BUSINESS COUNCIL of MONGOLIA NewsWire

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Issue 70, May 22 2009

NEWS HIGHLIGHTS:

Business: Ivanhoe official dispels misgivings based on misperception; Ivanhoe ready for an

agreement “equitable and fair to both sides”; CNNC announces extension of offer for Western Prospector; Denison Mines names new men at top; MCA appoints environmental consultant; No political vendetta in Anod Bank, affirms Prosecutor; Oil exploration attracts investors; Chinese companies shelve plans to build plant to process iron ore; Students thank Ivanhoe Mines for help; Aussie shareholder feels Rio-Chinalco “can, should revise” deal; Australia likely to demand revisions in Rio-Chinalco deal.

Economy: Russia in USD7 billion deal to build railroads, develop mineral deposits; Russia to pay

for licenses, Mongolia will invest in the mining; Russia could build large plants, using Mongolian coal to sell power to China; 100,000 Mongolian sheep for Tuva; Surge in MNT savings; Government sets privatization goals until 2012; President proposes withdrawal of duty on cashmere export; More herders to join insurance program; Australia to overtake Mongolia in supplying coking coal to China; Unemployment rises 15% yoy; Air freight drops to almost half in a year; Tax revenue drops 35 percent; Monetary policy flayed as not being flexible; Trade balance shows deficit of USD93.3 million; Industrial output falls 7.6% in a year; Mongolian companies buy 1,000 transport wagons; Mongolian company resumes flour import after a year; 40% of extraction licenses are for gold; ; MNT540 billion frozen in construction sector; Most construction work done by domestic companies; Conference favors legal regulation of artisanal mining; Workshop on mine safety wants ILO Convention ratified; Shareholders caution EBRD on expanded lending; Family business in Canada makes 48 town homes for Ulaanbaatar.

Politics: Mongolia braces for presidential poll; Russia wants to re-assert old control, feels

foreign policy specialist; Putin's visit underlines an ongoing process of resuming old ties; Mongolia: The Kremlin takes aim; Can Government reject a proposal approved by Parliament?; Not all students may be able to vote; Standing Committees fail to meet, so does Parliament; Presidential candidates debate on TV; NGO monitors TV coverage of presidential campaign; Minister Zorigt holds meetings in USA; First Mongolian Gates scholar named; 1,800 children too poor to go to school; Program to spread knowledge of English begins; Crimes rise.

MEETING NOTICE TO BCM MEMBERS

The next BCM monthly meeting for Members will be Monday, May 25 at 5 PM at the Open Society Forum. Our meeting will feature a presentation by the Deputy Minister of Social Welfare and Labor, Mr. D.Nyamkhuu. on “The Mongolian Labor Market”. Another presentation will be by Mr. Ch.Khashchuluun, Chairman, National Development & Innovation Committee (NDIC), on “The NDIC Action Plan for Private Sector Development”. The Ambassador of South Korea to Mongolia, Mr. Chung Il, will review Mongolian-South Korean bilateral relations. Mr. L.Sumati, Director of Sant Maral Foundation and Vice Chairman of BCM, will update us on a subject of great interest, the results of the voting on Sunday, May 24 for the PRESIDENTIAL ELECTION.

Teleconferencing will again be available for Members not able to attend in person. Call number is (1-218) 936-7979, access code 771358 to be connected. Cost will be solely that of the long distance

call to the above US number.

BUSINESS IVANHOE OFFICIAL DISPELS MISGIVINGS BASED ON MISPERCEPTION Mr. A.Munkhbat, Vice President, Ivanhoe Mines Mongolia, answered some questions from a journalist: Many MP’s want the draft agreement to be signed with the parent company, Ivanhoe Mines Ltd., and not with Ivanhoe Mines Mongolia Inc. What do you think of the suggestion? The original idea, as agreed on in the draft of the agreement prepared in 2007, was to conclude the investment agreement with three companies - Rio Tinto, Ivanhoe Mines Limited, and Ivanhoe Mines Mongolia Inc. However, the current Minerals Law says that the investment agreement has to be made with a license holder and that is why only Ivanhoe Mines Mongolia was chosen. This was to preempt any criticism that the laws were being violated. I think the investors will have no problem accepting any Mongolian suggestion that the parent company be involved. The Minerals Law would also not be breached if three companies from the investor’s side, and not just the license holder, sign the agreement. This was, in any case, the original idea. MPs have expressed concern that Ivanhoe Mines Mongolia Inc is an off-shore company. Are they right to worry? This should not cause any worry among Mongolians. The company is properly registered in Mongolia to develop a deposit located in the territory of Mongolia. It will pay all taxes and fulfill all obligations in compliance with Mongolian laws. Being off-shore is a kind of protection to reduce the tax burden on the parent company -- that is registered in another country -- after it has paid all taxes and fees to Mongolia. The intention is not to evade tax, but to claim tax benefits in a perfectly legal manner. The Mongolian side need have no fear that we shall not pay taxes and disregard legal obligations here. All it means is that the parent company gets some tax benefits abroad. Mongolia does not lose anything because we are an offshore company. What do you think of the proposal by several Members of Parliament to amend the Minerals law so that resources would be added to the registered capital of the company? Yes, some MPs are suggesting that ratification of the investment agreement should wait until the Minerals Law is first amended. There can be no question of treating underground resources as part of the registered capital. There is no such provision in the Constitution or in the Minerals Law. Actually, treating underground resources as forming part of the registered capital of an entity or a company will be a blatant violation of the Constitution which is clear that all such mineral wealth is the property of the people. Read More… There is a common feeling that Ivanhoe Mines is selling Mongolian wealth to its Government that it is selling 34 percent ownership of wealth it already owns. Perhaps you see it differently? We are talking about an investment of billions of dollars. The Mongolian Government is entitled to 34 percent ownership without paying anything. Ivanhoe Mines Mongolia Inc. will use its funds to pay for the proportionate investment of the 34% owner. The agreement offers the 34% ownership to the Mongolian Government free, but every shareholder has to pay their part of the investment. Since the Mongolian Government does not have that kind of money right now, we shall be paying for them. What we pay will be adjusted against dividends as they fall due. This is exactly what was done in the case of the Erdenet joint venture, where Mongolia acquired 50 percent ownership free of charge and Russia invested on its behalf. That investment was part of our “great debt” and nobody seemed to mind. Why are the negotiations getting so complicated? Some people are distorting the issue, maybe deliberately, maybe because of their lack of understanding. For example, some fresh proposals are contrary to Constitutional provisions. Some are suggesting that if the two sides cannot reach an agreement, the Government will confiscate the

investor’s license, sell it at a fresh auction and pay a certain amount to the original license holder as compensation. However, confiscation of property is prohibited under the Constitution. Mongolia is a democratic country and I hope that Members of Parliament will apply their mind to the issues involved with proper seriousness. Some MPs have said that the underground wealth of Mongolia is being sold at foreign stock exchanges; is this the case? This shows a clear lack of understanding of how things work. Shares of many companies that operate mostly in developing countries are sold at stock exchanges of America, Europe and Asia. There is no complaint that the mineral resources of any of these countries are thus being sold off. No minerals are sold when shares are traded. This is just a way of raising capital by advertising how profits can be made in a particular country rich in minerals by investing in mining operations there. Besides, the money made from sale of shares at a public issue at a stock exchange cannot be kept, but is utilized as the source of financial investment and has to be paid back in any of a variety of ways. If there was enough capital in Mongolia waiting to be invested, the mining companies would certainly offer shares here. There is no economic justification to impose a condition that a percentage of shares has to be offered in the country. That is not the way the system works. What about complaints that the feasibility study of the project was not adequately detailed? It all depends on what exactly you expect from a particular feasibility study. To date, Ivanhoe Mines has completed three feasibility studies, and submitted all of them to the Government, the first in January, 2004. The second, an integrated development plan of the deposit, was submitted in October, 2005, while the third was worked out last year. It is under translation into Mongolian and would be ready to be submitted to the Government by the end of this month. The English version was delivered in March and the party groups in Parliament have it, too. However the investment agreement has to be concluded in order that the feasibility study can be finalized. A clear idea of the tax rates is essential to determine whether implementing a project is economically rewarding or not. In the present case, for example, the investor as well as banks and other financial institutions are certain that if the windfall profits tax stays there would be no economic incentive left. The Russian media report that Russia has agreed to participate in developing Tavan Tolgoi and Oyu Tolgoi deposits. What do you think about this? I understand that a joint company will be established with investment from state owned entities in both Mongolia and Russia to develop infrastructure required for utilizing large deposits in Gobi region. I assume that is all that the joint venture will do and not directly participate in mining operations. The wrong understanding possibly arises from the fact that Erdenes MGL, which holds the license for Tavan Tolgoi and which is expected to be the official partner of Ivanhoe Mines Mongolia Inc, signed the agreement with a Russian company to establish that joint venture to build railroads. But that company is not going to work in the mining sector. Also, the name of the entity is Infrastructure Development.

Source: Ardiin Erkh

IVANHOE READY FOR AN AGREEMENT “EQUITABLE AND FAIR TO BOTH SIDES”

Announcing results and reviewing its operations in the quarter ended March 31, Ivanhoe Mines Ltd. has said that, along with its strategic partner, Rio Tinto, it remains prepared to complete an agreement on Oyu Tolgoi Project with the Government of Mongolia that is equitable and fair to both sides. The companies are also continuing to assess the implications for the project and its development schedule of the delays in approval of the agreement, the sharp declines in certain commodity prices, and continuing uncertainty in international financial markets. Ivanhoe has recorded a net loss of USD56.0 million, compared to a net loss of USD63.6 million in Q1'08. The results for Q1'09 were mainly affected by USD37.4 million in exploration expenses and USD9.3 million in mainly unrealized foreign exchange losses. These were offset by USD10.7 million in income from discontinued operations. Exploration expenses decreased USD19.9 million from Q1'08, and included USD26.9 million spent in Mongolia (USD44.1 million in Q1'08), primarily for Oyu

Tolgoi and Ovoot Tolgoi. The company’s cash position, on a consolidated basis at March 31, 2009, was USD327.1 million. Among the highlights in a review of its operations, the company notes that its 80%-owned subsidiary, SouthGobi Energy Resources sold approximately 127,000 tons of coal worth USD3.5 million to customers in China from its Ovoot Tolgoi mine in southern Mongolia. The parliamentary review process of a draft Investment Agreement and a companion Shareholders' Agreement to begin construction of the Oyu Tolgoi copper-gold mining complex is continuing. Read more… Negotiations began in January with a newly formed Government Working Group on a competitive agreement that would recognize the realities of the current international investment environment and the economic benefits inherent in the development of the Oyu Tolgoi Project. Mongolian law provides for the completion of Investment Agreements to establish long-term stability of taxation and other fiscal policies and assurances regarding the operational environment necessary for new mine developments. An agreement for Oyu Tolgoi requires the approval of the national Parliament. Following the completion of negotiations, each page of the draft Investment Agreement was initialed by representatives of both the Mongolian Cabinet and Ivanhoe Mines Mongolia Inc. LLC before the document was presented to Parliament in March as part of the final approval process. The parliamentary review process has continued into May. The engineering and development team remained focused on maintaining the Oyu Tolgoi Project in a position to commence construction once an agreement is finalized. There was limited underground work at site during Q1'09. The company will prepare an update to the project's Integrated Development Plan once an acceptable agreement has been negotiated with the Government of Mongolia and approved by all parties - including the Board of Directors of Ivanhoe Mines. SouthGobi's Q1'09 sales were impacted by difficulties expediting the movement of its coal shipments across the Mongolia-China border. The Ceke crossing operated only five days a week, on the day shift, during January and February this year, greatly limiting the volume of coal that SouthGobi was able to move to China. As a result, SouthGobi curtailed production to a day shift in January 2009. This was followed by a mine shut down February 24, although crews continued loading stockpiled coal into customers’ trucks. In March 2009, the border point began operating eight hours a day, seven days a week, which enabled the shipment of more than 115,000 tons of coal during the month. SouthGobi expects to be in a position to resume mining operations at Ovoot Tolgoi in the near future if the border crossing maintains its current openings. SouthGobi is in talks with the Mongolian Government to keep the border open 24 hours a day year round. SouthGobi has appointed Norwest to complete a new Technical Report for the Ovoot Tolgoi project incorporating data obtained from drilling completed up to the end of 2008. The report is expected to be completed later in 2009.

Source: www.ivanhoemines.com

CNNC ANNOUNCES EXTENSION OF OFFER FOR WESTERN PROSPECTOR

CNNC International ("CNNC") and Western Prospector Group Ltd. ("Western") announced today that CNNC's indirect wholly-owned subsidiary, First Development Holdings Corporation (the "Offeror") has extended its offer to acquire all of the outstanding common shares of Western. The notice of extension sent to Western shareholders amends the offer dated April 15, 2009 to extend the expiry date from 5:00 p.m (Toronto time) on May 21, 2009 to 5:00 p.m. (Toronto time) on June 29, 2009.

As disclosed in a press release and a material change report filed by Western, dated April 14, 2009 and April 22, 2009, respectively, a notice was received from the Mineral Resources Authority of Mongolia stating that Western's exploration licenses 7685X and 4969X, which are the primary licenses for Western's Gurvanbulag deposit have been suspended for three months due to violations cited by inspectors from Mongolia's Atomic Energy Agency. If Western is not able to satisfy inspectors from Mongolia's Atomic Energy Agency that such violations have been corrected, then Western's licenses 7685X and 4969X may be subject to revocation.

The expiry time of the Offer is being extended to 5:00 p.m. (Toronto time) on June 29, 2009 to permit certain conditions relating the business, affairs, properties and operations of Western as set forth in Section 4 of the Offer to be met as well as to permit shareholders who have not yet tendered their shares under the Offer an extended opportunity to do so. As disclosed earlier, the

board of directors of Western has unanimously determined that the offer is in the best interests of Western shareholders and has unanimously recommended that its shareholders accept the offer.

Source: Marketwire, www.westernprospector.com

DENISON MINES NAMES NEW MEN AT TOP

Canadian uranium producer Denison Mines has named COO Ron Hochstein as president and CEO, and Dr. James Gill as Chairman of the Board. Denison has uranium mining assets in the US and Canada, as well as exploration properties in Zambia and Mongolia. Dr. Gill will focus on business development and growth at Denison, the company said in a statement.

Source: www.miningweekly.com

MCA APPOINTS ENVIRONMENTAL CONSULTANT

Euroconsult Mott MacDonald of the Netherlands has been appointed environmental and social oversight consultant to MCA-Mongolia to ensure that its programs meet environmental and social safeguards and mitigation standards. It will be helped in its work by two local sub-consultants, Energy and Environment Ltd., and an NGO, Green Focus Facilitator. Besides a general environmental and social impact assessment, the consultants will be responsible for project-specific tasks, and for developing and implementing environment management plans, as well as capacity building programs, including needs assessment and training activities.

The contract covers the period from June 3, 2009 to September 17, 2013.

Source: Montsame

NO POLITICAL VENDETTA IN ANOD BANK, AFFIRMS PROSECUTOR The State Prosecutor General’s Office has refuted suggestions that former senior officials of the Anod Bank scandal are being harassed because of political reasons and that the problems in the bank largely stemmed from the general economic crisis, and not from deliberate mismanagement. According to the Office, investigations have clearly revealed that the earlier board of directors of the bank transferred MNT55.3 billion from accounts abroad to private accounts here. They also bought shares worth MNT6 billion by unauthorized use of their friends’ identities, and lent billions of MNT to their relatives without collateral. They were also found to have failed to record in the bank’s accounts several loans that were paid back, continuing to show them as bad debt and as loss for the bank.

Source: Zuunii medee

OIL EXPLORATION ATTRACTS INVESTORS

Half of Mongolia’s oil fields will be under exploration in the near future. Five drilling companies are already at work and four more will start in six areas soon. A product sharing agreement with the two of these that are Mongolian -- MCS Holding and Shunkhlai Energy – will soon be signed allowing them to begin operations in one area each of the country’s 26 oil fields. Giving this information to newsmen, the Director of the Petroleum Authority, Mr. D.Amarsaikhan, said USD600 million was likely to be invested this year alone on exploration and when work begins it will give a clearer idea of just how much the country’s oil reserves are.

Under the product sharing agreement, the Mongolian Government “does not spend a single penny on exploration and production”, he said. However, Mongolia will get at least 35% of the profits and if two million barrels of oil are produced annually, MNT39 billion should accrue to the State budget. This amount will go up as production rises to three million barrels next year.

Source: www.news.mn

CHINESE COMPANIES SHELVE PLANS TO BUILD PLANT TO PROCESS IRON ORE Two Chinese companies that hold exploitation licenses for the Tomort and Kharaat iron ore deposits in Dundgobi province have shelved their initial plans to build a processing plant so that they could export iron concentration and not just the ore. They have told the Governor of the province that iron prices have dropped in the world market and other factors have also influenced their decision.

Source: Zuunii medee

STUDENTS THANK IVANHOE MINES FOR HELP Graduating students from various universities who had received financial support from Ivanhoe Mines Mongolia Inc. recently met with officials of the company to express their gratitude for the aid. Mr. Keith Marshall, executive director of the company, asked the students what they planned to do after graduation. The company has been running this assistance program for five years and has thereby helped a number of students during times of increasing tuition fees.

Source: Zuunii medee

AUSSIE SHAREHOLDER FEELS RIO-CHINALCO “CAN, SHOULD REVISE” DEAL

Top Australian shareholders in Rio Tinto Ltd. have called for changes in the company’s planned USD19.5 billion tie-up with China's state-owned Chinalco, and a newspaper reported that Chinalco would restructure the deal. The tie-up, which would give Chinalco stakes in some Rio mining assets as well as convertible notes to double its equity stake to 18 percent, has sparked concern in Australia about China's ability to influence pricing of strategic commodities.

"They can revise and should revise the whole cocktail of it," said Mr. Paul Xiradis, CEO of Ausbil Dexia, the ninth-largest shareholder in Rio Tinto. He said that reflecting shareholders' complaints, the preferred route would be to have a capital raising that allowed all shareholders to take part, and he would like to keep Rio's iron ore assets in Western Australia out of the deal. Five of the top 12 shareholders in Rio's Australian listed shares have kept their cards closely guarded on whether they would vote for the deal in its current form, but some say it now looks inevitable it would be revised.

The Sydney Morning Herald said on Thursday Chinalco would restructure the Rio deal to allay Australian Government concerns. Citing sources close to Chinalco, the report from Beijing said the Chinese firm is prepared to replace marketing provisions with a clear undertaking it will not play any role in setting prices. Chinalco is also prepared to scrap a contractual claim to 30 percent of Rio's iron ore production, but would not concede on its planned stakes in Rio assets or on its right to two board seats, the paper said.

Source: Reuters.com

AUSTRALIA LIKELY TO DEMAND REVISIONS IN RIO-CHINALCO DEAL

Rio Tinto’s commitment to the planned USD19.5 billion tie-up with Chinese metals firm Chinalco, and the latest endorsement of Chinalco, already Rio's largest shareholder, comes amid speculation the Australian government could demand revisions, or kill the deal under foreign investment guidelines because Chinalco is state-owned.

The Australian Financial Review has said Chinalco would consider changing the terms of the convertible bonds, but was adamant the other major element of the tie-up -- USD12.3 billion in direct investments in key Rio mining assets -- should remain as agreed in February. Citing no sources, the business daily said Rio Tinto's director of strategy, Mr. Doug Ritchie, was believed to have visited Chinalco officials last week to discuss investors' opposition to the deal and possibly to revise the terms of the bond issue. Chinalco President Wang Wenfu was believed to be pragmatic over the price of the notes, the newspaper added.

Read more.

In a report last week, investment bank UBS said BHP Billiton might offer to help underwrite a Rio Tinto rights issue and propose an iron ore joint venture. A BHP spokesman declined to comment even as BHP shares rose 3 percent.

Rio Tinto is also selling assets to pay down debt and it gave an update on the asset-sale program last week, saying it would record a gain of USD900 million on the sale of undeveloped projects for its first half-year to June 30.

Two major hurdles remain to the deal: Australian foreign investment approval and separate approval from Rio shareholders. Australia's Foreign Investment Review Board was expected to seek changes to the Chinalco deal, including limiting the size of its equity stake to 14.99 percent and asking Chinalco to forgo one of two Rio board seats it is seeking. The FIRB is expected to make its recommendations to Treasurer Wayne Swan by June 14. Swan has the final decision.

Source: Bloomberg.com, Reuters.com

ECONOMY RUSSIA IN USD7 BILLION DEAL TO BUILD RAILROADS, DEVELOP MINERAL DEPOSITS

The Russian rail monopoly and two Mongolian partners agreed to set up a joint venture during Prime Minister Vladimir Putin's visit to Mongolia on May 13. Russian Railways (RZD) pledged to modernize and build railways in return for development licenses for Mongolia's largest deposits, the Tavan Tolgoi coal deposit and the Oyu Tolgoi gold and copper field.

It has signed an accord with Erdenes MGL, the Mongolian state mining company, and MTZ, the country's national railway company, to set up a joint venture to build railways to the mineral deposits and develop the fields. The Russian company will hold a 50% stake in the USD7billion venture, while the Mongolian partners will each hold 25%.

At the initial stage, they are to contribute USD1.8 million for a feasibility study, which is due to be ready by September. The joint venture will receive development licenses for the deposits in 2010. Erdenes MGL owns all strategic deposits in Mongolia, including the Oyu Tolgoi gold and copper project, the Tavan Tolgoi coal deposit, and the Dornod uranium deposit.

Read more.

MTZ owns railroad assets, including a fiber-optic-based railway communication system, while Mongolia's railroads proper are controlled by Ulaanbaatar Railway, parity owned by the governments of Mongolia and Russia.

Tavan Tolgoi, located 342 miles from the Mongolian capital, is one of the world's 10 biggest coal deposits (6.5 billion tons). Oyu Tolgoi (32 million tons of copper and 32 million oz of gold) is located in the south Gobi region. The joint venture will not develop the deposits, but will hold tenders to choose co-investors. It will form project operators with the winners, holding 25% plus one share in them and leaving 75% minus one share to the selected co-investors.

In the past, RZD planned to recruit the assistance of Oleg Deripaska's En+ Group, Viktor Vekselberg's Renova, and Alexei Mordashov's Severstal Resurs for these projects. En+ and Renova are ready for cooperation, but the new agreement stipulates that the Russian-Mongolian joint venture is to hold tenders. This means that the Russian miners will not receive any privileges and will have to participate in the tenders on a par with Japanese, Chinese, American and other contenders.

Mongolia also hopes that Russia's contribution (USD250 million) could be used to increase the charter capital of Ulaanbaatar Railway, half of whose railroads need to be overhauled. It also expects Russia to provide an easy loan (USD300 million) for the purchase of Russian grain, agricultural machinery and mineral fertilizer, and a USD1.5 billion loan facility for other purposes.

The partners also agreed to set up a joint venture to process uranium produced at the Dornod deposit (49,000 tons, located in northeast Mongolia) and the East Gobi fields. The Russian partner will be Rosatom, with Japan's Mitsui considering participation. The stakes to be held by the partners and possible investment have so far not been determined.

Currently, Russia's largest projects in Mongolia are Erdenet and Mongoltsvetmet, joint non-ferrous producers established during the Soviet era. Mongolia holds controlling stakes in them (51%) while Russia's stakes (49%) have been recently turned over to the Russian Technology state corporation.

The corporation is considering adjusting the Erdenet project to the Udokan copper project in Russia. Russian Technology's partner, Alisher Usmanov's Metalloinvest, has been recently granted the development license for the Udokan project.

(The opinions expressed in this article are those of the author, economic commentator Oleg Mityayev, and do not necessarily represent those of RIA Novosti.)

Source: rian.ru/analysis

RUSSIA TO PAY FOR LICENSES, MONGOLIA WILL INVEST IN THE MINING

The Russian Railways company chief, Mr. Vladimir Yakunin, has clarified that the accord between his company and Erdenes MGL, the Mongolian state mining company, and MTZ, the country's national railway company, Russian Railways will pay for the licenses to the coal and copper deposits, while the Mongolian side will invest in the mining. He did not specify which deposits the joint venture planned to develop but said it was going to improve access to Tavan Tolgoi, which is thought to hold the world's largest untapped reserves of coal used in steelmaking. Mongolia has hired JPMorgan and Deutsche Bank to sell up to 49 percent of the project. Potential buyers include

several Russian firms, China Shenhua, U.S. miner Peabody Energy, and BHP Billiton.

Mr. Bayar has said talks are still under way with potential investors in Tavan Tolgoi. Mr. Putin said Russia was still hoping to participate in the Tolgoi development. "There's always a chance. We'll see," he said. The field will require USD2.4 billion to develop, Erdenes says on its Web site.

Source: The Moscow Times

RUSSIA COULD BUILD LARGE PLANTS, USING MONGOLIAN COAL TO SELL POWER TO CHINA

Minister of Energy S.Shmatko has said Russia could build power plants in Mongolia to supply electric power to China. "We are interested in a few projects. If there is a good dynamics, we build"," he said. China wants to buy electricity, and it would be possible from Mongolia taking into account its coal reserves, he added.

According to Mr. Shmatko, “the situation is conceptual so far”, and any decision will be taken after preliminary studies of the feasibility of constructing large power plants in Mongolia and after ascertaining the views of other Russian enterprises.

Source: Montsame

100,000 MONGOLIAN SHEEP FOR TUVA

Russia will buy 100,000 pedigree sheep from Mongolia to help the Republic of Tuva improve the quality of its livestock. The animals will be sent to Tuva through the checkpoints of Tsagaan-Tolgoi and Artsuuri.

"Active cooperation between Tuva and Mongolian has been developing in recent years," Mr. Sholban Kara-ool, head of the Republic of Tuva, has said, referring to trade between Tuva and Mongolia reaching USD7 million in 2008, double the amount in 2007.

Source: Mongolia-web.com

SURGE IN MNT SAVINGS With the fall of the MNT halted, the rush among people and companies to save in a foreign currency has been arrested. The latest financial reports show 65.5% of total savings is in MNT now. The trend began in February and has been growing steadily since. Date revealed by the Central Bank say MNT savings fell by MNT21.5 billion in January, but rose by MNT18.3 billion in February, and by MNT60.5 billion in March. Foreign currency deposits dropped by 2.8% in March and stood at MNT15.1 billion.

Source: Onoodor

GOVERNMENT SETS PRIVATIZATION GOALS UNTIL 2012 The Government has finalized its privatization goals between 2009-2012 and has identified for partial disinvestment the following state owned companies: Baganuur, Shivee Ovoo, MIAT, Mongoliin Tsahilgaan Kholboo, Mongol Shuudan, Darkhan Metallurgical Plant, Khotol Cement, Thermal Power Plant Mo. 2, Mongolbolgargeo, Dalanzadgad Thermal Power Plant, and Autoimpex. The proposal has now to be approved by Parliament. Disinvestment will be through international auctions and, if necessary, additional shares in certain companies will be sold in both international and domestic stock markets. The Government hopes the energy sector will attract the interest of foreign and Mongolian investors so that the State is relieved of an economic burden. The main principles of privatization were reaffirmed to be the following:

- To decrease state participation in the economy and increase private sector involvement; - To help set commodity prices, service charges and tariffs based on the open market

economic system; - To introduce productive cooperation between the state and the private sector by using

international support and consultation. Source: www.gogo.mn

PRESIDENT PROPOSES WITHDRAWAL OF DUTY ON CASHMERE EXPORT President N.Enkhbayar, seeking reelection, has proposed cancellation of the duty on raw cashmere export to help herders cope with the fall in prices. Income from sale of cashmere has been

considerably less than expectation in recent months, hitting herders hard. As a matter of fact, 66,000 herders still owe banks MNT81.9 billion. The Head of the President’s Office has submitted the draft law calling for the cancellation to Parliament Speaker D.Demberel.

Source: Udriin sonin

MORE HERDERS TO JOIN INSURANCE PROGRAM Herders in Sukhbaatar province will this year join the Livestock Indexed Insurance project that started in 2005 and has so far covered Khentii, Bayankhongor and Uvs provinces. In these years 340 herders in Khentii province alone have received MNT248 million thanks to this insurance. Project officials and experts from the National Statistics Office recently held a training on livestock counting software for officials and deputy governors in Khentii province. This year’s livestock census will take place from June 2 to 8, and herders who insured their livestock will get their payments by June 10.

Source: Ardiin Erkh, Zuunii medee

AUSTRALIA TO OVERTAKE MONGOLIA IN SUPPLYING COAL TO CHINA According to JBWere, Australia will this year replace Mongolia as China’s major supplier of coking coal. China's coking coal imports have remained at some 6 million tons in the last five years, but in 2009 they may exceed 13 million tons. The report said 6 million of the newly increased 6.5 million tons of coking coal is going to be imported from Australia. As safety standards have been pushed up and also for geological reasons, China's small coal mines cannot meet the newly emerged demand in China.

Source: Steelguru

UNEMPLOYMENT RISES 15% YOY

The number of unemployed people registered at the Social Welfare and Labor service offices in the provinces and in the capital stood at 36,700 at the end of April, an increase of 4,769 or 14.9 percent compared with the same period of 2008.

Source: Montsame

AIR FREIGHT DROPS TO ALMOST HALF IN A YEAR

The first four months of 2009 recorded a fall in both freight and passenger traffic on Ulaanbaatar Railway. Freight was 15.4% less than in the corresponding period last year, while the number of passengers dropped by 29.7 per cent. Cargo carried by air fell by 47.2 per cent and the number of passengers on flights by 31.8 per cent.

Source: Montsame

TAX REVENUE DROPS 35 PERCENT

The total budget deficit stood at MNT143.5 billion at the end of April. The current account deficit was MNT74.8 billion. Tax revenue was 35.0 percent less than in the same period last year. Collection from the windfall profits tax fell by 91.8 percent, from corporate income tax by 45.6 percent, and from value added tax by 18.5 percent. Non-tax revenue fell 4.4 percent, largely because state-owned organizations contributed 24.6 percent less than in the first four months of 2008.

The total budgetary expenses and net lending showed a 3.6 percent drop, mainly because of a decline in subsidies. GDP stood at MNT617.1 billion at 2005 constant prices. This was 4.2 percent less than in the same period last year.

Source: Montsame

MONETARY POLICY FLAYED AS NOT BEING FELXIBLE

A recurrent complaint at a recent conference on “Government monetary policy – its effect on the economy and business” was that the policy lacked the flexibility to be effective in changing circumstances. One businessman even said the Government’s policy was to have no monetary policy. MPs, businessmen, academics and representatives of the Central Bank attended the

conference. Many of them thought less Government control over business and industry would improve and stabilize the economy. There was disappointment that even after declaring that 2009 would be the Year of Industrialization, the Government was not doing much to support entrepreneurs. Many felt the present laws discourage competition and discriminate against smaller companies and should be amended.

Source: www.news.mn

TRADE BALANCE SHOWS DEFICIT OF USD93.3 MILLION

The external trade balance at the end of April showed a deficit of USD93.3 million, USD 0.2 million less than in the same period last year. Value of exports fell by 42.4 percent, largely because of a drop in the international price of all major items like copper concentrate, zinc concentrate, and gold. The lower deficit was the result of the value of total imports falling by 37.8 percent.

Source: Montsame

INDUSTRIAL OUTPUT FALLS 7.6% IN A YEAR

Total industrial output in the first four months of 2009 reached MNT472.4 billion, demonstrating a decrease of 7.6 per cent (at 2005 constant prices) from the same period last year. Mining and quarrying output fell 2.9 per cent in and manufacturing 21.5 per cent.

Source: Montsame

MONGOLIANS COMPANIES BUY 1,000 TRANSPORT WAGONS

Private Mongolian companies recently bought 1,000 transport wagons for USD7 million at a ceremony attended by Minister of Road, Transport and Urban Development Kh. Battugla, Mr. B. I Yakunin, Head of the Russian Railway organization, and other senior officials from both countries. These wagons, used in Russia for 10 years and capable of carrying 64-69 tons of load, were offered for sale according to a decision taken by the Mongolian and Russian intergovernmental commission. They will now be leased to mining companies.

Source: Odriin sonin

MONGOLIAN COMPANY RESUMES FLOUR IMPORT AFTER A YEAR

PAVA, the largest Russian grain processor east of Urals, has shipped the first consignment of an order from a wholesaler in Mongolia for 870 tons of high and first grade flour. PAVA first exported flour to Mongolia in end-2007 and the beginning of 2008. After that Mongolia did not import any flour for a year as a bumper crop in 2008 fully satisfied domestic flour needs.

Source: www.FLEX-NEWS-food.com

40% OF EXTRACTION LICENSES ARE FOR GOLD

The number of special mining licenses stands at 5,183, most of them in Tov, Dornogobi, Omnogobi, Selenge, and Khentii provinces, whereas Orkhon and Gobisumber have the fewest. Over 40 percent of the total 1,107 extraction licenses are for gold. Tov has 90 extraction licenses, the largest number among all provinces, and 57.5 percent of them are for gold. Extraction and exploration work covers about one third of the territory of Zaamar district in Selenge province, where, since 1992, about 50 tons of gold have been extracted.

Source: Montsame

MNT540 BILLION FROZEN IN CONSTRUCTION SECTOR The Ministry of Road, Transportation, Construction, and Urban Development estimates that MNT540 billion is frozen in 171 incomplete buildings all over Mongolia. Intending buyers paid MNT174.1 billion to construction companies in advance, while banks lent MNT214.3 billion to construction companies, and MNT68.7 billion to buyers. The construction sector has said it needs MNT215 billion to complete work on the buildings.

Source: Onoodor

MOST CONSTRUCTION WORK DONE BY DOMESTIC COMPANIES

Construction and installation work valued at MNT25.3 billion was recorded in the first four months of 2009. Of this the share of domestic entities was 90.9 per cent, and the other 9.1 per cent was carried out by foreign entities.

Source: Montsame

CONFERENCE FAVORS LEGAL REGULATION OF ARTISANAL MINING Ulaanbaatar hosted an international conference on the impact of mining on health and on strengthening health system research earlier this week. Papers were presented on several aspects of the themes and how challenges could be met. Apart from the 44,000 people employed in organized mining, Mongolia has about 30,000 artisanal miners and there is no provision for their health care, social insurance, and safe working environment. Participants at the conference discussed the absence of any legal regulation in this huge unorganized sector and felt that the social issues could be resolved once artisanal mining was brought under a legal umbrella. Canadian delegates referred to their experience with artisanal miners and felt that Mongolia could benefit from studying how the government there had brought all mining activities under the law, allowing such miners to access the benefits of social and health insurance.

Source: Onoodor

WORKSHOP ON MINE SAFETY WANTS ILO CONVENTION RATIFIED A recent workshop on safety and health in mining revealed that the number of both accidents and deaths has been declining in Mongolia. In 2006, there were 44 deaths in 70 cases, in 2007, just 8 people died in 36 accidents, and last year 35 accidents resulted in 42 deaths. The total number of deaths in mining mishaps between 1990-2008 stood at 154.

The main causes of accidents in underground mining were fire, landslide, dust explosion, flooding, gas leaks, and deoxidation, while in open pit mining these were identified as mountain slips, dust explosion, malfunctioning of electrical equipment, flooding, and careless handling of explosives. Particupants felt that the number of accidents could be reduced by preparing and implementing better regulations, and improving workers’ discipline and labor culture.

Considering that mining operations will keep on increasing and manual mining is unlikely to be effectively controlled, it was felt that ratification of the ILO 176 Convention could help achieve better safety in mining in Mongolia. The ILO has already offered to provide technical assistance in framing more effective laws and regulations.

Source: Ministry of Social Welfare and Labor

SHAREHOLDERS CAUTION EBRD ON EXPANDED LENDING

The European Bank for Reconstruction and Development (EBRD) shareholders have decided to bring forward a planned review of the development bank's available capital as some countries criticized its lending practices for leaving eastern Europe and Central Asia exposed to the global financial crisis. It also faced shareholder calls at the end of its two-day annual meeting last week to re-examine its role in helping former communist countries make the transition to market economies following the credit crunch that has savaged its 30 countries of operations, including Mongolia.

The lender's 63 shareholders will decide on whether to increase the bank's capital at next May's annual meeting in Zagreb instead of 2011. Some members appear to favor an EBRD capital increase while others said the lender could explore more efficient methods of utilizing its current capital of 20 billion euros. The EBRD, whose total investments stood at about 43 billion euros in March, has said it would spend a record 7 euro billion in investments this year in sectors ranging from banking to infrastructure to help the region cope with the deepening economic slowdown.

Major shareholders, such as the European Union, said the bank had to be mindful of financial risks as it scaled up its lending activities. "On account of the EBRD's strong exposure to the private sector, the high share of equity in its portfolio and the considerable country and sector concentration in its activities, the recent unfortunate developments are certainly affecting the bank's capacity to bear further risk," they said.

Read more…

Japan, another large EBRD contributor, said the lender had exposed the former Soviet bloc to "excess risks" by helping to privatize banking sectors in these countries without ensuring the development of domestic capital markets. "(The) introduction of markets or development of private companies as market players alone cannot bring about long-lasting stable economic growth," it said. This rare criticism from Japan came as some shareholders continued to question the EBRD's longer-term mandate and remit.

Source: Reuters.com

FAMILY BUSINESS IN CANADA MAKES 48 TOWN HOMES FOR ULAANBAATAR

A family business in Canada, Pacific Homes, has been awarded a CAD4-million contract to supply 48 town homes for a new development in Ulaanbaatar. The major structural components, such as floors, walls and ceilings, will be shipped in containers to the Mongolian capital for assembly. "Mongolia is looking to start North American-style housing," says the company, which is creating two-story fourplexes of 1,200 square feet, with two to three bedrooms. Everything from the foundation up is being built with local wood and finishings. The contract will provide about two months' work to about 10 people. "We will probably ship out a couple of units a week once we start rolling," the company says.

British Columbia's Forestry Innovation Investment agency is promoting wood-frame housing in Mongolia as a way to bolster international demand for the province's wood products. It was a partner in building two wood-frame demonstration homes in Mongolia last year. The B.C. Institute of Technology has also helped Mongolian officials rework their building code to Canadian standards for wood-frame homes. Export Development Canada is assisting with financing through a Mongolian bank as well.

Source: pacific-homes.com

POLITICS

MONGOLIA BRACES FOR PRESIDENTIAL POLL

Mongolia, one of the world's youngest democracies, goes to the polls Sunday to choose a new president amid deep suspicions over whether the elections will be fair. The race is between incumbent Nambaryn Enkhbayar of the former communist Mongolian People's Revolutionary Party (MPRP) and Tsakhiagiin Elbegdorj, the ex-leader of the main opposition Democratic Party (DP).

The 50-year-old Enkhbayar pledged during an election rally in Ulaanbaatar to bring the nation together. "I will unite Mongolians, and we will make this country great," said the president, also a former prime minister. Mr. Elbegdorj, 46, is targeting an end to graft and inequality in the nation of nearly three million people. "Shall we change? Corruption and poverty are both excessive. Unemployment and unfairness have gained ground," he told crowds at a recent rally. The slight favorite is Mr. Elbegdorj, once a celebrated leader of a peaceful revolution that ended 70 years of communist rule. Twice prime minister, he was DP leader at the time of deadly riots in July 2008 after parliamentary elections and was blamed by some, including Prime Minister S. Bayar, for instigating the riots by making vote-rigging allegations - a charge he has vehemently denied.

Read more…

Underlining lingering suspicions over Mongolia's politics, nearly two thirds of respondents questioned said the election would be tainted by corruption, according to a poll on a popular Mongolian website gogo.mn. Most Mongolians see little difference between the two candidates. This is partly because their respective parties have entered into a coalition in Parliament and therefore pursue similar policies on a day-to-day basis. Voter indifference is reflected in what could be the lowest-ever turnout on Sunday. A survey of 9,000 people by Olloo, a Mongolian news website, showed that only 56 percent planned to vote.

Source: www.asiaone.com.sg

RUSSIA WANTS TO RE-ASSERT OLD CONTROL, FEELS FOREIGN POLICY SPECIALIST

Ts.Sukhbaatar, a former Ambassador to Britain and now Secretary on foreign relations of the

Democratic Party, was not surprised to learn that the Mongolian Foreign Affairs Ministry did not allow journalists to ask Prime Minister Putin about Russia’s apparent blocking of MCC assistance to Ulaanbaatar Railway. He feels “it is clear Russia refuses to leave this traditional space to anybody else and wants to retain its control”, and with both President Enkhbayar and Prime Minister Bayar popularly perceived as pro-Russian, Mongolia is coming slowly under Russian influence once again.

With its economy getting powerful and its military capacity increasing, Russia has been behaving as the superpower of old, and has made clear its intentions to resume its former position of influence and supremacy in the region. This means it would control policy in countries close to it. Mongolia has long and friendly relations with Russia and the Russian people, and Russia also has not forgotten old ties. Mr. Sukhbaatar said while it was true that when the Mongolian economy had collapsed after the fall of socialism, “we were put back on our feet with the help of primarily western countries, not Russia”, it is equally true that “in the present financial crisis our only help has come from China and Russia”.

Read more…

He found it natural that Russia “felt uneasy” when Western countries expressed their strong interest to cooperate in the mining sector. It “did not fancy too much Western help for a country right next to it, nor did it wish to lose access to our huge resources”. Mongolia “invited foreign investors, but when they came they found they were not very welcome”. If foreign investors now leave Mongolia “the vacuum will certainly be filled by Chinese and Russians”. Mr. Sukhbaatar feels Russia’s main interest is uranium, not so much Oyu Tolgoi and Tavan Tolgoi. He wants “our leaders” to remember that even as the Russian economy grows powerful, the level of technology in Russia is not high, and this makes it “imperative to have Western investors in Mongolia, even if it means giving them some special facilities”.

Source: Ardiin Erkh

PUTIN’S VISIT UNDERLINES AN ONGOING PROCESS OF RESUMING OLD TIES

Russian Prime Minister Vladimir Putin’s visit was to boost bilateral cooperation in various sectors including economy and trade and to promote the two countries' traditional good-neighborly partnership.

In the age of the Soviet Union, Mongolia had close ties with it in various fields including politics and economy. Mongolian-Russian relations were suspended after the collapse of the Soviet Union in the 1990s and their bilateral trade volume witnessed a sharp drop of 80 percent. Mr. Putin's visit to Mongolia in 2000, which rekindled the hope for Russia and Mongolia to resume and promote their traditional ties, gave a strong push to their halted relations and marked the return of Russia's cooperation with the neighbor. The visit of former Russian Prime Minister Mikhail Kasyanov in 2002 pushed further the bilateral ties. In 2003, the two countries established their good neighborly and traditional partnership during the visit of then Prime Minister Enkhbayar. With frequent exchanges of high level visits, the two countries have signed a series of cooperative agreements in recent years, and Mr. Putin's visit expectedly projected a broader prospect for economic and trade exchanges between the two countries.

Source: Xinhua

MONGOLIA: THE KREMLIN TAKES AIM Russian Prime Minister Vladimir Putin's recent visit to Mongolia indicates that the Kremlin is making a push to restore bilateral relations to a level not seen since the Soviet era. But reality says that it may not be possible for the Russian leader to get what he seeks. Mr. Putin's visit on May 13 aimed to cement a new Russian-Mongolian special relationship in place. For the Russian state, the payoff was something much larger: a Mongolian promise of close cooperation in developing uranium deposits. Russia is now trying to gain primacy in access to deposits in Mongolia so that it can utilize the uranium mined there for the development of its own nuclear industry. Mr. Putin also sought to get Mongolia to agree to a plan under which the two states would settle trade accounts in their respective national currencies. This would have the net effect of creating additional demand for the Russian currency, and thus help prop up its value on international currency markets. Ironically, Russian businesses have complained about a lack of protection for their investments, alleging that Mongolia has arbitrary taxation policies and a constantly changing

regulatory framework. While Mongolia is certainly interested in Russian investment, officials in Ulaanbaatar know that competition will keep prices at their highest. So, expect Ulaanbaatar to do its best to keep ties strong with other neighboring states, including China and Kazakhstan. Of course, China's economic influence in Mongolia is still far larger than that of Russia. It may well be that officials in Ulaanbaatar want to expand economic ties with Moscow in part because they wish to balance China's already strong economic presence. In this sense, Mongolia may end up serving a traditional role -- acting as a proving ground, where the strengths and/or weaknesses of Russia's relationship with China are put to the test.

Source: EurasiaNet

For the full story please visit Eurasia Insight: MONGOLIA: THE KREMLIN TAKES AIM AT MONGOLIA'S URANIUM RESERVES, 5/18/09.

CAN GOVERNMENT REJECT A PROPOSAL APPROVED BY PARLIAMENT?

Some MPs were asked about an apparent anomaly in the way the Millennium Challenge Corporation grant for the railway was rejected. The head of the Russian Railways has said he refused to take the money because he does not like free things. But can the Government cancel an agreement approved by Parliament?

D.Enkhbat (Green Party): The way the grant was rejected, the way an auditory inspection was stopped, clearly indicates that Mongolian foreign policy is changing. And all this after years of discussion on the grant and the projects it will be spent on, followed by Parliamentary approval, and then the Presidents of the two countries signing the agreement. As 50 percent owner of the Railway, Mongolia certainly has the right on its own to order the audit to proceed since every organization in Mongolia has to be audited under the tax law or company laws. The Russian side fears US investment in Ulaanbaatar Railway which has a special geopolitical importance, but we must understand one thing. We no longer live in a world that has only Mongolia, Russia and China.

Su.Batbold (MPRP): Parliament will likely discuss the whole thing. Personally I’m confused. The people who were involved in the matter say nothing definite to my questions. The issue certainly should be clarified.

D.Gankhuyag (DP): Any organization or company operating in Mongolia must follow the laws of Mongolia and the audit should be held. The Government should also have talked with the Russian side when it decided to use the grant on the project.

Source: en.News.mn

NOT ALL STUDENTS MAY BE ABLE TO VOTE

Some 10% of the total electorate in the presidential election are students and a decision of the General Election Committee makes it likely that many of them may not be able to cast their vote on May 24. This is because a sizable percentage of the 161,000 students in 145 universities and institutes throughout the country live away from home and have been told, for the first time this year and quite late, that they must get a certificate from where they are registered before they can vote where they now are. Only their parents can apply for the certificate and only they can receive it to forward it to the student concerned. Such paper work usually takes time. With only a few days left there is not sufficient time for them to send their ID cards back and get the certificates from distant provinces.

Students in Ulaanbaatar demonstrated against the curtailment of their rights. Many said they were paid MNT5,000 each to disperse. Asked why the GEC could not issue voter mandates based on temporary residence certificates, its head, Mr. N.Luvsanjav, said many students do not have these certificates in proper order and also because there is no provision for this in the election law. Incidentally, prisoners also have been told that if they wish to vote they would have to obtain a certificate explaining why they are not at home.

Observers from Japan, the United States, and Russia have confirmed their presence during the election.

Source: en.News.mn, Montsame

STANDING COMMITTEES FAIL TO MEET, SO DOES PARLIAMENT

With MPs from both parties busy campaigning for their candidate, attendance has been low at several recent meetings of Standing Committees of Parliament, often leading to their cancellation. For the last few weeks, Parliament has not met on Fridays as the Standing Committees had not met to prepare the agenda.

This has meant that there has been no discussion on draft changes to the real estate mortgage law, the bond law, the insurance law, the agriculture law, and the health law or on Government policy on herders. There has also been no information on the USD300 million loan from China, on increased Government participation in financial markets, on extending the loan period of herders and on the status of road and construction work in progress. Even the Prime Minister’s presentation on the financial crisis has been interrupted.

Source: Ardiin Erkh

PRESIDENTIAL CANDIDATES DEBATE ON TV

A debate on Thursday evening between President N.Enkhbayar and Mr. Ts.Elbegdorj, respectively the MPRP and DP candidate at the presidential election on Sunday, was almost the last act of their long nationwide campaign. It was aired live via national radio and television.

The two contenders for the nation’s highest office talked on the promised Homeland Bounty, the higher education scene, exploration of strategic deposits, and the judicial system of Mongolia.

Source: Undesnii Shudaan

MINISTER ZORIGT HOLDS MEETINGS IN USA

During his visit to the USA last week, Minister of Mineral Resources and Energy D. Zorigt attended the annual meeting at the World Bank of the Board of Extractive Industries Transparency Initiative, of which he is a member. He also had meetings with senior officials responsible for Mongolia at the Bank and at the International Finance Corporation. The discussions centered on possible participation of these institutions in Mongolia’s mining and energy sectors and provision of consultancy services.

Mr. Zorigt held a meeting with U.S. Secretary of Commerce Gary Locke, where they both expressed their desire to cooperate in energy, particularly in renewable energy and clean processing of minerals, as well as in other sectors of the economy such as mining and tourism. The Minister also held meetings at the U.S. Department of Energy and with some larger U.S. corporations and non-profit organizations currently working in Mongolia.

Source: www.mongolianembassy.us

FIRST MONGOLIAN GATES SCHOLAR NAMED

Ms. Jargal Jamsranjav has become the first Gates scholar from Mongolia, which will see her going to Cambridge University in the autumn to do a PhD on the relationship between society and natural resources, focusing on the conflict between nomadic herders in Mongolia and wildlife. She is one of the 90 students from 32 countries to be chosen for the scholarship from a field of over 6,700 applicants. Ms. Jamsranjav graduated as a biologist and worked on conservation programs in Mongolia before going to Cambridge as a Chevening scholar in 2002 to study biodiversity. On her return to Mongolia she took charge of the Zoological Society’s Steppe Forward Program which trains Mongolians in ecological research. She has also been co-managing a team developing a biodiversity conservation strategy in the Altai Mountains. She also has a gold medal in Mongolian traditional dancing.

The Gates Cambridge Trust was established in October 2000 with a donation to the University of Cambridge of USD210 million by the Bill & Melinda Gates Foundation of the USA. This benefaction creates in perpetuity an international scholarship program to enable outstanding graduate students from outside Britain to study at the university.

Source: Montsame

1,800 CHILDREN TOO POOR TO GO TO SCHOOL

While 530,000 students attend secondary schools in Mongolia, a recent survey has found that there are 5,260 other children who do not go to school. Of them, 460 are in Ulaanbaatar and 4,800 in the provinces. The survey reveals that 1,800 of them cannot go to school because of poverty, 730 do not wish to study, and 431 need to work. Among the rest, 1,170 children could not give any definite reason why they have dropped out.

Another survey has found that the number of disabled children has increased to 41,000 from 34,000 three years ago. The number of children congenitally disabled is also increasing. Air pollution, inadequate nutrition during pregnancy and the mother’s lifestyle are mainly blamed for birth defects.

Source: en.News.mn

PROGRAM TO SPREAD KNOWLEDGE OF ENGLISH BEGINS

The first phase of the national program of English education approved by the Government in July 2008 has begun. The program, to run until 2020, seeks to improve knowledge of English among Mongolians. New methodologies to teach the language will be developed and implemented, a variety of training material designed, and trainings organized for teachers.

A first phase aims at improving comprehension and speaking abilities among students and will gradually include 50 teachers and 600 students of 33 secondary schools, nine language schools and eight universities. It will also provide manuals, primers and training material to 50 language clubs when they are formed, and organize workshops, establish a central library as well as create a Web site.

This particular project will continue up to November. Contests will be organized among the 50 clubs. The Asia Foundation will donate 100 books to the library of each club under its Books for Asia program. This program has donated more than 700,000 books to Mongolia since 1993.

Source: www.news.mn

CRIMES RISE

The number of recorded crimes all over the nation in the first four months of the year reached 7,246, an increase of 6.3 percent over the corresponding period of 2008. The crimes include assaults, theft, robbery, fraud, forgery as well as crimes against environmental protection.

Source: Montsame

NEW MONGOLIAN LAWS

The following amendments to current Mongolian laws were published in recent weekly Government Bulletins. Unless decided otherwise by Parliament, the amended law takes effect ten (10) days after publication. Date Laws

05.11.2009 Amendments to "Law on Civil Service" Amendments to "Law on rehabilitation of political repression and compensation" 05.18.2009 Amendments to "Law on Construction" Amendments to "Law on Forest"

Please visit BCM’s website, Legislative Committee, for a summary of new Mongolian laws. BCM members who wish complete versions of the laws in Mongolian language are welcome to call or email the BCM office (11-332-345; info@bcmmongolia.org) to arrange for a convenient pickup.

ANNOUNCEMENT

BCM is pleased to announce that Mongolian National Broadcasting continues its cooperation with BCM on “MM Today”. This English news program is aired every Friday for 10 minutes and is scheduled for 9:45 PM tonight. Tune in to watch this program that reports stories from today’s BCM NewsWire.

SPONSORS

ECONOMIC INDICATORS

MSE WEEKLY REVIEW

For the week ended May 15, 2009, trading activity on the Mongolian Stock Exchange (MSE) totaled

570,500 shares with 31 companies traded. Total market value of transactions was MNT 393.0

million. Total market capitalization of the 358 stock companies listed on the MSE was MNT 436.2

billion, and decreased by MNT 6.6 billion or 1.5% from the previous week.

The Top-20 Index decreased by 102.47 points or 2.1% compared to the previous week, closing at

4,760.40 points. The MSE Composite Index decreased by 36.30 points or 1.5% compared to the

previous week, closing at 2,375.16 points.

Most active stocks traded were: Tuul Songino Usnii Nuuts (408,000 shares), Khuh Gan (55,800

shares), Naco Tulsh (54,700 shares), Genco Tur Buro (23,400), and Altai (7,700 shares).

Major share price percentage gainers were: Khurd (14.9%), Undurkhaan (14.4%), and Talkh Chicker

(8.7%). Major share price percentage losers were: Buunii Khudaldaa (14.9%), Genco Tur Buro

(11.8%), Buligaar (9.7%), Mon Tsakh Kholboo (7.7%), and Auto Impex (7.7%).

INFLATION

Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)] Year 2007 *15.1% [source: NSOM] Year 2008 *22.1% [source: NSOM] April 30, 2009 *12.5% [source: NSOM] * year over year (yoy)

CURRENCY RATES – May 21, 2009

Currency name Currency Rate

US dollars USD 1422.41

Euro EUR 1939.24

Japanese yen JPY 14.82

British pound GBP 2205.16

Hong Kong dollar HKD 183.48

Chinese yuan CNY 208.41

Russian ruble RUB 44.84

South Korean won KRW 1.14

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.