16.03.2012, NEWSWIRE, Issue 213

BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
Issue 213 – March 16, 2012
NEWS HIGHLIGHTS:
Business
 E-TT IPO faces further delays while market-listing goals remain;
 Mitsui signs cooperation agreement with E-TT;
 Xanadu prepares exploration program for copper project;
 Khan Resources hits hurdle in ARMZ litigation;
 Mongolia Mining expects Chinese demand to boost revenue;
 Haranga makes equity placement with largest shareholder;
 Development Bank partners with Sumitomo Mitsui Bank;
 Voyager expected to be at turning point in Q2;
 Mongolia Mining declares itself modern and competitive miner;
 Centerra looks to Gatsuurt as Boroo Gold reaches its end;
 Softbank Corp. takes steps toward “Asia Supergrid” in Gobi;
 London law firm enters association with Khan Lex Advocates;
 Italian luxury brand to open in Mongolia;
 Khan Fund opens Mongolia’s door to investors abroad;
 Petro Matad appoints three industry veterans non-executive directors;
 London Stock Exchange to buy large stake in LCH.Clearnet;
 Western companies challenge China’s supremacy in rare-earth market.
Economy
 Social economic data released;
 Development Bank bonds to yield up to 6.25 percent;
 Mongolia clears World Bank's hoops for IBRD loan;
 Local petroleum refinery could reduce prices by 10 percent, says Khet Co.;
 Operations to begin at Salkhit wind farm this fall;
 Mongolia should invest more into infrastructure, says Khan Bank’s Kato;
 Family incomes to plunge in July;
 Rapidly growing Mongolia hopes to avoid overheating;
 Seeking measured growth;
 Emerging Mongolia;
 Consolidating China's rare-earth industry;
 Record deficit at world's factory;
 One percent's hoarding habits tilts Chinese economy.
Politics
 Mongolia to enter FTA negotiations with Japan;
 U.S. president nominates next ambassador to Mongolia;
 Former minister suspected of embezzlement;
 Cabinet appoints new officials;
 Parliament waits on DP's decision on draft election law;
 Parliament begins adopting legal reform package;
 No plans for other bond offerings, says Minister of Finance;
 President calls for earlier timetable for enforcement of corruption law;
 DP calls for fair competition in June election;

 Civil group calls for Election Committee resignations;
 Equal opportunities for education;
 PM's Japan visit sparks return of nuclear fears;
 The trouble with nuclear waste;
 Resource investors raising political risk factor as elections approach;
 Nuclear disarmament effort to North Korea bears few results yet high optimism;
 U.S. president announces WTO case against China over rare-earths.
SPONSORS
Khan Bank Eznis Airways
Kempinski Hotel Khan Palace Mongolian National Broadcasting
Mongolian Star Melchers Breakthrough PR
Asia Pacific Securities Oxford Business Group
BUSINESS
E-TT IPO FACES FURTHER DELAYS WHILE MARKET-LISTING GOALS REMAIN
The public listing of Erdenes-Tavan Tolgoi (E-TT) has been delayed by at least six months by
regulatory hurdles and political deadlock as Mongolia's parliamentary elections approach.
The delay of the much-vaunted Tavan Tolgoi triple listing underscores the challenges in that
process as Mongolia's democratically elected politicians wrangle over how best to tap the country's
mineral wealth. E-TT, the state-owned company developing the mine, had planned the unusual,
three-city listing this March or April, which was expected to value the entire company at roughly 10
billion.
The complex listing has been pushed back to September, according to several people involved in
the deal, as E-TT waits for Parliament to pass a new Securities Law that will create the legal
framework necessary for the listing to proceed.
The government's botched handling of a tender process for the western half of the Tavan Tolgoi

block has caused further reasons for delay. People familiar with the deal said that uncertainty over
the western block, which would share infrastructure with the eastern block, could have an adverse
effect on valuations for the initial public offering (IPO) of the eastern block.
The bigger hurdle for the IPO has been the tense political climate in Ulaanbaatar as Parliament
prepares for elections at the end of June. The opposition Democratic Party resigned from the
coalition government in January, and the fate of Tavan Tolgoi is set to be a hot election topic. That
has made decision-making difficult at E-TT, which has to grapple with issues such as defining its
corporate structure and board in advance of the listing.
At least 20 percent of the company will be listed in Ulaanbaatar in shares distributed to Mongolian
citizens and companies, with a further 20 percent or so listed overseas. The listings in London and
Ulaanbaatar are likely to happen roughly simultaneously, while the Hong Kong listing may follow at
a later date.
Source: Financial Times
MITSUI SIGNS COOPERATION AGREEMENT WITH E-TT
Japan's Mitsui & Co. Ltd. has made steps toward cooperation with Erdenes-Tavan Tolgoi LLC (E-TT)
that could eventually lead to a purchasing agreement.
Prime Minister S. Batbold met with M. Ijima, president of Mitsui this week. Batbold said that
Mongolia is working on ensuring the participation of Japanese firms in the Tavan Tolgoi project.
―Japanese companies expressed their will to cooperate in big projects such as to build a railway,‖
said S. Batbold.
After Batbold‘s meeting was a signing ceremony for a memorandum of cooperation between Mitsui
and E-TT. Mitsui suggested it could build a power station and steel factory in Mongolia. The
memorandum also opens the possibility that it might purchase its coal from Tavan Tolgoi. Currently
the firm purchases its coal from Chinese companies.
Source: News.mn
XANADU PREPARES EXPLORATION PROGRAM FOR COPPER PROJECT
Xanadu Mines Ltd. has plans to begin exploration drilling presently at its Sharchuluut Uul porphyry
copper project. The company has contracted Major Drilling Mongolia LLC for the first phase of
exploration drilling at Sharchuluut Uul with a minimum of 6,000 meters of diamond and reverse
circulation drilling.
The Sharchuluut Uul project is located at Bulgan Aimag, approximately 230 kilometers northwest of
Ulaanbaatar. It is also 30 kilometers northwest, and along strike, from Mongolia's largest producing
copper deposit at Erdenet, with a 2004 estimate of 2.37 billion tons of copper and molybdenum.
The Sharchuluut project consists of a cluster of five porphyry-related prospects: Sharchuluut Uul,
Bukhin Gol, Salkhit Khushuu, Modon Khushuu, and Khamartyn. All occur within the central part of
the exploration license owned 100 percent by Xanadu Copper Mongolia LLC. It was identified as an
area of prospective porphyry-style alteration mineralization as part of a regional exploration
program.
Source: Xanadu Mines Ltd.
KHAN RESOURCES HITS HURDLE IN ARMZ LITIGATION
Canada's Khan Resources Inc. said an Ontario court upheld an appeal from Russian uranium miner
Atomredmetzoloto JSC (ARMZ), wherein the former and its affiliates will not be able to proceed in
Ontario with their CAD 300 million lawsuit (USD 302.1 million). The decision comes shortly after
reporting an earlier loss of USD 932,000 for the final quarter of 2011.
Khan Resources sued ARMZ in the Ontario Superior Court of Justice for alleged interference in its
Mongolian operations, but the Russian justice ministry had refused to effect service on the state-
owned miner in February.
The Canadian uranium miner said ARMZ sought to eliminate Khan's mining and exploration license in
Mongolia so that it could proceed with its own joint venture with Mongolia's state-owned MonAtom
LLC.

―[The decision] raises the perturbing question as to how a company like ourselves can achieve
adequate recourse for its shareholders given the inability to even serve ARMZ without claim,‖ Khan
Resource's Chief Executive Grant Edey said in a statement.
The next stage of court sessions has been arranged for 10 April. The decision from the serial court
session from the London Court of International Arbitration will reportedly come at the end of June.
If the Mongolian government is found guilty it would reportedly owe USD 285 million to Khan
Resources. The first stage of court session was attended by a delegation led by as G. Bayasgalan,
State Secretary of Ministry for Justice and Home Affairs, just before the New Year.
Read more…
Khan Resources Inc. recently released its financial statement for the three months ended 31
December, reporting a USD 932,000 net loss. The company is also awaiting a response from the
Toronto Stock Exchange (TSX) to see whether it still meets listing requirements. The company said
in a statement that it anticipates the exchange will render a narrow interpretation of its rules and
guidelines.
Source: Reuters, Khan Resources Inc, Undesnii Shuudan
MONGOLIA MINING EXPECTS CHINESE DEMAND TO BOOST REVENUE
Mongolia Mining Corp., Mongolia's largest coking coal exporter, expects revenue to continue rising
this year because of demand from China.
―The trend will continue‖ after a surge in Chinese sales last year, Executive Director Battsengel
Gotov said.
Profits rose 98 percent to USD 119.1 million last year, matching the average USD 118.7 million
estimate of six analysts in a survey. Revenue climbed 96 percent to USD 542.6 million, the Hong
Kong-listed company reported.
The shares rose 4.2 percent to HKD 7.39 as of 10:55 a.m. local time, headed for the highest level
since 28 September. Mongolia Mining has fallen 24 percent in the past year, compared with the 11
percent decline in the benchmark Hang Seng Index.
Source: Bloomberg
HARANGA MAKES EQUITY PLACEMENT WITH LARGEST SHAREHOLDER
Haranga Resources Ltd. has agreed to issue 15 million new shares to Golden Rain Holdings Ltd., a
wholly owned subsidiary of Lippo China Resources Ltd., with Haranga Resource itself on the roster
of Lippo Group‘s assets.
The 15 million shares will be sold to Golden Rain at USD 0.40 a share for a total of USD 6 million, a
reported discount from the last closing price of USD 0.48 a share on 13 March. The placement will
nearly double Lippo Group‘s stake, increasing its holding from 7.35 percent to 13.92 percent. Lippo
has also agreed to a 12-month ―voluntary lock up period‖ for its entire 13.92 percent shareholding,
signaling its long-term confidence in Haranga Resources.
Haranga Resource will use the added liquidity to finance its exploration activities. This comprises
drilling required to define the full mineral inventory at its Selenge iron ore asset and completing
the Selenge Project Scoping Study. It will also use the funds to obtain a mining license for the
Selenge project as well as to pursue potentially significant additional iron ore acquisitions in
Mongolia.
Source: Haranga Resources Ltd.
DEVELOPMENT BANK PARTNERS WITH SUMITOMO MITSUI BANK
Sumitomo Mitsui Banking Corporation has struck up an alliance with the Development Bank of
Mongolia LLC to help meet the funding demands for large-scale projects.
The two banks signed a memorandum for the deal on 12 March. The Japanese bank entered the deal
due to its interest in Mongolia's rapid economic growth and aiding in projects related to railway
infrastructure and air pollution.
The governments of Japan and Mongolia have agreed to economic cooperation and are set begin
negotiations for a free trade agreement (FTA).

Source: Financial Post
VOYAGER EXPECTED TO BE AT TURNING POINT IN Q2
Voyager Resources Ltd.'s maiden resource in the next quarter is expected to be at a transitional
point supporting an attractive mid-scale development project with further significant upside
potential.
Voyager Resources is characterized as ―the most advanced, independent copper exploration and
development play in Mongolia,‖ with controlling interests at the KM and Khongor projects, located
atop of the same copper belt as Oyu Tolgoi. Recent aggressive exploration at KM has some drawing
comparisons to the Chilean porphyry systems.
Voyager Resources is looking to undertake a four-part strategy at KM to define a maiden resource,
determine the potential of the remaining 26 deposit veins already identified, learn more about a
primary source of mineralization, and begin feasibility study. The company has completed over
40,000 meters of drilling for its 50,000 program in the first 10 months of exploration. It also
continues to marginalize risks to its flagship project as it gains a better understanding of the deeper
primary mineralization potential.
Source: Ocean Equities
MONGOLIA MINING DECLARES ITSELF MODERN AND COMPETITIVE MINER
Mongolian Mining Corp. has announced its transition into a fully-fledged coal mining, processing,
transportation, and marketing platform.
The mining firm reported revenue of approximately USD 542.6 million for last year, a USD 265.1
million increase from the year before. Its shareholders equity base increased from USD 119.1
million, up USD 59 million, or 98.2 percent, from the year before.
Following this announcement, it reported it decision to borrow up to USD 300 million from a
commercial bank. The company is able to pay the loan in installments for 36 months. In the event
of default, MCS Holding LLC will give up at least 30 percent of its stake in the company.
Source: Mongolian Mining Corp.
CENTERRA LOOKS TO GATSUURT AS BOROO GOLD REACHES ITS END
Centerra Gold Inc.'s president and chief executive officer, Stephen Lang, expects 2012 to a busy
year.
―2012 will be a pretty busy year for us. I think particularly as we come out of the Mongolian
elections, looking to get the approvals for Gatsuurt finally moving,‖ said Lang. ―Once that happens
it'll take about two months for that to get into production and that'll bring [the mine in] Mongolia
where it's historically been for us at the 150,000 to 200,000 ounce a year level.‖
Lang said his company will be focusing on its Kumtor mine in the Kyrgyz Republic as well as a few
other development projects.
The company's 2011 gold production totaled 642,380 ounces, down from 678,941 ounces in 2010.
The lower production was attributed to the company's Boroo mine production dropping nearly 50
percent.
―That's really at the end of its mine life,‖ said Lang, adding later, ―Boroo has produced about 1.5
million ounces since we opened it in 2004.‖
Source: MarketWire
SOFTBANK CORP. TAKES STEPS TOWARD “ASIA SUPERGRID” IN GOBI
Softbank Corp. said it will tie up with Mongolian investment firm Newcom Group and Korea Electric
Power Corp. (KEPCO) in order to start a wind power generation project in the Gobi Desert in
Mongolia. Softbank believes the collaboration will be the first step toward realizing its ―Asia
supergrid‖ initiative of linking Asian countries with undersea cables for efficient management of
electricity supply and demand in the region.
The Japanese Internet and telecommunications conglomerate aims to transmit electricity to Japan
in the future, officials said. Newcom Group will be tasked with acquiring land and coordinating with

the Mongolian government. KEPCO will mainly design the power grid.
For the time being, the three partners will develop technologies for the Mongolian wind power
project, as well as for electricity generation by photovoltaic and other natural resources. Details of
the Mongolian project, such as the scale of spending, have yet to be decided.
Source: Power Engineering
LONDON LAW FIRM ENTERS ASSOCIATION WITH KHAN LEX ADVOCATES
Ulaanbaatar-based Khan Lex Advocates LLC signed a formal association agreement with London-
based international law firm Clyde & Co.
Clyde & Co. Is a global law firm with a network including 27 offices and associated offices in the
Americas, Asia Pacific, Europe and Middle East regions. It has been steadily increasing its range of
advice to Mongolian clients and to other clients looking to do business in Mongolia.
Clyde & Co. international trade partner Stephen Tricks said: ―We can now link our clients to a law
firm that is not only first rate in terms of ethos and quality, but also has a unique experience with
the legislative codes and considerable insight into the Mongolian government.‖
Although established in the capital just last year, Khan Lex Advocates was chosen by Clyde & Co.
for the firm's strong background in both the private and public sectors.
Khan Lex Advocates managing partner B. Enkhbat said: ―This association with Clyde & Co. enables
us to work with an international law firm that has a long track record of assisting its clients in
emerging markets and particularly in the areas of mining, energy, financial services, infrastructure
and international trade.‖
Source: Khan Lex Advocates LLC
ITALIAN LUXURY BRAND TO OPEN IN MONGOLIA
In an effort to cover the Eurasian region more thoroughly, Italian luxury leather-goods producer
Coccinelle will open a name-brand store in Mongolia. Business Development Director for Coccinelle,
Antonio Sottile said locales such as Mongolia and Kazakhstan are not to be overlooked with their
booming economic growth fueled by their mineral and petroleum sectors.
―We'll be the first Italian brand of leather when we open in Mongolia later this month. ―We're also
expanding in unusual territories like China and Kazakhstan.‖
Sottile admitted that Italian brands, including Coccinelle, are having a hard time producing the
entirety of their products in Italy. He noted that it has been a trend in the past few years to
outsource production to China and other countries. He said the Italian brand and the fact that his
company's products are made of leather 100 percent from Tuscany are most important. The director
also shared his worries over the bigger corporations buying out smaller family-owned brands, as
happened in the acquisition of the 150-year-old La Rinascente, a famous upscale Italian department
store, by a Thai company last year.
The brand has also been receiving numerous offers, especially from Southeast Asia and Russia--
‖we're a very strong brand in this region,‖ said Sottile. However, he noted that most acquisitions do
not affect the direction or heritage of a brand.
Source: Business World Online
KHAN FUND OPENS MONGOLIA'S DOOR TO INVESTORS ABROAD
The Khan Mongolia Equity Fund has worked in the interest of both Mongolia's private sector and
investors, focusing to provide equity to Mongolian mining companies, with 30 percents of its assets
in the Mongolian Stock Exchange (MSE). The fund, which is billed as to presenting diversified and
liquid exposure to ―one of the world's most resource rich and fastest growing economies,‖ is open
to investors worldwide.
―When investing in the Mongolian growth story, it's fair to say though that it's hard to avoid the
mining sector and mining related industries,‖ said Travis Hamilton, founder of the fund, adding,
―[T]he significant amounts of investment that have been made in the mining sector over the last
several years are already providing significant spillover effects into other areas of the economy.‖
The fund's objectives are to attain growth opportunities through investment of equities to securities

for the eventual expansion of the Mongolian economy. The company invests in both on-shore and
offshore assets that are principally Mongolian investments, said Hamilton.
Hamilton said the financial structure of Khan differentiates itself strongly from the Quam Silk Road
Mongolia Investment Fund and MSE Liquidity Fund. While the Khan Fund is a mix of both domestic
and internationally listed companies, the MSE Liquidity Fund is focused only on Ulaanbaatar-listed
companies. As for the Quam Fund, Hamilton described it‘s competitor as a ―segregated investor
portfolio‖, which covers a number of strategies and portfolios. The Khan Fund, contrastingly, is a
―stand-alone single entity and thus avoids any potential contagion issues that may be raised through
a structure such as Quam's.
Read more…
Mongolia's financial sector faces challenges such as a small market in Ulaanbaatar that is plagued
with liquidity challenges in addition to infrastructural bottlenecks that limit the value of companies
and their products, and ultimately their shares, he said. There are also concerns for the nation's
dependence on Chinese consumption. While Hamilton admitted that the U.S. recession and
European sovereign default would derail current growth forecasts for Mongolia, he felt growth in
China would only be marginally impacted. He said even if growth were halved, an unlikely thought
to him, infrastructure is the only current impediment from replacing more expensive suppliers such
as Australia.
Source: Seeking Alpha
PETRO MATAD APPOINTS THREE INDUSTRY VETERANS NON-EXECUTIVE DIRECTORS
Petro Matad Ltd. has announced the appointment of three non-executive directors, and the
retirement of John Robertson and D. Sarangua.
As directors, Robertson and Sarangua guided the growth of Petro Matad from its initial listing on the
London Stock Exchange. Both are retiring to pursue other business interests. In addition to the
retirement of Gordon Toll in January, their resignations have allowed the company to continue its
ongoing development with new additions to the board.
Petro Matad appointed Phillip Vingoe, George Watkins, and David Skeels to the board.
―Petro Matad is delighted to announce the appointment of three such prominent figures within the
industry to its board. Their experience and qualification are outstanding,‖ said Petro Matad Chief
Executive Officer Douglas McGay. ―With this set of appointments, the board has been strengthened
by the addition of 125 combined years of oil and gas industry knowledge and experience.‖
Vingoe has over 35 years experience in the oil and gas industry. He began his career with BP PLC,
where he spent nearly 20 years and was chief geophysicist and general manager for worldwide
exploration. Watkins has nearly 45 years experience in the oil and gas industry, beginning his career
with Royal Dutch Shell PLC before moving to Conoco Inc. to work the next 30 years, with 10 as
chairman and managing director of Conoco UK Ltd. Skeels is a geologist with 45 years' experience in
gas and oil, including 20 years at Conoco and 10 years at BG Group. Recently he has been working
with governments and state organizations across Eastern Europe and Azerbaijan.
Source: Petro Matad
LONDON STOCK EXCHANGE TO BUY LARGE STAKE IN LCH.CLEARNET
The London Stock Exchange Group agreed on Friday to buy up to a 60 percent stake in
LCH.Clearnet, an independent clearinghouse for financial transactions, for EUR 463 million (USD 612
million). The LSE has spread its interests far and wide, having partnered up with the Mongolian
Stock Exchange (MSE) to direct the latter‘s development.
Financial exchanges have been actively trying to strike deals in recent months, as the industry looks
to consolidation to bolster profits and margins. But few big mergers have been successful. After
months of negotiations, Deutsche Börse‘s planned tie up with the New York Stock Exchange
Euronext was called off in February after European regulators rejected the move because of
antitrust concerns.
The London Stock Exchange‘s bid for LCH.Clearnet, which still must receive regulatory approval,
includes offering the firm‘s shareholders EUR 19 for each of their shares, as well as EUR 1 special

dividend to be paid in five years. The deal values LCH.Clearnet at EUR 18 million.
―Strategically, structurally, and financially, this is a highly persuasive transaction,‖ the chairman of
the LSE, Chris Gibson-Smith, said in a statement. ―Together, we have secured the enlarged group‘s
long-term role in the operation of international capital markets.‖
Analysts say that by acquiring a majority stake in LCH.Clearnet, one of Europe‘s largest
clearinghouses, the London exchange will be able to earn extra fees in addition to cost savings, as
the exchange currently outsources clearing activities to LCH.Clearnet. The exchange said it
expected annualized cost savings of EUR 35.8 million by the end of 2012. Both companies said they
expected further cost savings of EUR 23 million by the end of the third year after the transaction
closes.
Read more…
The deal makes strategic sense, as clearing is a fast-growing business and LCH.Clearnet, will mean
the LSE earns 45 percent of its revenue from post-trading services, double the proportion now. Still,
the quality of the deal is less clear cut. The EUR 19 a share price tag values LCH.Clearnet at 6.8
times last year‘s operating profit.
Source: Wall Street Journal
WEST CHALLENGES CHINA‟S SUPREMACY IN RARE-EARTH MARKET
Molycorp Inc.‘s USD 1.3 billion deal to acquire a key processor of rare earth minerals has sparked a
warning from industry officials that it could reinforce China as the main source for specialized
magnets used in consumer electronics and sophisticated weapons.
Molycorp said it plans to buy Neo Material Technologies Inc., one of the world‘s leading experts in
chemistry needed to transform rare earths into specialized magnets. Molycorp said the deal creates
the most diversified rare-earth company outside of China, which dominates the industry. But the
deal also leaves Molycorp to ship minerals to Neo Material‘s Chinese operations, to an arm called
Magnequench. Ed Richardson, president of the U.S. Magnetic Materials Association, worries that the
United States is already ―dangerously dependent on China‖ for rare-earth-magnet materials.
While much of the debate over China‘s hold on the rare-earth market has focused on mining, the
Molycorp deal highlights China‘s ability to process mined oxides into metals that help electric cars
hold their charge, make wind turbines turn, and bring precision to military gyroscopes. In response
to China‘s supremacy in the rare-earth industry, companies such as Molycorp and Australia‘s Lynas
Corp. are trying to provide supply alternatives to China, which has a 90 percent market share in
many aspects of the industry.
The narrowest bottleneck in the global rare earth supply chain lies in taking fairly pure rare earths
from the mining companies and processing them into high-tech materials of extremely high purity.
This industry is dominated by Rhodia of France and Neo Material. Both currently buy most of their
resources from China. But Neo Material has been working with Molycorp and Rhodia has been
working with Lynas to develop alternatives.
The World Trade Organization is expected to challenge China over its rules to limit its exports, rules
that Beijing says are meant to protect the environment but Washington labels a trade barrier.
Molycorp is paying 71 percent of the cost in cash and the remaining 29 percent in shares. Molycorp
valued its offer at CAD 11.30 (USD 11.40), a 42 percent premium to Neo Material‘s closing price of
CAD 7.97 last week on Thursday.
Source: New York Times, Wall Street Journal
ECONOMY
SOCIAL ECONOMIC DATA RELEASED
Consumer price index
The national consumer price index increased by 12.5 percent compared to the same period of the
previous year. The increase in national index was mainly due to a 7.2 percent increase in food and
non-alcoholic beverages.

Unemployment
The number of unemployed who had registered at the Labor and Welfare Service Divisions in
provinces and the capital city, and were actively looking for jobs, reached 58,400, reflecting an
increase of 19,900 persons, or 51.6 percent, compared with the same period of the previous year.
External trade
The external trade balance increased 2.6 times compared to the same period of the previous year.
External trade increased 4.9 times since this time last year showed a deficit of USD 154.8 million
compared to a deficit of USD 60.2 million in February 2011. Total external trade turnover increased
42.4 percent.
Industrial output
In the first two months of this year, the total industrial output increased by MNT 20.6 billion or 7.7
percent to MNT 287.8 billion (at 2005 constant prices) compared to the same period of last year.
State budget
Total revenue and grants of the General Government Budget amounted to MNT 674.8 billion and
total expenditure and net lending amounted to MNT 682.1 billion representing a deficit of MNT 7.3
billion.
Social welfare
Social welfare pensions and benefits were allocated to 56,200 people, and increase of 479 people or
0.9 percent. The total amount of allocated funds increased by MNT 5.5 billion or 32.4 percent
compared to this time last year.
Freight and passenger
The number of freights and passengers rose by 26 and 6.5 percent, respectively, from this time last
year. The number of passengers traveling by rail rose 8.6 percent. Revenue increased by MNT 21.8
billion or 47.3 percent to MNT 68.1 billion in the first two months of 2012, compared with the same
period last year.
Source: National Statistics Office
DEVELOPMENT BANK BONDS TO YIELD UP TO 6.25 PERCENT
The Development Bank of Mongolia LLC (DBM) is marketing a sale of U.S. dollar bonds to yield about
6 percent to 6.25 percent, according to a person familiar with the matter.
The company hired Deutsche Bank AG, HSBC Holdings PLC, and ING Group NV to help arrange a
series of credit investor meetings from March 8. DBM is a wholly-owned by the Government of
Mongolia.
Source: Bloomberg
MONGOLIA CLEARS WORLD BANK'S HOOP FOR IBRD LOAN
The World Bank has opted to declare Mongolia creditworthy for its International Bank for
Reconstruction and Development (IBRD) lending.
―As Mongolia‘s development needs remain great, the government is seeking to access new sources
of financing to accelerate critical investments,‖ said Mongolia's Finance Minister D.
Khayankhyarvaa.
The World Bank Group makes IBRD financing available to middle-income and creditworthy poorer
countries to promote sustainable, equitable and job-creating growth, reduce poverty and address
issues of regional and global importance. Mongolia will continue to qualify for concessional
financing from the International Development Association (IDA), the World Bank fund for the
poorest, during a transition period.
―Without our financial and analytical support, Mongolia has been able to achieve some excellent
results—bringing water to the ger areas of Ulaanbaatar, helping set up mobile phone services across

the country, and establishing more transparent and effective public management systems,‖ said
Klaus Rohland, World Bank country director for China and Mongolia. ―We are confident that they
will continue to make good use of IBRD resources.‖
Source: World Bank
LOCAL PETROLEUM REFINERY COULD REDUCE PRICES BY 10 PERCENT, SAYS KHET CO.
A new petroleum processing plant could reduce fuel prices by 10 percent and keep gasoline prices
in the triple digits, said an employee of the fuel supplier Khet Co.
Khet Senior Specialist B. Nasantogtokh said his company could build a small factory to supply the
eastern region of Mongolia in two and a half years. Construction has not yet begun, however, as
the firm is waiting for the green light from the Mongolian government.
―If the government would collaborate with local companies and support the development of
domestic oil production, it could overcome the fuel shortages and reduce current prices,‖ said
Nastogtokh.
The company began researching the project in 2000, and last year in February it presented its
proposal to the Ministry of Mineral Resources and Energy. Although the project proposal received
approval, no decision has been made on whether the government would allow the company to
proceed with construction. Delays have postponed the project by two years, said Nasantogtokh.
The specialist said the plant would produce 120,000 tons of petroleum a year, with production
concentrated on A-92 gasoline and A-95 gasoline fuels, and winter and summer diesel fuels
according to Euro-3 standards. He added that the introduction of a local producer would reduce
fuel prices by 10 percent, and could possibly keep A-92 fuel prices below MNT 1,000.
Source: Zuunii Medee
OPERATIONS TO BEGIN AT SALKHIT WIND FARM THIS FALL
Newcom Group has ramped up its development to its Salkhit wind farm. The firm plans to have the
USD 110 million power station begin operations in November. It would provide 20 percent of the
electricity consumed in Ulaanbaatar.
Development of the area began last year with two infrastructure projects. Last year a new road
connecting the Salkhit Mountains to the Gobisumber region and an electric network at Nalaikh
station were built. This year the company will begin its installation of 31 wind turbines, weighing
57 tons each. This week the company has begun digging at 31 sites for underground turbines. The
installation of one turbine requires up to 900 tons of concrete mixture, enough to build a nine-story
building.
The wind turbines and parts will be provided with Newcom's partner to the project, General Electric
Co. Each 80-meter tall turbine will be able to generate 1.6 megavolts of electricity. Construction of
the wind power stations will be finished this year in May.
Financing to the project has been provided by the European Bank for Reconstruction and
Development (EBRD) and the Dutch Development Bank.
Source: Udriin Sonin
MONGOLIA SHOULD INVEST MORE INTO INFRASTRUCTURE, SAYS KHAN BANK‟S KATO
Mongolia‘s economy has reached a ―crucial stage‖ for development, said Noriko Kato, chief
executive officer of Khan Bank. The banking executive recommended that Mongolia invest more
money into infrastructure, as it will play an important role in Mongolia‘s economic growth.
―I think it would be wise to contribute major funding to infrastructure, as it will play an important
role in Mongolia‘s economic growth, for instance, the Tavan Tolgoi infrastructure,‖ said Kato. ―Its
value will significantly increase only if investors are introduced to plans and view how exactly the
mining site will operate when it‘s completed.‖
Kato warned that weaning a nation off resource dependency is a difficult feat that countries in the
Middle East are now trying to accomplish. He said attention must be paid to improving education
and diversifying the economy. Wealth must be targeted toward long term goals, he said, and
foreign trade deficits should be avoided. He said one advantage Mongolia has over the Middle East is

its greater transparency, as government expenditures and deficits are not made public there.
Source: UB Post
FAMILY INCOMES TO PLUNGE IN JULY
Allowances and raised pensions from the Human Development Fund have artificially risen family
incomes, said an economist at this year's Mongolia Economic Forum.
N. Tuya, an economist and member of the Democratic Party, said average family income rose 32
percent at the end of 2011 compared with the year before, from MNT 420,000 to MNT 555,000.
However, 20 percent of that growth is a result of salary raises, while 80 percent is from pensions
and allowances from the HDF. She warned this extra income would disappear once the allowances
expire in July. She said the government should have used the money from the fund to create more
jobs and build up infrastructure.
―I think government had the chance to raise incomes and increase the number of workplaces, but
they squandered it,‖ said Tuya.
She said in the first two months of this year, 34 percent of all jobs held were in retail, 20 percent in
processing, and only 4 percent in the mining sector. She recommended that government focus its
policy in developing factories to create finished products and expand employment opportunities in
the service sector.
RAPIDLY GROWING MONGOLIA HOPES TO AVOID OVERHEATING
Mongolian Prime Minister S. Batbold said a tight monetary policy and budget discipline will check
the rate of inflation and prevent Mongolia's economy from overheating.
Buoyed by a wave of foreign direct investment to exploit its extensive but largely untapped natural
resources, Mongolia's gross domestic product surged 17.3 percent last year—up from 6.4 percent in
2010. That has sparked concern that inflation, which reached 12.5 percent in February, could end
up short-circuiting its blistering economic growth.
―We have to have tight monetary policy. And also we will have to take control over the
expenditures, especially on the budget side,‖ Batbold said.
Last month, the World Bank reported that government spending in Mongolia rose 56 percent in 2011
and is expected to increase 32 percent this year. Noting that the stepped-up spending was enabled
by a gusher of natural resourced-related revenue, the international aid organization warned that
Mongolia's economy may see a repeat of previous boom-and-bust cycles. Weak global growth has
also prompted questions about Mongolia's ability to ride out a potential downswing in the prices of
commodities such as copper, coal and gold.
The Mongolian currency depreciated 11 percent in 2011 because of steady inflationary pressure and
sagging commodity prices later in the year. But Batbold is confident the economy will stay on track
for elevated yet sustainable growth for the coming years, largely through infrastructure
investments.
Batbold said Mongolia is very interested in establishing new air routes and more frequent service
linking his country with Japan and other regional destinations. ―It is very important to Mongolia.
This is one of the bottlenecks for growth,‖ he said. Currently there are only two nonstop flights a
week between Tokyo and Ulaanbaatar, both via MIAT airlines.
SEEKING MEASURED GROWTH
Momentum in Mongolia's mineral sector helped gross domestic product growth surge in 2011,
however, extra fiscal vigilance is needed this election year as overheating could lead to high
inflation, exchange rate volatility and wage pressures.
According to World Bank estimates in late January, growth reached 14.9 percent in 2011 and will be
15.1 percent in 2013. Domestic brokerages point to the country's low population, at three million
people, and an abundance of natural resources as evidence that the expansion will continue.
Mongolia will likely keep its competitive edge due in part to its proximity to energy-hungry China,

which allows for faster delivery times and cheaper transpiration costs for energy and mineral
imports than possible from countries such as Australia or those in Africa and South America.
Though minerals are the engine of the country's growth, figures suggest government efforts to avoid
Dutch disease—whereby the financial benefits of a resource boom lead to a hollowing out of other
sectors—are also having an impact. The government has also recognized the importance of
transparency on tax and royalty payments in harnessing mineral wealth, with President Ts.
Elbegdorj contributing to a World Economic Forum report on the issue.
Indeed, the consumer price index in February 2012 increased by 2.5 percent compared with the
previous month, and by 12.5 percent compared with the same period last year. Food and non-
alcoholic beverage prices rose around 7 percent alone. Inflation is estimated to have risen by 10.2
percent in 2011.
Read more…
Investment banking and securities firm Goldman Sachs Inc.'s February decision to buy a 4.8 percent
stake in the Trade and Development Bank of Mongolia (TDB) also boosted confidence in government
measures to tighten fiscal policy. A source told Reuters the investment was only kept below 4.99
percent because a higher stake would have been subject to U.S. regulations. However, in the same
month International Monetary Fund (IMF) officials warned the government there may be an eventual
hard landing due to overspending, especially if external shocks hit the economy.
Source: Oxford Business Group
EMERGING MONGOLIA
The abundance of natural resources in Mongolia offers great business development opportunities in
the country. While the many current and potential benefits are exciting, it has its own risks and
challenges to deal with.
Mongolia is fast becoming a key producer of many minerals. Copper, zinc and coal are some of the
major exported natural resources. The agricultural sector employs 35 percent of the workforce.
Mongolian government believes that the country's capacity could allow it to produce 30 percent of
the world's cashmere. Here Mongolia will compete with China, which has a price advantage. Brand-
recognition could turn out to be a strategy Mongolia could capitalize on. The service sector is
expanding with growth of about 10 percent, with growth expected in the communications, banking,
and real estate sectors in particular.
Corruption and government ineffectiveness represent the greatest risks to governance in Mongolia.
It received one of the lowest scores among the 2010 Corruption Perception Index with little
improvement in 2011. Nevertheless, an anti-corruption law, intended to strengthen the private
sector, has recently passed in Mongolia.
Limited infrastructure remains as one of the greatest challenges to the fledgling nation. This highly
export-oriented economy is experiencing difficulties with delivery of its products to the market.
Railway infrastructure connecting main mining deposits to consumer markets is underdeveloped. A
1,500-kilometer railway system is due to begin construction. In terms of consumer markets, low
purchasing power limits market attractiveness for foreign companies. Markets are much less
developed outside of Ulaanbaatar. The situation is worsened by the 55 percent rate of
unemployment.
Future prospects include the development of a more balanced economy to provide sustainable
growth. Economic growth could create opportunities for construction business, including new
commercial development and apartment complexes. Development for transportation systems also
has big potential.
Source: Global Atlanta
CONSOLIDATING CHINA'S RARE-EARTH INDUSTRY
China will establish two or three large rare-earth enterprises by consolidating companies in the
sector, said a top industry official on Sunday. China's closed grip on the rare-earths market has led
developers to look at locations such as Mongolia for alternative sources.
Miao Wei, minister of industry and information technology, said China will retain limits on rare-

earth export quotas after the industry rationalization. Miao said the first large rare-earth enterprise
had already been created in the Inner Mongolia autonomous region by consolidating 14 related
companies under the leadership of Baotou Steel Rare-Earth Hi-Tech Co. The official did not give a
timetable for the nationwide restructuring, but a statement issued in February last year said that
over a five-year period, China would regulate the industry to ensure ―reasonable exploration and
orderly production.
Miao said the rare-earth export quota would not change in 2012 from 2011, a sum total of 30,184
tons. However, in 2011 actual exports amounted to just half of the quota. Miao said the industry
regrouping would cover firms in more than 10 provinces, adding that the domestic industry value
stands at about CNY 40 billion (USD 6.35 billion).
Japan, the world's biggest importer of rare earths, will provide JPY 5 billion (USD 65 million) in
subsidiaries for projects that reduce the need for the elements as it aims to cut its reliance on
imports to meet demand. The funds will support projects that reduce the consumption of magnetic
products that use dysprosium and neodymium, improve recycling and develop new technologies.
Industry representative Tul Hailing said that now is the ―best time‖ to develop the downstream end
of the industry, such as processing. He suggested the government should also involve venture
capital to facilitate a combination of financing planned technology as well as special funds to aid
technology upgrades.
Source: China Daily
RECORD DEFICIT AT WORLD'S FACTORY
China's trade sector fell deeply into the red last month after running huge trade surpluses for much
of a decade, raising questions about whether the country's economy is tailing off more rapidly than
anticipated. Growth to China is particularly important to Mongolia as it profits heavily from exports
to fuel its energy needs and build up its cities.
The weekend report of a USD 31.5 billion trade deficit in China for February was substantially larger
than most analysts expected and followed a string of other disappointing economic data, including
weak growth in car sales, industrial production and retail sales, and the continuation of a steep fall
in property sales. The only bright economic star was that inflation slackened more rapidly than
expected.
A week-long Lunar New Year holiday in January disrupted China's usual export and import flow for
the first two months of the year. But even when combining January and February, the trade deficit
came to USD 4.25 billion, compared with a deficit of USD 890 million in the first two months of last
year. Exports grew just 6.8 percent compared with the first two months of 2011, down from 14.2
percent growth in the final quarter of 2011.
However, the biggest trade deficit on record for the Chinese economy is bad news for the world's
factory—and its customers. Growth in processing trade imports fell to 2.4 percent compared with a
year earlier, down from 8.6 percent in the fourth quarter of 2011. Those imports are the inputs to
make China's own exports. Such a low growth rate suggests factories are anticipating weak demand
for their products down the line, and going slow on accumulating stock.
The overall results prompted analysts to predict that China will ease monetary policy over the
coming months to bolster growth—but few expect a package remotely on the scale of the stimulus
spending and lending that occurred in 2009 and 2010 in response to the global financial crisis.
ONE PERCENT'S HOARDING HABITS TILTS CHINESE ECONOMY
It is not just inadequate consumption by the 99 percent that is the problem for China's unbalanced
economy. It is the 1 percent hoarding their showy gains. The unpredictability of the Chinese
economy has made investors wary of Mongolia due its dependence on China's massive consumption
of its minerals and fuel products.
The conventional wisdom is that low household income is the cause of China's woes. If only
households had a bit more cash in their pockets and a higher willingness to spend, domestic
consumption would take off, and investment and exports could take a well-earned break, goes the

thinking. That analysis is based on official numbers that suggest urban households are poor and
income is relatively evenly distributed. It might be only half correct. Research by the think tank
China Reform Foundations confirms that the average household is poor, rich households enjoy
massive hidden income.
The bottom 40 percent of China's urban population accounts for just 11.4 percent of total income.
Even if income for low earners grows rapidly, the immediate impact on China's economic aggregates
would be negligible. The top 20 percent, by contrast, are hoarding 60.3 percent of China's
household income. Lowering taxes on luxury production would encourage China's wealthy to spend
more on the mainland rather than abroad. However, the propensity to consumers among China's
haves is inherently lower than that of the have-nots, as even a monthly consumer binge leaves
plenty to plow into savings.
That means reducing disparity in wealth is the best solution. Policies that target corruption—a
major source of hidden income—and as shift to a more progressive tax base should be high on the
list of priorities.
POLITICS
MONGOLIA TO ENTER FTA NEGOTIATIONS WITH JAPAN
Leaders of Japan and Mongolia said Monday they will begin negotiating for the fast-growing north
Asian nation‘s first bilateral free trade agreement (FTA)
Prime Minister S. Batbold and his Japanese counterpart Yoshihiko Noda agreed that the two
countries will boost cooperation in the development of natural resources and infrastructure,
according to a joint announcement released after their meeting in Tokyo.
Japan is keen on working more closely with Mongolia as the fast-growing country has abundant
natural resources, including coal, copper, uranium, and rare earth minerals. Mongolia has no FTAs
with other countries.
Batbold, who is on a six day visit to Japan from Saturday, told Noda that Mongolia will ensure
Japanese companies' participation in developing the Tavan Tolgoi coal mine in the south Gobi
Desert. He told reporters that his meeting whit Noda was ―very fruitful for the strategic
partnership‖ of the two countries, achieving an important ―first step‖ in promoting bilateral trade
and investment.
The Japanese government believes that Mongolia is increasingly vital also in terms of diplomatic
and security policies. Japan and Mongolia mark this year the 40th anniversary of the establishment
of diplomatic ties.
Read more…
The two countries had aimed to enter FTA talks a year ago, but efforts stalled as the government
led by Noda's predecessor, Nato Kan, was thrown into turmoil after the catastrophic earthquake and
tsunami that hit the country's northeastern region and triggered the world's worst nuclear crisis in a
quarter century. Japan, one of the major donors for Mongolia, also said it will provide a total of
about JPY 2.74 billion in aid to help the emerging country's development.
Source: Mainichi Daily Times
U.S. PRESIDENT NOMINATES NEXT AMBASSADOR TO MONGOLIA
President Barack Obama has sent his nomination of Ms. Piper Campbell to the U.S. Senate as U.S.
ambassador to Mongolia.
―The Senate has the constitutional prerogative to 'advise and consent' to administration appoints,
but this nomination is expected to sail through with no controversy,‖ said Steve Saunders, president
of the North American Mongolian Business Council.
If confirmed Campbell will succeed current Ambassador Jonathan Addleton, after three years of
service beginning in 2010. The next step in the confirmation process is a hearing to be held by the
Senate Foreign Relations Committee. The State Department is hoping a confirmation vote will be

made before the long recesses for the two national party conventions in June and regular August
recess.
Campbell has been a career member of the Senior Foreign Service since 1989. Most recently she
served as Consul General at the U.S. Consulate General in Basra in southern Iraq since July 2011.
Previously, she was chief of staff to then-deputy secretary of state for Management and Resources
Jacob Lew, where she worked on Iraq's transition planning. Jacob Lew went to become director of
the Office of Management and Budget (OMB), and since 9 January has served as White House chief
of staff.
From 2006 to 2009, Campbell was deputy chief of mission at the U.S. Embassy to Cambodia. Other
overseas posts have included counselor for humanitarian affairs for the U.S. Mission to the United
Nations in Geneva, Switzerland; advisor to the USAID mission director in Croatia; senior advisor to
the head of civilian affairs for the United National Transitional Administration in Eastern Slavonia,
Croatia; general services officer in Belgium; and general services officer and consular officer in the
Philippines. In the United States, Campbell has served as an advisor on Asian issues for the U.S.
Mission to the United Nations; human rights officer in the Bureau of International Organizations; and
a watch officer in the State Department's Operations Center.
A native of Buffalo, New York, Campbell holds a Bachelor of Science in Foreign Service from
Georgetown University School of Foreign Service and a Master of Public Administration from Harvard
Kennedy School.
Source: NAMBC
FORMER MINISTER SUSPECTED OF EMBEZZLEMENT
U. Barsbold, former Minister of Nature, Environment and Tourism, was recently detained for three
days under the suspicions that he may have taken part in an illegal financial transaction.
Barsbold was a project manager at Hong Kong-based Mongolia Energy Corporation Ltd.'s (MEC's)
Khushuut coal mine. The former government official was reportedly responsible for shares of
MonEnCo, a subsidiary to MEC, which were later sold. Suspicions aroused after he reportedly
transferred a large sum of money from his personal savings to a shared account between him and
close acquaintances. He was taken into custody last Tuesday, 6 March, and released the following
Thursday.
CABINET APPOINTS NEW OFFICIALS
The Government Cabinet has selected new high level officials to lead the Ministry of Defense and
Unfair Competition Regulatory Agency. Positions have been made vacant in recent times due to the
dissolution of the grand coalition pact between the Mongolian People's Party and Democratic Party
in addition to the removal of government officers in response to economic turbulence spurred by
the spike in gas prices in January.
Lieutenant General Ts. Togoo has been appointed as state secretary to the Ministry of Defense.
Togoo is a former head of the General Headquarters of Mongolia's Armed Forces (GHMAF). The
Cabinet also chose B. Lhagva as the new head to the Unfair Competition Regulatory Agency (UCRA).
Lhagva has served as a head of the National Committee of Zonal Development.
In addition to the high level offices, the cabinet made appointments to full-time and non-staff
members of the UCRA.
Source: Montsame
PARLIAMENT WAITS ON DP'S DECISION ON DRAFT ELECTION LAW
The working group for the draft Law on Local Elections has nearly reached a consensus that local
and central government elections should be held separately said the committee head. The law has
also prompted an amendment that would decide on election details and provide regional
governments with more power.
The working group tasked with developing the draft law regarding upcoming elections this summer,
as appointed by the Standing Committee of State Structure, has agreed to move forward with the

plan to hold state and regional elections separately. This point has been backed by all parties
except for the Democratic Party (DP), said MP D. Dondog, the head of the working group. He said
there is a rumor that the DP is waiting to hear from regional representatives before deciding on the
draft law.
The working group responsible for the election law is a multi-partisan collaboration comprised of
groups representing each party and is lead by D. Lundeejantsan of the MPP and Z. Enkhbold of the
DP for discussion. The working group head said each representative party's proposal is the same
except for the dates for when the local election should be held. It will be up to Parliament to
decide on one proposal for debate, rather than further complicate matters by debating two or more
proposals, he added.
Additionally, a draft law has already been signed by 40 MPs to initiate an amendment to the
Constitution for improved local governance and decentralization. The working groups have agreed a
general ballot should be held asking if the appointed authorities for self governance should be
chosen by the party in power or the people; and if local elections should be held separately from
state elections.
Read more…
MP D Baldan-Ochir explained that state and local elections cannot be held on the same day due to
difficulties such as state election will be counted by machine while local elections by hand. State
elections will also be held two hours longer, ending at 22:00 compared with elections to end a
20:00.
A discussion on the proposed amendment will be held during the spring session of Parliament.
Dondog said the general ballet for the amendment will be held at the same time as state elections.
Source: Undesnii Shuudan
PARLIAMENT BEGINS ADOPTING LEGAL REFORM PACKAGE
Parliament adopted a package of laws during a special session that would bring greater strength to
the legal system. Members were able to pass 16 laws and three resolutions, reported Parliament
Vice Chairman N. Enkhbold.
Introduced by President Ts. Elbegdorj, the package included 6 laws, three of which have been
adopted already. Those passed are the Law on Court, Law on Judgment, and Law on Layers. The
new laws give more freedoms and independence to the courts, regulate pressures placed on judges
and provide opportunities to increase their abilities. The passage makes good on Elbegdorj's vowed
to reform the justice system after taking office.
Policy makers plan to discuss the remaining three draft laws in the upcoming spring session of
Parliament. Those three remaining include the Law on Court Administration, Law on the
Representation of Citizens in Court, and The Law on Consent. The main focus of the laws was to
increase the salaries of civil workers and pensions to the elderly.
Parliament has left the Law on Elections for the spring session as the law still needs further
development.
Source: News.mn, Udriin Sonin
NO PLANS FOR OTHER BOND OFFERINGS, SAYS MINISTER OF FINANCE
The Ministry of Finance has denied rumors that it would release a bond offering ahead of the
Development Bank of Mongolia's planned offering of USD 600 million Euronote bonds over the
Singapore Stock Exchange (SGX).
Finance Minister D. Khayankhirvaa said that although MPs such as O. Chuluunbat have proposed an
official bond offering, the Ministry of Finance does not have any plans to do so.
―We will study [Chuluunbat's proposal]. By study, I mean after considering the proposal at the level
of the Ministry of Finance, it should be submitted to government. As everyone knows, it will take
more time for the submission to Parliament if it is indeed approved by government.
Khayankhirvaa said his ministry is currently focused on selling bonds issued by the Development
Bank to markets in England and Hong Kong. He said he expected the work to be completed by next
week.

PRESIDENT CALLS FOR EARLIER TIMETABLE FOR ENFORCEMENT OF CORRUPTION LAW
President Ts. Elbegdorj is pushing for a speedier implementation of the Law on Regulating Public
and Private Interests.
The Standing Committee on Justice recently back a veto by the president to Clause 30.1 of the 30th
article of the aforementioned law. MP D. Lundeejantsan expressed his concern that Parliament
needs time to become well briefed before passage can be allowed. He said a targeted date for July
would suffice.
However, the President argued for a target for 1 May, as he had called for authorities from the
Anti-Corruption Authority to begin further preparations after making the partial veto to the law on
17 February.
Source: Montsame
DP CALLS FOR FAIR COMPETITION IN JUNE ELECTION
The Mongolian Democratic Party (DP) has called for fair competition among all political parties for
the next election.
The initiative is committing the party to conforming to the Law on Elections and the principles of
fair competitiveness that were delivered to 18 parties registered at the Supreme Court. The party
aims to introduce fair participation and elections that follows the rules and regulations of the Law
on Elections, the Law on Elections to Mongolian Parliament, and other related policies. It has also
called for other parties to follow its example.
The DP has organized seminars on the new Law on Elections to Mongolian Parliament in 120 election
offices throughout provinces and in provincial capitals.
Source: Undesnii Shuudan
CIVIL GROUP CALLS FOR ELECTION COMMITTEE RESIGNATIONS
A local civil organization has demanded the resignation of all officials leading the General Election
Committee for this year's June elections. The group believes the committee is compromised, as it is
composed only by members of the Mongolian People's Party (MPP) and Democratic Party (DP).
The Temporary Committee for Fair Elections wishes to direct the changes made to the election
structure. It is comprised of the five local organizations National Khas, Let's Serve the Nation, Rapid
Change, The Soil and Earth of Mongolia, and Independence Revolution.
The group has protested a regulation introduced in 2008 that allows anybody with state
identification to vote, even if they are not registered with a voting office or do not hold residency
in the location where they are voting. Sh. Nanjid, a member of the group, said the decision has
complicated matters for 19 of the 26 elections centers.
The results of the 2008 elections showed the now-defunct Mongolian People's Revolutionary Party
(not to be confused with the current party under the same name and led by former president N.
Enkhbayar) erupted in large protests that broke out in violence at Sukhbaatar Square on 1 July.
Nanjid said the printing of 120,000 identification cards tampered with nearly 11 percent of the vote
in the 2008 election.
―There is no point to empty talk about fair elections,‖ said Nanjid. ―The election law shall be
discussed among our citizens nationwide. There should be members from private organizations and
citizens, as well as delegates from parties without seat holders in Parliament.‖
The activist said the group expects a reply from Parliament by next Tuesday and will take further
action to oppose the election structure if there is no response.
Source: Zuunii Medee
EQUAL OPPORTUNITIES FOR EDUCATION
Mongolia is using its newly exploited mineral wealth to reform its social services. While the
government should be applauded for looking to the future, it is a challenge ensuring the changes do
not come at the expense of the majority of people in this vast rural country. Mongolia‘s unique

population structure creates especially difficult conditions for schools, which are frequently
overcrowded in the capital, but must accommodate sparse and highly dispersed populations
elsewhere.
Mongolia‘s approach to education reforms appears to be quite similar to efforts in Kazakhstan. Both
countries are working with Cambridge University to develop a small network of elite schools to
serve the most academically successful students in the capital city and regional centers. But
education reform does not trickle without a concerted effort and well-coordinated plan, which the
Ministry of Education currently lacks.
Ulaanbaatar-based non government organizations dedicated to education worry about public schools
that lack adequate financing, where teachers are poorly paid, schools and dormitories are severely
under-resourced, and thousands of children don‘t even attend school. They fear these elite schools
will divert resources from public schools. Separating academically successful children into an elite
system raises serious concerns about equity. Selecting and sorting students based on narrow
measures of academic achievement, like admissions tests, tends to deepen social inequalities by
favoring children who have been well prepared through preschool programs and family experience.
Thus, children living in poverty, children in rural areas without access to preschool, minority and
minority-language children, and children with disabilities are at an immediate disadvantage, and
certain not to test into the elite schools.
Research by the Organization for Economic Coordination and Development (OECD) shows that
countries with greater equity in their education systems produce better outcomes for all children
than those that sort and track their students. If education reform in Mongolia is to pave the way for
prosperity and social cohesion, policies must direct resources to the children who need them most,
not a small elite.
The author, Kate Lapham, is the senior program manager for the Open Society Education Support
Program.
Source: Eurasianet
PM'S JAPAN VISIT SPARKS RETURN OF NUCLEAR FEARS
A local anti-nuclear energy and material trade organization held a peaceful demonstration on the
anniversary of the 11 March Fukushima nuclear power plant explosion. While the government has
voiced interest in developing its uranium trade and introducing nuclear energy, many citizens have
expressed their opposition to the notion.
The group No Nuclear held its protest over its concern that Prime Minister S. Batbold's visit to Japan
might be related to renewing talks about disposing nuclear material on Mongolian soil. It also took a
stance against the exploration and exploitation of uranium in Mongolia.
―We are against the construction of nuclear power plants and uranium exploration,‖ said L. Lenski,
an activist with the No Nuclear group. ―In western provinces are reported cases of thyroid
complications which could be connected to uranium. The uranium projects there do not have safety
professionals and experts, and have presented their operations as environmentally friendly, which is
terribly wrong.‖
Lenski said there are about 135 licenses to explore for uranium, with two allowing for exploration.
One of those exploration licenses had been granted to French nuclear group Areva, he said. He said
Mongolia has about 500 tons of uranium, or 0.9 percent of the earth's total uranium reserves.
Read more…
―We hope that officials who have proposed nuclear projects don't know all the pros and cons of
nuclear energy,‖ said Lenski. ―Our goal is to provide information to the public so that people will
make the right decisions and will not allow the interests of individuals go above those of the
nation.‖
Last year controversy began following reports that the United States and Japan might be interested
in a uranium ―leasing‖ program that would allow Mongolia to sell its uranium abroad and then
receive them again for storage once the materials had been spent. However public opposition drove
President Ts. Elbegdorj to ban the National Security Council from participating in any talks on the
matter and later announcing at the U.N. General Assembly session in New York last September that

Mongolia could never participate in such a program.
THE TROUBLE WITH NUCLEAR WASTE
Coverage on a secret document detailing an international nuclear waste disposal site that Japan
and the United States had planned to build in Mongolia has highlighted the difficulties in dealing
with radioactive waste.
The secret plan surfaced as the crisis at the tsunami-hit Fukushima No. 1 Nuclear Power Plant had
stirred controversy over the pros and cons of nuclear power. It was revealed that the Japanese
Economy, Trade and Industry Ministry and the U.S. Department of Energy had been secretly
negotiating the plan with Mongolia since the autumn of 2010.
An interview with A. Undraa, then-ambassador of the Mongolian Foreign Ministry for the
negotiations on this plan, revealed that Mongolia was in a position to compete with a similar plan
for Australia.
Visits to the sites where the disposal facilities would have been built found no water sources at any
of them. Experts share the view that nuclear plants cannot be built in areas without water. When
questioned on this matter, Mongolian officials responsible for nuclear power policy emphasized that
all the three sites meet the safety standards for nuclear power plants set by the International
Atomic Energy Agency (IAEA). Further prodding revealed that Japan and United States were
proposing to build a spent nuclear waste disposal facility in a country that has little knowledge of
nuclear energy.
The Mainichi Daily Times' scoop on the secret plan sparked campaigns in Mongolia to demand that
the plan on a spent nuclear fuel disposal facility be scrapped and that relevant information be fully
disclosed. Bowing to the opposition, President Ts. Elbegdorj declared in the U.N. General Assembly
session in September last year that the country can never host a radioactive waste disposal facility.
Source: Mainichi Daily Times
RESOURCE INVESTORS INCREASING POLITICAL RISK FACTOR AS ELECTIONS APPROACH
Mongolia's impressive store of natural resources and close proximity to the world's most resource-
ravenous nation—China—have made it a hotbed for exploration in recent years, but resource
nationalism and populist sentiment may tip the scale for resource investors against investment.
―Four-fifths of the country is still unsurveyed,‖ writes Dexter Roberts, Asia News Editor at
Bloomberg Businessweek. ―Over the next decade copper production is expected to double, iron ore
to triple, coal to grow by six times, and gold and oil by 10 and 13 time respectively.‖
Mongolia has proven susceptible to resource nationalism, however. A recent Ernst & Young Mining
and Metals Survey identified resource nationalism as the biggest risk factor for mining companies in
2011 and 2012.
Ivanhoe Mines Ltd., the 66 percent stakeholder in one of the world's largest copper and gold
deposits, Oyu Tolgoi, first drilled in 2000, but an investment agreement was not signed until 2009.
In 2006 the government introduced a 68 percent windfall profits tax on copper sold above USD
2,600 a ton and gold above USD 850 an ounce. The tax, which was the largest in the world, was
revoked in late 2009. Some worried the government would take control of Oyu Tolgoi, as happened
in 2008 when Tavan Tolgoi was taken from Energy Resources LLC. State-owned Erdenes-Tavan
Tolgoi now operates there. It has plans for a massive public offering, and has made every citizen a
shareholder.
―Since leaving the Soviet Union, Mongolia has zigzagged between privatization and nationalization,‖
said Roberts.
Roberts' pointed out Mongolia's tendency to appease populist sentiment led to the passage of the
2006 windfall profits tax. Richard Pomfret, a professor of economics at the University of Adelaide,
pointed out that Mongolia missed out on the copper price boom of the 2000s in its 10 years of
negotiating the Oyu Tolgoi project.
As the June Parliamentary elections near, the rights to Mongolia's vast store of natural resources is
becoming an even greater political issue. Uncertainty concerning just how far politicians are willing

to move toward resource nationalism in an effort to win votes is understandably raising Mongolia's
political risk factor in the eyes of resource investors.
Source: Resource Investment News
NUCLEAR-DISARMAMENT EFFORT TO NORTH KOREA BEARS FEW RESULTS YET HIGH OPTIMISM
Representatives from the six nations engaged in the effort to denuclearize the North Korean
Peninsula wrapped up two days of meetings in New York on Friday with no breakthroughs on
dividing issues, but with momentum on moving forwards, conference organizers said. As a country
seen with greater influence in the region and a bridge to North Korea, representatives from
Mongolia took part in the event.
The talks took place under the so-called Track 2 discussions, which are designed to provide an
atmosphere to explore and discuss issues in a more informal setting than government-to-
government talks. Other nations represented at the conference include the United States, China,
the European Union, Germany, Japan, Russia, and the United Nations. All of the attendees were
there in an unofficial capacity according to organizers. They reflect a broad range of experience in
sectors, including academia, government, think tanks, and civil society organizations.
―I can say that based on the amicable and candid interaction among the participants, the organizers
believe that the conference achieved its final result of building trust despite remaining political
differences,‖ Christophe Polhmann, a representative of the German non-government organization
(NGO) Friderich-Ebert-Stifung (FES), said.
The absence of any bilateral discussions between North and South Korean interlocutors did not
seem to be a basis for pessimism going forward. The small steps of open conversation showed signs
for optimism, said one attendee. The meeting also comes at a time of transition in North Korea,
following the death of Kim Jong-il late last year. Though planning for the talks began over a year
ago, organizers said the fact they went forward sent a signal about the new leadership of Kim Jong-
un.
Read more…
After six-party talks broke off more than two years ago, North Korea recently announced a
moratorium on long-range missile launches, nuclear tests and enrichment activities at nuclear
facilities, along with an agreement to allow U.N. nuclear inspectors back into the country to
monitor and verify the moratorium. In return, the United States has agreed to resume nutritional
assistance to North Korea.
Source: CNN
U.S. PRESIDENT ANNOUNCES WTO CASE AGAINST CHINA OVER RARE-EARTHS
The United States, European Union, and Japan are filing a challenge with the World Trade
Organization against China's export restrictions on rare-earth minerals, materials crucial to the
production of many high-tech devices, President Barack Obama announced Tuesday.
In a statement to reports at the White House, Obama said the case seeks to force China to lift
export limits on rare-earths.
China produces 97 percent of all rare-earths, according to the European Union. The materials are
used in products such as flat-screen televisions, smart phones, hybrid car batteries, wind turbines,
energy-efficient lighting, electronics, cars and petroleum.
―We want our companies building those products right here in America,‖ said Obama. ―But to do
that, American manufacturers need to have access to rare-earth materials which China supplies.
Now, if China would simply let the market work on its own, we'd have no objections.‖
Source: CNN
NEW MONGOLIAN LAWS
The following laws, amendments and addenda to laws were published in the latest weekly
Government bulletin. Unless otherwise decided by Parliament, they will take effect ten (10) days

after publication.
Date Laws, Amendments and Addenda
07.03.2012 Law on Loan Guarantee Fund
Amendments to Law on Financial Regulatory Commission's Legal Status
Addendum to Law on Small, Medium Enterprises
Addendum to Law on Corporate Income Tax
Amendments to Law on Government's Special Fund
Law on Exemption from Customs Tax
Law on Exemption from Value Added Tax
Please visit BCM's website, Legislative Working Group, for a summary of new Mongolian laws. BCM
members who wish to access complete versions of the laws and regulations in Mongolian language
are welcome to email the BCM office: info@bcmongolia.org.
ANNOUNCEMENTS
MINES AND MONEY HONG KONG LESS THAN ONE WEEK AWAY!
Mines and Money Hong Kong 2012 is now less than one week away, so register now for up to five day
of unrivaled mining investment opportunities, market analysis and networking. The event will be
held at the Hong Kong Convention and Exhibition Center on 19 to 23 March
The brochure was updated last week so take a look at the latest version here. There is a USD 200
surcharge for onsite registration, so reserve a place today.
At the exhibition will likely be well over 2,500 leading investors, brokers, and mining executives
brought together under one roof. Attendees will meet with miners and major natural resources
investors from Hong Kong, China, Asia and around the world. BCM is a supporting organization for
the event.
For more information or reservations click here.
___________________________________________
RUNGE'S MINING FOR NON-MINERS COURSE, 2-3 APRIL
Runge is offering its fourth Mining for Non-Miners course from 2 to 3 April in Ulaanbaatar.
The world-class mining-consulting software company, Runge, has been holding its training course,
Mining for Non-Miners, since last year after establishing its office in Ulaanbaatar. The aim of the
course is to provide those from a non-mining background with a comprehensive introductory
understanding of the mining sector.
The course duration is two days, with the first day focused on coal mining and the second on
metals. Click here for the full schedule. The Runge staff features featuring both expatriate and
local national staff.
Runge is holding classes for USD 700 per student for the two-day course. The number of participants
is limited. BCM is a organizing partner for the course. For more information or registration email
saruul@bcmongolia.org, or call 317027
___________________________________________
SAFETY FIRST FORUM, 22-23 MARCH
The Safety First forum and exhibition will be held on from 22 to 23 March at the Chinggis Khan hotel
to introduce mining sector safety to the Mongolian mining industry.
Although Mongolian mining firms have paid more attention to safety in their operations, there is no
consolidated policy on safety concerning standards and regulations, and many are outdated. The
Safety First event intends to bring the mining community together to find a solution to this
problem.
The forum will have sessions on topics such as government policy on safety, company practices

(case studies), safety management, and the best safety technologies.
For registration, visit safetyfirst.mn or for more information call 31 4877 or +976 9916 9954.
___________________________________________
BCM TO HIRE WORKING GROUP COORDINATOR
The Business Council of Mongolia seeks to recruit a Working Group Coordinator.
The position would require one to take charge of managing the BCM working groups. Tasks would
include arranging meetings for the working groups, including contacting speakers as necessary; take
minutes of meetings; communicate with working group members; and update BCM staff regularly on
issues and recommendations from working group members. In addition, the selected candidate
would provide other assistance to BCM officers as assigned.
Main requirements include excellent communication skills, fluency in both Mongolian and English
languages, strong knowledge of general business, excellent interpersonal and communication skills,
and good computer skills. Candidates should be self motivated, resourceful, and attentive to
details.
For more information please email your CV by 23 March 2012 to info@bcmonoglia.org. The position
can be either full or part time. Only short listed candidates will be contacted.
___________________________________________
“MM TODAY” ON MNB-TV, FRIDAYS AT 18:30 [TONIGHT]
BCM is pleased to announce 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
18:30 tonight! Tune in to watch this program that reports stories from today‘s BCM NewsWire.
___________________________________________
“BSPOT” ON B-TV, MONDAY TO FRIDAY AT 18:20
B-TV (Business TV) now telecasts a 10-minute English-language news program called BSPOT every
evening from Monday to Friday at 18:20, taking most of the stories from the BCM NewsWire.
___________________________________________
POSTINGS ON BCM‟S ENGLISH WEBSITE 'PRESENTATIONS' AND 'MONGOLIA REPORTS' SECTIONS
AND BCM‟S MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS
New for 2012 is a ‗Presentations‘ section on the BCM Mongolian website which can be reached via
link to bcm.mn/itgeluud. Several presentations are already posted including 9 from Coal Mongolia
on February 9-10, 2012.
As a key component of BCM‘s Mongolian website, ‗News‘ section, articles from the Government‘s
―Open-Government.mn‖ site are regularly posted.
On BCM‘s English website, ‗Resource, Presentations‘ section, for your review are 11 presentations
from Coal Mongolia 2012, 7 speeches from the Mongolian Investment Summit on December 8-9 in
London, several speeches at the Risk Management Forum on November 8 co-organized by BCM and
Mandal Insurance, speeches at Discover Mongolia 2011, and speeches from BCM‘s last 12 monthly
meetings in 2011-2012.
Also on BCM‘s English website, ‗Resource, Mongolia Reports‘ section, please note "Blitz and Lead" by
Sant Maral Foundation on August 2011, Z. Batbayar, Deputy Director of the Water Authority, at
BCM‘s Environmental Working Group‘s recent meeting and the Polit Barometer-May 2011 from Sant
Maral Foundation.
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.
___________________________________________

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 http://www.facebook.com/pages/THE-BUSINESS-COUNCIL-OF-
MONGOLIA/129826330435540 to read the latest announcements and comment on events with the
community. Hear breaking news and announcements as they happen when you follow BCM on
Twitter at http://twitter.com/#!/bcMongolia. Connect with BCM on Linked-in to join the diverse
group of professional contacts creating a better business environment in Mongolia today.
Of course for news information, interviews, and announcements regarding our organization, visit
the official BCM website at bcMongolia.org and bcm.mn.
ECONOMIC INDICATORS

INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
February 29. 2012 *12.5% [source: NSOM]
*Year-over-year (y-o-y)
CENTRAL BANK POLICY 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]

CURRENCY RATES – March 15, 2012
Currency Name Currency Rate
U.S. dollar USD 1,336.76
Euro EUR 1,744.07
Japanese yen JPY 16.06
British pound GBP 2,095.97
Hong Kong dollar HKD 172.23
Chinese yuan CNY 211.04
South Korean won KRW 1.19
Russian ruble RUB 45.29
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.

16.03.2012, NEWSWIRE, Issue 213

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16.03.2012, NEWSWIRE, Issue 213