The document summarizes news from the Business Council of Mongolia newsletter. It discusses negotiations over mining agreements for the Oyu Tolgoi and Tavan Tolgoi deposits. The draft agreement for Oyu Tolgoi would give the Mongolian government 34% initially, increasing to 50% after 30 years, and includes provisions for taxes, smelting in Mongolia, employment, and infrastructure. The Western Prospector company is eager to begin work on its Gurvanbulag uranium project and believes production could start within 2-2.5 years if its mining license is approved. Mongolia's politics appear increasingly cooperative for major mining projects to bring in external capital needed to support the economy.

1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmmongolia.org
info@bcmmongolia.org
Issue 58, February 20, 2009
NEWS HIGHLIGHTS:
Business: No surprise in draft of Oyu Tolgoi agreement; “We will own 50% some day,” asserts
Zorigt, without saying just when; NAMBC chief says lengthy negotiations on Oyu Tolgoi
serve a purpose; Western raring to go in Gurvanbulag; Rio unlikely to bid for Tavan
Tolgoi; Guesses galore on who will get Tavan Tolgoi; Mongolian mining contract boosts
Leighton confidence; Citi’s top Asia mining banker joins SouthGobi; Chinalco set to
grab Rio assets, up stake; No special consideration for Rio-Chinalco deal, says
Australian Treasurer; Rio may consider changes to deal, JPMorgan Cazenove says; BHP
sounds Rio Tinto investors; Biggest tumble for copper since October 30; “IMF does not
believe us on Anod Bank,” Bayar tells Parliament; Mongolian-owned mine starts
processing iron ore; Government establishes company for uranium; Award for
MobiCom; Move to open protected areas to mining; Government warns against keeping
mines idle; New vocational training law passed.
Economy: Revised budget cuts salaries, allowances, jobs, projects; Action plan passes first
reading; Crisis a national challenge, says Bayar; Former PM warns of debt trap,
stopgap measures; Tax revenue much less than expected; Less cash in circulation;
Apartment prices start rising; Foreign workers indispensable at the moment, says MP;
Meeting mulls tourism strategy in times of crisis; No fall in diesel price;
Unemployment up, but 1,800 get a job in January; Selenge tries to change animal
husbandry practices; Visiting and living in Altanbulag to be made easy; Mongolians
among investors in Australian “gold rush.
Politics: Labor Union protests salary cut, Bayar explains decision; Prime Minister to have 7
advisors; Ambassador tells media about U.S.-Mongolia relations; 14,000 leave MPRP to
keep jobs; Government House is sinking; Holiday on Friday, but March 1 will be a work
day; Buy local products for Tsagaan Sar, appeals Government; Mongolians to have 90-
day visas for South Korea; Only 6% of Mongolians are more than 60 years old;
Ulaanbaatar to have 60 km of subways; US grain for Mongolia comes through
Vladivostok; Asia Foundation grant to biology faculty; World Bank offers grants to
develop leadership qualities.
There will be no issue of the BCM NewsWire next Friday, February 27. We wish all of our BCM
Members and other readers a Happy Tsagaan Sar.
NOTICE TO BCM MEMBERS
The second 2009 BCM monthly meeting for Members will be Monday, February 23 at 5 PM at the
Open Society Forum. Featured will be presentations by Mr. L.Orgil, Foreign Policy Advisor to the
President – ―PRESIDENT AND FOREIGN AFFAIRS‖, and by Mr. Byung Kyoon Jang, Resident
Representative, International Monetary Fund (IMF) – ―CURRENT ECONOMIC CLIMATE AND POSSIBLE
DONOR SUPPORT‖.
Mr. Do.Ganbold, President, Mongolian National Mining Association (MNMA) will provide an update on
key developments in the Mining Sector. U.S. Ambassador Mark Minton will report on U.S.-Mongolia
relations in the Obama administration and provide updates on various U.S. programs here.
Teleconferencing will again be available for Members not able to attend in person. Call number is
(1-218) 936-7979, access code 771358 to be connected. Cost will be solely that of the long distance

2. call to the above US number. Members who plan to attend the meeting in person or via
teleconferencing with questions on these presentations should Email them in advance to
info@bcmmongolia.org.
BUSINESS
NO SURPRISE IN DRAFT OF OYU TOLGOI AGREEMENT
The working group set up by the Government to negotiate an agreement with Ivanhoe Mines and Rio
Tinto, the two joint investors in Oyu Tolgoi, has finished its work. The draft will be presented to
Parliament soon, after the National Security Council finishes reviewing it. If Parliament approves it
as it stands, there will be no further obstacles to work beginning on the mines. If, however,
Parliament rejects the draft, either in its entirety or in part or parts, the talks will have to be held
again.
The agreement has 160 clauses placed under 16 main articles. The more salient points are given
below.
- Ivanhoe Mines Mongolia will operate in Oyu Tolgoi and the Mongolian Government would own 34
percent of the deposits. This percentage will increase to 50 within one year of extending the
contract. This is likely to be after 30 years, though the Government will neither confirm nor deny
that the present agreement is going to be for that period.
- The Mongolian share of the investment expenses and the interest accruing on them is to be
adjusted against the dividends that will be due to it in future.
- The Mongolian side will take USD125 million in advance.
- Ivanhoe Mines will pay taxes and other dues in accordance with the laws of Mongolia.
- The mined gold will be sold to the Central Bank at the market rate prevalent on the day of sale.
- Once the initial amount of investment plus an additional 29.9 percent of it has been recouped,
income from the project will be subject to 30 percent tax.
- A copper smelting factory will be set up in Mongolia.
- All the technology used for the mining will be non-hazardous to the environment and must meet
Mongolian and international standards. The excavation has to be efficient, with as little waste as
possible.
- An Umnugobi Regional Development Council will be established. The investor will be a member
and support its activity.
- Energy for the mines and everything to do with them will come from China for the first 4 years,
after which period domestically produced power will be used. For this a power station will be
built in a place advantageous to Mongolia. The investor will build a road connecting the Oyu Tolgoi
mines and the Gashuun Sukhait border port and also construct an aircraft landing strip at the
mines site.
- At least 90 percent of the employees will be Mongolian.
Source: Ardiin Erkh
“WE WILL OWN 50% SOME DAY,” ASSERTS ZORIGT, WITHOUT SAYING JUST WHEN
Minister for Minerals and Energy D.Zorigt told media on Tuesday that the Government would own 50
percent of the Oyu Tolgoi deposits some day, but refused to specify when that ―some day‖ would
be. He also indicated that substantial progress has already been made in preparing the draft of the
agreement on the Tavan Tolgoi deposits.
He said both drafts would strictly follow the directives given to the Government by Parliament. If
the National Security Council wished to amend any articles of the Oyu Tolgoi agreement, the draft
will have to be revised and re-approved by the Government.
Source: en.News.mn
NAMBC CHIEF SAYS LENGTHY NEGOTIATIONS ON OYU TOLGOI SERVE A PURPOSE
The draft of the agreement now before Parliament for its approval confirms that the Government is

3. satisfied with a 34-percent stake in Oyu Tolgoi, Ivanhoe Mines Ltd.'s long-stalled copper-gold
project. Mr. Steve Saunders, president of the North America-Mongolia Business Council, has said
that this reaffirmation that the Mongolian Government would not push to seek more than 34
percent of the project signals that the Government wants to attract more foreign investment. The
agreement is not yet final, ―but I think the draft communicates to the global investor community
that the Mongolian Government is sticking with the 2006 law and not doing any other tinkering with
the legal environment," Mr. Saunders said.
Oyu Tolgoi has been unable to enter the formal development stage for years due to the
Government's inability to finalize an investment agreement with Vancouver-based Ivanhoe. Mr.
Saunders said that the process, while lengthy, plays an important role. "Because this is such a
capital-intensive industry, both sides need the security and certainty of knowing what each side is
going to do, not just in the next 12 months but in the full period of the development and
operation," he said.
Source: Metal Bulletin
WESTERN RARING TO GO IN GURVANBULAG
In a Business Plan Update released earlier this month, Western Prospector has revealed its
eagerness to begin work on its 100% owned Gurvanbulag uranium project in north eastern Mongolia
(certain other deposits are joint-ventured with 70% WNP ownership), where it holds exploration
licenses covering 1,900 sq. km, containing more than ten deposits with ―historic resources‖.
Western owns all land rights required to develop its property, and has already invested more than
USD80 million on major start-up costs, including development of 17 km of underground lateral
tunnel for partial dewatering. More than 10 MW of electrical power is in place, a cell phone
network has been activated, highway engineering and environmental assessment have been
completed, and a 200-person camp built, readily expandable for production.
Gurvanbulag is a world class asset with near-term proven production capability. A Positive
Definitive Feasibility Study has confirmed that 1.8 million lbs of uranium can be produced per year.
At the moment 7 parts of the mining application are completed. The 8th part, the resource reserve
in Mongolian format, is with the MPRAM for its approval. Once that is received, Western‘s mining
license application will be complete, and ready to be submitted for final approval. Production can
start within 2 to 2 1/2 years from signing of agreement, so it could be as early as January 2012.
The market outlook for uranium remains strong as China, Japan, India, Russia, and the USA all plan
to increase their nuclear power share, or install new applications for existing reactors, or build new
reactors, while delays in some major projects continue, and new projects are cancelled due to
funding issues. Price forecasts promise to remain robust through 2014.
Mongolian politics looks increasingly cooperative for major mining projects. Western believes that
some of the best mining deals will be struck this year in Mongolia as the only way to prop up the
Mongolian financial system is to get external capital into Mongolia as soon as possible.
Western remains committed to the completion of its Strategic Partnering program in Q1 2009. Its
cash position is fine. It had CAD9.2M of cash as of December 31, 2008. In Q4 2008, the company
instituted cost cutting measures to reduce the monthly operating burn to CAD700K, allowing it to
operate into 2010 without any additional external financing.
Source: www.westernprospectors.com
RIO UNLIKELY TO BID FOR TAVAN TOLGOI
A person familiar with the situation has said that given its involvement in Oyu Tolgoi and the mine's
historical ownership issues, Rio Tinto is unlikely to make a bid for Tavan Tolgoi coal deposits. Rio
Tinto declined to comment.
Mr. Robert Lepsoe, a Hong Kong-based adviser to the Mongolian Government, has said no stake size
or timeline has been given to Deutsche Bank and J.P. Morgan Chase in their negotiations with
prospective investors. The Government is exploring a range of privatization options with a broad
range of investors spanning the mining majors, state enterprises in China and other countries, as
well as financial investors. "The initial plan is for the mine to sell thermal and coking coal, but the
Government intends to eventually build power plants so that power can be exported to China," Mr.

4. Lepsoe said.
A source following the developments feels Chinese bidders, who have been active in buying assets
abroad, will likely be the front-runners for the sale, because they have domestic financing lines
open to them. Shenhua has already started construction on a rail line to the Mongolian border.
Mongolia has been working to clarify its mining laws, and Mr. Lepsoe said the Government has
agreed on a framework where it would own 34% of Oyu Tolgoi and 51% of Tavan Tolgoi.
Source: Dow Jones Newswire
GUESSES GALORE ON WHO WILL GET TAVAN TOLGOI
Vale, Xstrata, and Rio Tinto are among the companies that have submitted proposals to develop
Mongolia's prized USD2 billion Tavan Tolgoi coal mine, according to two sources with direct
knowledge of the matter. Mongolia's Government has hired Deutsche Bank and JP Morgan to sell up
to a 49 percent stake in what is often called the world's biggest untapped coking coal deposit. BHP
Billiton and coal giant China Shenhua Energy have also bid, according to the sources. Tavan Tolgoi,
which has a coal reserve of 6.5 billion tons, and holds thermal coal, is also drawing bids from
consortiums of Japanese, Russian and Korean firms. Those firms include energy, commodity and
trading companies, one of the sources said.
Shenhua, which analysts long considered the leading bidder because of China's proximity to
Mongolia, may not have frontrunner status. "It's not a slam dunk that Shenhua is the party that is
going to get that development," said a Hong Kong-based investment banker, adding the Mongolian
Government is leaning toward an international and diversified player. The bids have been put
forward in different forms -- some detailed development proposals, some 1-page expressions of
interest, the investment banker said.
"Basically good quality hard coking coal is quite a scarce commodity in the long term and such large
assets are hard to come by, so companies with a long-term view on coal could find the assets
attractive," said Mr. Malcolm Southwood, an analyst at Goldman Sachs in Melbourne. A supply
crunch last year helped more than double the price of hard coking coal, which is used in the metals
sector, to USD300 a ton as steelmakers across the globe gobbled up huge quantities amid an
economic boom. While prices have since collapsed as demand from steel mills slumps on the back
of a global economic downturn, analysts said the long-term outlook for hard coking coal prices
remains robust.
Media reports have named a range of potential bidders such as Japan's Itochu Corporation and
Peabody. But the process has been plagued by setbacks as Mongolia clarifies its mining laws, and no
timetable for development has been confirmed. "It's a fabulous asset and that will present a great
opportunity to whoever is the successful bidder, and certainly we'd love to see that put into motion
as soon as possible, but I'm not holding my breath," said Mr. Andrew Driscoll, Head of Resources
Research at CLSA.
Source: Reuters.com
MONGOLIAN MINING CONTRACT BOOSTS LEIGHTON CONFIDENCE
Leighton Holdings has expressed confidence the global financial crisis will not spoil its growth
momentum, after announcing its order book had grown USD9 billion to a record USD39 billion since
the start of the financial year. Despite the engineering and mining contractor last week reporting a
56 per cent fall in first-half profits to USD111 million after booking USD239 million of pre-tax asset
writedowns, chief executive Wal King said he was confident it would continue to win new work.
"Our underlying strength and momentum continues," said Mr. King, highlighting the awarding of two
mining contracts in Mongolia and Indonesia worth USD2.5 billion.
The company maintained its forecast of a full-year net profit of USD480 million and revenues of
USD19 billion. "Of course there are issues. You can't expect to travel through such a turbulent
environment and not be hit by issues," Mr. King said. "But our boat is in particularly good shape and
our boat is capable of withstanding any of the shocks that may happen in the future."
Source: The Sydney Morning Herald

5. CITI’S TOP ASIA MINING BANKER JOINS SOUTHGOBI
Citigroup‘s Asia-Pacific head of metals and mining investment banking is leaving the bank to take
an executive position at Canadian miner SouthGobi Energy Resources. Mr. Alexander Molyneux is to
start work at the Vancouver-based coal producer on April 27. SouthGobi published a statement on
Mr. Molyneux‘s hiring last week. He was granted options to acquire 625,000 common shares of
SouthGobi at USD7.94 per share, for a 7-year period, according to the company.
Mr. Molyneux, based in Hong Kong, has been an adviser and banker to mining, metals and industrial
corporations for 12 years. ―It‘s a try at a different career path, in terms of taking a leadership
position in a very complex business and trying to test myself a lot more on the managerial side of
business,‖ he said.
SouthGobi is focused on exploring and developing metallurgical and thermal coal deposits in
Mongolia and Indonesia. Its flagship coal mine, Ovoot Tolgoi in Mongolia, sells coal to customers in
China. Local media have reported that SouthGobi plans to pursue an initial public offering in Hong
Kong. Mr. Molyneux would not comment on thís, but said, ―The first thing is to establish SouthGobi
Energy Resources in Asia. It‘s got to have more of a presence in the investment community here.‖
Source: Reuters.com
CHINALCO SET TO GRAB RIO ASSETS, UP STAKE
Chinalco is set to up its stake in Rio Tinto to 18% after the two groups announced a USD19.5 billion
partnership. Under the transaction terms Chinalco will invest USD12.3 billion across a range of Rio‘s
assets while a two-tranche convertible bond will be issued to a total of USD7.2 billion. If converted,
the bonds would lift Chinalco‘s stake in Rio to 19% of the London-listed entity and 14.9% in Rio
Tinto Limited. This is equivalent to an 18% stake in the Rio Tinto Group. If this goes through -- the
Australian Government Foreign Investment Review Board has to authorize it -- Chinalco will be in a
very dominant position. Under current Australian law a company has to lodge a formal takeover
offer if it acquires more than a 19.9% equity position in an Australian company. Chinalco will be
able to nominate two members to the Rio board.
Chinalco president Xiao Yaqing has told the Financial Times his firm has no plans to increase its
minority stake in Rio. "Depending on the market, we will look at converting our convertible bonds
into equity. But we have no plans for increasing our stake beyond that," Mr. Xiao said. "We view this
from the angle of creating financial returns." He also rejected the suggestion that Chinalco's
investment was a political as well as a business move, since it could boost China's overall global
influence. "The market and the price-setting mechanism for iron ore is extremely transparent and
there is no way that Chinese companies would gain an advantage in that respect through this deal,"
he said. "Other companies have joint ventures with Rio Tinto as well, so they have just as much
influence."
Source: MiningNewsPremium.net Newsletter, Reuters.com
NO SPECIAL CONSIDERATION FOR RIO-CHINALCO DEAL, SAYS AUSTRALIAN TREASURER
Wayne Swan has said he will assess Chinalco's planned USD19.5 billion investment in Anglo-
Australian miner Rio Tinto in the normal way and based on Australia's foreign investment guidelines.
Mr. Swan also said that he had told Mr. Lou Jiwei, chief executive of China Investment Corp., the
country's sovereign-wealth fund, that Australia welcomed foreign investment ―as long as it fits our
guidelines and meets our national interest test. I said that to him as I say it to many from other
countries."
On the Rio-Chinalco deal, Mr. Swan said he would consider it "seriously, very closely", and that the
transaction needs to be "in the national interest" in order to be approved.
Source: The Sydney Morning Herald
RIO MAY CONSIDER CHANGES TO DEAL, JPMORGAN CAZENOVE SAYS
Rio Tinto may consider changes to its USD19.5 billion agreement to sell convertible bonds and
stakes in projects to the Aluminum Corp. of China, JPMorgan Cazenove Ltd. has said. Mr. Tom
Albanese, Rio‘s chief executive officer, told an analyst briefing on Tuesday that the company will
―continue to listen to shareholders‖, Mr. David Butler, an analyst at JPMorgan Cazenove in London,
wrote the day after in a research note. Rio will ―act appropriately as conditions change‖, he cited

6. the CEO as saying.
Insurer Legal & General Group Plc, London-based Rio‘s second-largest institutional shareholder, has
called for an alternative to the transaction that protects current investors‘ rights. Chinalco, as the
Chinese state-owned company is known, is already the mining company‘s largest investor and would
increase its stake to 18 percent if the debt were converted.
―They did allude to some limited scope for changes,‖ Mr. Butler wrote. ―However, the extent to
which that might stretch is unclear.‖ Mr. Nick Cobban, a London-based spokesman for Rio, declined
to comment. Chinalco agreed on February 12 to purchase USD7.2 billion of convertible bonds and
pay USD12.3 billion for stakes in Rio‘s Chilean, U.S. and Australian projects.
Mr. Albanese confirmed that Rio had held talks with ―a number of parties‖ on asset sales, according
to Mr. Butler. That included discussions with larger competitor and former takeover suitor BHP
Billiton Ltd. on buying the remaining stake in the Escondida copper mine in Chile. ―The valuations
offered by Chinalco were significantly more attractive,‖ Mr. Butler wrote.
Melbourne-based BHP, which abandoned a hostile bid for Rio in November, operates Escondida, the
world‘s largest copper mine, and owns a 57 percent holding. Rio has a 30 percent stake, half of
which is being sold to Chinalco.
The Chinalco accord, which requires approval from 51 percent of shareholders and Australia‘s
government, will be voted on at an extraordinary general meeting in the second quarter, Rio
Chairman Paul Skinner has said.
Source: Bloomberg.com
BHP SOUNDS RIO TINTO INVESTORS
With shareholders wary of the Rio Tinto-Chinalco deal, BHP Billiton advisors have surveyed Rio Tinto
investors about their support for an alternative to a proposed cash injection by Chinalco, the
Financial Times has said. Among Rio Tinto's major assets which BHP Billiton might be interested in
acquiring is Oyu Tolgoi. Rio has a strategic stake in project owner Ivanhoe Mines with a view to
taking a majority interest in the company. The mine is expected to produce an average of 440,000
tons of copper and 320,000 oz of gold a year over a 35-year life. BHP last December dropped a
USD66 billion bid for Rio Tinto.
Source: Reuters.com
BIGGEST TUMBLE FOR COPPER SINCE OCTOBER 30
Commodities this week plunged to their lowest level since June 2002, led by energy and industrial
metals, on mounting signs that the global recession is deepening and demand for raw materials will
decline further. The Reuters/Jefferies CRB Index of 19 prices dropped for the sixth straight session,
the longest slump since December. The gauge touched 203.25, the lowest since June 21, 2002, and
has slipped 11 percent this year. Crude oil fell as much as 8.2 percent today, and copper declined
the most in three months.
Precious metals were the lone commodity gainers. Gold topped USD975 an ounce, reaching the
highest price since July, on speculation that low interest rates and government spending will
devalue currencies, boosting the appeal of bullion as an alternative. Silver and platinum also rose.
Copper tumbled 7.2 percent in New York on Tuesday, the most since October 30.
Source: Bloomberg International Business Newswire
“IMF DOES NOT BELIEVE US ON ANOD BANK,” BAYAR TELLS PARLIAMENT
Strong reassurances from the Central Bank President were needed to dispel the concern of a
number of MPs about the true state of commercial banks in the country. Mr. L.Purevdorj appeared
in Parliament to answer questions during its discussion of the action plan. The lawmakers noted
that the global crisis has had a very heavy impact on banks in many countries. In Mongolia, the Anod
Bank came very near failing despite several claims from overseeing authorities that everything was
going well. The Prime Minister said, ―The International Monetary Fund has urged a thorough study
by domestic and foreign experts of the events leading to the situation in Anod Bank. They don't
believe us."

7. Some MPs also reported that citizens' confidence in the soundness of commercial banks has not
been restored even after the State guaranteeing the safety of their savings in 16 banks. The Central
Bank President rejected concerns that the banking system is in trouble, saying, ―It is working fine,
though we could so with some help and assistance.‖ Of the MNT1.5 trillion required for the
implementation of the action plan, about MNT400 billion will go to the banking system. Control and
supervisory practices have been streamlined and strengthened. Some banks needed a bit of
propping up, and some would do better if they merged with others. He thought it was unlikely that
smaller banks would get any Government loans, given the stringent conditions.
Source: Ardiin Erkh
MONGOLIAN-OWNED MINE STARTS PROCESSING IRON ORE
The 100 percent Mongolian invested Beren Group is the first mining company in the country to
process iron ore, according to the MNB TV channel. It is mining the ore in Tuvshruuleh in Arhangai
province, and then using inexpensive technology to produce 68 percent grade iron concentrate. This
will be taken to the Erdenet plant to be turned into pure iron.
Source: SCREEN
GOVERNMENT ESTABLISHES COMPANY FOR URANIUM
The Government has decided to establish a company named AtoMon to work in exploration and
production of uranium and other radioactive minerals. The company will be responsible for
exploration of such minerals, calculation of the amount of the reserves, estimating the economics
of their use, mining uranium ore, processing and enriching the uranium mined as well as exporting
it.
Source: www.news.mn
AWARD FOR MOBICOM
The magazine, My Computer, and the Information Communication Technology Authority (ICTA) of
the Government of Mongolia have jointly chosen MobiCom Corporation for an award for using the
‗Best New Technology‘ in the country. MobiCom uses Altobridge‘s Remote Community Solution in its
remote GSM service. The award recognizes the positive impact of the service on enterprises and
communities in remote parts of Mongolia. Mobicom has been deploying Altobridge‘s Split-BSC
Architecture across rural Mongolia since it awarded the company a three-year, fully-managed rural
GSM contract in April last year. The deployments are providing cost-effective personal mobile
communications for small user groups in villages, business enterprises and government border posts.
Mr. Munkhbold Udval, Director of Research and Development at MobiCom, said, ―We are delighted.
The Altobridge technology has helped us deliver profitable, much-needed, quality communications
to isolated communities and enterprise installations.‖ Headquartered in Ulaanbaatar, MobiCom is
the first cellular telephone service operator in Mongolia, operating since March 1996 as a
Mongolian-Japanese joint venture. Currently, MobiCom provides a wide range of services including
GSM cellular communications, international communications, Internet and satellite
communications, wireless local loop and other services to both corporate and consumer markets.
Source: WebWire®, www.mobicom.mn
MOVE TO OPEN PROTECTED AREAS TO MINING
Prime Minister S.Bayar has dismissed the contention of MP Sh.Saikhansambuu that there is no need
to look abroad for the MNT1.5 trillion needed to implement the action plan, as the money can be
raised by selling 40 tons of Mongolian gold. He has reminded his fellow MP from the MPRP that gold
mining is dependent on the season, and 40 tons of gold ―cannot come to the Government in a
matter of days‖.
Bayar admitted the theoretical possibility of mining substantial amounts of gold in Bayankhongor,
Gobi-Altai and Umnugobi provinces, but no mining is at present allowed in such specially protected
areas. First, Parliament has to give its permission and then entire mining operations have to be set
in motion. All this will take time, but the Government is working on a draft law to begin mining in

8. protected areas.
Source: en.News.mn
GOVERNMENT WARNS AGAINST KEEPING MINES IDLE
Prime Minister S.Bayar has warned mining companies that their licenses could be revoked if they do
not pursue exploration or excavation activities. The Government needs money urgently and will not
have idle mines.
Source: www.news.mn
NEW VOCATIONAL TRAINING LAW PASSED
The new law on vocational education and training approved by Parliament on February 13 was
deemed to come into effect immediately so that the Millennium Challenge Account (MCA) money
allotted to it could be utilized without delay. The Head of the Standing Committee of Social Policy,
Ms. D.Oyunkhorol, told media that an independent body, comprising employers and experts in and
outside government, will determine the areas where training had to be organized. Companies that
hire such trained people would most likely get certain tax incentives.
USD25.6 million of MCA money will now come directly to the education sector. It will be given to
nine organizations in the field of professional education to be used in acquiring innovative
technology and improving their training system. USD5 million will be spent on upgrading teachers‘
training.
Source: Ardiin Erkh
ECONOMY
REVISED BUDGET CUTS SALARIES, ALLOWANCES, JOBS, PROJECTS
The Government has submitted the revised budget estimates for 2009 to Parliament. The revision
became necessary to reduce the budget deficit as far as practicable. New sources of revenue have
been tapped, and all inessential expenses chopped, without, however, affecting prospects for
economic growth and creation of employment, or withdrawing protection from the poor.
The main features of the revised budget are:
- Every child under 18 will continue to receive MNT3,000 every month. However, the
MNT25,000 additionally paid from the Mongolia Development Fund every season will now
become MNT10,000.
- The MNT500,000 paid to every newly married couple will be reduced to MNT300,000, thus
saving MNT6.6 billion annually.
- A newborn child will continue to get MNT100,000 and the amount paid to a woman with
five or more children will also remain the same.
- Strict watch will be kept so that there is no duplication of payment of any allowance.
- Government employees will be paid 20 percent less salary for a year beginning March 1. In
the case of high officials, the cut will be 30 percent. This will save MNT98.6 billion.
- MNT25.3 billion will be saved by giving less money to Government organizations for their
expenses.
- No new work places will be created and there will be no replacement for an employee
retiring to be eligible for pension.
Several measures have been proposed to reduce investment expenses.
- No new project or activity planned for 2009 will be started.
- Any construction, project or activity planned last year but not begun for whatever reason
will be kept in abeyance. This will save MNT130 billion.
The Government, however, made it clear that projects that have important socio-economic
significance and also those that are part of credit and aid programs and/or are commitments in
accordance with international agreements will not be affected by this restriction.
The Government has also decided to double the present coal export fee from March 1.

9. Source: Ardiin Erkh, www.business-mongolia, Montsame
ACTION PLAN PASSES FIRST READING
The special session of Parliament completed its first reading of the action plan last week, with 91.7
percent of the members present showing their approval. The draft will now be discussed at relevant
standing committees before returning to Parliament for the next reading.
Many MPs had questions to ask and suggestions to offer. Mr. D.Zagdjav (MPRP) wanted tax relief for
companies with their revenue exceeding MNT100 million so that they could employ more people.
Mr. D.Odkhuu (DP) regretted the absence of any indication of the sources for the necessary
finances. Mr. R.Rash (MPRP) wanted less generality and a more specific listing of the problems and
also of the measures expected to solve them. Mr. Z.Enkhbold and Mr. Ts.Elbegdorj, both from the
DP, found the plan more akin to a manifesto than a program ready for implementation.
Source: Ardiin Erkh
CRISIS A NATIONAL CHALLENGE, SAYS BAYAR
Expressing his happiness at the support the action plan received in Parliament, Prime Minister
S.Bayar told media that the crisis is a national concern and not something that affects only the
Government. Many things need to be changed, and not just Government policy. Individuals and
businesses also have to review their work. ―It is not like everything will be solved if we approve the
plan. The crisis is changing its nature constantly. We also have to change accordingly,‖ he says.
―There are things that depend on the Government, but there are also things that don‘t. Every
family should make its own calculation.‖
A crisis, he said, is like an illness. First comes the diagnosis, then the treatment. There are few
remedies that will work in every country in a crisis, or for everybody in a country. Mr. Bayar said
there has to be clarity about plans, aims, and priorities. For this, many questions have to be
answered. Where is the money going to come from? What possibility is there to reduce inefficient
spending? ―We hope to finish the present session before Tsagaan Sar, but if the budget is to be
revised, it may continue longer. We are trying to solve the financial crisis by using internal sources,
but they are not enough. The Government does not have the right to seek money from foreign
countries on its own. It can borrow only under authorization by Parliament. Similarly, the
Government cannot alter the budget. Only Parliament can do that,‖ he said, explaining why haste
was necessary but also why results cannot be expected in a matter of days or weeks.
Mr. Bayar said money can be earned only from exports. For this there has to be more extensive
mining. But the output from the mines has to be moved, and for this the railway and the roads have
to be repaired. All such work will employ many people.
Source: en.News.mn
FORMER PM WARNS OF DEBT TRAP, STOPGAP MEASURES
Participating in the debate in Parliament on the action plan, a former Prime Minister and now a DP
member, Mr. R.Amarjargal criticized the idea of finding money from wherever it is available. ―It is
wrong to look for money from any possible source and run up huge external debts,‖ he said and
warned that any stopgap measures to halt the crisis temporarily would only be counterproductive.
―The Central Bank should not even try to keep the MNT value stable during February and March.
Instead, it should give money to commercial banks to strengthen their position. Terrible things will
happen if we spend time and money trying to battle the economic crisis. We should just let it run
its course and after the economy has totally collapsed, we should plan for its revival. It is also
unwise to indiscriminately curb Government expenses in the name of balancing the budget. We
cannot afford to impair economic activity. If economic growth declines by one percent, the state
loses USD40 billion,‖ he said.
Source: Ardiin Erkh
TAX REVENUE MUCH LESS THAN EXPECTED
Tax revenue in January 2009 was half of what it was in January 2008. The Government had hoped

10. for MNT98.2 billion, but the final figures have totaled MNT83.7 billion. This stood at MNT175.4
billion in January last year.
Source: www.news.mn
LESS CASH IN CIRCULATION
The National Statistical Office has revealed that total cash in circulation in January 2009 was
MNT346.6 billion, MNT60.6 billion less than in the previous month, but MNT8.2 billion more than in
January 2008. Individual and corporate deposits at commercial banks came down by MNT11.5 billion
from December to January. Altogether commercial banks now hold MNT922.6 billion in deposits,
MNT209.3 billion or 18.5% less than in January 2008. Foreign exchange circulation, however, was up
the equivalent of MNT113.1 billion in this period.
Source: business-mongolia.com
APARTMENT PRICES START RISING
Apartment prices have gone up by 18.3 percent in January compared to the fourth quarter of 2008.
However, present prices are 5.7 percent less than what they were in the first quarter of 2008, 16.2
percent less than in the second quarter and 16.4 percent less than in the third quarter. The data
collected from six districts of Ulaanbaatar show that apartment prices were overall 5.5-50.7
percent more in 2008 than in 2007, but in the fourth quarter they fell by 10.9-18.8 percent against
third quarter prices in 2008.
Source:
FOREIGN WORKERS INDISPENSABLE AT THE MOMENT, SAYS MP
MP D.Zorigt (DP) feels that Mongolia should have developed and approved an action plan much
earlier. ―There is not a single day to lose,‖ he told media, while dismissing criticism from some
economists that such a plan will achieve little. Time is passing and the agriculture and business
season is about to start.
Referring to concerns that even if jobs are created, foreigners will take them, he said this was a
risk that had to be taken. Foreign labor is indispensable for as long as Mongolia does not have
enough skilled workers of its own. This is a gradual process, and foreign workers cannot be
dismissed all at once. That will create a vacuum.
He said the first investments should be in areas that increase exports. The next priority is to
produce things that will replace imported goods, such as food items and construction material.
Construction and road building should be centralized in Ulaanbaatar because two thirds of all
vehicles in Mongolia are here. ―What need is there to repair a road where only 20-30 cars pass on a
day?‖ he asked.
He defended the proposal to reduce minimum wages by saying this was the only way to stop job
cuts. It is a choice between earning less and earning nothing.
Source: www.news.mn
MEETING MULLS TOURISM STRATEGY IN TIMES OF CRISIS
Representatives of some 20 tourism companies and tour camp operators met with officials of the
Ministry of Environment and Tourism last week to plan a strategy to make sure the economic crisis
did not hurt the industry too much in the ensuing season. All preliminary indications are that there
will be fewer tourists this year and some of the participants thought the efforts in the present
circumstances should be aimed at attracting tourists who spend more rather than those who are on
a budget. There were suggestions that services should be priced in the national currency instead of
foreign ones. "This will accord with the policy 'One tourist-one investor',‖ they said. It was decided
to hold further meetings with administrative officials and NGOs so that arrangements can be in
place well in time before the arrival of summer, and tourists.
Source: Montsame

11. NO FALL IN DIESEL PRICE
Fuel prices have fallen further. A80 is now MNT890 a liter, cheaper by MNT105, and A92 is MNT990
instead of MNT1,100. The price of diesel, the main fuel for public transportation and mining work,
has not, however, changed from MNT 1,250 a liter. The price decrease follows a reduction in
Russian taxes on oil product exports.
Source: Ardiin Erkh
UNEMPLOYMENT UP, BUT 1,800 GET A JOB IN JANUARY
The registered number of jobless people reached 31,400 in January, 1,700 or 5.6 percent more than
in January 2008. Women account for 57.9 percent of the total number. Some 1,800 people also got
a job in January. About 17 percent of them were hired in government factories and budgeted
organizations. Others joined private enterprises.
The Labor Supporting Fund has so far given MNT1.3 billion in loans to 272 people in the unorganized
sector, 438 unemployed people, 184 herders and 30 organizations. Many of the individuals are using
the loan in a productive way.
Source: www.nso.mn
SELENGE TRIES TO CHANGE ANIMAL HUSBANDRY PRACTICES
More than 400 herders in Selenge province recently met with teachers and scholars from national
universities and institutes to explore the feasibilities of ―intensive‖ animal husbandry in
combination with farming. The meeting was jointly sponsored by the Ministry of Food and
Agriculture and the Red Cross Society at the initiative of the Governor of the province who wants to
develop Selenge as an agrarian region with intensive animal husbandry. Agriculture is already the
main economic activity in the province, which has 1,442,003 head of livestock at last count. Experts
estimate the pasture lands have been overgrazed by 42.7 percent, and the whole present practice
of animal husbandry should be changed. The number of livestock should be reduced, but production
should not fall.
The tentative decision at the meeting was that horses will account for 5 percent of the total
number of livestock, cattle 30 percent, sheep 51 percent, and goats 14 percent. The province is to
be divided into zones that will each specialize in certain kinds of farming. New technology suitable
for each zone will be introduced and winter green houses will be extensively developed.
Source: Montsame
VISITING AND LIVING IN ALTANBULAG TO BE MADE EASY
The Government has approved regulations governing travel to and residence in the Altanbulag free
trading zone for both Mongolian citizens and foreigners. Visas valid only in the free zone will be
easier to get and procedures to grant residence permits will be relaxed. The Government feels that
easier conditions of access to and living in free trading zones are essential to attract foreign
investment. Foreigners based in Altanbulag will however have to take a fresh visa to travel to other
regions of Mongolia.
Source: Ardiin Erkh
MONGOLIANS AMONG INVESTORS IN AUSTRALIAN “GOLD RUSH”
With gold jumping to a sixth-month high last week on soaring demand as investor confidence in
financial assets erodes and central banks spend trillions of dollars to prop up the banking system,
investors from everywhere are increasing their holdings of gold at the Perth Mint in Western
Australia at an unprecedented pace as they seek to preserve the value of assets. The number of
depositors at the Mint has jumped 50 percent in the past year and clients come from 84 countries as
diverse as Mongolia and Kyrgyzstan. Investors can buy through certificate and depository programs
where their gold is stored at the Mint or they can buy coins to hold themselves.
―The world at large does seem to understand innately that governments are bankrupting themselves
and destroying paper currency,‖ said investor Jim Rogers, chairman of Singapore-based Rogers
Holdings. Mr. Peter Munk, chairman of Barrick Gold Corp., the world‘s largest producer, has said an

12. ―unpleasant and frightening‖ trend of investors buying gold as protection against uncertainty may
push the metal over USD1,000.
Source: bloomberg.com
POLITICS
LABOR UNION PROTESTS SALARY CUT, BAYAR EXPLAINS DECISION
Officials of the Mongolian Labor Union told Parliament Speaker D.Demberel and Prime Minister
S.Bayar on Tuesday that the Government‘s decision to reduce the salary of all employees in
budgeted organizations would badly hurt the 130,000 persons working in them. Mr. S.Ganbaatar,
head of the Union that represents interests of labor in all 21 provinces and nine districts of
Ulaanbaatar, said the cut would lead to reduced consumer spending and would add to the crisis in
the economy. He also feared private companies would follow the Government‘s lead and impose
salary cuts for their staff. He regretted that the Government had taken the decision unilaterally, in
contravention of the existing tripartite agreement. The Union Vice President Tseyen-Oidov stated
the widespread price rise has meant the minimum salary set at MNT108,000 has lost 30 percent of
its value and the proposed cut would only make things worse.
Explaining the imperatives behind the unpleasant decision, the Prime Minister said the crisis was
assailing the economy from all sides and was affecting all sectors. He said, ―We reviewed the
situation carefully and found we had few options left. At least MNT300 billion had to be saved if we
wanted the GDP to grow at six percent. For this, every sector had to sacrifice.‖ He asked the labor
leaders to remember that the salary of over 1,000 high officials was to be cut even more, by 30
percent, so the Government was not favoring any section. Expressing his apprehension that the
economy would be in a worse condition in the autumn, Mr. Bayar said, ―We did not want to reduce
the salaries, but the choice was between cutting salaries and cutting jobs.‖
Source: Ardiin Erkh
PRIME MINISTER TO HAVE 7 ADVISORS
A decision has been taken on the organization of the Ministry of Finance and of the Cabinet
Secretariat. The Ministry of Finance will have 9 departments and 9 divisions with a total maximum
staff strength of 136. The Cabinet Secretariat will have 6 departments and 5 working services, and
can employ up to 106 people. The Prime Minister has been permitted to have 7 advisors — one
senior advisor with no specific charge, and one each on foreign, economic, foreign investment,
social, construction and urban development policy.
Source: Montsame
AMBASSADOR TELLS MEDIA ABOUT U.S.-MONGOLIA RELATIONS
U.S. Ambassador Mark C. Minton hosted a press conference on February 13 to elucidate U.S.-
Mongolia relations in the Obama Administration. He said the foreign policy priorities of the new
American government included ending the war in Iraq responsibly, finishing the fight against the
Taliban and al Qaeda in Afghanistan, safeguarding nuclear weapons from the reach of terrorists,
and renewing American diplomacy to support strong alliances and to seek a lasting peace in the
Israeli-Palestinian conflict. Other priorities will include addressing climate change and fighting
poverty. Ambassador Minton explained how these issues will fit into U.S.-Mongolia relations, and
also provided updates on various U.S. programs here, including the Peace Corps, the Millennium
Challenge Account, educational exchanges, and consular services.
Source: The U.S. Embassy
14,000 LEAVE MPRP TO KEEP JOBS
The new state employment law that bars political party members from holding almost all kinds of
jobs in the Government or in Government organizations seems to have hurt the MPRP most. The law
came into effect this year and about 14,000 members of the MPRP have shed their party status,
opting instead to keep their job. Only 17 persons have gone the other way, resigning their job to

13. stay with the party. Their replacements will soon be chosen. Most of these positions are filled by
some process of election.
Source: Onoodor
GOVERNMENT HOUSE IS SINKING
If anyone entering Government House has that sinking feeling, it does not have to be because of the
economic crisis. A downward shift is posing insidious damage to the apparently invulnerable seat of
power. Its latest addition is the worst sufferer, with the gypsum wall of the Chinggis complex
having already started to sink. Obviously not enough importance was attached to the water under
the foundation when the plan for the showpiece annex was approved. Its present state could be one
reason why the full complex is not yet ready, even though it was supposed to open in the summer
of 2006.
The development is not unexpected as water from a stream once accumulated where the western
wing of the building is. Construction of Government House started in 1947 and the Mongolian
government moved to its new seat in 1951. Long before that, the Selbe River had two streams, one
of them flowing near where the State Department Store now stands. It was filled up to allow
construction in the area. Unseen by human eyes, the water deep down seeped its way to what
would be the site of Government House. The humidity persists and causes electricity breakdowns
almost every year.
The western wing is the most affected part, with construction experts discovering some years ago
that the conference hall had started to sink. Major repairs have been made, but the root cause
cannot be eliminated. Other areas are not safe also. When Mr. N.Bagabandi was President, a huge
overhead lamp fell on his desk after cracks had weakened the ceiling. The President was absent at
the time.
Source: en.News.mn
HOLIDAY ON FRIDAY, BUT MARCH 1 WILL BE A WORK DAY
The first two days of the Lunar New Year or Tsagaan Sar will be on Wednesday and Thursday. Friday
has also been declared a public holiday, but Sunday, March 1, will be a regular work day.
Source: Ardiin Erkh
BUY LOCAL PRODUCTS FOR TSAGAAN SAR, APPEALS GOVERNMENT
The Government has issued a statement appealing to people to celebrate Tsagaan Sar, the lunar
new year festival, in a peaceful manner and befitting in these days of the global economic crisis. It
calls on people to follow the traditional way, by honoring elders and making children happy, using
no alcohol, but dairy products more, and by giving presents produced locally.
All Government and regional organizations have been asked to celebrate Tsagaan Sar without asking
others to contribute. No Government money will be available towards expenses.
Source: en.News.mn
MONGOLIANS TO HAVE 90-DAY VISAS FOR SOUTH KOREA
Foreign Minister S.Batbold has submitted to the Parliament Speaker his draft amendments to the
laws governing travel conditions of Mongolian citizens to South Korea. The amendments became
necessary following the decision taken during Prime Minister S.Bayar‘s visit to Korea in October
2008 that Mongolian citizens will have a 90-day visa for Korea and those with such a visa will be
exempted from registration at any immigration point. This longer visa will help those who go to
Korea for medical treatment or extensive business purposes. Mr. Batbold is hopeful that this
development will one day lead to Mongolian citizens being able to travel to Korea without visa.
Source: Onoodor
ONLY 6% OF MONGOLIANS ARE MORE THAN 60 YEARS OLD
Demographic figures released recently confirm that Mongolia is a country of young people. About 29
percent of the total population of 2.7 million in January 2009 were children under 15, while people

14. above 60 accounted for only 6 percent. Ulaanbaatar is home to some 40 percent of the population,
with an overwhelming 65 percent of them aged under 35. Average life expectancy is now 66.8
years, 1.5 years more than in 2004. Approximately 16,000 births are registered a year.
Source: www.nso.mn
ULAANBAATAR TO HAVE 60 KM OF SUBWAYS
The master plan for developing Ulaanbaatar includes building a subway network and the
construction blueprint is ready. Some 60 kilometers of underground roads will be built in five
directions. They will connect 7-Buudal and Zaisan tolgoi, Uliastai and 5-Shar, Chinggis Khaan Airport
and White Gate, Shar Khad and Sansar district, and the other will be under the Outer Ring.
Source: en.News.mn
US GRAIN FOR MONGOLIA COMES THROUGH VLADIVOSTOK
Earlier this month railroad men, longshoremen and forwarding agents at the port station
Vladivostok on the Russian Far East Railways transferred a huge quantity of grain into 390 wagon-
cars in just 6 days. The consignment was meant for Mongolia and had arrived from the USA at
Vladivostok Trade Port. For 11 years now, grain has annually been sent to Mongolia by the USA
through this route.
Source: VOSTOK-MEDIA
ASIA FOUNDATION GRANT TO BIOLOGY FACULTY
The Asia Foundation has allocated USD100,000 to its first education support fund in Mongolia. All
the money will go towards improving facilities at the Faculty of Biology of the National University of
Mongolia. The first USD10,000 will be spent on financing research projects, purchase of books and
equipment, and on scholarships for those studying for a master‘s degree.
Source: Montsame
WORLD BANK OFFERS GRANTS TO DEVELOP LEADERSHIP QUALITIES
The World Bank Mongolia Country Office is on a nationwide search for project proposals aimed at
developing leadership qualities amongst today's youth who will be tomorrow's leaders. Its future
generation is a valuable resource to any country and the Bank, therefore, is offering small grants to
organizations to help nurture the next crop of leaders.
"Through positions of leadership at home, in schools, in any community and so on, youth can
stimulate the present and the future," World Bank Country Manager and Resident Representative
Arshad Sayed said. "Youth leaders engage with the public and influence the way they live. In these
testing times our major hope is that we pass on knowledge to those who will one day lead the
country forward. If the issues of today are allowed to fester, our next generations will carry the
burden. We must, therefore, support, and engage with tomorrow's leaders."
The deadline for receiving applications for small grants is March 24.
Source: The World Bank Mongolia
ANNOUNCEMENT
WATCH EAGLES HUNT
The Kazakh Development Foundation will be holding an Eagle Hunting Festival on February 26 at the
Dundad Zuun tourist camp, near Terelj. The opening ceremony at 11 a.m. will be followed by a
special horse riding competition, a display of homemade hunting outfits, call to eagles at a
distance, and finally various examples of how eagles help in the hunt. The session will end around
2, and from then until 3.30 guests can buy traditional Kazakh food for lunch.
Tickets at a special price of MNT10,000 per person can be collected from the BCM office. Entry is
free for children under 16.

15. More information on the festival can be found at www.mgleaglefestival.com or at the office of the
Kazakh Development Foundation on the 6th floor of Altai Center, on the right of the State
Department Store (Tel: 11-31-55-56; Mobile: 99110303, 88088388, 8098188).
SPONSORS
NEW MONGOLIAN LAWS
The following new amendment to a current Mongolian law was published in the latest weekly
Government Bulletin. Unless decided otherwise by Parliament, the law will take effect ten (10)
days after publication.
Bulletin Date Law
02.06.2009 Amendment on ―Law of Official Document Permission and Warranty Fee‖
Please visit BCM‘s website, Legislative Committee, for a weekly listing summary of new Mongolian
laws commencing February 2009.
BCM members who wish full versions of the law in Mongolian language are welcome to call or email
the BCM office (11-332-345; info@bcmmongolia.org) to arrange for a convenient pickup.
ECONOMIC INDICATORS
MSE WEEKLY REVIEW
For the week ended February 13, 2009, trading activity on the Mongolian Stock Exchange (MSE)
totaled 10.3 million shares with 29 companies traded. Total market value of transactions was MNT
1.1 billion. Total market capitalization of the 358 stock companies listed on the MSE was MNT 434.1
billion, and decreased by MNT 14.1 billion or 3.1% from the previous week.
The Top-20 Index decreased by 238.65 points or 4.9% compared to the previous week closing at

16. 4,624.84 points. The MSE Composite Index decreased by 61.90 points or 2.5% compared to the
previous week, closing at 2,394.59 points.
Most active stocks traded were: Remicon (10,101,100 shares), Olloo (123,400 shares), Genco Tur
Buro (34,900 shares), APU (25,800 shares), and Khuh Gan (20,500 shares).
Major share price percentage gainers were: Buligaar (15.0%), Genco Tur Buro (13.6%), APU (10.0%),
Mon.Tsakh.Kholboo (6.0%), and UID (0.7%). Major share price percentage losers were: Tavan Tolgoi
(24.5%), BD Securities (15.0%), Mongol Savkhi (15.0%), Khorinkhoyordugaar (14.6%), and Baganuur
(14.1%).
INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
Year 2008 *22.1% [source: NSOM]
January 31, 2009 *20.7% [source: NSOM]
* year over year (yoy)
CURRENCY RATES – February 19, 2009
Currency name Currency Rate
US dollars US 1465.78
Euro EUR 1848.64
Japanese yen JPY 15.83
British pound GBP 2090.50
Hong Kong dollar HKD 189.01
Chinese yuan CNY 214.38
Russian ruble RUB 40.22
South Korean won KRW 1.00
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.