BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org

info@bcmongolia.org

Issue 74, June 19, 2009

NEWS HIGHLIGHTS:

Business: Elbegdorj prefers 50% profit sharing to part ownership in OT; Moody's downgrades

ratings of Khan, TDB, and Xac banks; Centerra settles Boroo dispute, to pay more redundancy benefits; Boroo mine operating license suspended for up to 3 months; Progress on several issues at talks with Ivanhoe, says Zorigt; “Two neighbors” blamed for delaying Tolgoi agreements; Robert Shapiro back in Mongolia to help with OT agreement; Government wants to suspend all uranium licenses; Rabobank leads Erdenet copper pre-financing; Red Hill Energy agrees to sell Ulaan Ovoo mines to Falcon Mining; ZTE clicks deal with Skytel; Chinese firm to extend oil drilling work after initial success; 5,177 mining licenses granted this year; Unpaid dues from power plants may force coal mines to close down; Petroleum prices up, but less than importers wanted; Staff complain about way Anod Bank is being run; 7 banks tie up with MoneyGram to make Euro transactions easier; Khan Bank team visits herders to provide relief; Copper slides on weak US data, stronger dollar; Goldman sees 2010 copper price at USD5,800 a ton; Chinalco praises Australia, hints Rio is to blame; Australia sees good in BHP-Rio tie, China sees red; Rio Tinto launches rights issue, warns outlook 'uncertain'; Shenhua retains focus on Mongolian coal mines; Chinese company wants to buy 20% shares of Denison Mines; U.S.-Mongolia Business Forum focuses on energy; Depleting water resources discussed at conference.

Economy: World Bank boss urges transparency to attract private investment; Central Bank again

reduces interest rate; Industrial output falls 7.2% yoy; Money supply rises, but still lower than a year ago; Steep rise in unemployment; Trade turnover less, so is deficit; Sharp fall in freight and passenger traffic; Tax revenue falls 29.8%, pushing up budget deficit; Consumer prices rise 8% yoy, 0.1% mom; Average household spends more than it earns, survey finds; All tax refunds to be paid by June; Business wants MPs to hear what it needs; Loans to SMEs will raise GDP in Ulaanbaatar to MNT7 million per head; World Bank to help „professional inspection‟ turn more professional; New market access for Canadian livestock in Mongolia; Crisis rumbles along the Mongolian steppe; MPs discuss competition law amendments with MNCC.

Politics: Elbegdorj sworn in, says he will fulfill people‟s demand for reform and change; Ex-

President does not have a bank account, PM does not have a car; Enkhbayar hosts farewell dinner for MPs; MPRP members call for changes in party; Medical graduates no longer need two years‟ training; Crimes rise; NGO faults TV channels on coverage of presidential election; World Bank leads support to Mongolia‟s statistical system; Three held for Mongolia‟s first credit card fraud.

MEETING NOTICE TO BCM MEMBERS

The next BCM monthly meeting for Members will be Monday, June 22 at 5 PM at the Open Society Forum. Our meeting will feature a presentation by Mr. Do.Ganbold, President, Mongolian National Mining Association (MNMA), on key developments in the mining sector. The Ambassador of the U.S. to Mongolia, Mr. Mark Minton, will provide an update on Mongolian-U.S. bilateral relations. Teleconferencing will again be available for Members not able to attend in person. Call number is

(1-218) 936-7979, access code 771358 to be connected. Cost will be solely that of the long distance call to the above US number.

BUSINESS ELBEGDORJ PREFERS 50% PROFIT SHARING TO PART OWNERSHIP IN OT

In an interview on the eve of assuming office as Mongolian President, Mr. Tsakhiagiin Elbegdorj said he wanted to change a proposed gold and copper mining deal with Rio Tinto Group and Ivanhoe Mines Ltd. that would allow the government to buy an equity stake in the project. “I think an equity share is not a good proposal,” Mr. Elbegdorj said, suggesting instead that the government take 50 percent of the profit.

Mongolia has struggled to create a framework for foreign investment in its gold, copper and coal deposits, leaving projects in limbo. Copper‟s 39 percent slump in the past year has hurt state finances, increasing the urgency of opening more mines as economic growth slows.

“I think now we are approaching the final moments to get a good agreement,” Mr. Elbegdorj said. “I would like to say to the foreign investors, do not close the door, there are still opportunities.” Mr. Elbegdorj called reaching an agreement his “first priority” on the economic front, though he gave no more specific time frame for a deal than the next three years. This agreement is the first agreement,” he said. “If we make a good agreement, this will be an example for exploiting other big deposits and there is no space to make mistakes.”

Mr. Elbegdorj also proposed that the government consider changing a 2006 windfall profit tax that imposes a rate of 68 percent on revenue when copper prices exceed a certain amount per ton. Instead, he suggested a graduated system, for example a rate of 40 percent when copper prices reach USD8,000 per ton and 60 percent when they reach USD10,000 per ton. “I think one big high rate is not very wise,” he said.

Source: Bloomberg.com

MOODY‟S DOWNGRADES RATINGS OF KHAN, TDB, and XAC BANKS Moody's Investors Service has downgraded its rating of three Mongolian banks to reflect stresses arising from the current crisis and the increasing convergence between the government's ability to support them and its own debt capacity. The banks are: Khan Bank, Trade and Development Bank of Mongolia (TDB) and XacBank.

Explaining the rating actions, Moody's has said it is concerned that the core capital level of the banks could be further weakened by the expected deterioration in asset quality. An estimate of credit losses shows that the rated banks' earning power and capital adequacy would deteriorate to a level under which their current BFSRs and outlooks would not be justified.

The rating actions follow a comprehensive review of all rated banks in Mongolia after (i) conducting scenario analysis that tested the banks' sensitivity to various credit loss assumptions; (ii) concluding Moody's review on Mongolia's sovereign ratings; and (iii) better aligning the banks' credit ratings and the Mongolian government bond ratings as a result of the global financial crisis.

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Among the rating actions taken are:

[1] The Bank Financial Strength Rating (BFSR) of Khan Bank and XacBank were lowered to D- from D, and map to a baseline credit assessment (BCA) of Ba3 from Ba2. The revised ratings carry stable outlooks. The BFSR of TDB was placed on review for possible downgrade.

[2] All three banks' foreign currency long term deposit rating was confirmed, but assigned at the same time a negative outlook.

[3] Khan Bank's foreign currency long term issuer rating and senior unsecured MTN rating were lowered to Ba3 from Ba2. Its local currency long term bank deposit rating, issuer rating, and senior unsecured MTN were lowered to Ba3 from Baa3. Its foreign currency subordinate MTN was lowered to B1 from Ba2. Its local currency subordinate MTN was lowered to B1 from Ba1. Its local currency short term bank deposit rating was lowered to NP from P-3. The revised ratings carry a stable outlook.

[4] TDB's foreign currency long term issuer rating and senior unsecured rating were lowered to Ba3

from Ba2. Its foreign currency subordinate MTN rating was lowered to B1 from Ba2. Its local currency long term bank deposit and issuer ratings were lowered to Ba3 from Ba1. The revised ratings are placed on review for possible downgrade.

[5] XacBank's foreign currency long term issuer rating was lowered to Ba3 from Ba2. Its local currency long term bank deposit and issuer ratings were lowered to Ba3 from Ba1. The revised ratings carry a stable outlook.

Source: www.moodys.com

CENTERRA SETTLES BOROO DISPUTE, TO PAY MORE REDUNDANCY BENEFITS

Centerra Gold Inc has announced that the labor dispute with the Boroo trade union was settled on June 16 with the parties officially signing a Settlement Agreement as well as amendments to the Collective Agreement. The key terms of the settlement provide enhanced future redundancy benefits to permanent employees. The company believes the settlement will not have a material impact on future cash costs.

All site-based employees will return to work when the current suspension of operations at the mine site has been lifted. Boroo Gold is working with the relevant government agencies to remove the suspension as soon as possible in order to resume normal operations.

Boroo Gold Co. Ltd. values its employees and looks forward to a long and cooperative relationship with the Boroo Trade Union and BGC employees. Boroo Gold and Centerra Gold desire their presence in Mongolia will grow through additional investments that create employment opportunities as well as other economic and social benefits for the people of Mongolia.

Source: www.mining-journal.com/breaking-news, www.centerragold.com

BOROO MINE OPERATING LICENSE SUSPENDED FOR UP TO 3 MONTHS

Centerra Gold said on June 12 authorities in Mongolia have suspended the operating license at its Boroo mine, knocking the company's shares down 9 percent. The news had no immediate impact on Boroo's production as it came when the mine was already shut down due to a labor dispute, since resolved. Centerra said Mongolia cited issues related to record-keeping, incorrect land use, and improper operating procedures in its suspension, which is set to last for up to three months. If the issues are not resolved within the three-month period, the licenses could be revoked.

Centerra spokesman John Pearson said the suspension was handed down following a visit from Mongolia's State Specialized Inspection Agency. "We're working with the authorities to understand what these issues really are and to resolve them in a timely manner," he said. Mr. Pearson said he did not know whether the inspection agency's visit was related to conditions of the work stoppage. Some striking workers had gone on a hunger strike.

"I don't know whether that was directly related to the strike or not. Certainly there was a working group formed to inspect the Boroo mine site. So they came and visited and the report came out of that visit," he said. Mongolian media have reported the Government formed the working group to investigate the company after workers accused it of misdeeds.

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The mine had been expected to produce between 160,000 and 170,000 ounces this year, but Centerra will revisit its projections when the issues are resolved, Mr. Pearson said.

Analysts said it is unlikely the shutdown will extend past three months. "I think the issues are fairly succinct and look like they can be remedied quickly with proper co-operation by both parties. I don't even think it'll last three months," said one, adding, "My understanding is senior management is on the way down there in the next day or two to try and resolve this."

Another said the Mongolian government likely wants to establish itself as a presence at the mine, but he agreed that the shutdown probably will not last very long. "Who knows when you're dealing with governments, but Centerra are well used to dealing with them and if they say three months, then it'll probably be three months," he said.

Source: Reuters.com, The Canadian Press

PROGRESS ON SEVERAL ISSUES AT TALKS WITH IVANHOE, SAYS ZORIGT

Minerals and Energy Minister D.Zorigt has said renewed negotiations with Ivanhoe Mines on the Oyu Tolgoi investing agreement have led to progress on several issues raised by MPs, but those related to finance are eluding a consensus. These mainly center on how Mongolia will provide its 34 percent share of the investment expenses. Another contentious issue is that of the period of the initial agreement.

The regular Government meeting last week discussed a letter from Ivanhoe Mines which sought to dispel the doubts raised by MPs that the draft investment agreement did not adequately protect Mongolian interests and could even damage national security. Mr. Zorigt said his Ministry is preparing a reply to this and when it is ready it will be sent to the mining company as well as to the Government and Parliament.

Source: Ardiin Erkh

“TWO NEIGHBORS” BLAMED FOR DELAYING TOLGOI AGREEMENTS

Senior Democratic Party MP, Mr. E.Bat-Uul has blamed Mongolia‟s “two neighbors” for the delay in reaching an agreement on investments on the two Tolgoi deposits. “We wouldn‟t be begging everybody for money if mining there had begun,” he said, adding, “We got to tell the truth to the people. The neighbors do not want to let us out of their control and do not wish western mining giants to work here, as they think that may then allow the governments of the USA, Japan, Australia and such countries to have more influence in Mongolia.”

Source: The Mineral News, MNMA

ROBERT SHAPIRO BACK IN MONGOLIA TO HELP WITH OT AGREEMENT

Mr. Robert Shapiro, co-founder and chairman of Sonecon, a U.S. private finance consultancy, is in Mongolia again to help in reaching an agreement on investing in the Oyu Tolgoi project. He earlier provided the Government and Parliament with information and analysis on various aspects of the proposed agreement. Mr. Shapiro feels the best course for the Government would be to impose taxes on the investor for the entire life of the project, rather than own equity in it, but accepts that a national government will have its own compulsions.

Source: Zuunii medee

GOVERNMENT WANTS TO SUSPEND ALL URANIUM LICENSES

The first discussion of the national policy on radioactive minerals by the Standing Committee on Security and Foreign Policy heard two conflicting views, both forceful, on what the national policy on uranium should be. Mr. Ch.Khurelbaatar opposed the Government proposal to impose total state ownership, especially when it has been seen that Mongolia “cannot mange state concerns responsibly”. Both democracy and the economy “flourish only when private entrepreneurship is allowed to thrive and Mongolia should not follow Hugo Chavez‟s way,” he said, expressing concern that if the state decides to own all the uranium in the country, it will mean all existing licenses will be canceled.

The Head of the committee, Mr. Z.Enkhbold, said uranium is not like copper or coal but “is a mineral under international control, and special conditions are placed on its use”. That makes “total Government control of the sector essential”, more since Mongolia has “enough uranium to meet one full year‟s global demand”, he said.

Minister for Minerals and Energy D.Zorigt agreed that uranium has a special status in international affairs, but assured that “licenses of reliable companies will not be taken back”. Mr. N. Enkhbold wanted uranium to continue being treated as a strategic mineral, but was against canceling or suspending licenses, as “we cannot be seen as changing the rules suddenly in the middle of the game”.

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Mrs. B. Dolgor, Head of the Cabinet at the State Secretariat, has said that work on improving the legal environment can begin only when all current licenses are suspended. The logic is difficult to follow. The present license holders have not broken any rules, nor have any charges been leveled against them. Most of them have invested considerable time and money on efforts to determine the

deposit size. Now their activities have been frozen and the Government wants to take the licenses back.

Mr. B. Erdenebileg of the Central Asian Uranium Co. calls the move “ridiculous” and wonders how the companies are expected to recoup their invested amounts. A Western Prospector official, who declined to be named, has said the Government should seek other solutions, and negotiate terms with companies that would transfer their licenses.

All data relating to uranium deposits in Mongolia were concealed until 2002 by Russia which had mined and taken away over 550 tons of the metal during 1988-1995. Mongolia became aware of its wealth in the form of uranium resources only when its U-308 deposit found a place in international mining maps. The country now realizes that the uranium it has can prove as important as either of the two Tolgois. And bigger powers are actively seeking to place their hands on it.

Source: Zuunii Medee

RABOBANK LEADS ERDENET COPPER PRE-FINANCING

Ocean Partners, Rabobank and Banco Espirito Santo have signed a USD55 million trader-led pre-payment financing for the Erdenet Mining Corporation, better known as just Erdenet. This is the first new metals structured commodity finance transaction in the region since late 2008.

The one-year deal is a club arrangement, with Rabobank acting as coordinating arranger and providing USD42 million of the funding. Banco Espirito Santo (BES) is providing the remaining USD13 million. Ocean Partners is the borrower of record, which on-lends to Erdenet. As such, there is a pass-through risk, with performance risk being taken on Erdenet to produce and deliver copper concentrate to OP at the Chinese border. Pricing on the deal is not being disclosed. Denton Wilde Sapte (DWS) acted as legal counsel for the lenders.

Source: www.tradefinancemagazine.com

RED HILL ENERGY AGREES TO SELL ULAAN OVOO MINES TO FALCON MINING

Red Hill Energy has signed an agreement with Falcon Mining AG of Zug, Switzerland whereby the latter will acquire a 100% interest in Red Hill Mongolia LLC, a wholly owned subsidiary of Red Hill Energy, which owns a 100% interest in Red Hill's Ulaan Ovoo coal project in northern Mongolia. Falcon Mining will assume operational activities and incur 100% of all costs pertaining to pre-production, coal mine development and managing all coal production activities at Ulaan Ovoo. The project is located within 120 km of Mongolia's central railroad.

Falcon Mining has agreed to pay Red Hill Energy USD30 million with the first USD3 million due within 14 days of Red Hill Energy receiving both shareholder and TSX-V regulatory approval. The present transaction represents less than 20% of Red Hill Energy's combined measured and indicated tons of thermal coal, with the company retaining its 100% ownership of both the Chandgana Tal and Chandgana Khavtgai coal projects in central Mongolia.

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The Mongolian Government has granted the Ulaan Ovoo coal project all major pre-requisite approvals required prior to commencing with coal mining operations, including approval of the Detailed Environmental Impact Assessment (DEIA) as well as the issuance of a long term, fully transferable mining license.

Falcon Mining has indicated that it intends to continue supporting initiatives of Mongolian communities and projects sponsored and assisted by Red Hill Energy including the Dolma Ling Community Center which provides medical services, meals, education and other vital services to an impoverished neighborhood of Ulaanbaatar.

Source: www.redhillenergy.com

ZTE CLICKS DEAL WITH SKYTEL

The Chinese company ZTE Corp has bagged a UMTS contract with Skytel of Mongolia. The deal will require ZTE to set up a nationwide commercial UMTS network thereby marking convergence of Skytel‟s UMTS and CDMA networks. “We are honored to partner with Skytel to assist them in maintaining their leadership position in Mongolia,” said Mr. Zhang Jianguo, General Manager of

ZTE‟s UMTS products. “Our SDR technology will help Skytel meet their growing market needs while maximizing the ROI to attain the best business results.”

Source: www.Telecomtiger.com

CHINESE FIRM TO EXTEND OIL DRILLING WORK AFTER INITIAL SUCCESS PetroChina, the largest oil/gas producer and distributor in China, is also the leading Chinese company operating in Mongolia in terms of the amount invested. China National Petroleum Corporation (CNPC) is the sole shareholder of PetroChina which, in turn, set up PetroChina Daqing Tamsag LLC in Mongolia in 2005. Its president, Mr. Fang Baocai, says the company has made about 300 drillings in Tamsagbulag basin, Dornod province, since 2005 and has found oil in 70 of them. Since 20% success is considered adequate, “we are extending our operation," Mr. Fang added. PetroChina Daqing Tamsag holds exploration rights in Contract Blocks XIX, XXI & XXII in Tamsagbulag basin. In 2005, it paid USD940,962 into Mongolia's state budget, and after a drop (USD301,0951) in 2006, this amount rose to USD6,563,282 in 2007, and then to USD17,897,246 in 2008. Last year it employed 3,972 employees and the number is expected to reach 5,064 in 2009.

Source: Montsame

5,177 MINING LICENSES GRANTED THIS YEAR

The Mineral Resource and Petroleum Authority reports that so far this year 5,177 mineral licenses have been granted to 1,993 companies. Of these 42 percent are for gold, 15 percent for coal, 13 percent for fluorspar, 19 percent for construction material, and 11 percent for other common minerals. While 281 of the license holders are 100-percent foreign invested, 1,488 are local, and 154 are joint enterprises.

Source: Montsame

UNPAID DUES FROM POWER PLANTS MAY FORCE COAL MINES TO CLOSE DOWN

Some coal mines are about to close down because the power stations have not paid for their coal. According to Mr. T.Naran of the Coal Association, some MNT30 billion is outstanding on this account, despite promises by the Government that all dues will be cleared. “Coal mines don‟t get paid while the Government plans to build a new power station. It would be wiser to take care of the coal mines which feed the four power stations now, as Mongolia may crash if the mines collapse,” says Mr. Naran.

Source: www.news.mn

PETROLEUM PRICES UP, BUT LESS THAN IMPORTERS WANTED

Petroleum importing companies raised prices by a flat MNT50 per liter on Monday afternoon, after the Government had rejected their plea for a higher increase. The Ministry told the producers to consider the interests of the consumer.

Source: Zuunii Medee

STAFF COMPLAIN ABOUT WAY ANOD BANK IS BEING RUN A committee of Anod Bank employees has written to Mr. L.Purevdorj, the Central Bank President, charging Mr. B.Nasanjargal, sent 6 months ago by the Central Bank to rescue Anod from an emergency, with doing nothing much so far, “except dismissing 60% of the staff, and closing all previously profitable activities”. The committee has demanded an account of his achievements up to now and has also asked that the report of the foreign auditors be published. The letter regrets that no dismissed worker has been taken back even after a court found the firings illegal. No other bank is also willing to employ them. It resents that in these difficult days for the bank Mr. Nasanjargal is paid MNT5 million a month which equals 20 dealers‟ salary. It claims that Anod Bank, the only national bank established without foreign investment, has been “deliberately dragged towards bankruptcy”, with its legitimate executives kept in jail. Demanding their release, if necessary with conditions, the letter says they “will be able to revive the bank‟s fortunes”.

Source: Udriin Soniin

7 BANKS TIE UP WITH MONEYGRAM TO MAKE EURO TRANSACTIONS EASIER Seven banks - Trade and Development, Mongol Post, Savings, Ulaanbaatar City, Erel, Anod and Capitron – are now working as accredited representative of MoneyGram, which has 162,000 service outlets in over 180 countries. According to B. Bayarmaa, a senior TDB official, this has made it more convenient to operate transactions in Euro as the amount sent or received in Euro no longer has to be changed into USD first. The difference in exchange rates usually meant some money was always lost in the process. Now, any Euro transaction will be only in that currency.

Source: Udriin sonin

KHAN BANK TEAM VISITS HERDERS TO PROVIDE RELIEF

A team led by Mr. D. Batsaikhan, Deputy CEO of Khan Bank, visited Bayankhongor and Uvurkhangai provinces recently to arrange for Khan Bank Foundation relief to herders who suffered loss of life, livestock and property in a strong blizzard and sand storm last April. The group also discussed a livestock re-stocking program with herders. The Bank has provided assistance to 40 herder families in 4 provinces so far and the Foundation has already spent MNT13 million on the livestock re-stocking program.

Source: www.khanbank.com, Montsame COPPER SLIDES ON WEAK U.S. DATA, STRONGER DOLLAR Copper prices slid on Monday, retreating from last week's rally, after weak US Manufacturing data strengthened the dollar and signaled to traders that demand remains weak. Copper for three-month delivery on the London Metal Exchange closed at USD5,006 a ton, down from USD5,230 on June 12. "Prices were looking over-extended and we were looking for a pullback over the summer," said an analyst at Barclays Capital. "Probably what we are seeing today is a bit of a correction from those extremely big gains, sparked by the data." A stronger dollar makes metals priced in the US currency more expensive for holders of other currencies. Copper, used in power and construction, hit an eight-month high of USD5,388 a ton last week on Thursday on a slew of improved economic data, but analysts say fundamentals remain weak. It has risen more than 60 percent this year in a rally sparked by increased demand from China. But this demand, which appears to have been based largely on stockpiling by the world's top copper consumer, seems to be tailing off.

Source: www.miningweekly.com

GOLDMAN SEES 2010 COPPER PRICE AT USD5,800 A TON

Goldman Sachs expects the current downward movement in the price of copper to be short-lived amid growing expectations of a recovery in global economic growth, and it sees copper selling at USD5,800 per ton by the end of 2010. The investment bank kept its 12-month copper price target at USD4,800 per ton, unchanged from its May forecast.

"We are moving to a much less cautious stance on metal markets, and now view the current correction as likely to be shallower and shorter in duration," Goldman said in a research note released on Tuesday. Goldman pointed to stronger activity on the long end of the forward price curve, which reflected an improvement in the global growth outlook, particularly in emerging markets. "While we still expect weaker current fundamentals to create some weakness in time spreads this summer, such a pullback would likely be very small in the context of the upward pressure on long-dated prices."

Source: www.miningweekly.com, Reuters.com

CHINALCO PRAISES AUSTRALIA, HINTS RIO IS TO BLAME

Chinese metals conglomerate Chinalco feels Australia had an "open and welcoming" attitude to its failed USD19.5-billion bid to invest in Rio Tinto. Chinalco President Xiong Weiping has said the deal collapsed because of factors beyond Chinalco's control, with disagreements on board seats and a convertible bond issue, and despite its offer of several amendments after the terms were thrashed out in February.

Among the concessions, Chinalco agreed to accept a lower stake in Rio than the original 18 percent, gave ground on the convertible bond, and simplified the agreed marketing structure for iron ore. "We believe these were very significant concessions and amendments to the original transactions and were sufficient to meet the requirements of both the shareholders and the Australian regulators," Mr. Xiong said.

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Chinalco failed to resolve the question of representation on Rio's board. But it did not blame Australia's government, which has been under the investment spotlight because of its stringent process for accepting foreign investment. "In the process of this transaction, Chinalco has also felt the open and welcoming attitude from the Australian government towards foreign investment, including from China," Xiong said.

Xiong cited several factors that were beyond Chinalco's control and contributed to the break-up of the Rio deal: metals market changes, Rio's share price rise, the requirements of Rio's shareholders, Rio's planned share placement and the BHP joint venture. Chinalco, which is Rio's largest shareholder with a 9 percent stake, has not yet decided whether to subscribe to Rio's planned rights issue, but was studying all the possibilities, Xiong said.

He reiterated that Chinalco was "very disappointed" and said the deal had represented a good value-creating opportunity for Rio, improving its market image and boosting its shares. Chinalco will stick to its strategic goal of becoming a global diversified mining company, he said.

Source: www.miningweekly.com

AUSTRALIA SEES GOOD IN BHP-RIO TIE, CHINA SEES RED

Australia's government gave cautious support last week to BHP Billiton's and Rio Tinto's planned iron ore joint venture, as a newspaper reported that China had threatened sanctions against the two if the deal went ahead. As angry press commentaries in China voiced suspicions that Canberra quietly encouraged the deal as a way of sinking an alternative Chinese investment in Australia's biggest iron ore province, Australian Resources Minister Martin Ferguson said he saw benefits in the deal, assuming it would receive all the required regulatory approvals.

"I actually think the joint venture has synergies of benefit to Australia, in terms of improving productivity, which represents a better return on our natural resources to the Australian community," he told Australian radio. The proposed venture could be a threat to China, the world's biggest steel making country, as the combination of the world's second and third largest iron ore producers would leave only two main suppliers alongside Brazil's Vale. In the face of this, China may impose trade sanctions against BHP and Rio if they carry out the merger without the approval of Chinese competition agencies, the Sydney Morning Herald has said.

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"According to China's anti-trust law, we can veto such a merger agreement if the concentration of overseas business operations stands to affect domestic market competition," Mr. Ma Yu, the director of the foreign investment department at the Ministry of Commerce, was quoted as saying in the report from Beijing. The paper said China's new anti-trust law empowers it to block offshore deals, but enforcement mechanisms remain unclear. BHP declined to comment on the report.

Resources minister Ferguson also played down the threat of any sharp reaction from China. "We will get through it. In the end, China needs our resources and Australia needs China. As we return to global growth, we are key to actually fuelling China's growth opportunities, and China is also key to our recovery," he said.

Source: www.miningweekly.com

RIO TINTO LAUNCHES RIGHTS ISSUE, WARNS OUTLOOK „UNCERTAIN‟

Diversified mining giant Rio Tinto has released a prospectus for its USD15.2-billion rights issue, announced earlier this month after the company terminated a USD19.5-billion investment agreement with Aluminum Corporation of China (Chinalco). The rights issue will enable the group to reduce debt, strengthen its financial position and “take advantage of future potential value-creating opportunities”, Chairman Jan du Plessis said in a letter to shareholders on Tuesday.

However, the group cautioned that the outlook for the balance of this year remained “uncertain”.

“The key driver of earnings in the second half of the year is expected to remain the pricing of the group‟s key commodities, particularly iron ore, aluminum and copper. Chile iron ore prices for the 2009/10 contract year have been settled with some important Asian customers (other than Chinese customers), there remains uncertainty in the pricing of spot iron ore, copper and aluminum,” Rio Tinto said.

In light of the “uncertainties” over the macroeconomic outlook, the group has decided it will not pay an interim dividend for the current financial year, although it does plan to pay a final dividend, “subject to satisfactory trading results”. The group expects that the total cash dividend payment for the 2010 financial year will be at least equal to the USD1.75 billion paid for 2008, albeit over an increased number of shares.

Source: www.miningweekly.com

SHENHUA RETAINS FOCUS ON MONGOLIAN COAL MINES

China Shenhua Energy Co Ltd, the top Chinese coal miner, will not consider buying any major overseas mines before it starts operating the Watermark coal project in Australia. "We will not go for other projects if we have not succeeded in this one, the first step of our overseas efforts," Shenhua board secretary Huang Qing was quoted as saying by the Shanghai Securities News. "Shenhua will take an active and cautious approach (toward overseas buying)."

Mr. Huang said Shenhua would focus on opportunities in Australia, Indonesia and Mongolia that could be potential suppliers to coal users on China's southeast coast. He added that the company was also interested in coking coal resources in Mongolia. He downplayed concerns over the impact of rising coal imports on the domestic market, saying most of the coal was still supplied by domestic producers. China's major power companies stepped up coal imports this year as they failed to reach price agreements with domestic coal miners for annual supply contracts.

Coal imports in April soared to a record high of 9.16 million tons, up 3.4 million tons from a month earlier and far above market expectations. Imports in the first four months surged 56 percent to 22.77 million tons.

Source: Reuters.com

CHINESE COMPANY WANTS TO BUY 20% SHARES OF DENISON MINES

Sinostil, China‟s second biggest metal ore company, is considering buying 20% of the shares of Denison Mines, which conducts uranium exploration in Mongolia. This expression of interest comes after the Canadian company announced on Monday the signing of definitive agreements on equity financing and uranium off-take with the Korea Electric Power Corporation.

Source: Zuunii medee

U.S.-MONGOLIA BUSINESS FORUM FOCUSES ON ENERGY The Fourth U.S.-Mongolia Business Forum on June 9 in Washington DC provided valuable information about commercial opportunities in Mongolia, and gave companies a chance to meet potential business partners. The focus of the Forum was on the energy sector, especially coal mining, coal and methane power production, oil extraction and processing, renewable energy, and nuclear energy. Among the speakers were Mr. Rick Wade, Senior Advisor to U.S. Secretary of Commerce Gary Locke, Mongolian Minister of Foreign Relations and Trade S.Batbold, Ms. Michelle O‟Neill, Acting Under Secretary for International Trade at the U.S. Department of Commerce, Mr. B. Ariunsan, Deputy Minister of Mineral Resources and Energy of Mongolia, senior U.S. and Mongolian Government officials, and representatives of the business communities in the two countries.

Source: Mr. Michael D. Richmond, Senior Commercial Specialist, U.S. Embassy in Ulaanbaatar

DEPLETING WATER RESOURCES DISCUSSED AT CONFERENCE

A recent conference on mining and the environment, jointly organized by the Ministry of Environment and Tourism, the Ministry of Finance, and the Germany-based Friedrich Ebert Foundation, was mainly devoted to issues related to mining in the Gobi regions. As mining work expands there, availability of water is becoming a major challenge. Delegates from Ivanhoe Mines

noted that when the Oyu Tolgoi project works to full capacity, it will use up to 785 liters of water per second. The participants called upon Mongolian authorities to introduce thorough and regular environmental inspection arrangements at the mining sites and on the soil and water in their regions, build paved roads to reduce dust and dryness, an to plant more perennial trees.

Source: Zuunii shuudan

ECONOMY WORLD BANK BOSS URGES TRANSPARENCY TO ATTRACT PRIVATE INVESTMENT In a public address in Ulaanbaatar last week, Dr. Juan Jose Daboub, the World Bank‟s managing director for operations in 74 countries, said, “Mongolia has managed the transition of its economy and politics since 1991 very well, but the impact on the country of the present global economic crisis has revealed the need for continued reforms.” During a three-day visit to Mongolia Mr. Daboub met Government officials, parliamentarians, members of the business community, civil society, and other development partners, in addition to seeing first-hand how the crisis has hit the most vulnerable in Ulaanbaatar as well as in Mongolia‟s outlying rural communities. Referring to the possible contribution of the mining sector to the economy, Mr. Daboub said, “From my conversations, it is clear to me that there is a common vision and a strong desire to develop the mining sector in a sustainable and transparent way in order to benefit present and future generations of Mongolians. We stand ready to continue to support the authorities in this endeavor.” In his meetings with representatives from the civil society and the private sector, Mr. Daboub highlighted the important role of the private sector as creator of sustainable jobs, growth and development. Read more… “With the global economy in recession and credit flows still tight, small countries like Mongolia more than ever need to ensure that they maintain transparent, efficient and competitive business environments to attract private investment. Our private sector arm IFC is present in Mongolia and actively pursuing investment opportunities,” he said. Underlying the importance of good governance, he commented that stronger institutions and transparent mechanisms that enhance public awareness and oversight are the best allies in the fight against corruption. “I have seen in the eyes and smiles of Mongolian children optimism and determination to take destiny into their own hands for a better future. We will support the government and work with it to create the opportunities they need and deserve.” he said. “There is potential in this great nation and I believe that once the dust settles from this economic storm Mongolia‟s march will continue. The World Bank stands ready to accompany Mongolians in their path to prosperity,” he said as a final word.

Source: www.worldbank.org.mn

CENTRAL BANK AGAIN REDUCES INTEREST RATE

The Central Bank has reduced the interest rate by 1.25 percentage points to 11.5 percent. The measure is expected to lower the inflation rate, stabilize the currency, and arrest the economic downturn. If all goes well, the rate will be brought down to 10 percent by late 2009. The interest rate was 14 percent before it was reduced by 1.25 percent in March.

Source: Zuunii medee

INDUSTRIAL OUTPUT FALLS 7.2% YOY Industrial output at the end of May was 7.2 percent less than in the same period in 2008. The fall was 1.5 percent in the mining and quarrying sector and 21.8 percent in the manufacturing sector. The former resulted primarily from the 1.6-42.8 percent drop in production of minerals such as copper, gold, fluorspar, tungsten and zinc, while in the latter there was a drop of 11.1-83.6 percent in the production of items like spirits and beer, lime, wheat flour, carpets, and molybdenum concentrate. Of the MNT35.9 billion worth of construction and installation work in the period, 92.7 percent was done by domestic entities.

Source: Montsame

MONEY SUPPLY RISES, BUT STILL LOWER THAN A YEAR AGO The Central Bank reports that money supply (broad money or M2) at the end of May amounted to MNT2,461.4 billion, a 2.5 per cent increase in a month, but 2.2 per cent less than in May 2008. Growth of quasi money is the main reason why money supply has risen 6.1 per cent since the beginning of 2009. Currency issued increased 8.1 per cent over April, and 2.9 per cent over May 2008. Outstanding loans at the end of May dropped 1.2 per cent from April 2009, but were 2.4 per cent more than in May last year.

Source: Montsame

STEEP RISE IN UNEMPLOYMENT Registered unemployment at the end of May was 20.4 percent higher than in the same period of 2008. Numerically, there were 38,500 people looking for a job, 6,571 more than in the corresponding period last year. Some provinces have shown a decrease but most not, including Ulaanbaatar city, and there has been a 200% increase in Umnugovi, according to the National Statistics Office.

Source: National Statistical Office

TRADE TURNOVER LESS, SO IS DEFICIT Mongolia carries out trade with 90 countries, with the total turnover reaching MNT1,287 million in the first five months of the year, or 40 percent less than the corresponding figure for 2008. At USD592.9 million, exports fell 40.5 percent, and imports worth USD 694.1 million showed a drop of 39.6 percent. The deficit this year is, however, USD 52.2 million less than in January-May 2008.

Source: Montsame

SHARP FALL IN FREIGHT AND PASSENGER TRAFFIC

The railway carried 10.7 percent less freight and 28.9 percent fewer passengers between January and May than in the corresponding months last year. The drop was sharper in both sectors in air transport. There the freight volume fell as much as 47.8 percent and the number of passengers by 32.0 percent.

Source: www.nso.mn

TAX REVENUE FALLS 29.8%, PUSHING UP BUDGET DEFICIT The general Government budget showed a deficit of MNT199.4 billion at the end of May. The current account deficit was MNT70.2 billion. Tax revenue fell MNT212.4 billion or 29.8 per cent from the corresponding period last year. Collection from the windfall profits tax was 86.9 per cent lower, and 45.5 per cent less from corporate income tax, and 7.4 per cent less from value added tax. Non-tax revenue up to May rose MNT27.8 billion from the same period in 2008, mainly because dividends went up by MNT41.4 billion, and despite income from crude oil falling MNT11.2 billion, and despite state-owned organizations earning MNT7.9 billion less. Expenditure and net lending increased 1.5 per cent in one year, mainly because of an 8.2 per cent rise in wages and salaries. Capital expenditure in the first five months was 5.7 per cent lower than in the same period last year.

Source: Montsame

CONSUMER PRICES RISE 8% YOY, 0.1% MOM The national consumer price index in May was up by 0.1 per cent over April, 5.7 percent over the end of 2008, and 8.0 per cent more than in May last year.

Source: National Statistical Office

AVERAGE HOUSEHOLD SPENDS MORE THAN IT EARNS, SURVEY FINDS The National Statistics Office reports that according to a survey of socio-economic conditions in the 1st quarter of 2009, the average monthly household income now stood at MNT344,700, an increase

of 21.4 percent over the figure 12 months ago. The average monthly household expenses stood at MNT355,700, rising 9.5 percent in a year.

Source: www.nso.mn

ALL TAX REFUNDS TO BE PAID BY JUNE The National Tax Office has compiled a list of businesses that paid more tax than was due from them and has started refunding the excess paid. Of the MNT3.9 billion to be refunded to 20,738 entities, MNT2.6 billion has already been received by 12,765. The rest will be paid by the end of June.

Source: Udriin sonin

BUSINESS WANTS MPs TO HEAR WHAT IT NEEDS Several speakers at a recent meeting jointly organized by the Mongolian National Chamber of Commerce and Industry (MNCCI) and the Parliamentary Standing Committee on the Economy emphasized the need to consider the legitimate interests of business when formulating monetary and credit policies. MNCCI head S.Demberel said stronger measures were required to control inflation and hoped Parliament would seek the views of business people when preparing the monetary policy for 2010. The Director of the Monos Group, Mr. L.Khurelbaatar, criticized the Unfair Competition Monitoring Agency for using dated methods and following a rigid mindset. Several entrepreneurs wanted similar formal discussions to be held before Parliament debates any measure related to the economy and business.

Source: Montsame

LOANS TO SMEs WILL RAISE GDP IN ULAANBAATAR TO MNT7 MILLION PER HEAD An entrepreneurs‟ forum was held last week as part of the Mayor‟s program to celebrate the 370th anniversary of Ulaanbaatar. An industrialization plan for the city was presented to the attending Government officials and representatives of the MNCCI and other organizations. The plan will disburse among small and medium sized entrepreneurs low-interest loans from a fund with a USD10 million corpus. The authorities are confident that successful implementation of the plan will raise the average GDP of every citizen of Ulaanbaatar to MNT7 million.

Source: Udriin sonin

WORLD BANK TO HELP „PROFESSIONAL INSPECTION‟ TURN MORE PROFESSIONAL

A meeting of the Consultative Council for Investment Climate and Private Sector Development (CCICPSD) was held last week, co-chaired by First Deputy Prime Minister N.Altankhuyag and World Bank Managing Director Juan Jose Daboub. Among those present were representatives of the private sector, and international and domestic banking and financial organizations. The meeting discussed ways to improve professional inspection, to get out of the crisis in the construction sector, and to simplify license-related procedures in this sector.

Ms. Josephine Bassinette, Program Manager, Business Enabling Environment, at the IFC –- a member of the World Bank group with special responsibility for providing investments and advisory services to build the private sector in developing countries -- said professional inspections certainly played an important role in ensuring public security, but their inefficient implementation puts various burdens on the private sector. She felt such inspection is not transparent enough in Mongolia at the moment, and allows corruption and bribery to flourish. The IFC has prepared a project to change the ways of work in the area which will fulfill all requirements of the State, while making things easier for business. The project will introduce the best international practices, enhancing inspectors' competence and thus getting more out of their work. Emphasis will be placed on raising the level of public awareness of such inspection activities and their goals.

Source: Montsame

NEW MARKET ACCESS FOR CANADIAN LIVESTOCK IN MONGOLIA An agreement was reached in talks early this week between Canada‟s Agriculture Minister Gerry Ritz and visiting Mongolian Minister for Food, Agriculture and Light Industry, Mr. Tunjin

Badamjunai, that gives Canadian farmers and exporters new market opportunities in Mongolia for beef, cattle and swine and their products. Mr. Ritz called this “an important development in relations between our two countries”, opening “doors to many new exports and opportunities in agricultural cooperation". Canadian agriculture and food products that can be exported to Mongolia are: live cattle, live swine, ovine/caprine genetics (sheep/goats), bovine genetics, porcine semen, day-old chicks and hatching eggs, and meat products, including all beef and beef products. "The Government's decision to open a new Embassy in Ulaanbataar last year is already paying dividends," said International Trade Minister Stockwell Day, who met with Minister Badamjunai on Monday to discuss further trade cooperation. "We are the second largest foreign investor in Mongolia and our existing strong commercial relationship in the mining sector is broadening into real opportunities for Canada's agricultural producers."

Source: Marketwire, www.internationaltrade.gc.ca

CRISIS RUMBLES ALONG THE MONGOLIAN STEPPE A drop in demand for cashmere clothing as investment bankers, lawyers and other high-flyers have either lost their jobs or faced salary cuts has led to a 50 percent fall in cashmere prices, sapping the income of goat herders on the Mongolian steppes. That is just the tip of the iceberg of the impact the global financial crisis is having on the people of this vast, landlocked country, wedged between Russia and China. Aside from plunging wool prices, the economic slowdown in countries such as South Korea means that the tens of thousands of Mongolians working there are sending less money back home to their families, or even returning home after losing jobs. And with prices for the country's main export, copper, and other metals down relative to last year, construction and other spending have slowed, taking a toll on the government's coffers and its ability to help the poor. Read more… Mr. Sereeter Damba, who like much of the population is a nomadic herder, is looking for new ways to support his wife and 11 children now that his 200 sheep and goats are no longer worth what they used to be. "I'm trying to find a way to plant crops, some vegetables, because I'm not making enough from my herd. But it's hard to get land to do so," Mr. Damba, 52, said at a settlement at Bayanchandman, 70 km northwest of Ulaanbaatar. In the meantime, a loan of MNT500,000 (USD355) is helping his family to get by at a time when inflation in Mongolia is still over 12 percent after peaking at 34 percent last summer. He is determined to hold onto his herd, which serves as collateral on the loan. "Of course I'll pay it back," he said. Many others have not been so lucky. Pinched between double-digit interest rates and low meat and cashmere prices, more and more herders have been driven into default on their loans, forcing them to give up some or all of their flocks. With jobs scarce and inflation high, the real effective wages of day laborers fell by about 60 percent between April 2008 and April this year, the World Bank said in a recent report. Once protected by a socialist safety net, the poor are increasingly unable to rely on state handouts as the government's revenues have dropped by more than 30 percent over the past year in the wake of tumbling metals prices relative to the historic highs reached last year.

Source: Reuters.com

MPs DISCUSS COMPETITION LAW AMENDMENTS WITH MNCCI Some MPs recently met with officials at the Mongolian National Chamber of Commerce and Industry (MNCCI) to discuss the amendments they propose to make to the current Competition Law. Several companies and businesses have already sent to the MNCCI their opinions on the proposed changes. Some feel these should be more specific, while others have found some articles lack basis in reality. Some have commented that most of the suggested amendments appear to follow provisions in the competition laws of Russia and Kazakhstan and, if approved, will increase government control of business, allowing government agencies to get involved in the day to day running of companies. The MNCCI told the MPs the private sector must be kept free of bureaucratic interference, and identified a number of articles that should be more clearly reformulated, and also called for the total withdrawal of certain articles.

Source: Udriin sonin

POLITICS

ELBEGDORJ SWORN IN, SAYS HE WILL FULFILL PEOPLE‟S DEMAND FOR REFORM AND CHANGE

Soon after taking the oath of office on June 18, the newly elected President of Mongolia, Mr. Ts.Elbegdorj, gave a call for national unity, asserting that he would “work to fulfill the trust of those who supported me, and also work to gain the trust of those who did not”. Addressing dignitaries, both Mongolian and foreign, assembled at the Great Hall of Government House, he thanked people for electing him, saying democratic responsibility assumes more importance in times of crisis. The historic choice of May 24 showed people wanted reform and change. Above all, they wanted fairness, as much as they wanted clean water and fresh air. A corrupt state system corrodes the nation and renders it powerless. “I want to tell everybody, „Stop corruption in state work right from this moment‟,‟ he said.

His priority would be reforming the judicial system, as the fundamental basis of a truly fair society was that everybody was equal before the law. Mongolia did not need foreign advice or help to achieve this. What it did need was, he said, unity among the people to work for a common purpose.

Turning to guests from abroad, Mr. Elbegdorj said Mongolia‟s traditional foreign policy to have friendship with all nations would be pursued with a new vigor and thrust. Mongolia will continue to have special ties with its two neighbors, but will also seek to be an active member of the world community. Read more… The ceremony went with clockwork precision. Mr. Elbegdorj took the oath at 12.06 p.m., knelt before the national flag, and then received the seal of office from his predecessor. He had been persuaded not to wear a business suit as he had wanted, but to stick to convention. He, however, shunned ostentation and while Mr. Enkhbayar wore the same deel of handmade silk from 1940 and a handmade hat with 32 cross stitches that he had done when he took office four years ago, the new President was in things more ordinary. He however changed into a suit when he came out to Sukhbaatar Square where people had gathered since late morning to have a glimpse of the new president and watch the military parade. The list of foreign guests did not feature any heavyweight, disappointing many. However, observers refuse to see any diplomatic significance in this. It is being said that the explanation is more mundane. Both Prime Minister S.Bayar and a member of the National Security Council were on vacation, and by the time they came back to decide on the invitation list and sent letters to foreign leaders, it was too late for them to take time off from their busy schedule to be able to attend the ceremony.

The President will move his office from the third floor in the left wing of Government House to the fifth floor of the Chinggis Khaan Complex. All his staff will also be located there.

Source: en.News.mn, Udriin sonin

EX-PRESIDENT DOES NOT HAVE A BANK ACCOUNT, PM DOES NOT HAVE A CAR

According to their declaration of assets and income to the Anti-Corruption Authority, a legal requirement since 2006, some of the 100 high officials earn less than a director of a small company. Many report that they do not even have a car or the piece of land allotted free to each citizen of Mongolia.

President Elbegdorj has a yearly income of MNT5.582 million. The total income of his family is MNT39.8 million. He has a Mercedes Benz and a Lexus and also owns a house valued at over MNT253 million, 80 horses, 60 sheep, and 25 cows.

Former President N.Enkhbayar earns MNT90 million a year and has one apartment worth MNT67 million. He has 48 horses worth MNT13.5 million and does not have any money in the bank or any land. His wife does not work and has no separate income.

Speaker of Parliament D.Demberel earns MNT5.319 million a year and has bank deposits of MNT8.6 million. Members of his family earn a total of MNT4.59 million. He has an apartment valued at MNT60 million and a car worth MNT6 million. He has 59 heads of livestock worth MNT7.1 million, shares in Gobi Company worth MNT21 million. He also does not own any land.

Prime Minister S.Bayar does not have a car, but his apartment is worth MNT195 million. His annual income is MNT147 million and he owns 10 percent of Sansar CATV and Palace LLC as well as 0.07

acre of land received free from the state.

Source: www.news.mn

ENKHBAYAR HOSTS FAREWELL DINNER FOR MPs

One of the last official acts of former President N.Enkhbayar was to host a dinner for MPs and Cabinet members. Taking leave of them, he said that since his election in 2005 he had done his best to fulfill his program. “With the cooperation of Parliament, government and the civil society, we adopted a long-term National Development Policy. The program on regional development will also change the face of rural areas and the capital city,” he said. He reminded his guests that the first duty of anybody holding a public office was to be free of corruption and to work free of any pressure. He also emphasized the need to have a competent bureaucratic structure.

Source: Ardiin Erkh

MPRP MEMBERS CALL FOR CHANGES IN THE PARTY

Mr. S. Byambatsogt, a young MPRP member of Parliament, has welcomed the efforts by some of his party colleagues to form a group to press for changes in the party. “It is unfortunate that there are many politicians who prefer to be surrounded by puppets or yes-men who believe flattery will make their fortune or that politics is merely a means to make money,” he said. Asserting that the country can move forward only if politics is cleansed of such self-seekers, the MP praised the party members who told a recent press conference that the results of the presidential election have made it clear that people do not approve of the way the party works.

They have already sent suggestions to the leadership on how the party can be made more acceptable. More care should be taken to ensure that policies and programs are actually implemented. There should also be new and broad-based ways to discuss and adopt policies. “Everything in the party now revolves around only a few people, and this must change,” they felt.

Source: Zuunii medee, Ardiin Erkh

MEDICAL GRADUATES NO LONGER NEED TWO YEARS‟ TRAINING

In a bid to fill medical posts in the provinces, Parliament last week decided that fresh Health Science University graduates would now be allowed to practice medicine without having to go through two years of attachment to a hospital. The changes take effect immediately and are expected to use the 480 students graduating this year to serve in rural areas that need 360 doctors, with 28 districts having no doctor at all.

Not all MPs were happy about the change. One said inexperienced new graduates cannot be dependable doctors and warned, “We are putting the lives of people at stake.” Another, however, said in any case most fresh graduates get their training in the provinces and experienced doctors are concentrated in Ulaanbaatar. A former Health Minister and a medical doctor himself, L.Gundalai said the logic behind asking a medical graduate to work for two years as a trainee before they can call themselves a doctor should be extended to MPs also, asking them to work in the Civil Representatives‟ Assembly in a soum for a year and then in a province for another year before they can qualify to become an MP.

Source: en.News.mn

CRIMES RISE The total number of crimes committed nationwide in the first five months of 2009 increased by 4.8 percent over the same period last year, according to the National Statistics Office.

Source: Montsame

NGO FAULTS TV CHANNELS ON COVERAGE OF PRESIDENTIAL ELECTION

Globe International has released the final results of its systematic monitoring of the TV coverage between May 8 and 22 of the May 24 presidential election. The NGO was supported by the Open Society Forum in the work that covered all election-related programs on the National Public

Broadcasting Television, UBS, TV-5, TV-9 and TV Channel 25. The goal of the project was to evaluate mass media performance in providing objective and balanced coverage of candidates in their news and current affairs programs.

Altogether the five channels devoted 1,324 hours to the election in these 15 days, excluding news programs. Positive information about the two candidates accounted for 64 percent (83 hours) of this, neutral information for 13 percent (17 hours) and negative information for 23 percent (30 hours). Positive coverage of Mr. Enkhbayar was 1.9 times more than that of his challenger, while negative coverage of Mr. Elbegdorj was 4.3 times more than that of the incumbent president. News programs devoted 51 hours to the candidates, of which 61 percent went to Mr. Enkhbayar, and 39 percent to Mr. Elebgdorj. There was 6 times more negative information about Mr. Elbegdorj than about his opponent.

Read more…

The NGO concluded that:

TV channels did not provide equal opportunity to the two candidates.

People did not receive accurate information about the candidates, as the channels were mostly one-sided, polarized and biased.

The news programs failed to meet professional standards. They were more like election advertisements, and actually, almost half of the news coverage had been paid for. This kept on increasing as Election Day drew closer.

The Mongolian National Public Broadcasting Television performed better than the commercial channels.

Source: www.globeinter.org.mn

WORLD BANK LEADS SUPPORT TO MONGOLIA‟S STATISTICAL SYSTEM

The World Bank has approved an investment credit of USD2 million for a multilateral 5-year project to strengthen the national statistical system of Mongolia. The project aims to improve the efficiency and effectiveness of the system so that it can provide relevant, timely and reliable data for evidence-based policy making in support of the Government of Mongolia‟s MDG-based National Development Strategy (NDS).

The other donors are South Korea with USD0.7 million and the Trust Fund for Statistical Capacity Building, with USD0.4 million. The Turkish International Cooperation Agency will support the project through in-kind contributions. The Mongolian National Statistics Office will be the main executing agency of the project and will be responsible for its overall management and implementation. ”This project is part of the Bank‟s ongoing efforts to support the government in implementing „second generation‟ reforms in terms of strengthening the national statistical system to produce reliable, timely and quality data for monitoring of key poverty and development indicators,” said Mr. Arshad Sayed, Country Manager and Resident Representative for the World Bank in Mongolia. The project will reduce the cost of information supply, increase demand, and make coordination of statistical activities, financing, and execution more effective. It will also help statistical agencies in line ministries through improved institutional interaction.

Source: www.worldbank.org

THREE HELD FOR MONGOLIA‟S FIRST CREDIT CARD FRAUD

The Economic Crimes Department of the police is working on the country‟s first case of credit card fraud. Three men who had studied in Britain and Germany have been arrested and are being interrogated.

Police found the machine which was used to make the fake cards and chips at their residence. The three, who withdrew more than MNT12 million from banks with their cards, are believed to have accomplices in Ukraine and England.

Source: Undeshnii shuudan

NEW MONGOLIAN LAWS

The following new law and an amendment to a current Mongolian law were published in a recent weekly Government Bulletin. Unless decided otherwise by Parliament, the amended law takes effect ten (10) days after publication. Date Laws 06.17.2009 Addendum to "Law on Crops" "Law on Accepting plenipotentiary rights of the President of Mongolia" Please visit BCM‟s website, Legislative Committee, for a summary of new Mongolian laws. BCM members who wish complete versions of the laws in Mongolian language are welcome to call or email the BCM office (11-332-345; info@bcmmongolia.org) to arrange for a convenient pickup.

ANNOUNCEMENTS

FRONTIER SECURITIES CONFERENCE, “RECOVERING MONGOLIA”

Frontier Securities with the collaboration of FIFTA and Mongolian University of Science and Technology is pleased to announce its June Conference “Recovering Mongolia” to take place at The Corporate Hotel, Ulaanbaatar, on June 29-30, 2009. The Conference focuses on investment opportunities in Mongolia which is slowly but surely recovering from the financial crisis.

For registration please contact staff@frontier.mn or call 70119999 or fax 70111991.

“MM TODAY” ON MNB-TV

BCM is pleased to announce that Mongolian National Broadcasting continues its cooperation with BCM on “MM Today”. This English news program is aired every Friday for 10 minutes and is scheduled for 9:30 PM tonight. Tune in to watch this program that reports stories from today‟s BCM NewsWire.

SPONSORS

ECONOMIC INDICATORS

MSE WEEKLY REVIEW

For the week ended June 12, 2009, trading activity on the Mongolian Stock Exchange (MSE) totaled

10,668,000 shares with 26 companies traded. Total market value of transactions was MNT 1.3

billion. Total market capitalization of the 358 stock companies listed on the MSE was MNT 465.9

billion, and increased by MNT 12.5 billion or 2.75% from the previous week.

The Top-20 Index increased by 100.62 points or 2.2% compared to the previous week, closing at

4,787.47 points. The MSE Composite Index increased by 49.20 points or 2.0% compared to the

previous week, closing at 2,483.33 points.

Most active stocks traded were: Genco tur buro (10,025,500 shares), Tuul songino usnii nuuts

(278,500 shares), Khuh gan (255,100 shares), APU (50,400 shares), and Naco tulsh (30,000 shares).

Major share price percentage gainers were: Mon Tsakh Kholboo (15.4%), Noyot khairkhan (15.0%),

Undurkhaan (14.6%), Khuh gan (11.8%), and Tavan tolgoi (11.7%). Major share price percentage

losers were: Bishrelt Industrial (15.0%), Buligaar (14.0%), and Naco tulsh (9.3%).

INFLATION

Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)] Year 2007 *15.1% [source: NSOM] Year 2008 *22.1% [source: NSOM] May 31, 2009 *8.0% [source: NSOM] * year over year (yoy)

CURRENCY RATES – June 18, 2009

Currency name Currency Rate

US dollars USD 1427.54

Euro EUR 1982.50

Japanese yen JPY 14.83

British pound GBP 2335.53

Hong Kong dollar HKD 184.19

Chinese yuan CNY 208.78

Russian ruble RUB 45.81

South Korean won KRW 1.13

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.