1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
Issue 243 – October 12, 2012
WE HAVE A TEMPORARY GMAIL WEB BROWSER PROBLEM. GMAIL USERS WHO CANNOT
VIEW THE ENTIRE NEWSWIRE, PLEASE CLICK HERE TO VIEW THE COMPLETE NEWSWIRE.
NEWS HIGHLIGHTS:
Business
Peabody offered contract to develop TT's West Tsankhi;
TT is priority Number 1, says foreign minister;
Enebish steps down as Erdenes-TT CEO for “some rest”;
Erdenes-TT has three choices to move forward, says outgoing CEO;
Oyu Tolgoi CEO defends OT investment agreement;
Power lines ready at OT;
Erdene restarts drilling at Altan Nar;
Berkh Uul receives USD 1.06 billion estimate for fluorspar deposit;
Environmental groups request suspension of Areva operations;
S&P rates Mongolian Resources “B-”;
Bloomberg launches Bloomberg TV Mongolia;
EBRD funds Mongolyn Alt copper mine;
EBRD delegation arrives in Mongolia;
Oxfam turns investor with loan to Xac Leasing;
Inspectors suspend construction at Adobe Properties site;
MCA-Mongolia seeks new CEO;
Rio speeds up cost cuts to cope with Chinese slowdown.
Economics
Central Bank no longer to accept low-interest mortgage applications;
Higher fuel tax raises gas prices from Rosneft;
BPI introduces supplier development program;
Market share for compliant traders on MSE reaches 95 percent;
Japanese university opens rep office at MUST;
Agency says reports of plague false;
Get your tugrug here!;
Mongolia’s white-hot growth slows on China woes;
Cementing growth;
Mongolia, Australia aim to partner for mining boom;
Environment pays price for infrastructure shortfalls;
Asia becomes world's wealthiest region;
Global recession risk rises.
Politics
DP plots out 2013 budget;
Mining minister sees new policy for mining sector;
Batshugar appointed as Mongol Bank VP;
Temporary head of UB Railway JSC appointed;
2. Government officials refuse to report incomes;
Parties and candidates prepare as local elections near;
U.N. delegation to observe human rights in business activities;
Norwegian Premier arrives in Ulaanbaatar;
Boom or Bust: The Foreign Investment Law;
The impact from Parliament's revision of environmental laws;
Minister of Justice receives threats;
Capitalists bid farewell to Lenin statue;
Canada, too, fears acquisition from Chinese state owned enterprise.
*Click on titles above to link to articles.
SPONSORS
Khan Bank Eznis Airways
Kempinski Hotel Khan Palace Mongolian National Broadcasting
Breakthrough PR Oxford Business Group
BUSINESS
PEABODY OFFERED CONTRACT TO DEVELOP TT'S WEST TSANKHI
Erdenes Tavan Tolgoi JSC has approached Peabody Energy Corp. with the proposal to contract the
latter to develop the West Tsankhi coal field at Tavan Tolgoi.
The contract would last for the term until a final solution is made for the west block project.
According to the government, the decision does not affect Peabody Energy's ability to participate in
a consortium and does not signal a change to the intended plan of its development. Parliament had
decided before Erdenes-TT's approach to Peabody Energy that it would allow for a single contractor
to operate at the site until there is resolution to the issue of who should develop the site.
If given a positive response, operations could begin as early as next week. Officials said Peabody
Energy was chosen because it is the world's largest coal company in the private sector and is a
leader in environmental responsibility.
Source: Udriin Sonin
TT IS PRIORITY NUMBER 1, SAYS FOREIGN MINISTER
Mongolia's new government will focus on attracting overseas investors to the country's biggest coal
3. field instead of renegotiating the Oyu Tolgoi copper-gold mine, the foreign minister said in Japan.
The four-party ruling coalition hopes to name ―within months‖ who will develop part of the six
billion metric ton Tavan Tolgoi coal field, L. Bold said. Bold is the first official from Mongolia's new
government to visit Japan, which offers the best new economic partnership in the Asia region, he
said. An ex-defense minister and a former chairman of Golomt Bank of Mongolia LLC, the nation's
second-largest lender, Bold is a member of the Democratic Party (DP).
―Our priority is third-neighbor relations,‖ Bold said, referring to landlocked Mongolia's efforts to
develop ties with nations outside of its two main neighbors China and Russia. ―We expect our
cooperation with Japan to go up a level. We want to broaden it, especially with Japanese banks and
companies.‖
The first sign of how Mongolia balances its foreign relations between China, Russia, and Japan, as
well as South Korea and the United States, may come in the way the country splits the Tavan Tolgoi
coal project, which also needs new rail lines and roads, as well as power plants. Mongolia first
announced and then said it would review an accord in July 2011 that planned to give China's
Shenhua Group a 40 percent stake in the coking-coal-rich West Tsankhi area of Tavan Tolgoi, with
Peabody Energy Corp. of the United States taking 24 percent and a Russian-Mongolian group the
rest. The initial shortlist of companies seeking to develop West Tsankhi includes South Korean
steelmaker Posco, and the trading houses of Japan led by Itochu Corp.
Mongolia would like to see Japanese companies making more investments and also bringing their
technology to Asia's most sparsely populated nation, Bold said. Japan has invested in Mongolia
outside of mining. Trading house Sumitomo Corp. and Japan's second-largest telephone operator
KDDI Corp. joined with local partner Newcom Group in 1996 to set up Mobicom Corp., Mongolia's
first mobile operator.
Source: Bloomberg
ENEBISH STEPS DOWN AS ERDENES-TT CEO FOR “SOME REST”
The head of the state-owned Tavan Tolgoi coal project resigned on Thursday, raising hopes that a
new chief executive officer may hasten the launch of the massive mine's western block project.
B. Enebish, chief executive of Erdenes-Tavan Tolgoi resigned because of personal reasons, he told
Reuters.
―After four years of hard work, I am a little bit tired and needed some rest,‖ he said.
Enebish will be replaced by Ya. Batsuur, a former member of Parliament with the ruling Democratic
Party. A new chief may help jumpstart the launch of the much coveted 7.5 billion-ton coal deposit,
situated around 300 kilometers from the Chinese border, which has been repeatedly delayed as a
result of financing problems.
The change of government following June parliamentary elections have also have hastened
Enebish's departure.
―Given the recent change of political power in Mongolia, the departure of Enebish is not a
surprise,‖ said Nick Cousyn of BDSec. ―We hope the government appoints a replacement who is
capable of getting the Tavan Tolgoi IPO to market in a timely manner, while balancing the interests
of Mongolia and its foreign partners.
Source: Reuters
ERDENES-TT HAS THREE CHOICES TO MOVE FORWARD, SAYS OUTGOING CEO
A string of missteps have made Erdenes Tavan Tolgoi JSC look inept compared to the likes of
Mongolia Mining Corp. But the announcement that the state-owned coal miner has begun
exploration at the Western block has added a bit more luster to its flagging reputation.
Former Chief Executive Officer B. Enebish who resigned this week has offered three ways to finance
the Tavan Tolgoi mine. He proposed that the initial plan to give control to a consortium of strategic
investors would stabilize project financing and offer cheaper transportation, but would not help
benefit shareholders, namely the Mongolian government and the Mongolian citizens who hold
shares. The second option is for the government to operate the mine on its own, while bartering
off-take agreements with foreign companies for transportation and sales. Enebish said that the
4. shareholders would realize the highest stock prices, and that the highest initial public offering (IPO)
valuation would result from this option because the company would begin mining and exporting
much sooner. However, dropping strategic investors would run the risk of unstable project
development as well as poor deals on prices.
A third option would be to sell up to 49 percent of Erdenes-TT's equity to foreign investors, and is
considered middle ground between the other schemes. Enebish said he prefers this third option, as
it allows strategic investment from foreign countries, and therefore brings the associated benefits.
He also mentioned that the participation of many countries would promote higher transparency and
counterbalance, which would translate into higher confidence on the international equity markets
and better IPO valuations.
The sudden start of excavation is due to the state-owned coal miner's obligations. Erdenes-TT is
responsible for supplying the promised amount of coal to Aluminum Corp. of China (Chalco) Ltd., as
per its USD 250 million offtake agreement. The opening of the West Tsankhi would allow Erdenes-TT
to produce the one to two million tons in 2013 it currently targets and ramp up to 20 million tons by
2017. The sudden production ramp-up is likely intended as a remedy for the budget shortfall, which
is due in part to missing mining revenues according to statements from Parliament.
Source: MICC, Udriin Sonin
OYU TOLGOI CEO DEFENDS OT INVESTMENT AGREEMENT
Oyu Tolgoi LLC's chief executive officer spoke on the benefits of its current investment agreement
during a commemoration of its third-year anniversary.
Chief Executive Officer Cameron McRae told media Oyu Tolgoi has paid USD 803 million to the
government in taxes in the months leading up to autumn this year, and that Rio Tinto PLC had seen
no revenues thus far from the project.
The miner currently employs about 3,000 Mongolians at Oyu Tolgoi, and that between 80 to 90
percent of its workforce was already Mongolian.
―I can only tell you one thing in confidence,‖ said McRae, ―that the Oyu Tolgoi investment
agreement is a profitable agreement for Mongolia, with 71 percent of the project's cash flow going
to Mongolia.‖
He explained that the 71 percent figure, which is currently being discredited by members of
Parliament, was determined by the International Monetary Fund (IMF).
McRae added that price swings in copper would impact Oyu Tolgoi's investors, but the company
would continue to pay its taxes and the government would not lose a single cent.
He added that dividends paid to shareholders, another benefit to the government, may be bumped
up from 2020 to sometime this year.
Source: Udriin Sonin
POWER LINES READY AT OT
Toronto-listed Turquoise Hill Resources Ltd. on Tuesday said construction of power lines to its
flagship Oyu Tolgoi copper-gold project was complete and had been successfully tested with full
power loads and was ready for use.
The company, which is controlled by diversified miner Rio Tinto PLC, said it had now entered into
negotiations with Chinese authorities for a power purchase agreement. The mine, which is located
out 80 kilometers from the Chinese border, was expected to be the only new copper mine coming
on line in the medium-term that counted among the world‘s top ten largest copper mines.
The miner said power from Inner Mongolia was required for the full commissioning of the project
and to start production. First concentrate production was expected to follow within a month and
commercial production was expected to start three to five months earlier.
Source: Mining Weekly
ERDENE RESTARTS DRILLING AT ALTAN NAR
Erdene Resource Development Corp. (ERD) has commenced further drilling at its Altan Nar gold
project in southwestern Mongolia.
5. ―Results from the Altan Nar gold project continue to surpass our expectations with recently
completed surveys having identified multiple new drill targets,‖ said Peter Akerley, President and
Chief Executive Officer.
The drilling program began on 7 October and is expected to include up to 20 shallow holes, totaling
approximately 2,500 meters. Fifteen exploration targets have been identified over a 5 kilometer by
1.5 kilometer area following the completion of a detailed soil test and other tests. Most of these
drill targets lie outside the 1 square kilometer area of drill-tested to date, which means greater
potential for identifying additional gold mineralization at Altan Nar. The objective of this new
phase of drilling is to identify which targets would require further drilling.
Previous drilling at the ―Discovery Zone‖ intersected multiple shallow mineralized zones greater
than 30 meters grading more than 1 gram per ton of gold. Results at the south end include 29
meters averaging 4.3 grams per ton and 24.1 grams per ton of silver from hole TND-19. Drilling at
the northern end of the Discovery Zone intersected a broad mineralized zone that includes 29
meters of 1.1 grams per ton of gold and higher grade zones including four meters of 10.5 grams per
ton of gold and 56 grams per ton of silver.
Source: Erdene Resource Development Ltd.
BERKH UUL RECEIVES USD 1.06 BILLION ESTIMATE FOR VALUE OF FLUORSPAR DEPOSIT
An evaluation of Berkh Uul JSC's Delgerkhan fluorspar project resulted in an estimated total
indicated and inferred resource of 9.64 million tons, with an estimated value of USD 1.06 billion for
the deposit.
Between September and November 2011, Berkh Uul took on the consulting services of CBM LLC,
which operates exclusively for Berkh Uul shareholder Firebird Management LLC, to assist in the
design and implementation of a 1,800-meter drilling program over the Delgerkhan mining license
under the guidance of international resource consultancy firm Micromine Pty. Ltd.
The drilling program focused on confirming historical joint Mongolian-Russian drilling to bring the
resource into compliance. In addition, the drilling targeted deeper, unexplored veining to extend
the down-dip depth of the deposit. Three-dimensional wireframe modeling was undertaken, taking
the historical mining there into account.
―This resource verification makes Berkh Uul‘s Delgerkhan ore body the largest in Mongolia and is
triple that of previous estimates," said Nick Cousyn, chief operating officer at BDSec JSC. ―The
indicated resource of 6.6 million tons would place Delgerkhan within the top 10 single largest
resources in the world, a real game changer.‖
Berkh Uul produced fluorspar until 2008, when operations were shut down. The company is moving
on the prefeasibility stage of the project, which it hopes to complete in the first quarter of 2013.
Source: Berkh Uul JSC, BDSec JSC
ENVIRONMENTAL GROUPS REQUEST SUSPENSION OF AREVA OPERATIONS
Environmental groups have called for the end of uranium exploration by Areva SA subsidiary
Kojegobi LLC.
The Citizens Council for Mongolia's Environment and non-government organization Bayansharga,
both of which oppose nuclear activity in Mongolia, complain that the Mongolian government is
allowing the development of sites for uranium excavation without enough knowledge in the area
and the effect it could have on future generations.
The petitioners have requested a reply by 15 October.
Source: Zuunii Medee
S&P RATES MONGOLIAN RESOURCES “B-”
Standard and Poor's (S&P) Ratings Services has awarded Mongolian Resources Corp. (MRC) a rating of
"B-" with a "Stable" outlook.
MRC's liquidity is "less than adequate," as defined in our criteria. The company's liquidity is sensitive
to iron ore prices, sales volumes, and fluctuations in working capital requirements. We expect MRC's
liquidity sources to cover its liquidity needs by about 1.05x over the next 12 months. Liquidity
6. sources include proceeds of up to US$300 million from the proposed notes and about US$22 million
in committed bank working capital facilities.
The stable outlook reflects our expectation that MRC's financial risk profile will remain "highly
leveraged" in the next 12 months, despite higher sales volumes. The stable outlook is also
contingent on the company issuing the proposed notes.
Source: Standard & Poor's Rating Services
BLOOMBERG LAUNCHES BLOOMBERG TV MONGOLIA
Bloomberg Television has announced the official launch of Bloomberg TV Mongolia.
The launch of Bloomberg TV Mongolia, which is in partnership with Trade and Development Bank
(TDB) of Mongolia LLC, signifies the introduction of the first international broadcast news
organization in Mongolia, one of the fastest-growing stock markets and investing environments in
Asia today.
Over the last year, Bloomberg has trained over 30 logical journalists who are now working at BTV
Mongolia, and built a state-of-the-art high television studio in the heart of downtown Ulaanbaatar.
Bloomberg TV Mongolia will deliver international, market-moving business and financial news to the
local community, and insightful coverage of Mongolia to the rest of the world, providing a unique
edge for viewers.
"With the economic growth of Mongolia, decision makers and business leaders here have an
increasing need for market-moving, accurate and international business and financial news.
Likewise, global audiences are becoming ever more intrigued by what is happening in Mongolia,"
said O. Orkhon, First Deputy Chief Executive Officer of TDB.
With Executive Producer Todd Baer at the helm, Bloomberg TV Mongolia launched on 8 October
with its flagship evening newscast Money Flow. The weekly program includes five hours of locally
produced content, combined with simultaneous and taped translated Bloomberg content. Weekend
programming schedule includes 12 hours of taped translated Bloomberg programs, supplemented by
Bloomberg TV's pan-Asian feed. Bloomberg TV Mongolia will be available on all of Mongolia's major
cable providers.
Source: Bloomberg
EBRD FUNDS MONGOLYN ALT COPPER MINE
In its largest investment in Mongolia to date, the European Bank for Reconstruction and
Development (EBRD) is raising the standards in the country's mining industry with a USD 250 million
loan for the development of the Tsagaan Suvarga copper mine located in Dornogobi Aimag.
Through the project, the bank is aiming to help develop a sustainable mining sector in Mongolia.
The project also has a strong demonstration effect, as it introduces high environment and social
standards in the Mongolian copper industry, as well as supporting the further growth of a
domestically grown company. Another USD 100 million is expected to be syndicated by the EBRD on
the international market.
Mongolian-owned mining company Mongolyn Alt (MAK) and the EBRD have been established business
partners since 2007. The bank's first project with MAK financed the first development phase of the
company and the creation of a clean-coal production facility. This project was launched in 2011 and
has been instrumental in reducing air pollution in Ulaanbaatar.
The proceeds of the new loan will finance the development of an open-pit copper and molybdenum
deposit in south-eastern Mongolia. With the EBRD's financing, MAK will diversify its business by
beginning production of these two commodities. The project enables a domestic company to
produce a value-added product and boosts its competitiveness in both international and domestic
markets.
Source: European Bank for Reconstruction and Development
EBRD DELEGATION ARRIVES IN MONGOLIA
A delegation of officials from the European Bank of Reconstruction and Development (EBRD) visited
Mongolia from 6 to 10 October, on a country strategy mission.
7. The delegation came to hold consultations on the bank's new 2013-2016 country strategy for
Mongolia, which is expected to be approved in April 2013 by the EBRD's board of directors. Led by
First Vice President Varel Freeman, the delegation met with senior government ministers and
officials as well as local government, private sector representatives, diplomats, international
finance institutions, banks and civil society.
In addition to Ulaanbaatar, the delegation traveled to the south Gobi region to visit the Oyu Tolgoi
mining complex, where the bank is considering providing financing.
Since the beginning of its operations in Mongolia in 2006, the EBRD has invested USD 600 million in
45 projects in different sectors of the economy, mobilizing an additional USD 1.1 billion from other
sources of financing. To date, all of EBRD's investments in Mongolia have been in the private sector.
EBRD operations in Mongolia focus on the development of the corporate and financial sector and on
providing support for developing critical infrastructure.
Source: FinChannel
OXFAM TURNS INVESTOR WITH LOAN TO XAC LEASING
British anti-poverty charity Oxfam has made its first venture into corporate finance with a EUR 1
million (USD 1.29 million) loan to a Mongolian machinery and equipment leasing company, Xac
Leasing. The loan is being made by the Small Enterprise Impact Investing Fund—a joint initiative
between Oxfam, the City of London Corporation and Symbiotics, a Swiss micro-finance specialist.
The fund aims to support social projects and provide financial returns for its investors.
The idea of charities engaging with the commercial sector is gaining ground. The development of
micro-finance was an important driver, with the Graemeen Bank in Bangladesh raising most of its
original funding form donor agencies. Charities such as WorldVision have followed suit, raising and
using money for micro-finance investments, but Oxfam said it was the first U.K. charity to establish
and advise a fund aimed at impact investing on this scale.
Oxfam said that lending to Xac Leasing, part of Mongolia's Tenger Financial Group, fits the fund's
mandate of investing in financial intermediaries supporting small and medium-sized enterprises in
Africa and Asia. Based in Ulaanbaatar, Xac Leasing LLC lends to some 260 small-medium
enterprises, and in line with Social Enterprise Investment Fund (SEIF) requirements, it includes
social and environmental considerations into its lease appraisal process.
―In particular, SEIF has been designated to meet the needs of the 'missing middle,'‖ said Barbara
Stocking, chief executive of Oxfam. ―These are the countless small businesses in developing
countries which have the potential to thrive but are completely stifled by limited access to credit.
The fund is also intended to have a symbolic role for the rest of the asset management industry, she
added.
Source: Financial Times
INSPECTORS SUSPEND CONSTRUCTION AT ADOBE PROPERTIES SITE
A 13-story construction project has been closed following the failed inspection that had
Ulaanbaatar's mayor as one of the inspectors.
Ulaanbaatar Mayor E. Bat-Uul led a delegation visiting various construction sites in the Khan-Uul
District in Ulaanbaatar. The inspection team banned any further work at the Adobe Properties-
owned project because it lacked necessary permits. The mayor said construction would be
suspended, the building demolished, and the construction company would face fines.
Bat-Uul said a number of construction companies are currently operating at construction sites
without the necessary permits.
Source: Zuuni Medee
MCA-MONGOLIA SEEKS NEW CEO
The Millennium Challenge Account-Mongolia (MCA-Mongolia) is seeking to fill its chief executive
position.
The U.S. financing agency has posted the vacancy, requesting that candidates apply before 17
October. The appointed chief executive officer would be responsible for overseeing the agency's
8. secretariat and reporting directly to the board of directors.
Source: NAMBC
RIO SPEEDS UP COST CUTS TO COPE WITH CHINESE SLOWDOWN
Global miner Rio Tinto PLC said on Tuesday it would step up cost cuts because of an uncertain near-
term outlook that includes lower growth this year in China, which absorbs over 90 percent of
Mongolia's mining commodities in addition to being the largest consumer in the world.
Rio Tinto said it had already made annual costs cuts of USD 500 million so far in service and support
roles, and would now trim in operations, project studies and elsewhere, cutting an unspecified
number of jobs. It has imposed a hiring freeze for support staff early this year.
The world's second largest iron-ore miner is widely seen as the diversified producer most exposed to
China and its industrial recovery. Rio Tinto is counting on Chinese infrastructure spending plans to
drive a pickup in steel demand, but it may have to wait until after the once-in-a-decade power
transition takes place.
―There is some good news coming. The question is when will all of this flow through, ultimately, to
our markets,‖ Chief Executive Tom Albanese said. ―Overall, I'd say that we are more cautious on
the outlook for the next few quarters for our business than we would have been a couple months
ago.‖
Rio Tinto said it saw positive signs in China and the ―deceleration is probably bottoming out,‖ but
the company cut its forecast for China's economic growth in 2012 to ―just below‖ 8 percent, from 8
percent, in line with the International Monetary Fund (IMF).
The company's copper business has a brighter near-term outlook than iron ore, but Rio Tinto flagged
potential delays at its newest project, the massive Oyu Tolgoi copper-gold mine in Mongolia, due to
prolonged talks with China over power supply. Analysts have fretted as talks with Chinese
authorities have dragged on. Lengthier talks could affect the ramp-up timetable at the mine, unless
a deal is reached before the end of the year.
According to Rio Tinto's statement, once a power deal with China is signed, the first ore would be
processed within six weeks and first concentrate production would start a month later. Commercial
production could take up to eight months from the point at which power is received, its analysts‘
presentation said.
Source: Reuters
ECONOMY
CENTRAL BANK NO LONGER TO ACCEPT LOW-INTEREST MORTGAGE APPLICATIONS
The Bank of Mongolia has officially suspended its acceptance of applications for low-interest loans
as part of the 100,000 Homes housing project.
Before applications finished, Mongolian citizens had the opportunity to apply for 6 percent
mortgages. Housing Finance Corp. said it had already received 3,664 applications, of which it had
approved 850 for a total of MNT 35 billion.
The Central Bank has already received financing of MNT 30 billion from the Development Bank of
Mongolia, but said it will not resume accepting applications until it receives an additional MNT 20
billion in financing owed to it by the Development Bank.
Source: News.mn
HIGHER FUEL TAX RAISES GAS PRICES FROM ROSNEFT
Russian oil exporter Rosneft has introduced an increase to its prices with a 6.4 percent increase in
fuel taxes.
The company now sells A-80 gasoline at USD 23 per ton and A-92 at USD 44 per ton. The price of A-
95 remains unchanged, however. Diesel prices have grown by MNT 90 for a price of MNT 1,061.
Source: Zuuni Medee
9. BPI INTRODUCES SUPPLIER DEVELOPMENT PROGRAM
USAID's Business Plus Initiative has launched a supplier development program to help ensure large
companies use local sources to meet their supply and service needs.
The supplier development program will help Mongolian businesses buy markedly higher volumes of
quality goods and services from local sources. The program aims to increase jobs and heighten
Mongolia's economic growth. Experience in other countries suggests that a program applying this
buyer-led approach can generate at least three dollars in sales for every dollar invested.
The program will work first by securing the commitment of buyers to purchase from suppliers, and
then provide the know-how and support required to ensure the supplier meets that order. BPI plans
to open Supplier Development Centers serving Selenge, Bulgan, Umnugobi, and Tuv Aimags.
Source: Business Plus Initiative
MARKET SHARE FOR COMPLIANT TRADERS ON MSE REACHES 95 PERCENT
The number of broker-dealer companies eligible to participate in trading on the Mongolian Stock
Exchange (MSE) has grown to 47.
The growth is a sign that the MSE is successful implementing its activities aimed at developing the
sector. This latest figures shows that 95 percent of the market has become compliant for trade.
New regulations were made for trading after the MSE installed its Millennium IT trading software.
Source: Mongolian Stock Exchange
JAPANESE UNIVERSITY OPENS REP OFFICE AT MUST
Japan's Akita University has opened a representative office at the Mongolian University of Science
and Technology (MUST).
The two institutions have partnered since 2003 when a Japanese professor lectured at MUST. Last
year two students were admitted to Akita and two lectures and one student this year, said Professor
B. Damdinsuren.
The new office opens the possibility of brining Japanese technology for mining education and
establishing a cooperative effort for a student exchange program.
Akita vice head E. Kasuhiko said that the representative office has been opened for information
purposes. He added whether or not Japanese professors would lecture at MUST was a matter being
discussed.
Source: Unuudur
AGENCY SAYS REPORTS OF PLAGUE FALSE
A Mongolian agency for infectious diseases has refuted claims by a Russian website that Mongolia
has declared a nationwide quarantine due to twenty reported cases of the Bubonic plague.
The Baikal Daily website made the report on 26 September, saying that plague had spread from
marmots which reside in Mongolia's countryside. The article went on to say that the disease was
spreading quickly and could reach Russia.
However Mongolia's National Center for Infectious Diseases reported there have been no reports of
plague registered in Mongolia for over 10 months. The agency did, in fact, receive a report of one
possible case in August, but testing proved it was not the plague.
Source: News.mn
GET YOUR TUGRUG HERE!
Minister of Finance Ch. Ulaan has set forth a number of standards for the country's monetary and
fiscal policy that could help the tugrug fare better against hard currencies.
While the minister has no actual influence on monetary policy, his support for tighter liquidity may
give the Bank of Mongolia the needed political cover in its fight against inflation. The directives the
ministry would like to see implemented into the policy are maintaining balanced budget income,
supporting reduced dependency on commodity exports, limiting budget deficits to 2 percent of
gross domestic product and establishing maximum budget increases year-to-year through to 2014.
"Given that Ch. Ulaan is a member of the Mongolian People's Revolutionary [MPRP] Party, it would
10. appear that the coalition between the [Democratic Party (DP)] and MPRP is 'working,'‖ said Nick
Cousyn, chief operating officer at BDSec JSC. ―In the past, the MPRP has been less supportive of
tight budgets and more in favor of social welfare. Should this sentiment translate into tighter
budgets, Mongolia will take its first meaningful step to deal with recent inflationary pressures.‖
If the DP, MPRP and Central Bank can agree on lower liquidity and tighter budgets, then we have
likely seen the lows for the tugrug versus popularly traded foreign currencies. With the United
States and Japan printing historic amounts of currency, any sign that Mongolia is serious about
dealing with its inflation problem should result in a much higher tugrug.
Source: BDSec JSC
MONGOLIA‟S WHITE-HOT GROWTH SLOWS ON CHINA WOES
Mongolia's white-hot economic growth has cooled this year as the ripple effects of the global
economic downturn—and especially slowing Chinese growth—start to hit home.
Growth eased to 13.2 percent in the first half of this year, and while that is still among the world's
highest rates, questions are being asked about its heavy dependence on coal exports to China,
where economic growth is slowing. Mongolian coal exports have leaped in recent years on voracious
Chinese demand, and grew 27.5 percent in 2011 to 21.3 million tons, according to government
figures, nearly all of it going across its southern frontier to China. But China's usually turbo-charged
growth rates have slowed significantly this year, sapping coal demand, contributing to a 10 to 15
percent decline in Mongolian coal prices this year and trimming the country's coal export
projections.
―We are now hoping that we can equal last year's export numbers, but it's unlikely that we'll be able
to beat those figures,‖ said D. Damba, President of the Mongolian National Mining Association.
Ninety-two percent of the country's total exports go to China, according to Mongolian government
data, and nearly all of that consists of coal. But economic growth in China slowed to 7.6 percent in
this year's second quarter, the weakest performance in three years.
David Paull, managing director of Australia-based Aspire Mining, said Mongolia has been squeezed
by seasonal weakness, softer Chinese demand and a pending leadership change in Beijing. Some
analysts have said the coming leadership transition is delaying expected Chinese economic stimulus
moves.
Landlocked Mongolia is sandwiched between Russia and China, and its proximity to the fast-growing
Chinese economy has been a huge plus when coal markets are bullish. But the slowdown is stoking
discussion over how to spur development of other industries such as wool production and tourism in
order to diversify.
Coal can be susceptible to seasonal and other cyclical swings, while copper demand typically
remains steady, said Eric Zurrin, director of Resource Capital.
Source: Michael Kohn
CEMENTING GROWTH
The government's approval of a bond offering over the next two years to help fund major
infrastructure projects should provide a much needed boost to the construction housing and
transport sectors, with affordable housing and road connectivity cited as the top policy concerns.
The government has confirmed the planned issuance of bonds worth USD 5 billion from the
Development Bank of Mongolia to fund ―large-scale‖ projects. It has identified 5,572 kilometers of
roads and 900 kilometers of highway that require restoration under the umbrella of a MNT 4.9
trillion development program.
Additionally, there are plans to overhaul rail links with Russia and China. In total, the government
plans to invest MNT 30.9 trillion in infrastructure, as well as a number of sectors, including mining,
construction and energy, between 2010 and 2015.
As part of its development plans, Ulaanbaatar also wants to build 100,000 affordable family homes
across the country by 2016 as part of the Development Bank-funded Homes for 100,000 Households
program, with 75,000 of these to be built in 17 different locations in and around the city. The
project will require approximately 2.3 million cubic meters of concrete mortar in the coming five
11. years.
As development plans forge ahead, concerns over the supply of construction materials have eased
with the announcement in September that FLSmidth, a Denmark-based cement and engineering
firm, had been awarded a contract worth approximately USD 111.2 million from Mongolyn Alt Group
(MAK) to build a greenfield cement plant with a capacity of 3,000 tons per day. Domestic firm
Remicom JSC also confirmed earlier this year that it was planning to build an USD 8 million cement
production facility with a 250,000-to 300,000-ton capacity.
Another major issue facing the industry is human resources. In a June 2012 update, the World Bank
reported, ―capacity constraints are likely to prove a significant impediment to the massive road-
building and social housing plans announced by the government, as well as to housing development
planned by the private sector.‖
The labor market is currently dependent on Chinese labor, but officials have complained that this
raises nationalist tensions.
Source: Oxford Business Group, UB Post
MONGOLIA, AUSTRALIA AIM TO PARTNER FOR MINING BOOM
President Ts. Elbegdorj has encouraged Mongolian-Australian cooperation in Mongolia's mining
boom.
Elbegdorj, noting that Mongolian-Australian relations have moved forward in various fields since the
countries established diplomatic ties 40 years ago, said his country's emerging mining sector
represents an opportunity for the countries to improve bilateral ties, Xinhua News Agency reported.
The president's comments were made during a meeting in Mongolia with Australian Foreign Minister
Bob Carr.
Carr, in an interview with Australian Broadcasting Corp. (ABC) from Mongolia, addressed concerns
that Mongolia's rising mining sector poses a challenge to Australia's dominance of the export trade
to China for coal and Iron ore.
―Whatever we do, they're going to have a mining boom anyway,‖ Carr said. ―They've got a very
strong mining sector.‖
Carr said he presented Mongolia with a guide on sustainability in mining, produced as an Australian
aid project and written in Mongolian.
He pointed out that Mongolia's biggest mine—the Oyu Tolgoi copper-gold mine— is owned by Anglo
Australian miner Rio Tinto PLC and that 54 Australian companies are operating in Mongolia.
Source: UPI
ENVIRONMENT PAYS PRICE FOR INFRASTRUCTURE SHORTFALLS
With poor infrastructure in Mongolia's south Gobi mining belt, companies have resorted to building
their own paved roads that lead to the border with China.
The law allows builders to treat roads as their own for 10 years, greenlighting hefty private tolls
that have caused other companies to forgo the new highways, or start building their own alongside.
Energy Resources LLC built the one existing road from its coal mine in Tavan Tolgoi—the world's
largest untapped coking coal deposit—some 245 kilometers to the Chinese border at Gashuun
Sukhait. When it opened in 2011, herders welcomed the promised relief from dust stirred up by the
constant traffic of coal trucks. But many trucks still tread over bare earth and there is no end in
sight for construction alongside the new road, making air worse.
The road was built on a 10-year build-operate-transfer concession agreement with the government,
permitting Energy Resources to charge tolls to third-party users until handing the rights over to the
state in 2021. But drivers working for neighboring mines say the toll of MNT 180,000 per load is
exorbitant, and to avoid them they detour onto dirt tracks.
Running parallel to the Energy Resources road is a yet-unpaved road being built by a subsidiary of a
private Mongolian company called Ajnai Corp. A 2011 report published by USAID raised concerns
about Ajnai's intention to build the road to avoid the Energy Resources toll. One problem, the
report said, is that "local governments have the authority to construct their own roads, so there is
no coordination."
12. The Oyu Tolgoi copper mine is building yet another road, which will run alongside the Energy
Resources road, at times crisscrossing, to the same border checkpoint at Gashuun Sukhait.
The roads also bisect wildlife corridors between two adjacent national parks, the Small Gobi Special
Protected Areas. The roads are small compensation to herders as well and many who wonder how
the new roads can benefit land already destroyed.
Source: Eurasianet
ASIA BECOMES WORLD'S WEALTHIEST REGION
For the first time, Asia is the wealthiest region in the world, according to a new study by Credit
Suisse Group.
The bank's Global Wealth Report 2012 found that the region surpassed Europe in terms of household
wealth in the 12-month period ending June. While total global household wealth fell 5.2 percent,
Europe took the biggest hit due to its debt crisis and the global economic slowdown, with its wealth
dipping 14 percent to USD 69.3 trillion. Asia's wealth proved more resilient, shrinking only 1.9
percent over the same period to USD 74.1 trillion.
Europe's steep drop allowed the Asia-Pacific region (which includes Asia and Australia) to overtake
it in terms of total wealth, an unprecedented development. What's more, the report projects that
Asians will get rich at a faster pace than any other region in the next few years. Asia's millionaire
population is expected to grow 70 percent over the next five years to 11.7 million, with Japan and
China minting the most new millionaires.
Source: Wall Street Journal
GLOBAL RECESSION RISK RISES
The global economy risks skidding back into recession just three years after pulling out of the
previous one, the International Monetary Fund (IMF) warned.
―Risks for a serious global slowdown are alarmingly high,‖ said the IMF's World Economic Outlook
report. It was its bleakest assessment of global growth prospects since the 2009 recession. The fund
expects the world economy to expand just 3.3 percent this year and 3.6 percent in 2013, as growth
slows in nearly every major nation and political uncertainties threaten recoveries in the United
States and euro zone. That is a revision downward of 0.2 percentage point for 2012 and 0.3 percent
point for 2013 from its July forecast.
Under the IMF's definition, global gross domestic product does not have to shrink for the world to be
in recession. Before the 2009 contraction, the IMF identified three other ―global recessions‖ in the
postwar period, and the shortest gap between them was seven years. They were in 1975, 1982, and
1991. The IMF defines recession as a decline in real per-capita GDP, along with weakness in other
indicators including industrial production, trade, capital flows and joblessness.
The IMF says global efforts to slash deficits and debt (which it had recommended broadly) may have
hurt growth because they occurred too quickly and too widely. Since the 2009 recession, the IMF
said it had underestimated the negative effects on growth by fiscal consolidation.
China, the top consumer of Mongolia's mining exports, is expected to see growth slow to 7.8 percent
this year, rather than hit its customary 10 percent-plus pace. Growth in China is expected, however
to pick up to 8.2 percent next year, helping commodity exporters such as Mongolia.
The uncertainty and weak growth from advanced economies are spilling over into emerging
economies, knocking down trade and the flow of capital into nations that were already struggling
with their own problems.
A key question hanging over the latest run in the recovery: Is it merely a bump in the road,
triggered by policy makers' inaction? Or are the troubles pulling the world toward a new recession?
Source: Wall Street Journal
13. POLITICS
DP PLOTS OUT 2013 BUDGET
The Democratic Party named increased royalties on Oyu Tolgoi as one of its aims for the 2013
budget.
The party worked within the limitation of a budget deficit of no more than 2 percent of gross
domestic product (GDP) or MNT 360 billion, and set a maximum budget of 7.4 trillion. It took into
account MNT 100 billion for planned salary increases and affirmed the intention to release USD 5
billion worth of bonds through the Development Bank of Mongolia.
The government plans to raise taxes on petroleum next year and boosting the portion of the budget
allotted to Mongolia's provinces from 9 percent to 20.7 percent.
Source: Udriin Sonin
MINING MINISTER SEES NEW POLICY FOR MINING SECTOR
Minister of Mining D. Gankhuyag said new policy for the mining sector will be implemented during
the fall session of Parliament.
―The draft was reviewed and supported at the cabinet meeting last year, and as the new
government's 2012-2016 Action Plan was recently approved by Parliament, our ministry has
withdrawn this document for further revision,‖ said Gankhuyag.
Source: Mongolyn Medee, Boroo Gold LLC
BATSHUGAR APPOINTED AS MONGOL BANK VP
The government made a series of appointments to the courts and government agencies, which
includes the confirmed appointment of E. Batshugar, 25 year old son of former President N.
Enkhbayar, as vice president of the Bank of Mongolia. Enkhbayar is currently serving a four-year
sentence in prison for corruption.
Currently up for judge appointment are Kh. Soninbayar and Kh. Batsuren, who have each worked
between 20 to 25 years in the legal sector. While discussing whether or not their appointments
should be confirmed, MPs noted that the judicial sector is in need of reform to ensure that judges
remain impartial.
Ch. Sodnomsteren, former secretary general of the General Election Committee (GEC), was
appointed as the agency's head. B. Altanjargal was appointed as secretary general and D.
Delgertsogt as an agency official.
Batshugar's confirmation came last with 84.5 percent approval. The GEC had rejected Batshugar's
campaign application for the parliamentary elections last June.
Source: Zuuni Medee
TEMPORARY HEAD OF UB RAILWAY JSC APPOINTED
The government has appointed T. Sereenendorj as temporary head of state-owned UB Railway.
In addition, Minister of Roads and Transportation A. Gansukh proposed that the Railroad Institute be
renamed the Transportation Institute to reflect the aim to prepare professionals in air, auto, and
marine traffic as well as rail.
Source: Zuuni Medee
GOVERNMENT OFFICIALS REFUSE TO REPORT INCOMES
Ninety-six officials have refused to submit the income statements required by law.
Over 45,000 public officials throughout the nation have been asked to submit income statements to
the Anti Corruption Authority (ACA). Eighty of the 96 public officials who refused to disclose their
income are local representatives of Khuralaimag Soum, six are state administrators, another six are
from government-owned entities, two are project coordinators, and one is an official appointed by
the prime minister.
The Anti-Corruption Authority has ordered that officials who fail to submit their income statement
should be charged with a violation of the law.
14. Source: News.mn
PARTIES AND CANDIDATES PREPARE AS LOCAL ELECTIONS NEAR
Preparations are underway as Mongolia prepares for its nationwide local elections this month, said
newly appointed Chairman of the General Election Committee N. Luvsanjav.
The chairman said thus far 1,988 election units have been established for the local election
compared with 1,905 for parliamentary election, due to an amendment to the local elections law.
Currently, two coalition and five political parties have submitted applications to the General
Election Committee to participate in the election. The Justice Coalition, the political pact between
the Mongolian People's Revolutionary Party (MPRP) and Mongolian National Democratic Party
(MNDP), has split for the local election, and the two parties will campaign separately.
Campaigning will begin two weeks before the election day or once a candidate has received his or
her election card. Some candidates are still being considered by the Election Committee to decide
whether they should be permitted to run for election.
Additionally, the government is prepared to hold run-off votes on the same day as the initial
election.
Source: News.mn
U.N. DELEGATION TO OBSERVE HUMAN RIGHTS IN BUSINESS ACTIVITIES
A group of independent experts on business and human rights from the United Nations will
undertake its first country mission to Mongolia from 8 to 18 October to assess the impacts of
business activities on human rights in the country.
―Mongolia has one of the fastest growing economies in the world, and is expected to continue
growing at this very fast pace in the coming decade,‖ noted Margaret Jungk, a member of the U.N.
Working Group on the issue of human rights in business enterprises who will visit the country. ―The
tremendous amount of business activity lying behind this dramatic economic growth may have
equally dramatic impacts on the human rights of the population living there. These impacts can be
both positive and negative,‖ she said.
The U.N. Human Rights Council unanimously endorsed new guiding principles on business and human
rights in 2011, which established for the first time an authoritative global standard to address
negative impacts on human rights of business activities. This is the first time that a mission by U.N.
Experts will be conducted around the guiding principles.
Jungk and Sulyandziga, who visit the country at the invitation of the government, will travel to
Ulaanbaatar and Umnugobi Aimag to visit mining sites and to meet with senior government officials,
MPs, the National Human Rights Commission, and relevant stakeholders.
Source: OHCHR
NORWEGIAN PREMIER ARRIVES IN ULAANBAATAR
President Ts. Elbegdorj met with Jens Stoltenberg, Prime Minister of Norway, during his official visit
to Norway.
The president opened the meeting with a brief introduction of Mongolia's economy and its social
and political conditions. He asked Norway's premier how Norway was able to successfully develop a
pension fund using revenue from its natural resources while involving its state-owned companies.
He also expressed interest in learning from Norway's experiences developing a water power station
as a renewable energy source.
In response, Stoltenberg said, ―Most resource-rich countries cooperate with foreign companies, but
all of our largest companies are state-owned. Many of these companies face problems, such as
political influence and corruption. Despite this, we could potentially develop our country by
providing high accountability and transparency.‖
The state officials told journalists they were able to share ideas on developing bilateral cooperation
between their respective countries, in addition to issues of human rights. Elbegdorj noted that
Norway has never resorted to distributing cash allowances, as Mongolia has.
Source: News.mn
15. BOOM OR BUST: THE FOREIGN INVESTMENT LAW
Mongolia has seen its economy grow at a blistering rate. However, a new foreign investment law
and continuing political uncertainty could potentially derail foreign investment in the industry.
The most momentous development by far, however, has been the recently implemented Foreign
Investment Law that came into effect in June this year. Hastily pushed through Parliament, specific
regulations have yet to be issued, yet the general tenor of the law specifically targets foreign
investors‘ control over the mining industry. Key features of the law include capping foreign
investment into strategic sectors of the economy, unless a deal receives approval from government.
Potential investors are required to notify the government beforehand for any transactions under
which they would acquire between 5 percent and a third of the shares in a strategic company.
Further, if the foreign investor intends to hold more than 49 percent of the shares, and the amount
invested exceeds USD 75 million, then approval from Parliament must be given based on a
submission from the Cabinet ministers.
Worryingly, at the moment the law does not specify the processes for how the request for approval
should be submitted, what information should be contained in that submission and in what way, and
how quickly Parliament will respond. The law has created a chilling effect on new investment
because people are not exactly sure how it is going to be implemented. The law is vaguely drafted,
but one of the effects is to specifically target state-owned enterprises that aim to gain control of
key strategic sectors, said Chris Melville, partner at Hogan Lovells.
Besides the new investment law, practitioners highlight a few other obstacles when it comes to
doing business in Mongolia. Firstly, corruption: There are concerns that it may lead to additional
corruption which is a serious problem in terms of people trying to get projects through the system
there.
Overall, lawyers highlight that the process on the ground in terms of doing business is relatively
complex, but par for the course for what you would find in other developing countries.
Source: Asia Legal Business
THE IMPACT FROM PARLIAMENT'S REVISION OF ENVIRONMENTAL LAWS
The adoption of a new set of environmental laws will have consequences for companies operating
within Mongolia's mining sector. The new environmental legislation replaces 18 environmental laws
with 8 laws and introduces two entirely new laws.
The Law on Environmental Protection introduces the ―polluter pays‖ principle, which makes
polluters liable to pay compensation for damage caused to the environment and natural resources.
Natural resources are all given intrinsic values that translate into fines for offenders. Amendments
to the Law on Environmental Impact Assessment (―EIA Law‖) mandate that anyone proposing a
project will have to report on an environmental management plan and submit it to the Ministry of
Environment. Additionally banks and financial institutions will be barred from providing any funding
to those who fail to meet their obligations, and project developers will have to meet with local
communities.
The Law on Water Use has also been revised and consolidated so that a new Law on Water stands
along with the introduction of a Law on Fees for Use of Water and Mineral Water, which
consolidates past laws. The Law on Water Pollution fees is new and introduces fees payable for
pollution to water resources.
The Mongolian government is clearly making an attempt to ramp up environmental protection in
Mongolia, and this round of revisions does reduce legislative duplication, indicating the direction
government plans to take in this area. However, much of the drafting is vague or undeveloped. As is
common, a ―wait and see‖ approach will need to be adopted by operations in terms of
implementation.
Source: Hogan Lovells
MINISTER OF JUSTICE RECEIVES THREATS
Minister of Justice and MP Kh. Temuujin received a threatening letter this week.
The letter came anonymously and warned Temuujin that his security ―could not protect you.‖
16. ―We are the many, you are poor and have no friends,‖ says the letter. ―Food poisoning or an
accident will be next to you and we will be next to you to watch,‖
The next day Temuujin announced legal reforms for the 2013-2014 period, as well as a hospital for
civil workers.
Source: News.mn
CAPITALISTS BID FAREWELL TO LENIN STATUE
The bronze statue of Bolshevik revolutionary Vladimir Lenin, at the heart of Ulaanbaatar and once a
prized symbol of relations with the Soviet Union, is to be removed.
The decision to part with the four-meter relic of Soviet propaganda was made by the mayor of
Ulaanbaatar, E. Bat-Uul, known as one of the ―original 13 Democrats‖ who helped overthrow
communism in a 1990 bloodless revolution.
―I think the Communists are big criminals not only to the outside world, but in front of their own
people. So I believe we should take down this Lenin statue because it represents repression,‖ Bat-
Uul, a founding member of the Democratic Party, said.
Bidding for the statue, erected 58 years ago, will start at MNT 400,000 and Bat-Uul said two
companies had already expressed interest, including a tourist ger camp outside Ulaanbaatar which
already owns a statue of Soviet dictator Josef Stalin.
Thousands of Lenin statues were erected across the former Soviet bloc after his death in 1924, but
most were torn down, melted for scrap, or re-purposed as retro-Soviet decor in cafes and nightclubs
following the collapse of the Soviet Union in 1991. The Lenin statue in Ulaanbaatar managed to
survive, largely because many older Mongolians still revere the Russian leader for supporting
Mongolia in its fight for independence in 1921.
―If Russia did not exist and Lenin did not help us, then Mongolia would not exist either,‖ said 55-
year old D. Erdenbileg, a driver. ―The Russians saved us in 1921 and then again during World War II
when the Japanese invaded our country. We owe them a lot.‖
Bat-Uul said he hoped a new monument would eventually replace Lenin, and some have already
proposed a memorial dedicated to five people murdered in political violence in 2008. Bat-Uul
prefers a statue of former Prime Minister Amar, executed in 1941 in the Russian city of Omsk.
―He defied the Communists until the end and it cost him his life.‖
Source: Michael Kohn
CANADA, TOO, FEARS ACQUISITION FROM CHINESE STATE OWNED ENTERPRISE
Canada admitted on Thursday that a Chinese bid for domestic oil company Nexen raises difficult
policy questions, but the government gave no sign it would bow to an opposition demand to veto
the deal. Mongolia is having similar reservations for investment into resources of strategic
importance, which has resulted in widespread nationalist sentiment and a hastily passed Foreign
Investment Law.
Speaking hours after the main opposition party demanded a veto on CNOOC Ltd.'s USD 15.1 billion
bid, Prime Minister Stephen Harper said the government would look at a range of issues as it
determines whether the transaction, the largest foreign takeover ever launched by a Chinese firm,
is of net benefit to Canada. The deal has also raised rare public signs of unrest among Conservative
legislators, some of whom fret about the idea of a Chinese State-owned enterprise buying Canadian
energy assets.
―This particular transaction raises a range of difficult policy questions, difficult and forward-looking
issues. Those things will all be taken into account,‖ Harper told reporters in Ottawa, when asked
about the bid.
Fund managers and market analysts say they expect Ottawa will ultimately approve the deal, but
not before reaching a series of conditions. These could include seeking guarantees on employment
and investment, requiring that CNOOC promise to follow Canadian laws and practices, and
demanding that a certain number of Canadians be appointed to the board of directors.
The government is trying to balance concerns over the CNOOC bid with the energy patch's huge
need for human investment, much like the Mongolian government attempted to do when Aluminum
17. Corp. of China Ltd. (Chalco) made a bid for majority control of SouthGobi Resources Ltd—ultimately
Chalco rescinded its offer.
Nexen shareholders have already voted overwhelmingly to accept the bid and the Alberta
government is in favor. Harper says Ottawa will take public opinion into account before making a
decision. Polls have shown most Canadians oppose China buying Nexen.
Source: Reuters
ANNOUNCEMENTS
15TH ANNUAL NAMBC INVESTORS CONFERENCE, 16-18 OCTOBER
The 15th Annual North America-Mongolia Business Council‘s Investors Conference will be held in
Ulaanbaatar from 16 to 18 October. The usual late registration fee has been waived for members of
BCM and NAMBC.
The conference opens with a reception at the Zanabazar Museum on Tuesday, 16 October, followed
by two full days of speakers and panels on 17 October and 18 at the Kempinski Khan Palace Hotel.
Full simultaneous interpretation in Mongolian and English is available for all sessions.
Send registration forms to NAMBC directly, not BCM. Find the registration form here.
___________________________________________
MONGOLIA INVESTMENT SUMMIT 2012, HONG KONG, 30-31 OCTOBER
The Mongolia Investment Summit 2012 will be held from 29 to 30 October at the Four Seasons Hotel
in Hong Kong to once again bring the best of Mongolia's investment opportunities to Asia's leading
investment hub.
Now in its third year, the summit has strongly cemented its position as the largest Mongolian
investment event outside of Ulaanbaatar, providing foreign investors with the most comprehensive
overview of Mongolia's key economic growth sectors all under one roof.
Speakers to the event include Altai Khangai, Chief Executive Officer of the Mongolian Stock
Exchange (MSE), Cameron McRae, President and Chief Executive Officer of Oyu Tolgoi LLC, and
James Passin, Co-founder and Manager of Firebird Mongolia Fund.
BCM is again a Supporting Association for the event. For more information, find a brochure to the
event by logging on to the website: mongoliainvestmentsummit.com.
___________________________________________
MONGOLIA INVESTMENT CONGRESS 2012 IN SHANGHAI, 10 DECEMBER
Mongolian Investment Congress 2012 will be held in Shanghai, China on 10 December. The event is
presented by BCM along with the Mongolian Stock Exchange and Mongolian National Mining
Association, and INBC Global.
From mining, export infrastructure, and power generation to financial services, energy projects,
property development and more, Mongolian Investment Congress 2012 offers investment and
development opportunities at every turn.
Highlights for topics of discussion include international investment opportunities in Mongolia,
challenges for foreign investors in the mining industry and the coal reserves and resources.
___________________________________________
CLEAN COAL ASIA SUMMIT 2012 IN SHANGHAI, 11-12 DECEMBER
The event serves as the information and networking platform for commercializing clean coal
technologies in Asia and the world. Highlights for discussion include China's government policies in
the clear energy of China's 12th five-year plan (2011-2015) and innovation and new projects in coal
gasification and liquefaction.
___________________________________________
18. REGISTER NOW FOR MONGOLIAN MINING DIRECTORY - 2013
Mongolian Mining Directory-2013 which provides information database for Mining companies,
investors, suppliers, service companies, government and non government organizations will be
published for the fourth year to commemorate the 90th anniversary of the Mongolian mining
industry. The MMD is distributed free of charge to international and domestic mining companies,
international conferences and exhibition, embassy offices in Mongolia and foreign countries to
investors.
BCM is a Supporting Organization of the MMD and welcomes Mongolian mining industry participants
who are interested in advertising their products and services in Mongolian Mining Directory-2013.
For more information please visit: www.mining.mn, www.mongolianminingdirectory.mn or call
+976-7011 5590.
___________________________________________
REGISTER FOR BCM‟S MINING SUPPLY CHAIN DATABASE AT NO COST
The new version of BCM‘s Mining Supply Chain Database is ready for use. Following the initiative of
Oyu Tolgoi LLC, the BCM has maintained the Mining supply chain database since March 2009. It is
honor to introduce you to the new version of the database which is totally upgraded as to its
content and use of information technology opportunities.
We are inviting all Mongolian mining suppliers and buyer companies to join the Mining Supply Chain
Database. Please visit here for registration.
If you have any questions regarding the database, please contact Undral at undral@bcmongolia.org
or 317027.
___________________________________________
“MM TODAY” on MNB-TV, Friday‟s at 19:00
BCM is pleased to announce that Mongolian National Broadcasting continues its cooperation with
BCM on ―MM Today‖. This English news program is aired every Friday for 10 minutes and is
scheduled for 19:00 tonight. Tune in to watch this program that reports stories from today‘s BCM
NewsWire.
BCM WEBSITES
MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS
The new ‗Presentations‘ section on BCM‘s Mongolian website can be reached via bcm.mn/itgeluud.
Several presentations already posted include the World Bank‘s Mongolia Quarterly Economic
Update–June 2012 and 11 speeches from the 2nd Coaltrans forum, held on 23 to 24 May in
Ulaanbaatar.
As a key component of BCM‘s Mongolian website articles from the ‗News‘ section, and the
government website Open-Government.mn are regularly updated.
___________________________________________
ENGLISH WEBSITE 'PRESENTATIONS', 'MONGOLIA REPORTS' AND „MONGOLIAN BUSINESS NEWS‟
On BCM‘s English website, the ―Resources‖ and ―Presentations‖ sections are available to find recent
postings from BCM‘s 24 September monthly meeting and 9 presentations from Discover Mongolia
2012. The ―Mongolia Reports‖ section includes Taxes for Expatriates in Mongolia from
PricewaterhouseCoopers and the 2012 Mongolia Investment Climate Statement by the Economic and
Commercial Section of the U.S. Embassy.
BCM's English website includes the ―Mongolia Business News‖ section where the Open Letter to
Parliament and Government is available for download.
BCM continuously posts news stories and analysis of relevance to Mongolia at ‗Mongolian Business
News‖ before they are all put together each week for Friday's weekly NewsWire.
NewsWire will continue to be issued each Friday, incorporating items already on the home page for
19. a consolidated account of the week‘s events.
___________________________________________
SOCIAL 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.
Connect with BCM on Linked-in to join the diverse group of professional contacts creating a better
business environment in Mongolia today.
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 carried in
the NewsWire with the community.
Hear breaking news and announcements as they happen when you follow BCM on Twitter at
http://twitter.com/#!/bcMongolia.
Of course for news information, interviews, and announcements regarding our organization, visit
the official BCM website at www.bcmongolia.org and www.bcm.mn.
BCM WORKING GROUP MEETINGS:
The BCM Tax Working Group met Wednesday, October 10, with 15 members attending. Co-chairs
Arthur Cookson, OT, and Onch, Deloitte Onch, moderated the session.
New members Pierre Montpeyroux, /Petrovis LLC/, Aaron Schneider /Monrusconsulting LLC/, John
Henriksen /Petro Matad/, Oyunbayar Tserendorj, /International SOS LLC/ were welcomed.
Speakers and topics were:
Gurdeep Singh, /PWC/ - Withholding Tax;
Onchinsuren D, /Deloitte Onch/ - Review of tax impacts of draft Laws.
Next meeting: Leymlim Mizamkhan/Tax consultant of PWC/ - ―Permanent Establishment‖.
___________________________________________
The BCM Risk Management Working Group met Thursday, October 11, with 12 members attending.
Co-chairs Ganzorig U, UMC, and John Henriksen, Petro Matad, moderated the session.
New members Steven Forster /Wagner Asia Equipment/, Colin Brown /Deloitte Onch/, Tumentsogt
Ts /General Electric/ were welcomed.
Meeting discussion was on the following topics:
- Risk Survey results;
- PRMIA local chapter;
- Risk Forum III in Feb 2013.
Next meeting - Wednesday, October 24, American University of Mongolia
21. INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
Year 2008 *22.1% [source: NSOM]
Year 2009 *4.2% [source: NSOM]
Year 2010 *13.0% [source: NSOM]
Year 2011 *10.2% [source: NSOM]
September 30, 2012 *14.8% [source: NSOM]
*Year-over-year (y-o-y), nationwide
Note: 13.4% y-o-y, Ulaanbaatar city, September 30, 2012
CENTRAL BANK POLICY LOAN RATE
December 31, 2008 9.75% [source: IMF]
March 11, 2009 14.00% [source: IMF]
May 12, 2009 12.75% [source: IMF]
June 12, 2009 11.50% [source: IMF]
September 30, 2009 10.00% [source: IMF]
May 12, 2010 11.00% [source: IMF]
April 28, 2011 11.50% [source: IMF]
August 25, 2011 11.75% [source: IMF]
October 25, 2011 12.25% [source: IMF]
March 19, 2012 12.75% [source: Mongol Bank]
April 18, 2012 13.25% [source: Mongol bank]
CURRENCY RATES – OCTOBER 11, 2012
Currency Name Currency Rate
US dollar USD 1,379.05
Euro EUR 1,774.42
Japanese yen JPY 17.61
British pound GBP 2,208.62
Hong Kong dollar HKD 177.95
Chinese Yuan CNY 219.62
Russian Ruble RUB 44.28
South Korean won KRW 1.24
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.
