BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 247 – November 9, 2012

NEWS HIGHLIGHTS:

Business

OT clears power hurdle;

Prophecy may stop mining on weak prices;

Clean Energy Asia to provide renewable energy for “Asia Super Grid”;

MMC involvement in rail development’s new, consolidated plan;

Aspire increases Ovoot reserve;

Modun upgrades Nuurst coal resource;

Entrée-OT JV pushes toward development with OT power agreement;

Relationship at stake as investment banker leaves;

Prophecy receives preliminary economic assessment for Chandgana;

Mining firms accused of destroying preserved land;

Sod Mongol, Petrovis leave drivers with empty tanks;

MPP uses gas provider as campaign tool;

Newcom, GE renew partnership commitments;

S&P lowers rating of Golomt Bank;

Aspire director steps down.

Economy

Russian fuel exporter puts pressure on Mongolia with fuel hikes;

TV broadcasters held accountable for intellectual property violations;

CRC targets websites for IP violations;

Bus workers on strike;

BDSec releases CFO Survey;

Mongolia for sale;

Open source software alternatives on the Mongol Steppe;

Time names UB world's second-most polluted city;

OT offers Mongolia cash bonanza;

LME copper rises as Obama win hits dollar;

BHP chief casts doubt on coking coal outlook;

China coking coal, iron ore imports disparity to end;

China suspends coal mines before Congress, boosting safety;

Mongolian filmmaker wins funding for movie.

Politics

Debate in Parliament on OT agreement to be held this month;

Parliament looks to invalidate double-taxation agreements;

Legislation to reshuffle Parliament structure;

Parliament to retool Development Bank regulations;

Budget for 2013 under debate as deadline approaches;

Mongolia, Bulgaria to boost trade ties;

Elbegdorj discusses trade with Estonian premier;

Swedish trade official arrives in Mongolia;

Border troops train in Egypt;

Elbegdorj sends congratulations to Obama for second-term victory;

MPRP hold protest at MPP headquarters;

Enkhbayar requests hearing from Supreme Court;

Police investigation finds Gobi fossil smuggling ring.

ECONOMIC INDICATORS

MSE Top 20 Index by market Capitalization;

Foreign-listed Companies with Mongolian Assets;

Inflation;

Central bank policy rate;

Currency rates.

*Click on titles above to link to articles.

SPONSORS

Khan Bank Eznis Airways

Kempinski Hotel Khan Palace Mongolian National Broadcasting

Breakthrough PR Oxford Business Group

BCM MONTHLY MEETING RECAP

The meeting on 5 November with Laurenz Melchers in the chair was attended by 165 members and

invited guests.

BCM Executive Director Jim Dwyer thanked all in attendance for their continued support, without

which BCM could not exist. The day's events celebrated BCM's 5th Anniversary since it first began

supporting business investment and a favorable business climate while promoting the activities of

the private sector. During its celebratory Gala dinner after the meeting, the Business Council

recognized 2012 top achievers with awards. They are:

International Company of the Year: PricewaterhouseCoopers Audit LLC

Local Company of the Year: Mandal General Insurance LLC

Media Company of the Year: Mongolian Economy

Government Friend of the Year: B. Ganbat, Ministry of Economic Development

BCM Working Group of the Year: BCM Legislative Working Group

Towards the end of the dinner Peter Morrow, Founding Chairman of the Business Council,

announced that Laurenz Melchers, Chairman, and Luvsandendev Sumati, Deputy Chairman, would

step down from their posts after three years of exemplary service. Subsequently B. Byambasaikhan,

CEO of Newcom Group, and Tim O‘Neil, Executive Director of CPS International, were announced as

their replacements, respectively.

BCM membership totaled 253 at October 31, the end of BCM‘s membership year, up from 201 in

2011. The 14 most recent new members are:

American University of Mongolia (AUM) is a Mongolian registered non-governmental, non-profit

organization founded by a group of Mongolian and American business, educational and community

leaders. AUM offers a U.S. accredited curriculum based on American liberal arts tradition focusing

on critical thinking and creative problem solving, tailored to the needs and interests of students and

the Mongolian marketplace.

El Group Consulting is a team of highly skilled consultants providing a wide range of services in

executive search, human capital management and analytical research. El Group has in-depth

understanding and solid experience in serving multinational, domestic and international clients

from Central Asia, Kazakhstan, Europe and North America.

The Belgian Embassy and Consulates General has opened visa application centers in Beijing,

Shanghai and Guangzhou. This service is available for residents in China and Mongolia who wish to

apply for a Belgian Visa.

G&DS LLC (Geophysics and Drilling Service) is a Mongolian geophysical consulting service company.

The production crews are experienced in geophysical borehole logging and ground geophysics

planning, acquisition, processing, and equipment maintenance. G&DS has provided dozens of

ground and borehole geophysical services for Oyu Tolgoi LLC, Tethys Mining LLC (Vale), and Hunnu

Coal Ltd.

IRMUUN Multimedia, founded in 2004, is the largest privately owned publishing and communications

company and is the leading content creator with the most diverse publications in Mongolia.

Publications include Cosmopolitan, National Geographic magazine, Skyvision and Smartway in-flight

magazines.

The Julius Baer Group is the leading Swiss private banking group, focusing exclusively on the

demands of sophisticated private clients, family offices and external asset managers from around

the world. It has the largest international presence of all Swiss private banks with over 40 locations

in more than 20 countries. At the end of August 2012, the Group's total client assets amounted to

CHF 276 billion (USD 292 billion), with assets under management accounting for CHF 184 billion

(USD 195 billion). Switzerland and Asia are the group‘s two home markets.

LexLoci is a Mongolian law firm that provides quality legal services in the areas of corporate and

commercial transactions, mining and infrastructure development, real estate transactions, labor

and tax issues, civil and administrative litigation to foreign and domestic entities and individuals.

Management Department of Economic School of National University of Mongolia offers Bachelor,

Masters in Business Administration and Doctorate degrees with its faculty of 20 lecturers, most of

whom hold a PhD from respected international universities. The School of Economic Studies is

currently in the accreditation process by ACBSP in the United States and has partnerships with

respected institutions such as the University of Manchester, University of Kyoto, University of

Dankok and Utah Business School.

Onom Foundation is working to promote sustainable progress in Mongolia. It aspires to advance the

causes for education, health care, and democracy in Mongolia, and to contribute to the creation of

society where Mongolians have more opportunities to realize their dreams.

Orica Mongolia LLC is a subsidiary of the Australian Securities Exchange (ASX)-listed Orica Ltd. Orica

is the world‘s largest provider of commercial explosives and blasting systems to the mining and

infrastructure markets, the global leader in the provision of ground support in mining and tunneling.

Takhi Recruitment is a specialist recruitment agency in Mongolia that features a local presence with

international reach. It has a head Office in Ulaanbaatar and satellite offices in London and Perth,

Australia. It focuses on the repatriation of Mongolians, expatriate introductions, and local

recruitment through its executive recruitment services.

Techenomics Mongolia is an oil conditioning monitoring laboratory that provides controlled

maintenance and technical support. Services for the mining industry include: full oil analysis

including foam testing for hydraulic and gear oils; fuel testing to increase power and reduce

consumption; coolant, grease and transformer oil testing; and online reports on Blue Ocean

software.

Voyager Resources Ltd. is a copper and gold explorer. Its flagship KM copper project is located in

the Southwest Gobi Island Arc Terrain, which is one of a number of tectonic terrains that extend

across the Gobi and southern regions of Mongolia that have been proven to host a number of

mineralized copper porphyry systems, including the giant Oyu Tolgoi deposit. Its other projects are

the Daltiin Ovor and Khongor copper-gold projects. Voyager is listed on the ASX.

Wolf Petroleum Ltd. is now one of the largest holders of oil and gas exploration acreage in

Mongolia. It has secured contracts on conducting petroleum joint geological surveys and is now

actively seeking further license opportunities. It plans to carry out exploration by applying modern

data processing and interpretation techniques to geophysical information, acquiring additional

geophysical data and then, subject to future financing, undertaking drilling programs where

warranted.

The evening‘s presentations began with a report from Arshad Sayed, President of Peabody Energy

Corp. for Mongolia and India, to discuss the path of development for Mongolia's minerals sector and

introducing the industry's best practices. Sayed said if Mongolia is to attract the best skills in the

industry it must provide a stable legal and fiscal structure.

―There needs to be a serious debate of where the government sees itself going,‖ he said. ―Will it be

an owner? A beneficiary?‖

Conditions for a sustainable resource economy, said Sayed, include geological potential but go

beyond to political stability, minerals law, fiscal rule, and infrastructure.

He pointed to Chile as an example of country that has benefited enormously from its minerals

sector thanks to proper planning and management. It is noteworthy, he added, that Chile was the

only resource-based economy to not experience a downgrade from Standard & Poor's (S&P) Rating

Services due to its well stocked sovereign fund, which cushions the nation's economy from economic

downturns.

Randolph Koppa, President of Trade and Development Bank of Mongolia LLC, gave a presentation on

the state of the banking sector. He said Mongolia was experiencing growth in most areas of the

banking sector including total assets, loans, deposits, capital funds, and profits.

Trade and Development is one of the country‘s four major banks, each experiencing significant

growth on the back of Mongolia's mineral boom.

Houston Spencer, Vice President of Communications and Media Relations at Oyu Tolgoi LLC,

concluded the evening's presentations with an update on the Oyu Tolgoi copper and gold project.

He began with the announcement that Oyu Tolgoi had signed an agreement with Chinese firm Inner

Mongolia Power Corp. to purchase power, the last hurdle before commencing operations. Having

signed the agreement just two hours prior, BCM audience members were some of the first to hear

the news.

However, that does not change the fact that the Oyu Tolgoi investment agreement is under fire

from members of Parliament who would like more state ownership or to change the tax and royalty

terms.

Spencer mentioned statistics from a poll Oyu Tolgoi had conducted that exhibits some of the

challenges the project and its developers must face. The good news for Oyu Tolgoi is it is well

known and had strong ratings for employment, training and environmental care, especially with

young people. However, the poll also found that 60 percent of 1,000 respondents said the overall

economy is worse or stagnating, while 67 percent said their own households are worse or standing

still.

Finally, in another survey, conducted by the Sant Maral Foundation, over half of all polled felt

government should own more than half of any project, with a slight majority feeling private

enterprise should not have any involvement at all.

―Such absolute faith in the state is a legacy issue we are all struggling with,‖ said Spencer. He

added, ―We assume that everybody is pretty much sure that the free-market enterprise system is

what is needed to help Mongolia and its citizens succeed and approach this next wave of

development. But obviously we can't assume everyone is already convinced of that.‖

BUSINESS

OT CLEARS POWER HURDLE

Oyu Tolgoi, Rio Tinto PLC's flagship Mongolian copper-gold mine, is set to begin production in less

than three months after finally resolving the issue of power supply from neighboring China that had

threatened delays to the nearly USD 6 billion project.

The start of production will be a major landmark for Mongolia. The mine already accounts for a

third of the country's gross domestic product (GDP) and will be among the world's five biggest

copper mines once it reaches full production. After more than two years of difficult construction

work in the Gobi Desert, the final hurdle for the mine to move ahead was cleared on Sunday when

Oyu Tolgoi signed an agreement to buy power from china.

The negotiations over power supply were complex and unexpectedly prolonged as Oyu Tolgoi and

the electricity supplier, China's Inner Mongolia Power Corp., wrangled for the best commercial

terms. The deal, which also involved diplomatic negotiations between Beijing and Ulaanbaatar,

marks the first cross-border power supply agreement between the two countries.

Now that the electricity deal has been secured, the government's attention is likely to turn to the

investment agreement that governs Oyu Tolgoi's development. In October, Ulaanbaatar sent a letter

to Turquoise Hill Resources Ltd., the 66 percent stakeholder in the project, requesting fresh

discussions over the investment agreement. That request was eventually denied.

Erdenbulgan said Ulaanbaatar still wanted to discuss details of the investment agreement with

Turquoise Hill, including royalty fees and the government's share of payment for the stat-up costs.

Because the cost of building the mine has risen, the government wants to clarify how much of the

cost it must shoulder, Erdenbulgan said, adding that it was not seeking to change its 34 percent

share of the mine.

Source: Financial Times

PROPHECY MAY STOP MINING ON WEAK PRICES

Prophecy Coal Corp. may keep its Ulaan Ovoo coal mine closed if the government doesn't increase

the amount it is willing to pay, Chief Executive John Lee said.

The Canadian company's shareholders are concerned that it is selling coal at a loss to state-

controlled power plants, Lee said. Earlier this year, Lee estimated that the Ulaan Ovoo mine would

produce between 300,000 and 500,000 metric tons of coal for the Russian market in 2012. However,

the company halted operations in July after producing about 300,000 tons. It shipped just 50,000

tons to Russian customers after it became unprofitable due to high shipping costs and royalties. The

remaining stockpiles are being sold in the Mongolian market.

"We're subsidizing the coal supply to the Mongolian government at a break-even price at best," Lee

said, estimating Prophecy Coal's production cost around USD 30 a ton at Ulaan Ovoo against sale

prices as low as USD 20 a ton to Mongolian power plants."

Prophecy has spent the past year negotiating a power-purchase agreement with the Mongolian

government before it proceeds with development of a second coal mine and its 600-megawatt coal-

fired Chandgana power plant. It hopes the agreement will be finalized by April next year.

The Toronto-listed company is hoping to sell equity stakes in the power plant and has narrowed the

field down to three Asian developers. It is also in talks with three Asian finalists for the engineering,

procurement and construction of the power plant, he said. The plant, which is expected to cost USD

1 billion, will be financed using 30 percent equity and 70 percent debt, he said.

Prophecy is hoping to finalize a power-purchase agreement with the Mongolian government by

April, which would allow construction to start before winter. Lee said.

"We're aiming for a tariff that is lower than the rate at which Mongolia is currently importing power

from Russia, which is around 9 cents a kilowatt hour," he said. The country's current power plants

sell electricity to consumers at between 4 and 10 cents a kilowatt hour, depending on the plant's

size, he added.

Source: Fox Business

CLEAN ENERGY ASIA TO PROVIDE RENEWABLE ENERGY FOR “ASIA SUPER GRID”

Newcom Group LLC and Soft Bank Energy (SB Energy) Corp. have finished the paperwork to establish

a joint venture they believe will develop an "Asia super grid."

Clean Energy Asia LLC will focus on renewable energy generation and exploration as well as project

development for its aim to provide renewable energy throughout the Asian region. Members of SB

Energy arrived in Mongolia from Japan to sign the documents to make the company official.

Source: Newcom Group LLC

MMC INVOLVEMENT IN RAIL DEVELOPMENT‟S NEW, CONSOLIDATED PLAN

Mongolian Mining Corp. (MMC) reported that Parliament has discussed measures to accelerate the

development of Mongolia's railway network.

Understanding the socio-economic importance of the first and second stage of railway base

infrastructure construction, the government has resolved to consolidate them into a unified railway

project to be managed and implemented under the authority of the government with its financing

and with the participation of domestic and foreign investors. To ensure that current construction

continues uninterrupted, the government also decided that the previous concessionaires, which

include MMC subsidiary Energy Resources Rail LLC, will continue to participate in the project.

At the time of MMC's statement, the company had received no notification of the decision, but had

learned of this turn of events from local news.

Source: Mongolia Mining Corp.

ASPIRE INCREASES OVOOT RESERVE

Coal explorer Aspire Mining Ltd. has increased the coal reserve at its Ovoot coking coal project in

Mongolia by some 23 percent.

The ASX-listed Aspire Mining said on Friday that the project was now estimated to host some 219

million tons of run-of-mine coal, which extended the project's life-of-mine by a further five years,

to 20 years. The company increased the Ovoot reserve following a successful drilling campaign

during the Mongolian summer, which demonstrated the feasibility of an open-pit mining operation,

and increased the main open-pit resource by some 7 million tons of provable coal reserves.

Additionally, an underground mining study that focused on the upper seam in the northeast

underground area produced a maiden underground probable coal reserve of 8 million tons. Aspire

said that the underground mining study was not investigating the lower seam in the northeast

underground area. The study to assess the potential for further underground reserve growth will be

compiled by December this year.

Aspire completed a pre-feasibility study on the Ovoot project in May this year, and was targeting an

open-pit operation producing between 10 and 12 million tons a year of salable coking coal. First

production is targeted for 2016, subject to funding, approvals and licenses.

Source: Mining Weekly

MODUN UPGRADES NUURST COAL RESOURCE

Modun Resources has upgraded the JORC resourced at its Nuurst project in central Mongolia, with

326 million tons now in the high confidence measured category.

This comes hot on the heels of a recent offtake deal executed with Asia-focused commodity trading

house, Tennant Metals. The total resource, compiled by consultancy CSA Global, now stands at 478

million tons of sub-bituminous coal.

The updated resource reaffirms the potential for a large-scale coal supply close to transport

infrastructure and a major world market in China. Modun Resources now plans to work toward

defining a JORC reserve as the company works toward mine development. Offtake partner Tennant

Metals will also now begin marketing the Nuurst coal to potential customers in Mongolia and China.

Source: Proactive Investors

ENTRÉE-OT JV PUSHES TOWARD DEVELOPMENT WITH OT POWER AGREEMENT

Entrée Gold Inc. is subject to enjoy the benefits of Oyu Tolgoi's signed power agreement to receive

energy from China with its joint venture with Oyu Tolgoi LLC.

Lift 1 of the Entrée Gold-Oyu Tolgoi LLC joint venture's Hugo North Extension deposit is included in

the second phase of development of Oyu Tolgoi. Entrée has carried interest in the Hugo North

Extension deposit and the much larger Heruga deposit, both of which form part of the Oyu Tolgoi

mining complex.

First development for production on the joint venture property is expected as early as 2015.

Source: Entrée Gold

RELATIONSHIP AT STAKE AS INVESTMENT BANKER LEAVES

The departure of a key official at Bank of America Merrill Lynch (BofA Merrill) has some rival

bankers attempting to persuade the Mongolian government to reopen the bidding process for a

mandate.

Just as Mongolia announced it had picked BofA Merrill, Deutsche Bank, HSBC, and JP Morgan for its

debut sovereign bond, BofA Merrill said that Henry Ayliffe, a managing director responsible for

coverage of emerging companies, was leaving. Rival bankers described Ayliffe as a "point man" for

Mongolia, but people close to BofA Merrill deny he was behind their Mongolian successes.

BofA Merrill has certainly won an enviable book of business from Mongolia this year. The U.S. bank

ran the books on a five-year dollar bond for Mongolian Mining Corp. earlier this year, alongside

other banks. Mongolian Resources not too long ago announced it had picked BofA Merrill, HSBC and

ING Group for a dollar bond, before the government also included the U.S. bank in its revived plans

for a U.S. dollar sovereign debut.

Lately, borrowers have become more cautious about handing out mandates amid sell side lay-offs,

on concerns that the quality of execution could suffer if their primary contact should suddenly be

let go.

Read more…

"Bankers usually give us feedback if their company is going through a massive downsizing, but we

haven't got this kind of feedback from anybody else besides UBS—they told us they were still

committed to DCM and to our market in particular." said a funding official at a South Korean issuer.

However he noted: "If we see this issue surface and bankers we work with getting laid off, it is a

serious concern and it will affect our mandate decision," he added.

Personnel issues also work the other way around. A sovereign bond has been in the works for a long

time, and Citigroup Inc. and ING had picked up a formal mandate in September 2006 with a USD 300

million-to USD 500 million-deal. Bank of Mongolia governor O. Chuluunbat, however, was replaced

in late 2006, and Mongolia's Ministry of Finance took over the responsibility for issuing offshore

debt, voiding the original mandate.

Source: Reuters

PROPHECY RECEIVES PRELIMINARY ECONOMIC ASSESSMENT FOR CHANDGANA

Prophecy Coal Corp. has received its preliminary economic assessment (PEA) for its Chandgana Tal

coal mining licenses in central Mongolia.

The PEA examines the economics of coal production from the mining licenses while excluding the

Chandgana Khavtagai exploration license. Prophecy Coal subsidiary Chandgana Coal LLC intends to

mine the coal and supply it to the proposed 600 megawatt Chandgana mine-mouth power plant.

Prophecy Power Generation LLC is expected operate the power plant.

The two Chandgana Tal mining licenses contain an estimated 124 million tons of coal resources.

After a short ramp-up period, mine production will be 3.5 million tons a year for a 30-year mine

lifespan. The mine will be a surface mine and is located two kilometers from the proposed power-

plant site.

The mine has a total estimated capital cost of USD 160.2 million for its lifetime. According to the

PEA's financial evaluation, the project is potentially economically viable given the coal pricing

assumption of USD 17.70 per ton sold at mine gate to the power plant. The coal price is fully

indexed and will rise according to rising input costs such as fuel, labor, and parts. The developers

believe the project will have stable returns throughout the life of the mine, and there is the

potential to scale up the Chandgana power plant with additional coal supplies from the nearby

Khavtagai Uul coal deposit.

Source: Prophecy Coal Corp.

MINING FIRMS ACCUSED OF DESTROYING PRESERVED LAND

The Ministry of Nature, Environment and Green Development (MNEGD) and State Professional

Inspection Agency (SPIA) have accused T&P and Zanart Uul LLC of mining illegally, which has led to

the destruction of site of historical and environmental significance.

The illegal operations have reportedly caused great damage to Gun Gualuutai of Bayandelger Soum,

Tuv Aimag. An inspection of the site revealed that T&P failed to meet its obligations for

preservation of nature and the demands of the state inspector of Bayandelger Soum. The inspection

also found that the area was partially dug up by Zanart Uul.

Gun Galuuntai Nature Reserve is a local protected area for the conservation of globally threatened

species near the licensed area of Zanart Uul. The site reportedly houses rare species such as argali,

rare birds and ancient tombs and graves.

Source: News.mn

SOD MONGOL, PETROVIS LEAVE DRIVERS WITH EMPTY TANKS

A number of gas stations have stopped selling certain fuels this week, beginning Tuesday.

Both Petrovis LLC and Sod Mongol LLC have suspended sale of types A-92 and A-95 petroleum and

diesel fuels, resulting in long lines at the pump. Meanwhile, Sod Mongol has only allowed sale to

those holding client cards.

―"We have run out of petrol reserves. If we buy expensive petrol we will see losses. We intend not

to buy highly priced imported petroleum, so shortages can be expected,‖ said Petrovis Director M.

Khaliunbat.

Petrovis would raise its fuel prices by between MNT 200 and MNT 300 a liter, due to hikes in fuel

prices introduced by Russia. Petrovis reported 8 percent profit loss for the month of August and

11.4 percent in October.

Source: News.mn, Zuunii Medee

MPP USES GAS PROVIDER AS CAMPAIGN TOOL

The Mongolian People's Party (MPP) worked hard this week to spread the message that the party-

affiliated Shunkhlai LLC was the only gas station selling all fuels without limit this week.

The MPP is apparently trying to capitalize on the recent price hikes on Russian gas. While many gas

stations have refused to purchase gas at the higher prices, the MPP has begun touting that

Shunkhlai stations, to which it openly admits holding ownership, will continue to operate without

interruption. It has used the event as an opportunity to embarrass the ruling Democratic Party,

which it says owns all other gas providers. With local elections fast approaching, the MPP hopes to

show that the DP cannot keep the economy running smoothly.

Shunkhlai reportedly has the only gas stations to continue operations with the onset of price hikes

instituted by Russian exporters. A Shunkhlai station visited was selling type A-92 and A-95 fuels with

no limit to how much could be purchased while diesel was only sold to people with customer cards

or coupons. Meanwhile, MT LLC M-Oil LLC, Just Oil LLC, Sod Mongol LLC, and Petrovis LLC were not

selling certain types of fuels nor had limits on how much could be bought by a single customer.

Source: Udriin Sonin

NEWCOM, GE RENEW PARTNERSHIP COMMITMENTS

Newcom Group Ltd. and General Electric Co. have renewed their partnership commitments by

extending their memorandum of understanding (MOU) on 30 October in Hong Kong.

The parties have cooperated in the development of the Salkhit Wind Park with General Electric

providing the wind turbines and Newcom's lead with subsidiary Newcom Clean Energy LLC. Newcom

and General Electric agreed to explore avenues of cooperation in developing Mongolia's

infrastructure--including power, water access, railways, and lighting.

Source: Newcom Group Ltd.

S&P LOWERS RATING OF GOLOMT BANK

Standard & Poor's (S&P) Rating Services revised the outlook on its long-term issuer credit rating on

Golomt Bank of Mongolia LLC to stable from positive. At the same time, S&P affirmed the ―B+‖ long

term and ―B‖ short-term issuer credit ratings of the bank.

S&P revised the outlook after similarly revising the outlook on the sovereign credit rating on

Mongolia (BB-/Stable/B) on 29 October. The outlook revision reflects the view that there is a

diminishing likelihood that the creditworthiness of Golomt Bank could benefit from extraordinary

support from the Mongolian government over the next 12 months. This is because the bank's stand-

alone credit profile (SACP) of ―B+ is very close to the local currency rating on the Mongolian

government, despite the bank's ―high systematic importance‖ and its assessment of the government

of Mongolia as ―highly supportive‖ of the country's banking sector.

S&P may raise the rating if Golomt Bank substantially improves its capitalization under the

expectation of strong asset growth or noticeably improves its risk position through moderated credit

growth and a continued track record of credit losses lower than domestic peers. It may also raise

the rating if the sovereign rating is raised and Golomt Bank maintains its ―high systemic

importance.‖ Conversely, the credit rater may lower the rating if the bank adopts a more

aggressive expansion that weakens its already moderate capitalization or risk position.

Source: Standard & Poor's Rating Services

ASPIRE DIRECTOR STEPS DOWN

Aspire Mining Ltd. non-executive director Tony Pearson has stepped down from his position.

The company is focused on its Ovoot project in northern Mongolia, where it recently boosted the

coking coal probable reserves by 23 percent to 219 million tons. Ovoot is confirmed as the second

largest coking coal reserve in Mongolia, with a marketable coking coal reserve of 180 million tons.

Source: Proactive Investors

ECONOMY

RUSSIAN FUEL EXPORTER PUTS PRESSURE ON MONGOLIA WITH FUEL HIKES

Russia has exerted its power over Mongolia with higher fuel prices.

Mongolia refused Russia's proposal to set up 100 gasoline stations in Ulaanbaatar and to create a

monopoly over jet fuel trade. Moscow has responded with a statement that Rosneft, the main

supplier of petroleum fuels to Mongolia, will raise its prices by USD 50 again. The Russian fuel

exporter provides 60 percent of all of Mongolia's petroleum fuels, delivering 15 tons a month.

Petroleum prices have experienced a recent fall internationally. Yet a month ago Russia said it

would introduce hikes on diesel prices, increasing prices by USD 90 by ton of diesel, USD 44 for A-92

petroleum, and USD 32 for A-80.

Source: Udriin Sonin

TV BROADCASTERS HELD ACCOUNTABLE FOR INTELLECTUAL PROPERTY VIOLATIONS

The Intellectual Property Authority (IPA) is set to begin enforcing its control over television

channels.

Some channels broadcasted in Mongolia have violated laws by playing illegal advertisements that

are prohibited or restricted and by using copyrighted materials. In response the IPA has announced

a law over intellectual property and gave guidance through its inspections last year.

Source: News.mn

CRC TARGETS WEBSITES FOR IP VIOLATIONS

The Communications Regulatory Commission (CRC) shut down 16 websites last week for violation of

laws for intellectual property and competition.

According to the CRC chair of the regulatory department, U. Tamir, the legal environment

regarding website operations needs improvement, especially for news websites, which should be

treated like any other mass media outlet. He said that although websites had been shut down,

there was no way of knowing who owns them.

―Most of these websites are registered in the USA. If they were registered with the Mongolian

Internet providers, it would be possible to identify their owners and enforce legal provisions.‖

He added that many of the site operators had switched their servers and could not be identified.

Tamir said one example of copyright infringement was putting up links from other websites.

Source: Unuudur

BUS WORKERS ON STRIKE

A public transportation services firm had its employees go on strike over a dispute with its chiefs

this week.

The Bus-1 transportation company services 11 routes in Ulaanbaatar. The employees' unplanned

walkout has caused confusion in the public services sector.

Source: News.mn

BDSEC RELEASES CFO SURVEY

BDSec JSC has released the results of a new survey polling chief financial officers of Mongolian firms

that takes a look at how well businesses are operating in Mongolia.

―While much is written about Mongolia in a macro sense, little if anything is known about the

challenges and opportunities facing domestic companies,‖ said BDSec in its note to investors.

The survey focused on medium-and large-sized companies with all of their assets in Mongolia. With

a survey size of 42 respondents, both public and private, the results found that although Mongolia

seems to have a robust economic climate, a lack of available credit is affecting long-term planning

and future growth.

According to the results, local companies appear bullish about 2013 prospects, as 83 percent plan

on hiring in 2013 and 76 percent plan on raising capital. The fact that 7 percent of respondents

indicate they have ―a lot‖ of debt, with 55 percent saying they have ―little‖ or ―no‖ debt, it seems

apparent that Mongolian assets are relatively unencumbered. Despite high demand for local capital

and low levels of indebtedness, 81 percent said credit from local banks is less available in 2012 than

a year ago. This could represent opportunities for companies to take avenues such as corporate

bond offerings to try to achieve capital-raising goals.

―Given the disparity of the availability and cost of credit relative to their foreign peers, we fear

local companies will be increasingly at a competitive disadvantage... We think the answer to this

problem is the use of convertible bonds in the local market, whereby borrowing rates could in some

cases be cut in half, duration extended, and debt repayments made in equity.‖

For a look at the complete survey results, visit www.bcmongolia.org – Mongolia Reports.

Source: BDSec JSC

MONGOLIA FOR SALE

With foreign debt of MNT 8.6 trillion, some economists worry about big plans from Parliament for

more spending backed by sovereign bond sales.

While some economists argue that Mongolia's current deficit to debt ratio of 47.7 percent is of little

worry, others worry how quickly debt is growing. According to government officials, Mongolia pays

some USD 12 million of its debt annually and they say other countries have a debt-to-GDP ratio as

high as 90 percent.

―But now, with a huge flows of income coming, Mongolia should not fear such debt,‖ said the Bank

of Mongolia.‖

Still, international experts claim Mongolia's debt could double by 2020. The Ministry of Finance has

plans to borrow MNT 708.1 billion this year, MNT 180 billion in the next, and MNT 200 billion the

next. But this year alone, the Mongolian government must pay MNT 111.2 billion for interest on

foreign loans and 167.4 billion for interest on bonds.

All this makes it worrying that the government is thinking about releasing another MNT 7 trillion

worth of bonds, especially if that money is only to sit inactive like the USD 600 million dollar

placement this year, which was costing Mongolia USD 91,000 a day. A bond placement for the City

of Ulaanbaatar is also in the works.

Source: Mongolian Economy

OPEN SOURCE SOFTWARE ALTERNATIVES ON THE MONGOL STEPPE

Open source software such as the popular Linux operating system Ubuntu can help spark

development while taking advantage of opportunities presented by emerging markets.

Former Peace Corps Volunteer Terrence Edwards arrived in mountainous Uyanga Soum, Uvurkhangai

Aimag in 2009 for a two year stint. When he arrived there was very little in the area of IT

capabilities, with most computers running pirated versions of Windows XP. The software often did

not run well and viruses were a huge concern, so he started looking elsewhere. He began testing

the waters with a popular Linux operating system called Ubuntu to see how teachers would take to

a different operating system. Before long, he had Ubuntu running on more than half of teachers'

computers, all of whom chose to make the change themselves.

At Zamyn-Uud Soum, the border point between China and Mongolia, Carmon Jones was

implementing a similar project. Jones, however, benefited from a local partnership with Mobicom

Corp., who was also interested in testing Ubuntu's appeal. Mobicom provided training and

demonstrations in Mongolian language to 20 teachers before eventually phasing out the use of

proprietary software completely. Volunteer Service Overseas (VSO) volunteer Ihab Eltayeb used the

same technology for his work, this time in hospitals throughout the entire province of Uvurkhangai

Aimag. Using buggy, pirated software compromised systems, resulted in the loss of patient records

and medical logs. Using an operating system other than Windows was an easy, low-cost fix.

Using open-source software such as Ubuntu frees non-government organizations (NGOs) and startups

from copyright concerns while easily adapting to fringe markets such as Mongolia. Language support

was a real asterisk for many. Ubuntu allows Mongolian language on most of the tool bars on the

home screen and office applications with a simple download. Ubuntu keeps a large database of

drivers on file, too, which solved hardware concerns most of the time.

Open-source alternative software is an IT solution for many of the developing economies, and

companies would be smart to target them. Paying these markets mind is an investment into a

country's development as well as a future market.

Source: OMG Ubuntu

TIME NAMES UB WORLD'S SECOND-MOST POLLUTED CITY

Time magazine ranked Mongolia second in its list of the 12 most polluted cities in the world.

The list ranks cities by the volume of air pollution. Ahvaz, Iran was ranked first on the list.

"Ulaanbaatar is the coldest capital in the world and has a great amount of air pollution because its

citizens burn a lot coal during winter. However, industrial pollution makes up only a small portion,"

writes Time.

Ulaanbaatar was the only capital city on the list. The countries that follow Mongolia on the list are

Ludian, India; Kanpur, Sandaj and Kermanshakh of Iran; and Kuetta and Peshawar of Pakistan.

Source: Undesnii Shuudan

OT OFFERS MONGOLIA CASH BONANZA

Deep in the heart of the Gobi Desert in Mongolia amid a landscape of sand dunes and ice canyons,

one of the world's biggest copper mines is about to come on stream—but it's not without its hurdles

as the largest private-sector venture in Mongolia's history.

―Most countries that have natural wealth have failed,‖ President Ts. Elbegdorj told AFP in an

interview. ―Those that succeed are open countries, meaning they have open policy and democracy.

I regard my country as an open country.‖

Later, mulling the possibilities in store for Mongolia's future, he asked, ―Will it be Nigeria or

Norway? Will it be the Philippines or Qatar?‖

Mongolian officials are aware of the so-called ―resource curse‖ that often afflicts developing

nations whose enormous natural riches fail to translate into better lives for citizens. The president

cited Norway, Australia and Chile as models. In order to fight possible corruption, the government

has put in place what it claims will be a transparent treasury system across its ministries in order to

track the flow of money. Mongolia is compliant with the Extractive Industries Transparency

Initiative (EITI), a Norway-based organization which uses third-party auditors to inspect mining

revenue data provided by governments and mining companies.

The mine has also run into political headwinds as a vocal backbench legislators demand the

government amend its 2009 investment agreement to increase its stake in the project to 50

percent. Prime Minister N. Altankhuyag has not endorsed the calls, but says Mongolia ―will revisit

and reconsider some aspects of the agreements‖ because of higher development costs—to the angst

of the private developers.

―When a few parliamentarians push government to renege on past deals it's not just investors who

are hurt, it‘s Mongolians, Mongolian businesses, the entire supply chain,‖ Rio Tinto spokesman

Houston Spencer told a recent conference.

Source: Michael Kohn

LME COPPER RISES AS OBAMA WIN HITS DOLLAR

London copper rose over 1 percent on Wednesday as the dollar slipped after television networks

projected President Barack Obama winning the U.S. presidential race, spurring hopes Washington

will continue with economic stimulus measures. Copper is a major export commodity for Mongolia,

with its importance only to grow with commercial production at the Oyu Tolgoi copper-gold project

set to go online in the first half of 2013.

The victory by Obama, who is seen in favor of keeping U.S. interest rates low, hurt the greenback,

making dollar-denominated commodities cheaper for holders of other currencies like the euro.

"Many investors are taking this to mean that the next government will continue to be more inclined

toward stimulus policies and rule out any sudden monetary tightening," said CIFCO Futures analyst

Zhou Jie.

After the conclusion of the U.S. election, investors‘ focus turns to the once in a decade leadership

transition in top copper consumer China, which is due to start on Thursday and at which investors

hope pro-growth measures will be introduced by the new government.

"Just as in the case of the U.S. elections, investors will be glad when the Party Congress is finally

out of the way," said a Shanghai-based trader. "The new lineup of top leaders and any

announcements made during the event may also offer a hint at the future policy directions of this

country. But more clarity will likely only come next year, when the new leaders are settled.‖

Also supporting sentiment in industrial metals, industry sources say China may resume stockpiling

some base metals, including copper and aluminum, to help domestic smelters hurt by weak

demand. But Chinese downstream copper demand remains weak with spot copper still trading at a

discount to Shanghai front-month futures prices.

Source: Reuters

BHP CHIEF CASTS DOUBT ON COKING COAL OUTLOOK

Despite a strong quarterly performance from his Queensland coking coal division, BHP Billiton Ltd.

chief Marius Kloppers said it is hard to see future investment approvals being made there as high

costs, including from new taxes and royalties, and low productivity squeeze returns amid falling

prices.

"It is difficult to envisage further incremental capital investment until the fundamental issues

affecting competitiveness are addressed," Kloppers said. "The heavy cost of taxes, royalties,

declining productivity and a strong Australian dollar means that further investment to grow these

operations is much less likely. It is particularly unfortunate that these costs are increasing at a time

when industry profitability is declining."

The claim comes two weeks after Queensland Premier Cambell Newman's coal royalty hikes kicked

in, further squeezing a coal sector whose declining fundamentals have surprised many in the

industry. Kloppers said commodity prices in the coming decade would not return to the record

levels hit during the past 10 years, when China's growth set off a period of unprecedented demand

for resources. But he said he expected this year's growth from China of between 7 and 8 percent to

stay at similar levels for a decade.

Source: The Australian

CHINA COKING COAL, IRON ORE IMPORTS DISPARITY TO END

China's imports of iron ore have risen for the past two months, but those of coking coal have

dropped for the past three, creating a seeming disconnect between two key ingredients for steel

making.

Coking coal imports slumped to 2.42 million tons in September, a 37.5 percent decline from the

same month a year earlier, according to Chinese customs data. This followed a drop of 21.7 percent

in August and 3.2 percent in July, and in volume terms the September figure was the lowest since

May last year. In contrast, iron ore imports have held up well despite the slowing growth in the

Chinese economy. Inbound shipments gained at 65.01 million tons in September, up 7.4 percent

from the same month a year earlier and the highest in 20 months. August imports were also up and

taken together, the last two months were the strongest for iron-ore imports this year.

There are several possible explanations. Firstly, the iron ore could simply have been stockpiled. It's

also possible that domestic coking coal output has increased, negating the need for imports. There

may have been some build-up of coking coal inventories earlier in the year, creating an overhang of

supplies that has allowed for weaker imports in recent months. The first half boom in coking coal

imports may be the best explanation of the weakness in the third quarter, and if this is the case,

the question becomes whether the overhang of supplies has been worked through or whether

weakness in imports will persist for several months to come.

The outlook for the steel sector in China is one of gradual improvement as the government's

stimulus measures kick in next year. This bodes well for imports of both iron ore and coal. While

iron ore has maintained its strength in recent months, coking coal clearly has not, and the risk is

that imports of the fuel will increase by the end of this year and into the first quarter of 2013.

Author Clyde Russell is a Reuters market analyst.

Source: Reuters

CHINA SUSPENDS COAL MINES BEFORE CONGRESS, BOOSTING SAFETY

China, the biggest producer of coal and consumer of the fuel from Mongolia, is suspending

operations at smaller mines in a bid to improve safety before the nation's once-in-a-decade

leadership transition this month.

Ahead of the 18th Party Congress, which begins 8 November in Beijing and runs for at least a week,

the State Administration of Work Safety has sent inspectors to mines to ―spot hazards‖ and

accelerate shutdowns over the next month, it said in a 24 October statement on its website. The

Congress is where China's next generation of leaders will be formally anointed. The suspension

could affect mines in provinces such as Inner Mongolia, Shanxi and Shaanxi, which combined

account for 60 percent of the nation's output. China has been working to improve safety in an

industry in which accidents killed 1,973 people last year and 2,433 in 2010, according to the State

Administration of Work Safety. That compares with 48 deaths in 2010 in the U.S. the world's second

biggest coal producer.

―Improving mining safety is a direction of China's coal policy. The recent fatal accidents highlight

the urgency,‖ said Helen Lau, a Hong Kong-based analyst with UOB-Kay Hian Ltd. ―Government

officials are severely punished for coal mine accidents now. So, maintaining social and political

stability is important in this leadership transition.‖

The temporary closures could affect all non-state owned mines that account for 47 percent of coal

output in Inner Mongolia and 42 percent in Shaanxi, said Chen Yanyan. Meanwhile, the suspension of

small mines due to licensing and safety issues is set to benefit bigger companies.

Source: Bloomberg

MONGOLIAN FILMMAKER WINS FUNDING FOR MOVIE

The Berlinale World Cinema Fund (WCF) jury has unveiled a quartet of projects to benefit from EUR

140,000 (USD 180,000) in funding spread across the four winners, one of which hails from Mongolia.

Mongolia's Byambasaikhan took home EUR 38,000 for his film Remote Control and South Facing Wall.

Argentina's Benjamin Naishtat's Historia del Miedo and Turkey's Elvent Kutlug Ataman took home the

same prize, while Vietnamese filmmaker Diep Nguyen Hoang's Flapping in the Middle of Nowhere

earned EUR 50,000. The WCF jury made their selection out of 95 submissions from a total of 37

countries.

Since its setup in 2004, the Berlinale's WCF has granted production or distribution backing to a total

of 106 projects selected from 1,879 submissions from Africa, Latin America, the Middle East,

Central and Southeast Asia, and the Caucuses.

Source: Hollywood World Reporter

POLITICS

DEBATE IN PARLIAMENT ON OT AGREEMENT TO BE HELD THIS MONTH

A debate will be held on 18 November in Parliament on whether or not the Oyu Tolgoi investment

agreement needs revision regarding its ownership.

The last count of MPs in support of change of ownership stood at 29 of the 75 seat holders.

Source: BDSec

PARLIAMENT LOOKS TO INVALIDATE DOUBLE-TAXATION AGREEMENTS

The Standing Committee for Security and Foreign Policy has held initial discussion on legislation to

invalidate Mongolia's double-taxation treaties with certain nations.

Parliament has shown support for draft legislation that would nullify some of Mongolia's existing

agreements regarding double-taxation. The standing committee has targeted Mongolia's agreements

with the United Arab Emirates, the Netherland, Luxembourg and Kuwait for renewed treaties. The

double-taxation agreements provide exemption for tax for countries operating in Mongolia with

offices in any of those countries.

"When agreements are invalidated in accordance with applicable procedures, companies will have

no exemption from double-taxation," said Ch. Ulaan, Minister of Finance. "Thus, the companies will

probably have to decide whether they start paying double taxes or register with Mongolia to pay it

taxes.‖

MPs have complained that companies have set up offices in these countries to avoid tax payments.

Source: Boroo Gold Weekly Press Clippings

LEGISLATION TO RESHUFFLE PARLIAMENT STRUCTURE

Parliament's Standing Committee on State Structure has made proposals for amendments to the Law

on Mongolian Parliament.

There was consensus during the meetings for amendments to improve legislative procedures and the

organizational structure of Parliament, following disputes regarding the outcome of the 2012

parliamentary election. President Ts. Elbegdorj submitted the draft law to prevent further

complications in future elections.

The legislation will also regulate the amount of time allowed for breaks, limiting them to five

working days upon the first request and three days for the second. Additionally, a party or coalition

to be established in Parliament must provide notification within 24 hours after the Speaker of

Parliament is selected.

Source: Info Mongolia

PARLIAMENT TO RETOOL DEVELOPMENT BANK REGULATIONS

Parliament is preparing to amend its regulations of the Development Bank of Mongolia.

The draft of amended legislation is currently under review by the Development Bank's board of

directors.

The World Bank has commented in its reports that the legislation covering the bank holds numerous

weaknesses. It pointed out that it was unclear what the governing authority is in regard to funding

for development projects and programs. It also criticized the amount of influence afforded to policy

makers and its lack of independence.

Source: Zuunii Medee

BUDGET FOR 2013 UNDER DEBATE AS DEADLINE APPROACHES

The Standing Committee on Budget has submitted its modified budget proposal to Parliament.

This will be the third debate held in Parliament on the 2013 budget, with approval needed by 15

November. With very little debate concerning general fiscal policy, discussion regarding the budget

by Parliament and the committee has thus far revolved around specific line items. The widest

contention in the debate concerned a MNT 50 billion line item budget for the Office of the Prime

Minister.

Opposition mainly came from members of the Mongolian People's Party (MPP) who argued that it

was not clear what those funds were needed for. Eventually the funding was broken down into 10

different projects, including a billing system for traffic violations, information kiosks, an Olympic

training center, shopping centers for provincial capitals and a farmers market for Ulaanbaatar.

Parliament also discussed the monetary policy proposal it submitted to the Bank of Mongolia. The

Central Bank is cooperating with the government for a MNT 720 billion program aiming to stabilize

the prices of goods by increasing the supply of goods such as meat to consumers.

Source: Mongolian International Capital Corp.

MONGOLIA, BULGARIA TO BOOST TRADE TIES

Bulgarian and Mongolian presidents Rosen Plevneliev and Ts. Elbegdorj met during the Asia-Europe

Meeting (ASEM) in Laos to discuss relations.

Both presidents stressed that trust would be the keystone to relations between their respective

nations. They agreed they should move forward by deepening cooperation in military and industry

training. Plevneliev spoke on the traditions and status of the Bulgarian military while expressing

interest in military training with Mongolia offers.

Elbegdorj spoke on interests in boosting trade for pharmaceutical products, especially generic

drugs. He also expressed interest in Bulgaria's agriculture, such as its food, wine and tobacco,

saying Mongolia would be a good destination for these products. He also said he hoped Bulgarian

universities would remain attractive for Mongolian students.

Source: Turkish Weekly

ELBEGDORJ DISCUSSES TRADE WITH ESTONIAN PREMIER

President Ts. Elbegdorj met with Estonian Prime Minister Andrus Asnip to discuss trade, e-

government, and shale oil at the Asia-Europe Meeting (ASEM) in Laos.

"Asnip said Estonian companies are interested in Mongolia as a trade partner with high potential,"

reads an Estonian press release.

Relations between the countries, both of which made the switch from Soviet-style government to

multi-party democracy in the early 1990s, have been growing closer over the past two years. In July

Estonia's foreign minister announced during a visit to Ulaanbaatar that Estonia will appoint a non-

resident ambassador to Mongolia in Beijing.

Trade between the two countries remains low, however. Last year Estonian exports to Mongolia

yielded EUR 1.4 million (USD 1.8 million), with zero exports from Mongolia.

Source: Estonia Public Broadcasting

SWEDISH TRADE OFFICIAL ARRIVES IN MONGOLIA

Swedish State Secretary for Trade Gunnar Oom arrived in Mongolia last weekend to learn about the

growing mining sector.

The trip was a detour before heading to China for the China Mining Conference and Exhibition 2012

on 5 November in Tiajin, where mining ministers, directors, representatives of world leaders in

mining, and financial experts met to discuss trends and strategies in the mining industry. Oom

opened the seminar with his presentation titled "Innovative, Efficient, and Safe Mining—Solutions

from Leading Swedish Mining Companies.

Source: News.mn

BORDER TROOPS TRAIN IN EGYPT

Mongolian troops are now stationed in Egypt for a one-month training program.

The program comes as part of a cooperation agreement between the Embassy of Mongolia to Egypt

and the Egypt Foundation. Assisted by Egypt's Academy of the Ministry of Interior, the Mongolian

soldiers will participate with border guards in theoretical and practical lessons while meeting with

counterparts for experience sharing.

The group of soldiers comprises 23 representatives of all border zones and two officers from

military headquarters.

Source: Montsame

ELBEGDORJ SENDS CONGRATULATIONS TO OBAMA FOR SECOND-TERM VICTORY

President Ts. Elbegdorj sent a congratulatory letter to recent U.S. presidential election victor

Barack Obama.

Elbegdorj congratulated Obama on behalf of the people of Mongolia, saying he is glad to continue

their cooperation together in strengthening bilateral comprehensive partnership relations and

bringing them to a strategic level. Elbegdorj said he will work to realize the proposals and

initiatives discussed between the two state heads when they met in the United States in 2011.

Source: Montsame

MPRP HOLD PROTEST AT MPP HEADQUARTERS

Members of the Mongolian People's Revolutionary Party (MPRP) held a sit-in strike at the Mongolian

People's Party's (MPP's) headquarters after 12 of its members were refused registration for the local

elections.

The MPRP is grieved due to the Sukhbaatar District Election Committee's refusal to register 12 of its

candidates. They have targeted the MPP as that is the party currently controlling the district.

The MPRP is an offshoot of the MPP led by a movement by party leader N. Enkhbayar under the

original name of the MPP.

Source: News.mn

ENKHBAYAR REQUESTS HEARING FROM SUPREME COURT

The high court of appeals has received a letter from the legal counsel of former President N.

Enkhbayar contesting his four-year sentence to prison on charges of graft.

Attorney S. Narangerel submitted the letter to the Supreme Court this week. The court will have

one month to debate whether or not they will accept a hearing.

This will be Enkhbayar's second appeal.

Source: Undesnii Shuudan

POLICE INVESTIGATION FINDS GOBI FOSSIL SMUGGLING RING

While foreign media continues to follow the case of Eric Prokopi and his alleged smuggling of a

tyrannosaurus fossil, it was not long ago when the Mongolian Police Department found significant

evidence of fossils excavated in Mongolia.

N. Tuvshinjargal, a Mongolian citizen found guilty of smuggling fossils from Mongolia, passed away

last year, while two other suspects accused of supplying Tuvshinjargal with fossils have been

released on bail after being questioned by police. Following their interrogation, police say they

uncovered a cross-border criminal organization involving Tuvshinjargal, Prokopi and Chris Moore of

the United Kingdom, Baats of Japan and an unnamed South Korean.

Police said the suspects smuggled and sold two complete fossilized dinosaur skeletons, head, spine,

and various other dinosaur parts to collectors around the world. Their investigation led them to

believe Prokopi, Moore and Baats were friends with Tuvshinjargal, who could speak English, Korean

and Japanese, and negotiated deals with him.

Tuvshinjargal would use advanced payments to pay off locals employed to collect prehistoric fossils

and bones. After collecting the fossils the alleged black market participants would come to

Mongolia to choose which items they wanted to buy. The three have been accused of visiting

Mongolia two or three times for this purpose, with Prokopi visiting Umnugobi Aimag twice. Police

say the three would next send some USD 30,000 to USD 40,000 to Tuvshinjargal to arrange the

documents for the smuggling operation.

Read more…

Chris Moore is reportedly a paleontologist who once distinguished himself for discovering a species

of flying dinosaur. Baats is the owner of a museum that displays fossils and is a trader of fossilized

artifacts. Prokopi has been the central figure behind Mongolia's attempt to have a renovated

tyrannosaurus skeleton Mongolia says was smuggled from Mongolia back. They are all believed by

police to be the heads of a cross-border smuggling organization. With the investigation finished,

those who took part in the alleged smuggling ring are now facing criminal charges.

Source: UB Post

ANNOUNCEMENTS

MONGOLIA INVESTMENT CONGRESS 2012 IN SHANGHAI, 10 December

Mongolian Investment Congress 2012 will be held in Shanghai, China on 10 December. The event is

presented by BCM along with the Mongolian Stock Exchange and Mongolian National Mining

Association, and INBC Global.

From mining, export infrastructure, and power generation to financial services, energy projects,

property development and more, Mongolian Investment Congress 2012 offers investment and

development opportunities at every turn.

Highlights for topics of discussion include international investment opportunities in Mongolia,

challenges for foreign investors in the mining industry and the coal reserves and resources.

The Clean Coal Asia Summit 2012 in Shanghai, 11-12 December

The event serves as the information and networking platform for commercializing clean coal

technologies in Asia and the world. Highlights for discussion include China's government policies in

the clear energy of China's 12th five-year plan (2011-2015) and innovation and new projects in coal

gasification and liquefaction.

____________________________________________

COAL MONGOLIA 2013

It is a great pleasure to announce that we are organizing the International Coal Investors

Conference and Exhibition ―COAL MONGOLIA-2013‖ on February 21-22, 2013, for the 3rd time.

The International Conference and Exhibition ―Coal Mongolia‖ has become the biggest Conference in

Mongolia and it has been a great opportunity to explore the Mongolian coal industry. Mongolia‘s

total coal resource is 162.3 billion tons with 300 deposits and is one of the world‘s top 15 coal rich

countries. We had over 700 delegates from over 300 foreign and domestic companies, NGOs, and

Government officials in our last Conference.

BCM is supporting this event. BCM members will get special discount.

WHAT IS NEW THIS TIME

- New Investment opportunities in coal exploration, production and processing projects in Mongolia

- the Fastest growing economy in the World

- Partnerships – bringing Mongolian Coal Miners to the International Market

- Mongolian New Government Position, Investment policy and Environment

- Environmentally friendly, new and efficient technologies in Coal Industry

We invite you to participate in the conference and we hope that the conference theme will be the

source of knowledge and inspiration in your further activities. Please contact Oyun at

oyun@mining.mn or at 70115590.

www.coalmongolia.mn

____________________________________________

REGISTER NOW FOR MONGOLIAN MINING DIRECTORY - 2013

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

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

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

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

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

investors.

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

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

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

+976-7011 5590.

____________________________________________

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

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

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

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

content and use of information technology opportunities.

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

Database. Please visit here for registration.

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

or 317027.

____________________________________________

“MM TODAY” on MNB-TV, Friday‟s at 19:05

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 19:05 to 19:15 tonight. Tune in to watch this program that reports stories from

today‘s BCM NewsWire.

BCM WEBSITES

MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS

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

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

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

Ulaanbaatar.

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

government website Open-Government.mn are regularly updated.

____________________________________________

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

On BCM‘s English website, the ―Resources‖ and ―Presentations‖ sections are available to find recent

postings from BCM‘s 5 November monthly meeting, 24 September monthly meeting and 9

presentations from Discover Mongolia 2012. Coming soon – dozens of presentations from the

Mongolia Investment Summit 2012 in Hong Kong on 30-31 October where over 30 BCM members

participated as speakers and panelists!

The ―Mongolia Reports‖ section includes ―The fiscal regime for mining - a way forward‖ by IMF

Fiscal Affairs Department; Mongolia-a supplement to Mining Journal from Mining Journal October,

2012; Taxes for Expatriates in Mongolia from PricewaterhouseCoopers and the 2012 Mongolia

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

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

Parliament and Government is available for download.

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

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

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

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

____________________________________________

SOCIAL NETWORK WITH BCM

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

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

improving each day with BCM.

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

business environment in Mongolia today.

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

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

the NewsWire with the community.

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

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

We have now 690 fans on our Facebook fans page, 857 connections on Linkedin network, and 500+

followers following us on Twitter.

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

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

BCM WORKING GROUP MEETING

The BCM Risk Institute of Mongolia Working Group:

The BCM Risk Working Group met Thursday, November 8, with 7 members attending.

Co-chairs Ganzorig U, UMC Holding, and Martin Pow, Deloitte Onch, moderated the session.

Meeting discussion was on the following topics:

1. Macro Risk

2. Enterprise Risk

3. Societal Risk

Next meeting: On November 29, 2012

Members will invite people to the next BCM`s RIM Working Group meeting from ministries of

Government who are charged with these risk topics.

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]

September 30, 2012 *14.8% [source: NSOM]

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

Note: 15.1% y-o-y, Ulaanbaatar city, September 30, 2012

CENTRAL BANK POLICY LOAN RATE

December 31, 2008 9.75% [source: IMF]

March 11, 2009 14.00% [source: IMF]

May 12, 2009 12.75% [source: IMF]

June 12, 2009 11.50% [source: IMF]

September 30, 2009 10.00% [source: IMF]

May 12, 2010 11.00% [source: IMF]

April 28, 2011 11.50% [source: IMF]

August 25, 2011 11.75% [source: IMF]

October 25, 2011 12.25% [source: IMF]

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

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

CURRENCY RATES – NOVEMBER 8, 2012

Currency Name Currency Rate

US dollar USD 1,398.42

Euro EUR 1,785.57

Japanese yen JPY 17.51

British pound GBP 2,235.44

Hong Kong dollar HKD 180.43

Chinese Yuan CNY 224.00

Russian Ruble RUB 44.35

South Korean won KRW 1.28

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.