September 17 2010

1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
Issue 136, September 17 2010
NEWS HIGHLIGHTS:
Business:
 Mitsui, Shenhua come together to bid for Tavan Tolgoi;
 Mongolian Railway allies with Japanese firm to develop infrastructure;
 Rio Tinto hikes stake in Ivanhoe to 34.9%;
 Rio‟s endgame is a piece of the Oyu Tolgoi pie;
 3 state-owned companies to follow new management system;
 Origo Partners and Monnis International form joint venture;
 Foreign miners take better care of Mongolia‟s heritage, says archeologist;
 Hunnu Coal announces two new executive appointments;
 Origo Partners acquires 25% stake in Kincora in Mongolia;
 “King” of Leighton ends 23-year reign;
 Redwood Capital opens office in Ulaanbaatar;
 Mongol 999 preparing list of equipment it will need for work;
 IFC finishes appraisal of investment proposal in dairy.
Economy:
 Mongolia to take bids for Tavan Tolgoi contractor next month;
 Mongolia will not draw remaining allocation from IMF;
 National debt stands at 29.5% of Mongolia‟s GDP;
 International Bond sales will need much homework, says Finance Minister;
 Economic, social data for August published;
 Power stations clear railway dues;
 Outstanding loans rise 1.6% m-o-m, 16.7% y-o-y;
 Railway raises freight rates, says profit not the motive;
 Central Asian officials to study microfinance in Mongolia;
 Mongolia‟s future lies beyond just mining, says Minister Zorigt;
 Successful end to two-day „Discover Mongolia-2010‟;
 Bonds sale planned to finance apartment loans;
 Australia's commercial engagement with Mongolia grows steadily;
 Mongolia tapping coal to be next cash cow;
 China‟s needs push Mongolia into the mining elite league;
 The rogue charm of the stock exchange draws investors in Ulaanbaatar;
 Copper stumbles on China growth worries;
 Gold sets new record above USD1,270/oz;
 Coal to remain world's top power source for next 20 years;
 Global banking regulators agree to triple the size of capital reserves;
 China explores a frontier two miles deep;
 China dodging hard landing risk;
 China trade surplus in surprise drop.
Politics:
 Mongolia has certain rights on transit transport, and is not a supplicant;

2.  Ex-President feels July 1 was a conspiracy by both parties;
 New Canadian ambassador presents credentials;
 DP election shows women ready to join active politics;
 Political will lacking to change conditions in Ulaanbaatar;
 Labor leader says office workers‟ gain will be disproportionately more;
 Special session to mark 20th
anniversary of Parliamentary politics;
 Global warming and too many goats make herders‟ life harder;
 President suggests less traffic control when VIPs travel;
 Audit questions payment of incentive to staff at agriculture fund;
 JCI contributes to national development by capacity building.
*Click on titles above to link to articles.
BUSINESS
MITSUI, SHENHUA COME TOGETHER TO BID FOR TAVAN TOLGOI
Japan's No.2 trading house Mitsui will team up with the world's largest coal producer Shenhua Group
to bid for development rights to Mongolia's Tavan Tolgoi coalfield, the Nikkei business daily has
reported. Chinese Premier Wen Jiabao has also pledged a total of 500 million yuan to the Mongolian
government, in the form of both aid and loans, but the Mongolian government is believed to be
cautious about falling under the economic control of China, the business daily reported.
The collaboration with Mitsui will mitigate the fear and will give Shenhua an edge in winning the
project. For Mitsui, which hopes to tap Shenhua's coal mining know-how, the tie-up would provide
an opportunity to increase its mine concessions, the Nikkei report said. Rival bidders include a
consortium of Japan's Itochu, Sumitomo, Marubeni and Sojitz.
The agreement comes as the world is closely watching whether Mongolia could bring in investment
from a third party for the development of its massive mining resources, and negotiate its way
through the geopolitical pressures being exerted by its two large neighbors, Russia and resource-
hungry China. Mongolia originally planned to sell as much as 49 percent of Tavan Tolgoi to a foreign
bidder, but cancelled the sale early this year in favor of 100-percent state ownership, with plans to
sign a development contract without giving any equity away. Now, it plans to divide the deposit in
two parts, one for Mongolia, the other for foreign development, although a final, detailed plan
about foreign involvement -- including Shenhua's -- has yet to emerge. The government is receiving
proposals from engineering companies and hopes to move forward with a plan this year.
Shenhua has decided to extend its private railway network to the Mongolian border to provide a
coal transport route.
Source: Reuters
MONGOLIAN RAILWAY ALLIES WITH JAPANESE FIRM TO DEVELOP INFRASTRUCTURE
CADEX KK of Tokyo and State-owned Mongolian Railway have announced the formation of a wide-
ranging business consulting alliance with aim of enhancing the railway infrastructure in Mongolia.
Under their agreement, CADEX and its Mongolian subsidiary CADEX LLC Mongolia (Ulaanbaatar) will
act as a business consultant of Mongolian Railway, specifically as manager of projects to acquire
railway technology and personnel (through hiring and education/training) with the goal of
contributing to the stable management and long-term growth of Mongolian Railway.
Under the alliance agreement, CADEX will apply its railway consulting and project management
experience in China, as well as its human resources network, achievements and know-how
throughout the Asian region, to build cooperative relationships with third parties outside Mongolia
with the objective of rapidly achieving a stable freight transportation system, new business
opportunities and the efficient development of underground resources.
Mongolian Railway was established in 2008 by the Government of Mongolia to equip and maintain
the country's railway infrastructure, and to proactively promote the development of resources and
supply these resources to international markets. Specifically, the company is working to rationalize
Mongolia's logistics system, establish a safe and secure railway management system, and establish
and maintain stable quality assurance systems, thereby modernizing Mongolia's railway system,
raising the presence of Mongolia in the international resources market and contributing to the
development of Mongolia's economy. The company is wholly-owned by the Government of Mongolia.

3. Source: Enhanced Online News
RIO TINTO HIKES STAKE IN IVANHOE TO 34.9%
Rio Tinto has increased its holding in Ivanhoe Mines by 5.3%, after the maturity of a USD350-million
convertible loan that Rio provided to Ivanhoe in 2007. The facility was fully drawn down by mid-
2008, and the outstanding principal and accrued interest of USD400 million was automatically
converted on maturity into common shares of Ivanhoe, at USD10 a share.
Rio Tinto now owns 34.9% or about 185 million shares of the Vancouver-based company, and could
increase its holding to about 44% if it were to exercise all the share-purchase warrants it owns.
Ivanhoe holds a majority stake in the Oyu Tolgoi project, which is scheduled to start first
production late in 2012. The company also owns 65% of Mongolian coal-miner SouthGobi Energy
Resources and a controlling interest in Ivanhoe Australia.
Ivanhoe and Rio Tinto revealed in July that a dispute had developed over Ivanhoe's new shareholder
rights plan, which Rio said breached the terms of existing agreements between the companies. The
firms were headed for arbitration to resolve the issue.
Source: www.miningweekly.com
RIO‟S ENDGAME IS A PIECE OF THE OYU TOLGOI PIE
Rio Tinto's executive and board gathered in bucolic Hampshire on Monday for their annual two-day
strategy summit. The main topic of conversation for the re-emerging global miner was the next
crucial stride towards an endgame in what must rank high on its list of next year's priorities by
picking up another 5 percent of Robert Friedland's Ivanhoe Mines.
The coincidence of Rio's pow-wow with the long established date for the crystallization of debt-to-
equity swap with Ivanhoe is so delightful it is hard to believe it wasn't deliberately concocted by
someone inside the Anglo-Australian. Ivanhoe and Rio, you see, are not seeing anything like eye-to-
eye on the ground rules of their investment partnership. Rio now owns 34.9 percent of Ivanhoe
and, all things being equal, it can move at a time of its own choosing to 44 percent of the
Godfather of Mongolian mining by exercising warrants over another 84 million Ivanhoe shares.
Ivanhoe is of interest to Rio because the Canadian company owns 66 percent of Oyu Tolgoi,
routinely touted as the world's biggest undeveloped copper project. Ivanhoe says phase one of its
copper giant will cost USD4 billion to build. It will doubtless be wrong. Given the current state of
project price inflation, it will certainly cost a heap more than that.
Read more…
And Ivanhoe's problem is that, given the current ownership construct of the project, it is going to
have to carry the whole of that funding. Just over two months ago now, Ivanhoe told Rio it would
go looking for another strategic partner to help it secure the USD4 billion necessary to finance stage
one of Oyu Tolgoi. The timing is significant because the terms of the investment agreement require
Rio be given 60 days notice of the termination of restrictions on the introduction of new strategic
investors. Now, ahead of that announcement Ivanhoe instituted what Canadians call a "shareholder
rights scheme" but what the rest of investment world knows as a "poison pill".
The aim of the scheme is to constrain any effort Rio might make to creep from senior minority to
controlling shareholder in Friedland's company. If the scheme stands, Rio will not be able to move
beyond 44 percent of Ivanhoe unless it makes an offer for the whole of the company. Rio has
challenged the legality of the proposed scheme on the basis that it retrospectively relieves the
company of rights established under the October 2006 investment agreement that introduced it as a
cornerstone shareholder in Ivanhoe.
The way Rio sees it, that agreement allows it to move to a maximum of 46.6 percent of Ivanhoe by
October next year and, as well, it includes a "no dilution" clause. Further, the deal provides Rio
with a call over any new capital that Ivanhoe might issue in the pursuit of cash to fuel its Oyu Tolgoi
ambitions. That call could be made even if it sees control pass to Rio. Ivanhoe disputes Rio's view of
the shareholder rights scheme saying it merely aims to prevent its partner creeping past 50 percent
to control.
Rio has requested the arbitration available under the Canadian rules to sort out this dispute, but
Ivanhoe has been unable to meet the 60-day deadline for the necessary agreement on just who
should be appointed to conduct that arbitration. So it would seem likely now that Rio will attempt
to get the courts to appoint an arbitrator with a view to delivering a decision by late November.
The outcome of that process might well determine the timing of whatever efforts Friedland is
making to introduce a new strategic shareholder to Ivanhoe.
If the shareholders rights scheme overrides the 2006 investment agreement and Rio is frozen at 44
percent, unless it is prepared to make a full bid for Ivanhoe, then Friedland could issue the 5

4. percent and more he has signaled could be placed with a third party without Rio being able to
redirect those shares to its own account. That is an outcome, needless to say, that would strongly
disappoint Rio. After all, while Albanese plays good cop, the company has engaged in a strategy
that aims ultimately to narrow even more Friedland's alternatives and to deliver Rio with a
controlling interest, not in Ivanhoe, but in its headline project, Oyu Tolgoi.
Rio has already discussed with Friedland its desire to translate its Ivanhoe investment into a direct
equity stake in the Mongolian copper play. And that remains the endgame here.
Source: The Australian
3 STATE-OWNED COMPANIES TO FOLLOW NEW MANAGEMENT SYSTEM
A three-month hands-on training program on the ―balanced scorecard‖ (BSC) methodology for
Directors and upper management of three pilot companies began in Ulaanbaatar last week. The
Government of Mongolia, with assistance from USAID/EPRC, has introduced the BSC system in three
state-owned companies: the Ulaanbaatar Electricity Distribution Network, the Central Energy
System Transmission Network, and the Darkhan Metallurgical Plant, LLC. The goal is to improve the
performance and accountability of state-owned companies.
Introduced for the first time in Mongolia, the BSC system is an internationally recognized strategic
planning and management system to align business activities with the vision and strategy of the
organization, improve internal and external communications, monitor organization performance
against strategic goals, and improve corporate governance practices.
Source: USAID/EPRC
ORIGO PARTNERS AND MONNIS INTERNATIONAL FORM JOINT VENTURE
Origo Partners (formerly Origo Sino-India), a China-based provider of private equity investment and
consultancy services, has formed a joint venture with Monnis International, a Mongolian industrial
holding company, to establish Resource Investment Capital, Ltd. The new joint venture company,
headquartered in Ulaanbaatar, will provide corporate finance advisory services primarily to
companies active in or seeking to enter the Mongolian natural resources sector.
Origo will own 35% of Resource Investment Capital, with the balance being held by Monnis, private
investors, and the company's management.
Source: TradingMarkets.com
FOREIGN MINERS TAKE BETTER CARE OF MONGOLIA‟S HERITAGE, SAYS ARCHEOLOGIST
Dr. D.Tseveendorj, director of the Archeological Institute, has said the nation cannot afford to have
its heritage items destroyed by wanton mining, and that Mongolian companies can learn from
foreigners how to be more careful and respectful about the country‘s treasures. Proper application
of the law should be adequate for this but mining companies are either not aware of or do not pay
any attention to its provisions, and they are rarely taken to task for their lapse. ―I think better
results will be achieved if this provision is incorporated into the Minerals Law,‖ he says.
At a rough count, he thought only about 50 companies out of hundreds with mining licenses seek
the help of archaeologists before beginning work. ―An exemplary model has been Ivanhoe Mines
which asks our archaeological team for advice often and takes great care to protect our heritage.‖
Mr. Tseveendorj also names Energy Resources as ―a highly responsible company‖ and says, ―The
Tavan Tolgoi deposit region is a storehouse of heritage. Whether they will be saved or destroyed
depends on other companies following the lead of Energy Resources.‖
In an ―appalling act‖, road companies working in Chin valley have blasted away the ruins of the
foundation of an ancient city. A petroleum company has started drilling at Khuduu Aral, the first
capital city of Chinggis Khaan. ―Are economic benefits from mining everything, and history and
heritage so unimportant that we must allow holes to be drilled on land under which lies an entire
city where Chinggis Khaan lived?‖ asks Mr. Tseveendorj.
Source: The Mongolian Mining Journal
HUNNU COAL ANNOUNCES TWO NEW EXECUTIVE APPOINTMENTS
Hunnu Coal has announced two new executive appointments that will enhance the effective
management and strategic development of the company in Mongolia. It has named Mr. Angus
Caithness as its new Chief Financial Officer. Mr. Caithness was previously an Executive Director at
Ernst & Young and has been providing assurance and transaction advisory services across the
international resources community within established and emerging markets for over 10 years. Mr.
Caithness will also co-ordinate the company‘s Hong Kong listing process.
Mr. T. Gansukh, previously Head of the Transportation Department of the Government Agency for

5. Transportation in Mongolia, is the new General Manager of Transportation and Logistics at Hunnu
Coal. He will supervise all coal transportation planning and management from the mine sites to
domestic and overseas customers as well as other related logistical matters.
Source: Hunnu Coal
ORIGO PARTNERS ACQUIRES 25% STAKE IN KINCORA IN MONGOLIA
Origo Partners has announced the acquisition of a 25% stake in Kincora Ltd, owner of the Bronze Fox
copper-gold prospect in Mongolia for USD3 million. Kincora owns a 100% interest in the Bronze Fox
prospect through a wholly-owned Mongolian subsidiary. Origo has also been granted an exclusive
option, exercisable prior to June 30, 2011, to increase its shareholding to 75% for an additional
consideration of USD12 million.
Source: RTTNews
“KING” OF LEIGHTON ENDS 23-YEAR REIGN
Top Australian contractor Leighton Holdings eased out CEO Wal King after 23 years, promoting
another company veteran into the top job on Monday. Leighton, majority owned by German
construction group Hochtief, said Mr. David Stewart, currently co-chief operating officer, would
take over on January 1, 2011. Leighton Holdings is the parent company of Leighton Asia which is
active in Mongolia.
King, 65, is synonymous with Leighton in Australia, having grown the company from a small
Melbourne-based construction group with a profit of AUD7 million in 1987 into the world's largest
contract miner, with a net profit of AUD612 million in 2010. He will stay on as a consultant.
Source: www.miningweekly.com
REDWOOD CAPITAL OPENS OFFICE IN ULAANBAATAR
S3 Investment Company has announced that its wholly-owned subsidiary Redwood Capital has
opened an office in Ulaanbaatar, to be able to work more closely with clients who operate in the
Mongolian market as well as explore additional emerging opportunities the country. Mongolia is
estimated to need up to USD30 billion of investment to develop its natural resources.
Redwood Capital has attended Mongolia investment events and is also exploring additional
opportunities in the country. "It has identified Mongolia as an important emerging global market,
and the new office in Ulaanbaatar will allow the company to better assist existing clients and
explore new opportunities with companies that operate in Mongolia," said S3 Investment Company
Chairman and CEO Jim Bickel. "Establishing a physical presence in this market is an important step
for Redwood Capital, and we expect to update client activities in Mongolia in the near term."
Source: S3 Investment Company
MONGOL 999 PREPARING LIST OF EQUIPMENT IT WILL NEED FOR WORK
Mongol 999, the consortium of domestic companies which is seeking a major role in operating the
Tavan Tolgoi deposit, has appealed to the general public, and not just its members, to submit
details of the equipment and machinery they can make available to it. It is clear the choice of
operator will be made on the basis of its access to machinery, technology and human resources and
Mongol 999 wants to have a clear idea how many excavators, dump trucks it can lay hands on and
what skills Mongolians have. The appeal urges individuals to come forward with any information
they may have.
Source: Udriin Sonin
IFC FINISHES APPRAISAL OF INVESTMENT PROPOSAL IN DAIRY
The World Bank‘s International Finance Corporation (IFC) has completed an appraisal of a proposal
to invest in Suu, the leading Mongolian dairy processor, with three principal goals. The first is to
help increase its production capacity, including purchase of additional milk packaging, butter
packaging, BactoScan milk quality laboratory equipment, an additional ice cream machine, an Alfa
Laval separator and company infrastructure renovation. The second is to help extend the raw milk
supply chain, including the establishment and development of 22 milk collection points, 13 milk
cooling units, two milking parlors and working capital to source additional milk purchases. The third
is to introduce and implement management systems consistent with ISO and HACCP.
The IFC promotes competitive markets in developing economies and provides skills-training for
transitioning governments. Its appraisal primarily included a compliance review of Suu‘s operations
with IFC‘s Performance Standards and Mongolian environmental, social and occupational health and
safety regulatory requirements. IFC also reviewed the Company‘s management capacity and

6. organizational structure to provide adequate oversight of environmental, social, health and safety
aspects of its business operations.
Suu was founded in 1958 as a state owned company and was partially privatized in 2002 with full
privatization in 2006. It is 94% privately owned with the remaining shares traded on the Mongolian
stock exchange. Its current processing capacity is 150t/day, and it produces 51 different products
comprising milk, yogurt, butter, curd and ice cream. Presently, Suu gets its milk from some 2,200
herders through19 collection points.
Source: FlexNews
ECONOMY
MONGOLIA TO TAKE BIDS FOR TAVAN TOLGOI CONTRACTOR NEXT MONTH
Mongolia will take bids for a contractor to mine Tavan Tolgoi ―in early October‖, Minister for
Minerals and Energy D. Zorigt said in an interview in the Chinese city of Tianjin on Monday.
Mongolia wants to retain ownership of new mines including Tavan Tolgoi. Among the companies that
have said they are keen to develop Tavan Tolgoi is China Shenhua Energy Co., the biggest Chinese
coal producer.
The nation expects to set up a state-controlled company, Erdenes Tavan Tolgoi, to oversee the
deposit before the start of the mining season in April, Mr. Zorigt said, adding, ―The government is
in the process of appointing an independent board and CEO for the Tavan Tolgoi Company.‖
Mongolia plans to sell 30 percent of the company controlling Tavan Tolgoi in share sales to help
fund USD1.5 billion of initial development cost. The shares will be sold in Mongolia and overseas,
but Mr. Zorigt said the government has not decided which overseas stock market will handle the
sale.
Source: Bloomberg News
MONGOLIA WILL NOT DRAW REMAINING ALLOCATION FROM IMF
Mongolia has forgone its right to draw the remaining USD46.4 million due to it under the18-month
Stand-By Arrangement (SBA) with the International Monetary Fund (IMF). The IMF Executive Board
last week completed the fifth and the sixth reviews of Mongolia's economic performance under the
program and approved the Mongolian request for rephasing the final disbursement. Total
disbursements under the arrangement remain at about USD185.4 million. The total amount
allocated in April, 2009 was about USD231.8 million, or 300 percent of Mongolia's quota.
In a statement following the Executive Board's discussion on Mongolia, Mr. Naoyuki Shinohara,
Deputy Managing Director and Acting Chair, said, ―The Mongolian economy is undergoing a brisk
recovery. International reserves are at historic highs, the fiscal position has strengthened, and pro-
poor spending has been protected. These developments are a testament to the authorities‘
unwavering commitment and policy performance under the Fund-supported program.
―The government has built a strong institutional foundation for fiscal policy. The recently adopted
fiscal responsibility law—a landmark in public financial management—will help secure fiscal
discipline. The nominal spending limit for 2011 enshrined in the medium-term fiscal framework will
promote macroeconomic stability and bolster fiscal policy credibility. Strict adherence to the
targets in the medium-term fiscal framework and fiscal responsibility law will be essential.
Read more…
―Spending on social transfers has steadily increased. The social transfer reform legislation,
expected to be adopted by Parliament in the coming months, will introduce a targeted poverty
benefit, which will both strengthen the social safety net and enhance budget flexibility.
―Monetary policy continues to focus on maintaining low inflation, contributing to strong,
sustainable, and equitable growth. The recent tightening of monetary policy, alongside a nominal
appreciation of the currency, has helped contain the upswing in inflation. The flexible exchange
rate regime continues to work well and foreign currency intervention is being used appropriately to
build reserves and smooth out short-term fluctuations in currency markets.
―Significant progress has been made in reforming the banking system. The Empowering the Banking
Sector and Capital Support Program, a comprehensive bank restructuring and recapitalizing
framework, has been submitted to parliament. Its implementation will help ensure prudent,
transparent use of public resources. The recently issued banking regulations are an important step
toward strengthening banking supervision, critical to preventing a re-emergence of vulnerabilities,‖
Mr. Shinohara stated.
Source: IMF

7. NATIONAL DEBT STANDS AT 29.5% OF MONGOLIA‟S GDP
The national debt stood at 29.5% of the GDP in 2009, considerably less than the 40% which is taken
to be the threat threshold, but still of concern. The IMF and The World Bank have classified
Mongolia as a country of ―minor risk‖ in terms of debt repayment. All outstanding debts at present
have to be repaid by 2050 but in most cases an annual interest has to be paid. The repayment will
reach its peak in 2020.
According to The Debt Department of the Finance Ministry, 94% of the Government‘s total debt is
from foreign sources, either from bilateral agreements with another country or from international
financial institutions. Of Mongolia‘s loans from individual countries, 56% is from Japan, 8% from
South Korea, 4% from China and 6% from Kuwait. Of institutional loans, 58% is from the Asian
Development Bank, 37% from The World Bank and 1% from the IMF.
Domestic debt accounts for 6% of the country‘s borrowing. Even some years ago the share was
minuscule, but it has gone up as more bonds carrying higher interests were sold to meet the
successive budget deficits. MNT300 billion worth of bonds were sold in 2009 and this equals 2.8% of
the GDP. Earlier sales amounted to MNT80 billion in 2005 and 2006 combined, and to MNT150 billion
in 2007. This year‘s bonds, mainly to provide for long-term apartment loans, will be on sale from
September 17. They will be for a total face value of MNT30 billion. Half of it will be redeemable
with 7.5% interest in 365 days and the other half with 7.8% interest in 546 days. All interest will be
paid on maturity.
USD118.7 million received as grants and soft loans has been invested in infrastructure in the last
two decades, USD883 million in the economic field, and USD141.8 million in social sectors.
Source: English.News.mn
INTERNATIONAL BOND SALES WILL NEED MUCH HOMEWORK, SAYS FINANCE MINISTER
Finance Minister S.Bayartsogt has said ownership of the entire Tavan Tolgoi deposit will rest with
Erdenes Tavan Tolgoi. It may choose to work by itself in a certain part of the territory, or enter into
a contract with a foreign or domestic operator. In other parts, it will announce an open tender and
invite international companies to bid. The two may appear to be the same as far as the method of
working is concerned, but the difference lies in the economic aspects of the agreements, such as
advance payment different.
Asked about the inherent uncertainties in sale of bonds, Mr. Bayartsogt agreed that ―this will be
uncharted seas for us‖ and that ―our market research should be thorough and the planning and
timing perfect‖. Interest on bonds is calculated from the day they are sold. Therefore, the projects
to be financed by the bond issue should be fully ready beforehand, so that the sales proceeds can
be used immediately. Otherwise, the Government pays interest on funds lying idle. ―We are
working on all this and I guess the end of this year or the beginning of the next year will be the best
time for a bond issue,‖ he said.
Source: The Mongolian Mining Journal
ECONOMIC, SOCIAL DATA FOR AUGUST PUBLISHED
The National Statistics Board has published data relating to a number of economic and social
sectors. All figures are for August or, in some cases, for the first eight months of 2010. They are
compared with the corresponding period last year, unless otherwise stated.
Consumer price index
The national consumer price index in August rose 0.7 percent over that in July, 9.0 percent over the
end of last year, and 11.2 percent over August, 2009.
Budget
The deficit in the General Government Budget in the first eight months was MNT 32.9 billion, MNT
301.6 billion less than in the same period in 2009. The budget current balance showed a surplus of
MNT 358.9 billion.
Tax revenue
Tax revenue from January to end of August was 70.0 percent higher. Receipts from the windfall
profits tax increased 3.7 times, from corporate income tax rose 95.4 percent, and from value added
tax 62.5 percent. Non-tax revenue decreased 13.3 percent. Capital expenditure was 29.0 percent
higher, but the foreign financed part fell 49.0 percent.
Unemployment

8. The number of job seekers registered all over the country stood at 39,599 at the end of August, 2.2
percent less. Ulaanbaatar saw a drop of 2,341 people.
Household budget
Average household monthly income increased 17.7 percent while average expenditure rose 17.1
percent.
Industrial output
Total industrial output value (at 2005 constant prices) in the first eight months was 15.5 percent
more.
External trade
Total turnover from trade with 120 countries in the first eight months rose 59.8 percent. Exports
were up by 65.7 percent, and imports by 54.9 percent, while the trade balance was 7.9 percent
less.
Construction
Of the total MNT107.3 billion worth of construction and installation work throughout the nation in
the first eight months of the year, 92.8 percent were executed by domestic entities, and the
remaining 7.2 percent by foreign ones.
Transportation
Passenger traffic on the railway in the first eight months of the year rose 7.1 percent and the rise in
the volume of freight was 17.9 per cent. Railway revenue increased 36.8 percent.
Passengers on flights numbered 25.4 percent more, and the volume of freight rose 35.4 percent.
Revenue from air transport was 14.0 percent higher.
Stock trading
Altogether 2.1 million shares were traded for MNT 787.8 million in 22 trading days in August.
Social insurance
Government employees accounted for 39.1 percent of the total 507,200 people registered as
insured in the first eight months of this year, with those in the private sector making up the
remaining 60.9 percent. Altogether MNT221.9 billion was paid out as pensions. Of this, retirement
pension accounted for 73.4 percent, pensions for the disabled 12.7 percent, breadwinner loss
pensions 7.2 percent, and military pensions 6.7 percent.
Social welfare benefits worth MNT16.9 billion were paid to 55,700 people. The number of
beneficiaries rose 1.6 percent, while the amount paid was up 1.8 percent. MNT 180.6 billion has
been given to 2.5 million people from the Human Development Fund in 2010.
Natural disasters, deaths
The first eight months of 2010 saw 190 human deaths in 1,838 cases of natural disaster and a total
estimated damage of MNT529.9 billion. The loss to livestock was 9.7 million animals.
Source: Montsame
POWER STATIONS CLEAR RAILWAY DUES
The accumulated loss in the energy sector rose from MNT24.4 billion in 2008 to MNT69.9 billion in
2009. Now, says Mr. Ts.Bayarbaatar, Chief of the Energy Board, the situation is looking up after the
State Budget allocated MNT15 billion to the sector. Some more money is coming from raised
electricity tariff also. The power stations have settled their dues to the railway. The budget
allocation was a loan and has to be paid back by December 10, but Mr. Bayarbaatar was sure
companies would have no problem with this.
The massive increase in demand for energy is their major worry now. The present demand is for
generation of 170 million kilowatt hour of electricity and this requires 70,000 extra tons of coal.
The main supplier to Ulaanbaatar power plants is the Baganuur mine which still charges at old
rates, but power stations in Darkhan and Erdenet are facing difficulty as their coal comes from the
Shariin Gol mine which has been privatized and has raised its coal price.
Source: Ardiin Erkh

9. OUTSTANDING LOANS RISE 1.6% M-O-M, 16.7% Y-O-Y
The Central Bank reports that money supply (broad money or M2) at the end of August expanded to
MNT 3656.1 billion, showing a 3.2 percent rise against the end of July, and a 42.6 percent rise
against August, 2009.
Loans outstanding at the end of August amounted to 1.6 percent more than at the end of July and
16.7 percent more than at the end of August, 2009. Principals in arrears decreased 22.1 percent
against the end of July, and 50.4 percent against the end of August, 2009.
The total amount of non-performing loans at the end of August was 1.0 percent less than at the end
of July, but 15.5 percent more than at the end of August last year.
Source: The Bank of Mongolia
RAILWAY RAISES FREIGHT RATES, SAYS PROFIT NOT THE MOTIVE
Ulaanbaatar Railway has raised its freight charges covering import, export and local transportation
from September 25. Wood and wood products will be charged 20% more, oil products 10%, food
items 25%, coal 25%, building materials 10%, household supplies 30%, and containers 30%. Some
economists fear that, coming at the same time as increased salaries for state employees, this move
would lead to a rise in inflation, and in retail prices and on services like heating and power
generation.
The Railway had decided on the revised rates in January, but permission from the Government
Coordinating Agency came only recently. The Fair Trade Practice Office had earlier criticized the
Railway for increasing passenger fares without first clearing it with the Government, so this time
the issue was sent to the Agency for approval.
In announcing the increase, the Railway said coal was one-third of the total freight it moves but at
MNT15 a ton, it is also the most uneconomical product to transport. ―The proposed 10%-30%
increases will not mean any profit for the Railway, but will only bring down the accumulated loss,‖
it said.
Source: Ardiin Erkh
CENTRAL ASIAN OFFICIALS TO STUDY MICROFINANCE IN MONGOLIA
Policy-makers from the governments of Kazakhstan, Kyrgyzstan and Tajikistan will be in Mongolia
next month to learn microfinance best practices. They will join their counterparts from Azerbaijan
and Bosnia and Herzegovina on the October 12-14 study trip, organized by the World Bank‘s
International Finance Corporation (IFC). The IFC promotes competitive markets in developing
economies and provides skills-training for transitioning governments.
The study trip aims to expose government workers to the basics of microfinance and the necessary
legal structures that must accompany it. ―Mongolia is an excellent example to show the government
and central banks‘ officials how their countries can benefit from a well-developed microfinance
sector and how local microfinance institutions can diversify and expand financial services to their
customers through a successful transformation into a bank,‖ said Mr. Rolf Behrndt, the Regional
Business Line Leader for Financial Markets of IFC Advisory Services in Eastern Europe and Central
Asia.
Source: Central Asia Newswire
MONGOLIA‟S FUTURE LIES BEYOND JUST MINING. SAYS MINISTER ZORIGT
Mining Minister D. Zorigt has said the future of the Mongolian economy will ultimately hinge on its
ability to transcend mining, he added. "It is our ultimate belief that economic prosperity is not
delivered by one particular industry or one particular resource. Economic prosperity and economic
growth are actually made possible by the skill-sets of the people."
He has confirmed Mongolia will keep full ownership of Tavan Tolgoi, amid intense foreign interest
and speculation about its plans for the project. He also indicated that the world's largest untapped
coking coal deposit was likely to finally go ahead in 2012. "A state-owned company is going to own
100 percent of Tavan Tolgoi and license the mining operations," he said last week. "It will be a 50
percent state-owned company, and the rest will be sold publicly", in a domestic share offering.
Mr. Zorigt was reiterating a decision made earlier this year, and his comments could help quell
speculation the government might change its mind. He said the government had already announced
it was open to bids from "fee-based" mining operators across the world to help develop the project.
"We certainly believe the decision to maintain control will give us a chance to create a national
flagship company that will be a player in the region and a leading player globally," Mr. Zorigt said.
But Mongolia has not completely ruled out foreign ownership at Tavan Tolgoi. He said, "The second
portion of it -- in due time we are going to have bidding by international investors, but that will be

10. done in conjunction with other aspects of the project, particularly transportation issues."
Read more…
Investors have suggested the decision to give priority to a rail route running east, enabling the coal
to be shipped to Russia and the Pacific coast, at a time when funding was already available for a
rail line to the Chinese border, was motivated by concerns about Mongolia's growing dependence on
China, but Mr. Zorigt said it was the country's dependence on unprocessed raw materials that was
the chief concern.
"It is driven by ... the logic of economic growth," he said. "Certainly when it comes to the resources
of the south, while we are aware that most of it will go to the markets in China and northeast Asia,
a significant portion needs to be delivered to industrial production in Mongolia itself, and that's why
the railway decision has been made."
Analysts have suggested the decision to cancel the auction at Tavan Tolgoi was partly a response to
accusations the government had sold resource rights cheap to foreign firms such as Ivanhoe Mines,
the majority stakeholder in the country's other flagship mining project at Oyu Tolgoi. "There are
debates about the economic benefits of the project, but I can only say that Mongolia is an open and
free country and everybody is entitled to his or her views," Mr. Zorigt said.
"Our conviction is that the (Oyu Tolgoi) project is going to be a very significant one that will drive
the growth of the country for the next decades." Mongolia, dubbed "Minegolia" by analysts, "is a big
country and one of the last remaining places in the world where more big discoveries can be made
in the coming years," Mr. Zorigt said.
Source: foxbusiness.com
SUCCESSFUL END TO TWO-DAY „DISCOVER MONGOLIA-2010‟
―Discover Mongolia 2010‖ attracted more than 700 participants from 12 different countries this
year. The active interest they displayed at all the four sessions over two days and in the exhibition
showed once again why this annual forum has become such an important part of the calendar of
international mining investors interested in Mongolia.
In his keynote speech as Guest of Honor, Mr. Bernard Guarnera of Behre Dolbear Group said
Mongolia‘s economic landscape will continue to encourage investment. With a stable GDP at 7% per
annum that‘s expected to grow and Foreign Direct Investment increasing five-fold between 2004
and 2008, the country can only move forward, he said. A recent survey by the mineral industry
advisory firm ranks Mongolia as the most attractive Asian country for mining investment, putting it
7th
internationally, behind Australia, Canada, Chile, Mexico, US and Brazil.
Coal and the Chinese demand dominated most of the talk at the first session on Mineral Investment
Environment. Catering to China‘s growing demand was key to Mongolia‘s projected growth, a view
shared by chief speakers Mr. Guanera and Mr. Tim Goldsmith, Partner and Mining Leader of
PricewaterhouseCoopers, one the world‘s leading audit and advisory firms and the second of the Big
Four to move into Mongolia after Ernst & Young.
―China will become a bigger economy than the US by 2025,‖ said Mr. Goldsmith, expressing
confidence in the future investment prospects that this held for Mongolia and explaining why PwC
made the strategic decision to set up a Mongolia office.
Read more…
The Chinese government‘s ongoing programs to develop the country‘s North West regions were
touted as a great opportunity for Mongolia‘s growth considering the regional proximity of Mongolia
to these areas. In his presentation, Mr. Alexander Molyneux, President and CEO of SouthGobi
Resources, delineated how high production cash costs and low safety records have kept China from
supplying its own need. Mongolian coal exports to China could stand at 30-to-50 million tons by
2015, he said, accounting for 60% to 70% of Mongolia‘s total coal production.
Mr. Layton Croft, Vice-President of SouthGobi Resources, and Mr. David Paull, managing Director of
Aspire Mining, also gave presentations on their respective coal fields in the South Gobi region and
the growing Chinese demand. The strategic need for infrastructure development to markets
particularly in China was a recurring theme.
Prophecy Resource Corp., represented by Mr. John Lee, CEO, presented the company‘s lead in
exploiting coal resources to meet Mongolia‘s energy needs. The company‘s project plans include
building a 4,200-mw power plant at the company‘s Chandgana thermal coal deposit in North East
Mongolia. Phase I looks at supplying both the Mongolian East Energy System (EES) and the Central
Energy System (CES) while proposals for Phase II include power transmission to China‘s North East
Power Grid with further plans to supply Russian grids.
The second session on Innovations, Best Practices and Lessons to Share featured a talk from Mr.
Martin Walsh, Senior Trade Commissioner for Austrade, where he recounted Australia‘s experiences

11. in resource development. Other topics in this session revolved around transparency initiatives,
responsible mining, challenges and issues in developing Mongolia‘s mining projects to international
standards, resource asset management and the country‘s mining investment trends and outlook.
Day 2 started with a session on the Challenges and Realities of the Mongolia Mining Sector. In his
opening speech, Mr. John Finigan, CEO of Golomt Bank, said 2016 would be the golden year when
Mongolia started collecting regular high revenues. With copper output expected to reach 36,000
tons a year, the GDP would lunge ahead from the current USD5 billion to USD27 billion. However,
adequate government support was critical for this, he warned, pointing out that investors were still
wary of Mongolia‘s policy shifts and volatile legal environment.
Impending License Crises, mining sector taxes and investment opportunities within the mining
supply chain were other subjects tackled in this session. Speaking on the subject of Mining
Grievances and Conflict Solutions, Ms. Rena Guandez, Senior Mining Advisor of USAID-EPRC, stressed
the need for collaboration between mining companies and the local community. Companies have to
develop and earn the social license to operate, she said while broaching the topic of mechanisms to
deal with grievances and avoiding conflict. Presenting a survey by Barristers&Solicitors LLC, Mr. G.
Surakhbayar, Director of the company, revealed that 66% of mining disputes were over revoked
license while admitting many companies were frustrated with the enforcement of seemingly
insignificant regulations.
The last session, on Community Relations and Sustainable Development, dwelt on the lack of skilled
labor for mining. Opening the session, Mr. Jon Lyons from Erdene Resources Development Corp.,
stressed the need for companies to engage early in community relations and identify the overlap
between community and company aspirations. He admitted that investments in community
relations remained poor and needed to be improved while adding that consultation with
beneficiaries on areas where CR investments should go is extremely essential. Other speakers called
for a reform of the labor market study to identify what jobs were in highest demand and the need
to establish more vocational training schools catering to the mining industry.
Turn-out at Parliament hour was thinner than anticipated, with fewer than 15 foreign
representatives present. The Members of Parliament present included Mrs. S. Oyun, Mr. Ts. Munkh-
Orgil, Mr. Ts. Badamsuren and Mr. B. Davasaambu. In his opening address, Mr. Davasaambuu,
Advisor to the Speaker of Parliament, made two requests to investors – one, to educate local staff
and personnel and to co-operate with local communities and safeguard environmental norms to
reduce conflict and two, to operate openly, honestly and transparently.
Most of the questions posted by attendees at both Parliament Hour and the subsequent Government
Hour were regarding the moratorium on issuance on new licenses and the Water and Forest
Protection Law prohibiting mining exploration and activity in the vicinity of a water source or forest
areas, a hugely unpopular move for many investors. The MPs defended the law as the way to save
swaths of land threatened by expansion of mineral activity, but assured miners that certain
provisions in the law will be clarified by the Government Agency responsible for the cadastral
mapping of the contested areas.
Responding to a foreign investor‘s complaint about the ambiguity in the Water and Forest
Protection law, Mr. Munkh-Orgil stated that companies that operate responsibly will not be affected
and called for mining companies to co-operate more with the media and environmental NGOs. Mrs.
Oyun revealed that the moratorium will be lifted on December 1 and the tender application system
will be revised. All the MPs were agreed that environmental protection and rehabilitation was a
must and a ―lenient attitude will not be brought in‖.
Responding to questions posed on the status of the proposed resource rent tax which may substitute
the Windfall Profit Tax once it is rescinded in January 2011, the MPs said the position should be
clear during the Autumn Session of Parliament.
During Government Hour, officials defended the President‘s decree. ―The suspension of licenses
was not an unpremeditated act, and the President merely acknowledged widespread public
concern,‖ said Mr. D. Batkhuyag, Head of the Mineral Resources Authority. Echoing the thought was
Vice Minster for Minerals and Energy B. Arunisan. ―When we travel outside Ulaanbaatar, we see the
environmental damage. We cannot sacrifice our environment for minerals,‖ he said.
On the Parliament Act prohibiting mining in certain areas, the officials did admit that the problem
lay in the implementation of the law and not the law itself as the Government Implementing
Agency was still struggling with reaching a consensus on the cadastral mapping of the areas
suspended from mining activities under the Act. Compensation measures for exploratory work
already done in these areas will be discussed at the Autumn Session of Parliament, said an official,
hinting that a maximum of MNT5 trillion in compensation might be in order.
Officials also reconfirmed their approval of Mongolia‘s railroad direction from the South Gobi mines

12. to Russia answering a question posed by a BBC journalist. ―We could put think about a route to
China next year, but right now the priority is to complete the line to Sainshand and then to the
Northern ports,‖ said Mr. Batkhuyag.
Some participants complained of the lack of booth space to accommodate the 23 sponsors in the
exhibition area, but all in all, the conference was a success, like its predecessors. A poll was taken
among participants on a proposal to rename the forum ―Develop Mongolia‖ next year, but gauging
by the sentiments overheard, Mongolia‘s largest international investment meeting is likely to keep
calling miners for another challenging trip to ―Discover Mongolia‖.
Source: BCM NewsWire
BONDS SALE PLANNED TO FINANCE APARTMENT LOANS
The Apartment Financing Corporation hopes to raise MNT20 billion from a fifth sale of bonds of its
own, to supplement the MNT30 billion the Government plans to get from a new series of bonds. The
money will be needed to issue loans to public servants to help them buy apartments under the
40000 Apartments program.
The corporation has so far lent MNT51.4 billion to 1,509 public servants.
Source: Undesnii Shuudan
AUSTRALIA‟S COMMERCIAL ENGAGEMENT WITH MONGOLIA GROWS STEADILY
Two years ago Alex Molyneux was sitting at Citi's Hong Kong Mining and Metals M&A desk. He was
there trying to find a new chief executive for one of his client's subsidiaries in Mongolia -- Asia's new
blockbuster mining country.
Canada's Ivanhoe Mines was looking for someone to take charge of its nascent coalminer SouthGobi
Resources and move it from startup to fully fledged operator. After the group knocked back three
or four suggestions, in March last year the Monash University-educated investment banker took the
job himself. "I had always wanted to move to the client side," he says, using impeccable banker
parlance. "But I thought it would be another five years or so."
The 35-year-old Molyneux is one of the best-known faces in Ulaanbaatar, at the head of a
remarkable Australian push into the mining boomtown. He runs a business now worth USD2 billion,
and until the Oyu Tolgoi copper project starts digging and selling, the biggest foreign-owned mine
in the country.
Australians in the city now number close to 400, boosted by the influx of Rio Tinto executives on
secondment to the Oyu Tolgoi project. This will see the company -- alongside co-investors Ivanhoe
and the Mongolian government -- employ as many as 8,000 people to build mining infrastructure to
the world's largest untapped copper deposit. Rio is the largest global mining company so far to
commit to Mongolia, but it will not be the last. Brazil's Vale has conducted a range of drilling
exercises and is one of a number of companies interested in the 6 billion-ton Tavan Tolgoi coal
seam, the world's largest. BHP Billiton, AngloAmerican and Peabody are also sniffing around on the
sidelines, judging when to dive in. Last week, almost 400 representatives from the world's mining
and mining services companies descended on the dusty Mongolian capital, in renewed confidence
that the country's long-promised mining boom is now under way.
Read more…
Alongside the conference, Austrade hosted Australia's biggest business delegation to Mongolia, with
representatives of 21 firms attending. "When we first announced it we were expecting eight or 10
companies," said Austrade trade commissioner Rod Commerford, who has spent the past five
months in the country. "We were amazed."
Mongolia's mineral wealth was well sketched out by its former Soviet ally before it withdrew in 1990
and the country turned to democracy. But the past decade has seen political uncertainty with
regular changes of government and mining laws that have exacerbated the young market economy's
administrative experience in dealing with a vast new sector expected to make up 95 per cent of its
exports within a few years.
Australia's ambassador to South Korea, Mongolia and North Korea, Mr. Sam Gerovich -- one of
Australia's most experienced Asian diplomats having spent most of the past three decades in the
region -- said it had been a great pleasure to witness, over the past 15 years, the steady growth in
Australia's commercial engagement with Mongolia. Early exploration by Australian mining
companies, particularly BHP Billiton, helped identify some major resource deposits in this country
which, over the past five years, have been finally been brought to an advanced stage of
development.
"Rio Tinto's major investment and Leighton Holdings' growing contract mining and construction
operations here promise to help realize the great potential of these and other discoveries,

13. underpinning Mongolia's future economic development and prosperity, as well as supporting our
future trade and investment co-operation," Mr. Gerovich said.
The Oyu Togloi mine is expected to double Mongolia's modest USD5.1 billion GDP when it gets to full
capacity. It is one of 15 deposits across the country that have been identified as strategic by the
government, which will hold a 34 per cent or 50 per cent stake depending on whether the mines
were a result of private or government exploration.
"These firms and the handful of smaller Australian companies working hard in Mongolia over the
past decade should be recognized and congratulated for their perseverance, foresight and
achievements," Mr. Gerovich said.
In some ways, Mongolia can be seen as competitor to Australia, as it sells the same metals and
minerals, mostly to China. But the opportunities of Australian business are enormous and Mr.
Gerovich says that rather than being seen as competitors, a greater influx of Australian businesses
can contribute to, and support, the overall Australian business presence in Mongolia. Yet for all its
potential, Mongolia has myriad problems headlined by a chronic lack of infrastructure in the
country and city -- exemplified by constant traffic snarls and weeks-long hot water droughts in a
city that still relies on four Soviet-era boilers.
The World Bank, in a report by economist Graeme Hancock, said slow decisions were hampering
energy sector development, with new projects expected to require substantial new generating
capacity (initially 600-1,000MW). "Border crossings are a major constraint to new exports of bulk
commodities and rail issues continue to be a real challenge," he wrote.
But the economy is now ticking up and up with GDP growth at 7 per cent and rising, Ulaanbaatar's
Soviet-era road system bursting at the seams with SUVs, and a fair smattering of German marques.
Five-star hotel chain Shangri-la is building in the middle of town. PricewaterhouseCoopers, the
world's biggest accounting firm, last week opened an office of 25 people.
The inexperience of the country's lawmakers shone through this year when the country's Finance
Ministry began exploring a version of Australia's resources tax. In 2006, the government slapped a
much maligned tax on gold and copper, which it repealed this year. Mr. Hancock said Mongolia was
currently perceived by some as having an unstable legal and fiscal framework.
"Many in government recognize this issue and are working to stabilize the legal and fiscal framework
-- however it's important to stabilize a good framework, not a bad one," he wrote. But if the
government can get it right, the rivers of resources gold will start to gush.
Source: The Australian
MONGOLIA TAPPING COAL TO BE NEXT CASH COW
Investors keen to reap the benefits of Mongolia‘s untapped mineral riches have shifted their focus
from glittering copper and gold to coal, with energy-hungry neighbor China first in line. The
landlocked Asian country‘s natural resources are widely seen as its ticket out of poverty, and at a
mining conference in Ulaanbaatar, industry experts and business leaders said coal could be
Mongolia‘s black gold.
―Coal is becoming a very hot topic in Mongolia,‖ lawmaker S. Oyun said on the sidelines of the
Discover Mongolia meeting. ―Coal prices are up and energy demand from China is insatiable. Now is
the time to diversify and get beyond copper and gold and onto our other natural resources.‖
Last year, Mongolia sealed a long-awaited multibillion-dollar deal with Canada‘s Ivanhoe Mines and
Anglo-Australian miner Rio Tinto to develop Oyu Tolgoi, one of the world‘s richest copper deposits
and a key gold source. This year, now that construction of the Oyu Tolgoi mine is under way, all
eyes in the mining industry are on Tavan Tolgoi in the south Gobi desert, which has some of the
world‘s largest untapped coal reserves.
Read more…
The deposit, 270 km from the border with China, contains 6.4 billion tons of coal — about a quarter
of which is high-grade coking coal, a key ingredient for steel production, while the rest is thermal
coal. ―There are enormous coal resources here. They are close to the surface, easy to mine and of
high quality,‖ World Bank senior mining specialist Graeme Hancock said. ―At the current rate of
production, they could still be mining coal in 10,000 years.‖
Last year, the government began accepting bids from mining firms hoping to buy an exploitation
license for Tavan Tolgoi. China‘s Shenhua group, U.S. giant Peabody Energy, Anglo-Swiss miner
Xstrata and Brazil‘s Vale were among those that showed interest, but the government has since
cancelled the auction, deciding to retain 100 percent ownership.
Mongolia has formed Erdenes MGL LLC to manage state-owned mining interests. The firm, which
owns 34 percent of Oyu Tolgoi, has created a subsidiary, Erdenes Tavan Tolgoi (ETT), to handle the
coal deposit assets. ETT is planning to contract out the development of Tavan Tolgoi to a private

14. company or consortium. According to Mr. Hancock, ETT is hoping to find a partner to develop a
major portion of Tavan Tolgoi by year‘s end. ETT officials declined to comment on the specific
timeline for the project.
Mr. Alexander Molyneux, chairman of SouthGobi Energy Resources, a unit of Ivanhoe, told the
conference last week that Mongolia‘s exports had doubled last year, with China the most obvious
key market. ―Mongolia is taking its rightful place as the main supplier of China‘s coal needs,‖ said
Mr. Molyneux, noting that in 2010, 39 percent of China‘s coal imports were expected to come from
Mongolia, up from just 11 percent in 2009.
He predicted that coal exports to China — the world‘s largest producer and consumer of coal, which
is used to satisfy 70 percent of its fast-growing energy needs — could total 30 to 50 million tons by
2015.
Mongolia‘s increased presence is shaking up global coal markets, with China reducing its
dependence on Australia. Experts say Mongolia could earn between USD400 million and USD600
million in much-needed revenue from coal in just a few years — a figure that does not account for
new production at Tavan Tolgoi.
But considerable questions about the future of the sector remain. The government has laid out a
controversial plan to build a new railway from the Gobi Desert to Russia, linking to the Trans-
Siberian railway in order to ship Mongolian coal to key Pacific markets such as South Korea and
Japan. The railway would send the coal 4,500 km away to distant ports while a ready market lies in
China, just a fraction of the distance to the south.
―The government has adopted a plan to build a railway to Russia. That is our priority,‖ Mr. D.
Batkhuyag, head of the Mongolian Resources Authority, told the conference. ―After building out the
rail to Russia, we will focus on rail to China.‖
Some policy analysts say that move is based more on geo-politics than on sound economics, though
having a second outlet for coal would keep China honest in its pricing mechanisms and give
Mongolia added options. ―If you look at the commercial realities, it makes more sense to look at rail
into China. But the government does not want to be completely reliant on one country,‖ said Mr.
Hancock.
Source: AFP
CHINA‟S NEEDS PUSH MONGOLIA INTO THE MINING ELITE LEAGUE
Once known for its vast, sweeping plains, Mongolia is in the early stages of an unprecedented boom.
The economy of this former Soviet satellite is a mere USD5 billion, but this could very easily triple
in the next decade. That's because this vast central Asian state is the scene of an astonishing
resources "land grab".
Beneath Mongolia's surface – from its mountainous north to the Gobi desert in the south – lies untold
mineral wealth. The country's reserves of coal, copper, gold and uranium have lately become the
talk of the world's mining industry. What's happening in this far-away state, land-locked between
Russia and China, provides a vivid illustration of just how fast the global economic order is being
turned on its head.
A third of Mongolia's people are nomadic or semi-nomadic – their lives revolving around horses and
other livestock. Despite that, foreign direct investment has been piling in, oblivious to global
recession and reaching over USD700 million in 2009 with billions more pledged to come. Much of
this FDI since 2003 has been mining-related, with no less than two-thirds coming from China.
American FDI in the same period accounted for less than 3% of the total, while British investment
was a mere 1%.
Read more…
China's recent import spike has been driven by its thirst for raw materials, and if Beijing does let its
currency rise more in the coming months, it won't be because of U.S. jaw-boning, but in order to
obtain resources from abroad more cheaply. Many of those resources will come from Mongolia –
despite its current lack of development. A mine I visited, with its 200 million tons of coal reserves,
is just 145 km from the Chinese border. Much of Mongolia's coal is the high-quality "coking" variety
vital to steel production. Low "strip ratios" – the amount of waste that must be moved – means that
it can be produced cheaply, for as little as USD15 per ton.
China, in the midst of the fastest industrial revolution in human history, is producing 50% of the
world's steel. That's one reason Beijing is so interested in Mongolia coal. In addition, 75% of China's
electricity derives from coal-fired power stations. That's why the Chinese government is a
cornerstone investor in the company developing the mine I saw. Beijing has even facilitated the
building of a new border post, kept open around the clock, so importing the mine's spoils is subject
to minimum delay.

15. The extent of China's investment in Mongolia – and across the whole of Central Asia – is truly mind-
boggling. Whether it's Mongolian coal and copper mines, or Kazakh oil fields, Chinese money is
being sunk into every country in this resource-rich region. Beijing holds major stakes in gas fields in
both Turkmenistan and Uzbekistan, for instance. Pipelines have been built going all the way back to
China, a metallic version of the ancient Silk Road.
This investment is partly driven by China's paranoia – given its huge yet still escalating need for
energy and other mineral resources. But as Western governments print money and prepare to
inflate away their debts, China has also become determined to invest its war chest of USD2,000
billion-plus reserves in tangible, rather than paper assets.
Source: The Telegraph, UK
THE ROGUE CHARM OF THE STOCK EXCHANGE DRAWS INVESTORS IN ULAANBAATAR
What sort of market conquers fears and cows doubters by galloping 44 per cent higher in three
weeks? The one serving the descendants of Chinggis Khaan, of course. On August 17, the Mongolian
Stock Exchange Top 20 Index, representing the cream of the equity crop in Ulaanbaatar closed at
10,188. That was already good for a 67% windfall so far this year, although it was well off the 2007
record above 13,000. Fast forward to September 7, when the MSE closed at 14,676. Not even the
khans moved this fast.
The Ulaanbaatar exchange trades for 90 minutes a day out of a former movie theater, eking out
daily turnover in the neighborhood of USD70,000. Although the benchmark index is up more than
tenfold in four years, its total market capitalization hasn‘t quite topped USD1 billion.
It is a market suitable only for well-informed insiders and the craziest speculators, which may be
part of its rogue charm. Beyond the vicarious thrill, Mongol mania shows what gets people excited
these days. Mongolia‘s sitting on a supposed treasure trove of untapped mineral riches, next door to
mineral-craving China.
Read more…
Mongolia‘s gold, copper, coal, and uranium are the envy of China, Russia, other Asian powers, and
many Western miners. Their collective heavy breathing has turned the Mongolian capital into a
hotbed of international intrigue. Russia seems to have the upper hand on uranium, while Australia‘s
Rio Tinto and Canada‘s Ivanhoe Mines have tussled over a big gold-and-copper project.
Coal could be another big earner. Coal-mining stocks starred last week in Ulaanbaatar, several
rising by the 15 per cent daily limit. The rally comes ahead of a landmark Hong Kong initial public
offering by a Mongolian coal producer: Mongolian Mining plans to raise USD700 million, equivalent
to 13 per cent of its home country‘s gross domestic product.
Another recession will surely come, eventually. But not before the Mongolians mine much gold and
coal.
Source: MoneyShow.com
COPPER STUMBLES ON CHINA GROWTH WORRIES
Benchmark copper on the London Metal Exchange lurched lower on Wednesday from the previous
day‘s USD7,590/t as the market worried about demand from top consumer China on talk of higher
capital adequacy ratios for the country's banks.
The United States is the world's second-largest consumer of copper after China, which many still
expect to see account for the lion's share of copper demand growth. Analysts expect to see this in
import data over coming months. Refined Chinese copper import data for August, due later this
month, is expected to show a rise based on preliminary numbers last week, while US imports also
appear to be picking up after a slowdown earlier this year.
Source: Reuters
GOLD SETS NEW RECORD ABOVE USD1,270/OZ
Gold surged more than 2 percent to a record above USD1,270 an ounce on Tuesday, its biggest one-
day gain in four months, as investors sought shelter from economic uncertainty and fled the U.S.
dollar. In a mixed day for commodity and financial markets, the dollar fell across the board on a
range of factors.
Gold also gained on concerns that more stimulus may be needed to get a shaky global economy
firmly back on track, one of the factors that have underpinned the metal's 16 percent increase this
year as major investors stock up on bullion. Although gold has held near record highs for a few
weeks, the market is now in the full throes of the buying season in the world's biggest consumer,
India, which seems undeterred by the price strength.
This year has seen an expansion in open interest in U.S. gold futures and hefty flows into exchange-

16. traded products backed by physical bullion. Even if economic data improves, some analysts believe
gold has room to rally further.
Gold could rally above $1,300 an ounce this year, setting successive all-time highs, as uncertainty
about economic recovery and a sovereign debt crisis stoke investment interest, metals consultancy
GFMS Ltd said in a closely watched report.
Source: www.miningweekly.com
COAL TO REMAIN WORLD‟S TOP POWER SOURCE FOR NEXT 20 YEARS
Global energy demand will rise as much as 40% in the next 20 years, IHS Cambridge Energy Research
Associates chairperson Daniel Yergin has said. "In our scenarios for the future we expect by 2030 to
see growth somewhere between 30% and 40% off a much larger base in demand. That's a very large
number," he told the World Energy Congress in Montreal.
Demand for energy had grown by 40% since 1990. "Between 1990 and 2010, about 1.4 billion people
were added in countries where the per capita income was less than USD10,000 a year," said Mr.
Yergin. "In the next 20 years we expect to see about three billion people moving into that range of
USD10,000 per year of income. That will have an enormous impact on energy demand."
Source: www.miningweekly.com
GLOBAL BANKING REGULATORS AGREE TO TRIPLE THE SIZE OF CAPITAL RESERVES
Global banking regulators have sealed a deal to effectively triple the size of the capital reserves
that the world‘s banks must hold against losses, in one of the most important reforms to emerge
from the financial crisis. The package, known as Basel III, sets a new key capital ratio of 4.5
percent, more than double the current 2 percent level, plus a new buffer of a further 2.5 percent.
Banks whose capital falls within the buffer zone will face restrictions on paying dividends and
discretionary bonuses, so the rule sets an effective floor of 7 per cent.
A majority of countries, including the U.S. and UK, wanted tougher standards than those that finally
emerged, but they agreed to a lower total ratio and an extended implementation period after
resistance from Germany, among others. The new rules will be phased in from January 2013
through to January 2019.
The long-awaited agreement, hammered out at the weekend by central bankers and officials,
follows months of wrangling among the 27 member countries of the Basel Committee on Banking
Supervision over how to make banks more resilient to financial shocks.
Read more…
Tougher capital standards are considered critical for preventing another financial crisis, but bankers
had warned that if the new standards were too harsh or the implementation deadlines too short,
lending could be curtailed, cutting economic growth and costing jobs. Analysts say that most large
U.S. and European banks can meet the 7 per cent standards without substantial new equity raising.
But some public sector German banks could struggle. The Basel group also warned that it was still
working on setting additional requirements for the largest global banks deemed systemically
important.
Source: The Financial Times
CHINA EXPLORES A FRONTIER TWO MILES DEEP
When three Chinese scientists plunged to the bottom of the South China Sea in a tiny submarine
early this summer, they did more than simply plant their nation‘s flag on the dark seabed. The
men, who descended more than two miles in a craft the size of a small truck, also signaled Beijing‘s
intention to take the lead in exploring remote and inaccessible parts of the ocean floor, which are
rich in oil, minerals and other resources that the Chinese would like to mine. And many of those
resources happen to lie in areas where China has clashed repeatedly with its neighbors over
territorial claims.
After the flag planting, which was done in secret but recorded in a video, Beijing quickly turned the
feat of technology into a show of bravado. ―It is a great achievement,‖ Mr. Liu Feng, director of the
dives, was quoted as saying by China Daily, an English-language newspaper, which telegraphs
government positions to the outside world.
The global seabed is littered with what experts say is trillions of dollars‘ worth of mineral nodules
as well as many objects of intelligence value: undersea cables carrying diplomatic communications,
lost nuclear arms, sunken submarines and hundreds of warheads left over from missile tests. While
a single small craft cannot reel in all these treasures, it does put China in an excellent position to
go after them.
Read more…

17. The small craft that made the trip — named Jiaolong, after a mythical sea dragon — was unveiled
publicly late last month after eight years of secretive development. It is designed to go deeper than
any other in the world, giving China access to 99.8 percent of the ocean floor. Technically, it is a
submersible. These craft differ from submarines in their small size, their need for a mother ship on
the surface, and their ability to dive extraordinarily far despite the darkness and the crushing
pressures. The world has only a few.
Jiaolong is meant to go as deep as 7,000 meters, or 4.35 miles, edging out the current global
leader. Japan‘s Shinkai 6500 can go as deep as 6,500 meters, outperforming craft ―all over the
world,‖ according to its makers. Russia, France and the United States lag further behind in the
game of going deep.
American experts familiar with the Chinese undersea program say it is unusual in that Beijing has
little experience in the daunting field. As a result, China is moving cautiously. Jiaolong‘s sea trials
began quietly last year and are to continue until 2012, its dives going deeper in increments. The
Chinese were especially interested in avoiding the embarrassment of a disaster that ends with the
aquanauts‘ entrapment or death. Still, China is already waving flags. The move resembles how
Russian scientists, in the summer of 2007, plunged through the ice pack at the North Pole and
planted their flag on the bottom of the ocean. Upon surfacing, the explorers declared that the feat
had strengthened Moscow‘s claims to nearly half the Arctic seabed.
China‘s splash in the arcane world of submersibles comes after years of singling out major
industries and technologies for rapid development. China is rushing to make supercomputers and
jumbo jets. With expanding political ambitions and territorial claims in neighboring seas, it has paid
special attention to oceanography and building a blue-water navy, one that operates in the deep
waters of open oceans.
Source: The New York Times
CHINA DODGING HARD LANDING RISK
The Chinese economy appears to be stabilizing after several months of slowdown, reducing the risk
that the country will suffer a hard landing as post-crisis stimulus is withdrawn. Coming on top of a
surge in imports last month, figures released over the weekend indicated that domestic demand
remains robust and suggested that the authorities will likely be able to avoid an abrupt slowing in
economic growth, a matter of intense concern among investors globally.
The government said industrial production and retail sales both grew more quickly in August than in
July, reversing the trend of the previous four months of slowing expansion. The main discordant
note in the August figures was a continued rise in consumer price inflation, which increased to 3.5
percent from 3.3 percent the month before. Most analysts believe this was largely due to the
temporary impact of summer floods on food prices, which are now falling again, reducing the need
for an interest rate hike to dampen inflationary pressures.
Some economists though argue that China could be entering a period of persistently higher inflation
as wages rise. The elevated level of inflation also means that real interest rates are negative,
raising the risk of asset price bubbles as bank depositors seek higher returns elsewhere.
Read more…
Chinese economic expansion has been slowing for several months after the government launched a
crackdown on property speculation in April, told banks to restrict credit to local governments and
pushed for inefficient heavy industry to be closed. The authorities have allowed the currency to
appreciate modestly against the U.S. dollar, including a 0.5 per cent increase last week when a
delegation of senior White House officials was in Beijing.
Industrial production in August rebounded more strongly than expected to increase by 13.9 per cent
from a year before, compared to a 13.4 percent rise in July. Retail sales also expanded faster than
forecast, rising by 18.4 per cent year-on-year, up from 17.9 per cent in July. Fixed asset investment
rose 24.8 per cent in the first eight months of the year, compared to the same period the year
before.
Source: The Financial Times
CHINA TRADE SURPLUS IN SURPRISE DROP
China‘s trade surplus narrowed last month, with imports growing much faster than expected though
not enough to defuse political pressure on Beijing over the level of its currency. According to
figures released last week, the trade surplus was USD20.03 billion in August, down from USD28.7
billion a month earlier and short of analysts‘ forecasts. Exports grew 34.4 per cent in August over
the year before while imports increased 35.2 per cent. While the trade surplus was below
expectations, analysts said it was still relatively large and was unlikely to pacify critics in the US

18. who are pushing for legislation that accuses China of manipulating its currency.
The year-on-year rate of increase in imports grew sharply from 22.7 per cent in July. While some
analysts said this could be a temporary phenomenon linked to restocking of raw materials, others
said it could be the result of firming domestic demand following gradual easing of policy in recent
weeks.
Source: The Financial Times
POLITICS
MONGOLIA HAS CERTAIN RIGHTS ON TRANSIT TRANSPORT, AND IS NOT A SUPPLICANT
As a landlocked country, Mongolia has long been at the mercy of its two neighbors when it wishes to
establish trade links with the wider world, despite certain rights granted to such geographically
disadvantaged countries by international agreements and conventions. China refused for long to
accept Mongolian demands and agreed to have a treaty only after a series of talks. It sent a 14-
member delegation to a three-nation meeting on November 27-29, 2005 in Ulaanbaatar. Russia sent
just one delegate who left after insisting that the draft needed rephrasing at a couple of places.
There the matter stood for almost five years until Russia‘s present offer of discounted transit
transport rates. It is better late than never, but Mongolia must be wary of superpower motives.
The northern neighbor has spoken, but the southern one remains silent. Till today, it has not
replied to a letter sent by the Mongolian Foreign Ministry asking it to attend a tripartite meeting in
the third quarter of this year, as suggested by Mongolia and Russia.
Russia is not giving something for nothing. A Russian conglomerate, financially weakened by the
global crisis, was forced to withdraw quite early from the race for Tavan Tolgoi. The Mongolian
Government‘s later decision to retain the rights over the deposit through a State-owned company
dashed the hopes of many other prospective investors from several countries, including Russia, that
they would get to run at least some part of it. The only thing now left for Russia is to be involved
in the new railway construction project.
Read more…
Their sudden decision to offer concessional transit transport terms, after years of inaction, has to
be seen as a move to persuade Mongolia to favor Russian participation in the railway project.
Partner, the in-house journal of the Russian Railway, recently wrote,―…The Russian Railway aims at
making profits by exporting Mongolian coal to China through Far Eastern sea ports, after
establishing control in (Mongolia‘s) mineral and infrastructure sectors and thus re-claiming the
primacy it enjoyed before losing it in the last 20 years, and by dominating the energy sectors of
China, Korea and Japan…‖
Meanwhile a seemingly upset China waits and watches. It offers no clues to its thinking, but there is
enough reason to suspect that it was badly upset when Mongolia decided to build the new railway
to the north. Observers feel it is waiting to find out if a Chinese company is chosen to operate in
Tavan Tolgoi. If it is not, this may seriously impair bilateral economic relations. Every decision
involving Russia and China is going to be tricky for Mongolia, which will have to carefully weigh the
pros and cons of choices with serious long-term implications.
Are we even now getting what we really need? The Russian offer is limited to a discount in railway
transit rates and makes no reference to port services, border fees, road, bridge and tunnel toll
charges. These are all important components in the final transport costs and should be clearly
governed by an agreement. Mongolia should not be naïve and feel excited that Russia has finally
offered long-awaited favors and that is the end of the matter. If our big neighbors follow the
strategy of ―moving a big rock by manipulating a small rock‖, Mongolia can also try to ―push a large
rock with another as big‖. We must take advantage of the strategic interests of others to see that
ours are met.
Source: The Mongolian Mining Journal
EX-PRESIDENT FEELS JULY 1 WAS A CONSPIRACY BY BOTH PARTIES
Former President N.Enkhbayar has deplored the decision of the two principal parties to form a
coalition, denying the country a responsible opposition force so essential to democracy. ―They
came together for profit, and not for any principle,‖ he has said, adding that the real goal is to
keep a monopoly control over power. Denying suggestions that he does not want to leave the
political limelight and seeks to remain on stage with interviews, he has said the media ask him for
his views as ―it seems the people want to hear them more than anybody else‘s‖. He enjoys ―the
freedom that I no longer have to give speeches as part of my duty to the Government or the party
and can now express opinions freely‖, and feels he has ―a duty to the nation, to give fair warning

19. that when mistakes are made‖, as his ―only concern now is the greater truth, beyond partisan
interests and gain‖.
Mr. Enkhbayar is opposed to the MPRP seeking a new ideological thrust, and says, ―A party is a
living organism and its lifeblood is its ideology. Changing that is likely to lead to death.‖ He sees
―no reason to change our leftist stand, but the ideology should be kept moderate and not allowed
to get extreme‖ and feels ―occupying the leftist space is vital to lead the country to a correct and
bright future‖. The two main parties ―should stick to their own separate ways, principles and
ideology‖, offering people a choice during elections.
At hindsight and after much reflection, Mr. Enkhbayar now ―suspects‖ that the July 1 incidents
were the results of a joint conspiracy, that ―the two parties had joined hands to organize the
demonstration to keep the charges about the election alive‖, and adds, ―Those directly or
indirectly involved do not like my saying this, but this is what I have concluded, and…since the time
the coalition was formed people have been convinced of the complicity of both parties in the entire
conspiracy.‖
Source: English.News.mn
NEW CANADIAN AMBASSADOR PRESENTS CREDENTIALS
Mr. Gregory Goldhawk last week presented his letter of credentials as Ambassador of Canada to
President Ts.Elbegdorj. He succeeds Ms. Anna Biolik and comes here from Thailand where he was
commercial counselor at the Canadian Embassy.
At the ceremony Mr. Elbegdorj recalled that Canadian investment in Mongolia is less than only
China‘s. "We want to deepen bilateral relations not only in mining, but also in food, agriculture,
light industry, transportation, tourism, environment and education spheres," he said. Mr. Goldhawk
said one of his priorities would be to conclude an agreement on mutual support and protection of
investments.
Source: Montsame
DP ELECTION SHOWS WOMEN READY TO JOIN POLITICS
The way the Democratic Women‘s Association chose a new head earlier this month gives us hope
that some things could be changing, and for the better, in the political arena of this country. Ms.
Ts.Oyungerel took over from Ms. B.Delgermaa, who decided to step down after seven years in the
job. The DP National Committee had sent a list of seven names from whom the party‘s women‘s
wing was to choose its head. Three did not wish to contest, and one was absent, so the choice came
down to three and Ms.Oyungerel polled the most votes among them.
Mongolian politics is totally dominated by men, who have distinguished themselves by their capacity
to make deals. Women have been so much of a rarity that it used to be said the DP could not find
anybody willing to lead its women‘s wing, one reason why Ms. Delgermaa held the job for so long.
Now we find three women keen on the position and ready to fight for it. While presenting their
program to the delegates, all three spoke about their commitment to the gender equality law,
more women‘s participation in politics, and a larger quota of women candidates for election to
Parliament.
It is strange that while there is no blatant gender inequality in Mongolian society and there are as
many distinguished women as men in most professions, the number of women MPs should be falling
from election to election. The present Parliament has only three of them, the fewest ever. The DP
experience shows women have rolled up their sleeves and the next parliamentary election might be
different. Reports also show how much interest the election generated in the party, and not just
among its women members. Delegates said Ms. Oyungerel had won their support solely on the
strength of her program, which she explained lucidly and defended with conviction. Such qualities
are not often seen in our male MPs. Let us now wait to see how the MPRP‘s Association of
Democratic Socialist Women chooses its head.
Source: Udriin Sonin
POLITICAL WILL LACKING TO CHANGE CONDITIONS IN ULAANBAATAR
The urban infrastructure in Ulaanbaatar is on the verge of breaking down. To give some random
examples, cars in the city center can move only at 10 km per hour. Around 160,000 people --
elders, students, policemen, and handicapped -- use public transportation free of charge. Entire
areas from the countryside have migrated but they have not brought their schools and hospitals
with them. Ulaanbaatar desperately needs to add to its 111 kindergartens and 44 secondary
schools, to build underground subways, to dig a tunnel in the Bogd Mountain, to construct bridges.
It is not just lack of money that stands in the way of progress. There is a sad lack of political will

20. also to press forward with urgent projects that might cause temporary discontent among people.
That is why the cold storage is the place for plans to change driving regulations, impose parking
fees, building more underground parking areas, banning burning of coal in the city, moving some
education institutes to Nalaikh, extending pavements, building a flyover for cars to cross the
railway track, and a host of others. It is strange that a city that now has as many people as the
entire country had in 1980, should be run by a State structure which is just the same as in
Govisumber province.
Source: Udriin Sonin
LABOR LEADER SAYS OFFICE WORKERS‟ GAIN WILL BE DISPROPORTIONATELY MORE
The Head of the Confederation of Trade Unions, Mr. S.Ganbaatar, has said the ensuing wage
increase will benefit desk-bound bureaucrats much more than hard working teachers, doctors,
nurses, cooks etc. The Government has not replied to his demand for a category-wise revision of
wages instead of the blanket 30% increase for all state officials from October 1. The salary increase
will apply to 150,000 state employees, 38,800 of whom work in offices.
Office workers stand to gain more as their average salary of MNT500, 000 is considerably higher
than the average MNT120, 000 for professionals, and so the increase will be correspondingly more,
further widening the gap. The amount of increase for the office workers will be almost the same as
the total salary for the others. Mr. Ganbaatar found this special treatment of bureaucrats, many of
whom are popularly perceived to be unsympathetic to the common man, unfair.
Minister of Social Welfare and Labor T.Gandhi, however, disputed Mr. Ganbaatar‘s stand and figures
when she met media on Wednesday after the regular Government meeting had discussed the final
notification of the raise. She said the average salary of no category of state employees is
MNT500,000. The average for administrative officials is MNT336,700, for state service officials
MNT321,300 and for state special officials MNT310,000. Similarly, the average for lower level
employees, though less than others‘, is MNT145,134, higher than what the Trade Union leader said.
―Labor productivity has direct links to wages and so there is no ground to support the demand, if it
is made, for any added raise for any one category,‖ she said, adding, ―An equal raise is fair.‖
Source: News.mn
SPECIAL SESSION TO MARK 20TH
ANNIVERSARY OF PARLIAMENTARY POLITICS
The Autumn session of Parliament will begin on October 5 and will observe the 20th anniversary of
Parliamentary politics in Mongolia. About 260 former elected representatives at all levels, and
senior officials, as well as former media personnel will be invited to a special session in the grand
hall of Government House.
Source: Undesnii Shuudan
GLOBAL WARMING AND TOO MANY GOATS MAKE HERDERS‟ LIFE HARDER
Forty-year-old Bayanmunkh has learnt the hard way about overgrazing. Riding slowly behind his
herd of close to 2,000 animals across Mongolia's arid plains, the herder reminisces about how the
land has changed. "Life has become much harder today. Nature is not what it was 10 years ago;
there is more and more desert and less and less pastureland," he says.
Now Bayanmunkh has made the tough decision to move far away from the increasingly sand-covered
area his family has grazed in for generations to find a new home. According to U.N. Development
Program estimates, 90 percent of Mongolia is fragile dry-land; land under increasing threat from
desertification. Part of the reason for this is thought to be global warming, but in Mongolia's case
another significant factor is the rise of the global cashmere industry.
Mongolia is the world's second largest producer of Kashmir goat's wool behind only China with 20
percent of the world market. Mongolian herders have found that cashmere is by far the most
profitable source of income available to them. They can make MNT50,000 or USD37 a kilogram in a
country where 35 percent of the population still lives below the poverty line. Because of this,
herders have been turning more and more of their attention to increasing their goat population.
Read more…
A sharp drop in global cashmere prices last year encouraged herders like Bayanmunkh to increase
the size of their herds to compensate. Before last winter's harsh conditions decimated herds, goats
accounted for almost half of the country's estimated 44 million livestock, a record high.
The sheer number of animals grazing is putting a considerable strain on the limited pastureland.
Goats are much more voracious eaters than other livestock, and consume the root of the grass
thereby stopping it from growing altogether. "Every year an adult goat molts about 300 to 400
grams of raw, greasy cashmere," says Andrei Marin, a doctoral student writing a thesis on climate-

21. change adaptation at the University of Bergen in Norway. "It is therefore one of the very few
constants in herders' lives and their economy." Marin also suggests that goats are more efficient at
securing food from low-productivity sites and are more likely to give birth to triplets and twins,
thus helping herders recover faster in the aftermath of harsh winters like this last one.
In 2005, USAID released a report which concluded: "The herding sector [in Mongolia] may well have
surpassed the total herd size that can be sustained by Mongolia's pasturelands and its herds may
already be causing desertification." With livestock numbers increasing since then, the problem has
only intensified, with previously green pastureland being swallowed by the sand, though not all see
the increasing goat population as key. "There are, to my knowledge, no studies that show goats
have a more negative effect on pastures than other livestock," says Marin.
Others, however, put the blame firmly on the rising proportion of goats. "The growing number of
goats has been a major reason behind [the decline in quality of Mongolian pastureland]," said David
Sheehy, of the U.S.-based International Center for the Advancement of Pastoral Systems, in a World
Bank report published late last year, "but there is also the general problem of too many livestock
and the added impact of climate warming."
Following the return of free market capitalism, the size of the country's livestock population has
grown dramatically -- almost doubling from approximately 23 million in 1993 to 44 million before
this last winter. While policies to counter pastureland degradation have been implemented it is
proving tough to limit the impact of overgrazing.
"The threats of land degradation, and consequent desertification, are becoming a serious obstacle
to the growth of Mongolia," says Shoko Noda, deputy resident representative of the UNDP. "This last
winter was caused by a combination of global warming but also an unsustainable number of
animals."
But with demand for cashmere still high, and shop after shop in the capital of Ulaanbaatar selling
Mongolian cashmere products, it will be hard to persuade herders to limit their involvement in the
lucrative business. "It is about moving from quantity to quality of animals, but that is very difficult,"
says Noda. "We have tried to discuss this with the government, but it sounds as if we are trying to
limit the earning potential of herders, who are also voters."
So far, little has been done to persuade herders to rein in their herds, though they themselves are
seeing the impact of the overgrazing as increasing amounts of pastureland is eaten up by the
desert. "For the moment there is enough pasture, but it is getting harder," says Ariunzaya, as he sits
beside a small lake 20 kilometers up the road from Bayanmunkh's slow-moving herd. His own
animals, 600 goats and 800 sheep, drink nearby. "More and more people are coming here because
the land is getting worse elsewhere," he says.
Like the majority of herders, Ariunzaya earns most of his money from the cashmere trade. He sells
around 150 kilograms of cashmere a year, earning about USD7,600 from this, a sizable sum in
Mongolia, but he is unsure how long that can last. "When I first arrived in this small area in 1996
there were just five families -- now there are 35. In 1995 there were about 3,000 goat and sheep,
now that number is about 15,000. I am not sure how many more it can support."
Source: edition.cnn.com
PRESIDENT SUGGESTS LESS TRAFFIC CONTROL WHEN VIPs TRAVEL
Dismayed by the inconvenience caused to motorists by controls on movement imposed when a
dignitary is to pass, President Ts.Elbegdorj has asked the Traffic Police and the State Security to
devise fresh traffic management methods on such occasions. At present, all cars on either side are
asked to use one lane each to keep the road free, leading to jams and citizens‘ irritation. The
President‘s Office will discuss the matter with the Prime Minister and the Speaker of Parliament,
the other two in Mongolia who get such privilege, and if they agree to the new system of traffic
control to be enforced, it could take effect as early as September 20.
Source: News.mn
AUDIT QUESTIONS PAYMENT OF INCENTIVE TO STAFF AT AGRICULTURE FUND
The National Audit Office has expressed surprise that between 2006 and 2009 the Fund for
Agricultural Support paid a total of MNT 357.1 million as incentive to 21 people who worked for it,
including budget administrators and board members. A senior Fund official justified the payment as
being a common practice outside Government, where employees are awarded a bonus if the
organization earns a profit. ―Atar III campaign employees are not public servants and we never paid
anything to anybody outside the Fund.‖
Source: Zuunii Medee

22. JCI CONTRIBUTES TO NATIONAL DEVELOPMENT BY CAPACITY BUILDING
The Mongolian chapter of the Junior Chamber International was registered in 1995 and has since
then been trying to motivate youth to contribute to national development, according to Mr. E.
Bolorchuluun, this year‘s National President of the global organization present in 110 countries. JCI
Mongolia has 400 members, who have to be between 18-40 years of age. Once past 40, a member is
known as a senator. The organization activities cover four main areas. First is personal capacity
development; second, business capacity development, in which it supports young entrepreneurs by
bringing them together to encourage ―reciprocal learning‖; third, social development, where
collective solutions are encouraged and, fourth, work at the international level.
Source: Udriin Sonin
NEW MONGOLIAN REGULATIONS
The following new amendments and addendum were published in the latest weekly Government
bulletin. Unless otherwise decided by Parliament, they will take effect ten (10) days after
publication.
Date Regulations
06.09.2010 Amendments to Law on Soldiers' Pension, Allowance
Addendum to Law on Government Special Fund
Amendments to Law on Mongolia's 2010 Budget
Please visit BCM's website, Legislative Working Group, for a summary of new Mongolian laws. BCM
members who wish to access complete versions of the laws and regulations in Mongolian language
are welcome to call or email the BCM office: 332345 or info@bcmongolia.org.
ANNOUNCEMENTS
“MONGOLIA: MONEY & MARKETS”, ULAANBAATAR, OCTOBER 5-6
―Mongolia: Money & Markets‖, a financial forum jointly organized by PrimeInfo Centre and the
Mongolian Financial Regulatory Commission, will be held in Ulaanbaatar on October 5-6. BCM is the
official supporting organization of the event. The forum will be the first of its kind in Mongolia,
bringing together policymakers, financial market participants like banks, insurance and share-
dealing companies, investment banking, non-banking financial service providing companies, saving
and lending partnerships. They will discuss government policy on financial market regulations, and
all other issues related to it.
The Forum‘s official website www.mongoliamoneymarkets.mn will be launched on September 13.
Enquiries can also be made at 99118770, 99081203, and 70111403.
____________________________________
MONGOLIA INVESTMENT SUMMIT 2010, HONG KONG, OCTOBER 14
The Mongolia Investment Summit 2010 in Hong Kong on October 14 will explore the many exciting
investment opportunities on offer, as Mongolia takes advantage of its mineral-rich geology and
location next to China - the world‘s fastest growing consumer of natural resources.
Conference highlights include:
* A range of 10-minute company presentations showcasing major investment opportunities in
Mongolia
* Insights into the investment climate in Mongolia from a range of high-level government and
industry speakers including D. Zorigt, Minister of Mineral Resources and Energy
* Update on the privatization of State-owned enterprises from D. Sugar, Chairman, State Property
Committee
* Insights from the leading companies in Mongolia‘s banking and investment community
* Keynote from Rio Tinto on the Oyu Tolgoi project and the implications for future investment
To view the full line up of speakers at the Summit, visit www.MiningInvestmentInsight.com.
Mongolia Investment Summit is co-organized with Foreign Investment and Foreign Trade Agency
(FIFTA) ensuring the full support of the Mongolian government and key organizations within
Mongolia including the Business Council of Mongolia and the Mongolia National Mining Association.