BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 332 – July 4, 2014

NEWS HIGHLIGHTS:

Business

Oyu Tolgoi dispute should not derail $4 bn funding, says OT director;

Oyu Tolgoi LLC makes cooperation agreement for energy generation;

Viking Mines signs second coal MoU with Mongolian power authorities;

Petro Matad loss narrows but search for farm-out partners goes on;

Development Bank borrows $75m to finance power plant;

APU opens new dairy plant;

FLSmidth nets $43 mn in orders from MAK;

MGG fills building occupancy with medical group;

Tenger Plaza opens as largest food storage market in Mongolia;

Famed German chocolate shop opens in Zaisan;

Trade Office of Mongolia opens in Hong Kong;

ADB helps Mongolia’s micro-, small- and medium-sized businesses access bank financing;

EBRD considers $15 mn in loans for small business and sustainable energy;

Voyager Resources announces management changes;

Four Mongolian university schools receive international accreditation;

GE partners with Notre Dame to build turbine research and test facility;

Australia Future Unlimited Education Fair Mongolia 2014;

Korean Air donates computers to Mongolian school;

Mongolia’s junior explorers drill despite political, financial challenges;

North Korea makes moves toward oil exploration.

Economy

Mongol Bank: FX auction, swap agreements, 1-week bills, treasury bills;

Investment official sees more diversity in investment while FDI continues to fall;

IMF director calls for fiscal tightening;

Food lab provides safer eating;

Construction for petroleum refinery on hold while seeking new location;

New road creates Peace Ave.-Seoul St. 4-way intersection;

Tourist visa changes for Mongolia in hopes of stimulating tourism;

Three Przewalski’s horses sent from Prague zoo to Mongolia;

Amur falcons return to Mongolia via Assam and Nagaland;

Copper traders look beyond China;

Surplus iron ore spells trouble for miners;

Sun finally shines on commodities;

China catches industrial polluters with drone missions.

Politics

Parliament adjourns for summer recess;

Agenda for 2014 fall session of Parliament;

Mongolia ends moratorium on issuing mineral exploration licenses;

Minerals law amendments passed by parliament, to boost exploration;

President plans to see 'Double Deel' bill passed next fall;

Jockeys under age 7 banned from Naadam horse racing;

President introduces “Smart Government” bills slated for autumn;

Public outrage forces government to withdraw land bill;

Cabinet backs ADB credit line for ger district redevelopment;

Government ministers called out by media for travel expenses;

Mongolia ranked 129th on Fragile States Index 2014;

Canada adds Mongolia to development assistance list;

Mongol Bank signs letter of cooperation with Japanese finance body;

Multinational partners conduct field-training exercise in Mongolia;

Mongolia dropped from Financial Action Task Force monitoring;

Authorities close 34 bank accounts opened by state organizations;

GIA investigates Genco program speculating on ethnic origin of MPs;

Video of racist attack against Mongolian on Barcelona train goes viral;

Mongolia’s approach: guidelines for U.S. failing North Korea policy;

Welcome to Stanistan.

Others

New Mongolian Law;

Announcements;

BCM Updates - Working Groups; Websites; Social Networks; Photo Gallery.

ECONOMIC INDICATORS

Weekly Market Indicators;

Inflation;

Central bank Policy Rate;

Currency Rates.

*Click on titles above to link to articles.

SPONSORS

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Invest Mongolia Agency

BUSINESS

OYU TOLGOI DISPUTE SHOULD NOT DERAIL $4 BN FUNDING, SAYS OT DIRECTOR

Turquoise Hill Resources Ltd.'s tax dispute should not derail USD 4 billion of project financing to

expand the Oyu Tolgoi copper mine part owned by Rio Tinto Group, a local director at the

resource‘s operator said.

―Don‘t mix the political importance of the project with this tax audit issue,‖ Ganbold Davaadorj, a

director of Oyu Tolgoi LLC, said yesterday by phone from Ulaanbaatar. The ―tax authority report is

one thing and importance of investment in the project is a completely different thing.‖

Turquoise Hill, based in Vancouver, said it had filed a notice of dispute with the Mongolian

government over an audit claiming unpaid taxes, penalties and disallowed entitlements. The

dispute delays distribution of a feasibility study for the mine‘s expansion needed for project

financing, it said. The filing is the first step in a resolution process including 60 days of negotiation,

Turquoise Hill said. The dispute may move to international arbitration if a deal isn‘t reached in that

time, it said.

Investment in underground expansion depends on resolution of the tax claims and other shareholder

issues, according to the statement from Turquoise Hill, 51 percent-held by Rio Tinto.

The Rio unit owns two-thirds of the mine operator. Ganbold said on June 23 the tax claim seeks

payment of about USD 130 million.

The director, also chief executive officer of Erdenes Oyu Tolgoi LLC, the Mongolian state company

with 34 percent of the project, said the feasibility study shouldn‘t be delayed after the tax claims.

―Investors should have provided the feasibility study two years ago, but it was always delayed,‖ he

said. Mongolia will work to resolve the disagreement without resorting to international arbitration,

Ganbold said.

Turquoise Hill said March the study would be available in the first half. Oyu Tolgoi shareholders and

the Mongolian Minerals Council need to approve the study for a project financing package with bank

terms that are set to expire Sept. 30.

―If both sides have interest to move the project as quickly as possible, they could provide some

general information earlier,‖ Ganbold said. ―But we have zero information that is the problem.‖

Source: Mine Web, Bloomberg

OYU TOLGOI LLC MAKES COOPERATION AGREEMENT FOR ENERGY GENERATION

The Cabinet Secretariat on 3 July resolved to make a cooperation agreement with Oyu Tolgoi LLC

for a regular power source to replace its current energy sourcing from China's Inner Mongolia

Autonomous Region.

Energy Minister M. Sonompil and Energy Regulation Committee Chairman S. Otgonbayar signed the

agreement, which sets out to provide power to the copper mine from a coal-fired plant at the

Tavan Tolgoi coal mine. The government plans to develop the 450-megawatt Tavan Tolgoi Power

Plant near the licensed coal deposits owned by state miner Erdenes Tavan Tolgoi LLC. Construction

would include a 150-kilometer power line from the Tavan Tolgoi site, which is located near

Tsogttsetsii Soum and 450 kilometers from Ulaanbaatar, to the Oyu Tolgoi mine, which would be a

main consumer of the energy generated from the plant.

The 2009 Oyu Tolgoi investment agreement the Mongolian government signed with investors Rio

Tinto PLC and Ivanhoe Mines Ltd. (now known as Turquoise Hill Resources Ltd.) requires that a

power plant be built within four years of the launch of production. The agreement allows for the

power to come from a power plant funded by the investors, a third party, or the country's central

energy grid. Oyu Tolgoi plans to have its power supply ready by the second half of 2017.

Source: Info Mongolia

VIKING MINES SIGNS SECOND COAL MOU WITH MONGOLIAN POWER AUTHORITIES

Viking Mines Ltd. has signed a second future coal supply agreement with a Mongolian government

power authority for its Berkh Uul bituminous coal project in northern Mongolia.

The non-binding Memorandum of Understanding was signed with Erdenet Power Plant state-owned

stock company (EPP), a major supplier of electricity to the Erdenet copper mine.

―The fact that the Berkh Uul project continues to be recognized by the Mongolian Government as a

potential key supplier of coal to the EPP is a further significant milestone in the development of the

project,‖ managing director Peter McMickan. He added, ―This second MoU provides more evidence

of the potential customer base for Berkh Uul‘s coal.‖

The Erdenet Power Plant is a 36-megawatt power plant that consumes about 250,000 tons of coal a

year. The memorandum relates to the intent by EPP to enter into future purchase agreements for

Berkh Uul coal. It also establishes a basis for technical evaluation of the quality and quantity of

coal, which includes testing of a bulk sample.

The agreement with Erdenet follows an earlier agreement with Darkhan Thermal Power Plant, the

major supplier of electricity to Mongolia‘s second largest city, the commercial and industrial center

of Darkhan, and the northern region of Mongolia.

Source: Proactive Investors

PETRO MATAD LOSS NARROWS BUT SEARCH FOR FARM-OUT PARTNERS GOES ON

Petro Matad Ltd. on Monday said its pretax loss narrowed in 2013, as expenses fell at the company,

but it continues to struggle in its search for development partners for its operations in Mongolia.

The oil exploration company, with operations in central Mongolia, said its pretax loss narrowed to

USD 7.5 million from USD 12.2 million the previous year. The company, which is yet to produce any

revenue, said the reduction in losses resulted from reductions in its employee benefits expenses

and in exploration expenditures.

Petro Matad opened up a range of major fundraising and farm-out initiatives during 2013 in order to

develop its exploration assets in Mongolia, but found that investors were unsure about its assets in

the country and so not enough funding was raised to develop the sites significantly.

The company said its search for a partner has been frustrating as many have concerns over the

investment climate and geology of Mongolia. It carried out a range of new tests on its assets

towards the end of 2013 and into 2014 to help improve its prospective opportunities.

Petro Matad said the process has rekindled interest in possible partners at the site, but no

agreements have yet been reached and finalizing a farm-out agreement could yet take some time.

Source: Alliance News

DEVELOPMENT BANK BORROWS $75 MN TO FINANCE POWER PLANT

The Cabinet Secretariat 25 June approved a request from the Development Bank of Mongolia‘s

board of directors for a USD 75 million refinancing agreement with Vnesheconombank of Russia.

The funds will be used to purchase and install a 100-megawatt turbine generator at Thermal Power

Plant No. 4. Vnesheconombank has requested adjusted financing terms so that repayment is due in

2022. Mongolia has so far provided USD 48.5 million in financing to expand the capacity of Power

Plant No. 4.

The Cabinet also approved the bank‘s board to make credit agreements going forward to fund

projects, allowing for maximum debt equivalent to 10 percent of the bank‘s capital.

Source: UB Post

APU OPENS NEW DAIRY PLANT

APU JSC opened a dairy factory able to process 45 million liters a year—enough to meet annual

domestic demand.

APU partnered with Germany's GEA for E.U.-standard construction of the factory, along with 26

domestic companies and around 60 specialists from 5 countries for the assembly of machines and

equipment. APU is set to hire 100 employees to operate the factory.

Ulaanbaatar and Tuv Aimag have 10 milk collection centers between them, with up to 80 farmers

providing between 60 and 80 tons of milk a day.

Source: Udriin Sonin

FLSMIDTH NETS $43 MN IN ORDERS FROM MAK

FLSmidth has received orders worth USD 43 million from Mongolyn Alt Corp. (MAK) Group to supply

engineering, procurement and site-construction services for the Tsagaan Suvarga copper-

molybdenum concentrator project.

The greenfield plant, with a capacity of 40,000 tons a day of ore, will be located in the central part

of the Oyu Tolgoi south Gobi porphyry copper belt in southeast Mongolia. FLSmidth is currently

supplying all the main process technology for the project under a separate, previously awarded

contract announced in 2011. The order will be booked by the mineral processing division and will

contribute beneficially to FLSmidth's earnings until mid-2017.

Source: Mining Magazine

MGG FILLS BUILDING OCCUPANCY WITH MEDICAL GROUP

Real-estate development firm Mongolia Growth Group (MGG) Ltd. on 2 July announced the

completion of renovations to create a new 1,110 meter medical facility in the downtown core of

Ulaanbaatar.

MGG last April signed a lease with a ―well-established medical tenant‖ who will occupy the building

beginning in early July. The new tenant will mean the building will be fully leased.

―This renovation has been our first renovate-to-suit mandate where we have specifically designed a

property for the unique needs of a tenant,‖ said MGG Chief Executive Officer Paul Byrne.

―Furthermore, by repositioning this previously underperforming asset, we have diversified the

portfolio into a segment of the economy that is less sensitive to economic volatility.‖

Source: Mongolia Growth Group Ltd.

TENGER PLAZA OPENS AS LARGEST FOOD STORAGE MARKET IN MONGOLIA

Prime Minister Norov Altankhuyag attended the opening ceremony of a new food market that was

financed with government funds.

The new market is the biggest trade center with storage capacity in the country, with 20 tons of

storage capacity, including 10 tons of vegetable and fruit storage capacity. The facility is also

equipped with a meat processing shop able to produce 10 tons daily.

The government granted a MNT 9 billion loan for the project, using funds from the proceeds of the

2012 Chinggis bond. The market has partnered with 70 small businesses and individuals to create

1,500 new jobs. The government plans to build five more similar structures able to store meat,

fruit, and vegetables, said Industry and Agriculture Minister Sh. Tuvdendorj.

Source: Undesnii Shuudan

FAMED GERMAN CHOCOLATE SHOP OPENS IN ZAISAN

Weinrich chocolates will be carried at a new brand shop in Zaisan as well as supermarkets in

Ulaanbaatar.

German chocolate company Ludwig Weinrich GmbH & Co. KG has opened a shop at Zaisan Square.

The Weinrich 1895 label has 18 varieties of chocolate at a cost of MNT 5,000 each, while the

organic chocolate label Vivani has 24 varieties at MNT 7,000 each.

Source: Unuudur

TRADE OFFICE OF MONGOLIA OPENS IN HONG KONG

The Trade Office of Mongolia has opened in Hong Kong to facilitate trade and promote market

opportunities with Hong Kong, Mainland China, and East Asia. The founders of the Mongolia Club in

Hong Kong registered the trade office during President Tsakhia Elbedgdorj`s visit to Hong Kong

while attending The World in 2014 international summit in November 2013.

Source: News.mn

ADB HELPS MONGOLIA‟S MICRO-, SMALL- AND MEDIUM-SIZED BUSINESSES ACCESS BANK

FINANCING

Asian Development Bank (ADB) is helping Mongolia‘s micro-, small- and medium-sized enterprises

(MSME) get better access to bank financing from one of its biggest banks, through a USD 40 million

loan approved on 1 July. The loan will be used to expand the small business portfolio of Khan Bank

LLC to 35 percent of its total loans by 2020 from 26 percent in 2013.

―Access to credit remains one of the most critical obstacles to the development of the MSME sector

in Mongolia,‖ said Monisha Hermans, an ADB investment specialist. ―ADB will help address this gap

by making available at Khan Bank more loans and longer repayment terms.‖

Small-and medium sized businesses comprise 98 percent of all enterprises in Mongolia, with three-

quarters of them considered as microenterprises. It is estimated that only 10 percent of them

regularly access financing through banks, as many banks are focusing their operations on top-tier

and larger companies which are perceived to be less risky. In December 2013, ADB provided a USD

40 million loan to Tenger Financial Group including XacBank LLC and XAC leasing LLC for MSME

relending and leasing market development.

Source: Asia Development Bank

EBRD CONSIDERS $15 MN IN LOANS FOR SMALL BUSINESS AND SUSTAINABLE ENERGY

The London-based European Bank for Reconstruction and Development (EBRD) is considering

disbursing a local-currency loan equivalent to USD 5 million to XacBank LLC, a lender to micro-,

small and medium-sized businesses in Mongolia.

The loan, if approved, would be used for on-lending to ―private micro, small and medium

enterprises in Mongolia.‖ EBRD also is studying the possibility of disbursing a local-currency loan

equivalent to USD 10 million to XacBank under EBRD‘s Mongolian Sustainable Energy Financing

Facility. If the loan is approved, EBRD would also aim to assist XacBank with capacity building

regarding financing projects such as energy conservation. If funding can be secured, the EBRD loan

would be supplemented with technical cooperation to ―support the identification of sustainable

energy projects‖.

Source: Microcapital.org

VOYAGER RESOURCES ANNOUNCES MANAGEMENT CHANGES

Voyager Resources Ltd. on 1 July announced that Joe Burke has resigned as chief executive officer,

with no replacement named as of yet. The board also announced that Scott Funston has been

replaced by Jonathan Hart as the company secretary.

Hart is a lawyer who has previously worked at Perth-based law firm Steinepreis Paganin. His

experience includes due diligence investigations, general corporate and commercial drafting, public

and private mergers and acquisitions, general corporate advice in relation to capital raising, and

Corporations Act and Australian Securities Exchange (ASX) compliance. Hart is company secretary of

Paradigm Metals Ltd., Black Star Petroleum Ltd., Wolf Petroleum Ltd. and Caravel Energy Ltd.

Source: Voyager Resources Ltd.

FOUR MONGOLIAN UNIVERSITY SCHOOLS RECEIVE INTERNATIONAL ACCREDITATION

Four Ulaanbaatar-based schools recently received accreditation from the Accreditation Council for

Business Schools and Programs (ACBSP).

The Computer Science and Management School of the Mongolian University of Sciences and

Technology, Etugen Institute, Mandakh Burtgel Institute and San Institute were selected from a list

of 22 colleges and universities in four countries for accreditation and reaffirmed by ACBSP on 29

June in Chicago.

"These campuses have shown their commitment to teaching excellence and to the process of quality

improvement by participating in the accreditation process. The initial accreditation and

reaffirmation of accreditation granted to these institutions demonstrates their commitment to

provide the highest quality business education for their students," said Steve Parscale, ACBSP

director of accreditation.

Source: Montsame

GE PARTNERS WITH NOTRE DAME TO BUILD TURBINE RESEARCH AND TEST FACILITY

The University of Notre Dame and a group of partners that includes General Electric Co. (GE), the

supplier of turbines to the Salkhit wind farm, announced on June 26 a USD 36 million project to

establish the nation‘s foremost research and test facility for advancing the technology in the

massive gas turbine engines used by commercial and military aircraft, power plants and the oil and

gas industry.

Construction in South Bend‘s Ignition Park on a 43,000-square-foot building—of which 25,000 square

feet will be for the Notre Dame Turbomachinery Facility—will begin this summer and be completed

by March. The facility will be fully operational in July 2016. Notre Dame will contribute USD 7.5

million to the project. General Electric Co. has committed USD 13.5 million to fund research and

testing for five years

―The center will allow GE‘s industrial businesses to simulate full-scale engine operating

environments,‖ said Rick Stanley, vice president and chief technologist for GE‘s Power and Water

business and a Notre Dame graduate. ―The important rig testing we will do at the center builds

upon GE‘s already strong and long-standing technical relationship with the University. For years, GE

has turned to Notre Dame for top technical talent.‖

Notre Dame‘s current turbomachinery laboratory has worked with industry and government partners

to advance gas turbine engine technologies since 2003. Center researchers focus on the design and

operation of test facilities that simulate full-scale engine operating environments. The new facility,

which will feature five test bays for compressor and turbine rig testing, will advance previous work.

It also will be used to advance current working relationships with both government sponsors and all

manufacturers of gas turbine engines.

Source: University of Notre Dame

AUSTRALIA FUTURE UNLIMITED EDUCATION FAIR MONGOLIA 2014

The Australia Future Unlimited Education Fair Mongolia will be held 19 and 20 September in

Ulaanbaatar.

Now in its third year, this year‘s fair will provide Australian education providers an opportunity to

raise awareness of their institution‘s profile in Mongolia and demonstrate the quality and innovation

of the Australian education sector. Eighteen Australian institutions participated last year and there

were more than 2,000 visitors.

Source: Australian Trade Commission

KOREAN AIR DONATES COMPUTERS TO MONGOLIAN SCHOOL

Korean Air held a donation ceremony on 26 June at Gun Galuutai Complex School nearby Baganuur,

Ulaanbaatar to formally handover to the school 30 computers with desks and chairs.

Gun Galuutai Complex School has 1,800 students from the first to 12th grades. The school has

experienced teaching difficulties because of the poor IT facilities. Korean Air‘s computer donation

program started last year when it provided 30 computers for the Bolovsrol School in Mongolia. The

aim of Korean Air‘s donation program is to enable Mongolian students to keep up with technology

and learn the skills to enable them to be computer literate.

Korean Air has other corporate social responsibility projects in Mongolia, including its ―Global

Planting Project,‖ which has seen the planting of trees in Baganuur since 2004 to help counteract

desertification. Students at Gun Galuutai have also participated in this project. The Korean Air

Forest in the Baganuur area now extends to 44 hectares (440,000 square meters), consisting of some

83,000 trees. The airline has also employed local forestation experts who are residing in the area to

manage the planted trees and educate residents on forestation.

Source: Travel Daily News

MONGOLIA‟S JUNIOR EXPLORERS DRILL DESPITE POLITICAL, FINANCIAL CHALLENGES

The summer months in Mongolia are a time of big exploration for the country's army of junior

mining companies as they drill in search of the coal, iron ore, copper and gold that have put this

country on the world map for natural resources. Investor sentiment toward these companies is still

rather cool compared with the weather here, but a joint venture deal between Australia's Aspire

Mining Ltd. and Noble Group has given the sector a lift.

On June 13, Aspire Mining, which is developing coking coal assets in northern Mongolia, said it had

agreed to buy 50 percent of a venture with Noble Group as it looks to expand their partnership in

Mongolia, which already involves the Hong Kong-based global supply chain manager providing

project financing and transport for the Australian miner. But junior miners are struggling to attract

the kind of investment they are looking for due to the wider economic struggles that the country is

laboring under, and the wider global mining industry has its own problems, according to auditor

PricewaterhouseCoopers' (PwC) "Mine 2014" report. PwC cited ―diminished profitability and

shrinking cash, [and] underlying performance in the industry‖ for 2013, as well as the market

capitalization of the industry falling by USD 280 billion.

PwC found that miners operating in emerging markets last year outperformed their developed

counterparts, earning USD 24 billion collectively compared with losses of USD 4 billion in developed

markets. That is a sentiment echoed by the chief executive of local junior explorer Erdene

Resources Development Corp. ―I think we've seen a return to favor for juniors, generally,‖ said

Peter Akerley about mining worldwide. ―In regard to Mongolia, you're seeing an uptick in activity in

the past few months, but the main issue globally is there is still difficulty in attaining funds for

exploration and that‘s compounded by Mongolia being a difficult place to do business.‖

One thing holding back investors is that Mongolia‘s new Investment Law remains untested. Some

also have little faith the laws will remain consistent for very long or that Mongolia will stand by the

tax stabilization agreements introduced by the 2013 Investment Law. ―Honestly I don‘t think it‘s

been a positive change,‖ says one investor who is actively seeking to buy mining assets in Mongolia.

―It‘s quite dubious, these investment guarantees, as opposed to international agreements because

the [former] are now just permits that a Mongolian agency is giving out. They can change their mind

any time.‖ The investor, who requested anonymity, added that there was no comfort in the fact

that disputes would likely have to be resolved locally rather than through international arbitration

under the new scheme. ―The local agency will never side against the local implementers.‖

Source: BNE

NORTH KOREA MAKES MOVES TOWARD OIL EXPLORATION

A Mongolian oil company with ties to North Korea is planning to entice foreign investors in the

country‘s energy sector by showing them geological data which could indicate the presence of oil

and gas resources.

Mongolian Stock Exchange-listed HBOil JSC is planning on opening for what is known in the industry

as a data room—a place where interested parties can inspect geological information on underground

structures that could indicate the presence of oil and gas fields. The DPRK has two ageing refineries

in Seungri and Bongwha, but both need upgrading, and HBOil, via their buyout of Ninox

Hydrocarbons last year, has set its sights on tapping into onshore oil basins in the DPRK. The

purchase made HBOil the owners of a joint venture with the Korea Oil Exploration Corp (KOEC),

North Korea‘s state run oil company. Now the company is looking to assess geological data that will

tell interested companies where to begin their exploration.

―The reason people have data rooms is because they‘re trying to persuade another company to

spend money in their block, on their well. They are looking for investment. In order for companies

to make decisions about that investment, they need to see the data,‖ Alistair Fraser, EGI chair in

petroleum geosciences at Imperial College London said.

The data room will be working on digitizing data from the 1960s through to more recent 3D seismic

data. HBOil will then aim to use the data to attract international bids on onshore oil and gas blocks

on behalf of KOECII, an international subsidiary of North Korea‘s state run oil company. Mongolian

investment bank and HBOil underwriters BDSec JSC did their best in an October report on the DPRK

to dispel potential investor fears. The report calls that KOEC‘s management ―highly intelligent and

dynamic, as well as enthusiastic and appreciative of the investment HBO has made and shall make

into the country.‖

Source: NK News

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ECONOMY

MONGOL BANK: FX AUCTION, SWAP AGREEMENTS, 1-WEEK BILLS, TREASURY BILLS

The Bank of Mongolia on 3 July auctioned USD 4 million and CNY 47 million to commercial banks for

closing rates of MNT 1,827.60 and MNT 294.32, respectively. The central bank also reported that it

had received an equivalent of USD 50.8 million from swap agreements with commercial banks.

The central bank reported on 4 July the issue of 1-week bills worth MNT 211.5 billion at a weighted

interest of 10.5 percent a year.

The central bank reported on 2 July MNT 36 billion in bids for the issue of 28-week treasury bills

with a face value of MNT 20 billion. Each unit was sold at a discounted price of MNT 1 million each

with a weighted average yield of 9.787 percent. The central bank also reported on 2 July MNT 11.5

billion in bids for the issue of five-year treasury bills with a face value of MNT 10 billion. Each unit

was sold at a discounted price of MNT 1 million each with a weighted average yield of 14.75

percent.

Source: Mongol Bank

INVESTMENT OFFICIAL SEES MORE DIVERSITY IN INVESTMENT WHILE FDI CONTINUES TO FALL

Although Mongolia saw foreign direct investment fall last year, it has seen some gains in indirect

investment, said Invest Mongolia Agency Director Sereeter Javkhlanbaatar.

Mongolia saw investment of USD 600 million in investment for the first quarter of this year

compared with USD 800 million last year, said Javkhlanbaatar. He added that the number of new

companies registered was about the same as last year, with 8,600 foreign companies registered in

total.

―As of the first quarter this year, foreign direct investment was approximately USD 300 million and

foreign indirect investment was approximately USD 300 million; in total more than USD 600 million

was invested to the country,‖ said Javkhlanbaatar.

The Bank of Mongolia reported a 65 percent fall in foreign investment for the first quarter of 2014,

year-on-year.

Source: Undesnii Shuudan

IMF DIRECTOR CALLS FOR FISCAL TIGHTENING

The deputy managing director of the International Monetary Fund (IMF) recommended fiscal

tightening and closer adherence to the principles of the Fiscal Stability law while in Ulaanbaatar at

the conclusion of his visit to Mongolia:

―In recent years, Mongolia has been one of the world‘s fastest-growing economies, vaulting into the

ranks of middle-income countries in just a few years,‖ said Naoyuki Shinohara. ―This growth was

earlier driven by large investments in the mining sector, spearheaded by substantial foreign direct

investment. But as these have dropped, growth has been held up increasingly by fiscal and

monetary stimulus. This has led to growing balance of payments pressures, the depreciation of the

tugrug, and higher inflation.‖

Shinohara said he discussed with Mongolia‘s top-ranking government officials the importance of

tighter macroeconomic policies and including spending by the Development Bank of Mongolia in the

deficit total for the country. That would mean greater fiscal prudence to maintain debt within the

restrictions in the Fiscal Stability Law. The law requires the debt-to-gross-domestic-product ratio to

remain below 2 percent.

―We also discussed the importance of strengthening bank supervision and the need to maintain

Mongolia‘s flexible exchange rate system. While such measures might entail a somewhat slower

growth path in the near term, they are critical to safeguarding domestic and external stability, and

making growth—still rapid by international comparison—more sustainable.‖

Source: International Monetary Fund

FOOD LAB PROVIDES SAFER EATING

The recently constructed Central Food Laboratory operated by the SAMO Scientific Food Research

and Manufacturing Institute opened Wednesday to improve food safety in Mongolia.

The new facility is a part of a Mongolia-Korea partnership to assist Mongolia in producing healthier

agricultural products, with Korea International Cooperation Agency (KOICA) providing financing. The

cost of the facility was USD 1 million, with USD 600,000 spent on equipment purchases and

installation and USD 400,000 on training researchers, according to reports.

―The Food Safety Law of Mongolia was approved last year and we faced an urgent need to establish

a high-capacity laboratory to enforce the law. The newly opened laboratory can detect the content

and origin of all types of food products, including meat, vegetables and flour, using nano-

technology,‖ said Deputy Minister of Industry and Agriculture Ts. Tuvaan at the opening ceremony.

Source: UB Post

CONSTRUCTION FOR PETROLEUM REFINERY ON HOLD WHILE SEEKING NEW LOCATION

The call for a new location for what is still being called the Darkhan Petroleum Refinery has delayed

construction for the project.

The National Security Council decided it would be better to have a location closer to the Mongolian

Tamsag oil fields, where there are oil exploration and production operations. That location is also

closer to the Chinese border, which is where crude oil could be imported for refinement. An

unnamed source said a new location for the refinery would likely be at Gobi-Sumber Aimag.

The feasibility study and technical assessment was made for Darkhan, where the plant project

developers originally planned to have it located. Project developers had planned to take out a loan

of USD 700 million from Japan for the project, the terms of which would remain, said the unnamed

source, and would still include a partnership with Japan's Toyo Engineering. Prime Minister Norov

Altankhuyag said the government could not provide a guarantee to any loans for the refinery,

despite hopes from project developers that it would.

Source: Unuudur

NEW ROAD CREATES PEACE AVE.-SEOUL ST. 4-WAY INTERSECTION

Prime Minister Norov Altankhuyag and Economy and Development Minister Nyamjav Batbayar

attended an opening ceremony for Marshall Street, a new road connecting the Tsetseg Center

intersection on Peace Avenue with Seoul Street.

HIB Co. led planning of the MNT 2 billion road construction project while Express Zam handled road

construction and Japan's CTI Engineering supervised. The street gets its name from its close

proximity to the Marshal Choibalsan Winter Palace. The street runs 160 meters long and is 10

meters wide. It is guaranteed for between 5 and 10 years.

The road project is one of the roads being commissioned for Ulaanbaatar's Streets program, which

was funded using proceeds of the 2012 Chinggis bond. Another intersection at Zuun Ail is also

nearly finished.

Source: Undesnii Shuudan

TOURIST VISA CHANGES FOR MONGOLIA IN HOPES OF STIMULATING TOURISM

Dreaming of a trip to Mongolia or Kazakhstan? After a change in visa regulations, they're more

accessible than ever

Many visitors to Mongolia will not need a tourist visa if they travel between 25 June 2014 and 31

December 2015. The country's immigration department has relaxed visa requirements for 42

nationalities, including: Andorra, Argentina, Austria, Bahamas, Belgium, Brazil, Bulgaria, Chile,

Costa-Rica, Croatia, Cyprus, Czech, Denmark, Estonia, Finland, France, Gibraltar, Greece, Grenada,

Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Monaco,

Netherlands, Norway, Panama, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden,

Switzerland, United Kingdom of Great Britain, Northern Ireland and Uruguay.

The United States, Germany, and Canada nationals have been able to travel to the country without

tourist visas in the past, but it is hoped that this new legislation will encourage visitors from other

countries too.

Kazakhstan officials have also relaxed tourist visa requirements. From 14 July, nationals of the

following countries no longer need visas for visits of 15 days or less: United States, Britain,

Germany, France, Italy, Malaysia, Netherlands, UAE, Korea and Japan.

Source: Wanderlust

THREE PRZEWALSKI‟S HORSES SENT FROM PRAGUE ZOO TO MONGOLIA

Three Przewalski‘s horse mares from Prague zoo were sent to Mongolia, their country of origin,

aboard a CASA military transport planes today.

This has been the fourth transport of Przewalski‘s horses to Mongolia, organized by the Prague Zoo

in cooperation with the Czech military. Since 2011, 12 Przewalski‘s horses have been sent to the

Gobi B National Park in Mongolia. All of them could stand the trip quite well and they got used to

the new habitat. This year, three other mares will join them: Ulla, Gretel and Bayan. At the very

last moment, the fourth selected mare had to be replaced but no suitable candidate was found, and

this is why only three flew to Mongolia to eliminate risks, Prague Zoo director Miroslav Bobek told

reporters.

The flight lasts 17.5 hours with an intermediate landing in Kazan and Novosibirsk. The plane will

finally land in Bulgan, and not directly in the Gobi Desert as originally planned, since the local

authorities did not allow that. From Bulgan, the mares will be driven for 7 hours to special

enclosures for acclimatization. They will stay there until next spring, when they are to be released

among other Przewalski‘s horses in the national park.

Prague Zoo is one of the main organizers of the transfers of the Przewalski‘s horse, the last of

which was shot dead in the wild 40 years ago, back to its original homeland. The transfers from

Western Europe started in the 1990s, and more than 100 horses have returned to Mongolia since

then. At present, about 1,900 Przewalski‘s horses live all over the world, including some 300 in two

national parks in Mongolia. Prague Zoo started breeding the Przewalski‘s horse in 1932. It has kept

the international pedigree book of this species since 1959.

Source: Prague Post

AMUR FALCONS RETURN TO MONGOLIA VIA ASSAM AND NAGALAND

The migration route of the Amur falcon, probably the longest bird migration from Mongolia to Africa

via Assam and Nagaland, has been confirmed recently for the first time.

The two birds—Naga and Pangti—which were fitted with tracking devices, have already returned to

Mongolia from South Africa where they had gone from Nagaland in November along with flocks of

birds they were traveling with and have reached their roosting sites in Mongolia. While starting

their journey back home, the Amur Falcon named Naga was the first one to lead the journey and

has reached Gujarat coast after taking different route during its backward journey. Naga and Pangti

have taken a different route while returning from South Africa and had entered the Indian

Subcontinent through the Gujrat coast. The two birds flew over Gujrat, Madhya Pradesh,

Jharkhand, Meghalaya and Manipur and avoided the Bay of Bangal while returning to Mongolia.

Moreover, 28 other Amur falcons were also fitted with leg bands or rings for proper study of these

migratory species, which travel about 22,000 kilometers every year from Mongolia to Africa via

Assam and Nagaland. It was in 2010 that 10 Amur falcons were fitted with satellite-tracking devices

in South Africa by a group of scientists led by Bern-Ulrich Meyburg of Germany. However, only one

bird returned to Newcastle in South Africa after completing the migration route. Amur falcons

raptors with pigeon looks are said to have one of the longest migratory routes. These birds travel

from Siberia, Mongolia and North China to Africa via India where they rest at Doyang in Nagaland

and at Nellie in Assam.

Source: Eurasia Review

COPPER TRADERS LOOK BEYOND CHINA

Some copper cargoes originally bound for China are changing course, traders and analysts say, as

falling prices in the world's biggest consumer of the industrial metal make other destinations more

attractive for sellers.

Although it's unclear exactly how much copper on ships is being diverted from China, signs of a shift

in the global metals market illustrates the probe's ripple effects and raises questions about demand

for copper from industrial consumers. Instead of being fabricated into wire and pipes, copper in

China is often used as collateral for loans. Some investors worry that copper prices, which are

sensitive to developments in China, could fall if Chinese imports slow due to the regulatory

crackdown. The so-called copper premium in China has shrunk to USD 60 to USD 70 a ton above the

current benchmark price of USD 6,970 a ton on the London Metal Exchange, according to traders.

That's half of what it was a month ago. In contrast, the premium in the U.S. has hovered around

USD 160 a ton, an indication of robust demand. The premium is a component of the copper price

that buyers pay when they want speedy delivery of the metal. When buyers are clamoring to get

their hands on the metal, the premium tends to rise, and vice versa.

"Shanghai premiums being so low, it is more profitable for traders to sell in many other locations,"

said Ivan Szpakowski, a commodities strategist at Citi Research in Shanghai.

The falling price of copper in China is also spurring holders of the metal to sell their stockpiles. A

trader based in Singapore said some copper is flowing from China's warehouses to other nations such

as South Korea. Some economists say solid demand for copper in China from the construction

industry should keep prices buoyant, with better China manufacturing data this past week boosting

investor confidence. But over the longer term, demand could fade because of slowing property

sales.

Source: Wall Street Journal

SURPLUS IRON ORE SPELLS TROUBLE FOR MINERS

As the half year end approaches one commodity stands out from the others--and not in a good way.

Iron ore has slumped 30 percent in 2014 as a wave of new supply has crashed onto the market

overwhelming demand. Barclays estimates the seaborne iron ore market is heading for a surplus of

79 million tons this year and 67 million next--but only if Chinese steel production grows at 5.1

percent. The benchmark price of ore with 62 percent iron content recently fell below USD 90 a ton

for the first time since 2012, putting a question mark over the size of potential share buybacks by

the world‘s biggest mining companies BHP Billiton and Rio Tinto PLC.

But it is not just the spot price that has captured the attention of investors, analysts and traders.

So too has the widening price differential between benchmark and lower grade ore. The spread

between 62 percent and 58 percent ore is currently about USD 17 a ton, versus an average of 10 last

year. Above and beyond the market moving into surplus James Rilett, analyst at MVS, a research

house, says a couple of factors are driving the widening ―quality spread‖.

First, there is currently a lot of lower grade product in the market due to the aggressive expansion

plans of Fortescue Metals Group. Second, there is a lower demand from Chinese steel mills, which

are favoring higher-grade material because of a push to improve utilization rates. (High grade ore

also makes for more environmentally friendly steelmaking, something Chinese policy makers are

targeting). Another reason for the expansion of the discount is reduced supplies of high-grade

Chinese concentrate production, which is needed for blending with lower grade material.

It looks increasingly likely that production and projects outside China will also have to be cut to

bring the market back into balance. As yet there are few signs of that happening. Gina Rinehart‘s

Roy Hill project in Australia is due to come on stream next year, while the acquisition of Aquila, an

Australian junior, by a Chinese led consortium could see some of its expansion plans become a

reality.

Source: Financial Times

SUN FINALLY SHINES ON COMMODITIES

After years of losses and investor pessimism the sun finally shone on commodities in the first half of

2014.

The Dow Jones-UBS index, which tracks the prices of 21 commodities, delivered total returns of 7.1

percent, outpacing U.S. equities, 10-year Treasuries and high yield corporate bonds. But the clouds

could quickly gather again if this year‘s big improvement in performance fails to entice long-term

investors back into commodities, say analysts.

―There‘s a lot resting on what happens in the second half of this year, in terms of the long term

viability of commodities [as an asset class],‖ said Kevin Norrish, commodities strategist at Barclays.

Attracted by strong returns, China‘s seemingly insatiable appetite for raw materials and low

correlation to other asset classes, investors piled into commodities before the financial crisis. In

recent years, however, long-term investors have shunned the sector as big picture strategists and

powerful consultants turned cold on oil, metals and grains because of lackluster returns and tight

correlation with other asset classes. But sentiment has started to improve this year as some of the

reasons that saw commodities become part of balanced portfolios in the first place have returned.

Strong gains have helped as has declining correlation between commodities and other asset classes.

During and after the global financial crisis, commodities moved in lock-step with equities, bonds

and the U.S. dollar as markets were gripped by bouts of ―risk-on risk-off‖ trading. That annoyed

many investors because commodities were supposed to provide diversification from other asset

classes. But that tight correlation has started to fade.

Returns from commodity investing have also improved because of a broad ―backwardation‖ in

futures markets—when prices for more immediate delivery are above those for later. A downward

sloping futures curve means investors are able to pick up a small yield each time they roll out of an

expiring futures contract.

Source: Financial Times

CHINA CATCHES INDUSTRIAL POLLUTERS WITH DRONE MISSIONS

China is turning to aerial drones to monitor pollution, with its biggest mission to date finding illegal

emissions by some of the largest industrial companies in the country‘s northern provinces.

A unit of Hebei Iron & Steel Group, China‘s No. 1 steelmaker, Shanxi Huaze Aluminum & Power Co.,

and Inner Mongolia Yihua Chemical Co. were found to have ―serious environmental problems,‖ the

Ministry of Environmental Protection said on its website yesterday. Data gathered by the drones

indicate a quarter of the 254 businesses targeted may be involved in illegal practices, it said.

Premier Li Keqiang declared war on pollution in March after swathes of northern China were

blanketed in smog and the government‘s climate-change adviser said the situation had reached

intolerable levels. Poor air quality in the world‘s biggest carbon emitter is a regional health issue

and damaging foreign investment and talent retention, World Health Organization chief Margaret

Chan warned the same month.

Hebei, Shanxi and Inner Mongolia are among the worst polluters and the focus of government

efforts to clean the environment. Seven of the 10 Chinese cities with the worst air pollution in the

third quarter of last year were located in Hebei, according to government data. Inner Mongolia is

among the country‘s biggest coal-producing provinces.

The use of unmanned aircrafts means that companies secretly discharging pollutants at night or on

weekends will find no place to hide, the official Xinhua News Agency reported, citing Chen

Shanrong, deputy head of environmental supervision at the ministry.

Source: Bloomberg Businessweek

POLITICS

PARLIAMENT ADJOURNS FOR SUMMER RECESS

Parliament broke for summer recess on 1 July—barely squeaking in some landmark legislation.

―Parliament is adjourning until the Autumn Plenary Session, while the fourth Spring Session lasted

for 62 working days,‖ said Speaker Zandaakhuu Enkhbold.

The spring session saw 9 laws, 43 amendments, 4 treaties, and 21 resolutions passed by Parliament,

in addition to two law reversals. That includes the 2015 state budget guidelines, budget forecasts

for 2016 and 2017, a socio-economic development strategy for 2015, the Protection of Cultural

Heritages law, the Law on Crude Oil, and the Law on Glass Accounts. Also noteworthy was the

passage of an amendment to the Mineral Resources Law.

During the last meeting for the spring session Parliament appointed parliamentarian D. Ganbat to

replace fellow parliamentarian Sh. Tuvendorj as chairman of the Legal Standing Committee

following Tuvendorj's appointment to Minister of Industry and Agriculture.

Source: Info Mongolia

AGENDA FOR 2014 FALL SESSION OF PARLIAMENT

The following is the legislation scheduled for discussion for the 2014 fall session of Parliament.

[Some titles do not provide further details than the vague terms provided by the Source while some

items were addressed on the final day of Parliament, before the adjournment for summer recess -

ed]:

• Draft law on the state budget 2015

• Draft law on the budget for the human development fund 2015

• Draft law on the budget for social insurance fund in 2015

• Draft resolution for the aim of state monetary policy in 2015

• ―Glass Accounts‖ transparency bill

• Trade bill

• Proposed amendments to the Minerals Law

• Revision to tax code

• Crime bill

• ―Violations‖ bill

• Domestic violence bill

• Mongolian language bill

• Proposed amendment to the Law to Prohibit Mineral Exploration and Mining Operations at

Headwaters of Rivers, Protected Zones of Water Reservoirs and Forested Areas

• ―Controls‖ bill

• Elections bill

• Political party financing bill

• Four miscellaneous bills

• Narrow gauge rail for use to transport goods to China bill

Source: Zuunii Medee

MONGOLIA ENDS MORATORIUM ON ISSUING MINERAL EXPLORATION LICENSES

Mongolia ended a four-year moratorium on issuing mineral exploration licenses, boosting

opportunities for mining companies as the nation seeks to spur investment.

A law passed by Parliament on 2 July also extends periods of exploration to 12 years from 9,

according to Otgochuluu Chuluuntseren, director general of the Ministry of Mining‘s strategic policy

and planning department. The law must be formally published before it is effective, and the

ministry must set out exploration boundaries, he said.

Erdenebulgan Oyun, vice minister for mining, said in May the law would expand the area of

Mongolia‘s land available for mining and exploration to about 20 percent from 8 percent. Mongolia

is seeking to boost the economy after almost two years of declining foreign direct investment,

including a 52 percent slump last year and 64 percent in the first five months of 2014.

―Lifting the moratorium for new exploration licenses was needed to save a sector which was

otherwise becoming non-existent because of the age of the existing licenses and limited land

available,‖ Sam Spring, chief executive officer of Vancouver-based Kincora Copper Ltd., said by e-

mail.

License rules including procedures for companies to extend them have been eased to spur

investment, Otgochuluu said. The passage of the law also increases the chance of reversing the

cancellation of 106 exploration licenses, he said. ―It is now closer to resolving that issue,‖

Otgochuluu said. ―We can handle it case-by-case.‖

The licenses, with 11 held by foreign investors including Kincora, were revoked by the government.

Source: Bloomberg

MINERALS LAW AMENDMENTS PASSED BY PARLIAMENT, TO BOOST EXPLORATION

Parliament yesterday approved changes to the nation‘s 2006 Minerals Law, a development that may

spur renewed investment in the flagging economy.

Passage of the amendments was announced on Parliament's website. The legislature, which ended

its spring session Tuesday, also passed a new law on energy to help expand that sector. In another

vote, parliament blocked government investment in the Tsagaan Suvarga copper and molybdenum

project, according to Otgochuluu Chuluuntseren, director general of the Ministry of Mining‘s

department of strategic policy and planning.

The flurry of activity comes amid Prime Minister Altankhuyag Norov‘s 100-day push to jump start

the economy after more than two years of slowing growth and plunging foreign investment. FDI fell

52 percent last year and dropped 64 percent in the first five months of 2014, due in part to plunging

coal prices and disputes with key investors, including Rio Tinto Group. Drafts of the Minerals Law

amendments included the creation of a National Geological Survey and the

formation of a Policy Council to oversee legal changes in the mining industry. The final version of

the changes hasn‘t yet been made public.

Mining law amendments will increase the proportion of Mongolia‘s area available to mining and

exploration to 20 percent from about 8 percent, by lifting a 2010 ban on new licenses, according to

comments made in May by Mining Vice Minister Erdenebulgan Oyun. The period of exploration will

also increase to 12 years from 9 years, he said. Passage of the amendments may also lead to a

resolution to last year‘s cancellation of 106 mining licenses, according to Otgochuluu.

―Uncertainty that has been hanging over the mining and exploration sector for quite some time has

been finally resolved with minimal amendments,‖ Dale Choi, head of the consultant Independent

Mongolian Metals & Mining Research, said by e-mail. Investors should ―be content that major parties

can agree at the last minute on some major issues.‖

Source: Bloomberg Businessweek

PRESIDENT PLANS TO SEE 'DOUBL DEEL' BILL PASSED NEXT FALL

President Tsakhia Elbegdorj can rejoice now that Parliament has passed his bill that he says will

improve transparency in government spending, while he remains undeterred by the denial by

Parliament earlier this year for his so-called ―Double Deel‖ bill as he seeks to resubmit the bill for

passage before the end of the year.

Parliament on 2 July voted in favor of a bill the president has dubbed the ―Glass Accounts‖ Law,

which aims to improve transparency in government spending. President Tsakhia Elbegdorj first

submitted the bill last April. Meanwhile the president hopes to resubmit another bill that failed

earlier during this session in the up-coming fall session of Parliament. The so-called ―Double Deel‖

bill would ban sitting members of Parliament from serving on the Cabinet Secretariat.

Source: News.mn, Udriin Sonin

JOCKEYS UNDER AGE 7 BANNED FROM NAADAM HORSE RACING

The State Specialized Inspection Agency has issued an order to the Federation of Mongolian Horse

Racing Sport and Trainers prohibiting children under 7 years old from participating in horse racing

this year, among other orders targeted at ensuring safety.

The order demands that all child jockeys wear protective gear and clothing, be subject to

inspection by related regulatory bodies, and advise those who take part as to their responsibilities

in managing risks. Any failures by the horse racing group would be made public, read the order.

Source: UB Post

PRESIDENT INTRODUCES “SMART GOVERNMENT” BILLS SLATED FOR AUTUMN

President Tsakhia Elbegdorj Monday introduced to parliamentarians the bills under development by

his office for his "Smart Government" initiative.

The bills, which are expected to come before Parliament in the fall session, focus on holding

elected or high-level appointed officials accountable and creating ―glass accounts‖ for greater

transparency. A bill for public hearing says about 7 basic kinds of hearings focused on the legislative

process, the monitoring of activities and budgets, appointment making, the investigation process,

administrative norms, local planning powers, and ensured civil participation in state management,

said the president. He added that Mongolia still does not have any way of regulating special laws for

state actions, which he said would be addressed by the General Law on Administration.

Source: Montsame

PUBLIC OUTRAGE FORCES GOVERNMENT TO WITHDRAW LAND BILL

Social media and the press are in a frenzy over a proposed land law that many believe would grant

foreign investors the right to buy land. The furor came shortly after anger faded out over the

proposed use of Chinese-gauge rail.

Although some experts argue in favor of the narrow gauge railway because it would save money on

coal deliveries versus the broad gauge, critics say it would threaten national security to give China

unbridled access to the country's rail network. They further point out that rail from Sainshand

Soum, where trillions of tugrug worth of industrial projects could eventually unfold, utilizes the

broad gauge and cannot make use of those same savings. The coal industry, they say, should be no

different.

―I hope the [Chinese standard] gauge bill is dropped today in Parliament,‖ reads a popular post on

Facebook by the nationalist group Dayar Mongol. ―We see the members who are pressing their

buttons while the public is clearly against it.‖

The anger expressed on social media has been attributed largely to nationalist political views and

Sinophobia, or anti-Chinese sentiment. Similar sentiment has erupted into protests over the Land

Law, a bill which was withdrawn by the prime minister last week. Many in the public were incensed

by the law because of misleading claims that it contained clauses that would make it possible for

foreign citizens to purchase and own land.

Members of the Democratic Party defended the law, saying it was wrongfully represented, and that

no clauses allowing foreign ownership were included. Various media, including Mongol TV, reported

that if passed, the law would allow foreign citizens and organizations based in Mongolia for over six

months to lease land for 60 to 100 years. But there is little difference between these long-term

leasing agreements and ownership for many. Mongolians believe that foreign ownership of land,

especially by Chinese, is a serious national security issue.

Source: UB Post

CABINET BACKS ADB CREDIT LINE FOR GER DISTRICT REDEVELOPMENT

The Cabinet Secretariat on 28 June backed a draft credit agreement for the first phase of

redevelopment of Ulaanbaatar's ger districts with the Asian Development Bank (ADB). The Cabinet

granted Minister of Economic Development Nyamjav Batbayar authorization to sign credit

agreements as a representative of the government of Mongolia for this first phase of

redevelopment.

Source: Montsame

GOVERNMENT MINISTERS CALLED OUT BY MEDIA FOR TRAVEL EXPENSES

The General Audit Authority reported last week in during Parliament that 11 ministers exceeded

their allowed spending for foreign travel last year by hundreds of millions of tugrug.

The ministers were criticized for spending taxpayer money on ―leisure and travel‖ by local news

outlets and on social media. Foreign Affairs Minister Luvsanvandan Bold, who was reported to have

exceeded his travel expense budget by MNT 558 million last year, responded in a press statement

that the allegations were untrue and that his ministry saved more than MNT 650 million last year.

―The claims of overspending for official travel of USD 558 million by the minister of foreign affairs'

for alleged travel and leisure doesn‘t match the reality, since 96 percent of this expense includes

the cost of commissioning and travel costs for the return of 39 diplomatic representative

organization workers,‖ Bold said.

Last year, Prime Minister Norov Altankhuyag promised to hold government responsible for wasting

taxpayers‘ money on travel. He said ministers would be allowed a quota for only two trips.

No actions have been taken against these ministers, although news outlets and social media are

putting on pressure for some sort of consequences.

Source: UB Post

MONGOLIA RANKED 129TH ON FRAGILE STATES INDEX 2014

Mongolia was included in the "less stable states" category on this year's Fragile States Index (FSI),

published by the Washington D.C.-based non-profit Fund for Peace. With a moderate 58.1 points,

Mongolia has been placed 129th among 178 countries, along with the likes of Montenegro, Greece,

Bulgaria, Kuwait and Romania.

The index focuses on the indicators of risk based on thousands of articles and reports that are

processed electronically. FSI divides a total of 178 countries into ten groups from "very sustainable"

to "very high alert.‖ The "very sustainable" group includes only Finland, who scored remarkably low

with 18.7 points, while African countries such as South Sudan, Somalia, Central African Republic,

Congo (D.R.) and Sudan were labeled "very high alert".

Source: Montsame

CANADA ADDS MONGOLIA TO DEVELOPMENT ASSISTANCE LIST

Mongolia has been added to Canada's list for official development assistance.

The list is updated every five years and includes 25 countries that will receive 90 percent of

Canadian foreign aid for the next five years. In 2013, the 20 listed countries received a sum total

USD 5.2 billion, or 80 percent of Canada's foreign aid during that period. Canadian Ambassador to

Mongolia Gregory Goldhawk said Canada was willing to support Mongolia's democracy and that its

inclusion would increase aid to Mongolia dramatically. Canadian aid to Mongolia has totaled USD 5.1

million since 1997.

Source: Unuudur

MONGOL BANK SIGNS LETTER OF COOPERATION WITH JAPANESE FINANCE BODY

Central Bank Governor Naidansuren Zoljargal and Japanese commissioner of its Financial Services

Agency, R. Hatanaka, on 25 June exchanged letters of cooperation to share experience and

expertise on financial markets.

Source: Bank of Mongolia

MULTINATIONAL PARTNERS CONDUCT FIELD-TRAINING EXERCISE IN MONGOLIA

Nestled in a grass-covered valley surrounded by a panoramic view of rolling hills and low mountains

lined with skyward-reaching rock formations, covered by an expansive sky that seems to go on

forever, the Five Hills Training Area of the Mongolian Armed Forces came to life with the arrival of

Soldiers for the Field Training Exercise (FTX) portion of Khaan Quest 2014, a regularly scheduled,

multinational exercise co-sponsored by U.S. Army, Pacific, and hosted annually by Mongolian Armed

Forces (MAF).

Beginning on 20 June, role players took turns challenging the students in different scenarios. In one

scenario, a man walks to the gate, a simulated unexploded bomb in his hands. The gate guards,

seeing this, direct the man to place the unexploded ordnance in a safe area and alert their

command. All the while, the instructors mark the performance into their notebooks in order to give

feedback after the training cycle is complete. After the Mongolians‘ turn, their U.S. counterparts

took their turn. In the first scenario, a group of people approach, firing AK-47 Kalashnikov rifles into

the air. The moment is tense, as they radio for backup. The group, however, does not act in a

threatening manner, and though alerted by the situation the soldiers maintain a safe posture,

allowing the group to pass by. In the after action review, the instructors inform the U.S.

participants that the group was celebrating a wedding and were firing their weapons into the sky as

is tradition in some cultures. They were right to let them pass.

A common theme that exists throughout the FTX is the need to learn to overcome language and

culture barriers, especially when working with multinational forces in operational environments

where communication is key. ―It‘s a little rough in the mornings with translation,‖ said Staff

Sergeant. Aaron Callahan, a combat medic section noncommissioned officer at the Alaska Army

National Guard. It takes a lot longer than we had anticipated for some of the slideshows, but the

MAF forces really picked up on all the treatments well.‖

Source: Defense Video & Imagery Distribution System

MONGOLIA DROPPED FROM FINANCIAL ACTION TASK FORCE MONITORING

The Financial Action Task Force (FATF) said it had found Mongolia had addressed security issues

related to the financing of criminal and terrorist groups at a plenary meeting in Paris, France on 25

to 27 June.

FATF noted the significant progress Mongolia had made on its anti-laundering regime as well as

efforts to combat the financing of terrorist groups. The group first identified Mongolia's weaknesses

on these fronts in June 2011 and the country has since worked to mend these gaps. Mongolia was

one of five countries to have the need for monitoring lifted. The others were Kenya, Kyrgyzstan,

Nepal, and Tanzania.

Source: Info Mongolia

AUTHORITIES CLOSE 34 BANK ACCOUNTS OPENED BY STATE ORGANIZATIONS

Finance Minister Chultem Ulaan has advised Parliament to take legal action against the state

organizations that have opened illegal bank accounts.

The National Audit Office (NAO) has closed 34 illegal accounts belonging to 53 organizations out of a

total 108 accounts it says are illegal. Total transactions made through the accounts have grown to

MNT 4.435 million. The remaining 74 accounts belong to the same 53 organizations, holding a sum

total MNT 2.561 million.

The 74 account names were disclosed publicly [although the Source omits those names or where

they can be found -ed].

Source: Undesnii Shuudan

GIA INVESTIGATES GENCO PROGRAM SPECULATING ON ETHNIC ORIGIN OF MPs

A criminal case has been filed against the management of the Hero Entertainment production

company for a program critical of government and speculating on whether members of Parliament

are of full Mongolian birth.

The program, titled ―100 important topics‖, was broadcast on television [Source does not cite a

date -ed]. The General Intelligence Agency is investigating the company, which is owned by former

Agriculture Minister Khaltmaa Battulga, for the "goal of sabotaging and breaking up national unity"

and "inciting animosity by nationality, origin, language and religious views." Battulga is the owner of

Genco Group and recently exited the Cabinet Secretariat because of his support for the so-called

Double Deel bill, which would ban parliamentarians from serving as Cabinet ministers. In a recent

interview, Battulga, who still sits in Parliament, said he wrote the script for the program but did

not pay to have it broadcast.

Mongolian newspaper Udriin Sonin called the program ―fascist and racist" for its anti-Chinese

sentiment, which focused on suspicions of the ethnic origins of some members of Parliament as well

as President Tsakhia Elbegdorj. The Government warned that "decisive measures are to be taken."

Source: Olloo.mn, Independent Mongolian Metals & Mining Research

VIDEO OF RACIST ATTACK AGAINST MONGOLIAN ON BARCELONA TRAIN GOES VIRAL

Spanish police have arrested a teenager suspected of beating up a Mongolian man inside a

Barcelona subway train in an alleged racist attack after a video of the incident posted online went

viral.

The 56-second video shows a blond youth, dressed in a black T-shirt and jeans and whose face is

pixelated, repeatedly punching the seated man before other passengers intervened late on

Saturday. It was reportedly first posted on Sunday to a Twitter account that contained Nazi symbols

and the slogan: "Always a patriot, white Europe". The owner of the account, who appeared in his

profile picture with a shaved head and his mouth covered by a bandanna, tweeted that he had

filmed his friend carrying out the attack on his mobile phone.

The victim, a 25-year-old Mongolian man who lives in Spain, filed a complaint with police on

Sunday. Police said in a statement on Monday they had detained a young man who is suspected of

carrying out the beating and charged two others, including another minor, who acted as

accomplices. Police did not give the nationality of the suspect who was arrested, but Spanish media

reported that he was Russian.

The video, which was repeatedly played on Spanish television stations and had over half a million

views on YouTube, sparked angry reactions from anti-racism campaigners and government officials.

"We want to make it clear that attitudes like this are not acceptable in our city," Barcelona city hall

said in a statement.

Source: AFP

MONGOLIA‟S APPROACH: GUIDELINES FOR U.S. FAILING NORTH KOREA POLICY

On May 23, 2014, Mongolia provided North Korea and the United States neutral ground in its capital

for track 1.5 meetings. Presumably, North Korea‘s chief nuclear envoy met with two former U.S.

State Department officials to discuss resumption of the Six-Party talks, which have reached a

complete standstill since 2009. Ulaanbaatar has been keen on normalizing Pyongyang‘s fractious

relations with its adversaries and assisting its Soviet-era ally in implementing economic reform. In

this way, Mongolia unveils an alternative strategy that could incrementally reconfigure Pyongyang‘s

behavior, offering the U.S. some lessons for its failing North Korea policy.

Mongolia has pushed for lucrative cooperation and investment deals. Seeking to ease both

countries‘ dependency on China and Russia, President Tsakhia Elbegdorj during a visit to North

Korea concluded significant trade and cultural accords. Through warming its relations with

Pyongyang, some analysts claim that landlocked Mongolia seeks to obtain sea outlets to ship its

energy resources and minerals to other Asian nations, and thus ironically gain potential access to

international markets. Apart from being potentially profitable, these engagement efforts make

Ulaanbaatar a crucial stakeholder in North Korea‘s economy.

Mongolia‘s activist approach towards North Korea does offer some basic guidelines for a more

sensible strategy. The Obama administration‘s current policy of strategic patience (which most

Korea observers refer to as ―doing nothing‖), did not bring about any efforts towards

denuclearization or a desired change in North Korean behavior; rather the opposite. Nor did

diplomatic isolation and punitive sanctions alter the regime‘s actions or hamper its continuity

during the last five decades. Even though North Korea remains anxious about its security position in

East Asia, and therefore hard to deflect from its strategic-military arrangement, Mongolia‘s

approach of investing in the North and becoming a stakeholder in its development, represents a far

more promising alternative.

Source: International Policy Digest

WELCOME TO STANISTAN

At a signing ceremony in the Kazakh capital, Astana, on May 29, the presidents of Russia, Belarus,

and Kazakhstan ratified the Eurasian Economic Union (EEU) into existence.

Yet, what if, instead of becoming a little fish in Russia's big pond, Kazakhstan dared to dream of

being the big fish in a pond of its own creation? A pond comprising all the 'stans, for example—not

just the former Soviet ones, but also the ones further south. The Kazakh-inspired superstate would

occupy a strategic place on the global map, linking Europe (yes, Kazakhstan is so massive that it's

partly in Europe as well) to the Indian subcontinent. It would also bridge the geostrategic gap

between the Middle East and the Far East. It would have an annual gross domestic product (GDP) of

just under USD 600 billion (2013), which would rank it somewhere between Switzerland and

Sweden—though in per capita terms, it would roam the bottom half of the tables, with Kazakhs

averaging USD 12,000 a year (slightly less than Hungarians), and Afghans surviving on one-

seventeenth of that (USD 700; slightly more than Rwandans). In addition to its economic

advantages, it would be ethnically and linguistically diverse, with Slavic, Turkic, and Persian

influences swirling about. But it would also have a few important unifying traits. It would be

predominantly Muslim, and it would share many historical and cultural similarities, from the

memory of the Silk Road and the legacy of Chinggis Khan to the celebration of Nowruz—the Iranian

New Year. They're not all "stans"—which means "land" or "country" in Persian—by accident.

But what would be the name of this new country? Of course, something predictable and boring like

the Central Asian Federation would be proposed. But the flash of lightning that could jolt this

strangely assembled beast to life would be the epithet that refers to the suffix they all share. And if

"Country of Countries" sounds a bit generic in English, the original is of a simple, unforgettable

beauty.

Source: Foreign Policy

NEW MONGOLIAN LAWS

The following amendments to a law were published in the latest weekly Government bulletin.

Unless otherwise decided by Parliament, they will take effect ten (10) days after publication.

Date Law

30.06.2014 Amendments to Law on National Holiday

Please visit BCM's website, Legislative Working Group, for a summary of 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.

ANNOUNCEMENTS

BCM FOOTBALL CUP-2014 SPONSORED BY MONGOLIAN PROPERTIES AND TRANSWEST MONGOLIA

Dear Members,

We are pleased to invite you to the 3rd annual "BCM Football Cup-2014" tournament which will be

held on School #5‘s field on July 5-6. Our sponsors are Mongolian Properties and Transwest

Mongolia.

The annual event has become one of the prestigious football tournaments among non-professional

players in the private sector. We have expanded to a 2-day event with 16 teams this year. We

apologize that we could not include all interested entities.

"BCM Football Cup 2014‘s" technical session with the Team captains was held on Tuesday, July 1.

Team allocation was selected by lottery during the technical session.

Please come out and join us at the tournament!

Contact otgoo@bcmongolia.org, 70114442 for additional information.

BCM WORKING GROUP NEWS

The BCM Environmental Working Group met on Thursday, 26 June with 15 members attending.

Bayarmaa A, Vice Director, BCM, moderated the session.

New member: Shinetsetseg-Breakthrough PR

Participants: Binderya Oyunbaatar, Dolzmaa Davaasuren-The Nature Conservancy, Tirza Thevnissen-

The Asia Foundation

Guests: Baigalmaa Puntsagmaa-Mongolian Water Forum, Tsenguun Tumurkhuyag, Munkhjargal

Bayarlkhgva-Sustainability East Asia, Altai Onkhor, Kevin Trzcinski-Mongolian National University.

Speakers and topics were:

- Introduction of Urban Services Program by Tirza Theunissen, TAF Deputy Country Representative,

Asia Foundation;

- Impact of Climate Change on Water Resources by P. Batima, Director, Mongolia Water Forum;

- Application and Use of Solar Thermal and Energy Efficient Technologies in Mongolia by Kevin

Trzcinski, Vice President of International Relations, Mongolian National University.

If you have any questions, please contact Erdenetsetseg at erka@bcmongolia.org.

___________________________________________

The BCM Logistics Working Group met on Tuesday, 10 June, with 7 members attending.

Mattias Ahlin-Scania, Chairman, moderated the session.

New members: D Enkhbat CEO-Mongolian Express; Rentsendorj Yondon, Mongolian Opportunities

Fund; Buyanderler Tsogt-Ochir, Logistics Supervisor, Cummins Mongolia; Nobuo Okada, General

Manager, Mitsui Co.

BCM`s Logistics Working Group Chair, Mattias Ahlin is leaving the country. Tengis Garamgaibaatar,

Chief Executive Officer, Monroad, was elected as WG chairman. Congratulations to him for his new

role as BCM`s Logistics Working Group Chairman!

Speakers and topics were:

1. Follow up from last meeting‘s discussion

a. Main challenges for the Mongolian Logistic sector

2. Discussion about BCM Logistics Working group role and focus areas

(Mission Statement)

a. Transport modes; road, rail, air

b. Customs efficiency

c. Legal framework; Loads and dimension, safety, standards

d. Stakeholders: Ministries, customs, transport organizations, vehicle manufacturer association

e. Transport efficiency

3. Discussion about meeting intensity and organization

4. Other business

Next meeting was scheduled on 7 August 2014. If you have any interest joining the new and

growing Logistics Working Group, please contact Erdenetsetseg at erka@bcmongolia.org

___________________________________________

The BCM Capital Markets Working Group met on Thursday, 29 May, with 11 members attending.

Howard Lambert /ING Bank/ and Nick Cousyn /BDSec/, Co-chairmen, moderated the session.

Guest: Michael O`Malley-Executive Director at ISG MineElect.

Speakers and topics were:

Facilitating foreign direct investment (FDI) and Capital Markets update - by Byambaa Losolsuren,

Leader of FDI Capital Markets group of 100 Day Revitalization Council, and Partner of Mandal

Capital LLC.

If you have any recommendations on Capital Markets for the Revitalization Council, please contact:

erka@bcmongolia.org

___________________________________________

The BCM Tax Working Group met Thursday, May 22, with 12 members attending.

Onch D. - Co-chair, BCM‘s Tax WG and Deloitte Onch a moderated the session.

Attending were representatives from the following BCM member entities - Deloitte Onch, PwC,

Ernst & Young, KPMG Tax, OT, Terra Energy, Petro Matad, MahoneyLiotta, TMZ and BCM.

New members: Amarbayasgalan and Tuvshinbayar from Terra Energy.

Meeting agenda:

• Overview - B. Byambasaikhan, Secretariat, 100 Day Revitalization Program; Chairman, BCM;

• Initial new tax policy thoughts from WG members.

On May 29 BCM‘s Tax Working Group sent a detailed study of the current value added tax (VAT)

deficiencies and recommendations for efficiencies to result in greater tax revenue to the 100 Days

Revitalization Council.

Please contact T.Erdenetsetseg, BCM Working Group Coordinator, erka@bcmongolia.org .

____________________________________________

The BCM ‗expanded‘ Legislative Working Group (LWG) met on Tuesday May 20, with 42 members

attending at Corporate Hotel meeting room.

This was the third expanded WG meeting on the draft Amendments to the Minerals Law. The 2 ½

hour session included BCM members from mining companies, embassies and the MNMA. Special

guests were 5 members of Parliament and others from the Mining Ministry, Geological Society and

Export Society.

LWG Co-chair, James Liotta, Mahoney Liotta, moderated the session.

The following 11 presentations were made:

-A healthy Private Sector Driven Industry (1997 and 2006 Minerals Law / Amendments / what to

look for. By Doug McGay – longtime resident in the Minerals and petroleum industry;

- Investor views and concerns about making investments in Mongolia and its mining sector. By

Randolph Koppa – Vice Chairman, BCM and President, TDB;

- A view from the Mining Majors by Sunjidmaa Jamba from Peabody Energy;

- A supply side view by Stephen Potter, Wagner Asia;

- Tax Issues impacting the Minerals Industry by D. Onchinsuren – Co-chair BCM Tax Working

Group and Deloitte Onch Audit;

- Use of MSE for State Privatizations by Nick Cousyn – Co-chair, BCM Capital Markets Working

Group and BDSec;

- Views from within the Industry by N. Algaa – Executive Director, MNMA;

- Transparency and Public Comment by David Wyche – Economic/Commercial Section Chief,

Embassy of the United States of America

- International Agreements that attract bi-lateral investment, and views on the State ownership

of assets by Maxim Berdichevsky – Counselor & Senior Trade Commissioner, Embassy of Canada

- Some specific thoughts on the Amendments by James Liotta – Co-chair, BCM LWG and

MahoneyLiotta Law Firm; Bayar Budragchaa - Co-chair, BCM LWG and ELC Law Firm.

As MP Garamgaibaatar, Chair of the Standing Committee on Economic Affairs and Head of the

Parliamentary Working Group on the Draft Amendments to the Minerals Law, commented at the

meeting's conclusion - "We should not really change general structure and core contents of the draft

Amendments."

Also MP Garamgaibaatar welcomed BCM sending any additional comments directly to his Working

Group which was accomplished by the BCM Legislative Working Group.

Note: Amendments to the Minerals Law were passed by Parliament on 2 July 2014.

BCM WEBSITES

MONGOLIAN WEBSITE: „PRESENTATIONS‟

The following statistics and reports posted on Presentations section in Mongolian:

http://bcmongolia.org/mn/илтгэлүүд

• Монгол улсын нийгэм эдийн засгийн байдал, 2014 оны 4 сарын байдлаар, Үндэсний

статистикийн хороо

• Мандал Женерал Даатгал тайлан, 2014 оны 5 сар

• Сант марал сангаас гаргасан УЛС ТӨРИЙН БАРОМЕТР №13(47), 2014 ОН 3 САР

• Монгол улсын нийгэм эдийн засгийн байдал, 2014 оны 3 сарын байдлаар, Үндэсний

статистикийн хороо

• ―Anti-Corruption legislation and State Policy‖ (Mongolian) by D. Munkhjargal, Prevention and

Public Awareness Department, Senior Commissioner, Independent Authority Against Corruption

(IAAC) Mongolia at the ―ANTI-CORRUPTION LEGISLATION/POLICY, INTERNATIONAL BEST PRACTICE

ON TRANSPARENCY‖ Training seminar, Mar 06, 2014

___________________________________________

ENGLISH WEBSITE: 'PRESENTATIONS', 'MONGOLIA REPORTS', „INTERVIEWS„, MONGOLIAN

BUSINESS NEWS‟, „PHOTO GALLERY‟

2 presentations from BCM monthly meeting on June 23, 2014:

• T. Gansuld, Executive Director, Outotec Mongolia – ―Outotec Mineral Processing Solutions and

Experience in Mongolia‖

• Lisa Gardner, Journalist & Media Trainer – ―Mongolia‘s Media Laws: Defamation, Libel and

Threats to Press Freedom‖

3 presentations from BCM monthly meeting on May 26, 2014:

• B. Lakshmi, Director, Mongolia Economic Forum – ―Why Mongolia Business Summit?‖ at the BCM

Monthly meeting May 26, 2014

• Nick Cousyn, Co-chair, BCM Capital Markets Working Group – ―Use of MSE for State Privatizations‖

at the BCM Monthly meeting May 26, 2014

• Peter Benson, VicRoads Team Leader, ADB Capacity Building Project – ―Mongolia Roads –

Achievements and Challenges‖at the BCM Monthly meeting May 26, 2014

• China Metals & Mining Thermal Coal, Coking Coal, Copper, Gold, Steel by Macquarie Capital

Securities Limited

4 presentations from 3rd Mongolia Trade and Commodity Finance Conference, May 13, Blue Sky-UB:

• Mongolia – New Investment Laws, Stephen Tricks, Consultant, Clyde & Co;

• Mongolia Investment Law: select issues, B. Enkhbat, Partner, MDS & KhanLex Law Firm;

• Mongolia‘s promise of mineral wealth, Arnout van Heukelem, Head of Metals & Mining Asia ING;

• Utilising international partnerships to extend access to trade finance, Marco Nindl, Trade Finance

Banker, EBRD.

16 Presentations at 2014 Mongolia Investment Summit London, April 30-May 1:

• Assessing developments in current economic policy and how the government will manage and

improve existing regulations, Ochirbat Chuluunbat, Vice Minister for Economic Development,

Ministry of Economic Development, Mongolia

• How should investors interpret the shift in government policy and the introduction of the new

investment law?, Andrew Danenza, Founder and Managing Partner, Melbury Capital, UK

• Examining legal developments and what this means for the stimulation of FDI, Chris Melville,

Partner, Hogan Lovells, Mongolia

• Examining Mongolian mining policy and how it could benefit the production and export of mineral

resources, Rentsendoo Jigjid, State Secretary, Ministry of Mining, Mongolia

• Analyzing the Mongolian coal market: how could mining companies best respond to the operating

environment and fluctuations in demand?, Battsengel Gotov, Executive Director and CEO, Mongolian

Mining Corporation, Mongolia

• Examining how Mongolian banks and financial institutions are dealing with the challenges and

opportunities of a fast growing economy, Norihiko Kato, CEO, Khan Bank, Mongolia

• Spotlight presentations: a chance to showcase your services and projects to a wide investor

audience, Leading bank of Mongolia: Golomt Bank - Munkhbat Davaatseren CEO, Golomt Securities

LLC, Mongolia

• To what extent has Mongolia retained its previously high levels of investment appeal? Alisher Ali

Chairman, Eurasia Capital, Mongolia

• How can Mongolia attract private investment in power development? Philip Lam, Senior Banker,

Power and Energy Utilities, EBRD, UK

• Examining the potential for successful renewable energy projects in Mongolia and the benefits

cleaner energy will bring for foreign investors, Bolor J. Artan, Deputy CEO, Newcom Group,

Mongolia

• Spotlight presentations: a chance to showcase your services and projects to a wide investor

audience, Michael Jonas Director, Genie Mongolia and Executive Vice President, Genie Oil and Gas,

Mongolia

• Assessing the Mongolian Stocks Exchange‘s cooperation with the London Stock Exchange and how

this can benefit investors, Jon Edwards Deputy Head of Primary Markets- Emerging Markets, London

Stock Exchange, UK

• Spotlight presentations: a chance to showcase your services and projects to a wide investor

audience, Boldbaatar Lamjav, Board Member, Nuudelchin, Mongolia

• Mining infrastructure case study: examining the development of infrastructure to support Erdenes

Tavan Tolgoi and how a continuation will bring, Badarch Enkhbat, CFO, Erdenes Tavan Tolgoi,

Mongolia

• Developing strategic mineral assets and infrastructure in Mongolia: Examining the timescales and

how obstacles can be overcome, Sainbuyan Odon CEO, Erdenes MGL LLC, Mongolia

• How could you ensure an effective IPO and the raising of the necessary capital for your business?,

Ayuna Nechaeva, Business Development Manager – Russia, CIS and Mongolia, London Stock

Exchange, UK.

___________________________________________

Mongolia reports: http://bcmongolia.org/en/mongolia-reports

• World Investment Report 2014 by United Nations Conference on Trade and Development ;

• Social and economic situation of Mongolia as of May 2014 by National Statistical Office of

Mongolia; (available in Mongolian language - Монгол улсын нийгэм эдийн засгийн байдал 2014

оны 3 сарын байдлаар, Үндэсний статистикийн хороо);

• Real Estate Report 2014 by Mongolia Properties;

• ASIA Reaching for the Top by International Monetary Fund, June 2014;

• ASIA Achieving Its Potential by International Monetary Fund, June 2014;

• Mongolia: Economy outlook 2014, by Asian Development Bank;

• Polit Barometer by Sant Maral Foundation, March 2014.

Interview Section: http://bcmongolia.org/en/interviews

• Talking to United World, the Executive Director of the Mongolian Drilling Association (MDA)

Professor J. Tseveenjav. Source: http://www.worldfolio.co.uk/

• Jim Dwyer, Executive Director, BCM – ―Business need more business‖;

• Damshnamjil Tsogtbaatar, Chairman of the SPC: ―Privatizing Mongolia‖;

• Jan Hansen, Economist, ADB: ―The depreciation should help to increase the competitiveness and

to develop the non-mining industrial sector‖;

BCM's English website includes the ―Mongolia Business News‖ section. 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 6th Anniversary BCM Renewal dinner on November

11, 2013.

BCM Football Cup 2013 pictures are posted to the website - http://bcmongolia.org/en/photos/350-

en/album?albumid=200

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.

Add BCM on Facebook at https://www.facebook.com/TheBusinessCouncilOfMongolia 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

https://twitter.com/bcmongolia.

The bulk of the content on BCM‘s new LinkedIn page is Mongolian language to better cater to BCM's

Mongolian-speaking audience and members. Please click on the below link to follow us on our new

LinkedIn page.

http://www.linkedin.com/company/business-council-of-mongolia?trk=company_logo

Social stats: BCM now has 5,839 fans on our Facebook fans page, 626 connections on LinkedIn

network, and 1,136 followers on Twitter.

Of course for news information, interviews, event photos, VIDEOS and announcements regarding our

organization, visit the official BCM website at http://bcmongolia.org/en/

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]

Year 2012 *14.0% [source: NSOM]

Year 2013 *12.5% [source: NSOM]

May 31, 2014 *13.7% [source: NSOM]

*Year-over-year (y-o-y), nationwide

Note: 13.9% y-o-y, Ulaanbaatar city, May 31, 2014

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]

April 8, 2013 11.50% [source: Mongol Bank]

June 25, 2013 10.50% [source: Mongol Bank]

CURRENCY RATES – 3 JULY 2014

Currency Name Currency Rate

US Dollar USD 1,826.95

Euro EUR 2,495.98

Japanese yen JPY 17.92

British pound GBP 3,134.22

Hong Kong dollar HKD 235.71

Chinese Yuan CNY 294.02

Russian Ruble RUB 53.35

South Korean won KRW 1.81

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.