May 18 2012

1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
Issue 222 – May 18, 2012
NEWS HIGHLIGHTS:
Business:
 Erdenes-TT given time to reach fuller valuation potential, says CEO;
 As OT nears completion, Ivanhoe losses wane;
 What's in a name? Rio Tinto gives Ivanhoe the blues;
 Threats to suspend licenses causing customers to cut orders, says SouthGobi;
 SAIL could set up mineral processing facilities in Mongolia;
 MCS, MAK plan for coal-to-liquid fuel production by 2016;
 SouthGobi reports profits, says Mongolia mines still open;
 FMO arranges groundbreaking syndicated loan for Khan Bank;
 Centerra Gold: Q1 report;
 TDB on review for downgrade by Moody's;
 Ivanhoe makes four director appointments;
 Prophecy clarifies power plant disclosures;
 Entrée Gold: Q1 report.
Economy:
 Secondary market bonds begin trade on MSE;
 Difference in Mongol Bank and MoF debt reports?;
 New data puts Mongolia 10th in world for coal holdings;
 USD 330 per capita tax revenue from oil and mining;
 100 days with Finance Minister Khayankhyarvaa;
 Government to brighten up city with 4,600 additional streetlights;
 Mongolia newspaper sales up 26 percent;
 Economic pitfalls may keep Mongolia from 20 percent growth in 2012;
 Mongolia struggles to harness wealth from mining boom;
 Climate change threatens nomad way of life;
 Rio chairman more confident than at start of 2012;
 China's iron-ore demand heading downhill, say BHP chief executive;
 Rare speed bump in commodities' long run;
 Beijing's tools for spurring growth dwindle.
Politics
 Mongolia caps investments;
 Parliament approves Foreign Investment Law;
 Foreign investment legislation is politicians seeking votes, says MNCCI head;
 Investors will have to wait until after elections, says Russian ambassador;
 Enkhbayar freed on bail;
 Prime Minister’s advisor arrested on corruption charges;
 Mongolia faces questions over commitment to democracy;
 Majority opting for cash in lieu of TT shares;
 Media joins the roster of “entities of strategic importance”;
 Mongolians living abroad permitted absentee ballots;
 Development Bank must remain free of politics, says official;
 Enkhbayar takes second in political popularity;

2.  New education law brings reform;
 Bill proposed for government evaluation company;
 PrIme Minister vows to tighten China-Mongolia ties further;
 U.S. National Guard officers espouse mining safety in Mongolia.
 Nine lessons on power and leadership from Chinggis Khan.
ECONOMIC INDICATORS:
 MSE Top 20 Index by Market Capitalization;
 Foreign-listed Companies with Mongolian Assets;
 Inflation;
 Central Bank policy rate;
 Currency rates.
*Click on titles above to link to articles.
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BUSINESS
ERDENES-TT GIVEN TIME TO REACH HIGHER VALUATION, SAYS CEO
State-owned coal miners Erdenes-Tavan Tolgoi JSC will use the added time before its public
offering to increase the value of its stock, said its chief executive officer. The initial public offering
(IPO) is tentatively slated for a March 2013 date.
―For TT, by initiating industrial and infrastructure projects, the mining project will not only be a
giant coal extraction process but a completely integrated mining complex with processing plants,
road and railway entrances and exits, and a power plant,‖ said B. Enebish. ―This will greatly add to
the value of TT.‖ He added that his company plans to begin these projects this summer.
In addition to the desire to increase the value of the company, Erdenes-TT's IPO has been delayed
because of its unclear situations due to the government's distribution of 20 percent of all stocks to
the populace, the need to select investors to the western Tsankhi project, and shortcomings of the

3. stock market before the passage of a new securities law.
Without the IPO for financing, the company will have to take a different route to pay for the
industrial complex to adjoin the mine. The company is looking into investment, coal pre-sale and
sales, and loan opportunities. The construction to railways is another crucial factor to boosting the
company's value as well as the nation's development, Enebish said.
―This is not only a matter of TT's development, but it will also be a huge step for Mongolia's
infrastructure,‖ said Enebish.
Source: UB Post
AS OT NEARS COMPLETION, IVANHOE LOSSES WANE
Ivanhoe Mines Ltd. has reported a narrowing of its first-quarter loss as the Vancouver-based miner
said its promising Oyu Tolgoi copper-gold project in Mongolia remains on track for commercial
production next year.
Ivanhoe Mines said after markets closed Tuesday that its net loss in the three months ended 31
March was USD 80.6 million, or USD 0.11 cents a share. That compared with a net loss of USD 492.5
million or USD 0.70 cents a share in the same 2011 period when the company took a USD 432.5-
million loss on a change in fair value of derivatives.
The company said overall construction of the first phase of Oyu Tolgoi was 77.8 percent complete
at the end of the first quarter and has advanced to 82.2 percent at the end of April.
―Construction remains on track to meet the mine's targeted start of initial production in the second
half of 2012. Commercial production is projected to begin in the first half of 2013.‖
Last month, Rio Tinto PLC, a 51 percent stakeholder, tightened its grip on Ivanhoe Mines as part of
a USD 3.3 billion financing deal that has seen Chief Executive Officer Robert Friedland step away
from the company he founded. The finance agreement has Rio Tinto providing USD1.5 billion in
bridge financing to Ivanhoe and a standby commitment for a USD 1.8 billion rights offering by
Ivanhoe.
Source: Vancouver Sun
WHAT'S IN A NAME? RIO TINTO GIVES IVANHOE THE BLUES
Ivanhoe Mines Ltd. said it will ask shareholders in June to approve a new name for the company:
Turquoise Hill Resources Ltd.
That's English for Oyu Tolgoi, Ivanhoe Mines' massive copper and gold project, the only asset
coveted by Rio Tinto PLC, which took management control of the Canadian miner last month after
moving to majority ownership.
Ivanhoe Mines is trying to sell of its other assets, which include a 58 percent stake in SouthGobi
Resources and a 59 percent stake in Ivanhoe Australia, reshaping ahead of a widely expected full
takeover by Rio Tinto eventually.
Source: Reuters
THREATS TO SUSPEND LICENSES CAUSING CUSTOMERS TO CUT ORDERS, SAYS SOUTHGOBI
SouthGobi Resources Ltd., the coal producer which Aluminum Corp. of China Ltd. (Chalco) has
agreed to buy, said some customers have cut orders after the government requested the suspension
of projects.
The Vancouver-based company said that it has not received an official order to suspend operations,
including at the Ovoot Tolgoi Mine, according to a Hong Kong Stock Exchange (HKEx) statement. The
company cannot provide guidance for the second quarter because of uncertainty.
―The announcement regarding potential license suspension has created significant uncertainty
among the company's customers,‖ SouthGobi Resources said in the statement. ―Concern over
whether SouthGobi will be able to deliver contracted volumes in the second quarter has in some
cases led customers to reduce their coal purchases.‖
Source: Vancouver Sun

4. SAIL COULD SET UP MINERAL PROCESSING FACILITIES IN MONGOLIA
Steel Authority of India Limited (SAIL), one of the largest state-owned steel makers in India and one
of the top steel makers in world, inked a major agreement with the Mongolian government last
week for the allocation of coking coal mines, exploring opportunities for setting up mineral
processing units for iron ore and coal, besides steel making units there.
Speaking on a memorandum of understanding (MoU) signed by SAIL and the Ministry of Resources
and Energy (MRE), a statement by SAIL said, ―The MoU envisages exploration of opportunities for
investment to be made by SAIL either individually or in consortium with other entities to develop
mineral processing/steel manufacturing facility in Mongolia.‖
Sail has been trying to diversify its coal requirements from the expensive Australian coal to other
destinations, including Mongolia and Africa. MRE Vice Minister T. Garamajav described the
partnership as a welcome step in cooperation between the two countries and hoped that a joint-
feasibility report could help Mongolia set up a mineral processing industry.
The official announcement said a joint pre-feasibility study for setting up a mineral processing
facility for iron ore and coal, both coking and thermal, and downstream steel-making facilities for
domestic consumption and trade, will be taken up by the MRE and SAIL. SAIL said it will select the
best available technology to treat Mongolian iron ore and coal deposits based on the study.
Source: The Hindu
MCS, MAK PLAN FOR COAL-TO-LIQUID FUEL PRODUCTION BY 2016
At a forum for the mining industry MCS revealed its plans to begin operations for synthetic diesel
fuel derived from coal in the next four year.
On the last day of the 90 Years of the Mining Industry summit, coal became a central point of
discussion. Mongolyn Alt (MAK) LLC and MCS Group presented their jointly planned project with SOD
Mongol Group LLC for the production of 420,000 tons of synthetic coal-to-liquid (CTL) diesel fuel
from coal.
Mongolia's potential for producing synthetic diesel fuel has garnered the attention of countries with
limited oil supply, such as the United States, Australia, China, and India. At the summit it was noted
that Mongolia has some of the greatest opportunities for producing coal-to-fuel synthetic diesel. In
China has halted all but a few similar projects with this aim. In Indonesia a factory is due to open
soon, and there is news of similar factories to open in India and Canada.
This kind of production would require large water resources and the construction of complementary
infrastructure to the industry. The project would also require investment, and MCS is already
looking to some Korean companies to assist with the financing. As for manpower, the project
currently employs 600 people but would potentially require 6,000 workers.
Source: Udriin Sonin
SOUTHGOBI REPORTS PROFITS, SAYS MONGOLIA MINES STILL OPEN
Mongolian coal miner SouthGobi Resources Ltd. reported a first-quarter profit, as its sales nearly
doubled and its average selling price rose.
The Toronto-listed miner said its coal mines in Mongolia were still operating despite a recent
government announcement about a planned suspension of its mining licenses. After China's state-
owned Aluminum Corp. of China Ltd. (Chalco) said in April it planned to acquire a majority stake in
SouthGobi Resources for USD 926 million, the Mongolian government said it would suspend its the
latter's licenses for its several large coal projects. The government has also begun to write new
foreign investment laws.
On Monday SouthGobi Resources said as of 14 May it had not received any official notification of the
suspension and it believed its licenses were still in good standing. That said, the company cautioned
it would have to halt operations if it received such a notice. Due to this uncertainty, the company
said it was unable to provide any forecast for the second quarter.
First-quarter net income amounted to USD 3.1 million, or USD 0.02 a share, compared with a year-
earlier loss of USD 46.6 million, or USD 0.25 a share. Quarterly revenue almost doubled to USD 40.2
million from USD 20.2 million, while gross margins in the quarter rose to 56 percent from 3 8

5. percent a year earlier.
Source: Reuters
FMO ARRANGES GROUNDBREAKING SYNDICATED LOAN FOR KHAN BANK
A 5-year USD 94 million combination of a subordinated Tier 2 (USD 32m) and senior (USD 62m)
syndicated facility agreements arranged for Khan Bank by FMO (the Netherlands Development
Finance Company) was signed by a group of participating development banks today. It is the first
syndicated loan to a commercial bank in the country's history.
The facility strengthens Khan Bank‘s capital position, further increasing its ability to meet loan
demand from Mongolian SMEs and corporate clients. The largest private sector bank in Mongolia,
Khan Bank has a strong focus on SMEs and retail customers and has a wide reach thanks to its
extensive network of rural branches. In small provincial towns and rural areas, Khan Bank is often
the only commercial bank active.
FMO‘s Chief Investment Officer Jurgen Rigterink said: ―FMO is proud to have arranged this
groundbreaking loan facility for Khan Bank. This long-term commitment is a boost for the Mongolian
economy and a clear vote of confidence for the Mongolian financial sector in general.‖
―Khan Bank is committed to the effective execution of this capital. This is a genuine landmark
transaction in Mongolia, and especially for Khan Bank,‖ said Khan Bank acting CEO Mr. Norihiko
Kato.
As mandated lead arranger and agent, FMO syndicated the transaction to three European
development banks: FMO (USD 25 million), DEG (USD 24 million) and BIO (USD 20 million). In
addition EBRD provided a USD 25m parallel senior loan aligned with the FMO syndicated senior
financing.
Source: FMO
CENTERRA GOLD: Q1 REPORT
Centerra Gold Inc. reported a net loss for the first quarter of 2012 of USD 14.7 million, or USD 0.06
a share, on revenues of USD 133.8 million.
The first-quarter loss includes USD 19.2 million of abnormal mining costs, USD 4.6 million due to a
work stoppage at its Kumtor mine in the Kyrgyz Republic and a USD 1 million to close its Reno
exploration office. For the same period in 2011, the company recorded net earnings of USD 136.6
million, or USD 0.58 a share based on revenues of USD 250.2 million in the same quarter last year,
reflecting significantly higher gold production and sales.
―The lower first quarter gold production reflects the changes to our guidance for 2012, due to the
accelerated ice movement above the SB Zone at Kumtor, as we previously announced,‖ said Steve
Land, president and chief executive officer.
At the Boroo mine in Mongolia, gold production was 11,848 ounces in the first quarter of 2012
compared to 16,549 ounces in the first quarter of 2011. The ore grades averaged 0.77 grams a ton
compared to 1.35 grams a tons in the same quarter of 2011. The heap leach operation at Boroo
remained idle during the first quarter of 2012, pending issuance of final permission by the
government.
During the first quarter of 2012 exploration expenditures in Mongolia increased to USD 2.1 million
from USD 800,000 in the first period of 2011. Capital expenditures at Boroo in the first quarter of
2012 increased to 3.7 million compared to USD 14,000 in the year-ago period.
For its 2012 forecast, at Boroo mine gold production is projected at approximately 60,000 ounces.
The 2012 forecast also assumes no production from the heap leach facility or the Gatsuurt due to
the aforementioned pending permission from government. 2012 sustaining capital expenditures for
Boroo are expected to be about USD 3 million primarily for component change-outs and mill
maintenance. No capital for development at Gatsuurt has been forecast and will only be invested
following a greenlight for commissioning of the Gatsuurt oxide project.
Source: Centerra Gold Inc.

6. TDB ON REVIEW FOR DOWNGRADE BY MOODY'S
Moody's Credit Ratings current ratings on Trade and Development Bank (TDB) of Mongolia LLC are on
review for downgrade.
Moody's assigns a bank financial strength rating of D- to TDB, which maps to a standalone rating of
―Ba3‖ on the long-term rating scale, reflecting its solid market position, sound probability, and
good operating efficiency. The rating is offset, however, by high concentration risk, substantial
core capital needs, and relatively weak corporate governances on a global basis.
The operating environment has been improving due to the recovery of the mining industry. Moody's
believes that the benefits of the Oyu Tolgoi and Tavan Tolgoi projects will be transformational to
the economy. According to the International Monetary Fund (IMF), the economy is overheating,
raising concerns of a ―hard landing‖ if external shocks reach the country.
Credit strengths include a solid in-country franchise, ranking as the third largest bank in terms of
loans and deposits, a leading position in corporate banking, foreign exchange and trade-related
project finance, and sound profitability with good operating efficiency. Challenges include
maintaining good asset quality, lack of geographic diversification, high risk from customer
concentrations and core capital under pressure if its rapid growth continues in coming years.
While there are no factors to constitute an upgrade as things stand, asset quality deterioration,
non-performing loans surpassing 4.5 percent and new formation rate of gross loans exceeding 8
percent, core capital falling below 9 percent, deteriorating profitability, and signs of strain in
liquidity were some factors listed that could lead to a possible downgrade.
Source: Moody's Credit Ratings
IVANHOE MAKES FOUR DIRECTOR APPOINTMENTS
Ivanhoe Mines Ltd. appointed four new directors, namely Jill Gardiner, Peter Gillin, Isabelle Hudon,
and David Klinger. The new appointees join Kay Priestly, recently named chief executive officer, as
newcomers to the company following majority stakeholder Rio Tinto PLC's reshuffling of command.
Gardiner was a senior executive of RBC Capital Markets; Gillin has served as chairman and chief
executive officer of Tahera Diamond Corp. and president and chief executive officer of Zemex
Corp.; Hudon is currently president of Sun Life Financial Quebec and previously served as president
of Marketel and president and chief executive officer of the Board of Trade of Metropolitan
Montreal; and Klingner has been a corporate director since 2004 after spending 38 years in the
mining industry.
All directors will be submitted to a vote by shareholders at the Ivanhoe Mines annual meeting
scheduled for 28 June.
Source: Ivanhoe Mines Ltd.
PROPHECY CLARIFIES POWER PLANT DISCLOSURES
Prophecy Coal Corp. issued a statement clarifying previous disclosures related to a feasibility study
of a proposed mine-mouth power plant near its Chandgana coal deposit in Mongolia.
In January the company issued a statement describing the feasibility study for the proposed mine-
mouth power plant, and said last week it reconfirms that the report pertains to the power plant
only, and does not include an economic assessment of the Chandgana coal deposit under NI 43-101
compliant standards. Given the report is linked to a specific coal deposit, an economic assessment
under N1 43-101 compliant standards of the mine is required because ―economics of each is integral
to the other,‖ said the company.
The report is expected to include a summary assessment of the Chandgana power plan economics,
along with an assessment of the technical and economic viability of coal production at the deposit
to verify the input prices assumed.
―While no mine analysis from the study was disclosed, the company should not have referred to any
study which was non-compliant with N1-43101,‖ it said. The commissioned study will supersede the
costing study, the company added.
Source: Proactive Investors

7. ENTRÉE GOLD: Q1 REPORT
Entrée Gold Inc. has reported progress in its exploration of its various properties while yielding that
the firm is not impervious to the weak market climate in its first 2012 quarterly report.
―Entrée's key projects in Mongolia and Nevada are progressing in the midst of the current market
volatility,‖ said Greg Crowe, president and chief executive officer. ―Many resource companies have
seen sharp declines in their share prices since 2011... and Entrée is no exception.‖
At the Lookout Hill Oyu Tolgoi LLC-Entrée Gold joint venture project, Entrée Gold reported ―some
of the highest grade mineralization found to date along the Oyu Tolgoi trend.‖ In 2011 its
exploration team drilled 14,900 meters. Last April Entrée Gold announced that core hole EJD0034A
on the edge of the eastern flank of its Heruga deposit intersected 590 meters of 0.33 percent
copper, 0.70 grams per ton of gold and 56 parts per million of molybdenum.
At the adjacent Shivee West project, Entrée Gold continues its exploration from its discovery of a
new gold zone (the Argo Zone) in 2011. The firm has sent out a field crew for further exploration
there.
Source: Entrée Gold Inc.
ECONOMY
SECONDARY MARKET BONDS BEGIN TRADE ON MSE
Secondary trading in government bonds worth MNT 525,000 officially launched on the Mongolian
Stock Exchange (MSE) on 15 May.
This was the first time that Mongolian government bonds with international securities identification
numbers were traded in the secondary market in accordance with internationally accepted
principle. The yield on one-year Mongolian bonds was 7.5 percent; its price rose to MNT 5,000.
Unlike in the primary market, the yields are not auctioned, so the price is most important, as it is
with stocks.
Source: BDSec
DIFFERENCE IN MONGOL BANK AND MOF DEBT REPORTS?
The Minister of Finance reported a foreign trade debt difference of MNT 7.7 billion compared with
estimates by the Central Bank.
Minister of Finance D. Khayankhyarvaa reported MNT 9.6 trillion in total foreign debts in Mongolia,
of which 2.6 trillion is held by the government. According to MP N. Batbayar there is a difference of
MNT 7.7 billion in debts within the private sector from estimates calculated by the Bank of
Mongolia.
―There is a difference of 30 percent between the volume of estimated debts reported by
government and the Mongol Bank,‖ said MP. N. Batbayar. He later added, ―We need detailed
information on what companies took these debts, and the finance minister must reveal the names
of those companies.‖
While some MPs claim Mongolia's foreign debts could threaten the national security of the economy,
the government said it believed the debt levels were still at a reasonable level. At the end of the
session, members decided that these debts must be investigated further before the next budget is
drafted
Source: Udriin Sonin
NEW DATA PUTS MONGOLIA 10TH IN THE WORLD FOR COAL HOLDINGS
Mongolia's coal holdings make it 10th in the world, according to a 2011 report on coal research from
the Mineral Resource Authority.
The report found that Mongolia has some 163.2 billion tons of coal, and that number is growing.
Currently Mongolia has about 300 mines in 15 locations in operation with about 20 billion tons of
coal, making its reserves the 10th largest in the world.
Today 75 percent of all coal reserves are located at Mongolia's largest mines: Tavan Tolgoi has 85

8. percent, Chandgana has 9 percent, Shivee Ovoo has 5 percent, Baganuur has 5 percent, Ukhaa
Khudag has 4 percent, Ovoot Tolgoi has 4.5 percent, with the remaining 16 percent at different
locations. About 40 companies are operating in Mongolia, of which 56 percent (or 9 billion tons) of
Mongolia's coal reserves are in the possession of government-owned companies Erdenes Tavan
Tolgoi JSC, Shivee Ovoo JSC, Baganuur, and Sharyn Gol JSC. Private companies possess the
remaining 44 percent (or 7.121 billion tons).
The transition to a market economy in the 1990s slowed the coal industry down in Mongolia, but it
is now experiencing a tremendous comeback. In 2011, 3.241 million tons was extracted, of which
21.1 million was exported for sale, representing increase 136.7 percent and 139.3 percent
respectively from year-ago statistics. The increase in extraction figures is explained by greater
demand from China and fallen exports from Australia.
Private sector companies such as Energy Resources LLC, Mongolyn Alt (MAK) LLC, SouthGobi Sands
LLC, Mon & Co. have already picked up on the trend and are working to expand their processing
facilities.
Source: Udriin Sonin
USD 330 PER CAPITA TAX REVENUE FROM OIL AND MINING
With a population of 2.8 million people, Mongolia collected USD 330 per head from its oil and
mining resources, shows the country's 2010 Extractive Industries Transparency Initiative (EITI)
report. The report released by Prime Minister S. Batbold reveals that the government collected a
total of USD 913.8 million in taxes and other payments from the top tax paying companies in 2010.
Mongolia is part of a global trend to require additional disclosure from the companies as part of
their EITI, and beyond minimum requirements. Miners are also now disclosing environmental
rehabilitation transfers to the government and real expenses. Mongolia has for the first time
disclosed the names of current holders of production and exploration licenses in the report.
More than 50 percent of tax revenue stems from copper mining, with coal mining being the second
largest source. Furthermore, windfall tax and corporate income tax are the largest revenue
streams, representing 36 percent and 17 percent of total reported government income,
respectively. In total, the mining sector accounted for 30 percent of gross domestic product, 32
percent of government revenue, and 81 percent of exports in 2010.
The EITI report now includes payments from 150 of the largest companies, whose payments are
larger than the agreement threshold. The 2010 report includes detailed reporting of social
payments and donations to state, regional, and local governments.
Source: EITI
100 DAYS WITH FINANCE MINISTER KHAYANKHYARVAA
Within 100 days of his appointment Finance Minister D. Khayankhyarvaa has helped the country
attain loans, expand transparency within the mining sector and draft legislation. Khayankhyarvaa
was appointed after the dissolution of the Democratic Party (DP)-Mongolian People's Party (MPP)
coalition government.
Under the minister's watch, the Mongolian government attained a USD 300 million soft loan from
South Korea. The World Bank has lent USD 11 million for additional funding to the Mongolia Second
Sustainable Livelihood project and USD 15 million for the Ulaanbaatar Fresh Air project. The World
Bank also gave a USD 10 million grant to Mongolia for its preschool education. Mongolia also
received a USD 500 million loan from China for the purchase of small tractors.
For legislation, Khayankhyarvaa participated on draft legislation for savings account insurance and
revisions to a draft on index insurance for securities. Additionally, under his lead of the Ministry of
Finance, Mongolia's released its first international government-guaranteed debt offering—a sold-out
bond offering worth USD 580 billion—with the Development Bank of Mongolia LLC and its
participation in the Spring Meetings of the World Bank and International Monetary Fund.
The ministry has also been involved in actions made to create greater transparency within
Mongolia's mining industry. The Ministry of Finance is now responsible for reporting on mining
revenue collected by the government on its website (mof.gov.mn) monthly. It will also post

9. information on the value of extracted minerals and the taxes and royalties the government receives
from them.
Source: Udriin Sonin
GOVERNMENT TO BRIGHTEN UP CITY WITH 4,600 ADDITIONAL STREETLIGHTS
The government plans to budget MNT 9 billion for repairs to 4,600 streetlights and MNT 19.8 billion
for flood protection.
Currently Ulaanbaatar has about 19,000 street light poles, but underground cables have posed a
problem. The government plans to replace 40 kilometers of cable to correct the issue.
So far bidding results from contractors have shown that it would be possible to save MNT 570 million
of the allotted MNT 9 billion. The contracted company would have to provide one year's warranty,
after which the government would be responsible for repairs. All repair and installation work has
been planned to begin in May and finish before the Naadam holiday season in July.
Government budgeted some MNT 2 billion for 1,000 solar panel lights but no bids have thus far been
made. The new lamps would have sensors and feature LED lamps, which are twice as efficient and
bright as standard models.
In the ger districts, the government plans to replace about 3,000 lights along the main streets and
within the enclosures of select households. The government is currently discussing a proposal for
installing cameras for monitoring as well.
Read more…
Plans also include MNT 19.3 billion for the construction of infrastructure for flood production,
adding an additional 25 kilometers of protective lines to the existing 130 kilometers. The flood
protection would be installed at the Khangai Market in the Zaisan area, along the Selbe River,
Dengjiin Myanga, Tolgoit, and Zuun Uul areas of Ulaanbaatar began in mid-April and is planned for
completion in September. The added infrastructure would reportedly strengthen flood defenses by
18 percent.
Source: Udriin Sonin
MONGOLIA NEWSPAPER SALES UP 26 PERCENT
The Press Institute of Mongolia has issued its 13th report concerning media activity.
In January this year a report said that Mongolia has 469 media organizations, 126 of which are
newspapers, 72 are radio stations, 149 are television stations, and 30 are websites. Newspaper sales
increased by 2.9 million copies this year, a 26 percent increase from a year ago. Seventy-three
percent of all newspapers sold are Mongolian dailies.
According to the report, this year saw the entrance of one additional television station, bringing the
total of networks broadcasting nationwide to 16. The number of professionals working in media
increased to 4,415, with 47 percent them above the age of 30.
Source: News.mn
ECONOMIC PITFALLS MAY KEEP MONGOLIA FROM 20 PERCENT GROWTH IN 2012
While Mongolia experienced its best first quarter in a decade this year, with reported 16.7 percent
economic growth from the National Statistics Office (NSO), political uncertainty and skyrocketing
inflation may keep it from projected growth of 20 percent.
Mongolia's gross domestic product (GDP) grew 16.7 percent year-on-year in the first quarter of 2012
compared 9.8 percent in 2011. In nominal terms growth reach 30.2 percent year-on-year. That
growth is driven by the mining sector, commodity exports and government spending.
Industry and construction contributed 15.7 percent to GDP growth. Mining sector output, the largest
component (68 percent) in industrial output advanced 10.1 percent year-on-year. Coal output
surged 10.3 percent to almost 10 million tons, crude oil grew by 59.8 percent to 1.1 million barrels,
iron ore grew by 44 percent to 1.5 million tons, and zinc grew by 24.6 percent to 43,100 tons.
Mongolia's export growth seems to be propelled by strong demand for resources in major Asian
economies, primarily China, and competitive commodity prices.
The government budget increased 20.9 percent year-on-year to MNT 1.5 trillion, while tax revenue

10. increased 21.5 percent to MNT 1.3 trillion. Additionally, the government has collected MNT 8.9
billion for its Stabilization Fund. With expenditure growing at 31.7 percent rate to MNT 1.5 trillion,
the general government budget registers 39.1 billion, or a 1.7 percent GDP deficit. Capital
expenditure doubled to MNT 255.4 billion, including domestic investment of MNT 248.3 billion.
Government consumption increased 27.2 percent year-on-year to MNT 215.3 billion. Wages and
salaries were also up 28 percent.
Concerns to the economy include inflation reaching 16 percent year-on-year, instigated by salary
increases and cash handouts. Although the latest draft has been softened, there is a perceived
common consensus among policy makers to impose additional regulations on foreign investment
coming to the sectors and entities of ―strategic importance‖. Passage in its current form may affect
the current speed of output by key resource producing companies, government revenues and
private consumption. This would prevent Mongolia from reaching the projected estimate of 20
percent growth for 2012 by the source.
Source: Eurasia Capital
MONGOLIA STRUGGLES TO HARNESS WEALTH FROM MINING BOOM
Economic growth driven by mining significantly accelerated last year to nearly 17 percent and will
be 15 to 20 percent in 2012 and 2013, an economist said last week.
"The giant Oyu Tolgoi copper-gold mine will start commercial production next year, that will give
another boost to economic growth and export revenue," Jan Hansen, a senior economist of the
Asian Development Bank (ADB) Mongolia Resident Mission said.
Although economic growth prospects were promising, Mongolia still faces many challenges, led by a
high dependence on natural resources, he said. Natural resource dependence often leads to growing
income disparities, as resource extractions create relatively few jobs.
Hansen said Mongolia, which historically had a comparatively balanced income distribution, has in
recent years experienced an interesting inequality which could undermine social cohesion and
stability. He suggested Mongolia should further improve its economic and political institutions to
ensure transparent, accountable, and equitable management of natural resource revenue and
further diversify the economy by supporting investment in non-resource sectors.
Another major threat to the economy he mentioned was the country's over-expansionary fiscal
policy. He said Mongolia, which historically had a comparatively balanced income distribution, has
in recent years experienced an increasing inequality which could undermine social cohesion and
stability.
Read more…
Government spending had significantly increased in the past two years, which has led to high
inflation. The inflation rate reached 16 percent in April and the ADB expected it would remain in
double digits in 2012 and 2013, he said. Rising inflation indicated risk of overheating the economy.
He highlighted the Bank of Mongolia's role in combating high inflation and cooling the overheating
economy, but recommended increasing the policy rate and reserve ration further.
The ADB economist said fiscal resources generated from mining revenue had to be spent much more
efficiently to solve the problem. Universal cash payments from the Human Development Fund,
which will be phased out soon, are not effectively protecting the poor but instead are increasing
demand pressure and fueling price rises.
Source: Xinhuanet
CLIMATE CHANGE THREATENS NOMAD WAY OF LIFE
The average annual temperature has risen more in Mongolia than any other place on earth, nearly 4
degrees. The rain patterns have changed, and some 60 to 70 percent of the country is at risk of
desertification. If that happens, the country's nomadic herders will have to give up their herds and
traditional way of life.
Clyde Goulden, a scientist from Drexel University in Philadelphia, had worked in Mongolia for two
decades, studying Mongolian forests and grasslands, when he noticed his research site had warmed
up dramatically. He soon learned that since the 1940s, Mongolia as a whole has warmed more than

11. almost anywhere on Earth.
For herders, it means greater burdens to their way of life. The herding couple Hurelchuluun and
Bayambaa said the weather has gotten much worse in recent years, especially with unusual sudden
cold and hot spells.
―Sudden cold is causing the biggest problem,‖ Bayambaa said, ―Extreme weather... is causing the
death of animals.‖
The couple also complains of changing rainfall patterns. Goulden said that instead of gentle, light
rains that might last for two or three days, the region he lives in gets short downpours. He said the
locals call these ―rains that don't wet.‖ Instead, the water runs off into creeks, leaving behind dry
soil and poor grass.
Erdenchuluun Zorigt, the environment advisor to Mongolia's president, said that climate change
threatens Mongolia's future. Its potential impact on the ecology, economy and cluttered is
worrisome.
Source: Public International Radio
RIO CHAIRMAN MORE CONFIDENT THAN AT START OF 2012
Diversified miner Rio Tinto PLC chairperson Jan du Plessis said last week that while the global
economy continued to experience volatility, the economic picture had improved. He told
shareholders at a general meeting in Brisbane, Australia that he was more confident than six
months ago.
While the Chinese economy was cooling, Du Plessis said that the growth rate was still ―very
favorable‖ compared to global economic growth. He reaffirmed Rio Tinto's belief that the demand
for several of its products would double of the next two decades.
―Emerging markets are industrializing; people are moving to cities and working to raise their
standards of living. Your company is well placed to supply this increase in demand for metals and
minerals to meet rising infrastructure and consumption needs,‖ he told shareholders.
Rio Tinto would spend some USD 16 billion in 2012 on its growth strategies, including potential
acquisitions and disposals.
Rio Tinto is investing in expanding its iron-ore capacity, with its Pilbara production increased by
five million tons to 225 million tons last year, and to 230 million tons this year. The group will
expand its iron-ore output to 283 million tons and potentially 343 million tons. During the last
financial year, Rio chose to exit a number of businesses, which it deemed no longer in line with its
strategy. The mining giant streamlined its aluminum portfolio with 13 assets targeted for further
efficiencies and preparation for either divestment or closure.
Source: Mining Weekly
CHINA'S IRON-ORE DEMAND HEADING DOWNHILL, SAY BHP CHIEF EXECUTIVE
A lower rate of growth was on the way in the demand from China for global seaborne iron ore, a
Mongolian export commodity with growing demand from China, said BHP Billion's chief executive
officer.
While BHP Billiton continued to expect Chinese crude steel production to reach 1.1 billion tons a
year by 2025, Kloppers emphasized than this equated to a lower 650-million tons-a-year rate of
growth in the demand for global seaborne iron ore than the 800 million tons a year that had been
experienced in the last ten years.
While there was an opportunity for BHP Billiton and others to continue to invest in iron ore, those
investments should be made knowing that supply would in due course meet demand and that the
pricing mechanisms and the pricing regimes would change.
For the longer term, beyond 2025, the combination of a plateau for steel use in China and
increasing availability of ferrous scrap was likely to result in a protracted period of low-to-negative
growth for the seaborne iron-ore market. Therefore, low-cost seaborne iron ore would continue to
displace higher-cost supply and prices would revert to marginal cash cost. It was thus BHP Billiton's
belief that a window of opportunity was reserved for incumbent iron-ore producers that were low
on the cost curve, able to leverage existing development, close and quick to the market, and had

12. competitive fiscal terms and stability.
By contrast, companies producing copper, Mongolia's still-top export commodity, would show a
decline over the next decades. Taking that decline into account and adding that to the forecast
underlying growth of 3 percent a year, copper producers would have to meet a 5 percent-a-year
growth in production. BHP's base-case scenario was that prices over that period of decades would
be set at a level high enough to create incentive for investment in copper supply.
Source: Mining Weekly
RARE SPEED BUMP IN COMMODITIES' LONG RUN
After a strong start to the year, prices for crude oil and gold have slumped by double-digits in
percentage terms from their 2012 highs, and copper—an often-cited barometer of economic activity
and a pillar to Mongolia's own economy—also has fallen 8 percent from a peak for the year in
February.
The commodities market has become hyper-attuned to moves in the world economy. Broad worries
about the global economy, especially Europe's debt woes, also often override fundamental forces of
supply and demand to drive prices. From the outset, the rally that began in 1999 was fueled by two
diverging forces: Rapid growth in emerging markets sparked fresh demand, particularly from China.
At the same time, supplies were limited as years of low prices had made producers reluctant to
expand their operations. The situation has since changed, and production has increased. Crude oil
output has risen 16 percent since 1999, while copper is up 28 percent aluminum 94 percent.
The changes to the supply-and-demand picture, and the recent declines in prices, have ignited a
debate over whether the so-called ―super-cycle in commodities is over‖—or, at least, heading for
the back-end of the cycle. While analysts are not predicting a prolonged decline in prices from here
anytime soon, some say the commodities market may have entered a slower-growth phase, during
which periods of falling prices will regularly interrupt what were once routine gains.
Commodity prices remain high in historical terms—the Dow Jones-UBS Commodity Index has risen
73.2 percent since the end of 1998. Continued growth in China and other developing markets will
keep them supported. Also, prices for key goods can spike with any supply problems, such as bad
weather. The cost of finding more rich veins of many metals is rising.
Still, the recent swoon has had a number of casualties. Rising supplies can have a significant impact
on prices. Natural-gas prices have slumped thanks to a ramp-up in production. Increases in mine
output have weighed on gold, risking the metal's streak of 11 straight years of gains.
Source: Wall Street Journal
BEIJING'S TOOLS FOR SPURRING GROWTH DWINDLE
The leaders of China, the chief consumer of Mongolian commodities, reached into their economic-
stimulus tool kit last weekend to boost flagging growth, but the measures don't pack the wallop
they once had.
After China announced a number of disappointing economic indicators on Friday, its central bank
said that it would lower the share of deposits that banks must hold in reserve by 0.5 percentage
points, starting 18 May. The cut is aimed at kick-starting lending, but banks already appear to have
ample credit with interbank lending rates falling to 3.2 percent last Friday, down from a high of 5.4
percent in the second half of February.
The data shows China's growth continues to lose steam in the second quarter and might not rebound
as many expected. China's authoritarian government circumvents the need to negotiate with the
public or a parliament. Also, a relatively low debt allows it to afford additional spending. But
Beijing has its own constraints, including an immense stimulus program worsened by a housing
bubble that has ratcheted up local-government debt. Cutting interest rates, a favorite tool of
central banks globally, could worsen the inflation that China's central bank spent last year trying to
tame. A once-in-a-decade leadership transition is further inhibiting action.
After three years of high investment, the low-hanging fruit on infrastructure projects has already
been picked. Indeed a number of measures likely to be considered to boost growth—slowing the
rate of yuan appreciation to help exporters, cutting interest rates to boost demand, investing more

13. in infrastructure—have the downside of slowing hindering the transition to a domestic-market
focused economy.
The country's growth target fell to 7.5 percent from the 8 percent goal it has had since 2005.
Although the target is not literal,—Chinese Chinese growth usually goes well above the official
target—it is a signal to local leaders that the central government wants to shift economic strategy,
even at the cost of the pace of growth. Consumption is a firmer foundation for growth over the long
term. Now, though, China is in danger of slipping closer to the stated target, government is seeking
alternatives to speed up growth.
Source: Wall Street Journal
POLITICS
MONGOLIA CAPS INVESTMENTS
Parliament approved its new investment law yesterday that caps future foreign participation in
certain strategic industries, reflecting a growing public push to keep mineral profits inside the
country.
When it goes into effect, the law will require foreign investors to obtain government review and
parliamentary approval for investments at 49 percent and above into industries such as resources,
finance, telecommunications and media, according to analysts in Ulaanbaatar. The cap is specific
to deals valued above about USD 75 million. Investors owned by governments will also need special
permission to buy into the sectors.
Foreign investment is critical to Mongolia's future as a commodity powerhouse, but the law reflects
anxiety among ordinary Mongolians that foreigners would enjoy the spoils of the country's hoard of
resources. Its passage comes weeks before parliamentary elections too.
―Foreign investment should continue to be the lifeblood of Mongolia's strong mining-sector ramp-
up,‖ Jim Dwyer, executive director of the 220-member Business Council of Mongolia, said by email.
Previously, Mongolia set few hard limits on foreign investments. In the all-important mining sector,
the government had previously wanted about 34 percent of strategic mineral deposits that were
developed privately, and retained stakes of up to 51 percent when government funds for
exploration were used. Mongolia's key mine projects remain in their infancy, and projects are
already drawing foreign investment to push up gross domestic product (GDP) above 16 percent.
One event that spurred the law's rush to passage was an 1 April deal by Ivanhoe Mines Ltd. to sell a
large stake in a coal company to a state-owned Chinese investor. Under that plan state-owned
Aluminum Corp. of China Ltd. (Chalco) would pay over USD 920 million to buy up to 60 percent in
coal producer SouthGobi Resources Ltd.
Source: Wall Street Journal
PARLIAMENT APPROVES FOREIGN INVESTMENT LAW
The Foreign Investment Law bill has apparently been rushed through Parliament and may have
suffered for it.
In addition to stakeholder regulations imparted on companies operating within sectors of strategic
importance, Mongolia‘s foreign review agency is expected to address additional issues such as
activities that may contradict Mongolia's national security, operational compliance with Mongolian
law, and monopolization of an industry.
Industries of strategic importance include minerals, finance and banking, media and
telecommunications. Ownership by foreign investors in any enterprise of strategic significance has
been capped at 49 percent for investments above MNT 100 billion. Any larger ownership stake will
need approval from Parliament.
The law will directly impact Aluminum Corp. of China Ltd.'s (Chalco's) proposed purchase of 60
percent of SouthGobi Resources Ltd. because the law requires all investments by foreign state-
owned enterprisesto obtain Government and Parliamentary approval. State-owned aluminum miner
Chalco, which is looking to diversify into coal production with Mongolian deposits, will now need

14. expressed permission from Parliament.
Source: Frontier Securities
FOREIGN INVESTMENT LEGISLATION IS POLITICIANS SEEKING VOTES, SAYS MNCCI HEAD
Parliament's rush to pass its Foreign Investment Law is yet another example of politicians looking to
capture the appeal of the masses at the expense of the good of the country, said the head of the
Mongolian National Chamber of Commerce and Industry (MNCCI) in an interview with BCM.
S. Demberel, who is head of the MNCCI as well as advisor to both the president and prime minister,
said more time should be given to such important legislation. However, as elections approach,
politicians are willing to risk the well-being of the economy.
―Don't hurry, we should consider investment in a complete way to make certain changes necessary
in special areas (such as finance, high-tech, banking),‖ said Demberel. ―Minerals need special
consideration and, most of all, input from the investors themselves.‖
Demberel, who is widely expected to run for office with the Civil Will Green Party and will
announce his final decision this Sunday, said Mongolia should be careful not to act as to shun foreign
investment. However, Mongolia would be wise to add some prudent regulation.
―Mongolia has passed a period of naivety starting from the 1990s, when it expected a lot from
foreign investment. We opened the door very wide and received lots of foreign dollars.‖ He added,
―After 20 years, we discovered Mongolia had large mineral resources but mining law and finance
law didn't fit well together.‖
He pointed out that this law would have to fit well with a new bill concerning the mining industry
after elections, as well as the existing legal environment. Rushing to pass a law, he warned, may
only result in creating contradictions and the need for revision later on.
Source: BCM
INVESTORS WILL HAVE TO WAIT UNTIL AFTER ELECTIONS, SAYS RUSSIAN AMBASSADOR
Political uncertainty has even Russia, a closely regarded political and economic ally to Mongolia,
second-guessing investment opportunities.
Russian Ambassador to Mongolia Victor Samoilenko said that although Russia would like to
participate in projects such as Tavan Tolgoi, the current political climate and its unstable legal
environment is making that difficult. He said foreign investors will have to wait for the interests of
investors and Mongolia to align once again before progress can be made.
―It is very difficult to understand what is going on here and what will happen next,‖ said
Samoilenko. ―As I understand it, it seems that all will come to a conclusion after parliamentary
elections.‖
The ambassador criticized Mongolian Parliament's penchant for rushing legislation out the door and
making changes as problems arise. He said sustainable law is a top need for investors, and no
investor would be interested in an opportunity if they could not know what tomorrow will bring.
Source: Unuudur
ENKHBAYAR FREED ON BAIL
The former Mongolian president jailed pending charges of corruption, has been released on bail
after a 10-day dry hunger strike, temporarily soothing a dangerous stand-off that has rolled
Mongolia's democratic politics ahead of elections next month.
Although Mongolia has successfully seen several peaceful transfers of power during its 20 years of
democracy, the recent jailing and hunger protest of N. Enkhbayar, who left power in 2009, have
highlighted the turbulent and capricious political battles in Mongolia.
Enkhbayar's release on bail later on Monday followed several days of protests by supporters in
Ulaanbaatar, and mounting concerns from human rights organizations about his treatment in jail.
The former president had been planning to run for Parliament in Mongolia's nationwide elections on
28 June as the head of an independent political party he founded. It is Mongolia's third most popular
political party, according to polls before his arrest.
However, Enkhbayar has been charged with five instances of corrupt behavior, and was forcibly

15. arrested on 13 April after failing to appear for questioning. The allegations represent the highest-
level corruption case Mongolia has ever experienced, and has deepened political fissures ahead of
the polls. Corruption has been a growing challenge for Mongolia as it seeks to develop its vast
mineral resources without falling prey to the so-called ―resources curse,‖ a phenomenon in which
countries rich in raw materials experience slower economic development than countries without.
The end of Enkhbayar's hunger strike and release on bail should clear the way for the beginning of
his trial, although a date for the first court hearing has not yet been set. His lead defense said he
plans to ask for the case to be dismissed on procedural irregularities due to alleged denial of basic
rights granted to defendant under Mongolian law, including the right to confidential legal counsel.
Source: Financial Times
PRIME MINISTER‟S ADVISOR ARRESTED ON CORRUPTION CHARGES
D. Batkhuyag, former chairman of the Mongolian Mineral Resources Authority and an advisor to
Prime Minister S. Batbold, has been arrested on corruption charges.
Batkhuyag is being held in a detention center while he is investigated for abuse of power and
corruption in issuance of mining permits. The Ulaanbaatar office of SouthGobi Sands LLC, a mining
company controlled by Canada's Ivanhoe Mines Ltd., was sealed off Monday for a day in relation to
the corruption investigation.
Source: Xinhuanet
MONGOLIA FACES QUESTIONS OVER COMMITMENT TO DEMOCRACY
President Ts. Elbegdorj, responding to international concerns over the jailing of his predecessor,
said he has no right to interfere in corruption probes.
But in a statement he called for "humane" and transparent" treatment for N. Enkhbayar, who has
been jailed for almost a month on allegations he illegally profited while in office. It comes as
Mongolia's leadership faces mounting questions about its commitment to democracy.
Enkhbayar's family said his effort to protest his innocence and detention with a hunger strike has
now landed him in a hospital where doctors are debating whether to begin force-feeding him. Thus
United States has voiced its concern too, as a U.S. State Department spokeswoman said this week
that Kurt Campbell, assistant secretary of State for East Asian and Pacific Affairs, summoned
Mongolia‘s ambassador to discuss his case.
In his statement, Elbegdorj highlighted international and domestic "debates" over the case but said:
"I cannot and would not, advocate for a particular position on the recent arrest and allegations of
corruption brought by the Independent Authority Against Commission (IAAC).
Elbegdorj said judicial reforms, including protecting human rights and rooting out corruption, have
been hallmarks of his administration. Peter Goldsmith, a former U.K. attorney general representing
the former president's family, called for more action.
The corruption probe, which has included questioning of politicians and executives, reflect political
jockeying ahead of next month's parliamentary election, according to several analysts who term
Mongolia's democracy as both vibrant and immature.
Source: Wall Street Journal
MAJORITY OPTING FOR CASH IN LIEU OF TT SHARES
A recent poll found that the majority of citizens polled thus far said they would prefer to receive
MNT 1 million in cash in lieu of their entitlement to shares of Erdenes Tavan Tolgoi JSC.
A survey conducted by the Ministry of Social Welfare and Labor that began on 7 May and found as of
16 May that 680,000 citizens would opt for cash payments compared with 20,000 who would like to
have the money transferred to a loan for an apartment or social insurance premiums. Another
270,000 disabled persons opted for the MNT 1 million as well, bringing the total to 970,000 citizens.
In comparison, 738,000 people said they would like to keep an account open for their shares.
According to the figures, the survey includes input from 1.7 million of Mongolia's 2.8 million
population.
The poll will be completed on 20 May with results to be released on 1 June.

16. Source: Unuudur
MEDIA JOINS THE ROSTER OF “ENTITIES OF STRATEGIC IMPORTANCE”
Parliament has added media to the list of enterprises of strategic importance for the bill on foreign
investment.
Media joins the minerals, banking and finance, and telecommunication sectors under the scope of
the law that would cap foreign ownership at 49 percent and require permission from Parliament to
go higher. In addition, any ownership position by state-owned entities will require permission from
the Parliament.
According to Minister of Foreign Affairs G. Zandanshatar, the law aims to require permission of the
government for foreign investors to buy over 15 percent shares in a national enterprise with
strategic significance. However, he clarified that the law was not meant to prohibit foreign
investment into Mongolia.
―We do not intend to block any foreign investment and it will not affect our relations with our two
neighbor countries badly. It is only to protect Mongolia's interests and create a new principle and
better regulation mechanisms for negotiations.‖
Source: Zuunii Medee
MONGOLIANS LIVING ABROAD PERMITTED ABSENTEE BALLOTS
Mongolians living abroad will get their chance to cast their vote in Parliamentary elections for the
first time this year.
With the election about six weeks away, the cutoff date for Mongolians living abroad will be June
10. The election will be held using a combination of majority and proportional systems. However,
voters from abroad will not be able to cast their vote to the majority portion of the election.
A commission has been created that will oversee the votes coming from abroad. B. Batkhishig, State
Secretary of the Ministry for Foreign Affairs, is in charge of the commission comprised of 39
diplomat representatives and a party of representatives from each commission.
According to a report from the consulate, 112,862 Mongolians currently live abroad.
Source: Udriin Sonin
DEVELOPMENT BANK MUST REMAIN FREE OF POLITICS, SAYS OFFICIAL
It is in the best interest of the Development Bank of Mongolia to remain independent and free of
politicization, said the bank's first deputy chief executive officer.
―Because the election is not far away, there is a tendency to bring politics into everything. The
Development Bank is not an object of politics. It can affect badly on the activities of the bank as a
financial organization of Mongolia.
She added that the bank should work closely with Mongolia's private and public sectors, and help
ensure profitability. Bolormaa suggested MIAT Mongolian Airlines, the Tavan Tolgoi coal project and
Power Plant No. 5 as projects the bank could support.
Source: Zuunii Medee
ENKHBAYAR TAKES SECOND IN POLITICAL POPULARITY
The Sant Maral Foundation, one of Mongolia's top polling organizations, placed recently arrested
former President N. Enkhbayar second of Mongolia's top political figures. The survey was compiled
before the arrest of the former president, giving the possibility that his popularity and influence
may have since changed.
Enkhbayar was second to S. Ganbaatar, President of the Confederation of Mongolian Trade Unions
on the survey conducted from 16 March and 14 April. The pollster found that preferences for the
Democratic Party and Mongolian People's Party (MPP) were nearly identical at about 32-33 percent
each, while 12 percent went to Enkbhayar's Mongolian People's Revolutionary Party (MPRP), 7
percent to other parties and 16 percent were adopted by independent candidates. These
percentages exclude ―No answer‖, ―Depends on a candidate‖ and ―Don‘t know‖.
Enkhbayar has served as prime minister from 2000 to 2004 and president from 2005 to 2009. He was

17. arrested under order of the Sukhbaatar District Court after refusing to submit to questioning for a
case built against him by the Independent Authority Against Corruption (IAAC).
Enkhbayar's family and lawyer have made claims that his arrest may have been politically motivated
to keep him from campaigning in the upcoming election. Enkhbayar, however, has been released on
bail this month with the promise that he would cooperate with the investigation.
One reason for Ganbaatar's popularity was the cause he took up for higher salaries for workers and
protests against rise in gas prices last January.
Source: Zuunii Medee
NEW EDUCATION LAW BRINGS REFORM
Parliament has passed a new law to bring change to the methods for teacher evaluation and social
services given to workers in education.
The new law on education passed last week will give teachers and directors who have worked 25
years a bonus equal to two-year's salary. Teachers who work in the countryside would receive a
bonus worth three-year's salary. In total Mongolia has 17,000 teaching personnel working in
education.
The new law adopts a new 12-year system that mandates five years of elementary education, four
years basic education, and eight years secondary education. MP D. Oyunkhorol said the new law is a
priority of the education sector.
Source: News.mn
BILL PROPOSED FOR GOVERNMENT EVALUATION COMPANY
MP L. Bold has sent a bill proposing the establishment of a company that would collect feedback for
the government.
The proposed legislation to create the company, named Bayanmongol (translation: rich Mongolia)
Co., is similar to one proposed in 2009 that eventually resulted in government's propping up of the
Human Development Fund. The government also established Erdenes (translation: mineral) MGL LLC
for the Tavan Tolgoi mine and Erdenes OyuTolgoi for the Oyu Tolgoi project. Since then it has
distributed 1,072 shares from Erdenes-Tavan Tolgoi JSC, a subsidiary of Erdenes MGL responsible for
coal extraction of the project, to every Mongolian born before March 2011.
Bold's proposal is for an independent company, away from government influence, with a governing
body of shareholders and two representatives from Mongolia's 21 provinces as well as four
representatives from the capital.
Source: News.mn
PRIME MINISTER VOWS TO TIGHTEN CHINA-MONGOLIA TIES FURTHER
Mongolian Prime Minister S. Batbold said Thursday that his government will strengthen cooperation
in various fields with China to push forward the bilateral strategic partnership.
At a meeting with Xu Cahiou, vice chairman of China's Central Military Commission, Batbold said
developing friendly relations with China is a chief goal of Mongolia's foreign policy. He said his
government will continue to adhere to the one-China policy and respects China's stance on Tibet.
He also said Mongolia considers China's rapid development as a great opportunity for Mongolia and
wants to maintain high-level contacts with China to further promote bilateral cooperation in various
fields.
Xu said China and Mongolia are important neighbors. With joint efforts, bilateral ties in all areas
have made strides in recent years and brought great benefit to the two nations. He stressed that
China attaches great importance to developing China-Mongolia ties and is willing to work with
Mongolia to ensure long-term steady and sound development of their strategic partnership.
Source: Xinhuanet
U.S. NATIONAL GUARD OFFICERS ESPOUSE MINING SAFETY IN MONGOLIA
Mine safety is the top priority of three West Virginia Army National Guardsmen in Mongolia to share
their mining knowledge with coal mining officials.

18. First Lieutenants Joshua Poling and John Sinsel, and Staff Sergeant Tommy Wolford are full-time
miners as well as soldiers taking part in an Alaska National Guard partnership program with
Mongolia that has been in effect since 2003. The U.S. National Guard has sent personnel from
various fields of expertise to Mongolia for brief periods of time to train government and civilian
personnel.
"This opportunity came up through conversations with out Mongolian partners," said Major Wayne
Don, Alaska National Guard partnership officer. "Since Alaska doesn't deal with coal mining that
often, I started communicating with the West Virginia National Guard to request support from
them."
In 2011 Mongolia had more than 100 mining fatalities, and began reaching out to other countries for
help in determining the root causes of the problem.
Among other topics, Wolford said, "We are teaching the importance of ventilation in keeping the
mines safe.
Source: Sunday Gazette Mail
NINE LESSONS ON POWER AND LEADERSHIP FROM CHINGGIS KHAN
Chinggis Khan's reputation as an evil and bloodthirsty ruler may not be entirely fair or accurate. For
starters: he abolished torture, embraced religious freedom, united disparate tribes, hated
aristocratic privilege, was a meritocratic ruler, loved learning and advanced the rights of women in
Mongol society. His philosophy lies somewhere in between the conniving ambitiousness of
Machiavelli and humble and loyal Cyrus the great.
Taking from Jack Weatherford's ‗Genghis Khan and the Making of the Modern World‘, let us see how
Khan—in his own words—managed to accomplish this great work and what his obligations were.
Have an End in Mind
―For the Mongol warrior, there was no such thing as individual honor in battle if the battle was lost.
As Chinggis reportedly said, there is no good in anything until it is finished.‖
Lead from the Front
When it was wet, we bore the wet together, when it was cold, we bore the cold together.‖
Serve a Greater Good than Yourself
―[A leader] can never be happy until his people are happy.‖
Have a Vision
―Without the vision of a goal, a man cannot manage his own life, much less the lives of others...
The ancients had a say: 'United of purpose is a fortune in affliction.'‖
Be Self-Reliant
―No friend is better than your own wise heart! ... Although many people can be your helper, no one
should be closer to you than your own consciousness.‖
Be Humble
―The mastery of pride, which was something more difficult, he explained, to subdue than a wild
lion. He warned, 'If you cannot swallow your pride, you can't lead.'‖
Be Moderate
―I hate luxury, I exercise moderation... It will be easy to forget your vision and purpose once you
have fine clothes, fast horses and beautiful women. [In which case], you will be no better than a
slave, and you will surely lose everything.‖
Understand Your People
―People conquered on different sides of the lake should be ruled on different sides of the lake.‖
Change the World, But Change it Gradually
―The vision should never stray from the teaching of the elders. The old tunic fits better and it
always more comfortable; it survives the hardships of the bush while the new or untried tunic is
quickly torn.‖
Chinggis Khan's reputation precedes him (a brutal pillager who shows no mercy to men, women or
children), but that was deliberate. Chinggis allowed rumors of his atrocities to spread to encourage
surrender and cooperate from enemies who might otherwise resist. Putting that aside, we can learn
from him how to be loyal, understand our people, induce change, and have a vision.

19. Source: Forbes
NEW MONGOLIAN LAWS
The following laws and amendments to laws were published in the latest weekly Government
bulletin. Unless otherwise decided by Parliament, they will take effect ten (10) days after
publication.
Date Laws
11.05.2012 Ratification of Protocol
Capital City's Citizen Representatives Council Election
Amendments to Law on Local Council Election
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 email the BCM office: info@bcmongolia.org.
ANNOUNCEMENTS
FUTURE MONGOLIA, 16-19 MAY, UB SPORTS PALACE
Mongolia first-ever world-class exhibition, Future Mongolia, will open from 16 to 19 May at Buyant
Ukhaa Sports Palace in Ulaanbaatar. Future Mongolia is an international trade fair and conference
for sustainable development.
Future Mongolia is on the best track to become the leading trade fair in Mongolia for the
international capital goods industry. Industry giants, e.g. Caterpillar, Liebherr and the mining
equipment manufacturer TAKRAF already confirmed their participation. The organizer is confident
that the envisaged number of more than 100 exhibitors will be reached. BCM is a Supporting
Organization for the trade fair. For more information visit the website.
Those interested in the event can call (976) 9910-5076, (976) 9914-5711 or email info@future-
mongolia.com.
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2nd COALTRANS MONGOLIA IN ULAANBAATAR ON 23-24 MAY
Coaltrans Mongolia will be held from 23 to 24 May at the Chinggis Khan Hotel in Ulaanbaatar.
Having overtaken Australia to become the largest exporter of metallurgical coal to China at the end
of 2011, the Mongolian coal market continues to establish itself as a competitive producer in the
global coal markets. This event will explore the development of coal projects in the country and
offer insight into what level of influence Mongolia will have over the future of coal prices.
Guest speakers include Graeme Hancock, Chief Operating Officer of Erdenes Tavan Tolgoi, and Dr.
G. Battsengel, Chief Executive Officer of Mongolia Mining Corp.
BCM is a Supporting Organization again this year for Coaltrans Mongolia. BCM members will get
special 15% discount. For more information visit coaltrans.com/mongolia or email
coaltrans@euromoneyplc.com.
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ALS THREE-DAY COAL QUALITY COURSE BEGINS 28 MAY
The ALS Coal Quality Course will begin run 28 until 30 May at the Blue Sky Tower Hotel.
The course is a comprehensive introduction to the broad issues of coal quality, from mining and
preparation through the end user. It is delivered in bite-size modules to assist students in
understanding how to obtain the maximum benefits from a coal product.
Students will attend the three-day comprehensive course on broad issues of coal quality, from
exploration, to mining, testing and preparation through to delivery to the end user, delivered by

20. expert presenters.
Registration fee is USD 1,500. For more information call 343882, 99092732, or email
b.sainbileg@alsglobal.com for additional information about the course.
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MINExpo INTERNATIONAL 2012, LAS VEGAS, 24-26 SEPTEMBER
The Business Council of Mongolia (BCM) and the Mongolian National Mining Association (MNMA) with
the support of the U.S. Embassy‘s Commercial Section in Ulaanbaatar are now registering a
Mongolian business delegation to participate in ―MinExpo International 2012‖ which will be
organized at the Las Vegas Convention Center on September 24-26, 2012.
MinExpo International 2012 is the world's largest and most comprehensive exposition dedicated to
mining equipment, products and services. More than 1,400 exhibitors in eleven exhibit halls will
display the latest technology, equipment, components, parts and services for exploration,
extraction, safety, environmental remediation and preparation and processing of metallic ores,
coal, industrial minerals and more!
Registration deadline is 5 p.m., 30 April. Please contact BCM at 70114442, tugi@bcmongolia.org or
MNMA at 314877, enkhbold@miningmongolia.mn for registration and additional information about
the event.
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REGISTER NOW FOR MONGOLIAN MINING DIRECTORY-2013
Mongolian Mining Directory-2013 which provides information database for Mining companies,
investors, suppliers, service companies, government and non government organizations will be
published for the fourth year to commemorate the 90th anniversary of the Mongolian mining
industry. The MMD is distributed free of charge to international and domestic mining companies,
international conferences and exhibition, embassy offices in Mongolia and foreign countries to
investors.
BCM is a Supporting Organization of the MMD and welcomes Mongolian mining industry participants
who are interested in advertising their products and services in Mongolian Mining Directory-2013.
For more information please visit: www.mining.mn, www.mongolianminingdirectory.mn or call
+976-7011 5590.
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“MM TODAY” on MNB-TV, Fridays at 18:40 [TONIGHT]
BCM is pleased to announce Mongolian National Broadcasting continues its cooperation with BCM on
―MM Today‖. This English news program is aired every Friday for 10 minutes and is scheduled for
18:30 tonight! Tune in to watch this program that reports stories from today‘s BCM NewsWire.
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POSTINGS ON MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS
The new ‗Presentations‘ section on BCM‘s Mongolian website which can be reached via link to
bcm.mn/itgeluud. Several presentations already posted include 9 from Coal Mongolia in February
9-10, 2012.
As a key component of BCM‘s Mongolian website ‗News‘ section, articles from the Government‘s
―Open-Government.mn‖ site are regularly posted.
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POSTINGS ON ENGLISH WEBSITE 'PRESENTATIONS', 'MONGOLIA REPORTS' AND „MONGOLIAN
BUSINESS NEWS‟
On BCM‘s English website, ‗Resource, Presentations‘ section, for your review are 4 presentations
from BCM‘s April 23 monthly meeting; 3 speeches from ―Corporate Governance Training for
Directors‖ on April 27-28; 12 presentations on Mongolian entities at Mines and Money Hong Kong
2012 on March 21-23; 11 presentations from Coal Mongolia 2012 on February 9-10; 7 speeches from

21. the Mongolian Investment Summit on December 8-9, 2011 in London; several speeches at the Risk
Management Forum on November 8 co-organized by BCM and Mandal Insurance; speeches at
Discover Mongolia 2011; and speeches from all BCM‘s monthly meetings in 2011-12.
Also on BCM‘s English website, ‗Resource, Mongolia Reports‘ section, please note the Polit
Barometer, April 2012 by Sant Maral Foundation (Mongolian and English versions); ―Preliminary
estimates of staggering costs of inefficient trade regulation in Mongolia‖ by Olin McGill, consultant
to USAID BPI; ADB‘s Asian Development Outlook, April 2012; detailed results of BCM‘s NewsWire
survey of March 2012; World Bank‘s Mongolia Quarterly Economic Update, February 2012; Executive
Summary of the Mongolian Real Estate Report 2012 by M.A.D. Investment Solutions; Mongolia –
World Bank Country Survey 2011; Welcoming remarks by Jim Dwyer, BCM at Mongolia Investment
Summit 2011 Hong Kong, Mining Journal Supplement for Mongolia, October 2011; and ―Mongolia‘s
Mining Services Cluster 2010‖, Professor Michael E. Porter, Harvard University, The Microeconomics
of Competitiveness.
We are now posting some news stories and analyses relevant to Mongolia to BCM website's
‗Mongolian Business News‘ as they come, instead of waiting until each Friday to put them all
together in the weekly NewsWire. The NewsWire will, however, continue to be issued on Friday,
and will incorporate items that are already on the home page, so that it presents a consolidated
account of the week‘s events.
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SOCIAL NETWORK WITH BCM
The Business Council of Mongolia (BCM) has expanded its reach to your favorite social networks.
Keep up to date on the latest business deals in Mongolia and how the climate for investment is
improving each day with BCM.
Connect with BCM on Linked-in to join the diverse group of professional contacts creating a better
business environment in Mongolia today.
Add BCM on Facebook at http://www.facebook.com/pages/THE-BUSINESS-COUNCIL-OF-
MONGOLIA/129826330435540 to read the latest announcements and comment on events carried in
the NewsWire with the community.
Hear breaking news and announcements as they happen when you follow BCM on Twitter at
http://twitter.com/#!/bcMongolia.
Of course for news information, interviews, and announcements regarding our organization, visit
the official BCM website at www.bcmongolia.org and www.bcm.mn.

22. ECONOMIC INDICATORS

23. INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
Year 2008 *22.1% [source: NSOM]
Year 2009 *4.2% [source: NSOM]
Year 2010 *13.0% [source: NSOM]
Year 2011 *10.2% [source: NSOM]
April 30, 2012 *16.0% [source: NSOM]
*Year-over-year (y-o-y), nationwide
Note: 17.8% y-o-y, Ulaanbaatar city, April 30, 2012
CENTRAL BANK POLICY RATE
December 31, 2008 9.75% [source: IMF]
March 11, 2009 14.00% [source: IMF]
May 12, 2009 12.75% [source: IMF]
June 12, 2009 11.50% [source: IMF]
September 30, 2009 10.00% [source: IMF]
May 12, 2010 11.00% [source: IMF]
April 28, 2011 11.50% [source: IMF]
August 25, 2011 11.75% [source: IMF]
October 25, 2011 12.25% [source: IMF]
March 19, 2012 12.75% [source: Mongol Bank]
April 18, 2012 13.25% [source: Mongol Bank]
CURRENCY RATES – May 17, 2012
Currency Name Currency Rate
U.S. dollar USD 1,320.23
Euro EUR 1,679.79
Japanese yen JPY 16.39
British pound GBP 2,098.70
Hong Kong dollar HKD 169.55
Chinese yuan CNY 208.82
South Korean won KRW 1.13
Russian ruble RUB 42.67
Disclaimer: Except for reporting on BCM‘s activities, all information in the BCM NewsWire is
selected from various news sources. Opinions are those of the respective news sources.