September 21 2012

1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
Issue 240 – September 21, 2012
NEWS HIGHLIGHTS:
Business
 Private business sector makes its appeal to Parliament;
 Erdenes-TT reveals challenges to standing committee;
 EBRD considers funding OT plant;
 Terra eyes September to begin mining;
 Centerra receives approval for two projects;
 Manas announces spud of second well;
 First Sino-Mongolia Micro Finance Institution launches;
 XacBank considers dollar bond offering;
 Australian metals firm eyes Mongolian exploration through Wolf takeover;
 Boroo boasts 95 percent reclamation record;
 SouthGobi appoints new CEO and president;
 Petro Matad installs non-executive chairman;
 FeOre reports 62 percent iron-grade concentrate at Ereeny;
 Environmental training seminar.
Economy
 Development Bank prepares to raise USD 5 billion from debt offering;
 New Mongol Bank president vows to combat inflation, maintain independence;
 Economist attributes short-sighted government to economic woes;
 Mongolia, UNEP celebrate ozone layer preservation day;
 Mongolia hosts Seismological Commission meeting;
 Radiation at abandoned uranium mine unlike to pose health risk, says AEA;
 Mongolian agriculture sees greater harvests this year;
 Vegetable farmers struggle with low prices following surplus crop production;
 What Mongolia means to HFT;
 Overcoming Insurance Challenges;
 OT in Khanbogd transforms Mongolia;
 Two decades of democracy and globalization;
 Ghost warehouse stocks haunt China's steel sector.
Politics
 MPs resist call for OT renegotiations;
 Parliament passes 2012-2016 action plan;
 Local elections set for 21 November;
 Parliament passes local elections law;
 Philippines, Mongolia expand trade relations;
 Major powers recognize Mongolia as nuclear weapons free;
 Elbegdorj sends greetings to North Korea's Kim Jong Un;
 U.S. Chamber to lead Mongolian delegation to expand bilateral ties;
 The US—A partner in Mongolian Democracy;
 Mongolia—key to U.S. security goals in Asia;
 Mongolia can't live with China, can't live without it;
 Governance and corruption send a mixed message;
 Enkhbayar case reveals vulnerabilities in Hong Kong, Singapore banks;
 Representation in Mongolia signals of progress in gender equality.
ECONOMIC INDICATORS:
 MSE Top 20 Index by Market Capitalization;
 Foreign-listed Companies with Mongolian Assets;
 Inflation;

2.  Central Bank policy rate;
 Currency rates.
*Click on titles above to link to articles.
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SPONSORS
Khan Bank Eznis Airways
Kempinski Hotel Khan Palace Mongolian National Broadcasting
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BCM MONTHLY MEETING ANNOUNCEMENT:
BCM‘s next monthly meeting for members will be Monday, September 24, 2012 at 5PM at the
KEMPINSKI HOTEL KHAN PALACE, 2nd floor, Altai Ballroom.
The bilingual meeting will feature the following presentations:
 Call to Order/Business Council of Mongolia: Laurenz Melchers, Chairman, BCM
 BCM Report: I.Ser-Od, Vice Director, BCM
 Anne Delarue, Country Director, Oxford Business Group - "Mongolia Report 2013 mission" and
BCM and OBG MOU signing
 Patrick Nijs, Ambassador of Belgium Consulate in Ulaanbaatar - "Introduction of Belgium
Trade Mission"
 D. Bum-Erdene, Director, MMCG - "Marketing research development and perspective in
Mongolia"
 B. Bayar, Managing Partner, ELC and Co-Chair of BCM Legislative Working Group -
"Supporting Investment"
 Houston Spencer, Vice President, Communications and Media Relations, OT - "Oyu Tolgoi
Update"
A networking reception will be held for all attendees immediately following the business portion of
the meeting at the foyer area of Altai hall. The networking reception is sponsored by Embassy of
Belgium.
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BUSINESS
PRIVATE BUSINESS SECTOR MAKES ITS APPEAL TO PARLIAMENT
Organizations from Mongolia‘s private sector have appealed to Parliament to accept its input in
future drafting of legislations that would have affect on private business in Mongolia.
The Mongolian National Chamber of Commerce and Industry (MNCCI), Mongolian Employers‘

3. Federation, Business Council of Mongolia, Confederation of Mongolian Professional Associates,
Mongolian National Mining Association, and the Fair Taxes and Wise Spending NGO have sent a joint
letter asking Parliament to maintain a fair business environment for investors. The letter points to
the Law on Regulating Foreign Investment in Strategically Important Entities as a point of
contention, saying its scope was expanded from restricting ownership by foreign state-owned
companies to ―all industrial sectors that are lacking investment.‖
―Open and irresponsible statement by MPs and high ranking officers have created a situation that
could result in serious damage and loss to the country‘s economy, magnifying global economic
crisis,‖ says the letter. It later adds, ―This unstable policy environment was generating by
temporary emotion, and the demands of some social groups, and this is already having an adverse
impact on the mining construction sectors that have carried the greatest of load on their shoulders,
with undesirable consequences such as less tax income and a greater unemployment rate.‖
The letter asks that Parliament heed the advice and pay mind to the data businesses and
international organization can give, and confer with the business community when creating policy
that will directly impact upon it.
―Research findings by international organizations demonstrate that if the government of Mongolia
could improve its operational competitiveness to a small extent (without dedicating much capital),
and make one step up in terms of its creditworthiness and ranking, the country will make at least
USD 500 million savings on the interest on the USD 708 billion required for larger scale projects
scheduled to be implemented by 2017.‖
To read the letter in its entirety, visit BCM website.
Source: BCM
ERDENES-TT REVEALS CHALLENGES TO STANDING COMMITTEE
Erdenes Tavan Tolgoi JSC gave a presentation to the Standing Committee on Economy regarding its
operations, outlining all the challenges it faces.
Erdenes-TT has many obstacles to deal with in the near future, said chief executive officer B.
Enebish, including outstanding debts, infrastructural limitations, and the politicization of its
operations. Currently the mine lacks a rail line to China and instead must deliver its products by
truck, much of the time on unpaved roads.
The government‘s decision to distribute 20 percent of shares of Erdenes-TT has resulted in smaller
interest the company can sell when it eventually goes public. The coal miner currently has plans for
a triple listing on stock exchanges in Ulaanbaatar, Hong Kong, and London. However, those plans
have been delayed due to complications from the distribution of shares by government as well as
the delayed selection of investors for Tavan Tolgoi‘s Western Tsankhi block, said Enebish. The chief
executive suggested that Mongolia could operate the mine itself, without investment from foreign
countries, which would eliminate issues regarding its public offerings.
The debts held by Erdene-TT include the USD 250 million offtake agreement to Chalco forl 4 million
tons of coal, he said. He added that another strain came from government‘s constant demands for
upfront payments.
―In regard to the some MNT 937 billion owed to the state budget, our company hasn‘t promised to
pay this money to the state. Instead, without asking us, this amount was simply put to paper,‖ said
Enebish. He later added, ―Parliament, government, and the Ministry of Finance pressed our
company to pay to the Human Development Fund. There was no request; they simply just
constantly more money because of the election promises made by the Mongolian People‘s Party.‖
Source: Undesnii Shuudan
EBRD CONSIDERS FUNDING OT PLANT
The European Bank for Reconstruction and Development (EBRD) is considering a project involving
the development, construction, and operation of an open-pit and underground mine and ore
processing facility at the Oyu Tolgoi copper and gold project.
A project finance loan to Oyu Tolgoi is to be syndicated to commercial banks. The EBRD loan should
be part of a larger financing package, including loans from the International Finance Corporation
(IFC) and Export Development Canada. (EDC)
Oyu Tolgoi holds a current resource of almost 40 billion pounds of copper and 20 million ounces of
gold, plus further identified reserves of 40 billion pounds of copper and 24 million ounces of
contained gold, which are in the process of being defined. The project is being developed in
phases, with commercial production from a 100,000-tons per-day concentrator (due to start in
2013) to be sourced initially from the Southern Oyu open pit mine. In parallel, construction is under
way to develop infrastructure at the underground Hugo North deposit.
The fiscal benefits for the country will include greater tax revenues, as well as royalty and
dividends. The project will adopt the best transparency standards through compliance by the

4. project company with the Extractive Industries Transparency Initiative (EITI) requirements and
serve as an example to other private sector investors in the Mongolian mining industry.
Source: European Bank for Reconstruction and Development
TERRA EYES SEPTEMBER TO BEGIN MINING
ASX-listed Guildford Coal was expecting coal production from its Mongolian operation to start in
November this year, after its 75 percent-held subsidiary Terra Energy said that mining would start
in the September quarter.
The North Pit of the South Gobi operation was expected to deliver some three million tons a year of
coking coal in the first full year of operation, ramping up to four million tons a year the following
year. Terra Energy said in a statement that the future development of additional pits would likely
increase mine production up to 10 million tons a year from the multiple-pit complex within an
anticipated five-year time frame. The start-up capital fro the North Pit was expected to be in the
range of around AUD 10 million, the coal developer said.
The South Gobi project consists of five tenements in Mongolia's South Gobi province. Terra Energy
was planning a conventional opencut strip mine for the North Pit, using hydraulic excavator and
track combinations. The project hosts an estimated JORC-compliant resource of 704 million tons of
coking coal, consisting of an indicated resource of 39.7 million tons, and an inferred resource of
30.7 million tons.
An exploration target of between 70 million and 892 million tons has also been estimated, which
was in addition to the current mineral resource. Terra Energy said the negotiations have progressed
with short-listed parties from the offtake tender process, and a non-binding heads of agreement
had been reached with Sojitz Corp. and its joint venture partner Erdos Group, which locked in key
terms that would form the basis for the development of a long-term offtake agreement.
Negotiations are hoped to be completed by the end of September this year.
Source: Mining Weekly
CENTERRA RECEIVES APPROVAL FOR TWO PROJECTS
Toronto-listed Centerra Gold Inc. on Wednesday said it had received regulatory approval for its
mine plan to restart using the heap leach facility at its Boroo mine, in Mongolia.
The gold miner said it expected to resume the heap-leach operation when it had been
recommissioned and estimated production from the heap-leach operation would add about 2,000
ounces per meter to its production portfolio from December onwards.
Centerra Gold also said it had received a mining license for its Altan Tsagaan Ovoot (ATO)
development project, in Eastern Mongolia. The company said exploration drilling would continue on
the ATO property, targeting extensions and feeders to the pipe-like bodies hosting the current ATO
resource and possible strike extensions to the nearby Mungu prospect. Regional exploration on the
larger land package, including other target areas, would continue during the year.
Since 2010, the company had established a combined measured and indicated resource of 22.28
million tons grading 1.2 grams per ton holding an estimated 824,000 ounces of gold. The company
expected to produce between 450,000 ounces and 470,000 ounces of gold from the Boroo and
Kumtor in Kyrgyzstan) mines for the year.
Centerra Gold, in July, said it was watching the Mongolian political landscape evolve following
recent elections, in which the liberal 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 and the possible nationalization of mines.
Source: Mining Weekly
MANAS ANNOUNCES SPUD OF SECOND WELL
Oil explorer Gobi Energy Partners LLC executed plans to spud its second well in Mongolia on 20
September.
Although Gobi Energy, a subsidiary of Manas Petroleum Corp., had originally planned to drill its first
well, Ger Chuluu A1, to a depth of 1,200 meters, it stopped drilling at 1,098 meters without having
encountered any seal. Well costs should amount to approximately USD 1.1 million. Gobi Energy had
also planned to drill its second well—East Sainshand A1—in another sub-basin of the East Gobi
Cretaceous basin, which is located approximately 170 kilometers away from Ger Chuluu. But
management decided to drill a second well in the Ger Chuluu sub-basin before moving to East
Sainshand A1.
Gobi Energy drilled Ger Chuluu A1 in an effort to prove the extent of the Zuunbayan sub-basin
petroleum system. One of the key assumptions of the model it produced from testing was the
continuity of the Zuunbayan formation over the structure, as indicated by outcrops. Unfortunately
the geology turned different from expected and reservoirs produced water, with only a few meters

5. of shale encountered. The oil explorer plans to drill another well of 650 meters at that site for
some USD 700,000.
―To depart from the Ger Chuluu sub-basin without having a conclusive test of its potential,
especially after considering the knowledge we gained from Ger Chuluu A1, would not fit our
Mongolian exploration strategy for the East Gobi Basin,‖ said Werner Ladwein, president of Manas
Petroleum.
Plans for drilling at the East Sainshand A1 well, located 170 kilometers away, will depend on a
smaller seasonal window.
Source: Manas Petroleum Corp.
FIRST SINO-MONGOLIA MICRO FINANCE INSTITUTION LAUNCHES
Urumqui Tianrong Micro Finance Co. hosted its grand opening ceremony in Urumqi on 3 September
for a finance institution with both Mongolian and Chinese partners. The company is a joint venture
between TenGer Financial Group, Xinjiang Longhaide, Shanghai Junhe, and International Finance
Corp. (IFC)
The company will expand access to finance for small business in China‘s less-developed region of
Xinjiang and support economic cooperation in Central Asia. With the combined international
financial knowledge and experience of its investors, Tianrong can lead the micro finance sector in
Xinjiang and elsewhere in Central Asia.
―Under the partnership with IFC, [TenGer Financial] has built up a sound business and a team of
experienced professionals in the micro finance space,‖ said M. Bold, chief executive officer of
TenGer Financial. ―Now we would like to replicated this model and share our lessons in other
markets in the region, in Xinjiang, after the pilot investment in Kyrgyzstan in 2009.‖
Source: XacBank LLC
XACBANK CONSIDERS DOLLAR BOND OFFERING
XacBank LLC is considering an issuance of U.S. dollar bonds and has hired ANZ and Citigroup to
arrange meetings with potential investors.
Investor meetings are scheduled to take place in London and Hong Kong from Wednesday.
Source: NASDAQ
AUSTRALIAN METALS FIRM EYES MONGOLIAN EXPLORATION THROUGH WOLF TAKEOVER
Strzelecki Metals is hoping to morph into a Mongolia-focused oil exploration company via a reverse
takeover of Wolf Petroleum.
Adelaide, Australia-based Strzelecki Metals, floated under the name Primary Resources in 2006, was
most recently exploring for molybdenum and copper in Poland, with drilling last carried out in May.
The company will be renamed Wolf Petroleum after the takeover, which values the oil explorer at
USD 33.1 million at the current Strzelecki share price of 1.6 cents. '
Wolf claims to be ―one of the largest holders of oil and gas exploration acreage in Mongolia.‖ The
Strzelecki bidder's statement says Wolf is conducting successful work programs across three blocks
and has a total exploration acreage of 72,791 square kilometers. Wolf is not currently an oil and gas
producer, however.
As a part of the takeover, Strzelecki shares will be consolidated on a 10 for one basis. Wolf
Petroleum shareholders will then be given 2.5 Strzelecki shares for each Wolf Petroleum share. The
merged entity would have about 9.7 million in cash and would maintain its exploration interests in
Poland and Australia
Source: Adelaide Now
BOROO BOASTS 95 PERCENT RECLAMATION RECORD
The environmental efforts by Boroo Gold Co. have maintained 95 percent preservation of its mining
sites, said its environment director.
Steve McIntosh told media at the Discover Mongolia international mining investors forum that his
company has maintained its record of land reclamation by following its standards and working with
third-party organizations to study soils and plants.
―The area affected by Boroo Gold's open-pit mining operations is very small compared to the
surroundings,‖ said McIntosh. ―Therefore the primary purpose of our revegetation measures is to
establish suitable vegetation species so that the green growth protects the soil and provides a
desirable stand of vegetation until the surrounding native vegetation can re-inhabit the disturbed
areas again.‖
A. Ariunzaya, Boroo Gold's media relations manager, echoed those remarks, saying their company's
efforts in introducing better practices to Mongolia is an investment into the mining sector.
Source: Centerra Gold Inc, Niigmiin Toli

6. SOUTHGOBI APPOINTS NEW CEO AND PRESIDENT
SouthGobi Resources Ltd. said that its board has appointed Ross Tromans as president and chief
executive officer effective immediately, after the ―industry veteran‖ was nominated for the
position last week. The company said that deputy chairman Sean Hinton will manage the transition
on behalf of the board over the next few weeks.
―I am honored and excited to be named to lead SouthGobi Resources,‖ said Tromans. ―We are
confident in the long-term market and industry fundamentals for quality coking coal deposits in
Mongolia, such as our Ovoot Tolgoi operation.‖
Tromans added that he looks forward to working with the board and the management team as
SouthGobi focuses on strengthening its core business performance and realizing Ovoot Tolgoi's
production potential.
―Ross [Tromans] brings a wealthy of industry insight to SouthGobi after almost three decades in the
coal and energy sector,‖ said new SouthGobi chairman, Kay Priestly, in a statement last week.
Priestly is also the chief executive officer of Turquoise Hill Resources Ltd.
SouthGobi Resources is focused on exploration and development of its Permian-age metallurgical
and thermal coal deposits in Mongolia's south Gobi region. The company's flagship coal mine, Ovoot
Tolgoi, produces and sells coal to customers in China. SouthGobi Resources said it plans to supply a
wide range of coal products to markets in Asia.
The coal miner also unveiled board changes in early September, including the resignation of three
existing directors and the appointment of five new directors. Last month the company posted a
sharply lower second-quarter profit as sales volume and revenue declined due to the curtailment of
mining operations at its Ovoot Tolgoi mine in Mongolia.
Sales volume in the latest period declined as the takeover bid by Aluminum Corp. of China Ltd.'s
(Chalco's) bid resulted in the Mineral Resources Authority announcing a request to suspend
exploration and mining activity on certain licenses. The company was also impacted by various
infrastructure constraints in Mongolia, and the softening of inland China coking coal markets toward
the end of the second quarter.
Source: Proactive Investors
PETRO MATAD INSTALLS NON-EXECUTIVE CHAIRMAN
Petro Matad has appointed George Watkins as a non-executive chairman. The previous chair, J.
Oyungerel, will become deputy chair to allow more time for her other interests, the company said,
but will remain on the board.
An experienced non-executive director and mining graduate, Watkins came to Petro Matad in March
this year. He spent 29 years with Conoco Group.
―The contribution of Dr. Watkins and his non-executive colleagues Dr. Philip Vingoe and Mr. David
Skeels, to the company since their appointments to the board earlier this year, have been
invaluable,‖ said Oyugerel.
Source: Proactive Investors
FEORE REPORTS 62 PERCENT IRON-GRADE CONCENTRATE AT EREENY
FeOre has demonstrated that its Ereeny project in Mongolia is capable of producing a 62 percent
iron-grade concentrate following the completion of a process and processing facility study.
The study, which was conducted by China Minerals Corp. subsidiary Changsha Research Institute of
Mining and Metallurgy Co., showed this grade could be achieved through industry standard multi-
stage grinding and staged magnetic separation processing. FeOre is now in the process of
incorporating the processing study results into the mine plan design to confirm the mine
construction requirements and equipment needs.
Source: Proactive Investors
ENVIRONMENTAL TRAINING SEMINAR
A free training workshop on green development activities will be held on 25 September at the
Ulaanbaatar Hotel.
The Clean Development Mechanism Designated National Authority (CDM DNA) has partnered with
the Institute of Global Environmental Strategies (IGES) to present the training in English language
for an audience with basic understanding in CDM
Source: Newcom Group
ECONOMY
DEVELOPMENT BANK PREPARES TO RAISE USD 5 BILLION FROM DEBT OFFERING
The government of Mongolia has announced its intention to raise up to USD 5 billion in debt

7. financing over the next two years through the issuance of bonds by the Development Bank of
Mongolia. The funds are expected to be used for major development projects such as rail, roads,
power, the Tavan Tolgoi coal mine and the Sainshand industrial hub east of Oyu Tolgoi.
―It is not clear what proportions of the funds will be used to finance the development of Tavan
Tolgoi and its infrastructure, but if it is not significant, we view USD 5 billion as an ambitious target
in light of the recent uncertain backdrop surrounding foreign investment,‖ said Dale Choi, associate
in market intelligence at Origo Partners MGL.
The Cabinet of Ministries has a directive to issue USD 300 million of the Development Bank's funds
to Erdenes Tavan Tolgoi JSC, with the bank having decided to provide those funds in tranches of
USD 100 million. The bank also plans to provide 50 million for financing for a subsidized residential
housing financing program. Prime Minister N. Altankhuyag has also instructed the mayor of
Ulaanbaatar and members of the ministry of finance to manage the MNT 100 billion alloted for the
repair of roads in the capital.
Last month, the Cabinet decided to invest Development Bank funds into one to six-month
government and central bank securities. This allowed the government to earn as much as MNT 15
billion in revenue from interest paid and MNT 3.1 billion from the issuance of MNT 400 billion to
Erdenes-TT, totaling MNT 18.1 billion by the end of 2012. Hypothetic average interest on this
placement would accrue to 8 percent annually, brining the bank's free funds to some USD 422
million.
Source: Origo Partners MGL
NEW MONGOL BANK PRESIDENT VOWS TO COMBAT INFLATION, MAINTAIN INDEPENDENCE
The central bank's new president has voiced his intention to contain inflation, reducing figures to
the single digits. Bank of Mongolia President N. Zoljargal said an outdated financial structure has
directly influenced the rise in inflation.
―The most important thing is the needed reform in the finance sector,‖ said Zoljargal. ―It also
requires structural changes. We have been working for many years within such an old structure.‖
Zoljargal said the bank would continue to combat the weakening of the tugrug and try to prevent
any sudden shocks to the currency. He also noted the fact the while the central bank determines
interest rates, Parliament develops monetary policy. He said the bank would continue to try and
maintain its independence.
―The activity of the Mongol Bank is regulated by state laws. This is as per usual. Nobody can deny
that the government has had its finger in our work over the last four years.‖
Source: Udriin Sonin
ECONOMIST ATTRIBUTES SHORT-SIGHTED GOVERNMENT TO ECONOMIC WOES
A leading economist pointed to falling coal prices as one reason for the tugrug‘s weakening
exchange rate in addition to a lack of foresight by government. A. Jargalsaikhan, director of the
Economic Policy Institute, said the strengthening of the U.S. dollar and a 69 percent price fall in
coal prices have contributed to the poor exchange rate.
―Dollar increases mean more expensive imports, increases to prices, and increases to inflation,‖
said Jargalsaikhan.
Jargalsaikhan recommended the government reduce spending, but said unemployment would likely
be an unfortunate side effect. He blamed poor planning and the inability to analyze the situation as
the main instigators for Mongolia‘s current economic woes.
―The stabilization fund should have been established three years ago. Now it is too late.‖
Source: Undesnii Shuudan
MONGOLIA, UNEP CELEBRATE OZONE LAYER PRESERVATION DAY
The Mongolian government and the U.N. Environment Program (UNEP) organized activities to
celebrate the upcoming International Day for Preservation of the Ozone Layer on Friday, 19
September.
S. Oyun, minister of environment and green development, said a public event would mark the 25th
anniversary of the Montreal Protocol, one of the most successful multilateral cooperation
agreements on environmental issues. The Montreal Protocol on Substances that Deplete the Ozone
Layer came into effect with the support of 24 countries, but 198 had not ratified it, Oyun said. She
said the Mongolian government had taken an active position in implementing the international
conventions and agreements on the protection of the ozone layer and mitigation of climate change,
and the government would continue to intensify its efforts in this field.
Megumi Nakamura, from UNEP's Ozone Secretariat, told a press conference on the celebration the
successful implementation of the Montreal Protocol had led to significant progress in phasing out
ozone depleting substances in refrigerators, fire extinguishers and elsewhere, and the ozone layer
was slowly recovering.

8. Nakamura also recognized Mongolia's important role in implementing the protocol. Mongolia had
done its homework and worked diligently to take action nationally to meet its obligations, she said.
The Montreal Protocol was ratified by Mongolia in March 1996. The country has committed to phase
out HCFCs progressively. For the first stage of compliance, Mongolia has to freeze its baseline
consumption by 1 January 2013 and reduce HCFC consumption by 10 percent by 1 January 2015.
Source: China.org.cn
MONGOLIA HOSTS SEISMOLOGICAL COMMISSION MEETING
Scientists from nearly 120 countries are discussing the latest in seismic research during the ninth
General Assembly of the Asian Seismological Commission.
Mongolian Deputy Prime Minister. D. Terbishdagva said at the meeting opening on Monday that the
gathering held great significance for Mongolia's efforts to prevent possible seismic disasters and
improve resecue operations in case of earthquakes. Terbishdagva said that by hosting the assembly,
Mongolica can receive advice and recommendations from international professional organizations on
how to train its people and make the country better prepared for possible disaster.
During the four-day event, scientists from around the wolrd were to exchange information on the
latest achievements in seismology research and explore ways to prevent and mitigate seismic
disaster.
Source: China.org.cn
RADIATION AT ABANDONED URANIUM MINE UNLIKE TO POSE HEALTH RISK, SAYS AEA
The government has reported that news of danger from radiation near a decommissioned uranium
mine have been exaggerated.
The Atomic Energy Agency (AEA) commenced testing at the Mardai uranium mine, a
decommissioned Soviet operation, following media reports that a Japanese research team found
dangerous levels of radiation there. The government team found radiation levels between one and
2.5 times that of natural radiation levels and average levels in the surrounding area.
―The radiation tests carried out show that radiation levels at the surrounding area of the Mardai
mine are not high enough to directly affect the health of the people and animals there.‖
The AEA said it would work with the Professional Inspection Agency (PIA) to conduct follow up tests.
Source: Undesnii Shuudan
MONGOLIAN AGRICULTURE SEES GREATER HARVESTS THIS YEAR
Projections show that Mongolia may be able to produce a surplus of up to 200,000 tons of wheat
this year for export.
By 17 September, Mongolia had harvested more than 20,000 tons of wheat from 14,000 hectares.
Weather conditions this summer resulted in a later maturation date for the wheat, resulting in a
seven-to 10-day delay before harvest. Farm acreage increased by 31 hectares, compared with the
year before, to 481,000 hectares. This could produce some 480,000 tons of wheat, according to
projections.
As for produce, farmers dedicated 208,000 hectares to potato crops compared with 199,000 last
year with greater acreage also given to fruits. Last year Mongolia imported 1.5 percent of its
national potato consumption, or 3,000 tons, from China compared with 30 percent five years ago.
Source: Undesnii Shuudan
VEGETABLE FARMERS STRUGGLE WITH LOW PRICES FOLLOWING SURPLUS CROP PRODUCTION
Vegetable farmers are complaining of pressure from vendors to sell their produce too cheaply.
The large amount of rainfall has produced larger than average crops, resulting in a surplus of
vegetables. Batsumber Soum, a district with a long history of agriculture, has projected to produce
up to 20 tons of potatoes per hectare of cropland, with farmers hoping for MNT 20 million in profits
from this year's crops.
Vendors are currently asking farmers to sell their vegetables for between MNT 150 and MNT 200 a
kilogram compared with the MNT 1,200 they sell for at grocery stores. Many farmers have
complained that the prices that are being forced upon them at are unfair. Dealers are also
reportedly buying up land at up to MNT 2 million a hectare from families migrating to Ulaanbaatar.
This year's usually large harvests has pushed farmers to hire additional help to assist in collecting
crops. Most are hiring young people such as secondary and university school students and recently
decommissioned soldiers for MNT 15,000 an hour.
While the country's largest producers have contract deals with major grocery chains, smaller
operations are forced to negotiate with dealers and strike deals with vendors at places such as
Narantuul Market. Meanwhile others have set up small stands in Ulaanbaatar, such as the dealers in
front of Sky Department Store and on Peace Avenue in the Chingetlei District.

9. Source: Udrin Sonin
WHAT MONGOLIA MEANS TO HFT
A look into high frequency trading (HFT) has revealed a few startling passing nuggets. Among them
is Mongolia's own stock exchange join in the ranks.
First, the fact that it is a system created by highly paid computer geniuses prompts a very strong
suspicion that the regulators probably do not have a clue how these HFT programs works. Second,
HFT is a locust swarm of buys and sells with tens of millions of trades whistling down fiber optic
cables. How can such a deluge be properly audited, regulated, examined, or even understood?
Third, when cutting edge technologies and sate-of-the-art delivery systems are put into a country
like Mongolia, which has just jailed its ex-president for corruption, it cannot but help make you feel
like someone is being set up to be monumentally exploited.
But the London Stock Exchange (LSE) and the Financial Services Authority in the United Kingdom
would dismiss these concerns as irrational, unrepresentative, groundless. Perhaps, they would be
right. Perhaps regulators and exchanges are on top of highly skilled programmers and can monitor
the flurry of sales that pass faster than the eye can see.
One of the main vehicles that created the debt crisis was the lack of understand regarding HFT.
This ignorance is further compounded by a failure of academics and governments to properly—and
independently—work out whether HFT is a force for good or bad. Economists cannot get the market
data to analyze and come to an independent conclusion. Or if they cannot get the data it is because
a trading house has given it to them as part of a commissioned study—in which case the conclusion
they come to is not independent.
Until hard and fast independent data shows that HFT is of ultimate benefit to an economy, caution
must be the priority. Without caution, and the necessary reforms and safeguards that such caution
would bring, we put our markets and economies at risk—something even the yaks of Mongolia must
know is not a good idea.
Source: The Bureau Investigates
OVERCOMING INSURANCE CHALLENGES
With demand in the private insurance market expected to rise, proper management with
appropriate legislation represents a challenge to regulatory bodies.
In June, Mongolia's Social Insurance and Human Development Funds (HDF) reported that 555,000
people out of the country's 2.8 million population were now covered by a social insurance scheme,
representing a 13.6 percent year-on-year (y-o-y) rise. The private insurance market remains small,
with 17 companies operating on MNT 57 billion total capital as of 2011. There are a number of
major challenges for sector growth, including a low level of consumer education on insurance and
difficulty in reaching a scattered rural population. Additionally, there are currently no major
insurers with operations in the country.
This is widely expected to change in coming years. According to the Mongolian Insurers Association,
early signs of growth have already been seen in the most recent figures, with total premium income
rising by 48 percent year-on-year to MNT 242 billion by the second quarter of 2011, and total assets
increasing to MNT 72.2 billion, a 60 percent y-o-y rise. While auto and home insurance penetration
is currently less than 5 percent of the population, the Mongolian government has already approved
a law that will make auto insurance mandatory by 1 October.
In a boost for the domestic insurance industry's credibility, in 2011, the Financial Regulatory
Commission (FRC) proposed that companies share customer data with each other. The aim of this
move is to eliminate market inefficiencies. The FRC has also focused on helping policyholders
receive what they are contractually owed in a bid to improve consumer confidence. The expanding
mining sector also gives potential to the labor segment. In leading to the creation of niche
products, with Mandal Insurance in 2011 launching a dedicated range of retail and commercial
services specifically for expatriates.
The government is currently mulling reforms to the insurance law. Proposed legislative changes
expected later this year aim to increase minimum capital requirements, as well as allow firms to
obtain more control over what can be done with investment accounts.
Source: Oxford Business Group
OT IN KHANBOGD TRANSFORMS MONGOLIA
The Oyu Tolgoi copper-gold project, scheduled to begin operations next month, is changing life and
the landscape of Mongolia—for better or worse.
―This single mining project is one of the main reasons for the amazing economic growth in the
country,‖ said Dale Choi, an analyst at Origo Partners.
The economic impact of Oyu Tolgoi is visible on the streets of Khanbogd Soum, the town nearest to

10. the site. The population of Khanbogd has grown from 2,000 a decade ago to over 7,000 today, not
including the 10,000 workers housed at the mine itself. The dusty roads are now crisscrossed with
vehicles filled with workers traveling from the nearby camp to the mine and back.
Speaking on the process of development in the area, Oyu Tolgoi Chief Executive Officer Cameron
McRae said, ―In terms of the basic infrastructure, there were no decent roads, no electricity, no
water, no air transport coming in, and the work force we needed was nowhere near the mine,‖
which is about 375 miles from the mine. ―Basically we have to provide everything from scratch.‖
Electricity is now available to household for set periods, throughout the day, and the mine has
promised residents 24-hour electricity soon. Still, life is harsh for many here, with no running water
and only five doctors working at the town's small, one-story hospital, the same number as before
the influx of people.
Not all the effects are positive. Respiratory illness is the southern Gobi Desert is high, said L.
Narantsetseg, a doctor at the Health Sciences University of Mongolia, because of migration there
and construction projects.
Further, the mine is altering the entire country. Once it reaches full production, which is expected
for 2018, the operation will be among the top three copper and gold mines in the world and is
expected to account for more than a third of Mongolia's economic output. Some residents in and
around Khanbogd fear this nationwide improvement will come at their expense, especially those
who continue to herd animals in the dry expanse and who rely, like generations before them, on a
delicate relationship with nature.
Source: New York Times
TWO DECADES OF DEMOCRACY AND GLOBALIZATION
In 1992 downtown Ulaanbaatar did not look like much. The typical staid socialist institutional
architecture dominated the wide, well-maintained streets, but the buildings and urban layout was
neat and orderly. Quite frankly, the city today is a mess.
New buildings are everywhere, with little regard to architectural niceties or consistency. The urban
sprawl grows with huge encampments of low-waged workers living in traditional gers with no
amenities. The combination of exhaust fumes from the vehicles, woods stoves from the gers and the
billowing smoke of three enormous coal-burning power plants has created the worse smog of
virtually any city in the world.
On the plus side, globalization has raised the living standards of most urban, educated
professionals. Cell phones are everywhere, even in the Gobi Desert. All college students have
computers and most are dedicated users of Facebook and Twitter.
Since Mongolia opened up to the world, investors and developers from around the world have
poured into Mongolia from China, South Korea, Japan, Germany, and the United States. It is easy to
see where the money has gone—counting the luxury cars and boutiques on the streets—and has not—
looking at the disappearance of roads as soon as a car reaches the countryside. Money is not going
into social services either. The end of the socialist system ended free health care and university
education, and guaranteed jobs. In the countryside people still live in gers alongside their goats and
sheep, their horses, yaks and camels.
So what happened to all of those hopes for a new Mongolia twenty years ago, when democracy was
in the air? Today's Mongolia matches an unfortunate trend throughout the world, a trend that
promotes a managerial capitalism bereft of democratic control or social aspiration. It means for
Mongolia, and for many around the world, a future with cell phones, Facebook, and Lexus SUVs, but
also with brown air, bad roads and astounding economic inequality.
Author Mark Juergensmeyer is director of the Orfalea Center for Global and International Studies at
the University of California, Santa Barbara and president of the American Academy of Religion.
Source: Huffington Post
GHOST WAREHOUSE STOCKS HAUNT CHINA'S STEEL SECTOR
Chinese banks and companies looking to seize steel pledged as collateral by firms that have
defaulted on loans are making an uncomfortable discovery: the metal was never in the warehouses
in the first place. Iron ore is an important mineral export for Mongolia who may feel the effects of
any price swings.
China's demand has faltered with the slowing economy, pushing steel prices to a three-year low and
making it tough for mills and traders to keep up with payments on the USD 400 billion of debt they
racked up during years of double-digit growth. As defaults have risen in the world's largest steel
consumer, lenders have found that warehouse receipts for metal pledged as collateral do not
always lead them to stacks of stored metal. Chinese authorities are investigating a number of cases
in which steel documents in receipts was either not there, belonged to another company or had
been pledged as collateral to multiple lenders.

11. Ghost inventories are exacerbating the wider ailments of the sector in China, which produces
around 45 percent of the world's steel and has over 200 million metric tons (220.4 million tons) of
excess production capacity. Steel is another drag on a financial system struggling with bad loans
from the property sector and local governments.
In a note to investors, Nick Cousyn, chief operating officer of BDSec JSC, warned that the so-called
"ghost inventories" could extend to other forms of collateral, including copper, gold, silver, and
aluminum, resulting in deficits for certain commodities.
"With prices and sentiment for steel and other industrial commodities at multi-year lows, we are
hard pressed to view this as a negative for the supply-demand dynamic (especially supply)." He said
the inventories would have to be replaced and could lead to a "bottom for steel and coal," that
would be in in the favor of Mongolia's producers.
Source: Reuters
POLITICS
MPS RESIST CALL FOR OT RENEGOTIATIONS
Only a few MPs supported a motion by Justice Coalition seat holders to introduce renegotiations of
the Oyu Tolgoi investment agreement at a meeting of the parliamentary standing committee.
MP O. Baasankhuu, of the Justice Coalition, introduced the discussion to Parliament, focusing on
this issue of raising Mongolia's ownership of the Oyu Tolgoi project to 51 percent. However only a
few MPs supported the motion, with exception given to MP. Kh. Battulga, the minister of industry
and agriculture, and D. Bat-Erdene, minister of Defense.
In a surprising twist, not even MP D. Terbishdavga, a strong criticizer of the Oyu Tolgoi investment
agreement during the last government, supported the motion. MP N. Battsereg opted to abstain
from commenting on the issue.
Source: Business Mongolia
PARLIAMENT PASSES 2012-2016 ACTION PLAN
Parliament has passed a four-year action platform that observers are calling supportive of foreign
investment.
The 2012-2016 Action Plan of Government, which has not yet been published, is said to reflect the
core liberal principles of the Democratic Party. Key reforms includes targets such as the Mongolian
Stock Exchange, state-owned entities, and the financial sector. The plan also sets the goals of
putting a lid on inflation and deficits—reducing the former to the single digits and keeping the
latter from exceeding to 2 percent of gross domestic product (GDP).
Parliament also included some new light controls aimed at regulating the mining sector to
reinvigorate its attractiveness for investment, including updating its double taxation treaties,
regulating investment by foreign state-owned companies, updating the list on strategic deposits,
and directing efforts and investment toward mapping and exploring Mongolia's vast terrain. The
plan also sets the objectives for allowing localities to provide input in the distribtuion of mineral
licenses and making that process more transparent, while providing incentives for developing the
infrastructure to produce value-added products.
As for the Oyu Tolgoi investment agreement, an issue of heated debate within Parliament, the plan
outlines a course for further study of the agreement before moving forward with any decision
regarding renegotiations.
―Whilst we acknowledge that a degree of uncertainty remains, we view the issue primarily in the
context of Mongolia being a vibrant and well-functioning democracy in which a range of different
opinions will continue to be debated, reviewed and resolved by majority,‖ said Origo Partners PLC
in a note to investors.
Source: Origo Partners PLC
LOCAL ELECTIONS SET FOR 21 NOVEMBER
A mixed election system, similar to parliamentary elections in June, was passed as part of the Law
on Local Election. Local elections will be held on 21 November.
The Standing Committee on State Structure opted for a mixed system tallied by automated voting
machines despite pressure from the Mongolian People‘s Party (MPP) for a majority election system.
Voters will vote using mixed ballots, voting directly for a representative for their district by
majority vote and voting for a party by proportional vote where a candidate will be chosen from a
party list.
State government will provide MNT 3.6 billion the General Election Committee (GEC) and Ministry of
Finance to fund the election compared with the MNT 5.2 billion requested by the standing
committee. Local governments are responsible for providing an additional MNT 1.6 billion.
Some MPs criticized the date selected, saying it was the time when herders had already settled at

12. their winter camps and would likely be unable to participate.
Source: Unuudur, News.mn
PARLIAMENT PASSES LOCAL ELECTIONS LAW
Parliament has passed a law on local election with 68 percent approval.
Passage followed many hours of debate and questioning. This included, actions that should be taken
in the event of poor weather conditions and the use of voting machines. Controversies to election
results in the June election has resulted in mistrust in the technology and the accuracy of the
outcomes voting machines report. However, most of that sentiment is reportedly held by politicians
rather than average voters. Representatives of the Mongolian People's Party (MPP) have been
ordered to cooperate and participate in election activities and desist negative campaigns regarding
the election system to the public. If the MPP opts to protest the election, its members will forfeit
their seats, Parliament declared.
The number of candidates participating in the election will be proportionate to the population size
of the districts. For example a district of 2,000 people will have 15 candidates to choose from and a
population of between 80,000 and 180,000 will have 35 candidates. The maximum number of
candidates is 41 for populations exceeding 180,000.
Source: Udriin Sonin
PHILIPPINES, MONGOLIA EXPAND TRADE RELATIONS
The Philippines may soon have trade relations with Mongolia as the Philippine Chamber of
Commerce and Industry (PCCI) has signed a partnership agreement with the Mongolian National
Chamber of Commerce and Industry (MNCCI).
―The cooperation agreement outlined possible areas of cooperation between the Philippines and
Mongolia. It provides for the promotion of trade relations, exchange of information, strengthening
of business contacts as well as the putting up of a Philippine-Mongolia Business Council [PMBC],‖
PCCI said in a statement.
The PMBC will outline concrete measures for the promotion of trade relations and outline possible
areas of cooperation between the two countries. The agreement was signed by PCCI‘s vice chairman
for international and trade affairs, Oscar De Venecia and MNCCI Chairman S. Demberel. Meanwhile,
the PCCI sent a business delegation to Taiwan to discuss the possible expansion of trade and
investments.
―The meeting featured plenary sessions focused on topics such as medical tourism, agriculture and
food, environment and waste management. A special session on the proposed economic cooperation
between Taiwan and the Philippines and investing in the Philippines—featuring the Freeport of
Bataan—were likewise presented,‖ the PCCI said.
The delegation was composed of 19 businesspeople representing the textiles, pharmaceuticals,
cosmetics, agricultural and real estate sectors. Members of the delegation identified possible
investments in cosmetics, fabrics and textiles, and medical tourism.
Source: BusinessWorld Online
MAJOR POWERS RECOGNIZE MONGOLIA AS NUCLEAR WEAPONS FREE
Mongolia, jammed between nuclear arms giants Russia and China, on Monday secured a unique
pledge from the major powers not to breach its self-declared nuclear weapons-free zone.
The U.N. ambassadors for Britain, China, France, Russia and the United States—the five permanent
members of the U.N. Security Council and original nuclear weapons powers—signed a declaration
after marathon talks. The major U.N. Powers, in turn, did not want to recognize a one-country
nuclear weapons free zone so complex talks were held on the statement signed Monday.
J. Enkhsaikhan, Mongolia's ambassador to the United Nations atomic energy agency in Vienna, said
his country wanted to be part of efforts to halt the spread of nuclear weapons.
―It does not want its territory to be a vast, undefined gray area in this respect,‖ he told reporters.
Enkhsaikhan said Mongolia would have preferred a legally binding treaty but the declaration was
―tantamount to recognition of Mongolia's neutrality in the nuclear powers' possible power politics or
designs.‖
Source: AFP
ELBEGDORJ SENDS GREETINGS TO NORTH KOREA'S KIM JONG UN
President Ts. Elbegdorj has sent greeting to North Korean leader Kim Jong Un in recognitions of the
64th anniversary of the Democratic People's Republic of Korea.
In the message, Elbegdorj extended warm greeting to Kim Jong Un and the Korean people for the
celebration of the country's 64 years as a state. The president spoke of Mongolia's steady adherence
to its stand to boost the traditional friendly relations with North Korea, expand cooperation in

13. trade, and cooperate with North Korea to help settle conflict at the Korean Peninsula between the
North and South Koreas.
Source: News.mn
U.S. CHAMBER TO LEAD MONGOLIAN DELEGATION TO EXPAND BILATERAL TIES
The U.S. Chamber will host its first ever business delegation to Mongolia in recognition of 25 years
of diplomatic relations between the United States and Mongolia.
The delegation's arrival, led by Senior Vice President for International Affairs Myron Brilliant, will
underscore the importance of U.S.-Mongolia relations and promote growing commercial
opportunities for American companies in Mongolia. The U.S. Chamber launched a Mongolia Working
Group in 2011 to institutionalize a platform to promote bilateral ties and engagement between the
United States and Mongolian governments and their respective business sectors.
Brilliant will highlight the role of American investors in bringing the latest technology, highest
standards of corporate governance and transparency, and strong commitment to corporate social
responsibility to Mongolia. He will also underscore American business' long-term commitment to
helping develop the Mongolian economy.
―The Chamber and our members recognize Mongolia's remarkable track record of sustainable
economic development and reform, which is fueling unprecedented trade and investment
opportunities that will benefit the Mongolian people,‖ said Brilliant. ―We support and encourage
Mongolia to continue to promote open markets that will maximize the benefits of foreign
investment and boost the country's economic development and prosperity.‖
The U.S. Chamber is the world's largest business federation, representing more than three million
businesses and organizations of every size, sector, and region.
Source: U.S. Chamber
THE US—A PARTNER IN MONGOLIAN DEMOCRACY
2012 marks the 25th anniversary of diplomatic relations between the United States and Mongolia. I
would like to outline a few of the areas where I‘m particularly happy to see the United States and
Mongolia working together.
The United States is excited about the possibility for world-class U.S. firm Peabody Energy Corp. to
play a major role in the development of Tavan Tolgoi. Additionally Wagner Asia Equipment LLC,
Mongolia‘s Caterpillar dealer, has received awards from Mongolian institutions for best ―Best
Entrepreneur‖ and ―Investment Envoy.‖ We call this good corporate citizenship, which, for Wagner
Asia, means local investment and bringing advanced knowledge, training, and the best practices to
Mongolia.
I arrive in Mongolia at a time when our cooperation is particularly evident, given the recent close of
the annual Khaan Quest military exercise. Mongolian peacekeeping forces have also been active in
international peacekeeping operations from Afghanistan to Darfur and South Sudan, from the
Western Sahara to Chad, in Kosovo, and in Iraq. Mongolia has dispatched over 5,600 peacekeepers
to 14 different peacekeeping operations since 2002.
Mongolia‘s ―decision for democracy‖ in the 1990s was a remarkable development. Through its
competing political parties, transparent and peaceful election, respect for human rights, and
current role as chair of the Community of Democracies, Mongolia serves as a positive role model for
other countries in the region and beyond. During Secretary of State Hillary Clinton‘s visit to
Mongolia, she said, ―If you want to see democracy in action, if you want to see progress being
shaped by leaders who are more concerned about lifting up their people than fattening their bank
accounts, come to Mongolia.‖
Finally, people-to-people engagement remains incredibly important. The U.S. embassy operates
many programs, among them the Fulbright and Humphrey programs that send Mongolians to the
United States each year on education exchanges. Every year more than 100 Peace Corps volunteers
work in Mongolia in sectors ranging from education to business to health care.
I am newly arrived, and just beginning to form these connections and memories with new friends
and colleagues here in Mongolia. I look forward to sharing these experiences with you in the coming
years.
Author Piper Anne Wind Campbell, ambassador extraordinary and plenipotentiary of the United
States of America to Mongolia, is a senior career U.S. Foreign Service officer, sworn in as
ambassador to Mongolia on 6 August 2012, following her nomination by U.S. President Barack
Obama and U.S. Senate confirmation. She follows Ambassador Jonathan Addleton, who completed
his service
Source: UB Post
MONGOLIA—KEY TO U.S. SECURITY GOALS IN ASIA

14. Mongolia continues its rapid ascent in the strategic playbook of the United States and the West. The
U.S. views Mongolia through an integrated lens balancing its economic interests with strategic
concerns. As the world's fastest growing economy, Mongolia is an appealing target for foreign
investors in sectors such as mining, nuclear power, and technology. For Washington, though,
security still trumps in Mongolia. The U.S. continues to view Mongolia as a credible partners in an
uncertain area filled with turbulent neighbors.
In July U.S. Secretary of State Hillary Clinton praised Ulaanbaatar for being a model democracy in a
region flush with kleptocratic regimes. Although not identified, Uzbekistan and Tajikistan come to
mind as repressive states in the region and are rife with corruption. Clinton also used pointed
language aimed at China, asserting that prosperity is connected to a free democratic system and
the promotion of human rights.
Mongolia has long been a part of Washington's strategic calculus in Central Asia and its importance
has been magnified by the war in Afghanistan. Currently there are more than 100 members of the
Mongolian Armed Forces serving there as part of the International Security Assistance Force.
Ulaanbaatar's cooperation with NATO was formalized earlier this year when it signed an individual
partnership and cooperation program—which is slated to enhance interoperability with the alliance.
Mongolia also plays host to an annual gathering of militaries for Khaan Quest, which recently ended
in August and was attended by 12 countries including the United States, United Kingdom, Germany,
Japan and Canada. Khaan Quest and NATO integration are two strong indicators of the important
role that Ulaanbaatar plays as a strategic partner to the United States.
As the United States draws down its presence post-2014 in Afghanistan, it will look to credible
partners such as Mongolia to be a leading example of transparency, democracy, and solid
governance in Central Asia.
Source: Forbes
MONGOLIA CAN'T LIVE WITH CHINA, CAN'T LIVE WITHOUT IT
Mongolia and China have never exactly gotten along. For the past millennium, the two countries
invaded and ruled each other in turn. In the 13th century, Khublai Khaan swept into China and
founded the Yuan Dynasty, putting Mongolians on the Chinese throne for nearly a century. Then, in
the 17th century, Mongolia was conquered by the Manchu-led Qin Dynasty.
Both have gone their own way for the past hundred years, but the history lesson is worth
remembering because Mongolia's mining development today is dependent on its giant, resource-
hungry neighbor. As a result, the China-Mongolia dynamic plays a big role in shaping foreign
investment policy—like the foreign investment law that was passed earlier this year in response to
Aluminum Corp. of China Ltd.'s (Chalco's) attempt to buy a majority stake in SouthGobi Resources
Ltd.
Even though Chalco has since walked away from that deal, China already plays a dominant role in
the Mongolian mining sector. Analyst Gavin Bowring at consultancy Gavekal wrote that Chinese
entities control up to 70 percent of resource assets and 4,000 exploration licenses. The result of
this dynamic is a slow rise in resource nationalism among Mongolian voters, with several
nationalistic parliamentarians selected in the June election.
―Chinese entities have used their control over rail, road and storage linkages to ensure they pay low
prices,‖ says Bowring's report. ―In this face-off between Ulan Bator and Beijing the reality is that
China Inc has most bases covered.‖
According to Bowring this doesn't bode well for foreign investors, Chinese or not:
―The focus of populist anger has been China's tightening control over Mongolia's economy and claims
that politicians sold the country's commodity birthright too cheaply. The challenge facing Mongolia's
new government is to rebalance its relationship with foreign investors—in particular Chinese firms—
without killing the proverbial golden goose.‖
Source: Financial Times
GOVERNANCE AND CORRUPTION SEND A MIXED MESSAGE
As Mongolia attempts to put a legacy of corruption behind it, international news media and
observers have questioned those motives and criticized its methods.
Talk of a stalling democratization process has dominated international press on Mongolia over
recent months, prompted by the arrest and eventual guilty verdict and sentencing of former
President N. Enkhbayar. Amnesty International also released a statement critical of the
government's handling of the arrest, labeling the charges arbitrary. Enkhbayar, widely known as the
―father of corruption‖ in Mongolia, was arrested on corruption charges in April 2012, and
subsequently ruled ineligible to run in the 2012 elections.
While the timing of Enkhbayar's arrest was certainly circumspect and ill-advised, many are
exasperated to find Mongolia receiving condemnation for tackling what the international community

15. consistently cites as one of the country's greatest problems. Mongolia ranks 120 out of 183 countries
rated on Transparency International's 2011 Corruption Perception Index. The United Nations, foreign
companies and governments have all highlighted the importance of tackling corruption, not just for
Mongolia's own benefit, but also to improve the foreign investment climate for the resource-rich
economy that is turning with the speed of its growth.
Ironically there was another recent trial that attempted to respond to international calls to address
impunity, which did not receive any international coverage despite representing a much clearer
violation of human rights. On 6 and 7 June, four senior members of the Mongolian police force were
tried in a secret court in Ulaanbaatar. Details of the hearing were not released until after the men
were sentenced—three received jail terms of up to three and a half years—and the defendants were
not allowed legal representation. Mongolia's Human Rights Commission attempted to observe the
trial when alerted by the defendants' family members but were denied admission.
Enkhbayar is likely to appeal. He has already been transferred from prison to a hospital on health
concerns, as he was before the trial. If the new coalition government, or the courts, allow the
former president special treatment, the cynical in-crowd of Mongolian politics will be maintained,
and the untouchability of the men who dominate it confirmed.
Source: East Asia Forum
ENKHBAYAR CASE REVEALS VULNERABILITIES IN HONG KONG, SINGAPORE BANKS
Recent reports that banks in Hong Kong and Singapore may have been used to launder millions of
dollars for former President N. Enkhbayar have revealed the need to review anti-laundering checks.
―This is a timely reminder for institutions to ensure that they have robust systems and procedures in
place regarding client acceptance, ongoing monitoring of... accounts and timely reporting of
suspicious or unusual transactions to the authorities,‖ said Christopher Wilson, a partner with
Deloitte in Hong Kong.
Enkhbayar was imprisoned last month in Ulaanbaatar after having been under investigation by the
Independent Agency Against Corruption (IAAC). The IAAC has claimed that some of Hong Kong and
Singapore's best banks were used for money laundering by a syndicate connected to Enkhbayar. The
IAAC alleges that shell companies and bank accounts in Hong Kong and Singapore have been used by
some wealthy Mongolians including Enkhbayar, to transfer funds illegally out of the country.
Enkhbayar and his associates reportedly sent Mongolian state funds to two state steel factory
contracts. One of his associates was the sole director of the two companies. A common practice for
corrupt officials is to have relatives get licenses in the names of offshore companies, only to
transfer shares to overseas owners to thwart regulations seeking to control the trading of licenses.
Major financial centers such as Hong Kong and Singapore are often sought by launderers to launder
funds. It was, therefore, crucial to conduct enhanced measures to ensure that the monies banked
from places such as Mongolia and Myanmar were not derived from the proceeds of crime, stressed
Jhaveri.
A spokeswoman for the Hong Kong Monetary Authority (HKMA) said Mongolian authorities had not
approached them. Enkhbayar has argued that the case against him is politically motivated, and
remains in jail pending an appeal against his four-year jail term.
―What is clear is that the nature of anti-corruption laws are such that they can easily be used for
political purposes as much as they can be used for good,‖ said Alex Duperouzel, managing director
of Compliance Asia, a consultancy in Hong Kong.
Source: Trust.org
REPRESENTATION IN MONGOLIA SIGNALS OF PROGRESS IN GENDER EQUALITY
Although standards of living in Mongolia are on the rise, gender inequality is one area that is
stubbornly slow to change.
According to the latest country report from the U.N. Development Programme (UNDP), inequality in
the region is holding back some of the progress that can be made. When ―inequality‖ is placed as an
indicator inside the country‘s Human Development Index, a metric that takes into account health,
education and living standards in the region, Mongolia shows a 14 percent loss as gender equality,
environmental sustainability, and the work to successfully reach the U.N. Millennium Development
Goals drops. Figures for Mongolia with gender inequality have actually dropped between the years
2001 and 2010.
Today the push to educate women and girls is on as male members of the family are often expected
to work in the fields instead of staying in school. Women, on the other hand, are now going to
college 60 to 70 percent more than men. In spite of increases in education, Mongolian women are
still earning much less than their male counterparts. They have also had historically an unsteady
and low political representation inside the region.
But the open room for women in politics is now changing for the better. The 2012 elections saw

16. nine women voted into Parliament from three.
―It was always hard for women to come out [politically],‖ said newly elected woman MP L.
Erdenchimeg of the Democratic Party (DP). ―‗Men would say nine women is a nightmare!‘ It was not
so good then for women—we were dependent on men. [Now] we are more independent, we can say
everything.‖
After winning parliamentary seats, the nine women winners decided to form an informal political
group called the Women‘s Caucus in late July. The decision is based on consolidating a vision of
shared ideas and values, and also as a means of connecting with civil society, the caucus said. MP
Erdenchimeg explained that although they come from different political parties, all members of the
Women‘s Caucus did experience difficulties in politics and can relate to each other as being
―independent, fighting [for] women‘s rights, children‘s right.‖
Source: Women‘s Network
______________________________________________________________________________________
ANNOUNCEMENTS
USAID/BPI QUALITY ASSURANCE LEAD AUDITOR TRAINING SERIES 8-15 OCTOBER
The USAID/BPI project, in collaboration with the Mongolian Quality Management Center of
Excellence (QMCE), plans to offer a first 5-day Lead Auditor training series in Mongolia from 8 to 15
October 2012.
The intent of the Lead Audit training series is to build awareness and capacity of professionals
seeking to become quality assurance managers, auditors or those persons responsible for quality,
environment or food safety conformity across respective businesses or associations.
Upon completion, trainees will have understanding in principles and practices of executing
management system audits.Global Certi Co., a fully accredited and licensed South Korean
training/certification provider registered with global training bodyRAB-QSA, will facilitate courses.
Cost per trainee delegate is MNT 800,000.
For information or to secure a reservation, contact Khaliun at BPI offices at +976 11 32 13 75
Khaliun@bpi-chemonics.biz.
MONGOLIA INVESTMENT SUMMIT 2012, HONG KONG, 30-31OCTOBER
Now in its third year and with its position as Hong Kong's one-and-only investment platform that
connects international investors with Mongolia's most promising projects and businesses, the
Mongolia Investment Summit will be held from 30 to 31 October.
Covering all key economic growth sectors—Mining, Financial Services, Infrastructure, Power, Real
Estate and Agriculture—the summit brings the best of Mongolia‘s investment opportunities together
under one roof. Interest for the summit has been overwhelming so far and organizers expect over
450 international and Mongolian delegates to attend.
BCM is again a Supporting Organization for the event, and BCM members will get a 15 percent
discount. Register by 21 September to benefit from the special early bird discount.
For more information, find a brochure to the event by logging on to the website:
mongoliainvestmentsummit.com.
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REGISTER NOW FOR MONGOLIAN MINING DIRECTORY-2013
Mongolian Mining Directory-2013 which provides information database for Mining companies,
investors, suppliers, service companies, government and non government organizations will be
published for the fourth year to commemorate the 90th anniversary of the Mongolian mining
industry. The MMD is distributed free of charge to international and domestic mining companies,
international conferences and exhibition, embassy offices in Mongolia and foreign countries to
investors.
BCM is a Supporting Organization of the MMD and welcomes Mongolian mining industry participants
who are interested in advertising their products and services in Mongolian Mining Directory-2013.
For more information please visit: www.mining.mn, www.mongolianminingdirectory.mn or call
+976-7011 5590.
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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.

17. 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.
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―MM TODAY‖ on MNB-TV, Friday‘s at 19:00
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 19:00 tonight. Tune in to watch this program that reports stories from today‘s BCM
NewsWire.
BCM WEBSITES
MONGOLIAN WEBSITE ‗PRESENTATIONS‘ AND ‗NEWS‘ SECTIONS
The new ‗Presentations‘ section on BCM‘s Mongolian website can be reached via 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.
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ENGLISH WEBSITE 'PRESENTATIONS', 'MONGOLIA REPORTS' AND ‗MONGOLIAN BUSINESS NEWS‘
On BCM‘s English website, ‗Resource, Presentations‘ section, for your review are the following
recent postings from BCM‘s August 27 monthly meeting:
Dr. Nigel Finch, Director of Admissions and Associate Professor, University of Sydney Business
School, ―Enhancing Sustainable Economic Growth in Mongolia by Improving Transparency and
Accountability in the Mongolian Public Sector‖;
Caroline Clarke, Managing Partner, PricewaterhouseCoopers Audit LLC, ―International Women‘s
Forum and the Business Sector in Mongolia‖;
John Bachrach, Director, IEEC, member of IMC Montan, ―Mining Consulting – Adding Value in the
Sector‖;
Peter Benson, Team Leader, VicRoads International, ADB-funded Technical Assistance 7844:
Mongolia Road Sector Capacity Development Project".
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.
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.
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SOCIAL NETWORK WITH BCM
The Business Council of Mongolia (BCM) has expanded its reach to your favorite social networks.
Keep up to date on the latest business deals in Mongolia and how the climate for investment is
improving each day with BCM.
Connect with BCM on Linked-in to join the diverse group of professional contacts creating a better
business environment in Mongolia today.
Add BCM on Facebook at http://www.facebook.com/pages/THE-BUSINESS-COUNCIL-OF-
MONGOLIA/129826330435540 to read the latest announcements and comment on events carried in
the NewsWire with the community. Recently posted BCM football cup pictures.
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.
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18. ECONOMIC INDICATORS
INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
Year 2008 *22.1% [source: NSOM]
Year 2009 *4.2% [source: NSOM]

19. Year 2010 *13.0% [source: NSOM]
Year 2011 *10.2% [source: NSOM]
July 31, 2012 *14.5% [source: NSOM]
*Year-over-year (y-o-y), nationwide
Note: 14.9% y-o-y, Ulaanbaatar city, July 31, 2012
CENTRAL BANK POLICY RATE
December 31, 2008 9.75% [source: IMF]
March 11, 2009 14.00% [source: IMF]
May 12, 2009 12.75% [source: IMF]
June 12, 2009 11.50% [source: IMF]
September 30, 2009 10.00% [source: IMF]
May 12, 2010 11.00% [source: IMF]
April 28, 2011 11.50% [source: IMF]
August 25, 2011 11.75% [source: IMF]
October 25, 2011 12.25% [source: IMF]
March 19, 2012 12.75% [source: Mongol Bank]
April 18, 2012 13.25% [source: Mongol Bank]
CURRENCY RATES – August 30, 2012
Currency Name Currency Rate
U.S. dollar USD 1,402.14
Euro EUR 1,817.80
Japanese yen JPY 17.76
British pound GBP 2,268.59
Hong Kong dollar HKD 180.85
Chinese yuan CNY 222.63
South Korean won KRW 1.26
Russian ruble RUB 44.38
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.