This document summarizes news from the Business Council of Mongolia newsletter dated August 17, 2012. It includes highlights on business, economic, and political news items. On the business front, it discusses updates on the OT 94% construction completion, Rio Tinto's concerns about securing a power deal for OT, SouthGobi Resources' suspended mining license and profit decline, and Prophecy Coal's temporary mine shutdown. It also notes leadership changes and deals involving companies like Turquoise Hill Resources, Erdene Resource Development Corp, and Leighton Holdings. The economic section summarizes data, inflation trends, and mining industry effects. Politics updates include changes to government structure and parliamentary activities.

1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
Issue 235 – August 17, 2012
NEWS HIGHLIGHTS:
Business
 OT 94 percent complete;
 Rio sweats on power deal;
 SouthGobi chief sees no way forward for Chalco bid;
 Mongolia Mining Corp. revises production plan;
 SouthGobi suffers steep fall in profits;
 Prophecy suspends operations on speculation of overproduction;
 MRC accepts Meritus' gold resource registration at Gutain Davaa;
 Mandal launches private equity fund;
 Turquoise appoints two board members;
 Turquoise pays USD 19.4 million to cancel deals with Friedland;
 Erdene transfers North American property interests;
 Profit decline may force Leighton to sell off contracts;
 Standard Chartered settles Iran money case;
 China to create rare-earth mega corporation.
Economics
 Social economic data released;
 E-reporting on taxes to save billions of tugrugs in Government spending;
 Rent prices grow with the boom;
 Mongolia tops Asia in inflation growth;
 Public investors lose in Mongolian mine battle;
 Vision to transform Mongolia into clean energy powerhouse;
 Shoring up technology gaps;
 Japanese scholar suggests Mongolia enter computer chip market;
 Development in the capital hobbles forward;
 Mongolia brings in its largest Olympic medal haul in London;
 Sorting out Mongolia’s strategic reserves;
 When nomads settle the city;
 Mongolian immigrants in L.A. look to return home;
 Tooth disease becomes growing concern;
 Mongol Derby takes off;
 Any future for Mongolia’s coal?;
 China lowers 2012 output target as economy slows;
 Chile cuts its 2012 copper output;
 Sliding investment in China signals flagging confidence;
 China’s growth engine begins to slow.
Politics
 Prime Minister orders Development Bank to plug “money losses”;
 Government installs new prime minister;
 Prime Minister submits proposal for new government structure;
 Opposition rejects prime minister’s proposed government structure;
 Speaker announces Parliamentary Council;

2.  Parliament allots its internal budget;
 Khaan Quest 2012 opens;
 Elbegdorj stresses importance of Non-Aligned Movement meeting;
 MP proposes renovations to Darkhan metallurgy plant;
 U.S. scholars speak on democracy at Government Palace.
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.
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BUSINESS
OYU TOLGOI 94 PERCENT COMPLETE
Rio Tinto PLC‘s massive Oyu Tolgoi copper and gold project is nearing completion and remains on
track for commercial production next year, with the cost for the first phase of development
expected to come in as expected at USD 6.2 billion, the mining company‘s Turquoise Hill Resources
Ltd. subsidiary said Wednesday.
Canada‘s Turquoise Hill, formerly known as Ivanhoe Mines Ltd., in its second-quarter earnings
statement said the first phase of construction of the project was 94 percent complete at the end of
July. Initial output of copper and gold concentrate is set to begin before the end of this year and
commercial production is expected in the first half of 2013.
Turquoise Hill said it swung to a net loss of USD 285.9 million in the three months through June
from a profit of about USD 600,000 a year earlier, including USD 168.7 million in financing costs,

3. USD 8.7 million in foreign exchange losses plus other expenses. Revenue for the period fell to USD
28.2 million from USD 47.3 million.
Source: Fox Business
RIO SWEATS ON POWER DEAL
Rio Tinto PLC and its partners in Mongolia‘s Oyu Tolgoi mine are running out of time to strike a
power supply deal for the massive copper and gold project.
Oyu Tolgoi ranks as arguably Rio Tinto‘s most important growth project, but a cloud continues to
hang over plans to start the project as early as next month because a power supply deal with China
remains elusive.
Oyu Tolgoi is located close to the Chinese border, and a paucity of power options near Oyu Tolgoi
means Rio Tinto and its parties need to rely on importing power from China for the initial years of
operation at least. Electrical transmission cables have already been laid and tested, but the Rio
Tinto subsidiary company that is developing Oyu Tolgoi—Turquoise Hill Resources Ltd.—reported
today that a deal with Chinese authorities had still not been reached, despite close to a year of
talks.
―If those negotiations are not successfully concluded and the establishment of a dedicated power
plant is required for production at Oyu Tolgoi, that would adversely affect the project‘s ability to
achieve the planned start of commercial production in 2013,‖ the company said in a statement.
Rio Tinto and its partners have been saying similar things for many months now, and the situation
becomes more concerning as Oyu Tolgoi‘s start date approaches. The project is expected to ―start-
up‖ in the September quarter of 2012, and first commercial production is expected in the first half
of 2013.
Source: Business Day
SOUTHGOBI CHIEF SEES NO WAY FORWARD FOR CHALCO BID
Political sensitivities to Chinese investment will likely scotch the USD 920 million Chinese effort to
acquire a majority stake in SouthGobi Resources Ltd., its top executive said.
The comments by Chief Executive Alexander Molyneux suggest China‘s ambitions to play a major
role in its landlocked neighbor‘s burgeoning and potentially rich mining sector could be dealt a
blow. In a conference call with investors, Molyneux said SouthGobi Resources sees ―no clear way
forward‖ at this time for a bid from Aluminum Corp. of China Ltd. (Chalco) in April to purchase a
majority stake in Hong Kong-traded SouthGobi Resources from Canada‘s Turquoise Hill Resources
Ltd. Molyneux cited a lack of regulatory framework from Mongolian officials.
―Without clear regulations on the foreign investment law or without a process through which such a
foreign investment proposal can be reviewed and considered, it‘s almost impossible to see how
Chalco can navigate its bid through the Mongolian government infrastructure,‖ Molyneux said. In an
interview, he added, ―We‘ve had no contact from Chalco for more than a month, and that doesn‘t
seem to me like something that would be part of a process for putting together a circular for a
bid.‖
Chalco‘s bid in April for SouthGobi Resources triggered a wave of political hostility in the Mongolian
capital of Ulaanbaatar, which in May moved to suspend SouthGobi Resources' mining license on
national-security grounds and unveiled a new law to cap foreign investment in strategic sectors,
including resources. Mongolia‘s government since has not moved to set regulatory procedures in
motion to review the potential bid.
Source: Wall Street Journal
MONGOLIA MINING CORP. REVISES PRODUCTION PLAN
Mongolia Mining Corp., the country's top coal producer by volume, has cut its 2013-14 overall output
target by over 13 percent due to coking and thermal coal price differentials, logistical issues and
weaker demand said Chief Executive G. Battsengel.
The reduction comes at a time of slowing global economic activity, reduced coal demand in many
countries, and an expected fall in China's second-half 2012 steel output. The steel industry is a

4. major user of coking coal, which is more expensive than thermal coal used for power generation.
―Coal demand is slowing, but supply remains strong, particularly from North America and Australia,
I think this pressure will continue in the second half,‖ Battsengel said.
The Ulaanbaatar-based company has decided to shelve plans to start producing thermal coal, and
now will not do so until an export railway to China comes into service in 2015, although it will boost
coking coal output next year. It is targeting a 2013-2014 coking coal output of 12 million to 13
million metric tons, up from 10 million tons planned earlier, but now will not be producing an
anticipated 5 million tons of thermal coal, he said.
―We revised the production plan as the profit margin of coking coal is higher than that of thermal
coal. We are trying to maximize the benefit of the company,‖ Battsengel said. ―Once the railway is
in place, the transportation costs will be lower and the economic benefit of selling thermal coal will
become appealing.‖
China's coking coal prices fell 5 to 10 percent in the first half due to lower demand from steel mills
in response to slowing orders from the construction, ship-building and machinery manufacturing
sectors. Mongolia is a preferred choice for Chinese coking coal importers, given its lower
transportation costs and quality levels comparable with Australian coal.
Source: MENA FN
SOUTHGOBI SUFFERS STEEP FALL IN PROFITS
Coal miner South Gobi Resources Ltd.'s second quarter profit plunged on lower output after the
Mongolian government suspended its mining license following a takeover bid by Chinese Aluminum
Corp. Ltd. (Chalco)
The Mineral Resources Authority in April suspended the company's license to mine at its flagship
Ovoot Tolgoi mine in southern Mongolia after Chalco bid for a 60 percent stake in SouthGobi
Resources.
The company said operations, which have been fully curtailed since 30 June, will be remain so in
the third quarter due to the uncertainty. The company's profits fell to USD 237,000, or a loss of 12
cents per share, from USD 67.3 million, or 37 cent per share, a year earlier. Revenue fell steeply to
USD 8.4 million from USD 47.3 million.
Source: Reuters
PROPHECY SUSPENDS OPERATIONS ON SPECULATION OF OVERPRODUCTION
Prophecy Coal Corp. temporarily halted coal mining operations in Mongolia as its Ulaan Ovoo mine,
in a move that will see 80 workers laid off.
The Vancouver-based company, which announced the news on Thursday, said its coal stockpile,
which is at 187,000 tons, is sufficient to meet contractual supply obligations for fiscal 2012.
Prophecy has paid out a total of USD 100,000 in severance costs to the laid-off workers. The
company said 15 workers will remain on-site for equipment, maintenance, shipping, and security
during the shutdown.
The company expects the local labor force to remain available for ―prompt rehire‖ when needed,
due to little local employment competition. The shutdown is expected to last six months but could
cease sooner, if Prophecy Coal snags new coal sale contracts.
Prophecy Coal said it is using the downtime to work with Mongolian officials to seek road and bridge
improvements, and to open the Zeltura border to facilitate Russia export sales. The overall effect
of the suspended operations will be modestly cash flow positive as Ulaan Ovoo operations had not
yet achieved break-even levels.
Source: Proactive Investors
MRC ACCEPTS MERITUS‟ GOLD RESOURCE REGISTRATION AT GUTAIN DAVAA
The Mineral Resources Council (MRC) has accepted Meritus Minerals Ltd.'s registration of the 3.2-ton
gold Toordogiin Shil prospect on the Gutain Davaa project.
Meritus Minerals has completed its environmental impact assessment and presented it to the
Ministry of Nature, Environment, and Tourism as well as the local municipality government for

5. evaluation.
Source: Meritus Minerals Ltd
MANDAL LAUNCHES PRIVATE EQUITY FUND
Mandal Asset Management LLC has launched its Equity Partners private equity fund, a new
investment vehicle which invests in opportunities arising in Mongolia.
Sixteen top business executives from different backgrounds such as mining, banking, insurance,
capital markets, manufacturing, agriculture, civil aviation, telecommunication and real estate
joined forces to kick start the first ever home-grown private equity fund. The fund will operate as a
hybrid of a private equity fund and an investment club.
―The fund is a unique opportunity as it brings intrinsic sector expertise, ability for turnaround
management, money, and business intelligence to one place,‖ said founder O. Munkhjargal.
Mandal is the sponsor of the fund and acts as the fund manager and administrator.
Source: United Mongolia Corporation
TURQUOISE APPOINTS TWO BOARD MEMBERS
Turquoise Hill Resources Ltd., formally Ivanhoe Mines Ltd., has appointed Charles Lenegan and
Jeffery Tygesen as directors of the company, bringing the total number of directors to 13.
―Charles and Jeffery both have extensive backgrounds in the global mining industry and will bring
valuable knowledge and experience to the board as Turquoise Hill moves toward production at Oyu
Tolgoi,‖ said David Klinger, chairman of the board.
Lenegan currently serves as a director of Oz Minerals Ltd. and as non-executive chairman of Rey
Resources Ltd. He previously spent 28 years with Rio Tinto PLC in various senior management
positions and is a former chairman of the Minerals Council of Australia. Tygesen has served as vice
president of copper development at Rio Tinto since 2009. He has been with Rio Tinto for the past 30
years in a variety of positions within the company‘s copper, energy, and diamond divisions.
Source: Turquoise Hill Resources Ltd.
TURQUOISE PAYS USD 19.4 MILLION TO CANCEL DEALS WITH FRIEDLAND
Turquoise Hill Resources Ltd., the developer of the Oyu Tolgoi copper and gold mine, paid USD 19.4
million to cancel cost-sharing deals with companies linked to former Chief Executive Officer Robert
Friedland.
―These arrangements were on a cost-recovery basis and included aircraft rental and administration
and other services‖ in London and Singapore, Turquoise Hill, formerly Ivanhoe Mines Ltd. and 51
percent owned by London-based Rio Tinto PLC, said in a statement. The deals were made with
companies 100 percent owned by Friedland, it said.
Friedland, who founded Ivanhoe Mines, controls about 10 percent of Vancouver-based Turquoise
Hill, according to data compiled by Bloomberg. He resigned as chief executive in April, three
months after Rio Tinto raised its stake in Ivanhoe Mines to 51 percent, allowing it to replace
managers.
Source: Bloomberg
ERDENE TRANSFERS NORTH AMERICAN PROPERTY INTERESTS
Erdene Resource Development Corp. (ERD) will transfer its North American property interests to
Morien Resources Corp.
The deal mostly concerns ERD‘s interest in the Donkin Coal Project in Cape Bretori, Nova Scotia.
Morien Resources, formerly known as Amalco, will have John Budreski as its new chief executive
officer following the transfer to manage the North American assets of ERD.
―As we move towards a restructuring of our company to allow for a more focused approach to the
development of the Donkin Coal Project and to our Mongolian exploration efforts, it was an
important initial step to ensure we identified an individual who possesses the management
expertise and broad experience to lead the North American business,‖ said Peter Akerley, chief
executive officer of ERD.

6. Budreski was most recently Vice Chairman of Cormack Securities Inc. and prior to that was
president and chief executive officer of Orion Securities Inc. He has over 25 years of broad
experience in the resource and resource investment banking industries. Budreski will be joined on
the executive team of Morien Resources by Michael MacDonald, vice president of technical and
government affairs, and Ken MacDonald, chief financial officer.
Source: Erdene Resource Development Corp.
PROFIT DECLINE MAY FORCE LEIGHTON TO SELL OFF ASSETS
Leighton Holdings, the parent company of Leighton Asia, the contract manager of MMC‘s Energy
Resources and the Salkhit wind farm project, has built itself into a corner.
Australia's largest construction company by market capitalization saw profits fall to AUD 114.6
million (120.5 million) in the six months to 30 June, down two-thirds compared with the six months
ended 31 December. Worryingly, operating cash flow was negative AUD 206 million.
A joint venture (JV) in the Middle East continues to be a drag. The JV, formed in 2007 to tap the
regions' explosive growth, has had major problems collecting payment for work done and Leighton's
been forced to take big write-downs. More recently, Leighton Holdings' move into contract mining is
also a concern. The strategy has seen Leighton borrow heavily to buy costly new equipment. Its
debt to equity ratio jumped 45 percent between 2009 and 2011.
Stabilizing the balance sheet is a priority. But raising equity is not an option—Leighton Holdings'
chief executive said this week he would not ―sleepwalk‖ into issuing equity. The company's biggest
shareholder, German construction company Hochtief, is majority-owned by heavily-indebted
Spanish construction company Actividaes de Construccion y Servicios (ACS) SA, which has been busy
selling assets to cut its own debt. That means ACS is in no position to fund a capital raise at
Leighton.
Cutting leverage to a more appropriate level likely means having to sell assets. But that will hurt
earnings growth. Last year the company sold an iron ore contract mining business to BHP Billiton
that was bringing AUD 1.1 billion of revenue, or 7 percent of the group's total revenue last year.
Source: Wall Street Journal
STANDARD CHARTERED SETTLES IRAN MONEY CASE
Standard Chartered PLC agreed to pay USD 340 million to a New York regulator to settle allegations
that the bank broke U.S. money-laundering laws in handling transactions for Iranian customers,
after a weeklong, trans-Atlantic regulatory drama.
The agreement came just eight days after the regulator stunned the banking world, and fellow U.S.
regulators, by accusing the fifth-biggest U.K. bank by assets of illegally scheming over a decade to
hide more than 60,000 financial transactions totaling USD 250 billion for Iranian clients. The
settlement led the New York regulator to call off a hearing scheduled for Wednesday morning at its
offices in lower Manhattan.
The bank, which earlier had contested much of the allegations, acknowledged the fine covers all
the transactions that the New York regulator alleged were illegal. The bank will acknowledge
misconduct related to the USD 250 billion in transactions, although the final language is being
worked out. The settlement took the form of a term sheet that spelled out the key points in the
agreement, including the monetary penalty.
The penalty is the latest in a series of enforcement actions by U.S. authorities against foreign banks
over allegations they failed to uphold U.S. money-laundering laws. Standard Chartered wanted to
settle with U.S. authorities as a group to assuage investors‘ concerns about exposure to future
penalties, but the other regulators didn‘t move quickly enough, said a person close to the bank.
―Banks that violate international sanctions aren‘t just breaking the law, they are enabling the
financing of terrorist regimes and undermining our collective safety and security,‖ said Erin Duggan,
a spokeswoman for Manhattan District Attorney Cyrus Vance Jr.
Analysts say the settlement is a good outcome for Standard Chartered. They say the penalty is
manageable for a bank the generated nearly USD 4 billion of profit in the first half of 2012. And the
resolution of Lawsky‘s probe, as well as his threat to revoke the bank‘s New York license, is likely

7. to relieve investors, said Alastair Ryan, a banking analyst with UBS.
Source: Wall Street Journal
CHINA TO CREATE RARE-EARTH MEGA CORPORATION
A proposal to form a massive rare-earth corporation has been submitted to the State Council,
China's Cabinet, and is highly likely to be approved soon, a leading domestic producer said
Thursday. China's dominance of the industry has led many hi-tech goods manufacturers—which need
the key ingredients to produce their products—to look at destinations such as Mongolia as a new
source.
The establishment of China North Rare Earths (Group) Hi-tech Co. (REHT) will be led by China's top
rare-earth producer, the Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Co., whose light
rare-earth output accounts for more than half of the world's total, REHT's general manager Zhang
Zhong said. He said REHT would team up with major rare-earth producers in Gansu, Sichuan, and
Shandong provinces to integrate light rare-earth resources in the country's northern region.
China plans to foster two or three large rare-earth enterprises by consolidating companies in the
sector. The industry consolidating and the country's other measures all aim to control
environmental damage, stave off resource depletion and promote the sustainable development of
the sector. China now supplies more than 90 percent of global demand for the metals, although its
reserves account for just 23 percent of the world's total.
Source: China Daily
ECONOMICS
SOCIAL ECONOMIC DATA RELEASED
In the first seven months of 2012, Mongolia experienced the following economic shifts:
Consumer price index
The national consumer price index in July 2012 increased by 0.6 percent compared to the previous
month, 10.4 percent compared to the beginning of the year, and 14.5 percent compared to same
period of the previous year.
Unemployment
The number of unemployed reached 45,600, reflecting an increase of 5,100 persons, or 12.5
percent, compared to same period of the previous year.
External trade
Total external trade turnover increased by USD 722 million, or 12.5 percent, of which imports went
up by USD 525.6 million, or 15.3 percent. Exports grew by USD 196.4 million, or 8.4 percent,
compared to the same period of the previous year.
Industrial output
Total industrial output increased by MNT 97.1 billion, or 9 percent, to MNT 1.18 billion (at 2005
constant prices) compared to same period of the previous year.
State budget
Current revenue of the General Government Budget amounted to MNT 2.7 trillion and current
expenditure reached MNT 3.3 billion, representing a deficit of MNT 599.6 billion. The budget
equilibrated current balance was a surplus of MNT 148.6 billion.
Social welfare
Social welfare pensions and benefits were allocated to 56,600 persons, showing an increase of 478
persons, or 0.9 percent. The total amount of the allocated funds increased by MNT 12.2 billion, or

8. 63.4 percent, compared to the same period of the previous year.
Human Development Fund (HDF) granted cash allowances to 2.8 million people (with double
counting) amounted to MNT 583.8 billion. A total of MNT 373.8 billion was spent on cash allowances
of MNT 10,000, MNT 21,000, and MNT 70,000. Another MNT 210 billion was spent on cash payment
of 1 million to 309,900 elderly and disabled persons.
Freight and passenger
A total of 11.52 million tons of freight and 2.34 million passengers (with double counting) were
carried by railway transport. Compared to same period of the previous year, the number of carried
freight rose by 1.37 million tons, or 13.5 percent, and the number of carried passengers rose by
160,400 persons, or 7.3 percent.
A total of 2.26 million tons of freight and 403,400 passengers (with double counting) were carried
by air transport. Compared to same period of the previous year, the number of carried freight
increased by 984.8 tons, or 77 percent, and the number of carried passengers rose by 97,800
persons, or 32 percent.
Source: National Statistical Office
E-REPORTING ON TAXES TO SAVE BILLIONS OF TUGRUGS IN GOVERNMENT SPENDING
The shift to electronic tax reporting in Mongolia will reduce government expenditures fourfold,
reported the General Tax Office (GTO).
The transition was led by USAID‘s Business Plus Initiative project with its aim to improve conditions
for the 56,000 companies that pay taxes in Mongolia. The project, which cost MNT 21.5 billion to
implement, will reportedly save MNT 72 billion a year.
Although the GTO previously introduced tax reporting via post, tax payers still had to enter an
office to sign the report. This system failed to reduce any expenses. The new tax payment system
will be introduced by May 2014.
Source: Unuudur
RENT PRICES GROW WITH THE BOOM
Mongolia Growth Group Ltd. reported that per-meter rent at the most popular locations in
Ulaanbaatar generally has grown by 50 percent over the past year.
The price growth is apparently driven by a desire by Mongolian businesses to have an increased
retail presence on the streets with the greatest traffic, said Harris Kupperman, chairman and chief
executive of the company. The company has observed a greater market presence from banks in
particular in addition to multi-chain restaurants and cell phone companies, in addition to greater
interest from international brands.
―Over time, it is only natural that these international brands will also need retail space,‖ said
Kupperman. ―This demand, combined with rapidly increasing levels of disposable income from
Mongolian consumers, is leading to an increased ability for tenants to pay higher rates and these
tenants are bidding up prices along the high-traffic streets in the city.‖
The company reported large increases in rents of office space due to the extreme lack of available
supply in downtown Ulaanbaatar and 30 to 50 percent annual increases in per-meter rents is an
apparent norm from the top three tiers of space. The company projected that undersupply of space
will grow more severe in the coming few years before projects are finally complete.
Source: Mongolia Growth Group Ltd.
MONGOLIA TOPS ASIA IN INFLATION GROWTH
The National Statistical Office reported that inflation in Mongolia is the highest in the continent.
Inflation in Mongolia has been out of control in recent years. Most recently it rose 0.6 percent from
the previous month in July. It rose 10.4 percent since the beginning of the year and currently stands
at 14.5 percent year-over-year nationwide.
―On a national scale, Mongolian inflation is extremely high,‖ said B. Badamtsetseg of the National
Statistical Office. ―Compared to the last three years, it has doubled. Meat prices, money supply,

9. and petroleum
prices are the biggest influence on inflation.‖ Badamtsetseg added that inflation had cooled in the
last three months, but was still readily apparent.
Source: UB Post
PUBLIC INVESTORS LOSE IN MONGOLIAN MINE BATTLE
Mongolia's treatment of the Chinese bid for coal-producer SouthGobi Resources Ltd. shows that the
state that birthed Chinggis Khaan has lost none of its warlike spirit. Politicians seem determined to
spike an offer from China's state-owned Aluminum Corp. of China (Chalco), which also involved
mega-miner Rio Tinto PLC and China's sovereign wealth fund.
A truce is possible but public investors look likely to lose out. Chalco's USD 925 million offer for a 60
percent stake in SouthGobi Resources in April produced an unfriendly response: a new investment
law limiting foreign companies to 49 percent ownership of mines unless government gives approval.
More insidiously, Mongolia has dragged its feet over renewing some of SouthGobi Resources'
licenses, scaring away customers and squashing production. The company's shares now trade at less
than half the value of Chalco's April approach, which stands until September.
Mongolia's protectionism looks short-sighted, but its opponents are unlikely to fight back too hard.
Rio Tinto will not want to jeopardize its 66 percent interest in world-class mine Oyu Tolgoi and
many Chinese steel mills depend on Mongolian coking coal. There is room for compromise, as
Mongolia needs capital and customers and China controls its main trade routes. That makes it risky
to boot Chalco out entirely.
The Chinese miner could turn a crisis into an opportunity, lower its offer price and settle for less
than half of the company in return for some certainty of supply. It might also buy out some of the
shares of China Investment Corp., a 13 percent stakeholder in SouthGobi Resources, to mitigate the
fund's losses.
Without Chinese control, Mongolia's nationalists would be happy to leave SouthGobi Resources in
relative peace.
Author John Foley is a Reuters Breaking News columnist.
Source: Reuters
VISION TO TRANSFORM MONGOLIA INTO CLEAN ENERGY POWERHOUSE
31 wind turbines will go into operation over the next month across the football-field-sized Salkhit
wind farm, supplying 5 percent of the nation's current power needs. More importantly, those
involved are hoping it will kick-start a clean energy revolution when the country is in dire need of
non-polluting energy sources.
―We have a vision to transform Mongolia into a clean energy powerhouse of Asia,‖ said B.
Byambasaikhan, chief executive officer of project developer Newcom Group.
Mongolia has the natural advantages to make it a key source of clean energy for the world: high
plateaus with constant winds; vast sparsely inhabited plains; and strong sunlight even during the
bleak winter months. The problem is that Mongolia's past, present, and future are indelibly tied to
coal, which drives the economy.
―All of the power plants in Mongolia are old and coal-fired said S. Sinha, an economist with the
United Nations Development Program in Ulaanbaatar. ―Increased urbanization and major mining
projects are causing a serious strain on the power sector, and the energy infrastructure really needs
a lot more investment,‖ he added.
Over 80 percent of Mongolia's electricity is produced by five coal power plants built mainly in the
1970s and 80s. And with power demands across the country rising dramatically over the last few
decades, each plant is forced to run at full capacity most of the year, especially in winter.
Those involved in the clean-tech industry are optimistic that winds and solar energy have the
potential to radically transform the country, moving it away from coal and while developing an
industry as valuable to the country as the fossil fuel is today. A Japanese research group has
proposed establishing an Asian super grid with Japan and other countries importing electricity via
high-voltage transmission lines from newly created wind farms in Mongolia.

10. Newcom and its partners are already looking beyond Salkhit to what could eventually be a 1,000-
square mile wind farm in the Gobi Desert. It would produce six times as much electricity as the
Salkhit site in the first phase alone.
Source: Global Post
SHORING UP TECHNOLOGY GAPS
The information and communications technology (ICT) sector has been boosted in recent months by
measures to enhance local online content and implement e-bidding systems for investors. However,
technological glitches during the elections in June have highlighted issues with internet coverage.
The country took a step towards increasing Mongolian content on the Internet with the Internet
Corporation for Assigned Names and Numbers‘ acceptance of its proposal for new internationalized
country-code, top-level domains. This will allow Mongolia to use domain names that use Mongolian
Cyrillic script rather than the Latin alphabet. A study between 2005 and 2009 by Intec, a domestic
ICT consulting firm, found just 2,535 websites with Mongolian content. The low figure contrasts
with the 16 percent rise in Internet users to 390,000 between 2006 and 2011. Broadband users
increased from 3,500 to 85,000 in the same period.
To improve connectivity in the country‘s more remote areas, the government also plans to launch a
communications satellite by 2015 with assistance from Japan. Meanwhile, an e-bidding system that
will be used for satellite and other government tenders was unveiled in May. The first official online
tender under the new system was for office equipment for the Ministry of Finance, with local media
estimating that some USD 2.6 million will be saved per bidding processes conducted online.
However, Mongolia still ranked 76th out of 190 countries in this year‘s U.N. E-government Survey, a
fall of 23 places from 2010. The One Home, One PC government program provides low-cost
computers to homes and is credited with help bring nationwide PC penetration to reach 60 percent
by 2009. The country ranked 63rd out of the 143 countries surveyed in the Network Readiness Index
2011-12, released by the World Economic Forum in April. Mongolia scored well in its business and
innovation environment (69th), but poorly on its political and regulatory environment (105th). Also,
government and business usage ranked 44th and 84th respectively compared with individual usage
of the internet at 101st.
Source: Oxford Business Group
JAPANESE SCHOLAR SUGGESTS MONGOLIA ENTER COMPUTER CHIP MARKET
Parliament Speaker Z. Enkhbold discussed Mongolia's opportunity for opening up the manufacturing
of hardware and semiconductors for computer chips in Mongolia during a recent meeting with the
director of the University of Tokyo recently.
Enkhbold met with university Director Kunihiro Asada to discuss how Mongolia could enter the
market of fabless manufacturing, the design and sale of hardware devices and semiconductor chips.
Enkhbold said Mongolia was planning to establish a research center next to the National University
of Mongolia that would be similar to the Design and Education Center at the University of Tokyo.
―Mongolia shouldn't rely only on its natural resources,‖ said Enkhbold. ―We have a potential to
develop the fabless manufacturing sector. To do that it is important to practice a policy to promote
and sustain the sectors that requires one‘s intelligence and academic skills.‖
As an example of this drive, he spoke of the proposal by Japan's Softbank Corp. to Newcom Group
to develop an Asian energy super grid that could supply clean energy to Mongolia's neighbors
through high-voltage energy transmission lines.
Source: Info Mongolia
DEVELOPMENT IN THE CAPITAL HOBBLES FORWARD
Ulaanbaatar traffic stands as a great hurdle to the development of the country. While city
authorities blame the increasing number of cars, poor urban planning seems to be the true culprit.
Its implementation is even worse, and city government has historically let the problem fester as
officials conspired to sell the licenses to public property.
Although a master plan for Ulaanbaatar does exist, Japan International Cooperation Agency (JICA) is

11. currently revising it because ten years ago developers did not predict the sharp jump in population
and expansion of ger districts.
More roads will be needed to clean up traffic congestion, but little space is left. Widening roads
does not seem a possible option either. A law bans the construction of building within a 50-meter
range of roads. It also requires drainage lines and other infrastructure underneath roads. Both go
largely ignored, leading to excessive flooding during the rainy season.
Public officials have too many tools and opportunities for corruption at their disposal. They have
every interest in keeping public property undeveloped so they may sell it for themselves, as
happened with the Urgoo Hotel. The mayor and the district government's authority to issue licenses
is too much power and seems specifically there for embezzlement purposes.
Last month it seemed the people were finally fed up with the city administration and so chose the
Democratic Party (DP) to run the city instead of the Mongolian People's Party (MPP). Some progress
is already becoming apparent. The last month has seen the beginning of a number of construction
projects for buildings, public roads, and parks. A number of tenders that had fallen to the wayside
are now getting the green light as well.
City residents are expecting a lot from the new administration. They will need to take their time in
proper planning and attaining the financing to fulfill their election promises. But it seems they can
get that done faster than the last party, which had 100 years to do the same without much result.
Jargalsaikhan ―de Facto" Dambadarjaa is an economist, specialized in the financial markets.
Source: UB Post
MONGOLIA BRINGS IN ITS LARGEST OLYMPIC MEDAL HAUL IN LONDON
It was one of those priceless Olympic moments when a small corner of East London was
transforming into an outpost of Ulaanbaatar, as scores of Mongolians celebrated a new Olympic
landmark. The victory of boxer U. Munkh-Erdene in his light welterweight quarter-final bout against
host nation favorite Thomas Stalker means that Mongolia was assured of winning more medals at
London 2012 than in any previous Olympics.
―My soul is full of emotion.‖ said Munkh-Erdene. ―It has been my longstanding dream to get a
medal, which I have now achieved.‖
With a silver and two bronze medals already in the bank, Munkh-Erdene‘s win meant that two
Mongolian boxers—flyweight N. Tugtsogt being the other—had qualified for the semi-final stage of
the respective competitions. This assured them of at least a bronze medal, in turn guaranteeing
Mongolia a haul of at least five medals—a new record.
The country mustered four medals on three previous occasions, most recently in Beijing four years
ago, when it won its first two golds. It seems particularly appropriate that this record should have
been attained at London 2012, as the metal ore for some of the medals was mined at Oyu Tolgoi.
Munkh-Erdene's victory was all the more noteworthy as it was achieved in a highly-charged
atmosphere, with the vast majority of speculators noisily urging on the home favorite Stalker. The
final tally was close with a 23 to 22 point decision in favor of Munkh-Erdene. The win brought out a
celebration in earnest from the 100 to 200 Mongolians present—many armed with the highly
distinctive red, blue and gold national flag. The Mongolia fans had chanted their support despite
being comprehensively outnumbered.
Source: Inside the Games
SORTING OUT MONGOLIA‟S STRATEGIC RESERVES
The term ―strategically important‖ in reference to certain mineral deposits has long been used in
the laws of both Russia and Mongolia, but there is considerable ambiguity in people‘s minds about
its intention and application.
Mongolian law lists 15 deposits as already accepted as strategically important, while the second
refers to another 39 deposits and asks the government to first estimate their reserves accurately.
The list is not final, however. If a reserve in a deposit is exhausted, it loses its place on the list and,
if a new deposit with appropriate reserves is discovered it can be added to the lists. It is
Parliament‘s job to do both.

12. Three considerations were taken into account when making the list of strategic mines: reserve
amount, whether or not exploration was conducted using state funding, and the criteria outlined in
the Law on Minerals. Critics will argue Parliament passed the decree to the list of strategic deposits
without any reference to professional opinion and was prepared on political grounds.
In the five years since the decree was made by Parliament, exploration has been conducted
exclusively by the private sector. It is widely believed that application of the three criteria
mentioned above will disqualify many of the candidate deposits from ever being on the list as they
have run out of reserves. Yet, several deposits where exploration licenses are owned by foreign
companies will have to be included. Many observers feel up to 60 mines will have to be transferred
to full or partial state ownership if the criteria laid down by the decree by Parliament regarding
strategically important mines are to be enforced.
Source: Mongolia Mining Journal
WHEN NOMADS SETTLE THE CITY
Over the last decade, Mongolians have rapidly begun to concentrate in Ulaanbaatar, as well as
other cities around the world.
This trend is accelerating and making Ulaanbaatar, originally designed for a maximum population of
400,000, an unbearably crowded place, though still relatively small in comparison to most of
China‘s major cities. Almost half of Mongolia‘s entire population lives in the capital.
Traffic is one of Ulaanbaatar‘s major issues. Apart from the very center of the capital, there are
many traffic lights at intersections, and the result is horrendous traffic jams. Another of
Ulaanbaatar‘s ills is pollution, which largely comes from the raw coal that the majority of the
habitants burn for heating in the long winter. In the winter, the atmosphere above the city is full of
soot and smoke.
Why herders want to come to the city is a complex question. One expert said that because of the
popularity of television, more and more Mongolians are gradually getting to know about modern
society. The young generation aspires to have contacts with the outside world, and going into the
city is the only way to do that. Of the 2.7 million Mongolians, more than 300,000 go and study or
work in Japan, South Korea, and China, helping to open up Mongolia to the outside world. Another
reason for the mass migration to the city is the desertification of Mongolian territory, which is
making the pasture land unsuitable for grazing.
The wealth disparity is wide. Most herders arriving in the capital have no tradition of saving money.
After selling their flock they can only afford to live in gers. Buying a house is an unreachable dream
for them. Over time, their children grow up and yearn to live in a building, to have convenient
living facilities, to watch television, and to surf online. While some can achieve this by working for
foreign mining firms, others remain marginalized, unable to follow the city‘s rhythms for a secure
livelihood.
Source: World Crunch
MONGOLIAN IMMIGRANTS IN L.A. LOOK TO RETURN HOME
Starting just over two decades ago, tens of thousands of citizens started leaving Mongolia amid a
wrenching economic transition from a planned economy to a free market. Now, with the Mongolian
economy poised to boom, many émigrés are wrestling with a dilemma—whether or not to abandon
the new country for the old?
According to 2010 figures from the National Statistical Office in Ulaanbaatar, over 100,000
Mongolians live abroad. The most recent U.S. census figures place the number of Mongolians in the
United States at around 15,000, a 300 percent increase from a decade ago. Los Angeles has perhaps
the largest Mongolian community in the country, roughly 5,000.
Mongolians abroad can‘t help but keep a close eye on what‘s going on at home. The economic news
of late has been eye-popping: some mining experts estimate that the country possesses as much as
USD 1 trillion worth of untapped precious metals and minerals. While the possibilities may be
greater in the United States, many find the immigrant path to prosperity to be a difficult one.
A 2005 study on the ―Status and Consequences of Mongolian Citizens Working Abroad‖ that surveyed

13. over 100 migrants from Los Angeles, Denver and San Francisco found that although many had
extensive educational backgrounds and professional qualifications, more were in ―low-status
occupations‖ due to a lack of legal documentation and other factors.
Those determined to build new lives in Los Angeles are attempting to bolster the sense of a
Mongolian community anyway they can. This year community leaders organized a Naadam festival
where B. Ulambayar, a Mongolian sumo wrestler who now makes Los Angeles his home, was a
headliner at the festival. But no matter what community leaders are doing to make immigrants
there feel closer to their homeland, Mongolia is looking more and more appealing.
―People go to school, finish their degrees, and just go back home,‖ said M. Dovdon, a volunteer at
the Mongolian School in Los Angeles. ―They don‘t stay here for long.‖
Source: Eurasianet
TOOTH DISEASE BECOMES GROWING CONCERN
Tooth disease among Mongolian children is reaching a ―dangerous condition‖, warned international
health aid group Doctors Without Borders
―Tooth disease in Mongolia is at a dangerous condition, particularly among children,‖ said group
leader Volf Gan Pal. ―Of course the main reason is Mongolian parents allow their kids to eat too
many sweets.‖
He warned Mongolia to take quick action and education the population on proper habits and
dangerous behavior.
Doctors Without Borders has conducted annual treatments in the rural areas of Mongolia since 2007.
Since then German doctors have visited 15 of Mongolia‘s provinces and treated 7,200 Mongolians.
Source: News.mn
MONGOL DERBY TAKES OFF
Following in the hoofsteps of Chinggis Khaan's Mongol horde, Mongolia has launched its first Mongol
Derby, billed as the world's longest horse race.
The 1,000-kilometer marathon retraces ancient routes across the rolling steppe with 25 horse
stations set up at 40-kilometer intervals. This year the race, which has been held annually since
2009, began on 10 August. Competitors aim to complete the course on semi-wild mounts in an
exhausting seven to ten days. The event aims to raise money for economic development charity
work in Mongolia, and is the brainchild of the Adventists, the group that is also behind the Mongol
Rally. There is no route—it's up to participants to make their way between the horse stations as
quickly as they can. At the stations each must pick up fresh horses.
Mongolian horses are renowned for being ultra-tough and holding amazing reserves of stamina.
Hopefully the same can be said for the riders.
Source: Eurasianet
ANY FUTURE FOR MONGOLIA‟S COAL?
Coal is quickly becoming the main driver of Mongolia‘s economic strength, providing more funding
to the state budget than even copper today.
Coal exports are on a fast upward trajectory, comprising 98.6 percent of the foreign trade of
mineral resources and 48.6 percent of total exports. Mongolia benefits from coal miners as they are
some of Mongolia‘s most prominent taxpayers and create numerous jobs with competitive salaries.
Mongolia holds an estimated 175 billion tons of coal, and that number could grow with further
exploration. But China is perhaps hungry enough to take it all.
Randolph Koppa, President of Trade and Development Bank of Mongolia (TDB), said in a recent
speech regarding Mongolia‘s coal market that Mongolia will have to depend on the development of
China‘s economic and industrial growth as a linchpin to its own. He predicted that by 2016 Mongolia
could export 50 million tons of coking coal, a key ingredient to steel production, to China. China is
the world‘s leading consumer of coking coal, with an iron industry that grew by 9 percent last year
compared to worldwide growth of 6 percent.
Yet coal miners are growing anxious watching the coal market experience downfalls in prices. Fear

14. of a ―hard landing‖ to China‘s economy has many worried how it would affect Mongolia.
Despite this there is room for optimism. According to China‘s 2012-2017 development plan,
construction will exceed that in the United State eight times.
―Although some of its economic factors might face some turbulence… [China‘s] domestic coal
exploitation will reach its peak,‖ said Koppa.
Source: Mongolian Economy
CHINA LOWERS 2012 OUTPUT TARGET AS ECONOMY SLOWS
Top coal producer and consumer China cut coal output targets at the top three producing regions by
as much as 7 percent from a year ago to ease a supply glut caused by a slowdown in economic
growth, which has also weakened global prices.
The National Development and Reform Commission (NDRC), a top government economic planning
agency, set China‘s total coal output for 2012 at 3.65 billion tons, an increase of just 3.7 percent
from a year ago and a deceleration from the 8.6 percent growth of last year and 9 percent the year
before. Coal accounts for about 80 percent of the fuel China uses to generate electricity, but the
waning growth has reduced demand for power from manufacturers and cut the increase in total
electricity generation to around 2 percent so far this year, compared to 12 percent for the whole of
2011.
Chinese miners will not follow counterparts in top coal in cutting production as they grapple with
global prices which have fallen about 20 percent so far this year. Cuts in output targets follows
double-digit growth in coal production from Inner Mongolia and Shanxi from a year ago, which had
driven national output 9 percent higher and created record high stockpiles at the key Qinhuangdao
port of 9.5 million tons by mid-June. Traders said they did not expect demand to increase until the
end of the year at best as many power utilities overestimated their need for coal and now have
huge stockpiles. China does not publish stockpile figures.
―If Chinese miners can stick to the target, then coal prices should stabilize and perhaps see a
rebound in the fourth quarter,‖ said a Beijing-based coal trader. ―For exporters like us, a return to
price stability will also help to put an end to the large scale defaults that we saw over the past two
months. It will make our lives a lot better.‖
Source: Reuters
CHILE CUTS ITS 2012 COPPER OUTPUT
Chile, the world‘s top copper producer—a title Mongolia is soon to challenge with its massive Oyu
Tolgoi copper-gold project—lowered its 2012 average copper price outlook to USD 3.52 a pound
from a previous estimate of USD 3.85, and sees prices slipping to USD 3.48 next year.
―The lowest copper price [forecast] is chiefly due to downwardly revised GDP [gross domestic
product] growth and industrial production in the main copper consuming countries, as well as lower
demand expectations,‖ state copper commission Cochilco said.
Copper prices have shed 12 percent since the beginning of May on mounting fears of deteriorating
economic outlooks in top metals consumer China, the Euro zone and the United States. But
expectations for central bank stimulus measures amid signs of global economic weakness have
helped to limit copper‘s downside, keeping prices locked in a trading range between USD 7,200 a
ton (USD 3.25 a pound) and USD 7,800 a ton (USD 3.55 a pound) since mid-May.
Chile, which produces about one-third of the world‘s copper, is seen mining 5.4 million tons this
year, significantly down from a previous projection of 5.7 million tons. The reduction is larger than
the output of top copper producer Codelco‘s giant Andina mine, which produced about 234,000 tons
of copper last year. Chile‘s copper output would be a 2.7 percent increase from last year‘s
production.
The Andean country is battling fiercely dwindling ore grades in its ageing mines, and uptick in labor
actions, worker accidents and extreme weather. But some expansions of its behemoth mines and a
few new deposits have lifted output in recent months.
Chile‘s 2012 production will be boosted by a recovery in the world‘s largest copper mine,
Escondida, majority owned by BHP Billiton Ltd., as well as higher output from others, Cochilco said.

15. Source: Reuters
SLIDING INVESTMENT IN CHINA SIGNALS FLAGGING CONFIDENCE
Foreign direct investment (FDI) in China, Mongolia‘s chief trading partner, fell to the lowest level in
two years in July.
Investment declined 8.7 percent from a year earlier to USD 7.58 billion, the eighth drop in nine
months and the smallest inflow since July 2010. Chinese financial institutions sold a net CNY 3.8
billion (USD 600 million) of foreign currency last month, indicating capital is flowing out as property
curbs, weakness in exports slow growth, and the yuan weakens. Premier Wen Jiabao stoked
speculation that the government may cut banks‘ reserve requirements to support the economy
when state media reported yesterday that he saw room to adjust monetary policy.
―In the recent months, especially since July, there are some positive changes in the economy,‖ said
Wen. Domestic demand is showing greater effect in supporting economic growth, industrial output
in eastern regions is picking up and the job market is stable, he said.
China‘s slowdown may extend into a seventh quarter after export growth collapsed in July and
industrial production and lending missed economists‘ forecasts. The nation reported a USD 71.4
billion capital account deficit in April through June, the biggest quarter shortfall in data going back
to 1988.
The People‘s Bank of China (PBOC) is likely to cut reserve requirements within the next two weeks,
Nomura Holdings Inc. said in a note today, saying that Wen‘s comments reinforced that view. UBS
AG said that a reduction may come ―soon‖ and the central bank is likely to work with regulators to
encourage more lending to key investment projects. The nation‘s biggest banks are currently
required to park 20 percent of their deposits at the PBOC.
Source: Bloomberg
CHINA‟S GROWTH ENGINE BEGINS TO SLOW
A grim routine has developed around China‘s monthly economic data: Beijing publishes numbers
that surprise on the downside, analysts lower their growth forecasts, and markets wait with bated
breath for policy makers to respond with more stimulus measures. A slowdown in growth to the
main consumer of Mongolia‘s raw material exports could stump its own.
While the Chinese economy is holding up far better than it did when the global financial crisis
erupted in late 2008, the expectation was that it would be doing more than just holding up at this
point in time. It was supposed to be in the midst of a full-fledged recovery. Instead, a slowdown in
industrial production, a plunge in year-on-year export growth to 1 percent in July and tepid bank
lending all point to the recovery both being weaker and coming later than many investors had
hoped.
―People tend to be too optimistic about how long it takes policy to affect the real economy,
especially with the external headwinds,‖ said Shuang Ding, an economist with Citi Group.
China shifted to a pro-growth policy stance at the start of June when it cut interest rates for the
first time in nearly four years, following that up less than a month later with another rate cut.
There have also been signs of a ―stimulus-lite‖—a small burst of spending that would echo the much
bigger cannons brought out in late 2008.
A steep slide in exports has put even more pressure on Beijing. For the past five years, the Chinese
economy has progressively reduced its reliance on exports, to the point that they are no longer seen
as a growth engine for the country. But they are still important, employing tens of millions of
workers. The big question now is whether the disappointments of July prompt Chinese policy
makers to unveil more in the way of monetary easing and fiscal spending.
While analysts‘ opinions vary on how Beijing will respond, uncertainty stems from the fact that the
country‘s top leaders are more focused on politics than economics as a once-in-a-decade leadership
succession is due for this year.
Source: Financial Times

16. POLITICS
PRIME MINISTER ORDERS DEVELOPMENT BANK TO PLUG “MONEY LOSSES”
Prime Minister N. Altankhuyag has ordered officials at the Development Bank of Mongolia to put a
stop to its daily financial losses of MNT 120 million.
The losses are a result of interest it must pay for the USD 580 million in bonds it sold in its debt
offering in April, Mongolia‘s first sovereign debt offering in international markets. The premier has
called for the Development Bank to discontinue its daily losses immediately.
Source: Zuunii Medee
GOVERNMENT INSTALLS NEW PRIME MINISTER
N. Altankhuyag of the Democratic Party was confirmed as Mongolia's new prime minister, ending
weeks of political uncertainty after the party failed to win enough seats in a June election to form
a government on its own.
The transfer of power from the former ruling Mongolian People's Party (MPP) raised hopes of a
friendlier investment climate and a tougher stance on graft, especially after last week's conviction
of MPP leader N. Enkhbayar for corruption. In a note to clients private equity firm Origo Partners
called Altankhuyag's confirmation as the country's 27th prime minister ―a positive development‖,
adding it viewed Enkhbayar's conviction ―a landmark event‖ for stronger anti-corruption regulatory
enforcement.
The DP's moderate stance will be a departure from the MPP, which had demanded to renegotiate
mining contracts with a view to limiting foreign ownership of the country's mineral wealth. One of
the targets was the massive Oyu Tolgoi copper and gold project, which is set to start production
later this year.
―The newly established government will welcome foreign investment, we will guarantee them a
stable legal environment, we will try to fulfill our party agenda,‖ MP Chimed Saikhanbileg,
proposed as Minister of Government Office by the prime minister, told Reuters in a telephone
interview.
Source: Reuters
PRIME MINISTER SUBMITS PROPOSAL FOR NEW GOVERNMENT STRUCTURE
Prime Minister N. Altankhuyag submitted a proposal for the structure of the new government to
Speaker Z. Enkhbold.
The new government would include 16 ministries and 19 ministers. Altankhuyag said he would first
have to discuss the structure of government before deciding who would be ministers.
The following are the names Altankhuyag submitted for the new government selection (this list is
subject to change as it is just a preliminary mock up and the MPP has since rejected it):
Prime Minister: N. Altankhuyag (DP)
Deputy Prime Minister: D. Terbishdagva (MPRP)
Minister of Government Office: Ch. Saikhanbileg (DP)
Minister of Environment and Green Development: S. Demberel (Civil Will-Green Party)
Minister of Foreign Affairs: L. Bold (DP)
Minister of Finance: M. Enkhsaikhan (MNDP)
Minister of Justice: Kh. Temuujin (DP)
Minister of Construction and City planning: A. Gansukh (DP)
Minister of Defense: Sh. Tuvdendorj (DP)
Minister of Education and Science: L. Gantumur (DP)
Minister of Road and Transport: B. Ariunsan (DP)
Minister of Culture, Sport and Tourism: Ts. Oyundari (DP)
Minister of Mining: G. Batkhuu (DP)
Minister of Industry and Agriculture: Kh. Battulga (DP)
Minister of Labor: Ts. Oyungerel (DP)
Minister of Human Development and Social Welfare: R. Amarjargal (DP)

17. Minister of Economical Development: N. Batbayar (DP)
Minister of Energy: M. Sonompil (MNDP)
Minister of Health: N. Udval (MPRP)
Source: News.mn
OPPOSITION REJECTS PRIME MINISTER‟S PROPOSED GOVERNMENT STRUCTURE
The Mongolian People‘s Party (MPP), the opposition party in Parliament, has rejected Prime Minister
N. Altankhuyag‘s proposed government structure.
Altankhuyag submitted the his proposal for 16 ministries and 19 Minister in government on 15
August, but faced opposition from the Justice Coalition, the Democratic Party‘s largest partner in
its grand coalition, as well as the MPP. Although the DP would eventually persuade the Justice
Coalition to vote in favor of the proposal, it was ultimately rejected by the MPP.
Source: Info Mongolia
SPEAKER ANNOUNCES PARLIAMENTARY COUNCIL
Parliament Speaker Z. Enkhbold has issued an order for the approval of the Parliamentary Council.
Amendments to the composition of the council will be made as soon as the Mongolian People‘s Party
officially announces formation as the opposition party in government.
The following MPs have been approved for the 15-member council:
Ch. Ulaan, the Deputy Speaker of the Parliament
D. Erdenebat, the Chairman of the Democratic Party faction in the Parliament
N. Battsereg, the Chairman of the ―Justice‖ Coalition (the merge of Mongolian People‘s
Revolutionary Party and Mongolian National Democratic Party) faction in the Parliament
N. Altankhuyag, the Head of Democratic Party
U. Enkhtuvshin, the Head of Mongolian People‘s Party
S. Oyun, the Head of Civil Will-Green Party
Ts. Tsolmon, the Chairman of Security and Foreign Policy Standing Committee
G. Bayarsaikhan, the Chairman of Environment, Food and Agricultural Standing Committee
Z. Bayanselenge, the Chairwoman of Social Policy, Education, Culture and Science‘s Standing
Committee
A. Bakei, the Chairman of State Structure‘s Standing Committee
Ts. Davaasuren, the Chairman of State Budget Standing Committee
Sh. Tuvdendorj, the Chairman of Legal Standing Committee
B. Garamgaibaatar, the Chairman of Economic Standing Committee
S. Ganbaatar, the Representative of the Independent Candidates elected in the Parliament
L. Erdenechimeg, the Representative of the Women Candidates elected in the Parliament
Source: UB Post
PARLIAMENT ALLOTS ITS INTERNAL BUDGET
Parliament has adopted a 2013 Budget for Parliament of MNT 18.6 billion. This particular budget
pertains to the needs of Parliament and its members.
The budget includes MNT 400 million for the renovation of the parking lot for MPs, MNT 500 million
for the repair of rooms for MPs, MNT 800 million to be distributed to the various parties and
factions, MNT 637 million for routine measures, and MNT 200 million for apartments.
Source: Montsame
KHAAN QUEST 2012 OPENS
Hundreds of service members and distinguished guests from the U.S. Army Pacific Command and
surrounding countries gathered for the Khaan Quest 2012 opening ceremony held at the Mongolian
Armed Forces Peace Support Center at the Five Hills training area near Ulaabaatar.
―For the seventh consecutive year, these ancient hills in central Mongolia graciously host the
servicemen from peace-loving nations striving together for the cause of peace on our planet,‖ said
President Ts. Elbegdorj in his opening address

18. Khan Quest 2012 is a combined joint exercise hosted by the Mongolian Armed Forces in partnership
with USARPAC, which contributes to enhancing the defense readiness and tactical interoperability
of U.S., Mongolian and other international forces in the Pacific region. It is designed to promote
regional peace and security, while strengthening multinational relations.
This year‘s event is slated to host more than 1,000 service members, including approximately 300
U.S. personnel and participants from South Korea, India, Canada, New Zealand, Austria, Japan,
France, the United Kingdom, and Germany. Kazakhstan, Russia, and China will also have observers
present during the exercise.
Source: Defense Video and Imagery Distribution System
ELBEGDORJ STRESSES IMPORTANCE OF NON-ALIGNED MOVEMENT MEETING
President Ts. Elbegdorj said Tuesday that his country attached great significance to the upcoming
meeting of the Non-Aligned Movement (NAM) slated for 26 to 31 August in Tehran, Iran.
Elbegdorj made the remarks in a meeting in Mongolia‘s capital city of Ulaanbaatar with the visiting
Iranian Deputy Foreign Minister for Asia and the Pacific Affairs Abbas Araqchi. During the meeting,
Aragchi submitted an invitation from Iran‘s President Mahmoud Ahmadinejad to his Mongolian
counterpart to attend the NAM summit meeting in the Iranian capital. Elbegdorj welcomed the
invitation saying that Ulaanbaatar would participate in the meeting at the highest level.
The president then referred to the 40 years of historical cooperation between Tehran and
Ulaanbaatar, stressing the need to promote bilateral relations.
Source: IRNA
MP PROPOSES RENOVATIONS TO DARKHAN METALLURGY PLANT
MP S. Ganbaatar and a union representative called for renovations to the Darkhan Metals Refinery
plant in a press conference.
Ganbaatar, who is the former president of the Confederation of Trade Unions and the current head
of the Development and Renovation Committee, met with Employer and Owner Union head L.
Khaschuluun to announce that government would collect investment from the Darkhan-Uul
Governor‘s Office until 10 September for the proposed Darkhan plant. Ganbaatar said that
development of heavy industry would have an impact on light industry as well and that it was in the
interest of the nation to shed its dependence on foreign nations for metallurgical and chemical
interests.
But the governor of Darkhan has argued that Mongolia‘s iron-ore reserves are quite small and
throughout the plant‘s 18 years of operation, it has never had great output or a large impact on the
economy. Mongolia has an estimated 270 million tons of iron ore, enough to last 100 years of
extraction. Mongolia current has two mines for iron ore extraction that employ 3,000 people.
Darkhan‘s Metallurgy plant currently employs some 1,500 people.
According to the 2010-2015 development plan for the plant, it would need between MNT 100 billion
and MNT 120 billion of investment, of which the government has collected some MNT 60 billion so
far.
Source: Udriin Sonin
U.S. SCHOLARS SPEAK ON DEMOCRACY AT GOVERNMENT PALACE
Three scholars, Francis Fukuyama, Steve Krasner, and Larry Diamond spoke on issues regarding
developing democracy in a nation.
―The theorists, researchers, scientists and students of democracy and political studies desire to
meet these professors first,‖ said President Ts. Elbegdorj in his opening remarks. Criticizing the
current state of politics in Mongolia, he later added, ―In this poor, atrophic society, state policy will
surely be poor too. Thus I want to ring the bell to wake everyone up.‖
Fukuyama spoke first of the three on the topic of the development of democracy in the post-
economic crisis world. He pointed out that although the U.S. economy has grown, salaries have not
experienced much growth in the last 30 years, and that most of the wealth in the country was
chiefly in the hands of the wealthy few. The recession in the United States was linked to weak

19. government regulation and the United States would have to develop a strong, efficient government
rather than a big and ineffective one to prevent a reoccurrence of this disaster.
Next, Krasner spoke on the so-called ―mining curse‖, a term used for how resource-based
economies can exacerbate disparity between rich and poor society and create economic turmoil. He
pointed out that government still faces the same issues of lacking infrastructure in addition to poor
health care and education after its distribution of cash handouts. He suggested Mongolia partner
with a nation such as Singapore to develop a ―Mongolian Development Fund.‖ The fund would be
overseen by a board with members from both Mongolia and its partner nation.
Finally, Diamond discussed the quality of democracy in various countries and the fall in the number
of democracies from 120 in 2010 to 116 in 2012. Bad governance, he said, is one of the chief
obstacles to any democracy, resulting in corruption and the undervalued sale of natural resources.
He said developing a strong democracy has a direct correlation to stamping out corruption in a
society, and that abiding by the law was a main condition to that cause. He used Enkhbayar‘s
recent arrest and four-year sentencing for graft as evidence that Mongolia was on the right track.
Source: Unuudur, Info Mongolia
ANNOUNCEMENTS
DISCOVER MONGOLIA-2012, AUGUST 30-31
The Discover Mongolia conference will be held on August 30-31 in Ulaanbaatar. The conference
venue will again be the Children's Palace. BCM is again a supporting organization of Discover
Mongolia 2012, and BCM members will have the opportunity for an early-bird rate for attendance.
Oyu Tolgoi LLC, Mongolia's largest copper and gold mining firm, will be the event's premier sponsor,
in addition to the forum's ―gold sponsors‖: Monnis International Inc., Xanadu Mines Ltd., Aspire
Mining Ltd., Micromine Mongolia LLC, and Mongolian Mining Corp. The conference agenda will
concentrate on recent developments that have taken place in Mongolia's mining and foreign
investment landscape.
For more information, call +976 7014 9762 or email info@discovermongoliaforum.com.
___________________________________________
MINING AND CONSTRUCTION CONFERENCES, 5-7 SEPTEMBER
Representatives of 170 companies from 22 countries will gather in Ulaanbaatar for the Mining
Mongolia 2012 and Building & Construction Mongolia forums from 5 to 7 September at Buyant-Ukhaa
Sports Palace. BCM is supporting this event and so its members will receive a 5 percent discount to
book exhibition space.
For more show information and online visitor pre-registration, please visit
miningandconstructionmongolia.com.
___________________________________________
MONGOLIA INVESTMENT SUMMIT 2012, HONG KONG, OCTOBER 30-31
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 Organization for the event. Jim Dwyer, Executive Director of BCM, will
chair both morning sessions. For more information, find a brochure to the event by logging on to
the website: mongoliainvestmentsummit.com.

20. 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.
BCM WORKING GROUP MEETINGS:
The BCM Tax Working Group met on Wednesday, August 1, with 14 members attending. Co-chairs
Arthur Cookson, OT, and Onch, Deloitte Onch, moderated the session.
New member Amgalan, Business Plus Initiative (BPI), was welcomed.
Meeting discussion was on the following topics:
- Mongolian Tax Authority training/allocation of topics (October 2012)
- Discussion on Royalties
- ―Hot topics‖ discussed:
- Double Taxation Treaties
- Withholding tax increases
- SEFIL article 6.3
Next meeting: Gurdeep R. Sign, Director of Tax Services, PricewaterhouseCoopers Audit LLC, will
speak about withholding taxes.
Onch D., General Director of Deloitte Onch LLC, will update on impacts of tax-related draft laws.
___________________________________________
The BCM Risk Working Group met on Thursday, August 2, with 8 members attending.
John Wheadon, OT, and Ganzorig U., UMC, co-chairs, moderated the session.
New member Ebone Bishop, MahoneyLiotta, was welcomed.
Meeting discussions on the following topics:
- Planning of Risk Forum 2012
-Updates on Risk Survey, issued to BCM members mailing list (900 individuals), Aug 16
Please contact erka@bcmongolia.org for additional information on Working Groups.

21. BCM WEBSITES
MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS
The new ‗Presentations‘ section on BCM‘s Mongolian website can be reached via link to
bcm.mn/itgeluud. Several presentations already posted include World Bank‘s Mongolia Quarterly
Economic Update–June 2012; 11 speeches from the 2nd Coaltrans on May 23-24 in UB.
As a key component of BCM‘s Mongolian website ‗News‘ section, articles from the Government‘s
―Open-Government.mn‖ site are regularly posted.
___________________________________________________________
ENGLISH WEBSITE 'PRESENTATIONS', 'MONGOLIA REPORTS' AND „MONGOLIAN BUSINESS NEWS‟
On BCM‘s English website, ‗Resource, Presentations‘ section, for your review are 4 presentations
from BCM‘s June 25 monthly meeting; 12 presentations from the 2nd Coaltrans on May 23-24 in UB;
3 speeches from ―Corporate Governance Training for Directors‖ on April 27-28; 12 presentations on
Mongolian entities at Mines and Money Hong Kong 2012 on March 21-23; 11 presentations from Coal
Mongolia 2012 on February 9-10; and speeches from all BCM‘s monthly meetings in 2011-12.
Also on BCM‘s English website, ‗Resource, Mongolia Reports‘ section, please note the Polit
Barometer, June 2012, and the Polit Barometer, April 2012 by Sant Maral Foundation (Mongolian
and English versions); Risk Report for Mongolia 2012 by Mongolia Economic Forum; ―Preliminary
estimates of staggering costs of inefficient trade regulation in Mongolia‖ by Olin McGill, consultant
to USAID BPI; ADB‘s Asian Development Outlook, April 2012; detailed results of BCM‘s NewsWire
survey of March 2012; World Bank‘s Mongolia Quarterly Economic Update, February 2012; Executive
Summary of the Mongolian Real Estate Report 2012 by M.A.D. Investment Solutions; 2011 Mongolia
Investment Climate Statement by Economic and Commercial Section of U.S. Embassy, Ulaanbaatar,
Mongolia; and Transition Report 2011 (Mongolia data) by EBRD and the Economic Research Institute.
___________________________________________
BCM is now posting some news stories and analyses relevant to Mongolia to BCM website's
‗Mongolian Business News‘ as they come, instead of waiting until each Friday to put them all
together in the weekly NewsWire. The NewsWire will, however, continue to be issued on Friday,
and will incorporate items that are already on the home page, so that it presents a consolidated
account of the week‘s events.
___________________________________________
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.

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]
July 31, 2012 *14.5% [source: NSOM]
*Year-over-year (y-o-y), nationwide
Note: 14.9% y-o-y, Ulaanbaatar city, July 31, 2012
CENTRAL BANK POLICY RATE
December 31, 2008 9.75% [source: IMF]
March 11, 2009 14.00% [source: IMF]
May 12, 2009 12.75% [source: IMF]
June 12, 2009 11.50% [source: IMF]
September 30, 2009 10.00% [source: IMF]
May 12, 2010 11.00% [source: IMF]
April 28, 2011 11.50% [source: IMF]
August 25, 2011 11.75% [source: IMF]
October 25, 2011 12.25% [source: IMF]
March 19, 2012 12.75% [source: Mongol Bank]
April 18, 2012 13.25% [source: Mongol Bank]
CURRENCY RATES – August 16, 2012
Currency Name Currency Rate
U.S. dollar USD 1,361.78
Euro EUR 1,677.99
Japanese yen JPY 17.25
British pound GBP 2,133.43
Hong Kong dollar HKD 175.56
Chinese yuan CNY 213.97
South Korean won KRW 1.20
Russian ruble RUB 42.70
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.