April 10 2009

1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmmongolia.org
info@bcmmongolia.org
Issue 64, April 10, 2009
NEWS HIGHLIGHTS:
Business: Changes in draft would mean renewed negotiation; Minerals Minister plays down talk of
Ivanhoe ultimatum; MPRP group proposes 16 amendments to draft agreement; Ivanhoe
publishes 2008 results and review of operations; Peabody renegotiates Mongolian coal
deal with Polo; Estimates of new large copper-molybdenum deposits approved; Ceke
border point working longer hours to help export more coal; BHP says building mines
will become cheaper than buying them; Entrée “encouraged” by exploration results;
MIAT proposes to cut 25% of international flights; Audit of Anod Bank completed; EU
signs civil aviation agreement with Mongolia; Rio Tinto lines up USD8 billion rights
issue, says newspaper; Poll finds Australians opposed to Chinese investment in mining;
China denies spies targeted Australian PM, Rio Tinto; Italian company to advise Gobi.
Economy: Long road to higher growth for Mongolia, says World Bank report; Mongolia given
immediate access to USD76 million of IMF loan; No Trans Europe Express freight
service now, says Deutsche Bahn; Speaker discusses herder loans, help for SMEs with
bankers; Banks buying foreign currency spend it on imports; We have to wait for
results, says TDB President defending monetary policies; Seminar on credit
information; 3 officers under probe for issuing mineral licenses without tender; MSE
team discusses economy with First Deputy PM; Mayor wants help from business to
control litter; Mongolia could profit from tourism of doom; New MNCCI building
inaugurated.
Politics: Straight fight to decide next President; Prime Minister visits China next week;
President’s veto of law stirs political passions; Incidence of serious crimes increasing;
Buriyat Republic wants 50,000 sheep from Mongolia; Veterans demonstrate against
delay in allotting apartments; Camel gives birth to twins, President informed; Work
on garbage recycling to start next month; Amusement park to open in August; 8,606
cars lose registration for illegal parking; US club to provide helmets to child jockeys
during Naadam; Korean group pins hope on eco-energy project in Mongolia; NGO offers
scholarship to two Hazaras in Afghanistan; 53% in Russia fail to say where Mongolia is.
BUSINESS
CHANGES IN DRAFT WOULD MEAN RENEWED NEGOTIATION
A high-level delegation from Ivanhoe Mines told Speaker D.Demberel last week that the draft Oyu
Tolgoi investment agreement was a complex document, based on mutual consent and negotiation,
and “if we now change a single provision or a single clause, the whole structure will be disturbed
and the whole exercise will have to be started again”.
Mr. John Macken, CEO of the company, said the agreement had been drafted “after long
negotiations” and “in “full cooperation with the Government”. One could not expect accord on
every single thing, but “well known analysts conclude that the draft is beneficial to the Mongolian
Government,” he said.
The company team pointed out that the Mongolian share of the investment, as 34% owner of the
project, is to be made by Ivanhoe Mines, making the project risk free for the Mongolian side. On the
other hand, most of the reserve is 1-2 km under the surface, which means the investors are saddled
with a lot more risk,” they said.
Mr. Macken wanted it to be understood that the project was finally going to start at a time of
recession. “Our Board thinks there should be no further delay. The project was initiated in 2003
when commodity price was low, but then it went up and has fallen now. It is the right time to build
the mine so that we are ready when the next wave of commodity price boom comes,” he said.

2. If the agreement is signed “in the near future and funding questions are solved”, construction can
start in the summer, he said. This will give employment to many Mongolians. “Our mission is to
make this project one of the top three in the world. We have the experience, the know-how and
the reputation,” Mr. Macken said.
Earlier, the Speaker had assured the delegation that Parliament was “in favor of adopting a draft
investment agreement” on Oyu Tolgoi and that is why it has been placed on the agenda of the
Spring session. However, “party groups and standing committees” wanted to review “some issues”
in the present draft “more carefully”. When this is done, the Standing Committee on the Economy
will “consider their suggestions” and present a revised draft, if necessary, to the Government.
The Speaker began the meeting by assuring his visitors that MPs, in party groups and in standing
committees, had debated the provisions of the agreement in depth but wanted more information on
a few matters to make sure that it was “mutually beneficial and workable”. He hoped the present
meeting would help “develop, update and upgrade mutual understanding”.
Mr. Demberel said the Mongolian side considered the interest rate on the prepayment made by the
investors to be too steep. Mongolia also “wanted a copper smelting factory as the project had good
prospects, with the large reserves in the area, their high grade and increasing copper demand in
the world market”.
Another point mentioned by the Speaker referred to the clause that capped taxes to be paid at 68%.
“To make it a fair deal, there also should be a clear statement on the bottom level of taxes that
can be imposed,” he said. He also wanted it to be made clear that “the Mongolian side will never
receive less than 55% of the profits”. He felt it would be “appropriate if both sides agreed upon a
tax on dividends, according to international practice and standards, instead of waiving it”.
The Mines delegation comprised Mr. John Macken and Mr. John Fognani, Chief Executive Officer and
Executive Vice President respectively of Ivanhoe Mines, Mr. Keith Marshall, Executive Director of
the Oyu Tolgoi project, and Mr. A.Munkhbat, Vice President and Executive Director of Ivanhoe Mines
Mongolia Inc.
MP Ts.Bayarsaikhan, Head of the Standing Committee on the Economy, MP Kh.Badamsuren, MP
G.Zandanshatar, and adviser to the Speaker D.Davaasambuu also attended the meeting.
Source: Media Relations Department of Parliament
NOTE: This report is based on the authoritative version of the discussion as issued by the Speaker‟s
Office. As will be seen, the Ivanhoe Mines team did not use any threat or issue an ultimatum. It
merely pointed out that the draft had been prepared on the basis of consensus after prolonged
discussion, and any change will mean renewed negotiation. This will inevitably lead to more delay
in beginning work on a project vital to Mongolia‟s economy.
MINERALS MINISTER PLAYS DOWN TALK OF IVANHOE ULTIMATUM
After some newspapers had reported that senior officials of Ivanhoe Mines “warned” Parliament
Speaker D.Demberel on Thursday that there would be no agreement if anything was to be changed
in the draft now, Minister for Minerals and Energy D.Zorigt was asked on Monday if the Ivanhoe
team had indeed said there would be no further negotiation if the draft was revised.
Mr. Zorigt said he was not present at the meeting, but had also not heard anything about Ivanhoe
Mines making any sort of final statement that it would not accept any changes in the draft. He was
sure the Speaker had explained the present status of the draft, the points on which MPs had
reservations, and that the amended draft would be ready soon. “I do not think the investors said
everything is over if anything is touched,” the Minister said. There is widespread talk that about 10
changes are going to be made in the draft before it is submitted to Parliament.
Source: www.news.mn
MPRP GROUP PROPOSES 16 AMENDMENTS TO DRAFT AGREEMENT
Reviewing the draft Oyu Tolgoi investment agreement at a meeting on Wednesday attended by
Prime Minister S. Bayar, the MPRP group in Parliament proposed 16 amendments before it is
submitted to Parliament for discussion. Among these are: the initial agreement will be for less than
30 years; the advance payment of USD125 million will be increased; and the total amount of
investment will be revised. The group hoped the working group now reviewing the draft would
complete its work soon so Parliament can begin discussing it.
Source: Zuunii medee

3. IVANHOE PUBLISHES 2008 RESULTS AND REVIEW OF OPERATIONS
The financial results and review of operations for 2008 recently announced by Ivanhoe Mines reveal
that a new zone of high-grade gold and copper mineralization was discovered last December at Oyu
Tolgoi. The Oyu Tolgoi mineralized structural corridor now has a total strike length of more than 20
km –- with Oyu Tolgoi in the centre and encompassing more recent extensions to the south and
north onto the joint Ivanhoe-Entrée agreement area. Ivanhoe‟s 80%-owned subsidiary, SouthGobi
Energy Resources, commenced sales of high-quality thermal coal from its Ovoot Tolgoi mine in
September 2008.
Ivanhoe Mines recorded a net loss of USD184.1 million in 2008, compared to USD457.7 million in
2007. Results for 2008 were mainly affected by USD260.3 million in exploration expenses, a
decrease of USD43.7 million from 2007, and including USD207.3 million spent in Mongolia (USD274.9
million in 2007), primarily for Oyu Tolgoi and Ovoot Tolgoi. Exploration costs are charged to
operations in the period incurred and often represent the bulk of the company‟s operating loss for
that period. Ivanhoe Mines expects to commence capitalizing Oyu Tolgoi construction and
development costs once an Investment Agreement is finalized with the Government of Mongolia.
At Oyu Tolgoi, construction of the No. 1 shaft to its full depth of 1,380 meters was completed in
February. A total of 594 meters was developed laterally at the 1,300-m level, utilizing a fleet of
underground mining equipment. In November 2008, underground operations were scaled back and
the workforce was reduced by 50%.
Oyu Tolgoi exploration is now concentrated on gold-rich copper discovery, open to expansion in all
directions, within Ivanhoe Mines‟ 100%-owned Mining License. The discovery in December 2008 is
highly significant because it indicates that there is a strong probability of an additional gold-rich
copper deposit.
In June a USD35.0 million earn-in amount was reached on the Entrée Gold-Ivanhoe Mines joint
venture agreement areas. Ivanhoe Mines now has earned a participating interest of 80% in all
minerals extracted below a subsurface depth of 560 meters on the optioned property. An 80%-20%
Ivanhoe Mines-Entrée Gold joint-venture is being formed.
The 2008 exploration program at Ovoot Tolgoi was focused on obtaining additional information
about the structure and quality of the deep underground coal mineralization. The 2008 drilling
program at the new Sumber Coal Project is expected to provide the basis for a resource estimate in
2009.
The company is continuing to assess the implications for the Oyu Tolgoi Project and its development
schedule as a result of the delays in approval that have been experienced in Mongolia, the sharp
declines in certain commodity prices and continuing uncertainty in international financial markets.
Ivanhoe Mines‟ cash position, on a consolidated basis at December 31, 2008, was approximately
USD384.1 million.
Source: www.ivanhoe-mines.com
PEABODY RENEGOTIATES MONGOLIAN COAL DEAL WITH POLO
Peabody Energy said last week it has entered into a renegotiated agreement to create a 50-50 joint
venture holding Polo Resources Ltd.‟s Mongolian coal interests for up to USD25.8 million. This
option agreement supersedes the agreement announced in January, in which Peabody obtained an
option to purchase up to a 50 percent interest in the joint venture for USD73.2 million. Peabody has
also been granted warrants to enable the company to acquire an approximate 15 percent equity
interest in Polo.
Polo's Mongolian coal sites include Tavan Tolgoi, Ovoot Tolgoi and Nariin Sukhait in the South Gobi
coal region, with a potential resource of more than one billion tons in a region with some of the
largest metallurgical and thermal coal resources in close proximity to the high-demand China and
Asian markets. Polo has an active mining operation in Mongolia, with more than 100 employees on-
site.
Peabody officials feel the creation of Peabody Polo Resources BV will help Peabody expand its
presence in Mongolia. The company recently named D.L. Lobb as senior vice president of Mongolian
operations. The company also has ongoing initiatives to assist the Mongolian Government in large
long-term coal resource development.
Polo officials recently announced the company "has made a strategic decision to refocus its human
and financial resources in the uranium sector”. Polo holds 100% of ten uranium exploration
tenements and has seven tenements under application in the Dornogovi District, Mongolia.

4. St. Louis-based Peabody is the world's largest private-sector coal company. Its coal products fuel
about 10 percent of all U.S. electricity generation and 2 percent of worldwide electricity. Polo,
based in Road Town, British Virgin Islands, buys and develops advanced-stage coal and uranium
properties in Asia and Australia.
Source: stlouis.bizjournals.com, www.mineweb.com
ESTIMATES OF NEW LARGE COPPER-MOLYBDENUM DEPOSITS APPROVED
The Mineral Council of the Mineral Resources Authority has approved estimates of copper and
molybdenum deposits at sites between Bulgan and Selenge provinces and close to the Russian
border. A Mongolian-British joint venture, Monrosiz, made the discovery and its officials say further
exploration will be useful as there is a strong likelihood of finding a gold deposit close to the copper
and molybdenum deposits.
It will take 3 years to start mining operations and the deposit, estimated to be equal to what
Erdenet holds and with possibility that more will be discovered, could be mined for 30 years.
Source: Undesnii Shuudan
CEKE BORDER POINT WORKING LONGER HOURS TO HELP EXPORT MORE COAL
SouthGobi Energy Resources has experienced difficulty, from time to time, expediting the
movement of its coal shipments through the Ceke border point on the Mongolia-China border due to
unpredictable opening hours and sporadic closures. The border crossing only operated five days a
week, on the day shift, limiting the amount of coal SouthGobi was able to sell to customers in
China. As a result, the company has temporarily curtailed production to reduce current mine
stockpiles and preserve cash.
On March 22 the border extended its operations to seven days a week/eight hours a day. The
Mongolian Government and SouthGobi are coordinating efforts to open the border-crossing access
24 hours a day/seven days a week for SouthGobi‟s coal shipments.
Source: www.ivanhoe-mines.com
BHP SAYS BUILDING MINES WILL BECOME CHEAPER THAN BUYING THEM
BHP Billiton Ltd., the world‟s biggest mining company, may develop new copper mines rather than
acquire them because of falling costs, says Mr. Diego Hernandez, president of the company‟s base-
metals division. The cost of developing a copper mine is decreasing as materials and energy become
cheaper, Mr. Hernandez said in an interview on Monday. Construction costs may become as
attractive as buying companies within six months, he said. “Looking at the market the obvious
conclusion is that we will see some distressed companies that have to dispose of good assets,” Mr.
Hernandez said. “But in fact we have not seen” any opportunities, he said.
Shares of Rio Tinto Group, the world‟s third-largest mining company, Alcoa Inc. and Xstrata Plc
have all risen this week on speculation they may be BHP targets. Debt sold by BHP rose as much as
15 percent this week on concern the world‟s largest mining company may be planning an acquisition
after selling USD6.3 billion in bonds.
BHP‟s rivals may lag behind in developing mines because of a lack of credit, Mr. Hernandez said.
“For big projects, the mining companies will need to go back to project financing and there is not
too much available yet,” he said.
Source: Bloomberg.com
ENTRÉE “ENCOURAGED” BY EXPLORATION RESULTS
Entrée Gold President and CEO Greg Crowe is confident that recent endorsements of the draft
Investment Agreement for the giant Oyu Tolgoi project will provide a major boost to Mongolia‟s
mining industry. He has also said Entrée is encouraged by the 2008 exploration results at its
Mongolian properties. Last year saw the company spend USD10 million on exploration, with the
majority of funds devoted to efforts in Mongolia. According to him, Entrée‟s solid financial position,
with about CAD54 million in its treasury, allows it to retain relative strength as it continues to
evaluate potential acquisition opportunities.
Source: www.entreegold.com
MIAT PROPOSES TO CUT 25% OF INTERNATIONAL FLIGHTS
The national carrier MIAT has proposed to the Ministry for Transportation that it will not use a

5. leased Boeing 737-800 for the next 10 months. The company reached the decision as the number of
flights it runs fell 50 percent in the first quarter of the year, and the airline wants to keep to this
schedule for the rest of 2009. The two other planes it has, another Boeing and an Airbus, will be
able to take the load. MIAT plans to reduce its international flights from 1,200 last year to 925 in
2009.
Negotiations on the terms of the non-use are yet to be concluded between MIAT and CIT Aerospace
Company of Great Britain from whom the plane is leased. CIT is ready to waive the monthly
USD340,000 rental if MIAT pays for all maintenance and repairs for the period when the plane will
not be used. This is likely to cost USD5.5 million, and MIAT has suggested that CIT Aerospace takes
the present aircraft back and offer a new one on lease in 2010.
Source: Ardiin Erkh
AUDIT OF ANOD BANK COMPLETED
A German team has completed their audit of Anod Bank accounts. The fate of the bank will be
decided after its report is reviewed by the Central Bank. Shareholders and those with accounts with
Anod Bank are expected to be kept informed of any decision the Central Bank would take.
Source: Zuunii medee
EU SIGNS CIVIL AVIATION AGREEMENT WITH MONGOLIA
The European Union and Mongolia have signed an aviation agreement which will restore legal
certainty regarding bilateral air services agreements between Mongolia and EU Member States. The
so-called "horizontal" aviation agreement does not replace the bilateral agreements in place
between Mongolia and 12 EU Member States, but brings these in line with EU law. Most importantly,
it will remove nationality restrictions in bilateral air services agreements between EU Member
States and Mongolia, thereby allowing any EU airline company to operate flights between Mongolia
and any EU Member State in which it is established, in which a bilateral agreement with Mongolia
already exists, and in which traffic rights are available.
The agreement is being seen an important step towards strengthening aviation relations and
encouraging further traffic between the EU and Mongolia.
Source: http://www.traveldailynews.com
RIO TINTO LINES UP USD8 BILLION RIGHTS ISSUE, SAYS NEWSPAPER
Mining giant Rio Tinto has drawn up contingency plans to raise USD8 billion in a rights issue
underwritten by JP Morgan Cazenove and Credit Suisse, the Sunday Times reported without citing
sources. The newspaper said the agreement has been in place since Rio announced its full-year
results in February. However, Rio will only use the rights issue option if its controversial USD19.5
billion deal with China's state-owned Chinalco falls through. Rio Tinto could not be reached for
comment on the report.
Separately, The Financial Times reported that Rio Tinto is ready to proceed with a rights issue of
about USD10 billion if its tie-up with Chinalco fails. Chinalco could extend a planned convertible
bond to UK investors if deemed necessary by Rio's board, the FT said, citing a person familiar with
Chinalco's thinking. Rio remains committed to the Chinalco deal, but that could be blocked by
regulators or vetoed by shareholders, the FT said.
Source: Reuters.com
POLL FINDS AUSTRALIANS OPPOSED TO CHINESE INVESTMENT IN MINING
Most Australians oppose Chinese investment in mining companies as Australian Treasurer Wayne
Swan mulls Aluminum Corp of China‟s proposed USD19.5 billion investment in Rio Tinto Group. Some
57 percent of people polled said Chinese investment in mining companies should be resisted
because the nation‟s interests would be “better served” with Australian ownership, according to a
poll of 890 people conducted by Essential Research.
Twenty-five percent of the respondents supported Chinese investment in resources because it
would help the economy and protect jobs, according to the survey that had a margin of error of
plus or minus three percentage points. Eighteen percent did not know.
The Foreign Investment Review Board has until mid-June to advise Mr. Swan on the Rio bid and a
Senate inquiry is due to report on June 19.
Source: Bloomberg.com

6. CHINA DENIES SPIES TARGETED AUSTRALIAN PM, RIO TINTO
China denied last week that its spies attempted to hack into the phone and computer of Australian
Prime Minister Kevin Rudd during a visit to Beijing, amid growing unease in Canberra over Chinese
investment. “The Australian” said on Friday China directly targeted Mr. Rudd during a visit to China
last August. The newspaper said Mr. Rudd and his staff were under constant cyber attack from
authorities trying to access communications gear. "It is a totally groundless saying and not worth
any comment, this so-called cyber spying," Chinese embassy spokesman Jin Liu said.
The newspaper, citing intelligence sources, said Beijing's blatant electronic espionage had alarmed
Mr. Rudd's centre-left government and led to a tightening of communications security for senior
government figures traveling to China.
Anti-Chinese sentiment has been building in Australia with opposition lawmakers accusing the
Mandarin-speaking Prime Minister of being a "roving ambassador" for China and too close to senior
figures in Beijing. China's Australia ambassador has defended Chinese investment in local resource
firms as Canberra considers whether to approve a USD19.5 billion tie-up between state-owned
metals firm Chinalco and mining giant Rio Tinto. Opposition lawmakers have accused Mr. Rudd's
Labor of being prepared to "sell the farm", losing control of vital resource assets sought by energy-
hungry China.
Rio Tinto may also have been the target of a Chinese cyber attack in the early stages of Chinalco's
bid for the Anglo-Australian miner, The Australian said, citing government figures, who called the
attacks "incessant and enduring".
Source: Reuters.com
ITALIAN COMPANY TO ADVISE GOBI
Mongolian cashmere manufacturer Gobi last week signed a one-year cooperation agreement with
the Italian company Valdani Vigari Associati (VVA). VVA will help Gobi improve its production
management system, and advise on the quality and competitiveness of products and designs. VVA is
a well-known consulting company and has worked with fashion companies like Valentino Fashion
Group, Gruppo Forall, Romano S.P.A, and others.
Source: Onoodor, Odriin sonin
ECONOMY
LONG ROAD TO HIGHER GROWTH FOR MONGOLIA, SAYS WORLD BANK REPORT
In its half-yearly update on the economic scene in East Asia and the Pacific, the World Bank says
prospects for Developing East Asia, the grouping that includes Mongolia, may be better than those
in other developing regions, but concerns remain that a return to higher growth will be slow in
materializing, with implications for employment generation, increases in living standards, and
poverty reduction. The report, called “Battling the Forces of Global Recession”, was released on
April 7.
Low-income countries are likely to be the worst affected by the crisis, given their small domestic
markets, over-reliance on commodity exports, and virtual lack of fiscal space. A return to stronger
economic expansion in China should help support growth among the countries of the region, but a
sustainable recovery will ultimately depend on developments in the advanced economies.
Referring to developing East Asia, the report says the impact of the crisis in the advanced countries
was transmitted to the economies of the region with unusual speed. The downturn was marked by a
sharp increase in the price of external private capital, a shortage of dollar liquidity, and in some
cases, a depreciating currency. Still, the direct impact of last year‟s financial turmoil on the low-
income countries in the region was modest because their underdeveloped financial markets and
limited integration with global financial markets provided some protection.
Mongolia depends heavily on commodity exports and has been hit hard by the sharp decline in
commodity prices. It will need to make tough adjustments in its fiscal and monetary stance to
maintain macroeconomic stability. Measures so far taken will only mitigate, not overcome, the
contractionary forces. Migrant workers, wherever they are, are likely to be among the first to lose
their jobs. This will mean lower remittance flows and, if they return home, worsening
unemployment at home.
There are signs that the strongest economy in the region, China, is beginning to turn the corner.
China‟s imports are likely to rise at a faster pace than before, and much of the increase will

7. probably be accounted for by raw materials. This bodes well for Mongolia.
All in all, despite determined policy easing, real GDP growth in developing East Asia is projected to
slow to 5.3 percent this year from 8 percent in 2008. Some low-income countries will experience
the largest declines in growth.
Source: www.worldbank.org
See BCM website, Articles/Reports on Mongolia, for WB report, “Battling the Forces of Global
Recession”.
MONGOLIA GIVEN IMMEDIATE ACCESS TO USD76 MILLION OF IMF LOAN
The International Monetary Fund's executive board last week approved a USD229.2 million credit
line for Mongolia to help it cope with the effects of the global economic crisis. The country has
immediate access to USD76.4 million of the 18-month standby arrangement, the fund said in a
statement.
"Mongolia has been severely affected by the global financial crisis through a sharp reduction in the
prices of its main mineral exports, notably copper," said Mr. Takatoshi Kato, the IMF's deputy
managing director and acting chairman of the board. "The authorities are committed to restoring
macroeconomic stability and putting in place the conditions for strong and equitable growth. The
program aims to smooth Mongolia's adjustment to the large terms-of-trade shock, put fiscal
finances on a sustainable footing, allow for a more flexible exchange rate, address weaknesses in
the banking system, and mitigate the impact of adjustment on the most vulnerable," he said.
Source: Dowjones Business News, Bloomberg.com
NO TRANS EUROPE EXPRESS FREIGHT SERVICE NOW, SAYS DEUTSCHE BAHN
Deutsche Bahn, the German raiway, has announced it will delay the launch of its weekly Trans
Europe Express (TEE) container rail service linking South China and Russia with Western Europe. The
service would have passed through Mongolia. A successful test run was made in late 2008 in which
50 containers traveled by rail from Xiangtang in China via Mongolia, Russia and Poland to Hamburg.
Hopes were raised that the troubled Ulaanbaatar Railway would earn some revenue, but the global
economic crisis led to uncertainty about enough traffic load and now, finally, there is this indefinite
postponement.
Source: Montsame
SPEAKER DISCUSSES HERDER LOANS, HELP FOR SMEs WITH BANKERS
Speaker of Parliament D. Demberel had a meeting last week with Deputy CEO of Khan Bank D.
Batsaikhan, President & CEO of Mongol Post Bank D. Oyunjargal, and President & Executive Director
of Khas Bank M. Bold to discuss the banks‟ current policies toward herders and small and medium
enterprise owners.
The bank executives explained how their lending strategy was supporting herders and SMEs. Mr.
Batsaikhan said Khan Bank started giving herders loans in 2000 and now has 65,000 loans
outstanding. Last December, the bank offered concessionary terms to these borrowers. So far,
6,315 loan repayment periods have been extended and new loans are also being disbursed. Only
3.3% of herders are defaulters and the bank is being “as flexible as we can with them through
means such as waiving interest”. The bank has around 20,000 customers engaged in SME and there,
too, it is extending loans and negotiating repayment schedules wherever necessary.
Mr. Demberel appreciated the banks‟ approach and reminded the executives that the policy of
Parliament was to “prevent citizens from being mired in bank debts”. He asked banks to use their
resources efficiently and to ensure accountability in all their operations. The Government‟s
decision to guarantee the security of all bank deposits means “we will watch banks closely to make
sure they remain sound”, he said.
Central Bank Governor L. Purevdorj and Advisor to the Speaker D. Davaasambuu were also present
at the meeting.
Source: www.Khan Bank.com
BANKS BUYING FOREIGN CURRENCY SPEND IT ON IMPORTS
An inspection has satisfied the Central Bank that banks which bought foreign currency at the
auction on March 24 used the money only to pay for imports. This is a legal requirement according

8. to the rules governing the auction.
Source: www.news.mn
WE HAVE TO WAIT FOR RESULTS, SAYS TDB PRESIDENT DEFENDING MONETARY POLICIES
Mr. Randolph Koppa, President of Trade and Development Bank (TDB), answered some questions on
Mongolia's financial climate in a recent interview. Brief excerpts follow:
Do you think that foreign direct investment will continue in the coming years?
Mongolia has a comparatively stable political situation and a strategic location between the vast
emerging markets of Russia and China. It also has extensive and largely untapped natural resources.
Foreign direct investments in Mongolia have been growing in the last few years, mainly in the
mining sector, and despite the world financial crisis, the Tavan Tolgoi, Oyu Tolgoi, Tumurtei, Asgat,
Dornod, and Gurvanbulag-Mardai projects will further stimulate foreign investment in Mongolia.
What is the overall outlook for Mongolia's banking system in this financial crisis?
Fortunately, Mongolia's banks were not particularly integrated into the international capital
markets and are not dependent on funding from the international interbank market. They also did
not invest in the asset backed securities and collateralized debt obligations issued and distributed
by investment banks. Following the high rate of inflation in 2008 and the recent fall in the value of
the MNT against foreign currencies, the Central Bank has tightened money supply. This, together
with the economic slowdown, has led to a stalling in the introduction of new products, such as
mobile banking. Despite the credit crunch, we are observing more demand for banking services and
public confidence in the banking sector continues to be strong.
Foreign central banks have reduced their policy interest rates, even down to zero in some
countries, but the Central Bank here recently raised them. What are your views on this?
The Mongolian economic structure is different, so the Central Bank here has to follow a different
logic. Its action was aimed at stabilizing the value of the MNT against foreign currencies by
restricting the conversion of MNT savings into USD, and limiting capital outflows, thus restoring the
confidence of entrepreneurs. I think that makes sense. I also agree that pouring more money into
the market would lead to a further fall of the MNT. But sometimes we have to wait to see the
results.
What do you think of the Government action plan? Can Mongolia manage to raise capital in the
foreign debt market?
The plan needs MNT1.5 trillion to be fully implemented, and this the Government cannot spend if it
has to keep the budget deficit within 6% of GDP as stipulated by the IMF as a condition for the
USD224 million reserves support facility. Some international donors are reported to have promised
about USD200 million more. Commercial arrangements have to be made to access the rest of the
money. Raising funds through a domestic bond issue is not feasible in an already tight bank credit
market. Mongolia has never tapped the foreign debt market, and conditions for that are not very
favorable now, especially as the country rating is under review. Bilateral discussions with major
neighbors are more likely to yield results.
What are the prospects of business growth?
In recent months as the economy has slowed, the growth of many companies has also slowed.
However, as more mining projects are activated, and as needed infrastructure and housing projects
are undertaken, the outlook for corporate, SME, and small business will get brighter and the market
for financing them will grow. Although it may not appear so from the experiences of the past few
months, the disposable income of more and more Mongolians has increased significantly in the past
four or five years, and their spending has been one of the main drivers of GDP growth, even beyond
the contribution of the mining sector. As conditions here stabilize and the global recession eases,
we can expect Mongolians to resume spending to again stimulate the business activity here.
How is the Mongolian Mortgage Corporation, of which you are the chairman, doing?
The Corporation (MIK) was established in 2006 by ten Mongolian banks and the Central Bank to
develop a secondary market for residential mortgages. One of the original objectives of MIK was to
attract foreign investors to buy mortgage backed securities issued by MIK. However, the sub-prime
loan crisis and the related problems related to asset-backed securities have made it difficult to
attract such investors. However, the German KfW bank has decided to provide EUR 5 million to MIK
in the form of technical assistance and funds to purchase mortgages from banks. The credit crunch
has affected all banks‟ ability to issue house loans, but there is still a great need and demand for
more housing, and thus mortgage financing is essential. The banks in Mongolia need liquidity to

9. make more mortgage loans, which are long term in nature. Therefore a secondary mortgage market
is also essential. The Central Bank, the Mongolian Bankers‟ Association and MIK are working
together to find ways to soon provide some liquidity to the banks by helping MIK purchase more
existing mortgages from the banks through the issue of some securities into the local market. All
parties concerned recognize the importance of helping Mongolians own their own residences.
Source: www.tdbm.mn
SEMINAR ON CREDIT INFORMATION
A recent seminar hosted by the Mongolian Banks' Association and the International Finance
Corporation in cooperation with the USAID-funded Economic Policy Reform and Competitiveness
project focused on issues concerning credit information, its legal adjustments and the
establishment of a credit information bureau of the private sector of Mongolia. Papers were read on
topics such as "Credit bureau: international tendencies and practices", "The current state of
Mongolia's credit information", "Legal regulation of credit information", and "Composition of credit
bureau".
IFC specialist Colin Raymond said the seminar was aimed at providing important information to
policy makers of Mongolia on establishing a credit information center in the country. "Reliable
information will help Mongolian banks achieve better competitiveness," said Mongolian Banks'
Association CEO Z.Shagdarsuren.
Source: Montsame
3 OFFICERS UNDER PROBE FOR ISSUING MINERAL LICENSES WITHOUT TENDER
The Anti-Corruption Agency has started an investigation against three of the 22 officers of the
Mineral Resources and Petroleum Authority (MRPA) who did not declare their incomes and assets to
the agency within the stipulated period. The case against the three is that they broke laws, and
caused significant loss to the state budget by issuing mineral licenses to companies without floating
public tenders.
Source: Onoodor
MSE TEAM DISCUSSES ECONOMY WITH FIRST DEPUTY PM
The Director and CEO of the Mongolian Stock Exchange (MSE), Mr.R.Sodkhuu, and some of his
colleagues met with First Deputy Prime Minister N.Altankhuyag recently to discuss the state of the
Mongolian capital markets, the general economic situation in the country, and factors that have led
to a fall in the securities index and market indicators. They also talked about the Government‟s
plan to overcome the financial difficulties the capital market is encountering and about how the
technology reform and capacity strengthening program of the MSE was being implemented and
financed.
Source: www.business-mongolia.com
MAYOR WANTS HELP FROM BUSINESS TO CONTROL LITTER
Ulaanbaatar Mayor G.Munkhbayar has suggested to district governors that they seek financial help
from business establishments to appoint inspectors to see to it that people do not throw trash
around. “Even with all our cleaning, the streets are full of litter. We can settle the problem with
cooperation from companies. They will not mind paying MNT10-20,000 each a month as they too
will benefit from living and working in a clean environment,” he said.
Source: Odriin sonin
MONGOLIA COULD PROFIT FROM TOURISM OF DOOM
Travelers are increasingly flocking to see endangered natural phenomena, creating a new market
niche: „tourism of doom‟. Sector specialists coined the term for the growing number of travelers
flocking to far-flung corners of the planet to see endangered natural wonders before they
disappear.
Mr. Ken Shapiro, editor of TravelAge West, a magazine for travel agents, says among the
destinations are melting glaciers, shrinking tropical rain forests or other places these travelers
believe will be destroyed in a generation due to climate change, overbuilding or other threats to
the environment. The trend was first spotted about two years ago, he added.
Mr. Shapiro said travel agents report that clients are increasingly requesting trips to see wonders

10. with an expiration date. These include the iconic grasslands and nomadic traditions of Mongolia
threatened by a combination of climate change and economic growth that is fuelling the rapid
spread of desert sands.
Source: AFP/Expatica
NEW MNCCI BUILDING INAUGURATED
The new office building of the Mongolian National Chamber of Commerce and Industry (MNCCI) was
inaugurated on April 3 at a ceremony attended by Prime Minister S.Bayar and the Chinese
Ambassador, Mr. Yu Hongyao. The Chamber is the main representative body of the country‟s
business community, engaging most companies, enterprises and trade organizations in its wide
range of activities and services and protecting their common interests.
MNCCI was established in 1960. It was then called the Chamber of Commerce and until 1990, under
the socialist system, its activities were very limited and it promoted trade and industry as a quasi-
governmental agency. Following the transition to a market economy and the later adoption of the
Law of the Chamber of Commerce and Industry in 1995, MNCCI has been working to promote the
private sector and has seen a vast expansion in its activities.
Source: Montsame
POLITICS
STRAIGHT FIGHT TO DECIDE NEXT PRESIDENT
Mongolia's two main political parties announced candidates last Friday for the May 24 presidential
ballot, the first national vote since a disputed election last year triggered riots that left five dead.
The election comes as the poverty-stricken country struggles to cope with plummeting prices for its
main export commodities, particularly copper. One third of Mongolia's 2.9 million people already
live below the poverty line.
The ruling Mongolian People's Revolutionary Party voted unanimously to put forward incumbent
President N.Enkhbayar as its candidate. He will run against former Prime Minister Ts. Elbegdorj of
the Mongolian Democratic Party, who garnered 65.3 percent of his party's votes, nudging out other
contenders. The Democratic Party has a largely young, urban power base while the MPRP party gets
much of its support from rural areas. The two parties have joined forces to form a coalition
government, but will fight each other for the presidency.
At the party conference that nominated him, Mr. Elbegdorj pledged to tackle the yawning wealth
gap and corruption, as well as restore public trust badly shaken by last summer's riots. “Mongolia
needs a government which serves and cares for its people rather than a government which shoots at
its citizens,” he said, apparently in reference to allegations that police had opened fire on rioters.
Accusations that the MPRP rigged the June 29 parliamentary poll last year led to rioting in the
capital of the fledgling democracy that left five dead, 300 injured, and hundreds detained.
Independent observers found no signs of systematic abuses and Prime Minister S.Bayar accused Mr.
Elbegdorj at the time of fanning political tension with the vote-rigging accusations.
It will be a straight fight between Mr. Enkhbayar and Mr. Elbegdorj as the two other parties entitled
to put up a candidate did not do so. Instead, both the Civic Will Party and the Green Party
announced they would back the DP challenger.
Mongolia's presidential post is largely ceremonial, although it carries the power to veto laws and
other decisions passed by Parliament. Candidates are limited to two terms.
Source: Associated Press
PRIME MINISTER VISITS CHINA NEXT WEEK
Prime Minister S.Bayar will be on an official visit to China next week. He will discuss some concrete
proposals on bilateral trade and economy with Chinese leaders. He will make a special study of the
activities of the Tianjin seaport and visit a Shenhua coal liquefying plant.
Economic cooperation and trade, investment and business promotion between Mongolia and China
have been steadily increasing in recent years. Almost two thirds of Mongolia's export products go to
China.
Source: Montsame

11. PRESIDENT’S VETO OF LAW STIRS POLITICAL PASSIONS
Meeting on Tuesday both the Standing Committee on Law and Justice and the Standing Committee
on State Structure accepted the President‟s veto of the law on government employment.
Parliament is now unlikely to discuss the merits of the President‟s action. For a few days the issue
had been stirring political passions. The law passed by Parliament in the last special session was
vetoed by the President on March 25. It allowed the Government to decrease the salary, allowances
and pensions of its employees, and also allowances for the elderly and the disabled, at a time of
crisis. The Mongolian Labor Union (MLU) supported the President‟s refusal to approve the law and
said if Parliament were to overturn the veto, it was ready to fight for the rights of labor. The MLU
saw the law as directly violating the agreement among Parliament, the Government and itself that
provides for a commission with representatives from all three sides to take such a decision. MLU
said Parliament had totally bypassed this requirement and usurped the authority and so the
President was right to withhold consent.
Sensing the political mood, the President used his customary address to Parliament on the first day
of its Spring session to explain his action. He said if the Government reduces salaries, the private
sector will do the same. “Even if the country is in a crisis this will have negative results,” he said.
With the country getting into election mode the DP group in Parliament, meeting later in the day of
the President‟s address, took the strong stand that the salary of Government employees must not
be reduced. It reasoned that Parliament approved the revised budget only after the Government
had reassured it that salaries would not be touched. The law turns that promise on its head and the
DP group will submit a memorandum to the Government on the issue, demanding an explanation
from the responsible people.
Source: en.News.mn
INCIDENCE OF SERIOUS CRIMES INCREASING
There have been 25 percent more murders and 12 percent more rapes in the first three months of
2009 than in the corresponding period last year. Giving these figures, a spokesman of the General
Police Department told media that the number of crimes has not increased, but that of such serious
crimes has. Asked whether the economic crisis was a factor, he said it could very well be, even if
indirectly. Crimes do increase when employment rates are low and other social and economic
factors put people into difficulty, he said.
He admitted that people migrating from the countryside were behind most crimes, but also said the
crime graph has seasonal ups and downs. Stealing livestock is commoner in winter, while thefts and
robberies increase as it gets warmer.
Source: en.News.mn
BURIYAT REPUBLIC WANTS 50,000 SHEEP FROM MONGOLIA
A team from the Buriyat Republic of Russia led by Minister for Food and Agriculture J.D.Batuyev is
in Ulaanbaatar to discuss areas of cooperation. MP D.Zagdjav has met with the team and says that
there is general support among Mongolian MPs for a plan to import wheat seeds and fertilizers from
Buriyat and to export animal products in return.
During the socialist era the Buriyat Republic had 1.8 million sheep but the number has now come
down to 200,000. They are keen on getting something like 50,000 sheep from here. The advantage
of the plan is that the sheep will not have to be transported, as they will go towards their new
home as they graze and then cross the border.
Source: Onoodor
VETERANS DEMONSTRATE AGAINST DELAY IN ALLOTTING APARTMENTS
Veterans demonstrated on Tuesday to express their dissatisfaction at the slow rate at which the
Government‟s promise to provide them with apartments or monetary equivalent was being
implemented. With only 100 allotments a year, the last of the 1,800 veterans will have to wait for
18 years. Those who fought in World War II or in the earlier war against Japan qualify as veterans,
so the wait may prove to be too long for them.
Source: www.news.mn
CAMEL GIVES BIRTH TO TWINS, PRESIDENT INFORMED
The Mongolian President has received a special message from a district governor in Khovd province

12. which has nothing to with matters of state. It is a national tradition that the head of state has to be
informed when twin calves are born to a camel, as this rare event is believed to presage prosperity
and good fortune for the nation.
The present message gives news that such a twin birth has taken place in the province for the first
time ever. Residents of Myangad district have decided to celebrate the event by holding a camel
festival.
Source: Ardiin Erkh
WORK ON GARBAGE RECYCLING TO BEGIN NEXT MONTH
The Ulaanbaatar Mayor‟s Office has decided to begin the first phase of the garbage recycling
project supported by the Japanese development agency, JICA. Work on training workers on
classifying the contents of household garbage will start in May. This will determine what items are
biodegradable, which can be recycled and which are to be destroyed.
Source: Undeshnii Shuudan
AMUSEMENT PARK TO OPEN IN AUGUST
The amusement park being billed as the “Mongolian Disneyland” is expected to be ready by August
after three years of work. Installation of all the games and other attractions will start later this
month.
Source: Odriin Sonin
8,606 CARS LOSE REGISTRATION FOR ILLEGAL PARKING
Traffic police have cancelled the registration of 8,606 cars for violating parking regulations so far
this year. They also confiscated 2,087 driving licenses for ignoring traffic rules.
Source: www.news.mn
US CLUB TO PROVIDE HELMETS TO CHILD JOCKEYS DURING NAADAM
The Centaurs 4-H Club in New Jersey, USA, with the help of Horse News, is collecting riding helmets
for Mongolian children who ride in the Naadam festival horse races. The club is asking local tack
suppliers as well as local equestrians to donate helmets. Cash donations will also be accepted to
help purchase helmets and to pay for shipping of the helmets to Mongolia. Ms. Lillian Shupe
suggested the project to club members after being contacted by a friend of a member of the Peace
Corps.
The races take place in Mongolia each summer during the festival over the course of three days.
Children aged 4 to 12 race at a full gallop on ponies for up to 40 km. Very few have helmets and
many do not even have saddles.
Source: Equestrianmag.com
KOREAN GROUP PINS HOPE ON ECO-ENERGY PROJECT IN MONGOLIA
The core businesses of the Daesung Group, one of the top 50 conglomerates in South Korea, are
information technology, energy and finance, with “strategic businesses” in education, culture and
media. Its Chairman David Kim has also taken an interest in climate change, and invested in eco-
friendly energy. One of the Group‟s biggest ambitions is centered on the “Eco-Energy Park Project”,
currently under way in Mongolia. It is designed to power facilities and homes in the Gobi Desert
using a hybrid solar and wind power system, with the ultimate goal of water treatment and
reforestation to reduce yellow dust.
Source: joongangdaily.joins.com
NGO OFFERS SCHOLARSHIP TO TWO HAZARAS IN AFGHANISTAN
Tsakhim Urtuu Kholboo, an NGO, has decided to offer scholarships to two high school graduates
from the Hazara ethnic group in Afghanistan. The scholarship will allow them to study at the
Mongolian National University for five years, including a year of Mongolian language training. The
Hazaras are believed to be of Mongolian origin and, for that and other reasons, are subject to
discrimination in their country.
Source: en.News.mn

13. 53% IN RUSSIA FAIL TO SAY WHERE MONGOLIA IS
Almost half of Russia's adults would fail the state geography examination for school leavers,
according to a nationwide survey. The All-Russian Public Opinion Research Center (VTsIOM) asked
sample questions on global location, and found that only 9% were able to pass with a "five"
(distinction), while 47% scored a "two" (the lowest grade in Russian school exams).
When asked to name the country bordering on Russia out of Sweden, Turkmenistan, Mongolia and
Iran, only 47% correctly answered Mongolia. Asked where the highest mountain range was - Tibet,
the Alps, Altai, or the Caucasus - only 32% gave the correct answer. The largest number of
respondents who failed the test was in rural areas (57%). Most of them were aged between 18 and
24 (58%), and 69% of them said they had finished high school.
Source: RIA Novosti
ANNOUNCEMENTS
CONFERENCE ON MINING AND INFRASTRUCTURE DEVELOPMENT
The Government of Mongolia and the World Bank will be hosting a two-day conference on mining
and infrastructure development in Mongolia at the Ulaanbaatar Hotel on April 13 and 14. Members
of Parliament, Government officials, private sector representatives, civil society organizations, and
external partners will exchange ideas about how best to sustainably develop the country‟s mining
sector and to deliver the infrastructure needed to support mining activities.
Mr. Eduardo Aninat, former Finance Minister of Chile, will be one of the keynote speakers.
MINETECH-2009
The Mongolian National Mining Association invites you to be a part of MINETECH-2009, a mining
machinery and equipment show on April 17 and 18 at Misheel Expo Center, Ulaanbaatar. The Expo
is designed to help miners and explorers make educated decisions before a major buy. Attendance
is FREE.
Registration deadline: April 10, 2009. To register, please contact:
Tel: 976-11-314877, 976-9910-4648, 976-9909-9492; Fax: 976-11-330032
E-mail: chinzorig@miningmongolia.mn; tegshjargal@miningmongolia.mn
Website: www.miningmongolia.mn/minetech
_____________________________________________________________________________________
SPONSORS

14. ECONOMIC INDICATORS
MSE WEEKLY REVIEW
For the week ended April 3, 2009, trading activity on the Mongolian Stock Exchange (MSE) totaled
1,325,100 shares with 26 companies traded. Total market value of transactions was MNT 157.2
million. Total market capitalization of the 358 stock companies listed on the MSE was MNT 452.4
billion, an increase of MNT 1.1 million or 0.2% from the previous week.
The Top-20 Index decreased by 12.48 points, or 0.3 percent compared to the previous week, closing
at 4,980.28 points. The MSE Composite Index decreased by 15.97 points, or 0.6 % compared to the
previous week, closing at 2,508.44 points.
Most active stocks traded were: Remicon (1,212,200 shares), Orkhon Dalai (52,300 shares), Khuh
Gan (29,300 shares), Genco Tur Buro (15,300 shares), and APU (6,000 shares).
Major share price percentage gainers were: Tavan Tolgoi (18.2%), Orkhon Dalai (15.0%), Spirt Bal
Buram (13.9%), Baganuur (5.0%), and Naco Tulsh (0.6%). Major share price percentage losers were:
Gobi (15.0%), Erdenet Zandan (14.7%), Moningbar (11.0%), Genco Tur Buro (9.1%), and Bishrelt
Industrial (9.0%).
INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
Year 2008 *22.1% [source: NSOM]
March 31, 2009 *16.3% [source: NSOM]
* year over year (yoy)
CURRENCY RATES – April 9, 2009
Currency name Currency Rate
US dollars USD 1413.89
Euro EUR 1864.92
Japanese yen JPY 14.18
British pound GBP 2071.07
Hong Kong dollar HKD 182.42
Chinese yuan CNY 206.82
Russian ruble RUB 42.01
South Korean won KRW 1.05
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.