20.07.2012, NEWSWIRE, Issues 230-231

BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
Issue 230-231 – July 20, 2012
THIS IS A DOUBLE ISSUE, WITH STORIES FROM NAADAM WEEK WHEN THE NEWSWIRE
WAS NOT PUBLISHED.
NEWS HIGHLIGHTS:
Business:
 SouthGobi files notice of investment dispute against Government;
 Entrée’s Argo Zone deposit grows in size;
 Altan Rio begins exploration at Chandman-Yol;
 CNNC approved for uranium project;
 Newcom selected in consortium for Power Plant No. 5;
 Prophecy utilizes USD 10 million debt facility for coal resources purchase;
 Winsway stocks sink along with coal prices;
 Mongolian Investment Institute awards USD 300,000 PR pact to D.C. firm;
 General Mining inks JV agreement for copper project;
 Meritus renegotiates Gutain Davaa purchase agreement with Asmos;
 Kincora Copper places convertible note with Origo Partners;
 Wolf Petroleum agrees to reverse merger with ASX-listed entity;
 Asia Pacific Breweries plans vodka JV with MCS Group;
 Franchisee to open Round Table Pizza restaurants in Mongolia;
 Black Ridge considering legal action after disappointing rare-earth findings;
 Mongol Bank revises banking regulations;
 MMC bets on Chinese demand for minerals with railway;
 Winsway stock sinks along with coal prices;
 LSE's software goes live at Mongolian Stock Exchange;
 Swap agreement handled by new MSE trading system;
 Rio Tinto reshuffles top management;
 Former Boroo president exits Mongolia;
 MMC non-executive director resigns; J. Od appointed to board;
 Centerra “assured” of tenure at Kumtor gold mine in Kyrgyzstan;
 Rio Tinto: One-trick pony;
 Rio, BHP score high on transparency ranking.
Economy:
 Economic indicators released;
 Coal and copper revenues to comprise 17 percent of 2013 budget;
 Mongol Bank auctions USD 56.8 million;
 Steep hurdles keep applicants from accessing low-interest mortgages;
 Gas prices grow between June and July;
 Tourism falls by 2.3 percent;
 The state of the financial sector;
 Habitat for Humanity builds 20 new homes;
 Spotlight on investment into tourism industry;
 MSE activity grows with greater broker participation;
 Boomtown brings hopes and fears;
 Resource nationalism on rise worldwide, says Ernst & Young;
 Holiday and elections dampen business activity;
 Mongolia's behind-the-times industries exacerbate global warming;
 Mongolia goes for gold at Olympics;

 Mongol Rally contestants take off;
 Copper miners weather political storm;
 Mongolia's mining boom and Persian Gulf's oil bonanza;
 In defense of extractive, or development, enterprise;
 China's restructuring underway;
 Chinese are coming to Canada;
 China to launch rare-earth trading center in Inner Mongolia;
 Australia's new plan on Mongolia's resource boom – oil and gas;
 Export opportunities for Australia with Mongolia;
 Australia's mining boom covers troubles elsewhere;
 Excessive taxes, regulations threaten mining investment in Australia.
Politics:
 DP announces Coalition government;
 Parliament opens with four seats still contested;
 N. Altankhuyag: I will work rapidly, vigorously and responsibly;
 Enkhbayar's trial postponed to 31 July;
 Bat-Uul elected to head Ulaanbaatar government;
 U.S. Secretary of State Hillary Clinton arrived in UB;
 Clinton digs at China from Mongolia;
 U.S. ambassador bids adieu;
 Mongolian troops head for South Sudan;
 Mongolian democracy crawls, but moves ahead;
 DP rivalries among its factions;
 Enkhbayar grapples for redemption;
 Dens of snow leopard mothers located for first time in Mongolia;
 Przewalski horses flown by Czechs to Mongolia.
*Click on titles above to link to articles.
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BUSINESS
SOUTHGOBI FILES NOTICE OF INVESTMENT DISPUTE AGAINST MONGOLIAN GOVERNMENT
Toronto-listed SouthGobi Resources Ltd.‘s Mongolian operating subsidiary SouthGobi Sands (SGS) on
Wednesday filed a notice of investment dispute against the Mongolian government in terms of the
bilateral investment treaty (BIT) between Singapore and Mongolia.
In terms of the notice, SGS is frustrated by the country‘s Mineral Resources Authority‘s failure to
execute the pre-mining agreements (PMAs) associated with certain exploration licenses of the
company, for which valid PMA applications had been lodged in 2011. The areas covered by the
applications included the Zag Suuj deposit and certain areas associated with the broader Soumber
deposit.
The notice triggered the dispute resolution process under the BIT, whereby Mongolia had a six-
month cure period to satisfactorily resolve the dispute through negotiations. If the negotiations are
not successful, the company would be entitled to start conciliation and arbitration proceedings
under the auspices of the International Centre for Settlement of Investment Disputes (ICSID).
If Mongolia fails to enter negotiations, ICSID arbitration proceedings may be accelerated before the
six months have expired.
Source: Mining Weekly
ENTRÉE‟S ARGO ZONE DEPOSIT GROWS IN SIZE
Entrée Gold Inc. has extended the area of gold mineralization at the Argo Zone of its Shivee West
project by 140 meters.
―The expansion in size of the near-surface Argo Zone is extremely encouraging,‖ said Greg Crowe,
President and Chief Executive Officer of Entrée Gold. ―The presence of very high-grade gold values,
occurring within a much larger gold system, attests to the potential of this new discovery.‖
One trench sample returned 81.4 grams per ton of gold over three meters. The map up of gold
mineralization there has been expanded by 140 meters north from that defined by the reverse
circulation drilling program from 2011, now bringing the total measure to 400 meters long by up to
130 meters wide. The entire area of known gold mineralization has now been traced over 700
meters along strike and remains open.
Source: Entrée Gold Inc.
ALTAN RIO BEGINS EXPLORATION AT CHANDMAN-YOL
Altan Rio Minerals Ltd. signed a contract for drilling to begin in July at the Chandman-Yol copper-
gold porphyry project.
Exploratory drilling will include some 3,000 meters of diamond core drilling and drill tests at two
―high-priority,‖ never-before-drilled targets identified through field work completed in 2011. The
2010-2011 exploration seasons at Chandman-Yol produced several new targets for the firm. The two
most advanced targets that are ready for drilling are Ovoot and Takhilt.
The company has also said it will soon finalize the earn-in for 90 percent ownership of the Onon
epithermal gold project. Altan Rio will complete the final stage of the earn-in by issuing Erdenyn
Erel LLC, a private Mongolian company, 240,000 common shares of Altan Rio.
Onon is located in northeastern Mongolia and is at an early stage of gold exploration.
Source: Altan Rio Minerals Ltd.
CNNC APPROVED FOR URANIUM PROJECT
China's state-owned China National Nuclear Corp. (CNNC) has received approval from the Mongolian
government for its planned first phase of development of the Gurvanbulag uranium mine in Doronod
Aimag.
CNNC acquired the mine in 2009 from Canada's Western Prospector for USD 25 million. Located near
the Mardain mine, the site holds a reported 10,000 to 15,000 tons of uranium. CNNC said it has
begun its environmental studies and sent a three-year plan for environmental study, technical
research and construction to the Atomic Energy Agency for its project agreement requirements.
Source: Zuunii Medee
NEWCOM SELECTED IN CONSORTIUM FOR POWER PLANT NO. 5
A consortium for the development of Power Plant No. 5 has been selected by government.
Following the finalization of the engineering, procurement and construction contract, the
consortium comprising International Power, Sojit, Posco Energy and Newcom Group will build and
operate a coal-fired CHP plant with an electricity capacity of 415 megawatts and 487 megawatts for

steam. The plant will consist of three circulating fluidized bed boilers and is expected to go online
in 2015.
The Mongolian government will purchase the entire output produced from the plant under a 25-year
power purchase agreement. The city of Ulaanbaatar will use the steam produced for heating
purposes. A mix of debt and equity, a ratio of 75 and 25 percent respectively, will be used by the
consortium to fund total cost of the project, which is expected to meet the rising energy demand in
Mongolia.
International Power, Sojitz, and Posco Energy each hold 30 percent stake in the consortium, while
Newcom has a 10 percent stake.
Source: Energy-Business-Review
PROPHECY SECURES USD 10 MILLION DEBT FACILITY FOR COAL RESOURCES PURCHASE
Prophecy Coal Corp. has arranged a USD 10 million secured debt facility with Waterton Global Value
L.P. to help fund the purchase of the Tugalgatai coal project.
―We appreciate Waterton Global's continuing support. The proceeds will fully fund completion of
the acquisition of Tugalgatai coal licenses which are expected to significantly increase our coal
resources,‖ said John Lee, chief executive.
The loan has a one-year term with 14 percent annual interest. A structuring fee of 2.5 percent plus
a bonus of USD 600,000 are payable through the issuance of 2.7 million Prophecy Coal shares.
Source: Prophecy Coal Corp.
WINSWAY STOCKS SINK ALONG WITH COAL PRICES
Winsway Coking Coal Holdings Ltd., which processes and moves coal to China from Mongolia, fell
the most in more than three months in Hong Kong after saying it posted a first-half loss because of
lower prices and demand.
The stock fell as much as 10.9 percent to HKD 1.23 (USD 0.16), the most since 28 March, in intraday
trading.
The price of coking coal, the raw material used to make steel, fell as Chinese mills and coke plants
cut back demand, the company said today in a statement to the Hong Kong Exchange (HKEx).
Winsway has dropped 34 percent since 23 April when China's biggest aluminum producer Aluminum
Corp. of China Ltd. (Chalco) agreed to purchase a majority stake.
Source: Bloomberg
MONGOLIAN INVESTMENT INSTITUTE AWARDS USD 300,000 PR PACT TO D.C. FIRM
Venn Strategies has a USD 300,000 six-month pact to promote Mongolia as a ―stable target for direct
investment with reliable rule of law and investor protections,‖ according to its contract with the
Mongolian Investment Institute.
The Washington, D.C. public affairs shop founded and headed by Stephanie Silverman will handle
public relations and media support, conduct outreach and dialog building exercises with U.S.
government entities, and engage with influential third-party interests.
Prior to launching Venn Strategies, Silverman was a senior advisor at Manatt, Phelps & Phillips, and
an associate in Citibank‘s global finance unit.
Source: O'Dwyer's
GENERAL MINING INKS JV AGREEMENT FOR COPPER PROJECT
General Mining Corp. has secured a joint venture agreement covering a copper project adjoining its
existing licenses on the Khangai Fault in the northwest of Mongolia.
The Khangai Fault lies within the much larger Mongol-Okhotsk suture zone that stretches 3,000
kilometers into Russia and is up to 200 kilometers wide. General Mining, through its subsidiary
Golden Cross LLC, can earn up to a 60 percent interest in the Oyut Tolgoi copper project—not to be
confused with Oyu Tolgoi in the south of Mongolia—by meeting certain expenditure obligations
before February 2013.
Surface exploration and diamond drilling in the mid-1970s at Oyut Tolgoi identified extensive
copper mineralization hosted in gabbroic rocks, with several of the historic holes returning
mineralized intervals over tens of meters down hole. Exploration included geological mapping,
trenching, and diamond drilling resulting in the discovery of a sizeable copper system.
Source: General Mining Corp.
MERITUS RENEGOTIATES GUTAIN DAVAA PURCHASE AGREEMENT WITH ASMOS
Meritus Mineral Ltd. has renegotiated the terms to the agreement with Asmos Co. Ltd. for the issue

of a default notice and termination of the Gutain Davaa option agreement.
The significant changes to the agreement include the requirement that Asmos make the first
payment of a non-refundable subscription of USD 350,000 before 21 August for the issuance of 12.75
percent of Gutain Davaa LLC, eventually leading to the acquisition of 51 percent of shares. Apart
from these changes, the terms of the new agreement are the same.
During the period in which the agreement was renegotiated Asmos has been active in upgrading
access to the project in addition to holding discussion with the community administration
concerning their objectives. It has also commissioned an environmental impact report.
Meritus reported steady progress at the Gutain Davaa gold project. The two independent experts
required for review for the application have completed their work. The application has been
submitted to another group of eight experts all of whom have also signed off on the application.
The report was presented to the Minerals Industry Council for final approval on 5 July.
Source: Meritus Mineral Ltd.
KINCORA COPPER PLACES CONVERTIBLE NOTE WITH ORIGO PARTNERS
Kincora Copper Ltd. and Origo Partners PLC have arranged a non-brokered private placement
offering of a convertible note of up to USD 2.5 million.
The note is due and payable three years from the date of issuance, bearing an interest rate of 8.7
percent a year. Kincora Copper has agreed to give Origo certain pre-emptive rights to acquire
additional equity securities.
Origo is currently the largest shareholder of Kincora, with 29.28 percent interest. The completion of
the offering is subject to the approval of the TSX Venture Exchange (TSX-V).
Source: Kincora Copper Ltd.
WOLF PETROLEUM AGREES TO REVERSE MERGER WITH ASX-LISTED COMPANY
Stzelecki Metals Ltd. has made a move to acquire the unlisted Wolf Petroleum, a Mongolian-focused
oil and gas explorer holding shallow low cost prospects, with a heads of agreement already in place.
Consideration for the company changing transaction includes a 100 percent stock transaction, with
Strzelecki offering 25 of its own shares for one Wolf share. There is also a proposal to rename
Strzelecki to Wolf Petroleum.
Wolf Petroleum is one of the largest and most active petroleum explorers in Mongolia and is
currently conducting successful work programs across three blocks, with the country an emerging
petroleum province.
Source: Proactive Investors
ASIA PACIFIC BREWERIES PLANS VODKA JV WITH MCS GROUP
Five years after it invested in a brewery in Mongolia with MCS Group, Asia Pacific Breweries Ltd.
(APB) plans to purchase 27.5 million ordinary shares of Mongolian Beverages Company Pte. Ltd.
from Grandkhaan Holdings Limited and its controlling shareholder for MNT 29.1 billion.
Mongolian Beverages engages in the production, marketing, sales and distribution of vodka and
spirits in Mongolia. It offers brands such as Grandkhaan, Chinggis, Kublai, Xappa, and Eruu which
are familiar vodka names among consumers in the market.
―Our maiden investment in the spirits sector in Mongolia will enhance APB‘s growth in the
Mongolian alcohol market. Though Mongolia is predominantly a vodka market, beer is increasingly
gaining popularity,‖ said Roland Pirmez, chief executive officer. ―Our diversification into vodka will
strategically enable us to build a multi-beverage portfolio to ensure our relevance, sharpen our
competitive edge and drive greater top line gain in Mongolia.‖
Apart from generating a new income stream for APB, the vodka business will improve the position of
the brewer as a multi-beverage player with product offerings in both beer and vodka. Upon
completion of the deal, both the beer and vodka businesses will share the same sales and
distribution infrastructure. The beers of APB including Tiger, Sengur and Jalam Khar, will gain
access to previously untapped retail channels as well as markets, particularly those beyond
Ulaanbaatar.
Source: Asia Pacific Breweries Ltd.
FRANCHISEE TO OPEN ROUND TABLE PIZZA RESTAURANTS IN MONGOLIA
Round Table Pizza has announced the signing of an exclusive agreement with Mongolia International
Food Holding to develop 10 restaurants in Mongolia.
Ali Ghali, chief executive officer of Mongolia International Food Holding, said the food and beverage
industry in Mongolia has a large potential for growth. The first Round Table Pizza Restaurant is

expected to open in Ulaanbaatar in September.
―We continue to see increased interest from abroad as entrepreneurs recognize the value in our
brand,‖ said Rob McCourt, Chief Executive Officer and President of Round Table Pizza.
The announcement brings the total number of international Round Table Pizza restaurants
operating or slated for development to 47.
Source: Pizza Market Place
BLACK RIDGE CONSIDERING LEGAL ACTION AFTER DISAPPOINTING RARE-EARTH FINDINGS
Black Ridge Mining NL has given up on its pursuit of rare-earths exploration at the Avdrant site in
Mongolia.
The company reasoned that the results of the due diligence conducted on the Avdrant rare-earths
project did not support continued development of the project. It was unable to replicate and verify
the results and grades as presented to it when the project was introduced.
Black Ridge is now considering legal options due to the outcome.
Source: Black Ridge Mining NL
MONGOL BANK REVISES BANKING REGULATIONS
The Bank of Mongolia has adopted regulations on bank licensing to implement certain provisions of
the Banking Law of Mongolia dated 28 January. These regulations replace the regulations on bank
licensing passed in August 2000.
The promulgation of regulations consistent with the Banking Law had been pending for several
months, and their issuance should help to clarify uncertainties relating to the procedural aspects of
the approvals and notifications process at the Bank of Mongolia. The scope of the Bank Licensing
Regulations relates to applications to the Central Bank for establishing a bank, conducting banking
activities, changing a bank‘s shareholding structure and share capital, and the review of such
applications and supporting documents.
The regulations further clarify certain definitions, specify the requirements for establishing a
wholly-owned subsidiary of a foreign bank in Mongolia, and the circumstances in which banking
licenses may be issued, restricted, suspended, or revoked.
Foreign banks are now subject to greater restrictions. Currently, it is not possible for foreign banks
to operate through their branch offices in Mongolia. Foreign banks may establish local subsidiaries
no earlier than one year after the establishment of their Mongolian representative offices. Further,
the minimum share capital requirement for a Mongolian subsidiary of a foreign bank is set at USD 50
million, which is much higher than the minimum capital requirement for an existing Mongolian bank
(currently USD 6 million and set to increase to USD 12 million from 1 May 2013).
Source: Hogan Lovells
MMC BETS ON CHINESE DEMAND FOR MINERALS WITH RAILWAY
Mongolian Mining Corp. (MMC) is betting there‘s enough demand from China to support the
construction of an USD 800 million railway that will double export capacity to the nation that
counts Mongolia as its biggest coking coal supplier.
Expanding transportation links between the adjacent countries ―will improve the position of
Mongolia as the leading coking coal supplier to China,‖ said Battsengel Gotov, Chief Executive
Officer of MMC. Mongolia overtook Australia as China‘s biggest coking coal supplier last year,
exporting 20 million metric tons of the raw material used to make steel. MMC is building a 250-
kilometer rail to add 30 million tons of export capacity direct to China.
Chinese demand has been curbed by slower global growth and coking coal prices have fallen as
much as 15 percent in the first half from the previous six months, Gotov said.
MMC plans to boost output by around 41 percent to 10 million tons this year from its Ukhaa Khudag
mine at the Tavan Tolgoi deposit and then to 15 million tons in 2013. It will use about half the
export capacity of its planned railway and will lease the rest to mining companies, Gotov said.
Mongolia will assume 51 percent ownership of the rail after 19 years. The rail, due for completion in
2015, will halve the time it takes to transport coal by road from Tavan Tolgoi to China to between
two hours and three hours.
Source: Bloomberg
WINSWAY STOCK SINKS ALONG WITH COAL PRICES
Winsway Coking Coal Holdings Ltd., which processes and moves coal to China from Mongolia, fell
the most in more than three months in Hong Kong after saying it posted a first-half loss because of
lower prices and demand.

The stock fell as much as 10.9 percent to HKD 1.23 (USD 0.16), the most since 28 March, in intraday
trading.
The price of coking coal, the raw material used to make steel, fell as Chinese mills and coke plants
cut back demand, the company said today in a statement to the Hong Kong Exchange (HKEx).
Winsway has dropped 34 percent since 23 April when China's biggest aluminum producer Aluminum
Corp. of China Ltd. (Chalco) agreed to purchase a majority stake.
Source: Bloomberg
LSE'S SOFTWARE GOES LIVE AT MONGOLIAN STOCK EXCHANGE
The London Stock Exchange (LSE) Group said its Millennium Exchange software has been deployed at
the Mongolian Stock Exchange, making it the third location to go live with the platform after Italy
and South Africa.
―The development of stable, efficient, and transparent capital markets infrastructure is a vital step
in Mongolia's journey towards greater prosperity,‖ Xavier Rolet, Chief Executive of LSE Group said in
a statement.
Mongolia went live with MillenniumIT's Millennium Exchange software on 2 July, which the firm says
is the fastest trading platform in the world. The software, which also drives the LSE itself, is
developed by Sri Lanka-based MillenniumIT, a unit of the LSE. Borsa Italiana and Johannesburg
Stock Exchange (JSE) migrated to the software in the past month.
Source: Lanka Business
SWAP AGREEMENT HANDLED BY NEW MSE TRADING SYSTEM
A swap agreement was made at the Mongolian Stock Exchange (MSE) on 9 July that transferred
2,000,524 shares of Mongol Em Impex for a unit price of MNT 276, totaling MNT 552.2 million.
The MSE has transitioned to the Millennium IT trading system. To participate in trades on the new
system, the exchange requires brokers to establish clearing agreements with commercial banks.
Those brokers permitted to trade include BDSec, Frontier Securities, Tenger Insurance, TDB Capital,
Golomt Securities, Rescap Securities, Grandline, DelgerKhangai Securities, MICC, and Standard
Investment LLC.
Source: Info Mongolia
RIO TINTO RESHUFFLES TOP MANAGEMENT
Rio Tinto PLC's well-regarded chief financial officer, Guy Elliot, plans to retire at the end of 2013
after more than a decade in the post and 32 years with the mining giant.
Chairman Jan du Plessis said the Anglo-Australian company will shuffle several senior executives
and separate responsibility for executive strategy from the role of chief financial officer with the
impending departure of Elliot. Elliot and Chief Executive Tom Albanese in February elected to forgo
their annual bonuses after the company reported a 59 percent drop in profits for 2011, dented by
USD 9.29 billion in impairment charges largely relating to the ill-time USD 38 billion acquisition of
Canadian aluminum company Alcan Inc. at the top of the market in 2007.
Elliot was instrumental in reviving Rio Tinto's balance sheet when the market turned and the
company's high levels of debt forced it to see businesses and slash costs. He will remain on the
boards of the London and Australian-listed arms of Rio Tinto through 2013 and hold onto the role of
chief financial officer until a successor is appointed.
With Elliot's planned departure, Doug Ritchie will from 1 January be based in London to take on the
role of head of executive strategy, and Harry Kenyonh-Slaney, currently chief executive of diamond
and minerals, will replace him in Brisbane as chief executive of the energy division. Alan Davies,
the president of the international iron ore operations, will take on the role of chief executive of
diamonds and minerals from 1 September.
Source: MarketWatch
FORMER BOROO PRESIDENT EXITS MONGOLIA
Paul Korpi, former President and General Director of the Boroo Gold mine, will be leaving Mongolia
to take on the position of chief operating officer at Marengo Mining Ltd. Marengo Mining is currently
developing its flagship Yandera Copper-Molybdenum-gold project in Papua New Guinea.
Korpi told BCM that although he would be away from Mongolia, he will maintain open
communications through established connections.
―I will be away from Mongolia, but will stay in touch via PAK LLC and the BCM and my many friends
here,‖ he said. ―I plan to maintain a presence in Mongolia over the longer term.‖
Source: Marengo Mining Ltd.

MMC NON-EXECUTIVE DIRECTOR RESIGNS; J. OD APPOINTED TO BOARD
One of Mongolian Mining Corp.‘s (MMC‘s) non-executive directors, L. Enkh-Amgalan has resigned. J.
Od has since been appointed to the board.
Od is the president of MCS Group and a director of a number of subsidiaries within it. He also works
in the Royal Danish Consul in Mongolia, a member of the National Consul of the Pacific
Economic Council, and is a board member of the Osazawa Foundation.
Source: Mongolian Mining Corp.
CENTERRA “ASSURED” OF TENURE AT KUMTOR GOLD MINE IN KYRGYZSTAN
Centerra Gold Inc. said it was guaranteed of security of tenure at its flagship Kumtor gold mine, in
Kyrgyzstan, following a state commission ordered to review a Parliamentary report, including the
company's contract by 1 October. Centerra Gold operates the Boroo mine in Mongolia and is
awaiting a mining permit for its adjacent Gatsuurt project.
Shares in Centerra Gold had plunged to more than two-and-a-half year lows at the end of June after
two days of heated debates in Kyrgyzstan's legislature were triggered by the report, which accused
the miner of afflicting massive damage on the country's ecology and the health of local villagers.
The parliamentary commission head said at the time that Centerra Gold had done damage worth
around USD 4 billion through its operations in Kyrgyzstan, although the miner, which produced
about 12 percent of the country's gross domestic product (GDP), denied the allegations.
A draft resolution contained in the parliamentary report suggested the government should
nationalize the Kumtor mine and said the government should create a state company that would
sell some of its gold output to the central bank to replenish its reserves. However, the resolution
was voted down by MPs who instead resolved to order a state-led commission, bringing together
government members, parliamentarians, officials from the presidential administration, and
independent experts to present a revised contract with Centerra Gold.
Meanwhile, Centerra Gold said it was watching the Mongolian political landscape evolve following
recent elections, in which the conservative Democratic Party won the most seats in Parliament,
although not enough to avoid forming a coalition government. The party was reported as
campaigning for more restrictive international mining laws.
Pearson said operations were starting to wind down at the Boroo mine, as the last section of ore is
to be mined by year-end, following which production would be sustained for an extended period
from the operation's stockpiles.
RIO TINTO: ONE-TRICK PONY
Despite strong data from 2012 second-quarter production, Oyu Tolgoi operator Rio Tinto PLC's share
price fell 2 percent, down by a quarter this year. That looks overdone given that China's managed
economic slowdown has reduced growth from 9.2 percent last year to a still robust 7.6 percent in
the second quarter.
Rio's portfolio diversity counts for nothing when investors conclude that its heavy reliance on iron
ore and Chinese longer-term growth make it a ‗one-trick pony‘. Yet the ore price, at about USD 134
a ton, is still tight. And chief miner Tom Albanese has a point when he claims that Rio Tinto's tier
one projects are ―robust under any probable macroeconomic scenario.‖
Assuming a USD 7 per ton freight rate, the landed iron-ore price in China would have to fall to USD
37 a ton before Rio Tinto lost out. Sure, as China's steel intensity declines, Rio Tinto should slow its
iron-ore capital expenditures. The same applies to coking coal.
Understanding Rio Tinto's iron-ore bias calls for acceptance that there is no compelling alternative
at present. While diversification has its attractions, mining is a multi-decade investment in which
cycles come and go. At the moment, iron ore is having its day in the sun.
Source: Financial Times
RIO, BHP SCORE HIGH ON TRANSPARENCY RANKING
Rio Tinto PLC, the indirect majority stakeholder in the Oyu Tolgoi copper and gold project, has
come up tops in a recent report by anti-corruption group Transparency International.
Out of the 105 largest publicly traded companies, Rio Tinto placed in second, behind Norway's
Statoil at the highest ranking and BHP Billiton at third. The report analyzed the transparency of
corporate reporting on a range of anti-corruption measures among the 105 companies.
Company scores ranged from zero to 10, where zero was the least transparent and 10 was the most,
and were based on the public availability of information about anti-corruption systems,

transparency in reporting on how they structure themselves, and the amount of financial
information they provide for each country they operate in. Rio Tinto scored a 7.2 compared with
Statoil's score of 8.3.
Despite the diversified miners' high score, Transparency International chair, Huguette Labelle, said
that multinational corporations could play a more significant role in the fight against corruption.
―As the world continues to recover from the deep economic pain of 2008, the leadership at more
companies must commit to stopping corruption,‖ Labelle said.
Read more…
Governments and regulators were also urged to make transparency obligatory for all companies
seeking export subsidies or competing for public contracts. Investors should also demand greater
transparency in corporate reporting to ensure both ethical, sustainable business growth as well as
sound risk management, said a representative of the watchdog group.
The report echoed sentiments issued by Rio Tinto chairperson Jan du Plessis earlier this month
when he said that major corporations had to regain the trust lost during the global financial crisis.
Du Plessis urged multinationals and large corporations to reassess how business was done, and to
pro-actively explain operations to numerous stakeholders, adding that large companies had to
respond to public and shareholder perceptions.
ECONOMY
ECONOMIC INDICATORS RELEASED
The National Statistical Office has released data on the first half of 2012.
Consumer price index
The national consumer price index in June 2012 was 14.7 percent and 15.1 percent in Ulaanbaatar
city compared to same period of the previous year.
Unemployment
The number of unemployed reached 47,500 at the end of June 2012, an increase of 5,700, or 13.6
percent, compared to same period of the previous year.
External trade
Total external trade turnover increased by USD 5.56 billion, of which exports made up USD 2.27
billion and imports made up USD 3.31 billion.
Industrial output
Total industrial output increased by MNT 81.8 billion, or 8.7 percent to MNT 1.02 trillion (at 2005
constant prices) compared with same period of the previous year.
State budget
Current revenue of the General Government Budget amounted to MNT 2.3 trillion and current
expenditure reached MNT 2.28 trillion. Thus, the budget equilibrated current balance was in surplus
of MNT 65.2 billion.
Social welfare
In the first half of 2012, social welfare pensions and benefits were allocated to 53,900 persons, a
decrease of 1,664 persons, or 3 percent. Total welfare paid increased by MNT 9.8 billion, or 63.1
percent, compared with same period of the previous year.
In the first half of 2012, total cash allowance distributed from the Human Development Fund
amounted to MNT 375.7 billion. Cash allowances are distributed in monthly sums of MNT 10,000,
MNT 21,000 and MNT 70,000.
Freight and passengers
9.95 million tons of freight and 1.96 million passengers (double counting) were carried by railway
transport. Compared to same period of the previous year, the number of carried freight rose by
1.42 million tons, or 16.7 percent, and the number of carried passengers rose by 135,200 persons,
or 7.4 percent.
In the first five months of 2012, 1.88 million tons of freight and 321,300 passengers (double
counting) were carried by air transport. Compared to same period of the previous year, the number
of carried freight increased by 917.1 tons, or 95.6 percent, and the number of carried passengers
rose by 87,100 persons, or 37.2 percent.
Source: National Statistical Office
COAL AND COPPER REVENUES TO COMPRISE 17 PERCENT OF 2013 BUDGET
The Ministry of Finance has revealed that it plans to fund 17 percent of the 2013 state budget from
revenues collected from the copper and coal industries.
The copper industry will provide for 6 percent while coal producers will contribute to 11 percent of

the prices
on the international market. The results are USD 6,643 for a ton of copper concentrate, USD 8,609
per ton of
processed copper, USD 124 for a ton of processed coal and USD 102 for a ton of coking coal.
Mongolia law mandates that revenues of MNT 109.6 billion from copper and MNT 224.2 billion from
coal must be deposited into the Stability Fund. According to a report on this year up until May, the
Stabilization Fund deposits have grown by only MNT 25 billion.
MONGOL BANK AUCTIONS USD 56.8 MILLION
The Bank of Mongolia sold USD 56.8 million at a closing rate of MNT 1,342.50 by auction on 18 July.
Commercial banks sent in request to purchase up to USD 57.8 million. Banks have also sent requests
to purchase Chinese yuan. The Central Bank has, however, deemed the domestic supply of yuan
currently stable and thus did not make it available for auction.
The sale of foreign currencies is used by the Central Bank to perpetuate transparency in domestic
currency operations, increase the performance of the tugrug, and stabilize the exchange rate.
STEEP HURDLES KEEP APPLICANTS FROM ACCESSING LOW-INTEREST MORTGAGES
Data from the Bank of Mongolia shows that only 6 percent of applicants received low interest rate
mortgages.
High requirements have only allowed for 270 of the 1,808 applicants to meet approval for the 6
percent mortgages coming from the government's 100,000 Homes project. Applicants are subject to
such rigid conditions as having to pay 45 percent of the family income and exclusions are made for
any young people whose parents have purchased an apartment in recent years.
According to B. Naranbat, an official from the Finance and Economic Policy Department of the
Ministry of Finance, these rules come down from the ministry as it is responsible for any risk of
default from mortgage holders. The Development Bank of Mongolia has reportedly only transferred
MNT 20 billion of the MNT 50 billion it promised.
GAS PRICES GROW BETWEEN JUNE AND JULY
Rosneft, the largest provider of Russian petroleum to Mongolia, raised its fuel prices last month.
Gas prices typically experience hikes during the summer months in Mongolia.
The price of a ton of A-80 gasoline grew by USD 41 USD to 1,101 this month, while A-92 fuel grew by
USD 21 to USD 1,301. Diesel fuel grew by USD 30 to USD 1,031.
However, there was no change in fuel prices between May and June.
TOURISM FALLS BY 2.3 PERCENT
The Mongolian National Tourism Center has reported that the number of tourists visiting Mongolia in
the first half of 2012 fell by 2.3 percent compared to the same period last year.
The drop is related to the decline of tourists from Russia, which fell by 21.8 percent compared to
the first half of 2011. The drop shows that Mongolia must develop a management policy to attract
more Russian tourists. The number of tourists from Japan, however, increased by 20 percent, which
is likely due to the new regulation that issues Japanese citizens holiday visas upon entry to
Mongolia.
According to statistics from the Tourism Center, in the first half of 2012 Mongolia received a total
of 280,000 foreign visitors, with 199,000 coming to Mongolia for leisure purposes. Also during this
period, the estimate of total revenue from the tourism sector is USD 109 million, comprising
between 3 and 4 percent of the country's gross domestic product (GDP). China leads with the most
number of tourists traveling to Mongolia, followed by Russia, South Korea, the United States, and
Japan.
THE STATE OF THE FINANCIAL SECTOR
The Mongolian economy is continuing to grow at a very rapid pace, expanding by 16.7 percent year-
on-year in the first quarter and gross domestic product (GDP) growth accelerated to an
unprecedented 17.3 percent in 2011 from 6.4 percent in 2010.
To create balance in the financial sector, where commercial banks currently dominate, Mongolia

needs to develop the capital market so it resembles that of others countries. Developing the capital
market is the cornerstone of policy to provide people and enterprises with opportunities to find
investment, encourage the development of public companies, put natural resources into economic
circulation, and distribute national wealth equally.
The Financial Regulatory Commission (FRC) is currently leading extensive reform to capital market
infrastructure and legislation with other regulatory organizations. It submitted the new draft of the
Securities law to Parliament, which was developed in accordance with international standards in
cooperation with the Mongolian Stock Exchange (MSE), the Ministry of Justice and Home Affairs,
research institutions, market participants-broker dealers, underwriters, and foreign and domestic
specialists.
The new trading system launched on 2 July has prohibited some from participating in MSE trading
because they have not yet established an agreement with clearing banks nor posted collateral.
Therefore, the brokerage and underwriting firms with special licenses are encouraged to sign a tri-
party contract with the Securities Clearing House and Central Depository and banks in order to keep
up with the development of the capital market.
Source: Financial Regulatory Commission
HABITAT FOR HUMANITY BUILDS 20 NEW HOMES
Habitat for Humanity volunteers are still wiping the dust from their hands after the Blue Sky Build
project held from 2 to 7 July, which brought 20 new homes to families in Mongolia.
‖We are most thankful for the passion of our volunteers and the commitment of our sponsors in
making the Blue Sky Build a success,‖ said Charles Joliffe, director of Habitat for Humanity
Mongolia.
The new homes built during the second Blue Sky Build are part of the Atlanta-based organization‘s
goal to construct 1,000 houses in Mongolia in the next three years. More than 300 volunteers turned
out to the build site in the Khan-Uul district, a suburb of Ulaanbaatar. International volunteers, 190
in all, represented nations as diverse as New Zealand, Cambodia, Nepal, Germany, the United
States, and the United Kingdom. An additional 150 locally based volunteers from
PriceWaterhouseCoopers (PwC) Mongolia Corp. and Wagner Asia Equipment LLC, students from
Technical and Technological College Co. Ltd., and members of the U.S. Peace Corps and Joint
Christian Services joined in the work.
Houses were build with polystyrene blocks which offer better insulation than concrete and highly
efficient coal-burning stoves that produce heat four times as long as standard stoves. The homes
were decorated with streamers and balloons for an emotional move-in day. To date, Habitat for
Humanity Mongolia has built, renovated or repaired more than 2,000 homes in Mongolia.
Source: Habitat for Humanity
SPOTLIGHT ON INVESTMENT INTO TOURISM INDUSTRY
With the 2015 target date by which Mongolia hopes to welcome 1 million visitors per year drawing
near, officials are calling on the government to channel investment into the country‘s tourism
industry and take specific steps to encourage greater private sector participation.
Figures show that the number of people coming to Mongolia is on the rise, with visitor numbers up
11 percent in the past three years and revenue showing an increase of 32.5 percent for the same
period. However, with tourism still only contributing around 5 percent to GDP, industry officials are
calling for tangible measures to be put in place aimed at generating sector growth. In particular,
they highlighted the need for investment in transport infrastructure, Internet and communications
connections, high-quality hotel accommodations, flight links and human resources.
―Investment is needed to create a productive tourism sector,‖ Ts. Orgodol, the head of tourism at
the Ministry of Nature, Environment and Tourism, said. ―Instead of just talking we must start taking
action. The government must create a favorable environment for the private sector to operate.‖
With expansion in Mongolia‘s tourism industry slower than industry officials would like, Orgodol,
along with others also fears that the sector is missing out on opportunities to attract good quality
human resources, such as translators, guides, managers and accountants, who are instead taking up
employment in the mining industry. While there is frustration among those who believe mining has
contributed to delays in the government‘s efforts to drive up visitor numbers, some tourism officials
acknowledge that the lucrative extractive industries can also play a key role in providing the funds
for much-needed infrastructure development. Mongolia has already taken the first step by using
mining revenues to partially finance the country‘s forthcoming Khushigiin Khundii International
Airport, which is expected to be a key component in driving tourism growth and improving domestic
links.

While concerns remain about the pace at which Mongolia‘s tourism sector is expanding, most
industry players acknowledge that pushing for resource revenues to be channeled into the industry
rather than targeting mining is the way forward.
Source: Oxford Business Group
MSE ACTIVITY GROWS WITH GREATER BROKER PARTICIPATION
The Mongolian Stock Exchange (MSE) saw increased activity with the number of brokers
participating in the trading increasing to 12 on 10 July. Market turnover stood at MNT 5.6 million.
The T+3 settlement cycle completed with Monday‘s trades settled. Brokers continued to work with
the clearing banks to open their settlement accounts, which is a pre-requisite for trading under the
new regulations.
The new regulations are designed to meet the international standards of T+3 settlement. The MSE
has opted to meet international standards, hoping to attract foreign investment and improve
market liquidity.
Source: Mongolian Stock Exchange
BOOMTOWN BRINGS HOPES AND FEARS
Three kinds of foreigners, they say, prowl the world‘s energy frontiers: missionaries, misfits and
mercenaries.
Howard Hodgson, a weather-beaten Australian drilling executive with the mouth of a sailor, is
proud to say he is in it for the money. When he landed in Mongolia more than a decade ago,
Hodgson found an economic wasteland still reeling from the fall of Communist overlords in 1990.
Yet to him, a veteran of the wilds of Papua New Guinea, Myanmar and Pakistan, the young
democracy was a welcome change of scenery: ―Here you won‘t get shot.‖
These days, the perks are far plusher. Mongolia sits atop a treasure trove of copper, coal, and gold
that is changing the fate—and the face—of this mostly empty country, thanks to China‘s insatiable
demand for natural resources. And now the mercenaries in finance have joined in too. Like it or
not, mining is changing Ulaanbaatar, and first-world profits are colliding with third-world problems.
A series of flock-devastating winters and the lure of mining riches have attracted thousands of
herders from the grasslands.
―At the moment people are waiting for the mining wealth to somehow spill over to them,‖ said L.
Sumati, Director of the Sant Maral Foundation.
According to the recent polls of the foundation, 86 percent of Mongolians think corruption is
widespread and 80 percent say they believe their country‘s oligarchs have too much power.
Discontent over corruption and government concessions to foreign mining firms were the major
campaign issues in last month‘s election. Those now in power face high expectations to spend the
mining windfall on health care, infrastructure and economic development.
Still, some wonder whether Mongolia can avoid the familiar demons of political instability,
corruption, and widening poverty that plague other mineral-rich developing nations. Some
Mongolians are starting to feel the benefits, including the civil servants who received a 50-percent
pay increase this year and those taking up professions with mining firms. The boom has also become
a magnet to those who left years ago.
Source: New York Times
RESOURCE NATIONALISM ON RISE WORLDWIDE, SAYS ERNST & YOUNG
An ―expanded footprint‖ has ensured that resource nationalism, a sentiment that has already swept
the Mongolian population, retained its position as the number-one global risk for mining and metals
companies around the world, as ranked by advisory firm Ernst & Young.
―This is because resource nationalism has now expanded its footprint, not only in terms of the
number of geographies that are being added to the list of those undertaking resource nationalism,
but also in terms of its scope being changed. It is not just about taxes and royalties, but now
includes a wave of requirements introduced around mandated beneficiation, such as bans on the
export of raw materials, as well as export levies and limits on foreign ownership,‖ the company‘s
global mining and metals leader, Mike Elliot, said.
He added that projects around the world had been deferred and delayed, and in some cases
investment withdrawn altogether, owing to the degraded risk-reward equation. Meanwhile the
global skills shortage and infrastructure access retained second and third spots, respectively, in the
risk rankings this year, while rapidly escalating costs have pushed cost inflation up from the number
eight spot to the fourth position. Infrastructure blockages remained prevalent in rail and port
infrastructure supply chains and were increasingly impacting mine-supporting infrastructure and

power and utilities networks, owing to the remote development locations.
Meanwhile, a new risk, ―sharing the benefits,‖ made its debut at number nine this year, replacing
interruptions to supply, with ―social license to operate,‖ ―capital project execution,‖ ―price and
currency volatility,‖ ―capital allocation,‖ and ―fraud and corruption‖ rounding out the top ten.
Elliot said that although there was not a large reshuffle in the relativities of the risks, their absolute
impact had increased and at a time when some commodity prices have eased in the last six months.
Looking ahead, Elliot said more developed countries such as Canada and Australia would pose higher
risks to mining in metals going forward. Meanwhile, potential short-term margins would really
attract investment, particularly in politically unrest countries such as the Democratic Republic of
Congo.
HOLIDAY AND ELECTIONS DAMPEN BUSINESS ACTIVITY
The elections and Naadam celebrations have resulted in a substantial slowdown in the pace of
business activity.
Last year at this time, the lull lasted roughly the month of July. However, this year, due to the
recently held election, this period has extended. Business activity is likely to pick up again in
August.
Meanwhile Mongolia‘s economy is continuing its rapid pace of growth. While most of the world
continues to fret about problems in Europe and anemic growth in other developed countries,
Mongolia reported a first quarter growth rate of 16.7 percent in 2012. This is down only slightly
from the annualized growth rate of 17.3 percent in the fourth quarter of 2011. Also, the Oyu Tolgoi
project, expected to begin commercial production in 2013, should bring substantial increase to
government revenues.
Source: Mongolia Growth Group
MONGOLIA'S BEHIND-THE-TIMES INDUSTRIES EXACERBATE GLOBAL WARMING
Hydrocholorfluorocarbons (HCFC), an industrial gas used in Mongolia to insulation pads for the walls
of buildings, is a significant driver of global warming. But it is only one of a two-pronged problem
closely linked to economic growth and urbanization. The other is another family of gases called
hydrochlorofluorocarbons (HFC), used in air conditioning.
At current rates of use and growth, HCFCs and HFCs will drive 27 percent of global warming by
2050. The biggest drivers are, of course, the giant economies of China and India. But no less critical
are new sources coming on line as thus far low-impact cities, like Ulaanbaatar, enter the scene with
their frantic building sprees fueled by foreign investment.
Under the 1987 Montreal Protocol, considered the world's most successful environmental
agreement, the earlier family of gases used in refrigerators, air conditioners, propellants and
foam—and which decimated the ozone layer—was phased out and replaced with HCFs and HFCs. But
while that helped the ozone hole to stabilize and even edge toward recovery, these gases pack a
greenhouse gas punch far higher than carbon dioxide.
The Multilateral Fund, under the Montreal Protocol, helps finance conversion to less-harmful gases.
But conversion too less-harmful substitutes such as hydrocarbons is difficult even without resistance
from entrenched industrial interests due to red tape and restrictions. HCFCs are under the protocol
while HFCs are absent, something experts have clamored for change. As of now, the gases remain
under the failing Kyoto Protocol
―The Montreal Protocol can no longer work in isolation,‖ warned Atul Bagai, Bangkok-based ozone
program coordinator for 38 countries. ―Leapfrogging to environmentally friendly refrigerants has to
be part of a much broader debate on food security, urbanization, safe habitat, energy security and
climate change.
Source: Straits Times
MONGOLIA GOES FOR GOLD AT THE OLYMPICS
Copper and gold that was extracted from Mongolia has been transformed into medals--the heaviest
ever made for the Olympics--and are currently being stored at the Tower of London.
―It is a great honor for the Mongolian people, and an example of our involvement with the Olympics
and our commitment to the Olympic movement,‖ said Mongolian National Olympic Committee
president D. Zagdsuren.
Success in Beijing in 2008, when Mongolia won its first two gold medals, had already ramped up
enthusiasm for the Olympics. Exploratory work carried out during the construction phase of the Oyu
Tolgoi copper and gold mine have provided the gold and copper used in the medals. Rio Tinto PLC,

the company in charge of operations there, supplied eight tons of gold and copper from there and
also the United States as part of its sponsorship agreement with the Olympic organizers.
There are high hopes that some of the 29 Mongolia athletes going to London will return with metal
originally dug out from their homeland, helping Mongolia make its mark on the international stage
through sport as well as economics. The level of expectations in Mongolia to take to the world stage
is revealed in a memorandum that outlines ambitions for the country to stage its first East Asian
Games by 2017, Asian Games by 2018, and its first Olympics by 2040.
―I think that Mongolia is already an Asian Tiger in that it has one of the fastest growing economies
in the world, but the medals definitely add some more spice to the story,‖ said the president of the
Oyu Tolgoi mine, Cameron McRae.
Source: Phuket News
MONGOL RALLY CONTESTANTS TAKE OFF
Hundreds of ―amateur adventurers: are setting off from West Sussex in ―tiny, unsuitable cars‖ on a
10,000 mile charity drive to Mongolia.
The annual Mongol Rally, which was founded in 2004, is being launched from the Goodwood Motor
Circuit. More than 270 teams have signed up, with another launch being held in the Czech Republic
on Monday. Drivers will then either head north via the Arctic Circle or travel through Kazakhstan or
Iran and Turkmenistan.
Teams are expected to take between three and six weeks to complete the rally. The rules are that
each vehicle must have no more than 1.2 liters of ―raw engine power under the bonnet,‖ each team
must raise at least EUR 1,000 (USD 1,224) for charity, and that there is no set route, no professional
drivers, and no back-up or support of any kind.
The official charity of the Mongol Rally 2012 is the Lotus Children's Centre in Ulaanbaatar, with the
total amount expected to be raised by the teams set to be more than EUR 300,000.
Source: BBC
COPPER MINERS WEATHER POLITICAL STORM
Mongolia's general election was a victory for democracy, but what it means for foreign investors is
still up in the air. With strong public support for resource nationalism, there is growing concern
from major mining groups that they will not see the returns they are expecting.
―Bad governance and mining wealth have rarely been a good mix for the fortunes of a developing
resource-rich country,‖ cautioned N. Tuya, a visiting fellow at the Center for Northeast Asian Policy
Studies at the Brookings Institute.
Mongolia has over 6,000 deposits of 80 different minerals and is home to the Oyu Tolgoi copper and
gold project. Many analysts hope the incoming government's rhetoric will be toned down as
politicians focus less on attracting voters to ensure that Oyu Tolgoi succeeds as it is expected to
account for over 30 percent of GDP once completed.
―The paramount importance of attracting and retaining foreign investment in developing Mongolia's
economy has become recognized,‖ stated Eric Zurrin, Director General of Resource Investment
Capital.
Before the elections, Parliament passed a law limiting foreign ownership in major industries
including mining and capping foreign ownership in strategic sector companies valued at over USD 75
million to 49 percent. Foreign investors are remaining committed to profiting from Mongolia's
resources, and the number of junior mining companies in Mongolia has blossomed.
Halifax-based Erdene Resources Development, for instance, separated into two public companies
between its North American and Mongolian development efforts. The move will allow it to have a
―dedicated Mongolia management team with greater flexibility to access capital for future
programs‖ for its Zuun Mod copper and molybdenum project and Altan Nar gold discovery. Kincora
Copper Ltd. also has a significant stake in Mongolia's copper prospects as it operates at two former
high priority targets of Oyu Tolgoi's developers, namely its Bronze Fox and Tourmalien Hills
projects.
Australia's Voyager Resources, meanwhile, has the Khongor copper and gold, which is in the terrain
where the Oyu Tolgoi mine is located. It said it would support the government's rights to regulate
industry and was not ―dissimilar to the foreign investment review procedures that exist in many
other jurisdictions, including Australia.
Source: Copper Investing News
MONGOLIA'S MINING BOOM AND PERSIAN GULF'S OIL BONANZA
The new Mongolia is a picture that has VIP rooms, Louis Vuitton and Burberry outlets, and a

forthcoming Shangri La resort hotel. The ancient ways still exist—through the gers that litter the
steppe but now sometimes carry satellite dishes and solar panels—and why not? Neither Chinese nor
Soviet dominance could change Mongolia's famously nomadic individualistic culture. But now that it
has the world fastest growing economy, no one is quite sure if Mongolia's breakneck transformation
will prove for the better.
Mongolia has vast natural resources—copper, gold, uranium, and perhaps most importantly coal—
and few citizens among whom to divide the spoils. With China's increasingly insatiable appetite for
exactly the minerals that its northern neighbor boasts in abundance, Mongolia is joining a small
class of once-impoverished Asian nations that are getting rich by selling to Beijing and Kazakhstan.
Countries like Kyrgyzstan and Uzbekistan are building their economies on China's import market. It
is hard not to think of the Persian Gulf states that sold enough oil to the West to transform
themselves in only 50 years, from heavily nomadic and illiterate societies into countries so rich that
they have a problem with too many Ferrari sport cars on their streets.
The problem is that Mongolia's wealth is not sustainable. If the Chinese economy takes a sudden
downturn, as it might, the Mongolian economy could shut down almost overnight. Even if that does
not happen, there's no question that one day the coal mines will empty. Now that so many
Mongolians have abandoned their rural lifestyles to crowd into the rapidly growing capital city, they
are dependent on the mineral economy. Many of them many not have an old way to return to
should the new way fail them. And with inflation so high, a hard landing could be severely painful.
So, if Mongolia is profiting off of a Chinese version of the same model that made Middle Eastern oil
exporters so rich, then it faces a similar challenge: to invest that money into more sustainable
industries so that it will have something to fall back on when the buyers go away or the resources
run out.
Source: The Atlantic
IN DEFENSE OF EXTRACTIVE, OR DEVELOPMENT, ENTERPRISE
The global mining industry drives more than 45 percent of the world's gross domestic product (GDP),
while driving nearly all of Mongolia's growth, either on a direct basis or through the use of products
that facilitate other industries, said AngloGold Ashanti Chief Executive Officer Mark Cutifani.
Cutifani, who addressed this week's mining for change conference, calculates that mining products
revenue contributes 11.5 percent to total GDP; mining services industries a further 21 to 23 percent
and fertilizers for agriculture, fuel for transport and materials for construction then take mining's
combined direct and indirect contribution beyond 45 percent. The world would need to dedicate
twice the amount of land to agricultural activities were it not for mining's contributions to
agricultural productivity.
Yet, considerably less than 1 percent of the earth's surface is dedicated to mining, which consumes
less than 1 percent of the world's water—and mining products also help to purify much of that
water.
―Mining's the most important industrial activity in the world today and has one of the smallest
environmental impacts across the globe, which many people don't appreciate. Instead of calling us
the extractive industry, I would like us to become known as the development industry,‖ Cutifani
said.
The minerals in greatest demand globally also happen to be the chief mineral exports of Mongolia:
coal, copper, and iron ore.
CHINA'S RESTRUCTURING UNDERWAY
China, the top consumer of Mongolia's mineral and energy products, is grappling with an economic
downturn, but there is more than the usual amount of disagreement about how fast it is slowing
down and what its future prospects are. The battle is not between the usual bulls and bears, but
instead the most interesting split is between those who focus on a ―macro,‖ or top-down, picture,
and those who zoom in on a ―micro,‖ or bottom-up, picture of companies
The macro crowd says that China is slowing, but not collapsing. They point to broad-based
economic indicators like industrial output, which grew 9.6 percent year-on-year in May. Those of a
micro persuasion do not believe these statistics, and instead prefer to look at more detailed
corporate records, many of which show falling profits and sales.
The clash between the micro and macro views is then less evidence of terminal economic decline
than it is of a necessary economic restructuring. Companies are adapting to the end of China's
investment boom and its transition to slower overall growth. This structural change will be stressful
for many companies. Both the World Bank and Chinese government scholars estimate that China's

potential economic growth rate will be closer to 7 percent over the next several years than the 10
percent of recent years. This would still count as fast growth by most countries' standards, but it is
a significant change from what Chinese companies are used to.
Moreover, China will not grow in the same way over the next decade as it has over the past decade.
Growth in fixed capital formation, the broadest measure of investment, averaged 16 percent a year
over the past decade. With investment cooling, consumer spending will start playing a bigger role in
China's economy.
So rather than take the current signs of corporate distress as a signal that it needs to stimulate the
economy more, China's government needs to embrace the turmoil. China reaching its
macroeconomic potential in coming years will require a lot of microeconomic disruption.
Source: Wall Street Journal
CHINESE ARE COMING TO CANADA
Chinese companies have increasingly used Chinese nationals for their operations as they invest
billions into natural resource projects, a fate Mongolia has tried to avoid with its nationalist
resource policies in government.
Chinese nationals have been traveling throughout Canada negotiating deals with Native American
groups, called First Nations, or prospecting for minerals in remote areas. Meanwhile, a new breed
of small Chinese players—many of them private investors—are looking for smaller, early-stage
projects. These Chinese executives are building an on-the-ground presence to better manage risks
and avoid any political backlash.
Chinese companies have spent around USD 23 billion buying Canadian-based resource companies
since 2005, attracting the attention of Canadian intelligence. The China Mining Association of
Canada, an Ontario-based trade association, estimates that there are more than 20 Chinese mining
or mining investment firms located in Canada, up from just five in 2010.
In places from Australia and here in Mongolia, governments have increased their scrutiny of Chinese
investment. Ottawa has kept the welcome mat out, with Prime Minister Stephen Harper actively
courting Chinese investment. But Canada's announcement for changes to its foreign investment laws
has some Chinese executives worried about proposals that may require extra disclosure.
Canadian intelligence officials have hinted in recent years of concern about possible Chinese
influence over provincial politicians. More recently agents have focused on recent Chinese contacts
with First Nation groups.
CHINA TO LAUNCH RARE-EARTH TRADING CENTER IN INNER MONGOLIA
China's largest rare-earth producer plans to launch a trading platform, according to a company
newsletter, in the nation's latest attempt to exert more control over the pricing of the strategically
important minerals. As China clenches tighter on its grip over the market, some nations and
companies have begun looking to Mongolia as a new supply.
Inner Mongolia Baotou Steel Rare Earth Group Hi-Tech Co., China's largest producer by output, plans
to launch the physical platform on 8 August. Baotou Steel is leading about 10 major Chinese rare-
earth producers to set up the platform.
The market for rare earths is largely opaque because they aren't sold in public markets and move in
small volumes, and there are only a few private-sector and government sources providing pricing
data. A trading platform could provide some clarity, but if successful it could also give a China-
based entity a role on determining rare-earth prices.
China controls about 95 percent of the world's rare-earth production, a troubling fact to the Obama
administration in the United States. China has struggled with plummeting rare-earth prices as global
demand has weakened in the past year. Prices nearly halved from last year's level for such
bellwether minerals as neodymium oxide. China tries to influence prices through export quotas, but
exporters haven't even used them up due to weaker demand.
The rare-earth exchange will be located in the city of Baotou in China's northern region of Inner
Mongolia.
AUSTRALIA'S NEW PLAY ON MONGOLIA'S RESOURCE BOOM – OIL AND GAS
Australian investors will soon have a new play on Mongolia's resource boom, but it won't be the
usual suspects like copper and coal.
Minerals explorer Strzelecki Metals Ltd. plans to acquire unlisted Wolf Petroleum, which has rights
to explore vast tracts of the Mongolian steppe for oil and natural gas. The all-scrip deal comes after

Wolf Petroleum's advisor, Perth-based Garrison Capital, scrapped plans for an initial public offering
over the coming year.
Headline transactions include Hong Kong conglomerate Kerry Group's sale of a majority stake in its
Mongolian coking coal assets to Mongolian Mining Corp. for USD 464 million, and Thai coal producer
Banpu Public Co. Ltd.'s acquisition of the shares it didn't already own in Hunnu Coal Ltd., which
valued the company at USD 443 million.
In addition, Rio Tinto PLC took control of Ivanhoe Mines Ltd. as the pair invest billions of U.S.
dollars in Mongolia to develop the Oyu Tolgoi copper deposit.
Strzelecki Metals Chairman Brian McMaster said favoring a backdoor listing over a public offering
was not related to the sudden downturn in Australia's equity market.
Formed by Garrison in 2012, Wolf Petroleum is now regarded as the biggest oil tenement holder in
Mongolia, with more than 80,000 square kilometers. It has been running seismic studies for the past
year to identify the best targets, and plans to start a drilling campaign next year.
EXPORT OPPORTUNITIES FOR AUSTRALIA WITH MONGOLIA
With Mongolia's booming economy, Australia is in a prime position to benefit with trade.
Diplomatic relations between Mongolia and Australia began in 1972; however it was not until 1990
when Mongolia transitioned to a free market economy that the bilateral engagement was enhanced.
According to the customs official statistics report for 2011, the total export trade from Australia to
Mongolia was AUD 44 million (USD 45.2 million) and the import from Mongolia to Australia totaled
AUD 500,000. While the trade total is relatively modest, Australia exports to Mongolia have doubled
every year since 2009 and has further growth potential.
A significant portion of the Australian export to Mongolia include heavy machinery, specialized
equipment, measuring and analysis apparatus and technologies mainly used in the mining sector.
The main exports from Mongolia are cashmere, coal and fluorspar.
Australia has recently opened a permanent office in Ulaanbaatar with an aim to enhance the
commercial ties between Australia and Mongolia. The Mongolian government's policy to promote
international trade has created a favorable environment for the traders and the country continues
to facilitate trade. In order to overcome the over-dependence on imported products and to enhance
export, the export duty has been set to 0 percent and the import duty is one of the lowest at 5
percent for all commodities, with the exception of a seasonal duty increase. Mongolia also has a
number of free-trade zones. With an aim to support small and medium enterprises, current import
duty on equipment to them has been set to 0 percent until 31 December 2012.
Source: Export Council of Australia
AUSTRALIA'S MINING BOOM COVERS TROUBLES ELSEWHERE
Australia's economy, driven by a booming mining sector, is among the fastest-growing in the
developed world and has the enviable combination of low employment and little debt. Yet nearly
every part of the economy outside mining is struggling, and there is fear that if China stops gobbling
up its coal and iron ore, the remainder of the economy could not pick up the slack. With a similar
economic makeup, Mongolia may face a similar reality.
A strong Australian dollar is having unintended side effects on small business. When the dollar gets
more expensive, everything the country exports does too. The Central Bank is hoping to give the
rest of the economy a boost, cutting interests rates by 1.25 percent to 3.5 percent. This is true
despite the first-quarter gross domestic product (GDP) growth of 4.3 percent. The risk is Australia
will become so dependent on mining that weakened demand could lead to recession. Mining
accounts for 7 percent of the economy, nearly double its share in 2000.
―Australia has caught 'Dutch disease,'‖ said Michelle Blauw of surfboard maker D'Arcy Surfboards.
She is referring to a parallel that economists draw between Australia today and the Netherlands of
the 1960s when following a big gas discovery, an inflow of cash drove up the value of the Dutch
currency. That made it harder for other industries to sell goods in foreign markets, which hurt the
economy.
The Australian dollar has doubled in value against the U.S. dollar over the past decade, as foreign
companies bought up the currency to invest in mines. That has made exports more expensive and
imports cheaper, contributing to an increase in living costs.
So far, China's demand for resources is holding. But a survey by National Australia Bank Ltd. put
business conditions in May at their lowest level in three years, in part because of a slowdown in
mining.

EXCESSIVE TAXES, REGULATIONS THREATEN MINING INVESTMENT IN AUSTRALIA
The implementation of the mineral resource rent tax (MRRT) and the world‘s highest carbon tax
would put the brakes on resources investment in Australia (a competitor nation to Mongolia) free-
market think tank, the Institute of Public Affairs (IPA), warned. Tax hikes and concessions by
Parliament to resource nationalist sentiment may produce a similar outcome for Mongolia.
―With the introduction of the MRRT and the carbon tax, major Australian resources companies are
now looking to West Africa in search of better returns on their investment,‖ said IPA director of the
North Australia project, Hugh Tobin. He noted that current government policies lacked vision and
foresight, and suggested that a low-tax, low-regulation special economic zone be implemented in
northern Australia.
Federal Treasurer Wayne Swan has previously said that the introduction of the MRRT and the carbon
tax would not harm resources investment in Australia, saying that investment in the sector had
continued to grow strongly since the announcement of the tax reform in May 2010. The Bureau for
Resources and Energy Economics reported at the end of April some 98 resources projects were at an
advanced stage of development, entailing a capital expenditure record of AUD 260.8 billion.
POLITICS
DP ANNOUNCES COALITION GOVERNMENT
The Democratic Party has finalized its three-party coalition to form a new government, consisting
of the Democratic Party (DP), Civil Will-Green Party (CWGP) and Justice Coalition (JC).
The coalition has been divided so that the DP and CWGP represent 75 percent, and the JC 25
percent. It is unclear what settlement between the DP and JC has been reached on the crucial
issues of the prosecution of former President and Chairman of the Mongolian People's Revolutionary
Party (MPRP) N. Enkhbayar on graft charges as well as the role for former Prime Minister and
Chairman of the Mongolian National Democratic Party (MNDP) M. Enkhsaikhan.
Today a united session of Parliament will be held to elect the Parliament speaker, officially propose
the candidate for prime minister (DP party chairman N. Altankhuyag is the presumed prime
minister), and draft a bill on the government structure, including how many ministries there will
be. The coalition agreement will extend until 2016.
In addition, during a Steering Council caucus of the Mongolian People's Party (MPP) it approved the
nominations of U. Enkhtuvshin as party chairman, M. Enkhbold as deputy Parliament speaker, and
N. Enkhbold as caucus leader of the party. The party will finalize the matter of party chairman for
its party conference on 24 July.
The MPP has taken the position to oppose any increase to the number of ministries and to support
the proposal that one-third of cabinet members should be from Parliament.
Source: Frontier Securities
PARLIAMENT OPENS WITH FOUR SEATS STILL CONTESTED
Mongolia‘s newly elected members of Parliament began their first session on 6 July even as 4 of the
76 seats remain undecided.
The General Election Commission submitted the names of 72 winning candidates from last week‘s
nationwide vote for the president‘s approval, according to a statement on President Ts. Elbegdorj‘s
website. A new vote is needed in two seats after candidates failed to gather the 28 percentage
threshold stipulated by the election law, the commission said last week.
The results of two more seats contested in Uvurkhangai Aimag are being investigated after the
commission received documents alleging breeches of the election law by the winning candidates.
The candidates from the Mongolian People‘s Party (MPP) distributed alcohol and sweets to voters,
reported News.mn.
Source: Bloomberg
N. ALTANKHUYAG: I WILL WORK RAPIDLY, VIGOROUSLY, AND RESPONSIBLY
N. Altankhuyag the presumed prime minister, discussed the direction of the next government,
which is to be led by the Democratic Party.
―We will work for restoring responsibility and justice,‖ said Altankhuyag. ―We have become
accustomed to lying and promising nice things. We can't even organize our elections properly.‖
Altankhuyag made clarifications to the proposed structural changes of the state administration,
saying that the next government would make changes as the citizens' needs dictate.
―I will work rapidly, vigorously, and responsibly,‖ he vowed.

Source: Udriin Sonin
ENKHBAYAR'S TRIAL POSTPONED TO 31 JULY
The trial of N. Enkhbayar, Mongolia's third president who is now accused of political graft, was once
again postponed.
Enkhbayar arrived at the Sukhbaatar District Court on 18 July without his lawyer, O. Saingerel.
Saingerel's child has reportedly fallen ill and was at the hospital at the time the hearing was
scheduled. Enkhbayar took on the legal counsel of S. Narangerel as his replacement. As Narangerel
had not yet reviewed the case, Enkhbayar requested a one-month postponement, which was
accepted but only for 13 days. Enkhbayar's trial is scheduled for 31 July 2012.
Enkhbayar is on trial for corruption, under the Criminal Law of Mongolia, Article 150.3, for ―Causing
great mischief to others and Article 163.2's ―Acts of repeated or grouped nature, or abuse of power,
and gains of a large amount of income.‖ The trial began after three delays due to the need of
Enkhbayar's first lawyer to better familiarize himself with the case, changes in legal counsel, and
his ailing health.
BAT-UUL ELECTED TO HEAD ULAANBAATAR GOVERNMENT
The Democratic Party has selected E. Bat-Uul as the head of the Ulaanbaatar‘s City Government's
Consultative Committee.
Ninety-six of the 135 members and an additional 96 participants in attendance of at the
Consultative Committee meeting of the Democratic Party to decide on the leadership voted in favor
of Bat-Uul via secret Ballot.
Source: Montsame
U.S SECRETARY OF STATE HILLARY CLINTON ARRIVED IN UB
U.S. Secretary of State Hillary Clinton arrived in Mongolia on Monday 9 July as part of an Asian tour
aimed at promoting democracy, as local politicians were locked in dispute over recent elections.
President Ts. Elbegdorj has called on all parties to agree on forming a ruling coalition, after official
results showed the opposition Democratic Party won the most seats, but not enough for a majority.
There have been days of unease since the elections in which some parties said a new automated
system used for the election of Parliament had failed.
―The secretary is going to be very clear that we celebrated a succession of successful elections in
Mongolia,‖ a top State Department official told reporters traveling with Clinton.
Clinton told the audience in Mongolia that her visit is a reminder of U.S. support for democracy in a
region where China‘s influence continues to deepen. Clinton credited Mongolia‘s courage in building
a democratic system in territory surrounded by Russia and China, and sustaining it while its mining-
based economy become one of the world‘s fastest growing.
Clinton arrived in Ulaanbaatar from Tokyo, where she used a global forum on Sunday to make a
powerful plea for the rights of women in Afghanistan.
Source: AFP
CLINTON DIGS AT CHINA FROM MONGOLIA
Secretary of State Hillary Clinton, in an unmistakable message to China, delivered in a speech from
Mongolia that economic success without meaningful political openness was an unsustainable
equation that would ultimately lead to instability.
Clinton arrived in Mongolia on the second day of an Asia tour dedicated to broadening the Obama
administration‘s renewed focus on the region beyond an early emphasis on building up American
military strength. The effort was seen as an aim at easing away from confrontation with China, but
Clinton‘s comments came at a sensitive time for China. Clinton did not mention China by name, but
it was clearly the target of her remarks.
―You can‘t have economic liberalization without political liberalization eventually,‖ she said. ―It‘s
true that clamping down on political expression or maintaining a tight grip on what people read, say
or see can create an illusion of security. But illusions fade—because people‘s yearning for liberty
don‘t.‖
In a dig at China as it wrestles with an economic downturn after a decade of double-digit growth,
Clinton added, ―Countries that want to be open for business but closed for free expression will find
that this approach comes at cost: it kills innovation and discourages entrepreneurship, which are
vital for sustainable growth.‖ She also dismissed the idea by Lee Kuan Yew, the founder of modern
Singapore, that democratic values were for Western societies only, pointing to steady ―gains in

political and civil rights.‖
The Obama administration has taken a special interest in Mongolia, largely because of its position
next to China. Elbegdorj visited the White House last year, and Vice President Joe Biden went to
Mongolian last year as well.
Source: New York Times
U.S. AMBASSADOR BIDS ADIEU
Outgoing U.S. Ambassador to Mongolia Jonathan Addleton has released his farewell address.
―I will remember many things about Mongolia. But perhaps more than anything, I will remember the
vastness of the steppe; the beauty of the mountains; the brilliance of the night stars; and the
personal kindness extended by so many Mongolians at every step of the way.‖
The ambassador listed a number of accomplishments throughout his term, including the three
Fulbright scholarships for higher education in the United States funded by the U.S. Embassy in 2009
and eventually 16 in total in 2011 in addition to the Millennium Challenge Account of Mongolia's
attainment of the ―Country Commitment Award.‖
Addleton also mentioned the growing economic cooperation between the United States and
Mongolia, including imports growing from USD 40 million in 2009 to over USD 313 million in 2011.
During his term U.S. firms such as General Electric, Bloomberg Television, Wagner-Asia have opened
offices in Ulaanbaatar.
Source: U.S. Embassy
MONGOLIAN TROOPS HEAD FOR SOUTH SUDAN
A farewell ceremony was held for the 29 Mongolian rescue troops who will serve in the international
peacekeeping mission in South Sudan at the National Emergency Agency of Mongolia (NEMA) on 17
July.
The peacekeeping officers will serve for nine months in South Sudan in the first ever deployment of
Mongolian troops to participate in the U.N. peacekeeping missions.
―You are the sons of our homeland who took an oath to guard the national security of Mongolia to
rescue civilians' health, lives, and their possessions, and to dedicate one's strength in saving our
mother nature. But today you are participating in the U.N. mandated peacekeeping missions as
gallant militants who are recognized at an international level with disciplined and professional skills
and are opening a new page in your personal lives, in NEMA history, and further in Mongolian
history,‖ said Ts. Amgalanbayar, the chief and high commissioner of NEMA, in his farewell speech.
NEMA was established in 2004 to hold the responsibility of protecting the population, providing
stability to the national economy, organizing rescue missions, and responding to fires.
MONGOLIAN DEMOCRACY CRAWLS, BUT MOVES AHEAD
Reading some of the news out of Mongolia lately, it would be easy to conclude that the country is
on the verge of becoming yet another failed post-socialist experiment in democracy. Easy, but
wrong. Parliamentary elections held last month show an electorate exercising their rights, and
institutions growing more functional at meeting the demands of the public.
The origins of the doomsday fears for Mongolian democracy lie in the arrest of former President N.
Enkhbayar on corruption charges. It‘s no small matter for a government agency to authorize the
arrest of a predecessor from an opposing party when the predecessor is plotting a political
comeback. So observers might wonder whether this is a sign Mongolian democracy is running of the
rails.
Yet a look at the 28 June parliamentary elections belies the worst-case scenario. The first thing to
note is that both the polling and the aftermath have been largely peaceful. To ensure that the
violence from four years ago would be remembered as a one-off case, the General Election
Commission significantly tightened campaign and polling regulations. Voters‘ records were pulled
almost instantly following the fingerprint scan when they came to vote. Spot checks after the
election, manually recounting ballots first counted by machine, suggested the machinery worked
correctly.
Although the election results are set to be honored by all, allegations of fraud are telling. With
little evidence of problems, the circulating of these allegations signals a lack of trust in political
parties, their goals, and the means by which they achieve them. Political parties continue to be set
up around the business interests of politicians, so it‘s hard to build confidence that they are
anything but a collection of oligarchs.
A coalition led by the Democratic Party (DP) may not change specific policies. What‘s more, if the

public doesn‘t see steady improvement in governance and a fall in corruption over time, the lack of
trust could undermine the legitimacy of elections. Yet, even without an ideological profile, an
effective government through a grand coalition may still contribute to the building of trust in
political parties and thus the continued institutionalization of democracy in Mongolia.
Julian Dierkes is an associate professor and the Keidanren Chair in Japanese Research at the
University of British Columbia‘s Institute of Asian Research.
DP RIVALRIES AMONG ITS FACTIONS
As the Democratic Party looks to form a new government and the competing interests that might
come out from that, some wonder if squabbles within its own ranks might hinder the success of that
government.
Since the DP was established in 2000 as a coalition of five political parties, there have always been
rumors about rivalries among factions within it. Although most people know the names of faction
leaders, the question of who are the members of these factions and how they actually work have
been ambiguous.
Unless it is an official statement of one who is in the inner circle of party leaders, any discussions
about factions and their relations with each other have always been obscured. There has been much
discussion on how major factions within the DP, such as Altangada (translation: pole star), Shonkhor
(falcon), the Mongolian Democratic Union, The Mongolian National Progress Party (MoAH), North
East Asia, and Neg Ardchilai (one democracy) would agree on a coalition partner and the
distribution of political offices.
N. Altankhuyag, the chairman of the DP and the declared next prime minister, is known as the
leader of Altangada, which is regarded as the most influential. Z. Enkhbold, Parliament chairman,
leads Shonkhor; and former Minister of Roads, Transportation and Urban Development Kh. Battulga
leads MoAH and has been critical of Altankhuyag for working merely in the interests of his own
faction.
Source: Mongolia Today
ENKHBAYAR GRAPPLES FOR REDEMPTION
Five years ago N. Enkhbayar was at the peak of his political career. He was president of Mongolia,
was widely popular and had already served as prime minister and speaker of Parliament as Mongolia
sat on the precipice of a mining boom. Today, however, he holds no political post, is routinely
skewered in the media for controversial behavior and is about to go on trial for corruption.
Last month Enkhbayar's Justice Coalition scored surprisingly well in parliamentary elections,
winning 11 of the 76 seats in Parliament. The Democratic Party (DP) won the election with 31 seats,
slightly ahead of the Mongolian People's Party (MPP). With no party winning enough seats to form a
government, Enkhbayar said he would consider a coalition if the DP came calling.
These days, Enkhbayar speaks frequently about transparency, as the game of ―morality politics‖ has
reached a fever pitch in Mongolia. Politicians routinely point fingers at each other, alleging
corruption scandals, dodgy mining licenses acquisitions, and the theft of public land. Later this
month Enkhbayar himself goes on trial to defend against five counts of corruption that he denies.
Winning a seat in Parliament would have afforded Enkhbayar a certain level of immunity, but it was
not to be as the elections went ahead without his name on the ballot. He is, however, credited with
making the Justice Coalition the first real third party force in modern Mongolian politics.
Enkhbayar's plan is to take back mines that are foreign-owned after a set period of time
(approximately twenty years, he says) and give shares from those companies evenly to the public.
The party also advocates for the renegotiation of the Oyu Tolgoi investment agreement, insisting
Mongolia take a majority stake.
It was Tavan Tolgoi, however, that had a hand in changing the course of Enkhbayar's political
career. In the late 2000s the future of Tavan Tolgoi was up for grabs. According to Enkhbayar, the
MPP leadership grabbed stake in Tavan Tolgoi without his consent.
Read more…
Enkhbayar's sudden falling out with his comrades at the MPP was a major blow, but the election loss
of 2009 only fueled his resolve to get back into politics. He started by reforming the defunct
Mongolian People's Revolutionary Party (MPRP), which ruled Mongolia for 67 years during the
country's communist era. It received only modest support during its first year, but after Enkhbayar's
arrest in April the party surged in the polls. Voters were outraged by his treatment.
Unlike previous Mongolian presidents who drifted into oblivion after they left office, Enkhbayar says
he is determined to remain active, believing that he owes it to the public that voted him into

office.
Source: Michael Kohn
DENS OF SNOW LEOPARD MOTHERS LOCATED FOR FIRST TIME IN MONGOLIA
The dens of two snow leopard mothers and their cubs have been located in Mongolia for the first
time, with new, unprecedented video showing the mother and their young inside the den, a
conservation organization announced yesterday.
Snow leopard dens are difficult to find because of the animal‘s secretive, elusive nature and the
difficult, mountainous terrain in which they live. Finding the dens is an important step in learning
more about the reproductive behavior of the young of this endangered species.
―We have spent years trying to determine when and where snow leopards give birth, the size of
their litters, and the chances a cub has of surviving into adulthood,‖ said Tom McCarthy, executive
director of the snow leopard program at Panthera, a wild cat conservation organization.
The dens were discovered in Mongolia‘s Tost Mountains, where locals refer to the creatures as
―Asia‘s Mountain Ghost.‖ A team of scientists from Panthera and the Snow Leopard Trust entered
the dens when the mothers were away hunting. They found that the first had two cubs and the
second, one. All three cubs were weighed, measured and photographed and handled with extreme
care. Two were fixed with tiny microchip identification tags that were placed under their skin for
future identification.
Only around 4,500 to 7,500 snow leopards are thought to remain in the wild. In recent years,
pictures of snow leopards from camera traps have also been taken in other parts of the animal‘s
range, including Bhutan, Siberia, Kashmir, and Afghanistan.
Source: Christian Science Monitor
PRZEWALSKI HORSES FLOWN BY CZECHS TO MONGOLIA
The Prague Zoo is sending four more rare wild horses to Mongolia at part of its efforts to
reintroduce the endangered species to its native habitat.
Since the first four Przewalski horses that the zoo moved to western Mongolia last year have been
doing well in their new environment, four mares have been flown on a military plane from Prague
to the Gobi B National Park.
The Przewalski horse is native to the steppes of Central Asia and became extinct in the wild in the
late 1960s. It is listed as critically endangered by the International Union for Conservation of Nature
and is considered wild because it has never been successfully domesticated.
Source: Huffington Post
__________________________________________________________________________________
NEW MONGOLIAN LAWS
The following laws, addenda 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
05.07.2012 Law on Regulation of Foreign Investment in Economic Entities Operating in Sectors
of Strategic Importance (Foreign Investment Law)
Law on Reconciling Intermediation
Addendum to Law on Defence
Addendum and Amendments to Law on Arbitration
Addendum and Amendments to Law on Family
Addendum to Law on Labor
Addendum to Law on Dues from National Licenses
Addendum and Amendments to Law on Donors
Amendments to Law on Local Khural Election
Recent postings to the Laws of Mongolia section of BCM websites:
- English website: Company Law (revised)
- Mongolian website: Company Law (revised); Foreign Investment Law
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
DISCOVER MONGOLIA-2012, AUGUST 30-31
The Discover Mongolia conference will be held on August 30-31 in Ulaanbaatar. The conference
venue will again be the Children's Palace. BCM is a supporting organization of Discover Mongolia
2012, and its members will have the opportunity for an early-bird rate for attendance.
Oyu Tolgoi LLC, Mongolia's largest copper and gold mining firm, will be the event's premier sponsor,
in addition to the forum's ―gold sponsors‖: Monnis International Inc., Xanadu Mines Ltd., Aspire
Mining Ltd., Micromine Mongolia LLC, and Mongolian Mining Corp. The conference agenda will
concentrate on recent developments that have taken place in Mongolia's mining and foreign
investment landscape.
For more information, call +976 7014 9762 or email info@discovermongoliaforum.com.
__________________________________________________________________________________
REGISTER NOW FOR MONGOLIAN MINING DIRECTORY-2013
Mongolian Mining Directory-2013 which provides information database for Mining companies,
investors, suppliers, service companies, government and non government organizations will be
published for the fourth year to commemorate the 90th anniversary of the Mongolian mining
industry. The MMD is distributed free of charge to international and domestic mining companies,
international conferences and exhibition, embassy offices in Mongolia and foreign countries to
investors.
BCM is a Supporting Organization of the MMD and welcomes Mongolian mining industry participants
who are interested in advertising their products and services in Mongolian Mining Directory-2013.
For more information please visit: www.mining.mn, www.mongolianminingdirectory.mn or call
+976-7011 5590.
__________________________________________________________________________________
REGISTER FOR BCM‟S MINING SUPPLY CHAIN DATABASE AT NO COST
The new version of BCM‘s Mining Supply Chain Database is ready for use. Following the initiative of
Oyu Tolgoi LLC, the BCM has maintained the Mining supply chain database since March 2009. It is
honor to introduce you to the new version of the database which is totally upgraded as to its
content and use of information technology opportunities.
We are inviting all Mongolian mining suppliers and buyer companies to join the Mining Supply Chain
Database. Please visit here for registration.
If you have any questions regarding the database, please contact Undral at undral@bcmongolia.org
or 317027.
__________________________________________________________________________________
“MM TODAY” on MNB-TV, Fridays at 19:15
BCM is pleased to announce that Mongolian National Broadcasting continues its cooperation with
BCM on ―MM Today‖. This English news program is aired every Friday for 10 minutes and is
scheduled for 19:15 tonight. Tune in to watch this program that reports stories from today‘s BCM
NewsWire.
_______________________________________________________________________________
POSTINGS ON MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS
The new ‗Presentations‘ section on BCM‘s Mongolian website can be reached via link to
bcm.mn/itgeluud. Several presentations already posted include World Bank‘s Mongolia Quarterly
Economic Update–June 2012; 11 speeches from the 2nd Coaltrans on May 23-24 in UB.
As a key component of BCM‘s Mongolian website ‗News‘ section, articles from the Government‘s
―Open-Government.mn‖ site are regularly posted.
___________________________________________________________
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 June 25 monthly meeting; 12 presentations from the 2nd Coaltrans on May 23-24 in UB;
3 speeches from ―Corporate Governance Training for Directors‖ on April 27-28; 12 presentations on
Mongolian entities at Mines and Money Hong Kong 2012 on March 21-23; 11 presentations from Coal

Mongolia 2012 on February 9-10; and speeches from all BCM‘s monthly meetings in 2011-12.
Also on BCM‘s English website, ‗Resource, Mongolia Reports‘ section, please note the Polit
Barometer, June 2012, and the Polit Barometer, April 2012 by Sant Maral Foundation (Mongolian
and English versions); Risk Report for Mongolia 2012 by Mongolia Economic Forum; ―Preliminary
estimates of staggering costs of inefficient trade regulation in Mongolia‖ by Olin McGill, consultant
to USAID BPI; ADB‘s Asian Development Outlook, April 2012; detailed results of BCM‘s NewsWire
survey of March 2012; World Bank‘s Mongolia Quarterly Economic Update, February 2012; Executive
Summary of the Mongolian Real Estate Report 2012 by M.A.D. Investment Solutions; 2011 Mongolia
Investment Climate Statement by Economic and Commercial Section of U.S. Embassy, Ulaanbaatar,
Mongolia; and Transition Report 2011 (Mongolia data) by EBRD and the Economic Research Institute.
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.
_____________________________________________________________
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.
__________________________________________________________________________________
ECONOMIC INDICATORS

INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
June 30, 2012 *14.7% [source: NSOM]
*Year-over-year (y-o-y), nationwide
Note: 15.1% y-o-y, Ulaanbaatar city, June 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 – July 19, 2012
Currency Name Currency Rate
U.S. dollar USD 1,345.40
Euro EUR 1,654.30
Japanese yen JPY 17.01
British pound GBP 2,109.12
Hong Kong dollar HKD 173.38

Chinese yuan CNY 211.17
South Korean won KRW ` 1.18
Russian ruble RUB 41.97
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.

20.07.2012, NEWSWIRE, Issues 230-231

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