BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 336 – August 1, 2014

NEWS HIGHLIGHTS:

Business

Turquoise Hill announces sale of 29.95% interest in SouthGobi Resources;

Erdenes TT looks to diversify with methane gas production;

Xanadu Mines expands copper-gold discovery in Mongolia;

Aspire-Noble JV to commence exploration;

MEC to launch mining at Khoshoot coal mine;

Guildford to begin trial shipping from Baruun Noyon Uul coal mine;

ALS opens coal analytical laboratory at TT;

Mining Ministry to cooperate with MIRECO for 'friendly' mining;

KEPCO to build power plant in Mongolia;

Australian Wolf stalks Mongolian oil opportunities;

FRC investigates “suspicious trading”;

Levi Strauss opens flagship store in UB;

XacBank appoints M. Bold as CEO;

Kincora appoints CEO to board;

Mongolia-China Business Forum on 31 July;

Oyu Tolgoi plants 13,000 Gobi seedlings for land reclamation;

Rio Tinto closes dire chapter with $50 mn Mozambique coal sale.

Economy

Mongol Bank: FX auction, swap agreements, 1-week bills, treasury notes;

Mongol Bank hikes policy rate to 12%;

Development Bank of Mongolia raising $200mn;

Mongolia issues MNT 2.36 tn in housing mortgages;

Total savings grew 39% in June, y-o-y;

Mining Ministry, GIZ set out to establish minerals exchange;

Light industrial and technology park to be built at Khan-Uul;

Mongolia seeks China gas accord to boost foreign investment;

Mongolia to launch meat exports to Japan;

120 projects to be financed by the Chinggis and Samurai bonds;

BDSec sees MSE stealth bull market intact and accelerating;

Mongolia's railway to China turns into national security threat;

Mongolia's economic hangover;

Why the 'Wolf of Wall Street' visited the 'Wolf economy';

Visa-free travel to Mongolia for citizens from 42 additional countries;

Mine safety in question as 20-year-old worker dies of suffocation;

Over 87,000 citizens to receive food stamps;

Japan’s last “aid’ for Mongolia, USD 2.3 bn for new health sciences university;

Ulaanbaatar to sell monthly bus passes;

Water scarcity and rising energy costs threaten mining industry;

Riverside construction depletes UB’s fresh water reserves;

Urgakh Naran threatens UB's drinking water;

China’s plan to limit coal use could spur consumption for years;

Japan to step up support for overseas use of coal;

Japan’s record trade deficit raises fresh doubts about Abenomics.

Politics

MSE's acting CEO joins working group for Minerals Policy implementation;

Mongolia, Canada seek to strengthen ties;

Minter Ellison sees cheers and jeers in minerals law amendments;

“Better than expected” Minerals Law, says MIBG;

106-license resolution fails to meet investor expectations;

Former UB City mayor receives two-year sentence;

Enkhbayar is a no-show for expected return;

Corruption trial for 54 university officials postponed.

Others

Announcements;

BCM Updates - Working Groups; Websites; Social Networks; Photo Gallery.

ECONOMIC INDICATORS

Weekly Market Indicators;

Inflation;

Central bank Policy Rate;

Currency Rates.

*Click on titles above to link to articles.

SPONSORS

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International SOS

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Invest Mongolia Agency

BUSINESS

TURQUOISE HILL ANNOUNCES SALE OF 29.95% INTEREST IN SOUTHGOBI RESOURCES

Turquoise Hill Resources Ltd. on 30 July announced that it has entered into a share purchase

agreement with National United Resources Holdings Limited, a Hong Kong-based public company

listed on the main board of the Stock Exchange of Hong Kong, for a 29.95 percent stake in Mongolia-

based coal miner SouthGobi Resources Ltd.

Turquoise Hill has agreed to sell 56.1 million common shares that it owns in the capital of

SouthGobi to National United at a price of CAD 0.455 per common share. The deal leaves Turquoise

Hill with some 48.7 million shares of SouthGobi, representing approximately a 26 percent stake in

SouthGobi. Turquoise Hill will receive approximately CAD 12.8 million (USD 11.78 million) in cash at

closing and deferred consideration of approximately CAD 12.8 million payable one year after the

closing of the transaction.

Source: Turquoise Hills Resources Ltd.

ERDENES TT LOOKS TO DIVERSIFY WITH METHANE GAS PRODUCTION

Erdenes Tavan Tolgoi LLC has partnered with Korean Gas Corp. and Mongolian drilling company

Elgen LLC for the development of a coal-to-methane gas facility.

A three-party agreement was signed on 24 March for the partnership, with each of Erdenes TT's

partners to invest USD 8.6 million. A pilot facility is scheduled to open in April 2015 while gas

borehole drilling will begin August this year,‖ said Erdenes TT Chief Executive Officer Yaichil

Batsuuri.

Batsuuri said that Erdenes TT had managed to drum up respectable sales figures, despite the poor

market for coal. Erdenes TT increased sales 50 percent in the first half of 2014 at 3.2 million tons,

year-on-year, with a sales price of up to USD 37 at the mine directly and USD 58 for exported coal.

The additional volume of coal sales came from stockpiles gathered while export was on suspension

in 2013, he said.

―Erdenes-TT is taking all possible actions to reduce costs and increase the coal sales price.‖

Batsuuri said Erdenes TT would issue company shares to the Development Bank of Mongolia to

resolve its USD 200 million in debt to the bank. Debt to Chalco to be repaid in coal deliveries stood

at two million tons or USD 80 million worth of coal.

The chief executive added that the company's public offering is being postponed again, until 2016.

After the public offering, he said, the company can grant the 1,072 shares owed to each Mongolian

citizen. The government's plans to retain 51 percent ownership of the miner, while 20 percent

would go to Mongolian citizens, 20 percent in public offerings, and 10 percent through direct sale to

Mongolian companies. The reason for the delay, he said, was the poor market conditions for coal

mining.

―But the company is doing preparation work and with improvement of the coal mining situation and

beginning of infrastructure development the Erdenes-TT shares will be successfully introduced at

the international stock market.

Source: Udriin Sonin

XANADU MINES EXPANDS COPPER-GOLD DISCOVERY IN MONGOLIA

Xanadu Mines Ltd. has released further strong copper gold results from its Altan Tolgoi project in

Mongolia, after revealing assays from the first 550 meters of drilling last week.

The first 550 meters encountered a broad mineralized section grading 0.64 percent copper

equivalent. Following re-assay of material towards the end of the hole, higher grade sections of

242.7 meters at 0.55 percent copper and 0.75 grams per ton of gold for 1.02 percent copper

equivalent from 358.3 meters, and 132 meters at 0.65 percent copper plus 0.89 grams per ton of

gold for 1.21 percent copper equivalent from 468 meters have been confirmed. The latest

mineralization identified is predominantly hosted in tourmaline breccia and minor zones of relic

quartz-chalcopyrite stockwork. This is in addition to earlier results where high grade extensions to

the west of Altan Tolgoi included 160 meters grading 0.47 percent copper and 0.85 grams per ton of

gold from 110 meters in KHDDH338; and 42 meters grading 0.56 percent copper and 0.72 grams per

ton of gold from 202 meters in KHDDH340.

Drilling at KHDDH344 is now underway a further 50 meters to the east and continues to intersect

visible copper sulphides comprising disseminated and breccia-hosted coarse grained chalcopyrite

hosted by a strongly tourmaline-magnetite altered quartz monzodiorite.

Source: Proactive Investors

ASPIRE-NOBLE JV TO COMMENCE EXPLORATION

Aspire Mining Ltd. announced plans to begin an exploration drilling program at the Nuurstei Coal

Project for its Ekhgoviin Chuluu joint venture with Noble Group.

The drilling program designed to confirm resource continuity to enable preliminary economic

assessment, as well as provide samples for testwork, will commence in August 2014. Regulatory

approval for an environmental plan submitted prior to the acquisition is first needed before drilling

can begin. Drilling will target the northern part of the Nuurstei Project tenement area, and consist

initially of 20 holes at an average 100 meter depth. After reviewing data from a 2011, 11-hole

drilling program at Nuurstei that focused on the northern region, Ekhgoviin Chuluu approved a 20-

hole drilling program with a budget of USD 500,000. Drilling is expected to be completed by the end

of September 2014, with laboratory analysis expected to be received in the December quarter.

Results from the drilling program will be used to prepare a pre-feasibility study, which will allow for

the grant of a mining license, and for the completion of a general environmental impact

assessment. Enkhboviin Chuluu believes there is already justification for a possible small-scale road-

base due to near-surface quality coking coal and close proximity to existing road infrastructure.

Coal produced at Nuurstei could be transported along this road to Erdenet where product could

then be loaded onto trains and delivered to customers. Land purchased at Erdenet by Aspire in 2012

could be used as a coal stockpile and train load-out area.

A paved road is currently being constructed between Moron Soum, Khuvsgul Aimag and the city of

Erdenet, where existing rail infrastructure terminates. Sealing of this road commenced in 2012 and

is due to be completed at the end of 2015. Ekhgoviin Chuluu will consider completing an ore-

feasibility study into a small scale operation following the results of the 2014 drilling program.

Source: Aspire Mining Ltd.

MEC TO LAUNCH MINING AT KHOSHOOT COAL MINE

Hong Kong-listed Mongolia Energy Corp. (MEC) plans to begin mining coal at the Khoshoot mine

located in Darvi Soum, Khovd Aimag [Source provides no data of commencement -ed].

MEC in 2014 sold 15,300 tons of coal, or three times as much as the year before. The company

reported that it narrowed it pre-tax loss to USD 1 billion, despite having to lower prices due to a

declining market conditions for coal.

Khoshoot has an estimated reserve of 141.5 million tons of coal.

Source: UB Post

GUILDFORD TO BEGIN TRIAL SHIPPING FROM BARUUN NOYON UUL COAL MINE

Guildford Coal Ltd. announced that trucking of trial batches of coal from the Baruun Noyon Uul

mine in the south Gobi will commence in mid‐August to the Shivee Khuren-Ceke border for planned

washing and testing of logistics.

Guildford is negotiating with a number of customers in China to take delivery of initial parcels and

bulk samples as part of its strategy to establish and position the Baruun Noyon Uul coking coal brand

in the Chinese market. This is a significant milestone for the future development of the mine and

Guildford's other mining licenses in the region.

Source: Guildford Coal Ltd.

ALS OPENS COAL ANALYTICAL LABORATORY AT TT

Diversified testing services provider ALS Group LLC announced the opening of the new coal

analytical laboratory at the Tavan Tolgoi mine in Umnugobi Aimag.

The coal arm of ALS (formerly Stewart Mongolia) has invested in a new state-of-the-art facility

comprising of an over 1,000 square meter building located just next to the Tavan Tolgoi mine. The

new laboratory will service state-owned Erdenes Tavan Tolgoi LLC, with whom ALS has a long-term

cooperation agreement. The new facility provides sufficient infrastructure to allow installation of

additional capital equipment on a ―plug & play‖ basis facilitating an increase in production capacity

at any given time. The new facility is equipped with the latest technologies available such as

sample preparation, proximate analyses, determination of calorific value, determination of total

sulphur and phosphorus and free swelling index, and geotechnical analyses.

Source: ALS Group LLC

MINING MINISTRY TO COOPERATE WITH MIRECO FOR 'FRIENDLY' MINING

The Ministry of Mining has partnered with the Mine Reclamation Corporation of Korea (MIRECO) to

explore environmentally friendly and sustainable mining methods.

A memorandum was signed Tuesday by R. Jigjid, state secretary of the Mining Ministry, and MIRECO

Chief Executive Officer Kwon Hyuk-in. MIRECO's plans include prevention long-term damage from

mines, improvement projects effects on the environment, treatment of water used for mining

operations and contaminated soil, and forestry reclamation.

Source: Montsame

KEPCO TO BUILD POWER PLANT IN MONGOLIA

KEPCO, Korea's biggest power supplier, won the exclusive right to build and operate a fossil fuel

power plant in Ulaanbaatar, Mongolia, the company said Friday. Chief negotiators from KEPCO and

the Mongolian Energy Ministry signed a memorandum of understanding in Mongolia, Thursday, three

months after the two sides agreed to work together to improve the power supply infrastructure in

Mongolia.

"This is a milestone making it possible for us to make inroads into the fast-growing power supply

market in Mongolia," KEPCO said in a statement. "This project will make it possible for us to win

other projects there."

It is uncertain when the two sides will sign an official contract and when construction will begin.

"We will start a feasibility study soon," said a KEPCO official familiar with the case. "So it's hard to

predict when we will sign an official contract."

KEPCO is the world's sixth-largest power plant builder, having built nearly 40 nuclear and fossil fuel

power plants in 20 countries. KEPCO said it was seeking business opportunities in other developing

nations in Central Asia.

Source: Korea Times

AUSTRALIAN WOLF STALKS MONGOLIAN OIL OPPORTUNITIES

Australia's Wolf Petroleum Ltd. is hoping the recent passing of a new petroleum law will open up oil

production opportunities in Mongolia.

Wolf Petroleum is the only Australia-listed oil and gas company operating in Mongolia. But the

industry minnow, capitalized at just AUD 5.5 million (USD 5.2 million), claims a position as

Mongolia‘s largest petroleum acreage holder, with one production block and two exploration areas

covering more than 74,400 square kilometers (18,000 million acres). The long-awaited petroleum

law, which was enacted on 1 July, replaced one which had been on the books since 1991.

The new law is designed to boost foreign investment in Mongolia‘s petroleum industry and provide

among the most competitive production-sharing terms in the world, Wolf Petroleum Ulaanbaatar-

based Chief Executive Officer Bataa Tumur-Ochir said via email. Under the new law, production-

sharing contracts can be approved by the government within 180 days of request by the developer.

Royalty payments are 5 percent and contractors are exempt from customs duty, value-added tax in

the first five years and income taxes from oil sales. In addition, exploration, operation,

development and production costs can be recovered 100 percent.

Mongolia has a history of producing and refining its own oil, but the domestic industry shut down in

the 1960s. According to the U.S. Energy Information Administration, oil production resumed in a

small way in 1998, but did not start climbing significantly until after 2005, reaching 14,050 barrels a

day in 2013.

―PetroChina and Sinopec started their first oil production in 2005 and production has multiplied 25

times within the last nine years,‖ Tumur-Ochir said. ―Mongolia forecast annual production for this

year would be close to seven million barrels/year and by 2016 [it would be] over 10 million

barrels/year,‖

The EIA put Mongolia‘s oil consumption at 23,260 barrels a day in 2012, with net petroleum imports

estimated at 13,330 barrels a day. With plans afoot to build a new refinery in the country, albeit

one which would use Russian crude initially, Wolf‘s extensive acreage position might make it a small

player sitting on an interesting opportunity.

Source: Platts

FRC INVESTIGATES “SUSPICIOUS TRADING”

The Financial Regulatory has named Asia Pacific Securities LLC as a target for investigation as the

Mongolian Stock Exchange receives reports of suspicious trading from its Millennium IT Surveillance

system.

The surveillance system flagged trading on 24 July after shares of Ulaanbaatar Hotel JSC‘s fell 5.21

percent after three shares were traded at MNT 100,000 each and UID JSC‘s shares fell by 7.92

percent after 299 shares were traded at MNT 552.5 each. The Mongolia bourse also received alerts

when Baganuur JSC shares fell 7.92 percent after the trade of 228 shares at MNT 3,637 each; Tavan

Tolgoi JSC‘s shares fell 6.62 percent after shares traded at MNT 5,010 each; UID JSC‘s shares fell by

7.69 percent after the trade of 50 shares at MNT 600 each; and Blue Sky Sec JSC shares fell 15

percent after the trade of three shares at MNT 2,975 each.

Source: Mongolian Stock Exchange

LEVI STRAUSS OPENS FLAGSHIP STORE IN UB

Levis Strauss & Co. opened its first name-brand denim jeans shop on the third floor of the State

Department Store in Ulaanbaatar on 27 July. Levi Strauss in 2013 selected BTF LLC as its official

distributor in Mongolia.

Source: Unuudur

XACBANK APPOINTS M. BOLD AS CEO

XacBank LLC's board of directors at an irregular meeting on 10 July appointed Tenger Financial

Group LLC Chief Executive Officer M. Bold as chief executive as outgoing Chief Executive Officer D.

Bat-Ochir is appointed as general director.

Bold is a senior banking professional with more than 20-year expertise in public and private working

at global financial institutions such as the World Bank, the International Monetary Fund (IMF) as

well as the Bank of Mongolia. Bold has served as president of the Mongolian Bankers Association

since 2011, after serving as vice president for two years.

Source: Unuudur

KINCORA APPOINTS CEO TO BOARD

Kincora Copper Ltd. on 23 July announced the appointment of President and Chief Executive Officer

Jonathan ―Sam‖ Spring to its board of directors, effective immediately. Spring joined Kincora in

August 2012 as a senior mining analyst with over 10 years financial services experience across

various disciplines within the Goldman Sachs Group and Ocean Equities Ltd. (now part of Pareto

Securities).

Source: Kincora Copper Ltd.

MONGOLIA-CHINA BUSINESS FORUM ON 31 JULY

The Mongolia-China Business Forum was held at the Mongolian National Chamber of Commerce and

Industry (MNCCI) on Thursday, 31 July in Ulaanbaatar. The forum saw a business delegation arrive

that was led by the deputy of the Liaoning Provincial People's Association for Friendship with

Foreign Countries.

Source: Montsame

OYU TOLGOI PLANTS 13,000 GOBI SEEDLINGS FOR LAND RECLAMATION

Oyu Tolgoi LLC is shaping a new approach to land rehabilitation that it says is firmly focused on

maintaining the ancient natural environment.

During the first phase of Oyu Tolgoi‘s rehabilitation program in the autumn of 2013, the miner

planted 10,677 saxaul tree seedlings across 6.34 hectares in the Gunii Khooloi area of Khanbogd

Soum. Eighty percent of the seedlings successfully survived the winter, with those which had died

replanted in the spring, along with an additional 2,860 seedlings. The Gobi Desert has a dry and

extreme climate and native plants such as the saxaul tree have adapted to the harsh conditions

over generations. Desert saxaul forests prevent the movement of sand, creating more favorable

conditions for other plants, livestock and wild animals to flourish.

―The preparation, planting and care of saxaul tree seedlings takes a lot of time,‖ said B.

Altantsetseg, Environmental Superintendent at Oyu Tolgoi. ―First, we collect wild seeds from the

environment, clean and separate them from other seeds, and then dry them. We prepare seed pots

between November and February. Between April and May we place the seed pots in the planting

area and start growing.‖

―After two summers and one winter, the young seedlings are transferred from the pots and planted

in the ground. The 10,677 seedlings that were transferred from the pots in the autumn of 2013 had

been planted as seeds in the spring of 2012."

Oyu Tolgoi only uses native plants in its biological rehabilitation work. But even hardened, Gobi

plants require extreme care and support to survive. The saxaul trees planted in the fall are

irrigated and the soil is strengthened before it freezes, helping the young plants to survive the

winter. By the time they face the harsh winds of spring, many are strong enough to survive.

Rehabilitation work relies on local communities to support and participate in the effort. Last

autumn, 28 local herders worked on the program, which will lead to the appearance of brand-new,

saxaul forests in the Galba Gobi.

Source: Oyu Tolgoi LLC

RIO TINTO CLOSES DIRE CHAPTER WITH $50 MN MOZAMBIQUE COAL SALE

Rio Tinto PLC is to sell its coal assets in Mozambique for USD 50 million—a fraction of the multi-

billion dollar price it paid for them just three years earlier—closing a chapter on one of the most

disastrous acquisitions in the miner‘s history.

The Anglo-Australian group said on Wednesday it had reached an agreement to sell its Benga mine

and other coal projects in the Tete province of Mozambique to International Coal Ventures Private,

a company set up by the Indian government. Rio acquired the coal assets as part of its ill-fated USD

3.7 billion acquisition of Riversdale Mining in 2011, just as a decade-long mining investment boom

was coming to an end.

―This represents closure for Rio on one of the weird deals that it did at a time of very lax risk

assessment in the company,‖ said Mark Taylor, resources analyst at Morningstar. ―It paid far too

much at the time for assets that weren‘t as high quality as it thought.‖

Rio is pursuing a strategy of cutting costs and disposing of non-core assets following a decade of

heavy investment that caused its debt to balloon and ultimately cost former chief executive Tom

Albanese his job. Last year, Rio wrote down the value of its acquisition of Riversdale Mining by more

than USD 3 billion, blaming the logistical challenges of transporting coal from Tete to the coastline

some 600 kilometers away. Rio also revised its estimates of recoverable coking coal, which is used

in the production of steel, raising questions about due diligence.

Rio said the deal to sell the Mozambique coal assets was subject to conditions and regulatory

approvals and was expected to close later in the year. Rio will manage the mine during the

transition to the new owners.

Source: Financial Times

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Mongolian Economy Magazine

ECONOMY

MONGOL BANK: FX AUCTION, SWAP AGREEMENTS, 1-WEEK BILLS, TREASURY NOTES

The Bank of Mongolia on 31 July auctioned USD 7.5 million and CNY 87.5 million to commercial

banks for closing rates of MNT 1,827.00 and MNT 302.10, respectively. The central bank also

reported that it had received an equivalent of USD 800,000 from swap agreements and a swap

agreement ask offer of USDD 70 million with commercial banks.

The central bank reported on 30 July the issue of one-week bills worth MNT 307 billion at a

weighted interest of 10.5 percent a year.

The central bank reported on 30 July the cancellation of the auction for 28-week treasury notes

with a face value of MNT 20 billion due to the absence of both competitive and non-competitive

bids. The central bank also reported on 30 July the cancellation of the auction for five-year

treasury notes with a face value of MNT 10 billion due to the absence of both competitive and non-

competitive bids.

Source: Bank of Mongolia

MONGOL BANK HIKES POLICY RATE TO 12%

The Bank of Mongolia's Monetary Policy Council on 30 July raised the policy rate by 1.5 percentage

points to 12 percent.

―They're ratcheting up the policy rate to help dampen the rising inflation,‖ said Jim Dwyer,

executive director of the Business Council of Mongolia (BCM). ―Russia's doing it, too. Their central

bank raised rates by 2.5 percentage points to hold inflation to 8%.‖

Inflation nationwide currently stands at 14.6 percent year-over-year at June 30, according to data

from the Bank of Mongolia, up from 13.7 percent at 31 May.

Source: Cover Mongolia, BCM

DEVELOPMENT BANK OF MONGOLIA RAISING $200 MN

The Development Bank of Mongolia is raising USD 200 million via a loan that features a USD 100

million greenshoe option, made even more appealing with a guarantee from the country's

government.

Credit Suisse is the sole bookrunner for the deal, which is split into three portions: a three year

bullet, which pays a margin of 425bp (or 4.25 percent) over dollar London interbank offered rate

(LIBOR)—the average interest rate estimated by leading banks in London; a five year amortizer

offering at 437.5bp (4.375 percent) over LIBOR; and a seven-year amortizer paying 450bp (4.75

percent) over LIBOR. Lenders are allowed to commit to any or all of the tranches, said a banker.

The deal is open to banks at three levels of participation—mandated lead arrangers coming in with

commitments of USD 50 million or over will earn 125bp as fees for the three-year, 150bp for the

five-year and 175bp for the seven-year. Lead arrangers pledging between USD 25 million and USD 49

million earn fees of 110bp, 125bp and 150bp for the three tranches respectively, while co-arrangers

committing between USD 10 million and USD 24 million net fees of 85bp, 100bp and 125bp,

respectively

The fundraising comes just after the Trade & Development Bank of Mongolia LLC had to pull a

dollar-bond issue when investors were reluctant to open their portfolios to Mongolian risk. However,

because the Development Bank loan comes backed by a guarantee from the Government of

Mongolia, it is unlikely to run into similar headwinds, according to bankers.

Source: Global Capital

MONGOLIA ISSUES MNT 2.36 TN IN HOUSING MORTGAGES

Lenders have granted MNT 112.3 billion in credit for mortgages to 2,084 borrowers as part of the

government's 8 percent mortgage program, according to a May 2014 report on the program.

The central bank said that total outstanding mortgages were valued at MNT 2.36 trillion and the

total number of borrowers was 57,579. The central bank reported that the number of mortgages

issued in May increased 0.6 percent from April, and 80.7 percent since 2013. By the end of May,

domestic currency mortgage loans made up to 97.4 percent of total outstanding mortgage loans,

while the year-on-year growth was 10.4 percent. That includes MNT 1.61 trillion in mortgages issued

due to the government program, or 68.4 percent of all outstanding mortgages. Banks granted

mortgage loans to 1,395 borrowers in May, including 688 by commercial banks. By the end of May

2014, the total number of borrowers reached 57,579.

The 8 percent housing loan, which grants mortgages to new homeowners and refinances mortgages

to homeowners who have already borrowed, was initiated by Prime Minister Norov Altankhuyag in

an effort to stabilize housing prices and provide affordable housing to ger district residents. Over 60

percent of Ulaanbaatar‘s 1.3 million residents live in ger districts and use coal stoves for home

heating in the winter and for cooking year round. The initiative aims to reduce air pollution, as it is

estimated to be responsible for over one in four deaths in Ulaanbaatar.

Mortgages last between six months and 20 years, with a weighted average term of 15.8 years, said

the report. The weighted average term of total outstanding mortgage loans was 14.9 years. The

weighted average interest rate of issued mortgage loans stood at 10 percent. The weighted average

interest rate of mortgage loans issued in the reporting month by commercial banks in domestic

currency was 15.6 percent, while the foreign currency average was 8.7 percent per annum.

The comparative share of past due, in arrears, and non-performing loans in total outstanding

mortgage loans is stable, reported the central bank. The report added that by the end of May the

share of non-performing loans in total outstanding mortgage loans was 0.4 percent.

Source: UB Post

TOTAL SAVINGS GREW 39% IN JUNE, Y-O-Y

Mongolia's total savings in June increased 38.9 percent compared with the previous year despite a

0.8 percent fall from the previous month, for a total MNT 7.137 trillion, according to the Mongolian

Bankers Association.

Savings grew to MNT 261.8 billion for the year, or an 11 percent increase from the year before.

Saving contributed 5.8 percent to total money supply. Breaking down the money supply in accounts,

56 percent was savings denominated in the tugrug, 13.7 percent in foreign currency savings, 12

percent from account drawings, and 12.5 percent came from foreign currency accounts.

Money supply grew 8.3 percent for the first six months of the year while growing 25.9 percent from

the year before.

Source: Mongolian Economy

MINING MINISTRY, GIZ SET OUT TO ESTABLISH MINERALS EXCHANGE

The Mining Ministry and the German Federal Enterprise for International Cooperation (GIZ) Gmbh

signed a memorandum of understanding to partner in the establishment of a minerals exchange.

The exchange could help calibrate the prices of mineral commodities and play a key role for the

minerals trade in Central Asia.

Source: Zuunii Medee

LIGHT INDUSTRIAL AND TECHNOLOGY PARK TO BE BUILT AT KHAN-UUL

The light industry and technology park concentrating in leather and wool production will be built at

Emeelt, Khan-Uul, reported Ulaanbaatar's Office for the Media and Public Affairs.

The 214-hectare park will have areas for housing, recreation, services, and industry—including

factories, warehouses, and water treatment facilities. A preliminary estimate for the development

and construction of the park has been set at MNT 208 billion.

Another industrial park for construction materials is also planned for the Nalaikh District.

Source: Unuudur

MONGOLIA SEEKS CHINA GAS ACCORD TO BOOST FOREIGN INVESTMENT

Mongolia is seeking to sign a gas project and supply accord with China next month, in a deal that

would help the world‘s second-largest economy expand energy supplies and potentially revive

foreign investment in Mongolia.

The agreement will cover construction of two coal-to-gas plants with 95 percent of output going to

China through pipelines, Erdenebulgan Oyun, vice minister for mining said. Gas production is

expected to begin in 2019, he said. A preliminary contract with China Petrochemical Corp., known

as Sinopec Group, may be signed in August during an expected visit by Chinese President Xi Jinping,

Chuluunbat Ochirbat, Mongolia‘s vice minister for economic development, said in an interview in

Tokyo. Final details including cost, size and who will mine the coal needed for the plants, are yet to

be agreed, he said.

―Sinopec has taken several trips to do due diligence in Mongolia and it is still under way,‖

Chuluunbat said in Tokyo, where he‘s attending an investment summit. ―Mongolia has coal reserves

which are suitable for gasification.‖

Xi will visit Mongolia on 21 August said Chuluunbat. China has not officially confirmed the visit. The

Ministry of Foreign Affairs in Beijing today didn‘t reply to a fax about Xi‘s trip to Mongolia.

Sinopec Group Chairman Fu Chengyu signed on 25 October a memorandum of understanding for a

coal gasification project in Mongolia with Jigjid Rentsendoo, secretary of state of the Ministry of

Mines, according to a statement that month on the Chinese state-controlled group‘s website that

didn‘t give further details.

About 80 million metric tons of lignite coal will be extracted annually to produce the gas at the

plants, Erdenebulgan said. According to both vice ministers, the plants could produce 15 billion

cubic meters of gas a year. Chuluunbat estimated the cost of building a project of that size at USD

3 billion to USD 5 billion, and said the scale of the development could be increased. By comparison,

China‘s gas contract with Russia is for 38 billion cubic meters a year.

Source: Bloomberg

MONGOLIA TO LAUNCH MEAT EXPORTS TO JAPAN

The free trade agreement signed between Japan and Mongolia in July has opened the door for

Mongolia to begin selling meats and other items to Japan.

Mongolia and Japan last week signed a free-trade deal that for Japan means the export of vehicles,

hardware, and fruits, among other items to Mongolia. The agreement allows Mongolia to export

cashmere, wool, and leather products. It can also export foods such as meat products, pasta, salt

and the traditional drink aarts. Some items will be exempt from custom taxes while others will

benefit from reduced taxes and other eased conditions.

Source: Mongolian Economy

120 PROJECTS TO BE FINANCED BY THE CHINGGIS AND SAMURAI BONDS

The Development Bank of Mongolia is set to finance 120 projects using its combined proceeds from

bonds issues in 2012 and 2013.

The Development Bank is pulling funds from its first bond offering in 2012, the USD 580 million

Eurobond, the 2012 USD 1.5 billion Chinggis bond, and the 2013 JPY 30 billion (USD 300 million)

Samurai bond. Projects cover eight sectors, namely transportation, construction, infrastructure,

energy, mining, agriculture and light industry.

The bank is lending MNT 107 billion for 17 road and bridge construction projects, MNT 73 billion for

road renovations, and MNT 166.69 billion and USD 159.2 million for 8 construction projects. The

bank is financing 34 infrastructure projects, including the Tavan Tolgoi Power Station, the Amgalan

Thermal Station and the Eg River Hydroelectric Power Plant to expand the country's energy

generation capacity. Also for infrastructure, the bank plans to lend MNT 6.25 billion for the

Sainshand Industrial, which Mongolia is developing to boost its industrial capacity. The bank has also

lent MNT 48.4 billion in funds are also being used to help launch and expand the capacities of 311

small businesses. The largest lump sum of credit given by the Development Bank was USD 200

million to bail out Erdenes Tavan Tolgoi LLC when it ran into financial difficulties.

Source: UB Post

BDSEC SEES MSE STEALTH BULL MARKET INTACT AND ACCELERATING

The casual observer would conclude that local stocks reflect the bearish sentiment seen in foreign

investment, with the MSE Top 20 declining by 60 percent from its peak of 32,955 in February 2011

to a low of 13,364 in January 2013. The MSE Top 20 entered a bear market in March 2011, shortly

after its February peak and it remains in a technical bear to this day, trading around 16,500.

However, BDSec has made the case repeatedly that the MSE Top 20 is not representative of the

perfor¬mance of the broader market.

Some of the largest companies in the index are state-owned entities and, in many cases, poorly

managed and unprofitable. The MSE Top 20 is a market-cap weighted index, with state controlled

companies comprising 18.2 percent of the total market cap. In an effort to give investors a better

sense of how well privately controlled local shares have performed, the Source aggregated a list of

the MSE‘s 20 largest companies excluding state-owned firms—the BDS Top 20—which have

collectively increased in value nearly 800 percent since 2010 and outperformed the MSE Top 20 to a

massive extent.

The 20 largest private companies experienced their own bear mar¬ket in March 2011, declining 22

percent, but went on to register new highs only six months hence and have since gone on to

appreciate 260 percent. One-and three-year and year-to-day returns for these 20 stocks reflect

steady and deliberate out performance, both on a relative and absolute basis, versus the MSE Top

20 and all comparable Mongolian asset prices.

It looks likely Mongolia will be added to either the MSCI or FTSE Frontier indices (or both) in the

near or medium term, which would generate considerable inflows from mutual funds. The

ownership of the MSE has recently been transferred from the State Property Commission to the

Ministry of Finance, which has indicated it will undertake initia¬tives to improve operations and

policies, to attract more participants. With a market cap of only USD 900 million, the liquidity on

the MSE is both a liability and a virtue, with insiders owning approximately 60 percent of the float.

Read the full report here.

Source: BDSec JSC

MONGOLIA'S RAILWAY TO CHINA TURNS INTO NATIONAL SECURITY THREAT

It may be a difference of less than 10 centimeters, but it's proving enough to revive Mongolians'

darkest feelings of suspicion about their giant southern neighbor China.

The difference in question is the 85 millimeters between Mongolia's 1,520 millimeters rail gauge—a

legacy from the Soviet era, and called the "Russian gauge"—and China's narrower 1,435 millimeter

gauge, a more widely used track width across the globe that's known as the "standard gauge. While

Mongolia's growing army of mining companies consider it a logistics bottleneck, Mongolians

themselves see it as a matter of national sovereignty.

The debate became front-page news again after the government's recent attempt to pursue the

construction of a standard gauge railway stretching from Tavan Tolgoi, the country's largest coal

mine, to the Chinese border turned into a political quarrel fueled by the powerful and controversial

politician, businessman and judo hero, Khaltmaa Battulga. The TV show triggered a wave of anti-

Chinese sentiment right at a time when the Mongolian government is trying to increase commercial

ties with China. In an attempt to rebut the criticism, the government labeled the televised content

as ―damaging to national security, economic sovereignty, and diplomatic relations with China.‖

President Tsakhia Elbegdorj himself summoned Battulga and accused him of ―wrecking a good

culture being formed and shaped in politics.‖ Even so, the deliberations over the bill for the railway

project were delayed until the fall session.

The present cost of trucking coal across the 20-kilometer border is USD 10 per ton. This will come

down to USD 0.10 once the coal is moved by rail, with transportation times reduced to three hours

from three days and the overall transport capacity increased to 50 million tons a year from 20

million tons, according to government figures. If such estimates materialize, the narrower gauge

railway project will improve the competitiveness of Mongolia's coal, which gets often outpriced by

China's other coal suppliers like Australia. Mongolia exported to China 18.2 million tons of coal in

2013 and this is planned to reach 50 million tons by 2015.

Source: BNE

MONGOLIA'S ECONOMIC HANGOVER

After experiencing the buzz of double-digit growth rates and lavish interest from international

investors, Mongolia's economic miracle has turned a bit sour.

Caught between a weak commodity cycle and flagging investor sentiment, the Mongolian

government decided to breathe new life into the economic boom through generous fiscal and easy

monetary policies. As a result, the fiscal deficit ballooned and remained over 10 percent of gross

domestic product (GDP) in 2012 and 2013; the World Bank forecasts more of the same in 2014. In

the meantime, the central bank injected fresh liquidity into the system equivalent to 20 percent of

GDP, creating a credit boom.

If the gambit is paying off in terms of economic growth, increasing imbalances represent the flip

side. The credit boom achieved through central bank-sponsored programs like the 8 percent

mortgage rate has boosted imports in a time when exports, mostly raw minerals, were falling

because of China's economic slowdown. Resultant imbalances have ended up eroding foreign

currency reserves. The Bank of Mongolia's foreign reserves fell to USD 1.6 billion in May, down from

over USD 4 billion at the beginning of 2013, and without taking into account existing currency swap

agreements with other central banks, net reserves could be as low as USD 540 million, credit rating

agency Fitch Ratings has estimated.

Also, in the latest in a long series of sudden about-turns between the government and Rio Tinto

PLC, the local tax authority has filed claims for unpaid taxes, penalties and disallowed entitlements

associated with the initial development of the Oyu Tolgoi copper mine, which could be as much as

USD 130 million. Rio Tinto-controlled Turquoise Hill Resources refutes the claims and has opened an

official dispute with the government. An updated feasibility study for the expansion was expected

to be sent to Parliament for final approval in a matter of weeks, but ―distribution of the

underground feasibility study will be delayed‖ as ―outstanding shareholder issues, including tax

claims, must be resolved before further investment in the underground can proceed,‖ Turquoise

Hill said in a statement in July. That will likely put off any final agreement to 2015 as the earliest.

Source: BNE

WHY THE 'WOLF OF WALL STREET' VISITED THE 'WOLF ECONOMY'

International business strategist Jordan Belfort, the former stockbroker made famous by the book

he published in 2008 and the subsequent award-winning film in 2013 starring Leonardo DiCaprio,

paid a visit to Mongolia recently. No, he was not invited to give trading tips. In fact, the convict-

turned author and motivational speaker was here to talk about how Mongolian government officials

and business representatives can help speed along the country‘s success ―by effectively telling its

story.‖

Ironically, Mongolia is far from lacking in qualities that make for a good story; the trouble might

just be choosing which to share. Accented with lush and serene vegetation in the summer months,

parts of Mongolia could easily be confused for Switzerland, according to the Lonely Planet travel

guide. Known the world over for Chinggis Khaan and the traditionally nomadic lifestyle that is still

led by more than 30 percent of the population, Mongolia is looking to capitalize on its unique

culture and attractive scenery in a bid to open the world‘s eyes to many of its strengths as a place

to visit and do business. As a country rich with natural resources and a well-established mining

industry, Mongolia has been actively promoting itself to investors and business owners around the

globe, including in Canada through its newly established Canada Mongolia Chamber of Commerce,

located in Toronto.

―These days, Mongolian cashmere and sea-buckthorn berries have been two of the latest Mongolian

exports to gain popularity on the world stage. And likewise, as a country that has seen regular

double-digit growth, its emerging middle-class enjoys traveling to other countries and imported

goods,‖ said the chamber‘s executive director, Bolor Sambuu.

Canada is the second largest investor in Mongolia, and Export Development Canada (EDC) is actively

pursuing business there, having assisted 28 Canadian firms from its regional offices in Moscow,

Russia. Canadian businesses already export nearly USD 72 million to Mongolia. The Canadian

government has taken an important step to offer additional support to Canadian businesses by

opening up a Canadian Embassy in Ulaanbaatar.

Source: Tradeready.ca

VISA-FREE TRAVEL TO MONGOLIA FOR CITIZENS FROM 42 ADDITIONAL COUNTRIES

The Mongolian people easily find common ground with others, regardless of differences in religion,

culture and background, and Mongolians appreciate the value of meeting new people and learning

new things—a legacy deeply rooted in their nomadic origin, so now since 25 June, visitors from 42

nations no longer require a visa when traveling to Mongolia.

The government on 12 June issued Resolution No. 186, which opens up the opportunity for citizens

of a number of countries to visit Mongolia without obtaining a visa in 2014 and 2015. The resolution

has become effective starting 25 June and will remain valid until 31 December 2015. By eliminating

the step of obtaining a visa, Mongolia hopes to advance its tourism sector using the opportunity of

having the ―Welcome to Mongolia‖ Year 2015.

Now, 42 additional countries are included in the list of the countries that can visit Mongolia without

a visa: Luxembourg, Norway, Switzerland, Austria, Netherlands, Ireland, Sweden, Iceland, Belgium,

Denmark, Finland, France, Italy, Malta, Slovenia, Czech Republic, Slovakia, Estonia, Greece, Spain,

Portugal, Lithuania, Poland, Hungary, Latvia, Bulgaria, Romania, Lichtenstein, Monaco, Andorra,

Gibraltar, Vatican, Bahamas, Barbados, Trinidad Tobago, Argentina, Uruguay, Panama, Chile,

Grenada, Costa Rica, and Seashells. Thanks to this new resolution, visitors from these countries can

now enjoy a stay in Mongolia of up to 30 days from the date of entry without the hassle of obtaining

a visa. The only thing that a visitor should do before setting foot on the plane is to check whether

his or her passport is valid for at least 6 months. Travelers are invited to take advantage of this

unique opportunity while it is available.

In addition to the 42 countries mentioned above, 36 countries hold bilateral agreements with

Mongolia, which allows their citizens to visit Mongolia without a visa depending on their passport

types.

Source: 4Hoteliers.com

MINE SAFETY IN QUESTION AS 20-YEAR-OLD WORKER DIES OF SUFFOCATION

An accident resulting in the death of a 20-year-old artisanal miner at a micro-mine in Ulaanbaatar's

Nalaikh District on Tuesday has raised new questions about mine safety there.

The Mine Rescue Services (MRS) received a report that an unconscious young man had been pulled

out from 100 meters below ground. The young man had reportedly suffocated to death because of

poor safety precautions. The death follows a similar incident last year in May, when a 40-year old

man was found dead, also due to suffocation.

The mine, which is located at Orosiin Nuur in Nalaikh, is owned by Zoljargal [Source does not

provide a full name -ed]. Nalaikh District‘s inspectors and police at the scene of the accident

discovered that the mine‘s power had been cut off before the accident occurred. Authorities sealed

off the mined after their investigation.

Ulaanbaatar Governor Erdene Bat-Uul in May issued an ordinance for the closure of all the micro

mines in Nalaikh District to prevent more accidents. A total of MNT 55.6 million was spent from the

city budget to close down the mines. The ordinance is still effective, despite opposition from

Nalaikh District residents, and there have been several reports that miners are still illegally mining

coal from those mines.

―Brick factories buy coal from micro-mines in Nalaikh all year round, so illegal miners do not cease

extraction despite low coal demand in warm seasons,‖ said MRS Squad Chief D. Purevsuren.

Including this most recent death, two miners have died this year at the Nalaikh mines, and 27

miners have been rescued by the MRSM. On average, ten to 17 people die in the Nalaikh mines

every year, with 125 reported deaths between 2004 and 2009 and 287 injuries. In total, 61 miners

died in the Nalaikh micro mines between 2010 and 2013. The majority of the victims were between

15 and 35 years old, and the most common reason for accidents was either soil collapse inside the

underground mines or lack of air provisions.

Source: UB Post

OVER 87,000 CITIZENS TO RECEIVE FOOD STAMPS

The government is prepared to deliver foods stamps to 87,778 people from 15,137 families,

according to the Ministry of Human Development and Social Welfare.

The government has run its food stamp program for 5 years, making low-income citizens with wages

below the country's poverty line eligible for foods stamps accepted at 668 shops in Ulaanbaatar.

Coupons are able to redeem MNT 10,000 in food such as meat, milk, flour, eggs, vegetables, rice

and fruit for adults and MNT 5,000 for children.

Source: UB Post

JAPAN‟S LAST “AID” FOR MONGOLIA, USD 2.3 BN FOR NEW HEALTH SCIENCES UNIVERSITY

Japan will grant USD 2.3 billion as its last form of development aid to Mongolia for the construction

of a health sciences university, Japanese Ambassador Takenori Shimizu said at a press conference

[Source provides no date when press conference was held -ed]. Construction is set to begin next

year.

Source: Undesnii Shuudan

ULAANBAATAR TO SELL MONTHLY BUS PASSES

Ulaanbaatar will sell monthly bus passes for MNT 30,000, beginning in September. The order for the

launch of the monthly passes came from Ulaanbaatar's Specialized Inspection Agency and Public

Transportation Department.

Source: Udriin Sonin

WATER SCARCITY AND RISING ENERGY COSTS THREATEN MINING INDUSTRY

Access to water has become one of the most significant business risks for miners, says a report that

also highlights the threat to the sector from rising energy costs in some resource-rich areas. The

greatest risks were seen in Chile, Peru, South Africa and Mongolia in Ernst & Young‘s report

―Business risks facing mining and metal 2014-2015.‖

EY, the consultancy, said affordable water and energy should now be viewed as one of the 10

biggest problems for miners. Spending by mining companies on water infrastructure amounted to

almost USD 12 billion last year, compared with USD 3.4 billion in 2009, EY said. BHP Billiton Ltd.

and Rio Tinto PLC, the two largest miners in the world by market capitalization, are investing USD 3

billion to build a desalination plant at Escondido, the Chilean copper mine that is the world‘s

largest by output.

The EY report underscores how water resources are becoming an increasingly important concern

across business. Peter Brabeck, chairman of Nestlé, said water scarcity presented a more urgent

challenge than climate change. EY said large companies such as Rio, BHP and Anglo American PLC

had the expertise and financial strength to build complex water procurement systems for large

projects and were therefore ―likely to emerge as the partners of choice in water-scarce countries

seeking to exploit their natural resources.‖ By contrast, smaller companies with single-mine

operations in water-scarce regions were likely to be the most vulnerable, facing the greatest risks

with limited financial and technical resources.

EY also said miners were likely to have to devote more resources to renewable energy, which

―needed to become core to operations.‖ In Chile, the world‘s leading copper producer, electricity

costs had increased 11 percent annually since 2000, it said. The mining industry accounted for

about 36 percent of the country‘s electricity consumption, EY added. The biggest challenge for

miners, said EY, was to recover productivity levels, which had declined over the past decade. This

decline was ―a byproduct of a choice by industry participants to pursue volume growth at almost

any cost during an unprecedented boom in commodity prices,‖ EY said. ―Mines were developed to

get product out as quickly as possible, not as efficiently as possible.‖

While miners had been cutting costs, the drop in productivity had become ―entrenched.‖ What was

needed, EY said, was an across-the-board response, including different mining methods, new

equipment and more automation, as well as better measures to respond to data generated by their

operations.

Source: Financial Times, Osaka News

RIVERSIDE CONSTRUCTION DEPLETES UB‟S FRESH WATER RESERVES

Each day, every eight seconds, a child somewhere in the world dies from drinking contaminated

water while 2.3 billion people live in water-stressed areas, according to U.N. estimates. Mongolians

could be considered lucky because of the fresh water lakes and rivers available to them. But the

Tuul River, which has supplied settlers with fresh water for 400 years, may soon be running dry.

Numerous construction companies have launched projects nearby the river‘s fresh water reserves.

One example is the Agnista condominiums built by Imperial Castle LLC, situated in Khan Uul

District‘s 11th Khoroo. Fresh water has burst from the foundation of one of the buildings there,

spraying hundreds of tons of water for over 10 days. According to a security guard working at a

building neighboring the Agnista construction site, water gushing from the foundations of buildings

is a common problem.

Land near the Tuul River has become a marked location for luxurious housing. But the land where

these construction sites are found is protected by law. No construction is to take place within 200

meters of the river, and a 2004 law specifically banned construction near fresh water reserves. And

although authorities decided to raise the cost of water to MNT 24 a liter of fresh water and MNT 48

a liter of waste water, benefits have not been evident. A better plan would have been to target

companies rather than residents.

Source: UB Post, Ulsturiin Toim

URGAKH NARAN THREATENS UB'S DRINKING WATER

The 432 households of the Urgakh Naran apartment complex have been forced to suffer from a

contaminated environment due to poor sewage management by Blue Sky Partners LLC.

Blue Sky Partners LLC has failed to attend to the waste management issue despite several orders

from the Ulaanbaatar City Specialized Inspection Agency (UCSIA). UCSIA has proposed to

Ulaanbaatar's water authorities to suspend water deliver to Urgakh Naran. The complex, located at

the 11th Khoroo of Bayanzurkh District, is not connected to the central sewer pipelines and

Ulaanbaatar authorities have ordered the disposal of sewage and disinfecting of the soil. A soil

sample analysis by the Ulaanbaatar City Specialized Inspection Agency (UCSIA) found soil pollution

has exceeded the permitted level in nine hectares of land at Urgakh Naran.

―The reason that Urgakh Naran is still not connected to central lines is that sanitary pipelines

passing the town have not been completed yet,‖ said a spokesperson for Blue Sky Properties.

The sewage there is not only polluting the surrounding neighborhood, but also the air and soil

outside of the area where Ulaanbaatar‘s drinking water reserves and pipes are located. Ulaanbaatar

Deputy Governor S. Bataa upon a visit to the town promised to launch a project if the sanitation

issues remained unresolved by 15 September. The Blue Sky spokesperson said the company has

pledged to resolve these issues by that deadline.

Source: UB Post

CHINA‟S PLAN TO LIMIT COAL USE COULD SPUR CONSUMPTION FOR YEARS

Under pressure to reduce smog and greenhouse gas emissions, the Chinese government is

considering a mandatory cap on coal use, the main source of carbon pollution from fossil fuels. But

it would be an adjustable ceiling that would allow coal consumption to grow for years, and policy

makers are at odds on how long the nation‘s emissions will rise.

Observers say a coal ceiling would be easier to enforce than a cap on carbon emissions from all

fossil fuels, which some experts have proposed. China accounts for half of global coal consumption.

The coal cap would be stricter than current limits, which are not mandatory and are only loosely

enforced. But it would be pegged to expected economic growth and energy demand, so coal use

could keep rising for years. Meanwhile, some officials fear stricter limits would drag down the

economy.

But some economists argue that bold efforts to reduce coal consumption would be an economic and

environmental boon in the long term by encouraging new, clean modes of growth. And, experts say,

there is new pressure on the government from rising domestic anger over smog in Beijing that

results from coal burned in power plants, boilers and furnaces. Yet the most worrisome new threat

to China‘s carbon-cutting efforts could come from coal gasification plants, which officials have

promoted as a way to reduce particulate air pollution, said Barbara Finamore, the Asia director at

the Natural Resources Defense Council. Those plants can feed gas to big cities, cutting coal demand

in those cities, but producing the gas emits large quantities of carbon dioxide. A report issued by

Greenpeace East Asia this week said local governments in China had proposed 48 such plants, in

addition to two already running.

Source: New York Times

JAPAN TO STEP UP SUPPORT FOR OVERSEAS USE OF COAL

Japan said Wednesday it would step up support for coal-fired power plants in developing nations,

challenging a U.S. policy that seeks to discourage such plants in an effort to fight global warming.

"Without public loans and insurance from rich countries, emerging countries would turn to less

costly, inefficient technologies. It could aggravate the CO2 emission issue," said Takafumi Kakudo,

coal director at the Ministry of Economy, Trade and Industry, at a meeting where a government

panel of energy experts approved a new policy that promotes coal.

The move represents a repudiation of the Obama administration's strict stance of carbon emissions.

Washington is talking to members of the Organization for Economic Cooperation and Development,

a club of developed nations, about a rule that would ban national export-credit agencies from

financing new overseas coal power plants. But Japan contended in its policy, adopted Wednesday,

that developing nations would have to use coal whether others liked it or not. On 17 July, the

government-owned Japan Bank for International Cooperation announced a USD 202 million credit

line for Vietnam Electricity to purchase Japanese equipment for a coal-fired power plant.

Under Prime Minister Shinzo Abe's growth strategy, Tokyo seeks each year to back overseas coal

power-plant projects worth about USD 4 billion. Typically those projects have Japanese investors

and use at least some Japanese equipment.

Japan has been an ardent believer in energy efficiency since the first oil shock in the 1970s. Japan's

average rate of coal calorific value turned into electricity has been around 40 percent for two

decades, compared with more than 25 percent in India and around 35 percent in the U.S., according

to the Netherlands-based energy consultant Ecofys. The number shows Japan burns coal more

efficiently.

"In theory, replacing all coal power capacity in China, India and the U.S. with the Japanese up-to-

date technology would bring about a cut of 1.5 billion tons a year of CO2 emissions, more than

Japan's total," Wednesday's government report said.

But critics of coal power say it is better to shift now to clean technologies instead of cementing

coal use in place for decades.

Source: Wall Street Journal

JAPAN‟S RECORD TRADE DEFICIT RAISES FRESH DOUBTS ABOUT ABENOMICS

Japan‘s trade deficit widened to an unexpectedly large JPY 822 billion (USD 8.1bn) in June,

contributing to a record shortfall for the first half of the year and raising fresh doubts over the

government‘s Abenomics strategy to revive growth.

The trade deficit for the first half of 2014 was the largest since comparable data collection began in

1979, with the value of imports exceeding that of exports by JPY 7.6 trillion. The deficit in the

same period last year was JPY 4.8 trillion—a record then, but still much smaller. In June, the cost of

imports rose 8.4 percent from the same month a year earlier, to JPY 6.7 trillion. Exports fell 2

percent to JPY 5.9 trillion. The monthly trade deficit was the 24th in a row.

A big reason for the persistent deficits has been the disruption of Japan‘s nuclear power sector.

None of Japan‘s atomic plants have operated since the Fukushima nuclear crisis in 2011 The yen‘s

weakened buying power—it is down by a fifth against other major currencies since late 2012—has

made energy imports more expensive. But a more puzzling phenomenon has been the failure of

exports to take off.

Abe has been pushing for a limited revival of nuclear power, which would reduce energy imports,

and last week an atomic plant in southwestern Japan was certified by safety regulators—the first

time that has happened since tighter post-Fukushima standards were introduced last year. It could

begin operating again as early as this autumn, but additional restarts will take time, and experts

say that at most a third of Japan‘s pre-Fukushima capacity will be brought back online in the

foreseeable future.

Source: Financial Times

POLITICS

MSE'S ACTING CEO JOINS WORKING GROUP FOR MINERALS POLICY IMPLEMENTATION

The acting chief of the Mongolian Stock Exchange has received an appointment that will directly

influence developments in the mining industry.

The Mongolian Stock Exchange's (MSE's) acting chief executive officer, D. Angar, has been elected as

a member of the working group that focuses on government activities until 2016. That includes the

implementation of directives from the Mineral Sector that Parliament passed earlier this year.

Source: Mongolian Stock Exchange

MONGOLIA, CANADA SEEK TO STRENGTHEN TIES

Mongolia and Canada are seeking to strengthen ties as Canadian Foreign Minister John Baird arrived

in the country for an official visit.

Canada is one of Mongolia's foreign policy priorities, Mongolian Foreign Minister Luvsanvandan Bold

said during talks with Baird in Mongolia on Thursday. Bold proposed to elevate their four-decade-old

bilateral relations to a new level and strengthen cooperation in mining, judicial reform, agriculture,

healthcare and educational sectors.

Baird said that the Canadian government values its relations with Mongolia and has recently

designated Mongolia as one of 25 countries that will receive Canadian development assistance in

2014 to 2018. This bilateral development cooperation aims to help Mongolia stimulate sustainable

economic growth by strengthening public service capacity, particularly the management of natural

resources.

The ministers emphasized that Canada and Mongolia are willing to build enduring relations, based

on regional and global security concerns and values of democracy, human rights, and the rule of

law.

Source: Xinhua

MINTER ELLISON SEES CHEERS AND JEERS IN MINERALS LAW AMENDMENTS

The last-minute amendments to the Mineral law have brought some cause for cheer among

investors, but lingering issues remain.

Parliament on 1 July passed the much anticipated Law on the Amendments to the Mineral Law.

Investors and other interested parties who have been waiting for the 2010 moratorium on the

granting of new exploration licenses and the transfer of existing ones to be lifted will be pleased as

Parliament passed a separate law repealing the statute imposing that moratorium, effective 1 July.

Furthermore, the Amendments have scrapped pre-mining agreements going forward while allowing

for the preservation of existing ones, and extended the maximum term of exploration licenses to 12

years with the introduction of a third-3 year extension.

But there will likely be disappointment to find a competitive tendering process for the issuance of

new exploration licenses missing ―In the absence of any changes, our view is that the status quo,

direct applications on a first come first serve basis, will continue to apply to the issuance of new

exploration licenses.‖

The law also fails to reinstate the 106 licenses that were revoked last year in connection with the

former head of the Minerals and Resource Authority being found guilty of bribery. More positively

for investors, the amendments do not impose restrictions on pledges or transfers of exploration

licenses as had been contemplated in earlier drafts. Also contrary to earlier drafts (and

international practice), the amendments do not require relinquishment of the exploration license

area. What is unclear is the fate of licensed area above 150,000 hectares as the new law cuts the

maximum exploration licensed area from 400,000 hectares 150,000.

Read the full overview here.

Source: Minter Ellison LLP

“BETTER THAN EXPECTED” MINERALS LAW, SAYS MIBG

There is an old Mongolian proverb that says: "To lose it will take five days, but to gain it back will

take five years." Well it has been almost three years since foreign investors lost confidence in

Mongolia and the country's lawmakers. Since then, politicians have desperately been trying to gain

it back.

The most recent step forward, approval of much needed amendments to Mongolia's Mineral Law,

took place on the last day of the spring session of Parliament. The amendments to the Mineral Law

passed by Parliament are paving the way for the exploration sector to start again. The 2010 ban on

new exploration licenses including a ban on transfers of existing licenses. One of the key

developments to come out of the amendments to the Mineral Law is that the ban on issuance of

new exploration licenses will be lifted.

A side-by-side analysis of the new and old legislation has shown 81 articles have been added,

altered, changed, or terminated. From these 81 amendments, 37 amendments have been rated

positive, 38 amendments rated neutral, and six amendments were rated negative. We believe that

the legislation has not only put the 2012 proposed minerals law behind us, but it has actually

improved on its predecessor from 2006.

The government can now remove deposits from its list of strategic deposits, whereas previously it

could only add to the list. Also the definition of a strategic deposit has been altered to include

those deposits (potential mines) that have potential to affect the national economy, whereas

previously it defined strategic deposits as those that could have a regional economic impact.

Another significant change to the legislation is that the lifespan on exploration licenses had been

increased from 9 years to 12 years, and the terms of revoking exploration licenses have been

relaxed. In addition, various deadlines have been changed to force the Mineral Council to make

decisions faster, while also providing them with increased powers in certain areas.

Source: Mongolian Investment Banking Group

106-LICENSE RESOLUTION FAILS TO MEET INVESTOR EXPECTATIONS

The resolutions passed by government with the aim of settling the so-called 106-license dispute,

relating to the revocation of mineral exploration licenses in late 2013, are a far cry from what the

previous license holders and the market were expecting. In many ways this conflicts with, and

undermines, the positive amendments to the also recently passed Amendments to the Mineral Law.

Resolution No. 216 issues a competitive tender process for previously revoked licenses, noting not

one exploration license was ever issued via a competitive tender process under the 2006 Minerals

Law. This will require previous-license holders to bid against other interested third parties. At the

outset of bidding, the initial re-tendering price will be determined by costs incurred by the former

license holder.

Issues presented with the amended resolution lie within its lack of differentiation between former

license holders and third parties. In effect, former license holders will have to bid again for costs

that they have already incurred—despite these licenses previously being in good standing.

Amendments previously affirmed by senior government officials do not confirm this newly proposed

resolution or the implementation process. These discrepancies have not met the expectations of

many market participants, including Sam Spring, president and chief executive of Kincora Copper

Ltd., who oversaw a writeoff of nearly CAD 7 million last year due to the revocation of licenses.

―The proposed competitive tender process contradicts the positive move toward a direct

application 'first come, first served' approach adopted under the amended Minerals Law and is at

odds with recent proposed reform aimed at encouraging private sector activities, reviving the

minerals sector and Mongolian economy,‖ said Spring.

The implementation procedures of Resolution No. 216 have not yet been confirmed. Therefore,

Kincora Copper and other active former license holders will continue to press the government

officials involved to resolve the inconsistency with an outcome beneficial to all stakeholders.

Source: Mongolia Investment Banking Group

FORMER UB CITY MAYOR RECEIVES TWO-YEAR SENTENCE

Former Ulaanbaatar City Mayor Ts. Batbayar was sentenced to two years in prison on the illegal

privatization to city-owned land.

Batbayar and three other state officials on Tuesday stood trial on for the accusations of abusing

their authority and causing massive financial losses for the state through the illegal privatization of

state properties on Tuesday. Batbayar was chief of the Property Privatization Commission while

serving as mayor.

The former chief of the Ulaanbaatar City Council, T. Bilegt, was also found guilty of the illegal

privatization of land, but received a pardon from a prison sentence due to his defense based on the

terms of the Amnesty Law. Chief of the Property Privatization Division at the Ulaanbaatar Property

Relations Agency G. Manaljav and Ts. Batbayar‘s younger sibling, Ts.Chantsal, were acquitted of

their charges.

The Independent Authority Against Corruption and Ulaanbaatar City Prosecutors Office found during

their investigation that Batbayar had transferred MNT 605 million for the ownership of the

Ulaanbaatar-owned Urgoo hotel to Khar Dun LLC, which was owned by former President Nambar

Enkhbayar‘s son E. Batshugar. Khar Dun became a subsidiary of Enkhbayar‘s company Eskon LLC

after the transaction was made. Batbayar was also accused of privatizing the Ulaanbaatar-owned

Recovery Treatment Clinical Hospital, valued at MNT 779 million, for the far cheaper MNT 256

million to his sibling Ts. Chantsal, with the help of Manaljav.

Source: UB Post

ENKHBAYAR IS A NO-SHOW FOR EXPECTED RETURN

Mongolian People's Revolutionary Party chief and former President Nambar Enkhbayar failed to

arrive in Mongolia 28 July, with only a statement from the party that he needs to tend to his health

given as a reason.

Enkhbayar was advised to wait for his health diagnosis results before traveling, according to a party

statement. The delay, however, comes just as former Ulaanbaatar Mayor Ts. Batbayar was

sentenced to a high-security prison for two years, one month on charges of corruption for the sale

of the Ulaanbaatar-owned Urgoo Hotel for MNT 605 million to Khar Dun LLC while Batbayar served

as mayor and chief of the Ulaanbaatar Privatization Committee. The owner of Khar Dun is

Enkhbayar's son, Enkhbayar Batshugar.

Another possibility for the delay comes from a dubious comment made by parliamentarian O.

Baasankhuu. He said that high-ranking party officials from the Mongolian People's Party and

Mongolian Democratic Party had met in June, where Baasankhuu said he learned there was a

movement to band together against Enkhbayar upon his return.

Source: Udriin Sonin

CORRUPTION TRIAL FOR 54 UNIVERSITY OFFICIALS POSTPONED

A court trial for 54 university officials from the National University of Mongolia was postponed to 13

August.

District Primary Criminal Court No.1 was originally set to hold the trial for former director of the

School of Trade at the National University of Mongolia, B. Javkhlantugs, on Wednesday, along with

53 other university officials on charges of accepting bribes from students. A joint investigation by

the Independent Authority Against Corruption (IAAC) and the Ulaanbaatar City Prosecutor‘s Office

revealed that the university officials, mostly teachers, had taken bribes from students in return for

better grades for an extended period of time.

Source: UB Post

ANNOUNCEMENTS

INVEST MONGOLIA, 2-3 SEPTEMBER, ULAANBAATAR

Frontier Securities' eighth annual Invest Mongolia conference is scheduled for 2 and 3 September in

Ulaanbaatar

This year, the conference will be held over two days for presentations and discussions on ―smart‖

governance, a roadmap for Mongolia to come out of its economic crisis, and industries such as

mining, infrastructure, tourism, real estate and oil.

BCM members will receive a 15 percent discount at registration. Register online at frontier-

conference.com. For more information call 976-7011-9999 or email: conference@frontier.mn

___________________________________________

2014 DISCOVER MONGOLIA, 4-5 SEPTEMBER, ULAANBAATAR

The 12th Discover Mongolia International Mining Investors Forum (IMIF) will be held in Ulaanbaatar,

Mongolia on 4 and 5 September at the Children's Palace of Mongolia— the location of the conference

for the past 11 years.

The forum will have two days of intensive minerals and mining discourse and exhibition for

companies. Although the Mongolian economy is undergoing serious challenges and difficulties, some

decisions and resolutions adopted at the law-making and executive branches of the government

makes us restore confidence and trust. Parliament‘s decision to harness the country‘s economic and

business environment makes long-term steps to nurture investor confidence and trust in Mongolia.

The 12th annual Discover Mongolia- 2014 IMIF is pleased to announce its Platinum Sponsors are

Xanadu Mines and Mongol Metals and its Gold Sponsor is Anglo American.

Business Council of Mongolia is supporting Discover Mongolia 2014 International Mining. BCM

members will receive an early bird rate to attend the forum. For Exhibition, Sponsorship and

Delegates information visit discovermongolaiforum.com. For more information call 976-7014-9762,

fax 976-7014-9762, or email info@discovermongoliaforum.com.

___________________________________________

OIL & OIL SHALE MONGOLIA 2014, 10-11 SEPTEMBER, ULAANBAATAR

The Oil & Oil Shale Mongolia 2014 International Investment Conference is back with a new

scheduled date on 10 and 11 September in Ulaanbaatar, Mongolia.

This is the country's first international investment conference on oil, gas, and oil shale. The event

will be attended by international investors, oil, gas, and oil shale companies, service providers,

consultancies, equipment suppliers, and traders. The delegates will have a unique opportunity to

network with industry's key contacts and to obtain vital information on legislation and policies on

oil, gas, and oil shale exploration and production regulations from the officials of the Ministry of

Mining and Petroleum Authority of Mongolia.

Those who attend the Oil & Oil Shale Mongolia 2014 International Investment Conference will learn

how to reap the rewards from Mongolia‘s growth, the evermore favorable policies, and emerging

market of oil and oil shale.

BCM is supporting the conference. BCM members will receive a 15 percent discount. For more

information logon to OilMongolia.com.

BCM WORKING GROUP NEWS

The BCM Environmental Working Group met on 26 June with 15 members attending.

Bayarmaa A, Vice Director, BCM, moderated the session.

New members: Shinetsetseg-Breakthrough PR, Ariunaa Norovsambuu–The Asia Foundation.

New Participants: Tirza Theunissen-The Asia Foundation, Binderya Oyunbaatar, Dolzmaa

Davaasuren-The Nature Conservancy,

Guests: Batima Puntsagmaa-Mongolian Water Forum, Kevin Trzcinski-Mongolian National University,

Tsenguun Tumurkhuyag, Munkhjargal Bayarlkhagva-Sustainability East Asia, Altai Onkhor–Water

Resources Group.

Speakers and topics were:

Introduction of Urban Services Program by Tirza Theunissen, TAF Deputy Country Representative,

Asia Foundation;

Impact of Climate Change on Water Resources by P. Batima, Director, Mongolia Water Forum;

Application and Use of Solar Thermal and Energy Efficient Technologies in Mongolia by Kevin

Trzcinski, Vice President of International Relations, Mongolian National University.

If you have any questions, please contact Erdenetsetseg at erka@bcmongolia.org.

___________________________________________

The BCM Logistics Working Group met on 10 June with 7 members attending.

Mattias Ahlin-Scania, Chairman, moderated the session.

New members: D Enkhbat CEO-Mongolian Express; Rentsendorj Yondon, Mongolian Opportunities

Fund; Buyanderler Tsogt-Ochir, Logistics Supervisor, Cummins Mongolia; Nobuo Okada, General

Manager, Mitsui Co.

Tengis Garamgaibaatar, Chief Executive Officer, Monroad, was elected as WG chairman.

Congratulations to him for his new role as BCM`s Logistics Working Group Chairman! We thank

Mattias Ahlin for his groundbreaking efforts in launching the Working Group. Mattias is returning to

Scania‘s headquarters in Sweden.

Speakers and topics were:

1. Follow up from last meeting‘s discussion

a. Main challenges for the Mongolian Logistic sector

2. Discussion about BCM Logistics Working group role and focus areas

(Mission Statement)

a. Transport modes; road, rail, air

b. Customs efficiency

c. Legal framework; Loads and dimension, safety, standards

d. Stakeholders: Ministries, customs, transport organizations, vehicle manufacturer association

e. Transport efficiency

3. Discussion about meeting intensity and organization

4. Other business

Next meeting was scheduled on 7 August. If you have any interest joining the new and growing

Logistics Working Group, please contact Erdenetsetseg at erka@bcmongolia.org

___________________________________________

The BCM Capital Markets Working Group met on 29 May with 11 members attending.

Howard Lambert /ING Bank/ and Nick Cousyn /BDSec/, Co-chairmen, moderated the session.

Guest: Michael O`Malley-Executive Director at ISG MineElect.

Speakers and topics were:

Facilitating foreign direct investment (FDI) and Capital Markets update - by Byambaa Losolsuren,

Leader of FDI Capital Markets group of 100 Day Revitalization Council, and Partner of Mandal

Capital LLC.

If you have any recommendations on Capital Markets for the Revitalization Council, please contact:

erka@bcmongolia.org

___________________________________________

The BCM Tax Working Group met on 22 May, with 12 members attending.

Onch D. - Co-chair, BCM‘s Tax WG and Deloitte Onch a moderated the session.

Attending were representatives from the following BCM member entities - Deloitte Onch, PwC,

Ernst & Young, KPMG Tax, OT, Terra Energy, Petro Matad, MahoneyLiotta, TMZ and BCM.

New members: Amarbayasgalan and Tuvshinbayar from Terra Energy.

Meeting agenda:

• Overview - B. Byambasaikhan, Secretariat, 100 Day Revitalization Program; Chairman, BCM;

• Initial new tax policy thoughts from WG members.

On May 29 BCM‘s Tax Working Group sent a detailed study of the current value added tax (VAT)

deficiencies and recommendations for efficiencies to result in greater tax revenue to the 100 Days

Revitalization Council.

Please contact T.Erdenetsetseg, BCM Working Group Coordinator, erka@bcmongolia.org .

___________________________________________

The BCM ‗expanded‘ Legislative Working Group (LWG) met on 20 May with 42 members attending at

Corporate Hotel meeting room.

This was the third expanded WG meeting on the draft Amendments to the Minerals Law. The 2 ½

hour session included BCM members from mining companies, embassies and the MNMA. Special

guests were 5 members of Parliament and others from the Mining Ministry, Geological Society and

Export Society.

LWG Co-chair, James Liotta, Mahoney Liotta, moderated the session.

The following 11 presentations were made:

- A healthy Private Sector Driven Industry (1997 and 2006 Minerals Law / Amendments / what to

look for. By Doug McGay – longtime resident in the Minerals and petroleum industry;

- Investor views and concerns about making investments in Mongolia and its mining sector. By

Randolph Koppa – Vice Chairman, BCM and President, TDB;

- A view from the Mining Majors by Sunjidmaa Jamba from Peabody Energy;

- A supply side view by Stephen Potter, Wagner Asia;

- Tax Issues impacting the Minerals Industry by D. Onchinsuren – Co-chair BCM Tax Working

Group and Deloitte Onch Audit;

- Use of MSE for State Privatizations by Nick Cousyn – Co-chair, BCM Capital Markets Working

Group and BDSec;

- Views from within the Industry by N. Algaa – Executive Director, MNMA;

- Transparency and Public Comment by David Wyche – Economic/Commercial Section Chief,

Embassy of the United States of America

- International Agreements that attract bi-lateral investment, and views on the State ownership

of assets by Maxim Berdichevsky – Counselor & Senior Trade Commissioner, Embassy of Canada

- Some specific thoughts on the Amendments by James Liotta – Co-chair, BCM LWG and

MahoneyLiotta Law Firm; Bayar Budragchaa - Co-chair, BCM LWG and ELC Law Firm.

As MP Garamgaibaatar, Chair of the Standing Committee on Economic Affairs and Head of the

Parliamentary Working Group on the Draft Amendments to the Minerals Law, commented at the

meeting's conclusion - "We should not really change general structure and core contents of the draft

Amendments."

Also MP Garamgaibaatar welcomed BCM sending any additional comments directly to his Working

Group which was accomplished by the BCM Legislative Working Group.

Note: Amendments to the Minerals Law were passed by Parliament on 1 July 2014.

BCM WEBSITES

MONGOLIAN WEBSITE: „PRESENTATIONS‟

The following statistics and reports posted on Presentations section in Mongolian:

http://bcmongolia.org/mn/илтгэлүүд

• Монгол улсын нийгэм эдийн засгийн байдал, 2014 оны 4 сарын байдлаар, Үндэсний

статистикийн хороо

• Мандал Женерал Даатгал тайлан, 2014 оны 5 сар

• Сант марал сангаас гаргасан УЛС ТӨРИЙН БАРОМЕТР №13(47), 2014 ОН 3 САР

• Монгол улсын нийгэм эдийн засгийн байдал, 2014 оны 3 сарын байдлаар, Үндэсний

статистикийн хороо

•―Anti-Corruption legislation and State Policy‖ (Mongolian) by D. Munkhjargal, Prevention and

Public Awareness Department, Senior Commissioner, Independent Authority Against Corruption

(IAAC) Mongolia at the ―ANTI-CORRUPTION LEGISLATION/POLICY, INTERNATIONAL BEST PRACTICE

ON TRANSPARENCY‖ Training seminar, Mar 06, 2014

___________________________________________

ENGLISH WEBSITE: 'PRESENTATIONS', 'MONGOLIA REPORTS', „INTERVIEWS„, MONGOLIAN

BUSINESS NEWS‟, „PHOTO GALLERY‟

2 presentations from BCM monthly meeting on June 23, 2014:

• T. Gansuld, Executive Director, Outotec Mongolia – ―Outotec Mineral Processing Solutions and

Experience in Mongolia‖

• Lisa Gardner, Journalist & Media Trainer – ―Mongolia‘s Media Laws: Defamation, Libel and

Threats to Press Freedom‖

3 presentations from BCM monthly meeting on May 26, 2014:

• B. Lakshmi, Director, Mongolia Economic Forum – ―Why Mongolia Business Summit?‖

• Nick Cousyn, Co-chair, BCM Capital Markets Working Group – ―Use of MSE for State Privatizations‖

• Peter Benson, VicRoads Team Leader, ADB Capacity Building Project – ―Mongolia Roads –

Achievements and Challenges‖

• China Metals & Mining Thermal Coal, Coking Coal, Copper, Gold, Steel by Macquarie Capital

Securities Limited

Mongolia Reports: http://bcmongolia.org/en/mongolia-reports

• World Investment Report 2014 by United Nations Conference on Trade and Development ;

• Social and economic situation of Mongolia as of May 2014 by National Statistical Office of

Mongolia; (available in Mongolian language - Монгол улсын нийгэм эдийн засгийн байдал 2014

оны 3 сарын байдлаар, Үндэсний статистикийн хороо);

• Real Estate Report 2014 by Mongolia Properties;

• ASIA Reaching for the Top by International Monetary Fund, June 2014;

• ASIA Achieving Its Potential by International Monetary Fund, June 2014;

• Mongolia: Economy outlook 2014, by Asian Development Bank;

• Polit Barometer by Sant Maral Foundation, March 2014.

Interview Section: http://bcmongolia.org/en/interviews

• Talking to United World, the Executive Director of the Mongolian Drilling Association (MDA)

Professor J. Tseveenjav. Source: http://www.worldfolio.co.uk/;

• Jim Dwyer, Executive Director, BCM – ―Business need more business‖;

• Damshnamjil Tsogtbaatar, Chairman of the SPC: ―Privatizing Mongolia‖;

• Jan Hansen, Economist, ADB: ―The depreciation should help to increase the competitiveness and

to develop the non-mining industrial sector‖.

BCM's English website includes the ―Mongolia Business News‖ section. 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 6th Anniversary BCM Renewal dinner on November

11, 2013.

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.

Add BCM on Facebook at https://www.facebook.com/TheBusinessCouncilOfMongolia 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

https://twitter.com/bcmongolia.

The bulk of the content on BCM‘s new LinkedIn page is Mongolian language to better cater to BCM's

Mongolian-speaking audience and members. Please click on the below link to follow us on our new

LinkedIn page.

http://www.linkedin.com/company/business-council-of-mongolia?trk=company_logo

Social stats: BCM now has 5,885 fans on our Facebook fans page, 642 connections on LinkedIn

network, and 1,136 followers on Twitter.

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

organization, visit the official BCM website at http://bcmongolia.org/en/

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]

Year 2012 *14.0% [source: NSOM]

Year 2013 *12.5% [source: NSOM]

June 30, 2014 *14.6% [source: NSOM]

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

Note: 15.1% y-o-y, Ulaanbaatar city, June 30, 2014

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]

January 25, 2013 12.50% [source: Mongol Bank]

April 8, 2013 11.50% [source: Mongol Bank]

June 25, 2013 10.50% [source: Mongol Bank]

July 30, 2014 12.00% {source: Mongol Bank}

CURRENCY RATES – 31 JULY 2014

Currency Name Currency Rate

US Dollar USD 1,870.92

Euro EUR 2,506.28

Japanese yen JPY 18.19

British pound GBP 3,161.48

Hong Kong dollar HKD 241.41

Chinese Yuan CNY 303.14

Russian Ruble RUB 52.70

South Korean won KRW 1.82

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.