This document summarizes news from the Business Council of Mongolia newsletter dated July 31, 2009. It covers several topics in business, economic, and politics realms. In business news, it discusses ongoing negotiations between the Mongolian government and Ivanhoe Mines over the Oyu Tolgoi mining project, including demands for a 34% stake in the company. It also provides updates on other mining projects in Mongolia. In economic news, it mentions the effects of the global slowdown and support for small businesses. In politics, it notes a new amnesty law and Mongolia's plans to send troops to Afghanistan.

1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmmongolia.org
info@bcmongolia.org
Issue 79, July 31, 2009
NEWS HIGHLIGHTS:
Business:
 Government‟s new 35 demands include 34% share in Ivanhoe Mines Mongolia Inc.;
 Situation not easy, says Minerals Minister;
 Forcing Rio Tinto out will help China gain control;
 MP calls Mongolian conditions “very tough” and “unacceptable”;
 Parliament‟s desire is to invite China to control Mongolia‟s economy, says Baabar;
 Mongolia reinstates Boroo mine license;
 Suspending Boroo Gold operation was a mistake, says MP;
 Khan Resources worried about reported Mongolian regulation;
 Polo Resources kicks off new drilling at Val coal project;
 Lotus Resources makes first sale of fluorspar;
 Canoel‟s exploration period begins;
 Eznis goes international, flies to Inner Mongolia;
 Altan Dornod officials likely to claim amnesty;
 Agni Match wants to resume production, seeks Government help;
 Arrests up the ante for Rio in China;
 Petroleum product sharing agreement endorsed;
 Chinese company gives gers, noodles towards flood relief;
 Shivee Ovoo selling coal for less than production cost;
 Glenn Pickard leaves Eznis Airways.
Economy:
 Ban Ki-moon calls for help to landlocked countries;
 World Bank sees effect of economic slowdown in all sectors;
 SMEs wait for promised loans;
 Ministry increases loan size;
 Foreign companies to attend regional investment forums in August;
 Government wants to overhaul banking regulations;
 Three conditions for selling gold to Central Bank;
 Institutional loans start arriving;
 Mining endangers Onon river basin;
 Remote districts get linked to the Internet.
Politics:
 UN chief says he will come again;
 President dispels misconceptions about amnesty law;
 U.S. Embassy routes USD25,000 through Red Cross for flood victims;
 Mongolian troops to be in Afghanistan by September;
 Organization to liaise with Mongolians abroad;
 Mongolia, China to exchange information on corruption charges;
 Location ratings survey ranks Ulaanbaatar 34th
in Asia;
 Pasturelands in worrying decline, finds World Bank study;

2.  Canadian „Super House' to star on Mongolian TV;
 Ring importing fake Chinese medicine unearthed;
 Postal thefts traced to private carriers.
*Click on titles above to link to articles.
_____________________________________________________________________________________
BUSINESS
GOVERNMENT‟S NEW 35 DEMANDS INCLUDE 34% SHARE IN IVANHOE MINES MONGOLIA INC.
The working group set up by the Government and Ivanhoe Mines have been meeting every day since
Monday to reach an agreement on investing in the Oyu Tolgoi project. Both sides have been
tightlipped about how things are going and no immediate breakthrough is expected.
The Mongolian side includes three members of the Cabinet -- Finance Minister S.Bayartsogt, Mineral
and Energy Minister D.Zorigt, and Environment and Tourism Minister L.Gansukh. About a dozen
officials from the three ministries are helping them in the talks.
The investors’ side is led by Commerce Director Mr. Sam Riggall of Rio Tinto and Deputy Chairman
Mr. Peter Meredith of Ivanhoe. Both are familiar with past negotiations on the agreement.
The Mongolian side has submitted its fresh list of 35 demands. The most contentious issue is the 68
percent windfall profits tax. The Mongolian Parliament has said this can in no circumstances be
waived, while the investors have from the beginning refused to accept this, arguing that if this is
levied the total tax burden would go up to an unacceptable 90 percent of the profits.
Another thorny issue is that of how much share the Government will have. Parliament has
instructed the Government to try hard to raise this to 50 percent from the 34 percent that both
sides previously agreed upon. This would have been difficult to achieve as the mining law in force
does not support the Government claim to own more than 34 percent. To bypass this dichotomy the
Mongolian side is now asking for 34 percent share in Ivanhoe Mines Mongolia Inc., and not in the
project.
Read more…
The Government also wants three representatives on the 9-member Board of executives. Parliament
adopted a measure on the last day of the Spring session that disallows mining companies, including
Ivanhoe Mines, from claiming refund of VAT they pay. In addition, the Mongolian side has rejected
the investor’s proposal that equipment and machinery for the project be allowed to be imported
without paying customs duties.
In an effort to clear misconceptions, Rio Tinto and Ivanhoe Mines have written to each MP
individually, offering to provide them information and expressing readiness to discuss all issues with
them so that they can strengthen their understanding of mining matters in general and aspects of
the project in particular.
Source: en.News.mn
SITUATION NOT EASY, SAYS MINERALS MINISTER
Briefing newsmen on the progress of the talks on Oyu Tolgoi, Mineral and Energy Minister D.Zorigt
said on Wednesday that it is too early to report anything “but the situation is not easy”. He said the
investors have not yet rejected any of the Mongolian proposals or offered others of their own and
said, “I can only repeat that the situation is not easy.”
Source: Ardiin Erkh
FORCING RIO TINTO OUT WILL HELP CHINA GAIN CONTROL
It would appear that the only reason why Parliament decided to reassert several “tough and
unacceptable conditions” while pushing the Government to negotiate an agreement on Oyu Tolgoi
with Ivanhoe and Rio Tinto was to allow China to stake a claim. That development is being
facilitated by the deliberate spreading of rumors about the two companies giving up on Mongolia.
Neither of them has actually given any indication that they plan to do so. Indeed, its present
relations with China, following the arrest of four of its employees in Shanghai, give Rio Tinto an
added reason not to cede ground to that country.
If, however, China does get an opportunity to become the major investor in both Tavan Tolgoi and
Oyu Tolgoi, the mining sector of Mongolia would be under the full control of its southern neighbor.

3. The buyer and the producer would be the same, with unpredictable consequences on the price
fixing process. The likely loss to Mongolian revenue should be pondered by our MPs during their
present break.
Source: Onoodor
MP CALLS MONGOLIAN CONDITIONS “VERY TOUGH” AND “UNACCEPTABLE”
MPRP lawmaker Kh.Narankhuu has said that the global economic downturn is not likely to reverse
course any time soon, and in this situation, Mongolia cannot afford to lose the opportunity of
creating hundreds of jobs by not reaching an agreement on Oyu Tolgoi. Even though the Mongolian
conditions are “very tough”, Ivanhoe Mines has resumed talks. Given “all the risks involved in any
investment, particularly in these uncertain situation”, if Ivanhoe and Rio Tinto do not accept “our
unacceptable proposals, there is no other way but to review and change them all,” he said.
Source: Mongoliin Medee
PARLIAMENT‟S DESIRE IS TO INVITE CHINA TO CONTROL MONGOLIA‟S ECONOMY, SAYS BAABAR
Social commentator and former Finance Minister Baabar feels the nature of Parliament’s directions
to the Government “completely closes all gateways” for Western companies to cooperate with
Mongolia in the mining sector. It was “a deliberate and politically motivated move by our
lawmakers” to force Rio Tinto to abandon its interests in Oyu Tolgoi. Before it does so, Rio Tinto
will, for sure, demand the reimbursement of its loan from Ivanhoe Mines who unfortunately, has no
funds to oblige. The only way for Ivanhoe would be to seek a new partner for the project to help
with the cash to pay back Rio Tinto. The most promising partner could be state-run Chinalco or any
other company in China.
Shenhua and the Government of Mongolia are currently engaged in negotiations on investing in
Tavan Tolgoi. If China becomes a shareholder in both Tavan Tolgoi and Oyu Tolgoi, it would
exercise control over at least 90 percent of Mongolia’s economy, since 50 percent of our foreign
trade is with it. Our decision makers are fully aware of this, so what they have done reflects a
carefully orchestrated policy and approach.
Source: Udriin Sonin
MONGOLIA REINSTATES BOROO MINE LICENSE
Mongolia has reinstated the main operating licenses for Centerra Gold's Boroo mine, the Canadian
firm announced on Monday. The chairman of the Minerals Resources Authority issued a decree
annulling an earlier three-month suspension order, which Centerra received on June 12. The firm
had said at the time that the suspension was related to “alleged issues relating to the operating
licenses such as record keeping, incorrect land use, and improper operating procedures”. The
company expects the mine to resume full mining and milling operations in the next few days. It also
plans to continue talks with Mongolian regulatory authorities on the issues surrounding the
suspension.
The company produced 40,183 oz of gold at Boroo in the first three months of this year. However,
even before the suspension order in June, production was halted by a strike over wages. The work
stoppage, which the company said was illegal, began in late May and was resolved on June 16.
The lifting of the suspension will not affect the Boroo heap leach facility, which is subject to an
additional permitting process and remains shut. The company is working with the authorities to
obtain final permits.
Source: www.miningweekly.com, www.centerragold.org
SUSPENDING BOROO GOLD OPERATION WAS A MISTAKE, SAYS MP
Reporting on the performance of the Standing Committee on the Budget during the just concluded
Spring session, its head, Mr. Ch.Khurelbaatar, has regretted the decision to suspend operation of
Boroo Gold as the three-month suspension was expected to lose the State MNT15 billion. The most
important decision of the committee was to delink the discussion on the main guidelines for next
year’s economic and social development from that on the budget. So far both used to be discussed
in the Autumn session, not giving members enough time to carefully study all documents. Now only
the budget will be discussed in the Autumn session while the other gets listed on the Spring agenda.
Mr. B.Batbayar, who heads the committee on environment and agriculture, feels the most
important law it approved was the one prohibiting use of plastic bags. Mr. Z.Enkhbold, head of the

4. committee on security and foreign policy, thinks their greatest success was in approving five
development loans, four of them coming from international financial institutions and one from
Japan. The loans indicate foreign faith in Mongolia being a good risk, he said.
Source: Ardiin Erkh
KHAN RESOURCES WORRIED ABOUR REPORTED MONGOLIAN REGULATION
Canadian miner Khan Resources has expressed concern about a move by Mongolia to regulate
uranium mining and potentially boost the Government's ownership stake in mining assets. The
company last week said it was still trying to ascertain the implications of the new mining measures
that Mongolian lawmakers are reported to have approved and that could take effect on August 15.
The small Toronto-based company said it supports Mongolia's attempts to develop its uranium
mining regulations, but worries about how this measure was developed. It said in March it expects
initial capital costs for its Dornod uranium project in northeastern Mongolia to be about USD333
million and estimates the project to be completed in 36 months.
Source: Reuters.com
POLO RESOURCES KICKS OFF NEW DRILLING AT VAL COAL PROJECT
Polo Resources has kicked off the second year of drilling at the Val coal project in Mongolia
following what it called “encouraging” results from the 2008 drilling program. The company
reported that detailed mapping and trenching had identified coal seams in outcrop over an area of
20 sq km within the Val exploration license. In addition, coal bearing strata have been traced
continually for more than 4km along strike.
A further 2,000-meter diamond drill program has been designed to test selected areas where flat-
lying coal seams occur close to surface. That program is expected to take six weeks to complete.
Earlier this year Polo signed a 50/50 joint venture deal with US coal giant Peabody Energy that now
operates all of Polo’s coal and mineral interests in Mongolia.
Source: smallcapnews.co.uk
LOTUS RESOURCES MAKES FIRST SALE OF FLUORSPAR
Lotus Resources has announced that, following the signing in June of its joint-venture agreement
with Amguulan LLC, the mining license has now been transferred to the new joint venture company.
The license is located in Dornogobi province and the project has an approved resource of 170,000
tons of fluorspar. An environmental assessment and a mining plan are now being prepared and,
once they are approved, it is expected that open pit mining will commence in August 2009.
Lotus has made its first sales of fluorspar from the Dai Uul project owned by Lotus Dai Uul LLC. The
fluorspar is being sold to customers in Russia. The revenue from this activity is expected to more
than cover the current costs incurred by the Dai Uul Joint Venture.
Read more…
Mr. Simon Longworth, Chief Executive, has called the transfer of the mining license from the
Mongolian owner to the joint venture company “another significant step towards achieving our aim
of building a profitable fluorspar mining and processing business in Mongolia”. He added, “We are
now in a position where we can quickly bring several fluorspar mines into full scale production. The
sales from the Dai Uul property mean that this project is now self financing. The company has a
number of other fluorspar exploration and mining properties under consideration and is confident
that it can quickly expand this business over the next six to nine months."
Source: www.lotus-resources.com
CANOEL‟S EXPLORATION PERIOD BEGINS
Canoel International Energy has revealed that the Petroleum Authority of Mongolia has fixed the
effective date for the five-year exploration program for the large oil exploration block in Mongolia
designated as Block XXIII, which means that the exploration period for the property has now
commenced. Canoel has an agreement to acquire, for USD1.1 million in cash and the grant of a 6%
carried interest in the Block, all of the shares of a Mongolian corporation that holds the exploration
license to the Block.
Source: www.canoelenergy.com

5. EZNIS GOES INTERNATIONAL, FLIES TO INNER MONGOLIA
The first international scheduled passenger flight of Eznis Airways will leave Ulaanbaatar for Hailaar
in Inner Mongolia at 2 p.m. on August 3. It returns to Ulaanbaatar at 8 p.m. the same day. The
flights will be twice a week, on Tuesdays and Thursdays.
Hailaar is in the northeastern part of PRC, adjacent to Dornod aimag. This becomes the third
passenger air route between China and Mongolia, after Beijing and Hoh Hot. The Eznis
management has called this launch one of the many achievements of the outgoing CEO, Mr. Glenn
Pickard.
Source: www.eznisairways.com
ALTAN DORNOD OFFICIALS LIKELY TO CLAIM AMNESTY
The Government has charged Altan Dornod with evading payment of windfall profits tax amounting
to MNT56.9 billion in 2007 and 2008. The matter is before an international arbitration court, but
there is a possibility that the officials of the company will claim amnesty under the new law.
Authorities say investigation against them will continue but the plea for amnesty will be made when
the case comes to court. The criminal law provides for confiscation of property and a large fine or
3-5 years in jail for concealment of taxable income or property, and there is widespread concern
that the charged officials would claim, and be granted, commutation of the jail term by 3 years, as
stipulated in the amnesty law.
Source: Onoodor
AGNI MATCH WANTS TO RESUME PRODUCTION, SEEKS GOVERNMENT HELP
More than 90% of the matches used in Mongolia are imported from China, with some coming also
from Russia. In 2007, 556,320.9 kg matches were imported at a cost of USD636,700, going up to
600,245.5 kg or USD846,600 in 2008. The corresponding figures for the first six months of this year
are 286,602.7 kg and USD394,300 respectively. Agni Trade, the first Mongolian match producer,
opened its unit in Selenge in 2000, and supplied 8% of the domestic demand. Productivity suffered
because of poor equipment and also as most of the work was done manually and the company was
gradually forced to stop production. It is planning to resume operations taking advantage of the
Government’s promise to support small and medium enterprises.
Source: Onoodor
ARRESTS UP THE ANTE FOR RIO IN CHINA
Rio Tinto Group is known for playing hardball when negotiating iron-ore prices, prompting Japanese
steelmakers to present the company with a faceless doll as a tribute during one round of talks. Now
Rio faces higher stakes in China, which overtook Japan in 2003 as the world’s biggest buyer of iron
ore, and this month arrested four of the company’s executives as annual price talks with Chinese
mills stalled. China has accused the four, including Australian Stern Hu, of stealing state secrets.
Mr. Hu’s detention by Chinese security officials is related to a criminal probe into the talks,
Australia’s Foreign Minister Stephen Smith has said.
“What they appear to be wanting to do, in classic Stalinist fashion, is discipline the steel industry
and intimidate their negotiating partners at the same time,” said Mr. Paul Monk, former China
analysis head at Australia’s Defense Intelligence Agency. “From a point of view of a state that is
trying to establish its credentials in the market economy of the world, it is a really stupid thing to
have done.” Ms. Mona Chung, author of “Shanghaied: Why Foster’s could not Survive China,” said in
an interview, however, “Rio needs to re-examine its way of dealing with the Chinese. It has been
making some serious cultural mistakes, and it wasn’t just the last six months or 12 months.”
Read more…
“China will perhaps use the Hu situation to try and get at least some temporary advantage if not
some permanent advantage” in price talks, said Mr. Vic Edwards, a lecturer in banking and finance.
“They are releasing information through the media slowly and certainly that wouldn’t be
acceptable in Australia because it is preconditioning the public to a view or an attitude and it’s
almost prejudging him.”
China has also accused Mr. Hu of bribing mill officials during this year’s talks. Rio has denied the
bribery allegations and said it wasn’t aware of any evidence that would support an investigation by
Chinese authorities. Mr. Hu’s arrest was an individual judicial case and wasn’t political, a Chinese
Foreign Ministry spokesman has said.

6. Source: Bloomberg.net
PETROLEUM PRODUCT SHARING AGREEMENT ENDORSED
The Government last week approved a product sharing agreement concluded between the
Petroleum Authority and the Shunkhlai Energy company in May for conducting oil exploration in
Sulinkheer-22 block in Dornogovi province. Under the agreement, when drilling starts, the
Government will get 45 percent of the total extraction of up to 5,000 bbl a day.
Source: Zuunii Medee
CHINESE COMPANY GIVES GERS, NOODLES TOWARDS FLOOD RELIEF
PetroChina Daqing Tamsag Company donated 5 gers and noodles worth MNT6 million to help in the
flood relief work by the General Department of Emergency Services. Dozens of households were
rendered homeless after heavy rains and subsequent floods on two occasions in July.
Source: Montsame
SHIVEE OVOO SELLING COAL FOR LESS THAN PRODUCTION COST
The State-owned mining company at Shivee Ovoo is in serious financial difficulty as Government
policy does not allow it to raise coal prices. The present cost of mining the coal has been
determined to be MNT11.62 per kg, but it is sold for MNT11.40 per kg. The company has said it
cannot absorb more losses and has urged that it be permitted to raise current supply prices.
Source: Udriin Soniin
GLENN PICKARD LEAVES EZNIS AIRWAYS
Mr. Glenn E Pickard has left Eznis Airways after working as its Chief Executive Officer since January
2008. He had wanted to resign in May, but agreed to stay on until a successor was found. He has
been an active member and good friend of BCM and as he leaves Mongolia we wish him all the best.
Mr. Pickard leaves Eznis in good health. The airline has had its first profitable second quarter this
year, and the third quarter promises to be a repeat of last year, which was the first profitable
quarter the company had ever had.
Eznis’s new CEO is Mr. L.Tsoodol, He was previously General Manager of the Technical Department
and General Representative of MIAT in Berlin.
Source: BCM NewsWire
ECONOMY
BAN KI-MOON CALLS FOR HELP TO LANDLOCKED COUNTRIES
The most important international event that UN Secretary-General Ban Ki-moon attended during his
visit to Mongilia was the opening ceremony of the Think Tank on Trade and Landlocked Developing
Countries in Ulaanbaatar on July 27. In his address, Mr. Ban said “being locked in land should not
mean being locked out of trade” and praised Mongolia for hosting the institute, as “another
concrete demonstration of Mongolia’s leadership, solidarity and commitment” to the cause. One
out of every six United Nations Member States is a landlocked developing country, facing
fundamental geographic obstacles like “remoteness from major international markets, inadequate
transport infrastructure, and high transport costs”. Transit transport costs amount to 8 percent of
Mongolia’s Gross Domestic Product.
Mr. Ban hoped the new think tank would provide a center of excellence for high quality research
and policy advice for landlocked developing countries with a focus on economic growth and poverty
reduction and “provide home grown independent research catering to the specific needs of
countries literally from A to Z -– from Afghanistan to Zambia –- from Bhutan to Bolivia”.
Calling Mongolia “a pioneer” for such countries, the Secretary-General thanked it for “once again
leading the way” and ended with the hope that “Mongolia might be landlocked, but your
constructive foreign policy of good neighborhood relations, dialogue and cooperation is the key to
unlocking the door to an inclusive globalization and win-win solutions”.
Source: www.isria.com

7. WORLD BANK SEES EFFECT OF ECONOMIC SLOWDOWN IN ALL SECTORS
In its latest monthly brief, the World Bank sees the economic slowdown as continuing to adversely
affect both the financial and the real sectors of the Mongolian economy, with the negative impact
felt across all major sectors. Some financial indicators are stable, but risks exist in the banking
sector going forward. The fiscal situation has continued to be grim in the first half of 2009.
Revenues fell by 29.2 percent in real terms compared with the first half of 2008. Total expenditure
was relatively stable, except for an increase in net lending by the Government to the private
sector. The resulting 12-month rolling fiscal deficit deteriorated to 9.0 percent of GDP in June,
from 8.1 percent in May. However, the adjusted fiscal deficit (which excludes net lending) shows a
slight improvement to 6.5 percent of GDP in June from 6.8 percent in May. Following Parliament’s
amendment in June of the 2009 annual budget increasing expenditure by MNT104.6 billion, the
fiscal gap now stands at 5.8 percent of 2009 GDP, up from 5.4 percent under the March
amendment.
Read more…
The 12-month rolling trade deficit is narrowing, because imports continue to fall faster than
exports, pointing to a continued slowdown of the economy. Exports dropped by 40.2 percent
compared with the first half of 2008 due to lower commodity prices. There were also no gold
exports recorded in June. The Central Bank increased its net foreign exchange reserves by USD95
million to USD648 million at the end of June, while the corresponding figure for commercial banks
showed an increase of USD66 million to USD715 million.
Inflation was down sharply to 4.7 percent year on year in June, from 7.4 percent yoy in May, led by
a decrease in core inflation, giving further evidence of the economic slowdown. The Central Bank’s
decision to keep its policy rate unchanged may have contributed to increases in MNT deposits at
commercial banks.
Non-performing loans (NPLs) remained stable at 11.6 percent of outstanding loans while loans with
principal in arrears fell slightly to 5.9 percent of outstanding loans at the end of June, compared to
6.5 percent of outstanding loans at the end of May. The value of loans to the private sector in MNT
and to individuals in FX and MNT fell, and was only partly offset by an increase in the value of loans
in FX to the private sector.
Banks are still reluctant to lend to the private sector and are buying less risky Central Bank bills
instead. The year-on-year growth rate of total outstanding loans fell to zero in June 2009, i.e., the
value of outstanding loans is back at its June 2008 level. Loans to individuals shrunk by 15 percent
yoy, and the growth in loans to the private sector fell to 12 percent yoy.
Industrial production growth continued to be negative in yoy terms, with continued contraction in
manufacturing and mining output also slowing down. Registered unemployment increased by 22.3
percent in June 2009 compared to June 2008.
Source: www.worldbank.org.mn
SMEs WAIT FOR PROMISED LOANS
The Government announced some months ago a fund of MNT30 billion to support small and medium
enterprises. The money will be lent for three years and carry 1% interest per month. There are 90
business establishments registered as small- and medium-sized. They are all waiting to receive a
loan, but all requests or proposals seem to be stuck in the grooves of bureaucracy. Questions are
being asked whether the money will ultimately end up rescuing businesses and the national
economy or in private pockets. Their experience over the months has led SMEs to wonder whether
the recent waiving of the customs tax on equipment import will be of any real use to them or if it
would benefit only certain sections for whom it was not actually meant.
Source: Onoodor
MINISTRY INCREASES LOAN SIZE
According to figures for the last three years recently released by the Ministry of Light Industry and
Agriculture, 602 individuals or businesses borrowed MNT 4.3 billion for 483 projects in the provinces
and 119 projects in Ulaanbaatar at 1% monthly interest for two years. The limit for each loan was
MNT20 million in Ulaanbaatar and MNT10 million in the provinces.
The small and medium business development budget has been raised to MNT500 million for each
province from the beginning of July, 2009. The permitted amount of loans has been increased five
times. Khas, Mongol Shuudan, Zoos and Capitron banks are providing the loans according to their

8. own policy.
Source: Zuunii Medee
FOREIGN COMPANIES TO ATTEND REGIONAL INVESTMENT FORUMS IN AUGUST
The Deputy Prime Minister and the Foreign Minister have jointly arranged for four regional
investment forums in the coming months. The one for the eastern provinces will be held on August
6 in Choibalsan, and another for the western provinces on August 28 in Khovd. The forums are
meant to encourage investment in rural areas. Representatives of the Russian Federation, China,
South Korea, Turkey, Japan and the USA have expressed their desire to participate in the forums.
The east zone includes Khentii, Dornod and Sukhbaatar provinces that accounts for 7.1 percent of
the working age population and produce 6 percent of the nation’s GDP. Khentii offers scope to
develop tourism, while Sukhbaatar has unexplored resources like zinc. Dornod is better placed in
that it provides opportunity to develop both mining and tourism. Agriculture has accounted for 46
percent of the eastern zone’s economy in the last few years. Around 30 companies from Russia,
China, South Korea and Canada have invested USD20 million there between 1996 and now, with 70
percent of it in mining.
Bayan-Ulgii, Govi-Altai, Zavkhan, Uvs and Khovd provinces comprise the west zone that is home to
16.2 percent of the working age population and that produces 7 percent of the GDP. Agriculture
forms 71.8 percent of the economy here, with only 5.5 percent coming from industry. This has been
traditional, with Uvs growing mostly wheat and fruits, while Khovd and Zavkhan grow potatoes and
other vegetables. The west zone also has many ethnic groups. Some 70 companies from China,
Russia, USA, and South Korea have invested USD12 million here since 1996, with 60 percent of it
going to agriculture and food services.
Source: en.News.mn
GOVERNMENT WANTS TO OVERHAUL BANKING REGULATIONS
The Government has drafted amendments to the law currently regulating banking operations and
will submit them to Parliament for approval. The proposed changes are quite comprehensive, with
50 clauses in 8 sections, and are aimed at improving the performance of banks and at ensuring
general financial stability. They cover aspects like day to day operation norms, ownership of a
bank’s authorized share capital, strengthening bank leadership, improving auditing practices,
format of reporting, and protection against risks.
Source: Montsame
THREE CONDITIONS FOR SELLING GOLD TO CENTRAL BANK
The Central Bank has clarified that the terms and conditions regulating its purchase of gold are the
same for business units and individuals. There is no need to come through any agent and any
individual citizen can come directly to the bank as a seller if he met three requirements. First, the
gold has to be in ingots; second, its grade has to be certified by the state monitoring agency; and
third, it has to be more than 3 grams in weight. Individual sellers have to show their ID card and
have a valid bank account as the money is not paid in cash, but put there. The Bank also said it
expects the amount of gold sold to it this year to be less than in the past few years.
Source: Ardiin Erkh
INSTITUTIONAL LOANS START ARRIVING
Loans promised by international financial organizations as part of the agreement with IMF have
started arriving. The World Bank transferred USD41.9 million on July 24, thus raising the foreign
currency reserve to USD824.1 million and USD40 million from the ADB is expected any day.
Source: www.mongolbank.mn
MINING ENDANGERS ONON RIVER BASIN
Increase in mining and a sharp rise in the number of licenses issued for future work in the Onon
river basin in both Khentii and Dornod provinces are causing concern among local people. They are
aware of the importance of the income generated, but wonder if that is enough to offset the
ecological damage. Some gold mining companies, in particular, are seen to have done almost
nothing for environmental rehabilitation. Apart from the more than 20 lakes and springs that have
dried up due to their work, the large holes in the ground they leave behind attract ninjas and

9. frequently lead to the loss of livestock that fall into them.
The Onon river basin is among the 32 basins the World Conservation Fund has listed as endangered.
The Onon flows into the Ingedei and the joint stream then takes the name of the Shingedei to
become the 11th
longest river in the world. More than 30% of the river flows in Mongolia. The Onon
is the main source of water for more than 70 million people, and it is Mongolia’s responsibility to
protect its basin.
Source: Udriin Soniin
REMOTE DISTRICTS GET LINKED TO THE INTERNET
Altogether 39 districts in 8 provinces are now connected to the Internet at a cost of MNT 1 million
under a nationwide project being implemented by the State Committee of Communication
Regulation. The ultimate goal of the project is to connect over 200 soums in the western, central
and southern provinces to the Internet.
Source: Zuunii Medee
POLITICS
UN CHIEF SAYS HE WILL COME AGAIN
“This is not my last visit to Mongolia,” said UN Secretary General Ban Ki-moon as he left the country
on Tuesday morning after a busy two-day visit. His theme throughout his stay was how a poor,
landlocked country exemplifies the need for nations to adapt to changes caused by global warming
and the importance of helping local communities adapt to the effects of climate change so they can
become more sustainable in the face of extreme weather and other environmental problems.
Mr. Ban also visited Mongolian troops training to take up UN peacekeeping assignments and praised
Mongolia’s contributions to these efforts. He spent Sunday night in a traditional ger and talked to a
traditional nomadic herder community about how they were meeting problems posed by the
changing climate. He gave the name “Peace” to a takhi (wild horse) colt presented to him.
“I listened to the many problems of the community like water shortages and desertification as it
struggles to adapt to a changing environment, but fortunately we can see their resilience and
admire their spirit,” Mr. Ban told a news conference. Earlier he discussed with Mongolian leaders
how to address climate change issues and secure food supplies in vulnerable areas. They also
discussed how the country can meet the UN Millennium Goals for eradicating extreme poverty by
2015, he said.
Read more…
Wanting to learn from the people who are dealing with climate change as “the solutions are not
going to come from the scientists”, Mr. Ban discussed the community's challenges with the head of
the household, Mr. Mamo Batchuluun. “We are involved in an environmental project to protect the
nature of this area. We are trying to prevent desertification of the land,” Mr. Batchuluun said. The
community is part of a Netherlands-funded program that is helping find new sources of income,
such as growing vegetables and making felt handicrafts, while preserving the grasslands.
Source: Agence France Presse, en.News.mn
PRESIDENT DISPELS MISCONCEPTIONS ABOUT AMNESTY LAW
President Ts.Elbegdorj invited some journalists to his office last week to explain why he had
prepared the amnesty law and to dispel some misconceptions about the law in the popular minds.
He clarified that the law does not offer blanket amnesty to women prisoners, and will not apply to
those charged with murder or financial fraud. Asked if the application of the law could not be
restricted to those charged with the July 1 incidents, the President said he had wanted to go
beyond the basic principle that a democratic Mongolia should not have political prisoners. The jails
had too many people serving sentence for a first crime. The number went up in the last few years
as laws were applied too harshly, he felt.
The President said the fear that the amnesty would lead to the release of those convicted of
corruption was irrelevant as not a single person has been so far sentenced to a prison term for
corruption. In its three years of existence, the Anti-Corruption Agency has investigated and filed
charges but not one case has so far been decided in court. The criminal code also does not have any
reference to corruption as such. Mr. Elbegdorj said he had asked the Prosecutor General’s Office to

10. make sure nobody claims amnesty by managing to change the charge against him so that it comes
under the purview of the law.
Source: Ardiin Erkh
U.S. EMBASSY ROUTES USD25,000 THROUGH RED CROSS FOR FLOOD VICTIMS
The U.S. Embassy is providing USD25,000 in emergency relief assistance for the victims of last
week’s flash floods. The aid is being routed through the Mongolian Red Cross which will purchase
the relief supplies and transport them to the affected districts. Distribution of material is expected
to begin this week.
The money has been donated by the people of the USA and will be spent on buying wheat flour,
rice, vegetable oil, sugar, tea and salt. These will be distributed in the flood-hit districts of
Ulaanbaatar and also in affected areas in Gobi Altai province.
Source: mongolia.usembassy.gov
MONGOLIAN TROOPS TO BE IN AFGHANISTAN BY SEPTEMBER
Mongolia will send at least 150 soldiers to Afghanistan in its biggest contribution to the
international coalition fighting Taliban militants there. A Defense Ministry spokesman said last
week that the troops should be on the ground by September, with 130 soldiers performing security
duties in Kabul while another 23 training the Afghan army in artillery use and maintenance. Their
tour of duty will last six months. Mongolia has sent eight groups of no more than 25 soldiers at a
time to Afghanistan between 2003 and 2008.
Mongolian soldiers are considered ideal for training there because they use the same Soviet-era
military hardware commonly found in Afghanistan, said Lt. Col. David Tatman, the US defense
attache in Ulaanbaatar. His impression was that overseas peacekeeping and security missions have
provided Mongolia a way to step from the shadow of its much larger neighbors, following centuries
of domination by China and Russia. "Mongolia does not want to be forgotten. It's a large country
with a small population and could be easily overlooked, but they are contributing where they can,"
he said.
Another 800 Mongolian soldiers are set to join UN peacekeeping forces in Chad. The National
Security Council will decide on when they leave for a 9-month tour of duty.
Read more…
Modern-day Afghanistan is part of the vast empire conquered by Chinggis Khaan’s armies nearly 800
years ago. Mongolian soldiers returning from Afghanistan also describe a kinship with the country.
Hazaras, one of the significant minority groups in Afghanistan, claim to be descendants of foot
soldiers from those armies.
Source: Agence France Presse, Onoodor
ORGANIZATION TO LIAISE WITH MONGOLIANS ABROAD
The Government has decided to set up an organization to liaise with Mongolian citizens who live
abroad. It will begin work on August 24 and will have two main thrusts: protecting the interests of
immigrant citizens, and encouraging them to invest in the Mongolian economy.
Mongolians now live, study and work in 80 countries.
Source: www.news.mn
MONGOLIA, CHINA TO EXCHANGE INFORMATION ON CORRUPTION CHARGES
An Anti-Corruption Agency delegation headed by its chief, Mr. Ch.Sangaragchaa, visited
organizations and met officials in China during a recent visit there to strengthen ties to combat
corruption. The two countries will now exchange information more regularly to help in
investigations of allegations of corruption.
Source: Montsame
LOCATION RATINGS SURVEY RANKS ULAANBAATAR 34TH
IN ASIA
Ulaanbaatar has been ranked 34th
among Asian cities and 167th
internationally in the latest Location
Ratings Survey on expatriate living conditions by ECA International. For the tenth year running,
Singapore has topped the quality of life ranking for Asian cities. Undertaken annually, the survey
rates living standards in more than 400 locations globally according to categories including climate,
air quality, health services, housing and utilities, isolation, social network and leisure facilities,

11. infrastructure, personal safety and political tensions.
Source: www.eca.org
PASTURELANDS IN WORRYING DECLINE, FINDS WORLD BANK STUDY
A study by a team of experts led by Dr. Dennis Sheehy of the US-based International Center for the
Advancement of Pastoral Systems and Dr. Daalkhaijav Damiran of the Department of Animal and
Poultry Science at the University of Saskatchewan in Canada and supported by the World Bank says
Mongolian herds will be at greater risk from the climate if the growth of livestock populations is not
curbed and if degradation of the pastureland is not reversed. They studied pastureland plots in one
forest steppe region in Zavkhan and in the desert in Gobi Altai and found both areas to be in
alarming decline.
The total number of plant species used for forage has declined by more than 33% over 11 years. As
vegetation and plant cover has receded, the surface cover of bare soil and rock has spread. The
plant species preferred by livestock were less abundant on all seasonal pastures in the desert zone
while the relative composition of preferred, desirable, undesirable and toxic plant species was
unchanged for the forest steppe zone. Pasture productivity, too, has declined substantially in both
zones on winter and transitional pastures.
Dr. Sheehy identifies the growing number of goats as a major reason behind this, but says there is
also the general problem of too many livestock and the added impact of climate warming. “Drier
climate is reducing pasture quality and decreasing livestock production. Precipitation is lower;
lakes, streams and springs are drying up; and vegetation productivity is decreasing,” he says.
Read more…
Dr. Daalkhaijav feels the drop in cashmere prices might make it a good time to reduce the number
of goats in a herd and recommends “exploring alternative water sources and water distribution
systems” to improve pasture.
The present study – supported by the World Bank’s Netherlands-Mongolia Trust Fund for
Environmental Reform (NEMO) - continues work supported by the Asian Development Bank more
than a decade ago which measured 114 ecological macro-plots in four representative Mongolian
ecological zones. The final report is expected to be ready at the end of this year.
Source: www.worldbank.org.mn
CANADIAN „SUPER HOUSE‟ TO STAR ON MONGOLIAN TV
British Columbia wood products will receive celebrity treatment and nationwide exposure in
Mongolia this fall when a home designed and pre-built there becomes the star of a prime-time
show. The show will help establish wood-frame construction as a viable housing option in Mongolia,
and “further our exports to Asia, which is our fastest growing regional market,” said a minister in
the Canadian province. 'The 'Super House' reality TV program will see a wood-frame house
constructed in Ulaanbaatar over 12 one-hour episodes. The show will feature cameo appearances by
Mongolian celebrities who ask questions about the many benefits of the construction.
The 2,000-square-foot house was designed and pre-fabricated at Pacific Building Systems in Cobble
Hill which signed a CAD4-million contract in February to build a townhouse complex in Ulaanbaatar.
Among the 16 value-added and lumber and panel product firms that donated materials to help
make the project possible is one that has recently started to sell forest products in Mongolia.
Read more…
“While we're just at the beginning of market growth, we see solid potential for sales and building
stronger relations with Mongolian customers,” it says. “Mongolia has a climate much like northern
British Columbia and the presence of several large Canadian mining companies has made trade and
business ties fairly easy to establish. What is really exciting is fulfilling the immediate need for
housing in Mongolia which recently updated its building code to Canadian standards.”
“'I believe this program will make a huge impact in the effort to introduce Canadian wood-frame
housing to Mongolia,'” said Mr. Y. Manlaibayar, president of the 16-member Mongolian Wood
Construction Association. Apart from them, the project is also supported by the Mongolian Ministry
of Roads, Transport, Construction and Urban Development, the Mongolian University of Science and
Technology, and Mongolia's C1 Television Network.
Mongolia is experiencing a rapid urbanization and acute housing shortages. The Government
estimates between 150,000 and 200,000 housing units are needed in Ulaanbaatar, with many more
in the rural areas of the country. The introduction of the Canadian wood building code as the new

12. standard for residential construction is expected to actively encourage wood construction in the
country. Mongolia has announced a 100,000 housing unit program to meet the demand for housing
with a planned completion date of 2015.
Source: TMCnet.com
RING IMPORTING FAKE CHINESE MEDICINE UNEARTHED
Police have unearthed a ring that imported fake medicines produced in China. They were sold to,
among other things, help terminate pregnancy, lose weight, and as postnatal nutrition. People have
been warned not to buy medicines with instructions for use only in Chinese.
Source: Udriin Soniin
POSTAL THEFTS TRACED TO PRIVATE CARRIERS
The National General Inspection Authority has investigated complaints about theft of postal
packages and concluded that this happens because the State postal service has no money to bear
the costs of reaching to addresses in rural areas. They seek private help, and this has proved to be
unreliable.
Source: Onoodor
ANNOUNCEMENTS
“MM TODAY” ON MNB-TV
BCM is pleased to announce that Mongolian National Broadcasting continues its cooperation with
BCM on “MM Today”. This English news program is aired every Friday for 10 minutes and is
scheduled for 9:15 PM tonight. Tune in to watch this program that reports stories from today’s BCM
NewsWire.
_______________________________
“COMMERCIAL NEWS USA” MAGAZINE
BCM regularly receives the bi-monthly “Commercial News USA” from the U.S. Embassy’s UB
Commercial Section. This magazine contains trade shows, product showcases, and profiles of best
U.S. exporters. We would be pleased to share this information with BCM members. Also, we would
urge other BCM diplomatic mission members to submit trade information to the BCM.

13. SPONSORS
ECONOMIC INDICATORS
MSE WEEKLY REVIEW
For the week ended July 24, 2009, trading activity on the Mongolian Stock Exchange (MSE) totaled
914,000 shares with 25 companies traded. Total market value of transactions was MNT 178.4
million. Total market capitalization of the 358 stock companies listed on the MSE was MNT 457.1
billion, and decreased by MNT 3 billion or 0.65% from the previous week.
The Top-20 Index decreased by 24.16 points or 0.5% compared to the previous week closing at
4,763.64 points. The MSE Composite Index decreased by 19.83 points or 0.8% compared to the
previous week, closing at 2,394.21 points.
Most active stocks traded were: Naco tulsh (872,500 shares), Genco tur buro (14,700 shares), APU
(8,400 shares), and Khuh gan (7,900 shares).
Major share price percentage gainers were: Genco tur buro (7.2%) and NIC (1.4%). Major share
price percentage losers were: Erdenet khivs (8.7%), Gobi (7.1%), Bayangol Hotel (4.2 %), and APU
(4.0 %).

14. INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
Year 2008 *22.1% [source: NSOM]
June 30, 2009 *6.3% [source: NSOM]
* year over year (yoy)
CURRENCY RATES - July 30, 2009
Currency name Currency Rate
US dollars US 1454.95
Euro EUR 2060.50
Japanese yen JPY 15.41
British pound GBP 2382.77
Hong Kong dollar HKD 187.73
Chinese yuan CNY 212.95
Russian ruble RUB 46.28
South Korean won KRW 1.17
Disclaimer: Except for reporting on BCM’s activities, all information in the BCM NewsWire is
selected from various news sources. Opinions are those of the respective news sources.