September 12 2014

1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
Issue 342 – September 12, 2014
NEWS HIGHLIGHTS:
Business
 Turquoise Hill suffers another setback at Oyu Tolgoi mine;
 Erdenes TT suspends coal exports from East Tsankhi mine;
 LSE extends partnership with MSE;
 UBTZ signs agreement with Russian Railways for modernization strategy;
 Concentrate plant opens in Bulgan;
 Mongolia's first molybdenum concentrate plant opens in Orkhon;
 Aspire Mining receives coal blending facility concept study;
 Aspire's Ovoot project to benefit from Russia-Mongolia rail agreement;
 Viking Mines plans drilling for Berkh Uul coal project;
 Sinopec eyes C-T-L fuel production in Mongolia;
 M.A.D. joins professional standards body;
 Ministry signs memorandum of cooperation with IIB;
 Anglo American discusses investment with Mongolia's top officials;
 Turkish firm to build a hydropower plant in western Mongolia;
 Ice Cream Market in Mongolia: Databook to 2017;
 Oyu Tolgoi opens trades training center;
 TDB receives “Best Commercial Bank” award from Finance Asia;
 Anglo chief rules out corporate break up;
 Areva proposes to build nuclear research reactor in Azerbaijan;
 ABB launches “Next Level” strategy.
Economy
 Mongol Bank: FX auction, swap agreements, 1-week bills, treasury notes;
 Mongolia outlines steps to reduce default risks;
 SCO seeks transport hub in Mongolia;
 Russia to lift controls on Mongolian meat exports, says Putin;
 New UB road commissioned;
 Vice Speaker meets with head architect for planned UB-neighboring city;
 No money left for Mongolia's poor;
 Is Mongolia's mining boom causing UB to run out of water?;
 Out of steppe;
 Peabody Energy's Greg Boyce says don't write off coal;
 China scraps demand for iron ore;
 China on track to hit annual growth target of about 7.5%, premier says;
 Khan Resources CEO explains what went wrong in Mongolia – EDITORIAL;
 Mongolia and Japan: the road to economic partnership – EDITORIAL;
 China and Mongolia clash over how to exploit the Gobi desert – EDITORIAL.
Politics
 Premier announces plans for Cabinet reshuffle;
 Cabinet asks for another draft of president's bill for distribution of mining profits;
 MPP takes to the offensive with poor outcomes from economic stimulus initiative;
 Presidents of China, Russia, Mongolia likely to hold three-party meeting;
 DPRK delegation to visit Europe, Mongolia;
 Skull of T-Rex relative smuggled into U.S. from Mongolia;
 Putin's featured on commemorative postage stamp;
 First deputy chairman of General Police Department appointed;
 UB bans outdoor car markets;

2.  Mongolia is attempting tricky balance between the dragon and the bear;
 The USSR's legacy in Mongolia.
Others
 Announcements;
 BCM Updates - Working Groups; Websites; Social Networks; Photo Gallery.
ECONOMIC INDICATORS
 Weekly Market Indicators from MIBG;
 Inflation;
 Central bank Policy Rate;
 Currency Rates.
*Click on titles above to link to articles.
SPONSORS
Khan Bank International SOS
Wagner Asia Automotive Invest Mongolia Agency
BUSINESS
TURQUOISE HILL SUFFERS ANOTHER SETBACK AT OYU TOLGOI MINE
Turquoise Hill Resources Ltd. announced yet another setback at its troubled Oyu Tolgoi copper
project on Tuesday, saying the rake arms in one of the mine's two tailings thickeners had failed.
The Vancouver-based miner, a subsidiary of mining company Rio Tinto PLC, said an investigation
was under way to determine the cause of the failure and that repairs had begun at the mine in
southern Mongolia. In May, Turquoise Hill said rake blade failures had curbed production at Oyu
Tolgoi in the first quarter, shutting down one production line for about seven weeks. Such teething
issues at the mine, which began production in 2013, have followed a multitude of delays over the
years, due to disputes with the Mongolian government over licenses and other matters.
Turquoise Hill said its concentrator at Oyu Tolgoi continued to operate at about a 60 percent
production rate using the second thickener.
Source: Reuters
ERDENES TT SUSPENDS COAL EXPORTS FROM EAST TSANKHI MINE
Erdenes Tavan Tolgoi LLC has suspended coal shipments to Aluminum Corp. of China Ltd. (Chalco)
from its East Tsankhi mine due to the expiration of a pricing agreement.

3. “The end of the contract has reduced the price of coal from the East Tsankhi of the Tavan Tolgoi
by USD 10 per tons, so the coal shipment have halted,” said Ya. Batsuuri explained. “However, coal
extraction is still underway,”
Erdenes Tavan Tolgoi was scheduled to repay the USD 350 million it borrowed from Chalco in 2011
by last June, according to the terms of the borrowing agreement. The agreement requires that the
state-owned miner repay its debt in coal shipments.
Source: Zuunii Medee
UBTZ SIGNS AGREEMENT WITH RUSSIAN RAILWAYS FOR MODERNIZATION STRATEGY
Mongolia and Russian Railways on 3 September agreed to partner for the development of
Ulaanbaatar Railway by 2020.
Minister of Roads and Transportation Amarjargal Gansukh and Russian Railways (RZD) President
Vladimir Yakunin signed the agreement, setting the path for an agreement for the financial and
technical feasibility studies for the modernization and construction projects by 1 March 2015. The
objectives are to modernize 1,100 kilometers of rail running north and south from Sukhbaatar
Aimag on the Russian border to the Zamyn Uud-Erenhot station on the Mongolia-China border,
including the electrification and construction of a second track. Construction of 545 kilometers of
railway running between Erdenet branch to the Ovoot mine owned by Aspire Mining Ltd. would be
made to support coal mining developments. Another 215 kilometers of rail is planned for the Ovoot-
Arz Sur line will connect Kyzyl in Russia’s Tuva Republic with another 411 kilometers to Kuragino
and thus the Trans-Siberian corridor. According to the agreement, funding would come from
Ulaanbaatar Railway's (UBZD’s) own resources and borrowing.
“Developing the railway network will help Mongolia to open up rich but for now hard to access
deposits and make broader and more effective use of its potential as a transit country.” said Putin.
Study is also under way on a possible 239 kilometers of rail between Choibalsan and Errentsav in
the northeast while preparation has begun on a line linking Russia and China in Mongolia's west for
export from Russia to China, India, Pakistan, and other countries in the region.
Yakunin “emphasized the importance” of using the Russian-standard 1,520 millimeter gauge for
future Mongolian lines, with RZD “noting that constructing infrastructure using other standards will
lead to the unnecessary duplication of services and an increase in operating costs.”
Source: Railway Gazette
LSE EXTENDS PARTNERSHIP WITH MSE
The London Stock Exchange (LSE) Group on 9 September extended its partnership agreement with
the Mongolian Stock Exchange (MSE) for another three years.
Finance Minister Chultem Ulaan and LSE Chief Executive Xavier Rolet signed an agreement
extending their partnership until 2017 in London on Tuesday. The extension follows a three-year
partnership that saw the LSE assist the Mongolian bourse in the installation of the Millennium IT
trading platform software and the implementation of new regulations to modernize the capital
market's infrastructure. In addition, the LSE developed a wide-ranging education program for
market participants and worked with the Mongolian government to re-draft the country’s capital
markets regulations and securities law.
“We aim to transform the MSE into a world-class market with international best practices and
standards over the next three years,” said Ulaan. “With the global business and technological
expertise of London Stock Exchange Group, we will achieve this goal.”
As part of the extended agreement, LSE will work with MSE on several new areas including post-
trade infrastructure, FTSE Index development, and an investigation into opportunities for trading
new products and asset classes, including commodity derivatives and foreign exchange.
Source: LSE Group
IRON ORE CONCENTRATE PLANT OPENS IN BULGAN
Mining Minister Davaajav Gankhuyag on 6 September attended the commissioning of an iron ore
concentration plant for Focus Mining LLC's Khudag Baishint iron deposit in Bulgan Aimag.

4. The plant will produce 1.9 million tons of wet concentrate a year in its first five years of operation
and 69,000 tons of standard concentrate. The projected annual earnings from the factory are USD
228.2 million. At full capacity the factory will process 600 tons of iron a year for the production of
300 tons of 66 percent concentrate. At that grade concentrate can trade at between USD 40 and
USD 60 a ton.
Focus Mining spent USD 20 million on construction between 2012 and 2014. The plant's
commissioning creates 100 new jobs to operate it.
Source: Montsame, Udriin Sonin
MONGOLIA'S FIRST MOLYBDENUM CONCENTRATE PLANT OPENS IN ORKHON
Mongolia on 5 September relaunched operations at Mongolia's first factory for the processing of
molybdenum concentrate.
The factory has an annual production capacity of 3,600 tons a year of molybdenum and 2,500 tons
of technical molybdenum oxide, and 80 kilograms of a special type of steel with a high capacity to
resist heat that is often used for the construction of tanks and rockets.
Shim Technology Co. Ltd. spent USD 23.8 million for development and construction of the plant.
The factory is currently 30 percent owned by state-owned Erdenet Mining Co. and 70 percent by
Switzerland's Shimtech Industries Ltd., but the ownership structure will soon adjust so that
Mongolia owns 34 percent.
The factory first began its operations in 2005, but management halted production in 2009 because
of the poor market conditions for mining. Operations could launch again after investment came
from Russia's Uralgipromez JSC, said Parliament Speaker Zandaakhu Enkhbold at a ribbon-cutting
ceremony for the plant. At the plant's peak production, in 2007, exports were sent to Japan, the
United States, South Korea, India, Eastern Europe and South America for sales of up to USD 60
million a year.
Commissioning of the plant creates some 250 jobs for its operations.
Source: Udriin Sonin
ASPIRE MINING RECEIVES COAL BLENDING FACILITY CONCEPT STUDY
Aspire Mining Ltd.'s Ovoot coal quality has been highlighted by a new concept study into the
establishment of a 10 million-ton-a-year coal blending operation at the Sainshand Industrial Park.
The study recognizes the ability for Ovoot coking coal to upgrade a wide variety of Mongolian low
and non-coking coals and provides a commercialization path for the project. Under the study by
German engineers Tenova Takraf, coking coal will be delivered by rail from Ovoot and blended with
non or low coking coals from the South Gobi region at the EUR 53 million (USD 68.3 million) facility,
which can be upgraded if required. The resulting product will then be railed south to customers in
China and to Chinese ports for export under the recently agreed protocols. Aspire has now applied
to the Ministry of Agriculture and Science to secure a suitable land parcel at Sainshand to establish
this facility.
In April 2014, Aspire signed a non-binding memorandum of understanding with the Mongolian
government entity responsible for the Sainshand Park development which names the Ovoot coking
coal project as one of the potential key raw material suppliers to Sainshand with the government-
owned Tavan Tolgoi coal mine. The blending facility would be constructed over 70 hectares of land
at the Sainshand Industrial Park, which is strategically positioned along the existing Trans-
Mongolian railway and has both rail and road access to northeast China.
The concept study estimated a pre-contingency capital cost of EUR 53 million. Should Takraf be
appointed as the engineering, construction and procurement contractor to this facility, up to 85
percent of the construction cost is available for Export Credit Agency-backed debt funding.
Source: Proactive Investors
ASPIRE'S OVOOT PROJECT TO BENEFIT FROM RUSSIA-MONGOLIA RAIL AGREEMENT
Aspire Mining Ltd.'s shares are expected to trade high after its Ovoot coking coal project received a
boost after being recognized as a key user of a new rail transit corridor to Russia.

5. Notably, the Mongolian Ministry of Roads and Transportation and Russian Railways (RZD) will
investigate an extension of the railway in northern Mongolia from Erdenet past Ovoot to the Russian
border at Arts Suuri.
This is significant as it means the feasibility of the key Northern Line Rail Line from Ovoot to
Erdenet is no longer solely dependent on freight volumes from the Ovoot project alone.
The deal follows Russian President Vladimir Putin’s visit to Mongolia this week that resulted in 15
agreements signed covering cooperation in transport and infrastructure, mining, education and
communications. His visit follows Chinese President Xi Jinping’s visit just two weeks earlier,
underlying the improved ties between Mongolia and its closest neighbors.
The ministry and RZD will also study the expansion of the main Trans-Mongolian railway, including a
dual track and potentially electrified line to facilitate freight capacity of 100 million tons per
annum; a rail link from Arts Suuri to the Kyzyl-Kuragino railway and thereby Russia’s Trans-Siberian
Railway; and cooperation to increase Russian transit freight to China, via Mongolia’s rail network to
20 million tons a year.
“This agreement officially puts rail in the north of Mongolia on the map,” Managing Director David
Paull said. “Northern Railways continues to be in close contact with UBTZ (Ulaanbaatar Railways)
with regards to working together through the next steps and a joint development of the Erdenet to
Ovoot (Northern Rail Line) section.”
Source: Proactive Investors
VIKING MINES PLANS DRILLING FOR BERKH UUL COAL PROJECT IN MONGOLIA
Viking Mines Ltd. has issued a letter of intent to Ellehcor LLC for the provision of drilling services
for its Berkh Uul coal project in Selenge Aimag.
The proposed 2,000 meter drilling program will involve vertical pre-collar and diamond core drilling
to maximum depth of 200 meters that will infill and extend the existing drilling coverage.
Results from the program, which is scheduled to begin in the next three weeks, will contribute to
an update of the existing JORC resource of 38.3 million tons of coal.
It will also provide additional information for input into the approvals process for a mining license
for Berkh Uul and provide further coal quality information for input into the planned feasibility
study.
Source: Proactive Investors
SINOPEC EYES C-T-L FUEL PRODUCTION IN MONGOLIA
Sinopec is moving forward with plans to establish coal-to-liquid fuel production in Mongolia,
according to a company representative.
Sinopec has planned for an initial investment of USD 3 billion, with total expected investment set
at USD 30 billion, said Luy Dapen [Source does not state his position -ed]. Sinopec is planning to
build two plants for the processing of 100 million tons of coking coal a year, he said.
“The project for the production of gas from coal would have several positive results, such as the
reduction of air pollution, and the construction of high-capacity plants would provide benefits in
the form of taxes and job creation, resolve Mongolia's issues with demand for fuel, and the
development of a chemicals industry,” he said adding that such benefits could materialize by 2020.
The company has had gas operations in Mongolia since 2010, reporting discovered crude oil reserves
of 75,000 tons in the Gobi Desert, said Dapen. The company last year signed 25 agreements for fuel
exploration in areas such as Africa, the Asia Pacific, Central Asia and Russia.
“Our interest in Mongolia is in three main areas: exploration and excavation of natural oil, coal,
and a chemicals industry,” said Dapen.
Source: Zuunii Medee
M.A.D. JOINS PROFESSIONAL STANDARDS BODY
M.A.D. Investment Solutions LLC on 10 September announced that it had become Mongolia's first
real estate firm to operate under the regulations of the Royal Institution of Chartered Surveyors
(RICS).

6. M.A.D.’s inclusion into RICS allows it to carry out international standard valuations for clients both
within Mongolia and abroad, which means companies will no longer be obliged to fly in an external
valuer. RICS is an international professional body with over 100,000 members that regulates and
promotes the profession; maintain educational and professional standards; enforces a strict code of
ethics; and provide impartial advice, analysis and guidance.
Christopher de Gruben, managing partner of M.A.D., was prior to this also appointed as the first
chartered valuation surveyor of RICS in Mongolia.
Source: M.A.D. Investment Solutions
MINISTRY SIGNS MEMORANDUM OF COOPERATION WITH IIB
The Ministry of Economic Development on 8 September signed a memorandum of cooperation with
the International Investment Bank (IIB) to together support small business in Mongolia. Economic
Development Minister Nyamjav Batbayar and IIB Chairman Nikolay Kosov signed the agreement on
Monday, with Moscow-based IIB promising to invest in the establishment of an industrial complex
for Mongolia's agriculture industry.
Source: Montsame
ANGLO AMERICAN DISCUSSES INVESTMENT WITH MONGOLIA'S TOP OFFICIALS
A delegation of representatives from diversified miner Anglo American PLC last week arrived in
Mongolia to meet with Mongolia's head officials to discuss the possibilities for investing in coal and
copper assets in Mongolia.
The new Minerals Law ”has created a more favorable legal environment for foreign investments,"
Mining Minister Davaajav Gankhuyag told the delegation led by James Harman, Anglos' chairman of
business and development affairs, at an 8 September meeting. Last week, on 4 September, Harman
met with President Tsakhia Elbegdorj's chief advisor, P. Tsagaan, who advised the Anglo chair that
cooperation with Mongolian firms and the government would be key to a successful mining
operation. “Any foreign-invested company may be accepted nicely here and will face less difficulty
if it supports national companies, purchases their products and services and hires Mongolians,”
Tsagaan said.
Source: Montsame 1, 2
TURKISH FIRM TO BUILD A HYDROPOWER PLANT IN WESTERN MONGOLIA
A feasibility study for a new hydro-electric power station for Bayan-Ulgii Aimag will be finished
before the end of 2014, according to a representative of a Turkish engineering firm.
Mongolian Ambassador to Turkey B. Batkhishig discussed plans for the construction of a
hydroelectric power plant at Khovd River basin of Bayan-Ulgii Aimag with ZTM Engineering and
Consulting Co. Inc.’s General Manager Muslum Gunduz. Gunduz said progress was being made and
proposed possible terms for financing.
Source: BNE
ICE CREAM MARKET IN MONGOLIA: DATABOOK TO 2017
A new report has been published that aims to give an accurate understanding of key trends in
Mongolia's ice cream market.
"Ice Cream Market in Mongolia: Databook to 2017" presents detailed historic and forecast data on
the ice cream consumption trends in Mongolia, offering consumption volume and value at market
and category level. Bringing together Canada's research, modeling, and analysis expertise to
develop uniquely detailed market data, it allows both foreign and domestic companies to identify
the market dynamics of overall ice cream sales, and remain sensitive to those categories that will
be in the ascendency in the coming years.
“Through its provision of authoritative and granular detail of the ice cream market in Mongolia, this
report fills the gaps in marketers' understanding of market trends and the components of change
driving them. Thanks to its provision of comprehensive and granular insights into the ice cream

7. market in Mongolia, the report facilitates the confident updating of strategic and tactical plans,”
reads the Source.
Source: Digital Journal
OYU TOLGOI OPENS TRADES TRAINING CENTER
Oyu Tolgoi LLC on 10 September commissioned a trades training center at the Oyu Tolgoi mine site.
“This facility is one part of our Apprentice and Trades Training program, which we launched in
December last year,” said Oyu Tolgoi's general manager of human resources, Benjamin Briggs, at
the opening ceremony. “It is designed to benefit both our existing tradespeople, and our new
apprentices, providing the opportunity to build upon our existing knowledge and skills in line with
internationally recognized standards."
The training center will accommodate 100 students per round of trainings with classrooms and
practical training facilities. Trainings will be taught by experienced Mongolian teachers accredited
to Australian curriculum standards.
Source: Montsame
TDB RECEIVES “BEST COMMERCIAL BANK” AWARD FROM FINANCE ASIA
Trade Development Bank (TDB) of Mongolia LLC received the title “Best Commercial Bank in
Mongolia” from the magazine Finance Asia last week.
The magazine awards honors each year to financial organizations it finds to be the most
exceptional. TDB showed the highest growth and best financial performance in Mongolia, covering
40 percent of the banking sector profits of the country, according to the magazine’s website. It also
noted that TDB was the first bank in Mongolia to issue international debt offerings, and has the
“Most highly-qualified assets.”
The bank's executive director, B. Medree, received the award on behalf of the bank. “Our bank has
received this award for its constant growth in the recent years. The banking sector in Mongolia is
the fastest developing in the country," he said.
Source: Montsame
ANGLO CHIEF RULES OUT CORPORATE BREAK UP
Anglo American PLC’s chief executive Mark Cutifani is ruling out an attempt to follow BHP Billiton
Ltd.’s big corporate break-up, preferring piece-by-piece asset sales in restructuring the mining
group.
BHP last month revealed plans for the largest restructuring in the mining sector since the cooling of
the commodities boom, spinning off mines and projects estimated to be worth at least USD 10
billion into a separately listed company. Cutifani, who took over as chief executive at Anglo last
year, has vowed to improve or cull the miner’s long list of weak assets. Almost all the group’s
earnings are generated by about only a quarter of its 60 projects. But Cutifani said the “portfolio
work” at Anglo would entail a number of discrete sales of assets. “We think we can do better on a
piece-by-piece basis,” he said.
His strategy contrasts with that of Andrew Mackenzie, BHP’s chief executive, who said that
piecemeal sales would have been too time-consuming and risky compared with his demerger plans.
BHP is to spin off almost all of its unwanted assets to its own shareholders via a company listed in
Australia. One asset that could be sold is a stake in Quellaveco, a copper project in Peru. Anglo is
thought likely to try to find a partner to cut its cost of building the mine. Mr. Cutifani
acknowledged oversupply concerns in the market for iron ore and admitted that Anglo was “not
helping” with its Minas Rio project in Brazil, which is set to ship ore this year after a cost blowout
in construction that helped to seal the departure of Cynthia Carroll, his predecessor. Cutifani said
Anglo would not commit more capital to iron ore for the time being after completing the first phase
of Minas Rio, which will be capable of shipping 26.5 million tons of iron ore annually.
Cutifani inherited a miner that had underperformed its peers during much of the commodities
boom. He has dismissed concerns that Anglo could become a bid target, saying he is concentrating
on raising its value by improving its returns on capital.

8. Source: Financial Times
AREVA PROPOSES TO BUILD NUCLEAR RESEARCH REACTOR IN AZERBAIJAN
A delegation of experts from French company Areva SA, which signed a memorandum with Mongolia
to develop a uranium project together, met with Azerbaijan's Communications and High
Technologies Minister Ali Abbasov to discuss the possibility of a National Nuclear Research Center
there.
Abbasov said that National Nuclear Research Center established by the Ministry will use nuclear
technologies for peaceful purposes in its future activities. He added that the country has already
begun cooperation with the International Atomic Energy Agency (IAEA) and European Center for
Nuclear Research (CERN) in this field. Abbasov referred to the research nuclear reactor, which is
planned to be built in Azerbaijan. He also talked about the possibility of its use by scientists in the
region. Moreover, the minister added that he wants to see the transformation of Azerbaijan into a
regional center.
In turn, the head of the delegation and Areva's director for work in the field of nuclear energy with
the countries of Central Asia, Abbas Jafari Jalali stressed the importance of organizing various
trainings for the staff of the National Centre for Nuclear Research, establishing work on
organizational and other issues.
Source: AzerNews
ABB LAUNCHES “NEXT LEVEL” STRATEGY
ABB Group on 9 September presented its 2015-2020 “Next Level” strategy and financial targets of
driving profitable growth by shifting its center of gravity toward high-growth end markets,
enhancing competitiveness and lowering risk in business models.
The strategy will lead growth in operational earnings per share by 10 to 15 percent and deliver
attractive cash returns on investment of the mid-teens over the next five years. Its targets for
revenues growth on like-for-like basis was on average 4 to 7 percent per year, faster than
forecasted gross domestic product and market growth. ABB plans to steadily increase over the same
time period its profitability within a bandwidth of 11 to 16 percent while targeting an average
conversion of the annual free cash flow above 90 percent.
“Our Next Level strategy will focus on actions centered on accelerating ABB’s organic growth
momentum, margin accretion as well as enhanced capital efficiency to deliver greater shareholder
value,” ABB Chief Executive Officer Ulrich Spiesshofer said. “We are shifting our center of gravity
towards higher growth segments while enhancing competitiveness and lowering risk particularly in
our Power Systems division.”
ABB will continue to build on its leading power and automation portfolio, which will be managed in
its business units under the leadership of the five divisions. As of January 2015, its regional
structure will be streamlined to three regions responsible for customer collaboration, shared
services and the related countries.
ABB will pair its new strategy, which becomes effective 1 January 2015, with a reshuffle of its
executive committee structure. Peter Terwiesch, currently head of ABB in Central Europe and
Germany, will be responsible for the process automation division. The three newly created regions
will be led by the experienced executive committee members Frank Duggan (Asia, Middle East and
Africa), Greg Scheu (Americas) and Veli-Matti Reinikkala (Europe). David Constable, chief executive
officer of Sasol, was nominated to the ABB's board for election at its 2015 annual meeting.
Source: ABB Group
SPONSORS

9. Oxford Business Group Mongolian Economy Magazine
ECONOMY
MONGOL BANK: FX AUCTION, SWAP AGREEMENTS, 1-WEEK BILLS, TREASURY NOTES
The Bank of Mongolia on 11 September accepted bid offers of USD 15.5 million and CNY 108.6
million for an average exchange rate of MNT 1,844.51 and MNT 300.72, respectively. The central
bank also received an equivalent of USD 3.5 million in swap agreement transactions from
commercial banks and USD 60 million from swap agreement ask offers.
The central bank reported on 10 September the issue of one-week bills worth MNT 157.1 billion at a
weighted interest of 12 percent a year.
The central bank reported on 10 September MNT 17.03 billion in bids for the auction for 52-week
treasury notes with a face value of MNT 17.03 billion. The bills were sold at a discounted price with
an average yield of 16.168 percent. Also on 10 September, the central bank reported the canceled
sale of three-year government bonds with a face value of MNT 20 billion after receiving MNT 20
million in bids.
Source: Bank of Mongolia
MONGOLIA OUTLINES STEPS TO REDUCE DEFAULT RISKS
Mongolia is determined to reduce default risks on its international debt by resuming development
of the Oyu Tolgoi copper mine by the end of this year, bringing government debt levels to within
legal limits, and cutting back on welfare payments, Finance Minister Chultem Ulaan said.
Risks associated with the North Asian country surged in July after Moody’s downgraded its bonds by
one rung to B2, a rating that signifies “high credit risk,” for reasons including plunging foreign
exchange reserves, expansionary monetary and fiscal policies, and an unpredictable environment
for foreign direct investment (FDI). Moody’s estimates that total external debt was close to USD 20
billion in the first quarter of this year, equivalent to 167 percent of gross domestic product (GDP),
up from 158 percent of GDP in 2013. As a share of current account receipts, the external debt rose
much more steeply to 325 percent in 2013, up from 162 percent in 2011. At the same time, foreign
direct investment to GDP has plummeted to USD 402 million in the first five months of 2014, from
USD 1.1 billion during the same period of last year.
Mongolia’s Fiscal Stability Law stipulates that government debt to GDP cannot exceed 40 percent of
GDP from 2014 and Ulaan said the government is working hard to meet that target. “At the start of
the year [government debt to GDP] was 50 percent and now it is down to 44 percent,” he said,
adding that it was Ulaanbaatar’s goal to bring the ratio to beneath 40 percent. Part of the restraint
required by the law would come in the form of pared back welfare spending, so as to forward a
“goal to change the welfare system in which a lot of wealth collected is paid out to the public.”
Ulaan also said it is crucial to get the Oyu Tolgoi project back on track, partly because the ensuing
FDI inflows would strengthen Mongolia’s ability to service its external debts and partly because of
the restorative effect a resolution would have on Mongolia’s reputation.
A windfall from a visit to Mongolia in August by Xi Jinping, the Chinese president, was the increase
in the value of a currency swap agreement between central banks to CNY15 billion (USD 2.4 billion)
from CNY 10 billion previously. Moody’s said that the facility would bolster Mongolia’s weak
external position. The extension of the bilateral facility is credit positive for Mongolia (B2 negative)
because it will help address the country’s rapidly dwindling foreign reserves, stem downside
pressure on the tugrug currency and bolster a weak external payments position.

10. Source: Financial Times
SCO SEEKS TRANSPORT HUB IN MONGOLIA
The Shanghai Group is expected to consider Mongolia as the next member of the organization,
which is set to become a transport hub, the director of the Russia department of the SCO
International Relations Institute said Wednesday.
“For Mongolia, we need to see how it can become a transport hub in SCO, and how it could offer a
new model of cooperation,” Feng Noyzun said at the International Information Agency Rossiya
Segodnya press conference.
Andrei Kortunov, Director General of the Russian International Affairs Council, said: “Mongolia’s
membership is a prospect. Mongolia has its own keys to North Korea. So the SCO is not a war or
economic bloc, but a more flexible, more functional organization. And that is why the Mongolian
case is needed.”
Source: RIA Novosti
RUSSIA TO LIFT CONTROLS ON MONGOLIAN MEAT EXPORTS, SAYS PUTIN
Russia will lift restrictions on the import of meat products from Mongolia, Russian President
Vladimir Putin said on 3 September following talks with President Tsakhia Elbegdorj.
"We will certainly make steps towards our Mongolian friends and the decisions will be taken by the
Russian Government in the near future," said Putin.
Putin said that Mongolia has a big opportunity to significantly increase the supply of meat products
to the Russian market given compliance with Russian food safety regulations. In the last decade
Russia imposed restrictions on the import of livestock from Mongolia due to several outbreaks of
foot-and-mouth disease (FMD). In August, in retaliation for Western sanctions against Russia,
Moscow imposed a one-year food embargo against the countries that targeted it. Among the most
hit by the ban was Germany, which supplied 750,000 tons of pork annually, worth over EUR 1 billion
(USD 1.31 billion). The Canadian meat industry was also hit hard, with pork worth USD 500 million
left without a market in Russia, while Australian beef exports lost USD 147.4 million.
Source: RT
NEW UB ROAD COMMISSIONED
Prime Minister Norov Altankhuyag on 5 September attended the opening ceremony for a new 17.1-
kilometer road running between the Yarmag district at the north of Bogd Khaan Mountain to a road
checkpoint at Bayanzurkh District that planners say will reduce traffic in the area by a third.
In addition to the paved road is the construction of a 24.7-meter long bridge near the Bayanzurkh
checkpoint, and another 19-meter bridge near Zaisan Hill. Light posts have also been installed
along 1.2 kilometers of the road near the Zaisan Hill which has been illuminated as well.
Altankhuyag noted in his speech that authorities should put a special watch on the area as slippery
roads in winter might make navigating the windy road dangerous.
Construction spanned 16 months and cost MNT 24.7 billion, making it one of the biggest projects
achieved under the watch of the current government, said the prime minister. Construction was
performed by ESTO LLC while Monkonsalt LLC supervised.
Source: Montsame
VICE SPEAKER MEETS WITH HEAD ARCHITECT FOR PLANNED UB-NEIGHBORING CITY
Parliament's vice speaker met with the head of the urban planning committee for a new city to be
located near Ulaanbaatar.
Parliament Vice Speaker M. Enkhbold on 5 September met with Stefan Schmitz, a key architect at
the urban planning committee for the Maidar–Eco city. The city is planned for an area of 110,000
hectares north of Bogd Khan Mountain to hold population of 300,000. Schmitz said his team of
German architects currently leading planning is able to assist with the technology side for the urban
planning and provide experts. Development of the city will be handed off to Mongolian counterparts

11. in November, he said. The new town could be a new location for government agencies rather than
Ulaanbaatar, he suggested, "which will help in decentralization."
Enkhbold, a representative twice elected into office by Tuv Aimag, said he would support the
project due to the overcrowded conditions in the capital. “Ulaanbaatar was only planned for 68,000
people, according to the 1986 general plan, but the population has already reached over 1.2
million,” he said. “After working in the fourth urban planning group committee for the capital
while at the mayor’s office, my wish is that the Maidar–Eco City will meet the standards of New
York and Sapporo,” he added.
Enkhbold when serving as deputy minister initiated construction of a 25 kilometer road to the new
district.
Source: Montsame
NO MONEY LEFT FOR MONGOLIA'S POOR
Inside her home on the outskirts of Mongolia's capital, Altanzul Tsend-Atush sits surrounded by her
children and other children from neighboring gers. Altanzul does not think much of the often-
touted headlines on Mongolia having, up until recently, one of the fastest growing economies in the
world.
"We didn't see any of that money," the mother of six said. "We see a big gap with the way the poor
live and the way the rich live—I worry that the children will not have enough food and clothes for
the winter."
Altanzul's husband died of cirrhosis of the liver—a not uncommon illness in a country notorious for
its alcohol consumption. He had been too sick to work for some time, and with no palliative care
available, he had been staying at home in the ger along with his wife and six children who are aged
3 to 17. "All our hopes are now on our eldest daughter to get a job," said Altanzul.
Families in Mongolia receive around USD 11 a month from the government for each child—not
enough to cover food bills in a country suffering from rising prices and currency depreciation. It
means families like Altanzul's are living a hand-to-mouth existence, unable to save or make any
provision for the future. The government is among the first to admit fault when it comes to how
the influx of mineral wealth was handled. The vice minister of economic development, Chuluunbat
Ochirbat, said mistakes had been made following the financial boom. "[These are] true comments
and remarks," Chuluunbat said when asked about a World Bank report criticizing the government's
financial policy.
As the welfare fund ran dry, and families began to struggle to survive, Mongolia's government
looked to foreign investment to try to boost the economy once more. Chuluunbat said that approval
of a new law would make foreign investment easier. The government also plans to approve oil and
gas exploration in the country as a way of making financial gains. Chuluunbat said the welfare fund
had been spent too quickly because the country's rich were given as much as the poor.
Source: Al Jazeera
IS MONGOLIA'S MINING BOOM CAUSING UB TO RUN OUT OF WATER?
Water is already scarce in Ulaanbaatar. But with the mining industry competing with energy
facilities, agriculture and urban residents for water resources, the problem will intensify, says
analyst Qingfeng Zhang.
A recently released report by the Asian Development Bank (ADB) titled "Demand in the Desert:
Mongolia's Water-Energy-Mining Nexus," the development of the mining industry is leading to an
increase in the demand for water and energy; scarce resources especially in Mongolia's capital and
largest city, Ulaanbaatar. Qingfeng Zhang, the lead water resources specialist at ADB who oversaw
the report said that water shortages in the capital city are expected as early as 2015 as existing
groundwater supplies become fully utilized. Ulaanbaatar will then be forced to draw on additional
groundwater resources, but these may only last until 2021.
“Mongolia should promote energy efficiency in homes and industry, better rainwater collection, and
more recycling of wastewater,” he said.

12. Mongolia's mining boom raises environment concerns. For example, in the Galba-Uush Doloodin Gobi
Basin in the south of the Gobi Desert, recent water use has been less than five million cubic meters
per year. Major new mining operations, including Tavan Tolgoi and Oyu Tolgoi, and a new coal fired
power station, are expected to dramatically increase water demand, with an estimated 108.2
million cubic meters of water expected to be consumed annually by 2025. Although, basin-wide
water shortages are not predicted, it is expected that mining and energy water use will further
exacerbate water use conflicts with local communities and traditional herders.
“Mongolia suffers from regional scarcity of water resources. Abundant surface water resources are
located in Northern Mongolia. However, this water is inaccessible for most parts of the country.”
Source: DW
OUT OF STEPPE
Mongolia's booming economy is growing millionaires, but what happens to those who miss out or are
left behind?
Tserenjigmed Dagvadorj and his brother, Ganbaatar, are two of Mongolia's richest businessmen.
With a portfolio of businesses ranging from hotels to supermarkets and construction companies, the
brothers symbolize the former Soviet republic's fervent embrace of capitalism. But in the new
Mongolia, capitalism has not been as kind to everyone. A single mother living in a traditional yurt
on the outskirts of Ulaanbaatar, says she struggles to provide the daily necessities for her children.
After leaving the steppe to pursue work in the city, she has been shocked by the high cost of living.
She and her children often rely on hand-outs from charities.
A new consumerist way of life has emerged in the cities, prompting a rural exodus from the
country's vast grasslands. Of the three million Mongolians, half now live in the capital. Many are
abandoning nomadic lifestyles in search of better wages in the city. But the gap between the rich
and poor is extreme. Some 60 percent of Ulaanbaatar's population lives in slums with no access to
running water or electricity, in a city where winter temperatures can plummet to minus 40
degrees. Each year, more than 50,000 people leave the steppe to settle in neighborhoods
surrounding the capital. But once there, they say that their jobs are unstable and wages low in
relation to the cost of city living. Many rely on charities like the one run by Tuul Saruula, a fashion
designer who embodies the new Mongolia. She custom-makes expensive outfits for Ulaanbaatar's
socialites, but set up a charity after seeing the effects of the growing wealth disparity on the city's
outskirts. Here, she says, "poverty and alcoholism are rife."
This sentiment is fostering a new brand of nationalism, best symbolized by Amra, one of the
country's most popular rock stars. His lyrics, which lambast foreigners who profit from Mongolia’s
natural resources, appear to have touched a nerve with the Mongolian public, with his concerts
drawing record crowds. Even some of the country's elite are sounding a warning note that
Mongolia's rich traditions are at risk of being lost in the rush to modernize. The Dagvadorj brothers,
the powerful businessmen, are desperately trying to hold onto the traditions of their forebears,
investing in a herd of 500 race horses in the countryside. They visit their horse breeders as often as
their hectic business schedules allow, holding traditional ceremonies and customs that have been
passed down through generations.
Source: Al Jazeera
PEABODY ENERGY'S GREG BOYCE SAYS DON'T WRITE OFF COAL
As chief executive of the United State's largest coal company by output, Peabody Energy Corp.,
Greg Boyce carries the flag for an embattled industry. Peabody, which operates mines in eight U.S.
states and Australia, and was once set to play a key role in mining the Tavan Tolgoi coal deposit,
recorded USD 1.1 billion in losses over the last two years, mainly because of price swings, and is
poised to be in the red again this year. It also is loaded with debt: USD 6 billion—twice the level of
2010. Much of that stems from the USD 5 billion acquisition in 2011 of an Australian coal company,
purchased to give the St. Louis company greater access to growing Asian markets for coal used to
make steel.

13. Boyce's strategy has been to cut costs and hope for a recovery in what typically are cyclical coal
prices. Analysts agree that the coal market is likely to recover eventually, "but it's been down a
while," said Bob Hodge of IHS Energy. Peabody meanwhile faces competition for electricity
generation from natural gas, proposed environmental regulations aimed at slashing carbon
emissions and a public perception that coal is a dirty and dusty relic.
The 59-year-old Mr. Boyce, who has been CEO since 2006, said in a recent interview that people
shouldn't write off an industry that supplies more than 40 percent of the nation's electricity at a
cost that helps reduce "energy poverty."
When asked if coal could clean up its reputation, he pointed to figures that show that the world is
far from able to give up the black stuff over night. “Explain to everyone how much electricity today
depends on coal,” he said. “I mentioned to folks here in the U.S. that we still get 42 percent of our
electricity on coal. And they say, "Wait a minute. I thought we stopped using coal." He added that
coal technology had come a long way, noting that while use in the United States had grow 200
percent since 1970 carbon emissions had fallen 90 percent.
Source: Wall Street Journal
CHINA SCRAPS DEMAND FOR IRON ORE
There is more than one reason iron-ore miners and steel producers need to scrap the idea that
Chinese demand will save them.
The five-year nadir the price of iron ore reached last week reminded investors that the world's
biggest consumer of iron ore, China, is slowing down and doesn't need as much ore to forge into
steel. There is another thing to be mindful of: China can soon meet part of its demand by turning to
its own scrap metal. China so far hasn't recycled too many of its old cars, appliances or
construction material for fresh use in steel, simply because it didn't have many metallic objects
idling around. But China's breakneck growth in the past decade should mean more scrap is
available.
For instance, cars can be recycled 5 to 10 years after production, says CLSA's Ian Roper. So the
vehicles purchased by consumers in the automotive buying boom that started in 2009 may soon
make their way to steel furnaces. China last year boasted 127 million registered cars and trucks on
its roads, from 27 million a decade ago, according to data provider CEIC.
The new local supply of scrap is already making its presence felt in trade. Imports of iron-related
scrap between January and July fell by nearly half from last year. And they are a fifth of the
amount in 2009, when China needed all the steel it could get as the government sought to
stimulate the economy. More scrap should mean that China needs less iron ore to process into new
steel, especially because a 40 percent export duty on scrap keeps this recycled material at home.
Of course, China could process that scrap into finished products that it exports abroad, so more
Chinese scrap could succeed in hurting steel prices worldwide.
Iron-ore miners and steelmakers may wish that China's old cars and washing machines just rust
away. In reality, they are here to stay in one form or another.
Source: Wall Street Journal
CHINA ON TRACK TO HIT ANNUAL GROWTH TARGET OF ABOUT 7.5%, PREMIER SAYS
China is on course to hit its annual growth target of about 7.5 percent this year, Chinese Premier Li
Keqiang said, as he sought to reassure a high-profile gathering of Chinese and overseas executives
that the world's number-two economy continues to welcome foreigners and remains committed to
overhauls.
Li's comments at a gathering of the World Economic Forum on Wednesday come as more foreign
companies in China express worries. Recent polls by business groups show rising concerns about the
country's slowing economic growth, the pace of overhauls and stepped-up enforcement of the
country's pricing and antitrust laws.
"We are committed to pressing ahead with reform even though it is not an easy thing," Li said in the
northeastern Chinese city of Tianjin. "Just like an arrow shot, there will be no turning back."

14. Following the speech, he reiterated China's stance that it treats foreign and domestic companies
equally when it enforces the law. China's economic planners, long used to exceeding targets by a
couple of percentage points, have faced tough sledding this year. First-quarter growth came in at
7.4 percent compared with a year earlier, its slowest pace in 18 months, prompting targeted
stimulus measures such as loosened lending and spending on rail and housing projects. Second-
quarter growth rose slightly to 7.5 percent, but measures of trade, property prices and
manufacturing activity show momentum has slipped again, raising questions about the sustainability
of Beijing's growth-fanning measures. Some economists expect China to ramp up targeted stimulus
measures during the rest of the year to hit the 7.5 percent target.
China has twice this year lowered the amount of reserves that banks must hold with the central
bank in ways that loosen lending for specific industries such as agriculture, Li said. China's broadest
measure of money supply, M2, was up 12.8 percent on year at the end of August, marking the
slowest growth in five months. Li said China will continue to innovate and push into higher-value
industries even as it continues to benefit from and support the global order. "The Chinese economy
is resilient and has ample room to grow," he said, adding: "The world needs China, and China needs
the world."
Source: Wall Street Journal
KHAN RESOURCES CEO EXPLAINS WHAT WENT WRONG IN MONGOLIA – EDITORIAL
For some, the grass always appears greener for mining projects in distant and foreign jurisdictions.
But, in turn, we too often assume they (surely) would be converging to, if they are not already
similar to, Western norms.
Historically, political risk was covered by adding an extra percentage point to the interest rate on
debt drawn down for a project, the extra percentage point being for political risk insurance. Today,
however, a government’s track record becomes paramount as it takes upwards of a few decades to
establish any type of solid and certain record. On a scale of political risk, a country like Mongolia
would receive reasonable marks for rhetoric but would have to be awarded a failing grade for
actions.
My association with Mongolia comes from becoming a director of Khan Resources in 2007 and then
chief executive officer in 2010. Our minority partners in the project are (were) the governments of
Mongolia (through state-owned Monatom LLC) and Russia (through ARMZ). Activity in the nineties
and early 2000’s were limited due to a very poor market for uranium, but a significant rise in U3O8
prices in 2004 justified development for the Dornod project in 2005. The result was an independent
feasibility study in March of 2009 that calculated proven and probable reserves in excess of 50
million pounds U3O8, a project CAPEX of USD 330 million and an operating cost of USD 23 per pound
of U3O8.
However, in July 2009, the government of Mongolia suspended Khan’s Dornod licenses and
promulgated the Nuclear Energy Act, an act that sought to seize 51 percent of Dornod for the
government at no cost to them. In addition, the premier at the time went on to announce the
intention to establish the Dornod Joint Venture, a venture consisting of Mongolia via Monatom and
Russia via ARMZ to develop uranium mines in Mongolia starting with the Dornod deposit. There was
never any mention or acknowledgement of Khan’s interests in these announcements. The Dornod
licenses were never returned to Khan and were “revoked” in the spring of 2010. In January 2011,
Khan announced the initiation of an international arbitration action against the government of
Mongolia for the illegal confiscation of its interest in Dornod. A senior and well-respected Tribunal
heard the case in November 2013 and is expected to render its decision on the case in the near
future. In all, Khan is seeking over USD 350 million in damages (including interest).
A principal theme of this international arbitration case is whether or not Mongolia followed
international standards of due process (or the rule of law) in its expropriation of Khan’s Dornod
licenses. Any award to Khan will be legally binding and final.
Political risk is an ever-changing target in many jurisdictions and may take decades to stabilize to
any degree. Mongolia could be an attractive jurisdiction for foreign investment, but the country’s

15. actions to date have been disappointing to say the least. Investors need to undertake proper due
diligence and exercise caution before making any significant investment there.
Grant Edey is president and chief executive officer of Khan Resources Ltd. and a director of
Primero Mining with over 40 years of experience in the mining industry.
Source: Mining Markets
MONGOLIA AND JAPAN: THE ROAD TO ECONOMIC PARTNERSHIP - EDITORIAL
Japan was one of the first great powers to accept the Mongolian People’s Republic and establish
diplomatic relations with it in February 1972. Political relations with Mongolia were ceremonial in
nature up to 1990, but by 1977 Japan had become an important figure for its economic role.
After victory of the democratic revolution in 1990, Mongolia underwent a deep economic crisis from
1991-1993, due to the fall of the USSR, the country’s main support. It was in these years that Japan
became one of Mongolia’s main sponsors. Japan moved to the head of the movement it had
initiated, together with the World Bank, to provide donor assistance to Mongolia. The total
Japanese support by 2010 amounted to USD 3.6 billion. (More than 50 percent of the aid has been
in the form of grants, the rest in repayable loans).
Mongolia is interested in introducing Japanese technology, technical equipment, management, and
work methods. Japan, lacking any mineral wealth to speak of, is interested in obtaining from
Mongolia mineral raw materials (coal, copper, zinc, etc.) and agricultural products: beef, horse and
other meat, and wool. They have agreed to develop broad cooperation in agriculture, industry,
infrastructure, and the mining and tourism industries. They have also agreed on financial and
technical assistance from Japan in the realization of such major projects as the construction of a
medical training and diagnostic center in Ulaanbaatar, a refinery plant in Darkhan and a new
international airport near the capital.
President Tsakhia Elbegdorj’s and Japanese Prime Minister Shinzo Abe’s have negotiated for an
economic partnership agreement that is expected to be ratified in 2015. If ratified, it will help
promote trade, which in 2013 reached USD 280 million, and smooth the structure of trade. Today
Mongolia imports 90 percent and exports 10 percent; with 50 percent of imports being used
Japanese cars, and exports being beef, horse and other meats, and cashmere. For the expansion of
quantity of goods, the parties agreed on removing the 11 percent tax on Mongolian cashmere and
progressively reducing the 5 percent tax on the import of Japanese cars and the 38.5 percent
customs duty on the import of Mongolian meat. Finally, the Agreement will pave the way for an
increase in direct Japanese investment, currently at USD 500 million.
Mark Golman is a Ph.D. in history and a head research partner at the Institute of Oriental Studies of
the Russian Academy of Sciences, and a contributor to the Internet-magazine New Eastern Outlook.
Source: New Eastern Outlook
CHINA AND MONGOLIA CLASH OVER HOW TO EXPLOIT THE GOBI DESERT – EDITORIAL
The notion of conservation and the role of nature in everyday life is integral to the Mongolian
conception of the world whereas the Chinese model is focused on economic and infrastructure
development irrespective of environmental impact. That is playing out in the Gobi Desert, which is
home to herders and farmers, the world's fastest-growing economy, vast copper and gold mines and
is China's main domestic energy source.
Following Chinese president Xi Jinping’s visit to Mongolia to discuss a series of trade and energy
deals that would give Mongolia better access to global markets, it is worth looking at the shared
desert that lies between Beijing and Ulaanbaatar. As the two nations work together, reconciling
differences in the Gobi will be a major challenge.
In China strong state control and intervention has resulted in a manipulated water system where
farmers need swipe-cards to get allocated water, use of natural pastures for animals is restricted
and ecological resettlement sees once-mobile herders settled in villages by government decree.
Removal of livestock opens land for farming and most importantly, for profitable mining that often
is owned, or directly benefits, local governments. Mining in the region has led to economic growth,
jobs, pollution, land degradation, dust generation and settlements that lack basic infrastructure.

16. On the other hand, the notion of conservation and the role of nature in everyday life is integral to
the Mongolian conception of the world. In Mongolia national parks comprise 13 percent of the
country and species such as the Gobi bear, gazelle, marmot and saker falcon benefit from social
conceptions of nature's importance and varying degrees of protection. Though a vast area, the
Gobi's harsh environment and intricate ecosystem make wide swathes of open land and limited
human use of nature key to conserving flora and fauna. This means creating non-financial value for
wild steppe and desert regions. Preservation in the Gobi takes place against Mongolia's weak
institutional framework and China's all-powerful bureaucracy.
The picture in Mongolia is more optimistic as history and cultural preferences favor a strong role for
nature in Mongolia's conception of the world.
Troy Sternberg is a Researcher in Geography at the University of Oxford. He does not work for,
consult to, own shares in or receive funding from any company or organization that would benefit
from this article, and has no relevant affiliations.
Source: The Ecologist
POLITICS
PREMIER ANNOUNCES PLANS FOR CABINET RESHUFFLE
Prime Minister Norov Altankhuyag said he would submit to Parliament a proposal to reshuffle the
Cabinet Secretariat in his latest bid to direct improvements in the economy.
He said the changes would be to better address rail issues regarding the Oyu Tolgoi and Tavan
Tolgoi projects, continue his efforts to introduce greater economic transparency with the Law on
Debt Management, as well as address a litany of issues concerning the capital markets, corporate
governance, welfare for children and the elderly, unemployment, the development of
infrastructure and the agriculture sector.
Altankhuyag also responded to criticisms of his 100-day economic stimulus initiative, which he sad
“some officials deliberately distort it for political purposes.” He said improvements in the economy
would come slowly, and that the country will have to focus on its largest projects if it is to see any
dramatic change.
“Foreigners have appreciated the legal reform in foreign investment, but, nonetheless, the freeze
at the Oyu Tolgoi and Tavan Tolgoi projects are blocking the way for foreign investment. If these
can be tackled this autumn, it would bring USD 4 billion in investment,” said Altankhuyag.
Source: Montsame
CABINET ASKS FOR ANOTHER DRAFT OF PRESIDENT'S BILL FOR DISTRIBUTION OF MINING
PROFITS
The Cabinet Secretariat has handed back a bill submitted by the Office of the President that aims
to foster the equal redistribution of the wealth earned from Mongolia's mining sector. The Cabinet
on 4 September told the president's teams to cooperate with the Ministry of Finance for the next
draft, adding that the bill should focus on introducing a financial structure that protects the
national economy against price swings for minerals.
Source: Montsame
MPP TAKES TO THE OFFENSIVE WITH POOR OUTCOMES FROM ECONOMIC STIMULUS INITIATIVE
The opposition Mongolian People's Party is calling for the dismissal of Economic Development
Minister Nyamjav Batbayar as they are holding him accountable for the poor economic conditions in
the country after what they claim was a weak impact from Prime Minister Norov Altankhuyag's 100-
day economic stimulus initiative.
The opposition Mongolian People's (MPP) has criticized the initiative as a weak show from
authorities to buy themselves time away from criticism. They point to the fact that during the
campaign the tugrug had depreciated to an annual low of MNT 1,900 against the U.S. dollar and
over MNT 310 against the yuan. Also during that time consumer goods grew between 21 and 60
percent and the year's deficit grew to over MNT 160 billion.

17. MPP Chairman M. Enkhbold pointed out that the government had only approved 34 projects of a
total 70 projects it promised to pass to help drive the economy and that the government had
ignored the need to taper out the Price Stabilization Program, which they said was wasteful
spending when that money could be spent on pensions.
“When the government announced the economic stimulation program EZEN-100, opposition parties
did not just sit by and watch, but suggested some projects,” said MPP Chairman S. Byambatsogt.
“They did not listen to us and there are no results.”
Democratic Party Chairman D. Erdenebat has changed his tune from a May press conference where
he said government would be held accountable for the stagnating economy if the 100-day initiative
failed to drive change in the economy. In an 8 September interview D. Erdenebat said people
should look for the positives. “The ‘New Government for Changes’ has been the most open and
business-like government. We should not judge people’s sole mistakes, but people must have the
ability to find and fix their mistakes. Changing the government does not guarantee that new staff
will work better.”
Source: UB Post
PRESIDENTS OF CHINA, RUSSIA, MONGOLIA LIKELY TO HOLD THREE-PARTY MEETING
China and Mongolia are calling for a three-party meeting among presidents of China, Russia and
Mongolia in the near future, Foreign Ministry spokesman Qin Gang said on Thursday.
The consensus was reached during President Xi Jinping's Mongolia visit last month, Qin told a daily
press briefing, adding the three countries are maintaining close communication. Russian President
Vladimir Putin arrived in Ulaanbaatar Wednesday for a one-day working visit and held talks with his
Mongolian counterpart Tsakhia Elbegdorj to promote bilateral cooperation.
Both China and Mongolia, and Russia and Mongolia are good neighbors and partners linked by
mountains and rivers, Qin said, stressing China hopes the development of Russia-Mongolia ties will
be conducive to regional peace and stability. China is willing to work together with Russia and
Mongolia to achieve stability and development of the region, he said.
During President Xi's state visit to Mongolia on 21 and 22 August, President Xi and President
Elbegdorj signed a joint declaration to upgrade bilateral ties to a comprehensive strategic
partnership.
Source: CNTV
DPRK DELEGATION TO VISIT EUROPE, MONGOLIA
A delegation of the ruling party of the Democratic People's Republic of Korea (DPRK) on 6
September left China to visit Europe and Mongolia, the official KCNA news agency reported.
The Workers' Party of Korea (WPK) delegation, led by Kang Sok Ju, a political bureau member of
the WPK Central Committee, will visit Germany, Belgium, Switzerland, Italy and Mongolia, said the
KCNA, without disclosing further details.
The DPRK, which faces strained relations with South Korea and the United States, is now seeking to
break the ice in diplomacy with a series of moves.
Last week, Japanese lawmaker Antonio Inoki went to Pyongyang to stage a two-day international
wrestling tournament. During his short stay here, he held talks with DPRK officials over the re-
investigation into abductions of Japanese nationals in the 1970s and 1980s. The visit, which drew
worldwide attention, was widely called "sports diplomacy" and believed to help warm DPRK-Japan
relations.
DPRK Foreign Minister Ri Su Yong was also reported to address the U.N. General Assembly later this
month. The last time the DPRK sent a diplomat to attend the UN General Assembly was in 1999.
Source: Xinhua
SKULL OF T-REX RELATIVE SMUGGLED INTO U.S. FROM MONGOLIA
Federal prosecutors say a 65-million-year-old dinosaur skull was smuggled from Mongolia into the
United States by a French company that tried to pass the fossil off as a cheap replica.

18. Prosecutors say the skull and vertebrae of the Alioramus dinosaur arrived in New York in January
with paperwork saying it was a cast worth about USD 3,400. But U.S. Customs and Border Protection
officials and Homeland Security investigators say the company later admitted it was a genuine fossil
from Mongolia worth at least USD 250,000. As WCBS 880’s Irene Cornell reported, U.S. Attorney
Loretta Lynch said a stolen fossil of cultural and historical significance will not find safe haven in
our ports. The dinosaur is a relative of the Tyrannosaurus rex.
Federal prosecutors say the skull must be forfeited. It will likely be returned to Mongolia, where
national law prohibits the sale of such artifacts outside the country.
Source: CBS
PUTIN'S FEATURED ON COMMEMORATIVE POSTAGE STAMP
The Mongol Post released a special issue postage stamp commemorating Russian President Vladmir
Putin's five-hour visit to Mongolia on 3 September. The special issue postage stamp dedicated to the
Russian leader's visit to Mongolia last week is available for 800 MNT. The post also issued a special
stamp to commemorate the state visit of China's President Xi Jinping to Mongolia in August.
Source: News.mn
FIRST DEPUTY CHAIRMAN OF GENERAL POLICE DEPARTMENT APPOINTED
Minister of Justice Kh. Temuujin on 9 September appointed J. Ganbaatar as first deputy chairman
of the General Police Department. Ganbaatar was a deputy head of the General Police Department
and was in charge of support rendering affairs. The same day, the Minister granted him a title of
first deputy commissioner. Ganbaatar is replacing D. Erdenebaatar who was dismissed due to links
with alleged defamation against the Justice Minister.
Source: Montsame
UB BANS OUTDOOR CAR MARKETS
The Ulaanbaatar Citizens Council has issued an ordinance banning outdoor car markets, effective 1
October.
The council said the ban would reduce traffic accidents near the markets, which they said have
become a common occurrence near the largest ones. Ulaanbaatar's Specialized Inspection Agency
on 5 September delivered notices to car sales organizations that they must remove cars from public
areas immediately. Those that fail to comply will be fined, according to the law.
Source: News.mn
MONGOLIA IS ATTEMPTING TRICKY BALANCE BETWEEN THE DRAGON AND THE BEAR
Ulaanbaatar is looking to counter economic decline by exploiting more of its estimated USD 1.3
trillion in mineral resources. Presidential visits from China and Russia oversaw the signings of
multiple agreements in business and other areas, but at the same time it is painfully aware of the
risks of being dominated by any one partner.
“This traces back in history ever since China has become an urban settled civilization, (whereas)
Mongolia has its nomadic civilization,” explained Munkhdul “Mogi” Badral of Cover Mongolia.
“These are differences in our cultures, and where the very beginning of tensions began.” They
“never stopped”, he said, even at the height of Mongol power, when Chinggis Khan's descendants
ruled the largest contiguous land empire in history, stretching from eastern Europe to the South
China Sea.
Mongolia was in Moscow's orbit and under Communist rule from 1924 to 1990, when the Soviet
Union to the north was its major trading partner. It remains heavily reliant on Russian fuel and
electricity supplies, and political ties with Moscow remain strong, as do post-Soviet nostalgia and
pro-Russian sentiment in some quarters. Putin's visit was his third since he first became Russian
president in 2000, and in 2003 Moscow eradicated some 98 percent of Mongolia's Soviet era debt. It
then sought out mining and infrastructure projects, but its efforts have been “plagued by
problems”, said Sergey Radchenko, an international politics specialist at Aberystwyth University.

19. Mongolia has meanwhile formed strong links with the United States, which views it as a strategic
counterweight to its powerful neighbors and spends about USD 2 million a year on military
equipment for its 10,000-strong army. Japanese Prime Minister Shinzo Abe visited last year, while
Mongolia's President Tsakhia Elbegdorj signed a free trade deal in Tokyo in July.
China is the only country with which Mongolia has a trade surplus, Mogi pointed out. “We realized
that it's inevitable that we'll have to deal with China. Anti-Chinese sentiment will always be there,
but hopefully it will become more reasonable in future.
“All of China's neighbors, we should all have the same level of wariness when it comes to balancing
Chinese economic influence over our countries.”
Source: AFP
THE USSR'S LEGACY IN MONGOLIA
Mongolians are fiercely proud of their fledgling democracy. It is, they say, a sign that Mongolia is
politically independent, a free nation that will not be controlled by its much discussed neighbors—
Russia and China. The government—seen by many to be failing the poor, the environment, the
herders, and other mainstays of Mongolian life—will nevertheless complete its term of office and by
voted out "in the right way".
It is relatively new, this idea of a democratically elected government. The "democratic revolution"
of the 1990s spelled the beginning of the end of seven decades of socialism under the influences of
the USSR. So democracy in modern Mongolia can be traced back to the disintegration of the Soviet
Union. Seemingly, so can almost everything else. From traffic jams to the struggle of the LGBT
community—the end of the Soviet era in the early 1990s is the cause.
"Ulaanbaatar was not designed for everyone to have their own cars," said the driver Ganbat as
drivers honked their horns and to navigate the crammed streets of the capital. "It is a Soviet city—it
is designed for people to use public transportation."
For good or for bad, it cannot be denied that the Soviet Union left its mark on Mongolia—but there
is still strong positivity towards Russia. Despite China making up the majority of Mongolia’s export
markets—it is Russia that enjoys the bulk of the land-locked nation’s finer feelings. Altai Dulbaa, a
professor of Russian studies, said: "To truly understand the relationship between the two countries
you must go back to the 13th century, when Mongolia invaded Russia and brought the tribes
together."
But even this historic relationship was affected by 1990. "After the collapse, the relationship
became cold," Dulbaa said. "Boris Yeltsin was dealing with many problems at home and did not look
to Mongolia."
But Vladimir Putin, his successor, "is very distinctive because he has visited Mongolia many times",
said Dulbaa.
Source: Al Jazeera
___________________________________________________________
ANNOUNCEMENTS
NAMBC 17th ANNUAL INVESTORS CONFERENCE 2014, 7-8 OCTOBER, BEST WESTERN
Registration is still open for the 17th Annual Investors Conference organized by the North America-
Mongolia Business Council (NAMBC). Venue is the Best Western Tuushin Hotel. Speakers include
State Great Khural Chairman Z. Enkhbold, former President P. Ochirbat, Principal Deputy Assistant
Secretary of Commerce John Andersen, senior government officials from Mongolia, the US and
Canada and leading experts on the Mongolian economy. Program segments include the “Future of
Mining,” “Trade, Investment and the Third Neighbor Policy,” and “Reigniting Economic Growth.”
This is the oldest, continuously held conference on Mongolian business in the world. The BCM is a
sponsor and BCM members are treated the same as NAMBC members for registration. Non-members
are welcome. For more information and registration forms, visit www.nambc.org. If you have any
questions, contact nambc@mobemail.mn or hqinfo@nambc.org, or call UB Office Director Bolor at
9918-4372.

20. _____________________________________________________________________
RISK MANAGEMENT AND INSURANCE SOLUTIONS CONFERENCE, 15 OCTOBER, BLUE SKY TOWER
The Business Council of Mongolia has partnered with Aon for the Risk Management and Insurance
Solutions Conference for Mongolian industries on 15 October at the Blue Sky Hotel and Tower in
Ulaanbaatar.
A mining session will be held the morning of the conference by a number of business professionals
from the leading reinsurance and insurance markets of Europe who will provide an up-to-date
overview of the mining industry with a major focus on real cases and applicable specifics. A guest
speaker from Oyu Tolgoi LLC, the most significant as well as technically-advanced project in
Mongolia, will provide an insight on the Health and Safety risk approach introduced into their
operations. Political risks and trade credit will be in focus in the afternoon for the second session of
the conference day, as well as analysis of Aon's crisis management practices.
Participation is free of charge and is subject to preliminary reservation. Email
saruul@bcmongolia.org by 30 September for registration or call 11 317027.
____________________________________________________________________
MONGOLIA PROJECTS & INVESTMENT SUMMIT, 17-19 NOVEMBER, HONG KONG
The Mongolia Projects & Investment Summit will be held in Hong Kong from 17 to 19 November,
where Prime Minister Norovyn Altankhuyag will present his vision to sustain Mongolia’s growth.
The context of the Summit will be a constructive, productive and sincere appraisal of Mongolia as a
place for FDI, given the current circumstances, and what is being done to strengthen its
attractiveness to the international investment community. The Mongolia Projects & Investment
Summit Hong Kong will bring together leading business, investment and governmental figureheads
in an environment of progressive discussion and action.
The implementation of the new Investment Law, amendments made to the Mining Law, a realized
dedication to PPP and more do show that the government is moving in the right direction. The
question on investors’ minds is what tangible progress has been made since last November which
would warrant a return of FDI?
BCM members will be eligible for a 15 percent early bird special that lasts until 12 September.
Download the brochure for the conference agenda here. For registration logon here, or for more
information email info@beaconevents.com or call: +852 2219 0111.
_____________________________________________________________________
BCM WORKING GROUP NEWS
The BCM Environmental Working Group met on Thursday, 28 August with 33 members attending.
Bayarmaa A, Vice Director, BCM opened the meeting and announced the new chair of BCM's
Environmental WG.
New chair Bulganmurun Ts, Senior Officer at GGGI moderated the session. Congratulations to her on
her new role.
New Participants: Otgonsuren A - Wildlife Conservation Society, Yokoyama Hiroki - JICA,
Sugarkhorloo E - Techenomics, Sarnai G - Areva, Jargalsaikhan D, Ganchimeg R - MIH group, Naoh
Elbat, Ryan Calvert - Xac Bank, Darisuren P - US Embassy, Munkhjargal B - Mongolian Association of
Urban Centers, David Tsiklaur - USAID, Steffi Klawiter - MNU, Zandan B - UK Embassy.
Guests: Bjoern Wahlstedt - GIZ, Bunchingiv B - UNDP, Robert Angle - UC Merced Foundation and
University of California, Sugar E - Professional sport training center, Quentin Moreau - People in
Need, Itgel B - Gateway Development Mongolia, Bat - Erdene A - Green tTends.
Speakers and topics were:
Opening Remarks by:
Ms. Bayarmaa Amarjargal, Vice Director, BCM/Former Chair of the BCM’s Environment Working
Group

21. Ms. Bulganmurun Tsevegjav, Senior Officer at GGGI's Mongolia Representative Office, as our new
Working Group Chair;
Presentations:
• "GGGI's work in Mongolia and Mongolia's National Green Development Strategy with Focus on
Greening the Building Sector Opportunities and Challenges" by Ms. Bulganmurun Tsevegjav;
• "Mongolia's Green Building Council and Experience Sharing on Green Building Potentials" by Ms.
Nergui Dorj, Founder and Board Member of MGBC and Director of Mongolian National University;
• "Urban NEXUS activities of Ulaanbaatar city government with focus on buildings" by Mr.
Otgonbaatar Dorjgotov, Head of the Project and Cooperation Department, Ulaanbaatar City.
We are looking forward to follow up on this meeting and coordinate with the Mongolian Green
Building Council, Ulaanbaatar City government, private sector and other sector, associations
focusing on Green building development.
BCM will soon be establishing its Energy and Construction Working Group. If you’re interested in
joining this new working group, please contact Erdenetsetseg at erka@bcmongolia.org
______________________________________________________________________________________
BCM WEBSITES
MONGOLIAN WEBSITE: ‘PRESENTATIONS’
The following statistics and reports posted on Presentations section in Mongolian:
http://bcmongolia.org/mn/илтгэлүүд
• Монгол улсын нийгэм эдийн засгийн байдал, 2014 оны 4 сарын байдлаар, Үндэсний
статистикийн хороо
• Мандал Женерал Даатгал тайлан, 2014 оны 5 сар
• Сант марал сангаас гаргасан УЛС ТӨРИЙН БАРОМЕТР №13(47), 2014 ОН 3 САР
• Монгол улсын нийгэм эдийн засгийн байдал, 2014 оны 3 сарын байдлаар, Үндэсний
статистикийн хороо
• “Anti-Corruption legislation and State Policy” (Mongolian) by D. Munkhjargal, Prevention
and Public Awareness Department, Senior Commissioner, Independent Authority Against Corruption
(IAAC) Mongolia at the “ANTI-CORRUPTION LEGISLATION/POLICY, INTERNATIONAL BEST PRACTICE
ON TRANSPARENCY” Training seminar, Mar 06, 2014
___________________________________________
ENGLISH WEBSITE: 'PRESENTATIONS', 'MONGOLIA REPORTS', ‘INTERVIEWS‘, MONGOLIAN
BUSINESS NEWS’, ‘PHOTO GALLERY’
2 presentations from BCM monthly meeting on June 23, 2014:
• T. Gansuld, Executive Director, Outotec Mongolia – “Outotec Mineral Processing Solutions
and Experience in Mongolia”
• Lisa Gardner, Journalist & Media Trainer – “Mongolia’s Media Laws: Defamation, Libel and
Threats to Press Freedom”
3 presentations from BCM monthly meeting on May 26, 2014:
• B. Lakshmi, Director, Mongolia Economic Forum – “Why Mongolia Business Summit?”
• Nick Cousyn, Co-chair, BCM Capital Markets Working Group – “Use of MSE for State
Privatizations”
• Peter Benson, VicRoads Team Leader, ADB Capacity Building Project – “Mongolia Roads –
Achievements and Challenges”
• China Metals & Mining Thermal Coal, Coking Coal, Copper, Gold, Steel by Macquarie Capital
Securities Limited
Mongolia Reports: http://bcmongolia.org/en/mongolia-reports

22. • Mongolia Economic Report – August 2014 by BCM;
• World Investment Report 2014 by United Nations Conference on Trade and Development ;
• Social and economic situation of Mongolia as of May 2014 by National Statistical Office of
Mongolia; (available in Mongolian language - Монгол улсын нийгэм эдийн засгийн байдал 2014
оны 3 сарын байдлаар, Үндэсний статистикийн хороо);
• Real Estate Report 2014 by Mongolia Properties;
• ASIA Reaching for the Top by International Monetary Fund, June 2014;
• ASIA Achieving Its Potential by International Monetary Fund, June 2014;
• Mongolia: Economy outlook 2014, by Asian Development Bank;
• Polit Barometer by Sant Maral Foundation, March 2014.
Interview Section: http://bcmongolia.org/en/interviews
• Talking to United World, the Executive Director of the Mongolian Drilling Association (MDA)
Professor J. Tseveenjav. Source: http://www.worldfolio.co.uk/;
• Jim Dwyer, Executive Director, BCM – “Business need more business”;
• Damshnamjil Tsogtbaatar, Chairman of the SPC: “Privatizing Mongolia”;
• Jan Hansen, Economist, ADB: “The depreciation should help to increase the
competitiveness and to develop the non-mining industrial sector”.
BCM's English website includes the “Mongolia Business News” section. BCM continuously posts news
stories and analysis of relevance to Mongolia at ‘Mongolian Business News” before they are all put
together each week for Friday's weekly NewsWire.
The “Photo Gallery” contains photos from the 6th Anniversary BCM Renewal dinner on November
11, 2013.
The BCM NewsWire will continue to be issued each Friday, incorporating items already on the home
page for a consolidated account of the week’s events.
___________________________________________
SOCIAL NETWORK WITH BCM
The Business Council of Mongolia (BCM) has expanded its reach to your favorite social networks.
Keep up to date on the latest business deals in Mongolia and how the climate for investment is
improving each day with BCM.
Add BCM on Facebook at https://www.facebook.com/TheBusinessCouncilOfMongolia to read the
latest announcements and comment on events carried in the NewsWire with the community.
Hear breaking news and announcements as they happen when you follow BCM on Twitter at
https://twitter.com/bcmongolia.
The bulk of the content on BCM’s new LinkedIn page is Mongolian language to better cater to BCM's
Mongolian-speaking audience and members. Please click on the below link to follow us on our new
LinkedIn page.
http://www.linkedin.com/company/business-council-of-mongolia?trk=company_logo
Social stats: BCM now has 6,037 fans on our Facebook fans page, 1,721 connections on LinkedIn
network, and 1,208 followers on Twitter.
Of course for news information, interviews, event photos, VIDEOS and announcements regarding our
organization, visit the official BCM website at http://bcmongolia.org/en/
________________________________________________

23. INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
Year 2008 *22.1% [source: NSOM]
Year 2009 *4.2% [source: NSOM]
Year 2010 *13.0% [source: NSOM]

24. Year 2011 *10.2% [source: NSOM]
Year 2012 *14.0% [source: NSOM]
Year 2013 *12.5% [source: NSOM]
August 31, 2014 *13.7% [source: NSOM]
*Year-over-year (y-o-y), nationwide
Note: 13.6% y-o-y, Ulaanbaatar city, August 31, 2014
CENTRAL BANK POLICY LOAN RATE
December 31, 2008 9.75% [source: IMF]
March 11, 2009 14.00% [source: IMF]
May 12, 2009 12.75% [source: IMF]
June 12, 2009 11.50% [source: IMF]
September 30, 2009 10.00% [source: IMF]
May 12, 2010 11.00% [source: IMF]
April 28, 2011 11.50% [source: IMF]
August 25, 2011 11.75% [source: IMF]
October 25, 2011 12.25% [source: IMF]
March 19, 2012 12.75% [source: Mongol Bank]
April 18, 2012 13.25% [source: Mongol Bank]
January 25, 2013 12.50% [source: Mongol Bank]
April 8, 2013 11.50% [source: Mongol Bank]
June 25, 2013 10.50% [source: Mongol Bank]
July 30, 2014 12.00% {source: Mongol Bank}
CURRENCY RATES – 11 SEPTEMBER 2014
Currency Name Currency Rate
US Dollar USD 1,844.59
Euro EUR 2,385.98
Japanese yen JPY 17.26
British pound GBP 2,996.17
Hong Kong dollar HKD 238.00
Chinese Yuan CNY 300.90
Russian Ruble RUB 49.30
South Korean won KRW 1.78
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.
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