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28.09.2012, NEWSWIRE, Issue 241

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September 28 2012

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28.09.2012, NEWSWIRE, Issue 241

  1. 1. BUSINESS COUNCIL of MONGOLIA NewsWire www.bcmongolia.org info@bcmongolia.org Issue 241 – September 28, 2012 NEWS HIGHLIGHTS: Business  Oyu Tolgoi dispels myths;  Rio polishes its image;  A power struggle;  Voyager Resources looks to return to drilling in late 2012;  Centerra to extract value from low-grade ore;  Berkh-Uul confirms 2.3 million tons flurospar at Delgerkhaan;  Eznis adds Bombardier A400 to fleet;  Mongolian air charter export freight needs to stay lively for EFIS;  TDB raises USD 300 million in debt offering;  Mayer Brown advises TDB on international debt offering;  MMC receives B+ from S&P;  Origo to add exposure to MSE fund;  Centerra's regulatory approval at Boroo earns it higher marks;  MMC installs new risk-management software corporate-wide;  Aspire appoints non-executive director;  Centerra nears completion of maternity hospital annex;  Wagner Asia to provide USD 15,000 to environmental projects;  15th Annual NAMBC Investors Conference begins 16 October;  Mongolia set for USD 1.3 billion non-mining power plant investment;  Caterpillar dealers report double-digit sales jump for summer. Economy  Government to spend MNT 58.1 billion in cash payments for children’s welfare;  ADB to loan USD 200 million for UB transportation networks;  Government Action Plan is the chill pill to investors' pains;  Action plan hints at “aggressive policies” favorable to investors, says Origo;  Farmers look to greater rapeseed oil harvests for 2013 in place of wheat;  Street vendors’ apples falsely labeled from Mongolia;  Mongolia joins FTSE's watch list;  Multi-tasking Mongols;  Herders worry about the impact of mining projects;  Don't count out Mongolia's resource sector yet;  Managers—not workers—to blame for unsafe construction, says MBA president;  American University of Mongolia sets out to prepare Mongolia to think;  Solar panels light up herders' futures;  Zimbabwean helps Mongolians dig for gold;  Falcon's nest project aims to boost schools;  Machete armed gang robs crewmen of Mongolian vessel;  China cuts coal, rare earth production. Politics
  2. 2.  Parliament passes its 2013 legislative schedule  Deputy Minister recommends maintaining OT investment agreement;  Vice ministers appointed;  Budget cuts effect mass layoffs within government;  MPP loses membership to rival MPRP;  Mongolia's great opportunities must be shared by the nation, says Elbegdorj;  Elbegdorj returns to his alma mater;  Russian-Mongolian military exercise begins today;  China pledges for strengthened military ties;  Brazil to help develop football in Mongolia;  Government Action Plan shows more intended influence from government;  Mongolia's next challenge. ECONOMIC INDICATORS:  MSE Top 20 Index by Market Capitalization;  Foreign-listed Companies with Mongolian Assets;  August Macroeconomic Overview;  Supermarket price comparison-September 2012  Inflation;  Central Bank policy rate;  Currency rates. *Click on titles above to link to articles. _______________________________________________________________________________ SPONSORS Khan Bank Eznis Airways Kempinski Hotel Khan Palace Mongolian National Broadcasting Breakthrough PR Oxford Business Group ___________________________________________________________________________________ BCM MONTHLY MEETING RECAP The meeting on 24 September with Laurenz Melchers in the chair was attended by 100 members and invited guests. BCM Vice Director Ser-Od reminded members of the open letter to Parliament published in numerous newspapers in Mongolia. It appealed for a transparent and stable investment climate that
  3. 3. encouraged input from the private sector when Parliament drafts its legislation. The vice director also reported the Working Group for Education's intention to partner with the Ministries of Labor, Education, and Economic Development as well as international organizations such as the Korean International Cooperation Agency (KOICA). Additionally, the Working Groups for Taxes and for Capital Markets will meet in October, he said. BCM membership now stands at 242. The three most recent members are: 1. Mott MacDonald Mongolia is a uniquely diverse EUR 1 billion global consultancy, delivering leading-edge solutions for public and private sector clients across 12 core business areas. As one of the world's largest employee-owned companies with more than 14,000 staff, it has principal offices in nearly 50 countries and projects in 140. 2. Oval Partnership is a multi-disciplinary architectural practice headquartered in Hong Kong with offices in China and the United Kingdom. Oval is the center of a group of companies working on sustainable lifestyle projects across a variety of design disciplines, including architecture, master planning and interior design. 3. Od Consulting HGZ is a local legal consultancy firm that provides high-level professional services. It works closely with its customers to tackle any challenges and define strategies and solutions to gain significant and effective results. Its concentration is on long-term relationships with its customers and partners, which are always based on mutual trust and benefits. The evening began with an update from Anne Delarue, Country Director of Oxford Business Group, on its Mongolia Report. For 18 years OBG has focused on research and consultancy, and publishing. However, it is currently only active in research and publishing in Mongolia. OBG published its first Mongolia Report in March 2012 and has plans to publish its second before the end of the first quarter of 2013. ―At the end of the day, it's all about the information,‖ said Delarue; later adding, ―Data is the first step toward development.‖ OBG arrived on invitation by the Mongolian government and partnered with the Foreign Investment and Foreign Trade Agency (FIFTA) and BCM. Due to the restructuring of the government, OBG is now under talks with the office of the president for a new partnership with the government. At the conclusion of Delarue's presentation, she and Chairman Laurenz Melchers signed a memorandum of understanding (MOU), formalizing BCM and OBG's cooperation and partnership. Patrick Nijs, Ambassador of the Belgium Consulate of Ulaanbaatar, gave the second presentation of the evening, introducing the audience to Belgium's intentions for economic and political cooperation with Mongolia. As a nation familiar with occupations and geopolitical turmoil, said Nijs, ―it's no wonder for us to be one of most committed to cooperation in Europe‖and to become a founding member of the European Union. Belgium currently exports 80 percent of its production and ranks as the ninth largest exporter in the world, he said. ―Trade and business is a national business for us. We have no other national interests other than peace and trade.‖ Belgium is currently looking over Mongolia for opportunities for engagement and to learn the ―do's and don'ts for success in Mongolia.‖ The consulate hopes to step up Belgium's presence in Mongolia to pursue an economic mission after a year spent with fact finding and research. Members of the Beijing-based consulate are currently visiting Mongolia with three companies to meet with seven
  4. 4. ministries and the Mongolian National Chamber of Commerce and Industry (MNCCI), in addition to BCM. B. Bayar, Managing Partner of Economic Legal Consultancy (ELC) Co. and co-chair of the BCM Legislative Working Group spoke next to give an update on the progress of its draft legislation for ―investment support‖ to be submitted to Parliament. Bayar leads a team of lawyers that have thus far submitted draft laws for mineral and water resources. This latest law aims to introduce a tax system to offer stability for both foreign and Mongolian investors, said Bayar. ―The Law on Supporting Investors and a Stable Tax Environment aims to provide a tax environment where local and foreign shareholders are the same.‖ The law would allow companies to apply for long-term tax stability after meeting a certain threshold for investment. Companies would receive a certificate that allots a given number of years for the duration of tax stability. Other companies would also be granted a conditional term where it must reach the threshold or have its certificate status revoked. The law would include the procedures for applying, the time for approval, and other details to provide a clear and predictable process. ―This is a way to mitigate some anti-foreign investment sentiment in Parliament and hopefully improve it for you all,‖ said Bayar. Houston Spencer, Vice President of Communications and Media Relations of Oyu Tolgoi LLC, gave the final presentation, providing a summary of the Oyu Tolgoi investment agreement to dispel some of the rumors plaguing the media. He began by thanking BCM and its partners in the private sector for releasing their open letter to the government ―BCM worked together with the Mongolian National Chamber of Commerce and Industry, the Federation of Mongolian Employers, the CEO Club, the Mongolian National Mining Association, the Mongolian Confederation of Professionals, and an NGO called Fair Taxes and Wise Spending. That‘s a very long list of like-minded people who put their names on a full-page ad to the government. It is the length of the list that struck me. I don‘t think I‘ve ever seen anything come out from that group of organizations together.‖ Spencer listed off a number of false rumors such as Mongolia receives no benefit from the Oyu Tolgoi project; it will not see any money for decades; and Mongolia bears a huge risk. In actuality, Mongolia receives the largest share of Oyu Tolgoi's cash flow (71 cents on every dollar made); it has received significant tax income since the first day of construction (with projections to receive 700 million by the time the mine goes into commercial operation next year); and bears no-risk as per the Oyu Togloi investment agreement. ―Without access to global capital Mongolia would face very tough choices. If foreign investors hesitate, what are the alternatives? Who would fund development?‖ asked Spencer. ―Mongolia needs its friends and third-neighbor investors now more than it ever has.‖ ___________________________________________________________________________________ BUSINESS OYU TOLGOI DISPELS MYTHS Oyu Tolgoi LLC has issued some corrections regarding its characterization in the media in an official statement. To the claim that the Oyu Tolgoi investment agreement exempts investors from paying value-added tax (VAT) and export duty, the company said it does in fact pay tax and it was Mongolia's top
  5. 5. Customs tax payer and the sixth top tax payer to the government in 2011. By the end of 2013, the total taxes Oyu Tolgoi will have paid to the state budget will total USD 700 million. In 2011 alone, the government of Mongolia received USD 251 million in taxes from Oyu Tolgoi. To claims that Mongolia will receive no more than 30 percent of the cash flow from the project, statistics from the International Monetary Fund (IMF) show Mongolia will receive up to 71 percent of Oyu Tolgoi's cash flow over the lifetime of the project. Independent experts calculated Mongolia benefits far more than ―third neighbor‖ investors through dividends, income tax, royalties, VAT and additional taxes. Source: Oyu Tolgoi LLC RIO POLISHES ITS IMAGE Amid public back lash and political posturing by Parliament members against the Oyu Tolgoi copper and gold project, Rio Tinto PLC is faced with the great public-relations challenge of explaining that the project is truly beneficial to Mongolia. Twice in the past year, backbench members of Parliament have issued a letter to the prime minister ordering a renegotiation of the terms so that Mongolia can grab its 50 percent stake as soon as investors recoup their USD 6 billion start-up investment. Rio Tinto, the 66 percent indirect stakeholder through majority ownership of Turquoise Hill Resources Ltd., says that the time for negotiations has passed. But its defensive position comes with a dose of soft power too. The Anglo-Australian firm is spending over USD 2 million on environmental and social development projects. Projects included the renovation of a hospital near the mine site, a vocational program for the local population and a new dental clinic. Rio Tinto also donated USD 150,000 to rebuild a local Buddhist monastery, which Stalin's forces destroyed in 1937. For many locals, the most popular initiative is a USD 125 million vocational training program for more than 3,300 Mongolian workers. Rio Tinto is also helping to fund the American University of Mongolia, to open in 2014. Rio Tinto's efforts and reputation as a world-class block-cave miner has made the company a welcome part of Mongolia's corporate fabric, in sharp contrast to Canada's Ivanhoe Mines Ltd., the early license holder of the project. For many here, Ivanhoe Mines became a symbol of alleged foreign greed following media and political attacks against the project. ―Public opinion was really tough on Ivanhoe Mines, but Rio Tinto is more respected because Mongolians recognize the underground expertise of this global mining corporation,‖ said Origo Partners PLC analyst Dale Choi. ―Mongolians see this company as an indispensible partner.‖ But while Rio Tinto's mining skills and corporate responsibility are highly regarded, the company remains dogged by an investment agreement that many see as unfair. But while Rio Tinto repeatedly asks the country to keep a long-term perspective, for Mongolians the need for development is immediate. Source: Michael Kohn A POWER STRUGGLE In the middle of the Gobi Desert, Rio Tinto PLC's flagship USD 5.2 billion U.S. copper-gold mine stands nearly completion except for one thing: the mine is waiting for the power to be switched on. The Oyu Tolgoi mine, which holds the world's largest undeveloped copper deposit, has been caught in the middle of a complex negotiation between China and Mongolia. The two sides are trying to reach a deal under which the mine would buy electricity from the Chinese grid. ―Active discussions are continuing on the commercial agreement. You have to remember this is a complex deal, but we are maintaining our focus and working hard towards reaching an agreement,‖ said a Rio Tinto spokesperson. But for now the copper concentrator at Oyu Tolgoi sits idle after a multi-billion-dollar, three-year construction effort. The power lines from China to the mine have been built and tested, according to Rio Tinto, but the two sides have not been able to reach an agreement over the commercial terms of the power supply contract despite several years of negotiations. The mine construction currently stands at 97 percent completion, and further steps in the construction, such as fine- tuning the copper concentrator, will require larger and larger amounts of power.
  6. 6. ―In the absence of a power supply agreement they can't turn the plant on and start producing metal,‖ said Andrew Driscoll of CLSA. However, he still believes the power supply will come through without being a major disruption to commissioning plans. If the delay persists, the mine stands to miss out on roughly USD 8.4 million per day in delayed revenues from copper and gold production, according to rough estimates based on the mine's first-year production forecast. Source: The Globe and Mail VOYAGER RESOURCES LOOKS TO RETURN TO DRILLING IN LATE 2012 Mongolian copper and gold explorer Voyager Resources Ltd. said diamond core drilling would recommence in late 2012 to focus on copper porphyry in an update on its Khul Morit project. Voyager Resources has received ―highly encouraging‖ results from its Khul Morit exploration, including 34 meters of 3.4 percent copper and 14.7 grams per ton of silver from 92 meters as well as 116 meters of 2.4 percent copper and 7.2 grams per ton of silver from 30 meters at the Cughur prospect. A total of 763 samples from 26 of the last set of drill holes completed during the drilling program in early 2012 have been sent to the laboratory for assaying. These include three diamond core drill holes, three diamond core drill tails and 20 reverse circulation holes. Assay results are expected to be returned in early October. The company has also created a new geological team, led by Ken Stone, a senior consulting geologist with over 40 years international exploration experience. Stone has particular experience in the search and evaluation of porphyry copper and gold related environments. The geological and alteration signature at KM are typical of large copper porphyry systems globally. In particular the quartz tourmaline breccias, which indicate a high level copper mineralized porphyry system and the classic potassic alteration, typical of the low level core of a porphyry system. These results maintain Voyager Resource's confidence that Khul Morit has the potential to hose a significant copper porphyry system. The emphasis of recommenced drilling aims to ensure that the porphyry is in line with the company's primary strategy to focus on the large copper porphyry targets at KM. The company will also complete a number of hydro-geological drill holes to support the application for a mining license. Source: Voyager Resources Ltd. CENTERRA TO EXTRACT VALUE FROM LOW-GRADE ORE Centerra Gold Inc. has acquired the permits to use special techniques to produce gold from low- grade ore at its Boroo mine in Selenge Aimag. Heap leach technology produces gold by stacking low-grade ore on a specially prepared pad and leaching the gold by applying weak cyanide solution through the drippers installed in the ore. Boroo Gold LLC, the subsidiary company operating the mine, made estimates to produce 2,000 ounces of gold monthly by applying weak cyanide solution through the drippers installed in the ore. Boroo Gold estimates it can produce 2,000 ounces of gold per month starting from December this year. Centerra Gold also announced that it acquired the mining license to operate at Altan Tsagaan Ovoo in Dornod Aimag from the Mineral Resources Authority and is continuing exploration drilling at this property. ―We are pleased that we have been able to move forward with these permits. Progress on these milestones underline our continued confidence in the future of our Mongolian projects.‖ Source: Centerra Gold Inc. BERKH-UUL CONFIRMS 2.3 MILLION TONS FLUROSPAR AT DELGERKHAAN Berkh-Uul JSC has confirmed a fluorspar resource of 2.3 million tons at Delgerkhaan Soum, Khenti Aimag by the Mineral Resource Agency (MRA) The deposit reportedly comprises mineralization of 50.52 percent flurospar compared with average contents of 30 percent. The discovery raises Mongolia‘s potential for flurospar production nearly four times from 16 million to 60 million tons. Source: Unuudur
  7. 7. EZNIS ADDS BOMBARDIER A400 TO FLEET Eznis Airways LLC, the largest private airline in Mongolia, has acquired a previously owned Q400 aircraft and has started service in the country with the fast and fuel-efficient turboprop. Eznis acquired the Q400 aircraft through Nordic Aviation Capital, the Denmark-based leasing company. Eznis Airways' acquisition of the aircraft follows the type acceptance certification that was awarded by the Civil Aviation Authority (CAA) in May 2012 for operation of the aircraft in Mongolia. The certification preceded the decision in June 2012 by the Interstate Aviation Committee (IAC) to award aircraft type approval to the Q400 turboprop for operation in Russia and the Commonwealth of Independent States (CIS). ―The Q400 aircraft is leading Bombardier's expansion across much of Asia and the certification in Mongolia, in addition to the recent type approval in Russia and the CIS nations, are an important party of our strategy,‖ said Rod Sheridan, vice president of customer finance for Bombardier Commercial Aircrafts. Powered by two new-generation, 5,071 shaft horsepower PW150A engines, and capable of flying at a speed of up to 667 kilometers per hour, the Q400 aircraft can quickly climb above the strong summer head winds, which blow across Mongolia, and also access the high elevation airports in mountainous regions of the country. Its steep approach capabilities allow the aircraft to quickly descend over the mountains to easily navigate the strong northerly winds found at Chinggis Khan International Airport. The Q400 aircraft has been certified for gravel runway operations that predominate in rural Mongolia, which enables Eznis to fly mining charter customers directly to mine sites, while the aircraft's large baggage compartment allows ample storage of mining provisions. Source: Bombardier Inc. MONGOLIAN AIR CHARTER EXPORT FREIGHT NEEDS TO STAY LIVELY FOR EFIS A shipment of cattle to Mongolia arrived without problem, thanks to special care by a shipping company. Some consignments need to be handled with a little more care than others and when EFIS Air, part of the ECS conglomerate group which features a host of air cargo industry stakeholders, were approached to handle a particularly delicate shipment, the freight compound at Châteauroux-Déols airport in France took on more of the look of a farmyard than a cargo transit terminal. EFIS Air chartered a Boeing 747 freighter for the flight to Ulaanbaatar to ensure the 150 limousin and 30 montbéliarde cattle arrived safely at their destination. The cows are being used in a program to establish the breeds in Mongolia. On arrival at the airport, EFIS Air arranged for the cows to be carefully loaded into specially created shipping pens to ensure their safety during the flight. ―Moving livestock requires great care and attention to ensure the welfare of the animals and to meet all the regulatory requirements,‖ said Alain Boussard, managing director of EFIS Air. ―We were given responsibility for this flight because of our reputation for trust, expertise, and commitment.‖ Source: Handy Shipping Guide TDB RAISES USD 300 MILLION IN DEBT OFFERING Trade and Development Bank (TDB) of Mongolia LLC has issued USD 300 million senior unsecured notes listed at the Singapore Stock Exchange (SGX). This is the fourth time that TDB tapped the international bond market, after two successful senior unsecured deals in 2007 and 2010 and a subordinated notes issuance in 2010. TDB was the first ever Mongolian bank to issue bonds and the only Mongolian repeat bond issuer. With the world economy stagnated by the Eurozone debt crisis, an unstable financial environment in the United States and a slowdown in China, the bond issuance marks the first ever ―benchmark‖- sized bond issue from TDB and the Mongolian banking sector. The bond issuance is a notable achievement for a B1 rated country such as Mongolia. The transaction met with overwhelming demand and produced an overbook of USD 1.2 billion, comprising 150 accounts, an unprecedented
  8. 8. number compared to previous USD 75 million and 175 million bonds which TDB has been implementing within its Euro Medium-term Note program since 2007. TDB's new 2012 bond shows that Mongolian commercial banks have credibility with investors even in the current condition of the global economy. The first bond issued by TDB in 2007, worth USD 75 million, was duly repaid on maturity in January 2010. After the reappointment of its first issue, TDB's second issue of USD 150 million took place in October 2010. The new issue of senior notes carries a coupon of 8.5 percent and compares favorably with the first issue, which had a coupon of 8.625 percent. The bank's strong financial performance, positive record on previous issues and overall sound fundamentals have enabled it to solicit a strong market response, resulting in a four- times over-subscription of the offering. The issue met TDB's object over a broad institutional placement with 60 percent of the sale going to asset managers and hedge funds, 25 percent to private banks, and 15 percent to financial institutions. Geographically Asia took up 60 percent and Europe and offshore United States took up the remaining 40 percent. Source: Trade and Development Bank of Mongolia LLC MAYER BROWN ADVISES TDB ON INTERNATIONAL DEBT OFFERING Mayer Brown JSM announced that it has advised Trade and Development Bank (TDB) of Mongolia LLC on its recent issuance of USD 300 million senior notes due 2015. ―Mayer Brown JSM has built a long-standing relationship with TDB and we are delighted to have advised them on yet another international capital markets issuance,‖ said Jason T. Elder, a partner of Mayer Brown LLP, based in Hong Kong. ―We see great potential in Mongolia's banking sector, and we look forward to continue assisting TDB as they explore future business opportunities.‖ ING Bank NV, Singapore Branch and Merrill Lynch International acted as joint lead managers and TDB Capital LLC acted as the co-manager. Source: News.mn MMC RECEIVES B+ FROM S&P Standard and Poor‘s Rating Services (S&P) has given Mongolian Mining Corp. (MMC) a ―B+/Stable‖ credit rating. The rating reflects the company‘s mineral concentration in coking coal, customer concentration risks, and its exposure to an untested and evolving regulatory environment in Mongolia (―BB- /Positive‖). S&P had an ―uncertain‖ outlook for coking coal prices over the next 12 months, due to wavering demand from China that ―will likely limit a rapid, substantial, and sustainable price recovery over the next six months,‖ despite the government‘s expressed intention to provide stimulus. ―While China‘s recently announced USD 150 billion stimulus program could temporarily push up the demand for steel, the possibility of lasting effects remains unclear, in our view,‖ said S&P. ―Still current coking coal prices of US$140-US$150 per ton are inching toward the production costs of higher cost producers. This could trigger supply cuts and provide some cushion from a significant fall in prices.‖ MMC‘s financial performance for the first six months of 2012 was weaker than S&P had anticipated, with sales declined due to slowed growth in China. It described MMC as with ―adequate,‖ but easily swayed by coal prices. The credit rater expected MMC‘s liquidity to exceed its needs, however, by about 1.2 times. ―The stable outlook reflects our view that MMC‘s sales will increase and that the company will maintain its profitability over the next two years, further supporting its cash flow adequacy,‖ said S&P. The rating could be raised if there was greater transparency into MMC‘s financial performance and risk profile. However, lower than expected coal sales and falls in gross profit per tons below USD 35 could also lower it. Source: Standard & Poor‘s Rating Services
  9. 9. ORIGO PARTNERS TO ADD EXPOSURE TO MSE FUND Strong performance by Origo Partners PLC's Mongolian Stock Exchange (MSE) fund has convinced its managers to increase its exposure. The private equity investment company gave the MSE high marks in its half year report. It said the MSE Liquidity Fund continued to perform well during the period, reporting a return of 10.3 percent annualized, with June being its ninth consecutive month of positive performance since inception. ―With the fund's peers delivering negative returns year to date, we are very pleased this product has achieved comparatively world-class returns on the basis of modest risks,‖ said the company. ―We have therefore decided to increase exposure to the fund.‖ In the first half of the year China experienced economic slowdown, led by a contraction of the real estate market and reduced exports. China's economic deceleration has been accompanied by a loss of investor confidence in Chinese companies in the wake of a broad range of widely covered financial fraud cases. The reputation of Chinese companies have fallen significantly as a result. Mongolia, to which Origo Partners has a significant exposure through a number of mining investments, has gone through a turbulent period with negative foreign investment rhetoric, hampering its ability to increase the value of investments and generate cash realizations. Source: Origo Partners PLC CENTERRA'S REGULATORY APPROVAL AT BOROO EARNS IT HIGHER MARKS Centerra Gold Inc. announced last week that it had won regulatory approval to resume its operations at its Boroo mine in Mongolia, prompting a Scotiabank analyst to hike his price target on the company. Craig Johnston, analyst with Scotiabank, boosted his 12-month price target to USD 16 from a previous target of USD 12. As part of his price hike, Johnston increased his net asset valuation on Centerra Gold by 1.5 percent to USD 13.88. He also increased his net asset valuation on Centerra by 1.25 percent from 1 percent as Centerra Gold restarted its Kumtor mine in Kyrgyzstan. The gold miner has had trouble in Kyrgyzstan this year, given some politicians have tried to strip the company of its mining license as talks of nationalizing resources flared up. But the idea was voted down by lawmakers earlier this year, and Johnston notes a new government was sworn in this week. Johnston added, however, that Centerra Gold still has concerns at its Gatsuurt project, which requires a change in Mongolia's waters and forestries law to be approved. ―However operations could begin a matter of weeks after permission is received as ore is scheduled to be trucked to Boroo for processing,‖ he said. Source: Financial Post MMC INSTALLS NEW RISK-MANAGEMENT SOFTWARE CORPORATE-WIDE Active Risk announced that Mongolian Mining Corp. (MMC), the largest producer and exporter of high-quality hard coking coal in Mongolia, has selected its award-winning software Active Risk Manager (ARM) for enterprise risk management across all its department and subsidiary companies. ―Prior to the installation of Active Risk Manager, we were using spreadsheets and other related tools to manage risk,‖ said Tserdondov, senior risk analyst at MMC. ―This was proving time consuming and required considerable manual effort, therefore we looked around for a new dedicated risk management software solution.‖ Active Risk Manager is being implemented by MMC at a corporate level, through to its subsidiaries, and has also been adopted by MCS Holding Group, the majority shareholder in MMC. Source: Active Risk ASPIRE APPOINTS NON-EXECUTIVE DIRECTOR Mongolian coking coal explorer and developer Aspire Mining Ltd. has appointed S. Turbat as a non- executive director. Turbat has over 12 years of experience in the resource sector of Mongolia. As one of the authors of the 1997 Minerals Law of Mongolia and as an honorary member of the Mongolian National Mining Association (MNMA), he is a key figure in the development of the Mongolian mining industry policy
  10. 10. and regulative framework. Turbat is a founder of Mine Info LLC and the Discover Mongolia annual international mining forum. He currently serves as managing director of Behre Dolbear Mongolia LLC. Source: Aspire Mining Ltd. CENTERRA NEARS COMPLETION OF MATERNITY HOSPITAL ANNEX Centerra Gold Inc. is about 80 percent complete with the new annex of Ulaanbaatar's 1st Maternity Hospital. The hospital annex will have 150 beds (100 for women and 50 for infants), additional furniture and medical equipment, said D. Enkhbayar, hospital chairman. He said the building will be used for child birth only. The annex will provide medical treatment for women, utilizing computer tomography equipment. The addition will require the staff to double in size, including additional infant physicians and nurses. Current work on the hospital annex includes the installation of an oxygen system, sanitary engineering work, and air ventilation, said Ch. Ganchuudur, supervising engineer of the Ulaanbaatar City Investment Department. ―Our company is not a construction company, but a mining company,‖ said A. Ariunzaya, Media Relations Manager for the Boroo gold mine. ―However, our objective is to ensure that this hospital building is built according to high standards where children will be born in conditions that fulfill sanitary and hygiene requirements.‖ The completion of construction has been delayed from June to ensure that the annex is of suitable quality, said Ariunzaya. She added that the project is of special importance to the company, and that it would do whatever is necessary to bring about satisfactory results. Source: Centerra Gold Inc. WAGNER ASIA TO PROVIDE USD 15,000 TO ENVIRONMENTAL PROJECTS Wagner Asia Equipment LLC has agreed to provide USD 15,000 in funding for projects targeting environmental protection in Mongolia Wagner Asia acts as Mongolia‘s official Ford Motor Co. dealer in its decision to direct USD 15,000 for the financing of four projects using funds from the Ford Foundation. So far the company has allotted a sum of USD 5,000 to a project that aims to build a park at the Tolgoi Micro-district. Funding to the remaining three projects will cover up to 50 percent of costs. Source: Unuudur 15TH ANNUAL NAMBC INVESTORS CONFERENCE BEGINS 16 OCTOBER The 15th Annual North America-Mongolia Business Council‘s Investors Conference will be held in Ulaanbaatar from 16 to 18 October. The conference opens with a reception at the Zanabazar Museum on Tuesday, 16 October, followed by two full days of speakers and panels on 17 October and 18 at the Kempinski Khan Palace Hotel. Full simultaneous interpretation in Mongolian and English is available for all sessions. Registration ends on 1 October. Source: NAMBC MONGOLIA SET FOR USD 1.3 BILLION NON-MINING POWER PLANT INVESTMENT A group of foreign energy companies is set to invest USD 1.3 billion in a Mongolian power plant, the biggest foreign investment in Mongolia outside the mining sector. GDF Suez Group of France, Posco Energy of South Korea, Sojitz Corp. of Japan and Newcom Group of Mongolia are negotiating the final details of a USD 1.3 billion coal power plant that will supply power to Ulaanbaatar. The consortium announced in July that it was the preferred bidder for the project but negotiations over the contract had to be postponed while Mongolia's newly elected parliament formed a government, following the nationwide parliamentary elections in June. ―The new power plant is a priority project for this country and the government wants to make it happen as soon as possible,‖ he said. ―The power plant is scheduled to begin operations by 2016 and will supply roughly half of Ulaanbaatar's energy needs.‖
  11. 11. GDF Suez, Posco Energy and Sojitz will each hold a 30 percent stake in the consortium, and Newcom will hold 10 percent. GDF Suez will invest in the project through its subsidiary International Power PLC. Of the USD 1.3 billion price tag for the plant, USD 400 million will be raised in equity by the four consortium partners and a further USD 950 million will be raised in debt, according to B. Byambasaikhan, Newcom's chief executive. The imminent deal comes at a time when some foreign investors have started to pull back from Mongolia due to a new law on foreign investment. Earlier this year Mongolia passed new rules that mandate parliamentary approval for big investments in sectors including mining, banking and telecommunications. However, the power plant will not require parliamentary approval because the power sector is not covered by the foreign investment law. Source: Financial Times CATERPILLAR DEALERS REPORT DOUBLE-DIGIT SALES JUMP FOR SUMMER Caterpillar Inc. dealers reported a double-digit sales jump for the three-month period ended in August, partly due to strong sales in North America as customers replaced aging equipment. Wagner Asia Equipment LLC is the official Caterpillar dealer in Mongolia. Retail dealers for the world's largest heavy equipment maker reported a 13 percent sales increase for the June-through-August period. The figure is down slightly from the 14 percent increase for the May-through-July period, the company said in a filing with the U.S. Securities and Exchange Commission. Peoria, Illinois-based Caterpillar said dealer sales in North America—where most of the company's revenue comes from—were up 24 percent for the period, and dealer sales in the Asia- Pacific region—the second largest—were up 27 percent. While the U.S. economy remains depressed, many construction firms are having to replace aging heavy equipment, boosting Caterpillar and its peers. Sales in China have been dented this year, Caterpillar executives have said, and the company began exporting Chinese-made machines earlier this summer. The company does brisk business in Australia and other Asian nations, though, and expects China's recently announced USD 150 billion in stimulus spending to help results by next year. Source: Reuters ECONOMY GOVERNMENT TO SPEND MNT 58.1 BILLION IN CASH PAYMENTS FOR CHILDREN‘S WELFARE The government has set out to allocate MNT 58.1 billion in financial assistance to children up to age 18 beginning 1 October. The Ministry of Human Development and Social welfare is charged with responsibility for the distribution of cash payments. Meanwhile, Minister of Finance Ch. Ulaan will be responsible for setting aside funds of MNT 154.8 million for the monthly payments, training, advertisement of the program, and filing of applications. According to the National Statistics Office (NSO), Mongolia has 967,900 children eligible for payments, totaling to MNT 58.1 billion. Source: Undesnii Shuudan ADB TO LOAN USD 200 MILLION FOR UB TRANSPORTATION NETWORKS The Asian Development Bank (ADB) is to loan more than USD 200 million to Mongolia for the improvement of transportation in Ulaanbaatar. One of Asia's fastest growing cities, housing a population of 1.2 million, Ulaanbaatar is to benefit from an upgrade to its roads and internal transport systems. Using a multi-tranch loan of up to UD 217.4 million, ADB will help fund the upgrade of 7.7 kilometers of road and expand a bridge for a bus rapid transit corridor installation, and also upgrade 14 kilometers of electric trolleybus infrastructure, including electric wires, feeder cables, and substations. A second phase will comprise the construction of three additional bus depots and upgrade 11.1 kilometers of trolleybus infrastructure. The final phase, which will be completed by 2020, included the further expansion of the bus lane network.
  12. 12. Source: KHL Group GOVERNMENT ACTION PLAN IS THE CHILL PILL TO INVESTORS' PAINS The Government Action Plan will soon be filed officially, as the government set its four-year agenda following certain procedural formalities and publication in the State Information Digest of Mongolia. The news coming from Ulaanbaatar is positive. After a significance amount of uncertainty before and after the June 2012 election, the government is getting back to business, evidenced by the proposed action plan and a formally documented set of policies from the recently formed Democratic Party (DP)-led coalition government. The government has included some new light controls in regulating the mining sector, which will reaffirm the attractiveness of Mongolia as a mining investment jurisdiction. Positive news around Turquoise Hill Resources Ltd. sees the renegotiation of the Oyu Tolgoi investment agreement not included in the Action Plan after support from the current agreement was reaffirmed in a recent State Structure Standing Committee (SSSC). The agreement will still be subject to review, but this is in line with all investment agreements and recent concerns regarding populist and resource nationalism pressures appear to have been firmly dismissed. Foreign investment and capital into Mongolia is resuming with investors showing signs of supporting Mongolia after the election. Trade and Development Bank (TDB) of Mongolia LLC successfully issued senior notes on the Singapore Stock Exchange (SGX) worth USD 300 million last week, a record low yield, which provides a real time precedent and positive sign for investment appetite for Mongolia in the capital markets. At a meeting of the Cabinet of Ministers, support was thrown behind proposal for a USD 5 billion of bonds from the Development Bank of Mongolia over the next two years to go before Parliament. The funds would be used to finance major projects such as rail and automobile road networks, power generation, the Tavan Tolgoi mine and the Sainshand industrial complex. The last 180 days will be remembered as a temporary softening amidst a highly contested national election presenting investors a terrific opportunity to gain Mongolian exposure amid weakened sentiment. The next 180 months (15 years) should vindicate these investors in making very well- timed decisions. Source: ResCap's Mongol Minute ACTION PLAN HINTS AT ―AGGRESSIVE POLICIES‖ FAVORABLE TO INVESTORS, SAYS ORIGO Mongolia's new four-year Government Action Plan is favorable to foreign investment, easing the concerns of private equity investors in the country. The newly elected Parliament of Mongolia has approved a four-year Action Plan that helps ease concerns over foreign investment in the country, according to a statement from United Kingdom- listed fund manager Origo Partners PLC, which has USD 100 million invested in Mongolia. Although the 21-page action plan has yet to be published, Dale Choi, an associate at Origo Partners, describes the plan as ―ambitious and progressive‖ and said the country is generally moving toward favorable foreign investment policies. ―The new government has been extremely action-oriented,‖ Choi said, adding that they are intent on seeing results from foreign investment in the Mongolian market. He later added, ―We welcome these aggressive policies.‖ In May the Mongolian government passed several bills regulating foreign investment and includes several projects the government hopes to do in conjunction with foreign investors. Source: Emerging Frontiers FARMERS LOOK TO GREATER RAPESEED OIL HARVESTS FOR 2013 IN PLACE OF WHEAT The cheap price for wheat has driven Urgats Khuder LLC to pursue the cultivation of rapeseed for next year. With wheat prices as low as MNT 250,000 a ton for wheat and transport costs of up to MNT 190,000, wheat production is fast becoming less profitable, and thus less attractive, to producers. Expanded production and large harvests following an unusually rainy summer season have quickly led to a glut in the market and falling prices.
  13. 13. ―The owners of wheat factories are among the richest people in Mongolia,‖ said L. Tsandeleg, director of Urgats Khuder. ―If they don‘t understand farmers and treat them cheaply, wheat farming will fall.‖ Unless export prices from China grow to MNT 350,000 per ton, said Tsandeleg, farmers will opt to grow rapeseed for rapeseed oil production, which is currently a more profitable endeavor. Last year farmers could sell wheat to the government‘s Wheat Fund. But with leftover reserves from last year still there, this is no longer an option. Instead farmers must sell at market prices dictated by distributors. The aid from subsidies provided by the government are limited because they are based on how much wheat farmers sell to distributors. Tsandeleg, who is also the head of the Mongolian National Association of Concentrated Farming and Animal Husbandry (MNACFAH), recommended that subsidies instead be based on the number of hectares farmed. If the plans go through, Mongolia would see increased production from the 400 hectares of land farmed for rapeseed oil this year. Source: Udriin Sonin STREET VENDORS‘ APPLES FALSELY LABELED FROM MONGOLIA Street vendors are selling apples on the streets of Ulaanbaatar they falsely claim to be grown in Mongolia. The reality is that not enough apples are even produced in Hovd and Bayan Ulgii Aimags, where 90 percent of apples are grown in Mongolia, for sale in Ulaanbaatar, said Ts. Tsegmid, a senior specialist at the Unfair Competition Regulatory Authority. She said all of the 10 tons of apples produced in those provinces are sold in those provinces, while 70 percent of the 2,144 tons of imported apples come from China. Tsegmid said laboratory results of alleged Mongolian-grown apples purchased on the street revealed that they actually came from China. ―We have received information from the provinces that it isn‘t possible to supply the Ulaanbaatar market with [Mongolian apples],‖ said Tsegmid. Although the apples did not come from Mongolia, laboratory results showed that they were not harmful for consumption. However, they had been marked up from MNT 3,000 a pound to about MNT 5,000. Source: UB Post MONGOLIA JOINS FTSE'S WATCH LIST Mongolia has joined the watch group of the Annual Country Classification Review for 2012 by FTSE Group, a leading global index provider. This year the FTSE Policy Group has not reclassified any countries but has added two further countries to the current watch list of seven countries being considered for promotion between market classifications. Argentina is listed for possible removal from the ―Frontier‖ classification while Mongolia is under consideration for possible inclusion of the same category. Mongolia will join the Watch List for possible inclusion due to its progress in developing a market infrastructure that is attractive to foreign investors through improvements to its trading settlement and custody arrangements. The annual review is the process by which global equity markets are classified as ―developed,‖ ―advanced,‖ ―emerging,‖ ―secondary emerging,‖ or ―frontier.‖ They are evaluated against a set of 21 ―quality markets‖ criteria. As of July 2012, the FTSE All-World Index Series includes 47 countries, 25 ―Developed,‖ 10 ―Advanced Emerging,‖ and 12 ―Secondary Emerging.‖ A further 26 countries are classified as frontier. Source: FX-MM MULTI-TASKING MONGOLS Ulaanbaatar is teeming with entrepreneurs who are involved in three, four, or more ventures at once. What is partly behind Mongolia's brand of entrepreneurship is the simple economics of growth. Even though Mongolia's infrastructure remains poor and basic services limited, the country is emerging as
  14. 14. one of the top growth stories of the decade, largely due to its massive, untapped mining wealth. Most of these resources, including rich deposits of copper, coal, gold, iron ore, silver, uranium, and molybdenum, remain in the ground, but some estimate the total worth to be close to USD 2 trillion. A high-growth environment paired with a relatively low level of economic development creates countless opportunities for Mongolians with the hustle and connection to launch new businesses. Since few products are manufactured in Mongolia, many local entrepreneurs get their start in equipment. A foothold established in one or two businesses makes launching the next one, two, or five that much easier by leveraging their existing customer-supplier networks and revenue base. This is in stark contrast to entrepreneurs in the West where the standard practice is to pick one venture at a time and pursue it with laser focus. It is certainly true that successful new businesses in Western markets often require a higher level of innovation than those in Mongolia, so it is understandable that entrepreneurs there typically do not try to balance three or four businesses at one time. But closing the door on new opportunities just because one path has already been selected could limit an entrepreneur's potential in the end. Source: Forbes HERDERS WORRY ABOUT THE IMPACT OF MINING PROJECTS Livestock herders are worried that a series of massive gold and copper mining projects will dry up scarce water reserves and exacerbate desertification in the delicate Gobi Desert when operations begin next year to tap one of the world's largest copper and gold deposits. Critics say the large-scale mining operations have dire social and environmental costs. D. Sukhgerel, head of Oyu Tolgoi Watch, a Mongolian non-governmental organization (NGO) that keeps tabs on the Oyu Tolgoi copper-gold mine, said that the investment agreement the government signed with Rio Tinto PLC, the project's lead developer, is unfair and that World Bank leadership pushed too hard for the Mongolian government to sign on. She told the Bank Information Center in Washington DC that the World Bank extended ―too much credit to Mongolia‖ in support of mining ―without implementing compliance monitoring mechanisms or impact assessments.‖ Additionally, the London Mining Network notes that the mining company has failed to show that there is enough water for the 30-to 60-year project. This is despite the fact that mining industries consume the largest part to the country's annual water consumption, says the Rivers Movement, a Mongolian environmental group which points out that Oyu Tolgoi will use approximately 243 gallons of water a second. Meanwhile nomadic herders, who comprise 40 percent of the country's population, will be forced to wander further to find water for their flocks, a 2011 United States Agency of International Development report said. Rio Tinto says it is committed to having a ―zero impact on community water sources,‖ but many local herders are skeptical. ―When we come to the well, we can see the level of the well water is eight inches lower than it used to be,‖ said A. Mijiddorj, a 76-year-old who herds his camel near Oyu Tolgoi. The government has made a major effort to ban mining in environmentally sensitive areas but ironically this has the heaviest economic impact on the 100,000 Mongolian self-employed miners rather than on Rio Tinto. By contrast, Oyu Tolgoi will employ about 3,500 workers when it is operational, according to the World Bank. Source: Corp Watch DON'T COUNT OUT MONGOLIA'S RESOURCE SECTOR YET According to Australia's resource minister, Martin Ferguson, the mining booms in Australia is ―over.‖ BHP Billiton Ltd. recently canceled its USD 30 billion expansion plans for its Australian Olympic Dam project, Rio Tinto PLC has abandoned several Australian projects, and Fortescue Metals has announced hundreds of job cuts and a significant downsize of its expansion plans. These moves highlight Mongolia's growing competitive advantage to deliver comparably cheap resources to China—and potentially Japan and South Korea. August was another challenging month for the resource sector, however recent news of stimulus initiatives from China and the United States appears to be providing much needed market confidence. The U.S. Federal Reserve has announced QE3, a third round of quantitative easing,
  15. 15. following similar moves from the European Central Bank (ECB). China is stepping up infrastructure development as part of stimulus efforts to revive economic growth. According to HSBC, the Chinese government may boost infrastructure spending growth to an annual pace of more than 20 percent in the coming months. Road building, subway projects, rail upgrades are but some of the initiatives announced—projects that will underpin continued and increasing consumption of Mongolian resources. The implications of increased Chinese infrastructure development and consumption bode well for Mongolian resource exporters and the country's economy at large. After traveling to Mongolia for three weeks and visiting many companies and their mine sites with colleagues, our strong conviction is that Khan Investment Management Ltd.'s portfolio companies have substantial upside potential. Companies whose sites were visited including Mongolian Mining Corp., Erdenes Tavan Tolgoi JSC, SouthGobi Resources Ltd., Erdene Resource Development Corp., Xanadu Mines Ltd., Haranga Resources and Eruu Gol JSC. Author Travis Hamilton has worked in the financial services industry in Switzerland, Singapore and Australia since 2002. He founded Singapore-based Red Horse Investment Partners PTE Ltd., and Khan Investment Management Ltd. Source: UB Post MANAGERS—NOT WORKERS—TO BLAME FOR UNSAFE CONSTRUCTION, SAYS MBA PRESIDENT The president of the Mongolian Builders Association (MBA) has placed the blame from illegal construction projects that have resulted in deadly accidents onto the managers and companies instead of the construction workers operating at the sites. Accidents at buildings currently under construction have led to the Ulaanbaatar government to suspend the activities at a number of construction projects, many without the necessary permits. MBA President M. Batbaatar said that too many construction projects, led by rich financiers rather than those with construction experience, have begun without regard to regulations or industry wisdom. With the 100,000 Homes housing program delayed for two years, people set out to build as many residential development projects as possible so they could profit after the apartments were built, he said. The result is a number of projects hazardously spread across the city center and beyond, many less than 10 meters apart from each other. He noted that many of these projects were operating illegally, without the necessary permits, and were rushed to finish before winter sets. ―People who got rich in other professions are entering the construction industry thinking they would triple their money which they put into the project,‖ said Batbaatar. ―They are hiring the builders at low costs and making them work day and night.‖ Batbaatar stressed that blame should not be placed on the 37,000 construction workers working at the sites, who are taken advantage of and lack protections from their employers. He recommended government institute employee protections and benefits as well as enforce regulations that are in the interest of public safety around these sites. He added that the quality of construction has deteriorated, too, in Mongolia. ―In old times, Ulaanbaatar's infrastructure was well organized; the buildings had a certain distances between each other. But today buildings are almost fastened to each other. There are no buildings that can keep people safe in the event of an accident or earthquake.‖ The reorganization of construction projects would improve the quality of buildings as well as reduce real estate prices, he said. Source: UB Post AMERICAN UNIVERSITY OF MONGOLIA SETS OUT TO PREPARE MONGOLIA TO THINK Mongolia will need thinking to manage all the change flooding the country, and Peter Morrow, Chairman of the new American University of Mongolia (AUM), intends to bring that here. Morrows intends to offer a liberal United States-style education in Ulaanbaatar at the university, formally established this week. Classes for AUM‘s first freshmen will begin in the fall of 2014. The university, which currently occupies one floor of an office building on Seoul Street, already offers an executive MBA and English language classes. The university focus, at least to begin with, will be
  16. 16. on environmental and business issues, to produce graduates with the hard skills the emerging economy needs, Morrow said. ―We will train them. But they have to be able to think. So logically any curriculum would start with that,‖ he said. He added, ―Mongolia is obviously a strategic place to a lot of people. It needs more education, not just to dig stuff out of the ground and sell it, but also in terms of managing the change,‖ said Morrow. Key problems include environmental degradation and accompanying health risks, said Morrow. Then there is ―the pace of cultural change.‖ The consequences of moving large numbers of nomads and herders into apartments and having them working in mines is unknown, he said, but family abuse and alcoholism are two major social challenges already plaguing society. Governance is another: ―How do you mange important government functions in the face of all that change? How do you manage taxes and royalties? How do you manage it wisely?‖ While Japan, South Korea, and Taiwan became democratic only after liberalizing their economies, Mongolia worked from the other side, introducing its capitalist mechanisms after declaring a democratic government, said Morrow. The new university, whose funders include Newcom Group, Rio Tinto PLC, and the GE Foundation, is part of an informal chain of worldwide American Universities that includes those in Beirut and Cairo. It joins tertiary institutions already operating in Mongolia, such as the National University of Humanities. Source: New York Times SOLAR PANELS LIGHT UP HERDERS' FUTURES Off-grid solar home systems have changed the daily lives of about 100,000 herder families. The herders have gained access to solar power through a program launched by the Mongolian government with support from the World Bank and the government of the Netherlands. Thanks to the National 100,000 Solar Ger Electrification Program, over half a million men, women and children covering half the rural population and 70 percent of herders, now have access to modern electricity. The solar systems generate enough power for lights, televisions, radios, mobile phone charging, and small appliances. ―A few years ago, country herders managed with candles and lanterns. The change in life between then and now is like night and day,‖ said herder B. Khandaa. ―I believe that the quality of life in the countryside and the city are now about the same.‖ This program provided portable solar home systems adapted to herders' nomadic way of life. Herders can easily set them up and dismantle them when they relocate. The project employed a balanced approach to pricing the systems, where herders purchased the solar home systems, albeit with a subsidy that covered about half the costs. It made the systems affordable to herders while helping to expand sales. Reaching herders living it the vast rural countryside was a particular challenge to the project managers. The project established 50 privately owned solar home system sales and service centers spread across Mongolia. Their staff were trained to promote and sell certified solar home systems so that herders could buy with confidence. They were also trained to repair and maintain the units—vital to sustaining the benefits of the program. To extend their reach, the sales and service centers partnered with an existing network of village administrators located in 342 villages. This effective public-private partnership helped the project sell solar homes in every remote corner of the country. Mongolia has found off-grid electrification with solar power to be a viable approach to serving a nomadic rural population that is scattered across a vast territory of over 1.5 million square kilometers. The program has supplied 100,146 solar home systems, while also developing a sustainable supply chain of local businesses that will help achieve the government's goal of universal rural electrification by 2020. Source: World Bank
  17. 17. ZIMBABWEAN HELPS MONGOLIANS DIG FOR GOLD Development workers do not necessarily have to come from the West. A mining expert from Zimbabwe is helping to improve the lives of small-scale miners in Mongolia. Patience Singo knows the situation enterprising artisan miners are facing from his experience in his own country, Zimbabwe. The 40-year old is a mining engineer who has worked in various development projects across Africa aimed at improving the living and working conditions of artisan miners. In Mongolia he works with the Swiss Development Council (SDC), which has set up a project for small-scale miners in cooperation with the Mongolian government. When he first came to the country, three years ago, his first assignment was to set up a mercury- free processing plant for the miners because the Mongolian government had just banned the use of the toxic substance in small-scale mining. Within three months Patience and his colleagues had the plant up and running and it became a model for other mercury-free processing plants that were to follow. Singo had to deal with skepticism, as some did not see how someone who came from a developing country would be able to help. But with his positive attitude, Patience was quickly able to overcome their reservations. He said it is funny that Western experts are sent for training in one developing country so they can gain experience in such a context and then pass it on to people in another developing country. ―Why not bring a guy from a developing country and we do a south-to-south knowledge transfer? Isn't it cheaper and better and more effective?‖ he asked. In addition to deploying his professional skills, Patience also tries to introduce something of the African way of doing things. ―Mongolians are used to being nomadic, to living in an individualistic culture, but as Africans we are community-based people. There is a unique African value we call Ubuntu., and I always try to bring that community culture into the team because of my African background,‖ he said. Source: DW FALCON'S NEST PROJECT AIMS TO BOOST SCHOOLS An Abu Dhabi-funded program to build artificial nests for falcons could provide benefits for impoverished schools in Mongolia. Mongolian children in areas where the nests are built have been forging links with overseas schools, and sharing stores about falconry and their culture. In return, children overseas have been raising funds to help modernize schools in Mongolia. The project linking schools in different countries is the latest development to come from the artificial nests program, which was started in 2009 with funding from the Environment Agency-Abu Dhabi and aims to help increase the number of saker falcons in the wild. Mongolia is the only country with a Convention on International Trade in Endangered Species of Wild Fauna and Flora (Cites)-sanctioned trade in falcons, and the program was designed to ensure the trade was sustainable. Nicola Dixon, manager of the artificial nests program at the United Kingdom-based International Wildlife Consultants, said the school link program was about ensuring some of the benefits of the trade trickled down to the local community. ―At the moment communities aren't benefiting at all from the trade in falcons,‖ she said. ―For them to benefits, we need to link schools up through the program.‖ She said that a pilot study this year with a school in Bayan of Tuv Aimag and one in Cardiff, Wales had already paid dividends. Children at Glyncoed Junior School had already raised DH 6,000 of the DH 16,000 (USD 58,773) they needed to provide Internet access at a school in Bayan. The schools are communicating with each other, sharing ideas about falcon conservation and learning about falconry in both Mongolian and the United Arab Emirates. The eventual goal is to have schools in each of the 20 areas in Mongolia where artificial nests are installed participating in the program. Source: The National
  18. 18. MACHETE ARMED GANG ROBS CREWMEN OF MONGOLIAN VESSEL Eight men, armed with machetes and a gun, robbed the crew of a commercial vessel registered in Ulaanbaatar in the waters of Tanjung Piai, about 0.1 nautical mile from the Malaysia-Singapore border waters last night. The Malaysian Maritime Enforcement Agency (MMEA) Southern Region enforcement chief First Admiral Adon Shalan said the agency was in the midst of tracking down the eight robbers who escaped in a wooden boat. In a statement, he said the group was also linked to an attempted robbery on 13 September, also in the Tanjung Piai waters, involving commercial vessel MT Scorpio. Source: New Straits Times CHINA CUTS COAL, RARE EARTH PRODUCTION China autonomous region Inner Mongolia has shut down nearly 900 coal mines and 2,000 other mines as part of a seven-year effort to better manage resources, protected the environment and curb illegal resource extraction. The cut in China's domestic production means much for demand from Mongolia's raw resources. The traditional coal mining region where output reached close to a billion tons last year has reduced the number coal mines to roughly 500 from more than 1,300 in 2005 reported China Daily. All coal mines with an annual capacity of less than 300,000 tons have been ordered to shut down, according to the regional department of land and resources. Inner Mongolia is also an important center for the country's rare earth's industry, a commodity that some developers are looking to Mongolia as a new source. China—responsible for more than 90 percent of the global supply of the 17 elements used in a variety of industries including green technology, defense systems and consumer electronics—a few years ago embarked on a crack down on illegal rare earth mines and consolidation of the industry under a few large producers. Source: Mining.com POLITICS PARLIAMENT PASSES ITS 2013 LEGISLATIVE SCHEDULE Parliament passed a resolution on 18 september that adopted the following schedule for bill review during its autumn session: 1. Draft law on the mongolian state budget for 2013; 2. Draft law on human development fund budget for 2013; 3. Draft law on social insurance fund budget for 2013; 4. Draft resolution of parliament for ―The concept of state currency policy for 2013‖. 5. Budget utilization review from 2011, government consolidated financial report of 2011; 6. Draft resolution of parliament on ―the concept of improving the legislation of Mongolia for 2013‖ 7. Draft law on savings insurance. 8. Draft law on securities 9. Draft law on mongolian parliament and parliamentary procedure. 10. Draft law on the freedom of the press. 11. Draft law on food and food safety. Source: BCM DEPUTY MINISTER RECOMMENDS MAINTAINING OT INVESTMENT AGREEMENT Newly installed Deputy Minister of Economic Development O. Chuluunbat set out his plans for the next four years, expressing an interest of utilizing funds attained from the Development Bank of Mongolia‘s bond offering this year and maintaining the current Oyu Tolgoi investment agreement. Batbayar said his ministry currently has a number of projects to choose from, including the construction of railway lines, and the main objective now is to choose which would be of the greatest benefit to the country. He said the last government failed to decide on how to spend the USD 600 million earned by the Development Bank in its debt offering because of disagreements between the various ministries. While it is the Ministry of Economic Development‘s (MED's)
  19. 19. responsibility to choose which projects will take priority, it will not be leading any, said Chuluunbat, due to possible conflicts of interest. In regard to the Oyu Tolgoi investment agreement, the deputy minister said more time would have to pass to see how well Mongolia benefits from the current agreement before any decisions should be made on whether or not it should be renegotiated. ―...I was not among the 20 members of Parliament that signed the petition [for renegotiations] to government,‖ he said. Chuluunbat said the government should use Erdenet Mining Corp., which pays USD 50 billion to Russian investors while USD 950 billion stays within Mongolia via transportation fees, worker salaries, and payments for electricity, heating and other services, should be used as a point of reference to measure the benefits. ―Similarly, Oyu Tolgoi will bring many such benefits to the domestic economy,‖ he said. Source: Undesnii Shuudan VICE MINISTERS APPOINTED The Cabinet of Ministers has appointed its vice ministers. As per the agreement for the coalition government, 11 positions have been allocated to the Democratic Party (DP), three to the Mongolian People‘s Revolutionary Party (MPRP), two to the Mongolian National Democratic Party (MNDP), and two to the Civil Will-Green Party (CW-GP). The following is the complete list of vice minsters: Ministry of Green Development: B. Tulga (MPRP) Ministry of Foreign Affairs: D. Gankhuyag (DP) Ministry of Finance: S. Purev (DP) Ministry of Justice: E. Erdenjamyan (MPRP) Ministry of Construction and Urban Development: G. Baigalmaa Ministry of Defense: A. Battur (DP) Ministry of Education and Science: B. Urgamaltsetseg (DP) Ministry of Roads and Transportation: Ch. Erjan (DP) Ministry of Culture, Sport and Tourism: M. Tumenjargal (CW-GP) Ministry of Mining: O. Erdenbulgan Ministry of Labour: J. Batkhuyag (MNDP) Ministry of Social Welfare: E. Tamir (DP) Ministry of Economic Development: O. Chuluunbat (MPRP) Ministry of Energy: D. Dorjpurev (DP) Ministry of Health: J. Amarsanaa Ministry of Industry and Agriculture: B. Tsogtgerel (MNDP) Source: Undesnii Shuudan BUDGET CUTS EFFECT MASS LAYOFFS WITHIN GOVERNMENT The head of the Standing Committee on Budget said budget cuts would result in the layoff of 500 government workers. Committee head Ts. Davaasuren said eight projects to be funded by the state budget as well as resolutions had been approved by the standing committee. However, if the government is to keep state spending below 4.9 percent of the country‘s gross domestic product (GDP), as mandated by the Law on Fiscal Stability, it would have to lay off civil servants. 2013 will be the first year for the budgetary law to take effect. Source: Udriin Sonin MPP LOSES MEMBERSHIP TO RIVAL MPRP The Mongolian People‘s Party (MPP) is losing many within its ranks to the Mongolian People‘s Revolutionary Party. Thus far, 250 members have abandoned the MPP to join the MPRP, the party now working within the Democratic Party (DP)-led grand coalition. The MPRP has called the migration a return to its old ranks, as it is an offshoot of the MPP. The party formed after its current party leader N. Enkhbayar,
  20. 20. who is now serving four years in prison for graft, left the party because he felt it had compromised its ideals. MPRP Secretary General G. Shilegdamba greeted the new party members with party credentials and wishes that they restore justice to Mongolian government. Party members commented that another 549 members of the MPP also wished to join the MPRP but could not do so at that time. Source: Udriin Sonin MONGOLIA'S GREAT OPPORTUNITIES MUST BE SHARED BY THE NATION, SAYS ELBEGDORJ Mongolia is quickly becoming a geopolitical leader that Western democracies are looking to for trust in the Northeast Asian region. President Ts. Elbegdorj spoke about Mongolia's great opportunities for growth, stimulated by its vibrant mineral resources sector, and the wave of change flooding Mongolia's democratic society. ―This is a great opportunity,‖ said President Ts. Elbegdorj, speaking on Mongolia's 17 percent growth—the highest in the world. ―But we have to manage that. We have to share the great opportunity with all our people.‖ Despite the huge wealth, there is growing inequality and worry that it will not be spread around. There are also concerns about corruption, which Elbegdorj calls ―a mortal enemy for young democracies.‖ He believes the zero-tolerance policies the country is attempting to implement can help shield the country. Its neighbor China is a natural trading partner, but Elbegdorj believes the country must build more infrastructure to create gateways between both China and Russia. He also believes the United States has a common strategic interest with Mongolia. ―Our men and women in uniform actually serve together in Iraq, now we're serving in Afghanistan, and other hot spots.‖ Elbegdorj was recently in Iran for the Non-Aligned Movement (NAM) meeting, believing it to be an opportunity for Mongolia's diplomatic exposure. He said Mongolia's position is that Iran should comply with the U.N. Security Council resolution. He is also optimistic on North Korea and the possibility for reform under its new young leader, Kim Jong Un. He said Mongolia is ―uniquely positioned‖ in regard to its relationship with North Korea, while noting that Mongolia has an embassy in Seoul, South Korea. North Korea needs economic reform foremost, he said, and that Mongolia would be willing to help guide it through shared experience. Source: CNN ELBEGDORJ RETURNS TO HIS ALMA MATER President Ts. Elbegdorj gave a public address about Mongolia's peaceful transition into capitalism and democracy at the John F. Kennedy Jr. Forum this month. Elbegdorj spoke on corruption, human rights and his success in revitalizing his home country at the Institute of Politics. Championing the cause of the peaceful democratic revolution he launched to overthrown the long- standing communist regime in Mongolia, Elbegdorj offered a forceful diatribe against the widespread corruption in government that he successfully fought against, twice as prime minister and now as president. Speaking to a packed audience in the John F. Kennedy Jr. Forum, Elbegdorj dubbed Mongolia as the current world leader in freedom, referring to it as the ―democratic anchor of the east. Having graduated from the Harvard Kennedy School with a Master in Public Administration in 2002, Elbegdorj called it a ―high honor to return to Harvard‖ after ten years. He stated that he ―still ran on Harvard fuel‖ even now as a head of state. Elbegdorj also noted the strong diplomatic ties between the United States and Mongolia. He mentioned one incident in which he had to write a letter to prevent a stolen Mongolian dinosaur fossil from being auctioned off in the United States. Upon recounting this incident to Secretary of State Hillary Clinton, he said to her, ―Now, in this age, we only have one dinosaur—called corruption.‖ Source: The Crimson
  21. 21. RUSSIAN-MONGOLIAN MILITARY EXERCISE BEGINS TODAY The Russian-Mongolian military exercise codenamed Selenga 2012 begins 28 September at the training range Burduny near the city of Kyakhta in Russia's Buryatia. The Mongolian side will be represented by motorized infantry and tank units as well as an AD and a mortar battery. Russia will be represented similarly but with batteries of the Grad multiple-launch rocket system and Gvozdika self-propelled gun mounts. The Russian-Mongolian combined force created for the period of the exercise will carry out an imaginary anti-terrorist operation in an underpopulated mountain-woody area and work out methods to settle a crisis situation to ensure security in the region. It will plan an anti-terrorist operation, block and destroy imaginary illegal armed groups as well as ensure the withdrawal of refugees from the conflict zone. A military contingent of the Mongolian Armed Forces arrived in Burduny yesterday. The joint military exercise Selenga has been held regularly for the past five years. Russia has hosted the exercise four times, while last year it was held in Mongolia. The Selenga 2012 exercise involves about 250 military, as well as about 300 military of the Russian Eastern Military District. All in all, about 100 units of military hardware will be involved on both sides. The military exercise will continue until 29 September. Source: Zee News CHINA PLEDGES FOR STRENGTHENED MILITARY TIES China Defense Minister Lian Guanglie last Friday pledged to seek stronger defense ties with Mongolia. Liang made the pledge in a meeting with Choijamts, a senior official of the Mongolian Defense Ministry, who is leading the Mongolian delegation to Beijing for the sixth defense and security consultations between the two countries. Liang reviewed China-Mongolia relations in recent years, saying political trust has deepened, economic cooperation has developed, and people-to-people exchanges have flourished. ―Our defense relations have been smooth,‖ Liang said highlighting the high-level visits, defense consultations, personnel training, and border defense cooperation. Liang said China would like to work with Mongolia to expand areas of communication and deepened pragmatic cooperation to ensure the long-term steady growth of bilateral relations. Choijamts said Mongolia expected to step up defense cooperation with China and boost the growth of military relations. Earlier Friday, Ma Xiaotian, deputy chief of general staff of the People's Liberation Army (PLA), and Choijamts attended the sixth defense and security consultations between China and Mongolia. Both sides maintained that it was in the common interests of both countries to maintain regional peace and stability, which defense departments of both countries would make positive efforts to work for. Source: China Daily BRAZIL TO HELP DEVELOP FOOTBALL IN MONGOLIA Non-resident ambassador of Brazil to Mongolia Clodoaldo Hugueney said in Ulaanbaatar on Wednesday his country was ready to help Mongolia develop football. Hugueney made the remarks at a meeting with the director of the Implementation and Coordination Department for the sport policy of culture, sport and tourism ministry, D. Jargalsaikhan. During the meeting the two sides discussed collaborations in sports and agreed to sign a memorandum to bring Brazil's experiences in football development to Mongolia. The ambassador also said Brazil holds superiority in team sports including football, basketball and volleyball, while Mongolia enjoys advantages in individual sports such as boxing, judo, freestyle wrestling among others. He said he hoped the two countries can cooperate and exchange experiences in those sporting events. In recent years the Mongolian government has intensified its efforts to promote the popularization of youth football and since 2000 the Mongolian Football Confederation has implemented many programs together with the Asian Football Confederation (AFC) and International Federation of Football Association (FIFA) to help Mongolia develop the sport. Source: First Post
  22. 22. ACTION PLAN SHOWS MORE INTENDED INFLUENCE FROM GOVERNMENT The Mongolian government's Action Plan will have implications for Mongolia's development over the next four years, particularly its ability to continue to attract foreign investment. Mongolia's economic and social development featured prominently in the lead-up to the recent parliamentary elections, held on 28 June, and the role of foreign investment was one of the contentious issues. The release of the action plan for the period 2012 to 2016 will be the newly formed coalition government's first significant policy pronouncement regarding its term in office. The plan is understood to include reform of the taxation system, establishment of a home loan assistance program, programs for new jobs creation, promotion of infrastructure and development projects, policies to control inflation, regular forums for cooperation with the private sector, and reforms of the Mongolian Stock Exchange (MSE). The proposed reforms illustrate the new government's commitment to ongoing development of Mongolia's institutions and regulatory framework, while ensuring that more of its citizens enjoy the benefits of economic growth. In regard to the mining sector, the plan is expected to promote local participation, review double tax treaties, limit the number of mineral resource licenses that may be held by an individual or entity, promote value-adding activities within Mongolia, and promote increased exploration and development of petroleum reserves. These activities suggest that the new government intends to exert more influence in the mining sector than previous governments. The proposed restrictions do not, however, appear to extend as far as some may have been expected. For example, the idea that the plan would set out to amend the Mongolian legal framework to ensure that Mongolian interests own no less than 51 percent of a company holding a mining deposit was apparently unrealized. However, the fact that the action plan omits any regulatory change as well as guidance on the Law on the Regulation of Foreign Investment in Business Entities Operation in Sectors of Strategic Importance does leave some room for concern. Source: Allens Arthur Robinson TSMP MONGOLIA'S NEXT CHALLENGE American commentators have the unfortunate tendency to view democratizing countries, even those emerging from decades of repression and dictatorship, through an idealized lens that would leave even the United States out of focus. Mongolia is a case in point. The country has been in the news lately with the conviction of former Prime Minister and President N. Enkhbayar for corruption, a development that has led some to worry that mineral-rich Mongolia is already succumbing to the ―resource curse.‖ But some perspective is necessary. Freedom House has consistently ranked Mongolia as a ―free‖ country—the only former Communist country outside of Europe to have done so since 1999. The public trial of Enkhbayar bitterly divided the country. Opposing perspectives on the trial and conviction were evident in the many conversations had during a recent trip. Most people in and out of politics supported the conviction when interviewed. Many—most compellingly, a group of Western-educated Mongolians in the private sector—believed that Enkhbayar was guilty of crimes more serious than these he was convicted of. Enkhbayar's trial and conviction have been roundly criticized internationally, including by California Senator Dianne Feinstein and John Thornton, chairman of the board of the Brookings Institution. Members of Enkhbayar's Mongolian People's Revolutionary Party (MPRP) insist he has been wronged. A recent Brookings Institution commentary noted that corruption began to spiral out of control during Enkhbayar's time in office. A 2005 report for the U.S. Agency for International Development condemned ―the blurring of the line between the public and private sector brought about by an endemic and systemic conflict of interests at nearly all levels.‖ The author noted, ―Politics was allowed to be dominated by interests seeking to attain personal gains, and the culture of permissiveness toward corruption became the hallmark of the 2000s.‖ All this shows that Mongolia should vigorously prosecute grave acts of corruption by leaders from all political parties, while strengthening guarantees for due process. Given the current controversy about judicial independence, now would also be a good time for constitutional reforms that would increase the independence of the courts.
  23. 23. Authors Larry Diamond is a professor of political science, and Francis Fukuyama and Stephen Krasner are fellows at Stanford University. All three recently spoke on democracy at the Government Palace, at the invitation of President Ts. Elbegdorj. Source: Wall Street Journal _______________________________________________________________________________________________ ANNOUNCEMENTS GIANT STEPPES JAZZ FESTIVAL VI: ―THE JAZZ PARTY IS BACK!‖ 2-6 OCTOBER, ULAANBAATAR The Sixth Giant Steppes Jazz Festival will run in Ulaanbaatar from 2 to 6 October 2012. Thanks to the support of several international embassies and arts programs, we are set to enjoy the music of Eliane Amherd from Switzerland via New York City (http://www.elianeperforms.com), Bonnie J Jensen from Australia (http://www.bonniejjensen.com), Laurent Moore from France, the Martin Jacobsen Quartet from Denmark (http://www.martinjacobsen.com) and Zeki Caglar Namli from Turkey. Events will include concerts, jams and workshops. For more information, check out Giant Steppes Jazz on Facebook or jazzmongolia.com 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 body RAB-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, OCTOBER 30-31 The Mongolia Investment Summit 2012 will be held from 29 to 30 October at the Four Seasons Hotel in Hong Kong to once again bring the best of Mongolia's investment opportunities to Asia's leading investment hub. Now in its third year, the summit has strongly cemented its position as the largest Mongolian investment event outside of Ulaanbaatar, providing foreign investors with the most comprehensive overview of Mongolia's key economic growth sectors all under one roof. Speakers to the event include Altai Khangai, Chief Executive Officer of the Mongolian Stock Exchange (MSE), Cameron McRae, President and Chief Executive Officer of Oyu Tolgoi LLC, and James Passin, Co-founder and Manager of Firebird Mongolia Fund. BCM is again a Supporting Organization for the event. BCM members will get a 15% discount. Jim Dwyer, Executive Director of BCM, will chair both morning sessions. For more information, find a brochure to the event by logging on to the website: mongoliainvestmentsummit.com. _____________________________________________________________________________________ REGISTER NOW FOR MONGOLIAN MINING DIRECTORY-2013
  24. 24. 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, 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 bcm.mn/itgeluud. Several presentations already posted include the World Bank‘s Mongolia Quarterly Economic Update–June 2012 and 11 speeches from the 2nd Coaltrans forum, held on 23 to 24 May in Ulaanbaatar. As a key component of BCM‘s Mongolian website articles from the ‗News‘ section, and the government website Open-Government.mn are regularly updated. ___________________________________________________________ ENGLISH WEBSITE 'PRESENTATIONS', 'MONGOLIA REPORTS' AND ‗MONGOLIAN BUSINESS NEWS‘ On BCM‘s English website, the ―Resources‖ and ―Presentations‖ sections are available to find recent postings from BCM‘s 24 September monthly meeting and 9 presentations from Discover Mongolia 2012. The ―Mongolia Reports‖ section includes Taxes for Expatriates in Mongolia from PricewaterhouseCoopers and the 2012 Mongolia Investment Climate Statement by the Economic and Commercial Section of the U.S. Embassy. BCM's English website includes the ―Mongolia Business News‖ section where the Open Letter to Parliament and Government is available for download. BCM continuously posts news stories and analysis of relevance to Mongolia at ‗Mongolian Business News‖ before they are all put together each week for Friday's weekly NewsWire. NewsWire will continue to be issued each Friday, incorporating items already on the home page for a consolidated account of the week‘s events. ____________________________________ MONGOLIAN WEBSITE ‗PRESENTATIONS‘ AND ‗NEWS‘ SECTIONS
  25. 25. 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. ___________________________________________________________ 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 are 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. ______________________________________________________________________________________ ECONOMIC INDICATORS
  26. 26. AUGUST MACROECONOMIC OVERVIEW
  27. 27. SUPERMARKET PRICE COMPARISON-SEPTEMBER 2012 INFLATION Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)] Year 2007 *15.1% [source: NSOM] Year 2008 *22.1% [source: NSOM] Year 2009 *4.2% [source: NSOM] Year 2010 *13.0% [source: NSOM] Year 2011 *10.2% [source: NSOM] July 31, 2012 *14.5% [source: NSOM] *Year-over-year (y-o-y), nationwide Note: 14.9% y-o-y, Ulaanbaatar city, July 31, 2012 CENTRAL BANK POLICY RATE December 31, 2008 9.75% [source: IMF] March 11, 2009 14.00% [source: IMF] May 12, 2009 12.75% [source: IMF] June 12, 2009 11.50% [source: IMF] September 30, 2009 10.00% [source: IMF] May 12, 2010 11.00% [source: IMF] April 28, 2011 11.50% [source: IMF] August 25, 2011 11.75% [source: IMF] October 25, 2011 12.25% [source: IMF] March 19, 2012 12.75% [source: Mongol Bank] April 18, 2012 13.25% [source: Mongol Bank] CURRENCY RATES – August 30, 2012 Currency Name Currency Rate U.S. dollar USD 1,395.08 Euro EUR 1,797.70 Japanese yen JPY 18.02 British pound GBP 2,259.82 Hong Kong dollar HKD 180.59 Chinese yuan CNY 221.38 South Korean won KRW 1.25 Russian ruble RUB 44.71 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.

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