1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
Issue 287 – August 16, 2013
NEWS HIGHLIGHTS:
Business
Rio announces 1,700 redundancies;
Mongolia wants OT 2nd stage funded from cash flow, amid talks;
Mongolia studying IPO of stake in OT;
Rio hires power plant advisor;
Prophecy Coal clinches coal off-take deals, to restart Russia exports;
MIAT opens test route to Ereen;
SouthGobi posts loss, pulls production forecast;
New Ovoot mine plan slashes capex, lowers initial output;
MGG announces private placement;
Wolf Petroleum to issue entitlement options;
Coal rally lifts a forgotten international ETF;
Oyu Tolgoi donates $600,000 for forestry project;
Rio releases 2013 H1 results;
Turquoise Hill releases 2013 Q2 results.
Economy
Tugrug down 12.32% vs. dollar causes panic;
Bad press pushes down tugrug value, says presidential advisor;
Mongolia economic growth accelerates as state spending increases;
Budget deficit reaches MNT 145.6bn in July;
FDI falls 43 percent for H1;
Currency auction held on 15 August;
Monetary statistics altered with new standards in place;
UB households to pay more for water;
New road closed for repairs;
Khushigt airport to open 2016;
Migration trends shows women heading to UB and men to Gobi;
Mining the Gobi: The battle for the resources;
Ulaanbaatar wrestles with Dutch disease dilemma;
Mongolian designers re-introducing traditional attires;
China trade data fuels miners;
Iron ore rally is boon for mining industry;
First rare earth exchange to help stabilize market;
Indonesia's self-inflicted economic woes.
Politics
Mongolia bans New Zealand milk powder;
WHO director general discusses health initiatives with president;
Cabinet minister visits Hong Kong;
Economic development minister talks cooperation with JICA president;
Turkey provides education materials to Tyva Turks in Mongolia;
Enkhbayar seeks medical care in South Korea;
Mongolia deports four illegal immigrants;
2. Sumo on the Steppes;
Four injured in $4m train accident;
Mongolia breaks two world records for horse riders;
Citizens appeal to president to protect UB Botanical Gardens;
ECONOMIC INDICATORS
MSE Top 20 Index by market Capitalization;
Foreign-listed Companies with Mongolian Assets;
Inflation;
Central bank policy rate;
Currency rates.
*Click on titles above to link to articles.
SPONSORS
Khan Bank Major Drilling
International SOS Wagner Asia Automotive
Wagner Asia Equipment Oxford Business Group
Mongolian National Broadcasting Breakthrough PR
BUSINESS
RIO ANNOUNCED 1,700 REDUNDANCIES
Rio Tinto PLC said on Wednesday it would have to cut up to 1,700 jobs in its Mongolian operations
after a more than USD 5 billion underground expansion of the giant Oyu Tolgoi copper mine was
suspended.
The expansion was put on ice last month as the global miner said the Mongolian government wanted
parliament, currently in recess, to approve financing for the project. Mongolian Prime Minister
3. Norov Altankhuyag said last week that Rio did not need to see parliamentary approval for the
development's package.
The delay marked the latest bump in the road for Rio at one of its biggest projects—and one of the
world's largest untapped copper deposits—which started exporting form an open pit in July after
two last-minute hiccups in securing government approval. Mongolia has raised concerns about the
costs of the Oyu Tolgoi expansion and the potential that rising expenditure will delay when it starts
receiving its fair share of profits.
―[Oyu Tolgoi is] still an operating business, exporting concentrate to our international customers
and infrastructure projects outside of the underground development, such as the road construction
to Tsagaankhad, will continue,‖ said a Rio spokesman.
At the end of April 2013, Oyu Tolgoi employed 11,750 people, almost 90 percent of them Mongolian
nationals. Rio said Oyu Tolgoi shareholders—itself and government—were still ―fully committed‖ to
resolving the issues holding back the underground development.
Source: Reuters
MONGOLIA WANTS OT 2ND STAGE FUNDED FROM CASH FLOW, AMID TALKS
Mongolia wants the planned USD 5.1 billion expansion at Rio Tinto PLC's Oyu Tolgoi mine to be
financed from cash flow until a dispute over the cost of the biggest foreign investment in the nation
is resolved.
Cost overruns at the copper and gold mine are increasing the debt the government owes to Rio
Tinto's Turquoise Hill Resources Ltd. unit, which operates the projects, Minister of Mining Davaajav
Gankhuyag said on 9 August. Rio delayed work on the underground expansion last month amid the
dispute over financing that contributed to production delays at the first stage of the mine.
Outstanding issues that need to be resolved include taxes and the right to a royalty stream from the
project.
―Until the project financing is resolved, I think it is proper to continue the underground mine with
revenues from concentrate,‖ Gankhuyag said in a letter to Rio Tinto that he showed reporters on 9
August. ―The costs specified in the feasibility study are creating a high risk of reducing profits to
the Mongolian side,‖ he told reporters.
Another point of dispute is a royalty on production to be collected by Rio Tinto, he said. ―Mongolia
believes that only the state has the right to take a royalty,‖ he said. When construction is
complete, including the tunnels that will make up the underground portion of the mine, the total
cost to build Oyu Tolgoi may exceed USD 24 billion, significantly higher than the USD 14 billion that
Mongolia had first anticipated, Gankhuyag said.
According to the North America-Mongolia Business Council, current revenue from Oyu Tolgoi is
―totally insufficient‖ financing development of an underground mine.‖
To pay for its 34 percent stake, Mongolia borrowed USD 800 million from Rio Tinto and pays interest
of 7 percent to 8 percent a year, said Chuluuntseren Otgochuluu, the director general of the Mining
Ministry's Department of Strategic Policy and Planning. Mongolia is also concerned about cost
overruns on infrastructure for the mine, which Otgochuluu said have topped USD 1 billion. A task
force is currently conducting an audit of USD 2 billion spent during the first phase. The results of
the audit will be available in two to three weeks, Otgochuluu said.
Source: Businessweek
MONGOLIA STUDYING IPO OF STAKE IN OT
Mongolia is studying converting its shares in the Oyu Tolgoi mine into a public company, giving
citizens a stake in one of the world's largest copper deposits.
A proposed new company would hold the state-s 34 percent interest, said Chuluuntseren
Otgochuluu, director-general of Strategic Policy and Planning at the Mines Ministry. Ten percent of
the company would be made available to the Mongolian public and 10 to 20 percent more may be
sold on the domestic market. The potential initial public offering may aid a planned expansion of
the mine, which has been held up by disagreements over costs and revenues. By giving a stake to
Mongolian citizens who have complained that the project only benefits investors, the government
4. will find it easier to negotiate with partner Rio Tinto PLC, according to brokerage BDSec JSC.
Mongolia is also considering an IPO of its 51 percent stake in the Erdenet copper mine, Otgochuluu
said in an interview in Ulaanbaatar. The sale of both project stakes would echo a similar
government plan for state-owned coal company Erdenes Tavan Tolgoi LLC, in which more than
1,000 shares will be issued free of charge to every Mongolian citizen.
―Something like that can also happen at Erdenet and Erdenes Oyu Tolgoi,‖ Otgochuluu said. By
setting up a public company, the government would be able to issue bonds and shares and accrue
funds, he said.
The proposed new company may be called Mongol Copper. An international IPO may follow a
domestic offering, according to the ministry official, who said the location and size of such a sale
were yet to be determined. The government's initial goal is to put state assets in the hands of the
public, he said.
―If we gradually change from state-ownership to public ownership we can improve the efficiency
and governance,‖ Otgochuluu said. ―State-owned enterprises can be controlled by government
officials for their benefit.‖
Source: Bloomberg
RIO HIRES POWER PLANT ADVISOR
Rio Tinto PLC has appointed a financial advisor for a new 450-megawatt captive coal-fired power
plant at its Oyu Tolgoi mining project.
Societe Generale will help in the bidding and financing of the power plant, which will supply
electricity to its copper and gold mining operation in Mongolia. Rio Tinto has already signed an
agreement to use power from the Chinese energy grid for the first four years of operation, but
pursuant to the investment framework with the Mongolian government, it must source power from
the domestic market afterwards.
Source: Project Finance, Cover Mongolia
PROPHECY COAL CLINCHES COAL OFF-TAKE DEALS, TO RESTART RUSSIA EXPORTS
Mongolia-focused coal miner Prophecy Coal Corp. has inked two binding sale-and-export contracts
for 30,000 tons of coal from its Ulaan Ovoo mine to a buyer in Russia.
The Vancouver-based company said on Monday that the buyer was a substantial coal trader with a
yearly volume of turnover of more than two million tons in Russia‘s Buryatia region. The Buryatia
region, which consumes about six million tons of thermal coal a year, was facing a coal shortage
owing to declining coal production as a result of aging local mines.
Prophecy said an uninterrupted supply of Ulaan Ovoo coal was critical to meet growing regional
demand for premium thermal coal. Under the, off-take agreements 5,000 tons a month of coal
would be exported through northern Mongolia‘s Sukhbaatar rail station, a significant Mongolian
gateway to Russia, connected to the Russian trans-Siberian railway. The fresh-coal deliveries were
expected to start in November, when mining resumes after the completion of pit-dewatering
activities at the Ulaan Ovoo mine.
Further, the Russian buyer had also inked a nonbinding memorandum of understanding
contemplating the potential increase in monthly coal sales volume to 30,000 tons at Sukhbaatar.
Prophecy previously exported coal to Russia in 2011 and 2012. The company said the new contracts
were an important step in its drive to restart Ulaan Ovoo on a meaningful mining scale with sales
prices that could potentially generate an investment return.
―The sales price is robust, and management believes the off-take agreement and potential
additional coal sales contemplated by the MoU will help establish the long-term viability and
stability of the mining and logistical operations at Ulaan Ovoo,‖ the company said.
Meanwhile, Prophecy continued to engage Mongolian and Russian officials to work toward the
reopening of the Zeltura border crossing between the two countries. Zeltura is less than 20
kilometers away from Ulaan Ovoo, and the reopening of the border could further increase export
sales volume, reduce transportation costs, and achieve greater economy of scale. A customs
warehouse was being built on the Russian side of the Zeltura border.
5. Source: Mining Weekly
MIAT OPENS TEST ROUTE TO EREEN
MIAT Mongolian Airlines has opened a new route between Ulaanbaatar and Ereen.
The route is chartered by a Boeing 737-800 for a travel time of an hour and 10 minutes. The new
destination is the eighth for MIAT, with a total of 12 new destinations planned by 2016. MIAT
received approval for the route from the Mongolian Civil Aviation Authority on 8 August.
Erenhot is a popular destination for Mongolians, with between 5,000 to 8,000 passengers crossing
the border to the city via a two-day journey by car. The route is currently a preliminary measure to
run until 20 November to test demand.
Source: Undesnii Shuudan
SOUTHGOBI POSTS LOSS, PULLS PRODUCTION FORECAST
Coal miner SouthGobi Resources Ltd. reported a second-quarter loss and withdrew its full-year
forecast for semi-soft coking coal, citing weak demand in China.
The withdrawal of the forecast for semi-soft coking coal, a variety of coal used to make steel,
comes five months after the company set the target at 3.2 million tons. SouthGobi said the timing
of any recovery next year remained uncertain and was dependent on the Chinese economy, where
demand and prices for coking coal have been weak. The company's flagship Ovoot Tolgoi mine is in
Mongolia, which neighbors China. The mine producers and sells coal to customers in China.
Certain coal prices indices in China have reached four-year lows and coal consumption and
production in regions close to the Mongolian border have dropped significantly year-on-year,
SouthGobi said in a statement. Economic activity after transition in China's leadership has been
slower than expected, the company said.
Chinese President Xi Jinping's appointment as Communist Party chief in a once-in-a-decade
leadership change last November had triggered hope of political reform. SouthGobi said average
realized selling prices fell 77 percent to USD 14.40 a ton in the second quarter. SouthGobi posted a
net loss of USD 33.7 million in the second quarter, compared with a net income of USD 237,000 a
year earlier. Revenue slumped to USD 374,000 from USD 8.4 million. The company produced
170,000 tons of raw coal, compared with 270,000 tons a year earlier.
Source: Mining Weekly
NEW OVOOT MINE PLAN SLASHES CAPEX, LOWERS INITIAL OUTPUT
Coal hopeful Aspire Mining Ltd. has revised the mine plan for its Ovoot coking coal project, in
Mongolia, in an effort to drive down costs.
A 2012 prefeasibility study on the Ovoot project had considered the staged development of the
project, with the Stage one operation delivering six million tons a year by 2016 and ramping up to
eight million tons a year from 2018. The capital requirement for stage one was estimated at USD
459 million, along with a USD 264 million contingent for the mining fleet. However, Aspire said on
Tuesday that the new mine plan had reduced the capital expenditure at Ovoot to USD 144 million,
and changed the model from an owner-operator model to using contractors to supply mining, camp,
aviations and communication services.
Initial production has also decreased to five million tons a year, with later production increases to
be funded from internal cash flow. The five million ton a year operation would start in 2017, to
coincide with the commissioning of a railway from Erdenet to the Ovoot project. Aspire told
shareholders that the development of the project would take around 12 months. The company
noted that it was in the midst of sourcing funding for the revised mine plan at Ovoot and had, thus
far, received nonbinding letters of intent from Deutsche Bank and BHF Bank to provide USD 40
million and USD 50 million respectively, in loans.
The Noble Group had also expressed its willingness to provide a range of initiatives to support the
development of Ovoot and the port and rail options for the project. One of these initiatives was a
working capital facility of some USD 20 million to support an initial mining operation. A further USD
60 million could also be secured from two large international mining contractors for a five-year, 368
6. million ton waste and coal mining contract. Additional funding would also be sourced from potential
coal customers, Aspire said.
The new mine plan has the start of construction for the December 2015 quarter, with first
production scheduled for 2017.
Source: Mining Weekly
MGG ANNOUNCES PRIVATE PLACEMENT
Mongolian Growth Group Ltd. announced a non-brokered private placement offering for proceeds of
up to USD 10 million.
MGG is offering up to some 3.1 units at USD 3.25 each, with each unit representing one common
share in capital and one half of one common share purchase warrant. The offering is scheduled to
close on 13 September and is subject to the completion of formal documentation and receipt of
regulatory approval, including the conditional approval of the TSX Venture Exchange.
MGG intends to use the net proceeds from the offering to acquire additional property assets in
Ulaanbaatar and for other general working capital requirements.
Source: Mongolia Group Ltd.
WOLF PETROLEUM TO ISSUE ENTITLEMENT OPTIONS
Wolf Petroleum Ltd. announced an agreement with CPS Securities to underwrite a non-
renounceable entitlement issue of up to some 174.6 million options at an issue price of USD 0.015
each to raise approximately USD 2.618 million before costs.
The offer to shareholders will be on the basis of two options for every three shares held in the
company at the record date. The option will have an exercise price of USD 0.05 expiring on 31 July
2018. The offer will allow shareholders the opportunity to maintain exposure to the significant
upside presented by the company's highly prospective petroleum asset in Mongolia. Mongolia
remains open for business and supportive of foreign investment.
The company has completed its 2013 contract commitments during the first half of the year and has
identified the largest sub basins that have the potential to be the main petroleum generation
source of Eastern Mongolia. Funds raised under the entitlement issue will be primarily used to
complete the company's 2014-2015 contract commitments in the second half of 2013. This next
phase of exploration activity will focus on confirming encouraging results made earlier this year,
completion of 450 kilometers of 2D seismic data acquisition, geological and geophysical surveys,
geochemical surveys and identifying drilling targets on the Sukhbaatar block.
Source: Wolf Petroleum Ltd.
COAL RALLY LIFTS A FORGOTTEN INTERNATIONAL ETF
With each passing day, the rally in coal stocks appears to be gaining legitimacy. One new fund that
has gotten a lift from the coal bounce is the Global X Central Asia & Mongolia Index (AZIA) ETF.
AZIA's surprise is that Mongolia is only about 5.5 percent of the ETF's weight. The United Kingdom
and Canada combine for nearly half the new ETF's weight because AZIA's underlying index ―is
comprised of companies that are domiciled in, principally traded in or whose revenues are primarily
from Mongolia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan,‖ according to
Global X. AZIA has also become more diverse since its April debut. When the ETF first came to
market, materialists and energy names combined for about 80 percent of the ETFs weight. That
weight has been trimmed to about 63 percent.
Although Mongolia is not AZIA's largest country weight, perception is often reality with ETFs. The
perception with AZIA, and is also the reality, is that this is the closest thing, at least for now, that
investors have to a Mongolia ETF. And that is good news for the ETF when coal equities are soaring.
AZIA's 8.8 percent gain in the past five days affirms as much.
Just a few weeks after AZIA debuted, Standard and Poor's Rating Services lowered its rating outlook
on Mongolia to negative from stable while affirming the central Asian country's BB- long-term and B-
short-term sovereign credit rating. Those are both junk ratings. The slumping mining sector was one
reason for the downgrade, but the economy is taking a pro-active to facilitating economic growth in
7. other areas of the economy. Mongolia's central bank has lowered interest rates three times this
year. Mongolia's GDP grew 11.3 percent in the first half of this year, but that was down from an
annual pace of 12.4 percent last year, according to Bloomberg.
Source: Benzinga
OYU TOLGOI DONATES $600,000 FOR FORESTRY PROJECT
Non-government organization Ikh Ust Tuul celebrated the 6 August launch of stage two a forest
initiative at the Tuul River tributary.
Oyu Tolgoi LLC joined the project to afforest 2,400 hectares of land this year at Shar Shuvuut of
Erdene Soum, Tuv Aimag with a USD 600,000 donation toward the project. According to
Environment and Green Development Sanjaasuren Oyun, most of the MNT 5 billion spent on
forestation each year goes toward fighting forest fires, protecting forest from insects, and
supporting environmental cooperatives compared with just MNT 1 billion for forestation.
―The Tuul River is an inseparable part of Mongolia that supplies water for almost half of Mongolia's
citizens,‖ said Oyu Tolgoi President and Chief Executive Officer Cameron McRae. He added,
―Increasing the forest reserve is not an activity that the government can pursue alone. Therefore,
we are focusing on attracting investment from private sector companies to the form other economic
leverage for the project.‖
Source: UB Post
RIO RELEASES 2013 H1 RESULTS
Rio Tinto PLC released its financial results for the first half of 2013 on 8 August.
The Source reported underlying earnings of USD 4.2 billion, down 18 percent to reflect lower
average market prices and a higher effective tax rate, partly offset by record iron ore shipments
and cost savings momentum. Net earnings of USD 1.7 billion included non-cash exchange losses of
USD 1.9 billion and a USD 300 million write off of water stripping costs and damage equipment at
the Kennecott Utah copper project following the pit wall slide at Bingham Canyon in April. Interim
dividends saw a 15 percent increase per share.
The report named three priority actions: Improved performance, strengthening the balance sheet,
and, delivering results. For the third priority, the Source mentioned that the Oyu Tolgoi copper-gold
mine and concentrator were in production and consistently operating at more than 80 percent of
design capacity.
―We are seeing good early results of our business performance initiatives in our pursuit of greater
value for shareholders,‖ said Chief Executive Sam Walsh. ―We have achieved USD 1.5 billion in total
cost reduction efforts in the first half, with USD 977 million from operating cost savings and USD 483
million from lower exploration and evaluation on spending. This has driven strong operating cash
flows, on a par with the first half of 2012, despite the weaker prices for most of our products.
Capital expenditure has been reduced, approved growth projects are on track and operations are
performing well.‖
See the full report here.
Source: Rio Tinto PLC
TURQUOISE HILL RELEASES 2013 Q2 RESULTS
Turquoise Hill Resources Ltd. released financial results for the second quarter of 2013, ended 30
June.
The Source said Turquoise Hill had consolidated cash of USD 103.3 million, a consolidated working
capital deficiency of USD 1.6 billion and an accumulated deficit of USD 4.8 billion. The consolidated
working capital deficiency is largely a result of the approximate USD 1.8 billion interim funding
facility due to majority shareholder Rio Tinto PLC being classified as a current liability.
See the full report here.
Source: Turquoise Hill Resources Ltd
8. ECONOMY
TUGRUG DOWN 12.32% VS. DOLLAR CAUSES PANIC
Last week the tugrug saw perhaps the most depreciation in 2012 as the exchange rate for the U.S.
dollar was at MNT 1,527 at the beginning of the week to MNT 1,564 at the end.
The spike has caused panic in the economy, as the president of Mongolia summoned the prime
minister and the Parliament speaker to call fro an extraordinary session of Parliament to address
the economy. The Source believes the extraordinary session will likely take place at the end of
August 2013. and many discuss the changes to SEFIL to promote foreign direct investment into
Mongolia.
The lack of foreign direct investment (FDI) as well as falling export commodities prices such as coal
and copper had been the demand factor of the recent move in the tugrug. On the other hand, the
central bank's aggressiveness in issuing low-interest mortgage loans as well as issuing loans to
petroleum importing organizations had caused the oversupply of the tugrug in the market.
Speculation about the government budget losses mounting up as well as the recent bailout of
Savings Bank had caused panic among Mongolians last week.
The Bank of Magnolia has actively been engaged in keeping the tugrug value relatively stable in
comparison to the dollar. So far in 2013, the central bank had been the buyer of dollars in only one
instance, overall the central bank had injected USD 647.5 million in addition to approximately USD
185 million worth of Chinese yuan into the local economy and states that it is ready to do more.
―We believe the MNT will not strengthen until the end of 2013, as the seasonal weakness in MNT
will start in September,‖ said the Source. ―Even though the politicians create favorable
environment for FDI, the economic activity for the fall and winter will be too small to create any
significant demand for the MNT. At MIBG we are expecting MNT to depreciate much further to the
1680-1730 range by October as the seasonal spike in imports start to take place.‖
Source: Mongolian Investment Banking Group
BAD PRESS PUSHES DOWN TUGRUG VALUE, SAYS PRESIDENTIAL ADVISOR
A presidential advisor has blamed the recent downward trend of the tugrug on negative rumors
surrounding the Mongolian economy.
―The rapid rate changes in markets in the past few weeks were caused by negative rumors,‖ said S.
Bold, advisor to the president from the Bank of Mongolia. ― First of all, there was the spread of
never-before-heard news related to the debt from Standard Bank of South Africa. Second is the
Khadgalamj Bank matter. However, the fast measures taken by the Central Bank to merge with
Turiin Bank prevented any service holds-ups and operations are continuing normally without any
setbacks in any transactions.‖
Bold also noted negative investment sentiment resulted in Rio Tinto PLC's announcement that it
would wait for parliamentary approval before going forward with the development of an
underground mine at the Oyu Tolgoi project. In addition to the tugrug the value of the Chinggis
bond has also fallen. He noted that Mongolia has USD 2.8 billion in reserves as well as USD 2 billion
worth of Chinese yuan for swap auctions.
―We have no doubts that the government will make important decisions in the near future to
support foreign trade, foreign investment, exports, improved competitiveness, restored
investments, and clear the Oyu Tolgoi project matter.‖
Source: Info Mongolia
MONGOLIA ECONOMIC GROWTH ACCELERATES AS STATE SPENDING INCREASES
Mongolia's second-quarter economic growth accelerated from the first three months of this year as
the government boosted spending on infrastructure.
Gross domestic product grew 14.3 percent in the three months from April through June, compared
with 7.2 percent in the first quarter, according to the National Statistical Office. Expansion in the
first half was 11.3 percent, compared with an annual pace of 12.4 percent in 2012.
Mongolia, which raised USD 1.5 billion in a sale of bonds last year, has increased government
9. spending this year as foreign investment plunged and slowing demand from China, which buys more
than 90 percent of its exports, cut sales of coal by almost half. The Mongolian central bank has
reduced its policy rate three times this year to aid growth.
Spending of proceeds from the bond sale ―contributed much to the economy in the second
quarter,‖ Ganbaatar Gerelt-Od, senior vice chairman of the National Statistics Office, said in an
interview from Ulaanbaatar. A more than 20 percent increase in agricultural production also fueled
growth, he said. Projects funded by the bond sale include the construction of roads linking six
provinces to Ulaanbaatar, according to Deputy Minister of Economic Development Ochirbat
Chuluunbat.
Foreign investment in the first half declined 43 percent from a year earlier to USD 1.41 billion,
according to central bank data. Mongolia's coal exports fell to USD 542.4 million from USD 1 billion,
government data showed. Total exports in the first half slid to USD 2.35 billion from USD 2.53
billion, according to the statistics office. Mongolia's currency ha fallen 13 percent this year, hitting
a four-year low last week. In the first seven months of this year, Mongolia exported USD 595.5
million of coal, down from USD 1.16 billion a year earlier. Gold exports increased to 4.7 tons from
1.2 tons, it said.
Source: Bloomberg
BUDGET DEFICIT REACHES MNT 145.6BN IN JULY
The state budget saw total generated revenue of MNT 3.04 trillion as well as expenditures and net
lending of MNT 3.19 trillion, representing a deficit of MNT 145.6 billion in the months up to July in
2012.
The fall in net lending and spending was an effect of an increase of MNT 33.4 billion or 94.3 percent
in lending minus repayments, 14.3 percent in expenditure of goods and services, while interest
payments grew 2.4 times. The budget saw falls, however, of MNT 18.9 percent in capital
expenditure and 20.7 percent in subsidies and transfers.
Source: Montsame
FDI FALLS 43 PERCENT FOR H1
Foreign direct investment fell by 43 percent for the first half of 2013 compared with the year
before, according to the Ministry of Economic Development and Central Bank
Investment in mineral exploration and geological work fell 32.07 percent, banking and finance
investment fell 92.48 percent, tourism fell by 98.5 percent, with total investment totaling MNT
960.9 billion compared with MNT 1.688 trillion in 2012.
Source: Montsame
CURRENCY AUCTION HELD ON 15 AUGUST
The Bank of Mongolia sold USD 16 million at a closing rate of MNT 1,569.20 and CNY 29.5 million at
a rate of MNT 256 on 15 August. Commercial banks have requested to purchase USD 120 million in
currency swap.
Source: Info Mongolia
MONETARY STATISTICS ALTERED WITH NEW STANDARDS IN PLACE
The Bank of Mongolia has made adjustments to its record of transactions made from June 2010 after
following instructions given by PriceWaterhouseCoopers.
Data has notably been revised from December 2012 to May 2013, based on the the International
Standard of Monetary and Financial Statistics. Net foreign assets and other net items listed in
monetary surveys decreased from between MNT 1.4 to MNT 31.8 million. Other net items increased
by MNT 14 to MNT 16.1 million.
Source: Bank of Mongolia
UB HOUSEHOLDS TO PAY MORE FOR WATER
The price for water services in Ulaanbaatar was set to rise on 15 August, said the Director of Water
10. Supply and Sewage Authority of Ulaanbaatar.
Each household will pay an additional MNT 2,000 a month for water services, said S. Unen.
Commercial entities will pay more depending on their plumbing: 15 millimeter pipes cost MNT
5,500, 50 millimeter pipes cost MNT 41,000, and 400 millimeter pipes cost MNT 480,000.
The Water Supply and Sewage Authority reported a loss of MNT 7 billion for 2012 with another
expected loss of MNT 10 billion of this year. The new price scheme will reduce losses by MNT 1.2
billion to MNT 2 billion.
Source: Udriin Sonin
MIGRATION TRENDS SHOWS WOMEN HEADING TO UB AND MEN TO GOBI
A study has shown migration patterns of men increasingly relocating to the Gobi desert while
women move to Ulaanbaatar.
Presented by the minister of human development and social welfare and president of the Mongolian
Youth Federation President, S. Erdene, the study shows that 67,100 youths, or 7.1 percent of the
young population, have relocated to abroad. Meanwhile, migration is also taking place internally in
the country as the Ulaanbaatar population doubled in the last five years due to migration from rural
Mongolia. The Gobi Desert, however, is also seeing a spike in population, reaching 10,0000.
One strong pattern observed is the propensity for women to move toward the capital, where there
are many jobs in the service sector, and men to the Gobi, where a majority of the mining boom is
taking place. Erdene noticed that the pattern was the catalyst for some socials problems as the
separation was resulting in a greater number of divorces and and the deteriorating health of mine
workers.
Source: Zuunii Medee
NEW ROAD CLOSED FOR REPAIRS
The recently completed road at 22nd Tovchoo is needing repair shortly after its commissioning and
has been closed until repairs are complete.
Government has blamed the company in charge of the road's construction for the damage, while the
company has blamed overloaded trucks driven on the road that exceeded its capacity. As it has
refused to accept fault, the construction company said it would not provide repairs for free.
Observers, however, have criticized the road for its thin pavement.
Source: Udriin Sonin
KHUSHIGT AIRPORT TO OPEN 2016
The new international airport planned for Khushigt valley is scheduled for commissioning in 2016,
announced Minister of Road and Transportation, Amarjargal Gansukh.
Workers have already laid down the concrete foundation for the airport, which will replace Chinggis
Khaan International Airport for most international travel. It will have a 3,600-meter runway and will
be located 54 kilometers from Ulaanbaatar. The lead operator is the Mitsubishi-Chiyoda.
Source: News.mn
MINING THE GOBI: THE BATTLE FOR THE RESOURCES
The construction of a huge mine in the middle of the Gobi Desert was supposed to catapult
Mongolia toward rapid economic growth. But an ongoing conflict over profits from the gold and
copper mined there threatens to capsize the young democracy.
Mongolia is over four times the size of Germany, with nearly 3 million inhabitants and a GDP of USD
10 billion in 2012. British-Australian mining corporation Rio Tinto employs 71,000 people in more
than 40 countries and is worth about USD 60 billion. These two unequal partners have joined
together to mine one of the globe's largest deposits of copper and gold. But will they be capable of
distributing this wealth fairly?
Geophysicist Samand Sandor is the mine's vice president, making the 67-year-old the highest ranking
Mongolian on site. His office is in an air-conditioned glass building that rises out of the Gobi Desert
like a blue spaceship. Every few weeks, a company jet flies him and his colleagues back and fourth
11. between the capital and the mine. Asked whose side his is on—his country or his company's—Sandorj
takes a long time to answer. Finally he says, ―I'm Mongolian first, but this mine is my baby.‖
Not far from the office of Chuluuntseren Otgochuluu, the 35-year-old head of the Mining Ministry's
planning department, 800,000 rural refugees have settled in Ulaanbaatar's ger districts. They live in
gers and have no running water, no sewage systems and only sporadic electricity.
―So far, the people haven't benefited from the mine,‖ said Otgochuluu. ―Our deal with Rio Tinto
hasn't been a fair one. Rio Tinto is doing great work in the desert here, but if they want to cheat us
when it comes to money, then we can't be friends.‖
Source: ABC
ULAANBAATAR WRESTLES WITH DUTCH DISEASE DILEMMA
Despite rapid, mining-driven economic growth, Mongolia is experiencing persistent unemployment,
a widening gap, and a 30 percent poverty rate. The country's leaders are now promising to diversify
the economy, aiming to create jobs that push more people above the poverty line.
Mongolia appears to be at high risk of suffering from so-called Dutch Disease, an economic condition
in which a nation's economy becomes overly dependent on the export of natural resources. Mining
currently contributes about a third of gross domestic product (GDP) and accounts for 89.2 percent
of the country's total exports, according to data compiled by Oxford Business Group. But the sector
employs only about 4 percent of the entire workforce. Inversely, the traditional agricultural
sector—livestock for meat and wool—employs about 40 percent of the workforce and contributes
less than 15 percent of GDP, according to the same data.
This wasn't always so. Mongolia's manufacturing sector comprised about a third of the economy in
1988. In 2011, the figure was 7 percent. Saurabh Sinha, senior economist at the United Nations
Development Program (UNDP) in Ulaanbaatar, pointed to the collapse of state-owned factories as
the reason. In April, Ulaanbaatar demonstrated its support for agricultural development with USD
86.2 million in soft loans for cashmere companies, garment industries and dairy producers. But
limited private investment and scant infrastructure continues to check agriculture's growth
potential, according to French entrepreneur and dairy expert Didier le Goff, who started a cheese
factory near Ulaanbaatar in 2010. ―Mining is fast money for a short time, agriculture is slow money
forever,‖ said le Goff. He believes Mongolia has a unique potential to become an exporter of
―organic bio-products‖ given the country's nomadic heritage. But he admits sourcing local milk year
round is difficult and enormous challenges exist to rebuild the streamline supply chains in the
country.
Jim Dwyer, director of the Business Council of Mongolia, agrees that developing the agriculture
sector is Mongolia's best bet to diversifying the economy. He argued the government must reinvest
mining wealth in infrastructure and social services to generate broad employment. A sign that
authorities are listening is the announcement for plans to spend some USD 145 million for improving
cashmere production technology, dairy production, and wool industries.
Source: Eurasianet
MONGOLIAN DESIGNERS RE-INTRODUCING TRADITIONAL ATTIRES
Going back to traditional roots seems to be the norm these days as more and more people from
different nationalities and communities are constantly trying to adopt their long-forgotten age-old
customs and dressing styles into their everyday lives. Inspired from this recent interest in reviving
anything that belongs to the bygone era, Mongolian designers are trying to bring back the nation's
ethnically diverse fabric designs and decorations into modern-day attires.
Be it the different shape of hats or the stitching styles of robes and images on ribbons, the
designers from varied Mongolian tribes are making clothes that resonate with the distinctive
cultures of their respective ethnic groups. In their effort to make the elaborate costumes more
appealing to the urban crowd, the designers are also infusing modern variations, such as the size of
the heavy floor-length skirts are being cut short and blouses without sleeves have been introduced
to make them more comfortable and easy to wear.
Apart from Mongolia, the irresistible charm of the colorful conventional costumes has also taken the
12. international runways by storm. Recently at Mercedes-Benz Fashion Week Tokyo 2013, the
Mongolian-born young fashion talent Ariunaa Suri garnered a lot of appreciation from the fashion
media for her eclectic Spring-Summer 2014 collection, which was a fusion of traditional Mongolian
designs and modern-day styles.
Source: Fibre2Fashion
CHINA TRADE DATA FUELS MINERS
Aggreko rebounded as investors were urged to look beyond a ―temporary lull‖ in trading while the
broader London market benefited from China data-fueled gains for miners.
Shares in the world's largest provider of mobile power generators slumped to their worst drop in
seven months last week after it admitted that customers at its emerging markets power projects
division remained hesitant about signing new contracts.
―The slowdown in Power Projects order intake has unsettled investors,‖ said Caroline de La
Soujeole, analyst at Cantor Fitzgerald. ―But we remain positive and recommend investors to look
beyond this lull in trading.‖
David Badden, of IG, said ―Natural Resource stocks are back in favor as China's second wind could
lead to an increased appetite for metals,‖. ―Banking stocks are also in the black as a combination
of short-covering and bargain-hunting kicks in.‖
The mining sector was led by precious metal stock, which continued their recovery after a bout of
heavy selling in the week. Rio Tinto PLC, which leads operations at Oyu Tolgoi, climbed 5 percent
to GBP 31.68 as Credit Suisse reiterated outperform advice on its Sydney-issued stock.
Source: Financial Times
IRON ORE RALLY IS BOON FOR MINING INDUSTRY
Iron ore prices rose above USD 140 a ton on Tuesday, their highest level in five months, as the
Chinese steel industry moved to rebuild inventories. Though iron ore is a minor commodity in
Mongolia, steel making coal is a major driver.
The rally in iron ore—one of China‘s most important commodity imports—reflects growing
confidence in the country‘s industrial sector about the economic outlook. Benchmark Australian
iron ore prices, with 62 percent iron content, have rallied 28 percent since the middle of June to
Tuesday‘s high of USD 1,480 a ton. The price of iron ore is crucial to the global economy, as it is
used to make steel and so feeds through ultimately into the price of everyday good such as cars and
washing machines, as well as the cost of construction of building and infrastructure.
The rally also bodes well for the mining industry, which relies heavily on iron ore to drive its
profitability. Iron ore is the most important driver of earnings for BHP Billiton Ltd., Vale SA, Rio
Tinto PLC and Anglo American PLC. Rio Tinto, for example, saw its share prices jump 12.6 percent
in just four days, while BHP Billiton is up 8.7 percent in the same period, and Vale is up 15 percent
in a week.
Analysts said lower supplies from both Australia and Brazil—the two main iron ore producers—had
combined with a wave of buying by Chinese traders and steelmakers to drive prices higher.
Most analysts expect iron ore prices to fall over the next few years, as Chinese demand slows and a
wave of new supply hits the market. But the most bearish forecasts have been proven wrong as
prices have so far been supported at historically elevated levels. Over the past year, spot prices
have averaged USD 127.50 a ton—compared to less than USD 50 in 2007.
Source: Financial times
FIRST RARE EARTH EXCHANGE TO HELP STABILIZE MARKET
China's first rare-earth products exchange is scheduled to launch in early October after a year's
preparation. It will help further regulate the market and deliver pricing power, said a senior
official. Some miners have looked to Mongolia as a destination for rare-earth extraction as a future
alternative to China.
China is the largest rare-earth producer and exporter, accounting for more than 90 percent of the
world's supply. However, the wild price swings of the resources have had a negative effect on
13. Chinese producers.
―The exchange will help the Chinese rare-earth industry to have a bigger say on prices in the global
market,‖ said Gu Ming, general manager of the Baotou Rare Earth Products Exchange, during the
Fifth China Baotou Rare Earth Industry Forum held in Baotou, the Inner Mongolia Autonomous
Region.
In May 2011, the State Council announced guidance for the rare-earth industry, making it a national
concern. The guidance required different authorities and local governments to regulate the
exploration, production and trading of the resource and make efforts to crack down on illegal
mining and smuggling. On Wednesday, the central government launched a three-month campaign to
crack down on illegal activities in the rare-earth sector again. Zhou Yong, general manager of a
rare-earth trading company in Guangdong province, said the company didn't make money for the
first half of the year because of the high level of smuggling. Zhou hopes the exchange can really
help the industry and promote fair trading, but added it has a long way to go.
According to Gu, the exchange will at first provide spot and forward trading for companies,
excluding futures. All rare-earth products throughout the production chain can be traded on the
platform. However, he said Baotou Steel Rare-Earth will not put all its products on the platform at
the beginning because it takes time for new exchanges to grow. He denied the exchange will attract
hot money, saying there will be detailed rules to prevent that from happening.
Source: China Daily
INDONESIA'S SELF-INFLICTED ECONOMIC WOES
It is a tale too common among large emerging markets, and it is one that Mongolia seems to be
playing out, given recent events.
Just a few years ago, Indonesia was the latest darling of the international business community. Its
recipe: a large and fast-growing consumer class with newfound eagerness to spend, blended with
impressive macroeconomic performance, a dash of political stability and a sudden penchant for
marketing. Economic pundits hailed Indonesia as the new ―I‖ in the then-elite club of ―BRICs‖ while
consultancies and investment banks played up the story. McKinsey garnered huge headlines with
straight-line predictions that Indonesia's economy would overtake Germany's in a scant 30 years.
Heady stuff, and as Davos Man took notice, one could almost hear the chest-thumping and high-
fives in the presidential palace.
Little more than a year later, much has changed. Foreign investors no longer clamor to their
embassies in search of door-opening session with Indonesian ministers. One commercial attaché
lamented that his life has become far less interesting: ―Inquiries about how to do business here
have gone from an all-time high to eerily quite in a few short months.‖
Success can breed hubris, and in Indonesia the government has overplayed its hand. Policy changes
in the mining, retail, horticultural and oil and gas sectors have led foreign investors to reassess the
risk of doing business here. Boards of foreign multinationals questions the direction of economic
policy. They ask, as presidential elections approach next year: Is economic nationalism a permanent
feature of the business landscape, or will the current spike in protectionism give way to the more
investor-friendly stance of the recent past.
The circumstance's of Indonesia's nationalist economic turn shed some light on what to expect in
the future. As Chatib Basri, an economic straight-shooter recently installed as finance minister,
likes to say, ―In Indonesia, bad times make for good policies and good times make for bad polices.‖
Source: Wall Street Journal
POLITICS
MONGOLIA BANS NEW ZEALAND MILK POWDER
The Ministry of Industry and Agriculture announced a ban on milk powder from New Zealand after
Fonterra-brand products were found to be contaminated with botulism. Mongolia is currently
inspecting imported milk products for contamination.
14. Fonterra milk products have been recalled from China, Thailand, Australia, Malaysia, and Saudi
Arabia. Fonterra apologized on Monday saying that no known illnesses due to the contamination had
been identified.
Source: News.mn
WHO DIRECTOR GENERAL DISCUSSES HEALTH INITIATIVES WITH PRESIDENT
The World Health Organization (WHO) director general met with President Tsakhia Elbegdorj during
an official visit to Mongolia.
Accompanying Director General Margaret Chan was WHO Permanent Representative Soe Nyunt-U
and Minister of Health Natsag Udval. Chan said she expressed satisfaction with the cooperation
between Mongolia and the WHO. Elbegdorj noted the success in implementing WHO policies and
program such as its p vaccinations against H1N1 in 2009. He also mentioned that Mongolia was
taking steps toward greater control of tobacco roducts, this year adopting a law in Ulaanbaatar that
bans smoking in public areas. Another health campaigns noted by the president was one for
alcoholism, which the president requested assistance for from the WHO.
Source: Montsame
CABINET MINISTER VISITS HONG KONG
A Mongolian delegation led by Cabinet Minister Chimed Saikhanbileg met with officials in Hong Kong
to discuss investment opportunities.
Saikhanbileg with Financial Secretary John Tsang and Permanent Secretary for Commerce and
Economic Development Andrew Wong to discuss possibilities for investment, infrastructure, finance,
and business projects that the government of Mongolia has already begun or plans to carry out. Also
discussed was the possibility for a visit by high-ranking Mongolian officials in the near future.
The Cabinet minister also met with Secretary for Security Lai Tung-kwok to discuss a bilateral
agreement that would ease visa requirements between Mongolia and Hong Kong. In a meeting with
the Hong Kong Stock Exchange and Trade Development Council, Saikhanbileg discussed the progress
made in Mongolia's investment environment. Also participating in the delegation was Mongolian
Stock Exchange Director Khangi Altai to discuss investment partnership opportunities for
infrastructure in Mongolia.
Source: Info Mongolia
ECONOMIC DEVELOPMENT MINISTER TALKS COOPERATION WITH JICA PRESIDENT
Japanese International Cooperation Agency (JICA) President Akihiko Tanka held talks with Economic
Development Minister Nyamjav Batbayar on 1 August in Tokyo.
Mongolia faces may problems that must be solved to achieve sustainable growth. These include
diversifying an economic structure that relies excessively on income from mineral resources,
servicing decaying infrastructure and improving social services. In August 2012 the government of
Mongolia, to further promote national development, established a Ministry of Economic
Development, which centrally oversees issues including promoting foreign assistance, trade and
investment, and Batbayar became its first minister to lead it.
―Since Mongolia began its democratization and transition to a free market economy in 1990, JICA
has cooperated in the areas of human resource development and improving the economic and social
infrastructure, and we would like to continue cooperating with Mongolia as a partner,‖ Tanaka said
at the beginning of the talks.
Both officials expressed intentions to continue cooperation, with Batbayar specifically mentioning
the need for assistance in infrastructure development and the promotion of industry in regional
towns and cities.
Source: Japanese International Cooperation Agency
TURKEY PROVIDES EDUCATION MATERIALS TO TYVA TURKS IN MONGOLIA
Turkey‘s international development agency TIKA provided Tyva Turks living in Mongolia with
education materials and equipment in a bid to help them protect their mother language and
15. culture.
Tyva Turks, consisting of 393 homes and 843 people, live inside the Buyant Soum, Khovd Aimag,
some 500 kilometers from Ulaanbaatar. The materials and equipment delivered to the Tyvan
officials at a ceremony held in an upland at Buyant.
Source: World Bulletin
ENKHBAYAR SEEKS MEDICAL CARE IN SOUTH KOREA
Former President Nambar Enkhbayar, who recently received a presidential pardon from his two-
and-a-half years sentence from prison for corruption, is receiving treatment in South Korea for his
ailing conditions experienced during his incarceration.
The president was hospitalized at General Hospital No. 2 for much of his prison time. On 13 August
he traveled to South Korea for treatment after spending a few days rest at his home.
―Our doctors diagnosed his illness as cytolysis,‖ said Minister of Health N. Udval. ―This was
confirmed by constant weight loss, but we haven't fully diagnosed it yet.‖
Source: Info Mongolia
MONGOLIA DEPORTS FOUR ILLEGAL IMMIGRANTS
The Mongolian Immigration Agency on 15 August deported four Vietnamese citizens living illegally in
Mongolia.
The illegal immigrants had been working at a Vietnamese auto shop. In total, Mongolia has deported
951 citizens from 20 countries in the first eight months of 2013 for visa violations. Violations include
violating temporary visitor procedure at least twice in a year, overstaying a visa's given term,
conducting activities not permitted by the visa, and working without permission from a certified
organization.
Source: Info Mongolia
SUMO ON THE STEPPES
In the land of Chinggis Khaan, wrestling is a national sport and 2,000-year-old tradition. ―Bokh,‖ as
it is known locally, features annually at tournaments across Mongolia. The biggest such event is the
Naadam Festival, which sees 40,000 wrestlers compete in provinces across Mongolia. The largest of
the tournaments is held in the capital Ulaanbaatar, where 500 wrestlers battle it out be crowned
champion. There are no weight or height divisions in these competitions and fighters must
outmaneuver their opponent with an array of different moves. And with no time limits, the bouts
can last for as long as four hours, demanding great levels of endurance.
Now, Mongolia's wrestlers are using their warrior spirit and fighting skills to conquer Japan's oldest
sport—sumo wrestling. Two grand champions of the sport—Hakuho and Harumafuji—hail from
Mongolia and, along with their compatriots, they are revolutionizing sumo by employing more
advanced wrestling techniques than their Japanese competitors.
Japan's Sumo Association has attempted to curtail the dominance of foreign participants and, in
2002, limited the number of foreigners each stable could have to one. But for foreign fighters, sumo
often represents a route out of poverty. And with many Japanese shunning the rigorous training
required or being lured away by more lucrative sports, some experts predict that Mongolian
dominance of a sport tarnished by cheating scandals, drug use and allegations of bullying will
continue for years to come.
But sumo is not the only outlet for Mongolian wrestling skills and many are now looking to harness
their fighting skills in Olympic sports like Judo. And some of those taking to the mat are women,
who have traditionally been offered few athletic opportunities.
Source: Al Jazeera
FOUR INJURED IN $4M TRAIN ACCIDENT
A major train accident occurred where a freight train collided with a vehicle at a railway crossing
near Sky Resort ski center damaging 200 meters of rail and injuring four.
Two locomotives derailed off to the side, hitting a vehicle belonging to Ulaanbaatar Railway
16. contractor Esto LLC. Ulaanbaatar Railway staff evacuated the train and vehicle after the accident
before it finished repairing the damaged track at around 10 p.m. that day. Afterwards, trains were
once again to operate on that portion of the rail.
The Ministry of Roads and Transportation has estimated the cost from the damages to be USD 4
million.
Source: News.mn
MONGOLIA BREAKS TWO WORLD RECORDS FOR HORSE RIDERS
Horse riders in Mongolia broke a Guinness World Records for the largest gathering of horses and
largest number of participants in a horse race on 10 August.
Over 11,000 horses from all 21 Mongolian provinces arrived for the event, beating its target by
1,000 horses. The race saw 4,249 horses compete, also beating its target of 3,000.
―I watched the biggest horse parade in the world yesterday with 11,000 horses. Today I had the
great opportunity to witness a horserace enrolling over 4,000 horses, which is the highest number
on record,‖ said Lucia Sinigagliesi, the Guinness representative to judge the event. ―I see that little
Mongolia jockeys are undoubtedly masters at riding race horses.‖
Source: UB Post
CITIZENS APPEAL TO PRESIDENT TO PROTECT UB BOTANICAL GARDENS
Concerned environmentalists and academics have issued a letter to President Tsakhia Elbegdorj on
the need to protect the Botanical Gardens in Ulaanbaatar.
Non-government organizations and university staff members at the Mongolian Academy of Sciences,
the National University of Mongolia, and Khovd University wrote to the president in the hopes of
convincing him to be the first president to take the garden under his patronage and protect the
gardens from developers. Those who wrote the letter said the plant is home to distinct and rare
plant life.
―President Tsakhia Elbegdorj,‖ reads the letter, ―you were honored with the United Nations‘
Champion of the Earth 2012 award for your contributions to positively impacting the environment
and initiated the Sustainable Development Program of the 21st Century, the national ―Green Wall‖
program and a National Tree Planting Day. Mongolia hosted World Environment Day for the first
time on June 5, also at your initiative… Please approve our request and take the Botanical Garden
under your auspices and pass it down to our next generation, protecting and developing it.‖
Despite protections decreed by the Ulaanbaatar Citizen‘s Representative Council, many
organizations have attempted to develop the area for commercial gain. Ulaanbaatar Deputy Mayor
Ts. Enkhtsengel had 10 hectares of the land at the gardens privatized following the repeal of a
decree by the Ulaanbaatar citizen‘s council.
Source: News.mn
NEW MONGOLIAN LAWS
The following law, amendments and addendum 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
08.08.2013 Law on Protection of witness, victim
Addendum to Law on Civil service
Amendments to Law on Court decision implementation
Addendum to Law on Government Special Fund
Addendum to Law on Ratification of state confidentiality list
Law on Legal assistance provided to insolvent defendant
17. 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
TOP GOVERNMENT OFFICIALS TO ATTEND NAMBC INVESTORS CONFERENCE
Minister of Environment and Green Development Sanjaasuren Oyun and Ulaanbaatar Mayor Erdene
Bat-Uul will be featured speakers at the North America-Mongolia Business Council's (NAMBC's) 16th
Annual Investors Conference, to be held from 24 to 26 September at the Kempinski Khan Palace
Hotel in Ulaanbaatar. Registration deadline is September 6
The investors conference will celebrate the 40th anniversary of Mongolia-Canada diplomatic
relations this year. Full simultaneous interpretation will be provided. This conference is the
longest-running international investors forum in or about Mongolia, held annually in Ulaanbaatar
since 1998.
Non-members from any country are welcome. For more information visit nambc.org. Find a
registration form here.
___________________________________________
DISCOVER MONGOLIA, 5-7 SEPTEMBER, ULAANBAATAR
The 11th annual Discover Mongolia international investors' forum will be held from 5 to 7 September
in Ulaanbaatar, Mongolia.
The forum is Mongolia's main venue for the widest international exchange on Mongolia's minerals
developments. Throughout its 10 years of history, the forum has become one of the hallmark events
in Mongolia's minerals exploration and development sector. The primary mission of the forum is to
support the development of the Mongolian mining sector by connecting people, providing
information, building networks, and realizes the importance of mining exploration sector and its
legal environment. It also acts as a bridge between the Mongolian government and private sector
investors through its "Government Hour" sessions.
BCM is a supporting organization again for this year‘s forum. For more information, log on
discovermongoliaforum.com.
___________________________________________
30TH ABA GENERAL MEETING AND CONFERENCE, 12-13 SEPTEMBER, ULAANBAATAR
The 30th Asian Bankers Association (ABA) General Meeting and Conference will be held from 12 to
13 September in Ulaanbaatar at the Blue Sky Hotel and Tower.
This year's conference will focus on the theme ―Asia: Growth Engine of the Global Economy.‖ The
two-day event aims to provide another platform for ABA members and invited experts to discuss
how major developments in the global and regional markets will impact on the Asian banking sector
and to exchange views on measures that the Asian banking sector can undertake to help sustain
growth and enable the Asia-Pacific region to play a catalytic role in the global economic growth and
recovery.
To register, complete the form and send it back to the Professional Conference Organizer c/o fax
+976 11 323581 or email abamongolia@mba.n no later than 20 August 2013. For more information
email nomindari@mba.mn or call +976 9917 7149.
___________________________________________
MINING MONGOLIA AND POWER AND RENEWABLE ENERGY MONGOLIA, 19-21 SEPTEMBER, UB
Mining Mongolia and Power and Renewable Energy Mongolia will be held from 19 to 21 September at
the Buyant-Ukhaa Sports Complex in Ulaanbaatar.
120 companies from 18 countries including pavilions from Australia, Canada, Korea and Germany
will display a wide range of technology, supplies and services for the mining and electric power
18. generation and transmission sector; on a scale never before seen in Mongolia. Inside and outside
displays, providing a first opportunity for buyers to see technology and learn about new mining and
electric engineering service from industry experts.
BCM is a supporting organization. Register at miningandconstructionmongolia.com or for priority
booking email mongolia@chinaallworld.com.
___________________________________________
MONGOLIAN MINING SUMMIT 2013, 29-31 OCTOBER, PERTH, AUSTRALIA
Mining IQ's Mongolian Mining Summit will be held at from 30 to 31 October at Crown Perth, Western
Australia, Australia.
The Mongolian Mining Summit is the perfect forum to bring together senior level executives from
Mongolia and Australia to further business relationships in the resources sector. Send your senior
executives to attend this summit to meet with CEOs, executive directors, MDs, VP, and GMs, and
heads of investment from Australian organizations interested in entering the Mongolian mining
industry.
Speakers include:
- Graeme Hancock, President and chief representative of Anglo American in Mongolia,
- Dr. Battsengel Gotov, Executive director and CEO of Mongolian Mining Corporation.
- Jim Dwyer, Executive director of the Business Council of Mongolia.
BCM is a supporting organization of this event. Register now and pay only AUD $999 for Mining and
Government Companies—register by 23 August 2013.
To register call +61 2 9229 1000 or email registration@iqpc.com.au.
___________________________________________
MONGOLIA INVESTMENT SUMMIT HONG KONG 2013, 18-20 NOVEMBER, HONG KONG
Bringing the best of Mongolia‘s investment opportunities to Asia‘s leading investment hub.
Featuring a line-up of Government representatives, business leaders and international investors, the
4th Annual Mongolia Investment Summit provides investors and companies seeking to do business in
Mongolia with a thorough update of Mongolia‘s investment and business climate and showcases its
actual investment opportunities. Key sectors covered include Mining and Mining Services,
Infrastructure, Energy, Financial Services, Retail, Real Estate, Construction and Agribusiness.
Mongolian companies and Mongolia-focused funds seeking to meet with investors and potential
business partners, should make attendance at Mongolia Investment Summit Hong Kong 2013 their
number one priority. Click here to download the latest brochure.
BCM is a supporting partner organization. BCM members will enjoy 15% discount; please quote
Priority Code 695BCM15D during registration.
BCM WEBSITES
MONGOLIAN WEBSITE ‘PRESENTATIONS’ AND ‘NEWS’ SECTIONS
The ‗Presentations‘ section on BCM‘s Mongolian website can be reached via bcm.mn/itgeluud.
As a key component of BCM‘s Mongolian website, articles from the ‗News‘ section and the
government website Open-Government.mn are regularly updated.
S. Oyun, Minister of Environment and Green Development, presentation at BCM monthly meeting on
May 27 added to Mongolian website, bcmongolia.org/mn/илтгэлүүд.
- Байгаль орчин, ногоон хөгжлийн сайд С.Оюун, Байгаль орчин, ногоон хөгжлийн шинэчлэлийн
бодлого, үйл ажиллагаа, МБЗ-ийн сарын уулзалт 5 сарын 27, 2013
The following presentations were added from "Foreign Investment in Mongolia: Challenges, Risks
and Solutions" conference (in Mongolian) on April 19 at the Kempinski Hotel organized by the
Business Council of Mongolia (BCM) and UB Risk Management Consulting:
19. • Гадаадын хөрөнгө оруулалтын өнөөгийн байдал, хэтийн төлөв, Төв банкны ерөнхий эдийн
засагч С.Болд, ―МОНГОЛ УЛСДАХ ГАДААДЫН ХӨРӨНГӨ ОРУУЛАЛТ –ЭРСДЭЛ, СОРИЛТ,
ШИЙДВЭРЛЭХ АРГА ЗАМУУД‖сэдэвт эрдэм шинжилгээний бага хурал, 2013 оны 4 дүгээр сарын
19
• Шууд хөрөнгө оруулалтын өнөөгийн байдал, тулгамдсан асуудал, шийдвэрлэх арга зам,
Монголын Бизнесийн зөвлөлийн дэд дарга И.Сэр-Од, ―МОНГОЛ УЛСДАХ ГАДААДЫН ХӨРӨНГӨ
ОРУУЛАЛТ –ЭРСДЭЛ, СОРИЛТ, ШИЙДВЭРЛЭХ АРГА ЗАМУУД‖сэдэвт эрдэм шинжилгээний бага
хурал, 2013 оны 4 дүгээр сарын 19
• Үнэт цаас, хувьцааны зах зээлийн хөрөнгө оруулалт: эрсдэл, сорилт, цаашдын хандлага,
Монгол банкны Ерөнхийлөгчийн зөвлөх, санхүүгийн тогтвортой байдлын зөвлөлийн ажлын
албаны дарга Д. Ган-Очир, ―МОНГОЛ УЛСДАХ ГАДААДЫН ХӨРӨНГӨ ОРУУЛАЛТ –ЭРСДЭЛ,
СОРИЛТ, ШИЙДВЭРЛЭХ АРГА ЗАМУУД‖сэдэвт эрдэм шинжилгээний бага хурал, 2013 оны 4
дүгээр сарын 19
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ENGLISH WEBSITE: 'PRESENTATIONS', 'MONGOLIA REPORTS', ‘MONGOLIAN BUSINESS NEWS’,
‘PHOTO GALLERY’
On BCM‘s English website, the ―Resources‖ and ―Presentations‖ sections are available:
• Bilguun Ankhbayar, Chief Executive Officer, Mongolian Investment Banking Group LLC,
―MIBG Review‖, at the MSE-BCM Securities Law Overview Session, July 4, 2013
• Robert Rooks, Director, PwC Hong Kong, ―A brief Overview of Custody Services‖, at the MSE-BCM
Securities Law Overview Session, July 4, 2013
• Anthony Woolley, Senior Associate, Hogan Lovells, ―The Revised Securities Market Law‖, at the
MSE-BCM Securities Law Overview Session, July 4, 2013
• B. Saruul, Director General, Securities Department, Financial Regulatory Commission of Mongolia,
―Securities Markets Law – Path to Market Reforms‖, at the MSE-BCM Securities Law Overview
Session, July 4, 2013
• Nick Cousyn, Chief Operating Officer, BDSec JSC, ―Gobi‘s Resort‖ at the BCM Monthly meeting
April 22, 2013
• Brian White, Editor, The Mongolist – ―Analyzing Mongolian Politics from the "Middle Layer" at the
BCM Monthly meeting Apr 22, 2013
• Ch. Otgochuluu, Head of Strategic Policy and Planning Department, Ministry of Mining, ―Brief
introduction on mining policy‖ at the BCM monthly meeting Apr 22, 2013
• S. Bold, Chief Economist, Central Bank, ―The current flow of investment into Mongolia‖, at the
"Foreign Investment in Mongolia: Challenges, Risks and Solutions" conference on April 19, 2013 at
the Kempinski Hotel.
• S. Javkhlanbaatar, Foreign Investment Regulations and Registration Department Head, Ministry of
Economic Development of Mongolia, ―About regulation on FDI‖, at the "Foreign Investment in
Mongolia: Challenges, Risks and Solutions" conference on April 19, 2013 at the Kempinski Hotel.
• B. Amarsanaa, Academic Secretary of National Legal Institute, ―Legal issues of regulation of
foreign investment‖, at the "Foreign Investment in Mongolia: Challenges, Risks and Solutions"
conference on April 19, 2013 at the Kempinski Hotel.
• D. Gan-Ochir, Head of Financial Stability Council, Advisor to President of Central Bank,
―Investment in stocks and equities in Mongolia: risks, challenges and trends‖, at the "Foreign
Investment in Mongolia: Challenges, Risks and Solutions" conference on April 19, 2013 at the
Kempinski Hotel.
• D. Achit-Erdene, CEO, MICC, ―On current state of equities foreign investment‖, at the "Foreign
Investment in Mongolia: Challenges, Risks and Solutions" conference on April 19, 2013 at the
Kempinski Hotel.
• Ruth Pulaski, Director Marketing & Development, American University of Mongolia – ―American
University of Mongolia: Integrating a Liberal Education Approach to Learning‖ at the BCM monthly
meeting, March 25, 2013
• B. Bayar, Managing Director, ELC LLC – ―Update on Legal Developments Regarding Foreign
20. Investment‖ at the BCM monthly meeting, March 25, 2013
• Tony Burchill, Australian Consul-General & Trade Commissioner, Austrade – ―The Business of Being
a Third Neighbor‖ at the BCM monthly meeting, March 25, 2013
Other presentations:
• Dr. Brian Fisher, Managing Director, BAEconomics, "Economic Impact of draft Minerals Law" at the
Kempinski Hotel, March 18, 2013, Ulaanbaatar
• Dr. Ch. Khashchuluun, CEO of UBRM Consulting, ―Mongolia and Mining, The policy evolution:
What's the next?‖ at the Kempinski Hotel, March 18, 2013, Ulaanbaatar
• Martin Pow, Partner, Enterprise Risk Services and Learning Leader, Deloitte Onch LLC, ―Black
Swans: Fact or Fiction,‖ A different risk management philosophy at the BCM Risk Management
Working Group meeting, March 14, 2013
Please note the presentations from each of the BCM monthly meetings.
The ―Mongolia Reports‖ section includes the following:
-―Mongolia Macro Flash‖, Adrienne Lui, Asia Pacific Economics Research, Citigroup Global Markets
Asia Ltd;
-―Selected Macroeconomic Indicators for Mongolia, as of June 2013‖ by International Monetary
Fund;
-―Polit Barometer April, 2013‖ by Sant Maral Foundation;
- ―Market Update‖ by Mandal General Insurance LLC;
- ―Annual Report 2012‖ by International Monetary Fund;
- ―Regional Economic Outlook: Asia and Pacific‖, April 2013 by International Monetary Fund;
- ―Highlights of 2012, Mongolia‖ by European Bank for Reconstruction and Development (EBRD);
- ―Official statement of Oyu Tolgoi LLC in relation to information, data and facts related to Oyu
Tolgoi -―2013 discussed during open session of the State Great Khural‖, dated 1 February, 2013‖;
-―Mongolia Investment Climate Statement‖, by the Economic and Commercial Section of the U.S.
Embassy;
-―Mongolia Foreign Labor Force Ratio for 2013‖ by Hogan Lovells International LLP;
-―How Mongolia will perform in 2013?‖ by Mandal Asset Management;
-―Mongolia Business Owner and CFO Survey result‖ by BDSec JSC;
-―The fiscal regime for mining - a way forward‖ by IMF Fiscal Affairs Department;
-―Taxes for Expatriates in Mongolia‖ by PricewaterhouseCoopers.
BCM's English website includes the ―Mongolia Business News‖ section where the Open Letter to
Parliament and Government is available for download.
BCM continuously posts news stories and analysis of relevance to Mongolia at ‗Mongolian Business
News‖ before they are all put together each week for Friday's weekly NewsWire.
The ―Photo Gallery‖ contains photos from the 5th Anniversary BCM Gala dinner on November 5.
BCM Football Cup 2013 pictures are posted to the website - http://bcmongolia.org/en/photos/350-
en/album?albumid=200
The BCM NewsWire will continue to be issued each Friday, incorporating items already on the home
page for a consolidated account of the week‘s events.
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SOCIAL NETWORK WITH BCM
The Business Council of Mongolia (BCM) has expanded its reach to your favorite social networks.
Keep up to date on the latest business deals in Mongolia and how the climate for investment is
improving each day with BCM.
Add BCM on Facebook at http://www.facebook.com/pages/THE-BUSINESS-COUNCIL-OF-
MONGOLIA/129826330435540 to read the latest announcements and comment on events carried in
21. the NewsWire with the community.
Connect with BCM on Linked-in to join the diverse group of professional contacts creating a better
business environment in Mongolia today.
Hear breaking news and announcements as they happen when you follow BCM on Twitter at
http://twitter.com/#!/bcMongolia.
We have now 1,313 fans on our Facebook fans page, 1,325 connections on LinkedIn network, and
733 followers on Twitter.
Of course for news information, interviews, event photos, and announcements regarding our
organization, visit the official BCM website at www.bcmongolia.org and www.bcm.mn.
ECONOMIC INDICATORS
22. INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
Year 2008 *22.1% [source: NSOM]
Year 2009 *4.2% [source: NSOM]
Year 2010 *13.0% [source: NSOM]
Year 2011 *10.2% [source: NSOM]
July 31, 2013 *8.3% [source: NSOM]
*Year-over-year (y-o-y), nationwide
Note: 7.0% y-o-y, Ulaanbaatar city, July 31, 2013
CENTRAL BANK POLICY LOAN RATE
December 31, 2008 9.75% [source: IMF]
March 11, 2009 14.00% [source: IMF]
May 12, 2009 12.75% [source: IMF]
June 12, 2009 11.50% [source: IMF]
September 30, 2009 10.00% [source: IMF]
May 12, 2010 11.00% [source: IMF]
April 28, 2011 11.50% [source: IMF]
August 25, 2011 11.75% [source: IMF]
October 25, 2011 12.25% [source: IMF]
March 19, 2012 12.75% [source: Mongol Bank]
April 18, 2012 13.25% [source: Mongol Bank]
January 25, 2013 12.50% [source: Mongol Bank]
April 8, 2013 11.50% [source: Mongol Bank]
June 25, 2013 10.50%[source: Mongol Bank]
23. CURRENCY RATES – AUGUST 15, 2013
Currency Name Currency Rate
US dollar USD 1,568.73
Euro EUR 2,085.00
Japanese yen JPY 15.98
British pound GBP 2,438.12
Hong Kong dollar HKD 202.20
Chinese Yuan CNY 256.51
Russian Ruble RUB 47.65
South Korean won KRW 1.40
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.
