BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 324 – May 9, 2014

NEWS HIGHLIGHTS:

Business

Oyu Tolgoi terms to be resolved by September, says vice minister;

Free-trade zone Altanbulag in Selenge aimag begins registering companies;

Mongolia moves to privatize State Bank;

Erdenet not responsible for Just Group‟s illegal actions, rules arbitration court;

MEC builds dry coal processing plant;

MIAT is renting a new airplane;

MAK makes third large order with FLSmidth;

Rosneft to introduce lower pricing scheme for fuel imports;

Mongolian Railway shortchanged for new rails, says project director;

Wolf Petroleum reports higher oil resource estimates at Sukhbaatar block;

Newera Resources poised to drill at Ulaan Tolgoi;

Viking Ashanti, Auminco sign coal MoU with Mongolian power authority;

Korean supported Buddhist TV to be built;

MSM announces corporate restructuring;

Mongolian Business Summit, 19-21 June at Ikh Tenger;

Centerra Gold profit drops; miner cuts cost forecast.

Economy

Mongol Bank: FX auctions, swap agreements, 1-week bills, treasury bonds;

Mongol Bank reserves stand at USD 2.4 billion;

Price Stabilization Program may not be renewed;

Mongolia employs 3,467 foreign miners including 2,660 in oil sector;

Mongolia ranks 61st for Networked Readiness Index;

Mongolia is power short, but long on potential;

Premier updates on Chinggis bond spending;

Copper: long term bulls and short term bears almost in consensus;

China's coal story is far from over, says Woodmac;

China‟s property bubble has already popped, Nomura report says;

Indonesia‟s gamble on ore export ban starts to hit home.

Politics

Parliament approves Economic Stimulus Plan;

Mongolia set to end dispute with investors over mining licenses;

Parliament receives resolution to allow both Chinese and Russian gauges;

Mongolia renews debt ceiling debate to boost infrastructure;

Mining Minister provides details on highly anticipated amendment to Minerals Law;

Independent MPs submit „Double Deel‟ amendment to Constitution;

Justice Minister speaks on foreign executives “trapped” in Mongolia;

Mongolia climbs three places on Press Freedom Index;

National committee established to plan urbanization;

Press Court to be created in Mongolia;

Mongolia intends to become ASEAN's dialogue partner, says EAS member;

Cambodia, Mongolia establish bilateral consultations;

Mongolia-Myanmar consultative meeting held;

International Conference on Mongolian Studies in Washington D.C.;

Rosneft pipelines to and through Mongolia;

UNCTAD reviews Mongolia‟s investment policy.

ECONOMIC INDICATORS

Inflation;

Central bank policy rate;

Currency rates.

*Click on titles above to link to articles.

SPONSORS

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Mongolian Economy Magazine

Oxford Business Group

Milestone GRP

BUSINESS

OYU TOLGOI TERMS TO BE RESOLVED BY SEPTEMBER, SAYS VICE MINISTER

The impasse between Rio Tinto PLC and the Mongolian government over a giant copper mine in the

country should be resolved by September, with underground mining beginning within two years, a

government official said.

Construction of the underground mine at Oyu Tolgoi, one of the world's largest undeveloped copper

deposits, was put on hold last year when the government said financing had to be approved by

Parliament because it was concerned cost over-runs would delay when the country began receiving

its share of profits. But Mongolia's vice minister for economic development, Ochirbat Chuluunbat,

said the government had learnt from its mistakes and progress was now being made.

"We are under arrangements and negotiations with Rio Tinto now to complete the process by

September this year," he said on the sidelines of the Mongolia Investment Summit in London.

"Underground mining will be put into operation in a year and a half or two years time," he added. In

a stark change of tone, Chuluunbat said disagreements with Rio Tinto had damaged the country's

image. ―The ongoing negotiation process with Rio Tinto has really hurt the reputation of Mongolia

as a reliable partner for businesses and investors," he said.

"We are not going to blame Rio Tinto for the situation that occurred between the government and

Rio Tinto. There are also a lot of things the government has done in the wrong way," Chuluunbat

said.

Source: Reuters

FREE-TRADE ZONE ALTANBULAG IN SELENGE AIMAG BEGINS REGISTERING COMPANIES

Altanbulag in Selenge Aimag will be commissioned as a free-trade zone on 22 June, said the head of

the border port, Ch. Chimedsuren.

Altanbulag will be treated as a pilot project to observe the challenges that come with running a

free-trade zone, as it will be the first in Mongolia. Businesses and private individuals looking to

open a business at Altanbulag will have to register with its mayor‘s office. The mayor‘s office has so

far registered 28 businesses.

Source: Zuunii Medee

MONGOLIA MOVES TO PRIVATIZE STATE BANK

State-owned Deposit Insurance Corp. of Mongolia LLC has submitted a proposal to the Finance

Ministry to privatize Toriin Bank (State Bank) LLC at the start of 2015.

―We own 85 percent of State Bank, and we are willing to privatize the bank soon,‖ said Executive

Director B. Lkhagvasuren. Work to privatize the bank will launch this year, he said.

Source: Undesnii Shuudan

ERDENET NOT RESPONSIBLE FOR JUST GROUP‟S ILLEGAL ACTIONS, RULES ARBITRATION COURT

An arbitration court has ruled that Erdenet Mining Corp. would not be held responsible for the

falsified documents that permitted Just Group to borrow from Standard Bank, reported Policy

Lieutenant Colonel D. Enkhtur.

An arbitration court hearing held in London on 7 March ruled that Erdenet Mining would not be held

responsible for a filing by Standard Bank‘s against Just Group and Erdenet Mining. Just Group

Director Sh. Batkhuu in 2009 received a loan for his company from Standard Bank using falsified

documents that included forged letters of guarantee from the State Property Committee and

Erdenet Mining Corp. that allowed it to take credit from the South African bank.

Source: Undesnii Shuudan

MEC BUILDS DRY COAL PROCESSING PLANT

Mongolia Energy Corporation (MEC) Ltd. has completed construction on a dry coal processing plant

able to produce two million tons of down-stream coal products at its Khushuut mine in western

Mongolia.

Monnis Group is scheduled to begin overburden removal at the Khushuut deposit in July. MEC

already has a cooperation agreement with Monnis Mining Equipment to kickoff overburden removal

at Khushuut. The mine had been intermitted for an infinite time period. Monnis is planning to

remove overburden of 11 million ton until the end of the next year.

Source: Montsame

MIAT IS RENTING A NEW AIRPLANE

State-owned MIAT Mongolian Airlines LLC has added to its fleet a new rental Boeing B737-800

aircraft.

MIAT will receive the Boeing plane on 11 May. The airplane has 150 economy class seats and 12 for

business class. MIAT purchased a new Boeing airplane 767-300 in 2013.

Source: Undesnii Shuudan

MAK MAKES THIRD LARGE WITH FLSMIDTH

FLSmidth has received orders worth approximately USD 43 million from the Mongolian company,

Mongolyn Alt (MAK) Group to supply engineering, procurement and site construction services for the

Tsagaan Suvarga copper-molybdenum concentrator project.

MAK‘s Greenfield plant, with a capacity of 40,000 tons per day of ore, will be located in the central

part of the proven Oyu Tolgoi south Gobi porphyry copper belt in southeast Mongolia. FLSmidth is

currently supplying all the main process technology for the project under a separate, previously-

awarded contract announced in 2011, and in February 2012 FLSmidth was awarded an order from

MAK to supply a greenfield cement plant. MAK is the third largest company in Mongolia with diverse

business activities, including coal and gold mining operations. This will be the Group's first copper

concentrator.

"We are very happy to receive this third major order from MAK for their Tsagaan Suvarga copper-

molybdenum concentrator project. It confirms our strategy of working closer with our customers,

providing the support and services they need as a key to developing long-term partnerships," said

Peter Flanagan, president of the mineral processing division.

Source: Globe News

ROSNEFT TO INTRODUCE LOWER PRICING SCHEME FOR FUEL IMPORTS

Imports from Russian fuel producer Rosneft are expected to fall from USD 1,400 a ton to USD 900 as

a new price setting agreement at the border is set to take effect.

The Petroleum Authority of Mongolia and fuel importers met with representatives of Rosneft and

Rosneft-MMG to discuss the pricing last week. While Rosneft‘s prices currently are set by global

market prices, one of many agreements signed by Rosneft‘s president during a March visit sets the

price for fuel in line with prices in Singapore.

The agreement will reduce fuel price at the border from last year‘s pricing of USD 1,400 a ton to

USD 900, said the Petroleum Authority.

Source: Undesnii Shuudan

MONGOLIAN RAILWAY SHORTCHANGED FOR NEW RAILS, SAYS PROJECT DIRECTOR

The Development Bank of Mongolia has failed to make its contributions to the financing to pay for

construction of new rails, said P. Bat-Erdene, project director at state-owned Mongolian Railway

JSC.

Bat-Erdene denied a claim made by Minister of Economic Development Nyamjav Batbayar that

Mongolian Railway had received the entirety of its USD 455 million to fund construction. The

Development Bank had provided less than half of the funds it promised for the New Railway project,

he said.

―Currently, the Development Bank has financed USD 186.7 million in total for the project, of which

USD 164.2 million is from the Chinggis bond and USD 22.5 million from its own funds,‖ he said.

―Originally, the Development Bank planned to finance USD 455 million in total for the project, of

which USD 400 million was to be from the Chinggis bond.‖

Source: Zuunii Medee

WOLF PETROLEUM REPORTS HIGHER OIL RESOURCE ESTIMATES AT SUKHBAATAR BLOCK

Mongolian oil explorer Wolf Petroleum Ltd. disclosed Monday an increase to its oil resource

estimates with the addition of two new drill-ready leads at its Sukhbaatar block in Mongolia.

The estimated quantities of petroleum that may potentially be recovered by the application of

future development projects relate to undiscovered accumulations. These estimates have both an

associated risk of discovery and a risk of development. Further exploration appraisal and evaluation

is required to determine the existence of a significant quantity of a significant activity of

potentially moveable hydrocarbons.

Wolf Petroleum signed a production sharing contract on the Sukhbaatar block in January 2013 for up

to 39 years of exploration and production. In 2013, Wolf completed a two-year work program in one

year and is now one year ahead of contract commitments. Comprehensive geological and

geophysical exploration programs have identified one of the largest sub-basins in Mongolia with over

a billion barrels of independently estimated oil. Geochemical analysis has revealed high quality

light oil seeps within the samples, possibly indicating live and active petroleum systems within the

basins identified on the Sukhbaatar block.

Source: Wolf Petroleum Ltd.

NEWERA RESOURCES POISED TO DRILL AT ULAAN TOLGOI

Newera Resources Ltd. is poised to start 2,000 meters of diamond drilling to test for potential coal

deposits underlying five seismic lines that have produced positive results at its Ulaan Tolgoi coking

coal project in Mongolia.

In the first of two phases, it plans to drill two diamond holes of about 300 meters each into the best

prospects identified as a pre-cursor to the 1,400 meter phase two. The company has already

completed all necessary regulatory and other requirements and notifications to enable drilling to

begin once local weather permits.

The drilling contractor, Best Drilling, has relocated a suitable diamond drilling rig to the regional

city of Dalanzadgad in preparation for easy transport to the Ulaan Tolgoi site. Newera expects that

by the time the rig has been mobilized to site and before commencement of the first hole, it will

have earned a 51 percent interest in CMNM LLC—the Mongolian registered company holding 100

percent of the Ulaan Tolgoi exploration license as its only asset.

Source: Proactive Investors

VIKING ASHANTI, AUMINCO SIGN COAL MOU WITH MONGOLIAN POWER AUTHORITY

Viking Ashanti Ltd. and its 92.69 percent owned subsidiary Auminco Mines have clinched a future

coal supply agreement with a Mongolian government power authority for its Berkh Uul bituminous

coal project in northern Mongolia.

The non-binding memorandum of understanding was signed with Darkhan Thermal Power Plant for

coal from Auminco‘s Berkh Uul bituminous coal project in northern Mongolia. ―The fact that Berkh

Uul Project has been recognized by the Mongolian government as being a potential key supplier of

coal to the DTPP is a significant milestone in the development of the Project,‖ said Director Peter

McMickan. ―Auminco‘s discussions with nearby cement works and power stations had already

confirmed a local industrial demand for unwashed Berkh Uul coal, due to its low ash, low sulphur

and relatively high calorific value.‖

The agreement was seen as an endorsement of Auminco‘s takeover by Viking. Viking currently has

90 percent shareholder approval for the deal.

Source: Proactive Investors

KOREAN SUPPORTED BUDDHIST TV TO BE BUILT

A high ranking figure of the Gandantegchenlin Monastery requested assistance in establishing a

television network focused on Buddhism in Mongolia from broadcaster Korean Buddhist BBS TV,

during a delegation visit in Seoul.

―In order to spread the Buddhist religion, you should act quickly to establish your television

[network]. We are ready to give technical assistance on this,‖ BBS TV Director I Che Boni told

Deputy Bishop N. Nanzaddorj.

Korean Buddhists helped to establish the Buddhist FM radio station in Mongolia ―Lavain Egshig‖

which today broadcasts nationwide.

Source: Unuudur

MSM ANNOUNCES CORPORATE RESTRUCTURING

Mongolian Star Melchers LLC (MSM) on 6 May announced the completion of its corporate

restructuring since 1 March, as well as the addition of a new shareholder.

―The FMCG business, excluding Beverage Distribution, was demerged from the corporation and is

now managed under a new company which is no longer affiliated with MSM,‖ reads the Source.

―Mrs. Suren is no longer a shareholder of MSM.‖

The new shareholder is Mongolian Equipment Services, joining with Laurenz Melchers and David

Reiner. MSM said it would use the proceeds of the investment to expand into new business lines and

increase its presence outside of Ulaanbaatar.

Source: Mongolian Star Melchers LLC

MONGOLIAN BUSINESS SUMMIT, 19-21 JUNE AT IKH TENGER

The Mongolian Business Summit will be held in Ulaanbaatar from 19 to 21 June.

Organizers aim to provide comprehensive, up-to-date and sector-specific information on foreign

investment in Mongolia over the three days. Presentations will be made on public-private

partnerships in mining, infrastructure development, agriculture, wool and cashmere, as well as food

production and building materials.

Optional tours will also be offered, including visits to mine sites, a cashmere factory, agricultural

centers, food processing facilities, and cultural centers.

Source: Info Mongolia

CENTERRA GOLD PROFIT DROPS; MINER CUTS COST FORECAST

Centerra Gold Inc. reported a decline in first quarter profit on Tuesday as the price of gold dropped

and its cost of sales increased.

The Canadian miner cut its forecast for full-year all-in sustaining costs, a benchmark gold sector

cost metric, due to lower operating costs at its Boroo mine in Mongolia. The lower costs are partly

due to a weaker local currency and a reduced royalty rate.

First-quarter net earnings were USD 2.1 million, or 1 cent a share, in the three months to the end of

March compared with earnings of USD 51.4 million, or 22 cents, a year earlier. Revenue fell to USD

148 million in the quarter from USD 192.3 million. Centerra produced 116,669 ounces of gold in the

first quarter, up from 115,220 a year earlier. All-in sustaining costs rose to USD 1,109 per ounce

from USD 1,068 per ounce. Analysts, on average, had been expecting a loss of 5 cents a share,

according to Thomson Reuters I/B/E/S.

Centerra said its cost of sales increased 20 percent to USD 109.1 million because of the higher cost

of processing ore at its flagship Kumtor mine in Kyrgyzstan. Access to the ore mined required more

stripping of ice and waste. The average price realized for its gold dropped 19 percent to USD 1,301

per ounce compared to a year ago. The company did not change its 2014 production forecasts

released in February. However, it lowered its forecast for all-in sustaining costs for the year to

between USD 857 and USD 929 an ounce. In February it forecast costs of between USD 989 and USD

1,074.

Centerra's Kumtor open-pit mine has faced several setbacks since the project started in 1994,

including threats of nationalization, riots and more recently a USD 300 million ecological damages

lawsuit. The mine contributes some 10 percent of the impoverished country's GDP. Centerra said on

Tuesday that it has not yet received formal approval for its 2014 Kumtor mine plan from Kyrgyz

authorities, something that usually takes place in the first quarter of the year.

Source: Reuters

ECONOMY

MONGOL BANK: FX AUCTIONS, SWAP AGREEMENTS, 1-WEEK BILLS, TREASURY BONDS

The Bank of Mongolia on 6 May reported the currency auction of USD 20.2 million for a closing rate

of MNT 1,799.50 and CNY 26 million for a closing rate of MNT 287.51. Also on 6 May, the Bank of

Mongolia received an equivalent of USD 46.5 million from swap agreements with commercial banks.

The central bank reported on 7 May the issue of one-week bills worth MNT 269.7 billion at a

weighted interest rate of 10.5 percent. The central bank also reported on 7 May MNT 43 billion in

bids for the auction of 28-week treasury bonds with a face value of MNT 20 billion. Each unit was

sold at a discounted price with a weighted average yield of 9.36 percent. Also on 7 May, the central

bank reported MNT 10 billion in bids for five-year treasury bills with a face value of MNT 10 billion.

Each unit was sold at a premium price, each worth MNT 1 million with a weighted average yield of

13.84 percent.

Source: Bank of Mongolia

MONGOL BANK RESERVES STAND AT USD 2.4 BILLION

The Bank of Mongolia in a quarterly statement reported foreign currency reserves of USD 2.4 billion,

demonstrating a 40 percent decrease over the past three years.

Central bank reserves have fallen significantly since the second quarter of 2013 because of a

dramatic downward shift in foreign investment. The central bank had USD 4 billion in reserves in

2011, before receiving USD 1.5 billion in December 2012 from Chinggis bond proceeds. The added

funds brought currency reserves again to USD 4 billion for January 2012.

Source: Undesnii Shuudan

PRICE STABILIZATION PROGRAM MAY NOT BE RENEWED

The government will not renew the Price Stabilization Program this year, according to an unnamed

―reliable‖ source.

The government spent MNT 3 trillion introducing the program last year, which set out to maintain

consistent prices last year for products such as petrol fuel. Despite the efforts, however, inflation

has reached 13 percent this year. Adding to inflationary pressures, the tugrug exchange rate

reached a high for the year of MNT 1,806 against the U.S. dollar.

Source: Zuunii Medee

MONGOLIA EMPLOYS 3,467 FOREIGN MINERS INCLUDING 2,660 IN OIL SECTOR

Mongolia rejected nearly half of the foreign nationals who applied to work in Mongolia‘s mining

industry this year, reported the Labor Ministry and the Employment Center.

Mongolia approved 3,467 out of a total 6,333 foreign nationals who applied to work for 52

organizations this year. Officials approved the employment requests of 807 individuals requesting to

work in mining and geology and 2,660 in oil, said the mining ministry.

The government has a quota that allows the employment of only 20 to 25 percent of the workforce

at exploration and mining companies to be foreign, compared with 60 to 75 percent at oil

exploration and extraction operations.

Source: Montsame

MONGOLIA RANKS 61ST FOR NETWORKED READINESS INDEX

Mongolia fell two spots to 61st out of 148 economies on the Networked Readiness Index in the World

Economic Forum‘s Global Information Technology Report.

Mongolia scored 4.1 this year on the report, which is compiled in partnership with the European

Institute of Business Administration. This year‘s index included an all-time high of 148 economies,

accounting for over 98 percent of global gross domestic product (GDP), compared with 142

economies last year.

Northern European economies continue to dominate the top spots, with Finland, Sweden and

Norway all among the top 5 positions.

Source: Info Mongolia

MONGOLIA IS POWER SHORT, BUT LONG ON POTENTIAL

Mongolia is short on energy, but long on potential, according to Philip Lam, senior banker for the

European Bank for Reconstruction and Development (EBRD)‘s power and energy team.

Speaking at last week‘s 2014 Mongolian Investment Summit in London, he said Mongolia was at a

crucial time in its economic development and a deficit in power could hit its growth potential.

―Anyone that has been to Mongolia, you see CHPs [coal and heat power stations] from the airport.

Those are all quite dated—ranging from 30 to 60 years old. They operate at 20 to 40 percent

efficiency, whereas new[er] CHPs are running at 60 percent to 70 percent efficiency. The central

grid is 900 megawatts, although only 70 percent of that is available at any one time,‖ Lam said.

One project that highlighted the country‘s potential was the Salkhit wind farm, which the EBRD

helped support with a USD 47.5 million debt and equity finance package, Lam said. The project was

connected to the grid in June of last year and started producing electricity around that time. But,

should the country sort out its initial needs—Lam was realistic that not all of this initial power

would come from renewable sources, there was potential for Mongolia to start exporting some of its

renewable energy abroad.

Lam drew parallels with Georgia in Eastern Europe, which consumes a small amount of energy

domestically with low energy prices, has been encouraging investors to build hydropower projects

and export the energy. Private companies had benefitted from higher tariffs and prices from

Turkey, situated just over the border after infrastructure was built by the government for export.

Meanwhile, the government benefitted from the initial investment and at least some power staying

within the country, he said.

―Mongolia is in a similar situation to Georgia. There are attractive prices and tariffs [abroad] and

China, more than anything, needs to adapt a new approach to growth [in its power sector].‖ The

export of power would not happen overnight, but ―it certainly could happen if the right

infrastructure is built [by the Mongolia government],‖ he said.

Source: Mining Journal

PREMIER UPDATES ON CHINGGIS BOND SPENDING

Prime Minister Norov Altankhuyag on 31 March updated Parliament on spending from the Chinggis

bond.

The construction of roads to be financed by Chinggis bond proceeds is 68 percent complete, said

Altankhuyag. Work is finished on 930 kilometers out of a total planned 1,800 kilometers of road

financed by the Chinggis bond. Paved roads have been built connecting Dundgobi and Bayankhongor

Aimags with Ulaanbaatar. Road construction is underway to connect Umnugobi, Dornod, Sukhbaatar

and Khuvsgul Aimags and is expected to complete by August.

Ulaanbaatar has begun to see construction of roads as well as basic infrastructure using funds from

the Chinggis bond. Ulaanbaatar saw the renovations of 17 street crossings, and construction of a

highway to run along the Tuul and Selbe Rivers will start this June. MNT 416 billion in spending is

planned to fund 92 projects by 2014 to improve Ulaanbaatar‘s amenities infrastructure. The

Development Bank has already provided MNT 101.8 billion, which will be followed by another MNT

200 billion, to provide drinking water provisions, a sewage system, the delivery of electricity and

heating to 7 apartment blocks and 10 ger districts.

A state-owned company for housing management plans to build the 28-building Buyant Ukhaa 1

Apartment Complex. The complex will be aimed at providing housing to young families, retirees and

civil servants. Real estate will sell for MNT 1.28 million per square meter. Construction is complete

for 9 apartment buildings to house 567 families. The remaining buildings are expected to complete

by the second quarter of this year.

Chinggis bond proceeds will contribute USD 14 million to a USD 42 million factory that would

produce materials for housing construction. Erel LLC has invested another USD 13.1 million for the

factory, which is expected to produce materials for 184,000 homes for 5,000 families in

Ulaanbaatar. The materials are being designed to build houses that reduce pollution to the air,

ground, and water, said the prime minister.

Golomt Bank signed an agreement with the Ministry of Industry and Agriculture to issue loans worth

MNT 53.7 billion to 53 companies to promote the development of Mongolia‘s wool, cashmere,

textile, dairy, and agriculture industries.

The government has financed USD 14 million out of a total USD 16 million planned to fund the

construction of a 450-megawatt power plant at the Tavan Tolgoi coal mine. Another USD 34 million

from the Chinggis bond will be used for the development and construction of a hydro-electric power

plant at the Egiin River.

The government has allotted USD 164.2 million from the Chinggis bond for the construction of 267

kilometers of railway, which is 25 percent complete. Mongolia plans to build 1,800 kilometers of

railway between Tavan Tolgoi, Sainshand and Choibalsan as well as Tavan Tolgoi and

Gashuunsukhait

Source: UB Post

COPPER: LONG TERM BULLS AND SHORT TERM BEARS ALMOST IN CONSENSUS

Legal firm, Herbert Smith Freehills, which has a strong mining team based primarily in London and

Paris, hosted a well-attended copper bulls and bears panel discussion, organized by the London

Chapter of Women in Mining and the Association of Mining Analysts, this week. For the bears were

Paul Dewison of SNL and Robin Bhar of SocGen and for the bulls Olivia Ker of Blackrock and Bruce

Alway of Thomson Reuters. But what the audience took away from the discussion was that in many

respects both the bulls and bears were talking from the same songbook!

Overall it seemed that the bulls are not looking for much in the way of short term price increases

unless some black swan event impacts on the current supply surplus, but also don't see much, if

any, downside. They are, however, are looking for big price increases ahead as the surpluses

disappear and the market is projected to move into significant deficit. The bears on the other hand

do see short term price weakness perhaps taking prices down towards USD 6,000 per ton, but then

even they see a recovery from around 2016 although Paul Dewison did comment that China is likely

to provide the most volatile impact on the sector. It accounts currently for around 40 percent of

global copper consumption, but much of it is being consumed in technologies where copper has

seen major substitution by aluminum in the West and while there is little sign so far that China is

moving in this direction there is potential for a big switch to the lighter and cheaper metal,

particularly in power transmission.

But overall there was probably little said to convince the audience to change their perhaps already

set viewpoints. The bear case was largely short term, and that of the bull medium to long term.

Both could well be right!

Source: Mine Web

CHINA'S COAL STORY IS FAR FROM OVER, SAYS WOODMAC

China‘s demand for coal was expected to continue, advisory firm Wood Mackenzie (Woodmac) said

on Monday, as the country was unlikely to meet its environmentally driven, government target of

200 gigawatts nuclear power capacity by 2030.

A recent report by Woodmac concluded that, while China would make significant progress in its

nuclear endeavors, with capacity increasing from 14.6 gigawatts in 2013 to 175 gigawatts by 2030,

the inability to meet its targets would translate into opportunities for coal producers to capture

additional demand growth. Woodmac‘s head of Asia Pacific gas and power research, Gavin

Thompson, said that China's environmental measures would drive notable nuclear capacity growth,

while uranium supply would remain available for China.

―However, remaining challenges will result in nuclear falling short of government targets. The

government targets 200 gigawatts of nuclear capacity, which would make up 11 percent of the

power generation mix by 2030. In reality, we forecast nuclear capacity to reach 175 gigawatts by

then, making up just 10 percent of the power generation mix: equivalent to a 2.3 percent annual

growth, from 14.6 gigawatts of nuclear capacity in 2013.‖

Woodmac forecast that by 2030, China‗s nuclear capacity would account for 30 percent of the

world's total nuclear fleet. Woodmac's nuclear generation forecast revealed a 200 terawatt hours

gap in baseload electricity supply. The advisory firm stated that coal would meet 125 terawatt

hours of the gap while natural gas and renewable energy would account for the remainder.

Though natural gas production and imports would significantly increase, it would be insufficient to

prevent coal from accounting for 64 percent of the power generation mix by 2030. The report

highlighted that although coal‘s share would decline from 75 percent in 2013, owing to the rapid

growth in natural gas and renewables capacity, coal would still see net volume growth. Further, the

1 percent upside for coal from nuclear not meeting targets would translate to an additional coal

demand of 63 million tons a year by 2025 and 55 million tons a year by 2030.

Source: Mining Weekly

CHINA‟S PROPERTY BUBBLE HAS ALREADY POPPED, NOMURA REPORT SAYS

A combination of a huge oversupply of housing and a shortage of developer financing is producing a

housing market downturn that could drive the gross domestic product (GDP) of Mongolia‘s top

trading partner, China, to less than 6 percent this year.

―To us, it is no longer a question of ‗if‘ but rather ‗how severe‘ the property market correction will

be,‖ three Nomura analysts wrote in a report released Monday.

Nomura bases a lot of its argument on the observation that that property investment turned

negative in four of China‘s 26 provinces in the first quarter of 2014, and in two of them,

Heilongjiang and Jilin, the fall was greater than 25 percent. To Nomura, that‘s a warning sign of

similar problems to come in other Chinese provinces. Falling investment leads to falling levels of

construction and sales. And given the property market‘s huge role in the Chinese economy,

declining growth in the property sector means declining growth in GDP.

The government has lousy policy choices, Nomura argues. Continue with minimal stimulus and GDP

growth could fall below 6 percent this year. On the plus side, developers wouldn‘t add much to

China‘s long-term housing and debt problems. Alternatively, ramp up monetary and fiscal policy by,

say, cutting by 0.5 percent the reserves that banks hold in the central bank and by turbo-charging

government spending, and the government could achieve 7.4 percent growth this year, Nomura

estimates. But taking that route would only worsen China‘s housing glut and delay the downturn by

a year, the investment firm argues. In 2015, Nomura estimates, GDP would slow to 6.8 percent.

While delaying problems for a year could give leaders more time to put in place reforms that could

help China over the long term, Nomura also says China would have a one-in-three chance of GDP

growth falling even faster by the end of 2015 and starting a ―hard landing,‖ which it defines as four

consecutive quarters of GDP growth below 5 percent.

Damned if you do and damned if you don‘t.

Source: Wall Street Journal

INDONESIA‟S GAMBLE ON ORE EXPORT BAN STARTS TO HIT HOME

A long-planned ban on the exports of unprocessed ores in Indonesia, a competing exporter to

Mongolia of thermal coal to China, serves as an example of how poorly thought out policy can

detriment a country‘s mining industry and spread to cripple regional economies within a nation.

The move was designed to promote investment in costly domestic processing facilities, but critics,

such as the World Bank, say it has damaged investor confidence and is threatening the state

finances. Economic growth fell to its slowest pace in five years in the first quarter as tens of

thousands of workers were made redundant and mineral exports, which reached USD 11 billion last

year, were halted.

The government of southeast Asia‘s biggest economy, which is a key global supplier of bauxite,

nickel and other minerals, has always insisted that such local pain is necessary to ensure national

gain. A spokesman at the ministry of energy and mineral resources says the government wants to

ensure mining companies ―add value‖ rather than just ―exporting our earth‖. The government is

willing to let companies start exporting again if they show they are ―serious‖ about building

smelters or refineries, he adds.

Vanessa Lau, an analyst at Bernstein in Hong Kong, says that at current metals prices, the returns

on an alumina smelter in Indonesia such as the one being built by Harita could be as low as 6

percent per year over a 20-year production cycle. It might be worthwhile for Chinese buyers like

Hongqiao to finance it as a way to get access to the natural resources, she notes, but the wider

benefits for Indonesia are not clear.

―The world is already filled with refineries and smelters, especially in China,‖ she says. ―By building

a whole new production system in Indonesia, why is it going to be more competitive?‖

Source: Financial Times

POLITICS

PARLIAMENT APPROVES ECONOMIC STIMULUS PLAN Parliament on 7 May approved PM Norov Altanhulag's 23-point Action Plan for Economic Stimulus.

Source: BDSec

MONGOLIA SET TO END DISPUTE WITH INVESTORS OVER MINING LICENSES

Mongolia is trying to recover confidence in its mining industry amid a serious downturn, by making

conciliatory noises in a stand-off with its biggest investor Rio Tinto PLC and proposing to end a

dispute over more than 100 exploration licenses suspended during a corruption investigation. The

Central Asian country also expects to resolve arguments with Rio Tinto, its largest foreign investor,

over a delayed investment to expand the country‘s largest copper mine, according to a member of

the government.

―It is time for us to recover confidence,‖ said Ochirbat Chuluunbat, the deputy minister for

economic development during an interview in London. ―Mongolia has learnt a good lesson…  the

important thing for us is to create good jobs and good revenues.‖

Mongolia is seen as one of the most interesting countries for mining exploration, combining good

geology with a strategic location next to China, the world‘s largest user of commodities. But

investors have been losing confidence in the country amid a series of legal disputes and stalled

developments. Foreign direct investment halved last year and the country‘s economic growth,

government budget and currency—which has fallen 8 percent this year against the dollar—have all

come under pressure.

Last year some 106 exploration licenses held by foreign and local investors were revoked, after

their award was called into question amid a corruption case involving former government officials.

Chuluunbat said the government now intended to ask Mongolia‘s parliament to approve a return of

the licenses to holders that had complied with their terms, without requiring new tenders as a court

ruling had suggested.

Oyu Tolgoi is the large copper mine that Rio Tinto opened in Mongolia last year. An expansion of the

project, in which the government is a shareholder, has been delayed amid a dispute between the

company and the state over how to share costs and profits. Chuluunbat acknowledged that the

project had become ―the main barometer of investment in Mongolia‖, but said he was confident a

deal could be struck by September. ―Mongolia is ready to strike a deal,‖ the deputy minister said.

Source: Financial Times

PARLIAMENT RECEIVES RESOLUTION TO ALLOW BOTH CHINESE AND RUSSIAN GAUGES

Government has submitted a resolution to Parliament that would allow for a mix of Chinese and

Russian-gauge rails in Mongolia.

The Chinese gauge would be used for routes that head directly to China, between Tavan Tolgoi and

Gashuun Sukhait, Sainshand and Zamiin Uud, and Khuut and Bichigt. The routes to Russia using

Russia‘s narrower gauge would be between Tavan Tolgoi, Sainshand, Huut and Choibalsan, and

Erdenet and Mogoin Gol.

Source: Udriin Sonin

MONGOLIA RENEWS DEBT CEILING DEBATE TO BOOST INFRASTRUCTURE

Mongolia‘s Ministry of Finance presented a plan to Parliament that would raise the nation‘s debt

ceiling, paving the way for the government to sell more foreign debt to pay for infrastructure

development.

The government plans to increase the debt ceiling to 70 percent of gross domestic product from 40

percent, Gantsogt Khurelbaatar, the State Secretary for the Ministry of Finance, said yesterday at a

meeting with diplomats and foreign press. The change is part of a new debt management plan he

said was introduced to Parliament yesterday. Mongolia is studying financing options for

infrastructure projects that can help it process and export its resources as foreign direct investment

fell 28 percent in the first two months of 2014. In November, Parliament blocked a bill to raise the

debt ceiling to 60 percent, prompting Moody‘s Investors Service to describe the rejection as a credit

positive.

Raising the debt ceiling is one of several changes proposed by the Ministry of Finance, said

Gantsogt. The plan also includes a 20 percent limit on state guarantees and changes to the way the

government calculates debt, he said. Mongolia has raised about USD 2.3 billion in sovereign debt

since March 2012. Underscoring the challenges for the economy, Standard & Poor‘s this week

lowered Mongolia‘s long-term sovereign rating to ―B+‖ from ―BB-―, or four levels below investment

grade. The 40 percent limit went into effect this year as part of the country‘s Fiscal Stability Law,

adopted in 2010 as a way to smooth spending habits and generate savings from mineral revenue.

Government debt in 2013 was 49.5 percent of GDP, just shy of the 50 percent mark allowed for that

year.

Source: Bloomberg

MINING MINISTER PROVIDES DETAILS ON HIGHLY ANTICIPATED AMENDMENT TO MINERALS LAW

The Mining Ministry‘s proposed amendment to the 2006 Minerals Law will maintain the original law‘s

intent to protect the environment, said Minister Davaajav Gankhuyag, while setting new provisions

to better regulate the industry.

―The main principles of mining legislation haven‘t been touched,‖ said Gankhuyag, adding that the

principle aim was to create a new framework to attract investment by creating more transparency

and aligning Mongolia‘s regulations with that of other countries‘ rules. ―The classification of mining

resources will be provided according western standards, which will be more open and clear to

investors,‖ he said.

The government prohibited the issuance of new licenses and cancelled some existing licenses where

protection was needed because of the proximity to headwaters and forests. The government‘s

actions reduced the amount of licensed territory in Mongolia from 46 percent of the country to 7.6

percent and the amount of active licenses nearly in half to about 2,000, Gankhuyag said. The

amendment would set a limit to the amount of licensed territory to 20 percent. Exploration will be

permitted for 12 years as opposed to 9 years, as the government is taking into account the limited

amount of time available for exploration before the harsh Mongolian winter sets in, which generally

restricts the amount of activity possible to a bare minimum.

The amendment also holds miners accountable if a mine site is closed without any restoration while

making explicit the responsibilities miners have to local communities, he said. ―This amendment

has a paragraph requesting a special worker who will report on reclamation work, mining closure

actions and collaboration status with local community and local citizens.‖

The amendment also sets out to professionalize the artisanal mining profession, requiring them to

register with cooperatives so that they will conform to Mongolian laws.

Source: Udriin Sonin

INDEPENDENT MPS SUBMIT „DOUBLE DEEL‟ AMENDMENT TO CONSTITUTION

Four parliamentarians on 5 May called a press conference to announce their intention to propose an

amendment to the Constitution that would apply the terms of the so-called ―Double Deel‖ bill to

the Cabinet Secretariat.

Independent members Sainkhuu Ganbaatar, Ts. Davaasuren and Kh. Bolorchuluun and the Mongolian

People‘s Revolutionary Party‘s G. Uyanga have submitted to the government a proposed

amendment that would prohibit members of Parliament from serving in certain ministerial positions

after the Double Deel bill failed to pass in Parliament last week. Originally submitted by the Office

of the President, the Double Deel bill was opposed by the Democratic Party.

Uyanga, Davaasuren and Bolorchuluun voted against the bill last week, despite throwing their

support behind the bill in the weeks leading up to the vote. They said at the press conference they

now believe it would be better to introduce the provision as an amendment to the Constitution. The

proposed amendment has been sent to the Office of the President and relevant government offices

for their review, they said.

Currently, 14 of Mongolia‘s ministerial positions are held by members of Parliament, not including

the prime minister, deputy prime minister and Cabinet Secretariat minister.

Source: Montsame, Undesnii Shuudan

JUSTICE MINISTER SPEAKS ON FOREIGN EXECUTIVES “TRAPPED” IN MONGOLIA

The 50 expats banned from leaving the country will not likely be able to leave during the current

session of Parliament, said Justice Minister Khishigdemberel Temuujin.

Temuujin confirmed that there were foreign executives prohibited from leaving the country, as

Bloomberg reported in April, as well as a number of Mongolians. He said authorities‘ liberal use of

their power to deny exit visas was because of the failing of Mongolia‘s Criminal Law.

The ministry was looking into the issue, said Temuujin, which would likely be addressed in the

coming fall session of Parliament.

Source: Mongolia Investment Banking Group

MONGOLIA CLIMBS THREE PLACES ON PRESS FREEDOM INDEX

Mongolia ranked 74th out of 197 nations on the US-based non-government organization Freedom

House‘s Press Freedom Index.

Mongolia climbed three places this year from last, ranking alongside the likes of Serbia, Mali and

Hong Kong. The Netherlands, Norway and Sweden topped the ratings, whereas Cuba, Belarus,

Turkmenistan, Uzbekistan and North Korea were put at the bottom of the list.

Freedom in the World 2014 evaluates the state of freedom in 195 countries and 14 territories during

2013. Each country and territory is assigned two numerical ratings—from one to seven—for political

rights and civil liberties. One represented the most free and seven was the least free. The two

ratings are based on scores assigned to 25 more detailed indicators. The average of a country or

territory‘s political rights and civil liberties ratings determines whether it is ―Free,‖ ―Partly Free,‖

or ―Not Free.‖

Source: Montsame

NATIONAL COMMITTEE ESTABLISHED TO PLAN URBANIZATION

The Cabinet Secretariat on 3 May initiated the establishment of a national committee that will be

responsible for overseeing the development of small towns across the nation.

The committee will be responsible for managing migration to larger cities, particularly for

Ulaanbaatar. It will encourage families to relocate to smaller towns, sometimes creating new

settlements. Urbanization in Mongolia has grown sharply in recent decades alongside population

growth. The portion of Mongolians living in urban areas grew from 44 percent in 1969 to 67.9

percent in 2010. Migration to the cities in Mongolia, mostly to Ulaanbaatar, has been driven by

citizens looking for a better life than by any government directive.

Source: Montsame

PRESS COURT TO BE CREATED IN MONGOLIA

Several media organizations have partnered to help lift the Mongolian press industry to a

professional standard with the establishment of the country‘s first Press Court.

Over 20 associations for newspapers and journalists on 30 April gathered to announce their

intention to cooperate to establish a Press Court for Mongolia to create clear standards for

journalism, including professionalism and independence. The group would together develop the

rules for the Press Court and conduct discussions on professional ethics and principles among

journalists, training for self regulation, and experience sharing with international professional

institutions.

Source: News.mn

MONGOLIA INTENDS TO BECOME ASEAN'S DIALOGUE PARTNER, SAYS EAS MEMBER

Mongolia‘s visiting deputy foreign minister, Damba Gankhuyag, said Friday that Mongolia has the

purpose to become an ASEAN's dialogue partner and a member of the East Asian Summit.

Gankhuyag unveiled the plan during a meeting with Cambodian deputy prime minister and foreign

minister Hor Namhong, according to Koy Kuong, a spokesman for the Cambodian Ministry of Foreign

Affairs. Namhong said Cambodia welcomed Mongolia's intention to seek cooperation with ASEAN and

EAS, a forum held annually by leaders of 18 countries in the East Asian region. Namhong

recommended the country to submit documents to Myanmar, the current chair of ASEAN.

Source: Shanghai Daily

CAMBODIA, MONGOLIA ESTABLISH BILATERAL CONSULTATIONS

Cambodia and Mongolia on Friday signed a memorandum of understanding on the establishment of

bilateral consultations, aimed at bolstering bilateral ties and cooperation, a Cambodian official

said.

The deal was inked between Long Visalo, secretary of state of the Cambodian Ministry of Foreign

Affairs, and Damba Gankhuyag, deputy foreign minister of Mongolia.

"The MoU is very important to pave the way for the two countries to increase cooperation in

bilateral, regional and international frameworks," Koy Kuong, a spokesman for the Ministry of

Foreign Affairs, told reporters after the signing ceremony. "Under the deal, both sides also can

exchange information and opinions on bilateral, regional and international issues."

He said it was the second document after the two countries signed an agreement on visa exemption

for diplomatic and official passport holders in 2012. Both sides also agreed to strengthen

cooperation in economics, trade, investment and tourism.

Cambodia and Mongolia established diplomatic relations in 1961.

Source: Xinhua

MONGOLIA-MYANMAR CONSULTATIVE MEETING HELD

Mongolia and Myanmar‘s foreign affairs ministers met Tuesday for their first consultative meeting.

The ministers discussed Mongolia-Myanmar relations as well as cooperation and the integration of

the Asia-Pacific region. They agreed to hold experience-sharing events for the exploitation of

mineral resources as well as to cooperate in the field of tourism. The delegates also agreed to allow

the International Cooperation Foundation of Mongolia to hold training for civil servants on the

topics of democracy, open society, service to the state, court reforms, and a multi-party political

system.

Mongolia also discussed with Myanmar, who this year is chairing the Association of Southeast Asian

Nations (ASEAN), the possibility of Mongolia participating in the ASEAN Dialogue and East Asia

Summit. Myanmar agreed to allow Mongolian Foreign Minister Luvsanvandan Bold to participate in

the ASEAN Ministerial Meeting in August as a special guest. Myanmar would also consult with

members about Mongolia‘s proposal to host an unofficial meeting of ASEAN+1.

Source: Montsame

INTERNATIONAL CONFERENCE ON MONGOLIAN STUDIES IN WASHINGTON D.C.

The Mongolian Embassy to the United States and the Mongolia Cultural Center (MCC) hosted the

International Conference on Mongolian Studies from 2 to 4 May in Washington D.C., where over 50

delegates attended.

Over 20 scholars from Mongolia, the United States, Russia and South Korea participated in four

sessions to discuss Mongolia‘s history, literacy in the country, and challenges to education.

Mongolian Ambassador B. Altangerel gave a speech where he noted that the Mongolian government

had turned its attention to the development of Mongolian studies abroad and expressed hope that

the newly established fund to support Mongolian studies would make great impact. This year‘s

event focused on socio-economic changes being witnessed in Mongolia, debating its impacts, gains

and losses. In the past the forum has focused on history, archeology, literacy and linguistics.

Source: News.mn

ROSNEFT PIPELINES TO AND THROUGH MONGOLIA

Events in Ukraine create both uncertainties and opportunities in Ulaanbaatar. A changing balance of

power in Europe and closer ties between two regional powers, Russia and China, certainly create

new uncertainty for Mongolia. With their country‘s ―regionless‖ fate of living between two giants,

politicians in Ulaanbaatar have been cautious in their remarks regarding the events in Europe‘s

East, though they clearly prioritize political stability.

Implementation of any major plans to increase bilateral levels of trade and investment has been

slow. Mongolia‘s import of fuel from Russia remains the most important, though an exceedingly

complex issue, at any level of inter-governmental meetings between the two neighboring states.

Yet, presumably, with the recent visit to Mongolia by Igor Sechin, the president of Russian oil giant

Rosneft, energy talks might finally speed up. During his three-hour stay in Ulaanbaatar on 17 March,

Sechin met with President Tsakhia Elbegdorj, Prime Minister Norov Altankhuyag and Mining Minister

Davaajav Gankhuyag. The Rosneft president informed his hosts of Russia‘s willingness to supply oil

to Mongolia via pipeline on a long-term basis, and he even discussed the possibility of transiting

crude oil from Russia to China through Mongolian territory.

There are several clear reasons for why the Russian government has become so forthcoming to

Mongolia. For one, the landlocked country is still regarded as small but growing and reliable market

for Russian fuel exports because of Mongolia‘s increased mining and agricultural activities in

addition to a rising number of individual consumers there. Second, all previous governments in

Mongolia have been attempting to reduce the country‘s dependency on Russian gasoline and

petroleum product imports; they have struck deals with China, Kazakhstan and others as potential

sources for Mongolia‘s domestic energy needs. In addition, Mongolia‘s search for new sources of

energy—such as shale oil exploration—is ongoing. Third, after much debate, Mongolia has finally

begun building the country‘s first oil refinery in Darkhan City, which is scheduled for completion by

2015. In order to maintain its dominance in the Mongolian fuel market, earlier in 2011, the Russian

side had offered to set up 100 gas stations in Mongolia. But the proposal triggered sudden

protectionist debates among Mongolian politicians, fuel distributors and the public.

Although Mongolia is in many ways geopolitically constrained by its powerful neighbors, any shifts

between China and Russia have presented both challenges and opportunities for Mongolia. Today,

Russia urgently looks eastward for markets for its energy exports due to tensions with the West over

Ukraine. And because of this, Mongolia will likely be able to position itself to host a Russia-to-China

oil transit pipeline.

Source: Modern Tokyo Times

UNCTAD REVIEWS MONGOLIA‟S INVESTMENT POLICY

With foreign direct investment (FDI) flowing largely to its mining sector, Mongolia responded

favorably to the U.N. Conference on Trade and Development‘s (UNCTAD‘s) Investment Policy

Review recommending it to stimulate sustainable growth by diversifying FDI inflows.

Ochirbat Chuluunbat, vice minister of economic development, said he expected UNCTAD‘s

Investment Policy Review (IPR) of Mongolia to help catalyze growth and have considerable impact

on sustainable development in his country. The IPR recommendations are timely, Chuluunbat said.

Mongolia is taking steps to capitalize on development opportunities presented by foreign investment

in mining and setting up a strategy to diversify foreign direct investment (FDI) inflows into the

country.

―Since 1991, when we moved towards a market economy, we have been implementing reforms to

increase living standards in Mongolia. A quite significant contribution was made by FDI. Our

evolution was not always smooth, but together with UNCTAD and consultations with private sector

we have managed to move forward with reforms to improve the legal environment,‖ Chuluunbat

added.

The report recommends that Mongolia adopt a three-pronged diversification strategy aimed at

attracting investment to new sectors, to new regions within the country, and from non-traditional

investors. Essential to the proposed strategy are improvements in transparency, accountability,

business procedures and anti-corruption laws. In addition, the IPR advises Mongolia to employ

mining revenues, as well as FDI, to address major infrastructure and skills impediments. The mining

sector itself could become a ―growth pole‖ supporting economic diversification, with the adoption

of an enhanced regulatory framework.

In addition, the IPR suggests that considerable potential exists in sectors associated with the

country's traditional economic and social model, such as in eco-tourism, livestock and cashmere

production. Growing FDI in these segments will require a carefully designed plan, strong

institutional setting and professional investor-targeting based on a country brand.

Read the full report here.

Source: U.N. Conference on Trade and Development

ANNOUNCEMENTS

GTR‟S 3RD ANNUAL MONGOLIA TRADE & COMMODITY FINANCE CONFERENCE, BLUE SKY HOTEL,

13 MAY

The Business Council of Mongolia is offering members a limited number of free corporate passes

available (reserved for exporters, traders, manufacturers and producers of physical goods) and a 10

percent discount to GTR's 3rd Annual Mongolia Trade & Commodity Finance Conference 13 May at

the Blue Sky Hotel

With its focus on Mongolia‘s mining, minerals and vast commodity-led growth, this will be the key

trade gathering for the country‘s senior business leaders, providing timely insight on the challenges

facing the local banking and private sectors, as well as offering perspectives from the industry‘s key

supporting actors. A total of 190 participants have registered as of May 5.

BCM is an institutional partner for the event, and so is offering members a 10 percent discount

when they enter the code BCM10. Contact Grant Naughton at gnaughton@exportagroup.com for

more information.

___________________________________________

“MM TODAY” ON MNB-TV, FRIDAY, 19:00 TO 19:10

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 19:00 to 19:10 tonight. Tune in to watch this program that reports stories from

today‘s BCM NewsWire.

BCM WORKING GROUP NEWS

The BCM Legislative Working Group (LWG's) Memorandum based upon the expanded LWG meeting

on 28 April was delivered to Mining Minister Gankhuyag on 8 May.

The group had steered away from a line-item review and pushed for higher level comments. This

was in part due to timing, and in part what is stated below (can't do a sufficient line item review as

the draft amendments are presented).

The key themes picked up in the Memorandum were (1) unclear rational impacting ability to

comment and (2) unclear public consultation with stakeholders from which to "group think" the

amendments. Are they really best for Mongolia? Are they really best for business/commercial use?

Do they fit the purported goals of the Minerals Policy? All questions unknown without items 1 and 2

being properly addressed.

Even though the group agreed not to do a line item review, there were some specific comments

which were shared with BCM‘s partner, the MNMA, and brought to the attention of a key Mining

Ministry official. But noted that they did not substitute for the general higher level comments

delivered to the Mining Minster on 8 May.

Source: James Liotta, Co-chair, BCM Legislative Working Group

„BCM IN THE UNIVERSITY CLASSROOM‟ NEWS

Business Council of Mongolia (BCM) has been progressing with its ‗BCM in the University Classroom‘

series since March 2012. Led by BCM‘s Education Working Group, the program provides lectures at

universities to help inspire students and give them direction for their future careers. The series has

grown to include an average of 10 lectures per academic year.

Now 1,544 students and teachers have participated to BCM in the University Classroom Project.

Most recently Ms. Unurjargal O. from Mongolian Talent Network gave a presentation entitled

―Mongolian Working Environment‖ to an audience of 178 students of Economy and Business

Management graduating students at the Mongolian University of the Humanities on 2th of May 2014.

Next ‗BCM in the University Classroom‘ series will be held on 9f May at the International Trade and

Culture School of Mongolian University of the Humanities. A Mongolian Talent Network team is again

invited to speak.

If you like to share your experience on some specific topic, you can discuss with us for the next

school term. Please contact:erka@bcmongolia.org

BCM WEBSITES

PRESENTATIONS (in Mongolian):

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

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

government website Open-Government.mn are regularly updated.

• ―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

The presentation below was made at Mongolian National University as part of the ―BCM in the

University Classroom series‖ on February 27, 2014:

• Ser-Od Inchinkhorloo, Vice Director, BCM, ―Investment environment: Past, Present, Future‖

(Mongolian)

The presentation below is from the February 24 BCM monthly meeting:

• О. Зоригт, Гүйцэтгэх захирал, Майн Инфо "Майн Инфо ХХК-ний товч танилцуулга", МБЗ-ийн 2

сарын 24-ний сарын хурал

Dr. Khashchuluun, Executive Director, National Council of Private Sector Support, ―Taxation Impact

Research‖ to BCM Tax Working Group, February 19, 2014

• ТАТВАРЫН БАГЦ ХУУЛИЙН ӨӨРЧЛӨЛТ: ХУВИЙН ХЭВШИЛД, Ч. Хашчулуун, Хувийн хэвшлийг

дэмжих үндэсний зөвлөлийн гүйцэтгэх захирал 2014.02.19

20 Presentations from Coal Mongolia, 20-21 February, 2014:

• Уул уурхайн сайд Д. Ганхуяг, Төрөөс Эрдэс Баялгийн Салбарт Баримтлах Бодлого, Нүүрсний

Салбарыг Хөгжүүлэх Стратегийн Чиг Хандлага, Коал Монголиа 2014, 2 сарын 20-21.

• Сангийн сайд Ч.Улаан, МОНГОЛ УЛСЫН САНГИЙН ЯАМ, Улсын төсөвт нүүрсний салбарын

үзүүлэх нөлөө, татварын орчин шинэчлэл, Коал Монголиа 2014, 2 сарын 20-21.

• Монгол орны нүүрсний салбар дахь байгаль орчны асуудал, Байгаль орчин, ногоон хөгжлийн

яам, ХБОБНГ-ын дарга Д.Энхбат Коал Монголиа 2014, 2 сарын 20-21.

• НҮҮРСНИЙ АЖ ҮЙЛДВЭРЛЭЛИЙГ ХӨГЖҮҮЛЭХ ТЭЭВЭР ЛОЖИСТИКИЙН АСУУДЛУУД:

Л.ПҮРЭВБААТАР ТӨМӨР ЗАМЫН ИНЖЕНЕРҮҮДИЙН ХОЛБООНЫ ЕРӨНХИЙЛӨГЧ, ―УУЛ УУРХАЙН

БҮТЭЭГДЭХҮҮНИЙ ТЭЭВЭРЛЭЛТ‖ Коал Монголиа 2014, 2 сарын 20-21.

• МОНГОЛ УЛСЫН НҮҮРСНИЙ САЛБАР ДАХЬ ХӨРӨНГӨ ОРУУЛАЛТ, ХУДАЛДААНЫ ТААТАЙ ОРЧИН

БҮРДҮҮЛЭХ НЬ,ЭДИЙН ЗАСГИЙН ХӨГЖЛИЙН ДЭД САЙД О.ЧУЛУУНБАТ Коал Монголиа 2014, 2

сарын 20-21.

• Уул уурхайн дэд сайд О. Эрдэнэбулган, Олон улсын нүүрсний зах зээл дэх Монгол улсын

өрсөлдөх чадварыг нэмэгдүүлэхэд төрийн оролцоо Коал Монголиа 2014, 2 сарын 20-21.

• Ж. Батцэнгэл, Монголын Уул Уурхайн Корпорацийн дарга, МОНГОЛЫН НҮҮРСНИЙ САЛБАРЫН

ӨНӨӨГИЙН НӨХЦӨЛ БАЙДАЛ, Тулгарч буй бэрхшээл ба шийдэх боломж Коал Монголиа 2014, 2

сарын 20-21.

• Аршад Саеид, Пийбоди Энержи компанийн Монгол ба Энэтхэг улсыг хариуцсан Ерөнхийлөгч,

Дэлхийн нүүрсний зах зээл, Монгол улсад үзүүлэх нөлөөлөл, Коал Монголиа 2014, 2 сарын 20-

21.

• МОЗА гүйцэтгэх захирал Ч. Хашчулуун, Занарын дэлхии ̆н хувьсгал ба Монголын эдии ̆н засагт

үр нөлөө, Коал Монголиа 2014, 2 сарын 20-21.

• Багануур Энержи Корпорэйшн ХХК, Нүүрс хийжүүлэх, шингэрүүлэх цогцолбор парк төслийн

товч танилцуулга, Коал Монголиа 2014, 2 сарын 20-21.

• АДУУНЧУЛУУНЫ ЦАХИЛГААН СТАНЦ, БЕНЗИНИЙ ҮЙЛДВЭРИЙН ТӨСӨЛ, Ж.Золжаргал –

Төслийн удирдагч, Коал Монголиа 2014, 2 сарын 20-21.

• Ц.Ганцог, Жени Ойл Шэйл Монголиа ХХК Гүйцэтгэх захирал, ШАТДАГ ЗАНАРЫГ АШИГЛАХ

БОЛОМЖ, Коал Монголиа 2014, 2 сарын 20-21.

• Фэн Вэй эрчим хүчний зөвлөгөө өгөх компани, 2014 оны хятадын нүүрсний зах зээлийн

шинжилгээ болон үнийн таамаглал, Коал Монголиа 2014, 2 сарын 20-21.

• Я. Батсуурь, Эрдэнэс Таван Толгой ХК, Танилцуулга, Коал Монголиа 2014, 2 сарын 20-21.

• Хишиг Арвин Индустриал ХХК, ҮНДЭСНИЙ КОМПАНИУДЫН ТӨЛӨВШИЛ, ӨРСӨЛДӨХ ЧАДВАР,

Коал Монголиа 2014, 2 сарын 20-21.

• Виртген Групп, МОНГОЛЫН НҮҮРСНИЙ ЗАХ ЗЭЭЛ ДЭХ WIRTGEN БРЭНДИЙН SURFACE MINER

БУЮУ АНГИЛАН ОЛБОРЛОГЧИЙН ТЕХНОЛОГИ БОЛОН АШИГЛАХ БОЛОМЖУУД, Коал Монголиа

2014, 2 сарын 20-21.

• ―Тавантолгой‖ ХК-ийн Гүйцэтгэх захирал Р.Сэддорж, Дэвшилтэт технологи ба инновацийг

нутагшуулах нь, Коал Монголиа 2014, 2 сарын 20-21.

• ―УУЛ УУРХАЙН ДЭД БҮТЦИЙН ХӨРӨНГӨ ОРУУЛАЛТЫГ ДЭМЖИХ ТӨСӨЛ‖ Төслийн Зохицуулагч

Б.Энхбаатар,Коал Монголиа 2014, 2 сарын 20-21.

• ДЭД САЙД Д.ДОРЖПҮРЭВ, Эрчим Хүчний Яам, 2014 ОНД ЭРЧИМ ХҮЧНИЙ САЛБАРЫН

ХИЙГДЭХЭЭР ТӨЛӨВЛӨСӨН АЖЛУУД БОЛОН ТӨРӨӨС БАРИМТАЛЖ БУЙ БОДЛОГО, Коал

Монголиа 2014, 2 сарын 20-21.

• Ай Эм Си Монтан Компани, Нүүрс баяжуулах талаар, Коал Монголиа 2014, 2 сарын 20-21.

The below presentation is from the January 27 BCM monthly meeting:

• ОЙ ХАМГААЛАЛД СУУРИЛСАН БИЗНЕС, Цэсэдийн БАНЗРАГЧ /Ph.D/, БОНЯ- ны ОЙ

ХАМГААЛАЛ, ОЙЖУУЛАЛТЫГ ЗОХИЦУУЛАХ ХЭЛТЭСИЙН ДАРГА, МБЗ-ийн 1 сарын 27-ны

гишүүдийн сарын хурал дээр

___________________________________________

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

BUSINESS NEWS‟, „PHOTO GALLERY‟

16 Presentations at 2014 Mongolia Investment Summit London, April 30-May1:

• Assessing developments in current economic policy and how the government will manage and

improve existing regulations, Ochirbat Chuluunbat, Vice Minister for Economic Development,

Ministry of Economic Development, Mongolia

• How should investors interpret the shift in government policy and the introduction of the new

investment law?, Andrew Danenza, Founder and Managing Partner, Melbury Capital, UK

• Examining legal developments and what this means for the stimulation of FDI, Chris Melville,

Partner, Hogan Lovells, Mongolia

• Examining Mongolian mining policy and how it could benefit the production and export of mineral

resources, Rentsendoo Jigjid, State Secretary, Ministry of Mining, Mongolia

• Analyzing the Mongolian coal market: how could mining companies best respond to the operating

environment and fluctuations in demand?, Battsengel Gotov, Executive Director and CEO, Mongolian

Mining Corporation, Mongolia

• Examining how Mongolian banks and financial institutions are dealing with the challenges and

opportunities of a fast growing economy, Norihiko Kato, CEO, Khan Bank, Mongolia

• Spotlight presentations: a chance to showcase your services and projects to a wide investor

audience, Leading bank of Mongolia: Golomt Bank - Munkhbat Davaatseren CEO, Golomt Securities

LLC, Mongolia

• To what extent has Mongolia retained its previously high levels of investment appeal? Alisher Ali

Chairman, Eurasia Capital, Mongolia

• How can Mongolia attract private investment in power development? Philip Lam, Senior Banker,

Power and Energy Utilities, EBRD, UK

• Examining the potential for successful renewable energy projects in Mongolia and the benefits

cleaner energy will bring for foreign investors, Bolor J. Artan, Deputy CEO, Newcom Group,

Mongolia

• Spotlight presentations: a chance to showcase your services and projects to a wide investor

audience, Michael Jonas Director, Genie Mongolia and Executive Vice President, Genie Oil and Gas,

Mongolia

• Assessing the Mongolian Stocks Exchange‘s cooperation with the London Stock Exchange and how

this can benefit investors, Jon Edwards Deputy Head of Primary Markets- Emerging Markets, London

Stock Exchange, UK

• Spotlight presentations: a chance to showcase your services and projects to a wide investor

audience, Boldbaatar Lamjav, Board Member, Nuudelchin, Mongolia

• Mining infrastructure case study: examining the development of infrastructure to support Erdenes

Tavan Tolgoi and how a continuation will bring, Badarch Enkhbat, CFO, Erdenes Tavan Tolgoi,

Mongolia

• Developing strategic mineral assets and infrastructure in Mongolia: Examining the timescales and

how obstacles can be overcome, Sainbuyan Odon CEO, Erdenes MGL LLC, Mongolia

• How could you ensure an effective IPO and the raising of the necessary capital for your business?,

Ayuna Nechaeva, Business Development Manager – Russia, CIS and Mongolia, London Stock

Exchange, UK.

____________________________________________

• ―Public-Private Partnership in Mongolia: Now and Future Prospects‖, E. Enerelt, Investment

Officer, ADB and Ts. Batbayar, Director of Concession Division, Ministry of Economic Development

at BCM monthly meeting, March 24, 2014;

• ―Areva in Mongolia: 15 years of presence – New perspectives in uranium mining‖, Thierry Plaisant,

General Director, Areva Mongol at BCM monthly meeting, March 24, 2014;

• ―Impact of Corruption in Mongolia‖ by L. Sumati, Director of Sant Maral Foundation at the ―ANTI-

CORRUPTION LEGISLATION/POLICY, INTERNATIONAL BEST PRACTICE ON TRANSPARENCY‖ Training

seminar, Mar 06, 2014;

• ―Anglo American Business Integrity policy and its application within the Business Globally‖ , Dr.

Graeme Hancock, President and Chief Representative Mongolia of Anglo American at the ―ANTI-

CORRUPTION LEGISLATION/POLICY, INTERNATIONAL BEST PRACTICE ON TRANSPARENCY‖ Training

seminar, Mar 06, 2014;

• Change of the package of taxation laws: private sector, Dr. Ch. Khashchuluun, Executive Director,

National Council for Private Sector Support, at the BCM`s Tax working group's meeting Feb 19,

2014;

• Economic and Capital Markets Update, Nick Cousyn, Chief Operating Officer, BDSec at the BCM

Monthly Meeting, Feb 24, 2014

15 Presentations at Coal Mongolia, February 20-21:

• Impact of Coal Sector on Government's Budget and the Taxation Regime , Ch. Ulaan, Minister of

Finance, MINISTRY OF FINANCE OF MONGOLIA

• Environmental issues in Mongolian coal mining sector, D.Enkhbat Ministry of Environment and

Green Development, Head of Environment and Natural Resources Department

• COAL INDUSTRIAL DEVELOPMENT, TRANSPORT AND LOGISTICS ISSUES: PRESENTATION TOPIC:

TRANSPORTATION OF THE MINING PRODUCT" Purevbaatar Luvsandagva, Head, Association of Railway

Engineering of Mongolia

• INVESTMENT INTO MONGOLIAN COAL MINING SECTOR AND CREATING AN ATTRACTIVE

ENVIRONMENT FOR INTERNATIONAL TRADE, VICE MINISTER OF ECONOMIC DEVELOPMENT, O.

Chuluunbat, Vice Minister, Ministry of Economic Development

• Government Involvement and Support to Enhance the Mongolian Competitiveness in Coal Sector,

O. Erdenebulgan, Vice Minister of Mining

• MONGOLIAN COAL INDUSTRY, Overcoming challenges in volatile market conditions, G.Battsengel,

Director, Mongolian Mining Corporation

• Global Coal Markets and Implications for Mongolia , Arshad Sayed, President of Mongolia & India,

Peabody Energy

• Introduction of CTL Plant Project, T. Munkhtur, Baganuur Energy Corporation

• ADUUNCHULUUN POWER AND CTL PROJECT, J.Zoljargal, Project Manager, MAK

• OIL SHALE OPPORTUNITIES IN MONGOLIA, Ts.Gantsog, Executive Director, Genie Oil Shale

Mongolia

• China Coal Market Lookout 2014, Fenwei Energy Consulting

• Erdenes Tavan Tolgoi JSC, Y. Batsuuri, CEO

• WIRTGEN SURFACE MINING TECHNOLOGY AND CHALLENGES IN COAL IN MONGOLIA by Wirtgen

Group

• "MINING INFRASTRUCTURE INVESTMENT SUPPORT PROJECT", Project Coordinator, B. Enkhbaatar at

the Coal Mongolia 2014, Feb 20-21.

• Coal Processing by IMC Montan.

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

• Monthly statistical bulletin, March, 2014, by Mongol Bank

• Social and economic situation of Mongolia as of March 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)

• Polit Barometer, March 2014, by Sant Maral Foundation

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‖;

• Jim Dwyer, Executive Director, BCM: ―Minerals Policy‖;

• D. Bayasgalan, Director of Golomt Bank: ―Golomt has no problem‖;

• From the Oxford Business Group, Mongolia Reports 2013 book;

• B. Byambasaikhan, Chairman, BCM: ―Talk is cheap‖;

• President Ts. Elbegdorj: ―Diversifying for growth‖;

• Jim Dwyer, Executive Director, BCM: ―Non-mining sectors budding‖;

• Peter Morrow, Chairman, American University of Mongolia: ―Filling in the blanks‖;

• N. Zoljargal, Governor, Bank of Mongolia: ―Sustainable vision‖;

• Gansukh, Minister of Roads and Transportation: ―Accessing new markets‖;

• J. Od, President, MCS Group: ―Building interest‖.

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

• 2014 Article IV staff report for Mongolia by International Monetary Fund;

• BCM comments on draft Amendments to the Minerals Law made to Mr. D.Gankhuyag, the Minister

of Mining, February, 2014;

• BCM 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 6th Anniversary BCM Renewal dinner on November

11, 2013.

BCM Football Cup 2013 pictures are posted to the website - http://bcmongolia.org/en/photos/350-

en/album?albumid=200

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 5,467 fans on our Facebook fans page, 557 connections on LinkedIn

network, and 1,049 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/

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]

Year 2012 *14.0% [source: NSOM]

Year 2013 *12.5% [source: NSOM]

March 31, 2014 *12.4% [source: NSOM]

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

Note: 11.9% y-o-y, Ulaanbaatar city, March 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]

CURRENCY RATES – 8 MAY 2014

Currency Name Currency Rate

US Dollar USD 1,806.72

Euro EUR 2,515.77

Japanese yen JPY 17.15

British pound GBP 3,063.75

Hong Kong dollar HKD 233.08

Chinese Yuan CNY 290.08

Russian Ruble RUB 51.66

South Korean won KRW 1.77

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.