November 16 2012

1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
Issue 248 – November 16, 2012
NEWS HIGHLIGHTS
Business
 Prophecy enlists strategic partner for development of Chandgana power plant;
 Police unlawfully taking trucks off UB’s roads, says Wagner Asia head;
 Petrovis may be severely penalized for gas price hikes;
 Kincora raises USD 4.6 million from private equity placement;
 Strzelecki Metals to hold USD 5.2 million offering to Wolf Petroleum shareholders;
 Turquoise Hill Q3 income shoots to $114.3 million on fair value gain;
 SouthGobi reports Q3 losses as mine stays closed;
 Boroo denies rumors of destroying archaeological site;
 Erdene expands exploration target;
 DP replaces Erdenet Mining head;
 Boroo achieves better gold production in Q3;
 Philippine company markets air-cleansing device in Ulaanbaatar;
 National Consumer Conference tells companies to improve service efforts;
 Mitsubishi says done for now with natural resources investment.
Economy
 Market prepares for surging gas prices;
 Inflation rises along with fuel price hikes;
 Government orders 60-day oil reserves;
 Power Plant No. 5 expected in 2016;
 Turbine order signed to expand Power Plant No.4;
 Government planning projects to be funded by sale of USD 5 billion in bonds;
 Foreign trade deficit widens as mineral exports show sharp drop;
 Mongolia sees USD 139.7 million balance of payments surplus in September;
 Mongol Bank aims for low inflation;
 Mongolian delegation tours Russian nuclear plant;
 Elbegdorj vows to tap into renewable energy potential;
 Meat industry union rallies against government reserve sales;
 Mongolia sees good harvest of crops in 2012;
 Banking system challenge;
 Mongolia’s maiden ship sets sail;
 Mongolian investment climate at the moment is “uh-oh”;
 Key political risks to watch;
 Coal demand to soar in short term, but longer outlook dim;
 China leads the way as coal demand surges worldwide;
 China’s banking leaders seek to calm concerns over loan quality;
 Slowed inflation to allow more stimulus in China.
Politics
 Parliament approves 2013 Budget, added royalties included;
 Election season sparks anti-OT rhetoric;
 Parliament receives draft law for bank savings guarantee;
 Minister unveils justice reforms;

2.  Mongolia hosts senior Japanese-North Korean talks;
 Candidates prepare for local elections;
 Mongolia celebrates Chinggis Khan’s birth;
 Russians hang on through post-Soviet change;
 Beatles’ nostalgia act draws back to Mongolia’s revolutionaries;
 China reveals its new leaders;
 Don't expect dramatic change from China's new leaders.
ECONOMIC INDICATORS
 MSE Top 20 Index by market Capitalization;
 Foreign-listed Companies with Mongolian Assets;
 Inflation;
 Central bank policy rate;
 Currency rates.
*Click on titles above to link to articles.
SPONSORS
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Breakthrough PR Oxford Business Group
BUSINESS
PROPHECY ENLISTS STRATEGIC PARTNER FOR DEVELOPMENT OF CHANDGANA POWER PLANT
Prophecy Coal Corp. has entered into a memorandum of understanding (MOU) with an unnamed
strategic partner it is calling ―one of the world's largest power generation groups‖ to jointly develop
the Chandgana Power Plant.
The MOU sets out the proposed terms of the cooperation and time line of implementation of a
transaction between the strategic partner and Prophecy Coal. However, the company said the
agreement is nonbinding and has no guarantee that the transaction will come to fruition.
Prophecy Coal said the agreement ―is a positive step for Prophecy and its shareholders towards
recovering value for the substantial effort and capital spent.‖ The company is also in active

3. discussion with other power generation companies to create a consortium for the project's
completion.
Source: Prophecy Coal Corp.
POLICE UNLAWFULLY TAKING TRUCKS OFF UB‟S ROADS, SAYS WAGNER ASIA HEAD
Wagner Asia Equipment LLC‘s management reported difficulty getting trucks through the city due to
new traffic regulations.
Wagner Asia General Manager Steve Potter complained that a new law aimed at protecting the
roads has been abused by officials. He said that while the roads do indeed need proper care the law
was not being correctly enforced.
"Someone in government (probably city government) has instructed the traffic police to stop truck
traffic in the city because they consider trucks are damaging the road surface during this period of
freeze-thaw conditions prior to the real onset of winter and a fully frozen sub-base," said Potter.
Potter said it had become apparent that most companies dealt with the issue outside the law, while
those refusing to stoop to these practices suffered. Even cars that meet the legal requirements
have been stopped by police, he said.
"Yesterday our rental low loader, which is totally road compliant and meets all the axel loading
requirements, was pulled over by the traffic police and since no inducement was forthcoming was
told to apply for a license which would take three weeks to process," sad Potter, adding "Our
customer was expecting delivery of the rental equipment yesterday!"
Ulaanbaatar's roads have fared poorly in the face of the exponential growth of drivers and harsh
weather conditions. Many of the roads have potholes and gridlock traffic is profuse. Potter cited
poor design and maintenance as two main causes for wear and tear on the roads while overloaded
trucks exacerbate conditions.
Source: Wagner Asia Equipment LLC
PETROVIS MAY BE SEVERELY PENALIZED FOR GAS PRICE HIKES
Petrovis LLC may face punitive actions for raising its gas prices.
The Fair Competition and Consumer Protection Agency (FCCPA) began its investigation of Petrovis
following its announcement that it would increase fuel prices by between MNT 200 to MNT 250 per
liter. Unnamed sources from the government have said the FCCP will likely impose a MNT 10 million
fine on the company or could even revoke its permits.
Source: Zuunii Medee
KINCORA RAISES USD 4.6 MILLION FROM PRIVATE EQUITY PLACEMENT
Kincora Copper Ltd. has closed the first tranche of its private placement for a gross amount of CAD
4.6 million (USD 4.6 million).
The copper explorer sold some 44.1 million shares at CAD 0.105 per unit, with each unit consisting
of a common share and a common share purchase warrant. Each whole warrant will entitle the
holder to acquire one common share of Kincora for a period of three years expiring 14 November
2015 at a price of CAD 0.19 a share. All securities issued during the offering are subject to a four-
month hold period expiring 15 March.
Kincora's largest stakeholder Origo Partners PLC purchased USD 2 million of the offering. The
offering included participation from shareholders of Temujin Mining Corp., as per the agreement for
the acquisition of Golden Grouse LLC. Kincora Copper has proposed to include any subscriptions
received from Temujin shareholders in a secondary closing, which remains subject to approval from
the TSX Venture exchange.
Funds from the offering will be used to continue drilling and exploration at its flagship Bronze Fox
project and as working capital.
Source: Kincora Copper Ltd.
STRZELECKI METALS TO HOLD USD 5.2 MILLION OFFERING TO WOLF PETROLEUM SHAREHOLDERS
Strzelecki Metals Ltd. has released a prospectus for a 25 million-share private offering to Wolf

4. Petroleum Ltd. share holders to raise AUD 5 million (USD5.2 million).
The prospectus, which follows Strzelecki Metals' consolidation of shares and acquisition of oil and
gas company Wolf Petroleum, will bring its total equity holdings to some AUD 9.5 million. Proceeds
from the offering will be used mainly to fund exploration as well as administration costs and
working capital.
Wolf Petroleum holds interest in the Baruun Urt, Jinst, and Sukhbaatar blocks. The 8,744-square-
kilometer Baruun Urt block located between Petro Matad's recent oil discovery and Petro China's
exploration and development blocks is currently the project of focus. This region already has
successfully operating oil fields.
Strzelecki Metals shareholders have approved a motion to change its name to Wolf Petroleum. Wolf
Petroleum benefits from the same management team as Hunnu Coal Ltd., whom attracted interest
for the sale to Thailand's Banpu Public Company Ltd. CPS Securities is the lead manager of the
offering.
Source: Strzelecki Metals Ltd.
TURQUOISE HILL Q3 INCOME SHOOTS TO $114.3 MILLION ON FAIR VALUE GAIN
Turquoise Hill Resources said its third-quarter net income shot up to USD 114.3 million, largely due
to a USD 176.2 million increase in the fair value of certain derivatives.
The Vancouver-based company formerly known as Ivanhoe Mines Ltd. said net income for the
quarter amounted to 13 cents a share, compared to income of USD 7.3 million, or a penny per
share, in the same quarter of 2011. The most recent quarter also included USD 55.3 million in
exploration expenses, USD 57.2 million in cost of sales, USD 18.3 million in general and
administrative expenses, and a USD 12.5 million writedown on current assets.
Those changes were offset by a USD 12.9 million change in the fair value of SouthGobi Resources
Ltd.'s embedded derivatives, a USD 176.2 million increase in the fair value of the derivatives on its
2012 rights offering, and USD 4.7 million in interest income. Revenue was USD 23.8 million, though
the company, now majority-owned by Anglo Australian mining giant Rio Tinto PLC, did not provide a
year ago comparison.
The Vancouver-headquartered company announced earlier this month the signing of a key power
purchase agreement of its Oyu Tolgoi copper-gold mine in Mongolia. The deal with Inner Mongolia
Power Corp. will allow the completion of commissioning of Oyu Tolgoi, leading to the first
production of copper-gold concentrate. Within the next few weeks, Oyu Tolgoi is expected to begin
a seven-week commissioning of the ore-processing equipment, the company said in a statement.
First concentrate production will follow within one month and commercial production is expected
to begin three to five months after that. The company has also agreed that all the project's power
requirements would be sourced from within Mongolia no later than four years after the start of
commercial production.
Its other assets include a 58 percent interest in SouthGobi Resources, which reported a loss in its
most recent quarter as the company kept its mining operations on hold to help manage coal
inventories. The company reported a loss of USD 54.6 million for the quarter ended 30 September
compared with a profit of USD 55.9 million a year ago.
Source: Canadian Business
SOUTHGOBI REPORTS Q3 LOSSES AS MINE STAYS CLOSED
Coal miner SouthGobi Resources Ltd., caught in a dispute with the Mongolian government that has
closed its only producing mine, reported a quarterly loss and warned operations would likely remain
suspended in the fourth quarter.
The Mongolia government suspended the mining license of the company, which operates the Ovoot
Tolgoi coal mine, in April following a bid by Chinese state-owned Chalco. Chalco dropped its USD
926 million bid for a majority stake in SouthGobi Resources in early September in the face of stiff
political opposition. The mining company said it could not estimate production volumes, sales
volumes and pricing for 2012.
The company recorded a net loss of USD 54.6 million, or 30 cents per share, in the third quarter,

5. compared with a net income of USD 55.9 million, or 31 cents per share, a year earlier. Revenue fell
95 percent to USD 3.3 million.
SouthGobi has been struggling with a churn at its top since the failed Chalco bid. It hired Ross
Tromans from Rio Tinto Coal Australia as Chief Executive in September, after firing the former chief
executive officer. The chief financial officer resigned last week.
Source: Mine Web
BOROO DENIES RUMORS OF DESTROYING ARCHAEOLOGICAL SITE
Boroo Gold LLC has denied accusations from local media that it has mined a site with ancient
remains of the Huns.
Boroo Gold denies that it has employed any exploration or extraction operations at Noyon Mountain
due to state protection. Local newspaper Udriin Shuudan said it had become apparent that
operations had begun there while questioning a local expert what the impact would be.
―Noyon Mountain has been spoiled a lot from the Tuv Aimag side,‖ said U. Bavuu, a consultant to
the General Museum of Selenge Aimag. ―Now, if a major mining company starts operating from the
Zuunkharaa side, there will be nothing left of this mountain.‖
Noyon Mountain is where evidence of the ancient Hun settlements of the second and third centuries
still stand today in Mongolia. The area's significance as a historical site has many deriding alleged
gold mining operations believed to be taken place there. According to archaeologist N. Erdene-
Ochir, the site is proof that the Xiongnu Empire existed within the borders of present-day Mongolia,
where he says archeology teams have found monuments, settlements and over 200 tombs.
―Rare archaeological monuments that represent the centuries-long history of Mongolia and the
period of prosperity of Mongolia are still being discovered,‖ said Erdene-Ochir.
Erdene-Ochir said he knows of no evidence that any historical remains have been lost due to poor
protection and restoration of the area by mining firms. Boroo Gold has denied accusations that it
has begun mining in the area and destroyed some artifacts in the process.
―Our company respects the legislation of Mongolia and undertakes its activities in compliance with
applicable laws. Pursuant to the existing legislation, no companies are allowed to conduct
exploration or mining operations in the areas under State protection,‖ said Boroo Gold spokesperson
A. Ariunzaya.
She added that the site is not within Boroo Gold's license area and is, instead, 7 kilometers away.
Source: Oloo, Centerra Gold Inc.
ERDENE EXPANDS EXPLORATION TARGET
Erdene Resource Development (ERD) Ltd. released additional assays from reconnaissance drilling at
the Altan Nar gold project in southwest Mongolia.
Fourth quarter highlights from the 2012 drill program included three new gold zones and a 50-meter
expansion of the ―discovery zone‖. At the north end of the site, explorers uncovered 4.5 meters of
2.4 grams per ton of gold and 19 grams per ton of silver.
Assays have been received for nine of the 11 reconnaissance holes and seven of these holes
returned intervals of 0.5 grams per ton of gold or higher. Results for two holes located 1.3
kilometers northwest of the discovery zone have been previously reported.
Source: Erdene Resource Development Ltd.
DP REPLACES ERDENET MINING HEAD
The Democratic Party (DP) continues its process of replacing the top figures of state-owned
enterprises with members of its own ranks. The latest replacement was made at Russian-Mongolian
joint-owned copper miner Erdenet Mining Co.
Government has dismissed Erdenet Mining's chief executive, Ch. Ganzorig, and his deputies. Many
have speculated that the lead positions and boards of all state-owned companies will be replaced
by allies of the DP. This follows the resignation of Erdenes MGL JSC Chief Executive B. Enebish.
Furthermore, coalition partner Mongolian People's Revolutionary Party (MPRP) has requested deputy
positions for its party members. There is some speculation that D. Galbaatar, a candidate who

6. failed to win the seat representing Orkhon Aimag, would receive one.
Source: Zuunii Medee
BOROO ACHIEVES BETTER GOLD PRODUCTION IN Q3
Boroo Gold parent company Centerra Gold Inc. swung to a loss in the third quarter and reported a
sharp decline in gold production, as a seven-week shutdown of the mill at its Kyrgyzstan mine and
lower grades impacted on the company's output.
At Boroo, better gold production was achieved in the third quarter as the higher-grade Pit 6 ore was
processed. The heap-leach facility at Boroo also resumed operations after receiving regulatory
approval and all required permits in September. The mine produced 18,938 ounces in the period,
compared with 13,719 ounces in the third quarter of 2011. The Gatsuurt project remains under care
and maintenance, owing to continued delays in permission resulting from the water and forestry
law, which prohibits mining and exploration activities in water basin and forest areas.
The company also again lowered its full-year production guidance to between 415,000 and 425,000
ounces from its previous estimate of 450,000 to 470,000 ounces. In March, Centerra reduced its
expected output from Kumtor by a third after faster-than-expected ice movement in the southeast
section of the high-altitude open-pit operation made it unsafe to access the block of ore intended
to feed the mil from March to October. The company instead focused its efforts on the southwest of
the pit to access a new block of ore, which is reached in September, while simultaneously working
to offload the waste ice and waste responsible for the movement, effectively cutting back the
glacier.
Revenue fell 75 percent year-on-year to USD 68.8 million, while cash costs surged to USD 1,401
ounces from USD 556 ounces a year earlier. Centerra Gold posted a net loss of USD 46.8 million, and
included USD 19.3 million recognized as abnormal mining costs, and other operation expenses of
USD 5.2 million for the care and maintenance of the underground development project at Kumtor.
For the same period in 2011, the company recorded net earnings of USD 83.7 million, reflecting
significantly higher gold production and sales at that time.
Source: Mining Weekly
PHILIPPINE COMPANY MARKETS AIR-CLEANSING DEVICE IN ULAANBAATAR
Mongolia is adopting Filipino technology to help improve the health of people in Ulaanbaatar.
The Philippines' Eco-G Nano Technology and Mongolia's Erdene & Gochio LLC signed a memorandum
agreement to avert the life-threatening conditions due to fuel emissions Ulaanbaatar suffers from
severe air pollution coming from the ger district and auto emissions.
According to Eco-G president Alexander Cayaba the Eco-G3000 can support gas savings and cutting
auto emissions. It consists of a fuel vaporizer, an auxiliary tank, and a catalyst. The fuel mixture is
vaporized, heated and fed into the vehicle's intake manifold which results in improved fuel
efficiency and the significant reduction of toxic emissions such as carbon monoxide, carbon dioxide,
and nitrogen oxide.
"Test results from Land Transportation Office-accredited testing centers have shown that Eco-G3000
can reduce toxic emissions up to 80 percent," said Cayaba.
The system has been installed in tricycles, motorcycles, cars, trucks, and buses in Metro Manila.
Source: Manila Standard Today
NATIONAL CONSUMER CONFERENCE TELLS COMPANIES TO IMPROVE SERVICE EFFORTS
The Mongolian government held a National Consumer Conference last week under the banner head
"People are God"—a title presenters hoped would send home the message to service providers that
consumers should be treated with the highest regard.
Prime Minister N. Altankhuyag promised to reform government for a more "service-oriented"
structure in his opening remarks. He vowed to create more jobs and wealth for people while
providing affordable food to improve their livelihood.
Government officials from various sectors of the economy answered questions focusing on housing
quality, the heating of homes during winter, and food prices. Some consumer representatives said

7. that manufacturers should guarantee quality at the beginning, and the distributors should not
ignore the reasonable demands of customers when business is good.
More than 800 representatives from all parts of the country attended the conference, many of
whom queued to raise questions.
Source: NZ Week
MITSUBISHI SAYS DONE FOR NOW WITH NATURAL RESOURCES INVESTMENT
Mitsubishi Corp., Japan's biggest trading house, is almost done for now with investing in natural
resources, after having spent more than USD 12.5 billion on copper, gas, and coal assets in the past
three years, its president said on Wednesday. Mitsubishi was one of the contenders bidding for
Tavan Tolgoi‘s West Tsankhi project while Japan is being looked at as a market for Mongolian coal
outside of China.
Japan's top trading houses were ramping up a natural resources buying spree until early this year
using financial firepower bolstered by a decade-long commodities boom and the yen at near record
highs. But recent steep falls in coal and iron-ore prices following a slowdown in demand in China
forced Mitsubishi to slash its full-year profit outlook by nearly a third and Mitsui and Co—who is
currently aiming for a place in the Tavan Tolgoi project—by a quarter. Mitsubishi said it would
accelerate replacement of assets including natural resources to generate cash and bolster returns,
and also would focus on boosting cost edge at its existing mines by implementing restructuring
measures.
"We have done what it's going to do for now as far as investment in natural resources is concerned,"
Ken Kobayaashi, president and chief executive officer of Mitsubishi, said at a media briefing on its
first-half result. "While a fall in the cost of assets is attractive, we won't find easy coal, easy gas,
easy copper projects anymore."
Source: Reuters
ECONOMY
MARKET PREPARES FOR SURGING GAS PRICES
Rumors of hikes in gas prices dominated headlines last week, leading to a debate over the root
cause and how the situation should be handled.
Local media reported that gas price increases introduced by Russia's giant oil exporter Rosneft will
lead to higher prices at the pumps in Mongolia. Most of Mongolia's gas companies have refused to
purchase the gas at the higher prices, leading to gas shortages of diesel and A-92 gas at many gas
stations in Ulaanbaatar. M. Khaliunbat, Petrovis' chief executive, said Rosneft raised its prices by
USD 49 a ton this month, adding that the sudden bump in prices was necessary as his company had
been operating at a loss for months.
Official statements from the government say the shortage is a result of a 10-day suspension in
production for maintenance. Ministry of Mining official B. Batkhuu said gas vendors are restricted
from raising their prices in excess of MNT 50 a liter and that a pricing committee made up of
representatives of the gas industry is currently in talks about how to handle the situation. Mongolia
has enough gas in its reserves for 20 days, he said.
However, the media has painted a different picture. Some have accused Petrovis LLC and Shunkhlai
LLC of illegal price gouging. Meanwhile, some have called for aid from the government in the form
of low-interest loans to gas vendors to help stabilize gas prices. The managers of gas stations said
they believed gas prices would rise between MNT 200 and MNT 300 a liter.
Mongolia is the only country to receive a price increase, said one columnist, while the Mongolian
market is not such a big source of revenue for Russia. He suggested that Russia may feel its
involvement with some projects and delays may be threatened due to the change in government in
the last election.
Source: MICC

8. INFLATION RISES ALONG WITH FUEL PRICE HIKES
The consumer price index (CPI) saw a 0.6 percent increase last month, 12.9 percent increase year-
to-date and a 15.0 percent increase year-over-year nationwide.
The National Statistical Office reported 4.6 percent inflation in real estate prices, water, electricity
and gasoline. The figure from inflation comes from prices gathered from 330 consumer goods and
services.
Source: Zuunii Medee
GOVERNMENT ORDERS 60-DAY OIL RESERVES
Parliament has directed government to up its reserve oil supply to two months worth of fuel.
Government has commissioned the construction of more containers to store oil so that it can store
reserves of at least 120,000 tons in 2008 with the 48th decree. Yet, the decree has never been
enforced and no oil importers have updated their oil reserves while demand and number of
importers have grown. It also necessitates annual reports on the status of these reserves every
August.
Past reserves created by order of the government only covered shortages for 20 days. The new
decree for 60 days of fuel reserves will take effect 1 March 2013.
Source: News.mn
POWER PLANT NO. 5 EXPECTED IN 2016
Officials from the energy sector said that terms for Power Plant No. 5 would soon be finalized.
According to Minister of Energy M. Sonompil, a contract for the plant's construction will be signed
by the end of the month with operations to begin after three and a half years. He said the
Ulaanbaatar thermal network could potentially be partially privatized through a public offering. The
minister added that the government was looking into selling up to 49 percent of Baganuur thermal
coal mine.
Source: MICC
TURBINE ORDER SIGNED TO EXPAND POWER PLANT NO. 4
Mongolia, struggling to add transport and power infrastructure to match the country's commodity-
driven economic growth, signed a turbine order that will help boost capacity at its biggest
generator by 21 percent.
The Ural Turbine Works agreed to supply and install a 120-megawatt steam turbine at Power Plant
No. 4, which supplies 70 percent of Mongolia's electricity and heat, Moscow-based Renova Group,
which controls the Russian factory, said in a statement. The turbine will begin operating in 2014.
Coal-fired Power Plant No. 4 has an installed capacity of 570 megawatts. The turbine order is
Mongolia's first purchase of such equipment from Russia since the breakup of the Soviet Union two
decades ago.
Source: Bloomberg
GOVERNMENT PLANNING PROJECTS TO BE FUNDED BY SALE OF USD 5 BILLION OF BONDS
The Ministry of Economic Development is poised to develop a list of projects to receive funding
from the USD 5 billion in bond offerings the government has planned.
Representatives of both the ministry and economic standing committee are participating in a joint
working group to plan spending from the bond offerings. The government is planning for long-term
sustainable projects that generate returns rather than needing annual funding, said Standing
Committee on Economy head B. Garamgaibaatar.
Funding will go toward both projects related and unrelated to the country's booming minerals
sector including the construction of roads linking each province with the capital and infrastructure
at the Sainshand industrial complex.
The government has also approved MNT 45 million for road construction and materials.
Source: Undesnii Shuudan

9. FOREIGN TRADE DEFICIT WIDENS AS MINERAL EXPORTS SHOW SHARP DROP
Mongolia has suffered a dramatic trade slowdown due to a sharp drop in mineral exports amid
global economic slowdown.
Mongolian foreign trade increased 3.3 percent by USD 304.3 million in the first 10 months of 2012,
reported the National Statistical Office (NSO). Exports fell 2.2 percent in the months leading up to
October compared with a year ago, lagging far behind surging export increases in 2011 when the
country registered record trade volumes of USD 11.3 billion.
Imports still continue to grow with a 7.2 percent increase driven by the country's booming
construction sector. According to the NSO, trade volume reached USD 940 million, of which exports
comprised USD 3.7 billion and imports USD 5.7 billion. The trade imbalance increased 29.3 percent,
registered at a deficit of USD 2.1 billion.
The widening trade deficit could put further downward pressures on the tugrug.
Source: Business Mongolia
MONGOLIA SEES USD 139.7 MILLION BALANCE OF PAYMENTS SURPLUS IN SEPTEMBER
The Bank of Mongolia announced a balance of payments surplus of USD 139.7 million for September.
The surplus resulted from low current account loss and large surplus in capital in finance account.
As a result, the Central Bank has grown its foreign currency reserves by USD 139.9 million for the
month of September and USD 454.1 million for the year.
Exports grew to USD 350 million in September from USD 232 million in August while imports
declined to USD 427 million from USD 614 million in August. Service account loss was low, at USD
54.7 million compared with USD 102.8 million in the previous month.
Current account loss was USD 159 million compared with USD 415 million in August. Total loss fell
from USD 9 million to USD 2.4 million.
Source: Eurasia Capital
MONGOL BANK AIMS FOR LOW INFLATION
The Bank of Mongolia stressed low and stable inflation to be the foundation for sustainable
economic growth and to improve the living standards and financial structure for the medium term.
The government plans to implement a program to combat supply-side inflation. The Central Bank
said it will supply low-interest loans to businesses to help keep the prices of consumer goods low.
According to investment bank Eurasia Capital, this would lower inflation by 30 to 40 percent, but a
depreciation of the tugrug might negate some positive effects.
―We think that if the commodity exports to China do not recover soon, [the tugrug] may face a real
danger of sharp depreciation in the coming months as the Bank of Mongolia will not have much
reserve to intervene in the market. On the other hand, if the government succeeds in its plan to
raise as much as USD 1.5 billion in bonds selling soon, that will be positive for [the currency], as
well as inflation.‖
It is likely that the bank will continue tightening its monetary policy. However the bank is sending
mixed signals with a projection money supply growth 25.9 percent to MNT 9.149 billion next year
with 13.3 percent economic growth in 2012.
Source: Eurasia Capital
MONGOLIAN DELEGATION TOURS RUSSIAN NUCLEAR PLANT
A Mongolian delegation of representatives from the Atomic Energy Agency and Mongolian Institute
of Science and Technology's Institute of Physics and Technology visited the Kalinin NPP nuclear
power plant to learn about Russian experience in their construction and operation.
"This is the first time a Mongolian delegation has visited our site, said Kalinin NPP Acting Plant
Manager Igor Bogomolov said. ―I hope you have seen what you wanted and were able to determine
areas of future studies for nuclear power where we can be helpful as an experienced and
knowledgeable organization."
The visit included a meeting between the delegation and the plant's management where they
discussed a broad range of issues related to the construction of a nuclear power plant, its

10. environmental impact assessments, monitoring radiation, and implementation of new science
techniques and technology. The guests toured the plants power units, training facilities, and
information center.
"Our country's economy develops in many respects owning to the use of mineral resources. At
present, we don't have sufficient capacities to process the feedstock,‖ said Ch. Baatar, director of
the Institute of Physics and Technology. ―In this regard we are interested in building real strong
sources for generating electricity."
Source: Rosatom
ELBEGDORJ VOWS TO TAP INTO RENEWABLE ENERGY POTENTIAL
President Ts. Elbegdorj told foreign delegates that renewable energy would take a stronger focus in
Mongolia during a speech to the Northeast Asia Renewable Energy Resources Cooperation Forum.
Elbegdorj noted that Mongolia has vast potential for solar, wind, and other renewable energy
sources. He said there is more than enough to meet domestic demand and the country has the
potential to export excess power generated. The Mongolian government plans to increase its share
of renewable energy to between 20 percent and 25 percent of its total energy consumption by
2020.
The two-day energy forum gathered delegates from China, South Korea, the Democratic People's
Republic of Korea, Japan, Russia, France, Britain, the Asian Development Bank and the
International Energy Agency.
Source: News.mn
MEAT INDUSTRY UNION RALLIES AGAINST GOVERNMENT RESERVE SALES
The union of workers from the meat industry has taken a stance against the government's meat
reserve.
The union said at a press conference that it opposes the reserve because of its negative effect on
meat producers, even forcing some into bankruptcy. The government established the reserve to
maintain lower prices during times of shortages. Last year 16,000 tons of meat from the reserve
were sold for MNT 3,500 a kilogram as prices reached MNT 10,000 a kilogram on the market. The
union said the government should sell its meat closer to real market prices so producers can
compete without suffering losses.
Union representatives added that if the government releases reserve meat again that meat prices
would grow within a month and would not fall.
Source: Udriin Sonin
MONGOLIA SEES GOOD HARVEST OF CROPS IN 2012
With yet another bumper harvest of crops, Mongolia's agricultural production has exceeded
domestic demand, local media said Wednesday. Mongolia's wheat production reached 457,000 tons,
way beyond its domestic demand.
The government is seeking ways to export wheat. As of 1 November, Mongolia had harvested
470,500 tons of cereals, 245,600 tons of potatoes, and 97,800 tons of vegetables, according to
figures from the National Statistical Office. Compared with the same period of 2010, potato
production grew 23.2 percent while cereal output rose by 5.7 percent, or 25,200 tons.
Mongolia launched its third land reclamation campaign in 2008. The country's grain production has
since increased greatly.
Source: Global Times
BANKING SYSTEM CHALLENGES
Monetary tightening measures have bolstered confidence in the stability of the banking system to
rise as credit growth slows, but exponential growth expected from resource revenue will require
strict macroeconomic vigilance from the Central Bank.
"The capitalization and profitability of the banking system have risen, and the outstanding stock of
non-performing loans has declined in absolute terms," the International Monetary Fund (IMF) wrote

11. praising the Central Bank for its enacted monetary policy. The fund praised the Bank of Mongolia for
raising the liquidity ratio to 25 percent from 18 percent and requiring the five main banks to raise
their capital adequacy rations to 14 percent from 12 percent.
The progress came ahead of pledges by Parliament on macroeconomic policy in 2013, with the
Governor of the Central Bank, N. Zoljargal, telling reporters in October that the bank would
improve the inspection and control system next year to bring it in line with international regulation
standards, and that there would be reform to the legal environment of payments to reduce risk.
The country's provision of access to banking services was lauded this year, with a World Bank report
finding in April that 78 percent of adults have an account at a formal financial institution and that
more than 40 percent of adults reported having a debit card. The bank also noted that 8 percent of
the population used their cellular phones to access banking services.
However, in May Moody's Investors Service downgraded the ratings of four Mongolia banks to put
them more closely in line with Mongolia's sovereign rating. In October Fitch Ratings also noted in a
report that Mongolian banks "increased foreign-currency funding raises [their] risk profiles," saying
that the agency expects lending volumes to pick up again over the next 12 to 18 months, and that
borrowers may struggle to repay foreign currency loans if the Mongolian tugrug were to depreciate
sharply.
To avoid overheating of the economy, the government will likely need to further tighten credit
measures and limit banks' exposure to interest and exchange rate risks, as well as unhedged foreign
currency lending.
Source: Oxford Business Group
MONGOLIA‟S MAIDEN SHIP SETS SAIL
If Mongolians are ever going to feel the effects of the sudden emergence of rapid economic growth,
the country will need to diversify the economy.
According to research from Harvard, meat, cashmere, tourism and information and communication
technology pose the strongest potential for Mongolia to capitalize on. That means developing a
workforce that has the skill sets for these industries and the infrastructure needed so they can
succeed.
According to a report by the Economic Policy and Competitiveness Research Center (EPCRC),
Mongolia would need USD 24 billion to build the necessary infrastructure. The USD 5 billion in bonds
proposed by Parliament is one option, and much cheaper than loans borrowing from international
groups and foreign nations. However, that still leaves another 19 billion to be raised. The
government can turn to financial organizations and donors, but it will have to meet stringent
requirements. That leaves the questions if Mongolia can manage repaying debt equal to its current
gross domestic product, and if it can spend the money wisely after receiving it so it can make those
repayments.
The foreign capital market is watching Mongolia very closely. If the government spends its income
selling bonds for the purpose it originally spoke of—building up infrastructure—it can bring a new
era of development and rapidly improve the lives of people. However, if it chooses to build every
factory itself and own every operation, it bears all the risks, too.
Mongolia is setting sail its first ship into the financial ocean with its issuance of government bonds
while Mongolians look onward, cheering. May our ship sail safely and return with great rewards.
Author Dambadarjaa “De Facto” Jargalsaikhan is an economist specializing in banking and the stock
market. He is a management consultant in banking and financial organizations.
Source: UB Post
MONGOLIAN INVESTMENT CLIMATE AT THE MOMENT IS “UH-OH”
The Mongolia Invest Summit in Hong Kong presented an outlook of Mongolia teetering a wire that, if
able to walk across, leads to success or a fall back to obscurity.
Former Minister of Mining D. Zorigt said investors should watch big projects such as Oyu Tolgoi, the
progress of railway infrastructure projects, how the government proceeds with the Strategic
Entities Foreign Investment Law (SEFIL), and the development of its power supply. Noting that ―the

12. projects in the country are larger than the [current] economy,‖ Zorigt pointed out how much
Mongolia has to gain.
The SEFIL is a large obstacle currently preventing capital injections into the economy. Failure to
comply with the law can invalidate licenses for mining firms and the lack of legal clarity leaves
many unwilling to roll the dice. James Liotta of MahoneyLiotta LLC said he could name 18
transactions canceled because of the law. However, Graeme Hancock, chief operations officer of
Erdenes Tavan Tolgoi JSC and former mining head of the World Bank in Asia, pointed out that the
law was needed for a long time.
Oyu Tolgoi seems to be the test everyone is watching to see how a large-scale project with foreign
investment can fare in Mongolia. News that Mongolia has passed a budget that increases the taxes
and royalties on its private investors is a bad sign, however.
Jim Dwyer, Executive Director of the Business Council of Mongolia, opened the conference stating
that there are still between USD 1 trillion and USD 2 trillion in natural resources in the ground in
Mongolia. That would leave USD 330,000 for every head in Mongolia. GDP growth of 11 to 12
percent is considered by some a disaster when compared with projections that growth should be
near 18 percent.
The potential for Mongolia is clear: If the government can guide it well, the rewards could be
tremendous.
Source: Seeking Alpha
KEY POLITICAL RISKS TO WATCH
A new prime minister confirmed in early August ended weeks of uncertainty after June's
parliamentary elections proved inconclusive. N. Altankhuyag has taken over from the former ruling
Mongolian People's Party (MPP), leaving the key risk for mining firms the influence of resource
nationalism.
Until and unless the new coalition government sends signals that it is in favor of foreign investors,
firms will be wary of making big new commitments to the country. The priority for Mongolia is the
development of its tiny but fast-growing economy, and foreign investors want to know if the
government can create a stable legal environment while pleasing its impatient citizens as well as its
two giant neighbors Russia and China.
Investment politics
In August, newly appointed mining minister D. Ganhuyag said Mongolia should raise its stake in Rio
Tinto PLC's Oyu Tolgoi copper and gold project, adding to worries about increasing hostility toward
foreign mining corporations. Few major projects are progressing smoothly. The government wants
to launch a USD 3 billion initial public offering (IPO) for Erdenes Tavan Tolgoi JSC, but it cannot
until Parliament passes a Securities Law. There is also a law regulating transactions involving
foreign ownership of strategic entities over USD 74 billion that caps ownership to 49 percent before
Parliament must give the okay.
The “resource curse”
With economic growth of 16.7 percent in the first quarter of 2012, Mongolia became the fastest-
growing in Asia. But it is already showing classic symptoms of ―Dutch disease,‖ including soaring
inflation and high interest rates. Meanwhile, the government is under pressure to spread the wealth
among the population.
Getting on with the neighbors
Many are concerned about growing Chinese and Russian influence. China already dominates
Mongolia's economy, buying 90 percent of the country's exports in the first half of 2011. Mongolia's
reliance on Russia and China for fuel, power, and transportation also poses a major risk to its
mining sector. Russia has been known to turn off supply taps, and China is not averse to closing
crucial railway links.
Mongolia also depends on Russia's railway network to fulfill plans to deliver coal to Japan and South
Korea. Its plans to build itself a railway network capable of transporting coal to foreign markets is
likely to be delayed.
Source: Reuters

13. COAL DEMAND TO SOAR IN SHORT TERM, BUT LONGER OUTLOOK DIM
Global coal demand will soar in the short term as emerging markets rely on it to power economic
expansion, but its declining quality and rising environmental awareness will dent demand in the
longer term, Axa Investment Managers said. Coal is a major export of Mongolia, but the market has
experienced recent turbulence.
The asset management arm of life insurer Axa said coal has been the clear winner of the past
decade, with supply and demand growing constantly, but warned that the boom of the last decade
might not last long into the future.
―Coal has a bright future in the short term, but that will not last long in our view,‖ Axa said in a
report published on Monday. The report said that coal still has a stranglehold on power generation
in developing countries,‖ where tackling energy poverty is a prime concern because of its
comparatively low cost per energy unit produced. ―From the standpoint of energy security, coal-
fired units remain a winner thanks to the widespread availability of the primary resource.‖
The chief executive of the World Coal Association said the economic growth and coal markets
remained closely linked.
―No one has been able to de-link the growth of GDP from the growth of energy, and coal in
particular,‖ association Chief Executive Officer Milton Catelin said.
But coal has a competitive edge over fuels such as natural gas only as long as pollution control
regulations are light, Axa said, adding that environmental awareness was rising fast in emerging
markets.
Axa also said growth in the coal sector was threatened by the falling quality of the mine product.
While Catelin argued the degraded quality might force power plants to improve their energy plants,
the report did said it would be effective. The carbon capture and storage (CCS) technology, which
would capture carbon dioxide produced from power plants before it enters the atmosphere and
store it underground, would not be able to improve the environmental footprint of coal-fired power
stations.
Source: Reuters
CHINA LEADS THE WAY AS COAL DEMAND SURGES WORLDWIDE
Coal remains a critical component of the world's energy supply despite its bad image. This is true
especially for China, who buys up nearly all of the coal Mongolia produces.
Coal may seem an odd contender in a world where promising renewable energy sources like solar,
wind, and hydroelectric power are attracting attention. But burning coal still costs about one-third
as much as using renewable energy like wind or solar. Global demand for coal is expected to grow
to 8.9 billion tons by 2016 from 7.9 billion tons this year, with the bulk of new demand—about 700
million tons—coming from China, according to a study by Peabody Energy Corp. China is expected to
add 240 gigawatts, the equivalent of adding about 160 new coal-fired plants to the 620 operating
now, within four years. During that period, India will add an additional 70 gigawatts through more
than 46 plants.
Besides strong demand for thermal coal, use of metallurgical coal is also expected to more than
double in China, to about 1.7 billion metric tons by 2016, according to the Peabody Energy study. In
all, coal use is expected to increase 50 percent by 2035, said Milton Catelin, chief executive of the
World Coal Association in London. Within a year or two, coal will surpass oil as the planet's primary
fuel, Catelin predicted. Coking coal is getting greater attention from coal miners with Shenhua
Energy Co. of China and Peabody Energy, plus a mix of Japanese, Russian and South Korean
companies bidding to develop Tavan Tolgoi.
For now, coal seems to be sidestepping a serious potential impediment to its use: international
accords restricting greenhouse gas emissions. So far, such agreements have been ineffective. There
has been a downturn in U.S. coal production but that has been more the result of market economics
than U.S. President Barack Obama's so-called ―war on coal.‖ Industry analysts expect the lull to be
short-lived.
In the long term, coal's future depends on China and India, and its prospects look bright—mainly
because it is cheaper than its competitors.

14. Source: New York Times
CHINA‟S BANKING LEADERS SEEK TO CALM CONCERNS OVER LOAN QUALITY
China's top banking regulators and the chairmen of the four largest banks tried to allay concerns on
Sunday that the country was allowing its banking system to grow at a reckless pace as a way to
sustain short-term economic growth. The regulators and bank chairmen said during a rare joint
news conference that they were managing the industry prudently and the effective measures had
been taken to limit the risk even as lending expands briskly.
―The risks are within control,‖ Shang Fulin, chairman of the China Banking regulatory Commission.
Loans have been climbing steeply as a share of the economy for four years, prompting foreign bank
analysts to question the sustainability of an economic model based on ever more debt invested in a
wide range of industries that are already facing overcapacity. Chinese households have begun
shunning the very low, regulated interest rates offered by the giant state banks in favor of more
speculative financial products. The central bank has been helping commercial banks sustain
extremely heavy lending this autumn by pumping record sums of money into the financial system.
Foreign analysts have warned that borrowers in many industrial sectors have used bank loans to
speculate in real estate, so the banking sector may have an unintentionally large exposure to the
country's real estate market. They've also been skeptical of the low proportion of nonperforming
loans, saying no one has seen the results of the loans issued in 2009 and 2010 to bail China out of
the global financial crisis.
Zhou Xiachun, the governor of China's central bank, briefly acknowledged that the rise of a less
regulated ―shadow banking‖ system would result in risks being transferred from banks to other
entities in China. But he said that most non-banks engaged in lending were subject in various ways
to government regulation.
Source: New York Times
SLOWED INFLATION TO ALLOW MORE STIMULUS IN CHINA
Inflation slowed further in China last month, the Chinese government said, leaving further room for
the Chinese government to continue heavy lending by the country's state-owned banks to rekindle
economic growth without stoking a broad increase in prices.
The National Bureau of Statistics said that consumer prices were up only 1.7 percent in October
from a year ago, compared with an increase of 1.9 percent in September. Western economists had
expected inflation in China to stay steady in October instead of declining. Producer prices were
down 2.8 percent October from a year ago, a slight faster pace than the 2.7 percent decrease that
economists had expected but not as fast a decline as in September, when they were down 3.6
percent.
The Chinese government was preparing to release a long list of economic indicators for October on
Friday afternoon, and there were hints from Chinese officials that those might show the beginnings
of an economic recovery after a summer in which growth slowed sharply.
"It has become increasingly clear that the Chinese economy is now moving in a better direction,"
said Zhou Xiaochuan, the governor of the People's Bank of China."
Source: New York Times
POLITICS
PARLIAMENT APPROVES 2013 BUDGET, ADDED ROYALTIES INCLUDED
Parliament approved the 2013 Budget last week, with the added royalties proposed by the
Democratic Party Caucus left intact.
Spending is up 18 percent from the latest revision to the 2012 budget. Parliament approved a
budget deficit of MNT 356.3 billion, making it the first to comply with restrictions guiding that the
deficit not exceed 2 percent of gross domestic product (GDP).
Calculations were made based on commodity prices from average historical prices and estimates

15. from Bloomberg. Price assumptions for copper washed coking coal, coking coal, and raw coal in
2012 were USD 6,328.90, USD 131.50, USD 80.20, and USD 65.50 per ton, respectively. The
projected price and export volume used for the budget calculations may be too optimistic,
however, with coal exports projected to more than double next year to 34.7 million from the
expected 16.5 million in 2012, said investment firm Eurasia Capital.
The government expects Oyu Tolgoi to contribute MNT 151.3 billion to the budget. But the
government also plans to collect an additional MNT 445.8 billion in tax revenue by increasing
royalty tax based on commodity prices and lowering some corporate income tax discounts and relief
in the investment agreement between the government and its investment partners Rio Tinto PLC
and Turquoise Hill Resources Ltd.
―Our position is that it is proper to re-discuss some clauses of the agreement, if necessary, to fulfill
the implementation of the agreement,‖ said Prime Minister N. Altankhuyag.
Rio Tinto rejected the government's proposal to renegotiate the agreement on 15 October. Tensions
are high as observers wait to see who will blink first.
―We see that the timing is on Rio Tinto and [Turquoise Hill's] side for now because any serious
tensions between the parties could delay production at Oyu Tolgoi, depriving the government of the
planned base taxes from the OT project. However, the OT renegotiation issue will be a long-term
story and the government may have more leverage to change it sometime in the future.‖
Source: Eurasia Capital
ELECTION SEASON SPARKS ANTI-OT RHETORIC
With election season jump-starting once again in Mongolia, the Oyu Tolgoi copper and gold mine has
become a hot topic for the upcoming local elections.
Earlier this week, a paid advertisement article appeared in all the major daily papers that criticizes
the Democratic Party (DP), which gained the most parliamentary seats in July. While none of the
newspapers revealed who issued the ad, the source speculated that the DP's opponents were behind
it--namely the Mongolian People's Party (MPP). The article cites the renegotiation of the Oyu Tolgoi
investment agreement as a key issue, blaming the DP for softening its pre-election rhetoric about
pushing for renegotiation.
The ad lists grievances, which include the 31-year period Mongolian government must wait before
increasing its stake in the project. It also attacked the tax agreements made, claiming that the 5
percent royalties agreed upon is among the lowest in the world and that Oyu Tolgoi will not pay
value-added nor excise tax. Another claim is that the estimated size of the resource has doubled
since the investment agreement was made in 2000, which it says is reason enough to renegotiate.
A public debate over the investment agreement between parliament members will be held next
week on 18 November.
Source: MICC
PARLIAMENT RECEIVES DRAFT LAW FOR BANK SAVINGS GUARANTEE
Government Cabinet Office Chairman Ch. Saikhanbileg submitted to Parliament a draft law on
savings insurance on 13 November.
The draft law is made up of seven sections and includes clauses on how to introduce savings
insurance and develop legislation on saving insurance companies. It also includes the liabilities
banks hold, taxes and commissions to be paid, and how insurance can be collected.
Source: Zuunii Medee
MINISTER UNVEILS JUSTICE REFORMS
Minister of Justice Kh. Temuujin introduced to government a plan to reform the Justice Department
at the Justice Sector Reform Forum held on 13 November.
Highlights of the plan include marshall service for witnesses and victims of crimes and protection
for judges. The Ministry of Justice would also introduce standardized formats for legal documents
and laws for legislation drafting.
The plan also included details to how Ulaanbaatar's district courts would operate. Courts would be

16. reorganized into two separate court divisions for civil and criminal cases, with construction of the
court houses to begin in 2013.
For prisoners, the ministry would consolidate all inmates into four or five large prison facilities with
the holding capacity for nearly 1,500 prisoners. Four new prison facilities had already been planned
near Nalaikh and Erdenet Soums, and Hovd and Dornod Aimags. The abandoned prison facilities
would be sold, said Temuujin.
Additional police stations are planned so that one police station would stand for every 100,000
people. The ministry has also proposed an electronic case management system that would allow
citizens to track their cases as they progress.
Source: Udriin Sonin
MONGOLIA HOSTS SENIOR JAPANESE-NORTH KOREAN TALKS
Japan and North Korea are to meet in Mongolia next week, a Japanese government spokesman said
Friday, with talks among very senior bureaucrats a sign of progress between the long-time foes.
The fresh talks will be held Thursday and Friday in Ulaanbaatar, building on an August meeting in
Beijing that marked the first official sit down between the two sides in four years.
"We will discuss the matters of mutual concern on a wide-ranging basis," Chief Cabinet Secretary
Osamu Fujimura told a regular briefing. "We are hopeful in that the level of talks will be one step
higher than the last time."
Tokyo is expected to step up its demand that Pyongyang come clean in its kidnapping of Japanese
nationals during the Cold War to train its spies in Japanese language and customs. The issue has
huge traction in Japan, where it is seen as prime among obstacles to the normalization of ties after
decades of mistrust. North Korea insists the abduction issue has been resolved with the return of
several abductees and announcements that others have died.
The two sides met initially to focus on the repatriation of remains of Japanese who died on the
Korean peninsula during and immediately after World War II. They have no formal diplomatic
relations and have long been at odds over numerous issues, including the seizures and the legacy of
Japan's colonial rule of the Korean peninsula. North Korea's nuclear tests and a series of missile
launches have also discouraged rapprochement.
Source: The Nation
CANDIDATES PREPARE FOR LOCAL ELECTIONS
Over 19,000 candidates will run in the upcoming local elections slated for 21 November.
The candidates from the ruling Democratic Party (DP) and the opposition Mongolian People's Party
(MPP) account for the majority of contenders for the 7,813 seats in councils or citizen's
representative councils for provinces and districts of Ulaanbaatar. The two parties have nominated
their candidates for almost every province and district, with 1,029 candidates from the MPP and
1,019 from the DP.
The local councils will be chosen through a mixed electoral system. Elections for citizen
representative councils will be voted on the same day. Some 2,500 vote-counting machines will be
in use for the polls after their introduction in last June's parliamentary elections.
Source: Business Mongolia
MONGOLIA CELEBRATES CHINGGIS KHAN‟S BIRTH
Mongolia celebrated its first annual holiday in observance of the birth of Chinggis Khaan this week.
This year the country celebrated the 850th anniversary of Chinggis Khan's birth, also the first day of
winter according to the lunar calendar. The day's events began with a ceremonial raising of the
Mongolian flag at Sukhbaatar Square, followed by the oath taking ceremony of new citizens and
commemorative speeches.
"Eight hundred fifty years ago, the great forefather of us, the Mongols, was born," said President Ts.
Elbegdorj. "The Earth has seen human births as numerous as the grains of sand and who'd argue it's
not true. Yet, there are not many who had left indelible footprints on the soil and molded their
fame. Of these few, our forefather, the Great Lord Chinggis Khaan, stands out."

17. In his speech, Elbegdorj went on to recite the events of Chinggis Khaan's life and his lasting impact
he had on Mongolia, his empire, and the world. He noted the achievements the ruler made during
his lifetime, including the rule of law set by the Mongols and the peace brought throughout the
Mongol Empire. He also praised him for the democratic principles he taught of representation and
decisions made on consensus.
"The Mongols used to teach that the state is built by the people. They would convene assemblies,
the Ikh Khuraldai, to discuss great missions, and agendas."
In observance of the holiday, places of work were closed and week-day traffic restrictions lifted.
Source: Info Mongolia
RUSSIANS HANG ON THROUGH POST-SOVIET CHANGE
The recent removal of the Soviet-era statue of Vladimir Lenin is a sign that Russia's influence may
be dwindling.
A few weeks before the Lenin statue was dismantled, the Friendship Gate—a stout, white arch
erected in 1956 to celebrate Soviet-Mongolian ties—was torn down to widen a road. Neoclassical
Soviet-era buildings are being replaced by taller, shinier structures, and few people in Mongolia can
still speak Russian. Ulaanbaatar is still home to a small Russian community, but its prominence with
the arrival of foreigners from across the globe is diminishing.
When Mongolia scrapped communism in 1990, about 110,000 Russians lived in the country. The next
decade saw an exodus of Russians, with about 1,600 Russian passport holders remaining permanent
residents in Mongolia. Ivan Bazarov, a third-generation Mongolian-born Russian who works as a
security guard at the Russian Cultural Center, said Mongolia will be his home for life, but it is
growing harder to live in Mongolia on a Russian passport.
"It's more difficult than before for me to take a bank loan. And I can't buy land, for example. I feel
more like a foreigner than before," said Bazarov, speaking in Mongolian. Yevgeny Mikhailov, the
center's director, says the Russian language has lost its preferred status in education. Russian was a
compulsory subject for all schools in communist Mongolia, but today only a handful of schools in
Ulaanbaatar still offer instruction in Russian. "Of course, before the Soviet Union was Mongolia's
main connection with the world, but now Mongolia has chosen English to communicate with the
world," Mikhailov said.
Mikhailov is confident that Russia and Mongolia will maintain good ties and that an interest in
Russian culture and arts will continue. The center also has seen a resurgence in interest for Russian
language courses following a sharp drop in demand from 1994 to 2005. Partially because of Moscow's
financial support for Mongolians seeking to attend Russian universities, Russian-language schools are
still among the most respected in Ulaanbaatar.
Source: Pearly Jacobs
BEATLES‟ NOSTALGIA ACT DRAWS BACK TO MONGOLIA‟S REVOLUTIONARIES
The legend of Beatlemania lives on in Ulaanbaatar, where the tribute band The Bootleg Beatles
performed, taking the capital by storm.
The group, comprising Britons Adam Hastings (as John Lennon), Steve White (Paul McCartney), Hugo
Degenhardt (Ringo Starr) and Andre Barreau (George Harrison), have been around for more than 30
years and performed close to 5,000 shows worldwide.
Their show in Ulaanbaatar was special as it was the first time they had visited the city, where they
performed to an "ecstatic" crowd of more than 10,000 at Sukhbaatar Square. The group said it was
heartwarming to see them singing along to all the songs and having a good time. They also met
Mayor E. Bat-Uul, who had listened to the Beatles growing up.
"He was telling us how much The Beatle's music meant to him growing up as a youth under a
communist regime," said White. "They were unable to listen to Western music as children and had
to sneak off to listen to it, so it kind of played a part in their sort of liberation."
Hastings said they were also glad to have found out about a Mongolian rock band called The
Lemons, which he felt had influences from U.S. rock group The Strokes. The Bootleg Beatles also
enjoyed being close to the Genghis Khan Equestrian Statue, where they wore warrior outfits and

18. snapped several shots of themselves. They also had the chance to see for themselves the guitar-
shaped Beatles monument with four bronze sculptures of the members set against a backdrop of a
brick wall in downtown Ulaanbaatar.
Source: Asia One
CHINA REVEALS ITS NEW LEADERS
With its unique and mystifying blend of pageantry, ritual and secrecy, China's ruling Communist
Party Thursday morning revealed the identities of the 7 officials it has chosen to lead the nation in
the coming years.
Ending the tremendous suspense it has generated over the course of a politically tumultuous year,
the party made public its newly selected Politburo Standing Committee by sending them striding, in
order of seniority, across a red carpet and into the view of journalists and television cameras
crowded into Beijing's Great Hall of the People.
All the new members are men and are heavily weighted toward the so-called ―elitist‖ or
―princeling‖ faction of the party. However, factional lines are drawn not only over policy
differences, but also on personal, regional and patronage networks about which outsiders have only
incomplete knowledge. But it does seem clear that Jiang Zemin, who left the top party job a
decade ago, has managed to place many of his own protégés on the standing committee, and that
the newly departed general secretary, Hu Jintao, came up with the shorter end of the sticks.
What this new leadership group inherits is a country facing vast and daunting new challenges. Social
and economic pressures are growing hand in hand. The global economic slowdown has been
matched by declining growth in China. Public sentiment is ever more soured by growing inequality,
persistent corruption, environmental degradation, and a sense that the party has lost touch with
the lives of ordinary people.
This autumn's change of party leaders will be followed next March by the shifting government
positions. Hu will retain his title as Chinese president until then, when Xi is expected to take it
over. At the same time, Li Keqiang is expected to take over from Wen Jiabao as premier.
Source: The Economist
DON'T EXPECT DRAMATIC CHANGE FROM CHINA'S NEW LEADERS
China's ruling Communist Party unveiled its new top leadership team on Thursday, another all-male
cast of politicians whose instincts are to move cautiously on reform.
Xi Jinping took the helm of the party, heading a team of 7 members in the new Politburo Standing
Committee, the peak decision-making body which will steer the world's second-largest economy for
the next five years.
The following are short biographies of the leaders, including their reform credentials and possible
portfolio responsibilities:
Xi belongs to the party's ―princeling‖ generation, the offspring of communist revolutionaries.
Married to a famous singer, Xi has crafted a low-key and sometimes blunt political style. He has
complained that officials' speeches and writings are clogged with party jargon and has demanded
more plain speaking.
Li Keqiang is seen as another cautious reformer due to his relatively liberal university experiences.
Vice Premier Li Keqiang, 57, is the man tipped to be China's next premier, taking over from Wen
Jiabao, also in March.
Zhang Deijiang is a conservative trained in North Korea. He saw his chances of promotion boosted
this year when he was chosen to replace disgraced politician Bo Xilai as Chongqing party boss.
Zhang is close to former president Jiang Zemin, who still wields some influence. On his watch as
party chief at Guandong, the southern province maintained its position as a powerhouse of China's
economic growth, even as it struggled with energy shortages, corruption-fueled unrest, and the
2003 SARS epidemic.
Yu Zhengsheng is a relatively low-key figure, but considered a cautious reformer. He was a party
boss in China's financial hub and most cosmopolitan city, Shanghai.
Liu Yunshan is a conservative who has kept domestic media on a tight leash. He may take over the

19. propaganda and ideology portfolio for the Standing Committee. He has a background in media and
as a minister of the party Propaganda Department since 2002, Liu has also sought to control China's
Internet.
Wang Qishan is a financial reformer and problem solver with deep experience tackling sticky
economic and political problems. At 64 he is the most junior of four vice premiers and an ex-mayor
of Beijing. But he has a keen grasp of complex economic issues and is the only likely member of the
Standing Committee to have been chief executive of a corporation, leading the state-owned China
Construction Bank from 1994 to 1997.
Wang is likely to lead the fight against corruption and is an experienced negotiator who has led
finance and trade negotiations. He is a favorite of foreign investors.
Zhang Gaoli is a party chief of the northern port city of Tianjin and a Politburo member since 2007.
He is seen as an ally to Jiang Zemin but also acceptable to President Hu Jintao. Also, he is an
advocate of greater foreign investment.
Zhang is low-key with a down-to-earth work style, and not much is known about his specific
interests and aspirations. But with his leadership experience in more economically advanced cities
and provinces, he could be named the top-ranked vice-premier.
Source: Reuters
ANNOUNCEMENTS
THIRD RISK FORUM, 27-28 FEBRUARY, BLUE SKY TOWER
BCM is hosting the third annual Risk Forum of Mongolia from 27 to 28 February at the Blue Sky
Tower.
The forum is co-organized by BCM and Mandal Insurance. It is the most focused and informative risk
management event in Mongolia. This year, the forum will feature excellent participation of key
stakeholders of risk management and aims to become the catapult of change in Risk Management
practice of Mongolia.
For more information call 11 317 027.
___________________________________________
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 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.
The 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.
___________________________________________
COAL MONGOLIA 2013
It is a great pleasure to announce that we are organizing the International Coal Investors
Conference and Exhibition ―COAL MONGOLIA-2013‖ on February 21-22, 2013, for the third time.
The International Conference and Exhibition ―Coal Mongolia‖ has become the biggest Conference in
Mongolia and it has been a great opportunity to explore the Mongolian coal industry. Mongolia‘s

20. total coal resource is 162.3 billion tons with 300 deposits and is one of the world‘s top 15 coal rich
countries. We had over 700 delegates from over 300 foreign and domestic companies, NGOs, and
Government officials in our last Conference.
BCM is supporting this event. BCM members will get special discount.
WHAT IS NEW THIS TIME
- New investment opportunities in coal exploration, production and processing projects in Mongolia
- the fastest growing economy in the world
- Partnerships – bringing Mongolian Coal Miners to the International Market
- Mongolian New Government Position, Investment policy and Environment
- Environmentally friendly, new and efficient technologies in Coal Industry
We invite you to participate in the conference and we hope that the conference theme will be the
source of knowledge and inspiration in your further activities. Please contact Oyun at
oyun@mining.mn or at 70115590.
www.coalmongolia.mn
___________________________________________
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 in use. Following the initiative of Oyu
Tolgoi LLC, the BCM has maintained the Mining Supply Chain Database since March 2009. It is an
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 18:55
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 from 18:55 to 19:05 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.

21. 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', „MONGOLIAN BUSINESS NEWS‟,
„PHOTO GALLERY‟
On BCM‘s English website, the ―Resources‖ and ―Presentations‖ sections are available. Just
uploaded this week are 25 presentations from the Mongolian Investment Summit 2012 on 30-31
October in Hong Kong; recent postings from BCM‘s 5 November and 24 September monthly
meetings; and 9 presentations from Discover Mongolia 2012.
The ―Mongolia Reports‖ section includes ―Mongolia Business Owner and CFO Survey result‖ by BDSec
JSC; ―The fiscal regime for mining - a way forward‖ by IMF Fiscal Affairs Department; ―Mongolia-a
supplement to Mining Journal‖ from Mining Journal October, 2012; ―Macro Overview‖ September,
2012 by EPCRC; ―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.
The ―Photo Gallery‖ contains photos from the 5th Anniversary BCM Gala dinner.
The BCM NewsWire will continue to be issued each Friday, incorporating items already on the home
page for 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.
We have now 690 fans on our Facebook fans page, 857 connections on Linkedin network, and 500+
followers following us on Twitter.
Of course for news information, interviews, event photos, and announcements regarding our
organization, visit the official BCM website at www.bcmongolia.org and www.bcm.mn.

22. ECONOMIC INDICATORS

23. 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]
October 31, 2012 *15.0% [source: NSOM]
*Year-over-year (y-o-y), nationwide
Note: 15.0% y-o-y, Ulaanbaatar city, October 31, 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 – NOVEMBER 15, 2012
Currency Name Currency Rate
US dollar USD 1,393.43
Euro EUR 1,775.02
Japanese yen JPY 17.60
British pound GBP 2,207.89
Hong Kong dollar HKD 180.06
Chinese Yuan CNY 223.69
Russian Ruble RUB 43.94
South Korean won KRW 1.28
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.