BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 339 – August 22, 2014

NEWS HIGHLIGHTS:

Business

OT feasibility study won't have financials or schedules;

Operations at Mongolia’s Tavan Tolgoi mine halted, Macmahon says;

Erdenes TT’s remaining debt to Chalco at $110 mn;

KOGAS set for coal-bed methane production at TT;

Mongolian Mining Corp. sees H1 2014 revenues fall 22 percent;

Berkh Uul mine to supply coal to Khutul Cement and Lime;

Banpu slashes capital outlays for this year and next;

Guildford inks first sales contract in Mongolia;

Prophecy consolidates Chandgana Nyalga coal basin;

Erel Bank changes name to Arig Bank;

Guildford Coal appoints Wal King as chairman;

World Bank announces new country representative for Mongolia;

Mongolia to exhibit at Kaohsiung Food Show for the first time;

Melbourne International Film Festival screens “Remote Control”;

Rio Tinto puts Papua New Guinea copper mine under review;

BHP Billiton’s spin-off is a turning point for mining industry.

Economy

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

Mongolia seeks economic lifeline with pivot to China, Russia;

Mongolia welcomes Chinese investment, says Beijing before Xi visit;

Government decisions to support businesses, says Economic Council head;

Watchdog group sounds the alarm on foreign borrowing;

Mongolia imports 188 million kWt from Russia in H1;

Apartment Price Index rises 17.2% in July y-o-y;

Sub-training on reactor engineering launches;

Airways New Zealand supports Mongolia safely reducing aircraft separation;

Food security snapshot;

Japan to fund repairs at schools and health centers;

U.S. group charts out cultural heritage sites;

Inner Mongolia coal production slumps;

Thermal coal falls victim to China’s energy policy;

Socio-economic development stuck in the mud - EDITORIAL.

Politics

Xi Jinping's Mongolia trip to focus on energy, infrastructure;

China eyes trade route deal with Mongolia during Xi visit;

Mongolia preps rail agreements;

China, Mongolia customs sign agreements;

Russia, Mongolia start war games;

U.S. medical experts train counterparts in Mongolia;

Dalai Lama's visit to Mongolia canceled under pressure from China;

Gansukh pleads to president for his innocence;

Brother of culture minister arrested for critical tweets;

Cabinet dismisses General Police Department head;

UB adds Beijing to list of 'sister' cities;

UB mayor reaches out to Pyongyang city leader;

UB bans transport of hazardous materials;

10 day-traffic regulations in place;

Chinese tea culture event to take place.

Others

Announcements;

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

ECONOMIC INDICATORS

Weekly Market Indicators from MIBG;

Inflation;

Central bank Policy Rate;

Currency Rates.

*Click on titles above to link to articles.

SPONSORS

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Invest Mongolia Agency

BUSINESS

OT FEASIBILITY STUDY WON'T HAVE FINANCIALS OR SCHEDULES

Shares in Turquoise Hill Resources Ltd. showed little reaction after the company's second quarter

financial results boasted concentrate sales from its Oyu Tolgoi mine in Mongolia increasing almost

three times over the first quarter.

Shareholders who have marked down the company‘s value nearly 30 percent over the past year,

continue to await concrete news on financing for an underground expansion project at the massive

copper-gold-silver mine, 66 percent owned by Turquoise Hill with the government of the Asian

nation holding the rest. Vancouver-based Turquoise Hill, controlled by Anglo-Australian giant Rio

Tinto PLC, suspended work in November on the USD 5.1 billion underground expansion of Oyu Tolgoi

where 80 percent of the resources are located and in April said potential lenders have extended a

deadline to arrange financing for the project until the end of September.

"We are all aware of the September 30 date and we are all working toward that deadline," Chief

Executive Officer Kay Priestly said on a conference call with investors, adding that the banks and

institutions "have been with us through this process for several years now," and remain "committed"

and "upbeat": "Clearly the underground is a significant part of the value of this mine, and right now,

we're focused on progressing the underground."

On the conference call Priestly said that the feasibility study is largely complete and a geological

reserve update is currently being reviewed, but "due to the outstanding shareholder issues, the

financial and scheduled portion of the submission were omitted."

For 2014, Oyu Tolgoi is targeting production of 150,000 to 175,000 tons of copper in concentrates

and 700,000 to 750,000 ounces of gold in concentrates.

But after phase two the mine in the southern Gobi Desert could produce more than 1.2 billion

pounds of copper, 650,000 ounces of gold and 3 million ounces of silver each year. Oyu Tolgoi would

then account for 30 percent of the economy of the nation of just over 3 million people.

Source: Mining.com

OPERATIONS AT MONGOLIA‟S TAVAN TOLGOI MINE HALTED, MACMAHON SAYS

Operations at Mongolia‘s Tavan Tolgoi coal mine have been suspended amid a disagreement

between state-owned mine operator Erdenes Tavan Tolgoi JSC and contractor Macmahon Holdings

Ltd.

About USD 22 million in progress payments for work already completed is overdue and its unit has

been in talks with Erdenes Tavan Tolgoi, Mongolia‘s largest state-owned coal company, regarding

payment, Perth-based Macmahon said today in a statement. ―Macmahon advises that operations at

Tavan Tolgoi have now been suspended by [Erdenes] TT, as part of a range of disagreements

between the parties,‖ the Australian company said. ―The parties are engaging in discussions to see

whether the matters can be resolved by agreement.‖

Macmahon has been operating at Tavan Tolgoi since 2012 and its contract is due to expire in 2017.

It won a bid in August 2011 to work as a contract miner at the east pit at Tavan Tolgoi, Mongolia‘s

largest coal deposit. The pit contains 1.08 billion metric tons of reserves and 78 percent is coking

coal, an important steelmaking ingredient.

Most of the coal from the mine is delivered to the Aluminum Corp. of China Ltd.

Source: Bloomberg

ERDENES TT‟S REMAINING DEBT TO CHALCO AT $110M

Erdenes Tavan Tolgoi JSC‘s remaining debt to Aluminum Corp. of China (Chalco) is USD 110 million,

said Economic Policy Advisor to the Prime Minister, D. Munkhbat.

Only about USD 10 million in coal has been delivered to Chalco in the last three months. Meanwhile,

Erdenes TT Deputy Director B. Enkhbat in late July said that 400,000 tons of coal worth USD 20

million was ready for delivery to Chalco, while Executive Director Yachil Batsuuri said that USD 100

million would be paid before autumn. Chalco and Erdenes TT are holding negotiations on a higher

price for the coal, according to unnamed sources.

Source: Undesnii Shuudan

KOGAS SET FOR COAL-BED METHANE PRODUCTION AT TT

Minister of Mining Davaajav Gankhuyag on 13 August briefed an official from Korea Gas Corp.

(KOGAS) on Mongolia's new legislation ahead of plans to extract coal-bed methane gas from Erdenes

Tavan Tolgoi's coal mine.

―KOGAS has been completing the first stage of the study in collaboration with Erdenes Tavan Tolgoi

JSC and we plan to run the methane gas pilot plant from June 2015,‖ Young-myung said, adding

that the methane gas would reduce air pollution in Ulaanbaatar.‖

Coal-bed methane (CBM) is an unconventional gas extracted from coal. Coal stores up to six or

seven times what a conventional natural gas reservoir of equal rock volume can hold.

Source: InfoMongolia.com

MONGOLIAN MINING CORP. SEES H1 2014 REVENUES FALL 22 PERCENT

Mongolian Mining Corp. (MMC) saw revenues fall 22.3 percent in the first half of this year compared

with the same period last year, which the company attributed to challenging market conditions in

China.

MMC's shareholders saw a USD 0.76 loss per share for the six months ended 30 June 2014, with a

total shareholder loss of USD 28 million compared with a loss of USD 25.2 million for the same

period in 2013. MMC and its subsidiaries sold a total of 3.2 million tons of coal products and

generated total revenue of USD 192.6 million during that time, compared to 3.1 million tons of coal

products sold with total revenue of USD 247.8 million for the first half of 2013. The fall in total

revenue was largely attributable to continued negative coking coal price trends, reads the Source,

and to a lesser extent, to a lower sales volume of washed hard coking coal. The average selling

price fell 12 percent.

The board did not recommend the payment of dividends for the period.

Source: Mongolian Mining Corp.

BERKH UUL MINE TO SUPPLY COAL TO KHUTUL CEMENT AND LIME

Australia-listed Viking Mines Ltd. announced that Mongolian cement company, Khutul Cement and

Lime (KCLC) JSC, on 15 August had signed an initial non-binding memorandum of understanding

(MoU) for coal deliveries with acquisition target Auminco Mines LLC.

―The MoU signed with Khutul Cement and Lime was a significant event for the company, as KCLC is

Mongolia‘s largest cement manufacturer,‖ Viking Chairman Jack Gardner said. ―We understand

KCLC has plans to substantially increase cement production to meet a growing domestic demand.

This would result in its coal demand increasing from the current 250,000 tons per year to around

400,000 or 500,000 tons per year.‖

Auminco and its Berkh Uul bituminous coal project are currently the subject of a takeover offer by

Viking. This is the fourth memorandum of understanding secured for Berkh Uul. The prior three

were to supply coal to the Darkhan Metallurgical Plant, Darkhan Power Station and Erdenet Power

Plant.

Source: Unuudur

BANPU SLASHES CAPITAL OUTLAYS FOR THIS YEAR AND NEXT

Stock Exchange of Thailand (SET)-listed Banpu PLC is likely to cut its planned capital expenditures

this year and next by USD 150 million from USD 779 million by postponing and adjusting investment

projects in Australia and Mongolia, said chief executive Chanin Vongkusolkit.

The investment plan in Mongolia has changed and the capital required till 2015 will be halved to

USD 50 million. Major investment in Mongolia might resume sometime between 2016 and 2017,

Chanin said. In Australia, Banpu moved machinery from its Newstand mine to the Myuna project

earlier this month, which should increase production output at Myuna by 300,000 tons to 2.1 million

tons a year. Banpu scrapped its plan to produce high-cost coking coal at Newstand, reducing its

planned investment of USD 197 million for 2014 and 2015 by about USD 100 million. Banpu's five-

year investment plan through 2015 allotted USD 779 million to be spent this year and next, with 40

percent allocated to its coal-fired Hongsa power plant in Laos, said Chanin.

Chanin said Banpu aims to achieve its coal production target of 48.8 million tons this year, up from

45.8 million in 2013. The miner plans to extract 30 million tons from Indonesian mines, 15.6 million

tons from Australia, and 3.2 million tons from China. In the first six months, Banpu sold 25.5 million

tons, with 16.2 million from Indonesia and 8.6 million from Australia. Banpu's average selling price

for hard coking coal is projected to slip to USD 70 per ton in 2014 from USD 72 last year. In the first

half, it fell 9 percent year-on-year to USD 68.1 per ton from USD 77.1, as global coal prices dipped.

Source: Cover Mongolia, Bangkok Post

GUILDFORD INKS FIRST SALES CONTRACT IN MONGOLIA

Junior coal developer Guildford Coal Ltd. has executed its first sales contract for its Baruun Noyon

Uul (BNU) coal mine.

The contract represented the first shipment of 8,000 tons of coal from the BNU mine to end-users in

China, which would provide feedback on the product. The first trucks were scheduled to leave the

mine on 25 August. Further deliveries of some 12,000 tons were also anticipated.

Previously known as the North pit, BNU forms part of Guildford‘s South Gobi project, and has a coal

resource of 70.4 million tons, which includes an indicated resource of 39.7 million tons.

Source: Mining.com

PROPHECY CONSOLIDATES CHANDGANA NYALGA COAL BASIN

Prophecy Coal Corp. on 18 August announced that it had entered into binding agreements with

Cosmo Coal LLC to form a new Mongolian company granting Prophecy 51 percent ownership and

Cosmo 49 percent.

Prophecy plans to consolidate its subsidiary Chandgana Coal LLC with Cosmo's Tugalgatai Mining LLC

to become Chandgana Tugalgatai Coal LLC by the close of October. Prophecy also plans to transfer

34 percent of outstanding shares of its subsidiary, Prophecy Power Generation (PPG) LLC, to Cosmo

and accept Cosmo's nomination of one new member to its board of directors. Cosmo in July agreed

to assist PPG in securing a concession agreement and power purchase agreement, and Prophecy

agreed to use its best efforts to bring to the power plant project equity investors, secure bank

financing, and manage the equipment procurement and construction cycle.

By consolidating the resources of the Nyalga Coal Basin, Prophecy said it will control one of the

largest undeveloped coal deposits in Mongolia. The Nyalga basin contains an abundant source of

coal that is situated in an ideal location to develop major power, coal to gas, and coal to liquid

projects. If the 600 megawatt power plant and coal mine begin operation, PPG and Chandgana are

expected to be the largest private employer in Khentii Aimag, and the largest private revenue

contributor in the province.

Source: Prophecy Coal Corp.

EREL BANK CHANGES NAME TO ARIG BANK

Erel Bank LLC has changed its named Arig Bank LLC. The word "arig" translates to "economical‖, but

the bank's intent is to communicate the message "clear‖ and ―transparent‖, which it says are the

principles to which it adheres.

Source: BNE

GUILDFORD COAL APPOINTS WAL KING AS CHAIRMAN

Guildford Coal Ltd. announced the appointment of former Leighton Holdings Chief Executive Wal

King as non‐executive chairman of the board, effective 29 September.

King joined Leighton in 1968 and was appointed the company‘s chief executive in 1987. Under his

leadership, Leighton grew from an organization with annual revenue of USD 1 billion to one of the

world‘s leading contracting, services and project development organizations with revenue of more

than USD 20 billion and substantial operations in Australia, Asia and the Middle East.

King is currently a non‐executive director of Coca‐Cola Amatil Ltd and Asia Resources Minerals PLC,

the non‐executive deputy chairman of mining services group Ausdrill Ltd and the non‐executive

deputy chairman of Sundance Resources Ltd. King joins Guildford as its BNU mine prepares for the

export of a trial shipment of coal to the Shivee Khuren-Ceke border port for processing and sale.

This pivotal event, ―first coal on road,‖ is expected to take place 25 August.

Source: Guildford Coal Ltd.

WORLD BANK ANNOUNCES NEW COUNTRY REPRESENTATIVE FOR MONGOLIA

The World Bank has appointed James Anderson as its new country representative for Mongolia and

will begin work in Ulaanbaatar next week.

James Anderson is a U.S. national witha Ph.D. in Economics. He brings with him 14 years of

experience with the World Bank. Before joining the World Bank Mongolia, he served as the senior

government specialist in Hanoi, Vietnam. From 1998 to 2008, he was a public sector specialist in

the European and Central Asia Region of the World Bank. During the 1990s he spent some years

working in Mongolia as part of a USAID project and consulting for the World Bank, organizing

training on institutional reform and conducting research on the effects of privatization and on

Mongolia‘s burgeoning informal sector. Anderson will soon begin making courtesy calls with

government officials, including the Minister for Economic Development and Minister for Finance.

―Mr. James Anderson will lead the World Bank‘s engagement in Mongolia, working in partnership

with the government and other stakeholders to support Mongolia‘s development, leveraging its

resources to help reduce poverty and ensure that Mongolia‘s prosperity is widely shared among the

population,‖ said the Country Director for Mongolia, China and Korea Klaus Rohland.

Source: World Bank

MONGOLIA TO EXHIBIT AT KAOHSIUNG FOOD SHOW FOR THE FIRST TIME

Several countries, including Mongolia, are scheduled to exhibit for the first time at the Kaohsiung

Food Show, being held this year in early November.

The United States, Japan, South Korea, Malaysia, Mongolia and Hong Kong will all make their debuts

at the expo from 6 to 9 November. The show, now in its eighth year, will feature a variety of locally

grown seafood as well as imports ranging from U.S. beef and Japanese rice and sweets to South

Korean kimchi and hot pepper paste and Mongolian juices and organic beverages. One highlight this

year will be sushi-making robots created by Japanese firm Thaiseng Trading which are expected to

attract the attention of hotels and restaurants.

Source: Want China Times

MELBOURNE INTERNATIONAL FILM FESTIVAL SCREENS “REMOTE CONTROL”

Mongolian director S. Byamba's ―Remote Control‖ became the first-ever Mongolian film to screen at

the Melbourne International Film Festival, which was held from 10 to 12 August.

An audience of 600 viewed the film, which depicts the harmony and conflict between old and new

generations in a rapidly modernizing world. Remote Control has won the New Currents Award, the

top prize offered at South Korea's Busan International Film Festival, and will screen in festivals in

Munich, Shanghai, Terracotta, Seattle, Vilnius and an international film festival in Belgium.

Source: News.mn

RIO TINTO PUTS PAPUA NEW GUINEA COPPER MINE UNDER REVIEW

Rio Tinto PLC is set to cut down further its portfolio of marginal projects after announcing a review

of its options for the Panguna copper mine, shut for a quarter of a century after being embroiled in

secessionist conflict in Papua New Guinea.

Panguna, on the Pacific island of Bougainville, was one of the richest copper mines in the world

before it shut in 1989 amid a violent uprising on the island. Production was suspended in 1989 and

all personnel withdrawn the following year. Since then the mine has barely been touched. Rio‘s

chances of successfully reopening the mine fell this month when the autonomous government that

now controls Bougainville stripped the mine‘s operating company of its mining and exploration

licenses. An act by the autonomous region‘s parliament in effect gives Bougainville Copper Ltd., the

mine‘s operator, only an exploration license and a right of first refusal over its renewed operation.

Rio, which controls Panguna through a 53.8 percent stake in BCL, said on Monday the legislation

made it an ―appropriate time to review all options‖ for its holding. BCL had been in talks with the

autonomous government, as well as with the government of Papua New Guinea and landowners on

Bougainville, over a possible return to Panguna. Reopening Panguna would be costly, according to

Rio. Its annual report says a USD 5.2 billion investment would be needed to reopen the mine with

new infrastructure, according to a study completed by BCL last year.

Rio‘s renewed presence on the island could also be controversial, after the civil war that erupted in

1989 lasted a decade and cost 20,000 lives, according to some estimates. As it is, the mine is

largely irrelevant to Rio‘s strategy for its copper division, which is based on output from four large

mines—in Mongolia, Chile, the United States and Indonesia—as well as two projects that are inching

towards board approval.

Source: Financial Times

BHP BILLITON‟S SPIN-OFF IS A TURNING POINT FOR MINING INDUSTRY

The asset spin off by BHP Billiton Ltd. is set to be seen as a turning point for the global mining

industry: a moment when its most valuable company definitively retreated from a ―more is better‖

approach.

It will detach BHP from almost all the assets it acquired when merging with Billiton in 2001—though

many have already been shed—and reinforce instead that productivity, rather than scattergun

diversification, is the preferred strategy for the mining industry‘s biggest name. What BHP seeks is

higher profits from huge mineral and petroleum deposits that it can exploit on an even larger scale.

Andrew Mackenzie, chief executive, says that centering the company on assets such as Australian

iron ore mines and Escondida, the world‘s largest copper mine, gives BHP the chance to take ―an

advanced manufacturing approach,‖ ironing out the vagaries of demand and geology and churning

out commodities with factory-like efficiency through good and bad times. The disappointed reaction

among British investors—who sent BHP shares down almost 5 percent—shows that while the miner

may be sending many of the right messages about enhancing value, it still has to work on the

details.

One sore point is that investors had thought this might be the time for BHP to start a share

buyback. A second reason for some investor concern is the decision to spin off ―newco,‖ as BHP

calls it, by giving all BHP investors shares in a company to be listed in Australia and South Africa.

Some of the British institutions holding BHP stock will have to sell. Mackenzie said a British listing

would have been a ―lot more expensive‖ with more difficult approvals. British investors, he says,

will ―make their decision accordingly‖ about whether to stay as owners of newco.

Graham Kerr, BHP‘s chief financial officer who will lead 24,000 staff in the spin-off, says he will

have an opportunity to ―change how we manage‖ the demerged assets, saying the newco could be

―more entrepreneurial‖. A minimal debt load transferred from BHP will ensure it is out there ―as a

strong entity,‖ said Kerr. As for Mackenzie, he will have no excuse for not being able to focus on

BHP‘s remaining businesses. The world‘s most valuable resources company will operate just a dozen

assets, including just seven mines and five petroleum fields, compared with 30 today. Mackenzie

dismissed the idea that economies of scale will be lost, saying BHP may be able to take out

operational layers and benefit from being a ―more intimate‖ company—albeit one with 70,000 staff.

Source: Financial Times

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ECONOMY

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

The Bank of Mongolia on 21 August reported that it did not accept any bid offers for foreign

currency exchange auctions. The central bank did, however, accept a swap agreement for the

equivalent of USD 11.5 million and a U.S. dollar swap agreement ask offer of USD 84 million.

The central bank reported on 20 August the issue of one-week bills worth MNT 21.3 billion at a

weighted interest of 12 percent a year.

The central bank reported on 20 August MNT 52 billion in bids for the auction for 12-week treasury

notes with a face value of MNT 70 billion. The bills were sold at a discounted price with an average

yield of 14.749 percent.

Source: Bank of Mongolia

MONGOLIA SEEKS ECONOMIC LIFELINE WITH PIVOT TO CHINA, RUSSIA

After two decades courting Western investors and political allies, Mongolia is refocusing on foreign

ties closer to home seeking to revive its economy.

China‘s President Xi Jinping arrived Thursday in the country landlocked between his nation and

Russia, as Mongolia‘s economic woes mount. Growth is the weakest in four years, foreign

investment has plummeted, inflation is rising and the currency has plunged to a record low. Xi‘s trip

to the mineral-rich nation, the first by a Chinese president in 11 years, comes ahead of the

expected visit of Russian President Vladimir Putin about two weeks later. As analysts anticipate

deals or negotiations from energy to infrastructure, the visits signal a pivot to Russia and China as a

prolonged spat with Rio Tinto Group over Mongolia‘s biggest ever investment has cooled foreign

interest in the nation.

―The timing is critical,‖ said Peter Morrow, partner at NovaTerra LLC, which advises on projects

including energy, from Ulaanbaatar. ―Both China and Russia are keenly interested in Mongolia‘s

resources, and both know that the country is going through a rough economic patch.‖

Still, agreements with China and Russia may hold risks including less transparency than dealing with

Western investors. There‘s also Mongolia‘s uneasy cultural relationship with China, with both

countries at different times a conqueror and a vassal of the other. China‘s thirst for power and

alternatives to burning its own coal because of environmental concerns, make Mongolia and its vast

reserves of the fuel a logical replacement, Chuluunbat Ochirbat, Mongolia‘s vice minister for

economic development, said 23 July. The USD 400 billion natural gas supply deal Russia signed with

China in May also offers Mongolia a chance to collect fees from transit pipelines, he said. Russian

President Vladimir Putin is expected to visit the nation in early September, Chuluunbat said last

month. A date for Putin‘s visit hasn‘t yet been set, according to the Ministry of Foreign Affairs in

Ulaanbaatar.

―Russia has the ability to re-engage Mongolia economically very quickly,‖ said Nick Cousyn, chief

operating officer of Ulaanbaatar-based brokerage BDSec. ―China on the other hand, can bring

investment to Mongolia on a scale unequaled globally.‖

Source: Bloomberg

MONGOLIA WELCOMES CHINESE INVESTMENT, SAYS BEIJING BEFORE XI VISIT

Mongolia welcomes Chinese investment, Beijing said Monday, as President Xi Jinping prepares to

visit the country where there is growing opposition to overseas control of its vast, largely untapped

mineral reserves.

The two countries are neighbors but Xi's trip to Ulaanbaatar on Thursday and Friday is the first by a

Chinese head of state for more than a decade. It comes with resource nationalism the major issue

in Mongolian politics, while Beijing is constantly on the look-out for resources to power the world's

second-largest economy.

"From our contact with the Mongolian government, people and the business community I believe

they welcome Chinese investment," assistant foreign minister Liu Jianchao told reporters at a

briefing ahead of Xi's visit. "They regard Chinese investment as a source of strength for their

development. In energy and resources both countries have conducted fruitful cooperation."

Source: Business Recorder

GOVERNMENT DECISIONS WILL SUPPORT BUSINESSES, SAYS ECONOMIC COUNCIL HEAD

The 100-days economic stimulus initiative that concluded on 14 August will bring long-term impacts

provided by the prime minister's Economic Council as a medium for business to engage with

government, said a leading figure in the council.

The council has submitted 29 bills, said Bayanjargal Byambasaikhan, secretary of Prime Minister

Norov Altankhuyag's Economic Council, some of which have already been passed. Byambasaikhan

echoed Altankhuyag's words during the ―Mongolia Business Summit 2014‖ on 20 June, where he said

that all decisions made by the government will support Mongolian businesses.

―More than 400 companies participated and 23 new projects were introduced. Investment follows

bigger projects, and the economy will grow along with the implementation of bigger projects such

as the [Oyu Tolgoi copper project], the 5th power plant, and railway projects,‖ he said, adding that

five concessions totaling USD 15 billion had been signed.

Source: Udriin Sonin

WATCHDOG GROUP SOUNDS THE ALARM ON FOREIGN BORROWING

The group Debtless Mongolia has issued a statement warning that total foreign debt has climbed to

USD 19.88 billion, or MNT 37.7 trillion.

Breaking down the figures, USD 4.5 billion in foreign debt belongs to the government while USD 1.41

billion to the central bank. Mongolia's borrowing has saddled each citizen with MNT 12.89 in debt

and is over four times the size of 2013′s GDP, said the group's director Ch. Enkhbat. He said that

USD 401.3 million in government debt was from soft loans issued by partner countries, international

banks and international financial organizations, while the remainder was from commercial loans.

―We should repay the USD 580 million in debt from the Development Bank and USD 500 million from

the Chinggis bond in 2018, and the remaining USD 1 billion of the Chinggis bond in 2022. We can

repay these debts on time only if GDP [gross domestic product] grows by 15 to 18 percent annually.

But we have no fundamentals to produce such growth, thus proving that Mongolia has undergone a

heavy debt burden.‖

Source: Unuudur

MONGOLIA IMPORTS 188 MILLION KWH FROM RUSSIA IN H1

Russia's Inter RAO exported 188 million kilowatt (kWh) hours of energy to Mongolia for the first half

of this year through its Mongolia unit, Eastern Energy Co. Imports grew 7 percent this year

compared with the same period last year. Eastern Energy Co. is Mongolia‘s only energy importer.

Source: Unuudur

APARTMENT PRICE INDEX RISES 17.2% IN JULY Y-O-Y

The Bank of Mongolia reported a 17.2 percent gain in apartment prices for the month of July

compared with the same time last year in its first-ever issue of the Apartment Price Index report.

The report showed a 2 percent growth in prices from June to July and 3.3 percent from the start of

January. The central bank has partnered with Tenkhleg Zuuch, Aktiv Zuuch and Mongolian

Properties to calculate the average change in prices of new and old apartments for sale.

Source: Cover Mongolia

SUB-TRAINING ON REACTOR ENGINEERING LAUNCHES

Japan's Nuclear Energy Authority this week has launched training for nuclear reactor engineering in

Ulaanbaatar for the Nuclear Energy Agency.

Participating in the event are over 10 engineers and professionals from the Mongolian University of

Science and Technology (MUST), the Nuclear Energy Agency, the Nuclear Research Center at

Mongolian State University, state-owned nuclear firm MonAtom, the company Linux LLC, and the

Institute of Physics and Technology at the Academy of Sciences.

Source: Montsame

AIRWAYS NEW ZEALAND SUPPORTS MONGOLIA SAFELY REDUCING AIRCRAFT SEPARATION

Mongolian air traffic control separation standards will reduce from 90 to 30 kilometers in September

following an Airways New Zealand review of the Mongolian Civil Aviation Authority (MCAA) safety

assessment requirements.

Tim Bradding, a former airways safety manager and current regional chief controller, visited

Ulaanbaatar recently to assist the MCAA in their reduction of aircraft separation distances. Since

the installation in 2012 of radar sites across the region, radar control in the area has been

introduced gradually, and currently relies on a 90-kilometer separation between aircraft. Bradding

said he worked closely with the MCAA to assess reducing radar separation standards to more closely

align with the ICAO standard of five nautical miles (10 kilometers).

―During my visit I considered equipment reliability, procedures, air traffic controller training and

contingency planning to enable the MCAA to achieve their aircraft separation goals,‖ he said.

―Reducing aircraft separation requirements in a safe manner will allow the Mongolian CAA to more

rapidly increase their air traffic flows, with economic benefits across the country and the region,‖

he added.

Source: Scoop Independent News

JAPAN TO FUND REPAIRS AT SCHOOLS AND HEALTH CENTERS

Japanese Ambassador Takenori Shimizu has signed five contracts worth USD 457,400 for repairs to

school buildings and health centers.

The funds will be used for repairs to the Bolovsrol school at Baganuur District, the Region Diagnostic

Center at Bayan-Undur Soum, Orkhon Aimag, a dormitory at Burd Soum, Uvurkhangai Aimag, and

the Bayanzurkh school at Bayanzurkh District. The grant will also be used for the construction of an

addendum to the Polytechnic College of Ulaanbaatar.

Source: Undesnii Shuudan

FOOD SECURITY SNAPSHOT

The U.N. Food and Agriculture Organization summarized the state of Mongolia's food supply levels

and expenses for the first half of 2014.

In Ulaanbaatar, prices of wheat flour in June were 23 percent above last year‘s level. Bread prices,

generally subsidized, have remained stable since March 2013 and were lower than those of wheat

flour. Prices of rice showed comparatively stable trends in recent months. Prices of beef and

mutton meat in Ulaanbaatar, which have been generally increasing since the beginning of 2014,

were at record and near-record levels in June.

The latest forecast for the 2014 wheat production, to be harvested in September, stands at 430,000

tons, or 17 percent up from last year‘s weather-depressed harvest. The good output is mainly

attributed to generally favorable climatic conditions between April and mid-August in the main

producing areas and a 6 percent expansion in the area planted compared to last year‘s reduced

level, due to the delayed onset of seasonal rains.

Wheat and rice are the two major imported cereals, mainly from the Russia and Kazakhstan. Cereal

imports in the 2013-2014 marketing year (October/September) are forecast to increase by more

than one-third from last year‘s low level, to 155,800 tons. The increase reflects larger wheat

imports, which are expected to grow by 50 percent to 120,000 tons, due to lower domestic

availabilities. Rice imports in 2014 are anticipated to remain similar to last year‘s average level.

Wheat flour prices increased between March and May, due to lower domestic availabilities during

the lean season. However, in June prices remained unchanged, partly attributed to decreasing

export prices in the Russian Federation, the country‘s main supplier.

Read the full report here.

Source: U.N. Food and Agriculture Organization

U.S. GROUP CHARTS OUT CULTURAL HERITAGE SITES

The U.S. Embassy's Fund for Cultural Preservation has funded the first systematic effort to classify

and protect the cultural heritage at the Ikh Nart Reserve of Dornogobi Aimag.

The Denver Zoological Foundation (DZF) this summer teamed and its partners identified 15 new

cultural heritage sites to be registered with the Institute of Archeology at the Mongolian Academy

of Sciences. DFZ received a grant to lead an investigation team at the Ikh Nart Reserve, which it

said contains artifacts from the Neolithic Period about 6,000 years ago through to the Mongol

Empire. One site dates back to the Hunnu society, remembered for giving birth to the conqueror

Attila the Hun.

DFZ's campaign is the first recorded instance of study at the 66,000-hectare Ikh Nart Reserve

located in the east of the Gobi Desert. First declared a natural reserve in 1996, the site harbors a

wide diversity of plant and animal species. Most archaeological research in Mongolia until now has

been carried out in the north and northwest of Mongolia.

Source: Montsame

INNER MONGOLIA COAL PRODUCTION SLUMPS

Coal production in Inner Mongolia, China's major coal reserve and where much of Mongolia's coal is

shipped, slumped 7.4 percent in the first seven months of 2014 year on year, local coal safety

authorities said on Wednesday.

The decline was smaller than that registered in the same period last year, but the coal market is

still severely oversupplied by Inner Mongolia. Market demand for coal is expected to remain

sluggish. Analysts expect a series of mergers and acquisitions as small and medium-sized mines

accounted for less than one quarter of last year's production. Meanwhile, big coal companies saw

production surge more than 20 percent.

To help its major industry, the regional government has lowered fees concerning coal production

and persuaded downstream companies to ink long-term deals with coal mines.

Source: Global Post

THERMAL COAL FALLS VICTIM TO CHINA‟S ENERGY POLICY

Thermal coal, long the power behind China‘s industrial activity, is in the doldrums.

Since reaching more than USD 130 a ton in 2011, thermal coal has dropped almost 50 percent and is

currently trading at levels last seen in 2009 when China, historically a net exporter, started to

import large quantities of the combustible rock to meet surging domestic demand. That recent poor

performance has prompted a growing number of analysts and traders to ask if thermal coal prices

are close to bottoming, particularly as Chinese demand picks up later this year.

―If there is any commodity that is currently trading at the bottom of the cycle, it is coal,‖ says Paul

Gait, analyst at Bernstein Research. ―For those looking for undervalued mining assets, it is hard to

believe there is a better commodity on offer currently.‖

Yet few market participants believe there will be a V-shaped recovery in prices. Thermal coal faces

oversupply challenges and a structural decline in demand brought on by decarbonization and

competition from more environmentally friendly sources of energy. In response to lower prices,

Russian authorities have thrown loss-making producers a lifeline by reducing rail tariff. The glut of

seaborne supply, a hangover from the 2009 price boom, is being felt across the globe including

China. Benchmark domestic prices have fallen more than 25 percent in 2014 and recently hit a

seven-year low of CNY 480 a ton.

―In the first half of the year, ex-China thermal coal demand was really weak, so a lot of seaborne

material was sold into China,‖ says Stefan Ljubisavljevic, analyst at Macquarie. ―Chinese producers

responded and it quickly became a race to the bottom.‖

But while reduced spending, a slowdown in Indonesian output and a dearth of new projects will

eventually see the market return to equilibrium, few think prices will return to 2011 levels. ―The

problem, and why we won‘t get a V-shaped recovery in prices, is that demand is structurally under

pressure,‖ says Ivan Szpakowski, an analyst at Citi. ―That‘s something we don‘t think is going to

change whether you wait 2, 5 or 10 years.‖

Source: Financial Times

SOCIO-ECONOMIC DEVELOPMENT STUCK IN THE MUD - EDITORIAL

Every responsible Mongolian today is concerned about the current outlook for the socio-economic

development of Mongolia, economic decline, the growing gap between the rich and poor, and

increased politicization in our society. The Democratic Party was given a lot of faith that it would

clean up politics and deliver the benefits of economic development to every household. However,

internal disagreements have turned our law enforcement agencies against each other and fractured

our government.

The Mongolian People's Party has most often been the ruling party while the Democratic Party has

had short-lived instances of power in the 20 years since Mongolia‘s democratic revolution. However,

neither of these two political parties has been able to develop and grow stronger as an institution,

which is why Mongolia‘s economic development is stuck in the mud today.

Enkhbayar, the former president and prime minister of Mongolia while the MPP was in power, was

arrested for corruption while Prime Minister Norov Altankhuyag is currently finding his family

members and loyalists under scrutiny for similar offenses. Leaders are lacking true leadership

qualities because the parties keep their sources of funding secret and abandoned their

responsibilities to the people. It has been two years since the Democratic Party has held a national

consultative committee meeting despite the fact that its charter states that committee should

meet no less than twice a year. And while the Democratic Party champions transparency and

―glass‖ accounts, it has failed to release its own financial reports.

Transparency is the solution here. Unless every political party produces audited financial reports,

the chain of corruption will never be broken. When that happens, Mongolia‘s socio-economic

development will be freed from the mud and shift to the next stage.

Dambadarjaa Jargalsaikhan (known as Jargal Defacto) is an independent media representative of

Mongolia. He is a host of Interview DeFacto on NTV Mongolia and a host of Radio program Defacto.

Source: UB Post

POLITICS

XI JINPING'S MONGOLIA TRIP TO FOCUS ON ENERGY, INFRASTRUCTURE

China will sign a series of energy and infrastructure deals with Mongolia as part of President Xi

Jinping's two-day state visit to the neighboring country this week, according to the Chinese Foreign

Ministry.

Assistant Minister of Foreign Affairs Liu Jianchao said yesterday that the trip would also yield

support for Mongolia's plans to boost cross-border transport through China. The trip, scheduled for

Thursday and Friday, comes as China tries to expand its influence in Central Asia by promoting its

idea of a Silk Road Economic Belt, an initiative designed to expand economic cooperation in the

region. It also comes as China continues to look beyond its borders to meet its growing economy's

increasing demand for energy and resources.

Mongolia is also fostering ties with nations such as India and Japan to meet its infrastructure needs.

It signed a free-trade deal with Japan last month and is also working to improve logistics links with

other nations through China and Russia.

"We are aware of the demand in Mongolia to step up cross-border transport through Chinese

territory. We will work hard to help the Mongolians in this regard," Liu said. "We believe this will

benefit economic and trade cooperation between Mongolia and other nations."

The last time a Chinese president visited Mongolia was a 2003 trip by Xi's predecessor, Hu Jintao.

Dialogue between China and Mongolia has expanded in recent months. In May, President Tsakhia

Elbegdorj went to China for a regional security summit, and Foreign Minister Wang Yi visited

Mongolia in June, paving the way for Xi's visit. Vice President Li Yuanchao also visited the country in

April.

Erdenebulgan Oyun, Mongolia's deputy minister for mining, said Mongolia aimed to sign a gas project

and supply accord with China during Xi's trip. The agreement would cover the construction of two

coal-to-gas plants, with 95 percent of the output being piped to China. Liu said the two countries

would also sign deals on coal mining and infrastructure, but did not give details.

Source: South China Morning Press, Bloomberg

CHINA EYES TRADE ROUTE DEAL WITH MONGOLIA DURING XI VISIT

China expects to sign agreements to give landlocked and resource-rich Mongolia easier access to

Chinese territory for its exports when President Xi Jinping visits the country this week, a senior

diplomat said on Monday.

Mongolia, nervous about over-dependence on its enormous neighbor, had once favored a more

circuitous and expensive northerly rail route via Russia that would connect its mines to the Pacific

coast, a plan the World Bank said was unrealistic. But in an apparent recognition that China is still

the best option for Mongolian exports, Mongolia is now talking with China about a route directly

south. Assistant Chinese Foreign Minister Liu Jianchao said that making the trans-shipment of goods

from Mongolia would be one of the topics for discussion during Xi's two-day trip to Ulaanbaatar,

which starts on Thursday.

"Everyone knows that Mongolia is a land-locked country with no sea ports, so the issue of trans-

shipment, especially via China, is a very important need for Mongolia. China fully understands this

and will do all it can to help Mongolia to smoothly and more easily carry out trans-shipments," Liu

told reporters in Beijing. "Both sides are currently having talks on this issue," he added, declining to

provide details. "The direction of these talks is to make Mongolia's trans-shipments easier and

smoother."

Liu would only say that China was talking with both Mongolia and Russia about the oil pipeline.

Source: Reuters

MONGOLIA PREPS RAIL AGREEMENTS

Mongolia and China are ready to sign a series of agreements on cross-border transportation,

railways and access to ports. Chinese President Xi Jinping is scheduled to visit Mongolia this week to

step up Sino-Mongolian relations, Mongolian President Tsakhiagiin Elbegdorj said during an

interview.

Xi is scheduled to embark on his first state visit to Mongolia since taking office on 21 August. It will

be his second solo presidential trip after his one-stop visit to South Korea in July, a rare gesture

that signals Mongolia's geopolitical importance to China. In a group interview on Friday with several

Chinese media outlets, Elbegdorj said the two countries will step up their partnership.

Elbegdorj summarizes the partnership as spanning five aspects—increasing mutual trust, expanding

cooperation in the field of security, improving transportation and infrastructure, enhancing

multilateral cooperation and boosting bilateral trade. "Agreements in energy, mining, infrastructure

and culture will also be signed," said the Mongolian president.

Bordered by Russia in the North and China in the south, Mongolia is landlocked and has traditionally

maneuvered between the great powers. To diversify its diplomacy, Mongolia has adopted a Third

Neighbor Policy in recent years where the country seeks to develop relations with countries like the

United States and Japan.

"Mongolia's Third Neighbor Policy does not imply countering or balancing relations with the two

neighboring states. I believe China will understand Mongolia's policy to develop equal relations with

different counties," said Elbegdorj.

Mongolia is rich in mineral resources, and a large part of its export revenue depends on coal

exports. Mongolia is actively seeking more access to ports to expand its oversea markets. The

Mongolian government has also submitted a draft bill to the country's parliament, proposing

construction of several railroads using an international narrow gauge, a standard also adopted by

China. Building standard gauge railroads could significantly increase exports to China, Mongolia's

biggest trading partner and one of its main sources of investment. Elbegdorj said that the unique

geographical position of Mongolia makes it the shortest passageway from Asia to Europe.

"There is great potential for China, Mongolia and Russia to cooperate on railways," Elbegdorj said.

Source: Ecns.cn

CHINA, MONGOLIA CUSTOMS SIGN AGREEMENTS

Mongolia and China made customs agreements during a Chinese delegate visit from 19 to 22 August.

Customs General Administration Chair Osor Ganbat and a Chinese customs delegation signed two

memoranda of understanding. One was between the national customs agencies while the second

was between the localities of Manzhouli, China and Dornod Aimag, Mongolia.

Source: InfoMongolia.com

RUSSIA, MONGOLIA START WAR GAMES

Russian-Mongolian war games codenamed Selenga 2014 timed to the 75th anniversary of the victory

in the Battle of Khalkhin Gol began at firing range Munkh Khet in Mongolia, the chief press officer of

Russian Eastern Military District said 15 August.

The Russian army was represented by around 500 servicemen. About 100 units of weaponry and

military hardware, including tanks T-72, infantry combat vehicles BMP-2, self-propelled howitzers

Akatsiya and multiple launch rocket systems, were delivered to Mongolia for the first time.

Meanwhile, three helicopter gunships Mi-24 were brought from Trans-Baikal Territory.

The Selenga Russian-Mongolian military exercise has been held regularly since 2008. This year war

games are dedicated to the 75th anniversary of the victory, when Soviet-Mongolian troops repelled

the Japanese army at the Khalkhin Gol River in 1939.

Source: ITAR TASS Russia News Agency

U.S. MEDICAL EXPERTS TRAIN COUNTERPARTS IN MONGOLIA

The sounds of agony filled the air near the wooded back lot of the Central Armed Forces Hospital

(CAFH) in Ulaanbaatar, as an interpreter encouraged accident victims to ‗ham up‘ their

performances during mass casualty response training, as part of Operation Pacific Angel 14-4

Mongolia. The Mongolian armed forces soldiers-turned-actors tested the readiness of Mongolian civil

military physicians and nurses, during a scenario that represented the culmination of a training

event with U.S. Air Force medical subject matter experts.

"We try to make these scenarios as real as possible for the students," said Master Sergeant Victoria

Grey, the enlisted personnel for mass-casualty response training during the operation. "When they

do go out to treat the patients we have moulaged, they know that they need to be treating the

most injured first."

The exercise helped cultivate common bonds and fosters goodwill between the United States,

Mongolia and regional nations by conducting multilateral humanitarian assistance and civil military

operations at locations like the CAFH. The CAFH, founded in 1921, provides medical and health care

services to all Mongolian armed forces, active-duty, retired veterans and their families. With

patience, persistence and the help of Mongolian translators, Air Force members worked seamlessly

with surgeons, cardiologists and a wide variety of nurses and technicians to help teach

organizational and communication skills.

"This course mainly centered on mass casualty management and emergency center preparedness,"

Bonjour said. "Their system already has a robust [structure] in place, and I think we facilitated

furthering the progression of their system."

Source: U.S. Air Force

DALAI LAMA'S VISIT TO MONGOLIA CANCELED UNDER PRESSURE FROM CHINA

The Dalai Lama's planned visit to Mongolia this month has been canceled under pressure from China,

which labels the Tibetan spiritual leader as a separatist, according to multiple sources

knowledgeable about Tibetan Buddhist affairs.

With Chinese President Xi Jinping due to pay a two-day state visit Mongolia from Friday, the

cancelation is believed to result from China's effective use of economic leverage on its landlocked

neighbor, whose economy is highly dependent on China as an export market for mineral exports and

as a source of investment. The sources said Tibetan Buddhist circles began planning early this year

for the Dalai Lama to visit the Ulaanbaatar in August to preside over a large-scale public

Kalachakra, or tantric initiation, like one he held there in August 1995 that attracted 30,000

followers.

The Dalai Lama is enormously popular in Mongolia, where a majority of the population is Tibetan

Buddhist. He has made 8 visits there since his first in 1979, despite objections from China. The

Mongolian Foreign Ministry has not commented on the Dalai Lama visit plan, except to say visits by

religious leaders have nothing to do with the work of government. But multiple sources said the

government, under pressure from China, requested Tibetan Buddhist circles to cancel the planned

events.

The Dalai Lama's last visit to Mongolia in November 2011 drew protests from China, which at the

time said it opposes any country providing "a stage for the Dalai Lama's anti-China splittist

activities."

The religious leader, who fled his homeland following a failed uprising against Chinese rule in 1959

and has since been based with his followers in northern India, insists he seeks genuine autonomy,

not independence, for Tibetans.

Source: Global Post

GANSUKH PLEADS TO PRESIDENT FOR HIS INNOCENCE

Advisor to the Prime Minister L. Gansukh has written a letter pleading his innocence to Mongolian

authorities and human rights groups.

―Authorities of the IAAC created fictitious cases for me that I embezzled billions of tugrug via my

daughter‘s company, and they are oppressing me,‖ said Ganksukh in the letter, which was sent to

President Tsakhia Elbegdorj, the State General Prosecutor`s Office, the National Human Right

Commission, and the head of the Democratic Party. He added, ―A company established by the

program's management has nothing do to with me and my daughter.‖

Gansukh has been in prison for two months on charges that he embezzled MNT 3.9 billion from a

distribution program for higher-quality coal that was meant to cut down on smoke output from

Ulaanbaatar's get districts.

Source: Udriin Sonin

BROTHER OF CULTURE MINISTER ARRESTED FOR CRITICAL TWEETS

Former MIAT Engineer Ts. Bat has been arrested for posting on Twitter critically about MIAT

Mongolian Airlines and Minister of Road and Transportation A. Gansukh.

The Bayanzurkh District Primary Court ordered Bat's arrest for one tweet in particular [Source did

not print Bat's comment -ed]. The court has ruled that Bat was guilty of libel against Gansukh upon

receipt of a petition from the minister.

Bat is the sister of Minister of Culture, Sports and Tourism Ts. Oyungerel. She said that Gansukh also

sued Davaapil [Source does not elaborate -ed] for his criticism of Gansukh on the highly contentious

issue of Mongolia's railways. Politicians have debated whether Mongolia should use the Chinese

gauge for rail instead of the current standard that is also standard in Russia. Oyungerel said the

arrest sets a bad precedent for Mongolia and the Democratic Party.

Source: Udriin Sonin

CABINET DISMISSES GENERAL POLICE DEPARTMENT HEAD

The Cabinet Secretariat on 14 August 2014 ordered the dismissal of the head of the General Police

Department, Brigadier General B. Bilegt, from his post due to allegations that his subordinates

abused their authority to apply political pressure against Justice Minister Kh. Temuujin.

Investigations are under way for N, Uuganbayar, head of the criminal policy department, his deputy

B. Ariunbold and head of the division Aadarsukh [Source did not provide a first name or initial -ed].

The individuals are suspected of coercion and blackmailing G. Sarangerel, who was rumored to have

had sexual relations with Temuujin. Sarangerel was looking at a year and half of jail time for

possessing narcotics.

The department's first deputy head S. Baatarjav, was appointed as the acting head.

Source: Udriin Sonin

UB ADDS BEIJING TO LIST OF „SISTER‟ CITIES

Ulaanbaatar Mayor Erdene Bat-Uul signed an agreement that names Beijing as its latest ‗sister‘ city.

Erdene Bat-Uul and Beiing Vice Mayor Chen Gang on 18 August signed a memorandum promising to

expand economic and business relations. Ulaanbaatar has announced plans to host a manufacturers‘

exhibition in Beijing in September. Ulaanbaatar has sister city relationships with over 40 cities in

the world.

The agreement came just before Ulaanbaatar hosted the Forum of Mayors of Northeast Asian Cities

for the first time between 18 and 19 August, with over 120 delegates expected in attendance.

Visitors for the forum include the deputy mayor of Beijing, city authorities from Tianjin, Hailaar,

Shenyang, Huh Hot, Vladivostok, Yakutsk, Novosibirsk, Irkutsk, Pyeongchang, Niigata, Pyongyang,

Hamhung, Wonsan, Rason, Ulaanbaatar, Darkhan, Erdenet, Baruun-Urt, and Choibalsan.

Source: News.mn

UB MAYOR REACHES OUT TO PYONGYANG CITY LEADER

Ulaanbaatar Mayor Erdene Bat-Uul initiated the move toward closer ties with Pyongyang while

meeting with the Chairman of the North Korean capital People's Committee Cha Hui Rim during the

Northeast Asian Mayors Forum that kicked off Monday in Ulaanbaatar.

Bat-Uul thanked the North Koreans for their participation in the forum, saying the ties established

between the two capital cities in 2003 needed more of a push, and that he was ―confident that the

Northeast Asian Mayors‘ Forum will make them clearer and closer." Mongolia intends to boost its

cooperation with numerous foreign cities for its 2030 development plan that Parliament adopted in

2013, Bat-Uul said.

Cha said he and his accompanying delegates were happy to attend the forum and that Pyongyang is

ready to expand ties with Ulaanbaatar and work together in the areas of the economy, agriculture

and culture.

Source: Montsame

UB BANS TRANSPORT OF HAZARDOUS MATERIALS

The Ulaanbaatar Citizens Council has prohibited the transport of hazardous items on trains within

city limits, effective 1 July 2019.

The decree prohibits any combustible materials, harmful gases, items that emit radiation, or any

other substances that prove harmful to human health, animals or the environment. An unofficial

study [Source provides no specific citation for study] shows that in the first quarter of 2014, 3.6

million tons of 52 types of hazardous items were carried by Ulaanbaatar Railway. Dangerous items

will be loaded in the Bagakhangai District of Ulaanbaatar when the new regulation takes effect.

Authorities, however, said they could provide no guarantee that they could enforce the new

restrictions.

Ulaanbaatar development plans running through 2020 includes an initiative to develop Bagakhangai

into a suburban satellite town, where transport logistics, wholesale business, food, light industry,

livestock feed, a refinery plant, and warehouse for hazardous items will be built.

Source: News.mn

10 DAY-TRAFFIC REGULATIONS IN PLACE

A 10 day-traffic ordinance has taken effect with the start of the new academic year.

From 22 to 31 August, vehicles with license plate numbers ending in even numbers will be allowed

to drive on even days, while vehicles with license plate numbers ending in odd numbers will be

allowed to drive on odd days. The regulations are in effect between 07:00 and 21:00. The

temporary traffic regulations were introduced for the first time last year and are meant to cut

down on traffic during a time which usually sees a spike in traffic jams.

Source: News.mn

CHINESE TEA CULTURE EVENT TO TAKE PLACE

A Mongolia group is leading an event featuring historical exhibitions and performances from 21 to 25

August, in observation of the state visit by Chinese President Xi Jinping. The Peace and Friendship

Organization has partnered with the Chinese Culture Society to host the event, which is called the

―Nation's Tea Road.‖

The Peace and Friendship Organization also plans to hold a special forum for the mayors of

Ulaanbaatar, Beijing, Moscow to promote the expansion of cultural, political and economic

relations.

Source: News.mn

ANNOUNCEMENTS

INVEST MONGOLIA, 2-3 SEPTEMBER, ULAANBAATAR

Frontier Securities' 8th annual Invest Mongolia conference is scheduled for 2 and 3 September in

Ulaanbaatar

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

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

mining, infrastructure, tourism, real estate and oil.

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

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

___________________________________________

2014 DISCOVER MONGOLIA, 4-5 SEPTEMBER, ULAANBAATAR

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

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

for the past 11 years.

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

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

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

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

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

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

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

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

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

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

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

___________________________________________

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

The international investment conference Oil & Oil Shale Mongolia 2014 is back with a new scheduled

date on 10 and 11 September.

The Ministry of Mining and Petroleum Authority and Minex Mongolia LLC have decided to host the

event after the passage of the long-awaited new Petroleum Law. This will be the country's first

international investment conference on oil, gas, and oil shale. The event will be attended by

international investors, oil, gas, and oil shale companies, service providers, consultancies,

equipment suppliers, and traders. Delegates will have the opportunity to network with key industry

contacts and obtain vital information on legislation and policies on oil, gas, and oil shale

exploration and production regulations from government authorities.

BCM members will receive a 15 percent discount to attend the conference. For more information or

to register email Chimednyam at chimednyam@minex.mn or call +976 344488, or +976 9910-5877.

___________________________________________

MONGOLIA PROJECTS & INVESTMENT SUMMIT, HONG KONG, 17-19 NOVEMBER

The Mongolia Projects & Investment Summit will be held in Hong Kong from 17 to 19 November,

where Prime Minister Norovyn Altankhuyag will present his vision to sustain Mongolia‘s growth.

The context of the Summit will be a constructive, productive and sincere appraisal of Mongolia as a

place for FDI, given the current circumstances, and what is being done to strengthen its

attractiveness to the international investment community. The Mongolia Projects & Investment

Summit Hong Kong will bring together leading business, investment and governmental figureheads

in an environment of progressive discussion and action.

The implementation of the new Investment Law, amendments made to the Mining Law, a realized

dedication to PPP and more do show that the government is moving in the right direction. The

question on investors‘ minds is what tangible progress has been made since last November which

would warrant a return of FDI?

BCM members will be eligible for a 15 percent early bird special that lasts until 12 September.

Download the brochure for the conference agenda here. For registration logon here, or for more

information email info@beaconevents.com or call: +852 2219 0111.

BCM WORKING GROUP NEWS

The BCM's Environmental Working Group is organizing a meeting on ―Green Building‖ on Thursday,

August 28 between 4 PM-6 PM at Open Society Forum (located next to the Silk Road restaurant).

The meeting is open to all BCM members and any interested individuals.

Please see below tentative agenda of the meeting.

16:00 Introduction of members, guests and new Chair of the Environment Working Group by Ms.

Bayarmaa Amarjargal, Vice Director of BCM;

16:15 Introductory Remarks by Ms. Bulganmurun Tsevegjav, Senior Officer at GGGI‘s Mongolia

Representative Office as a new Chair;

16:25 Presentation on ―GGGI‘s work in Mongolia and Mongolia‘s National Green Development

Strategy with Focus on Greening the Building Sector Opportunities and Challenges‖ by Ms.

Bulganmurun Tsevegjav;

16:45 Presentation on ―Mongolia‘s Green Building Council and Experience Sharing on Green Building

Potentials‖ by Ms. Nergui Dorj, Founder and Board Member of MGBC and Director of Mongolian

National University;

17:05 Q & A;

17:25 Feedback, comments, updates and suggestions on follow-up activities and next Environmental

WG meetings for 2014.

17:40 Conclusion and Closing remarks.

If you‘re interested in joining the BCM`s Environmental Working group meeting, please RSVP via e-

mail address erka@bcmongolia.org before 26th of August.

BCM WEBSITES

MONGOLIAN WEBSITE: „PRESENTATIONS‟

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

http://bcmongolia.org/mn/илтгэлүүд

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

статистикийн хороо

• Мандал Женерал Даатгал тайлан, 2014 оны 5 сар

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

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

статистикийн хороо

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

Public Awareness Department, Senior Commissioner, Independent Authority Against Corruption

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

ON TRANSPARENCY‖ Training seminar, Mar 06, 2014

___________________________________________

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

BUSINESS NEWS‟, „PHOTO GALLERY‟

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

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

Experience in Mongolia‖

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

Threats to Press Freedom‖

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

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

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

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

Achievements and Challenges‖

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

Securities Limited

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

• Mongolia Economic Report by BCM, August 2014;

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

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

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

оны 3 сарын байдлаар, Үндэсний статистикийн хороо);

• Real Estate Report 2014 by Mongolia Properties;

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

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

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

• Polit Barometer by Sant Maral Foundation, March 2014.

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

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

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

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

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

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

to develop the non-mining industrial sector‖.

BCM's English website includes the ―Mongolia Business News‖ section. BCM continuously posts news

stories and analysis of relevance to Mongolia at ‗Mongolian Business News‖ before they are all put

together each week for Friday's weekly NewsWire.

The ―Photo Gallery‖ contains photos from the 6th Anniversary BCM Renewal dinner on November

11, 2013.

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

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

SOCIAL NETWORK WITH BCM

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

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

improving each day with BCM.

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

latest announcements and comment on events carried in the NewsWire with the community.

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

https://twitter.com/bcmongolia.

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

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

LinkedIn page.

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

Social stats: BCM now has 5,934 fans on our Facebook fans page, 642 connections on LinkedIn

network, and 1,136 followers on Twitter.

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

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

INFLATION

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

Year 2007 *15.1% [source: NSOM]

Year 2008 *22.1% [source: NSOM]

Year 2009 *4.2% [source: NSOM]

Year 2010 *13.0% [source: NSOM]

Year 2011 *10.2% [source: NSOM]

Year 2012 *14.0% [source: NSOM]

Year 2013 *12.5% [source: NSOM]

July 31, 2014 *14.9% [source: NSOM]

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

Note: 15.4% y-o-y, Ulaanbaatar city, July 31, 2014

CENTRAL BANK POLICY LOAN RATE

December 31, 2008 9.75% [source: IMF]

March 11, 2009 14.00% [source: IMF]

May 12, 2009 12.75% [source: IMF]

June 12, 2009 11.50% [source: IMF]

September 30, 2009 10.00% [source: IMF]

May 12, 2010 11.00% [source: IMF]

April 28, 2011 11.50% [source: IMF]

August 25, 2011 11.75% [source: IMF]

October 25, 2011 12.25% [source: IMF]

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

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

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

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

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

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

CURRENCY RATES – 21 AUGUST 2014

Currency Name Currency Rate

US Dollar USD 1,858.68

Euro EUR 2,470.84

Japanese yen JPY 18.00

British pound GBP 3,089.87

Hong Kong dollar HKD 239.81

Chinese Yuan CNY 302.58

Russian Ruble RUB 51.27

South Korean won KRW 1.82

Disclaimer: Except for reporting on BCM‘s activities, all information in the BCM NewsWire is

selected from various news sources. Opinions are those of the respective news sources.