February 10 2012

1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
Issue 208 – February 10, 2012
NEWS HIGHLIGHTS:
Business
 Goldman Sachs agrees to buy 4.8 percent of TDB;
 Just Agro operations first in Mongolia to meet HACCP food safety standards;
 E-TT poised to export 1.3 million tons of coal in 2012;
 Erdenes MGL commissioned for border expansion;
 MMC begins operations at Baruun Naran;
 Xanadu seeks to unload thermal coal assets to focus on coking coal;
 Draig Resources identifies priority targets while on hunt for coal;
 Erdenet brings new blasting technologies to operations;
 Khukh Gan opens Mongolia's first iron-ore processing plant;
 Website opens for job recruiting service;
 Air Astana to launch Astana-Ulaanbaatar flights;
 Mongolia's top companies team up with government to share CTL fuels research;
 Ivanhoe Australia enlists UBS to seek out strategic partners;
 Friedland looks toward huge new copper project in the DRC;
 Rio commits to further investment in Australian iron-ore;
 Coke rides forward-moving sales momentum.
Economy
 Mongol Bank spreads the word on currency fluctuations;
 Mongol Bank won't take the rap for inflation/price gains;
 IMF official outlines economic risks;
 Miners respond to NGO report critical of mining operations;
 Mongolia tests out geothermal heating at countryside schools for big savings;
 Mogoin Gol Power Plant to provide 80 years of energy to western Mongolia;
 Mongolia Telecom overhauls phone number system;
 Counterfeit camel wool goods cheapen the industry, says Russian exporter;
 Fake drugs are a hard pill to swallow;
 U.K. audience indicates growing interest in vacations in Mongolia;
 Glencore-Xstrata merger may light fuse to merger & acquisition explosion;
 Six steps to advancing responsible mineral development;
 China set to keep copper usage high;
 Naran at Asia Foundation envisions bright future out of dark times;
 China's inflation rises faster than expected;
 Chinese premier says China has a stake in Euro-zone debt crisis;
 Economic trends indicate green light for mining and metals M&A in 2012.
Politics
 Transparency leads to clear vision for development;
 MPP research team projects up to USD 60,000 GDP per capita by 2032;

2.  DP and MPP battle it out in Parliament;
 Police Chief calls for more gun control following shooting crime;
 Salary raises leave MNT 172 billion gap in budget for Parliament to fill;
 Mongolia leads community of democracies in Geneva;
 Science team helps mold next generations for education and policymaking;
 U.S. Congress ponders cutting USAID funding to Mongolia;
 Organizers well-prepared for ongoing Coal Mongolia 2012 Forum;
 Government naming 30,200 falsely accused political prisoners from Communist era;
 Deputy Finance Minister asks for patience for economic growth benefits;
 The filthy rich and racists of the mining boom;
 Putin's hesitation to crack down on protests shows vulnerability.
*Click on titles above to link to articles.
SPONSORS
Khan Bank Eznis Airways
Kempinski Hotel Khan Palace Mongolian National Broadcasting
Mongolian Star Melchers Breakthrough PR
Mongolian Properties Oxford Business Group
BUSINESS
GOLDMAN SACHS AGREES TO BUY 4.8 PERCENT OF TDB
Goldman Sachs Group Inc., the fifth-biggest U.S. Bank by assets, will buy 4.8 percent of Trade &
Development Bank of Mongolia LLC (TDB) to help the lender develop as the economy expands.

3. ―Mongolia is a booming and fast developing economy driven by growth in mining sector and
commodities exports,‖ Balbar Medree, chief executive officer of TDB, said without giving the value of
the investment agreement. ―Goldman Sachs' global expertise and financial strength will help us grow
further and enhance our offering.‖
TDB has predicted that Mongolia must invest as much as USD 68 billion within four years in new mines,
roads, and housing. TDB, formed in 1990, was the first lender in Mongolia to receive an investment
from the Asian Development Bank (ADB) and International Finance Corp., which pumped in USD 11
million in 2004. The Bank had USD 1.3 billion of assets at the end of September.
Source: Bloomberg
JUST AGRO OPERATIONS FIRST TO MEET HACCP FOOD SAFETY STANDARDS IN MONGOLIA
Just Agro LLC of Just Group has recently become the first Mongolian company to receive the Hazard
Analysis and Critical Control Points (HACCP) certificate of international food safety standards. The
certification guarantees that the meat products of Makh Market, a subsidiary of Just Agro, meet
international standards. In the past meat producers' inability to meet standards has prevented export
sale to countries such as Russia and China.
First developed in 1970 by the United States, the HACCP standard originally was used for approval by
astronauts until evolving into an organization for determining international food standards. The
Mongolian National Food Safety program aims to have no less than 60 percent of Mongolian food
products pass the HACCP food standards test by 2016. The HACCP lauded Just Agro for working to bring
its standards ahead of the rest of the market, and for achieving this so quickly.
―This is only the beginning,‖ said chief executive officer of T. Sodnomdarjaa. ―We worked for only two
years on research and study to have Mongolian meat pass international safety and quality standards.‖
The executive added that his company has purchased MNT 61 billion worth of meat from herders, spent
MNT 50 million of new processing equipment and MNT 1 billion to better train its employees.
Source: UB Post
E-TT POISED TO EXPORT 1.3 MILLION TONS OF COAL IN 2012
Erdenes-Tavan Tolgoi LLC (E-TT) is currently able to export 60,000 tons of coal, with a target of 1.3
million tons for the year.
At the Tavan Tolgoi eastern block, 2.4 million tons of coal is reportedly ready for extraction. Next year
the company plans to export between 13 million and 16 million tons of coal for export compared with
this year's 1.3 million. The extraction of 15 million tons a year would give the eastern block's mine a
lifespan of 100 years.
Currently infrastructure for transport is still needed. Coal travels 240 kilometers in a heavy-load coal
truck over three days to Tsagaanmod Soum and back. Traffic at the border results in another eight-to
10-hour delay. The lack of roads puts great pressure on the land, kicks up a lot of dust, and leaves a
trail of coal particles in the air. In response, E-TT has constructed a 3.6-kilometer road to begin with,
and will use the road built by Energy Resources LLC once it is ready for operation.
Source: Zuunii Medee
ERDENES MGL COMMISSIONED FOR BORDER EXPANSION
State-owned firm Erdenes MGL LLC has permission to expand the Gashuun Sukhait border port to China
to a 10-car capacity.
Permission has been granted for the project through resolution 257, which directs the company to seek
out financing and development a plan for the port. G. Munkhbat, deputy director of Erdenes MGL said
that Erdenes Tavan Tolgoi LLC and Energy Resources LLC have invested a total of MNT 12.3 billion, or
50 percent of the entire costs for construction, towards the project.
The border will have six exit and four entry points, and a total of 10 roads for customs clearance. Plans

4. say that the expansion will increase the number of trucks allowed to pass through border each day from
a maximum of some 400 trucks to 1,000 each day.
Production and export will reportedly grow dramatically in the coming years by four tons this year to
eventually 20 tons in 2015. The port will be utilized by both the Oyu Tolgoi and Tavan Tolgoi mines,
said D. Davaasambuu, head of the Gashuun Sukhait border point. Taxes from the increased export
delivery are projected to grow from 120 billion to 279 billion, he added. In 2011 coal exports grew to
10.9 million tons from 8.1 million tons in the prior year.
Source: Zuunii Medee
MMC BEGINS OPERATIONS AT BARUUN NARAN
National coal miner Mongolian Mining Corp. (MMC) through its fully-owned subsidiary Khangad
Exploration LLC and a team of specialists from various government agencies have begun operations at
the Baruun Naran coking coal mine.
MMC hopes to mine 1 million tons coal by 31 December 2012 from the Baruun Naran coking mine,
located in Umnugobi Aimag in southern Mongolia and approximately 30 kilometers from its Ukhaa
Khudag coking coal mine. It plans to transport the coal from the Baruun Naran mine to Ukhaa Khudag
for processing at its coal handling and preparation plant before further marketing as washed coking
coal for sale in China.
In February 2010, McElroy Bryan Geological Services updated the geological model for the Baruun Naran
coking coal deposit according to the Code for Reporting of Mineral Resources and Ore Reserves
(―JORC‖) and identified approximately 282 million tons of JORC-compliant measured and indicated
resources. In March 2011, SRK Consulting completed reserve estimates which may change as MMC begins
to conduct its own studies and analysis on the future development of the Baruun Naran coking coal
deposit.
Source: Mongolian Mining Corp.
XANADU SEEKS TO UNLOAD THERMAL COAL ASSETS TO FOCUS ON COKING COAL
Junior exploration company Xanadu Mines Ltd. said it is seeking offers for its Mongolian thermal-coal
projects so it can focus on prospective coking coal, copper, and gold deposits in the country.
Confidentiality agreements have been signed with a number of unnamed parties and negotiations are at
an early stage, the Sydney-based company said in a statement.
Xanadu Mines has estimated its Khar Tarvaga and Galshar coal projects contain 497 million metric tons.
The company was recently granted a 30-year mining license for Khar Tarvaga and is applying for
Galshar. Miners have stepped up exploration of Mongolia's largely untapped mineral wealth in recent
years, hoping to capitalize on the growing demand for energy and metals for neighboring China and
other Asian markets.
―Our focus would be on coking coal assets with Noble, and our gold and copper assets,‖ Brian Thornton,
Xanadu Mines chairman, said. ―There's nothing concrete on the table yet.‖
Xanadu Mines has said its strategy is to target opportunities in the Trans-Mongolian rail corridor or near
the Chinese and Russian border. The company has three coking coal projects under development in its
joint venture with commodities-trading company Noble Group and is exploring for gold in the southeast
Gobi and for copper at a wholly-owned project.
Source: Wall Street Journal, Bloomberg
DRAIG RESOURCES IDENTIFIES PRIORITY TARGETS WHILE ON HUNT FOR COAL
Draig Resources has identified numerous Jurassic coal bearing drill targets following a geophysical
survey of two of its coal licenses in Uvurkhangai Aimag, as it works toward defining a JORC Resource in
the June quarter.
The targets identified within the Teeg and Nariin Teeg licenses were relatively shallow and, at Teeg,

5. could potentially include two laterally continuous synclinal features. Exploration drilling by Draig in
June last year intersected a 60-meter coal seam characterized by vitrinite-rich massive hard black coal
in the lower part of the seam. A separate 40 meters of thick black coal seam was intersected from a
depth of 89 meters, of which 30 meters was logged as consistently hard coal. The geophysical work
indicates the potential to define a substantial coal resource at Teeg.
Draig is currently in talks with drilling contractors to undertake a two-phase drill program. Phase one
will include 10 drill holes with a combined depth of about 2,200 meters to obtain samples for coal
quality testing. Phase two will aim to increase the resource size based on information from phase one
and previous exploration work.
Source: Proactive Investors
ERDENET BRINGS NEW BLASTING TECHNOLOGIES TO OPERATIONS
The Erdenet Mining Corporation has conducted a test outcome to contribute to a development of
blasting works. It has been done at an ore open-cast mine.
Engineers and technicians from the national company Mera, the United States' Austin Power, and
China's Chemical Industry Group have performed the test blasting using an electronic detonator, one of
the latest tools, for the first time.
The detonator is equipped with the latest technologies and allows engineers to set the blasting time for
any option, to control consumption of explosive substances, to determine directions of rock
movements, to start the blasting at any point and to reduce pollution.
Source: Montsame
KHUKH GAN OPENS MONGOLIA'S FIRST IRON-ORE PROCESSING PLANT
Khukh Gan plans to increase production of its processed iron by 66 percent with a new production line.
Its plant is Mongolia‘s first direct reduced iron (DRI) manufacturing plant.
While the company was able to produce 1,450 tons in the month of October, once a second production
line is built, production should read 2,500 tons, said Ts. Batbold, Khukh Gan's chief executive officer.
He said the plant is able to convert 42 percent of iron-ore into a metal with 65 percent iron
concentrate. The plant supplies its finished product to Darkhan Metallurgical Plant, the largest steel
production factory in Mongolia. Located in Erdenet, the plant opened after two years of construction.
―Mongolia has a low population and annual scrap production is small,‖ said Batbold. ―Therefore,
processing iron-ore and manufacturing iron metal from raw materials are crucial.‖
The executive added that his company has received interest from the likes of companies from China,
South Korea, and Japan for its product. It currently plans to export 300,000 tons of DRI for MNT 465,000
to China as a test for the market, and is currently negotiating with firms such as Japan's Toyota and
Korea's Toto. Export sale is crucial because the domestic market is still rather small, but its
dependence on purchases from nations such as China is another example of Mongolia's overall
vulnerability to swings in global economic trends. The plant's close proximity to the rail line at Erdenet,
which runs straight through the border to China, is advantageous for the transport of its goods.
DRI is a relatively cheap form of metal production because it does not use coking coal and is 30 percent
to 70 percent less harmful to the environment. However, the technology has a bottle neck in
production that limits it to 2 million to 5 million tons of processed metal a year. The metal produced
contains 87 percent to 92 percent iron and is of generally high quality said Batbold. Quality could reach
as high as 97 percent, but a lack of resources and a need for heavy investment are obstacles to
overcome before that sort of production can be done. According to estimates, Mongolia exports 3
million tons of iron-ore a year.
Source: BDSec

6. WEBSITE OPENS FOR JOB RECRUITING SERVICE
A new website for job recruiting, MongolianTalentNetwork.com, has gone live this week. The website
features job listings users can search in both Mongolian and English languages.
Users will benefit from traffic procured from the company‘s marketing campaign, a Mongolia-focused
LinkedIn group, and the organization's Facebook page. The website has also offered free listings for the
month.
Source: Angel News
AIR ASTANA TO LAUNCH ASTANA-ULAANBAATAR FLIGHTS
Kazakhstan's Air Astana will be operating its growing fleet of Embraer 190s on an expanded Central
Asian network to include Ulaanbaatar in 2012.
New international services from Astana to Mongolia's capital; Astana to Tashkent, capital Uzbekistan;
Almaty to Kaza, Russia and Atyrau to Moscow will launch following the delivery of three more aircrafts
during the second quarter of 2012.
Air Astana's strategic plan to develop a network of services serving destinations in Central Asia,
southern Russia, and western China from hubs in Almaty and Astana has been a tremendous success
over the past three years,‖ said Peter Foster, President of Air Astana. ―Popularity of the services has
been further boosted following the introduction Embraer 190 aircraft on the network earlier this year
and passengers can now look forward to more new destinations in 2012.‖
The twin-engine Embraer 190 jet is configured in a two class, 98 seat configuration and has a maximum
range of 4,500 kilometers. Air Astana currently operates a fleet of 26 aircrafts comprising two Boeing
767-300, five Boeing 757-200, ten Airbus A321/A320/A319, three Embraer E1190 and six Fokker 50. The
airline serves 23 domestic and 31 international destinations.
Source: Asia Travel Tips
MONGOLIA'S TOP COMPANIES TEAM UP WITH GOVERNMENT TO SHARE CTL FUELS RESEARCH
The government and private business have committed to a cooperative agreement to seek out
opportunities for a coal-to-liquid (CTL) fuels industry for Mongolia. Government agencies the National
Development and Innovation Committee and the Ministry of Mineral Resources and Energy have signed a
memorandum with some of Mongolia‘s top-tier companies such as the Mongolian Industrial Corporation
LLC, MCS Holdings, Mongolyn Alt Group (MAK) and Petrovis Group for the project.
The parties involved will work towards creating a resolution for the approval of a program to
developing an industry for CTL fuels. The partners will examine a list of the biggest projects proposed
for this aim, and will exchanging views on how to best support domestic investors. They will discuss the
possibility of constructing industrial complexes for CTL fuel production and the implications of
technical, economic, and environmental factors.
The memorandum requires all those involved to share the research they have compiled for the
construction of a CTL fuels plant and seek out opportunities for a joint project.
Source: Montsame
IVANHOE AUSTRALIA ENLISTS UBS TO SEEK OUT STRATEGIC PARTNERS
Ivanhoe Australia Ltd. has hired UBS AG to help find strategic partners for a string of Australian base-
metals projects as it vies to secure long-term funding to bring them into production. Ivanhoe Australia
is a subsidiary of Ivanhoe Mines Ltd, which has come into question after Rio Tinto Group took majority
control of the company.
The move to start a formal sales process comes nearly eight months after Ivanhoe Australia began
sounding out potential investors, and is a further sign that interest in industrial metals remains robust
despite a shaky global economic outlook. The process to bring in strategic partners is likely to last two
to three months, said Peter Reeve, chief executive of Ivanhoe Australia.

7. ―Part of UBS's role in this will be to organize and structure the process, and to bring in others,‖ said
Reeve.
Ivanhoe Australia is 59 percent owned by Ivanhoe Mines, and its chairman is Ivanhoe Mines founder and
chief executive officer Robert Friedland. Anglo-Australian mining titan Rio Tinto this month took
majority control of Ivanhoe Mines, increasing its stake to 51 percent. Reeve said that nothing had
changed as far as their business goes and that the company's management is focused on developing its
projects.
Source: Wall Street Journal
FRIEDLAND LOOKS TOWARD HUGE NEW COPPER PROJECT IN THE DRC
Ivanplats Ltd. Chief Executive Officer Robert Friedland said on Wednesday his company was developing
Africa's largest copper project in the Democratic Republic of Congo (DRC). Currently the chief
executive officer of Ivanhoe Mines Ltd., the 66 percent stakeholder in the Oyu Tolgoi copper and gold
project, his future with the company (along with the rest of management) has come into question since
Rio Tinto Group took a majority interest.
―This is the project that we think will set the mark for the rebirth of the mining industry in the Congo,‖
he told delegates at the Investing in Africa Mining Andaba in Cape Town.
Friedland said that the high-grade ore body discovery at Kamoa was 22 km long and up to 12 km wide,
with the flat lying body coming to within 30 meters of the surface. The size could increase further as
drilling was still taking place. Friedland noted that the geology of the discovery was similar to the
Polish Kupferschiefer mine. He said that while some people believed that the African copper belt in the
DRC had reached its exploration maturity, Ivanplats chose in 1996 to stake an area west of the copper-
rich Kolwazi district that had not previously been fully investigated, which led to the Kamoa discovery.
Friedland confirmed that Ivanhoe had further increased its interest in the DRC as it had reached an
agreement to acquire and redevelop the Kipushi mine of which it would have a 68 percent interest. A
USD 4 to 5 billion capital investment would allow the company to mine the large untapped zinc
discovery that has been identified at Kipushi. While the size of the deposit is still being determined,
Friedland believes it is the world's highest-grade zinc body.
Source: Mining Weekly
RIO COMMITS TO FURTHER INVESTMENT IN AUSTRALIAN IRON-ORE
Mining giant Rio Tinto Group has committed to a further USD 3.5 billion investment in its iron-ore
operations in the Pilbara mine. The investment would comprise a USD 2.2 billion investment to extend
the life of the Nammuldi iron-ore mine, increasing the miner's Pilbara production capacity to 283
million tons a year.
Rio said that the expansion of its Pilbara operations to 353 million tons a year was currently in the final
feasibility study phase, with a final investment decision expected later this year. The miner expected a
capital intensity of expansion from 220 million tons a year to 353 million tons a year to hover around
USD 150 a ton.
Rio iron-ore and Australia Chief Executive Officer Sam Walsh said that the company's drive toward a
more than 50 percent increase remained on track, adding that Rio Tinto was bringing new iron-ore
production on stream at a time when demand from Asian markets was forecast to grow strongly, while
industry supply remained constrained. It was expected that the 283 million ton a year production
capacity in the Pilbara would be reached by the second half of 2013, while the Nammuldi expansion
would deliver first ore in the third quarter of 2014.
Source: Mining Weekly
COKE RIDES FORWARD-MOVING SALES MOMENTUM
Coca-Cola Co. (Coke) is ratcheting up the pressure on PepsiCo Inc. and other beverage companies with

8. plans to plow up to USD 650 million in new, annual costs savings back into supporting growth for its
brands, which continued to grow sales and volume in the fourth quarter that saw actual earnings fall
due to a gain last year. Coke entered the Mongolian market place early on after the fall of communism
in Mongolia and has a history working alongside Mongolian beverage producer MCS Holdings, while
PepsiCo began distributing its products more recently. Both, however, have proven successful and have
carved in two strong positions in the market as emerging markets such as Mongolia have become a
growing priority for both producers.
Coke's plans to pile more marketing dollars behinds brands come as PepsiCo, under pressure from
investors due to lackluster beverage sales, is on Thursday widely expected to announce an increase in
its own marketing budget. But Coca-Cola is resolute that its plans do not involve being dragged into a
pricing war that will erase some of the progress it has made by raising prices.
The U.S. beverage maker from Atlanta said the new productivity targets, scheduled to be completed by
the end of 2015, include taking costs out of the supply chain and more effective marketing. On
Tuesday, Coke also reported a 71 percent drop in fourth-quarter earnings due to a big gain last year
related to the purchase of bottling operations. Sales and profit grew on strong results in emerging
markets.
The savings are expected to help mitigate commodity costs pressures that are forecast to rise up to USD
450 million this year after and USD 800 million spike in 2011.
Read more…
Looking ahead, Coke said foreign exchange is expected to be a strong profit headwind in 2012, mostly
from emerging market currencies that aren't hedged. Currency swings will have a negative mid-single-
digit impact on its operating income in percentage terms this year because of a stronger U.S. Dollar.
Analysts have been expecting foreign exchange to depress Coke's earnings by 2 percent to 3 percent in
2012 as the company translates its profits back into dollars.
Source: Wall Street Journal
ECONOMY
MONGOL BANK SPREADS THE WORD ON CURRENCY FLUCTUATIONS
The Bank of Mongolia has launched a new public awareness campaign to inform the public on how to
defend against fluctuating exchange rates. The campaign is a reaction to the sudden and sharp rises in
gas prices in Mongolia.
Mongol Bank official J. Bataa said that the central bank has advised commercial banks to inform
customers about ways to protect themselves from fluctuating currency rates. The central bank has
been working alongside a handful of domestic commercial banks to help spread this information to the
public.
Petroleum importers are currently being encouraged to negotiate currency exchanges with commercial
banks for fuel purchases, said Bataa. He said this would maintain stability for gas prices if the tugrug
fell against the U.S. dollar again. However, some importers and commercial banks have complained
that the costs related to this practice are too heavy.
Source: News.mn
MONGOL BANK WON'T TAKE THE RAP FOR INFLATION/PRICE GAINS
The Bank of Mongolia is now apparently on the defensive after facing criticism from both the
Government and the public for last month's price hikes. D. Delgersaikhan, the director of the
International Department at the Bank of Mongolia, said the Central Bank had warned Parliament about
inflation to no effect.
Over the past two years the tugrug rate had fallen due to greater dependency on the U.S. dollar,
explained the official. In 2010 the economy was on the rebound from the 2008-2009 financial crisis,

9. and a lot of foreign currency was in circulation. While mining operations ramped up, low demand for
U.S. dollars pushed the tugrug rate down 13 percent. By 2011 Mongolian mining projects were already
in full swing. Although the investment remained unchanged, its output (i.e. government spending) had
increased, causing another 11 percent drop to the national currency.
―We had sent numerous requests to Parliament to reduce budget losses, but they still give out cash,‖
said Delgersaikhan. ―I would like to point out that after the Bank of Mongolia warned the government
about possible risks, they sat back in silence as if they did not care. But when those risks became a
reality, and economic damage was inflicted, they begin looking for someone to blame, as usual.‖
Delgersaikhan outlined the Central Bank's strategy to maintain flexibility with the currency, following
supply and demand, and only intervening if any one side grows too heavy. She warned that trying to
force the tugrug in either direction without due cause would only result in exacerbating the situation,
as happened in 2008 when the exchange rate fell 34 percent.
She also said that the Bank would have to deny a request from the National Committee on Social
Welfare and Labor to bring the currency to where it stood three months ago because it would betray
investors' trust and create more cracks in the fundamentals of the economy.
Source: UB Post
IMF OFFICIAL OUTLINES ECONOMIC RISKS
Steve Barnett, the Assistant Director of the International Monetary Fund's (IMF's) Office for Asia and the
Pacific, has outlined four key short-term challenges and risks Mongolia will have to face as it continues
toward development. Those are overheating, global risks, fiscal policy and exchange rate.
Overheating is simply growth that comes too fast. He explained that growing too fast in the short run
often results in high inflation, exchange rate volatility, wage pressures, and ―Dutch disease.‖ All of
these effects could heighten fears of a ―hardlanding,‖ especially if there are ―external shocks‖ to
affect the economy. That in turns leads to the general threat of global risks. A slowdown in the global
economy is dangerous for any country, but it is especially so for Mongolia as they could affect copper
and coal prices, as happened in 2008. A return to a boom-bust policy would make Mongolia vulnerable
to another crisis, and hopeful MPs will not fall victim the temptation to make promises that involve
greater spending as elections near.
Fiscal policy is at the center of overheating and economic volatility. Government spending increased 60
percent last year and is set to rise a further 30 percent this year. This kind of growth is too great and
will most likely result in inflation. Barnett recommended immediate scaling back of government
spending to ―a much more prudent rate of growth.‖ Finally, a flexible exchange rate should be
maintained, and is perhaps most important to a healthy economy. While it is fine for the Central Bank
to intervene to smooth excess volatility, it should not target any specific level for the exchange rate.
He explained that this strategy is simply ineffective and will only deplete national reserves.
Source: Bank of Mongolia
MINERS RESPOND TO NGO REPORT CRITICAL OF MINING OPERATIONS
Miners have been vocal in response to a recently released report that says mining operations are
responsible for desertification and the end of traditional nomadic lifestyles, saying that the accusations
are exaggerated.
A report by non-government organizations (NGOs) claimed that a surge in mining developments have
pushed herders in the South Gobi region out of traditional camps, fragmented pasture land and put
pressure on water resources. But Brian Thornton, chairman of the Australian miner from New South
Whales Xanadu Mines Ltd., said a lot of the reported side effects of Mongolia's mining boom are
exaggerated. There is some truth to the claim that mining trucks are stirring up dust, Thornton said, as
trucks cross the border to China up to 500 times a day. But this was not extending Mongolia's deserts
and the problem is being alleviated as new roads are built from major mines to China, he said.

10. David Paull, managing director of Perth-based Aspire Mining, said dust problems will further improve
when the Mongolian government in 2015 completes a new rail line linking the world's largest
undeveloped coal deposit, Tavan Tolgoi, to the existing Trans-Mongolian Railway.
Thornton insisted that although development is racing ahead in a ―wild west‖ way, it is also bringing
badly needed jobs and wealth to an impoverished Mongolian population. Without foreign capital,
Mongolians could not develop massive projects like the Rio Tinto-managed Oyu Tolgoi copper and gold
operation, or the Tavan Tolgoi coal deposit, which was being auctioned off by the government amid
fierce interest from Asian entities, Thornton said. There was also a security imperative to Mongolia's
rapid development, given it is sandwiched between Russia and China.
Both executives agreed that the Mongolian government is no pushover. For example, it demonstrated
its will when it passed legislation demanding that 75 percent of foreign mineral explorers' workforce
must be local. That figure will increase to more than 90 percent once a project has reached
production.
Source: APP
MONGOLIA TESTS OUT GEOTHERMAL HEATING AT COUNTRYSIDE SCHOOLS FOR BIG SAVINGS
The government has contracted state-owned firm Mon Ugsralt LLC to install systems that would use
geothermal energy to heat buildings.
At Zuundelger Bag of Zuunmod Soum, the provincial capital of Tuv Aimag, Mon Ugsralt has begun
installing a heating system at the school and kindergarten located there. Making use of this technology
would provide both economic and environmental benefits to communities. It would remove the need
for the transport of wood and coal from sources of up to 300 kilometers away to heat these government
buildings.
The equipment bought has a 15 to 20 year warranty from the German firm Viessmann Group, providing
a guarantee of a long-term energy supply. Although the initial investment was high, the equipment will
eventually bring long-term savings of MNT 70 million.
The government agency has a goal to provide 20 percent of energy consumed with energy from
renewable sources by 2020. In Mongolia 170,000 Mongolian nomadic families use solar and wind energy
from facilities provided by the government. The government plans to complete its 100,000 Sunrays
program by next May, said T. Enktaivan, Vice Minister of the Ministry of Earth Resources and Energy.
Source: Unuudur
MOGOIN GOL POWER PLANT TO PROVIDE 80 YEARS OF ENERGY TO WESTERN MONGOLIA
Construction for a new power plant has begun at Telmen Soum in Zavkhan Aimag. Power will be
generated using coal extracted from the Mogoin Goal coal mine for a supply of 80 to 100 years.
Work on the Mogoin Gol Power Plant project began last year after a deal was approved the by State
Property Commission (SPC) last May. The plant will be used to provide power to Zavkhan and Gobi-Altai
Aimags, in addition to possibly Uvs and Khovd Aimags. The contract agreement has outlined that the
plant will purchase coal at the current market price and sell the power to communities in need of
energy.
Exploration results indicate that the mine will be able to provide 200,000 tons of coal a year. However
a rumor has spread that some tampering with mining licenses has resulted in a situation where the
mine no longer has the area needed for coal production. The mine is located at Tsetserleg Soum in
Khuvsgul Aimag and has two licenses, one for exploration and another for excavation. The firm Mogoin
Gol JSC has had special permission for the usage of 103 hectares of land since 1995, but the total
amount of the reserves there has not yet been verified.
At the current area allowed for operation, it is estimated that there is 17 million tons of reserves, or
according to estimates by the British firm Consulting Limited SRK the mine has about 21 million tons of
coal in total. However, the contract mandates that the power station in Telmen Soum in Zavkhan be

11. supplied with 200,000 tons of coal annually for 80 to 100 years. Construction for the plant has been
planned for two years, and it would take 20 years for the plant to reach full production. Afterwards,
however, the plant should be able to supply energy for the next 80 years.
Source: Udriin Sonin
MONGOLIA TELECOM OVERHAULS PHONE NUMBER SYSTEM
Land line phone service provider Mongolia Telecom has begun to transition to new local phone codes in
order to make them easier to use and planned to finish this process in March 2012. The change will
remove the need to dial multiple numbers to make calls to countryside locations. There will, however,
be no change in the last four digits in the phone number of users. Only the first numbers of digits will
be shortened. The coding change has allowed the company to better balance its fees for phone calls.
Each call made from a land line phone will now cost MNT 20. Callers can dial 109 for more information.
Source: Undesnii Shuudan
COUNTERFEIT CAMEL WOOL GOODS CHEAPEN THE INDUSTRY, SAYS RUSSIAN EXPORTER
Counterfeit camel wool products have allowed the price of genuine goods to fall, to the detriment of
the Mongolian economy, said Alexander Zakharov, a Russian businessman who exports camel fur from
Mongolia to Russia. He explained that if the industry could be legitimatized and properly marketed
Mongolia‘s cashmere and camel products could compete with top tier companies from countries such as
Italy.
The abundance of fake camel fur products sold in the Russian market has resulted in a dim sentiment.
An analysis of goods advertised as camel wool sold in Russia showed that they contained only 2.9
percent authentic camel wool, while the rest was made of other materials, such as sheep's wool. The
Mongolian climate has helped produce a product that no other country can replicate, he explained. In
Mongolia camels grow thick and warm fur like nowhere else to survive the cold.
―Russian people know that there are clothes made from camel fur, but since they are used to clothes
made from fake camel fur, they do not know how good it actually is,‖ said Zakharov. He added,
―Consumers already have the wrong ideas about camel fur products. They believe that camel fur
clothes are uncomfortable. They said that it often has an unwelcome odor and causes various allergies.
Mongolia has many factories that produce goods made from fake camel wool that are exported to
Russia, which are undercutting the market for authentic camel wool products. He suggested that
cashmere takes priority above concerns for camel fur and that Mongolia must do more to legitimize the
industry. He also recommended that Mongolian companies are now too small on their own and should
collaborate together when marketing their products abroad at trade shows.
Zakharov said he purchases only genuine products from Goyo, while claiming that not a single product
at the Narantuul market is authentic. He added that if he needs a supply of camel fur for his own
clothing production, he must explain exactly where he would like the material procured from.
Otherwise he would receive materials from various sources, and a great deal would be fake.
Source: UB Post
FAKE DRUGS ARE A HARD PILL TO SWALLOW
Mongolia sees its fair share of counterfeit products cross the border, but while fake Louis Vuitton toilet
seats and Prada car seat covers seem to harm little more than Mongolia's fashion integrity, counterfeit
drugs pose a more deadly threat.
A UNDP report revealed that between 10 and 13 percent of the world's drugs are counterfeit, and an
estimated criminal profit of USD 35 billion is made each year from sales of the fake drugs. Mongolia is
in a vulnerable position, between the two largest producers of counterfeit medicines, China and Russia.
The drugs themselves vary in quality. Some have unregulated quantities of the active ingredient,
making them weaker or stronger than their authentic counterparts. Others are made from substitute

12. materials, or are simply placebos made from dirt or chalk.
Despite the growing threat counterfeit drugs pose, there is often little defense that an under-resourced
Government can offer. Several parts of the world have initiated database programs to help track the
movement of the illicit drugs, including a successful system set up in Germany called It's True. The
system works on a user friendly barcode system, where registered products contain a concealed code
that can be typed into the database.
A similar database prototype has been set up in the Pharmaceutical Department of the Ministry of
Health. While the database has received initial funding from the government and the World Health
Organization (WHO), the software requires constant updates and will take years to reach international
standards. Even in perfect operating order, the system would still be unable to stop those who are
buying directly from sellers at border towns. As Mongolia opens itself up to an increasingly migratory
population, the issue of drug trafficking will become more and more prominent. Increased vigilance and
tighter border controls appear to be the only defense against a potentially devastating epidemic of
counterfeit drugs.
Source: UB Post
U.K. AUDIENCE INDICATES GROWING INTEREST IN VACATIONS IN MONGOLIA
Mongolia placed third in a recent poll to see where traveling enthusiasts most wanted to visit. Tourism
is an ever growing industry in Mongolia that peaks during the warm summer months.
'The travel map is rapidly changing and our readers are certainly ahead of the crowd voting for some
really unlikely destinations in the 'emerging' category,‖ Editor-in-chief Lyn Hughes said.
Mongolia was named among three unlikely locations, along with Sudan and Greenland, where travel
enthusiasts would eventually like to visit. The three countries were part of a list of ten hotspots
readers of the U.K. magazine Wanderlust thought would eventually make it on to holidaymakers' wish
lists.
Source: Daily Mail
GLENCORE-XSTRATA MERGER MAY LIGHT FUSE TO MERGER & ACQUISITION EXPLOSION
The proposed merger of Glencore International AG and Xstrata PLC would create a true rival to global
mining heavyweights like Vale SA, Rio Tinto Group, and BHP Billiton, as well as put pressure of mid-
sized players to either team up or grow through acquisitions. Companies may be driven to bet more
heavily on smaller, riskier ―frontier assets‖ in developing countries such as Mongolia.
―There's going to be the megamergers, which will pull levels of concentration much higher,‖ said
Michael Locker, the president of consulting firm Locker Associates Inc.
The potential Glencore-Xstrata combination would come during what already is a golden age for
mergers and acquisitions in mining and metals—albeit one slowed by recent economic and financial
turmoil. The number of deals in the sector rose to 1,009 last year from 564 in 2005 and 392 in 2000,
according to a survey by Ernest & Young. Commodity prices are high, while stock prices and borrowing
costs are relatively low, making it a good time for merger and acquisition activity.
A merger between Glencore and Xstrata would create a company worth roughly USD 90 billion. More
importantly, the new company would control one-third of the market for thermal coal used to generate
electricity and become the world's largest producer of zinc. As fears of a global financial and economic
meltdown recedes, mega mergers among top 10 players—possibly even a renewed effort by BHP to
acquire Rio Tinto—are more likely. The Anglo-Australian miners and Brazil's Vale together control 70
percent of the world's seaborne iron-ore trade.
Read more…
There is no guarantee that Glencore and Xstrata will succeed in merging. For one, antitrust regulators
have blocked deals they consider anticompetitive and there is no indication that regulators will stand
down. Also, high expectations from shareholders may prematurely end deal discussions as happened

13. when Xstrata tried to buy Anglo American PLC, a medium-sized Anglo-South African conglomerate.
Source: Wall Street Journal
SIX STEPS TO ADVANCING RESPONSIBLE MINERAL DEVELOPMENT
Six building blocks can help lift some of the least developed countries in the world out of poverty by
harnessing their mineral wealth, according to a new report published jointly today by the World
Economic Forum and the Boston Consulting Group. Now considered a medium-developed country,
Mongolia has grown quickly with the introduction of resource wealth, but some experts have warned
against painful economic side effects such as ―Dutch disease,‖ and the ―resource curse.‖
The report, ―A framework for Advancing Responsible Mineral Development,‖ draws on the practical
advice aimed at enabling developing countries to avoid the ―resource curse‖ and develop sustainably.
The report also highlights good examples, such as Rio Tinto Group's practice of publishing all its taxes
and royalty payments in the 28 main countries in which it operates, one of which is Mongolia.
The six building blocks identified are capacity building and the exchange of skills and knowledge; a
mutual understanding of the benefits, costs, risks, and responsibilities that come with mineral
development; collaboration from stakeholders throughout the cycle of the mining project; transparency
in operations; the practice of standing by agreements by all parties; and effective mechanisms in place
to solve disputes. All six building blocks aim to increase trust between different parties and create a
stable long-term environment for mining projects.
The report highlights 22 examples of existing projects and initiatives that show what can be
accomplished in countries including Mongolia, Liberia, Ghana, and Chile. Countries such as Mongolia
could transform their socioeconomic prospects by using the six building blocks to tap their resources.
―The case studies and recommendations will help countries such as ours develop our mineral resources
in a fair and responsible manner for all stakeholders,‖ says President Ts. Elbegdorj in the report.
―Socially as well as environmentally responsible mining is not merely a challenge for the host countries,
it is the prerequisite for sustainable global development.‖
Practical recommendations include encouraging companies and governments to publish mining-related
tax and royalty payments, creating local development councils, and establishing capacity-development
programs.
Source: MarketWatch
CHINA SET TO KEEP COPPER USAGE HIGH
China remains the key global growth driver for copper, but demand growth from the Asian giant is
expected to slow this year, Standard Bank head of commodities research Walter de Wet said this week.
China's demand, which has been growing at 15.1 percent a years since 2000, was expected to slow to
6.6 percent growth in 2012, and is essential to Mongolia's economy as the top buyer of Mongolian
metals and fuel products. Once the Oyu Tolgoi copper and gold project begins production, a majority of
which will head straight down to China, it should account for more than 30 percent of Mongolia's gross
domestic product.
U.S. and European copper demand, while still important, would contract this year, given the current
economic situation and a slow recovery in sectors consuming copper. Global copper consumption is
expected to grow by 1.2 percent with refined copper demand reaching 20.35 million tons.
―China should once again account for the majority of refined copper consumption in 2012,‖ De Wet
commented.
While there might be concern that a collapse in China's export market would impact negatively on
Chinese copper consumption, De Wet said that the risk was not of great concern as only 16 percent of
that country's refined copper consumption went to the export market. China's copper usage is primarily
local and currently 25 percent of the metal in China is used in domestically consumed products, which
De Wet believed would increase in 2012. The Chinese construction industry accounts for the largest

14. portion of copper usage at 55 percent, though building is expected to slow in 2012, thus impacting the
copper sector.
De Wet said his research indicated that the copper price would average USD 7,700 a ton this year.
Source: Mining Weekly
NARAN AT ASIA FOUNDATION ENVISIONS BRIGHT FUTURE OUT OF DARK TIMES
As miners do their best to send Mongolian-born minerals to foreign nations, aid works have been abroad
trying to bring back women sent abroad into prostitutions rings. Development and growth of the
Mongolian economy is opening up new opportunities and promises to women once shunned from
society.
Like the 60 percent of her country's population under 30, M. Naran was born into uncertainty. The
communist government that had ruled her nomadic people for 70 years struggled through the 1980s and
finally collapsed in 1990. Brutal winters and low livestock prices drove Mongolia's nomadic herders into
the two main cities. With little work and little opportunity in a country clawing its way through the
1990s, thousands of girls fell prey to rose-colored offers for jobs in neighboring countries.
Naran spent many evening at Hong Kong's night clubs trying to connect with the girls who tried to sell
themselves to foreign tourists. She said many of the girls saw this as their only opportunity for work.
Many underage girls are often coerced into the industry, she added. She brought the girls condoms and
spent hours listening to their stories. Naran now works with the non-profit Asia Foundation to make a
place for women in the new Mongolia rising from the ashes of communism.
Now Naran now spends long evenings sorting through hundreds of scholarship applications. During
daytime interviews, she hears the stories of young women, 120 of whom her organization will offer
scholarships to university science programs. Through the Asia Foundation, she also makes presentations
to judges and prosecutors on the extent and effects of human trafficking.
―Women had a strong place in traditional Mongolian society, but it was still a very patriarchal culture,‖
said Naran. ―We're trying to carve a bigger role for women in the new Mongolia.‖ She added, ―It's an
exciting time to be a Mongolian, and I'm trying to play my small part to help my country.‖
Source: The Chronicle Herald
CHINA'S INFLATION RISES FASTER THAN EXPECTED
Inflation in China accelerated unexpectedly in January due to higher food prices during the Lunar New
Year holiday. The pick-up inflation breaks a five-month trend of moderating price increases, raising
concerns that Beijing may not be able to loosen policy aggressively to support growth.
The consumer price index (CPI) rose 4.5 percent from a year earlier in January, up from 4.1 percent
rise in December. Economists polled earlier by Dow Jones Newswires had expected CPI to rise 4.1
percent in January, unchanged from December.
The PPI rose 0.7 percent from a year earlier in January, down from a 1.7 percent rise in December and
just slightly above expectations of a 0.6 percent increase.
On Tuesday, Chinese authorities signaled that they may be growing more comfortable with the inflation
situation by raising its ceiling for retail gasoline and diesel prices by around 3 percent. Beijing
benchmarks retail fuel prices to international oil prices, but sometimes delays price adjustments when
it fears that increases could add to inflationary pressures.
Source: Wall Street Journal
CHINESE PREMIER SAYS CHINA HAS A STAKE IN EURO-ZONE DEBT CRISIS
China has a stake in helping Euro-zone countries get through debt crisis, Chinese Premier Wen Jiabao
said, pointing to Europe's importance as a market and hinting at more possible support for beleaguered
exporters. Mongolia would therefore have an indirect stake, as a slowdown in Chinese growth would
mean the diminished sale of Mongolian mineral exports.

15. ―Now Europe is facing a debt crisis and we must consider relations with Europe strategically to protect
our national interests,‖ Wen said while visiting the export-dependent southern Chinese province of
Guangdong on Saturday.
China, with its USD 3.2 trillion worth of foreign exchange reserves, is often seen as a potential source
for funds needed to bail out some European governments. At a joint media briefing in Beijing with
German Chancellor Angela Merkel during a visit, Wen said China was studying how it might lend Europe
further support. He said China was thinking about participating more to helping to solve the debt crisis
through the EFSF, a temporary fund that has been used to bail our Ireland and Portugal and will help in
the second Greek package, and its upcoming replacement the ESM, a EUR 500-billion (USD 650 billion)
permanent bailout fund.
China has repeatedly said it supports a stable euro, and according to more estimates, China has about a
quarter of its foreign exchange reserves in euro assets. But Beijing has consistently been reluctant to
make specific promises about any contributions to the rescue funds. Still, China's exports to advanced
economies have been affected by the worldwide economic difficulties, and Wen said his country's
manufacturers would have to adapt and open up new markets.
Source: Reuters
ECONOMIC TRENDS INDICATE GREEN LIGHT FOR MINING AND METALS M&A IN 2012
Healthy demand fundamentals, strong balance sheets and an appetite for growth will drive a step-up in
mergers and acquisitions (M&A) in the global mining and metals sector for 2012, Ernst & Young global
mining and metals transaction leader Lee Downham said this week.
Commenting on the release of Ernest & Young's yearly global mining and metals sector transaction
report, ―Recognizing value in volatility,‖ Downham said mining and metals companies were learning to
live with uncertainty and were well positioned to seize opportunities.
―The global uncertainty and volatility is likely to continue through 2012, but mining and metals
companies have an appetite for growth and are increasingly unwilling to stall their growth plans, so it is
likely that there would be a return to deal-making this year,‖ he said.
Downham's comments came only days after diversified Xstrata PLC confirmed that it is in negotiations
with shareholder Glencore about a possible all-share merger of equals. Ernst & Young's report showed
that the total global deal value in 2011 was up by 43 percent to 162.4 billion, compared with USD 113.7
billion in 2010. However, while deal value was up, the global volume of deals in 2011 was down by 10
percent by 1,008 compared with 1,123 deals in 2010. Downham pointed to the dwindling number of
quality mineral deposited in developed mining countries at a reasonable price for the difference.
Meanwhile, turbulent equity markets and the limited availability of bank debt to noninvestment grade
borrowers forced mining and metals companies to look to alternative funding sources in 2011, a trend
that will continue in 2012. Downham added that equity markets remained sensitive to macroeconomic
news and for many companies market values did not appear to correlate ―with the value underground.‖
Source: Mining Weekly
POLITICS
TRANSPARENCY LEADS TO CLEAR VISION FOR DEVELOPMENT
Transparency on tax and royalty payments is key to helping developing countries harness their mineral
wealth, a report released by the World Economic Forum said on Monday. A lack of transparency within
the government and financial sector has long been called a serious detriment to development and
foreign partnerships of Mongolia.
―Some of the world's poorest countries are rich in mineral resources. Using these resources effectively
offers an unmatched opportunity for social and economic transformation,‖ said the study produced by
the Geneva-based think tank and the Boston Consulting Group.
Recommendations include publishing data on mining-related tax and royalty payments, and creating

16. local development councils. It said governments should make document agreements between
themselves and companies accessible to the public.
―The case studies and recommendations will help countries such as ours develop our mineral resources
in a fair and responsible manner for all stakeholders,‖ said Mongolian President Ts. Elbegdorj in the
report. ―Socially as well as environmentally responsible mining is not merely a challenge for the host
countries, but it is the prerequisite for sustainable global development.‖
The study, ―A Framework for Advancing Responsible Mineral Development,‖ was produced following
consultation with 400 experts from NGOs, governments and mining companies. It highlights 22 examples
of projects and initiatives in countries such as Mongolia, Liberia, Ghana, and Chile.
Source: Expatica
MPP RESEARCH TEAM PROJECTS UP TO USD 60,000 GDP PER CAPITA BY 2032
The Mongolian People's Party (MPP) has signaled that it is now prepared to move forward with a
development goal for the next two decades after charting out a path that would lead to a fully
developed nation in 2032.
―Without policy based on scientific estimation and research, and without a long-term future plan,
Mongolian won't develop properly,‖ said Prime Minister S. Batbold, the party's chairman.
To gather information for the direction of its development plan for the next 20 years, the party
appointed a research team with over 40 scientists. This team studied and compared the development
paths of Qatar, Kuwait, and Norway with Mongolia. Their research has led them to believe that gross
domestic product (GDP) per capita would reach USD 12,491 in 2013 and up to USD 60,000 in 2032,
which would make Mongolia a fully-developed country.
Source: UB Post
DP AND MPP BATTLE IT OUT IN PARLIAMENT
The Mongolian People's Party (MPP) has pushed a motion that would have local and state election held
on separate days. However, if passed it could bring about more than 10 potential obstacles such as
complications to vote counts.
Members of the MMP who have backed the draft law will have to contend with the Democratic Party
(DP), which has officially opposed its passage. The debate could continue over the next few months as
members attempt to establish the best circumstances to grant themselves reelection.
The MPP also argued for the development of a law that would eliminate any differences between
pensions and backed a law that would supposedly resolve the issue for the increase in salaries and
pension. However, the law they have backed to resolve the salary and pension problem is another the
DP has opposed. According to party leader U. Enkhtuvshin, the DP cannot oppose the issue any further
as some of the details they have argued against have already been implemented into the system.
Source: Udriin Sonin
POLICE CHIEF CALLS FOR MORE GUN CONTROL FOLLOWING SHOOTING CRIME
Following the shooting of a man at a Khan Bank in Nalaikh Soum, Chief of the General Police
Department D. Sandag-Ochir has called for revisions to the Law on Gun Ownership, with more
restrictions put in place.
The accused assailant reportedly entered the bank on morning claiming to be a journalist before he
pulled out a gun and announced a robbery. The husband of the director was fatally shot while trying to
protect his wife from the gunshot. The offender next fled the building and stole a taxi driver's car but
was later captured.
Sandag-Ochir said the current laws for gun control are outdated and greater restrictions should be
added. He also recommended that banks begin upgrading their security with cameras and other
measures to prevent future similar events from occurring.

17. Source: Zuunii Medee
SALARY RAISES LEAVE MNT 172 BILLION GAP IN BUDGET FOR PARLIAMENT TO FILL
Parliament is scrambling to find the MNT 172 billion it needs to give government workers the salary and
pension increases it promised.
Teachers and doctors went on strike last year, demanding that the government raise their salaries
immediately in 2012 rather than later in the year as was planned. However, now the government is
tasked with finding the MNT 172 billion it needs from the state budget to pay those salaries. One MP, N.
Enkhbold, said that a discussion regarding altering the budget before the current session of Parliament
adjourned was possible. Others, however, were less confident.
―Clarifications are strongly needed,‖ said MP B. Batbayar. However, it is not possible to give the
government the right without discussing those clarifications. There are people who want caution
because of the negative affect changes could have on the state budget.‖
However, MP S. Bayambatsogt said there was no time for discussion and that Parliament has the power
to move quickly. He pointed to examples of when Parliament quickly passed amendments to laws for
cases regarding oil and customs taxation, and said this problem could be handled in the same way.
Source: Unuudur
MONGOLIA LEADS COMMUNITY OF DEMOCRACIES IN GENEVA
The Ambassador-at-large of Mongolia to the Community of Democracies, S. Badra, has met with U.N.
officials to familiarize them with the group's goals and current operations. The international group is
currently under the lead of Mongolian officials.
The Ambassador introduced Kassym Jomart Tokayev, director general of the U.N. Office at Geneva, to
objectives such as the plan to set up a group within the Community of Democracies to work with the
United Nations and Human Rights Council, and asked for his support.
Badral also held a meeting with ambassadors of member countries of the Community of Democracies'
board to the U.N. Office at Geneva, and gave a detailed report on the activities and priorities of
Mongolia for the group's chairman. He explained that while under the chairmanship of Mongolia, the
Community of Democracies will seeking out opportunities to cooperate with the United Nations, and
reported on the preparations for a third meeting of the board on 1 March in Geneva. He also shared the
views expressed to him by Laura Lasserre, head of the Human Rights Council and Ambassador of
Uruguay.
Source: Montsame
SCIENCE TEAM HELPS MOLD NEXT GENERATIONS FOR EDUCATION AND POLICYMAKING
Almost every year for the past decade and a half, a crew of about 20 scientists converges on the
shorelines of Mongolia's lakes, rivers, and streams, just when swarms of aquatic insects do the same.
For three arduous weeks, teams reverse the sparsely populated countryside by jeep, helicopter, horse,
and on food. They sweep nets, set traps, flip rocks, dig into the soils, and sample water to catch as
many insects a possible. The Mongolian Aquatic Insect Survey represents not only the creation of a
comprehensive inventory of aquatic insects in Mongolia, but more importantly, an opportunity to train
new generations of Mongolians to identify and protect the fauna of their rapidly developing country.
The team's work since 1998 has helped trained young Mongolians to pick up where they leave off when
they finish by organizing university courses and training. Many of their former students are now in
positions of power where they can influence policy or are teaching the next generation. One student,
O. Yadamsuren, is currently pursuing her PhD in the United States, and afterwards plans to return to
Mongolia to use what she had learned to preserve her country's water quality, which has been degraded
by overgrazing, deforestation, mining, climate change, and urbanization.
The leader of the team, John Gelhaus, received his first grant in 2002 to help expand a water

18. management project, and another in 2008 to explore the aquatic insects of the Altai and Hangai
mountain ranges. To date the team has doubled the number of caddisfly, crane fly, and nonbiting
midge species known in Mongolia and have discovered dozens of new species, even naming one
Gonomyia oyunaae after his protégé Yadamsuren.
Source: The Scientist
U.S. CONGRESS PONDERS CUTTING USAID FUNDING TO MONGOLIA
USAID will meet with members of the U.S. House and Representatives and the Senate Appropriates
Committee to discuss a proposed 50 percent reduction in USAID spending in Mongolia for 2012, reported
Steve Saunders, president of the North America-Mongolia Business Council (NAMBC). If passed, the
reduction would take place after the end of the current fiscal year on 30 September 2012.
The cuts in USAID spending would bring the total to a little more than USD 3 million, or about 23
percent of Australia's aid to Mongolia. This would likely curtail new USAID programs such as via the
BusinessPlus Initiative or severely scale back other existing programs. A current initiative to support a
secondary mortgage market is one program that could be canceled as a result.
This year marks the 20th anniversary of USAID engagement with Mongolia and the 25th anniversary of
United States-Mongolia Diplomatic relations. The possibility of rescissions are part of a larger effort by
the Obama administration to cut government spending in a variety of departments and agencies, said
Saunders. He added that foreign aid is traditionally demonized by voters and is always a popular target
for cost-cutting, especially in an election year. However, these cuts would reduce influence from the
U.S. government and also raise questions about the two nation's relationship before this year's
elections.
The source sees no Mongolia-specific policy motive in this proposal, but everything to do with the U.S.
budget crisis. Furthermore, supporters of cuts argue that with the Mongolian economy rapidly growing
and government revenues increasing the Mongolian government's need for assistance may be
diminishing.
Source: NAMBC
ORGANIZERS WELL-PREPARED FOR ONGOING COAL MONGOLIA 2012 FORUM
More than 700 participants from 250 foreign and domestic companies are registered at the Coal
Mongolia 2012 forum now underway on February 9-10 in Ulaanbaatar. Organized by the Ministry of
Mineral Resources and Energy (MMRE) with help from the National Development and Innovation
Committee, the mining project feasibility firm Glogex and the mining information hub Mining.mn, the
forum has been used to attract investment into coal exploration, introduce mining and processing
techniques, promote the use of Eco-friendly technology, develop collaborative efforts, and increase
competitiveness in the coal mining sector.
Officials from the MMRE will choose the winners for companies and individuals competing for the titles
―Best Man of the Year in Coal Mining,‖ ―Best Processor of the Year,‖ and ―Best Exploration Company.‖
Mining.mn will choose the winners for ―Best Exhibitor‖ and ―Best Journalist in the Mining Industry.‖
Trips to Ukhaa Khudag, where Mongolian Mining Corp. operates, and Tavan Tolgoi have also been
organized for event attendees.
Source: Zuunii Medee
GOVERNMENT NAMING 30,200 FALSELY ACCUSED POLITICAL PRISONERS FROM COMMUNIST ERA
The government has printed the second volume of its White Book, a book with a list of 10,086 names of
people exonerated of political crimes. However, the organization believes there are at least 20,000
more names to be added in future releases.
The book lists the names of those who faced charges of political crimes with information regarding
their origins, titles and professions, and the nature of their charges. There is also information about

19. what organization accused them. During the period of communism from 1922 until 1989, 30,200 people
were charged with political crimes but were later found to have been a victim of conspiracy and
released after the democratic revolution.
The press office from the central commission said that the work is ongoing, and that it expects to
publish four to five more volumes before its work is completed.
Source: Unuudur
DEPUTY FINANCE MINISTER ASKS FOR PATIENCE FOR ECONOMIC GROWTH BENEFITS
Deputy Finance Minister Ch. Gankhuyag has asked the Mongolian population to be patient for the
economic growth Mongolia is currently experiencing to reach them.
―A certain time is required for the benefits of this economic growth to reach everyone,‖ said
Gankhuyag. ―There is no such thing as a free ride.‖
He said Mongolian people have only gotten a taste of the high economic growth experienced thus far.
Today anyone is able to acquire a loan and the lives of herders are improving, he said. He pointed to
the growing traffic and number of cars as an indicator of greater affluence in the country. However,
research organizations have reported an estimated 70 percent of people live in poverty.
The deputy minister asked that people resist the temptations of populist sentiment. To combat poverty
the government is focused on its 100,000 Homes project and its aim to bring gross domestic product
(GDP) per capita to USD 60,000 by 2031. Currently GDP growth per head is heading towards USD 5,000
by the end of this year, he said.
Source: Frontier Securities
THE FILTHY RICH AND RACISTS OF THE MINING BOOM
Perhaps no country finds itself as drawn in by China's economic magnetism, or as utterly terrified by its
growing geopolitical clout, than Mongolia. An impoverished parliamentary democracy encircled by
China and Russia, Mongolia is home to three million people, on land three times the size of France, and
so vast and remote that even trees are a rarity; while across the border are 1.3 billion Chinese,
countless factories, and the growing heft of an ancient enemy. Most importantly, it has the very stuff
needed to fuel China's economic explosion—coal, copper, gold, uranium.
For some, Mongolia is a place where you can become filthy rich, if you can tap into the minerals boom
(legally or otherwise). The GDP grew 17.3 percent last year and the rate is widely predicted to top 20
percent soon. It is also a place where plenty of people fear the future. Government corruption is
widespread, and a small number of tycoons exert a large influence on the government and the
economy. Mining is nothing new to Mongolia, but the boom is. During Mongolia's seven decades as a
Soviet client state, some mines were developed but much of the country was left untouched.
Historically contentious and easily given to conflict (between individuals or clans), modern times have
brought alcohol and poverty to exacerbate this issue. Besides big mining projects, there are black
market mines, many run or backed by Chinese interests. No one seems to know how many Chinese
there are. While Mongolia's democracy has proven resilient, an ugly ultra nationalism has been on the
rise. At the extreme end a handful of home-grown neo-Nazi groups have turned against Chinese and
other foreigners.
On the environmental end, activists in recent years have succeeded in pushing through a national law
restricting mining in areas of water and forest, but Ts. Munkhbayar, a so-called radical
environmentalist, said the area compassing Oyu Tolgoi and Tavan Tolgoi is exempt. Munkhbayar was a
darling of the international non-government organization (NGO) circuit, but has taken an increasingly
militant path. The backlash that Munkhbayar leads is inspired by Mongolia's herder past, a model
Mongolians are abandoning.
Source: The Global Mail

20. PUTIN'S HESITATION TO CRACK DOWN ON PROTESTS SHOWS VULNERABILITY
The movement against Vladimir Putin was Sunday preparing new rallies to loosen the Russian
strongman's 12-year grip on power after keeping up their challenge with a third mass demonstration in
Moscow. Tens of thousands marched through Moscow Saturday despite bitterly cold weather to protest
against Putin's domination, with organizers disputing police claims that a pro-Putin rally elsewhere in
the capital was even larger.
Putin is still expected to win the 4 March presidential election where he is seeking a third Kremlin term
after his four year stint as premier, but protest organizers emphasized that the polls mark only the
start of their challenge. The march on Bolotnaya Square over the Moscow River from the Kremlin was
the third mass rally since fraud-tainted 4 December parliamentary elections sparked demonstrations
that smashed the taboo against protests in Putin's Russia.
Putin's biggest challenge in the elections is likely to come from Communist leader Gennady Zyuganov,
who some analysts believe could push him to a second round but is an unpalatable figure for many in
the protest movement. Of the four candidates standing against Putin in the elections, only billionaire
tycoon Mikhail Prokhorov attended the protest march and he did not give an address.
Police said that 36,000 attended the opposition meeting but Nemtsov and other anti-Putin leaders said
over 100,000 had braved frigid winter temperatures of minus 17 degrees Celsius (1.4 degrees
Fahrenheit). By contrast, police said that 138,000 people had showed up for a pro-Putin rally in western
Moscow, with Moscow Deputy Mayor Alexander Gorbenko saying the organizers should be fined for
exceeding their planned turnout of 15,000.
Source: Reuters
NEW MONGOLIAN LAWS AND REGULATIONS
The following amendments and addendum to laws were published in the latest weekly Government
bulletin. Unless otherwise decided by Parliament, they will take effect ten (10) days after publication.
Date Amendments and Addendum to Laws
03.02.2012 Amendments to Law on Financing of Higher Education, Students' Social Guarantee
Amendments to Law on Government's Special Fund
Addendum to Law on Legal Status of Government Agency
Amendments to Law on Exemption from Value Added Tax
Amendments to Law on Exemption from Customs Tax
Please visit BCM's website, Legislative Working Group, for a summary of new Mongolian laws. BCM
members who wish to access complete versions of the laws and regulations in Mongolian language are
welcome to email the BCM office: info@bcMongolia.org.
ANNOUNCEMENTS
MASTERS FELLOWSHIP: 2013-2014 FULBRIGHT STUDENT FELLOWSHIP
The Public Affairs Section of the U.S. Embassy to Mongolia is now accepting applications for the 2013 -
2014 Fulbright Student Fellowship Program. Fulbright Student Fellowships are part of a U.S.
Government-funded academic exchange program and fund graduate-level (M.A., M.S) studies at U.S.
universities. Fulbright Student Fellows are selected by the Public Affairs Section of the U.S. Embassy.
Applicants will be assessed on the contribution that their study would make to greater understanding
between the United States and Mongolia, and the likelihood of the applicant performing successfully in
a U.S. Academic setting.

21. To qualify, applicants must: hold a university degree (at least B.A. or equivalent), be fluent in English
(IBT score of 80, Institutional TOEFL 550. (If you have not taken the test yet, it is important that you
take the test as soon as possible.) Note: Preference will be given to candidates who have not had
extensive recent experience in the United States. The program supports study in most fields of social
sciences and humanities, and some fields in science and technology (for a full list visit the website).
Interviews will take place late in May or early June, 2012. Applicants must be present for the interview.
Completed applications must be returned to the Public Affairs Section by 12 Noon on April 15, 2012:
Entry House, U.S. Embassy, Big Ring Road, XI Microdistrict, Ulaanbaatar. Visit:
http://mongolia.usembassy.gov/fulbright_2013-2014.html
____________________________________________
NEW YORK INTERNATIONAL AUTO SHOW 2012 - APRIL 6-15
The Business Council of Mongolia in collaboration with the US Embassy‘s Commercial Section is now
registering Mongolian business delegation to participate to ―New York International Auto Show 2012‖
which will be organized in the Jacob K. Javits Convention Center, New York, NY, USA between April 6-
15, 2012.
For over one hundred years, the ―New York International Auto Show 2012‖ continued its pioneering
tradition of bringing new and innovative ideas to a national and world stage, which makes the event
one of the most important automotive event in the world. The show offers virtually every make and
model vehicle sold in the U.S. under one roof giving consumers the unique opportunity to see
everything the auto industry has to offer.
Please contact 70114442 or tugi@bcMongolia.org for registration and any other additional information
about the event. Registration deadline is 5:00 PM, February 21.
___________________________________________
“MM TODAY” ON MNB-TV, FRIDAYS, AT 18:30 TONIGHT
BCM is pleased to announce 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 18:30
tonight. Tune in to watch this program that reports stories from today‘s BCM NewsWire.
___________________________________________
“BSPOT” ON B-TV, MONDAY TO FRIDAY AT 18:20
B-TV (Business TV) now telecasts a 10-minute English-language news program called BSPOT every
evening from Monday to Friday at 18:20, taking most of the stories from the BCM NewsWire.
___________________________________________
POSTINGS ON BCM‟S ENGLISH WEBSITE 'PRESENTATIONS' AND 'MONGOLIA REPORTS' SECTIONS AND
BCM‟S MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS
New for 2012 is a ‗Presentations‘ section on the BCM Mongolian website which can be reached via link
to bcm.mn/itgeluud. About 10 presentations already posted!
As a key component of BCM‘s Mongolian website, ‗News‘ section, articles from the Government‘s
―Open-Government.mn‖ site are regularly posted.
On BCM‘s English website, ‗Resource, Presentations‘ section, for your review are 7 speeches from the
Mongolian Investment Summit on December 8-9 in London, several speeches at the Risk Management
Forum on November 8 co-organized by BCM and Mandal Insurance, speeches at Discover Mongolia 2011,
speeches from BCM‘s 10 monthly meetings in 2011, and the address by Peter Nicholls, OT‘s VP-
Operations, at Global MInES in Sydney on July 4. Latest additions to this section include a presentation
entitled "Cracking the Commercial Oyster: Reflections on the 25th Anniversary of US-Mongolia Bilateral
Relations" by Jonathan Addleton, Ambassador extraordinary and plenipotentiary of the United States of

22. America to Mongolia.
Also on BCM‘s English website, ‗Resource, Mongolia Reports‘ section, please note "Mongolia's Booming
Economy" by Dr. Alicia Campi, Preident of US-Mongolia Advisory Group Inc, "Mongolia - The World Bank
Survey FY 2011" by the World Bank and Economic Policy & Competitiveness Research Center and
"Executive Summary of Mongolian Real Estate Report 2012" by M.A.D Investment Solutions.
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.
___________________________________________
NETWORK WITH BCM
The Business Council of Mongolia (BCM) has expanded its reach to your favorite social networks. Keep
up to date on the latest business deals in Mongolia and how the climate for investment is improving
each day with BCM.
Add BCM on Facebook at http://www.facebook.com/pages/THE-BUSINESS-COUNCIL-OF-
MONGOLIA/129826330435540 to read the latest announcements and comment on events with the
community. Hear breaking news and announcements as they happen when you follow BCM on Twitter
at http://twitter.com/#!/bcMongolia. Connect with BCM on Linked-in to join the diverse group of
professional contacts creating a better business environment in Mongolia today.
Of course for news information, interviews, and announcements regarding our organization, visit the
official BCM website at bcmongolia.org and bcm.mn.

23. ECONOMIC INDICATORS

24. INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
Year 2008 *22.1% [source: NSOM]
Year 2009 *4.2% [source: NSOM]
Year 2010 *13.0% [source: NSOM]
Year 2011 *10.2% [source: NSOM]
*Year-over-year (y-o-y)
CENTRAL BANK POLICY RATE
December 31, 2008 9.75% [source: IMF]
March 11, 2009 14.00% [source: IMF]
May 12, 2009 12.75% [source: IMF]
June 12, 2009 11.50% [source: IMF]
September 30, 2009 10.00% [source: IMF]
May 12, 2010 11.00% [source: IMF]
April 28, 2011 11.50% [source: IMF]
August 25, 2011 11.75% [source: IMF]
October 25, 2011 12.25% [source: IMF]
CURRENCY RATES – February 9, 2012
Currency Name Currency Rate
U.S. dollar USD 1,342.16
Euro EUR 1,782.79
Japanese yen JPY 17.47
British pound GBP 2,125.24
Hong Kong dollar HKD 173.62
Chinese yuan CNY 213.21
Russian ruble RUB 45.14
South Korean won KRW 1.21
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.