s Mongolian website can be reached via bcm.mn/itgeluud.

Several presentations already posted include the World Bank‘s Mongolia Quarterly Economic

Update–June 2012 and 11 speeches from the 2nd Coaltrans Forum, held on 23 to 24 May in

Ulaanbaatar.

As a key component of BCM‘s Mongolian website, articles from the ‗News‘ section and the

government website Open-Government.mn are regularly updated.

___________________________________________

ENGLISH WEBSITE: 'PRESENTATIONS', 'MONGOLIA REPORTS', „MONGOLIAN BUSINESS NEWS‟,

„PHOTO GALLERY‟

On BCM‘s English website, the ―Resources‖ and ―Presentations‖ sections are available. Just

uploaded this week are 25 presentations from the Mongolian Investment Summit 2012 on 30-31

October in Hong Kong; recent postings from BCM‘s 5 November and 24 September monthly

meetings; and 9 presentations from Discover Mongolia 2012.

The ―Mongolia Reports‖ section includes ―Mongolia Business Owner and CFO Survey result‖ by BDSec

JSC; ―The fiscal regime for mining - a way forward‖ by IMF Fiscal Affairs Department; ―Mongolia-a

supplement to Mining Journal‖ from Mining Journal October, 2012; ―Macro Overview‖ September,

2012 by EPCRC; ―Taxes for Expatriates in Mongolia‖ from PricewaterhouseCoopers and the ―2012

Mongolia Investment Climate Statement‖ by the Economic and Commercial Section of the U.S.

Embassy.

BCM's English website includes the ―Mongolia Business News‖ section where the Open Letter to

Parliament and Government is available for download.

BCM continuously posts news stories and analysis of relevance to Mongolia at ‗Mongolian Business

News‖ before they are all put together each week for Friday's weekly NewsWire.

The ―Photo Gallery‖ contains photos from the 5th Anniversary BCM Gala dinner on November 5.

The BCM NewsWire will continue to be issued each Friday, incorporating items already on the home

page for a consolidated account of the week‘s events.

___________________________________________

SOCIAL NETWORK WITH BCM

The Business Council of Mongolia (BCM) has expanded its reach to your favorite social networks.

Keep up to date on the latest business deals in Mongolia and how the climate for investment is

improving each day with BCM.

Connect with BCM on Linked-in to join the diverse group of professional contacts creating a better

business environment in Mongolia today.

Add BCM on Facebook at http://www.facebook.com/pages/THE-BUSINESS-COUNCIL-OF-

MONGOLIA/129826330435540 to read the latest announcements and comment on events carried in

the NewsWire with the community.

Hear breaking news and announcements as they happen when you follow BCM on Twitter at

http://twitter.com/#!/bcMongolia.

We have now 740 fans on our Facebook fans page, 900 connections on LinkedIn network, and 500+

followers following us on Twitter.

Of course for news information, interviews, event photos, and announcements regarding our

organization, visit the official BCM website at www.bcmongolia.org and www.bcm.mn.

BCM WORKING GROUP MEETING

The BCM Capital Markets Working Group met on Tuesday, November 27, with 13 members

attending.

Tim O`Neill, /CPS International/ Co-chair, moderated the session.

Speaker was Daniel Patrick O`Connell/Resident Debt Advisor for Mongolia, US Department of the

Treasury/.

Meeting discussion was on the following topics:

-Government`s plans to auction MNT270 billion of notes before the end of the year.

-Wide variety of current Mongolian capital markets-related topics.

Please contact: erka@bcmongolia.org.

ECONOMIC INDICATORS

MONTHLY MACROECONOMIC OVERVIEW – October 2012

SUPERMARKET PRICE COMPARISON – October 2012

INFLATION

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

Year 2007 *15.1% [source: NSOM]

Year 2008 *22.1% [source: NSOM]

Year 2009 *4.2% [source: NSOM]

Year 2010 *13.0% [source: NSOM]

Year 2011 *10.2% [source: NSOM]

October 31, 2012 *15.0% [source: NSOM]

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

Note: 15.0% y-o-y, Ulaanbaatar city, October 31, 2012

CENTRAL BANK POLICY LOAN RATE

December 31, 2008 9.75% [source: IMF]

March 11, 2009 14.00% [source: IMF]

May 12, 2009 12.75% [source: IMF]

June 12, 2009 11.50% [source: IMF]

September 30, 2009 10.00% [source: IMF]

May 12, 2010 11.00% [source: IMF]

April 28, 2011 11.50% [source: IMF]

August 25, 2011 11.75% [source: IMF]

October 25, 2011 12.25% [source: IMF]

March 19, 2012 12.75% [source: Mongol Bank]

April 18, 2012 13.25% [source: Mongol bank]

CURRENCY RATES – NOVEMBER 29, 2012

Currency Name Currency Rate

US dollar USD 1,396.51

Euro EUR 1,810.50

Japanese yen JPY 17.06

British pound GBP 2,237.14

Hong Kong dollar HKD 180.23

Chinese Yuan CNY 224.22

Russian Ruble RUB 45.08

South Korean won KRW 1.28

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.