December 28 2012

1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
2012 YearEnd Issue – December 28, 2012
THE BUSINESS COUNCIL OF MONGOLIA WISHES ITS MEMBERS AND ALL READERS OF THE
NEWSWIRE A HEALTHY, HAPPY AND PROSPEROUS NEW YEAR!
2012 – THE YEAR THAT WAS...
This year-ending issue comprises nine broad sections containing articles from the passing year's
previous issues of BCM's NewsWire which unfold the chain of events that lead to today's state of
affairs. This is a chronological compilation of reports as they appeared, not a summary or post
analysis.
Readers should bear in mind that the issues each week collect reports from various media sources,
and these reports, especially those in the Mongolian media, can often be distressingly vague or
tantalizingly incomplete. We give them as they were published, recording how events developed.
This issue is meant to be used as a primary source document, not organized history. The items
appear here as they did originally. The issue number and the source are given for those seeking
further information.
I. THE BUSINESS COMMUNITY - BCM MONTHLY MEETING RECAPS
These give a broad outline of how BCM progressed during the year.
BCM MONTHLY MEETING RECAP- JAN, 2012
The meeting on 23 January with Laurenz Melchers in the chair was attended by 95 members and
invited guests. Melchers announced four upcoming events: Coal Mongolia 2012 from 9 to 12
February in Ulaanbaatar: the USETEC Fair from 5 to 7 March in Cologne, Germany; Mines & Money
on 19 to 23 March in Hong Kong; and Coal Trans Mongolia in June in Ulaanbaatar.
BCM Vice Director I. Ser-od announced that Arthur Cookson, the head of tax at Oyu Tolgoi LLC, as
the new co-chair of BCM's Tax Working Group. He also announced a BCM In The Classroom program
to be held at Mongolian National University throughout February. This program will bring esteemed
speakers, such as Cameron McRae, President & CEO of Oyu Tolgoi, who will open the joint project.
BCM membership now stands at 183 members. More than 90 percent of members from 2011 have
renewed their membership. The nine recently joined members are:
1. Citi Group - The leading global financial services company. It has approximately 200 million
customer accounts and does business in more than 160 countries and jurisdictions. Through Citicorp
and Citi Holdings, Citi provides consumers, corporations, governments and institutions with a broad
range of financial products and services, including consumer banking and credit, corporate and
investment banking, securities brokerage, transaction services, and wealth management.
2. Turning Point Holdings LLC - This diversified company is a foreign investor company operating in
the areas of food and beverage, travel and property.
The recently opened Turning Point Café is a jazz-themed restaurant and bar located just half a
block from the State Department Store on Tserendorj Street (opposite the fountain). The Café
offers a unique selection of western-style menu items, sophisticated ambience, and smooth jazz
music (recorded, with occasional live performances).

2. Turning Point Travel organizes private and group tours in Mongolia. The company also organizes
tours in Bhutan, Nepal, Tibet and the Indian Himalayas.
3. Kincora Copper Limited – Focused on Mongolia, Kincora acts as a mining exploration and
development company. It is based in Vancouver, and listed on the TSX Venture Exchange. It says its
strength comes from a major asset in Mongolia and a management team supported by experienced
mining developers and years of background in Mongolia.
Its key asset, the Bronze Fox copper-gold deposit is located in southeast Mongolia, 200 kilometers
from the Chinese border, along the famed Oyu Tolgoi copper belt and approximately 140 kilometers
northeast of the world-class Oyu Tolgoi copper-gold project.
4. Europharma Co., Ltd - Founded in 1999, this company is one of the largest pharmaceutical
companies in Mongolia. The primary operation of the company covers on the import and trade of
medicines, medical devices, medical equipments, vaccines, bio preparations, diagnostic materials,
patient care products, and biologically active additional nutrition.
Since 2002, EuroPharma was designated as an organization to supply medicine and medical
equipment to State hospitals by the participating on the bids announced by the Ministry of Health
Mongolia. Nowadays the company distributes pharmaceuticals through its 11 wholesale centers and
23 drugstores located in the capital city and 6 provinces of the country.
5. ARD Capital Group - Formerly known as Northern Securities, ARD Capital Group is a Mongolian
Financial Regulatory Commission (FRC) licensed broker, dealer and underwriting company and
member of the Mongolian Stock Exchange. Founded in 2007, it has the goal of offering a wide range
of investment banking services including brokerage, underwriting and investment consultancy.
Its operational team consists of market experts to young motivated entrepreneurs, in all which
holds a FRC license to work in Capital market.
6. United Securities LLC – United Securities was established in January 2011 in order to provide wide
range of financial services in Mongolian financial market with the international standards and
legislation from the perspectives of professional. At the end of 2011, the company had received its
broker-dealer special license, underwriting license from the FRC as well as became the member of
Mongolian Stock Exchange. United Securities LLC had signed strategic partnership agreement with
Ulaanbaatar Capital LLC. With this strategic partnership agreement, United Securities LLC can able
to offer full investment banking services to its clients.
7. Ulaanbaatar Capital LLC - An investment vehicle of the Ulaanbaatar City Bank, this financial
group has the purpose of providing non-banking financial services to its customers in a broad range
of asset classes across Mongolian and International money, commodity and securities markets. Also
as an investment vehicle we do look for opportunities to create joint ventures that will bring high
yields in the fastest growing economy.
8. BB Consulting - The founder of BB Consulting is the former managing partner of GTs Advocates.
The firm provides legal consulting services and advises Firebird funds in connection with their
investments into various mining and exploration projects in Mongolia.
9. Shunkhlai Group LLC - This investment company manages diverse business portfolios, with the
largest business lines in the portfolio are mining, consumer goods production and distribution,
petroleum, oil and gas, information and communication technology and international trading.
As one of the first private entities in Mongolia, it aims to further strengthen existing business lines
as well as to expand its portfolio, including property, commodity trading, infrastructure, and
information technology for purposes of enhancing our contribution to development of Mongolia.

3. BCM MONTHLY MEETING RECAP FEB, 2012
The meeting on 27 February with Laurenz Melchers in the chair was attended by 80 members and
invited guests. Melchers announced that David Wyche has replaced Vinnie Spero as the U.S.
Embassy to Mongolia‘s economic and commercial head. The chairman also announced the publishing
of Oxford Business Group's ‗The Report: Mongolia 2012‘, and the report's launching on 1 March at
Blue Sky Tower. Additionally, he announced the expansion of the Board of Directors to 29 members.
For more information on the Board, visit BCM's website.
BCM Executive Director Jim Dwyer reminded members in attendance how far BCM has grown since
its modest beginnings in 2007.
―The Business Council has become the leading business stakeholders‘ partner in Mongolia‖, said
Dwyer. ―It used to be just a few voices reaching government, but now you guys make up the private
sector. We are at the table.‖
Dwyer also spoke about the formation of the Risk Management Working Group and the importance
of introducing the concept of risk management to business practices in Mongolia. He said next week
the Capital Market Working Group will meet with officials from the Mongolian Stock Exchange
(MSE), and went on to explain how BCM continues to be supportive of the MSE during its current
comprehensive upgrade.
BCM membership now stands at 200 members. The five most recently joined members are:
1. Cliffs Natural Resources Inc. - The international mining and natural resources company is the
largest producer of iron ore pellets in North America. It is a major supplier of direct-shipping lump
and fines iron ore out of Australia. It is also a significant producer of high and low volatile
metallurgical coal.
2. MacMahon Mongolia LLC – This construction and contract mining company leads in Australia with
major projects throughout Australia, and in New Zealand, Asia, Africa, and Mongolia. It currently
has a 5 year, USD 500 million contract for mining services at the Tavan Tolgoi eastern block project.
3. Oracle Corp. - The computer hardware and software company has more than 380,000 customers,
including 100 of the Fortune 100, and deployments across a variety of industries in more than 145
countries. In Mongolia BSB Service LLC was the first partner registered in 2001, and in 2002 Trade
and Development Bank of Mongolia (TDB) became Oracle's first licensed database user. Other
customers include the Mongolian Stock Exchange (MSE), XacBank, GASR, and ICTPA. The company
has organized four events since November 2010.
4. PAK LLC – the consultancy and service provider works in the mining industry, boasting an intimate
knowledge of mining processes and system understanding of the personality of the mining industry.
Headed by Paul Korpi, its value lies in strong mining and consulting competencies; professional skills
and an extensive internal database; an effective working ability; an extensive global network for
the mining industry; and its competent staff.
5. Startup Weekend Mongolia (SWMongolia) – Founded in June 2011 by a community of
entrepreneurs and leaders, the local non-profit is currently working on creating a structure to
provide seed capital, office space and a smart community with mentors and other entrepreneurs.
Some activities include lecture series, startup weekends, global entrepreneurship week and
trainings
L. Tur-od of the non-government organization Mongolia Economic Forum gave an update on the
eponymous event for this year. This year the Mongolia Economic Forum will have a third day,
making the event run from 5 to 7 March. The third day will feature participation from the Mongolian
Stock Exchange, World Bank and Ministry of Finance. This year the event focuses on the three areas
of ―Inclusive Growth,‖ ―Competitiveness: Green Growth,‖ and ―Innovation Policy,‖ each held at
separate venues within the Government Palace.

4. Christopher DeGruben, a founding managing partner of Make A Difference (M.A.D.) Investment
Solutions spoke to the audience about the development of Mongolia's real estate sector. He
described the trends that have emerged, challenges this sector faces, and the possibilities for the
future. He explained how Ulaanbaatar's population of 1.2 million was certain to grow along with
Mongolia's projected growth in urbanization from today's 63 percent to 75 percent after 15 years.
Currently Mongolia has only a 9 percent mortgage rate with average interest between 15 and 19
percent. Although high those rates are far less than the 20 to 25 percent rates he first saw when he
arrived in Mongolia seven years ago. Ulaanbaatar has tremendous foreign direct investment (FDI)
coming its way to real estate projects. Additionally, the city is seeing an emergence of national
billionaires, millionaires, and most importantly a middle class that would be interested in breaking
from traditional large family units to something closer to what resembles households in the west.
Opportunities include room for financing institutions, land banking and the development of second
tier cities. However the long winter season, collapsing and non-existent infrastructure, the small
pool of a skilled labor force, and the difficulty of obtaining construction materials all pose
challenges to supplying demand. Other challenges include taxation uncertainty, a hazy legal future,
the lack of global real estate companies, lacking due diligence in government, and the absence of
trusted valuators.
From the U.S. Embassy to Mongolia's Consulate Office was Consul Philip S. Cargrill espousing the
Embassy's commitment to supporting U.S. business ties with Mongolia. This includes a business
executive exchange program providing upcoming Mongolian business professionals the chance for an
U.S. education. Additionally, the website mongolia.usembassy.gov has information with specifics for
business.
Finally, from Valiant Art and Interior LLC was Elisabeth Koppa to promote her company's decorating
solutions for homes and corporations. The firm provides both art rentals and sales to suit the needs
of its clients, in addition to interior decorating services. The company also provides stretchable foil
that can function to cover, decorate and protect. The other branch of the business caters to heavy
industry providing impromptu structures for the storage of machinery, equipment, and vehicles, in
addition to space for operations and events.
BCM MONTHLY MEETING RECAP MARCH, 2012
The meeting on 26 March with Laurenz Melchers in the chair was attended by 90 members and
invited guests. Melchers announced that BCM has distributed surveys asking members for their input
on the quality of its NewsWire service, and encouraged all members to participate.
BCM Executive Director Jim Dwyer announced that BCM‘s recently formed Risk Institute of Mongolia
Working Group, headed by John Wheadon and U. Ganzorig, has the medium-term goal of becoming
an independent Mongolian NGO. One step toward that goal will be for the Working Group to take
over the organization of next February's 3rd Risk Management Forum of Mongolia. Jim said the
Legislative Working Group met last Friday focusing on draft laws on the agenda of the spring session
of Parliament. The Capital Markets Working Group recently was addressed by the marketing head of
the MSE. The WG also reviewed the fact that the MSE‘s regulator, the FRC, is understaffed and
underfunded and will offer to assist the FRC with the implementing of its strategic plan. The
Education Working Group has made headway with its ‗BCM in the University Classroom‘ program,
holding its first speaking event with the CEO of Oyu Tolgoi LLC, Cameron McRae. Additionally,
Prince Michael of Kent, a cousin of Her Majesty the Queen and a Patron of the London School of
Business and Finance will attend the Education Working Group‘s session on 16 April during his visit
to Mongolia.
BCM membership now stands at 210 members. The five recently joined members are:
1. Elgin Group LLC – Elgin is a privately-owned independent financial company headquartered in
Baar in the canton of Zug, Switzerland. Elgin primarily specializes in highly personalized, quality

5. investment services for affluent individuals, but also financial planning via regular savings
contribution plans, pensions, educational fee planning and life insurance.
2. Haranga Resources Ltd. - This miner is an Australian-listed company focused on developing high
quality iron ore projects in Mongolia. The Company controls 60% of the Selenge project, located in
the world class iron ore province of Selenge in northern Mongolia. The Company also holds majority
interests in the Shavdal, Sumber, and Tumurtei Khudag iron ore projects. Haranga Resources
operates and manages the Khundlun project which it owns 100% and each of its other 4 projects on
behalf of the joint ventures.
3. Minter Ellison – Based in Australia, this international law firm is one of the largest law firms
operating in the Asia-Pacific. More than 284 partners and 870 legal staff work in 14 offices across
Australia, New Zealand, Hong Kong, the People's Republic of China and the United Kingdom. Its
large and diverse client base includes leading multinationals and Fortune 500 companies, global
financial institutions, and numerous government departments and agencies in Australia and
overseas.
4. Rock Discovery Drilling LLC - This exploration drilling company employs over 90 staff and holds
responsibility to provide foreign and domestic clients with professional consulting services and
mining drilling solutions in Mongolia. Its mission is to become a leader in the mining drilling
industry, provide valuable contributions to the future development of Mongolia and to remain a
reliable partner of clients.
5. Standard Investment - This brokerage house and boutique investment bank has offices in
Ulaanbaatar, Hong Kong and Zurich. Standard Investment links international investors to high-
potential business projects in Mongolia. It holds an underwriting license and is providing investment
advisory, brokerage and dealing services in Mongolia.
Standard Investment is part of the Standard Group with companies Standard Property, Standard
Management, Standard Finance and InfoActive which is running the national lottery of Mongolia.
L. Bolormaa, Deputy CEO of the Development Bank of Mongolia, gave the first presentation to
discuss the bank‘s objectives and its means to meet its financial ends. The bank is Mongolia‘s first
policy bank and in less than a year since its conception has led Mongolia‘s entrance into the
international market with its USD 600 million (totaling USD 580 after a USD 20 million private
placement for the railways last year) Euro Mid-term Note program offering. She also mentioned the
banks intention to upscale that offering in light of orders exceeding the offer by 13 times, totaling
USD 6.6 billion.
The bank was created to create paths to finance projects to aid in Mongolia‘s development. These
include infrastructure projects to Mongolia‘s railway system, housing, and the Sainshand Industrial
complex. She also noted that the bank is looking into projects with energy-saving goals. The
development of roads, lack of capacity for road construction, the poor quality of roads already
built, and the absence of monitoring pose the greatest challenges, she said. The bank intends to
address these issues in part through partnerships with entities such as the Chinese Development
Bank. She added that the bank was also looking into developing the foreign exchange market with
ING Bank and has signed a memorandum of understanding with Barclays for objectives in risk
management and forecasts.
From Resource Investment Capital LLC (ResCap) Managing Director Eric Zurrin gave a description of
how Mongolian investors now see Mongolia. Living in Mongolia, he said, has many of us fixated on
looking at the world from the inside, but it is important to remember that people from the outside
looking in see a different picture.
The Mongolian story is a simple one: selling raw minerals to China. However, it is not foolproof.
Relying so heavily on one customer may not inspire much confidence among investors. However,

6. Hong Kong and New York are currently struggling, and they are looking for the next big success
story in the emerging markets. Financial firms are also always trying to outdo themselves and top
their own benchmarks.
Politically and geographically, Mongolia has the challenges of meeting the needs of an export
economy for labor and infrastructure. However, the government is supportive of the private sector;
there are no religious divides.
―To investors a nomadic culture means an entrepreneurial spirit that is always looking for progress
and growth,‖ said Zurrin.
Hot button issues for investors include strong local partnerships, the valuation of opportunities
(quantity and quality), and structuring mechanics. For that last point, he gave the example of
Mongolian Mining Corp.‘s acquisition of QGX Ltd., where the ultimate purchase price will range
between USD 450 million and USD 950 million depending on the milestones hit. The number of
access points are limited but are growing, he said, as evidenced by the recent debt offering by the
Development Bank of Mongolia. However, for now, investors are left with just domestic private
equity purchases, international funds, opportunities via the Mongolian Stock Exchange and
international capital markets.
The final presentation was given by S. Ganbaatar, the President of the Confederation of Mongolian
Trade Unions. He implored members of the private sector to take a more active role in helping
chart a course for Mongolia's proper development without taking shortcuts. He said policy makers
lack the skills and know-how to direct this incoming wealth into the most prudent investments,
something the private sector has in abundance. ―Politicians don't even know what they don't know,‖
Ganbaatar said. ―They are not the experts they think they are.‖ The trade union representative
said above all else Mongolia needs fair distribution of the wealth pouring in, fair taxation, in
addition to a wage policy. He reminded his audience that a trade union is powerless without
businesspeople to create jobs. Ganbaatar went on to liken Mongolia to a window shop, filled with
goods but lacking any means for production. Mongolia will need to use this money today to build the
infrastructure to stand on its own tomorrow, he said.
BCM MONTHLY MEETING RECAP APRIL, 2012
The meeting on 23 April with Laurenz Melchers in the chair was attended by 95 members and
invited guests. Melchers announced the anticipated arrival of Professor Nigel Finch, lead grant
researcher of the University of Sydney Business School, after receiving a grant to partner with
Mongolia's Ministry of Finance, Financial Regulatory Committee, and Mongolian Stock Exchange to
help impart greater transparency. In addition, the chair pointed out that Carl Robinson, author of
Nomad Empire of Eternal Blue Sky was in attendance.
BCM Executive Director Jim Dwyer introduced the new Working Group Coordinator, Erdenetsetseg.
Her responsibilities will include coordinating the activities of BCM's 6 working groups with over 100
volunteers with recommendations to help develop a better business climate for Mongolia.
BCM membership now stands at 214. The four most recent members are:
1. Czech Embassy – The Czech Republic's Embassy in Ulaanbaatar is the only Czech diplomatic
mission in Mongolia and is currently led by head of mission H.E. Vaclav Jilek. Diplomatic relations
between former Czechoslovakia and Mongolia were established on 25 April 1950. The first
ambassador, Jaromir Voshalik, started his mission in May 1953. Since then, the embassy has helped
implement many projects, including the construction of the Central Hospital, a shoe factory in
Ulaanbaatar, and a cement factory in Darkhan.
2. English School of Mongolia (ESM) – Formerly Erel School, this school opened its doors after major
renovations in September 2011. Unlike many other schools, ESM is an independent school with a
genuinely all-round English feel to it. There are about twenty native-English speaking numbers of
staff on site with more appointments month by month. ESM's facilities include spacious well-

7. equipped classrooms, interactive white boards, an assembly hall and theater, and two large
physical education halls.
3. Mongolia Talent Network – This employment agency was set up to provide the best practice from
the world into recruitment services to Mongolia. In a world where candidates have to make choices
without really understanding their options, and where talent is one of the biggest breaks on a
company's growth, the Talent Network is committed to bringing transparency into the process and
to matching the right opportunities with the right people.
4. Pamapersada Nusantara (Pama) – This mining operator provides world-class full-cycle services
from exploration to mine planning, equipment operation, infrastructure and roads, and
reclamation. In 2011 Pama produced almost 90 million tons of coal product and removed around 800
bank cubic meters of overburden, most of it on a contract basis to third-party owners in Indonesia
as well as for its own invested mines. Pama established a Mongolia representative office on 29
November 2011 and brings its deep industry expertise and investment into Mongolia.
L. Sumati, Director of the Sant Maral Foundation, led the first presentation of the night to discuss
the results his firm‘s Polit Barometer regarding the upcoming June parliamentary elections.
―At first sight, I don‘t think you‘ll see any difference between the two parties,‖ said Sumati. ―The
Mongolian People‘s Party [MPP] has a slight lead over the Democratic Party [DP] in the countryside,
but there is even distribution between the two major parties.‖
Sumati noted that this year‘s election outcome was more unpredictable than previous years, when
he had made startlingly accurate predictions. Trends included a large belief among 76 percent of
those polled that the mining industry would solve all problems, with unemployment standing as the
major concern, as it has in the past as well.
One trend in particular is the greater importance placed on individuals over a party.
―Parties are not as appreciated today. Today there is a focus on personalities.‖
Survey results show that Ganbaatar garnered the most support, even slightly above current Prime
Minister S. Batbold. Also noteworthy was the support for former president N. Enkhbayar prior to his
arrest. However, within the Mongolian People‘s Party (MPP), there is no one that can really
challenge Batbold for the position as head of the party, said Sumati. He added that Ganbaatar is
expected to run for office in the next election, and that ―if he does, I have high expectations that
he will be one of our leaders.‖
For the full report in English or Mongolian language, visit BCMongolia.org, in the ―Mongolia Reports‖
section.
Igor A. Kovarsky, President and Chief Executive Officer of Kincora Copper Ltd., gave the next
presentation to tell those in attendance about his company and its Bronze Fox copper and gold
project.
Bronze Fox is located on the copper-gold belt in southeast Mongolia that also hosts the world-class
Oyu Tolgoi deposit which is 140 kilometers away. A government-planned rail line from Tavan Tolgoi
to Sainshand, scheduled for construction in 2012, will pass 20 km from the mining site, and an
existing rail line is 200 km away. Kincora plans to take advantage of planned infrastructure for the
Tavan Tolgoi coal project and Oyu Tolgoi for its energy and transportation needs.
The company‘s 2012 strategy is to concentrate on a 25 square-kilometer zone, combined with an
acquisition strategy that includes the recent purchase for mining rights at Tourmaline Hill, adjacent
to Bronze Fox.
The firm has planned for a 2012 exploration program of USD 5.2 million for the project.
For the full presentation, visit BCMongolia.org, in the ―Resources, Presentations‖ section.
Robert Schoellhammer, Country Director of the Asian Development Bank (ADB), and Jan Hansen,
Senior Country Economist, presented next the ADB‘s development outlook for Mongolia.
At the top of the presentation, Schoellhammer reminded the audience of the ADB‘s role in Mongolia

8. as a resource for advisement and funding to Mongolia and other emerging nations.
―We are a financier, but our mandate is also very much of an advisor,‖ he said.
Hansen showed the audience data on 70.3 percent growth in gross domestic product (GDP) since
2010, in addition over a threefold gain in GDP per capita from 2005 to the current figure of USD
3,000. However, he reminded the audience that the added economic growth to individuals did little
to affect their purchasing power.
―I‘m not aware of any other country with such fast growth,‖ said Hansen, ―but very little of it is
real growth. Most of the growth experienced is from inflation.
The chief economist said that cash handouts from the Human Development Fund (HDF) have
created inflation and made the country more vulnerable to external shocks. Inflation had increased
to 15 percent in March 2012, he said, and ―it‘s likely to stay in the double digits this year and
throughout the next.‖
In order to avoid the perils of ―Dutch disease‖ and ―the resource curse,‖ Hansen said Mongolia will
have to focus on long-term growth and fiscal stability. He lauded the government for the passage of
the Fiscal Stability law in 2010, which is to take effect next year, and recommended more
legislation with this kind of thinking in mind.
For the full report, visit BCMongolia.org, in the ―Mongolia Reports‖ section.
Graeme Hancock, Chief Operating Officer of Erdenes Tavan Tolgoi, the state-owned company
running operations at the eastern block of the coal mining site, gave the final presentation of the
evening, delivering a status update on the project.
Erdenes-TT owns a majority of the Tavan Tolgoi coal field, the largest undeveloped open-pit coal
mine in the world. Having commenced production in July 2011, the mine has a reported 7.4 billion
tons of coal. One-third of that figure is hard coking coal, a commodity that is becoming increasingly
more valuable as Chinese miners are forced to dig deeper and operate under more dangerous
conditions to procure the mineral.
For greater cost savings the company will construct a coal washing plant and roads. Hancock said
that transport by rail was a much better method, but construction could not be finished until late
2015 at the earliest.
―Even though it is going to cost USD 130 million, we have no choice but to [build a road to the
Chinese border point],‖ said Hancock. He added that the dust from heavy-loaded coal trucks was
creating visibility problems for drivers with more than 20 fatalities in the last year and was killing
two kilometers of pasture land on each side of the dirt road.
For the full presentation, visit BCMongolia.org, in the ―Resources, Presentations‖ section.
BCM MONTHLY MEETING RECAP MAY, 2012
The meeting on 28 May with Laurenz Melchers in the chair was attended by 95 members and invited
guests.
Melchers opened the event with a few words on the recently passed Law on Foreign Investment:
―When the first draft first came, we were aware that there was no way to stop it, so instead we
worked behind the scenes to water it down as much as possible, in as short a time as possible.
The chair went on to explain BCM would go forward with a diplomatic approach when approaching
the law, vowing not to criticize it any further. He added that once elections have passed, BCM will
focus on its implementation.
―Now is the most crucial time,‖ Melchers said. ―The danger is that the authorities can implement
the law however they like, leaving question unanswered for investors.‖
BCM Executive Director Jim Dwyer described the great time and effort the Legislative Working
Group, with assistance from four embassies, put in to deliver input from the private sector while
the law was being shaped. He spoke of a dynamic Tax Working Group session led by Arthur Cookson
of Oyu Tolgoi LLC last week, in addition to the efforts of the Risk Management Working Group,
which will be releasing a survey for member companies in the near future.

9. BCM membership now stands at 220. The six most recent members are:
1. Calibre Global is a diversified engineering and project delivery company serving the resources
and infrastructure sectors. Its strategy is to provide services throughout the entire lifestyle of
project, from determining feasibility, to engineering design, project delivery, operational support,
and optimization of operating assets.
2. Composite Capital is an investment management and financial advisory firm focused on
opportunities in Mongolia. The firm can provide financial advisory services on capital raising and
financial activities for Mongolian and international investors locate investment opportunities in
Mongolia's rapid growing economy.
3. MBT aims to become an internationally accepted company that would become a valuable asset to
Mongolia's development.
4. Monadelphous is a leading engineering group that provides construction, maintenance, and
industrial services to resource, energy and infrastructure firms. Its customers include some of the
biggest and best involved in major projects.
5. The Oval Partnership is a multidisciplinary architectural practice headquartered in Hong Kong
with offices in China and the United Kingdom. It is at the center of a group of companies working on
sustainable lifestyles across a variety of disciplines, including architecture, master planning, and
interior design.
6. Steppe Learning works with educators, human resource managers, training officers and students
in one of the world's fastest growing regions, the vast, beautiful, Eurasian hinterland. Harsh
climates and huge distances are not a problem.
The evening began with a presentation by D. Munkhjargal, Manager for the Center for Executive
Education of Newcom Group. Munkhjargal explained that as Mongolia experiences its rapid
economic growth, its workforce is thirsty for knowledge. The Executive Education program aims to
deliver a high-impact curriculum through partnerships with world-class organizations. Through this
program, executives will learn to utilize innovation and present dynamic skills to management.
O. Batbayar introduced to the audience the global Young Presidents Organization (YPO), of which
he is chapter chair for Mongolia, YPO's newest country chapter. Batbayar presented the
organization as resource for executives under the age of 45 to share experiences and create a pool
of talents and resources from which all involved can benefit.
―This organization is a good opportunity for anyone running a company,‖ said Batbold. ―If you're
having a problem or experiencing difficulties, here is someplace you can obtain information from
peers.‖
The organization also presents ways for young executives to spend time with their families. Its
father-son and mother-daughter programs gives busy individuals in high-ranking management
positions opportunities to spend quality time with their children.
Olin McGill, senior business environment reform advisor of USAID's Business Plus Initiative, spoke on
the millions of dollars wasted in a redundant and overly bureaucratic trade regime.
―Mongolia is a reformer's paradise—there's so much opportunity,‖ said McGill.
McGill spent a large portion of his presentation outlining his experience in Georgia, where he saw a
great deal of success introducing ―unprecedented tax reform‖ with continued annual progress. He
explained how Mongolia could save MNT 4.7 billion a year for corporate income tax payers through
e-filing, which will be put in place on 1 June. Further, he noted the number of documents and time
taken for import-export activity where the elimination of five documents would save USD 5.9
million a year for exports and USD 13.8 million a year for imports. Lastly the elimination of 17.5

10. days would increase Mongolian trade by USD 2 billion annually.
Ch. Khashchuluun, Chairman of the National Development and Innovation Committee (NDIC),
presented on Mongolia's midterm development plan. As it stands, Mongolia has experienced 17.3
percent gross domestic product (GDP) growth in 2011 compared with 6.4 percent in 2010, and 16.7
percent in the first quarter of this year. Thus far, that money has been used to distribute USD 1,300
to every student and 20 percent of all shares of shares of Erdenes Tavan Tolgoi JSC, amongst other
cash benefit options.
Next, however, the government would like to use its mining revenue to target a diversified
economy with initiatives such as a 10 percent flat tax and improved business environment, low
interest rates, realized goals employed by the Development Bank of Mongolia, private-public
partnership (PPP) opportunities, and USD 8 billion for rail infrastructure.
Governance has seen improvements though its anti-cyclical budget policy, mandates for feasibility
studies in return for budget spending, election reform, and anti-corruption efforts.
Through its reform, the government hopes to achieve 12 percent GDP growth year-on-year (y-o-y)
and the doubling of per capital GDP in two years. Through proper investment, the Mongolian
government hopes to build up a strong stabilization fund with revenue from mining, further
capitalization of the Mongolian Stock Exchange (MSE), reduced poverty, a strengthened economy
with vulnerabilities eliminated, improved competitiveness to the country, and create a foundation
for a knowledge-based economy.
Houston Spencer, Vice President of Communications and Media Relations at Oyu Tolgoi LLC, came to
present one of the most advanced mining projects in the world built in one of the planet's most
extreme environments, what happens after that project goes online, and clear up some confusion
among the public regarding how Mongolia benefits from the project.
―When you think about Oyu Tolgoi and the impact it has on the economy, what you must remember
is that the Mongolian government benefits most, first and risk free,‖ said Spencer.
Oyu Tolgoi has two mines in preparation for production, the first of which (the open-pit mine) will
begin production in August and has already delivered some of its first ore. The second production
point, the underground mine, holds a higher quality ore and will begin production by 2017.
Already the government has seen returns from the Oyu Tolgoi project, while investors must wait
much longer. In the lowest estimate, the government receives 55 percent of the returns and 70
percent in the highest (not including indirect returns).
With Oyu Tolgoi, Mongolia's 2013-2020 GDP growth will be 12.7 percent versus 7.7 percent without.
The company is spending USD 8 million a day building the mine and employs just shy of 10,000
Mongolian employees, while spending MNT 1.7 trillion operating with local suppliers.
BCM MONTHLY MEETING RECAP JUNE, 2012
The meeting on 25 June with Laurenz Melchers in the chair was attended by 90 members and
invited guests.
Melchers opened the event with the announcement that BCM would celebrate its five-year
anniversary with a football tournament, the BCM Football Cup, on 7 July at High School No. 5 in
Ulaanbaatar. A press campaign is being planned for the anniversary and a photo album history of
BCM will be compiled. Additionally, the BCM Membership Renewal dinner will be held on 5
November, with special commemoration of the five-year milestone.
BCM Executive Director Jim Dwyer reminded guests that July would not have a meeting and the
next meeting would be held on 27 August. He went on to report on the difficulties BCM members as
well as outside organizations within the private sector have had since the passage of the new
Foreign Investment Law.
―Some will definitely need parliamentary approval while others will need more clarifications in the
law,‖ said Dwyer speaking on the predicament some companies have found themselves in due to
the law's ambiguities and the fact that FIFTA is not allowing any share transfers for businesses in

11. sectors of strategic importance until they have regulations, most likely sometime after Naadam.
The executive director reported that one law firm has had seven projects delayed that might be
impacted by the law. One is on hold due to a lack of definition of the term ―invest‖ which makes it
unclear if a transaction must be approved. Another is an Australian firm with mining licenses in
Mongolia which has found itself at a standstill as it tries to restructure for tax reasons by inserting a
holding company without knowing if they need go through the entire approval process. A Canadian
company has the same issue. Another, a local bank is left unsure how to make a change for one of
its foreign shareholders since the FIL does not address ―collective‖, so it is unclear if this must be
approved. There is also the threat of high penalties if the government deems a company has been in
violation of the law.
BCM membership now stands at 227. The eight most recent members are:
1. ADEN Services Mongolia LLC was created in Mongolia as a majority Mongolian-owned joint venture
partnership representing a unique combination of local experience and international expertise to
provide International Standard Camp Management Services in Mongolia. As a minority partner in the
joint venture, ADEN Services provides significant expertise as an international leading provider of
Integrated Support Services worldwide. ADEN Services has developed a new approach to remote site
services focusing on the quality of life for employees and an innovative CSR policy in every country
in which it operates.
2. Aero Mongolia LLC was established in 2001 and launched its first flight on 3 June 2003. Currently
the airline employs over 190 employees, well equipped with up-to-date technologies and own three
Fokker-50 aircrafts. Aero Mongolia Airlines operates 10 daily domestic and two international flights
from Chinggis Khaan International Airport in Ulaanbaatar. In June 2007, Aero Mongolia was acquired
and became a subsidiary of Monnis International LLC.
It received prestigious ―White Gold Star‖ award from the World Quality Association.
3. The British School of Mongolia has the mission to provide its students with the National
Curriculum of the England and Wales. The subjects of the English National Curriculum of England
and Wales will be taught in English language, and the subjects of Mongolian language, literature,
and Mongolian history and culture will be taught in Mongolian language in conjunction with the
educational standards of Mongolia.
4. Genie Energy Ltd. believes that competition and ceaseless innovation are required to meet the
world's growing demand for affordable, environmentally sustainable and reliable sources of energy.
It is comprised of two divisions: IDT Energy and Genie Oil and Gas.
IDT Energy, founded in 2004, has grown to become the largest independent residential energy
service provider (REP) in New York State, and in 2010 it entered deregulated markets in New Jersey
and Pennsylvania. Genie Oil and Gas (GOGAS) is pioneering technologies to produce clean and
affordable transportation fuels from the world's abundant unconventional fuel resources such as
shale.
5. IMC Montan is an internationally-owned independent mining consultancy which operates in the
Former Soviet Union (FSU), principally through its Russian-registered company, OOO IEEC. It is
based in Moscow and has been delivering services to the mining industry in the FSU since 1992,
undertaking Scoping, Pre-Feasibility and Feasibility Studies, technical assignments, JORC Reserve
Valuations and Mineral Expert Reports.
6. International Technical College partnered with Box Hill Institute TAFE (Melbourne, Australia) and
Sustainability Pty. (Perth, Australia) to offer Australian nationally accredited training in Mongolia.
Its staff come from Australia, the United States and Mongolia with diverse industry experience and
acquired Australian accredited teaching certificate.

12. 7. Industrial Construction Corp. was founded in January 2011 as a joint venture of Mongolian MIH
Group and Chinese NFC Co., Ltd. In 2012 ICC LLC has concluded contracts on Tsairt Mineral LLC‘s
employee‘s apartment complex and 10 km road construction in Baruun Urt city, Sukhbaatar
province. ICC LLC is planning to participate in the construction projects in mining sector,
infrastructure and cooperate with foreign and domestic companies.
8. Khan Lex Advocates LLC represent clients in their interactions with the legislative, executive and
judicial branches of the Mongolian Government. While a full-service law firm, the firm devotes
special focus to the Mongolian and foreign legislation related to securities, financial services,
merger and acquisition (M&A) in addition to a host of other legal needs.
Based in Ulaanbaatar, the partners in Khan Lex Advocates have vast prior experiences in diverse
fields of professional work. One of their strengths is the ability to mobilize international experience
and expertise in the form of its association with Clyde & Co international law firm.
G. Ariunkhishig, Managing Director of the British School of Ulaanbaatar introduced her school for
the first presentation of the evening. The British School's chief aims are to provide the national
curriculum of England with Mongolian content while providing a high-quality staff and a favorable
environment for learning.
The English curriculum is utilized by 30,000 schools in the United Kingdom and overseas. All
students will graduate with an IGSE and sit for A-level examination. Its core subjects are math,
English and science.
The school's facilities include four main buildings and a gym with an indoor swimming pool. This
September will mark the school's first year of operation, and it is currently accepting students
between the ages of 5 and 13 for enrollment. Class sizes will be a maximum of 20 pupils for year
one and 24 for all other years.
D. Bat-Ochir, Chief Executive Officer of XacBank, presented his bank to the audience, giving a
detailed description of its beginnings and current business model.
XacBank is one of Mongolia's top four banks and is the bank with the most balanced and diverse
shareholders, said Bat-Ochir. Its asset quality has been number 1 since 1998 and it can boast strong
corporate governance.
―Management has been with the bank since day one, and I have the privileged to have been with
the bank since the project was founded, before it was even a bank,‖ said Bat-Ochir.
Some of the bank's key strengths Bat-Ochir introduced to the audience include a solid credit rating,
a proven growth track record, and a strong capitalization.
L. Byambaa, Partner at UMC Holding, spoke about the importance of introducing corporate pension
plans. Pensions are crucial, she said, to provide added incentive to attract talented personnel,
develop a positive image for corporate social responsibility (CSR) and solve lingering social issues in
Mongolia.
―I think the time has come and we can see there is interest,‖ she said, ―It would be the solution to
many pressing problems,‖
Social insurance faces serious obstacles that it may not be able to overcome. The minimum pension
of MNT 105,300 is far below what an average person can live on, yet it is what 53 percent of the
Mongolian population receives. The population is beginning to age and with life expectancy on the
rise, social insurance is simply not sustainable.
UMC offers many solutions such as corporate pension plans. She urged companies take advantage of
these options for the benefit of the company as well as its workers.
―This is a good way to prove your company is here to stay, and that your company cares about the
lives of Mongolians,‖ said Byambaa.
L. Sumati, Director of the Sant Maral Foundation, gave an update on the political climate as
elections were approaching for his final presentation.

13. Sumati was quick to point out that there had been great change among the opinions of voters since
the last poll given in April. One month ago the Democratic Party (DP) and Mongolian People's Party
(MPP) were neck and neck, each receiving similar preference from voters. This time, however, the
DP was ahead by 14 points with 42.6%. There was also considerable attention brought to the
Mongolian People's Revolutionary Party (MPRP), which is largely seen as a protest vote option from
the two main parties. In any case, the party has been successful in attracting voters who might have
otherwise voted for the MPP, accounting for the DP's strong lead.
It is likely no small coincidence that the head of the MPRP, former president N. Enkhbayar, topped
the list of the country's most popular politicians. In April Enkhbayar was second behind
Confederation of Trade Unions President S. Ganbaatar. A section of the population has rallied
behind the former president since his arrest on charges of graft which many see as a politically
motivated.
Sumati concluded the presentation with two possible scenarios. The first gave the DP a majority
with a total of 49 seats. The second had the DP as the party with the most seats, with 40 seats, still
a majority and still just enough to form a government. In Sumati's opinion, the first scenario was
the more likely one.
BCM MONTHLY MEETING RECAP AUGUST, 2012
The meeting on 27 August with Laurenz Melchers in the chair was attended by 125 members and
invited guests. Melchers introduced the recently arrived new U.S. ambassador to Mongolia, Piper
Campbell. Campbell greeted the audience, expressing her wishes to introduce ways to aid business
relations between the two nations and foster greater cooperation.
BCM Executive Director Jim Dwyer announced that 130 volunteers are currently working in BCM's
various working groups. The tax working group has been busy arranging a training session in October
for over 50 Mongolian Tax Authority (MTA) officials. He added that the International Monetary Fund
(IMF) had asked the BCM to arrange a meeting on August 24 with large tax paying entities to derive
additional issues and recommendations for their ongoing consulting program with the MTA and its
Large Taxpayer Office. Additionally, with the start of the new school year the education working
group will soon restart its ‗BCM in the Classroom‘ program.
BCM membership now stands at 239 compared with 188 a year ago, an increase of 51 members. The
12 most recent new members are:
1. GEE - offers to supply highly experienced personnel, including Mongolian personnel or foreign
personnel for any position. It has available highly experienced personnel of all disciplines, from
engineers, managers, geologists, contracts, admin, schedulers, planners, safety supervisors and all
other disciplines and all levels of seniority.
GEE has a huge personnel data base of some 3,000 Mongolian personnel and 30,000 foreign
personnel of all nationalities. Customers include some of the major mining and exploration
companies in Mongolia.
2. HarrisMoure Mongolia - is a boutique U.S. law firm (16 lawyers, 5 paralegals), headquartered in
Seattle, Washington, working exclusively in international business transactions and dispute
resolution matters. Its Mongolia office was established to offer its global reach and experience to
clients.
Russell Murphy is the partner leading the Mongolia practice based in Ulaanbaatar, along with firm
founder Charles Moure in the Seattle office.
3. International SOS - provides medical and security assistance to companies operating in Mongolia.
The medical services division assists organizations operating in Mongolia to assess health risks and
deliver high-level medical services to employees working in some of the most remote and difficult
environments in the world.

14. 4. KPMG Audit – has a Mongolia team of approximately 50 professionals, providing a full range of
audit, tax, advisory and consulting services to major local and international clients across a range of
sectors and industries.
5. Modern Capital Vest - was incorporated in Mongolia in 2011 to manage and operate jointly the
first international Jackpot lottery games in Mongolia with Biz INVIN LLC, a Mongolian company
incorporated in 2009. Biz INVIN is a majority-owned subsidiary of Monvest Group. The lottery
business is operated under the name of Mongolia National Lottery.
6. Monrusconsulting - is a full service corporate law firm committed to helping its clients negotiate
the often intricate and confusing Mongolian and Siberian legal and regulatory environments. It has a
strong international team of American, Russian and Mongolian attorneys who all have extensive
experience working in Ulaanbaatar.
7. Netcapital – is a non-banking financial institution that operates in the areas of loans, deposits,
currency exchange, and consulting. Its mission is to continue maintaining a leading role in the
microfinance sector through services tailored to the needs of customers and employees who are
highly productive.
8. Sod Gazar - was established in 2005 and has its main office in Ulaanbaatar. Since its
establishment the company has performed geological surveys every year. It has discovered several
new ore deposits, including coal, iron, fluorspar and molybdenum.
9. Specialized Career Consulting - specializes in search and selection to access the very best
Mongolian and international candidates within management, sales, logistics, procurement, safety,
mining technical and back office financial positions.
10. Sustainable Environment Consulting - was founded in 2008 by a group of well-known
environmental experts. It is specialized in conducting environmental and social impact assessment
and rehabilitation projects.
Some of its big environmental projects include environmental and social impact reports for Oyu
Tolgoi, SouthGobi Sands, and Energy Resources.
11. Traverse Resources - is a world-class drilling company servicing the resources industry
throughout multiple geographical locations. It specializes particularly in remote and challenging
environments, and currently operates in Papua New Guinea, Fiji, Indonesia and Mongolia.
12. Woodmont International - is a public and government affairs firm headquartered in Ulaanbaatar
that provides clients meaningful solutions to external issues such as media, community
engagement, and government relations. It also assists a wide range of investors from around the
world on understanding opportunities in Mongolia.
The evening's presentations began with an introduction by Nigel Finch, director of admissions and
associate professor at the University of Sydney Business School. Dr. Finch and Professor Andrew
Terry, also of the University of Sydney, will be developing a plan to give training to officials for
greater transparency at the Ministry of Finance, the Mongolian Stock Exchange (MSE) and the
Financial Regulatory Commission (FRC).
The goals of this operation for the public sector are to identify deficiencies, build capacities, and
design a process for the dissemination of information to inform investors.
Finch pointed to benchmarks such as the World Bank's Doing Business report and Transparency
International's Perception of Corruption Index as evidence that Mongolia needs assistance in
cleaning up its public sector.
―The general trend is Mongolia is ripe for improvement in transparency,‖ said Finch.

15. Finch said the program is hoping to help raise Mongolia's sovereign credit rating two notches for a
target of ―BBB- which could save up to USD 500 million in interest per year on the forecasted
national debt.‖
Next, Peter Benson, team leader of the Asia Development Bank's initiative to improve Mongolia's
roads, spoke on the progress he has seen. Benson is an employee of VicRoads, an Australian
government organization that has experience building 24,500 kilometers of roads and 54,000
kilometers of lanes in both rural and metropolitan areas.
Benson and his team aim to develop a road map, provide on-the-job training for construction and
supervision, introduce international practices and standards, and establish a capacity for technical
development and transfer. The main goal, however, is to build 180 kilometers of road for 2013 with
a needed budget of between MNT 20 billion and MNT 30 billion from the government.
Additionally, Benson said he hopes to break up the government monopoly and replace it with
competitive bidding with government participation in work practices. The roads expert said
periodic maintenance is a much better strategy for road maintenance rather than waiting for
potholes to form.
―It's better to look out for it before it falls apart as opposed to fixing up a broken road,‖ said
Benson. ―That's not what happens in Mongolia. There is no such budget; no such skill.‖
Other objectives are to create a Road Fund, restructure the Department of Roads and create a Road
Research Institute.
Carolyn Clarke, Managing Partner, PricewaterhouseCoopers Audit LLC, spoke next to discuss the
recently conducted International Women's Forum. The event featured a visit from U.S. Secretary of
State Hillary Clinton, as the event is a passion project for the former U.S. first lady. Clarke said the
event provided the opportunity to raise many issues that are relevant to both men and women.
Although the event had good attendance from the public sector, participation from the private
sector was lacking. Clarke requested that the business owners in the audience ―volunteer and put
forth your female workers for a working group and help implement the ideas that came out of the
forum.‖
She asked the audience to consider the existing labor laws and if they favor either gender. It is up
to the private sector, she said, to address the fact that 70 to 80 percent of graduates are female,
while far less hold management positions.
Finally John Bachrach, director of IEEC, a member of the IMC Montan group, spoke on his company
and how it helps to add values to the minerals sector. Established in 1992, IEEC has provided
specialist mining consultancy for over 300 assignments.
―We don't drill holes, but we do advise on where those holes should be drilled,‖ said Bachrach.
IEEC and companies like his provide help in developing feasibility studies and mineral expert reports
for public offerings. With a strong knowledge in exploration and practices, a strategic vision and
technical knowledge, and extensive experience, IEEC can provide added value to mining operation.
BCM MONTHLY MEETING RECAP SEPTEMBER, 2012
The meeting on 24 September with Laurenz Melchers in the chair was attended by 100 members and
invited guests.
BCM Vice Director Ser-Od reminded members of the open letter to Parliament published in
numerous newspapers in Mongolia. It appealed for a transparent and stable investment climate that
encouraged input from the private sector when Parliament drafts its legislation. The vice director
also reported the Working Group for Education's intention to partner with the Ministries of Labor,
Education, and Economic Development as well as international organizations such as the Korean
International Cooperation Agency (KOICA). Additionally, the Working Groups for Taxes and for
Capital Markets will meet in October, he said.

16. BCM membership now stands at 242. The three most recent members are:
1. Mott MacDonald Mongolia is a uniquely diverse EUR 1 billion global consultancy, delivering
leading-edge solutions for public and private sector clients across 12 core business areas. As one of
the world's largest employee-owned companies with more than 14,000 staff, it has principal offices
in nearly 50 countries and projects in 140.
2. Oval Partnership is a multi-disciplinary architectural practice headquartered in Hong Kong with
offices in China and the United Kingdom. Oval is the center of a group of companies working on
sustainable lifestyle projects across a variety of design disciplines, including architecture, master
planning and interior design.
3. Od Consulting HGZ is a local legal consultancy firm that provides high-level professional services.
It works closely with its customers to tackle any challenges and define strategies and solutions to
gain significant and effective results. Its concentration is on long-term relationships with its
customers and partners, which are always based on mutual trust and benefits.
The evening began with an update from Anne Delarue, Country Director of Oxford Business Group,
on its Mongolia Report.
For 18 years OBG has focused on research and consultancy, and publishing. However, it is currently
only active in research and publishing in Mongolia. OBG published its first Mongolia Report in March
2012 and has plans to publish its second before the end of the first quarter of 2013.
―At the end of the day, it's all about the information,‖ said Delarue; later adding, ―Data is the first
step toward development.‖
OBG arrived on invitation by the Mongolian government and partnered with the Foreign Investment
and Foreign Trade Agency (FIFTA) and BCM. Due to the restructuring of the government, OBG is now
under talks with the office of the president for a new partnership with the government.
At the conclusion of Delarue's presentation, she and Chairman Laurenz Melchers signed a
memorandum of understanding (MOU), formalizing BCM and OBG's cooperation and partnership.
Patrick Nijs, Ambassador of the Belgium Consulate of Ulaanbaatar, gave the second presentation of
the evening, introducing the audience to Belgium's intentions for economic and political
cooperation with Mongolia.
As a nation familiar with occupations and geopolitical turmoil, said Nijs, ―it's no wonder for us to be
one of most committed to cooperation in Europe‖and to become a founding member of the
European Union. Belgium currently exports 80 percent of its production and ranks as the ninth
largest exporter in the world, he said.
―Trade and business is a national business for us. We have no other national interests other than
peace and trade.‖
Belgium is currently looking over Mongolia for opportunities for engagement and to learn the ―do's
and don'ts for success in Mongolia.‖ The consulate hopes to step up Belgium's presence in Mongolia
to pursue an economic mission after a year spent with fact finding and research. Members of the
Beijing-based consulate are currently visiting Mongolia with three companies to meet with seven
ministries and the Mongolian National Chamber of Commerce and Industry (MNCCI), in addition to
BCM.
B. Bayar, Managing Partner of Economic Legal Consultancy (ELC) Co. and co-chair of the BCM
Legislative Working Group spoke next to give an update on the progress of its draft legislation for
―investment support‖ to be submitted to Parliament. Bayar leads a team of lawyers that have thus
far submitted draft laws for mineral and water resources.
This latest law aims to introduce a tax system to offer stability for both foreign and Mongolian
investors, said Bayar.
―The Law on Supporting Investors and a Stable Tax Environment aims to provide a tax environment
where local and foreign shareholders are the same.‖

17. The law would allow companies to apply for long-term tax stability after meeting a certain
threshold for investment. Companies would receive a certificate that allots a given number of years
for the duration of tax stability. Other companies would also be granted a conditional term where it
must reach the threshold or have its certificate status revoked.
The law would include the procedures for applying, the time for approval, and other details to
provide a clear and predictable process.
―This is a way to mitigate some anti-foreign investment sentiment in Parliament and hopefully
improve it for you all,‖ said Bayar.
Houston Spencer, Vice President of Communications and Media Relations of Oyu Tolgoi LLC, gave
the final presentation, providing a summary of the Oyu Tolgoi investment agreement to dispel some
of the rumors plaguing the media. He began by thanking BCM and its partners in the private sector
for releasing their open letter to the government
―BCM worked together with the Mongolian National Chamber of Commerce and Industry, the
Federation of Mongolian Employers, the CEO Club, the Mongolian National Mining Association, the
Mongolian Confederation of Professionals, and an NGO called Fair Taxes and Wise Spending. That‘s
a very long list of like-minded people who put their names on a full-page ad to the government. It is
the length of the list that struck me. I don‘t think I‘ve ever seen anything come out from that group
of organizations together.‖
Spencer listed off a number of false rumors such as Mongolia receives no benefit from the Oyu
Tolgoi project; it will not see any money for decades; and Mongolia bears a huge risk. In actuality,
Mongolia receives the largest share of Oyu Tolgoi's cash flow (71 cents on every dollar made); it has
received significant tax income since the first day of construction (with projections to receive 700
million by the time the mine goes into commercial operation next year); and bears no-risk as per
the Oyu Togloi investment agreement.
―Without access to global capital Mongolia would face very tough choices. If foreign investors
hesitate, what are the alternatives? Who would fund development?‖ asked Spencer.
―Mongolia needs its friends and third-neighbor investors now more than it ever has.‖
BCM MONTHLY MEETING RECAP NOVEMBER 2012
The meeting on 5 November with Laurenz Melchers in the chair was attended by 165 members and
invited guests.
BCM Executive Director Jim Dwyer thanked all in attendance for their continued support, without
which BCM could not exist. The day's events celebrated BCM's 5th Anniversary since it first began
supporting business investment and a favorable business climate while promoting the activities of
the private sector. During its celebratory Gala dinner after the meeting, the Business Council
recognized 2012 top achievers with awards. They are:
International Company of the Year: PricewaterhouseCoopers Audit LLC
Local Company of the Year: Mandal General Insurance LLC
Media Company of the Year: Mongolian Economy
Government Friend of the Year: B. Ganbat, Ministry of Economic Development
BCM Working Group of the Year: BCM Legislative Working Group
Towards the end of the dinner Peter Morrow, Founding Chairman of the Business Council,
announced that Laurenz Melchers, Chairman, and Luvsandendev Sumati, Deputy Chairman, would
step down from their posts after three years of exemplary service. Subsequently B. Byambasaikhan,
CEO of Newcom Group, and Tim O‘Neil, Executive Director of CPS International, were announced as
their replacements, respectively.
BCM membership totaled 250 at October 31, the end of BCM‘s membership year, up from 201 in
2011. The 14 most recent new members are:

18. 1. American University of Mongolia (AUM) is a Mongolian registered non-governmental, non-profit
organization founded by a group of Mongolian and American business, educational and community
leaders. AUM offers a U.S. accredited curriculum based on American liberal arts tradition focusing
on critical thinking and creative problem solving, tailored to the needs and interests of students and
the Mongolian marketplace.
2. El Group Consulting is a team of highly skilled consultants providing a wide range of services in
executive search, human capital management and analytical research. El Group has in-depth
understanding and solid experience in serving multinational, domestic and international clients
from Central Asia, Kazakhstan, Europe and North America.
3. The Belgian Embassy and Consulates General has opened visa application centers in Beijing,
Shanghai and Guangzhou. This service is available for residents in China and Mongolia who wish to
apply for a Belgian Visa.
4. G&DS LLC (Geophysics and Drilling Service) is a Mongolian geophysical consulting service
company. The production crews are experienced in geophysical borehole logging and ground
geophysics planning, acquisition, processing, and equipment maintenance. G&DS has provided
dozens of ground and borehole geophysical services for Oyu Tolgoi LLC, Tethys Mining LLC (Vale),
and Hunnu Coal Ltd.
5. IRMUUN Multimedia, founded in 2004, is the largest privately owned publishing and
communications company and is the leading content creator with the most diverse publications in
Mongolia.
Publications include Cosmopolitan, National Geographic magazine, Skyvision and Smartway in-flight
magazines.
6. The Julius Baer Group is the leading Swiss private banking group, focusing exclusively on the
demands of sophisticated private clients, family offices and external asset managers from around
the world. It has the largest international presence of all Swiss private banks with over 40 locations
in more than 20 countries. At the end of August 2012, the Group's total client assets amounted to
CHF 276 billion (USD 292 billion), with assets under management accounting for CHF 184 billion
(USD 195 billion). Switzerland and Asia are the group‘s two home markets.
7. LexLoci is a Mongolian law firm that provides quality legal services in the areas of corporate and
commercial transactions, mining and infrastructure development, real estate transactions, labor
and tax issues, civil and administrative litigation to foreign and domestic entities and individuals.
8. Management Department of Economic School of National University of Mongolia offers Bachelor,
Masters in Business Administration and Doctorate degrees with its faculty of 20 lecturers, most of
whom hold a PhD from respected international universities. The School of Economic Studies is
currently in the accreditation process by ACBSP in the United States and has partnerships with
respected institutions such as the University of Manchester, University of Kyoto, University of
Dankok and Utah Business School.
9. Onom Foundation is working to promote sustainable progress in Mongolia. It aspires to advance
the causes for education, health care, and democracy in Mongolia, and to contribute to the creation
of society where Mongolians have more opportunities to realize their dreams.
10. Orica Mongolia LLC is a subsidiary of the Australian Securities Exchange (ASX)-listed Orica Ltd.
Orica is the world‘s largest provider of commercial explosives and blasting systems to the mining
and infrastructure markets, the global leader in the provision of ground support in mining and
tunneling.

19. 11. Takhi Recruitment is a specialist recruitment agency in Mongolia that features a local presence
with international reach. It has a head Office in Ulaanbaatar and satellite offices in London and
Perth, Australia. It focuses on the repatriation of Mongolians, expatriate introductions, and local
recruitment through its executive recruitment services.
12. Techenomics Mongolia is an oil conditioning monitoring laboratory that provides controlled
maintenance and technical support. Services for the mining industry include: full oil analysis
including foam testing for hydraulic and gear oils; fuel testing to increase power and reduce
consumption; coolant, grease and transformer oil testing; and online reports on Blue Ocean
software.
13. Voyager Resources Ltd. is a copper and gold explorer. Its flagship KM copper project is located
in the Southwest Gobi Island Arc Terrain, which is one of a number of tectonic terrains that extend
across the Gobi and southern regions of Mongolia that have been proven to host a number of
mineralized copper porphyry systems, including the giant Oyu Tolgoi deposit. Its other projects are
the Daltiin Ovor and Khongor copper-gold projects. Voyager is listed on the ASX.
14. Wolf Petroleum Ltd. is now one of the largest holders of oil and gas exploration acreage in
Mongolia. It has secured contracts on conducting petroleum joint geological surveys and is now
actively seeking further license opportunities. It plans to carry out exploration by applying modern
data processing and interpretation techniques to geophysical information, acquiring additional
geophysical data and then, subject to future financing, undertaking drilling programs where
warranted.
The evening‘s presentations began with a report from Arshad Sayed, President of Peabody Energy
Corp. for Mongolia and India, to discuss the path of development for Mongolia's minerals sector and
introducing the industry's best practices. Sayed said if Mongolia is to attract the best skills in the
industry it must provide a stable legal and fiscal structure.
―There needs to be a serious debate of where the government sees itself going,‖ he said. ―Will it be
an owner? A beneficiary?‖
Conditions for a sustainable resource economy, said Sayed, include geological potential but go
beyond to political stability, minerals law, fiscal rule, and infrastructure.
He pointed to Chile as an example of country that has benefited enormously from its minerals
sector thanks to proper planning and management. It is noteworthy, he added, that Chile was the
only resource-based economy to not experience a downgrade from Standard & Poor's (S&P) Rating
Services due to its well stocked sovereign fund, which cushions the nation's economy from economic
downturns.
Randolph Koppa, President of Trade and Development Bank of Mongolia LLC, gave a presentation on
the state of the banking sector. He said Mongolia was experiencing growth in most areas of the
banking sector including total assets, loans, deposits, capital funds, and profits.
Trade and Development is one of the country‘s four major banks, each experiencing significant
growth on the back of Mongolia's mineral boom.
Houston Spencer, Vice President of Communications and Media Relations at Oyu Tolgoi LLC,
concluded the evening's presentations with an update on the Oyu Tolgoi copper and gold project.
He began with the announcement that Oyu Tolgoi had signed an agreement with Chinese firm Inner
Mongolia Power Corp. to purchase power, the last hurdle before commencing operations. Having
signed the agreement just two hours prior, BCM audience members were some of the first to hear
the news.
However, that does not change the fact that the Oyu Tolgoi investment agreement is under fire
from members of Parliament who would like more state ownership or to change the tax and royalty
terms.

20. Spencer mentioned statistics from a poll Oyu Tolgoi had conducted that exhibits some of the
challenges the project and its developers must face. The good news for Oyu Tolgoi is it is well
known and had strong ratings for employment, training and environmental care, especially with
young people. However, the poll also found that 60 percent of 1,000 respondents said the overall
economy is worse or stagnating, while 67 percent said their own households are worse or standing
still.
Finally, in another survey, conducted by the Sant Maral Foundation, over half of all polled felt
government should own more than half of any project, with a slight majority feeling private
enterprise should not have any involvement at all.
―Such absolute faith in the state is a legacy issue we are all struggling with,‖ said Spencer. He
added, ―We assume that everybody is pretty much sure that the free-market enterprise system is
what is needed to help Mongolia and its citizens succeed and approach this next wave of
development. But obviously we can't assume everyone is already convinced of that.‖
BCM MONTHLY MEETING RECAP, DECEMBER 2012
The meeting on 10 December with Laurenz Melchers in the chair was attended by 80 members and
invited guests. Executive Director Jim Dwyer thanked Melchers for his three-years of success as
chair, as this would be the last meeting he would hold the position.
Dwyer next reported on BCM‘s 6 working groups‘ activities, involving over 130 member volunteers,
which included the Risk Working Group's preparations for the 3rd Risk Forum on February 26 and the
Education Working Group's success with its ―BCM in the Classroom‖ series which recently held two
events with 100 people in attendance at each at the Institute of Finance & Economics. Also, about
five members of the Tax Working Group were hard at work to form a joint working group with the
Mongolia Tax Authority‘s ―Large Taxpayer Office‖ to improve efficiencies and resolve questions in a
customer friendly way.
190 members have renewed BCM membership since the 2013 drive began in late October.
Reminders are going out to those yet to renew. Dwyer reiterated that BCM‘s membership is ―our
lifeblood‖ and anticipates membership reaching a new record high of 275 by October, 2013.
The seven most recently joined members are:
1. Allen & Overy is an international legal practice with approximately 500 partners and 5,000
people, working in 42 offices worldwide. Its lawyers are involved in many of the most influential
commercial ventures and are known for providing clients with pioneering solutions to the toughest
legal challenges.
2. Alpha Plant Maintenance provides maintenance and management services for mining equipment.
Alpha Plant Mongolia LLC has currently available a new EX1900-6 Hitachi excavator and 4 new 785-7
Komatsu dump trucks that can be quickly mobilized as well as a wide variety of ancillary
equipment. Alpha Plant Mongolia can also procure earthmoving equipment through its extensive
worldwide network for supply to the Mongolian mining and construction industries.
3. Applus Velosi is an international recruitment and workforce solutions firm. It has been active in
Mongolia since 2006 with its experienced industry professionals. Services include executive search
and staff appointments; contract recruitment, national and expatriate; human resource consulting,
payroll, travel, work visas and logistics.
4. Cliveden Trading AG is a professional and trusted trading and marketing company. It specializes
in offering bespoke services to Junior Miners. It has combined raw materials trading experience of
over 50 years.
5. Global Supreme Group has more than fifty years experience providing support to clients who
operate in some of the world's most challenging environments. Supreme has proven expertise

21. supplying food, equipment, fuel and complex logistical solutions in remote and difficult locations.
6. Mongol Daatgal LLC was established in 1934, and is the first and leading insurance company in
Mongolia that provides valuable insurance services throughout the country. It has 29 branch offices
in every district and province of Mongolia. It sells more than 60 types of insurance products into the
market. Core insurance products are: property all risks insurance coverage, financial insurance
products, liability insurance products, international health, and personal accident insurance
products.
7. Teck is a diversified resource company committed to responsible mining and mineral
development with business units focused on copper, steelmaking coal, zinc and energy, and is also a
significant producer of specialty metals such as germanium and indium. It has expertise across a
wide range of activities related to mining and minerals processing including exploration,
development, smelting, refining, safety, environmental protection, product stewardship, recycling
and research.
The evening began with a presentation from Adrienne Youngman, executive director of Mongolia
Talent Network, ―Human Talent in Mongolia.‖ In the year her company has operated, she and her
10-member team have focused on executive searches, recruitment and training. This time spend
has allowed her to find lots of potential for the Mongolian workforce.
―Anyone that's been operating here will know it's a relatively small pool of talent,‖ said Youngman.
―We see lots of potential with strong literacy, people having worked overseas, people with strong
aptitudes for foreign languages, and lots of motivation for pursuing education.‖
This year Mongolia sees 31,203 graduates earning their Bachelor's degree. Of those, 24 percent are
in business administration, 16 percent in teaching, and 10 percent in economics.
However, there seems to be a disconnect between the jobs available and what students are working
toward. Although mining is the largest growing sector in the Mongolian economy, Mongolia's two
largest universities saw only 235 mining graduates. Mongolia faces a diversity challenge, too, with
only 36 percent of graduates male. There is also a lack of clarity for the kinds of salaries workers
should be earning, with some who are new to the workforce having too-high expectations and
others who have worked years with pay far below what they deserve.
Jan Hansen, Asian Development Bank Mongolia Resident Mission's senior country economist, and E.
Enerelt, the bank's associate investment officer, presented an outlook for the Mongolian economy.
The bank has seen vulnerability from economic slowdown in China and growing pressures from the
balance of payments. Enerelt reported falls in both export and import activity and a current
account deficit equal to 30 percent of last year's gross domestic product (GDP). He also pointed out
government's overly optimistic revenue projections, difficulty in complying with the Fiscal Stability
Law, and public debt that equaled 40 percent of GDP strongly evidenced a pro-cyclical boom-bust
fiscal policy.
Hansen next pointed out the risks presented by off-budget spending by the Development Bank of
Mongolia. He strongly recommended spending be reigned in from all sides and the Bank of Mongolia
continue its policy for a flexible exchange rate.
―The main priority for economic policy is restraining fiscal spending and deficits because there are
few reserves in the Fiscal Stability Fund (2 percent of GDP), which are not enough,‖ said Hansen.
B. Tsendsuren, head of the CDM National Bureau for the Climate Change Coordination Office at the
Ministry of Environment and Green Development, spoke next on the opportunities Mongolia had for
the carbon market. She spoke on the CDM system that allows offset credits for trade.
―CDM is a mechanism Mongolia could participate that allows countries to implement projects to
reduce GHG [greenhouse gas] emissions and sell credits earned,‖ she said
However Mongolia faces technical barriers, such as the need for approved methods and market
barriers, such as the fact that some regions won't accept CDM credits.

22. The BCOM/JCM Japanese initiative may address this issue. It is a partnership between Japan and
Mongolia that would decentralize the trade process and allows more flexibility. It also would
provide upfront assistance from Japan and easier logistical methods.
Tsendsuren outlined a plan where Mongolia had already garnered consensus from government and
begun its feasibility studies over the past two years. Next, the country will have to test its
methodologies and, beginning next year, implement pilot projects.
A. Bayarmaa, a carbon finance specialist at Clean Energy LLC, Newcom Group, provided a brief
illuminating real world overview of the handling of carbon credits in the Salkhit wind farm CDM
project.
The final presentation was given by Efrain Laureano, Chief of Party at USAID's Business Plus
Initiative (BPI). BPI has worked in Mongolia to improve the business environment in Mongolia
through its support of private sector growth and competition. Two projects it has implemented to
meet these aims are the establishment of its Quality Management Center of Excellence to address
quality restraints while building capacities and the introduction of its Supplier Development
program, which sets out to build capacities for transaction making.
―We have identified an opportunity that has worked itself to include new participation for the
sector and work with trainers so they can be supplying from the start as we see the Quality Supplier
Development Center take off in the new year.‖
This month BPI will register the center. It also has targeted February for its focus on transaction
assistance.
II. THE TURQUOISE HILL - OYU TOLGOI COPPER AND GOLD MINE
Oyu Tolgoi is where the Mongolia story beings— with tremendous economic growth and a break-
neck speed for development—and is where some fear it could end if the government fails to
treat the issue with the sensitivity and gravity it deserves. At over 95 percent completion, the
Oyu Tolgoi copper and gold mine is on track to see commercial production begin in the first half
of 2013.
The development of the project has spurred tremendous investment. The investment
agreement behind the project, as chief investor Rio Tinto PLC and analysts assert, is the
cornerstone of investor confidence in investment in Mongolia. Rio Tinto holds 66 percent
interest indirectly in the project through majority ownership of Toronto-listed Turquoise Hill
Resources Ltd. (formerly Ivanhoe Mines Ltd.). This year saw Rio Tinto's success in acquiring
majority ownership in the Canadian mining outfit and the hasty exit of its former chief
executive Robert Friedland.
This year and in years past Oyu Tolgoi has been a media magnet as it is the rocket fuel that
drove 17 percent growth in 2011 and is the political bomb that has erupted in cries for
resource nationalism and populist anger in Mongolian society. This year saw a small section of
Parliament, again, call for a renegotiation of the terms of the investment agreement—with the
minister of mining leading the charge. Also, Parliament made the controversial decision to pass
a budget for 2013 that called for renegotiated terms to OT’s royalties.
As Oyu Tolgoi could remain a chief driver to the economy for up to the next 50 years in
Mongolia, its affairs will likely always be at the center of investment climate and political
stability.
Issue 206 – January 27, 2012
RIO STOPS AT MAJORITY INTEREST FOR OT IN IVANHOE GRAB
Rio Tinto PLC raised its stake in Canada's Ivanhoe Mines Ltd., the 66 percent interest holder in the
Oyu Tolgoi copper-gold project, to a majority stake but said it had not current plans to buy more
shares.

23. The move came after Ivanhoe Mines scrapped the shareholder rights plan that prevented Rio Tinto
from gaining control of the company. In December, an arbitrator invalidated the so-called "poison
pill," which Ivanhoe could have used to force the Anglo-Australian company to pay more for control.
It was no secret that Rio Tinto covets the Oyu Tolgoi asset and wanted to gain control of it. This
was called an opportune for Rio Tinto to make its move, as the risk for the deal dissipates as the
mine nears production. Ivanhoe Mines' share prices have also fallen, along with most other
commodity stocks amidst European economic frets. The stock stood at CAD 19.11 a piece last
week—well below its CAD 28.92 a share 52-week high.
Rio Tinto, scarred by the costly takeover of aluminum giant Alcan at the height of the commodities
boom, is not expected to move aggressively on Ivanhoe Mines. The mine is 70 percent complete,
and Ivanhoe Mines plans for it to be in commercial production in the first half of 2013. It is
expected to produce more than 1.2 billion pounds of copper and 650,000 ounces of gold a year, in
the first ten years of operation, with the mine producing 1.7 billion pounds of copper and one
million ounces of gold at its peak, in year seven.
Source: Mining Weekly, Reuters
WORRIES OVER COMMODITY PRICES DRIVES IVANHOE TOWARDS FINANCING DEAL
Perceiving a cloudy future for world markets, Ivanhoe Mines Ltd. announced that it had negotiated
an additional USD 1.8 billion bridge financing for Oyu Tolgoi.
"The facility, a precautionary response to volatility in the project finance and corporate debt
markets stemming from recent events in Europe, could be used if there is a delay in completing and
gaining approvals for the long-term project-finance packages," said the company in a statement last
week.
"The proposed bridging facility approved by the Ivanhoe Mines board remains subject to approvals
by Rio Tinto and the bank credit committee, and completion of final documentation."
The company says financing will be provided by a major international bank. Ivanhoe's stock slipped
two percent on Wednesday by USD 18.60 a share, following the announcement. According to the
firm, construction is 70 percent complete, and it expects to begin initial production in mid-2012,
with commercial production to begin in the first half of 2013.
Source: Mining.com
Issue 208 – February 10, 2012
OYU TOLGOI SCHOLARSHIP PROGRAM INVESTS IN SKILLED WORKFORCE FOR TOMORROW
Oyu Tolgoi LLC has agreed to and signed a memorandum of understanding with the Ministry of
Education, Culture and Science to develop a training program as a part of its larger effort to
support education.
The company responsible for one of the world's largest gold and copper mines has launched a
student scholarship program to support education in mining engineering, mine operations, and
environmental studies. The company will sponsor the education of 120 students attending Mongolian
universities and 30 students at international universities. Additionally, the company is offering
internship opportunities for students majoring in the aforementioned studies.
The program has selected E. Enkhtaivan, a third year student from Otgon Tenger University, as the
best performing student from its staff of interns at an annual award ceremony by the Mongolian
Youth Federation honoring the achievements of students. Each year students are selected from a
pool of the nation's 70 best performing students at various universities. Students are selected based
on the criteria of a minimum 95 percent grade point average for three consecutive quarters and
having performed outstanding work in the fields of economics, social science, medical science,
linguistics, and technology, in addition to active participation in the community.
"Oyu Tolgoi's objective is to select interns and scholarship recipients from students who are key
pillars to the future development of Mongolia based on academic achievement, social participation,
initiative, and future perspective to contribute to the Mongolian mining sector in the long term; and
boost enthusiasm and the future confidence of the students," said Cameron McRae, president and
chief executive officer of Oyu Tolgoi.

24. Source: Montsame
Issue 210-211 – March 2, 2012
OYU TOLGOI REACHES 73 PERCENT COMPLETION
Ivanhoe Mines founder and Chief Executive Officer Robert Friedland said today that construction of
the first phase of the Oyu Tolgoi mining complex in southern Mongolia has surpassed an estimated
73 percent completion and is on track to meet the mine's targeted start of initial production in the
third quarter of this year.
"Installation of the two production lines in the concentrator and pre-commissioning works are
progressing ahead of plan. The concentrator, which will have an initial capacity of 100,000 tons per
day, now is more than 80 percent complete. The first production line is scheduled to be completed
during the third quarter, followed by completion of the second production line in the fourth quarter
of this year," said Friedland. He added after first production this year, Oyu Tolgoi "will ramp up to
reach commercial production during the first half of next year."
Friedland said a goal is to have the Oyu Tolgoi mine site connected to a 220-kilovolt power line
reaching into China's Inner Mongolia by the end of July this year. Power transmission towers already
have been erected along the 95-kilometer route from Oyu Tolgoi, in Mongolia's South Gobi Region,
to the Mongolia-China border. A separate electricity-purchase agreement establishing a supply
arrangement between Mongolian and Chinese authorities is required before power can be imported
into Mongolia. Oyu Tolgoi LLC, which owns the project and is 66 percent owned by Ivanhoe Mines,
will be a party to a final power-supply agreement.
The long-term Investment Agreement signed with the Mongolian government in 2009 permits Oyu
Tolgoi to import electrical power from China for up to four years after the start of commercial
production, following which power will be sourced from within Mongolia.
Source: MarketWire
BATTLE FOR MONGOLIA'S COPPER LODE
Robert Friedland, the chief executive of Ivanhoe Mines Ltd. and one of the sector‗s most colorful
moguls, is vulnerable in a squabble with industry giant Rio Tinto PLC over the Oyu Tolgoi project.
Last month, Rio Tinto increased its ownership in Ivanhoe Mines to 51 percent for effective control.
Now in charge, Rio wants to hold on to Oyu Tolgoi but spin off or sell Ivanhoe‗s other mining assets.
One source familiar with the matter, however, said that Rio is in no hurry, as the Oyu Tolgoi project
still has hurdles to overcome, including wrapping up power-supply negotiations with Chinese
authorities.
Friedland is now reportedly looking to negotiate with Rio Tinto over an exit for himself and
Ivanhoe‗s other shareholders. If he wanted, he could hold on to the bitter end. Canadian rules
require a potential acquirer to own over 90 percent of a company‗s shares before forcing a full
takeover, which Rio would be unable to do if Friedland maintains his current stake.
The self-made, 61-year-old billionaire has a colorful past that include student activism against the
Vietnam War, a youthful friendship with late Apple Inc. co-founder Steve Jobs and some of the
sectors potentially most-lucrative discoveries in recent decades. Friedland, who spent much of the
1970s travelling in India, where he studied Sanskrit, Hindu culture and Buddhism, said he became
interested in mining after finding an abandoned gold mine on property he was developing for a
timber venture with Jobs. He came to prominence in the 1990s with a large Canadian nickel-deposit
find. In 2000 Ivanhoe Mines paid USD 5 million to BHP Billiton PLC and eventually USD 37 million for
rights and royalties to Mongolian licenses.
Lacking the firepower to develop Oyu Tolgoi on its own, Ivanhoe Mines invited Rio Tinto, which in
2006 took a 9.95 percent stake for USD 303 million. Since, Rio has invested over USD 4 billion to get
to its current 51 percent stake. But as Rio Tinto continued to build its ownership, analysts say the
relationship frayed with a 2010 shareholder-rights plan that allowed other investors to dilute Rio‗s
stake if it continued to grow. After Rio challenged this clause in arbitration, Ivanhoe abandoned the
plan, allowing Rio Tinto to go above 50 percent.
Rio Tinto could act by installing new board members and management and then selling off the non-

25. Mongolian assets. Or it could strike a friendly deal with minority shareholders by spinning off the
non-Mongolian assets, plus cash, to investors. While Oyu Tolgoi is valued at USD 13.3 billion, the
rest of Ivanhoe is worth some USD 3.4 billion. Those other assets include stakes in a gold project in
Kazakhstan and a coal mine in Mongolia.
Friedland has been hit by setbacks before but is upbeat by natures. Some early mining promotions
did not profit for investors, but Friedland could always drum up interest in new ventures. Ivanhoe
Mines‗ early days in Mongolia saw setbacks, including a local protest featuring an effigy of Friedland
in a top hat burnt in Ulaanbaatar. He‗s also proved controversial. Ivanhoe Mines once entered a
joint venture with a state-owned mining company in military-ruled Myanmar. Ivanhoe Mines said the
copper project, which it exited in 2007, brought investment into a developing country and began
before Canada placed sanctions on the regime.
Source: Wall Street Journal
Issue 213 – March 16, 2012
RIO AND IVANHOE STRUGGLE FOR OT POWER SOLUTION
A power solution for one of Rio Tinto PLC's most prospective mines remains elusive, raising doubts
over whether plans to be in production within six months can be achieved.
The Oyu Tolgoi copper and gold mine looms as one of Rio Tinto's most exciting growth projects on
the back of the company's recent takeover of Oyu Tolgoi's majority owner Ivanhoe Mines Ltd. But
difficulties in delivering power to the mine's remote location in the Gobi desert are continuing to
fester, with Ivanhoe Mines confirming that a deal to import power from China had still not been
reached.
The current plan would see the mine site, which includes concentrators and a large workers village,
connected to the power grid on the Chinese side of the border for the first four years of the mine's
life. But such a deal requires an agreement between Chinese and Mongolian authorities, and
Ivanhoe Mines confirmed today that officials from the two nations had still not agreed to terms.
Ivanhoe said extra diesel-generated power was being brought into the mine site in the meantime,
and warned that production schedules could slip if the plan to import Chinese power had to be
abandoned in favor of building a coal-fired power station on site at Oyu Tolgoi sooner than planned.
Under the mine contract, all power must be sourced from within Mongolia after four years of the
mine's life.
Source: WA Today
Issue 216 – April 6, 2012
CHALCO, RIO, AND IVANHOE ALL BENEFIT FROM SOUTHGOBI DEAL
When Rio Tinto PLC finally gained control of Ivanhoe Mines Ltd. and its prized Oyu Tolgoi copper-
gold mine in Mongolia earlier this year, it appeared probable that it would oversee slimming down
of its acquired firm to focus on the massive project. That process has now started.
Ivanhoe Mines has announced it had received notice that Aluminum Corporation of China (Chalco)
plans to make a proportional takeover bid for between 56 percent and 60 percent of the shares in
SouthGobi Resources Ltd. SouthGobi produces nearly five million tons a year of thermal and coking
coal, selling it into China. Chalco is a subsidiary of China's state-owned Chinalco group which is Rio
Tinto's biggest stakeholder.
Despite the collapse of a proposed USD 19 billion alliance in 2009, negotiated when Rio Tinto was
under extreme financial pressure, the companies have formed a strong relationship. Chinalco has
also expressed some interest in gaining a share of Oyu Tolgoi. The offer for SouthGobi, which values
that group at about USD 1.5 billion, will release between about USD 514 million and USD 866 million
for Ivanhoe Mines, which has entered a lock-up arrangement with Chalco that binds to tender its
shares into the offer. Ivanhoe said it planned to use the proceeds to help fund the development of
Oyu Tolgoi.
While the sale of a majority of its SouthGobi holding might not be part of a grander design, it will
focus more interest on the fate of the other non-Oyu Tolgoi assets within Ivanhoe Mines. The Kyzyl
gold project in Kazakhstan and Ivanhoe Australia Ltd. could both be worth up to USD 1 billion each,