The document summarizes news from the Business Council of Mongolia newsletter. It highlights that MCS won contracts over $33 million, fuel shortages may impact SouthGobi operations, and Voyager Resources acquired a porphyry copper project. It also provides updates on bond issuances, World Bank optimism for Mongolia's growth but warnings about similarities to pre-2008 crisis conditions, and plans for the country's first sovereign bond issuance later in May.

1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
Issue 167, May 13 2011
NEWS HIGHLIGHTS:
Business:
 MCS wins contracts for over USD33 million;
 Fuel shortage may curtail SouthGobi operations;
 Voyager Resources acquires major porphyry copper project;
 Prophecy Resource appoints new Chief Financial Officer;
 Manas Petroleum completes public offering and gets TSX-V listing;
 Khan Resources expects arbitration proceedings to start soon;
 Entree Gold sells non-core assets;
 Fresh foods for Oyu Tolgoi from Miami;
 Singapore firm solves space problems in Mongolian offices;
 Rio Tinto “positive” it will weather storm of fragile global economy.
Economy:
 Sovereign bond issue, in tranches, to begin this month;
 World Bank optimistic, but sees similarities with pre-crisis days;
 USD770-million China-Mongolia currency swap agreement valid for 3 years;
 Central Bank sees agreement as a landmark;
 Government reduces fuel import tax, seeks new Russian supplier;
 PM’s company forgoes loan claim after controversy;
 Enebish defends slow progress in talks on Erdenes-Tavan Tolgoi;
 Imbalance in trade with Russia causes concern;
 World Bank funds Mongolia infrastructure feasibility studies;
 Government proposes IPO for Mongolian Railway;
 Erdenes-TT shares likely to be listed at two exchanges;
 MP explains opposition to free shares for companies;
 Import duty on potatoes, flour, carrots increased;
 Exports estimated to rise by 49% in 2012;
 5th
power station to be ready by 2020;
 Development Bank formally inaugurated;
 175,000 people work on Day of Public Labor;
 Power transmission losses reduced;
 36 coal mines under active exploitation;
 Ban on new exploration licenses to continue;
 No more free ride for commodities;
 Tide shifts suddenly in favor of dollar;
 U.S. set to regain industrial crown;
 As China invests, U.S. could lose;
 China denies large trade surplus result of cheap currency;
 China’s efforts to tame inflation fall short;
 South Korea seeks to shift reserves to China.
Politics:
 DP ahead of MPP in survey, though both lose popular support;
 MPs urge Speaker to dismiss Minister Zorigt for poor performance;

2.  Convicted Anod Bank official submits information to Anti-Corruption Authority;
 MP asked to explain claim he gave bribes;
 Headless Anti-Corruption Authority sitting idle;
 Fresh report on plan for nuclear waste storage in Mongolia;
 DP MPs find Government’s record “very poor”;
 New health law to focus on prevention;
 Speaker’s choice fails to reach Standing Committee;
 State officials to be made more accountable;
 Nobody being sent to attend hearing of Khurts’s appeal;
 Supreme Court rejects parties’ plea to merge;
 Movement leader sees no alternative to peaceful revolution;
 Foreign organizations lose registration;
 MNT 684.3 million to register Mongolians abroad;
 Kazakh party calls for protest against spreading Chinese presence.
*Click on titles above to link to articles.
BUSINESS
MCS WINS CONTRACTS FOR OVER USD33 MILLION
The Mongolian Mining Corp. has submitted to the Stock Exchange of Hong Kong details of four
recent agreements it has entered into, as they are with indirect wholly-owned subsidiaries of the
company. This is a mandatory requirement. The agreements are:
(i) Power and Heat Generation, Distribution and Management Agreement between MCS
International and Energy Resources, whereby MCS would provide services to the Group for
approximately USD19 million;
(ii) Pipelines and Supporting Facilities Construction Agreement between MCS International
and United Power, whereby MCS will construct pipelines and other ancillary supporting facilities for
about USD9.5 million;
(iii) CHP Concrete Installation Agreement between MCS Property and Enrestechnology, whereby MCS
will provide concrete preparation and pouring services for approximately USD4 million; and
(iv) Electrical Installation Agreement between MCS International and Enrestechnology,
whereby MCS will install high voltage electrical facilities for approximately USD1.2 million.
Source: Mongolian Mining Corporation
FUEL SHORTAGE MAY CURTAIL SOUTHGOBI OPERATIONS
SouthGobi Resources warned on Tuesday that it is facing fuel shortages and may have to curtail
operations following Russia's recent move to curb fuel exports. Russia is the primary supplier of fuel
to Mongolia and it has substantially cut fuel exports to Mongolia for the month of May, the company
said.
SouthGobi said its fuel supplier has claimed force majeure and will be unable to meet contracted
fuel supply this month. The company said it has managed to secure an agreement with a new
supplier to offset some of the shortfall. The company said the new supply combined with its
existing diesel stocks will allow its Ovoot Tolgoi mine to operate for about 45 days under normal
conditions, or around three months if operations were partially curtailed to preserve fuel.
Source: Reuters
VOYAGER RESOURCES ACQUIRES MAJOR PORPHYRY COPPER PROJECT
Voyager Resources has entered into an agreement to acquire up to 80% of the Khul Morit Copper
Project in the Gobi Region of Mongolia, which it calls ―an exceptional project located within an
underexplored world class porphyry belt that hosts the Oyu Tolgoi deposit‖. The project comprises
five exploration licenses for approximately 50 sq. km of highly prospective ground. Limited drilling
conducted to date has returned highly encouraging shallow high grade copper mineralisation, and
the company plans to complete at least 10,000 meters of Reverse Circulation and diamond core
drilling in 2011 at Khul Morit.
Source: Voyager Resources

3. PROPHECY RESOURCE APPOINTS NEW CHIEF FINANCIAL OFFICER
Prophecy Resource Corp. has appointed Mr. David Jan as its Chief Financial Officer. "We are pleased
to have David join the Prophecy management team," said Mr. John Lee, Prophecy's Chairman and
Chief Executive Officer. "His coal background is an excellent fit for the company." With Mr. Jan's
appointment, Ms. Irina Plavutska, formerly the company's Interim Chief Financial Officer, has been
appointed Corporate Controller of the company.
Source: Prophecy Resource
MANAS PETROLEUM COMPLETES PUBLIC OFFERING AND GETS TSX-V LISTING
Manas Petroleum Corp. has announced the completion of a public offering of units pursuant to a
long form prospectus filed in all provinces of Canada except Quebec and a registration statement
filed with the Securities and Exchange Commission on Form S-1 in the USA. Manas sold a total of
44,450,500 units at USD0.50 each for aggregate gross proceeds of USD22,225,250. Each unit
consisted of one share of common stock in the capital of the company and one common share
purchase warrant entitling the purchaser to purchase one additional common share until May 6,
2014 at a purchase price of USD0.70 per share.
Concurrently with the completion of the offering, Manas has been listed as a Tier 2 Oil and Gas
issuer on the TSX Venture Exchange. Shares of Manas common stock will trade on the TSX Venture
Exchange under the symbol MNP and the warrants issued in the offering will trade on the TSX
Venture Exchange under the symbol MNP.WT. Manas will retain its current listing on the OTC
Bulletin Board but the warrants will trade only on the TSX Venture Exchange.
Manas Petroleum is an international oil and gas company with primary focus on exploration and
development in south-eastern Europe, Central Asia and Mongolia. In Mongolia Manas has through its
100%-owned subsidiary, DWM Petroleum AG, an interest of 74% in two production sharing contracts
covering Block 13 and 14.
Source: Manas Petroleum Corp.
KHAN RESOURCES EXPECTS ARBITRATION PROCEEDINGS TO START SOON
Khan Resources reported significant developments during the second quarter included the filing on
January 10 of an international arbitration action against the Government of Mongolia for its
―unlawful and expropriatory treatment‖ of Khan in respect of the Dornod deposit. The Tribunal will
consist of three well-known and highly respected international arbitrators: Mr. L. Yves Fortier of
Canada (appointed by Khan); Mr. Bernard Hanotiau of Belgium (appointed by Mongolia); and Mr.
David A.R. Williams of New Zealand (appointed as the presiding arbitrator by Messrs. Fortier and
Hanotiau). The Tribunal is expected to convene an in-person hearing to discuss the procedure by
which the arbitration will proceed in the very near future.
In addition, subsequent to the end of the second quarter, Khan and ARMZ entered into settlement
discussions in an attempt to resolve Khan's USD300 million lawsuit against ARMZ. The discussions
were not successful and Khan will reintroduce a motion in the Ontario Superior Court of Justice to
dispense with or order substitute service in respect of the suit.
Source: Khan Resources
ENTREE GOLD SELLS NON-CORE ASSETS
Entree Gold Inc. has sold non-core assets for more than USD3.2 million. The assets were acquired as
part of the company's June 2010 acquisition of PacMag Metals Ltd. The Vancouver-based miner
focuses on the worldwide exploration and development of copper and gold projects. Its flagship
Lookout Hill property in Mongolia surrounds the Oyu Tolgoi project.
Source: Entree Gold
FRESH FOODS FOR OYU TOLGOI FROM MIAMI
Move One has successfully handled another time- and temperature-sensitive consignment of fresh
foods for the Oyu Tolgoi mining project, one of the largest in the world, with thousands of
personnel on-site at all times. The value of the project is only matched by the extreme remoteness
of the site, meaning that essential supplies need to be shipped in using special equipment. Move
One‘s experience in handling delicate and hazardous cargoes has made it an ideal partner to keep
the enormous development site supplied and in peak condition.
The shipment was delivered all the way from suppliers in Miami, Florida, directly to the major
catering contractor in Ulaanbaatar, using temperature controlled containers and storage facilities.
Speaking on the technically complex supply project, Move One‘s Country Manager for Mongolia, Mr.
Noah Glassco, commented, ―Delivering temperature-sensitive cargo over such distances requires a

4. great deal of expertise and planning. This is doubly true when delivering to those parts of the world
with weaker transport infrastructure.‖
After years of providing freight forwarding services in Mongolia, Move One has recently opened a
brand new dedicated office in Ulaanbaatar to centralize its services in the country. With the new
office and another to follow shortly in Oyu Tolgoi, Move One is actively involved in the country‘s
industrial development, using all resources at its disposal to assist with freight forwarding and
logistics services.
Source: Move One Inc.
SINGAPORE FIRM SOLVES SPACE PROBLEMS IN MONGOLIAN OFFICES
One solution for most offices strapped for space would be to try to pack more workers into the
same work area to save money on rentals and furniture. Enter Wilsin Office Furniture, which has
come up with a unique design for maximizing office seating and workspaces. Through its in-house
research and development, the homegrown firm in Singapore came up with Deskspace, a series of
office furniture that has components which can be reused and extended to accommodate more
workers in the same space. Says Cindee Sim, founder and managing director of Wilsin, ―Nowadays,
most office staff use a laptop to work. It won't be long before they need only an iPad, and will need
even less space than before.‖
According to Ms. Sim, the company‘s first overseas foray in Russia led to Wilsin's exploration of
other markets such as Brunei, Indonesia, Maldives and Mongolia. Wilsin has ventured overseas
largely through agents and it has been especially successful in Mongolia. Says Ms. Sim, ―We have a
strong market presence in Mongolia, almost 80 per cent of the office furniture there is from us,
which makes us almost a monopoly.‖
Source: AsiaOne.business
RIO TINTO “POSITIVE” IT WILL WEATHER STORM OF FRAGILE GLOBAL ECONOMY
Rio Tinto, the world's third-largest miner, expects global markets to remain fragile in the near term
and sees itself in a strong position to weather any turbulence, its chairman has said. The company
expected little impact on demand for commodities following the earthquake and tsunami disasters
in Japan, and said in the long run demand may increase as Japan moved to rebuild.
"As far as the near-term outlook for the business is concerned, world financial markets remain
fragile. Persistent economic and financial imbalances continue to pose risks," Mr. Jan du Plessis told
shareholders at the group's Australian annual meeting last week. "However our pursuit of
operational excellence and our strong balance sheet put us in a positive position to weather this
short-term volatility."
After struggling through the global financial crisis and paying down $40 billion in debt that it took
on for its ill-timed acquisition of Alcan in 2007, Rio recently secured an upgrade in its credit rating
from Standard & Poor's to single A, following an upgrade from Moody's.
Armed with the stronger balance sheet and soaring cash flows, Rio is back on the hunt for
acquisitions, but has made clear it is only interested in small- to mid-size deals, worth less than
USD10 billion.
Source: Reuters
SPONSORS
Khan Bank Eznis Airways
Kempinski Hotel Khan Palace Mongolian National Broadcasting

5. Mongolian Star Melchers
ECONOMY
SOVEREIGN BOND ISSUE, IN TRANCHES, TO BEGIN THIS MONTH
Resource-rich Mongolia plans to issue its first sovereign bonds this month, marking a milestone. The
newly created Development Bank of Mongolia will issue USD700 million in these bonds to fund
lending programs, Mr. Ch. Khashchuluun, Chairman of the National Development and Innovation
Committee, has said.
Mr. Khashchuluun said the issuance would take place in tranches beginning this month, with the
first slice likely to be USD100 million. The bond will be in the Mongolian currency, which has
appreciated by 1.6 per cent against the dollar since January.
The Development Bank of Mongolia has a mandate to do policy loans in areas that include
infrastructure, industry, energy and roads. ―With the launch of the Development Bank we hope the
investment system will be modernized,‖ said Mr. Khashchuluun. ―Policy loans have not been done
for a long time in Mongolia and commercial banks cannot support these needs.‖ The Development
Bank is being set up with training from the Korean Development Bank and the Development Bank of
Japan.
Read more…
Two bankers in Ulaanbaatar voiced skepticism about the timing of the issuance, which has been
under discussion for several months. ―It‘s great for putting Mongolia on the map in terms of
developing the capital markets here,‖ said Mr. Eric Zurrin of Rescap, a corporate finance advisory
firm. ―However, I struggle to see how it will happen so soon.‖ He added that yields on the bonds
could be quite low, perhaps 6-8 per cent.
The Development Bank may be the first Mongolian entity to issue bonds with sovereign guarantees,
but it is not the only one. Politicians in Ulaanbaatar have talked about issuing bonds to support a
variety of industries, including for a cashmere subsidy fund.
Mongolian sovereign debt has a B1 non-investment grade rating from Moody‘s, the credit rating
agency. ―Mongolia‘s rating has been constrained by susceptibility to destabilizing boom-bust
cycles,‖ noted Moody‘s in its annual report on the country.
Source: The Financial Times
WORLD BANK OPTIMISTIC, BUT SEES SIMILARITIES WITH PRE-CRISIS DAYS
In its latest quarterly report, the World Bank says Mongolia‘s prospects in the medium term look
―excellent‖ from the perspective of both growth and fiscal management, but cautions that ―staying
the course‖ means implementing the landmark Fiscal Stability Law passed last year, and adopting a
supportive integrated budget law in the present session of parliament.
The Bank tempers its optimism with pointing out several similarities with the situation that
obtained prior to the 2008 crisis. Now, as then, there are plans for large cash handouts, exerting
upward pressure on prices for the second half of 2011, with the risk of substantial second-round
effects in the form of a wage-price spiral. Real interest rates are currently positive due to the fall
in inflation, but these could return to negative territory as was the case before the crisis. Similarly,
with the trade deficit continuing to widen with the mining boom, the current account is also in
deficit, as was the case in 2008. High domestic inflation will cause the currency to appreciate in
real terms, ultimately hurting the export sectors, and possibly creating a macroeconomic scenario
known as the Dutch Disease.
The last quarter of 2010 ended with a broad-based recovery, mostly in transportation, construction
and wholesale and retail trade, but the agriculture sector experienced double digit contraction in
all four quarters in 2010. There has been a moderation in inflation, but food prices are rising in
Russia and China from where Mongolia imports the bulk of its main food commodities.
On a 12-month rolling basis, the fiscal surplus increased to 2.4 percent of GDP in March 2011, up
from a 5 percent deficit in March last year, but the 2011 Budget envisages a steep increase in
government spending to an unprecedented MNT779 billion, which is more than 52 percent of GDP.

6. The trade deficit continued to widen, reaching USD646 million in March.
Read more…
The steady rise in NPL ratios in 2009 has been reversed, but solvency concerns continue to plague
small and medium banks. Outstanding loans have been on the rise, up 35 percent y-o-y in March
2011 or 29 percent in real terms. With credit growing this fast, as was the case prior to the 2008
crisis, regulatory and oversight issues among Mongolian banks (along with capital adequacy) remain
crucial.
Source: The World Bank Quarterly Report, April 2011
USD770-MILLION CHINA-MONGOLIA CURRENCY SWAP AGREEMENT VALID FOR 3 YEARS
The swap agreement between the central banks of China and Mongolia on exchanging national
currencies was signed on Friday morning last week, a day later than scheduled as the plane from
Beijing was delayed because of the weather. The deal is for USD770 million and will be valid for
three years, extendable by mutual consent. The agreement comes after two years of negotiation,
and is aimed at promoting bilateral trade and offering short-term liquidity to the two countries'
financial systems.
Central Bank President L. Purevdorj said at the signing ceremony that the deal would help stabilize
the MNT against the CNY by allowing the yuan into Mongolia's foreign market in emergency
situations. CNY is currently the second most actively traded currency in Mongolia's foreign exchange
market, he said, adding that Mongolia will have a stronger demand for the yuan as bilateral ties in
trade, economy and investment become closer. Chinese central banker Zhou Xiaochuan said the
deal would contribute to the financial stability in both countries and promote bilateral trade and
investment.
China has stepped up efforts to promote the yuan's use in cross-border trade and finance to reduce
its reliance on the U.S. dollar in the wake of the global financial crisis. So far, it has signed
currency swap agreements with 11 countries and regions with a combined value of CNY834.2 billion.
They include South Korea, Malaysia, Indonesia, Belarus and Argentina. The increased circulation of
yuan offshore is also key to China's efforts to internationalize its currency.
Read more…
Though the volume of yuan-denominated trade remains low, it is growing rapidly. About 7% of
China's foreign trade in the first quarter was conducted using yuan, up from 0.5% a year earlier,
according to data from the PBOC's quarterly monetary policy report released last week. In 2009,
Beijing began allowing exporters and importers in certain regions to use yuan to buy or sell goods
abroad, and China's central bank will expand the trial to the whole nation this year, local media
reported last month, citing a PBOC official. Most yuan-based trade deals so far have involved
Chinese companies using the Chinese currency to buy goods. Around 89% of yuan trade in the first
quarter was accounted for by China's imports, according to data from the PBOC.
Source: Ardiin Erkh, The Wall Street Journal, Xinhua
CENTRAL BANK SEES AGREEMENT AS A LANDMARK
Deputy Governor of the Central Bank B.Javkhlan has said in an interview with local media that the
agreement with China is ―a landmark and offers Mongolia a much delayed stepping stone to the
global market place by allowing it to trade in new currencies‖. At present, 80% of the country‘s
foreign trade is carried out in USD, which ―makes us vulnerable to fluctuations in USD rates and
puts our own economy at risk‖, he said. The Central Bank believes that the agreement will allow
Mongolia to reduce its USD reserves and this is likely to make the USD lose more value against the
MNT in the next few months. With yuan reserves increasing, Mongolia will be able to trade with
China in the Chinese currency, ―thereby stabilizing the exchange rate and benefiting our own
traders‖.
Source: business-mongolia.com, gogo.mn
GOVERNMENT REDUCES FUEL IMPORT TAX, SEEKS NEW RUSSIAN SUPPLIER
After days of silence or issuing vague statements of reassurance that did little to allay widespread
popular worry about a possible fuel shortfall and rise in prices following Russia cutting down on
exports, the Government finally acted on Wednesday. It reduced import taxes, by as much as
MNT200,000 per ton in the case of diesel, to counter increased taxes on Russian fuel exports, and
also placed an order with a Russian company TNK LLC for diesel at USD1,250 per ton when it was
clear the regular exporter in that country, Rosnefti, will not, or will not be able to, meet
Mongolia‘s regular demands. Just a few days ago the Government had insisted it had been assured
by Russia that there would be no cut on exports to Mongolia.

7. Fuel importers say the shortage began in April when Russia exported 35,000 tons of diesel against
their demand for 74,000 tons. They had asked for 84,000 tons of diesel in May but Rosnefti has sent
just 34,000 tons. It is believed the Russian Government has asked Rosnefti to supply 10,000 tons
more during the month. The importers had said on May 5 they had stocks for 19 days.
Mongolia‘s demands are increasing with the development of the mining sector. It has imported
186,400 tons of petroleum products so far in 2011, an increase of 10.7% over the same period last
year. Russia provides 99% of Mongolia‘s demands, and Kazakhstan 1%.
The Government also has to ensure fuel for spring planting operations to proceed smoothly. Many
fuel stations have already imposed a 30-liter limit on every consumer. Chief of Mineral Resources
and Petroleum Authority D.Amarsaikhan has blamed panic buying for making the situation worse.
Source: English.News.mn
PM‟S COMPANY FORGOES LOAN CLAIM AFTER CONTROVERSY
Altai Cashmere LLC, owned by Prime Minister S.Batbold, has withdrawn from Mongol Negtgel, an
umbrella organization of cashmere producers, following the controversy over low-interest
Government loans to companies in the sector from money raised through sale of bonds. The
Government plans to issue bonds for MNT110 billion to support the wool and cashmere sector.
Mongol Negtgel has identified 13 organizations as having the capacity to repay loans. Altai
Cashmere was one of these and was expected to borrow MNT20 billion.
Some DP MPs expressed surprise on Monday that rich companies were to receive preferential loans
for such large amounts, and on Tuesday Deputy Minister for Food, Agriculture and Light Industry
D.Zoljargal told the Standing Committee on the Budget, as it was discussing the matter, that Altai
Cashmere had withdrawn its request to Mongol Negtgel to be included among those seeking a loan.
MNT20 billion will now be lent to Buyan LLC of Mr. B.Jargalsaikhan, Chief of Republic Party, and
Gobi LLC; MNT12 billion to Eermel LLC, MNT6.5 billion to Goyo LLC, MNT3.2 billion to Erdenet
Khivs, MNT3.2 billion to Mongol Nekhmel and MNT3 billion to Cashmere Consmekts LLC. The MPs
find it grossly anomalous that rich individuals should get Government loans at 7% interest, while
ordinary citizens have to pay more for their apartment loans.
Source: News.mn
ENEBISH DEFENDS SLOW PROGRESS IN TALKS ON ERDENES-TAVAN TOLGOI
Mr. B.Enebish, Executive Director of Erdenes MGL has defended the delay in reaching a decision on
the Erdenes-Tavan Tolgoi investment agreement by saying the discussions with the shortlisted
bidders are on a wide range of issues that are too complex to yield any quick resolution. The talks
began on March 11 and are now at the 3rd stage. He would not give any details, beyond saying, ―We
shall soon select the investor consortium.‖ Negotiations cover ―not only issues to do with mining
the coal mine but also the railways, infrastructure and factories for value added products,‖ he said.
Source: business-mongolia.com
IMBALANCE IN TRADE WITH RUSSIA CAUSES CONCERN
Several speakers at a recent meeting organized by the Central Bank to discuss trade issues with
Russia felt that Mongolia needs a comprehensive export policy. The meeting was attended by
senior officials from the Russian embassy, several Ministries, the Customs Authority, Ulaanbaatar
Railway, private companies, mainly those with trade links to Russia, and civil organizations.
Speakers from the Central Bank reported that over 30% of Mongolia‘s import in terms of value was
from Russia, while exports there accounted for just 3% of the total foreign trade revenue. This
imbalance could grow into a major concern with the years, and many speakers felt a long-term
policy would be of help.
Source: Undesnii Shuudan
WORLD BANK FUNDS MONGOLIA INFRASTRUCTURE FEASIBILITY STUDIES
The World Bank has approved an investment credit of USD25 million for Mongolia to facilitate
investments in infrastructure to support mining, and related economic activity, by financing
feasibility studies and building local capacity to prepare and transact infrastructure projects.
Estimates indicate that the cost to build the required transport, power, water and township
infrastructure in Southern Mongolia, where several mineral deposits are poised for significant
development, could approach USD10 billion over the next ten years. The Government intends to
utilize all sources of funding to finance needed investments, including private sector investment.
No matter how these projects are financed (i.e., public funds, private funds, or international
assistance), good project preparation will be critical.

8. ―This project provides the Government with the necessary resources to carry out a variety of
studies to assess the feasibility of investments that the Government has identified as priorities.
These will help ensure that investments in infrastructure are financed wisely and that their
potential environmental and social impacts are also taken into account,‖ said Coralie Gevers,
Country Manager for the World Bank in Mongolia.
The Ministry of Finance will be the main executing agency of the project and will be responsible for
its overall management and implementation. A Project Steering Committee, which will include
representatives from key line Ministries and Agencies, will be established to determine jointly the
infrastructure projects that will benefit from the funds and oversee their use. The project will be
implemented between June 2011 and May 2016.
Source: The World Bank
GOVERNMENT PROPOSES IPO FOR MONGOLIAN RAILWAY
The Government will propose to Parliament that 49 percent of the shares of Mongolian Railway
should be offered for sale to foreign and domestic investors through the stock market. The
Government website statement did not specify which stock exchange or exchanges would host the
IPO. The proceeds will be used to finance the first two stages of the railway construction plans. The
first of these covers the 1,100 km from Dalanzadgad - Tavan Tolgoi – Zuunbayan and Sainshand -
Baruun-Urt – Choibalsan and will need USD3 billion, based on preliminary estimates of USD2 million
to USD2.5 million cost per km. The second stage would be the 900 km from Nariin Sukhait – Shivee
Khuren, Ukhaa Khudag – Gashuun Sukhait, Khuut - Tamsagbulan – Numrug, and Khuut – Bichigt.
Source: open-government.mn
ERDENES-TT SHARES LIKELY TO BE LISTED AT TWO EXCHANGES
Mr. D.Sugar, Head of the State Property Committee, has said a decision has been taken that
Erdenes-Tavan Tolgoi will be listed at two stock markets. The London Stock Exchange is almost
certain to be one of the two, and the Hong Kong exchange is the front runner for the second, not
least because the Government expects to get some special terms there. During his visit here, its
president hinted that some of their stringent rules and conditions could be relaxed for the sale of
Mongolian state-owned companies‘ shares.
Source: Zuunii Medee
MP EXPLAINS OPPOSITION TO FREE SHARES FOR COMPANIES
Mr. Ya.Batsuuri, DP MP, has opposed the decision to give Erdenes-Tavan Tolgoi shares to companies,
as their claims cannot be verified. The Government‘s final tally of companies has reached 53,000.
Half of them do not pay taxes and so should be considered inactive. Half the others have little
capital, and just one employee, and many of them, too, do not pay tax. Why should their claim be
the same as that of companies with hundreds of staff and whose taxes help run the economy, the
MP asked. Even NGO have started queuing up to obtain the shares. Advertisements seeking to buy
registration certificates of companies have become common. In the circumstances, national
companies should be asked to buy the shares, if they wish, when they are on sale in the stock
market, and the quota for citizens should be doubled so that the principle of equality is
maintained.
Source: Undesnii Shuudan
IMPORT DUTY ON POTATOES, FLOUR, CARROTS INCREASED
The Ministry of Agriculture and Light Industry has increased the import tax on potatoes, carrots,
turnips and flour in order to support domestic production. The Atar III campaign is aimed at
boosting domestic production so that it can meet 100% of the Mongolian demand for potatoes, and
70% of that for other vegetables.
Source: Undesnii Shuudan
EXPORTS ESTIMATED TO RISE BY 49% IN 2012
The National Development and Innovation Committee (NDIC) estimates that foreign trade turnover
will increase by 24% between 2012 and 2014, with large mining projects starting to work. The
balance of trade will show a surplus of USD0.4 billion in 2012, USD1.8 billion in 2013 and USD2.2
billion in 2014.
Exports will increase by 49% in 2012, 32% in 2013 and 18% in 2014. Imports will increase by 30% in
both 2011 and 2012, because of the need to bring in mining machinery and equipment, but will fall
in 2013 and 2014. Import of fuel would rise in 2013 and 2014.

9. Source: News.mn
5TH
POWER STATION TO BE READY BY 2020
The Government has decided to build the 5th
power station near the 3rd
. The construction will cost
MNT1 billion and will be finished in 2020. The plant will have capacity to produce 820 megawatt of
electricity using the latest technology. Two small factories, to produce cement and to process coal
waste, will be built as part of the project. The tender to choose the construction company would
be announced this year.
Meanwhile, the foundation stone of a thermal power station in Baruun-Urt in Sukhbaatar province
has been laid. The station will be built with USD5 million in a South Korean grant. Construction is
expected to take a year.
Source: Montsame
DEVELOPMENT BANK FORMALLY INAUGURATED
The Development Bank was formally inaugurated at a small ceremony on Thursday. It is located in
the old building of the Ministry of Finance, and will employ between 40 and 50 people in the first
months, the number rising to around 100 after a few years. Five South Korean specialists will be in
charge of management.
Mr. Ch.Khashchuluun, Chairman of the National Development and Innovation Committee and also of
the Board of the Development Bank, has said that a representative each from the Central Bank, the
Mongolian Banks‘ Association and the Mongolian National Chamber of Commerce and Industry will
be the three mandatory ―independent‖ members of the bank board. An agreement has been
concluded with the South Korean Development Bank to manage the bank‘s work in the initial years.
The next three months will see Mongolian nationals receiving intensive training in not just Korea,
but also in Japan and Germany. The bank will have an international advisory council, which will,
however, not be involved in day-to-day work.
The sale of bonds denominated in both USD and MNT will begin from mid-May, and the slight delay
is because the signature of the Executive Director is needed for this and one is yet to be appointed.
However, talks have begun with many investment funds interested in buying the bonds. Apart from
large projects in power generation, heating, clean water supply, sewage, and housing, the bank will
fund an extensive program for SME development. The Korean Development Bank has rich experience
in this and the management team has already identified food, agriculture and processing as areas to
focus on.
Read more…
Work on the Sainshand Industrial Park will begin with installation of heating, water supply and
sewage systems and then an SME complex will come up. As the big factories are built, the SMEs will
act as ancillary units, and this ―cluster system‖ of development will greatly reduce infrastructure
cost, while promoting competition. Such parks will come up in Darkhan, Erdenet, Selenge, and the
Gobi regions also. Mr. Khashchuluun made it clear that much of the work will be done by the
private sector, with the Government acting mostly as a facilitator.
Source: Business-Mongolia.com, News.mn
175,000 PEOPLE WORK ON DAY OF PUBLIC LABOR
Last Saturday was the Day of Public Labor and 120,000 people in the provinces and 55,000 people of
Ulaanbaatar city organizations marked the day by cleaning streets, weeding and planting trees,
repairing roads, cleaning road signs, and repairing children‘s toys. The value of the total work was
estimated to be MNT880.7 million.
Source: Ardiin Erkh
POWER TRANSMISSION LOSSES REDUCED
Losses during electricity transmission and distribution in the central region were brought down
19.4% in the one year since April, 2010. The five distribution networks serving the region, three of
them state-owned, distributed 43.1 million kW more of energy in April, 2011 than they did in April,
2010.
Source: Udriin Sonin
36 COAL MINES UNDER ACTIVE EXPLOITATION
The Mineral Resources Authority has revealed that of the 50 organizations currently exploiting coal
in 36 mines, two are state owned, three are owned by province administrations, and the remaining
45 are private companies. According to the Authority, Mongolia has geological coal reserves of

10. 163.2 billion tons in 300 deposits and occurrences in 15 coal basins, falling in 3 major regions. Of
the 172 mining licenses issued to 123 companies, 105 are in active use by these 50 companies.
Source: News.mn
BAN ON NEW EXPLORATION LICENSES TO CONTINUE
The ban on issue of new exploration licenses legally ended on April 30, but is likely to be extended.
Both parties are agreed on the extension, but there is as yet no consensus on its period. Some MPs
have proposed the ban to continue until January 2013, but the Democratic Party wants it to be
neither so specific nor for so long, preferring instead the issue to be decided along with the Mineral
Law that Parliament is expected to discuss soon.
Source: Undesnii Shuudan
NO MORE FREE RIDE FOR COMMODITIES
In 1911, Winston Churchill helped kick-start oil's ascent by converting the Royal Navy to run on it.
But investors shellacked by the sudden reversal in the price of oil and other commodities this week
would be better off remembering words spoken by Churchill decades later as the tide turned in
World War II: "Now, this is not the end. It is not even the beginning of the end. But it is, perhaps,
the end of the beginning."
Commodities markets, slammed in late 2008, resumed their bull run in early 2009. Economic
recovery, led by China, was a major factor, particularly for oil and copper. But loose monetary
policy, which aided recovery and pushed investment dollars toward hard assets, has also helped,
particularly for precious metals.
Two years into this run, the balance of risk for where commodities prices go from here is turning
negative. Last week, silver, a late-comer to the party, dropped almost a quarter. Crude oil slumped
as much as 7.7% last Thursday morning despite nominally bullish drops in U.S. inventories
announced the day before. Instead, investors are probably focusing on weak gasoline demand.
Copper, meanwhile, has struggled to gain momentum since December. Efforts to rein in the
property market and inflation in China, which accounts for 39% of global copper consumption,
appear to be biting.
Monetary policy is tightening already in major emerging markets such as India, Brazil and China—
key demand centers for commodities—as well as Europe. For commodities bulls, last week's weak
U.S. employment data are actually supportive for commodities, because that should prompt more
QE, reducing real rates further.
Read more…
QE3 is not a given, though. If it were, gold and silver would be strengthening. And while the Fed
probably won't reduce the size of its balance sheet for months to come, Chairman Ben Bernanke
acknowledged explicitly earlier this month that further monetary easing risked escalating inflation
and derailing recovery.
There is a further twist. Even if QE3 materializes, it could ultimately hurt industrial commodities
especially. China's continuing linkage of the yuan to the dollar means further U.S. monetary easing
would intensify domestic inflation. The risk of Beijing slamming on the brakes to contain prices,
significant already, would rise further. And if China's appetite for raw materials is sated suddenly,
you better be betting on QE33 to sustain the commodities bull run.
Source: The Wall Street Journal
TIDE SHIFTS SUDDENLY IN FAVOR OF DOLLAR
After weeks of the dollar not being able to catch a break, the U.S. currency suddenly has found
itself the recipient of several all at once. Just as dollar bears were stirring concerns about loose
U.S. monetary policy and a potential fiscal crisis, sending the greenback lower, the currency did an
about-face in the latter part of a tumultuous week amid a host of events that could lend strength
longer term.
Late Friday last week in New York, the euro was at USD1.4353 from USD1.4526 late Thursday. The
dollar was at ¥80.57 from ¥80.13. The ICE dollar index, which is based on a basket of currencies,
was up almost 3% from the three-year low it hit on Wednesday.
A combination of factors combined last week to help the U.S. currency start to fare better in what
many traders have been calling an ugly-dog contest between three currencies, each with problems:
the euro, the yen and the dollar.
Even with the tide seemingly turning for the dollar, big-time dollar bears are unlikely to become
raging dollar bulls quickly.
Source: The Wall Street Journal

11. U.S. SET TO REGAIN INDUSTRIAL CROWN
The era of widespread offshoring of manufacturing from the U.S. to China is coming to an end,
according to a study that forecasts a renaissance for American production industries over the next
five years. The report by the Boston Consulting Group (BCG) forecasts that, by 2015 – on the back of
good productivity growth and relatively low wages – the U.S. is likely to be slightly ahead of China
as a base for making many of the goods destined for sale in North America. Another important
factor is rapidly rising wage growth in many parts of China, which is reducing the incentive to base
production in that country for anything other than selling to the large domestic market.
The study will be welcomed in the White House, where President Barack Obama has made the
revival of U.S. manufacturing an important feature of plans for a sustained upturn.
In recent months, large companies such as Caterpillar, General Electric and Ford have announced
plans for new investments in U.S. manufacturing, while the production sector increased at an
estimated annual rate of 9.1 per cent in the first quarter of 2011, making it the fastest-growing
part of the U.S. economy.
However, the projected rise in U.S. industry‘s fortunes is unlikely to be enough to enable the nation
to regain its title as the world‘s biggest manufacturer, which it held for more than a century until
China overtook it last year. Mr. Hal Sirkin, senior partner at BCG, said the expected ―immense
demand‖ for goods by Chinese industry and consumers in the next few decades would be sufficient
to keep China in the number one slot for some time, with supply of most of these products coming
from locally based factories. ―All the indications are that the U.S. will remain a strong number two
[in manufacturing] and well ahead of other countries such as in western Europe, where the
economic trends are less favorable,‖ said Mr. Sirkin.
Read more…
Mr. John Makin, a resident scholar at the American Enterprise Institute think-tank, said the
projected rise in U.S. industry fitted into trends in which more U.S. companies were re-orienting
production to ―more sophisticated goods that can be made with novel labor-saving technology‖.
Many American companies had a ―great opportunity‖ in the next decade to increase manufacturing
in the country, helped by the weaker dollar. Last year, China accounted for 19.8 per cent of world
manufacturing output, fractionally in advance of the U.S., with 19.4 per cent. In 1990, China
accounted for only 3 per cent of the total.
The BCG study says that Chinese manufacturing wage costs seem likely to rise 17 per cent a year in
the next five years, compared with only 3 per cent a year in the U.S. While the productivity of the
average Chinese factory worker has increased tenfold in the past 20 years, it is still less than a third
of the comparable figure in the U.S. – offsetting the fact that Chinese wage costs are typically a
tenth of those in America.
Since employee costs typically account for 20 to 30 per cent of overall manufacturing expenses,
with other costs such as covering equipment often no lower than elsewhere, by 2015 China is
unlikely to have a cost advantage over U.S. factories in making many products for the U.S. market.
The goods that look like being more attractive to produce in the U.S. include those made in small
volumes and involving many design changes – such as construction machines and furniture. Items
made in long runs and with little variation – such as mobile phones and televisions – will continue to
be made in China, even for sale in the U.S., the study says.
Source: The Financial Times
AS CHINA INVESTS, U.S. COULD LOSE
For three decades, wealthy nations have invested hundreds of billions of dollars in China, helping
drive one of the most remarkable economic booms in history. Now, China is poised to return the
investment favor. The question is whether the United States will be willing and able to fully
participate, according to a new study released last week.
Flush with capital from its enormous trade surpluses and armed with the world‘s largest foreign
exchange reserves, China has begun spreading its newfound riches to every corner of the world —
whether copper mines in Africa, iron ore facilities in Australia or even a gas shale project in the
heart of Texas. The study, commissioned by the Asia Society in New York and the Woodrow Wilson
Center for International Scholars in Washington, forecasts that over the next decade China could
invest as much as USD2 trillion in overseas companies, plants or property, money that could help
reinvigorate growth in the US and Europe.
But the report also warns that the USA risks missing out on a large share of the Chinese investment
boom because of politics, a growing rivalry between the two nations and deep-seated perceptions
that Chinese investments are unwelcome in America. ―If political interference is not tempered,‖
the study warns, some of the benefits of Chinese investment — ―such as job creation, consumer

12. welfare and even contributions to U.S. infrastructure renewal — risk being diverted to our
competitors.‖ While Wall Street banks have lobbied for more Chinese investments in the United
States, hoping that will bring bigger deals for the banks, Washington has remained wary — even
though the Obama administration says it welcomes Chinese money.
But anti-China rhetoric is hot in Washington and among many state and local officials. One
frequently cited worry is that Chinese companies, many of them owned partly or entirely by the
government, will use their purchases to gain military secrets. Another concern is that Chinese
companies will buy American companies with manufacturing operations in the US, close those
factories and move production to China.
Read more…
China, of course, is already a force in global markets. Over the last few years, it has made
multibillion-dollar loans to developing nations and let its state-owned companies acquire minority
stakes in global powerhouses like Rio Tinto, Morgan Stanley and the Blackstone Group. China is also
a major player in the global debt markets, holding about USD1.6 trillion in U.S. Treasury bonds, an
investment that helps keep American interest rates low and finances America‘s enormous debt.
But China is still a relatively small player in overseas direct investments, which include purchases of
large, voting stakes in foreign companies and plants. That also includes investments in new
construction projects on previously undeveloped land — so-called greenfield facilities.
Last year, China‘s overseas direct investments amounted to about USD59 billion. By comparison, the
USA‘s figure was over USD300 billion. But with Beijing pushing its big companies to go overseas and
invest in resources and technology, China‘s investments could soon reach USD100 billion to USD200
billion a year, according to the Asia Society study.
The potential problem for Beijing is that Chinese companies are not always welcomed overseas —
not only because China wields enormous economic clout but because state-owned giants are
believed to be subsidized by the state and possibly working in the interest of the government.
A series of proposed Chinese deals in the US have been blocked by regulators or attacked by local
politicians, who say they are worried China could gain access to sensitive military technology or
take control of valuable natural resources. Angered at what it says is protectionism masquerading
as national security concern, Beijing has lodged sharp complaints with Washington.
Some experts say anti-China sentiment is so high across the country that the United States is
unlikely to attract the huge investments over the next few years that the Asia Society study
suggests are possible. ―There‘s no chance this is going to happen,‖ says Derek Scissors, an expert on
China at the Heritage Foundation, a conservative policy institute in Washington. ―They want to
invest a lot, but no one here‘s going to let them. The political climate in Washington is too anti-
China right now.‖
Daniel H. Rosen, co-author of the study with Thilo Hanemann, and a principal at the Rhodium
Group, an economic advisory firm in New York, says that if Chinese companies are turned away, it
could significantly reduce investment opportunities in the US. And, he warns, it could prompt China
to retaliate against American businesses that operate in China, while also discouraging Beijing from
pushing ahead with reforms that would make its business and financial markets more open and
transparent.
To ensure that America gets its share of China‘s money, the study calls on Washington to send a
clear, bipartisan message that Chinese investment in the US is welcome, to protect any national
security review process from political interference and to work with China to enhance its own
transparency when it proposes investing in the US.
Some analysts say China deserves some of the blame for opposition to its overseas investments, not
just in the US but elsewhere. Chinese companies are not very transparent, and much of the
investing by China is done by a handful of government-owned companies that have access to cheap
state financing, giving them what some analysts say is an unfair advantage in competing for
resources or assets.
But many analysts say China and the United States clearly need each other. China now has the
capital American business so desperately seeks, and the US has technology and a highly skilled work
force.
Source: The New York Times
CHINA DENIES LARGE TRADE SURPLUS RESULT OF CHEAP CURRENCY
China recorded a large trade surplus in April as imports of commodities and raw materials slumped
and exports surged, renewing pressure on Beijing to allow faster appreciation of its tightly
controlled currency. US leaders have been pressing China on its currency and financial sector
reform at the two countries‘ annual summit in Washington, which ended on Tuesday.

13. Mr. Tim Geithner, US Treasury Secretary, said Chinese leaders had made an ―unambiguous‖ decision
to make the currency more responsive to market forces to support domestic financial reform and
combat inflation. The renminbi has gained about 2.3 per cent against the US dollar over the past six
months.
In a joint appearance with Mr. Geithner on the Charlie Rose Show, Vice-Premier Wang Qishan
suggested that the biggest challenge was to ensure domestic backing for the Chinese leadership‘s
financial reform program. ―The biggest challenge for us in this respect is to make sure that
everyone is on the same page when we look at the problem,‖ Mr. Wang said. While acknowledging
the importance of monetary and fiscal policy in combating inflation, the vice-premier warned
against ―politicizing the issue‖ on the mistaken belief that the trade surplus was caused by China‘s
cheap currency. ―For all those people who really understand what the exchange rate is really
about, they would not say this is so,‖ he said.
Read more…
China‘s trade surplus reached USD11.4 billion in April, ahead of analysts‘ expectations. The figure
marked a dramatic turnaround from the three months to March, when China recorded its first
quarterly trade deficit in more than seven years. China‘s fastest-growing exports are labor-
intensive, low-margin products whose competitiveness would suffer from a dramatic appreciation of
the renminbi.
Some economists believe that a decline in raw material imports including copper, iron ore,
aluminum and raw plastics showed that government measures to slow the pace of economic growth
had started to take effect in April. But most observers warned against reading too much into one
month‘s data, arguing that Chinese companies typically build up large inventories of raw materials
at the beginning of the year.
Source: The Financial Times
CHINA‟S EFFORTS TO TAME INFLATION FALL SHORT
Consumer prices in April rose faster than the Chinese Government‘s target for the fourth month in a
row, as bank lending also climbed faster than expected, economic data released Wednesday
morning showed. The latest data underlined the challenges that China faces as it tries to tame
inflation while at the same time issuing trillions of extra renminbi to prevent the currency from
rising quickly against the dollar, which would erode the competitiveness of Chinese exports.
Consumer prices were 5.3 percent higher in April than a year earlier. That represented a slight
improvement from March, when consumer prices were up 5.4 percent. But economists had
expected inflation to edge down to 5.2 percent or below, and the government‘s target for the full
year is 4 percent, a level not reached in any month so far this year.
Many businesses across China say that they see healthy sales and have the profits or bank lines of
credit to allow them to invest in further expansion. Other economic statistics also released by the
Government on Wednesday presented a picture of an economy still expanding briskly, signaling that
recent moves to tighten credit have not had much effect.
Retail sales jumped 17.1 percent in April from a year ago. Fixed asset investment grew even faster,
climbing 25.4 percent last month from a year earlier. Western economists had expected inflation to
slow more quickly because food prices in China are flat or falling this year, unlike in many
countries. Food is the largest component of China‘s consumer price index, making up a third of it.
Source: The New York Times
SOUTH KOREA SEEKS TO SHIFT RESERVES TO CHINA
The Bank of Korea plans to invest some of its USD307 billion of foreign exchange reserves in
renminbi-denominated assets on the Chinese mainland, as the central bank diversifies away from
the US dollar. The bank has applied to Beijing for a quota under the qualified foreign institutional
investor (QFII) programme, which allows overseas groups to buy equities and bonds on the
mainland.
―It is time to think about directly investing in mainland assets, given China‘s fast-growing economy
and Beijing‘s increasing efforts to internationalise its currency,‖ Mr. Kang Sung-kyung, a senior BoK
official, said. ―Although there are still many restrictions against foreign investors, we believe
China‘s capital markets will eventually open up,‖ Mr. Kang said.
China‘s financial markets remain largely closed for foreign investors but the QFII programme
permits a number of big foreign investment firms to buy Chinese domestic securities.
Beijing has so far granted quotas totaling about USD21 billion to just over 100 qualified foreign
investors, including three central banks – in Norway, Hong Kong and Malaysia.
China‘s strict capital controls have meant that for decades the renminbi has been little used

14. outside the country‘s borders. However, in the wake of the global financial crisis, Beijing has
accelerated reforms to increase international use of the currency, especially for trade transactions,
seeking to reduce its reliance on the US dollar.
Source: The Financial Times
POLITICS
DP AHEAD OF MPP IN SURVEY, THOUGH BOTH LOSE POPULAR SUPPORT
If Parliament elections were held tomorrow, 23.7% (24.5%) people in the countryside, 14.0% (15.6%)
in Ulaanbaatar, and 35.7% (37.2%) nationwide will vote for the Democratic Party, while the
corresponding figures for the Mongolian People‘s Party are 21.2% (24.5%), 13.8% (15.1%), and 32.8%
(36.8%) respectively. The figures in the brackets are from a similar survey six months ago. The
erosion in support for both parties could be because of the split in what was the MPRP and of the
emergence of new groupings, though neither possibility was part of the April-May 2011 survey by
Sant Maral Foundation of 1,000 respondents from the capital and Sukhbaatar, Uvurkhangai, Selenge,
and Khovd provinces (distributed proportionally by 4 regional divisions and Ulaanbaatar), collected
from April 21 to May 2, 2011.
Asked about the two major parties, 27.5% in the countryside, 25.5% in Ulaanbaatar, and 26.7%
nationwide thought the MPP was headed in the right direction, while those who thought the other
way were 29.2%, 29.0%, and 29.1% respectively. The DP was perceived to be headed in the right
direction by 28.8% in the countryside, 25.8% in Ulaanbaatar, and 27.8% nationwide. The opposing
figures were 29.3%, 28.3%, and 28.9% respectively.
Nationwide, 10.2% said they were ―very satisfied‖ with the Government, 34.9% ―fairly satisfied‖,
29.2% ―rather not satisfied‖ and 19.7% were ―totally unsatisfied‖.
The most popular politicians in Ulaanbaatar are Elbegdorj (22.3%), Enkhbayar (16.9%), and
Ganbaatar (14.1%), with S.Batbold at 10th
place with 7.2%. The ratings in the countryside were
Elbegdorj (29.1%), Enkhbayar (22.8%), and Batbold (15%).
For the complete Polit Barometer survey, visit BCM website, Resources/Mongolia Reports.
Source: Sant Maral Foundation
MPs URGE SPEAKER TO DISMISS MINISTER ZORIGT FOR POOR PERFORMANCE
Three DP MPs - G.Bayarsaikhan, D.Gankhuyag and S.Erdene – last week submitted to Speaker
D.Demberel a seven-point note to demand the dismissal of Minister for Mineral Resources and
Energy D.Zorigt. Their principal charge relates to Mr. Zorigt‘s failure to implement Parliament‘s
instruction that Mongolia should retain 50% ownership of the Oyu Tolgoi deposit. The agreement
with the investor does give Mongolia 50% ownership, but only after 30 years of operation.
They also charge the Minister with inaction in starting work on the 5th
power plant even after
Parliament decided in 2008 to build it. The Minister is also blamed for talking no steps to improve
mine safety in Nalaikh, where 46 miners have died in recent times. They also fault Mr. Zorigt for
the delay in taking decisions on Tavan Tolgoi and for failing to start work on other strategic
deposits such as Tumurtei and Tsagaan Suvarga. Another of their charges against the Minister is that
he has failed to implement Parliament‘s resolution almost a year ago to establish a copper smelter
within six months.
No progress has also been made on erecting power generation plants at Shivee Ovoo and elsewhere.
―Work at Oyu Tolgoi depends entirely on generators and it seems once it starts production, it will
have to import energy from China. That a country with the world‘s third largest thermal coal
resources will import energy is shameful, and we blame the Minister for this,‖ the note from the
MPs to the Speaker said.
The move, however, received a setback at a special meeting of the DP group in Parliament on
Wednesday where the majority did not favor the demand. The talk had been that it would receive
the support of 12 DP MPs and 8 MPP MPs. If they achieve their goal, they will launch a wider
campaign for the dismissal of three more Ministers, as yet unidentified, the ultimate goal being
destabilization of the Government, so that its continuation becomes untenable.
According to law, the relevant Standing Committee should discuss the demand and submit its
opinion to Parliament within a week. Parliament should reach a decision within another week from
then.
Source: Udriin Sonin, Zuunii Medee, Ardiin Erkh
CONVICTED ANOD BANK OFFICIAL SUBMITS INFORMATION TO ANTI-CORRUPTION AUTHORITY
Lawyers for the convicted member of the Representatives Managing Council of the Anod Bank, Mr.

15. N.Davaa, told a press conference on Tuesday that their client had submitted to the Anti-Corruption
Authority (ACA) information about several state officials, including Chief of Cabinet Secretariat
Ch.Khurelbaatar, that has a bearing on the case. The lawyers said they would reveal more only
after seeing how the ACA treats the information. They claimed Davaa has been sentenced on
political grounds and the information he has forwarded shows how legislative organizations work
under political pressure.
Source: News.mn
MP ASKED TO EXPLAIN CLAIM HE GAVE BRIBES
The Investigation Department of the Anti-Corruption Authority (ACA) called MP Sh.Saikhansambuu
on April 27 to meet them and explain what he had meant by saying in a newspaper interview that
he had given bribes to officials, including MPs. The ACA thinks the statement can lead to initiation
of criminal proceedings against him for offering bribes to State officials, either personally or
through someone else. Mr. Saikhansambuu has said he will give any explanation, ―as part of my
civic duty‖, only after receiving an official request from the ACA.
The MPP MP said in another newspaper interview that he felt funny sitting in the Parliament
chamber ―alongside lawmakers who, I know, received bribes‖. Mr. Saikhansambuu has criticized the
present Parliament on other grounds also, saying ―it has so many faults‖ mainly because of the way
members are controlled. Many competent members ―would never be told to initiate laws or rules‖
on the ground that they lack enough experience. The coalition, as he feared, has created ―an
uncontrolled and chaotic organization of authority‖ and many who supported the move then are
today disillusioned.
Mr.Saikhansambuu has said the ACA should interrogate ―many many more MPs‖. He expressed
surprise that his comments on corruption have suddenly attracted attention as he has been saying
similar things ever since he entered Parliament in 2008, but his efforts to do something about it
have not succeeded as ―corruption in Mongolia is even more than a State secret, never to be
admitted openly‖, and both parties prefer this attitude. He did not wish to suggest that all MPs
were corrupt, but ―those of them who are in the Government or any of its agencies certainly are‖.
He knew Government members, heads of agencies, customs officers, special inspectors, court
officials, policemen, judges etc. ―who should also be called if I am charged with corruption‖, he
said.
Mr.Saikhansambuu owns the Narantuul Market, a glass factory in Shanghai and several other
transnational businesses without links to Mongolia.
Source: News.mn, the UB Post, Zuunii Medee, Undesnii Shuudan
HEADLESS ANTI-CORRUPTION AUTHORITY SITS IDLE
As is to be expected, all serious work at the Anti-Corruption Authority (ACA) has come to a halt
since its director, Mr. Ch.Sangaragchaa, and his deputy, Mr. D.Sunduisuren, were sentenced to
prison terms more than a month ago. The thinking seems to be that that their appeal against the
sentence will be upheld and they will resume their positions. It is difficult to understand how one
can be so certain of the outcome of a court case.
For the time being, the Deputy Speaker of Parliament has asked the head of the ACA Secretariat to
be in charge, but there are questions if the running of an organization of such enormous economic
and political significance can be left in his hands, and if the stacks of confidential documents it
harbors are safe in such ad hoc arrangements.
Why cannot our Parliament members bestir themselves and make new appointments? Their inaction
is only encouraging the spread of their corruption.
Source: Udriin Sonin
FRESH REPORT ON PLAN FOR NUCLEAR WASTE STORAGE IN MONGOLIA
The U.S. and Japan confirmed Monday that they have held discussions with Mongolia about nuclear
waste management, but both denied that they have any plans to send their spent nuclear fuel
there. The Chief of the Nuclear Energy Authority (NEA), Mr. D.Enkhbat, has, however, denied
reports on any talks on the matter. ―The NEA has not talked to anyone,‖ he asserted, adding, ―Who
wants to keep others‘ waste, especially nuclear waste?‖
On Monday Japan's Mainichi newspaper reported that the U.S., Japan and Mongolia were set to sign
an agreement over the project in February, but put it off after objections from Japan's Foreign
Ministry. The newspaper said it would be easier for the U.S. and Japan to sell their nuclear-reactor
technology overseas if they could offer countries a place to put their nuclear waste.
A U.S. Department of Energy spokeswoman said, "The U.S. government is not negotiating a deal to

16. send spent nuclear fuel to Mongolia." She added, "No discussions or potential fuel leasing services
involve U.S.-origin spent nuclear fuel." Asked whether Japan was talking with Mongolia about
nuclear-fuel storage, Japan's Deputy Foreign Minister, Mr. Chiaki Takahashi, said at a news
conference Monday that the countries had held an "informal exchange of views" about the subject.
He said the talks did not reach a conclusion and Japan does not intend to send its spent nuclear fuel
to Mongolia.
The U.S. and Mongolia signed a memorandum of understanding on nuclear power in September
2010, when Deputy Energy Secretary Daniel Poneman visited Ulaanbaatar. A U.S. official said that
accord included "waste management" but did not give details. A U.S. State Department official in
charge of nuclear issues, Mr. Richard Stratford, said March 29 that the U.S. Department of Energy
was talking to Mongolia about storing other countries' spent fuel, including possibly fuel that
originated in the U.S.
In April, the U.S. Embassy in Ulaanbaatar said Mr. Stratford's comments "may have been
misinterpreted" and it is "not correct" that the U.S. was talking to Mongolia "about the
establishment of a storage facility to accept foreign spent nuclear fuel."
Read more…
The report in the Mainichi daily said Japanese, U.S. and Mongolian officials, at a meeting shortly
before Japan's March 11 earthquake, informally discussed possible construction of a nuclear waste
storage facility for countries with nuclear power plants but no spent fuel storage capability of their
own. The facility would allow Japanese and U.S. nuclear plant exporters, which include joint
ventures and units of General Electric, Hitachi and Toshiba, to better compete with Russian rivals
that offer potential nuclear plant customers spent fuel disposal in a package.
Source: The Wall Street Journal, News.mn, Reuters
DP MPs FIND GOVERNMENT‟S RECORD “VERY POOR”
The Democratic Party group in Parliament has rated the performance of the coalition Government
―very poor‖ after a review of the status of implementation of the Government Program for its four-
year term. Household income has gone up only by 30%, ―though the promise was to raise it 300%‖.
Unemployment ―is not being taken care of‖ and the anticipated growth in GDP has not
materialized. A spokesman for the group told newspersons that ―the only success of the coalition
has been in allocating Government positions‖.
Source: Udriin
Sonin
NEW HEALTH LAW TO FOCUS ON PREVENTION
Minister for Health S.Lambaa has said that the law on health that Parliament passed last week is
different from the earlier one primarily because it shifts the emphasis from treatment to
prevention. ―We shall not neglect treatment care, but shall work more for a healthy and disease-
free Mongolia,‖ he said. As an example of how preventive services will work separately, the
Minister said soum hospitals would be renamed health centers to indicate that they are not just
placed for the ill. People will get medical check-ups and tests done there.
Source: Udriin Sonin
SPEAKER‟S CHOICE FAILS TO REACH STANDING COMMITTEE
Parliament last week approved the appointment of three members to the Constitutional Court,
taking its strength to eight, with only one place left to fill. The three are Mr. N.Jantsan and Mr.
D.Naranchimeg, nominated by President Ts.Elbegdorj, and Mr. J.Amarsanaa, nominated by the
Supreme Court. Mr. R.Rash (MPP) asked the Chief of the Standing Committee on Justice, Mr.
D.Odbayar (MPP), why the name of Mr. M.Altankhuyag, former Prosecutor-General, had not been
considered after Speaker D.Demberel had suggested it. Mr. Odbayar explained the Standing
Committee on State Structure was responsible for reviewing nominations. The Chief of that
committee, Mr.J.Sukhbaatar (MPP) said that Mr. Altankhuyag‘s name has not been forwarded to
them as yet.
The Speaker finally asked the committees to decide on the ninth member and to submit the name
to Parliament without delay.
Source: Unuudur
STATE OFFICIALS TO BE MADE MORE ACCOUNTABLE
The State Service Council and the Union of Advocates have signed a memorandum of cooperation to
institutionalize measures to ensure a more competent and responsible civil service. State officials

17. will not have any political affiliation, and will be chosen solely on merit and their professional
qualification for the post.
The lawyers‘ body will also help prepare legislation to hold state officials responsible if any of their
decisions or actions damage the interests of the state. This may mean claiming compensation from
them, or dismissal from service. Acts like filling vacancies or dismissing anybody in contravention of
rules, or ignoring decisions of the State Service Central Organization will also constitute an offence.
The advocates will offer their help free of charge, but will receive a certificate from the SSC for
their service.
Source: Undesnii Shuudan
NOBODY BEING SENT TO ATTEND HEARING OF KHURTS‟S APPEAL
No Government official from Mongolia will be present when a British court hears on May 13 the
appeal of Mr. B.Khurts, Chief of Administration at the National Security Council, against an order
for his extradition to Germany. The head of the working group monitoring the case, Deputy Minister
for Foreign Affairs B.Bolor, has said that the extradition could complicate matters for Mr. Khurts, as
the charge against him, that he abducted D.Enkhbat, who was suspected for the murder of S.Zorig,
from France in 2003, is a serious one in Europe.
The wife of Enkhbat is believed to have given to representatives of the German Government
documents, including a doctor‘s statement, that confirm he was tortured during investigation.
Representatives of German judicial organizations also have met with family members of Enkhbat
several times since the arrest of Mr. Khurts in Britain.
The brother, wife, and sons of Enkhbat wanted to testify at the trial but were told the court was
not trying Mr. Khurts for any abduction. It would decide only on the extradition. If Mr. Khurts is
tried in Germany, they could be asked for evidence.
Source: News.mn
SUPREME COURT REJECTS PARTIES‟ PLEA TO MERGE
The State Supreme Court this week cited technical irregularities to refuse permission to the Civil
Will Party and the Green Party to merge. The court ruled that the decisions of the special General
Assemblies of both parties that had approved the merger had failed to forward these to the court,
and, in addition, the Green Party had also failed to keep the court informed of its decision to stop
operating as an independent unit following the merger. The court asked the parties to apply again,
observing the legal requirements. It also asked the GP to resolve its intra-party differences on the
merger.
Source: Unuduur
MOVEMENT LEADER SEES NO ALTERNATIVE TO PEACEFUL REVOLUTION
Ms. G.Uyanga has dismissed comments in some newspapers that the movement by the People‘s
Assembly was aimed at bringing back the old socialist regime. She has also refuted suggestions that
Lenin‘s birthday was deliberately chosen to launch the movement. ―Indeed the day we started was
April 25, which is Oliver Cromwell‘s birthday,‖ she said. In a statement to the media she said, ―Our
goal is to re-establish the democratic principles that we have begun to lose and we shall do this by
peaceful means… It is strange that a country that calls itself democratic country still limits the
freedom of speech, and any demonstration against the Government is allowed only with
restrictions. Courts are supposed to uphold principles of justice, but they are blind to people in
power becoming billionaires, elections being repeatedly corrupt, and businesses surviving only on
payment of bribes… Government statistics say GDP has reached USD5,000 per capita, but hide the
fact that 48% of assets are owned by 0.1% of the population, and 50% of bank savings are held by
2.4% of the people. Almost 80% of the food consumed is imported, 37% of the population is living
under poverty level, 70% of the territory is under desertification and so on and on… Every effort to
protest against the ―educated‖ decisions of the politicians now in power has failed to make them
reform… We appeal to all to suggest if there is any other way to fight except revolution!‖
Source: Zuunii Medee
FOREIGN ORGANIZATIONS LOSE REGISTRATION
The Foreign Citizens‘ Affairs Office has deregistered some foreign organizations including NGOs for
their failure to submit regular reports on their work according to law, or because their work did not
follow any clear direction. Among these are two German-funded organizations, Tibet Heritage, and
People‘s Diplomatic Relations; Uzbekistan Association for Peace with Foreign Countries; Union of

18. Art Masters of the World; a South Korean humanitarian organization Support for Mongolian
Development; Vision International of Britain; Japan‘s Oiska Mongol and a humanitarian
organization, International Children‘s Peace Foundation in Asia; and CTV Ministries of the USA.
Altogether 113 foreign and international organizations and NGOs work in Mongolia at present.
Source: Zuunii Medee
MNT684.3 MILLION TO REGISTER MONGOLIANS ABROAD
MNT 684.3 million will be spent on registering the around 120,000 Mongolians abroad under the new
system and to make them eligible to receive allowances and free shares of Erdenes-Tavan Tolgoi.
Expatriate Mongolians may also be granted voting rights if an agreement between the Civil Will-
Green Party and an NGO bears fruit. At present Mongolians outside the country cannot vote in
elections. The agreement calls upon the two political parties to propose the necessary legislation in
Parliament, while the NGO will help create popular support for the move.
Source: Udriin Sonin, News.mn
KAZAKH PARTY CALLS FOR PROTEST AGAINST SPREADING CHINESE PRESENCE
Kazakhstan‘s leading opposition party, the All National Democratic Party (Azat), has called for
street demonstrations on May 28 to protest against the country‘s growing business ties with China,
and the growing influence of Chinese companies, particularly in Kazakhstan‘s oil and metals
sectors. Public protests are usually prohibited in Kazakhstan and it was not clear whether police
would sanction Azat‘s plan.
Kazakhstan, whose south-east border spans China‘s north-west region, has reoriented its economy
towards its neighbor in the past decade, signing more than a dozen oil production deals with
Chinese companies and accepting USD10 billion worth of loans pledged against future oil supplies.
China has also made inroads into Kazakh mining, acquiring copper, iron ore and uranium assets. Yet
many ordinary Kazakhs are wary of Chinese business practices and fear the country will be
swallowed up by its powerful, populous neighbor.
Suspicion of the Chinese is deep-rooted among ordinary Kazakhs, whose nomadic ancestors fought
repeated wars with China over land and trading routes along their shared border. Mr. Bolat Abilov,
the co-founder of Azat, said rising food prices and utilities tariffs had caused discontent in
Kazakhstan, but China‘s growing presence in the oil industry was an even greater concern. ‖What‘s
going on at the oilfields is a threat to the independence of the country and national security,‖ he
said.
A government proposal to lease land to China touched a raw nerve in Kazakhstan last year, drawing
hundreds of protesters on to the streets, some of whom became involved in scuffles with police.
―We know how the Chinese conduct their business. If they arrive on our land tomorrow, there will
be no room for us,‖ Azat said.
Source: The Financial Times
ANNOUNCEMENTS
RUNGE‟S COURSE ON „MINING FOR NON-MINERS‟, ULAANBAATAR, MAY 19-20
Runge is planning a course on ‗Mining for Non-Miners‘ in Ulaanbaatar, designed for people of a non-
mining background who interact with mining personnel. Runge is a world class mining consulting,
software and training company with an office in Ulaanbaatar with expat and local staff.
The dates are May 19 and 20, with one day focusing on coal mining and the other on metal mining.
The course is aimed at providing those from a non-mining background with a comprehensive
understanding of the mining industry. After attending, participants will have a greater
understanding of the operational practices pivotal to the mining industry, and will be able to
interpret essential terminology and feel more comfortable interacting with core mining staff.
Please send your expression of interest via return email by Monday, May 16, if you are interested in
attending this course to saruul@bcmongolia.org, or telephone 332345.
________________________________________________
GLOBAL ALLIANCE PARTNERS CONFERENCE, MONGOLIA INVESTMENT CONFERENCE,
ULAANBAATAR, MAY 24-26
Eurasia Capital is hosting the Global Alliance Partners Conference and the Mongolia Investment
Conference on May 24-26 in Ulaanbaatar. Through these back-to-back events, Eurasia Capital seeks
to draw attention of international and regional investors to Mongolia and its diverse range of
investment opportunities. Mongolia has recently experienced impressive economic growth, become

19. the best-performing stock market globally and received record levels of foreign investments. As a
result of pro-business reforms pursued by the Government, this resource-rich country has emerged
as an attractive investment destination for global strategic and portfolio investors. The two events
are intended to increase the awareness of the international investor community about emerging
opportunities in this new Asian resource powerhouse.
High level government officials, representatives of local business groups, international financial
institutions, CEOs of mining and non-resource companies will be among the speakers at the 2nd
Annual Mongolia Investment Conference on May 25. They will
 provide information on the current market environment and outlook for the Mongolian
economy
 offer insight into industries that are attracting growing interest
 assess the risks and rewards
 evaluate the comparative advantages of various business opportunities
 present a clear understanding of opportunities worth investing in.
To download the preliminary agenda please click here http://enews.eurasiac.com/cgi-
bin19/DM/t/hIEW0CUnT0Ddg0PLK60EM. For more information and applications please contact: Ms.
Zhyldyz Sadyralieva by email: zhyldyz.sadyralieva@eurasiac.com or phone: +976 9906 1673
COALTRANS MONGOLIA, ULAANBAATAR, JUNE 21-22
Coaltrans Mongolia will be a unique opportunity to see and understand at first hand the
development of one of the last remaining coal frontiers. It will address:
 Spectacular growth prospects for the Mongolian economy, coming on the back of the
development of the country‘s wealth of mineral assets with reserves estimated in value of USD1.3
trillion.
 Opportunities that many large scale coal investments offer – in particular the Tavan Tolgoi
coal deposit containing 6.4bt of coking and thermal coal which will be privatized.
 The prospects for exports of 25-40mt per annum of coal into China and in the longer term
through Russia to Pacific markets.
 The considerable challenges facing Mongolian transport infrastructure in delivering coal
exports across the border into China‘s burgeoning steel industry and power sector.
 The challenge of operating coal mines in extreme weather conditions as well as the scarcity
of water supply.
Among the speakers will be:
 D. Zorigt, Minister of Mineral Resources and Energy
 B.Enebish, Executive Director, Erdenes MGL
 D.Batkhuyag, Chairman, The Minerals Authority of Mongolia
 G.Battsengel, Chief Executive Officer, Mongolian Mining Corporation.
Business Council of Mongolia is a Supporting Organization of the event.
Enquiries about speaking opportunities are to be addressed to Gerard Strahan at
gstrahan@euromoneyplc.com, and about benefits available in relation to sponsorship opportunities
to David-Griffiths, at cdavid-griffiths@euromoneyplc.com.
________________________________________________
“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.
___________________________________________
NEW POSTINGS ON BCM WEBSITE'S 'PRESENTATIONS' AND 'MONGOLIA REPORTS'
Presentations from BCM‘s 4 monthly meetings in 2011, from the very successful Mines and Money
Hong Kong‘s ‗Mongolia Investment Summit Morning‘ on March 25, and from Voyager Resources‘ CEO

20. in both English and Mongolian at a March 16 MICC-sponsored gathering as well as Mongolia Reports
including the Polit Barometer–May 2011 by Sant Maral Foundation, the U.S. Embassy Mongolia‘s
Commercial Section‘s ―2011 Mongolia Investment Climate Statement‖ are among those posted on
BCM's website (www.bcmongolia.org) in the "Resource, Presentations" and ―Resource, Mongolia
Reports‖ sections for your review.
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

21. 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]
April 30, 2011 *5.5% [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 – May 12, 2011
Currency Name Currency Rate
US dollar USD 1,218.74
Euro EUR 1,732.99
Japanese yen JPY 15.03
British pound GBP 1,991.24
Hong Kong dollar HKD 156.79
Chinese Yuan CNY 187.54
Russian Ruble RUB 43.65
South Korean won KRW 1.12
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.