12.08.2011, NEWSWIRE, Issue 180

BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
Issue 180, August 12 2011
NEWS HIGHLIGHTS:
Business:
 SouthGobi achieves record sales and revenue;
 Voyager announces major new copper discovery at Cughur in South Gobi;
 Guildford Coal eyes coal production within a year, acquires additional land;
 MEC completes work on 6-km coal road to Xinjiang port;
 Petro Matad spuds Davsan Tolgoi-9 exploration well;
 Shivee Ovoo builds country’s first coal drying factory;
 Lucky Strike begins due diligence drilling program;
 Entree Gold announces Second Quarter 2011 results;
 Origo expands mining portfolio in Mongolia;
 Denison Mines reports net loss in Q2 results;
 Meritus Minerals goes ahead with private placement;
 Dealmaker of the Year Award for Ivanhoe Mines.
Economy:
 SPC chief Sugar says TT proposals will be modified, final decision in October;
 PM sees TT decisions as a tough job successfully done;
 China raises railway freight without proper notice;
 “Our minerals do not sell for the right price,” says head of Exporters’ Union;
 Silikat’s MNT3.6-billion IPO first new listing on MSE since 2008;
 Work starts on 3 oil refineries;
 MICC observes regular seasonal swings in investment;
 Caught between Russia and China, Mongolia dithers over Tavan Tolgoi;
 Mongolia on the move, but the path is not smooth;
 Mongolia: the only way is up;
 Outcome of bidding war is unclear at best;
 PM wants Development Bank to fund Mandalgobi-Ulaanbaatar road;
 UB Railway performance key to Russia-China trade;
 Geologist against suggestions that exploration should cease;
 Ministry officials hope to export wheat this year;
 Lack of funds stalls progress in 100,000 Apartments project;
 Investment Forum with a difference in Zuunmod;
 China inflation rises to 6.5% in July;
 China’s July trade surplus biggest in more than two years;
 China urges US to “live within its means”.
Politics:
 Demand grows for special session of Parliament on Tavan Tolgoi;
 SPC chief being probed for corruption;
 10 state officials penalized for errors in income statement;
 417 civil servants convicted of crimes so far this year;
 U.S. Vice President Biden to visit Mongolia this month;
 Prosecutors see no need for more investigation into Zoos Bank case;
 Court refuses to release Davaa of Anod Bank;

 Opinions divided on fresh appeal in Khurts case;
 British court’s decision on Khurts breaks some new ground;
 Ministry official asks contracted companies to "contribute" to MPP building;
 Mongolia hopes to generate nuclear energy in 2017;
 MPRP leaders claim Shinebayar still Deputy Chief of party;
 “Enkhbayar’s rating is not my concern,” says Shinebayar;
 Zorig Foundation monitors work in state organizations;
 Zamin Uud continues to suffer from utter neglect.
*Click on titles above to link to articles.
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BUSINESS
SOUTHGOBI ACHIEVES RECORD SALES AND REVENUE
The following are among the highlights listed by SouthGobi Resources Ltd. in its report for the
quarter ended June 30, and subsequent weeks.
 Total sales of approximately 1.05 million tons and revenue of USD47.3 million, with both
figures representing a record for any given second quarter and the revenue also
being the highest quarterly revenue since the commencement of mining operations;
 Average realized selling price for the second quarter of 2011 was USD54 per ton, an
increase of 7% compared to the first quarter of 2011 and an increase of 27% compared to
the second quarter of 2010;
 Cash costs impacted by unforeseen issue of diesel fuel shortage in Mongolia but issue
largely resolved now;

 Entered into an agreement with Ejinaqi Jinda Coal Industry Co. Ltd to toll wash coal from
the Ovoot Tolgoi Mine;
 Received a mining license pertaining to the Soumber Deposit;
 Awarded the tender to construct a paved highway from Ovoot Tolgoi to Mongolia-China
border with consortium partner NTB LLC.
SouthGobi substantially expanded its customer base during the first half of 2011 and raised prices
for individual products. To date the company has signed seven major customers to purchase coal in
the third quarter of 2011. SouthGobi anticipates the overall average realized sales price in the third
quarter of 2011 should be similar to that achieved in the second quarter.
Read more…
The success to date and potential for future growth can be attributed to a combination of the
company's competitive strengths, including the following:
 Projects are strategically located close to China;
 Substantial resources and reserves;
 Coal is of premium quality coals;
 Low cost structure due to favorable geographic and geological conditions;
 Strong financial profile;
 Established production with strong growth potential through future expansion of existing
mine capacity and development of the company's priority assets;
 Experienced management team with strong skills in mining, exploration and marketing.
As the Company looks forward through 2011, it is encouraged by the overall long term demand for
its products. There are many positive developments in Mongolia, which provide further reason or
hope that the mining sector will develop its resource base for long term growth. The company's
objectives for 2011 remain unchanged from the year ended December 31, 2010 and are as follows:
 Grow Ovoot Tolgoi Mine;
 The additional capacity of the new mining fleets should support growth in coal availability
and sales for 2011 over 2010, and the future;
 Continue to develop regional infrastructure
 The company's immediate priority centers on improving roads in the area around Ovoot
Tolgoi Mine;
 Advancing the Soumber Deposit;
 Further greenfields exploration will take place;
 Continuing to focus on production safety, environmental protection, operational excellence
and community relations.
Source: SouthGobi Resources
VOYAGER ANNOUNCES MAJOR NEW COPPER DISCOVERY AT CUGHUR IN SOUTH GOBI
Voyager Resources has announced that initial assay results from the Cughur Discovery at the KM
Copper Porphyry Project in the South Gobi confirm a major new high grade copper discovery. All
three 80-m deep RC holes have ended in high grade copper mineralization. The Cughur Discovery
remains open at depth and along strike.
RC holes and three diamond tail extensions have now been completed over four separate prospects
for over 4,000 meters of drilling. Many drill holes are intersecting porphyry style copper
mineralization over broad intervals. Drilling is continuing to focus on the Cughur Prospect area.
Source: Voyager Resources
GUILDFORD COAL EYES COAL PRODUCTION WITHIN A YEAR, ACQUIRES ADDITIONAL LAND
Guildford Coal has completed a USD3.5-million acquisition in the South Gobi coal bearing basin. The
new acquisition‘s exploration permit adjoins the existing South Gobi Project tenements which
expands the scale potential of the coking and thermal coal project. Guildford is already eyeing the
possibility of becoming a coal producer within a year in the South Gobi, due to the strategic
location close to the Chinese border station of Ceke - where coal from Mongolia is already trucked
into China.
Commenting on the company's operations, Mr. Mick Avery, Managing Director, said, "Exploration is
confirming the targets and Guildford is progressing towards the establishment of JORC-compliant
resources on three of our priority projects -- at Hughenden in Queensland and South Gobi and
Middle Gobi in Mongolia.‖ Independent geologists have developed an exploration target of 0 to 122
million tons for the new tenement, taking the target for the South Gobi Project to 0 to 582 million
tons. Guildford said an exploration target has also been developed of 29 to 149 million tons for the

Middle Gobi Project - which takes the total target for Guildford‘s portfolio of Mongolian Projects to
29 to 731 million tons.
Source: Guildford Coal
MEC COMPLETES WORK ON 6-KM COAL ROAD TO XINJIANG PORT
A 6-km road especially for coal transport has been built in northwest Takeshiken, the second largest
port at the China-Mongolia border, as the import of coal from Mongolia picks up. The project was
first proposed by Mongolia in April over fears that increased truck hauling of coal might damage
trade routes. Mongolia Energy Corporation Limited undertook the project and finished it at the end
of July, officials said.
The Takeshiken port, in the Xinjiang Uygur autonomous region, imported 5,000 tons of raw coal
from Mongolia in the first three months this year, official statistics show. Xinjiang, one of China‘s
key energy and heavy industry bases, is estimated to be short of 1.6 million tons of charred coal for
industrial use every year.
Source: Xinhua
PETRO MATAD SPUDS DAVSAN TOLGOI-9 EXPLORATION WELL
Petro Matad last week spudded the Davsan Tolgoi-9 well on Block XX. The well is being drilled
vertically to target depth of around 1,750 meters. This latest well will target the Lower
Tsagaantsav reservoir, which Petro Matad has found to be oil bearing in other parts of the block,
around 2.5 km south of the DT-4 that was drilled back in May.
Earlier, the company announced that the previous well, DT-8, had struck oil. The well encountered
live oil shows between 1,714 to 1,720 meters. Petro Matad said that these shows consisted of
‗spotty fluorescence‘ and ‗fast bluish-white‘ to ‗yellow-gold‘ cut, which indicates the presence of
hydrocarbons.
Source: Petro Matad
SHIVEE OVOO BUILDS COUNTRY‟S FIRST COAL DRYING FACTORY
Shivee Ovoo LLC will open Mongolia‘s first coal drying factory in the middle of this month. It will
also begin using a new method of moving coal from the mine. Coal with reduced moisture sells for a
higher price and this, together with faster coal hauling, will mean more revenue for the company
which has been facing financial difficulty.
Source: News.mn
LUCKY STRIKE BEGINS DUE DILIGENCE DRILLING PROGRAM
Lucky Strike Resources has awarded a contract to Elgen to perform a 1,500-meter due diligence
drilling program on the CN Coal Properties in Mongolia with the camp setup and mobilization of
equipment commencing on Wednesday. The company expects the results of the due diligence
drilling to be announced within 80 days. Information collected will include coal quality sampling,
wire-line geophysical logging, lithology logging, geotechnical information from core, and data for
water quality and hydrology studies.
Source: Energy Business Review
ENTREE GOLD ANNOUNCES SECOND QUARTER 2011 RESULTS
Among the highlights Entree Gold lists in its recently issued interim operational and financial results
for the quarter ended June 30, 2011, are:
 Drilling is under way at the Entree-Oyu Tolgoi LLC joint venture property, with one drill rig
testing the continuation of mineralization north of the currently defined reserves on Hugo
North Extension; and another mobilized to focus on the Southwest Heruga target;
 Onset of work program on Entree's 100% owned Shivee West property;
 Net loss of USD3,617,950 for the three months ended June 30, 2011.
The Hugo North Extension and Heruga deposits comprise part of the Oyu Tolgoi copper-gold mining
complex in Mongolia. Rio Tinto is manager of the project.
Source: Entree Gold Inc.
ORIGO EXPANDS MINING PORTFOLIO IN MONGOLIA
Origo Partners Plc has released its Interim Management Statement relating to the three-month
period ending June 30, 2011. In it Mr. Chris Rynning, Origo's CEO, says, ―In Q2, the company
completed material investments in Moly World Ltd. and Unipower Battery Ltd, expanding our
mining portfolio with an advanced molybdenum/tungsten exploration asset in Mongolia and

increasing our exposure to the Chinese Electric Vehicle sector.‖
Source: Origo Partners
DENISON MINES REPORTS NET LOSS IN Q2 RESULTS
Denison Mines Corp. recorded a net loss of CAD13,749,000 for the three months ended June 30,
2011 compared with net income of CAD16,744,000 for the same period in 2010. For the six months
ended June 30, 2011, the company recorded a net loss of CAD20,816, compared to net income of
CAD9,565,000 for the same period in 2010. Denison is engaged in uranium exploration, as both
operator and non-operator of joint ventures and as operator of its own properties in Canada, the
U.S., Mongolia and Zambia.
Exploration expenditures of CAD664,000 and CAD969,000 for the three and six months ended June
30, 2011 compared to CAD77,000 for the three months and CAD355,000 for the six months ended
June 30, 2010, were incurred in Mongolia on the company's joint venture properties. The company
has a 70% interest in the Gurvan Saikhan Joint Venture (GSJV). The Mongolian Government and
Geologorazvedka, a Russian entity, equally share the remaining 30%. Under the Nuclear Energy Law,
the Government could acquire a 34% to 51% interest at no cost to the Government. Discussions are
under way with it regarding resolution of the ownership structure of the GSJV and issuance of
mining licenses.
Source: Denison Mines Corp.
MERITUS MINERALS GOES AHEAD WITH PRIVATE PLACEMENT
The TSX-Venture Exchange has accepted for filing Meritus Minerals Ltd. documentation with respect
to the closing of its private placement. The company will issue 10,370,000 units at a price of
CAD0.05 per unit. Each unit consists of one common share and one share purchase warrant with
each warrant entitling the holder to acquire one additional common share at a price of CAD0.10 per
share for a period of 12 months from closing.
Source: Meritus Minerals Ltd.
DEALMAKER OF THE YEAR AWARD FOR IVANHOE MINES
Ivanhoe Mines, its Chief Executive Officer and founder Robert Friedland, and the company's
management team have been awarded Dealmaker of the Year honors by Australia's Diggers and
Dealers Mining Forum. The award recognizes the company‘s ongoing development of the Oyu Tolgoi
Project in Mongolia and also its 62%-owned subsidiary Ivanhoe Australia's development of its
Cloncurry projects in the Australian state of Queensland. The award was presented before 1,500
delegates at the close last week of the organization's 19th annual mining conference.
Presenting the award to Mr. Friedland, Diggers and Dealers Chairman Barry Eldridge said,
"Developing any project has many implications for companies, but developing world-class assets in
frontier regions has the most intriguing issues associated with logistics, regulations, market
influences, financing, innovation and access to appropriate expertise. Developing the Oyu Tolgoi
copper-gold project and the Ovoot Tolgoi coal project in Mongolia would have tested the corporate
skills of most companies. Ivanhoe has managed to retain full project equity. It did invite a 'big
brother' to the table, but through the entrepreneurial skills of Robert and his team, Rio (Tinto) took
equity in Ivanhoe rather than direct project equity, allowing shareholders of Ivanhoe to participate
fully in project development rather than being diluted out of the main game."
Read more…
Accepting the award, Mr. Friedland said, "Remember that if you don't grow it, you have to mine it.
And what you are doing when you are providing so much of the world's raw materials is you are
building the building block for a much better society all over the world. You are reducing the price
of real things, you are providing things that people need all over Asia and all over the rest of the
world."
Source: Ivanhoe Mines
ECONOMY
SPC CHIEF SUGAR SAYS TT PROPOSALS WILL BE MODIFIED, FINAL DECISION IN OCTOBER
The head of the State Property Committee, Mr. D.Sugar, has said the National Security Council has
refused to accept the draft investment agreement on Tavan Tolgoi sent to it by the Government.
The whole issue is being reconsidered and ―the final decision on the choice of investors will be
announced in October, or by the end of the year at the latest‖, he said. Mr. Sugar is the Director of
the Executive Board of both Erdenes MGL and Erdenes Tavan Tolgoi and also a member of the

Government working group on the western Tsankhi part of the Tavan Tolgoi deposit.
He categorically denied that companies from South Korea and Japan were excluded from the
preliminary choice announced by the Government and said the confusion arose because the
Government did not mention the individual members of the three consortiums it had selected. He
personally thinks, and is also certain the Prime Minister agrees with him, that there can be ―no
question of excluding the Japanese and Korean companies because we need their cooperation‖.
Read more…
Refuting suggestions that Mongolia had treated these companies and their countries unfairly, Mr.
Sugar said, ―To be honest, it is just the other way. Japan and Korea said Mongolia has the reserves
and they have the technology. This is to be the basis of successful cooperation in the project but
their proposal did not contain the expected offer of a steel plant and coal improving technology.‖
This was unexpected and the working group felt let down. However, the lapse can be rectified
before the final decision is taken.
Asked about the identity of the Mongolian component in the Russian-Mongolian consortium, Mr.
Sugar admitted that no Mongolian company had been mentioned in the original bid ―but Resolution
39 of Parliament states that Mongolian companies should be included‖. He expected the
Government to soon name the company which it wanted as part of the consortium, and said, ―It can
be Erdenes MGL or any other company.‖ He also did not rule out some Mongolian companies coming
together to form a 4th consortium.
Mr. Sugar said China has expressed its readiness to buy all the brown and black coal that is
unwanted in the global market. ―We have no problem with selling the coking coal but the coal used
for thermal power stations can be sold only in Mongolia and China,‖ so China‘s offer was a plus
point in its favor. So also was the anticipated help from Shenhua in transporting through China the
coking coal for export. This is why, Mr. Sugar revealed, the company wants to have 51% share.
The Russian consortium also wants 51% share on the ground that it will build most of the new
railway and Russian sea ports will be used to export the coking coal. Peabody also wants 51% share
because they are the largest coal mining company in the world, and had the best international
connections to sell the coal.
Mr. Sugar said it was obvious that not everybody could be satisfied, so a compromise has to be
reached and ―we also have to squeeze in the Mongolian company‖, whose share may not be big but
―which could help us monitor the others‘ work‖. The present proposal of giving Shenhua 40%, the
Russian consortium 36%, and Peabody 24% is likely to be modified.
He also revealed that Japanese companies now want to leave the consortium led by the Russian
Railways and own 10% on their own.
Source: business-mongolia.com
PM SEES TT DECISIONS AS A TOUGH JOB SUCCESSFULLY DONE
Prime Minister S.Batbold has said that in a way, Tavan Tolgoi is more important than any others
now because it can go into production earlier than Oyu Tolgoi. The strategic investors will build the
mine and only a small part of the reserve will have been extracted when the term of the agreement
with them expires after 30 years. Plus, during this period, they will be paying all taxes according to
Mongolian law. ―People should notice how careful and successful we have been in getting the most
for Mongolia from foreign investors. There is no transfer of license and no tax exemption. In
addition, we shall receive an advance payment and royalty,‖ he said.
Explaining that successful and profitable export of coal depends on a number of factors ―that are
not all under our own control‖, Mr. Batbold said, ―We have to deal with partners to help us with
transport, marketing, pricing, tariffs, and all that. It‘s been a hard job, but our coalition
government has done this successfully. We have chosen as partners our two neighbors, Russia and
China, and our third neighbor, the USA. Two other close partners, South Korea and Japan, will
cooperate with us in marketing and other technical issues. This will greatly strengthen economic
and political ties between Mongolia and these countries.‖
Read more…
Admitting that ―what we have achieved may not be perfect, economically or politically as
everything can be better‖, Mr. Batbold said it was imperative not to lose any more time as the
earlier TT develops, the more benefit for the economy. ―We cannot afford to be held back by the
populism of politicians.‖ Asked if political considerations were involved, the Prime Minister said,
"Of course. We thought deeply about them at every step. Whatever we export by sea has to go via
our two neighbors‘ territory and their cooperation is essential if we have to seek distant markets.
We need their railways, their sea ports. And our ―third neighbor‖ policy, designed as a balance, is
also very important and useful. There can be no denying considerations of geopolitics were an

integral part of the TT decisions.‖
Source: News.mn
CHINA RAISES RAILWAY FREIGHT WITHOUT PROPER NOTICE
The Mongolian National Freightforwarders Association said last week that it has been informed by
railway authorities in China that freight tariff between Tianjin and Erlian has been increased from
August 1. The decision should have been notified one month in advance, according to both a
trilateral transit trade agreement among Mongolia, Russia and China, and provisions in the
international agreement on landlocked countries. The Chinese authorities say the decision is
connected to the appreciating Swiss franc and USD and to the bottleneck in Zamyn Uud.
Depending on ownership of containers and which forwarder is used, the rate for a 20-ton container
has been increased by between USD250 and USD400, and that for a 40-ton container by between
USD500 and USD700. The sharp rise affects both trade and private citizens using the service.
Mongolian freight forwarders often have to bring back empty containers and the increase will
apply to these as well. Mongolian imports from beyond China, mostly come through Tianjin and are
likely to become more expensive. Mr. A. Munkhbat Ania, Senior Vice President of Oyu Tolgoi LLC,
says they will be affected ―only marginally‖ as most of their supplies come by truck through
Gashuun Sukhait.
Source: Frontier Securities
“OUR MINERALS DO NOT SELL FOR THE RIGHT PRICE,” SAYS HEAD OF EXPORTERS‟ UNION
Professor D.Galsandorj, President of the Mongolian Exporters Union, has expressed his
disappointment that companies here do not get the true price for their mineral products. Some 24
percent of Mongolia‘s copper concentrate and 51 per cent of the zinc concentrate go to China.
Besides, 75-95 per cent of the spar concentrate has been exported for about 30 years. Global
market prices are not followed in these sales. Both the mining company and the Government lose
money because of an inability to command the right price. Only China, Mexico and South Africa are
ahead of Mongolia in fluorspar production in the world. But Mongolia fails to take advantage of all
this as ―unfortunately, we have neither any export policy nor regulations, and even no export tax‖.
This allows the buyer to call the shots.
Buyer countries follow international trade rules but most Mongolian minerals are sold under
bilateral agreements. feels Mongolia should establish a mechanism to arrange for mineral exports
at the highest possible prices. Russian, Chinese and Korean brokerage companies ―buy our iron ore
and concentrates very cheap, and the entire coal export is also very inexpertly handled because of
no centralized control. We sell our coal at the mine head at a much lower price than the market
rate,‖ he said. ―We need a centralized mechanism to bargain with brokers, as also to improve
production quality so that higher prices can be rightfully claimed. We need professionals to run this
mechanism,‖ he added.
Read more…
Referring to companies like Energy Resource, MAK and SouthGobi Sands building their own coal
handling plants to produce value added end-products, Mr. Galsandorj said the exporters‘ union has
different views on this. ―We feel that instead of every mine spending a considerable amount of
money to build a coal handling plant for its own exclusive use, it will be better to have one or two
larger plants to serve several mines in a particular region,‖ he said.
He was skeptical about how effective the sliding royalty would be in generating revenue, ―as they
are designed for only times of high prices, which cannot be a permanent feature of the commodity
market‖. The Ministry of Finance ―went ahead on its own and did not ask professional organizations
or the Tax Authority for suggestions,‖ he complained.
Source: The Mongolian Mining Journal
SILIKAT‟S MNT3.6-BILLION IPO FIRST NEW LISTING ON MSE SINCE 2008
This week‘s fully subscribed MNT3.6-billion IPO (technically an FPO) by construction material
producer Silikat was the first new listing on the Mongolian Stock Exchange since 2008. BDSec, the
underwriter and book runner of the issue, allocated 80% of the total offering to institutional and
strategic investors, and 20% to the public.
Silikat was founded in 1966 and listed on the MSE in the early 1990s as part of the state
privatization plan. It currently provides 25% of the domestic lightweight concrete block market and
9% of the lime market. Following the IPO, the company is valued at USD8.4 million. It will use the
capital raised to add more capacity and increase its market shares
Source: Frontier Securities

WORK STARTS ON 3 OIL REFINERIES
With ceremonies to mark the start of work on three refineries, Mongolia took a big step this week
to reduce its total and abject dependence on oil import. The Khet refinery is expected to be
completed in 2015, when it will start producing 120 tons of fuel annually for 30 years. The
construction is expected to cost between MNT35 billion and MNT40 billion. Of the other two, one is
in Darkhan with a production capacity of 200,000 tons and will be built in cooperation with Mongol
Seku LLC. The last of the three is in Dorno-Gobi and will produce 300,000 tons. It will be built in co-
operation with Mon L Gas LLC.
Together the three are expected to meet 70% to 80% of domestic demand.
Source: M.A.D. News
MICC OBSERVES REGULAR SEASONAL SWINGS IN INVESTMENT
Major stock exchanges should not be affected by seasonality. At least that is what efficient market
theory would teach. But in Ulaanbaatar, even the pretty pink walls of the Mongolian bourse cannot
provide protection from the clear seasonal swings in investment, according to local investment bank
Mongolia International Capital Corporation.
The bank notes that based on an analysis of the past four years, the MSE is affected by seasonal
factors to a ―predictable degree‖. There are two phenomena that tend to affect the seasonality of
demand on the MSE.
Read more…
First, foreign Investors. The summer months offer a window when many foreigners, both tourists
and investors visit the country. MICC‘s office is very busy going into September, but by November,
seeing a foreign investor is uncommon, and only an investor with a very thick coat visits in January.
This increased interest in the summer months, and the investments that interest turns into, possibly
explains the share appreciations one observes.
Second, domestic Investors, who seem to have a different investment schedule. These investors,
often working in the construction, mining, and agriculture sectors, have seasonal incomes and
expenses. As gains are taken in the summer and surplus cash accumulates in the winter, domestic
appetite may explain the second annual rise in demand one observes in the colder months.
In the years observed, MICC noted that the MSE tended to increase in value going into September,
decrease until December (you are unlikely to see foreigners when it is -40C outside), and then rise
again back to its previous level by April.
The seasonal cycle was disrupted in late 2008 when the global financial crisis came crashing into
Mongolia, with the local market experiencing an 11-month decline from end of March 2008. But
since then, as the economy started to recover, the MSE came back to its seasonal cycle.
The Mongolian Stock Exchange was the best performing equity market globally in 2010 with the MSE
Top 20 Index, the benchmark, gaining 136 per cent. It is on course to repeat its success this year,
having gained 41 per cent already. But before rushing in, it is good to know when to invest.
Source: Tilt FT
CAUGHT BETWEEN RUSSIA AND CHINA, MONGOLIA DITHERS OVER TAVAN TOLGOI
Mining coal from landlocked Mongolia's largest and least populated province located in the Gobi
Desert, and then shipping it abroad, was never going to be easy. Banks and mining firms have been
drooling over the 7.5-billion-ton Tavan Tolgoi project, believed to be the world's largest coking coal
deposit and named after the "five hills" that rise from the empty plains of the south Gobi around
300 km (190 miles) from the Chinese border.
But last month's botched bidding process to develop the western block of the property has left
potential investors scratching their heads and put a much-heralded initial public offering of as much
as USD15 billion for the mine's eastern block next year in doubt. At stake is the promise of
prosperity for Mongolia's 2.8 million citizens, many of whom live on the edge of subsistence. The
mine's transformational potential also has implications as a whole for the region, which produces
more than half of the world's steel and aims to reduce dependence on primary coking coal supplier
Australia.
Read more…
But Mongolians are worried that their two powerful neighbors, China and Russia, will take their
resources on the cheap unless key donors Japan and South Korea join the bidding -- a point crucial
for parliamentary approval later this year. "It's a big question mark on whether they can come up
with a deal that can please everybody and have it approved in parliament when the Autumn session
opens in September," said Mr. Akmal Aminov, an analyst at Eurasia Capital.
Mining giants and trading houses from across the globe were involved in what had been promised to

be a fair and transparent bidding war. But they are now unsure whether a hotly disputed decision to
award the mine to China's Shenhua, U.S.-based Peabody and a mysterious Russian-Mongolian
consortium is final.
At least 150 representatives from 20 global investment banks landed in the Mongolian capital in
mid-January to pitch for a deal that could raise as much as USD15 billion for the Tavan Tolgoi coal
mine. Taking a night off from the task of drawing up bids, some of the bankers braved sub-zero
temperatures and bracing winds to gather in Ulaanbaatar's exotically named Grand Khaan Irish Pub.
Tensions over the bid were enough to start a brawl.
The matter seemed to be settled in February, after a similarly confusing sequence of events in
which the Government announced a list of winners and then backtracked, leaving the door open for
others to join at a later stage. It eventually settled on BNP Paribas, Deutsche Bank, Goldman Sachs
and Macquarie to lead the IPO, but recent events may have turned the lucrative listing into a
poisoned chalice.
The proposed share issue, possibly in Hong Kong, will cover the eastern block, but its fate is
intimately linked with the western section, the subject of July's abortive investment agreement.
"You need clarity on both before you can have anything marketable to the public capital markets,"
said an Ulaanbaatar-based source involved in the process.
The investment agreement was expected to reach Parliament for approval on July 7. But after
South Korea complained the process was "unclear and unfair", Erdenes -- the state-owned firm in
charge of Tavan Tolgoi -- said a final decision had not yet been reached.
Shenhua submitted its bid jointly with Japanese trading firm Mitsui & Co, while the Russian-led
consortium originally included Itochu Corp, Sumitomo Corp, Marubeni Corp and Sojitz Corp.
However, none of them were listed in the investment agreement, but Itochu and Mitsui, along with
the Korean Resources Group, will be allowed to buy 30 percent of the coal purchased by China's
Chalco in a deal signed recently.
Terms to be reworked include management duties, equity splits, mining royalties, participation
from Japan and South Korea and production capacity, said a government source, adding "just about
everything is back on the drawing board".
South Korea and Japan have been major donors to Mongolia since it became a democracy in 1991,
funneling money to the country in the hopes of securing trade deals. But Mongolia's unique
geopolitical problems dominate everything from the divvying up of its resources to the direction of
its railways, and while it is eager to please its allies, the success of Tavan Tolgoi will ultimately
depend on Russia and China. "Mongolia is landlocked and we are 98 percent dependent on Russia for
fuel and 90 percent dependent on China for trade -- there is no choice," said Mr. B. Enkhbaatar,
chairman of the Mongolian Mining Club, a private sector industry group.
Mongolia, facing elections next June, not only has to balance the interests of Russia and China and
its donors in Japan and South Korea, but must also appease public opinion. "It is obvious what they
did. You have China, you have Russia, and they included the United States. It is a typical Mongolian
strategy," said Mr. Oscar Mendoza, chief operating officer with the Ulaanbaatar-based Frontier
Securities. "Did they use the Japanese and the Koreans to convince the people that this was not
going to be handed to Russia and to China, and then in the end, take out the Japanese and the
Koreans anyway?"
Estimates show that mining-related foreign investment in coal to copper and gold could exceed
USD10 billion in the next five years alone, far higher than the country's total GDP of around USD6
billion in 2010. But Mongolia has been under pressure to spread the wealth and fulfill the promises
it made at the last elections in 2008.
The democratic government hopes to put USD250 million from the Tavan Tolgoi project into its
human development fund this year, and it has also pledged to distribute 10 percent of Tavan
Tolgoi's shares to citizens, with some saying it might raise that figure to 20 percent before polls
open next year. "The talk about shares to every Mongolian citizen is just to show that politicians are
implementing their election promises," said Mr. D. Jargalsaikhan, an economist well-known in
Ulaanbaatar for taking the Government to task. "Politicians are only promoting the IPO because
they promised to do so during the last election, but there is a lack of voice from critical experts or
financial analysts on whether this IPO is the right way," he said.
Until the uncertainties over the investment agreement are ironed out, the listing will remain under
a cloud. "It has been a fiasco and it is giving all the investment bankers a headache," said Mr.
Mendoza of Frontier Securities. "Whoever did not win the initial bid for the Tavan Tolgoi IPO is very
lucky."
Source: Reuters

MONGOLIA ON THE MOVE, BUT THE PATH IS NOT SMOOTH
Mongolia is on the move. Until recently, it was not so, but now there is a palpable sense of
giddiness among people intent to become a player in globalization‘s latest economic sandbox.
Mongolia‘s largely untapped but world-class mineral and energy resources reignited the interest of
foreign investors only belatedly. Most pinpoint that start to October 2009 when a landmark
USD4/billion deal was signed by the government with Ivanhoe Mines and Rio Tinto to develop Oyu
Tolgoi. ―That‘s when 803 years of Mongolia‘s history came to an end and a new era began‖ was how
one banker described it.
But what is dazzling investors today is coal, or more specifically coking coal – the low-ash, low-
sulfur variety that is prized for power generation. Mongolia has been thrust to the limelight with
the rise of China, which is now the world‘s largest buyer of coking coal and other commodities such
as iron ore and copper. Coal export has become the fastest growing sector and production has
doubled in the last five years.
Read more…
The race is under way in the Gobi on scooping the coal, loading them to trucks and transporting
them south – in the fastest and most cost-efficient way – to supply China‘s energy-hungry steel mills
located in the Inner Mongolia autonomous region and in Gansu, Hebei and Shandong provinces.
There is one word now in Mongolia, says Mr. Randolf Koppa, president of Trade & Development
Bank, the largest corporate lender in the country, ―trucks‖. And with the trucks, comes the
equipment to get the coal loaded onto them – excavators, shovels, bulldozers, scoopers, etc. There
are the 240-ton trucks that pick up the coal, go one kilometer up the hill and transfer the coal to
the transport trucks. Each excavator, some as large as 660 tons, is matched with four to five of the
240-ton trucks.
To do the job, Mr. Alexander Molyneux, president and CEO of SouthGobi Resources, says his
company buys the world‘s largest hydraulic excavators. ―In open-pit coal mining, the capacity of a
mine is based on these excavators,‖ he explains. SouthGobi buys its large excavators from Liebherr,
a German company with its factory in Colmar, France.
These excavators are the size of a four-storey house. In each scoop, it is able to hold 80 tons. If you
fill the scoop with water, park a car under the scoop, and release the water, Liebherr has shown in
a video how the car is washed, but also crushed. The excavator bucket is 34 cubic meters, able to
fit 40 people standing with enough elbow room.
Loaded with up to 120 tons of coal, the transport trucks begin their journey to the border with
China, which, depending on the location of the mine, is 50 km away (in the case of SouthGobi) or
250 km away (MMC). In a single day, 400 trucks, and sometimes 500, repeat this journey traveling
at 25 km per hour, 300 meters to 500 meters apart, and running for 12 hours daily. On average,
41,141 tons of coal is transported each day.
Mr. Dale Choi, Chief Investment Strategist at Frontier Securities, calculates that up to June 2011,
Mongolian mines exported USD3.84 million worth of coal each day or USD115 million a month. The
total value of coal exports to date totaled USD634.64 million, 178% more than last year. Total
volume year-to-date reached 6.8 million tons, 43% more than the 4.7 million tons a year ago.
As these trucks travel in a procession on the unpaved dirt road, the plume of dust cloud, which can
be seen from afar, spreads several kilometers and contaminates edible herbs and surrounding
vegetation. Last year, there were 23 road fatalities, attributable in part to a combination of the
often poor visibility from the dust cloud and inadequate driving skills.
Last year, MMC spent about USD15.50 per ton of coal sold for transportation either using its own
fleet or contracted trucks. For bulk commodities such as coal and iron ore, rail is far more
economical, efficient and reliable. Both MMC and SouthGobi are prepared to build rail networks
going south into China. MMC estimates the total cost today of its 250-km rail link to be about
USD698.8 million and should take two years to complete. SouthGobi, which is closer to the border
with China, had earlier earmarked USD150 million for its 50-km rail link to the border but has since
postponed the plan.
Although the solution is apparent, how they get implemented isn‘t that simple. By quirk of history
and geopolitics, Mongolian rail track is 152 cm wide, following the Russian gauge. China uses a
standard gauge of 143.5 cm, in use by 60% of the world‘s railways.
The government is also on a different track, so to speak. Its railway development master plan,
which was approved by Parliament a year ago, has placed the highest priority on first building a rail
line going from west to east – in total 1,830 km at a cost estimated to be billions of USD. This
proposed line will connect to the existing Trans-Mongolian line and eventually link into Russia‘s east
coast and port facilities at Vladivostok.
The problem is financing. No one, not even the government, is clear on how it could raise the funds

to undertake this ambitious project, which runs through remote, desolate parts of the country, with
no commercial possibilities.
If anything, the government‘s rail development approach reflects its nervousness of being overly
reliant on China both as a market – even though China today buys 90% of Mongolia‘s coal and copper
– and as a future transit point for its exports. If implemented according to the government master
plan, Mongolia will be able to, if it so chooses, completely bypass the need for exports to be sent
through Chinese territory.
At the earliest, the wall of money is coming Mongolia‘s way in 2014 with the commercial start of
the Oyu Tolgoi mine. At the moment, as the government unlocks the country‘s considerable natural
wealth and brings the economy into the 21st century, it is not just infrastructure that needs
development. Competing demands and priorities mean Mongolia needs to focus too on building
more power plants and to double its current capacity in five years.
It will need to deal with the looming water shortages, including in Ulaanbaatar. Although aquifers
have been discovered in South Gobi recently, these are not renewable. Rainfall has not been
plentiful enough and so the question is: how much is there and how long will it last?
Rapid urbanization, which saw the population in the capital increase by 30% since 2007, has led to a
housing shortage. The government wants to build 100,000 apartments to switch residents to live in
two-bedroom modern apartments, at an estimated cost of over USD6 billion.
Until the recent boom in mining, agriculture and herding used to be an integral part of the Mongolia
economy, exporting meat to Russia and cashmere to China, but now severe winters and the
overgrazing of grasslands are posing challenges. And then there are the social issues such as
education – need for a new university – health care, pension, and redressing wealth distribution,
where 36% of the population is below the poverty line and 11% is out of work.
Mongolia, by one estimate, will need close to USD50 billion between 2010 and 2020. That is a lot of
money for a country with 2.75 million people and 34.8 million head of livestock, consisting mostly
of goats, sheep, horses, cattle, and camels. That is also more than seven times the country‘s GDP
of USD6.7 billion at the end of 2010. Tapping the international capital market is being considered to
raise up to USD500 million.
The country‘s financing requirements probably could be addressed easily by reaching out to China,
which has the resources and the willingness to strengthen bilateral economic ties. But as one
observer notes, ―Mongolia‘s economic problems are geopolitical‖. While it knows it could easily
seek help from China given the cordial ties with its biggest customer – and supplier, Mongolia is
determined to keep an independent stance balancing China‘s influence by still keeping close ties
with Russia and the US.
A few years ago, the kind of investor that would turn up and do anything in Mongolia was looking for
40% return on investments. Now, Mongolia is being looked at like China – like an investment-grade
jurisdiction. The listed companies with operations in Mongolia have attracted the world‘s most
discriminating investors, the likes of Fidelity, pension funds from Germany and Canada including
the Ontario Teachers Pension Plan, and so on. However, Mongolia will still likely go through more of
what some describe as ―clarification of policies‖. As one banker says, ―There are [still] a lot of
hiccups with certain things.‖
Foreign visitors to Mongolia like to describe it as a happening place, on the cusp of one of the most
amazing economic transformation in modern times. It is once more on the move but ever conscious
and determined to keep its national identity. Mr. Koppa at TDB describes it well: since October
2009, Mongolia was given this huge A-380 jumbo jet; it is there in the desert; they are revving the
engine and they are learning how to run it. Meanwhile, they are building the runway; the plane is
starting to taxi; it is building speed for take-off; will the runway be built before the lift-off or will
they just crunch into the sand?
When Mongolia unveiled the much awaited results of the international bidding for the production
rights of the West Tsankhi block of Tavan Tolgoi in early July 2011, it illustrated the deliberate and
careful balancing act that the government has learned to perform as it pursues partnerships with
competing and powerful interests.
The draft investment agreement awarded China‘s Shenhua Group a 40% stake in the production
rights; with Peabody Energy from the US – the world‘s largest private coal miner – taking a 24%
stake; and a Russian consortium taking the remaining 36% stake. Unclear as to their participation
are other bidders including Brazil‘s Vale, Swiss-headquartered Xstrata, London-listed ArcelorMittal,
South Korea‘s Korea Resources and Japanese conglomerates – Mitsui, Itochu, Sumitomo and
Marubeni.
Highlights of the draft agreement also included construction of a railroad to the south and eastern
border; construction of a 2 x 300 MW power plant and other facilities such as CTL (coal-to-liquids)

and coking plants; and the payment of a total of USD1 billion – USD500 million non-refundable
payment and a prepayment of USD500 million. In addition to the taxes and fees for the production
rights, Erdenes Tavan Tolgoi (ETT) is to receive 5% from all sales minus transportation costs.
Even with the draft agreement, several challenges remain for the West Tsankhi block according to
the World Bank. The project needs to complete a bankable feasibility study for the contractor to
secure financing. Long-term availability of water remains also a concern for the washing of coal in
order to be able to fetch a higher value.
Erdenes Tavan Tolgoi will have full ownership of the Eastern Tsankhi block and is in the process of
hiring a mining contracting firm. Australia‘s Macmahon Holdings, German mining consortium BBM
and India‘s Nesco are shortlisted for this project. According to the World Bank, one of the financing
options for the Eastern Tsankhi block is for ETT to float a bond of up to USD500 million. Of this
total, USD250 million will be used to finance the start-up infrastructure investment and the
remainder as a tax prepayment to the government.
An IPO is planned for the first half of next year for ETT; it will be the first offshore listing of any
state-owned company by Mongolia. The plan is for the government to retain a 51% stake of ETT with
29% of the shares to be offered to global institutional investors. The government has set aside a
further 10% for local investors at a discounted price and another 10% to be given to Mongolian
citizens under the Human Development Fund as part of the government‘s income distribution
program. The program will be funded through the tax prepayment portion of the planned bond
issue of ETT.
Eventually, for the coal field to achieve full potential, the World Bank says that rail transit will
become critical. ―Currently, the route straight south to China through Gashuun Sukhait is the most
cost-effective,‖ the bank notes. ―However, the railway strategy adopted by parliament called for
Mongolia to have more than one option to export the minerals from the Tavan Tolgoi area. This
would imply establishing a Tavan Tolgoi-Sainshand railway link going east.‖
It adds that the rail straight south to China is not expected to be completed until the north-eastern
bound railway is under way. ―Any delay in railway access to China has the potential of reducing or
limiting the value and profitability of the Tavan Tolgoi developments until such market
infrastructure is in place,‖ it concludes.
Source: The Asset - Daniel Yu
MONGOLIA: THE ONLY WAY IS UP
The Mongolian Stock Exchange was the best performing equity market globally in 2010, and if the
first six months of 2011 are anything to go by, Ulaanbaatar could be in line to repeat its success.
Last year the MSE Top 20 Index, Mongolia‘s main equity benchmark, posted 136 per cent growth and
this year has already risen 41 per cent from the start of 2011, although it has fallen off 36 per cent
since a peak in late February.
So what is propelling this epic performance? Mr. B. Otgonshar, vice president at Mongolia
International Capital Corporation in Ulaanbaatar, puts it down to increased foreign participation in
the market. ―Foreign investors were the major force that increased trading volumes and pushed up
prices,‖ he said.
The mining sector, which contributes close to 30 per cent of the so-called wolf economy, has drawn
the greatest interest. The scramble from investment banks to be involved in the initial public
offering of Erdenes Tavan Tolgoi, a state-run Mongolian holding company that owns an untapped
coal deposit in the Gobi Desert, underscores the appeal of the minerals-rich country.
Read more…
But investors looking for rewards that match the opportunities will need to be savvy and
courageous. Most of Mongolia‘s top companies are not transparent and do not release audited
accounts, making valuation particularly difficult. In the mining sector this is complicated by the
fact that few miners declare their reserves, said Mr. Otgonshar.
However, for investors such as Firebird Management, the New York asset manager that was one of
the first foreign players to come to Ulaanbaatar, there can be big money to make if you have your
own view on valuations.
How will it play out? Eurasia Capital, a central Asia and Mongolia-focused investment bank, said in
April that positive investor sentiment would continue thanks to a strong economic outlook in 2011
and beyond – Mongolia‘s GDP is expected to grow at least 10 per cent this year and continue
double-digit expansion annually for the rest of this decade. In addition, the bank predicted that at
the end of 2011 the MSE Top 20 Index would hit 27,500. At opening time on August 8, the index
stood at 20,826.5.

Source: FT Tilt
OUTCOME OF BIDDING WAR IS UNCLEAR AT BEST
Mongolia, bereft of fiscal resources, is caught between the ambitions of its superpower neighbors,
Russia and China. Who will ultimately benefit is anyone‘s guess, but the country‘s nascent energy
and mineralogical riches have opened the land of Genghis Khan to a fierce bidding war those
ultimate outcome is unclear at best.
Mongolia's mining sector has some of the world's richest deposits of gold and copper, uranium, coal,
fluorspar as well as rare earth elements (RREs) such as tantalum, niobium, thorium, yttrium and
zircon. According to a 2009 estimation by the U.S. Geological Survey, Mongolia has 31 million tons
of rare earth reserves, or 16.77 percent of the world‘s total, exceeded only by China.
Oh, and coal. Erdenes, a state firm is overseeing Tavan Tolgoi, estimated to hold over 7.5 billion
metric tons of coking coal and currently the world's biggest untapped deposit. China would
undoubtedly happily buy virtually all of Tavan Tolgoi‘s output, but business is business, and
Mongolia is currently weighing all offers.
Read more…
In June the Mongolian Government gave each citizen 538 shares in the upcoming Erdenes-Tavan
Tolgoi IPO. If the IPO hits its anticipated USD10 billion, each Mongolian‘s shares would be worth
about USD360. The local populace will be watching the Tavan Tolgoi negotiations closely, as
Mongolia is a country where the CIA estimates that more that 36 percent of the population live
below the poverty line, with an annual per capita income of USD2,900. After all, in a democracy, a
2.8 millionth share in a site estimated to be worth more than USD48 billion is nothing to sneeze at,
and is cheaper than mounting the pony and replaying the campaigns of Genghis Khan to secure
booty.
Source: OilPrice.com
PM WANTS DEVELOPMENT BANK TO FUND MANDALGOBI-ULAANBAATAR ROAD
A paved road from Ulaanbaatar to the Gobi region is a priority of the Government and when, during
a visit to Dundgobi province, Prime Minister S.Batbold saw that work on the road connecting
Mandalgobi with the capital had come to halt because of lack of funds, he decided to include that
104-km stretch in the list of programs to be financed by the Development Bank. There the matter
stands for the time.
Source: Udriin Sonin
UB RAILWAY PERFORMANCE KEY TO RUSSIA-CHINA TRADE
The future of environmentally acceptable, sustainable and economically viable freight transport
between Russia and China lies firmly in the court of carriage of cargo by rail. The vast, often
featureless distances which make up Mongolia as the world‘s seventh largest country means logistics
inevitably turns principally to container carriage on the tracks, and the news emanating from
Ulaanbaatar Railways (UBR) has a positive note.
At a session of the UBR board last week a delegation led by Mr. A. Gansukh, Mongolian Deputy
Minister of Railways, Transportation, Construction and Urban Development, heard from Chairman
Vadim Morozov, First Vice-President of Russian Railways (RZD) and Mongolian Railways CEO, that for
the first time in recent years, UBR reported a positive financial performance. Mr. Morozov
commented, ―Last year UBR achieved operational improvements in both cargo and passenger
transportation. Cargo flows stood at 16.8 mio, up 18.6% from 2009. Export freight, especially of iron
ore, was up 57%, a substantial increase.‖
UBR is a joint 50/50 stock company, originally formed by agreement between the former USSR
government and that of Mongolia. Ownership of the Russian stake was transferred from the Federal
Railway Authority to Russian Railways (RZD) in 2009 with RZD charged with managing the equity
stake for a term of five years.
With rail transport responsible for carrying 60% of all cargo, RZD say their involvement has led to
practical assistance for UBR in terms of capital repair of railway tracks, modernization of rolling
stock, and technological improvements. UBR manages over 1,800 km of track sharing a common
1,520-mm gauge with Russia. This will prove vital as trade tie ups between Russia and China
develop, which many pundits view as important for Russia‘s economic and political ambitions.
Source: Handy Shipping Guide
GEOLOGIST AGAINST SUGGESTIONS THAT EXPLORATION SHOULD CEASE
The name of Mr. A.Chimeddorj has been synonymous with the Tavan Tolgoi deposit ever since, as a

geologist assigned to the area, he estimated the massive reserve there. Now working for SouthGobi
Sands, Mr. Chimeddorj does not agree with some veteran Mongolian geologists who want new coal
exploration to stop now that the country has discovered massive reserves, saying he keeps on
finding pieces of mineral at totally unexpected places. ―How can we stop learning? There is a lot
about our land that we do not know. So much of our territory has not been studied at all. There is
so much to know about even coal which we have been mining for decades,‖ he said.
Moreover, he reminded those calling for a halt that actually there has not been any new discovery
for many years. There has been an enormous increase in the number of investors and the quantum
of investment but these are mostly in deposits opened up in the days of socialism. Most good quality
coal deposits were sold to individuals in the beginning of the 1990s, and many of them have been
resold to foreigners who have spent money to find more and better coal than originally thought.
There have been cases where better testing has revealed that a thermal coal deposit actually has
coking coal. But almost nothing new has been discovered. ―We have to carry on looking, using more
modern equipment and more efficient technology. Some 100 billion tons of our 162 billion tons of
coal reserve is brown coal. This is increasing in value as this can now be liquefied or turned into
gas. The costs are high, but these things change. The more new reserves we find, the more money
we shall have to employ more efficient technology,‖ Mr. Chimeddorj said.
Read more…
Explaining how application of JORC increased his original estimated reserve of 6.4 billion tons by
one billion tons over, Mr. Chimeddorj said one set of standards considers only coal 2 meters or more
thick, but in JORC coal 0.6 meters thick is also included and so the new reserve estimate was
raised to 7.4 billion tons. He thinks mining coal of that thickness is very difficult with present
digging techniques, especially from slopes where the coal is mixed with rocks. However, this may
not be much of a problem in Tavan Tolgoi, given the topography there.
Asked how widespread fake geological estimates are, Mr. Chimeddorj said, ―Frauds are everywhere,
so why should there be no fake geological reports?‖ A man with integrity has to carefully check
everything, right from the first excavation reports and sometimes it is better to be physically
present at some parts of the exploration, to check how the drilling is actually done, to make sure
the GPS coordinates are right. ―You have to be certain of the veracity of what you are going to sign
as a report. But there is dishonesty, and I hear that nowadays forged signatures and fake documents
are offered on sale. A coal deposit in Bulgan province was presented as having features that were
actually of an area in Tavan Tolgoi,‖ he said.
Mr. Chimeddorj thinks Mongolia should issue separate licenses for prospecting and exploration. The
first would be changed to the second depending on initial finds. He also thinks better results are
achieved if licenses are granted only to professional people. He
Source: The Mongolian Mining Journal
MINISTRY OFFICIALS HOPE TO EXPORT WHEAT THIS YEAR
A senior official in the Ministry of Food, Agriculture and Light Industry has said Ministry officials
have held preliminary talks among themselves on exporting wheat to China this year, even if it is
not a large amount. The wheat crop should be enough to meet the entire domestic demand and still
have a surplus that can be exported. This is an indication of how agriculture has improved in the
last three years because of Government policy and investment. With 120,000 tons of wheat in stock
and a plentiful harvest expected, the Ministry is confident there will be no rise in the price of flour
and flour products.
Source: Uls Turiin Toim
LACK OF FUNDS STALLS PROGRESS IN 100,000 APARTMENTS PROJECT
There has been no progress in the Government‘s 100,000 Apartments project, meant to develop ger
districts and to give the chance to low- and middle-income citizens to own apartments of their own.
The lack of progress can be traced to the failure of the Development Bank to provide funds. At the
moment, there is no indication when the bank would have the capital to finance projects. People‘s
hopes were raised but they wait in vain.
Source: Ardiin Erkh
INVESTMENT FORUM WITH A DIFFERENCE IN ZUUNMOD
An Investment Forum on August 30 in Zuunmod city in Tuv Province will provide an opportunity to
explore the latest developments in Mongolia‘s business environment. The event is being jointly
organized by the Province Governor‘s Office, the National Committee for Regional Development and
GIZ Integrated Mineral Resource Initiative. BCM is the co-organizer of the event.

Participants will be able to consider and review fully developed business proposals in direct one-to-
one talks with businessmen and company owners. Besides, presentations by sector specialists will
give a detailed overview of the investment framework and mid-term plans. All proposals have been
carefully prepared by specially trained consultants and represent an interesting cross section of the
agriculture, food- and material-processing sectors. Some businesses are established enterprises
seeking capital to grow further, some others are still concepts requiring startup support, sand there
are also others that seek access to modern equipment and know-how.
Source: GIZ Integrated Mineral Resource Initiative
CHINA INFLATION RISES TO 6.5% IN JULY
Chinese inflation accelerated in July as consumer prices rose 6.5 per cent from a year earlier, up
from 6.4 per cent in June and the fastest increase since June 2008. The price rise was driven mostly
by volatile and politically sensitive food prices, which soared 14.8 per cent in July from a year
earlier, up from a 14.4 per cent annual increase in June, according to data released by China‘s
National Bureau of Statistics on Tuesday.
But despite the acceleration most economists expect inflation to have peaked in July and to
gradually moderate from now until the end of the year. ―The encouraging thing about the data is
that headline CPI inflation is up only slightly this month after a big jump higher last month,‖ said an
analyst at Royal Bank of Canada in Hong Kong. ―We think inflation is close to a peak and will head
lower later in the year as base effects turn favorable and the impact of previous policy measures
kicks in.‖ Prices of key commodities like oil are falling amid market turmoil and signs of slumping
global growth Within China, pork prices, a main driver of inflation in recent months, have started to
stabilize as more pigs come to market.
Read more…
Chinese growth has slowed in recent months but remains resilient despite 10 straight months of
monetary tightening. China‘s GDP grew 9.5 per cent in the second quarter from a year earlier, only
slightly slower than the 9.7 per cent growth recorded in the first quarter.
Chinese officials have already acknowledged the government will miss its target of 4 per cent
consumer inflation for this year but they have repeatedly said that reining in surging prices is their
top policy priority. On a monthly basis, China‘s consumer prices rose 0.5 per cent in July, faster
than the 0.3 per cent month-on-month rise in June. China‘s producer price index rose 7.5 per cent
from a year earlier in July, faster than June‘s 7.1 per cent annual increase but slightly below
economists‘ expectations.
Source: The Financial Times
CHINA‟S JULY TRADE SURPLUS BIGGEST IN MORE THAN TWO YEARS
China‘s trade surplus shot up to USD31.5 billion in July – the biggest in more than two years – on the
back of surprising export strength, signaling that the global economy is more resilient than investors
have feared in recent weeks. But the widening of the trade surplus, up from USD22.3 billion in
June, could also reignite foreign criticism of Beijing‘s policy of holding down the value of its
currency.
With the US and Europe struggling with debt woes and sluggish economic recoveries, they have
looked to Chinese demand as a key external source of growth. In the past, large Chinese trade
surpluses have sparked allegations that Beijing has effectively used a cheap renminbi to steal jobs
from other countries.
Chinese exports rose 20.4 percent in July from a year earlier, faster than June‘s 17.9 percent pace,
while imports increased 22.9 percent in July, up from 19.3 percent in June, the customs
administration said in a statement.
Read more…
The Chinese cabinet met on Tuesday to discuss the global market turmoil and draw up response
plans as a precaution. In a statement published after the meeting, premier Wen Jiabao said it was
important to strike the right balance between supporting growth and managing inflationary
expectations. His statement omitted wording that previously referred to the taming of inflation as a
―top priority‖. Economists said this change suggested that Beijing had shifted to a wait-and-see
mode, unwilling to tighten monetary policy further but not yet ready to relax it either.
Mr. Wen‘s statement was also the first official comment about the debt problems in the rich world
following Standard & Poor‘s decision on Friday to downgrade the US credit rating. Without
mentioning the US by name, the Chinese leader said all countries needed to adopt ―responsible‖
fiscal and monetary policies and to reduce their deficits in order to ensure the stability of financial
markets. Mr Wen‘s carefully chosen words contrasted with the broadside over the weekend by

China‘s official Xinhua news agency, which told the US to get over its addiction to debt.
CHINA URGES US TO “LIVE WITHIN ITS MEANS”
China‘s official news agency has called for ―international supervision over the issue of US dollars‖
and for the US to ―live within its means‖ in the wake of Standard & Poor‘s decision to downgrade
America‘s credit rating. The remarks underscore the frustration of China, the world‘s second-
largest economy and biggest holder of US debt, at having the fate of its foreign exchange reserves
so intertwined with US fiscal health.
―The days when the debt-ridden Uncle Sam could leisurely squander unlimited overseas borrowing
appeared to be numbered,‖ said a commentary published by the official Xinhua news agency. ―To
cure its addiction to debts, the United States has to re-establish the common sense principle that
one should live within its means.‖
But despite the fiery rhetoric, Beijing‘s insistence on keeping tight control over the value of its own
currency means it will have to continue investing its swelling foreign reserves in US government
bonds for the foreseeable future. China has the largest foreign reserves in the world, with an
estimated two-thirds of the USD3,197 billion total denominated in US dollars. As the biggest foreign
creditor to the US, China stands to lose most from any serious fall in the value of the US dollar.
Read more…
Other Asian countries, including South Korea and Japan, have voiced concern over US debt in the
past but refrained from directly criticizing the US following the credit downgrade. On Sunday both
countries said they had not changed their view on US Treasuries following the S&P move. ―Japanese
authorities think there is no problem regarding the creditworthiness of US Treasuries and US
government bonds will continue to be attractive assets,‖ a Japanese official said.
In contrast Xinhua said China ―has every right now to demand the United States to address its
structural debt problems and ensure the safety of China‘s dollar assets‖. There has been no official
comment from Beijing since the downgrade and Xinhua has routinely played the role of attack dog
in its commentary on the US crisis, in contrast to Beijing‘s more measured formal position. China‘s
foreign minister urged the US to enact ―responsible monetary policies to maintain the trend of
global economic recovery and ensure stable development of the world economy‖. In remarks just
before S&P announced the downgrade, he also said that China ―hopes the US can adopt measures to
ensure that the assets held by other countries in the US are safe‖.
The lack of an attractive alternative reserve currency to the dollar and the ongoing debt crisis in
Europe means that China will be forced to continue buying dollars in the near term. But America‘s
continuing debt woes have prompted more voices within China to call for an end to Beijing‘s tight
control over the renminbi exchange rate, which adds substantially to the country‘s foreign reserves.
China ―must stop buying US dollars and allow the Rmb exchange rate to be decided by market
forces as soon as possible,‖ Yu Yongding, a former member of the monetary policy committee of
the Chinese central bank, has said. ―It must stop policies that result in further accumulation of
foreign exchange reserves.‖ There is already some evidence that Beijing has this year stepped up
its efforts to diversify its reserves into other currencies, including the euro.
Xinhua also called for the US to make substantial cuts to its ―gigantic military expenditure and
bloated social welfare costs‖ and said ―a new, stable and secured global reserve currency may also
be an option to avert a catastrophe caused by any single country.‖
POLITICS
DEMAND GROWS FOR SPECIAL SESSION OF PARLIAMENT ON TAVAN TOLGOI
The demand is growing that a special session of Parliament should be held to discuss the draft
investment agreement on Tavan Tolgoi without delay and both the DP and MPP groups in Parliament
are considering asking MPs in their countryside electoral districts to return to Ulaanbaatar.
However, such a discussion can be held only after the National Security Council ratifies the draft
prepared by the Government.
Five MPs – Mr. L. Gantumur, Mr. Su.Batbold, Mr. G.Bayarsaikhan, Mr. D.Gankhuyag and Mr.
R.Amarjargal -- have said that an early discussion and decision is needed as the issue is too
important to wait until the Autumn session. They also think only an exclusive session can do justice
to the various issues involved. Mr. Amarjargal also feels MPs should be given adequate time to
prepare themselves for a proper discussion.
Source: Uls Turiin Toim

SPC CHIEF BEING PROBED FOR CORRUPTION
The Media Relations Department of the Anti Corruption Authority has revealed that the Chief of the
State Property Committee, Mr. D.Sugar, is being investigated by the ACA but has not said what the
charges are. Sources preferring anonymity say there have been several allegations of misuse of
authority against Mr. Sugar. The most damaging of these relates to his personal gain from arranging
for supplies to the Erdenet factory by a foreign company.
Source: Ardiin Erkh
10 STATE OFFICIALS PENALIZED FOR ERRORS IN INCOME STATEMENT
Up to the end of July, the Anti Corruption Authority (ACA) has checked the income statement of
600 state officials from 20 organizations and found that 55 of them violated the law against
corruption, and 60 gave incorrect information. The ACA transferred the cases to related
organizations for further action. Its information is that 31 officials have been asked to explain their
statement, while six have lost three months‘ salary. Two more have lost six months‘ salary and two
have been demoted.
The number of those who have not yet submitted their statement is 20.
Source: News.mn
417 CIVIL SERVANTS CONVICTED OF CRIMES SO FAR THIS YEAR
The Prosecutor General‘s Office has found that 3.3% of the total criminal convictions in the country
so far this year were of civil servants, including those employed at the state special agency.
Altogether 417 civil servants were found guilty in 315 cases. Of these,180 were ―serious crimes‖,
while 39 were ―very serious crimes‖. Roughly, two thirds of those convicted were male. Most of the
charges stemmed from misuse of position, while some were of falsifying documents and other kinds
of fraud.
Source: Zuunii Medee
U.S. VICE PRESIDENT BIDEN TO VISIT MONGOLIA THIS MONTH
U.S. Vice President Joe Biden will be in Ulaanbaatar on August 19. He will come here from China
and go to Japan before returning home. In Mongolia, Mr. Biden will underscore U.S. support for its
two decades of democratic development and growing bilateral economic ties.
Source: Office of the U.S. Vice President
PROSECUTORS SEE NO NEED FOR MORE INVESTIGATION INTO ZOOS BANK CASE
The Ulaanbaatar Prosecutors‘ Office has said there is no scope for additional investigation in the
case of the three persons, including the Chief of State Treasury Board of the Ministry of Finance,
charged with embezzlement of Zoos Bank funds, leading it to bankruptcy. The case was
investigated for two years but the Economic Crimes Section in the State Investigation Office sent it
back to the prosecutors in June, 2011 for further investigation.
Source: Unuudur
COURT REFUSES TO RELEASE DAVAA OF ANOD BANK
Judges of Bayanzurkh District Court last week extended by 23 days the term of detention of Mr. N.
Davaa, a member of the Representative Managing Council of the erstwhile Anod Bank, accused of
causing loss to shareholders and violating rules. Mr. Davaa has been ill and is in hospital under
special guard. His advocates requested his release on ground of ill health, but the court ruled that
this could delay investigation at the present stage. The matter has been under investigation for two
years.
The two others accused in the case, Mr. D.Enkhtur and Mr. Sh.Gur-Aranz, also have had their term
of detention extended by 30 days. The judges decided on a shorter extension for Mr. Davaa as he is
ill.
Source: Ardiin Erkh
OPINIONS DIVIDED ON FRESH APPEAL IN KHURTS CASE
The legal team for Mr. B.Khurts, Administration Chief at the National Security Council, feels a
further appeal against his extradition to Germany will not be productive but some members of the
working group on the case favor one more try. A final decision has to be taken within two weeks of
the British High Court rejecting Mr. Khurts‘s appeal. There are still a few days to go before that.
Source: News.mn

BRITISH COURT‟S DECISION ON KHURTS BREAKS SOME NEW GROUND
The decision on Mr. B. Khurts by a British appellate court — the England and Wales High Court — is
unusual and creates a further chink in the immunity of foreign government officials from criminal
prosecution for their official acts. The case involved an extradition request by Germany for Mr.
Khurts, the head of Mongolia‘s Office of National Security, who was the subject of a European
arrest warrant for allegedly having participated in the 2003 rendition from Germany to Mongolia
(through kidnapping and drugging) of a Mongolian national, whom the Mongolian Government
believed had been responsible for the assassination of the Mongolian Interior Minister. Mr. Khurts
was arrested after traveling to London to meet with Foreign Office officials.
The British court rejected arguments that Mr. Khurts had immunity from extradition under various
customary international law theories of immunity. Specifically, the court rejected his (and
Mongolia‘s) arguments that he was on a Special Diplomatic Mission, on the ground that the Foreign
Office had not specifically consented to his mission; that he enjoyed Head of State immunity
(ratione personae), on the ground that he was neither a head of state or foreign minister or
similarly high-ranking official; and that he enjoyed official acts immunity (ratione materiae), on the
ground that customary international law does not recognize immunity for an offence committed in
the state which seeks to conduct the prosecution.
Read more…
Although there are a few other precedents, the court‘s rejection of Mr. Khurts‘s argument for
official acts immunity breaks some new ground. Under traditional principles of customary
international law, current or former government officials enjoy immunity from prosecution or civil
suit in foreign courts for their official acts (although the U.S. Department of Justice has not always
recognized these immunities when prosecuting foreign officials). To allow otherwise would violate
the sovereign immunity of the government official‘s state, since states may only act through their
officials. In Mr. Khurts‘s case, Mongolia specifically took responsibility for his conduct in Germany.
Nevertheless, the British court recognized an exception to the general principle of official acts
immunity for cases, not of jus cogens violations (for which some human rights lawyers have urged
an exception to immunity), but where the alleged crime was perpetrated in the territory that seeks
to exercise jurisdiction. Because many cases involving the criminal prosecution of a foreign
government official are likely to involve crimes that have occurred in that forum, the British
decision may have widened an exception that could swallow the general rule of official acts
immunity.
Source: Lawfare
MINISTRY OFFICIAL ASKS CONTRACTED COMPANIES TO “CONTRIBUTE” TO MPP BUILDING A senior
and powerful official in the Ministry of Education, Culture and Science has for some time been
sending official letters to private entities that get work from the Ministry, asking them to give
anything from MNT 20 million to MNT50 million to help meet the costs of construction of the
Mongolian People's Party building, called Sovereignty Palace and the Museum of Sovereignty. About
40 construction companies that received funds from the Ministry to repair and renovate schools and
kindergartens have paid up, knowing that if they demur, the Ministry was likely to hold back signing
the completion certificate after their work is done and not award them a contract next year.
The letter from the official wants the contribution to be credited into the bank account of Jabco, a
company nobody has heard of and whose office at the address given in its registration certificate is
always closed. There is thus no way of knowing how the donations put into the account will finally
be used. It is fair to assume that the construction companies will make up for this imposition by
using substandard material and their work will also be shoddy. The whole thing is a perfect example
of what happens when the distinction between a party functionary and state official is erased.
MONGOLIA HOPES TO GENERATE NUCLEAR ENERGY IN 2017
A two-day meeting to explore ways of Mongolia-Japan cooperation in the atomic energy sector was
held in Ulaanbaatar this week. It was jointly organized by the Nuclear Energy Authority of Mongolia
and the Atomic Energy Agency of Japan. Japanese Ambassador T.Kidokoro opened the meeting,
which was chaired by the Deputy Chief of the Mongolian Nuclear Energy Authority, Mr.
Ts.Damdinsuren. Mr. Damdinsuren said Mongolia plans to begin work next year on construction of a
nuclear station and expects energy generation to begin in 2017. However, the availability of enough
skilled local manpower was a critical problem, he said.
The Director of the Japanese Atomic Energy Agency, M.Senzaku, also spoke.
Source: News.mn

MPRP LEADERS CLAIM SHINEBAYAR STILL DEPUTY CHIEF OF PARTY
The Monitoring and Ethics Committee of the MPRP called a press conference on Thursday to deny
reports in the media that the Deputy Chief of the party, Mr. Ts.Shinebayar, has resigned following
differences with the party Chief, Mr. N.Enkhbayar. They said Mr. Shinebayar has not informed the
party of his resignation and so continues to be its Deputy Chief, according to rules.
These say that if a nominated person does not wish to accept the position of Deputy Chief, he or
she should discuss it with the Chief. If their discussion bears no fruit, the party‘s general
conference will discuss the issue and take a decision. This procedure has not been followed in the
present case, and since party rules do not permit any unilateral resignation, the party considers
that Mr. Shinebayar has not left it and cannot cease to be its deputy chief.
Source: News.mn
“ENKHBAYAR‟S RATING IS NOT MY CONCERN,” SAYS SHINEBAYAR
Mr. Ts.Shinebayar was the lone MP to join Mr. N. Enkhbayar, but some weeks ago he and several
other senior leaders of the new MPRP left the party, all expressing dismay at the way they felt the
original intentions behind forming the new political group were being jettisoned. Mr. Shinebayar
recently told newsmen that the MPRP leader, Mr. Enkhbayar, had asked him to be its Deputy Chief.
Posts held no appeal for him, he said, adding that a politician‘s only goal should be the people‘s
welfare. He said this was reflected in the manifesto of the Khamug Mongol Alliance which he now
leads. The manifesto was written on December 17, 2010.
Mr. Shinebayar said that he would actively take part in the Autumn session of Parliament which is
scheduled to discuss important issues such as the Tavan Tolgoi project and a draft law on oil. Asked
for his comment on the finding of a survey that the rating of Mr. Enkhbayar rose after the MPRP
Special Assembly while his did not, Mr. Shinebayar said Mr. Enkhbayar‘s rating had never been his
concern. He worked for the good of society, and his success could not be judged by research
results. He favored an election system that would work well for the general good, and could not be
manipulated by the two big parties. The Khamug Mongol Alliance supports more power for local
governments and protection of human rights, and he would work for both.
Source: News.mn
ZORIG FOUNDATION MONITORS WORK IN STATE ORGANIZATIONS
The Zorig Foundation has completed a project financed by the Open Society Forum aimed at
improving the work culture and work ethics in state organizations. Workers from the Foundation
tracked and monitored activities related to civil registration, health and social insurance, and social
welfare distribution in some sub districts of Bayanzurkh and Songinokhairkhan districts of
Ulaanbaatar between January and June. The emphasis of the exercise was to ascertain the quality
of the performance of the bureaucracy and the extent of transparency in it.
The survey found that many citizens do not have civil documents such as an ID card and address
registration and therefore cannot claim Human Development Fund and other allowances. The
Foundation helped 200 citizens get their documents, and recommends a change in the rules
governing their issue. It also urges the Social Insurance and Welfare Office to arrange for
distribution of pensions, and all allowances to those who have been missing them.
Source: Udriin Sonin
ZAMIN UUD CONTINUES TO SUFFER FROM UTTER NEGLECT
Looking at what has been done on the Chinese side of the border, one can only wonder why Zamiin
Uud should be a lost land, with garbage-filled streets. There is no evidence that the
local administration uses the MNT 1,000 collected from every Chinese entering Mongolia for any
beautification, or even to provide basic amenities. The Chinese side collects a similar amount, 5
Yuan, from each Mongolian but there trees have been planted to keep away the sand storms, and
there is much greenery everywhere.
On the Mongolian side of the border both public toilets and eating places are most filthy.
Companies which won bids to improve conditions in Zamiin Uud town seem to have disappeared
without any trace that any work was done. Meanwhile apartments for the border staff continue to
be shared by 2-3 households and the staff themselves work overtime and under pressure in utterly
unwholesome surroundings.

ANNOUNCEMENTS
DISCOVER MONGOLIA 2011, ULAANBAATAR, SEPTEMBER 8-9
Discover Mongolia is partnering with Behre Dolbear Mongolia to hold a pre-conference workshop,
"ABC's of Mining",on September 5 and 6. "The workshop is designed for non-mining professionals.
Behre Dolbear holds similar workshops around the world and they mainly attract financial and legal
sector professionals. We are excited about this new addition to our forum" says Mr. D.
Jargalsaikhan, a member of the organizing committee.
This year‘s international mining investors' forum is the 9th edition of the annual hallmark event in
the mining sector in Mongolia. It will see domestic as well as multinational mining companies and
global resource financiers gather in Mongolia. The conference provides the opportunity for these
companies to introduce their projects and share views on Mongolia's emergence as a major resource
exploration frontier in the world.
"We have tried to create a balanced and highly informative agenda so that existing and new
investors and investment professionals can get the maximum understanding on Mongolia's
investment environment around its mining and resource sector" said Mr. P. Ochirbat, chairman of
the organizing committee. The two-day conference will feature speakers from UBS Bank, Credit
Suisse, Scotia Capital, PWC, Sprott AM, Firebird Management, Oyu Tolgoi, Tavan Tolgoi, Mongolia
Mining Corporation, South Gpbi Resources, and Erdene Resource Development.
This year the forum organizers are focusing on attracting early stage exploration projects to the
conference. There will be a parallel session on the second day of the conference allowing
companies the opportunity to introduce their early stage exploration projects. The traditional
investors conference this year will feature eight sessions over a span of two days. In conjunction
with the conference the organizers have planned two evenings of social events on the 8th and 9th.
Delegates are welcomed to attend other events such as: a mine site visit to Ovoot Tolgoi Coal mine
of SouthGobi Resources, a fishing trip hosted by the organizing committee. A cultural tour has been
arranged, keeping in mind that many of the forum delegates will be coming to Mongolia for the first
time.
This ywar‘s forum is being sponsored by South.Gobi Resources, Erdene Resource Development,
Hunnu Resources, PWC, Oyu Tolgoi LLC, Rio Tinto, Monnis LLC, Micro Mine, Prophecy Coal, Runge,
Aspire Mining, Transwest, Voyager Resources, Haranga Resources, Golomt Bank.
BCM is the official supporting organization and its members will get a special discount. Online
registration has started at www.discovermongoliaforum.com
_________________________________________________
JOB OPENING: RESIDENT DIRECTOR, AMERICAN CENTER FOR MONGOLIAN STUDIES,
ULAANBAATAR
The American Center for Mongolian Studies (ACMS) is seeking a Resident Director for its
Ulaanbaatar, Mongolia office. The ACMS is a non-profit, non-governmental educational organization
that supports the development of Mongolian Studies and academic exchanges with Inner Asia. The
ACMS is a member of the Council of American Overseas Research Centers (CAORC) with funding
from the US government, private foundations, member institutions and individuals.
The ACMS Resident Director is responsible for the management of the ACMS Ulaanbaatar office,
staff and programs, and the development of new programs, partners and funding sources. The
position requires an ability to work effectively with international and Mongolian academic
institutions, scholars and students, diplomatic staff, international donor agencies, and the business
sector. Experience in the US higher education system through study or work and experience working
or studying in Mongolia or Inner Asia is required.
The position is salaried and full-time, with a basic housing and benefit allowance. Short-term
research and personal leaves are negotiable.
For more information, please visit:
http://www.mongoliacenter.org/index.php?option=com_content&task=view&id=415&Itemid=129
_________________________________________________

METALS MONGOLIA, ULAANBAATAR, AUGUST 26
The main objective of the international investment conference, to be held in Government House, is
to provide a discussion platform and assist in medium- and long-term planning and implementation
associated with the Government‘s intentions to achieve value-added production at industrial parks
through downstream processing of ferrous and non-ferrous metal products. It is aimed to provide
potential investors with an insight into the Government‘s policies pertaining to metallurgical
industry, related exploration, extraction, processing, and infrastructure projects; to facilitate such
investments; provide opportunity for open discussion and possible solutions through involvement of
representatives of both public and private sector and professional organizations on the
opportunities and challenges in project financing, tax and legal environment.
The conference will have main and branch sessions involving over 800 representatives of parties
engaged in ferrous and non-ferrous metal projects, manufacturers, suppliers, foreign and domestic
investors, academics, professional associations, state administrative bodies, embassies. The main
conference will cover the present situation and future trends in Mongolia‘s metallurgical industry. A
special feature will be the Government Hour, which will feature an open discussion on
strengthening PPP in the metal-based industrialization process.
The branch conferences will be on
1. Opportunity to develop rare-earth based industries
2. Developing base metal industries
3. Developing iron and steel industries
4. Issues facing provision of required infrastructure to ferrous and non-ferrous metals based
industries-experiment and opportunity.
Each branch conference will include thorough discussions of resources and reserves of the type of
metal discussed, applicable market conditions, investment projects, technology and equipment.
BCM is a Supporter of the event.
For more information, Visit: http://www.metalsmongolia.mn/, or call +976-70115590, Fax: + 976-
70125590, or Email: info@metalsmongolia.mn.
__________________________________________
INVESTMENT FORUM, ZUUNMOD, TUV PROVINCE, AUGUST 30
The government of Tuv province, the National Committee for Regional Development, and the GIZ
Investment Policy and Advisory Service Project are jointly organizing the Investment Forum aimed
at promoting investment in Mongolia. Detailed business plans will be presented to allow a focused
dialogue between potential investors and Mongolian companies seeking capital for further
expansion. Targeted presentations by experts from the business community and public
administration will highlight the relevant framework.
BCM is a Supporting Organization of this event. For further information, please contact ipas@giz.de.
___________________________________________
COMPETITIVENESS AND CORPORATE SOCIAL RESPONSIBILITY CONFERENCE, ULAANBAATAR, SEPT
6-7
This conference, organized by GIZ Integrated Mineral Resource Initiative, will be focused on
debating whether corporate social responsibility increases the competitiveness of an economy and
its players in the long run or whether it is rather a disadvantage that, particularly in structurally
weak economies such as Mongolia, prevents the establishment of globally competitive value chains.
The main areas for discussion will be:
• CSR and Sustainable Economic Development
• Economic Globalization and CSR
• CSR and Enterprises.
BCM is a Supporting Organization for this event. For any questions please contact imri@giz.de.
___________________________________________
RETAIL LOGISTICS AND SUPPLY CHAIN MANAGEMENT, ULAANBAATAR, SEPTEMBER 27-28
The goal of this international conference, organized by the GIZ Integrated Mineral Resource
Initiative,
is to familiarize Mongolian businesses with a more expansive terminology of logistics and the
functions of modern supply chain management. Certain prospects for services shall be highlighted in
the context of Mongolia, with particular focus on trade-logistics.
The main areas for discussion will be
 Transport und Infrastructure

 Logistics and Supply Chain Management for Retail and Wholesale Businesses.
In addition, Mongolian and German firms will have the opportunity to solicit and discuss business
opportunities together. For any questions please contact imri@giz.de
------------------------------------------------------------
MONGOLIA TRADE & COMMODITY FINANCE CONFERENCE, ULAANBAATAR, OCTOBER 13
This landmark conference at the Chinggis Khaan Hotel will only welcome leading experts within the
trade and commodity finance sector, utilizing a format that includes detailed case studies,
informed debate and invaluable networking opportunities.
Among topics to be discussed:
• Considering the threat posed by volatile commodity prices
• Utilizing Mongolia‘s competitive advantage to improve product diversification
• Improving underdeveloped promotion services to demonstrate the unique appeal of
Mongolia
• Raising capital from foreign investors to develop projects and infrastructure
• Developing an export financing structure
• Expanding trading relations beyond traditional allies to become a truly global trade partner
• Reducing dependence on foreign imports
• Forging relationships between local and international banks to provide vital liquidity.
Speakers include:
 Ganhuyag Chuluun Hutagt, Vice Minister, Ministry of Finance of Mongolia
 Alisher Ali, Chief Executive Officer, Eurasia Capital
 Bat-Ochir Dugersuren, Chief Executive Officer, XacBank
 Randolph Koppa, President, Trade & Development Bank of Mongolia
 Jim Dwyer, Executive Director, Business Council of Mongolia
 Laurenz Melchers, Director, Mongolian Star Melchers
 Marat Utegenov, Executive Director, Mongolia Development Resources
 James Polson, Executive Director, AIDD
 B. Byambasaikhan, Managing Director, Newcom Group
 B. Enkhbat, Vice-President, Operations, Just Group
 Vincent O'Brien, Chair, Market Intelligence Group, ICC Banking Commission
BCM is a Supporting Organization for this event and special offers are available for BCM members.
The conference brochures with agenda will be available in BCM office and will also be distributed at
BCM‘s next monthly meeting on August 22.
Please contact Ms. Monika Kuzniewska, Marketing Executive, at monika@exportagroup.com or by
phone at +44 (0) 20 8772 3013 for further information.
_________________________________________________
MM TODAY” on MNB-TV, Fridays at 21:15
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 21:15 tonight. Tune in to watch this program that reports stories from today‘s BCM
NewsWire.
____________________________________________
“BSPOT” on B-TV, Monday to Friday at 21:30
B-TV (Business TV) now telecasts a 10-minute English-language news program called BSPOT every
evening from Monday to Friday at 21:30, taking most of the stories from the BCM NewsWire.
__________________________________________________
POSTINGS ON BCM ENGLISH WEBSITE'S 'PRESENTATIONS' AND 'MONGOLIA REPORTS' and BCM
MONGOLIAN WEBSITE‟S „NEWS‟ SECTIONS
As a key component of BCM‘s Mongolian website, ―News‖ section, articles from the Government‘s
―Open-Government.mn‖ site will be regularly posted. Also several draft laws, still to be discussed
in Parliament, are posted on BCM‘s English website in the Legislative Working Group section.
‗Presentations‘ from BCM‘s 6 monthly meetings in 2011, Peter Nicholls, OT‘s new EVP-Operations,
at Global MInES in Sydney on July 4, summaries of the key addresses at Eurasia Capital‘s Mongolian
Investment Conference on May 25, Jim Dwyer of BCM‘s interview on Mongolia National
Broadcasting‘s ―Face to Face‖ on May 16, and the very successful Mines and Money Hong Kong‘s

‗Mongolia Investment Summit‘ morning on March 25 are posted in BCM website‘s "Resource,
Presentations" for your review.
‗Mongolia Reports‘ including Z. Batbayar, Deputy Director of the Water Authority, at BCM‘s
Environmental Working Group‘s recent meeting, the Polit Barometer-May 2011 from Sant Maral
Foundation and the U.S. Embassy Mongolia‘s Commercial Section‘s ―2011 Mongolia Investment
Climate Statement‖ are among the reports posted on BCM's website (www.bcmongolia.org) in the
―Resource, Mongolia Reports‖ section.
We are now posting some news stories and analyses relevant to Mongolia on the BCM website's
‗Mongolian Business News‘ as they come, instead of waiting until Friday to put them all together in
the weekly NewsWire. The NewsWire will, however, continue to be issued on Friday, and will
incorporate items that are already on the home page, so that it presents a consolidated account of
the week‘s events.
ECONOMIC INDICATORS

INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
Year 2010 *13.0% [Source: NSOM]
June 30, 2011 *6.2% [source: NSOM]
*Year-over-year (y-o-y)
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]

CURRENCY RATES – August 11, 2011
Currency Name Currency Rate
US dollar USD 1,230.97
Euro EUR 1,753.89
Japanese yen JPY 16.07
British pound GBP 1,989.74
Hong Kong dollar HKD 157.82
Chinese Yuan CNY 192.60
Russian Ruble RUB 41.83
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.

12.08.2011, NEWSWIRE, Issue 180

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12.08.2011, NEWSWIRE, Issue 180