December 3 2010

1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
Issue 147, December 3 2010
NEWS HIGHLIGHTS
Business:
 Rio hopes Oyu Tolgoi will start production in 2012;
 Ivanhoe says it has plenty of options to head off takeover by Rio Tinto;
 Voyager Resources acquires copper-gold project;
 Centerra Gold clarifies status of Mongolian licenses;
 Sedgman has positive outlook for 2011;
 Entrée Gold to raise USD100 million;
 Xanadu Mines to list Mongolian assets on Australian Stock Exchange;
 Oyu Tolgoi focused on local community support, says the then CEO Marshall;
 Haranga Resources IPO closes early and oversubscribed;
 More big fish to be charged in Anod Bank case;
 Toshiba to source rare earths from Mongolia;
 5,000 people from 24 countries build Mongolia’s future in the Gobi;
 Oyu Tolgoi targets 90 percent of work force to be Mongolian;
 Arshad Sayed leaves World Bank for Peabody Energy;
 Rio spends USD3.1 billion in expanding infrastructure.
Economy:
 Approved budget has deficit equaling 9.9% of GDP;
 This year’s budget prepares for the economic growth to come, asserts MP;
 Mongolia to sell bonds worth USD500-USD600 million early next year;
 Mining bans could deter speculators, says mining investment banker;
 Mining licenses can be canceled only after compensation, say experts;
 MNCCI Chairman rumored to be on way out;
 Economists want Central Bank to be more proactive;
 Coal exports rise 145% y-o-y;
 Coal train reaches Russian port without hindrance;
 Group set up to work on Erdenes Tavan Tolgoi shares;
 Domestic companies claim more share in mining-related work;
 No need to import wheat, reasserts Minister;
 Copper likely to peak above USD11,000 in 2013;
 Inflation adds to pressure for stronger yuan;
 China allows first foreign consumer loan provider;
 Beijing acts on surging food prices;
 Manufacturing data show Asian divide;
 Dollar recaptures its safe-haven role;
 Peru seeks to double mining royalties.
Politics:
 Standing Committee rejects opinion of Constitutional Court;
 Prime Minister cancels visit to Britain;

2.  Mongolia passed North Korea’s message to U.S.: WikiLeaks;
 MPs want to know Mongolia’s gains from Ivanhoe share price rising;
 MPP has 3 key posts to fill;
 Judges in Ulaanbaatar district courts overworked;
 Choibalsan statue also to be recast in bronze;
 Speaker calls for equal justice for all;
 All leather and wool processing plants to be shifted;
 Number of environmental NGOs increases;
 10 Darkhan officials charged with financial fraud;
 Committee wants ban on smoking in all public places;
 No stock at all of snow melting substances.
*Click on titles above to link to articles.
EARLY NOTICE FOR BCM MONTHLY MEETING
BCM has combined the November and December monthly meetings because of the holiday season.
This will be held on December 13, 2010 at 5 PM at Kempinski Hotel Khan Palace, 2nd floor, Altai
Ballroom, and will be followed by a "holiday" reception for all members. Outstanding Achievement
Awards will be presented to a BCM corporate member and to a Government official. A more
detailed meeting notice and agenda will be sent as usual to all members prior to the meeting.
BUSINESS
RIO HOPES OYU TOLGOI WILL START PRODUCTION IN 2012
Rio Tinto‘s copper division head Andrew Harding stated last week in a Mongolian investors'
presentation in London that Oyu Tolgoi was on track to launch in late 2012, ahead of the so far
estimated 2013. In the third quarter this year, Rio produced a record amount of iron ore, but
copper output fell 19 percent. It said that copper output would fall 18 percent to 661,000 tons this
year, and decline 10 percent next year. The outlook would be bright for its copper unit once the
Mongolian project goes on steam.
Rio Tinto is to nearly triple capital spending to USD11 billion next year as it expands lucrative iron
ore mines in Australia, where it has found a further 2 billion tons of deposits. Chief Executive Tom
Albanese told an investors' presentation high metals prices were generating strong cash flow and Rio
might use some of this cash for takeovers. "Of course, that (capex) number excludes any small-to-
medium-sized M&A deals that we may choose to execute. We have a number of opportunities being
evaluated."
Source: Mineweb.com
IVANHOE SAYS IT HAS PLENTY OF OPTIONS TO HEAD OFF TAKEOVER BY RIO TINTO
Ivanhoe Mines has plenty of options as it fights a possible "creeping" takeover by Rio Tinto, its
founder has said, noting sovereign wealth funds were keen on Mongolia, where Ivanhoe is
developing a huge mine. Mr. Robert Friedland -- who is also executive chairman, CEO and a major
shareholder -- told a Mongolian investment conference in London last week there was no shortage
of possible investors.
"There's a lot of alternatives ... many countries are interested in Mongolia. For example, the Middle
Eastern sovereign wealth funds," he said. Abu Dhabi's investment council has invested in a
Mongolian bank while both Kuwait and Libya were interested in the country, Mr. Friedland added.
He was restricted on how much he could say because Ivanhoe was in the midst of a rights issue to
raise up to USD1 billion, but he told journalists on the sidelines of the conference some news would
emerge fairly soon. Ivanhoe is evaluating a range of options as it grapples with its biggest
shareholder Rio Tinto about terms under which Rio can increase its stake in Ivanhoe.
Ivanhoe owns 66 percent of the massive Oyu Tolgoi copper-gold project, which it is developing in
partnership with Rio and the Mongolian government. Ivanhoe and Rio are involved in arbitration to
resolve a dispute over a shareholder rights plan adopted by Ivanhoe in May, which Rio says violates

3. its contractual rights. Under a previous agreement, Rio can increase its 35 percent stake in Ivanhoe
to 46.6 percent. Ivanhoe argues that its rights plan protects it from a creeping takeover.
The arbitration proceedings are due to start in January. In the meantime, Ivanhoe is evaluating
options with the help of their new head of strategic planning, Mr. Sam Riggall, a former Rio
executive who helped negotiate the Oyu Tolgoi agreement with Mongolia. Ivanhoe, which needs to
come up with its share of USD4.6 billion needed to build Oyu Tolgoi, is considering possible sales of
subsidiaries, equity investments, project financing and various corporate transactions, it has said.
The group is seeking to arrange more than USD2 billion of financing with 13 institutions, including
the World Bank's International Finance Corporation, BNP Paribas and Standard Chartered.
Read more…
"Shareholder rights plans merely mean no one can do a coercive change of control of the company
without paying an appropriate premium," Mr. Friedland said. "The shareholder rights plan just
determines whether they (Rio) have to make an offer to everybody or whether they can keep
creeping." Ivanhoe also cancelled a "strategic purchaser" deal with Rio, allowing other investors to
buy a stake of more than 5 percent in Ivanhoe.
Source: Reuters
VOYAGER RESOURCES ACQUIRES COPPER-GOLD PROJECT
Voyager Resources Ltd. has announced its 100% acquisition of Khongor Copper-Gold Porphyry
Project located in the Oyu Tolgoi copper belt in South Gobi province. A drilling rig is being
mobilized to commence drilling.
Source: Voyager Resources
CENTERRA GOLD CLARIFIES STATUS OF MONGOLIAN LICENSES
Centerra Gold Inc. has issued a statement further clarifying the status of its Mongolian licenses, in
particular, the principal Gatsuurt hardrock mining license which is not on the list of alluvial licenses
to be revoked.
In July 2009, the Mongolian Parliament enacted legislation that would prohibit mineral prospecting,
exploration and mining in water basins and forest areas in Mongolia and provides for the revocation
of licenses affecting such areas. This ―Water and Forest Law" provides a specific exemption for
"mineral deposits of strategic importance", and accordingly, the company's main Boroo mining
licenses are not subject to the law. The Gatsuurt licenses and its other exploration license holdings
in Mongolia, however, are currently not exempt.
The Mongolian government has announced its intention to initiate the revocation of licenses under
the Water and Forest Law on a staged basis, beginning with the revocation of 254 alluvial gold
mining licenses. The Company has four licenses on the list of alluvial gold mining licenses that may
be revoked. None of these licenses is material to the company. The principal Gatsuurt hardrock
mining license is not on the list of alluvial licenses to be revoked.
The company continues its constructive discussions with the Government of Mongolia to resolve
uncertainty resulting from the Water and Forests Law and to obtain necessary approvals for the
commissioning of the Gatsuurt project.
Source: www.centerragold.com
SEDGMAN HAS POSITIVE OUTLOOK FOR 2011
The 2011 financial year outlook for engineering company Sedgman Limited is positive, given the
record levels of forward orders and targeted projects expected in the period, as well as an
expected improvement in global business conditions, states the company‘s review for the 2010
financial year. It says that the company‘s Beijing office was opened in 2008 to secure coal projects
that support China‘s industrialization to target emerging coking coal mines, particularly in
Mongolia, and to provide a base to build an Asian procurement hub. The region has provided a
foundation for rapid growth in the delivery of coal-handling plant project (CHPP) engineering and
operations contracts in Mongolia, with opportunities also emerging in the metalliferous sector.
Sedgman has completed the design of Mongolia‘s first five-million-ton-a-year CHPP for coking coal
at the Ukhaa Khudag (UHG) coal mine, in southern Mongolia. The company has also started the
procurement for the project, the construction of the UHG mine under an EPC and management
contract and the design of a second-stage expansion to increase the mine‘s capacity to ten-million
tons a year.
Source: www.miningweekly.com

4. ENTRÉE GOLD TO RAISE USD100 MILLION
Entree Gold Inc. has received a receipt for a final short form base shelf prospectus with the
securities commissions of each province of Canada, except Quebec, and a corresponding
registration statement on Form F-10/A with the United States Securities and Exchange Commission.
These filings will allow the company to make public offerings of common shares, warrants,
subscription receipts up to an aggregate offering price of USD100 million. The net proceeds are
expected to be used for acquisitions, development of acquired mineral properties and working
capital requirements. Entrée Gold owns the Lookout Hill deposit in Mongolia surrounded by the Oyu
Tolgoi project.
Source: Eurasia Capital newsletter
XANADU MINES TO LIST MONGOLIAN ASSETS ON AUSTRALIAN STOCK EXCHANGE
Xanadu Mines, an Australian-backed, Mongolian-focused minerals explorer and developer, has
opened its Initial Public Offer (IPO) ahead of its proposed listing on the Australian Stock Exchange in
late December. The IPO seeks to raise between AUD15 million and AUD21 million, valuing the
company at between AUD90 and AUD100 million. Xanadu commenced exploration in Mongolia
almost six years ago and in that time has assembled a portfolio of coal and copper/gold assets
strategically located in proximity to rail infrastructure and the Chinese border.
On completion of its IPO, Xanadu‘s strategy will be to step up the acquisition and exploration of
new coking and thermal coal opportunities. In 2011, it plans to drill out its Galshar coal to JORC
code classification. The company also intends to conduct further geophysics and an extensive
drilling campaign on its two advanced South East Gobi porphyry copper and gold projects at Hutag
Uul and Elgen-Zos.
The offer is scheduled to close on December 8, 2010 unless brought forward, with Xanadu set to
begin trading on the Australian Securities Exchange on December 21.
Source: Xanadu Mines
OYU TOLGOI FOCUSED ON LOCAL COMMUNITY SUPPORT, SAYS THE THEN CEO MARSHALL
The recent three-day Future Search conference, sponsored by Oyu Tolgoi LLC to focus on the future
development path of Khanbogd and Manlai, the nearest towns to the mine site, drew some 70
delegates including local government and infrastructure officials, NGO representatives, local
herders, businesses, students, health workers and investors. The company‘s then President and
CEO, Mr. Keith Marshall, told the participants of the importance it placed on working with local
communities. ―Since 2004 Oyu Tolgoi has invested USD3.4 million in South Gobi community support
and development projects. We estimate that this project will last for the next 40-50 years, and we
will work with you to ensure that all the people who live and work around the mine area are
positively affected by our operations.‖
Source: OT Newsletter
HARANGA RESOURCES IPO CLOSES EARLY AND HEAVILY OVERSUBSCRIBED
Haranga Resources, a Mongolia-focused iron ore exploration and development company, has closed
its Initial Public Offer (IPO) on the Australian Stock Exchange to raise USD25 million early and was
heavily oversubscribed. The Company will list on the exchange in early to mid December 2010. It
has booked drill rigs and geophysical survey crews for immediate commencement of exploration.
Haranga Resources is the majority owner and operator of five highly prospective Mongolian iron ore
projects. Each project has the potential to host significant economic deposits of iron ore and is
situated close to existing or proposed infrastructure in order to access the enormous market for iron
ore in next door China.
Source: Haranga Resources
MORE BIG FISH TO BE CHARGED IN ANOD BANK CASE
As prosecuting authorities prove further into the affairs of Anod Bank, some more important
officials, both in the bank and outside, are being suspected of wrongdoing. They include Mr.
Ch.Togtokhbayar, who worked in the Monitoring Department of the Central Bank and is being
accused of not paying back a loan he took from the bank and of taking money in return for
overlooking irregularities. Another suspect is Mr. D.Bayarsaikhan, head of the Financial Regulatory
Authority, who is believed to have misused his official position and connived in an unauthorized and
fraudulent sale of shares in the bank. It has been revealed that he was a shareholder in the Anod
Bank and owned a brokerage firm.
Source: Undesnii Shuudan

5. TOSHIBA TO SOURCE RARE EARTHS FROM MONGOLIA
Toshiba Corp. has signed a memorandum of understanding with Mongolia's MNFCC LLC agreeing to
discussions on cooperation in the development of Mongolia's mineral resources, including uranium,
rare earth and rare metals products. Many of the obscure minerals, metals and their oxides are
used in electronics manufacture and have been rising in price in recent years as China has
developed a monopoly position in their supply.
Mr. Naoto Kan, the Prime Minister of Japan, met the Mongolian President, Mr. Ts. Elbegdorj, on
November 19 and the two agreed to build a strategic partnership and to secure mutually beneficial
cooperation in developing mineral resources in Mongolia. Further moves to promote an economic
relationship between Japan and Mongolia are expected.
Under the terms of the MoU Toshiba will conduct feasibility studies on key social infrastructure
essential for securing Mongolia's continued economic growth, including thermal, nuclear and solar
photovoltaic power systems and transmission and distribution networks and will seek to promote
mutual development of mineral resources in an effort to secure a stable supply.
Source: EETimes.com
5,000 PEOPLE FROM 24 COUNTRIES BUILD MONGOLIA’S FUTURE IN THE GOBI
Deep in the Gobi Desert, in one of the most remote and bleak parts of the world, the most talked-
about copper-gold mine in history is going up with remarkable speed. Outside the Oyu Tolgoi mine
site, the Gobi is as it always is: Empty landscapes carry on as far as the eye can see, interrupted by
the occasional camel herd dotting the countryside. Inside, more than 5,000 people from 24
countries are hard at work, building a mine over a deposit holding an estimated 81 billion pounds of
copper and 46 million ounces of gold, and just 80 km from commodity-hungry China.
In any country, this would be a monumental project. In Mongolia, with only three million people,
this is the most important and controversial capital project in its history, and nothing really comes
close. When Oyu Tolgoi reaches full production by 2018, it is expected to make up a staggering 30%
of the country‘s gross domestic product.
The USD4.6-billion project is also Canada‘s most significant investment in Asia. While Oyu Tolgoi
employs workers from all over the world, it is a Canada-led venture: Vancouver‘s Ivanhoe Mines
Ltd. is the majority owner, and Canadian contractors like Moncton, New Brunswick‘s Major Drilling
and North Bay, Ontario‘s Redpath Mining are doing much of the dirty work on the ground. Ivanhoe,
which is made up of stakes in a loosely connected group of resource assets in the Asia-Pacific, has a
market value of more than USD13 billion due mainly to the promise of riches at Oyu Tolgoi.
Construction of the mine is still in its early stages. But it is going up on schedule, with initial
production expected in late 2012. While construction costs look to be ticking higher, they have
been kept in check so far.
Read more…
As investors know, getting to this point has not been easy. Oyu Tolgoi seemed like a pipe dream for
much of the past decade. While Ivanhoe‘s legendary leader Robert Friedland travelled the world
talking about its amazing potential, many doubted that a remote deposit in a land-locked country
they knew nothing about would become a reality. It took years of on-again, off-again negotiations
with the government for it to happen, and the mine dominated political discourse in Mongolia over
that period.
The project is now so big that it has become a litmus test for Western investment in Mongolia,
which the government badly wants to attract. ―If we do succeed with this project, it will encourage
many other Canadian and international companies to work in Mongolia,‖ says Mr. S. Batbold, the
country‘s Prime Minister.
Yet the future of Oyu Tolgoi is still cloudy. A dispute between Ivanhoe and joint-venture partner Rio
Tinto Ltd. has overshadowed all the progress at the site and made investors nervous. Rio Tinto, a
London-based mining powerhouse, has made it clear it wants the biggest piece of Oyu Tolgoi it can
get. And Mr. Friedland is not eager to cede control as he tries to raise billions of dollars of
financing.
It all happened because Ivanhoe decided to drill deeper. The discovery of the Oyu Tolgoi site
actually dates back decades. In 1983, local herders told Mongolian government geologist Dondog
Garamjav about green-stained rocks they noticed in the South Gobi. He mapped out the area as
part of a country-wide exploration program. It became known as Oyu Tolgoi, or ―Turquoise Hill,‖
because of the color of the copper ore in the rocks.
By the mid-1990s, Mr. Garamjav was working for Australia‘s Broken Hill Proprietary Co. (later BHP
Billiton), which got an exploration license for the area. BHP drilled 23 holes on the property over
the next couple of years, and while it found some interesting mineralization, it never hit anything

6. significant. Its mistake was not looking deep enough, as it was just trying to find shallow copper
systems. One hole that was halted for technical reasons came just 30 meters short of hitting the
mother lode.
Before long, BHP gave up and put the project up for sale. Copper prices were down around US65¢ a
pound and the company was cutting back exploration around the world. In March 1999, at a mining
conference in Toronto, Ivanhoe executive Douglas Kirwin took a look at BHP‘s drill core and saw
potential to expand the copper resources. Ivanhoe bought the property in 2000 and started drilling
shallow holes.
The results were nothing special, and by the end of 2000, the company had not found anything
close to a mineable resource. It was also burning through cash, and the company considered giving
up on Mongolia. Project head Charles Foster decided to drill some deeper holes and see what
happened. ―The result was incredible,‖ recalls Sanjdorj Samand, vice-president of the project. The
drills passed through high-grade copper-gold mineralization that was hundreds of meters thick.
It was clear right away that Ivanhoe had made one of the most significant mineral discoveries in
decades. And from there, it just kept growing. A scoping study in early 2004 confirmed that Oyu
Tolgoi was a world-class deposit, and Ivanhoe began negotiations with the government on a stability
agreement covering the project. It turned out to be one of the longest and most protracted
negotiations the mining industry has ever seen, and neither side made things easy.
Mongolia has a long history of mining, but it was not equipped to deal with a project of this scale. It
is, after all, a brand new country that only emerged as a fledgling democracy in 1990 after the
collapse of the Soviet Union. It has remained fiercely independent despite being sandwiched
between China and Russia, two less-than-democratic neighbors. Mongolians are not fond of either
one, especially China.
In its first 15 years of democracy, Mongolia enacted liberal mining policies to attract foreign
investment, including extended tax holidays. It didn‘t help. Commodity prices were dreadful
throughout the 1990s and early 2000s, and little money was coming in. That started to change by
2004, when prices moved up and investors took a keener interest in the country‘s resources. Like
many developing countries at the time, Mongolia reacted with a wave of resource nationalism.
―It was a very natural reaction after we had these liberal policies for the first 10, 15 years,‖ says
Ms. S. Oyun, a member of parliament and democracy activist. Ivanhoe saw this first-hand. By mid-
2004, the company was already saying negotiations with the government were in the ―late stages‖.
But at the same time, there were nationalistic forces in government and parliament that were
against any type of deal with foreign stakeholders. Other officials were openly speculating about
state ownership in the project.
Mongolians were also not amused by comments Mr. Friedland made at a conference in 2005, when
he joked that the Gobi Desert has plenty of room for ―waste dumps‖. He became a lightning rod for
enraged local protestors.
No agreement was signed into law, and in May 2006 the process took a huge turn for the worse
when the government passed its infamous 68% ―windfall tax‖, imposing a punitive levy even at very
low copper prices. The tax, which was an effort by some politicians to meet election spending
promises, was a fiasco. It was rapidly voted on and approved on a Friday night when most
politicians were not even in parliament, and gave credence to the doubters who wondered if
Mongolia would ever forge good mining policy. Ivanhoe shares plummeted.
―It certainly didn‘t help the negotiations,‖ says Mr. Keith Marshall, the outgoing president and chief
executive of Oyu Tolgoi LLC, the joint venture tasked with building the mine. ―Also, we were
heading into parliamentary elections and change of government. You‘ve got to do these
negotiations at the right time, which is really after government is elected and you know who you‘re
dealing with.‖
By 2007, Ivanhoe had what it called a ―draft investment agreement‖ with the government, but
there was still no sign of parliamentary approval. It ultimately took the most severe downturn in a
generation to get things moving. When the economic meltdown struck in late 2008, Ivanhoe went
into survival mode and laid off more than half its on-site personnel, going down to about 600
people. It was a wake-up call to the Mongolians that development of the project was not inevitable.
In the summer of 2009, the two sides returned to the bargaining table with a renewed conviction to
get a deal done. The talks were tortuous, with negotiations lasting until 2 or 3 a.m. every night in
the last few weeks. Whether it was taxation, labor quotas or environmental impact, every topic
took an enormous amount of time to negotiate. And given the size and scope of the project, most
government ministries were involved at some point. The World Bank, a former Chilean minister and
countless other experts took part at various stages.
A deal was finally signed into law on October 6, 2009. It scrapped the windfall tax and gave the

7. government a 34% stake in the project with Ivanhoe holding the rest. ―It‘s a pioneering project,‖
says Mr. G. Batsukh, chairman of Oyu Tolgoi LLC. ―Since Mongolia had no experience with anything
like this, the government took its time to make sure this could be a template for other strategic
mining projects in the country.‖
Ivanhoe had all the development plans in place before the deal was signed, and with the green light
given, contractors were able to mobilize fast to get things moving. Within months, the site
exploded from about 500 people to more than 4,000. Today, it has moved above 5,600, with
Mongolians making up more than 60% of the total.
On site, everything is happening on a huge scale. About 3,000 tons of material is being trucked in
every day. Foundations are being laid for a massive copper concentrator, and a 14-story pebble
crusher already dominates the skyline. One underground shaft is already in operation, and a second
31-story shaft along with an open pit is in development. Exploration is also ongoing; with
management all but certain it can add more resources and extend the mine life beyond the
estimated six decades.
The construction site turns into a raucous party at night, as the Mongolians head to an on-site pub
to knock back drinks. Others play basketball or take in an English class, at which they practice their
speech and sing a stirring rendition of Love Me Tender, in perhaps the last place in the world one
would expect to hear that song.
The Chinese workers are not part of the festivities — in a telling commentary on Mongolia-China
relations, the Chinese keep to themselves in a separate compound. It is an arrangement that seems
preferable for both sides.
The festive atmosphere at the site has probably not carried over to Ivanhoe‘s head office in
Vancouver, where a dispute with joint-venture partner Rio Tinto has overshadowed progress in
Mongolia. When Mr. Friedland signed up Rio as a strategic investor in 2006, it was a perfect match.
Ivanhoe needed both capital and a skilled mining partner to develop You Togo; Rio provided both.
Rio also gave a stamp of approval to a project that seemed far-fetched to some investors at the
time.
But tensions have grown during the past several months. Rio chief executive Tom Albanese has
made it clear that he is unhappy with the status quo, in which Rio holds a 35% stake in Ivanhoe and
Ivanhoe holds a 66% stake in the project. In a perfect world, he wants direct ownership of the mine
without having to take over Ivanhoe and acquire its many subsidiary assets. Ivanhoe, meanwhile,
needs to raise billions of dollars to build You Togo, but wants to do so on its own terms.
The first signs of trouble emerged last summer, shortly after Ivanhoe enacted a shareholder rights
plan (or ―poison pill‖) to help prevent a creeping takeover. Rio disputed it and began arbitration.
Around the same time, Rio publicly mused about converting its Ivanhoe stake into a direct stake in
Oyu Tolgoi, and said it held talks with an outside company (Chinalco of China) about participating in
the project as well.
It was a strange disclosure from Rio, given that Ivanhoe is the company that controls the deposit.
Mr. Friedland responded by terminating a clause that prevented Ivanhoe from bringing in new
strategic investors. And most recently, Ivanhoe began a ―rights offering‖ that allows it to raise
money without increasing Rio‘s influence in the company.
The dispute also extends to the mine, where the two sides have disagreed over how quickly the
project should be developed, and how much it will cost. Mr. Marshall, the joint-venture chief,
maintains that it is not disrupting work in Mongolia, but he acknowledges that it is a concern.
―When we see they are going to arbitration and we see that they‘re publicly discussing each other‘s
tactics, sure it affects everybody on the ground,‖ he says. Mr. Batsukh, who works closely with both
companies, calls the dispute a ―disagreement between mother and father‖.
―I don‘t think they want to kill this beautiful daughter they‘re raising together,‖ he says. They
don‘t. But it is also clear that the status quo cannot last forever. Both companies want to develop
the project as quickly and affordably as possible. The dispute is purely about money, and the rapid
progress of Oyu Tolgoi has raised the stakes for both sides. Investors are hoping for a quick
resolution that would remove the uncertainty and firm up the project‘s ownership.
In Ulaanbaatar, there is no talk about strategic investors or shareholder rights plans. People merely
want to know when they will finally see some benefits from a mine that they have heard about for
almost a decade. Some hold the view that it is going to fix the country‘s economic problems,
particularly its 32% unemployment rate. ―There are unrealistic expectations,‖ Mr. Batsukh says.
―Oyu Tolgoi is a mine; it can‘t solve all the problems the country faces.‖
Of course, there will be benefits: The Mongolian government will receive about 54% of the revenue
from Oyu Tolgoi once it begins production. And there will be significant job creation, particularly in
the communities near the mine. Ms. Oyun, a former Rio Tinto geologist-turned-politician, says the

8. biggest risk is bad political decision-making. She wants to see the mining revenues invested in
education and health, but worries that a bad call by government, like a repeat of the windfall tax,
could undo many of the benefits from Oyu Tolgoi and other projects. ―I‘m very optimistic for the
next five or 10 years, but I always put in brackets, ‗Subject to politics,‘ ‖ she says.
Mr. Batbold, the Prime Minister, would probably agree. He and his Cabinet recently toured the
project with Mr. Friedland, and came away impressed with what they saw. Once the Canadians and
the British and everyone else are finished building, it will be up to Mr. Batbold to harness
Mongolia‘s massive economic opportunity.
Source: Financial Post
OYU TOLGOI TARGETS 90 PERCENT OF WORK FORCE TO BE MONGOLIAN
The Human Resources Department of Oyu Tolgoi LLC is busy formulating ways to ensure that
Mongolians constitute 90 percent of the work force when production begins in 2013. In September,
100 Mongolian nationals began a 10-month course at Erdenet Technical Training School and another
43 started a diesel mechanic course with Wagner Asia Mongolia at the Mongolian-Korean Technical
College. Over the next five years Oyu Tolgoi will invest USD58 million in training and education to
prepare the work force for the start of operations, and to support mining operations throughout
Mongolia in the future. The signs of this investment can already be seen in the South Gobi capital
Dalanzadgad, where the foundation for a new professional training and vocational centre was laid in
a ceremony in August.
Five vocational training schools in Ulaanbaatar will have their facilities and curricula upgraded. A
USD10-million program of scholarships is also being developed, to support Mongolian students at
Mongolian universities and abroad. Meanwhile at the Oyu Tolgoi site, on-the-job training programs
are helping inexperienced or underqualified workers to improve their skill levels.
Of the 5,758 workers now employed by Oyu Tolgoi, 3,741 or 63% are Mongolian nationals, and 928 of
them are from the South Gobi province.
Source: OT Newsletter
ARSHAD SAYED LEAVES WORLD BANK FOR PEABODY ENERGY
Peabody Energy, the biggest U.S. coal miner, has appointed Mr. Arshad Sayed as president of the
group's Mongolia and India unit. Mr. Sayed recently ended a four-year stint as country manager and
resident representative for the World Bank in Mongolia. He was with the Bank for more than 15
years.
―Arshad has extensive experience in Mongolia and India, and he brings with him strong relationships
in the region that will allow him to advance Peabody's Asian growth initiatives," said Peabody
president Richard Navarre.
Source: www.miningweekly.com
RIO SPENDS USD3.1 BILLION IN EXPANDING INFRASTRUCTURE
Rio Tinto has signed an AUD467-million framework agreement with Milan-listed Ansaldo STS for its
rail development in the Pilbara region. The program of works, which would run over five years,
would include engineering, systems integration and the technology required to support Rio‘s
expansion and operational efficiency projects in Western Australia.
In October, Rio announced that it would invest a further USD3.1 billion into expanding its iron-ore
infrastructure in the Pilbara region, catapulting its infrastructure capacity to 283 million tons a year
by 2013.
Source: www.miningweekly.com
ECONOMY
APPROVED BUDGET HAS DEFICIT EQUALING 9.9% OF GDP
Parliament passed the draft combined budget late in the evening on November 25, with 79.1%
support from MPs present. Some earlier readings had received 97% support, and the reason for the
later lack of enthusiasm was not clear, as there were few changes of any real import. The approved
budget shows a total deficit of MNT779.5 billion or 9.9% of GDP, 1.3% more than estimated in the
original draft that was later revised before final submission to Parliament.
The main source of income is from copper export and the average price has been taken as USD8,425
per ton, as against the present USD8,900. If global prices fall, the Government and Parliament
would seek an alternative source of income. The price of gold has been estimated at USD1,350 an
ounce and that of processed coal at USD98.8 a ton.

9. The budget income includes MNT163.2 billion to come from Oyu Tolgoi LLC and MNT207.7 billion
from the Erdenet factory. Non-tax income would be MNT385.4 billion and MNT69.8 billion will come
from the oil exploitation sector. Marine transportation fees will bring in MNT300 million and the
Central Bank will pay MNT5 billion. Privatization of state property in 2011 will yield MNT98.4 billion
and MNT8 billion will come as foreign aid.
The state budget alone will spend MNT737.9 billion, while the original draft had fixed this at
MNT600 billion. Both the MPP and the DP supported paying a monthly allowance of MNT21,000 to
every citizen. This would require MNT702.5 billion from the Human Development Fund. Paying
MNT500,000 as tuition fees for each of 160,000 students would mean MNT102.5 billion more. The
Government has included MNT504 billion as revenue without clearly indicating its sources.
Read more…
Contrary to speculation, the passage of the budget was smooth, with well-orchestrated shuffling
back and forth between the full session and the Standing Committee on the Economy. The day
began with Parliament going through a second reading of the draft. It was then sent to the Standing
Committee for preparation for the third reading. This came back to Parliament at 9 pm, was
returned to the committee and finally the full session approved the draft after a fourth reading
when every provision was individually put to the vote.
The budget expects the economy to grow by 7.5 percent, but warns that a bad winter can hurt the
agricultural sector. Manufacturing and service industries are likely to grow beyond 10 percent.
Inflation rates from 2011 to 2013 will be within 8-9 percent.
Source: Onoodor, Montsame
THIS YEAR’S BUDGET PREPARES FOR THE ECONOMIC GROWTH TO COME, ASSERTS MP
The Chief of the Standing Committee on the Budget, Mr. Ts.Davaasuren, says the recently approved
budget of 2011 is special in that it will lead to the beginning of a new period in the national
economy. Things will be different from 2012 with large-scale expansion in mining and factories
beginning production. The budget prepares for this economic growth and extension. However, even
with expenses as high as equaling 52% of the GDP, the budget could not provide the money for
construction and infrastructure projects and it has been left to the Development Bank to provide
the capital for the railway, the processing factories and the electricity plant.
He says the coming year will be a period to implement the Government‘s programs and projects to
support economic expansion, strengthen the business environment and the social welfare system.
The deficit amounting to 9.9% of the GDP is a matter of concern but there are ways of plugging it.
For example, Mongolia‘s long-term debt ratings have been raised to B+ and this will enable the
country to raise funds in the international finance market. ―We shall, however, prefer to get the
money in the form of advance payment from the operator companies of mining projects,‖ Mr.
Davaasuren said. He expected the proposed sliding royalties to net MNT207 billion, and the Stability
Fund to provide another MNT183 billion to make up for the loss of revenue following the repeal of
the windfall profit tax.
Mr. Davaasuren justified the payment of monthly cash allowances by saying ―election promises have
to be met, even at the risk of a negative influence‖. He hopes inflation will be under control.
However, the price of both flour and rice has increased in the world market and ―we have to be
careful‖. Conceding that the budget does not meet the goals of the Government‘s action plan, as
pointed out repeatedly during the discussions in Parliament, he said, ―The plan cannot be
implemented if we continue with our monetary extravagance.‖ The budget also does not include
the allocation to MPs for work in their electoral districts.
Source: Ardiin Erkh
MONGOLIA TO SELL BONDS WORTH USD500-USD600 MILLION EARLY NEXT YEAR
Mongolia may launch its debut international bond early next year and the deal should total around
USD500 million to USD600 million, according to Ms. E. Enkhjargal, chief representative of the
London office of the country's Central Bank. "We believe a good size for the bond would be USD500-
USD600 million, maximum USD700 million. I think it will be at the beginning of next year," she told
reporters on the sidelines of a Mongolian investment conference in London last week. Ms.
Enkhjargal, a former deputy governor at the Central Bank, said, "We believe (the yield) will be
around 5-6 percent."
Mongolia earlier this year shortlisted Deutsche Bank, Goldman Sachs, HSBC, ING and Morgan Stanley
as potential lead underwriters for its debut bond. It had indicated earlier that the issuance could be
for USD1.2 billion. The Central Bank advised the government to issue a smaller bond, Ms. Enkhjargal
said, adding, "USD1.2 billion is too big."

10. Ms. Enkhjargal also said foreign direct investment (FDI) into the commodity-rich ex-communist
country is expected to be USD1.4 billion this year, rising to USD3 billion in 2011. Mongolia received
a ratings upgrade to B+ from Fitch last week, while Standard & Poor's rates it BB-.
Ms. Enkhjargal said economic growth next year is seen at 8 percent. A senior Mongolian government
official told the London conference 2010 economic growth was expected at 7.5 percent. Conference
delegates were more bullish. Mr. Kevin Bortz, director of natural resources at the European Bank
for Reconstruction and Development, told the conference the EBRD saw Mongolian GDP growth at 9
percent next year. Ms. Enkhjargal said, "We are very conservative at the Central Bank."
While conference delegates expressed concern at Mongolia's high inflation rate of 11 percent, Ms.
Enkhjargal said the bank is targeting a single-digit rate in 2011. Mongolia's currency has been
appreciating sharply -- up 15 percent this year at 1,245 per dollar. Growth in the economy has been
driven by Chinese demand, and the Central Bank has been acting to smooth volatility, Ms.
Enkhjargal told the conference, with FX reserves at a record USD1.8 billion. "We do not want to see
the MNT changing too much over a short period of time," she added.
Source: Reuters
MINING BANS COULD DETER SPECULATORS, SAYS MINING INVESTMENT BANKER
Mongolia's decision to revoke hundreds of gold mining licenses has alarmed investors but the
government's efforts to clean up its mining sector could have long term benefits, the head of a
foreign fund said. Energy and Mining Minister D. Zorigt announced late last month that 254 gold
mining licenses would be suspended for violating the country's environmental laws, while another
1,700 licenses would be put under review. The move came after a series of policy changes over the
last year aimed at bringing the booming but still nascent industry under greater supervision and
control.
In April, President Ts. Elbegdorj ordered a halt to the issuance and transfer of mining licenses until
parliament passed a new and stricter law. Small and unqualified miners were the main target of the
new rules, Mr. Eric Zurrin, chief executive of ResCap, an investment bank active in Mongolia, said.
"Too many outsiders were trying to pick up licenses in a bit of a lottery and trade, and you know
what that can lead to. These licenses need to be properly explored and well thought through," he
said.
The gold projects suspended last week were said to contravene the country's new water and forest
law, which bans mining activities in water basins and forests. Mongolia, under pressure to develop
its economy, has sought to open up its mining sector to foreign investors, but it has already led to a
backlash. In September, Mongolian environmental activists armed with hunting rifles opened fire at
the site of a gold mine owned by China's Puraam and Canada's Centerra Gold about 100 km north of
Ulaanbaatar, which they accused of running roughshod over local environmental laws.
But the ambiguities in the legislation are causing uncertainty, experts have said. Mr. Graeme
Hancock, senior mining specialist with the World Bank in Ulaanbaatar, has said that the law passed
last year did not offer any definition of water basins or forest areas, leaving it unclear what
projects would be under threat. "It was a knee-jerk reaction that isn't justified," he said. "The
answer lies in creating a sound management framework, not in just trying to ban it. The problem
now is that by banning these projects, they will be replaced by ninja miners -- and that is a worse
outcome than what they had."
Read more…
The government has been struggling to find the right mix of policies that will enable it to avoid the
mistakes made by other poor but mineral-rich countries, and some of its decisions have caused
alarm. A Mongolian-based mining executive said that a policy allowing the government to turn any
deposit into a "strategic national resource" was especially worrying. "If the Mongolian government
can revoke our licenses with immediate effect and declare the mines to be a strategic national
resource, where does that leave us?" he said.
Investors said the windfall tax has slowed progress in Mongolia's mining sector. "Potential investors
have been focusing on coal," said Mr. Zurrin, referring to a mineral not covered by the tax. "But the
interesting one is the copper-gold belt, where very few are looking right now. Because of the 68
percent windfall tax investors just said, 'Forget it, I'll look for coal'."
Source: Reuters
MINING LICENSES CAN BE CANCELED ONLY AFTER COMPENSATION, SAY EXPERTS
Professional organizations feel that the announced revocation of 254 alluvial gold mining licenses in
water basins and forest areas could prove unenforceable if they are challenged in court, as the law
on mineral resources is clear that licenses can be canceled only after compensation is agreed upon

11. and paid. There can be no cancellation before compensation. There is no allocation in the budget
for such compensation, so the mining entities can claim to continue with work under their existing
licenses. The State Organization of Geology and Mining has thus urged the Professional Monitoring
Agency to suspend the licenses, instead of canceling them, so that no further work is done until the
issue is resolved.
Mr. L. Davaatsogt, Head of the Department of Geology, Mining, and Cadastral Units at the Minerals
Resources Authority, has said that their organization has the final responsibility for canceling
licenses, and has not yet taken a decision on the Government resolution on November 17 to
invalidate 254 gold mining licenses in environmentally sensitive areas. He said four requirements
have to be met before they can act according to law. First, the government must define the
specific boundaries where the offending licenses breach the law; second, it must also specify
compensation procedures and rules; third, it must allocate the compensation money; and, fourth,
there has to be an individual compensation agreement with every license holder.
Source: English.News.mn, Udriin Sonin
MNCCI CHAIRMAN RUMORED TO BE ON WAY OUT
There is a move afoot to replace Mr. S.Demberel as Chairman of the Mongolian National Chamber of
Commerce and Industry, a post he has held since 1998. Officials of the Marketing and Management
Institute have said there are several allegations against Mr. Demberel misusing his position for
personal gain. He is currently in his third term as MNCCI Chairman and has been vocal in demanding
a bigger role for the private sector and has often been critical of the Government‘s economic
policies.
Among politicians and businessmen who have shown interest in succeeding Mr. Demberel are former
President N.Enkhbayar, the Head of Ajnai Corp. Mr. D.Bat-Erdene, and the Director of Buyan LLC,
Mr. B.Jargalsaikhan. The MNCCI has 700 members in Ulaanbaatar and its branches have a further
300. It works under a law passed by Parliament in 1995 and meets its expenses from membership
fees. Members fall into four groups and annual fees range from MNT300,000 to MNT1 million.
Source: News.mn
ECONOMISTS WANT CENTRAL BANK TO BE MORE PROACTIVE
The Mongolian National Chamber of Commerce and Industry organized a public discussion on
whether the present monetary policy was taking the country backward or forward on its way to
economic growth. Among those who participated were the Director of Monetary Policy and Research
at the Central Bank, Mr. D.Boldbaatar; MPs N.Batbayar and O.Chuluunbat; and economists
G.Purevbaatar, N.Dashzeveg and B.Lkhagvajav.
Most of the non-official speakers criticized the monetary policy of the Central Bank. Mr. Batbayar
blamed it for money being scarce in the market, and for loan interest rates being high. They
complained that the Central Bank took no steps to help entrepreneurs get bank loans on easier
interest rates. Businesses in the agriculture and light industry sectors cannot progress because of
this. Many of them referred to the fact that the Governor of the Central Bank was not a banking
professional and wondered if he understood the finer points of policy making, especially in a
country with a small domestic market.
Mr. Dashzeveg said the wrong monetary policy followed for 20 years has seen a few commercial
banks amass capital but no improvement in macro-economic indicators. In Mongolia, banks have got
richer with people‘s savings. They hold on to their money, scaring away customers with their high
interest rate, instead of lending more and charging less. The Central Bank should insist that a
percentage of the money saved with them has to be lent. The Bank‘s status was also discussed.
Most were against it being under the control of Parliament and wanted more independence for it.
Some economists felt some Government supervision was necessary, but Mr. Lkhagvajav said this was
not feasible as the Government budget amounted to between MNT3 and MNT4 trillion while the
Central Bank had to look after the national economy worth between MNT17 and MNT18 trillion. He
suggested a Constitutionally defined role for the Bank.
After listening to the participants‘ opinions and criticism, Mr. Boldbaatar explained the monetary
policy of the Bank which Parliament passed on November 25. He felt the budget would not be good
for the economy, with a deficit standing at 9.9% of the GDP and expenses totaling 50% of the GDP.
Defending the bank‘s performance, he said the business sector stagnates in Mongolia because the
financial market has a weak structure.
Source: English.News.mn

12. COAL EXPORTS RISE 145% Y-O-Y
Figures released by the administration in Inner Mongolia reveal that Chinese imports of Mongolian
coal in the first nine months of this year were 10.95 million tons, an increase of 145% over the same
period last year. At present, China is the only buyer of coal from Mongolia.
Source: Zuunii Medee
COAL TRAIN REACHES RUSSIAN PORT WITHOUT HINDRANCE
The train transporting Mongolian coal to the Russian port of Vostochnii has completed its trial run
successfully. It took four days to reach the port from the border point without hitch. Infrastructure
Development, the company which organized the transportation, carefully monitored the progress of
the freight and has said the cost of carrying coal along this route will not be any more than
exporting it from a port in China. The saving in time and cost because tracks in Mongolia and Russia
have the same gauge, obviating the need to change the wheels of every single wagon if the Chinese
railway were to be used, will be enormous when a consignment will consist of up to 8000 tons of
coal, it said.
Source: Udriin Sonin
GROUP SET UP TO WORK ON ERDENES TAVAN TOLGOI SHARES
A working group was formally set up on Tuesday at the order of the Chief of the State Property
Committee (SPC), Mr. D.Sugar, along the lines of a Government resolution on Erdenes Tavan Tolgoi
LLC. The group will prepare the groundwork for disposal of the company‘s shares and devise the
best ways of using the benefits from natural resources. It has already been announced that 10% of
the company‘s shares will be distributed free to the people, 10% more will be sold to economic
entities and 30% will be sold at stock exchanges.
Erdenes Tavan Tolgoi LLC does not yet exist as a legal entity. It is expected to work as a daughter
company of Erdenes Mongol which owns the licenses of the strategic deposit mine. An
advertisement to select the new company‘s director was published on August 22 and the deadline
for receiving applications was 12 noon of September 20. Another advertisement to select the
operator company was published on August 31. The Representatives Managing Council should be
appointed before the Director‘s selection, but the SPC is silent on when this will be done, except
for saying that the committee will have between 7 and 9 members. There are reports that an
Australian is likely to be appointed Director. The choice of the operator company appears to be
restricted to one German and two Australian companies. The German company is not a large mining
company and both Australian companies are subsidiaries of Leighton Holdings.
Source: News.mn
DOMESTIC COMPANIES CLAIM MORE SHARE IN MINING-RELATED WORK
The aim of the recent Competitive Mongolia exhibition was to demonstrate that a ―strong Mongolia
can be established only by allowing domestic producers, goods and service providers to participate
in the grand development of mining in the Mongolian Gobi‖, according to its joint organizers, the
Mongolian National Chamber of Commerce and Industry and the Mongol 999 national consortium. A
large number of domestic companies in such diverse fields as mining, construction, catering, light
industry, brokerage, dealership etc., including small and medium enterprises, participated in the
fair, asserting their claim that the present practice of choosing only foreign companies as suppliers
is harmful to the national economy as all the profits are exported.
According to Mr. L. Ariunbold, Executive director of Mongol 999, domestic industries represent the
Mongolian people and, as such, deserve ―strategic support‖ from the government, ―without which,
no matter what our capacity is, we cannot succeed‖. He stressed the need for longer-term bank
credit on easier terms to support ―Mongolians‘ courage and belief in themselves‖, and for the
government to restrict certain areas to only domestic companies. He hoped the recent
Memorandum of Understanding signed with officials of the European Council would bring in more
capital for Mongolian entrepreneurs to increase their competitiveness.
Source: Onoodor, Zuunii Medee
NO NEED TO IMPORT WHEAT, REASSERTS MINISTER
Deputy Minister of Food, Agriculture, and Light Industry Kh. Zoljargal has said the recent outbreak
of the foot and mouth disease was the first in Mongolia since 2001, and actually came at a time
when the Government was planning to write to the WHO that Mongolia was free of the disease. He
guessed the infection had come from antelope which travel to and from China, but did not answer a
question on whether ―China had deliberately sent infected antelope across the border‖.

13. He repeated his conviction that domestic production will meet the entire demand for wheat in the
country and said flour mills will be kept busier than ever before. He denied that bureaucratic
indifference had forced private companies to import wheat from Russia and explained that at one
point Russia was selling wheat at a price cheaper than that of the Mongolian wheat kept in the
national reserve.
Source: Onoodor
COPPER LIKELY TO PEAK ABOVE USD11,000 IN 2013
A growing production deficit is expected to lift the price of copper through a series of all-time highs
and a peak well above USD11,000 per ton in 2013, metals research and consulting firm GFMS has
said in its Quarterly Three-Year Copper Forecast report. "The noteworthy deficits the market has
seen recently will push the overall market balance for this year into negative territory," GFMS said
in a news release on Monday.
In the first half of 2011, GFMS sees slower economic conditions briefly tipping the global copper
market into a modest surplus. But deficit conditions are expected to re-emerge in the second half
of 2011 and should remain over the following two years, as supply struggles to keep up with
consumption. In its three-year outlook, GFMS expects a higher price environment will lead miners
to boost output, where possible, and secondary supply sources will continue to expand.
Source: Mineweb
INFLATION ADDS TO PRESSURE FOR STRONGER YUAN
In the complicated cocktail of policies China has pursued in recent weeks to tackle an unwanted
burst of inflation, one ingredient has been missing: a stronger yuan. But economists think that is
likely to change. In the past two weeks, the Chinese yuan has barely budged against the U.S. dollar,
though it is still up 2.4% this year. The tightly controlled currency is actually slightly weaker than it
was on November 11, when official data was published showing China's consumer-price inflation at
a two-year high of 4.4%, with food prices surging 10.1%.
With inflation already sparking public discontent, the government has been working overtime since
then to contain price pressures. While currency policy remains contentious, some observers think
the renewed worries about inflation could help shift the balance of debate among policy makers
and lead to renewed gains. "In the current situation, with inflationary pressures rising, there may
be more people who would support an appropriate appreciation of the renminbi," said Mr. Zhang
Yongjun, an economist with the China Center for International Economic Exchanges, a prominent
think tank in Beijing.
There are also noneconomic factors that could drive China toward continued gains in the currency,
notably, the planned state visit by President Hu Jintao to the U.S. in January, the first by a Chinese
leader in a decade. "In the months immediately ahead, there could be another round of relatively
fast renminbi appreciation against the U.S. dollar" to ease political tensions, said Morgan Stanley
economist Wang Qing.
While a stronger yuan wouldn't be a cure-all for the recent rise in food prices, it could help lower
the bill for China's huge imports of commodities, including iron ore, soybeans and crude oil. A
higher exchange rate should also reduce the trade surplus, which would slow economic growth and
thus also reduce broader inflationary pressures.
Source: The Wall Street Journal Asia
CHINA ALLOWS FIRST FOREIGN CONSUMER LOAN PROVIDER
Home Credit Group, a Czech company operating mainly in Russia and eastern Europe, has beaten
some of the world‘s largest financial groups to become the first foreign company to set up as a
consumer finance lender in China. The company received a license from China‘s banking regulator
this year and formally launched a pilot operation in the eastern city of Tianjin on Wednesday,
providing small loans to consumers to buy products such as mobile phones or motorbikes on credit.
Although Home Credit has operated in China since February 2008 and has built up a nationwide
network of retail stores offering credit products, it was restricted by regulations such as a
requirement to partner with local institutions.
The average size of the 700,000 loans extended by Home Credit in China this year is just USD270
and it is targeting the 700 million or so Chinese consumers with salaries below USD500 a month.
Most of these people lack a credit history and many have never opened a bank account. The
company has ambitious plans in China, where it expects to break even by next year and be issuing
more than 10 million loans annually within two or three years. Other companies that want to enter
the Chinese consumer finance market include General Electric, HSBC, BNP Paribas, Citigroup and

14. AIG.
Analysts say a traditional aversion to credit means older Chinese consumers in particular will be
slow to take up offers from consumer finance companies, especially given the high fees and interest
rates they charge.
Source: The Financial Times
BEIJING ACTS ON SURGING FOOD PRICES
Students rioting over prices in their school cafeteria, local authorities handing subsidies to poor
families, and government measures to bring down prices. It all points to one thing: high anxiety
over rising food prices in China after inflation hit a two-year peak of 4.4 per cent in October.
―Inflation is the enemy of social stability,‖ says Mr. Hu Xingdou, professor of economics at the
Beijing Institute of Technology, who expects inflation could reach 10 to 20 per cent next year, a
gloomier view than that of most economists. In the first two weeks of November, the average retail
price of 18 types of vegetables rose 62 per cent year-on-year, according to the ministry of
commerce.
Policymakers have responded with raft of measures to address escalating prices. A series of
coordinated announcements over the past week has sought to boost supply – for example by
allowing vegetable trucks to travel toll free on highways – and reassure the public that food prices
will not keep rising. Government ministries are pitching in. The banking regulator is trying to boost
loans to agricultural projects. Representatives of the State Council, China‘s cabinet, are traversing
the nation on a food-price inspection tour, and the agriculture ministry is issuing optimistic updates
on the planting of winter wheat.
China‘s civil affairs ministry has ordered local governments to step up welfare payments to ensure
the poor can afford food. Beijing is handing out one-time subsidies of USD15 to more than 220,000
low-income workers. In Shaanxi province, the government has set aside Rmb60 million to help
university dining halls cover costs.
These efforts, combined with a crackdown on speculation in futures markets, and rising
expectations of tighter monetary policy seem to have had their intended effect, with futures for
traded agricultural commodities sliding during the past two weeks. While the government appears
to have had some success in putting a lid on rising prices in the short term, some analysts warn that
structural pressures will make bringing prices down more difficult.
Source: The Financial Times
MANUFACTURING DATA SHOW ASIAN DIVIDE
China‘s official measure of manufacturing industry performance rose for the seventh successive
month in November, underlining a widening gap between Asia‘s largest economy and much of the
rest of the region. The strong performance was underlined by a significant rise in the unofficial but
widely watched HSBC Market purchasing managers‘ index for China, also released on Wednesday,
which improved at the strongest pace for eight months.
The strong Chinese numbers suggest that demand is continuing to improve, in spite of Beijing‘s
attempts to slow the economy by raising interest rates and increasing the level of reserves that
banks are required to hold as a way of discouraging lending. Figures published with the two surveys
suggest that output and export orders are continuing to rise, but are being outpaced by input
prices, which moved up firmly.
The China figures follow a sharp decline in the comparable manufacturing index for Japan. HSBC‘s
PMI indices for South Korea and Taiwan, also published on Wednesday, suggested continuing
weakness, although both indicated a slight improvement over October.
India said on Tuesday that the economy grew at an annual rate of 8.9 per cent in the quarter to the
end of September, which was above expectations.
The manufacturing indices reinforce the view that Asia‘s economy is dividing into two camps. Rapid
growth in China and India is generating fears of destabilizing asset bubbles, but growth is weaker in
Japan and much of emerging Asia, while remaining generally stronger than in the U.S. and Europe.
Source: The Financial Times
DOLLAR RECAPTURES ITS SAFE-HAVEN ROLE
The U.S. dollar is recapturing its role as the primary safe-haven currency, eclipsing the yen and the
Swiss franc, as tensions in Korea and Europe escalate. That re-emergence as the ultimate sanctuary
for those fleeing risk will likely result in continued strength, analysts expect.
Turmoil will remain a dominant factor in coming sessions as investors confront three key sources of
stress: the rolling sovereign-debt crisis in Europe, the escalating military confrontation in Korea and

15. the fear of further policy tightening in China. Japan's proximity to Korea, which undermines the
perceived safety of the yen, is clearly buttressing the dollar's safe-haven status. But beyond the
specifics of this multipronged retreat from risk is the dollar's unique position as the "home" currency
for global investors. As the flight from risk intensifies, the more investors will push aside other
issues and seek out the perceived safety and liquidity of U.S.-dollar assets.
Source: The Wall Street Journal Asia
PERU SEEKS TO DOUBLE MINING ROYALTIES
Peru's ruling APRA party is trying to get a bill through Congress that would double royalties paid by
mining companies as part of an effort to lift fiscal revenues in the country at a time of high metals
prices. The bill would raise the levy on mineral sales to between 2 percent and 6 percent of the
gross sales amount. The range is currently between 1 and 3 percent.
At the same time, copper would be charged a royalty of 5 percent and gold 10 percent. In addition
to royalties, mining firms in Peru pay corporate income tax and pay a levy based on the amount of
mineralized earth they mine.
Peru is a leading global producer of gold, silver, copper, zinc, lead and tin. The mining sector
generates much of its fiscal revenues and is responsible for about 60 percent of exports. But
economists say the government's tax take is relatively low -- equal to about 15 percent of gross
domestic product, about half as much as in the United States. Economists say Peru's low tax take
has hindered its ability to build infrastructure and provide social programs.
Source: Mineweb.com
POLITICS
STANDING COMMITTEE REJECTS OPINION OF CONSTITUTIONAL COURT
The Standing Committee on Justice has rejected the opinion of the Constitutional Court, delivered
on November 17, that district election committees or the General Election Commission are not the
proper authority to decide on election-related disputes. The MPs‘ committee favors carrying on
with the present practice and is against giving the court the final say on any electoral dispute.
Source: News.mn
PRIME MINISTER CANCELS VISIT TO BRITAIN
Deputy Minister of Foreign Affairs B.Bolor has said the Prime Minister canceled his visit to Britain
scheduled to begin on November 27 as he could not leave the country when Parliament was to
discuss the budget. This is going to fool no one as the date of the visit had been fixed with the full
knowledge that the budget had to be passed before December 1. It has also been suggested that he
wants to express Mongolia‘s displeasure at the arrest of Mr. B. Khurts, Chief of Administration at
the National Security Council, at Heathrow on September 17 and at the subsequent British refusal
to release him despite Mongolian requests. It is difficult to understand why Mongolia should be
displeased. After all, the Government has admitted that Mr. Khurts did forcibly abduct a man from
French soil, and it is well known European nations value human rights. Can the real reason be that
the Prime Minister was afraid the whole affair had given him a bad image and that he would not be
able to answer questions in Britain? Official hints that the Prime Minister‘s decision was meant to
―assert our national dignity‖ hide the fact the real threat to this dignity lay in the fact that the
Prime Minister would have been paying an official visit to Britain at a time when one of his
seniormost officials was in prison there.
Source: Onoodor
MONGOLIA PASSED NORTH KOREA’S MESSAGE TO U.S.: WIKILEAKS
North Korea attempted to reach out to the United States through Mongolia in 2009, suggesting that
the Mongolians host disarmament talks between Washington and Pyongyang, American diplomats
reported in a document obtained by the website WikiLeaks.
A Mongolian diplomat passed that information to the U.S. Embassy in Ulaanbaatar after an August
2009 meeting with Mr. Kim Yong Il, North Korea's vice foreign minister, a leaked embassy cable
recounts. "There are no eternal enemies in this world," the Mongolian official quoted Mr. Kim as
saying.
"VFM Kim said the DPRK is spending too much on weapons rather than on its children, but that the
current reality dictates that they cannot get away from weapons for now," the cable states, using
shorthand for the Democratic People's Republic of Korea. "Kim said the DPRK is not a threat and was
only interested in self-protection."

16. The Mongolian diplomat who recounted the meeting described it as "notable" since the North
Koreans "did not read from a prepared script, they were not aggressive and made no criticism of the
United States, and they criticized China and Russia 'three or four times' for supporting recent U.N.
resolutions aimed at the DPRK," the cable states.
The North Koreans repeated their insistence that they would not return to the six-party regional
talks aimed at persuading Pyongyang to dismantle its nuclear weapons program, according to the
document. As they had in the past, they indicated that they wanted to discuss disarmament and the
normalization of relations with Washington in one-on-one talks, which an embassy official suggested
could be held in Mongolia, according to the Mongolian diplomat.
The cable quotes Mr. Kim as saying that former President Clinton's visit to North Korea "has greatly
improved the prospects for such talks". Mr. Clinton had gone to Pyongyang a week earlier to
retrieve two American journalists held on charges of entering the country illegally.
Source: edition.cnn.com
MPs WANT TO KNOW MONGOLIA’S GAINS FROM IVANHOE SHARE PRICE RISING
MPs S. Erdene (DP), B. Bat-Erdene (MPP), D. Gankhuyag (DP), G. Bayarsaikhan (DP), Ts. Davaasuren
(MPP), and Ts. Shinebayar (MPP) have written to Prime Minister S. Batbold seeking information on
certain aspects of the Oyu Tolgoi Investment Agreement in circumstances that have changed since
the agreement was signed. A part of their letter reads, ―Since the agreement came into force, it
has been reported that the price of Ivanhoe Mines JV (sic) shares has shown a tenfold increase, and
the company has raised over USD10 billion. We would like to know how this affects Mongolia, and
how much Mongolia, as the side which owns 34% of the company that is going to utilize this deposit,
stands to gain, complete with interest.‖
Source: Onoodor
MPP HAS 3 KEY POSTS TO FILL
The MPP is stuck with finding candidates for three top jobs. Mr. T. Ochirkhuu has resigned as
Deputy Finance Minister to head Ulaanbaatar Railway, and the front runners to succeed him appear
to be Mr. N. Bayartsaikhan, former MP and now Director of the Department of Budget Policy at the
Ministry of Finance, and Mr. Ch. Gankhuyag, an advisor to the Prime Minister. The party would also
like to have its nominees to lead the Specialized Inspection Agency and the Constitutional Court,
but a choice is not proving to be easy in either case.
Source: Onoodor
JUDGES IN ULAANBAATAR DISTRICT COURTS OVERWORKED
Officials of the Ulaanbaatar Court have told media that most judges at the eight district courts
under it are overworked. At the end of September the courts resolved 2,095 of the 2,588 criminal
cases submitted. The number of cases was 2.5% fewer than in the same period last year, but
convictions were 7.8% higher. One judge presided over 216 cases on an average. Similarly, 10,882 of
the 18,130 civil cases had been disposed of, with each of the 49 judges resolving 222 cases on an
average.
The number of violent attacks has increased. Cases of premeditated murder have risen 6.3%, those
of unintended manslaughter 33.3%, those of grievous bodily harm 33.9%, rape 18.0%, assaults 1.4%
and auto accidents 19.8%.
There was no appeal against 90% of the judgments in civil cases, a slight fall from the 91.5% in
2009.
Source: Ardiin Erkh
CHOIBALSAN STATUE ALSO TO BE RECAST IN BRONZE
Following the statue of Commander D.Sukhbaatar, that of Marshal Kh.Choibalsan in front of the
Mongolian National University will also be recast in bronze. A new stone pedestal is being built.
The Ulaanbaatar Civil Representatives Assembly will decide on where the new statue will be put up.
As in the case of the Sukhbaatar statue, the original will be preserved as a cultural heritage item.
Work on both is expected to be finished this year. A proposal in 2008 to get the statue of
Sukhbaatar recast in bronze in South Korea had to be abandoned as the expenses worked out to
USD1.5 million. Costs in Mongolia are much cheaper, and expenses on the two together would now
be MNT900 million, of which MNT100 million will be needed for the statue of Choibalsan.
Kh. Choibalsan was the leader of Mongolia from 1928 to 1952. The ―purge of rightist elements‖ in
the 1930s, carried out under his orders, killed some 27,000 people, or 3% of the population. Of
them, 17,000 were monks. The capital of Dornod amag is named after him.

17. Source: News.mn
SPEAKER CALLS FOR EQUAL JUSTICE FOR ALL
Parliament Speaker D.Demberel has said it is unfortunate that the feeling is widespread in the
country that someone stealing MNT100,000 gets to spend 10 years in jail, but those stealing several
billions live in honor and dignity. ―More and more people wonder why it should be like this and
conclude that the law does not confer equal rights,‖ he said. He called for ―a national fight‖
against this ―social anomaly‖ where monetary worth influences the course of justice. ―A country is
corrupt when laws have two faces, for two sets of people.‖ In today‘s Mongolia, protest against
corruption is actually suppressed, he said, adding, ―We have good laws, but those with money
power stand in the way of their proper implementation.‖
Source: Onoodor
ALL LEATHER AND WOOL PROCESSING PLANTS TO BE SHIFTED
The city authorities have accepted recommendations in a feasibility study conducted by the
Ministry for Food, Agriculture and Light Industry on replacing the present Hargia waste water
treatment plant with a new one that will use newer technology and have more capacity. MNT1.7
billion will be needed for this and work is expected to begin before the end of the year. It has also
been decided to relocate all leather and wool processing units away from the city center, and
Mayor G.Munkhbayar has identified 56.5 hectares of land in Khan-Uul district for this.
Source: Onoodor
10 DARKHAN OFFICIALS CHARGED WITH FINANCIAL FRAUD
After four days of deliberation, a court in Darkhan has returned a case of embezzlement and
misappropriation of State funds against 10 senior officials of the province for further investigation.
It is not clear what more exactly the court wants to know as the charges against the accused appear
straightforward. These include transactions in the name of non-existent individuals to transfer
money to their own accounts, issuing payment orders without proper supporting documents, and
ignoring regulations on procurement.
Source: Onoodor
COMMITTEE WANTS BAN ON SMOKING IN ALL PUBLIC PLACES
The Standing Committee on Social Policy, Education, Culture and Science has approved an
amendment to the present law seeking to ban smoking in all public places. At present the ban
applies to all forms of public transportation only. Mr. L.Gundalai wondered why taking snuff has
been kept outside the proposed ban on tobacco and was told that a survey has shown only 1.8% of
the population use snuff as a habit, and also that it causes less harm. The MPs also felt the warning
pictures on cigarette packets were not effective and wanted a return to the cautionary words.
Members viewed with concern reports of increased smoking among secondary school students.
Minister of Health S.Lambaa said schools would soon offer lessons on the harmful effects of alcohol
and smoking.
Source: English.News.mn
NUMBER OF ENVIRONMENTAL NGOs INCREASES
It has been revealed that the number of non-governmental organizations (NGO) in the environment
field has gone up from 312 five years ago to 500. The growth has been simultaneous with the
expansion in mining in the last few years. A recent workshop emphasized the need to continue with
the regular cooperation between government agencies and NGOs in the same field. Their joint
efforts have so far led to the adoption of amendments to 10 laws, and passage of 4 new laws and 14
new rules. Environmental NGOs say they want to actively involve private companies and religious
organizations to improve ecological awareness among citizens.
Source: Undesnii Shuudan
NO STOCK AT ALL OF SNOW MELTING SUBSTANCES
As snow piles on the streets and makes them slippery, officials at the Mayor‘s office have found
that the planning and service department in no Ulaanbaatar district has followed instructions to
always keep in stock 30 tons of snow melting substances. It will be weeks before fresh supplies
come, as a tender will be announced only on December 12. It will take some more days before the
selected company can bring 140 tons of the substances from China.
However, salt and sand are in stock and 40 tons of the former were used in all districts, and 20 tons

18. of the latter on the roads of Bayanzurkh and Songinokhairkhan districts. About 500 tons of salt is
needed annually and the city has 130 tons of it at present.
It is planned to sprinkle 300 tons of very small crushed stones in December when sand will no longer
be effective, sticking to the snow.
Source: Ardiin Erkh
NEW MONGOLIAN LAWS AND REGULATIONS
The following new amendment was published in the latest weekly Government bulletin. Unless
otherwise decided by Parliament, it will take effect ten (10) days after publication.
Date Amendment
25.11.2010 Amendment to Law on Mongolia's administrative, territorial units and their
administrations
Please visit BCM's website, Legislative Working Group, for a summary of new Mongolian laws. BCM
members who wish to access complete versions of the laws and regulations in Mongolian language
are welcome to call or email the BCM office: 332345 or info@bcmongolia.org.
ANNOUNCEMENTS
MINES & MONEY HONG KONG 2011, MARCH 22-25
The 2011 Mines and Money Hong Kong on March 22-25 will be the largest dedicated mining
investment event in Asia with the exhibition set to increase by more than 50%. At least 80
exhibiting companies ensure a real showcase for anyone interested in investing in the resource
industry. Just under 700 investment and mining professionals attended the event in 2010 and this is
anticipated to increase to around 1,000 next year as interest in Hong Kong for the natural resource
sector heats up.
Mines and Money Hong Kong 2011 will provide networking opportunities for investors and mining
companies through the exhibition, new meeting rooms and evening functions. In addition, the two-
day conference and add-on workshops and summits allow delegates to get up-to-date information
on the market as well as listening to mining companies detailing their investment opportunities.
In 2011, either side of the two-day conference, are two separate investment summits focusing on
the Indonesian and Mongolian mining industries.
BCM is again a Supporting Organization for the Conference and Exhibition and Executive Director
Jim Dwyer will be the moderator of the Mongolia Mining Investment Summit on March 25. BCM
members receive a 15% discount. More information can be had at +852 2219 0111;
info@beaconevents.com.
________________________________________________
MONGOLIAN MINING JOURNAL AWARDS -2010
The Mongolian Mining Journal has announced its annual mining awards in five categories for those
working in the mining industry. The selection panel will comprise an MMJ Council, mining
professionals, environmental experts, researchers and business management specialists. The choice
will be made from among nominations received before December 15, 2010. Any individual or
company may nominate itself or others. The reasons for the nomination should be explained in a
maximum of four A4 pages. The winners will be promoted through different media, including TV
and newspapers.
The following are the categories for this year‘s awards:
1. Explorer of the Year: to be given to a person or a company for discovering the most significant
new mineral deposit.
2. Mine Development: open to both foreign and domestic companies, which successfully started
production, based on completed research.
3. Green Mining: will go to an exploration or extraction company, whose work was followed by
successful reclamation to support sustainable development.
4. Best Mining Technology: relates primarily to safety and will go to the company that has
implemented safe mining as well as used new technology and techniques.
5. Support for Mining Industry: for the Governmental or Nongovernmental organization or individual

19. that has initially worked to create better legal and investment environment in mining sector.
__________________________________________
“BSPOT" on B-TV, Monday to Friday at 21:30
BTV (Business TV) now telecasts a 10-minute English-language news program called BSPOT every
evening from Monday to Friday at 21:30, taking most of the stories from the BCM NewsWire.
___________________________________________
“MM TODAY” on MNB-TV, Fridays at 21:15
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 21:15 tonight. Tune in to watch this program that reports stories from today‘s BCM
NewsWire.
___________________________________________
NEW POSTINGS ON BCM WEBSITE'S 'PRESENTATIONS' AND 'MONGOLIAN BUSINESS NEWS'
From last week‘s successful Mining Investment Summit UK 2010 in London on November 24-25,
2010, posted are 15 featured speaker presentations on BCM's website (www.bcmongolia.org) in
the "Resource, Presentations" section for your review.
We are now posting some news stories and analyses relevant to Mongolia on the BCM website's
‗Mongolian Business News‘ as they come, instead of waiting until Friday to put them all together in
the weekly NewsWire. The NewsWire will, however, continue to be issued on Friday, and will
incorporate items that are already on the home page, so that it presents a consolidated account of
the week‘s events.
SPONSORS
Khan Bank Eznis Airways
Mongolia Web Mongolian National Broadcasting

20. ECONOMIC INDICATORS

21. INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
Year 2008 *22.1% [source: NSOM]
Year 2009 *4.2% [source: NSOM]
October 31, 2010 *11.3% [source: NSOM]
*Year-over-year (y-o-y)
CENTRAL BANK POLICY LOAN RATE
December 31, 2008 9.75% [source: IMF]
March 11, 2009 14.00% [source: IMF]
May 12, 2009 12.75% [source: IMF]
June 12, 2009 11.50% [source: IMF]
September 30, 2009 10.00% [source: IMF]
May 12, 2010 11.00% [source: IMF]
CURRENCY RATES – December 2, 2010
Currency name Currency Rate
US dollars USD 1,240.13
Euro EUR 1,617.87
Japanese yen JPY 14.84
British pound GBP 1,932.49
Hong Kong dollar HKD 159.66
Chinese yuan CNY 186.08
Russian ruble RUB 39.42
South Korean won KRW 1.08
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.