01.02.2013, NEWSWIRE, Issue 259

BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
Issue 259 – February 1, 2013
NEWS HIGHLIGHTS:
Business
 Chalco threatens legal action in TT coal dispute;
 Mongolia counts on Chinese rival to break coal deal impasse;
 Mongolia’s biggest coal miner loses executives in cost cutting;
 Macmahon faces possible funding hitch from Tavan Tolgoi;
 Investors demand refund for Erdenes-TT shares purchased;
 Rio said to consider halt at OT;
 Rio says OT is on track;
 Eurofeu Asia to commence first reverse takeover on MSE;
 Bank of China opens in UB;
 Peabody expects Q1 loss, recovery in rest of 2013;
 Energy Resources reports loss for 2012;
 Xanadu releases Q4 report;
 Baganuur projects 3.5 million tons for 2013;
 M.A.D. launches two new resources for Mongolia's investors;
 Moody's considers downgrade for MMC;
 OBG enlisted as media partner for Finance Mongolia 2013;
 MMC hosts opening ceremony for new school at Tsogttsetsii;
 Bombardier caps off successful year for its Q400 aircraft;
 Anglo American reports Q4 production with 2012 exploration up.
Economy
 Mongol Bank cuts policy loan rate by 0.75 percent;
 Hikes in energy prices pushed back to after Tsagaan Sar;
 Agricultural exchange to open in Q3 2013;
 2013 economic outlook for Mongolia, per Mandal;
 UB mayor plans heat and running water for ger households by 2020;
 Mongolia rank 128th on economic science research index;
 Critics slam plans for petroleum refinery in Darkhan;
 Cement costs rise as domestic production lags behind demand;
 Study shows 10 percent of UB deaths resulted from air pollution;
 Wind farm could tilt UB from coal toward green energy;
 Wanders never cease: The nomadic life of Mongolia's Kazakh eagle-hunters;
 Eagle hunting sustains Kazakhs' living legacy;
 Roubini: ‘Hyped Up’ BRICs risk success by growing state role in economy;
 Despite fewer M&A deals, values reach post-crisis high, says PwC;
 Time for Russia to deliver on reform roadmaps.
Politics
 Mongolian Railway approved for railway construction;
 BCM board member’s exit ban from Mongolia passes 90-day mark;
 Link between court official and MIAT scandal found;
 Taxation officials arrested on corruption charges;
 Former agriculture officials suspected of embezzlement;
 China's top legislator to visit Mongolia;

 Smokers, put out your cigarettes in March;
 Government debates ban of Chinggis from vodka bottles;
 Man jailed for cheating former sumo champ Dagvadorj;
 it's goodbye Lenin, hello dinosaur as fossils head to Mongolia museum.
ECONOMIC INDICATORS
 MSE Top 20 Index by market Capitalization;
 Foreign-listed Companies with Mongolian Assets;
 Inflation;
 Central bank policy rate;
 Currency rates.
*Click on titles above to link to articles.
SPONSORS
Khan Bank Oxford Business Group
Major Drilling Techenomics Mongolia
Breakthrough PR International SOS
Mongolian National Broadcasting
BCM MEETING RECAP
The meeting on 28 January with B Byambasaikhan in the chair for the first time was attended by
150 members and invited guests.
BCM membership now stands at 231 members, up 48 from 183 members a year ago. The 14 recently
joined members are:
Global Ideas is an architecture and construction company based in Ulaanbaatar. It provides a wide
array of services, from design and planning services, to tailored construction and renovation
services to foreign and local clients alike. Its goal is to provide better quality housing to the people
of Mongolia.

Golder Associates, established in 1960, is a global, employee-owned company driven the purpose to
engineer earth‘s development while preserving earth‘s integrity. From over 180 offices worldwide,
its more than 8,000 employees help its clients find solutions to the challenges society faces today
including extraction of finite resources, energy and water supply and management, waste
management, urbanization, and climate change.
Grata Law Firm, founded in 1992, is one of the leading professional law firms in Central Asia
including Mongolia. It provides full services in Mongolian laws and is engaged in the international
practices of commercial and business law.
The office opened in 2011 and is one of the first truly full-service international law firms in
Ulaanbaatar, Mongolia.
Interconsulting LLC is a professional consulting company which is uniquely positioned between the
development project consulting and traditional market research, investment advisory and
management consultancy services.
They are specialists in Mongolia strategy and advise foreign companies, international development
organizations, government and non-government institutions on development projects
implementation and Mongolia investment strategies.
ISG Mine Elect has concentrated on establishing successful alliances with clients and suppliers
throughout Australia. Now based in Australia and Mongolia we poised to deliver outstanding services
to our existing and new clients.
The Infrastructure Services Group (ISG) of companies provides complete ―turn‐key‖ infrastructure
solutions to all areas of Industry. With ISG Holdings providing streamlined cost effective
administrative, quality and safety systems to its subsidiary companies.
Lehman Bush offers a broad range of accounting, tax, payroll and corporate services to clients
seeking to enter Mongolia‘s thriving business market. It provides high value added consulting
support for companies with initial and second stage development programs in Asia and abroad,
ranging from investment in manufacturing, mining, minerals, governmental relations, to the
development of sales distribution and logistics.
In Ulaanbaatar, Lehman Bush offers a broad range of accounting, tax, payroll and corporate
services to clients seeking to enter Mongolia‘s thriving business market.
Mining National Operator (MNO) is a privately invested national mining company founded in 2010.
Its operational fields include mining operations (mine planning and mining), consulting (project
start-up, process of mining operation, etc), project estimation (long, medium and short term mine
planning), project management(management contract), environment management (assessment and
planning), contract mining (overburden removal and mineral resource mining contract works, pre-
striping waste), construction of infrastructure (paved road construction, gravel dam of the road,
gravel dam of the railway), construction of water pond facility (construction of plant tailings dam
and reservoir ponds), reclamation work (technical and biological reclamation for disturbed land),
and mine closure plans & execution.
Monroad LLC is the leading Mongolian road, bridge construction and road maintenance company,
established on 24 November 2001. It has grown into a highly respected regional contractor by
utilizing the most current innovations in construction technology and employing a highly skilled
workforce of operating engineers and field support personnel.
New Logistics LLC is a group of skilled and experienced professionals who combine an understanding
of effective logistics systems with local experience and awareness of the operating environment,
thereby being able to deliver the following services to our customers.
They aim to deliver an outcome that maximizes its contribution to client‘s objectives and go
beyond expectations with a view to creating value to the client.
Origo Partners MGL is a member of the China-focused private equity investment company, Origo. It
specializes in permanent capital and fund management. It has experienced local managers backed
by a blue-chip base of shareholders
Its key portfolio assets include Gobi Coal & Energy; Celadon Mining; R.M. Williams; China Rice;
Unipower Batteries, and NiuTech Energy.
Save the Children (Japan) in Mongolia is one of the world's leading independent organizations for
children. Its vision is a world in which every child attains the right to survival, protection,
development and participation. Its mission is to inspire breakthroughs in the way the world treats
children, and to achieve immediate and lasting change in their lives.
Save the Children started operating in Mongolia in 1994. And now has funding of approximately USD
4 million dollars for the wellbeing of children in Mongolia.
Sumitomo Corporation Ulaanbaatar Representative Office engages in multifaceted business
activities benefiting from its integrated corporate strength, selling a variety of domestic products

and services, conducting import-export and trilateral business transactions, providing domestic and
international business investment, and participating in numerous other profitable activities
facilitated by our global network and the relationships of trust.
It opened in Mongolia in 1992 and now has 5 local staff focused on investment and gathering
information. Its investments in Mongolia are Mobicom Corp. and Transwest Mongolia.
Summit strives to become the best and top company among other players in information technology
and a permanent partner to its customers by persistently meeting their needs in addition to
introducing and delivering high quality products and service to our customers.
Worley Parsons Mongolia service capabilities cover the entire asset lifecycle: from identifying the
opportunity to the operating phase. WorleyParsons extensive experience ensures that we provide
project solutions with the lowest total lifecycle cost while meeting each customer‘s specific
requirements.
WorleyParsons‘ scope of work will be delivered from its Brisbane office with support from its other
offices in China and Ulaanbaatar.
N. Algaa, Executive Director of the Mongolian National Mining Association, presented first for the
evening, providing his thoughts on the recently released draft Minerals Law from the Office of the
President.
He discussed the importance in providing provisions in the law concerning the ownership of mineral
deposit reserves, the bureaucracy for licensing, and the transferring of rights for licensing. Algaa
was also quick to point out that Mongolian companies would not go unscathed, as investors would
likely be leery about investing in any company that must operate under such conditions. He said
that developing the law that was most beneficial would take a cooperative act between all
stakeholders.
―Today Mongolia needs consensus between government and the private sector. Without consensus,
we cannot grow.‖
Algaa said there was still time for the private sector to help change the law for the better, echoing
the words of P. Tsagaan, the Chief of Staff of the Office of the President, who said ‗there should be
no rush to pass the law and it should not be used as a political device for candidates to campaign
on in the upcoming presidential election.‘
―Instead of just saying it's a bad law, we should seek out alternative provisions. We set up our
working group to find those alternative provisions.‖
The next speaker was Jay Liotta of the law firm MahoneyLiotta LLC. He brought to the audience's
attention two pieces of legislation recently passed by Parliament that would restrict the
professional abilities of lawyers and auditors in Mongolia.
―Today auditors and law firms can no longer give tax advice,‖ said Liotta explaining the effects of
the Law on Auditing and Tax Advisory.
According to Liotta, the law, which passed early this month and took effect 28 January,
restructures the auditing and tax advisory professions. Auditing firms are given three months to
restructure and establish tax consulting firms with five licensed tax advisors. He stressed it was
how quickly companies were expected to implement the changes that was the crux of the issue.
Although the second law passed, the Law on Lawyers was originally scheduled for 1 January 2014,
the date had been pushed forward to 15 April, again giving very little time for companies to
implement the changes asked for in the law. The law also provided very little clarity on how
lawyers could operate and what the actual licensing requirements were. He speculated that even
the Mongolian attorneys that had practiced for decades would no longer be able to operate as they
had been after the law takes effect.
―We're really trying to understand how the legislation is going to work and how it will be
implemented. As we saw with the draft Minerals Law and the Strategic Entities Foreign Investment
Law, we're curious on the social and economic impact assessments,‖ Liotta said. He added, ―If I try
and take a perspective of what's going on in Mongolia... I think part of it can be viewed as reform...
From another perspective, with some of the extremes in it, I guess it looks like legislative chaos.‖
Katsuhide Nagayama, Japan International Cooperation Agency (JICA) team leader of the JICA
Project Team, spoke next to present plans for developing Ulaanbaatar's public transportation
network with a metro system.
The JICA team had first submitted its master plan in 2009, targeting a completion date of 2030 for
the entire project. Nagayama said his team hoped to complete the first phase by 2020, with
operations transport to begin that year. The basic plan structure revolves around developing an

east-west metro line in Ulaanbaatar. Also included would be a north-south line, to be developed by
the Asian Development Bank (ADB). In total the metro network would include three east-west lines,
one north-south lines, and seven subordinate lines. Stations would include the Ulaanbaatar city
center, the now-under-development Zuunmod International Airport, Nalaikh Soum, the Tolgoit
logistics park, and the Bagakhangai agro-industrial center.
―After completion of the bypass for freight railway, the UB railway will provide a metropolitan
commuter rail service exclusively for passengers,‖ reads one of the slides in his presentation.
The plan calls for a public-private partnership with USD 200 million of investment from a private
partner firm and USD 1.5 billion from the government. The government and private firm could then
establish a public-private joint company to rent the infrastructure for use.
―This is a dream project but not really just a dream because with the economy blowing up from
investment into Mongolia's mineral sector, this city will be a hub of activity. In that city, this metro
is necessary.‖
Chris Adsett, Chief Executive Officer, Techenomics Mongolia, spoke next on the importance of oil
analysis to industry. Adsett said his company tailors itself to the Mongolian market, offering a range
of services. He explained that oil analysis was important, as it could help save companies money,
improve operating performance, and lower the frequency of unscheduled maintenance.
―If at the beginning, the lubricant stays clean from the start and cleanliness is maintained, the
crew can extend the life quite dramatically of compartments and lubricants.‖
Going forwards, Adsett said Techenomics aimed to provide companies with its fully-commissioned
monitoring services with regional labs—including one in Tsogtsettsii Soum, Umnugobi Aimag—
filtration units for oil refurbishing, and vibration analysis.
Mandar Jayawant, Managing Director of the Mongolian Opportunities Fund, gave the final
presentation, explaining the importance of private equity in a developing economy such as
Mongolia's.
Jayawant said his fund had already met its target financial goal of USD 50 million, with USD 13
million deployed already and 8 years to allocate the remaining USD 37 million. A fund such as his
needs companies to invest in that will grow fast and need upgraded technology, better
management, and financing. His funds, and others like it, are essential to help companies meet
their potential as there is a shortage of local lending options, limited expertise and difficulty in
making international connections. Private equity is particularly advantageous to firms as it aligns
the interest of the investor and the firm being invested into. It also provides outside perspective
and grants expert support, he added.
―Owners can be comfortable with interests of investment fully aligned, and the demand of
investment on cash flow won't be overly demanding,‖ said Jayawant.
He noted that his fund was not a venture capital firm and was not investing for the long haul. There
is always an exit strategy, he said, with the intention of leaving the company better off than when
the fund found it. Growth is key, not control, he stressed.
―If the exit is not clear, it is better not to go with the investment at all.‖
_____________________________________________________________________________________
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BUSINESS
CHALCO THREATENS LEGAL ACTION IN TT COAL DISPUTE
The Aluminum Corp. of China said on Monday that it would seek legal redress if Mongolia sought to
break a coal sales agreement signed in 2011.
Mongolia's state-owned Erdenes Tavan Tolgoi LLC, which runs the coveted 7.5 billion-ton Tavan
Tolgoi coal project, said last week that it is seeking to renegotiate a 2011 deal with Chalco to
supply USD 250 million worth of coal from the deposit. Speaking at a press conference, Li
Dongguang, president of China Aluminum International Trading Co. Ltd., a subsidiary overseeing the
Mongolian deal, said the company would seek compensation for any breach of the contract.
Li said Chalco imported 2.37 million tons of coal from Tavan Tolgoi in 2012, lower than the original
plan of three million to four million tons. Chalco made an advance payment of USD 250 million to
buy coal from Erdenes-TT in July 2011. Shipments to China were suspended earlier this month
because the state-owned Mongolian firm was unable to pay the cost of delivery.
Chalco would be willing to provide financial help to Erdenes-TT to keep operations running, and
would consider paying the company's transportation costs, but it says all offers have been ignored.

―We have proposed many solution plans, but there has been no response from them,‖ said Liu
Xiangyu, the manager of the company's Hong Kong unit, who is in direct talks with Mongolia. ―All
they request is to adjust the price, cut the volume, and renegotiate.‖
Ya. Batsuuri, the chief executive of Erdenes-TT, last week said the prices paid by Chalco were
lower than the cost of production, and that Mongolia wanted to sell its coal to other customers at
international prices. Chalco said the prices were index-based, with a 10 percent discount compared
with Australian prices to account for the lower quality of Mongolian coking coal. Li said Chalco was
paying as much as USD 100 per ton to move Tavan Tolgoi coking coal across the border to markets
in southern and eastern China.
―The new management team [of E-TT] doesn't understand the situation,‖ he said.
Source: Reuters, Wall Street Journal
MONGOLIA COUNTS ON CHINESE RIVAL TO BREAK COAL DEAL IMPASSE
Mongolia is reaching out to China's largest coal producer, China Shenhua Energy Co. Ltd., in an
effort to break a deadlock over the terms of a souring coal-for-loan deal with another Chinese
resource company, Aluminum Corp. of China Ltd. (Chalco), according to Mongolia's Ambassador to
Beijing, Ts. Sukhbaatar.
China's state-owned resource giants often compete with each other—at least in the early stages—in
securing projects, and Mongolia may be counting on the Chinese companies' innate sense of rivalry
to prompt renegotiation of an increasingly untenable resource deal.
State-owned Erdenes Tavan Tolgoi LLC, which owns the project, has halted coal exports to China in
a bid to renegotiate the July 2011 agreement, under which Chalco lent the firm USD 350 million to
be repaid in coal but capped the commodity's price at USD 70 a metric ton, Sukhbaatar said.
―Chalco was just using a moment when the government badly needed funding to get a deal that
was unacceptable in the sense of normal international trade,‖ he said.
The management team at Erdenes-TT has repaid nearly two-thirds of the loan, and now wants to
change the contract to reflect fluctuating market prices for coal, he said. Coking coal import prices
are around USD 190 a ton, according to the 52Steel.com consultancy, though they were even
higher—Russian coal imports cost around USD 229 a ton including transport and taxes—at the time
the Chalco deal was reached.
Mongolia may be hoping Shenhua, which is in the running to develop the western half of Tavan
Tolgoi, will work to resolve the impasse with an eye on gaining goodwill in its bid for the project.
―What we're trying is to deal with Shenhua as the principal and the biggest coal company‖ in China,
he said. ―They have the infrastructure. They are the international company. Chalco has nothing to
do with coal.‖
Source: 4-Traders
MONGOLIA‟S BIGGEST COAL MINER LOSES EXECUTIVES IN COST CUTTING
Erdenes Tavan Tolgoi LLC said its two most senior foreign executives resigned as part of cost cuts at
the cash-strapped company.
Chief Financial Officer Angus Caithness and Chief Operating Officer Graeme Hancock have left,
Erdenes Tavan Tolgoi spokeswoman G. Enkhmanduul said in an emailed statement. Caithness and
Hancock are two of four deputy directors at the company, she said.
―To overcome the current financial problems the board of directors decided to decrease the
company's management expense by releasing the foreign deputy directors,‖ Erdenes-TT said in a
separate statement today. The posts will be vacant until the company's financial situation recovers,
it said.
The departure throws into question the timing of Erdenes-TT's initial public offering, which was
expected to raise as much as USD 3 billion when first planned three years ago. They follow the
company revealing this month that it stopped deliveries to Aluminum Corp. of China Ltd. (Chalco),
its main buyer, because it could not afford to truck coal to China.
Hancock was the second-highest executive at Erdenes-TT and his role included preparing the
company to list in Hong Kong, London, and on the domestic bourse. Caithness is a graduate of
Harvard Business School and the Financial Services Institute of Australasia. He formerly served as
the CFO of Hunnu Coal Ltd.
Source: Bloomberg
MACMAHON FACES POSSIBLE FUNDING HITCH FROM TAVAN TOLGOI
Australia's Macmahon Holdings, the mining contractor at the Tavan Tolgoi coal mine, may face
problems there after April if its client Erdenes-Tavan Tolgoi LLC does not sort out funding
problems, a senior executive said on Friday.
Erdenes-TT has run into issues managing its debt and is looking to renegotiate a supply contract
with its main customer, Aluminum Corp. of China (Chalco).

―We're not too concerned at the moment, but it has the potential, if it's not resolved, to cause
problems,‖ Ashley Mason, Macmahon's general manager of strategy and business development, told
Reuters. Mason said Macmahon was still mining as normal at Tavan Tolgoi and is still being paid as
normal.
―We have money in an escrow account, so we're guaranteed payment until at least April,‖ he said,
adding that Macmahon had been through issues like this before in Mongolia and was confident
Erdenes Tavan Tolgoi would resolve its financing problem with the Mongolian government.
Source: Mining Weekly
INVESTORS DEMAND REFUND FOR ERDENES-TT SHARES PURCHASED
With the Tavan Tolgoi public offering pushed back to 2014 at the earliest, some companies who
purchased shares in 2012 are worried whether they will see any return from their investment.
The 1,540 private firms who applied for shares totaling 10 percent of the company, worth MNT 27.1
billion, have made complaints to the Ministry of Finance. That sum has reportedly been placed into
the savings of the Mongolian Securities Clearing House and Central Depository.
Six companies have demanded a refund of their money from the Ministry of Finance. Though the
ministry has promised to take action regarding these concerns, nothing yet has materialized from
government. The ministry is expected to make changes to government policy on the Erdenes Tavan
Tolgoi LLC shares in response to the complaints.
Source: Unuudur
RIO SAID TO CONSIDER HALT AT OT
Rio Tinto PLC, the second-biggest mining company, is considering a temporary halt to construction
work at its USD 6.2 billion Oyu Tolgoi copper and gold project in Mongolia as the government
demands a greater share of profits from the mine, according to two people familiar with the plans.
The London-based company is discussing the suspension to protest the central Asian nation's
demands for a bigger stake in the project and new mining royalty rates, said the people, who asked
not to be identified because they are not authorized to comment publicly. A suspension of work,
which may halt mining and processing, is not certain and is among options that managers are
discussing in London, one of the people said.
―We continue to work together with all stakeholders including the government of Mongolia to bring
the benefits of Oyu Tolgoi to all parties,‖ said Bruce Tobin, a spokesman for Rio in Melbourne. He
declined to comment on whether it is considering a temporary halt.
Richard Knights, a mining analyst at Liberum Capital Ltd. In London, said, ―Whilst a shutdown
would be negative in the short term, the fact such a move is under consideration suggests Rio is
prepared to play hardball to retain its stake in the project,‖
The mine may contribute 2.2 percent of the company's earnings before interest, tax depreciation
and amortization this year, Knights said. Rio Tinto's 2013 Ebitda will be USD 22.2 billion according
to the average of 25 analysts' estimates.
The escalating dispute with Mongolia also comes at a tie of upheaval at the company. Rio Tinto said
17 January it appointed Sam Walsh as chief executive officer to replace Tom Albanese, who left
after the company took USD 14 billion of writedowns on aluminum and coal assets.
Any suspension of operations at the project will not be permanent partly because if Rio Tinto took
that course it would then forfeit certain rights to the project under the terms of the government
accord, one of the people said.
Source: Bloomberg
RIO TINTO SAYS OT IS ON TRACK
Rio Tinto PLC said its Oyu Tolgoi project in Mongolia is on track to reach commercial production in
the first half of 2013, countering a media report saying the company was considering a temporary
halt to construction work because of political issues.
Shares of Turquoise Hill Resources, the Rio Tinto subsidiary that owns 66 percent of Oyu Tolgoi,
tumbled as much as 10 percent on the Toronto Stock Exchange (TSX) on Wednesday after the
report, triggering a circuit-breaker halt. The Mongolian government owns the remaining 34 percent
stake.
―The power is secured, first ore produced and the concentrator switched on,‖ said Rio Tinto
spokesman Illtud Harri. ―We are on schedule for first commercial production in the first half of the
year.‖
Source: Reuters, Financial Times
EUROFEU ASIA TO COMMENCE FIRST REVERSE TAKEOVER ON MSE
Eurofeu Asia JSC and its investment banker, Rescap Securities, have proposed the first reverse
takeover listing on the Mongolia Stock Exchange (MSE)

Eurofeu Asia JSC is Mongolia's leader and full-service provider of fire-safety products, fire
equipment maintenance services, fire risk assessment services, safety training and consulting with
a 10-year track record in Mongolia. The company is majority owned and operated by its founders,
French expatriate Sebastien Marneur and Eurofeu France, a company with EUR 81.36 million of
sales per year based in France operating in the fire safety business across Europe and North Africa.
Source: Eurofeu Asia JSC
BANK OF CHINA OPENS IN UB
Ulaanbaatar observed the opening a new branch of the Bank of China during Chinese high legislator
Wu Bangguo's visit to Mongolia.
The bank is one of four large Chinese banks to open a branch in Ulaanbaatar. The bank initially
requested to open a branch in Ulaanbaatar a year ago.
The bank is one of the world's top 21 banks. Wu, chairman of the Standing Committee of the
National People's Congress, attended the opening ceremony Thursday afternoon.
Source: News.mn
PEABODY EXPECTS Q1 LOSS, RECOVERY IN REST OF 2013
Peabody Energy Corp., who is currently reviewing a proposal from Erdenes Tavan Tolgoi for a
contract to develop the Western Tsankhi, reported a USD 1 billion loss for the fourth quarter and
warned of a current-quarter loss, but said lower costs and a rebound in prices for steel-making coal
would help lift its earning as the year progresses.
Peabody, the world's largest private sector coal miner, said it expected earnings to rise due to
higher volumes and prices at its Australian mines as well as lower production costs. Peabody
warned in December that its earnings would hit a trough in the first quarter due to higher costs in
Australia, lower prices for metallurgical coal and a fall in sales and pricing in the United States.
But the company remained optimistic about the rest of 2013.
Peabody expects a 40 million-to 60 million-ton increase in U.S. coal demand, with the rise in
natural gas prices prompting electric utilities to switch back to coal. Thermal coal prices, however,
remain weak, and Peabody expects U.S. revenue per ton to fall between 5 percent and 10 percent
from 2012 levels. The benchmark thermal-coal price declined about 3 percent to close at USD 87.15
in the three months ended 31 December.
Metallurgical coal prices, on the other hand, are expected to bounce back this year on
strengthening steel prices in China.
―Turning to 2013, recent data suggests that China's economic growth is again accelerating, and we
have seen some rebound in global coal prices,‖ said CEO Gregory Boyce.
Peabody is targeting sales of 230 million to 250 million tons for the year, compared with 248.6
million tons in 2012.
ENERGY RESOURCES REPORTS LOSS FOR 2012
Energy Resourced LLC reported a loss in earning for 2012.
The company exported approximately seven million tons of coal to China in 2012. Energy Resources
signed an agreement with China's Jinan Iron and Steel Group last November to deliver between
500,000 to two million tons of raw coking coal in the next five years at commercial prices. The
company believes this agreement could stabilize exportation.
Source: Zuunii Medee
XANADU RELEASES Q4 REPORT
Xanadu Mines Ltd. reported the completion of drilling at the Elgen-Zost epithermal gold project in
its quarterly activities report for the period ended 31 December.
The Elgen-Zost project in Doorknob Aimag consists of three low sulphidation epithermal prospects,
Elgen Uul, Suug and Zost Uul. During the second half of 2012, a reconnaissance reverse-circulation
and diamond drill program was completed within the Elgen-Zost district with 28 drill holes
completed for a total of 6996.6 meters.
Also, Xanadu continues its target definition at the Oyu Ulaan porphyry copper project in Umnugobi
Aimag. Completion of the Oyu Ulaan transaction from Temujin Mining Corp., however, will require
approval under the new Strategic Entities Foreign Investment Law (SEFIL).
New board appointments include Denis Gately as Non-executive Chairman and independent Non-
executive Directors Mark Wheatley and Darryl Clark.
Xanadu also reported on its joint venture company with Noble Group, Ekhgoviin Chuluu LLC. At
Nuurstei it reported a bulk sample confirmed moderate ash and low moisture, indicating a premium
hard coking coal. At Khus, the exploration team is continuing its 17-hole drilling campaign, where
sampling has indicated the potential for bituminous coal.
Source: Xanadu Mines Ltd.

BAGANUUR PROJECTS 3.5 MILLION TONS FOR 2013
Baganuur JSC has projected production of 3.5 million tons of coal for 2013.
The Baganuur mine is included in the current Minerals Laws' list of ―strategically important
deposits,‖ supplying over 70 percent of the coal consumed by the Central Regional Electricity
Network. This includes the combined heat and power plants (CHPs) in Ulaanbaatar, Darkhan, and
Erdenet, in addition to other facilities. It is considered one the largest open-pit coal mines in
Mongolia, with a resource of 599,818 million tons.
In 2012, Baganuur exceeded its target of 3.3 million tons of mined coal with 3.5 million tons in
total.
Source: Business Mongolia
M.A.D. LAUNCHES TWO NEW RESOURCES FOR MONGOLIA'S INVESTORS
M.A.D. Investment Solutions has launched two new resources for investors in Mongolia for 2013.
The Mongolian Real Estate Report 2013 is the second edition of the comprehensive market report
on Mongolia's property market. Based on over 7,000 transaction records, it sheds a light on the
state of the Ulaanbaatar property market, sector-by-sector and asset-class by asset-class. The
report also explores a wide number of second-tier cities and uncovers its recommended investment
opportunities of the moment.
M.A.D. also released what it calls ―an essential survival tool for any newcomer to Ulaanbaatar. ―
The M.A.D. Welcome Kit contains a wealth of information for those trying to navigate the streets of
Ulaanbaatar for the first few months. The guide explores the best places to live in Ulaanbaatar,
how to stay safe, where to go out for a great meal, the value of the currency, and other useful tips.
Living in Ulaanbaatar brings about its own unique set of challenges, common to other fast emerging
markets. The city is struggling to cope with the increasing population and material wealth of its
citizens which is gradually leading to a collapse of the infrastructure. This is acutely visible with
the terrible traffic situation as well as the lack of hot water and adequate heating in winter. The
Welcome Kit will continue to be updated throughout the year.
Source: M.A.D. Investment Solutions
MOODY'S CONSIDERS DOWNGRADE FOR MMC
Moody's Investors Service has placed Mongolian Mining Corp.'s (MMC's) B1 corporate family and
senior unsecured ratings under review for downgrade after MMC's profit warning announcement on
21 January 2012 of an expected consolidated loss for its full-year 2012 financial results, owing to
the decrease in the selling price of coking coal, and increases in its finance costs, as well as
inventory loss provisions.
―MMC was expected to announce a breakeven for 2012,‖ said Simon Wong, a Moody's Vice President
and Senior Analyst. ―It's warning of a loss, with weaker cash flows anticipated, could temper its
liquidity and hinder its ability to ride out the relatively lower prices for coking coal.‖
―The announcement also comes on top of MMC's weaker-than-expected results from the first half of
the year, from poor sales volumes and lower operating margins because of weakened Chinese
demand for coking coal,‖ Wong added.
Source: ETNet
OBG ENLISTED AS MEDIA PARTNER FOR FINANCE MONGOLIA 2013
Oxford Business Group announced its media partnership with Finance Mongolia 2013, to be held
from 22 to 24 February in Mongolia.
Finance Mongolia will have participation from large, middle, and small-sized commercial banks,
insurance companies, brokers, non-bank financial institutions, auditing companies, and saving and
credit cooperatives. Its purpose is to promote and exhibit the products and services of Mongolian
financial organizations to the general public as well as to help to assure the current market share of
financial institutions.
Source: Oxford Business Group
MMC HOSTS OPENING CEREMONY FOR NEW SCHOOL AT TSOGTTSETSII
Mongolian Mining Corp. (MMC) held an opening ceremony for a kindergarten it helped fund at
Tsogttsetsii Soum, Umnugobi Aimag.
The facilities are a part of the local community development initiatives taken by the company and
were intended to create a strong foundation for sustainable development. Covering a 6,240 square-
meter floor area, the new school and kindergarten complex is an all-modern facility which is
comprised of a secondary school for 640 children, kindergarten for 144 children and a dormitory for
about 100 children.
On 19 December 2011, MMC signed a cooperation agreement with the Umnugobi governor to jointly
finance the construction of the school and kindergarten complex, of which MMC provided 56
percent.

"This is my first visit to Umnugobi Aimag and I was both surprised and delighted when I saw the
scale of this joint effort by the local government and MMC," said MP Z. Bayanselenge. "By creating
this safe and modern learning environment for local children, the new facility is setting a new
standard of quality for secondary education in Mongolia."
Source: Mongolia Mining Corp.
BOMBARDIER CAPS OFF SUCCESSFUL YEAR FOR ITS Q400 AIRCRAFT
Bombardier Aerospace announced today that its Q400 and Q400 NextGen aircraft program wrapped
up a successful year in 2012 with up to USD 2.7 billion in orders, including 50 firm orders and 31
option aircraft, while welcoming seven new customers, operators and leasing companies. The Q400
is included in the fleet of EZnis Airways.
―The Q400 aircraft spread further into secondary markets and, together with the Q400 NextGen
aircraft, brought new customers, operators, and leasing companies from almost every continent
into the Bombardier turboprop family. This demonstrates the flexibility and performance capability
of the aircraft,‖ said Mike Acramone, president of Bombardier Commercial Aircraft.
In June 2012, the Q400 and Q400 NextGen aircraft became the largest Western-built turboprop
aircraft to be awarded type approval for operation in Russia and the Commonwealth of Independent
States. Mongolia granted the aircraft type acceptance certification in the region in May 2012. A few
weeks later EZnis, began operating its first Q400 aircraft showcasing its performance on gravel
runways and in cold weather, as well as its ample cargo and baggage compartments for supporting
mining charters and equipment.
Source: Bombardier Commercial Aircraft
ANGLO AMERICAN REPORTS Q4 PRODUCTION WITH 2012 EXPLORATION UP
Diversified mining major and Mongolia-interested Anglo American PLC on Friday reported solid
increases in its fourth-quarter output of export metallurgical coal, export thermal coal, copper and
diamonds, but lower iron-ore, platinum and nickel production.
Export metallurgical coal production increased by 13 percent to 4.6 million tons for the quarter.
Further, copper production from the Chile-based Los Bronces operations increased by 31 percent
with the mine's expansion contributing 54,000 tons, boosting total copper production by 2 percent
to 172,900 tons.
Meanwhile, Anglo American's exploration expenditure for the year amounted to USD 206 million, 70
percent higher than in 2011. Expenditure was primarily focused on opportunities in Australia,
Brazil, Canada, Chile, Finland, Peru, and several countries in Africa.
ECONOMY
MONGOL BANK CUTS POLICY LOAN RATE BY 0.75 PERCENT
Mongolia's Central Bank cut interest rates for the first time since June, 2009 after determining that
the outlook for inflation is benign and deciding to "cautiously" ease policy, its chief economist said.
The Bank of Mongolia reduced its policy rate to 12.50 percent from the previous 13.25 percent
effective yesterday, according to a table on the monetary authority's website and confirmed by
chief economist Sandagdorj Bold. The Central Bank is confident it will be able to achieve its 8
percent inflation target for this year, Bold said.
Source: Bloomberg
HIKES IN ENERGY PRICES PUSHED BACK TO AFTER TSAGAAN SAR
Energy officials have decided to push back the scheduled date for hikes in energy prices to 1 March
in light of Tsagaan Sar, Mongolia's lunar new year celebration.
Households that consume more the 200 kilowatt hours of electricity will pay higher prices, while
those that consume below that threshold will pay current prices.
Source: Unuudur
AGRICULTURAL EXCHANGE TO OPEN IN Q3 2013
Mongolia's first preliminary run of its agricultural commodity exchange has been slated for the third
quarter of this year.
The government has budged MNT 5 billion for the project, with another 49 percent of investment to
come from the private sector. That includes members of the commodity exchange, investors, and
domestic production companies.
Source: Udriin Sonin
UB MAYOR PLANS HEAT AND RUNNING WATER FOR GER HOUSEHOLDS BY 2020
Mayor E. Bat-Uul announced that 48,000 households would be connected to the city's central
heating grid and plumbing in the first phase of development of the city's ger districts.

The mayor's urban development plans have the ger districts divided into seven sections. The first
phase targets the ger districts of the Seventh Khoroolol, Denjiin Myanga, and MNTV. Development
of these areas is planned for the next seven years.
Bat-Uul said the residents of these areas had already been consulted. Connecting these households
to city infrastructure would decrease air pollution by 30 percent, he said. He added that the
project would require MNT 40 billion for 2013.
Source: Unuudur
MONGOLIA RANK 128TH ON ECONOMIC SCIENCE RESEARCH INDEX
Mongolia ranked 128th out of 147 locations on IDEAS' research in economic science index.
In first was the state of Massachusetts in the United States followed by Germany, France, Canada,
Italy, Holland, Spain and Australia. As for Mongolia's two giant neighbors, China ranked 42nd on the
list while Russia took 60th. Mongolia ranked behind Mozambique, Uganda, Trinidad and Tobago, and
Togo, but ranked ahead more politically unstable countries such as Zimbabwe, Cuba, and Laos.
CRITICS SLAM PLANS FOR PETROLEUM REFINERY IN DARKHAN
The decision to move the site for Mongolia's first petroleum refinery has come under fire as critics
suggest it would do nothing to help Mongolia achieve fuel independence.
The change in plans was reportedly prompted by Mongolsekyu, which was founded by Japan's Toyu
Engineering and Marubeni. Some have criticized the plan, as it hinges on imported raw oil from
Russia, which they say does nothing to resolve Mongolia's dependency on Russia for fuels. Those
critics have also speculated on the fact that Minister of Mining D. Gankhuyag studied oil refinery in
Japan while cooperating with Japanese firms, leading them to believe they might have lobbied him
for the decision.
The government of Mongolia has ordered Gankhuyag to submit a technical and economic
assessment by May this year.
Source: Unuudur
CEMENT COSTS RISE AS DOMESTIC PRODUCTION LAGS BEHIND DEMAND
The World Bank has pointed out that rapid development of buildings and infrastructure in Mongolia
has created a spike for cement prices in Mongolia.
The bank noted the rise in material costs in a report offering recommendations for appropriate
investments in infrastructure. Development has increased the amount of cement consumed 10
times in the last 10 years, reaching 1.5 million tons a year. The bank projected that consumption
would triple in the next three years.
With domestic production unable to meet demand, cement prices have risen rapidly since 2009.
Mongolia has experienced both quarterly and seasonal price changes with prices rising 167 percent
from USD 60 per ton in January 2007 to USD 160 in August 2010.
Source: Zuunii Medee
2013 ECONOMIC OUTLOOK FOR MONGOLIA, PER MANDAL
Mongolia's gross domestic product (GDP) is projected to grow 10 percent in 2013, a decrease from
12.3 percent in 2012 levels, as per forecasts by Mandal Asset Management. But with Oyu Tolgoi‘s
―full effect‖, growth may reach 17 percent.
There are several factors to have a major influence on the economy in 2013, including political
stability, the growth of government influence in the economy, the Oyu Tolgoi mine, and the
Strategic Entities Foreign Investment Law (SEFIL). While Oyu Tolgoi production will contribute
substantially to GDP, other mining, especially junior mining and exploration projects, may shrink
with a few exceptions. However, growth in infrastructure and infrastructure logistics sectors will
have a replacement effect.
Overall, there will be a shift from mining and exploration to infrastructure, logistics, and
construction sectors. There are a number of mega infrastructure projects lined up to start in 2013.
Monetary policy announced by the new Governor of the Bank of Mongolia is likely to have a positive
impact on the economy through a reduced inflation rate. In 2013, it is believed that it may get
closer to reaching its targeted single-digit rate, as its monetary policy is coordinated with
government's intention of restricting budget expenditures to 40 percent of GDP and budget deficit
at 2 percent of GDP. Also, the Bank of Mongolia has initiated and started to implement several
actions directed at smoothing imported inflation specifically related with fuel, construction and
consumer goods.
While tight monetary policy will help reduced inflation, it may not have a positive impact on
financing conditions, as it reduces the opportunity for loan rates to go down in general from the
current 18 percent rate.

2012 has been a reminder of how incredible the growth potential is for Mongolia, but at the same
time how fragile the economy is. It is not immune to external shocks and does not have thick
enough buffer to ease cyclical trends or navigate populist policy movements. It seems that 2013
will mark a higher growth trigger primarily by public funds investments in infrastructure and
construction and, of course, by Oyu Tolgoi. If not carefully managed, this may result in a crowd-out
effect of the private sector by government.
For complete 2013 Mongolia economic forecasts report from Mandal Asset Management, refer to
BCM website – Mongolia Reports.
Source: Mandal Asset Management
STUDY SHOWS 10 PERCENT OF UB DEATHS RESULTED FROM AIR POLLUTION
The American Center for Mongolian Studies (ACMS) presented its latest findings, showing that about
10 percent of recent deaths in the capital may be related to poor air conditions.
Ryan Allen, Ph.D. of Simon Fraser University, Canada, on 22 January said 10 percent of deaths in
Ulaanbaatar could be attributed to outdoor pollution. Allen, who last visited Mongolia in 2010, said
the findings came from a two-week analysis of pollution. The study measured the particulate
matter (PM) in the air, which has been determined to have a strong correlation with public health.
The study found that the burning of diesel fuel and coal in ger stoves have contributed to a PM of
2.5. According to the World Health Organization (WHO), 89 percent of the world's population lives
in conditions of high air pollution. Ulaanbaatar is the second most-polluted city in the world.
But there are no safe levels of air pollution, said Allen, who further suggested that in the near term
intervention would be needed to manage the situation. Allen and his team will conduct further
research at the Sukhbaatar District of Ulaanbaatar as well as some other nearby areas. He said
Ulaanbaatar presents itself to be the perfect setting for such research because of its relatively
small population.
Source: Info Mongolia
WIND FARM COULD TILT UB FROM COAL TOWARD GREEN ENERGY
Mongolia's attempt to wean itself away from a coal-based energy supply will be crucial in designing
new energy policies in the country.
Mongolia's potential for harnessing renewable energy is huge, proponents say. In 2005, the
government passed the Renewable Energy Program, mandating that green energy sources account
for 20 to 25 percent of Mongolia‘s needs by 2020. Renewable energy is nothing new for Mongolia: It
is common to see a remote nomad's ger fitted with solar panels and windmills powering satellite
receivers.
Newcom Group LLC, the country's largest Mongolian-owned private mobile telecom provider, is
helping finance the USD 80 million joint venture as is the European Bank for Reconstruction and
Development (EBRD).
"Extensive wind-mapping data has shown Mongolia has the wind capacity to generate enough
electricity to supply all of China's electricity needs," said B. Byambasaikhan, CEO of Newcom Group.
The cost has decreased rapidly recent years, making wind harvesting the most suitable renewable
energy for commercial operation in Mongolia, he said. But it is still more expensive than coal,
critics contend. And coal is a much better bet to bring in much-needed revenue in the coming year
and meet the country's power needs, they say. With estimated reserves of 150 billion tons,
according to the Ministry of Mineral Resources and Energy, the country is experiencing a coal rush.
Apart from the higher investment costs, wind power is unable to provide nearly enough power to
heat homes during Mongolia's bitterly cold winters when total heat demand from the country's
combined heat and Power (CHP) plants exceeds the level of electricity production. Stakeholders in
the Salkhit wind farm are under no illusion that renewable resources will replace coal any time
soon.
"Of course if you're sitting on the largest untapped coal deposit in the world, it puts the whole
renewable energy issue a little in the background," admits EBRD resident head Philip ter Woort. But
with mounting environmental problems in Mongolia, it makes sense to examine renewable options,
he added.
Source: Eurasianet
WANDERS NEVER CEASE: THE NOMADIC LIFE OF MONGOLIA'S KAZAKH EAGLE-HUNTERS
Kazakhstan and Mongolia share no common border, but at the closest point, where China to the
south meets Russia to the north, they are less than 40 kilometers apart. And the two countries
share much else: the world's first-and second-biggest landlocked countries respectively; both are
heirs to the legacy of Chinggis Khaan; both have tiny populations considering their vast size; both
amaze the eye with their endless perspectives; and both gladly discarded their Soviet overlords and
sent the Red Army packing when the Bolshevik experiment bit the dust.

Yet the Kazakh nomads, though they were accepted—Islamic religion, Turkic language and all—as
part of the traditional Mongolian mix, had a hankering for the company of their co-nationals. So
when Nursultan Nazarbayev, the ruler of Kazakhstan since before the collapse of the Soviet empire,
invited them to return "home" en masse, the population of Bayan-Olgii crashed from 102,000 in
1991 to 75,000 in 1993. Twenty years on, many say the experiment has failed. Although
Nazarbayev's appeal, post-Communism, was to Kazakh nationalism, the native traditions which the
nomads represented, whatever their sentimental value, have no place in the country he has
engineered—a place which today, thanks to its huge oil reserves and the ambition of Nazarbayev
himself, has more in common with the hyper-modern monarchies of the Gulf than with Mongolia.
So the exodus has been inverted. Though many of the Kazakhs confronted previously unimagined
obstacles of passports, visas and guarded frontiers, many have returned to Mongolia. At the last
estimate, in 2009, the Kazakh population had increased to more than 93,000.
And if, even in Mongolia, the old ways seem increasingly anachronistic, the fascinations of hunting
with eagles, and the winter festivals in which the sport is celebrated, attract a growing following
among visitors from Europe and the United States. Challenged on all sides by modernity, there is
life in the eagle hunter and their fabulous birds yet.
Source: The Independent
EAGLE HUNTING SUSTAINS KAZAKHS' LIVING LEGACY
Eagle hunting is a seasonal pastime, only practical in the autumn and winter after the birds have
molted. Orisbai Shatirbai's family of sheepherders moves between three steppe camps in spring,
summer, and early autumn. Ahead of the brutal winters, each October the family retreats from
their felt yurts to a couple of houses nestled in a hillside a few miles outside of the small, western,
Mongolian town of Tolbo. There, Shatirbai and his wife Khama live with their youngest son and his
large family.
The day before the hunt, Shatirbai's falcon, Hiran, is brought inside the house; she must get ample
exercise to make her hungry enough to hunt for a fox. Shatirbai prepared Hiran by tethering her to
a thick mitt that he then rocked up and down rapidly for several minutes at a time, as she tries to
hold on like a cowboy on a bucking bronco. One need spend only a few minutes with Shatirbai and
Hiran to see their strong relationship.
One morning, after reaching the top of a rocky bluff, Shatirbai removed Hiran's hood and she
quickly alighted toward something no one else can see. After swiftly coasting down on a scuttling
fox, the bird lashes its talons and elegantly sinks them into its prey.
Shatirbai could not be happier. Sitting with his bird, his son, and the dead fox, he posed proudly for
a photograph. Kazakhs both in Mongolia and across the border in Kazakhstan have strived to
preserve their rich nomadic cultural traditions in modern times. At least for today, in a desolate
swath of the great Central Asian steppe, that heritage is alive and well.
Source: Eurasianet
ROUBINI: „HYPED UP‟ BRICS RISK SUCCESS BY GROWING STATE ROLE IN ECONOMY
The biggest developing nations risk overturning the achievements of the past decade by increasing
the state's role in the economy, according to Nouriel Roubini. The comments come as Mongolia's
government looks to take a more active role in the economy with legislation such as the Strategic
Entities Foreign Investment Law (SEFIL) and the draft Minerals Law.
Roubini—dubbed Dr. Doom for predicting hard times before the global financial crisis began in
2008—said Brazil, Russia, India and China (BRICs) have been moving away from market economies
recently.
"BRICs have been hyped up too much," Roubini said in an interview Friday at the World Economic
Forum's annual meeting in Davos, Switzerland.
"Too much state role in enterprises, banks, resource nationalization, protectionism, lack of
structural market-oriented reforms that increase the size of the private sector—this is happening in
most of BRICs."
China maintained control of its biggest companies, Russian businesses spent shareholder money on
projects favored by the government, and Brazilian politicians intervened to cut utility rates last
year.
Developing economies are set to grow by an average 5 percent worldwide this year, compared with
1 percent for advanced nations, according to Roubini. In Latin America, Chile and Columbia "have
done a lot of things to improve the potential for growth," he said.
Source: Bloomberg
DESPITE FEWER M&A DEALS, VALUES REACH POST-CRISIS HIGH, SAYS PWC
Despite a 9.6 percent decline in deal volumes in 2012, the total value of announced mergers and
acquisition deals climbed 10.5 percent to reach its highest level since the market peak in 2007,

auditing house PricewaterhouseCoopers (PWC) revealed on Tuesday in its latest deal report ―2012
Year in Review: Q4 Deals and 2013 Outlook.‖ Overall, there were 2,811 announced transactions
worth USD 2010 billion in 2012.
―The key driver behind this growth has been a resurgence of activity in deals valued at over USD 1
billion. These ―mega deals‖ accounted for USD 123 billion in 2012, an increase of some USD 30
billion over 2011, which compensated a modest decrease in the aggregate value of sub-USD 1 billion
M&A activity,‖ PwC Canadian deals leader Nicolas Marcoux said.
The resource industries and the real estate sector continued to dominate in 2012. The energy
sector regained the title of the top targeted industry in Canadian deals—accounting for 29 percent
of published transaction values. The metals and mining sector was third, representing 11 percent
by value of Canadian deal target activity. Marcoux said he expected sustained growth in the
Canadian merger and acquisition market thanks to low interest rates, a surplus of cash and plenty
of liquidity in the debt market.
The report also found more mega deals were announced in 2012 than at any other time in the past
five years. The 49 deals over USD 1 billion were worth a total of USD 123 billion, or more than 58
percent of all deal values during the past year.
TIME FOR RUSSIA TO DELIVER ON REFORM ROADMAPS
2013 is a crucial year for Mongolia's northern neighbor, Russia.
This is the first year of the new post-crisis modus operandi. Everything has changed since the 2008
crisis. The twin surpluses that Russia has been used to will give way to deficits and high oil prices
no longer grant growth.
The Kremlin should have reformed and diversified the economy already. Now it has to—if not Russia
will face stagnation. This is the road that is forcing the Kremlin into action in the form of 22
roadmaps for reform, which were launched the minute Russian President Vladimir Putin was
inaugurated (literally).
The chart shows how much there is to do. On some things, such as contract enforcement and tax
administration, Russia does very well. Yet on other issues it made no progress at all. The Federal
Customs service, for instance, has previously managed to scupper all the reforms the Kremlin
ordered.
Source: Business News Europe
POLITICS
BCM BOARD MEMBER‟S EXIT BAN FROM MONGOLIA PASSES 90-DAY MARK
BCM board member and SouthGobi Sands LLC President Justin Kapla has been under an exit ban
from Mongolia for over three months.
Kapla's family in Minnesota believes his exit ban began at the same time as SouthGobi Attorney
Sarah Armstrong, whose circumstances received much greater press. Armstrong's exit ban was lifted
24 December and it had been assumed that no other SouthGobi employees were left living under an
exit band.
"We are aware of the case of U.S. citizen Justin Kapla, who has an exit ban in Mongolia," said a U.S.
State Department official. "We are in contact with Mr. Kapla and are providing appropriate
assistance."
Kapla previously had an exit band of several weeks in June 2012, prior to being able to visit his
family in Minnesota. He discovered he was under an exit ban once again in October 2012, when he
tried to take a trip to his company's office in Hong Kong.
Kapla has worked in Mongolia for most of the past decade, first with Boroo Gold then with
SouthGobi. His wife is a native of Mongolia and they have two children.
While the press surrounding Armstrong was tremendous, very little was said about Kapla's case. One
article wrote, "It is believed SouthGobi Sands President Justin Kapla, a U.S. citizen, has also been
banned from leaving the country." However, much else was never confirmed by any media source.
The exit ban seems to be following a growing trend in Mongolia to abuse legal mechanisms of this
sort. The U.S. Embassy in Ulaanbaatar writes in its 2013 Investment Climate Statement on
Mongolia, "...Mongolian public and private entities continue to abuse the exit visa system to
pressure foreign investors to settle civil and commercial disputes... Neither current law nor
regulation establishes a clear process or time-table for settlement of such issues."
Source: Seeking Alpha
MONGOLIAN RAILWAY APPROVED FOR RAILWAY CONSTRUCTION
The Cabinet of Ministers gave approval to Mongolian Railway for construction of rail infrastructure.

Approval follows the government's licensing of the firm for the construction of railway tracks and
related infrastructure. Following its licensing the company was ordered to seek out financing by
partnering with local and international partners.
The Development Bank of Mongolia has agreed to provide USD 55 million for the implementation of
the new railway project to begin February this year.
LINK BETWEEN COURT OFFICIAL AND MIAT SCANDAL FOUND
Investigators have found a link between an official from Mongolia's Constitutional Court and the
former MIAT Mongolian Airlines head arrested for a money-laundering scandal.
Nine people were arrested and more are under investigation for the crime. Last weekend police
sealed financial documents containing information regarding Mongolian Airlines Group, Mongolian
Air Trans and several other companies. Investigators are also looking into their bank accounts and
their recent transactions.
A number of suspicious transactions have been found between the former governing board member
B. Erdenbileg and D. Sugar, said investigators. Sugar is a member of the Constitutional Court,
however, and holds legal immunity while in office. Investigators said they had found evidence that
Erdenbileg created a special consulting position for a MIAT representative office in Japan for Sugar
and paid his monthly salary and rental fees. They also said Erdenbileg transferred large sums of
cash through his brother's company Mongol Ceramic to a Japanese real estate firm, seemingly
indicating an intention to purchase property in Japan.
Source: Unuudur
TAXATION OFFICIALS ARRESTED ON CORRUPTION CHARGES
Officials from the Independent Authority Against Corruption (IAAC) arrested the chair of the
Internal Audit and Monitoring Division and other authorities for alleged corruption.
Chairman Ch. Ganksukh, his son Ch. Enkhbat, chair of the State Budget Revenue Department, and
tax inspector Byambasuren were arrested for concealing tax revenue and bribery, said IAAC
officials. An unnamed source said that Gansukh had deposited MNT 1 billion to MNT 2 billion in
Byambasuren's bank account and USD 4 million in the account of Enkhbat's wife.
Officials searched the suspects' offices and homes and confiscated their computers. Some people at
the General Department of Taxation said Gansukh had a relationship with Byambasuren. Enkhbat
had worked previously as the chair of taxation for Bayangol District before he was let go when he
was accused of corruption. Enkhbat, however, won his court case and was later appointed to his
position at the General Depart of Taxation.
Source: Unuudur
FORMER AGRICULTURE OFFICIALS SUSPECTED OF EMBEZZLEMENT
Former officials from the Ministry of Agriculture are under investigation for allegedly embezzling
MNT 12 billion from a Japanese rice fund.
Former officials L. Duinkherjav and N. Zogtsaran are being investigated for the alleged personal use
of MNT 12 billion of 9,500-tons of rice sold for MNT 900 million.
CHINA'S TOP LEGISLATOR TO VISIT MONGOLIA
Top Chinese legislator Wu Bangguo will pay an official visit to Mongolia en-route to the 21st annual
Meeting of Asia-Pacific Parliamentary Forum in Vlivostok, Russia. The meeting is scheduled from 27
January to 1 February.
Wu, chairman of the Standing Committee of the National People's Congress, was invited by
Valentina Matviyenk, chairwoman of the Russia's Federation Council and Mongolia's Parliament
Chairman Z. Enkhbold, respectively.
Source: People Daily
SMOKERS, PUT OUT YOUR CIGARETTES IN MARCH
Mongolia will begin enforcing its smoking ban beginning next month.
Smoking will be banned in all public areas, including bars, restaurants, office buildings, residential
stairwells, playgrounds, parks, trains, airports and train stations. Schools, kindergartens and
dormitories and their surrounding areas will also be smoke-free.
The law also prohibits the sale of cigarettes within 500 meters from schools and dormitories and
raises the legal age for purchase from 18 to 21 years old. Violators of the law will have to pay a
MNT 50,000 fine, while businesses will have to pay 25 to 50 times the minimum wage.
Smoking habits are growing worse in Mongolia, according to the World Health Organization (WHO).
It reported that in 2009 that 48 percent of Mongolian men and 7 percent of women smoke regularly.
GOVERNMENT DEBATES BAN OF CHINGGIS FROM VODKA BOTTLES

Parliament has begun its debate on how it may regulate the use of Chinggis Khaan's name and
image.
Proponents of the motion would like to prevent the cheapening of the famed 13th century
conqueror. The legislation would grant the use of Chinggis Khaan's name and image only for
government purposes and explicitly forbid its use to market alcohol and tobacco products.
Mongolian law currently allows Chinggis' name and images and the Soyombo emblem—which is
featured in Mongolia's flag—as permitted for use for art and culture.
MAN JAILED FOR CHEATING FORMER SUMO CHAMP DAGVADORJ
A 78-year-old Japanese businessman was sentenced to five-and-a-half years in prison last Friday for
swindling former Mongolian sumo grand champion D. Dagvadorj out of USD 1.1 million.
Takeo Kikuchi conspired with an associate in 2009 to cheat the then-champion, who goes by the
name Asashoryu in Japan, by saying they needed the money to help develop projects in Mongolia,
the Tokyo District Court said.
Kikuchi and Takaharu Kumada, 65, told the wrestler they had gold ingots abroad and wanted to
melt and cash them in before investing in Mongolia, presiding judge Yukihiko Imasaki said. Kumada
has been tried separately on the same charges and is awaiting sentencing.
Dagvadorj handed them about JPY 100 million (USD 1.1 million) after they asked him to help pay an
overdue storage fee for the gold.
"What the defendants told him [Dagvadorj] were all false," the judge said. "We cannot help but
sympathize with him as the defendants took advantage of his feelings for his country, although he
was so naive as to respond to such a suspicious proposition," he said.
Source: Yahoo News
IT'S GOODBYE LENIN, HELLO DINOSAUR AS FOSSILS HEAD TO MONGOLIA MUSEUM
Once he bestrode the world, lending his name to more museums, streets, monuments and public
institutions than any other 20th century figure. But in Ulaanbaatar, at least, it is goodbye Lenin, as
a political dinosaur makes way for the real kind.
Mongolia is to transform a museum once dedicated to the Soviet dictator into a center for its
wealth of fossils, including a 70 million-year-old Tyrannosaurus bataar specimen. The grand
building, which still boasts a giant bust of Vladimir Ilyich, has been used as offices for several
years. The government has now earmarked the complex for a new dinosaur museum.
―Mongolia has been sending dinosaur exhibits abroad for 20 years, while not having a museum at
home,‖ said Ts. Oyungerel, the Minister of Culture, Sports and Tourism. ―We have a wonderful
dinosaur heritage, but people are not aware of it.‖ She said that fossils lent to overseas institutions
and specimens smuggled abroad illegally would fill several facilities if they were all brought home.
The center will also be home to a new register for Mongolia's dinosaur finds, allowing proper
tracking of discoveries. The minister said she hoped that education via the Ulaanbaatar museum
and other new exhibits around the country would help turn people into protectors of Mongolia's
heritage and deter smuggling. The government also hopes to encourage tourism.
International palaeontologists and the public have been interested in the country's treasures, but
many in Mongolia had been unaware of them, she added. She described running an outreach
program for children who lived next to fossil sites in the Gobi, but who thought dinosaurs were
mythical creatures.
―They should know what they have in their backyard... [but] there were no books they could read
in their language and no toys or television programs to learn about their inheritance.‖
The paleontologist has been at the forefront of efforts to promote public interest in dinosaurs and
protect specimens such as the Tyrannosaur bataar. The government has called a new dinosaur
center as an urgent priority because the natural history museum is in a state of disrepair, and other
specimens are due to return home soon.
Source: The Guardian
_______________________________________________________________________________________________
NEW MONGOLIAN LAWS
The following laws and amendments and addenda to laws were published in the latest weekly
Government bulletins. Unless otherwise decided by Parliament, they will take effect ten (10) days
after publication.

Date Laws
18.01.2013 Law on Tax Experienced Services
Law on Adhering the Law on Tax Experienced Services
Amendments to Law on Audit
Addendum to Law on Special Licence for Corporate Services
Addendum to Law on Fee of State Blank Documentation
Law on Invalidity of Some Enactments of General Tax Law
Law on Mental Health /Revised Version/
Law on Invalidity of Mental Health Law
25.01.2013 Amendments to Law on State Grand-Khural
Please visit BCM's website, Legislative Working Group, for a summary of new Mongolian laws. BCM
members who wish to access complete versions of the laws and regulations in Mongolian language
are welcome to email the BCM office: info@bcmongolia.org.
ANNOUNCEMENTS
COAL MONGOLIA 2013, 21-22 FEBRUARY, SS CONVENTION CENTER
Dear BCM member,
It is pleasure to invite you to attend the Coal Mongolia 2013 the Third International Conference and
Exhibition. The conference will take place at SS Convention Center, Ulaanbaatar, Mongolia, on
February 21-22, 2013, and it will be hosted by Mining.mn and Ministry of Mining.
The New ―Reform Government‖ is to decide the next 4 years Mongolian Economic growth,
completing/continuing the prior Government work and establishing the long-term policy. The
―Reform Government‖ will present their policy on coal mining industry for the first time since
election.
The Conference will present the following topics:
- Government Position on:
 Foreign Investment Policy and foreign relations
 Developing the coal sector
 Mining legal environment and mining laws and regulations
 Infrastructure (energy, roads and others)
 Environment and socials issues
Delegates will be introduced to ―Draft Minerals Law amendment‖ by Unurbayar, Legal Consultant to
President of Mongolia, followed by the Panel discussion with sector leaders such as Damba,
President of MNMA, D. Zorigt, ex-Minister of Mining, L. Naranbaatar, President of Glogex, and
others.
Keynote speakers are:
• Gankhuyag.D, Minister of Mining
• Batbayar. N – Minister of Economic Development
• Oyun.S – Minister of Minister of Environment and Green Environment
• Arshad Sayed, President of Peabody Energy Mongolia
• Battsengel.G, CEO of Mongolian Mining Corp. and many more.
BCM is a supporting organization of Coal Mongolia 2013 and BCM members will have 10%
discount for registration. Please contact Saruul at saruul@bcmongolia.org or 317027 to get a
special discount code.
Log on: www.coalmongolia.mn; Contact us: Tel: 976+70115590; Email: info@coalmongolia.mn.
____________________________________________________________________________
MINES AND MONEY HONG KONG, 18-22 MARCH

Mines and Money Hong Kong is where mining companies from around the world come to raise
capital in Asia and meet with investors from Hong Kong and mainland China.
Cementing its position as a major fixture on the global mining investment circuit, Mines and Money
Hong Kong 2013 will bring together over 3500 institutional investors, mining entrepreneurs, brokers
and investment analysts for five days of high-value networking, investment analysis and deal-
making, from 18-22 March.
Click here to read delegate feedback on the 2012 event and learn why the industry views Mines and
Money Hong Kong as a ―must-attend‖ event.
The exhibition floorplan for Mines and Money Hong Kong 2013 is already filling up fast – click here
to see the list of mining companies already signed up to showcase their projects and investment
opportunities at the event.
Bringing together more investors and investment opportunities than ever before, Mines and Money
Hong Kong 2013 is an event you will benefit from attending.
What‟s new in 2013?
§ Enhanced pre-event networking to facilitate meeting arrangement
§ More in-show meeting rooms to facilitate one-2-one meetings onsite – (sold out in 2012)
§ Extended exhibition to provide space for 320+ mining companies to showcase their
projects and growth prospects – (sold out in 2012)
§ Larger venue for the black tie Mines and Money Hong Kong 2013 Asia Mining Awards Gala Dinner –
(sold out in 2012)
§ Dedicated investor invitation team to ensure maximum investor attendance
Mines and Money Hong Kong will also provide…
§ A high-level conference covering the most relevant topics for your business
§ Leading international speakers from across the mining and investment sectors
§ Project spotlight presentations showcasing a wide array of mining investment
opportunities
§ Superb networking opportunities with decision-makers at the highest level
§ A bustling exhibition offering business opportunities at every turn
§ The largest gathering of investors focused on the mining sector in the Asia-Pacific region
As usual, BCM is supporting this event and members will get 15% discount for registration.
MINER &SUPPLIER CONFERENCE, 14-15 MARCH, ULAANBAATAR
The Third Annual Miner &Supplier Conference will be held at Chinggis Khan Hotel from 14 to 15
March. BCM members will receive a 10 percent discount for registration.
This year the forum will be organized under the slogan ―Maximizing Mining Capabilities with
Effective Procurement Strategies.‖ It several goals include improving contributions to society and
the national economy, promoting environmentally friendly products and technology and increasing
business coherence between suppliers and mining businessmen.
BCM members will have 10% discount to register. Please contact Saruul at
saruul@bcmongolia.org or at 317027 to get a special discount code. For more information visit
www.minerandsupplier.com.
MONGOLIA INVESTMENT SUMMIT 2013, APRIL 16-18, LONDON
Business Council of Mongolia members are invited to attend the Mongolia Investment Summit
London 2013 and receive a 15 percent discount on their registration fee.
With significant amounts of investment in Mongolia traditionally coming from Asia there are new
opportunities to be explored in the Western Hemisphere. Investor interest is high from the west and
fund managers, private investors and financiers want to gain exposure to Mongolian growth.
Mongolia Investment Summit London in April will provide an important opportunity to meet these
investors, raise the profile of Mongolia and promote your business.
The event provides an excellent opportunity to meet with major investors, mining groups,
government officials and real estate specialists to identify new business partners. At the event, the
views on the country will be discussed by investors from companies such as Barclays Natural
Resource Investments, HSBC Global Asset Management, Collabrium Capital and more. The event
provides an opportunity not to be missed.

Enter the discount code “Business-Council-Mongolia-Special” when you register to receive the
early bird discount plus an additional 15 percent off.
“MM TODAY” on MNB-TV, Friday‟s at 18:50
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 from 18:50 to 19:00 tonight. Tune in to watch this program that reports stories from
today‘s BCM NewsWire.
______________________________________________________________________________________
BCM‟S MINING SUPPLY CHAIN DATABASE
The new version of BCM‘s Mining Supply Chain Database is in use. Following the initiative of Oyu
Tolgoi LLC, the BCM has maintained the Mining Supply Chain Database since March 2009. It is an
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.
As of December 31, suppliers registered on the database totaled 1,405. During 2012, 251 new
supplier entities joined the Database and 236 prior supplier registrants updated their company
profiles. In addition, 22 buyers were also registered and 82 tender announcements were posted.
We are inviting all Mongolian mining suppliers and buyer companies to join the Mining Supply Chain
Database. Please visit here for registration—FREE!
If you have any questions regarding the database, please contact Undral at undral@bcmongolia.org
or 317027.
__________________________________________________________________________________________
BCM WEBSITES
MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS
The ‗Presentations‘ section on BCM‘s Mongolian website can be reached via bcm.mn/itgeluud.
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', „MONGOLIAN BUSINESS NEWS‟,
„PHOTO GALLERY‟
On BCM‘s English website, the ―Resources‖ and ―Presentations‖ sections are available. The
following 3 presentations were added from the BCM 28 January monthly meeting:
 Dr. Katsuhide Nagayama, JICA Team Leader, JICA Project Team – ―The UB-Metro toward a
world competitive city - Ulaanbaatar‖
 Chris Adsett, Chief Executive Officer, Techenomics Mongolia – ―Importance of Oil Analysis
to Industry‖
 Mandar Jayawant, Managing Director, Mongolian Opportunities Fund – ―The Value of Private
Equity for MoHYPERLINK
"http://bcmongolia.org/images/Presentations/MMJan2013/mandar.pdf"nHYPERLINK
"http://bcmongolia.org/images/Presentations/MMJan2013/mandar.pdf"golian Companies‖
Please also note recent postings from BCM‘s 11 December, 5 November and 24 September monthly
meetings; 25 presentations from the Mongolian Investment Summit 2012 on 30-31 October in Hong
Kong; and 9 presentations from Discover Mongolia 2012.
The ―Mongolia Reports‖ section includes the ―2013 Mongolia Investment Climate Statement‖ by the
Economic and Commercial Section of the U.S. Embassy; ―How Mongolia will perform in 2013‖ by
Mandal Asset Management; ―Mongolia Business Owner and CFO Survey result‖ by BDSec JSC; ―The
fiscal regime for mining - a way forward‖ by IMF Fiscal Affairs Department; ―Mongolia-a

supplement to Mining Journal‖ from Mining Journal October, 2012; ―Macro Overview‖ September,
2012 by EPCRC; ―Taxes for Expatriates in Mongolia‖ from PricewaterhouseCoopers.
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.
The ―Photo Gallery‖ contains photos from the 5th Anniversary BCM Gala dinner on November 5.
The BCM NewsWire will continue to be issued each Friday, incorporating items already on the home
page for a consolidated account of the week‘s events.
_____________________________________________________________________
SOCIAL NETWORK WITH BCM
The Business Council of Mongolia (BCM) has expanded its reach to your favorite social networks.
Keep up to date on the latest business deals in Mongolia and how the climate for investment is
improving each day with BCM.
Connect with BCM on Linked-in to join the diverse group of professional contacts creating a better
business environment in Mongolia today.
Add BCM on Facebook at http://www.facebook.com/pages/THE-BUSINESS-COUNCIL-OF-
MONGOLIA/129826330435540 to read the latest announcements and comment on events carried in
the NewsWire with the community.
Hear breaking news and announcements as they happen when you follow BCM on Twitter at
http://twitter.com/#!/bcMongolia.
We have now 907 fans on our Facebook fans page, 1,080 connections on LinkedIn network, and 576
followers on Twitter.
Of course for news information, interviews, event photos, and announcements regarding our
organization, visit the official BCM website at www.bcmongolia.org and www.bcm.mn.
ECONOMIC INDICATORS

NFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
December 31, 2012 *14.0% [source: NSOM]
*Year-over-year (y-o-y), nationwide
Note: 14.2% y-o-y, Ulaanbaatar city, December 31, 2012
CENTRAL BANK POLICY LOAN 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]
January 25, 2013 12.50% [source: Mongol Bank]
CURRENCY RATES –
January 31, 2013
Currency Name Currency Rate
US dollar USD 1,392.30
Euro EUR 1,881.35
Japanese yen JPY 15.29
British pound GBP 2,195.03
Hong Kong dollar HKD 179.47
Chinese Yuan CNY 223.84
Russian Ruble RUB 46.39
South Korean won KRW 1.28
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.

01.02.2013, NEWSWIRE, Issue 259

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01.02.2013, NEWSWIRE, Issue 259