BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 253 – December 21, 2012

WATCH FOR SPECIAL „2012 YEARENDER‟ ISSUE OF NEWSWIRE NEXT FRIDAY, DECEMBER

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NEWS HIGHLIGHTS:

Business

Oyu Tolgoi begins testing copper concentrator;

World Bank slammed for possibly funding OT power plant;

Oyu Tolgoi under investigation for worker salary equality;

SouthGobi Resources investigated for money laundering;

BDO enters Mongolian market;

Spanish firm proposes development of UB's public transport system;

Erdene plans USD 1 million private placement;

Beren Mining to hold initial public offering (IPO) on MSE;

Naco Fuel to use convertible loan for renovation of coal enrichment plant;

Newcom's deputy chairman of the board steps down;

Golomt appoints board chairman;

Ferro Iron Ore CEO resigns;

Oyu Tolgoi awards 42 scholarships to mining students;

NUM and Arizona Law partner for dual degree program;

German delegation tours Boroo mine;

Khan Bank volunteers organize nationwide cancer diagnoses and training;

GE begins work on advanced wind turbine blade technology;

Peabody halves capex to combat weak coal prices.

Economy

MillenniumIT software reaches full implementation on MSE;

Homeowners may pay more for energy and heating;

Industry sources expect rise in coal prices;

Coal comprises nearly half of all exports;

Foreign debt climbs to 70 percent of GDP in 2012;

Government to assist national production of construction materials;

Mongol Bank targets flour producers for price stability;

Chinggis bonds could finance renewable energy projects;

Government looks to clean up air pollution;

Government to pay allowances owed to elderly and disabled by year's end;

Property boom or bubble?

New real estate projects face utilities and permit hurdles;

Mongolia places at 100 on energy index;

Sri Lanka, Mongolia foreign currency debt ratios high, says Fitch report;

Japan-Mongolia economic partnership talks continue;

Mongolian police delegation travels to Turkey;

Oil woes drum up criticism for government;

UB's last green spaces have been up for grabs;

Coal set to rival oil as dominant energy source by 2017;

Chinese steel demand boosts iron ore.

Politics

New draft Minerals Law released by President’s Office;

MPRP no longer to pursue exit of governing coalition;

MPP parliamentarian joins DP;

MP calls for the resignation of deputy prime minister;

Justice Minister admits to failings of criminal law;

City authorities named;

China, Mongolia to strengthen cooperation in environmental protection;

Mongolia, Vietnam ink education agreement;

Interpol no longer in pursuit of Enkhbayar associates;

Mongolia shares mining experience with Kyrgyzstan.

ECONOMIC INDICATORS

MSE Top 20 Index by market Capitalization;

Foreign-listed Companies with Mongolian Assets;

Inflation;

Central bank policy rate;

Currency rates.

*Click on titles above to link to articles.

SPONSORS

Khan Bank Eznis Airways

Kempinski Hotel Khan Palace Mongolian National Broadcasting

Breakthrough PR Oxford Business Group

BUSINESS

OYU TOLGOI BEGINS TESTING COPPER CONCENTRATOR

The countdown to the start of one of the world's largest copper projects has begun, with testing of

the 35 million-ton concentrator plant now underway at the 96 percent complete Oyu Tolgoi

complex.

After the recent switching on of a power supply at the site, Turquoise Hill Resources said the

testing was expected to continue during the next month while the plant's operations were

scheduled to stabilize over the next three to six months.

Processed ore should be produced at the USD 6.2 billion operation by January, with exports

beginning by June. Oyu Tolgoi LLC's open pit mine is already operating at 60 meters deep and is

expected to reach a total depth of 550 meters. Almost five million tons of ore has already been

extracted from the open pit in southern Mongolia, which is forecast to have a life of 40 years. ―In

the first few years the copper concentration in extractions will be 0.56 percent. Next year's plan is

to produce 650,000 tons of concentrated ore, ramping up to reach 700,000 tons in the future.‖

The underground mine of Oyu Tolgoi is expected to be operation in 2016, following which the

output is set to increase dramatically. A feasibility study for this part of the operations will be

completed next year.

Source: Asia Miner

WORLD BANK SLAMMED FOR POSSIBLY FUNDING OT POWER PLANT

The World Bank is considering whether to provide financing for a new coal-fired power plant in

Mongolia just a month after putting out a devastating new report on why 4 degrees Celsius of global

warming ―simply must not be allowed to occur.‖

The Sierra Club, Oyu Tolgoi Watch, the Bank Information Center, and several other groups blasted

the bank in a release on Thursday, arguing that it needs to conduct a more thorough assessment of

impacts and alternatives. They argue that the bank should delay consideration until that is

completed. The groups argue that if this funding is approved, the World Bank would be violating its

own criteria for screening coal projects with regard to their climatic impacts. It would also violate

the International Finance Corporation's (IFC's) performance standards on environmental and social

sustainability, they argue.

While the groups cite concerns about access to water supplies and local nomadic herders, the

climate concern is probably the biggest. The environmental impact assessment conducted for the

coal plant does not seem to include any figures on how much carbon dioxide it would emit annually.

The World Bank has been criticized before for continuing to fund coal plants. The World Resources

Institute (WTI) issued a report a few weeks ago about coal plants that are currently proposed or

under construction, and it notes that the World Bank ―has actually increased lending for fossil fuel

projects and coal plants in recent years.‖ That includes USD 5.3 billion in funding for 29 new or

expanding coal plants. And just last year, the bank's own internal inspector criticized it for not

adequately evaluating carbon emissions before granting a USD 3.75 billion loan for a coal plant in

South Africa.

Source: The Guardian

OYU TOLGOI UNDER INVESTIGATION FOR WORKER SALARY EQUALITY

The Ministry of Labor has enacted an investigation regarding salary equality within the operations of

Oyu Tolgoi LLC.

Last month, former Oyu Tolgoi employee S. Gantuya reported unfair working conditions there. The

former project management officer said there was unequal pay among employees as well the

absence of a voice for workers rights.

The Ministry of Labor has established a working group to investigate the claims.

Source: Zuunii Medee

SOUTHGOBI RESOURCES INVESTIGATED FOR MONEY LAUNDERING

The investigation into SouthGobi Resources Ltd. and a former Mineral Resources Authority (MRA)

head has revealed evidence of money laundering and tax evasion.

The investigation in former MRA Chairman D. Barkhuyag's involvement in the illegal distribution of

mining permits has reportedly revealed that SouthGobi Resources avoided paying up to MNT 150

billion in taxes from the years 2007 to 2010.

Furthermore, USD 4.3 billion was transferred to the firm's bank account in Mongolia from Hong

Kong, allegedly for an investment into its mining operations. This transferred sum was not reported

in the company's annual financial report. It seems most of the money transferred ended up in the

hands of Monnis International.

SouthGobi Resources David Lokhav and Dennis Dortaj fled the country during the investigation into

them, while company lawyer Sarah Armstrong has been prohibited from leaving the country. The

two executives are now wanted by Interpol.

Source: Udriin Sonin

BDO ENTERS MONGOLIAN MARKET

BDO International Ltd. announced the admission of a new member firm in Mongolia.

Effective 1 January, BDO Mongolia will bring together Itgelt Audit and information-technology firm

Amar Incon. Both firms are based in Ulaanbaatar and together bring four partners and about 40

staff members to the BDO network.

―There is no doubt that the potential for developing consulting services with BDO Mongolia is huge.

Not only is the market underdeveloped in this respect, but we are well ahead of our competitors in

terms of expertise—particularly in consulting, IT professional service, e-government, e-banking and

solutions for the mining sector,‖ said Business Development Manager Yair Porat. ―Our people have

the highest technical and commercial skills and we are looking forward to joining our BDO

colleagues in delivering the exceptional client service that will ensure BDO Mongolia's long-term

success.‖

Source: BDO International Ltd.

SPANISH FIRM PROPOSES DEVELOPMENT OF UB'S PUBLIC TRANSPORT SYSTEM

Representatives from Spain's ACS Group have voiced interest in partnering with the City of

Ulaanbaatar to develop its public transportation network.

―I heard that the Municipal Government of Ulaanbaatar is planning to have a metro in its capital

city, thereby my visit is aimed to offer Magley Trains (derived from magnetic levitation) in

Ulaanbaatar, which costs three to four times cheaper and faster to build rather than using wheeled

mass transit systems of Metro,‖ said ACS Director Emilio Asensio. ―Moreover they are more effective

in reducing traffic jams and environmental air pollution.‖

Mayor E. Bat-Uul thanked him for his offer and directed him to the Planning and Designating

Institute of Ulaanbaatar where research and development was taking place for Ulaanbaatar.

Source: Info Mongolia

ERDENE PLANS USD 1 MILLION PRIVATE PLACEMENT

Erdene Resources Development Corp. is eying a group of wealthy Asian investors to advance its gold

discoveries in Mongolia.

The Dartmouth junior mining outfit plans to raise up to USD 1 million through a private placement

offer brokered by the Mongolian Investment Banking Group LLC. The financial services boutique will

target high net-worth investors in Mongolia to bankroll its Altan Nar project.

Chief Executive Officer Peter Akerley said the company has recently identified significant gold and

zinc deposits in the Gobi Desert.

―Drilling returned over one-third of an ounce of gold over 10 meters, close to surface, and with gold

trading in the range of USD 1,700 an ounce, we consider this very significant,‖ he said.

The company expects to resume drilling in the second quarter of 2013, once it determines key areas

to hone in on. The Mongolian Investment Bank that will act as ERD's placement agent is headed by

Saint Mary's University graduate B. Ankhbayar. The company's managing director of investment

banking, Christopher MacDougall, is also a graduate of the Halifax University. Although Akerley

admits it is a challenging time to raise funds, he said ―you can always secure funding for the best

projects.‖

―Mongolia remains a very active region for mineral exploration led by the giant Oyu Tolgoi project,

which is about to enter the production stage,‖ said Akerley. ―This project, discovered by a

Canadian company [Ivanhoe Resources Ltd.] and now controlled by Rio Tinto, has had about USD 6

billion invested to create one of the world's largest copper and gold producers.

The private placement, scheduled to close 19 December, will be comprised of up to 5.8 million

units offered at a price of USD 0.17 each. The Mongolian Investment Bank will be entitled to a 6

percent commission. ERD will also use funds for general working capital.

Source: The Chronicle Herald

BEREN MINING TO HOLD INITIAL PUBLIC OFFERING (IPO) ON MSE

Beren Mining JSC is poised for an initial public offering (IPO) on the Mongolian Stock Exchange

(MSE).

Beren Mining plans to sell 1.7 billion common shares with a nominal value of MNT 157.35 a share.

Also, the company will offer 30 percent, or some 522 million shares, at MNT 250 a share for MNT

130.5 million.

The proceeds will be used to finance the construction of an iron-ore concentration plant with the

capacity to produce 500,000 tons of iron ore concentrate with 67 percent iron content and 300,000

tons of direct reduced iron with 88 to 92 percent iron content. Those funds will also be used for

working capital, infrastructure development, and employee and office spending.

Source: Mongolian Stock Exchange

NACO FUEL TO USE CONVERTIBLE LOAN FOR RENOVATION OF COAL ENRICHMENT PLANT

Naco Fuel JSC announced the attainment of a USD 500,000 convertible loan from 2-PAK Resources

Investments SARL.

The proceeds of the loan will be used for working capital purposes and to restore Naco's coal

enrichment plant located at Darkhan-Uul. The plant would be used to enrich the thermal coal

extracted by Sharyn Gol JSC into carbon-rich char and subsequently into smokeless briquettes. The

plant is currently on care and maintenance as a result of operational problems.

Firebird Management LLC has an affiliate relationship with 2-PAK and has a large interest in Sharyn

Gol. Affiliates of Firebird Management now control 60.7 percent of the shares of Naco Fuel.

Source: Mongolian Stock Exchange

NEWCOM'S DEPUTY CHAIRMAN OF THE BOARD STEPS DOWN

Newcom LLC announced the retirement of its board's deputy chairman, J. Peter Morrow.

Morrow joined the board seven years ago to help the company strengthen its corporate governance

and advise on its operational structure. He also led Newcom's initiatives to form the American

University of Mongolia (AUM). AUM has now been spun into an independent non-government

organization (NGO) and Morrow has been elected chairman of its board of trustees.

―The time has come to relinquish my responsibilities at Newcom and devote more of my attention

to the American University,‖ said Morrow.

Source: Newcom LLC

GOLOMT APPOINTS BOARD CHAIRMAN

Golomt Bank LLC has appointed board member L. Boldkhuyag as its Chairman of the Board.

Boldkhuyag was twice previously appointed to the post of board chairman. He has been director of

Bodi International LLC, Bodi Daatgal LLC, and a member of the representative administration board

of Golomt Bank and Bodi Group since 1996. He has had experience with Golomt Bank and Bodi

Group for 16 years.

He was also honored with the state honor of ―Altan Gadas,‖ the ―Red Flag Order of Labor,‖ and the

Swedish Kingdoms premium prize.

Source: News.mn

FERRO IRON ORE CEO RESIGNS

Ferro Iron Ore Corp. saw the departure of its Chief Executive Officer and director, Craig Lindsay.

Lindsay said he resigned due to the need to focus on other opportunities. Ferro, which holds

exploration licenses in Mongolia, is in final negotiations with a new chief executive.

Source: Market Wire

OYU TOLGOI AWARDS 42 SCHOLARSHIPS TO MINING STUDENTS

Oyu Tolgoi LLC's National Scholarship program presented 42 students with awards.

Two-hundred seventy students competed for the scholarships. Thirty-five of those who received

scholarships had been studying at Mongolian universities for majors related to the mining industry,

and seven were selected for study at universities abroad.

The scholarships will cover annual tuition fees and dormitory expenses for students raised in rural

areas. Those students will also have opportunities for paid internships at Oyu Tolgoi and will

eventually be able to join its news graduates' development program. The scholarship holders to

attend schools abroad will receive payment for full tuition, monthly living allowances, international

student health insurance, visa costs and travel expenses.

Oyu Tolgoi said it has invested MNT 168 billion in Mongolia's education sector. It plans to award 200

students with scholarships for national universities and 30 students to study abroad by 2015.

Source: News.mn

NUM AND ARIZONA LAW PARTNER FOR DUAL DEGREE PROGRAM

Arizona's College of Law and National University of Mongolia's (NUM's) School of Law in Ulaanbaatar

have introduced a dual-degree as part of a wider partnership.

NUM's first students in the program, N. Dashnyam and N. Otgonbayar, already attended Arizona Law

this past fall as part of the agreement with scholarships from MahoneyLiotta LLC. The scholarship

covered tuition, living expenses, and will lead to employment at the firm after graduation.

―This dual degree partnership and generous scholarship support from MahoneyLiotta represents a

new model in international legal education,‖ said Brent White, associate dean for programs and

global initiatives at Arizona Law. ―On the other hand, the agreement satisfies a need for attorneys

trained and qualified to practice law in multiple jurisdictions—particularly in an emerging market

like Mongolia.‖

The agreement helps to fulfill Arizona Law's goal to exposed students to the international nature of

law, business, and public policy. It maintains international connects through its LLM programs in

international trade and indigenous people's law and policy. The recent establishment of the JD with

advancing standing program (JDAS) is also designed to grow an international student body.

Source: Arizona Law

GERMAN DELEGATION TOURS BOROO MINE

A German delegation visited Centerra Gold Inc.'s Boroo gold mine operation on 5 December as part

of a celebration of shared relations between Germany and Mongolia for the mining industry.

The visit was one of the activities held to celebrate the 50th anniversary of relations in geology and

the mining sector between Mongolia and Germany. Most activities were held at the Mongolian

University of Science and Technology in Ulaanbaatar.

Guests also visited the Government Palace and Sukhbaatar Square. Afterward, Aribert Kampe of

Germany and Mongolia's D. Enkhbat gave a presentation on gold exploration in Mongolia.

Source: Centerra Gold Inc.

KHAN BANK VOLUNTEERS ORGANIZE NATIONWIDE CANCER DIAGNOSES AND TRAINING

Khan Bank LLC led its second campaign against cancer with the National Cancer Center of Mongolia

and Mongolia National Broadcasting (MNB). The campaign provided 40,000 people with free cancer

diagnoses.

More than 600 volunteers from Khan Bank staff were trained as volunteer teachers to educate

people on cancer, as promoting public awareness was a key measure for the campaign. Over 13,600

people from over 500 organizations received successful training.

Source: Khan Bank LLC

GE BEGINS WORK ON ADVANCED WIND TURBINE BLADE TECHNOLOGY

Salkhit wind farm turbine supplier General Electric Co. is to team up with the Virginia Polytechnic

Institute & State University (Polytech) and the National Renewable Energy Laboratory (NREL) to

develop advanced wind turbine blade technology that could put wind energy on an equal economic

footing with fossil fuels.

―GE's weaving an advanced wind blade that could be the fabric of our clean energy future,‖ said

Wendy Lin, a General Electric principal engineer and leader on the U.S. Department of Energy's

advanced research projects agency (ARPA-E) project. ―The fabric we're developing will be tough,

flexible, and easier to assemble and maintain. It represents a clear path to making wind even more

cost competitive with fossil fuels.‖

The USD 5.6 million ARPA-E project will span three years. According to General Electric, this new

blade design could reduce blade costs 25 to 40 percent, making wind energy as economical as fossil

fuels without government subsidies. Advancements in blade technology will help spur the

development of larger, lighter turbines that can capture more wind at lower wind speeds, and

specially designed to meet the demands of wind blade operations.

―Wider, longer wind blades are tougher to move and maneuver and molds which form the clamshell

fiberglass structure cost millions of dollars to acquire,‖ the company said. ―GE's new fabric-based

technology would all but eliminate these barriers.‖

The new approach to making wind blades would enable components to be built and assembled on

site, meaning engineers would no longer need to design turbines according to manufacturing and

transportation limitations.

Source: Renewable Energy Focus

PEABODY HALVES CAPEX TO COMBAT WEAK COAL PRICES

Tavan Tolgoi Western Tsankhi contractor Peabody Energy Co. halved its capital spending for 2013 as

it warned earnings would hit a trough in the first quarter due to weak prices and sales.

Peabody Energy shares were up about 2 percent at USD 28.20 on the New York Stock Exchange

(NYSE) on Friday. A weak coal market has pushed the stock down about 18 percent this year. The

company said it expects capital expenditures to be 50 percent lower than the USD 1 billion to USD

1.1 billion earmarked for 2012.

―People expected a bad first quarter, but the fact that capital expenditures have come down so

dramatically means they will have free cash flow,‖ said Iberta Capital Partners analyst David Beard.

Damp demand from China and escalating operating costs and new taxes in Australia have hit

Peabody, which has been struggling in the U.S. as power companies replace thermal coal with

cheaper natural gas.

Source: Reuters

ECONOMY

MILLENNIUMIT SOFTWARE REACHES FULL IMPLEMENTATION ON MSE

A launch ceremony was held this week celebrating the full implementation of the MillenniumIT

software at the Mongolian Stock Exchange (MSE).

At the event Prime Minister N. Altankhuyag noted that this marked the second wave of changes on

the MSE in the effort to bring the market to international standards and to open up new

opportunities for companies to expand their businesses. The massive privatization program effected

20 years ago laid the foundation for private business in Mongolia, he said, and now this was the next

step.

The trading system reached full employment in just 18 months compared with several decades in

other nations with similar systems to Mongolia. MillenniumIT was first introduced to the market in

Ulaanbaatar last July, with testing of the software and modifications made since then. The MSE also

provided training for brokerage firms so they could trade on the new platform.

Source: Business Mongolia

HOMEOWNERS MAY PAY MORE FOR ENERGY AND HEATING

The Energy Regulation Committee (ERC) plans to enforce a 15 percent price increase for energy

above 150 kilowatt hours consumed, effective 1 January.

The regulatory body is waiting for approval to charge MNT 79.80 for the first 150 kilowatt hours and

MNT 96 for energy usage beyond that amount. Large companies will be charged a higher rate.

The price hike is necessary as energy infrastructure is being spread too thin this year. Also, the

losses are too great as a kilowatt of energy costs MNT 101 compared with the MNT 86 it was being

sold for. Heat is sold at MNT 12,600 per gigacalorie compared with the cost of MNT 25,000 to

generate that. B. Sunduijav, the communication officer of the ERC, said power stations were facing

losses of MNT 50 million a year.

The proposal goes before the Fair Competition and Consumer Protection Agency (FCCPA) this week

for approval.

Source: Zuunii Medee

INDUSTRY SOURCES EXPECT RISE IN COAL PRICES

Experts from Mongolia‘s industry have seen a spike in coal prices after months of decline.

Coal prices increased by CNY 850 for washed coal and CNY 30 to CNY 50 for raw coal compared with

a month ago. Coal mines have built up coal reserves since slowed demand began in China three

months ago. The government has estimated that coal exports would contribute to 11 percent of

next year's budgetary spending.

Source: News.mn

COAL COMPRISES NEARLY HALF OF ALL EXPORTS

Coal currently comprises 46.8 percent of all exports.

Mining commodities make up 98.5 percent of all exports, most of which are unprocessed minerals

sent to China. Mongolia has 23 coal mines in operation and some 7.8 billion tons of reserves. State-

owned operations include the Baganuur, Shivee Ovoo, Tavan Tolgoi, Bayanteeg and Mogoin Gol

projects. Private operators include Energy Resources LLC, Qinhua-MAK, Naryn Sukhait, and

SouthGobi Sands LLC.

Source: Zuunii Medee

FOREIGN DEBT CLIMBS TO 70 PERCENT OF GDP IN 2012

Mongolia's external debt has reached 70 percent of GDP this year, said a senior economist at the

Asian Development Bank's Mongolia mission.

Jan Hansen said the world has seen slowed growth due to the impending fiscal crisis in the United

States and the debt crisis in Europe. Given this, Hansen predicted economic growth of some 10

percent for Mongolia this year and 12 percent for the next.

Total debt held by the government has climbed to USD 2.9 billion, of which USD 1.9 billion is

foreign debt. That puts foreign debt at 24 percent of gross domestic product (GDP). That does not,

however, include the USD 1.5 billion international sovereign debt offering in October and USD 580

million Development Bank of Mongolia placement earlier this year. That debt sold in October alone

represents 15 percent GDP.

The Central Bank reported total foreign debt has grown to USD 12 billion, a 1.4 percent increase,

mainly due to some 44 percent growth of debt held by the government and private sector. This debt

is equal to two years of Mongolia's national expenditures.

Source: Undesnii Shuudan, Udriin Sonin

GOVERNMENT TO ASSIST NATIONAL PRODUCTION OF CONSTRUCTION MATERIALS

The Cabinet of Ministries approved a program to support the national production of building

materials on 15 December.

The initiative's aim is to assist national production on the manufacturing end for construction

materials to be used for the construction of 17 apartment complexes, the revitalization of the ger

districts, renovation of structures that no longer meet government standards, housing for 1,000

families in each of Mongolia's provinces, a town planned for a population of 100,000 next to the new

Hoshigt International Airport, and hydro and thermal power stations.

The government hopes this project will allow Mongolia to produce at least 70 percent of building

materials used by 2016. Currently 60 percent of construction materials are imported from overseas.

In 2010 and 2011 alone, USD 500 million was spent on importing building materials.

Source: Business Mongolia

MONGOL BANK TARGETS FLOUR PRODUCERS FOR PRICE STABILITY

The Bank of Mongolia has implemented a program that targets flour prices as part of a broader

scheme to stabilize food prices.

The program provides loans to flour mills to purchase wheat. About 40 mills operate in Darkhan Uul

as well as Huvsgul, Bulgan, and Selenge Aimags, which will receive a total of MNT 61 billion in

loans. The terms for the loans include an agreement by the mills to supply top-grade flour to

shopping centers and stores at prices of no more than MNT 550 a kilogram for wholesale and MNT

650 for retail.

The government plans to implement similar programs for petroleum, meat, and flour products over

the next three years.

Source: Business Mongolia

CHINGGIS BONDS COULD FINANCE RENEWABLE ENERGY PROJECTS

The minister of energy has ordered greater focus on the activities of Mongolia's renewable energies

agency.

The National Renewable Energy Center (NREC) has conducted research and numerous surveys on the

development of renewable energy resources using solar, wind, water, biomass, hot mineral water,

and geothermal. A feasibility study for the Chargait hydro-electric station is the largest of over 60

feasibility studies developed by Mongolian scientists and experts independently. B. Altangerel, the

Chief of the National Renewable Energy Center, stated that it would further replace the central

heating system partially in towns and local areas in the city.

After the solar battery production at the NREC suspended operations, Energy Minister M. Sonompil

offered to support its projects. The projects could be financed using money earned from the so-

called Chinggis bonds that went on sale on the international market last month, he said. Sonompil

ordered the ministry's state secretary to focus on renewable energy projects with feasibility studies

compiled by NREC.

Source: News.mn

GOVERNMENT LOOKS TO CLEAN UP AIR POLLUTION

Government has budgeted MNT 70.3 billion for programs to combat air pollution, said S. Myagmar,

head of the National Committee on Reducing Air Pollution.

Spending will increase 8 percent this year from a year ago, said Myagmar, and consumption is

projected to fall by 30 percent compared with 18 percent reduction a year ago. Last year 38.2

percent of 180,000 households surveyed in Ulaanbaatar's ger districts were provided with new more-

efficient coal-burning stoves. The government hopes to have replaced the stoves of 89 percent of

all households in the ger districts in the two years since introducing the project.

The government has also worked to make select coal more affordable, with the price reduced from

MNT 170,000 to MNT 90,000, Myagmar said. She said the government has planned for subsidies of

MNT 70.3 billion for 2013 compared with 64.8 billion in 2012, with MNT 41 billion to go to the city

and 29.3 billion to the provinces.

Also, the government budgeted MNT 31 for the operations of the Clean Air Foundation (CAF).

Source: Unuudur

GOVERNMENT TO PAY ALLOWANCES OWED TO ELDERLY AND DISABLED BY YEAR'S END

The government plans to fulfill its promise to distribute allowances to the elderly and disabled by

the end of 2012.

Last year the government released MNT 21,000 a month to pay off the first 500,000 of the MNT 1.5

million it promised voters in the 2008 election. Afterwards, the elderly and disabled took priority

for receiving the remaining MNT 1 million. However the previous government was never able to

make good on its promise before the entrance of a new government in last June's election.

Those living in Darkhan-Uul, Arkhangai and Dundgobi Aimags are still owed MNT 340,000. The

Democratic Party-led government has decided to release MNT 336.5 billion in bonds to the domestic

market to finance the rest of the payments due and pay back the MNT 220 billion borrowed from

the Central Bank by the previous government to fulfill its payment responsibilities.

The Standing Committee for Budget discussed amendments to be made to the Law on the Human

Development Fund last week and adopted a bill to push forward.

Source: Undesnii Shuudan

PROPERTY BOOM OR BUBBLE?

Confidence that Mongolia's resource wealth will generate unprecedented expansion in its real estate

market has seen prices rise and many of Ulaanbaatar's prime properties snapped up. However, the

experience of other countries that have had similar resource-related property growth suggests it

may not last forever.

Word of a real estate bubble and slowed growth cutting gross domestic product (GDP) projections

for the year from 17 percent to some 11 percent has clashed with the estimation of real estate

agencies, which are predicting that as copper and coking coal mines come online, the real estate

market will see ―exponential‖ growth.

―We expect [our[ diversified portfolio of high-quality retail, office and redevelopment property in

downtown Ulaanbaatar to compound at 30 to 50 percent per year going forward, undergirded by a

combination of rapidly rising rental yields and compressing capitalization rates,‖ wrote Mongolia

Growth Group, a real estate and financial services conglomerate.

Industry insiders say there is inherently less risk in the Mongolian market than Kazakhstan, where in

2008 the property bubble burst and prices dropped 40 percent from their peak, and currently are

half of what they were in 2007. However, although prices are rising borrowing is still uncommon and

is not yet a significant risk factor, said' Christopher De Gruben, Chief Executive Officer of M.A.D.

Investment Solutions. Also, there is the emerging middle class, with per-capital GDP having more

than tripled to 2,200 in 2010 from USD 638 in 2004.

The government is taking steps to encourage home ownership among citizens, which could help

avoid a bubble. The Ministry of Construction and Urban Development is planning to extend its 6

percent interest loans. But, in the same month as that announcement, the Central Bank said it had

stopped accepting applications for the loans, stating that it needed to acquire the necessary

financing to resume the loans from the Trade and Development Bank of Mongolia LLC.

While Mongolia's rapid growth story indeed raises the specter of its repeating mistakes made by

other resource-wealthy countries in the past, it has the opportunity to learn from their experiences.

Source: Business Mongolia; Oxford Business Group

NEW REAL ESTATE PROJECTS FACE UTILITIES AND PERMIT HURDLES

Some are speculating that construction could come to a standstill, again, as it did in 2008 due to

city infrastructure stretched too thin and a crackdown on illegal construction projects.

The purchase of apartments has fallen with the suspension of a number of housing projects and the

end of government-assisted mortgages. A number of construction projects were halted for failing to

have the necessary permits and their inability to meet inspection standards.

Ulaanbaatar Mayor E. Bat-Uul rejected requests for construction in seven districts. His office has

warned the city's existing heating structure could not supply new buildings and advised against

making purchases of apartments from buildings where this would be a problem.

Source: Unuudur

MONGOLIA PLACES AT 100 ON ENERGY INDEX

Mongolia ranked 100th out of 105 countries on the World Economic Forum's Energy Architecture

Performance Index (EAPI).

The EAPI ranks countries on how well their energy systems deliver economic growth and

development, environmental sustainability, and energy security and access. In the changing global

energy landscape, countries are seeking ways to manage the transition to new energy systems that

better deliver on those core goals. EAPI is a global initiative with the aim of creating a set of

indicators that help to highlight the performance of various countries across each facet of their

energy systems.

Norway, Sweden, France, Switzerland, New Zealand, and Latvia were the top performers on the

list. Mongolia ranked behind Nepal, Lebanon, Tanzania and Ethiopia.

Source: Business Mongolia

SRI LANKA, MONGOLIA FOREIGN CURRENCY DEBT RATIOS HIGH, SAYS FITCH REPORT

Foreign currency denominated debt is expected to fall as a ratio of current receipts except for in

Sri Lanka and Mongolia, where it will remain high, Fitch Ratings said in a report which tracked 12

emerging Asian nations.

―At the regional level, FC-denominated debt is projected to decline as a ratio of current external

receipts,‖ Fitch Ratings said in a report. ―However, it is projected to remain above 100 percent for

Sri Lanka and to remain above the end-2011 level for Mongolia. This factor is likely to weigh on

these sovereign ratings.‖

Fitch said a negative gap between inflation and the policy rate in Sri Lanka was only second to

Mongolia among 12 Asian countries tracked by Fitch ratings. Four other countries had smaller

negative policy rates.

Fitch said debt ratios are projected to fall slightly in India and Sri Lanka, but indebtedness was high

giving limited scope for further fiscal easing if shocks materialized. Critics, however, say Sri Lanka's

biggest macro-economic shocks have always been triggered by ―fiscal easing.‖ Last year's balance of

payments crisis, for example, involved at least 1.5 percent of gross domestic product (GDP) worth

bank credit financed loss or ―fiscal easing‖ via state energy utilities.

Source: Lank Business Online

JAPAN-MONGOLIA ECONOMIC PARTNERSHIP TALKS CONTINUE

The second round of negotiations for the Japan-Mongolia Economic Partnership agreement was held

last week from 11 to 14 December at the Ministry of Foreign Affairs in Tokyo, Japan.

The Japanese delegation was led by Jun Yokota, Ambassador in charge of Economic Diplomacy while

O. Chuluunbat, Vice Minister of Economic Development, led the Mongolian one for meeting

discussions. During meetings for expert-level discussions following the opening plenary, negotiators

from each side discussed trade in goods and services, rules of origin, customs procedures,

investment, intellectual property, competition, cooperation, technical barriers to trade, sanitation

and phytosanitation measures, government procurement, and improving the business environment.

The next round of negotiations will be held in Ulaanbaatar.

Source: Ministry of Economy, Technology, and Industry of Japan

MONGOLIAN POLICE DELEGATION TRAVELS TO TURKEY

A Mongolian delegation has conducted a five-day official visit to Turkey to boost cooperation

between their respective police agencies.

The delegation, led by National Police Chief B. Bilegt, came at the invitation of the Turkish National

Police's General Director, Mehmet Kiliclar, for experience sharing and vocational training.

During the visit, the Mongolian delegation visited Turkey's Department of Public Security and

Investigation, the Traffic and Education Departments, and the Police Academy of Turkey. Currently

the Police Academy has 26 Mongolian students studying for their Bachelor degrees and 10

postgraduates for their Master and Doctorate degrees.

Forty-two Mongolians have graduated from the Police Academy since 1997, and 332 have

participated in short-term vocational trainings in Turkey.

Source: Info Mongolia

OIL WOES DRUM UP CRITICISM FOR GOVERNMENT

Researchers and industry professionals criticized how the government has managed the petroleum

sector at a recent gathering for the industry.

Researchers from the Mongolian Academy of Science said Mongolia would need refineries in a

presentation titled ―Ways to Break Oil Dependence.‖ They criticized how Mongolia has allowed

foreign oil extraction companies to send oil produced out of the country for refinement and how it

has ignored alternative fuel development from coal and shale.

―Mongolia has the potential to possibly refine oil based on its lavish oil reserves without asking for

favors from fuel importers,‖ said scientist B. Avid. ―Unfortunately our government just gives the

plentiful resources underground to China for free.‖

He added that oil refinement and export could make up as much as 30 percent of the national

economy. Yet there have still been no plans for the production of shale oil in Mongolia. According to

estimates, Mongolia has some 164 billion tons of coal reserves, of which over 100 billion is thermal

coal. Experts say the country would need between USD 60,000 and USD 87,000 to refine oil from

that amount of coal.

Former President P. Orchirbat currently heads the working group tasked with directing plans for a

shale oil refinery. However, scientists have said problems would certainly arise as soon as

production began. This includes the 60 to 70 percent of emissions emitted from refining and how to

manage by-product waste.

―Over 10 oil refinery projects have been received by companies. But we are still waiting for the

government's acceptance to grant them the right to run oil refinery operations,‖ said J. Tsveenjav,

head of the School of Geology and Petroleum Engineering at the Mongolian University of Science

and Technology (MUST).

He said Mongolia's petroleum legislation was outdated, and that the country should try and rethink

the situation, as the law was first passed in 1990 when Mongolia was eager to attract foreign

investment. He criticized the fact that currently the law allows too much leeway in the way of

companies exploring for oil. He said the government should also hold greater than the 26 percent

ownership now mandated by the law.

―There is no domestic company that has run exploration with its own assets in Mongolia. That

means most of the deposits in Mongolia so far have been taken by the Chinese.

Source: News.mn

UB'S LAST GREEN SPACES HAVE BEEN UP FOR GRABS

As Mongolia's economic growth continues to boom, Ulaanbaatar's skyline grows higher and denser

with glass and steel, encroaching on historical sites and gobbling up green space. Activists are

becoming increasingly wary about how questionable deals are handing over public spaces to private

development.

American journalist Michael Kohn was among the few to openly investigate rumors the communist-

era Children's Park was to be sold quietly to developers. He had seen other public spaces

steamrolled to make room for private homes and businesses in the 1990s, and was worried.

―That was a period of time when playgrounds and soccer fields were simply up for grabs, sold to the

highest bidder. A lack of transparency and law enforcement allowed this problem to fester, and

there were no civic society institutions with the ability to fight it.‖

Activists helped uncover the fact that two of Mongolia's biggest corporations, MCS Group and Bodi

Group, and two smaller companies had acquired rights in the remaining park grounds for

development projects, including a 33-story Shangri-la five-star hotel and shopping mall, an

entertainment complex and sport center. The Mongolian Youth Federation (MYF) is calling for the

release of all relevant documents signed by the companies and the government agencies that issued

the permits.

―They have all the documents to show it's legal, but logically it's completely illegal,‖ MYF President

M. Ayush said.

Illegal construction has also marred the slopes of Bogd Khan mountain range. First protected in the

18th century by the Buddhist leaders, and awarded UNESCO Biosphere Reserve status in 1997, the

Bogd Khan Uul Strictly Protected Area is one of the world's oldest national parks. Despite legal

safeguard, vast portions of the preserve now house some of the most upscale and expensive

residential developments in Ulaanbaatar. Activists such as Kohn hail recent efforts by MYF as a start

to public participation in governance.

―During the communist period the government did everything to develop the city and the country.

Now the public is realizing that in a democracy the public has to take an active role in determining

its future,‖ he said.

Source: Eurasianet

COAL SET TO RIVAL OIL AS DOMINANT ENERGY SOURCE BY 2017

Coal will nearly overtake as the dominant energy source by 2017, and only a drop in world gas

prices could curb the use of the dirtier fossil fuel in the absence of high carbon prices, the

International Energy Agency said. Thermal coal is a major export of Mongolia.

China, who consumes nearly all of the coal exported by Mongolia, will use more coal than the rest

of the world put together, while India will overtake the United States as the world's second-largest

consumer and become the biggest global importer, the Paris-based IEA forecast in its annual

Medium-Term Coal Market Report.

―Coal's share of the global energy mix continues to grow each year, and if now changes are made to

current policies, will catch oil within a decade,‖ IEA Executive Director Maria van der Hoeven said.

The IEA, the energy agency for developed countries said earlier this year that without a major shift

away from coal, average global temperatures could rise by 6 degrees Celsius by 2050, leading to

devastating climate change. The world will burn around 1.2 billion more tons of coal per year by

2017 than it does today, which equals the current coal consumption of Russia and the United States

combined, the IEA chief said. Global consumption is likely to reach 4.3 billion tons of oil

equivalently by 2017, compared with 4.4 billion tons of oil equivalent for oil, although the pace of

growth is likely to be slower than over the past decade, the IEA forecast.

The report said that as long as carbon prices are low, only strong competition from low-priced gas

would be effective in cutting coal demand.

Source: Mining Weekly

CHINESE STEEL DEMAND BOOSTS IRON ORE

The price of iron ore, a lesser export commodity of Mongolia, hit a five-month high signaling that

demand from Chinese steel mills—the leading consumers of the commodity—has recovered.

Excess inventories that had weighed on the market in the middle part of the year have now been

run down. The benchmark for iron ore delivered to China—with 62 percent iron content—rallied to

USD 132.75 a ton, according to price reporting agency Platts, the highest since mid-July. The

commodity, used to produce steel, is almost 50 percent higher from this year's low of USD 88.75 a

ton, hit in early September.

Better economic news also supported the market. The rise in December's HSBC Flash Purchasing

Managers' index (PMI) for the manufacturing sector in China to 50.9, its highest level for 14 months,

boosted confidence among traders. Analysts at Macquarie said the price moves in iron ore were ―a

classical V-shaped recovery‖ and reflected the fall and rise in demand.

The rebound will be a relief to large mining groups, which have large exposure to the commodity.

These include Vale SA of Brazil, London-listed Rio Tinto PLC, BHP Billiton Ltd. and Anglo American

PLC, as well as trading companies such as Mitsui & Co.

In spite of the rebound in iron ore, international prices for coking coal, also used in steel

production, had remained subdued, said analysts. Miners have recently settled contracts at about

USD 165 a ton for benchmark coking coal from Australia, below current prices in the domestic

Chinese market of roughly USD 180 a ton. Analysts said coking coal prices could rise in the next few

months toward USD 190 to USD 200 a ton.

―[Coking] coal is the catch-up trade,‖ said Colin Hamilton, head of commodities research at

Macquarie.

Source: Financial Times

POLITICS

NEW DRAFT MINERALS LAW RELEASED BY PRESIDENT‟S OFFICE

The new draft Minerals Law has finally been released to the public, in both English and Mongolian

languages.

The current Minerals Law was signed in 2006, and is the basis for the Oyu Tolgoi investment

agreement. Both the Minerals Law and the agreement have been under constant political pressure

to be amended or changed. The bill has been kept under wraps since it first became known last

year that the president had it in his possession. That is until 7 December, when the President's

Office released the bill to the public for comments.

According L. Bolormaa, editor-in-chief of Mongolia Mining Journal, the bill will likely be used as a

point of support for his reelection campaign. With 143 articles, the bill is more than twice as long

as the current Minerals Law. According to Bolormaa, it is an ambitious piece of legislation that

―attempts to regulate every part of the mining industry.‖ She noted that the new bill drops the

term ―strategic deposit.‖

―In the current Minerals Law, and the infamous new Foreign Investment Law, the idea that a certain

deposit 'is of strategic importance' is used as a justification for the tighter regulation of said

deposit,‖ Bolormaa said.

She added that provisions such as mandates that the state should own at least 34 percent of a

strategic deposit have been removed completely and no new deposits could be added to the list of

strategic deposits. However, the state's ―free share‖ in each case is to be determined via a deposit

development agreement (DDA), which could open the door for renegotiation of the Oyu Tolgoi

investment agreement.

The law reads: ―If... circumstances [change which] become detrimental to the rights and interest of

Mongolia... [this] shall serve [as] grounds for making changes and amendments to this agreement.‖

This would clearly refer to the frequently made argument that the higher investment from USD 4.3

billion to up to USD 7 billion has affected Mongolia. If the new Minerals Law was enforced

retroactively to the Oyu Tolgoi agreement, then the unforeseen increase in Oyu Tolgoi's initial

investment would be considered grounds for renegotiation.

Source: Mongolia International Capital Corp.

MPRP NO LONGER TO PURSUE EXIT OF GOVERNING COALITION

The Mongolian People Revolutionary Party (MPRP) has made a formal announcement that it would

not pull out of the government-ruling coalition.

―The MPRP decided to remain in the coalition government, because the government needs to be

stable,‖ said MPRP General Secretary G. Shiilegdamba.

Shiilegdamba said the issue was discussed during a meeting of the Justice Coalition's administrative

board where 300 representatives of the Citizen's Representative Parliament from the party were in

attendance. Some of the issues the party had for possibly withdrawing from the grand coalition

were the prohibitions from registering candidates for the local election in November and the

conviction of former President N. Enkhbayar for graft.

―Every representative agreed to the suggestion the government should be stable, so we should be a

part of it to stop political repression and election fraud,‖ Shiilegdamba said.

Source: News.mn

MPP PARLIAMENTARIAN JOINS DP

MP D. Arvin has left the Mongolian People's Party to join the government-leading Democratic Party

(DP).

Arvin gave notice to the MPP of her desire to leave the party for the DP this week before a formal

announcement was made on 20 December.

―Congratulations to you, new member D. Arvin, in your decision. Let's develop together and change

the current political structure and accelerate the progress of Mongolia's growth.‖

Arvin said she would focus on the issues of most concern to Mongolia, including unemployment,

pollution and environmental degradation.

―For many years I have worried and looked into these issues, which need reform. And in the past I

had delivered my proposals several times to the authorities of the Mongolian People's Party and the

party group in Parliament, but they did not accept my initiations; thereby I change my political

affiliation,‖ said Arvin.

Source: Info Mongolia

MP CALLS FOR THE RESIGNATION OF DEPUTY PRIME MINISTER

MP J. Batzandan has submitted his request for the resignation of D. Terbishdavga from his position

at deputy prime minister.

Batzandan said that Terbishdavga has grown too preoccupied with his efforts to save the career of

former President N. Enkhbayar, who now serves a prison sentence of two and a half years for

corruption. If Terbishdavga refuses the request, the issue would be discussed in Parliament.

Source: News.mn

JUSTICE MINISTER ADMITS TO FAILINGS OF CRIMINAL LAW

Minister of Justice Kh. Temuujin admitted on television that the Criminal Procedure Law was being

used more as a tool for revenge than justice.

The discussion was had as part of a series of talks to survey public opinion on draft laws before

going before Parliament. During the televised broadcast of the discussion, people complained of the

Criminal Procedure Law, which was passed in 2002, saying it was being used as a tool for retribution

by authorities. Although there have been numerous reports of accidents due to inadequate

conditions at construction sites, the victims of these accidents and their families have had nowhere

to turn for their grievances. Also, the Criminal Procedures Law makes no mention of compensation

for emotional trauma.

―Human rights and press freedom concepts were first written on paper in Mongolia 22 years ago,

but the law was not really enforced. Human rights are violated around us every day,‖ said MP J.

Batzandan.

He added that a study showed that there are 1,700 crimes related to the law's failures annually.

Source: News.mn

CITY AUTHORITIES NAMED

The City of Ulaanbaatar has announced the names of new city authorities.

Yo. Gerelchuluun, head of the City of Ulaanbaatar's Governor's Office, announced B. Badral as the

chief of the implementation agency in the city governor's office, A. Gantulga, general manager of

the city, as the chief executive officer of the Apartment Financing Corp. (AFC), and N. Ankhtuya as

the head of the Children's Palace.

Also, Mayor E. Bat-Uul confirmed the appointment of district governors to the Citizen's

Representative Parliament. Those appoints are Kh. Boldbaatar for Nalaikh, S. Badarsan for

Sukhbaatar, D. Orosoo for Bayangol, D. Purevdavaa for Bayanzurkh, and J. Gankhuyag for Khan-Uul.

Source: News.mn

CHINA, MONGOLIA TO STRENGTHEN COOPERATION IN ENVIRONMENTAL PROTECTION

Chinese and Mongolian environmental authorities met on Monday and agreed to strengthen

cooperation in environmental protection and sustainable development.

At the meeting, Vice Minister Li Ganjie of the Chinese Ministry of Environmental Protection said

China and Mongolia are good neighbors with a long borderline, and enhancing environmental

cooperation serves the interest of both countries. Li expressed willingness to launch collaboration

programs with the Mongolian side in the fields of desertification monitoring, control and

prevention; the development and utilization of renewable energy; and the construction of cross-

border natural reserves.

The two sides also agreed to cooperate in protecting Mongolia's rare Gobi bears. China will share its

experiences in protecting giant pandas to help Mongolia protect its endangered species, whose

population is only 22 currently.

Source: China.org

MONGOLIA, VIETNAM INK EDUCATION AGREEMENT

Vietnam's Deputy Minister of Education and Training Tran Quang QUY and Mongolian Ambassador to

Vietnam D. Enkhbat signed a 2013-2016 agreement on education cooperation in Hanoi in December.

Both countries have plans for more delegate exchanges for experience sharing in education, with

particular emphasis on encouraging scientists and young researchers to share their experiences for

future joint projects. They will promote bilateral cooperation programs between their universities

and institutions and consider full recognition to each other's university degrees.

Vietnam and Mongolia have had student exchanges since the 1960s, and a 2006 agreement had 15

Mongolians sent to Vietnam annually. Since 2009 Vietnam has received a total of 62 students from

Mongolia with 14 Vietnamese students sent to Mongolia.

The two countries have signed some 20 cooperative agreements on economics, trade, culture,

education, science and technology, and other areas.

Source: Voice of Vietnam

INTERPOL NO LONGER IN PURSUIT OF ENKHBAYAR ASSOCIATES

Interpol has ended its pursuit of former President N. Enkhbayar's sister, after two months with her

on its wanted list.

The Independent Authority Against Corruption (IAAC) began its investigation of N. Enkhtuya as part

of its overall investigation into Enkhbayar. The IAAC has also looked into Enkhutya's assistant's

brother B. Khuyag, both of whom have fled abroad.

International anti-crime agency Interpol received its request to investigate Enkhtuya from the

government of Mongolia. Interpol first posted information and photos of the suspects on October

2012, registering Enkhtuya and Khuyag as wanted criminals. Two months later information on both

was removed from the official website, on 10 December, signaling the close of the investigation.

Khuyag is suspected by the IAAC of illegal privatization of the Urgoo Hotel and was called in for

questioning. He has reportedly escaped to the United States. Enkhtuya is wanted for questioning

due to the belief she participated in illegal activity while working as a dispatcher for ships bearing

the Mongolian flag in Singapore.

The IAAC reported that Enkhtuya took 500 shares of Media Holdings Co. from MP Ts. Munkh-Orgil

and became its chief executive. They have accused her of transferring the ownership of the

Ulaanbaatar Times Publishing House, another matter for which Enkhbayar was under investigation,

to that company.

Source: News.mn

MONGOLIA SHARES MINING EXPERIENCE WITH KYRGYZSTAN

A top Mongolian official explained to Kyrgyz geology officials the efforts to maximize mining

revenue in Mongolia. Mongolian Presidential Chief of Staff P. Tsagaan gave his remarks during a

consultation between his visiting governmental delegation and the Kyrgyz State Agency on Geology

and Mineral Resources (GAGMR).

―Since 1997, Mongolia has been able to occupy a high ranking in the mining of useful minerals

thanks to liberal legislation,‖ he said.

However, Mongolia, in response to public protests, has not issued a mining license since 2007 and

intends to review its mining laws soon.

The Kyrgyz government is pursuing reforms in protecting and attracting investment, creating clear

mining rules, applying the ―single window‖ principle (for miners seeking permits and other

government services), perfecting the licensing system and rooting out corruption, GAGMR director

Ishimbai Chunuyey said.

Source: Central Asia Online

ANNOUNCEMENTS

MINING ECONOMICS COURSE BY RUNGE ON 16-17 JANUARY

Runge will present its Mining Economics course from 16 to 17 January 2013. The event is supported

by the Business Council of Mongolia (BCM).

The course aims to provide a solid foundation in the fundamental principles of mining economics,

focusing on cost efficiencies at each step in the process. It also provides an introduction to

systematic mine planning and reinforces the importance of engineering decision-making based on

costs. The course is recommended for those who play a pivotal role in collecting, analyzing, and

presenting information for economic evaluation.

The course will be presented in English at the Runge Training Room on the eight floor of the Monnis

Tower on Chinggis Avenue. The price is USD 1,900 (USD 2,090 including VAT) per student.

For more information visit rpmglobal.com/professional-development. Register by email at

saruul@bcmongolia.org or call 317027.

___________________________________________

COAL MONGOLIA 2013, 21-22 FEBRUARY, SS CONVENTION CENTER

COAL MONGOLIA 2013 introduces Mobile Application.

The third annual Coal Mongolia investors conference and exhibition for 2013 will utilize an

environmentally friendly mobile application for the first time. The event is supported by the

Business Council of Mongolia (BCM).

The application avoids the use to paper applications and will allow guests to download conference

itinerary, send information to yourself and contacts by email, and set reminders for presentations.

To download the application to your mobile device visit coalmongolia.mn. For more information call

7011 5590 for more information or email info@coalmongolia.mn.

___________________________________________

THIRD RISK FORUM, 26 FEBRUARY, BLUE SKY TOWER

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

Tower.

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

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

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

practice of Mongolia.

For more information, call 11 317 027.

___________________________________________

INTERNATIONAL MINING INVESTMENT, SERVICES AND EQUIPMENT TRADE FAIR “PDAC 2012”

MARCH 3 - 6, 2013. TORONTO, CANADA

The Business Council of Mongolia with support of the Trade Department of Canadian Embassy is now

registering Mongolian business delegation to participate to International Mining Investment, Services

and Equipment trade fair ―PDAC 2013‖ which will be organized in Toronto, Canada from March 3 to

6, 2013.

This four-day annual Convention held in Toronto, Canada has grown in size, stature and influence

since it began in 1932 and today is the event of choice for the world‘s mineral industry. In addition

to meeting over 1,000 exhibitors, 30.369 attendees from 125 countries it allows you the opportunity

to attend technical sessions, short courses as well as social and networking events.

The program includes also business & entertainment activities in Toronto.

Please contact at 317027, 99197985 or otgoo@bcmongolia.org, for registration and additional

information about the event. Registration deadline is 6:00PM, January 15, 2013.

___________________________________________

REGISTER NOW FOR MONGOLIAN MINING DIRECTORY - 2013

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

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

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

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

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

investors.

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

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

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

+976-7011 5590.

___________________________________________

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

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

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

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

content and use of information technology opportunities.

As of November 30, suppliers registered on the database totaled 1,402. In addition 20 buyers were

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

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

Database. Please visit here for registration.

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

or 317027.

___________________________________________

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

BCM is pleased to announce that Mongolian National Broadcasting continues its cooperation with

BCM on ―MM Today‖. This English news program is aired every Friday for 10 minutes and is

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

today‘s BCM NewsWire.

BCM WEBSITES

MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS

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

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

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

Ulaanbaatar.

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

government website Open-Government.mn are regularly updated.

___________________________________________

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

„PHOTO GALLERY‟

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

following 5 presentations were added from the BCM December 10th monthly meeting:

•Bayarmaa A, Carbon Finance Specialist, Clean Energy LLC, Newcom Group ―Case of Salkhit wind

farm CD CDM project

•Tsendsuren Batsuuri, Head of CDM National Bureau, Climate Change Coordination Office, Ministry

of Environment and Green Development – ―Carbon Market Mechanisms: current status and

opportunities for Mongolia‖

•Adrienne Youngman, Executive Director, Mongolia Talent Network – ―Human Talent In Mongolia‖

•Jan Hansen, Senior Country Economist, Mongolia Resident Mission, ADB and Enerelt Enkhbold,

Associate Investment Officer, MNRM, ADB – ―Outlook for the Mongolian Economy―

•Efrain J Laureano, Chief of Party, Business Plus Initiative (BPI) – USAID Contractor - "Supplier

Development in Mongolia‖

Please also note 25 presentations from the Mongolian Investment Summit 2012 on 30-31 October in

Hong Kong; recent postings from BCM‘s 5 November and 24 September monthly meetings; and 9

presentations from Discover Mongolia 2012.

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

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

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

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

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

Embassy.

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

Parliament and Government is available for download.

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

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

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

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

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

___________________________________________

SOCIAL NETWORK WITH BCM

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

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

improving each day with BCM.

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

business environment in Mongolia today.

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

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

the NewsWire with the community.

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

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

We have now 795 fans on our Facebook fans page, 926 connections on LinkedIn network, and 500+

followers following us on Twitter.

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

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

BCM WORKING GROUP MEETING

The BCM`s Legislative Working Group met on Wednesday, December 19, with 21 members

attending. The WG was expanded to include officials representing 5 embassies.

Co-chairs Bayar B, ELC LLC, and James Liotta, MahoneyLiotta, moderated the session.

Meeting discussion was on the following topic:

-Draft Minerals Law released by President‘s Office for comments.

Next meeting: 24th of December; venue to be announced.

Agenda of the meeting will be: Discussion and comments on the Draft Minerals Law`s top 20 or

more issues on the draft.

Please contact erka@bcmongolia.org

ECONOMIC INDICATORS

INFLATION

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

Year 2007 *15.1% [source: NSOM]

Year 2008 *22.1% [source: NSOM]

Year 2009 *4.2% [source: NSOM]

Year 2010 *13.0% [source: NSOM]

Year 2011 *10.2% [source: NSOM]

November 30, 2012 *14.4% [source: NSOM]

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

Note: 14.2% y-o-y, Ulaanbaatar city, November 30, 2012

CENTRAL BANK POLICY LOAN RATE

December 31, 2008 9.75% [source: IMF]

March 11, 2009 14.00% [source: IMF]

May 12, 2009 12.75% [source: IMF]

June 12, 2009 11.50% [source: IMF]

September 30, 2009 10.00% [source: IMF]

May 12, 2010 11.00% [source: IMF]

April 28, 2011 11.50% [source: IMF]

August 25, 2011 11.75% [source: IMF]

October 25, 2011 12.25% [source: IMF]

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

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

CURRENCY RATES – December 20, 2012

Currency Name Currency Rate

US dollar USD 1,394.76

Euro EUR 1,842.90

Japanese yen JPY 16.62

British pound GBP 2,266.14

Hong Kong dollar HKD 179.97

Chinese Yuan CNY 223.92

Russian Ruble RUB 45.32

South Korean won KRW 1.30

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.