BUSINESS COUNCIL of MONGOLIA NewsWire

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Issue 181, August 19 2011

NEWS HIGHLIGHTS: Business:

Oyu Tolgoi mine begins development with a promising start;

Tavan Tolgoi begins operations;

Australian firm denies it made contract agreement at Tavan Tolgoi;

FRC approves first corporate bonds in three years;

XacBank establishes USD300 million medium-term note program;

Construction begins on Mongolian oil refineries;

Ivanhoe's first shot at oil;

East Asia renews and reevaluates its exploration strategy;

Voyager bolsters its mining projects;

Xanadu's early tests at Nuurstei indicate promising results;

Prophecy Coal uncovers new coal deposit near Ulaan Ovoo;

Positive reports emerge for TVN stock;

Tourism in Mongolia adapts to high-cultured tastes;

Russia launches new tourist route on rails;

Mongolia lays foundation for a developed nation with cement factory.

Economy:

Minister of Resources and Energy encourages foreign investment;

New railroad route to aid development and mining sector;

“Top-3” stocks of Mongolia's mining industry;

Frontier Securities foretells a grand future for Mongolia's economy;

Mongolia makes the cut;

MSE gets instruction in market development;

Mongolian economy will weather economic storm;

Government prepares for winter with financial aid;

Mongolian government debates its gold standards;

Investing floor may collapse under the weight of all this gold;

Asian demand for oil floats as the world's sinks;

Asian currencies remain rock solid while west's waver;

Smooth sailing for Russian economy, but commodity dependency threatens to sink it;

Oil prices may slip up Russian economy.

Politics:

Mongolian media speaks out on Tavan Tolgoi controversy;

Ministry announces plan for thermal energy plant;

Government aims to eliminate human rights violations in legal system;

Mongolia says phooey to China's claim to “khoomei”;

MPRP plays the name game;

Former deputy answers for his desertion from MPRP;

U.S. VP's visit to Mongolia and Asia is China focused;

Public fears nuclear waste disposal agreement;

South Korean President to come to Mongolia;

Disaster effects reduction in Chinese rail service;

Chinese rail projects chug on despite disaster;

Russia aims high for railway goal before 2018 World Cup;

Desertification threatens Mongolia;

Altai Region nations form a cooperative council;

Government will focus on merit-based grants for education, says MP.

*Click on titles above to link to articles.

BCM MONTHLY MEETING NOTICE BCM‟s next monthly meeting for members will be Monday, August 22, at 5 PM at the KEMPINSKI HOTEL KHAN PALACE,2nd floor, Altai Ballroom. Parking will be reserved in front of the hotel for BCM Members. The bilingual meeting will feature the following presentations: - Call to Order/Business Council of Mongolia: Laurenz Melchers, Chairman, BCM - BCM Report: Jim Dwyer, Executive Director, BCM - Bilguun Ankhbayar, CEO, Prime Info LLC (Organizer, Discover Mongolia) – “Discover Mongolia 2011” - Tumensogt Tsevegmid, Chief Representative, GE International Inc. - "GE's Products and Solutions for Mongolia" - Anne Delarue, Country Director, Oxford Business Group Mongolia - "Introduction of OBG Mission in Mongolia" - John Karlsen, CEO, Newcom Mining Services - "Newcom's Entry into Mining Services" A networking reception will be held for all attendees immediately following the business portion of the meeting.

SPONSORS

Khan Bank Eznis Airways

Kempinski Hotel Khan Palace Mongolian National Broadcasting

Mongolian Star Melchers Breakthrough PR

MCS Property Oxford Business Group

BUSINESS OYU TOLGOI MINE BEGINS DEVELOPMENT WITH A PROMISING START Development at the Oyu Tolgoi mining site began last month. Ivanhoe Mines may have cause to celebrate as it reported favorable business along with the beginning of the operation's pre-stripping phase. The mining corporation earned USD 600,000 in its June quarter, compared to its USD 30 million loss in the same quarter last year. Additionally, the company plans to finalize and sign a USD 4 billion project finance package for the development of Oyu Tolgoi by the end of the year. “A term sheet outlining the main terms and conditions common to all lenders is well advanced,” the company reported, adding that it expected to have access to a USD 1.8 billion interim funding facility from Rio Tinto as bridge financing until the debt package was finalized. The Oyu Tolgoi mine is expected to produce more than 1.2 billion pounds of copper and 650 000 ounces of gold a year in its first ten years of operation. By its seventh year, the mine would produce around 1.7 billion pounds of copper and one-million ounces of gold for the remainder of the project's life. The project was 33% complete, said the company.

Source: Eurasia Capital TAVAN TOLGOI BEGINS OPERATIONS Coal exports from Tavan Tolgoi recently commenced and will be followed by an increase in coal extractions, said Executive Director of Erdenes Tavantolgoi B. Enebish. Exports indicate the company will participate in the international market. The director of the state-owned company said 15 million tons of coal will be extracted from the mine annually, yielding a 155-year reserve. However, the development of infrastructure is needed to handle this increase. Negotiations are underway for several issues, including the candidate for a mine operator, the distribution of shares, the company to construct a railway for the mine, and the sum the company will pay the government in advance.

Source: M.A.D. Mongolia, News.mn

AUSTRALIAN FIRM DENIES IT MADE CONTRACT AGREEMENT Engineering contractor Macmahon Holdings denied it has won a coal mining contract in Mongolia. The company insists that no formal agreement was reached, but it did confirm that it will work in conjunction with Germany's BBM Operta. Macmahon is holding negotiations with Mongolian state-owned miner Erdenes Tavan Tolgoi JSC on a contract for mining operations at the large Tavan Tolgoi coal deposit.

Source: AFP

FRC APPROVES FIRST CORPORATE BONDS IN THREE YEARS The multi-faceted foreign corporation JustAgro LLC will issue MNT 330 billion of secured corporate bonds, the first listed under the Mongolian Stock Exchange (MSE) since 2008. The Financial Regulatory Commission of Mongolia (FRC) approved its petition to for the bonds. It will use the funds to finance the purchase of raw material and expand its business. The company plans to divide the total amount between three branches, depending on the timing of issuance with the first branch. The company will issue MNT 10 billion worth of bonds are expected to be issued by the end of August, said a company representative. Real estate will secure the bonds, put as collateral in the event of bond default. The company will pay a 16.2 percent interest rate annually.

Source: JustAgro

XacBank ESTABLISHES USD 300 MILLION MEDIUM-TERM NOTE PROGRAM XacBank will establish a USD 300 million European medium-term note program in conjunction with the investment banks, ING and UBS. The program is part of the bank's effort to improve its model with inclusive banking, fair investment and other financial services. “The program will enable XacBank to diversify its funding sources, and play an important role in the future development of XacBank,” said Frontier Securities in a press release. The program allows the bank to issue notes in any currency agreed upon by XacBank and its customer. The bank said it will use the program's proceeds to meet an expected increase in financing needs for its clients. These predictions come from the bank's projected period of growth. It also hopes to attract investors as a stable domestic, non-export institution. Source: Frontier Securities

CONSTRUCTION BEGINS ON MONGOLIAN OIL REFINERIES Mongolia plans to build an oil refinerey in early 2012 to meet domestic demand and reduce dependency on foreign imports. This year, Mongolia endured sporadic periods of gas hikes, causing disquiet among the populace. Politicians have spoken a lot about facilities to process raw oil in the past, but as of yet nothing has materialized. Construction on a refinery began on 11 August in Saishand Soum, Dornogobi Aimag with the aid of Mon L Gas LLC. The Saishand refinery will process 5,000 tons of crude oil per year. In comparison, Mongolia consumes less than one million tons of oil each year. Currently, Mongolia receives all of its petroleum from Russa, but the price of Russian fuel has dramaticially increased since April this year. This resulted in the return to talks of domestic oil refinement plants. The Mongolian government hopes to construct three refineries for production. According to reports, a second will be placed in Darkhan-Uul Soum with aid from Mongol Seku LLC and a third in Zuunbayan Soum, Dornogobi Aimag. Plans estimate that the plans will produce 200,000 and 300,000 tons respectively each year. Source: Oilprice.com

IVANHOE'S FIRST SHOT AT OIL At the Nyalga Basin, Ivanhoe Energy's first Mongolian oil well spudded on 16 August. The exploration well belongs to Sunwing Energy, a subsidiary of the Canadian firm Ivanhoe Energy, and is being drilled by the Daqing Exploration Company. “This is an important step in our exploration program in Mongolia,” said Ivanhoe President and Chief Operating Officer David Dyck. The site is approximately 32-square kilometers and will be drilled to a total depth of 2,500 meters. Ivanhoe first acquired it in 2009 when it merged with Sunwing and PanAsian Petroleum, giving it exclusive rights to the Nyalga oil block. Reports suggest that the characteristics of the Nyalga Basin would produce light oil east and south of itself and into northern China.

Source: Proactive Investors

EAST ASIA RENEWS AND REEVALUATES ITS EXPLORATION STRATEGY East Asia Minerals will begin exploring for uranium deposits once again in Mongolia. The company approved a 2011 summer drilling program to advance its existing projects at Enger, Ulaan Nuur, and Ingenii-Nars. Although East Asia Minerals will curtail its exploration activities at Miwah to re-evaluate the woods site, it will expand exploration activities in general with a renewal of exploration activities. Efforts will also increase at Tangse and Sangihi.

Source: East Asia Minerals VOYAGER BOLSTERS ITS MINING PROJECTS Drilling equipment was sent to the Khul Morit Copper Prophyr Projects for increased production. Voyager Resources mobilized two diamond core drilling rigs and plans to send another to the Khongor Project site for exploration, said a Voyager Resources representative. At Khurit Morit , the mining group has drilled 27 holes at areas of geological interest. Geolgoical reconnaissance has also located possible mineral desposits. Recent surface mapping identifed two new porphyry copper mineralized zones on the surface.

Source: Voyager Resources

XANADU'S EARLY TESTS AT NUURSTEI INDICATE PROMISING RESULTS Initial extractions at the Nuurstei site indicate a high-quality resource that could have a dramatic affect on the industry and Mongolia as a supplier. The site is being developed by Enkhgoviin Chuluu LLC, a joint venture between Xanadu Mining and Noble Group. “The initial coal quality results from the first hole at Nuurstei are very encouraging, with subsequent drilling confirming the discovery of a potentially significant new coking coal province in Northern Mongolia within reasonable distance of the Erdenet rail network,” said Xanadu Chairman Brian Thornton. Analysis was made with diamond drill holes at Nuurstei, confirming the coals reported outstanding quality. Since then, four diamond holes stretching 1,393 meters deep have been made. Results regarding the coals “washability,” coking, and plastometrics will be available shortly, said a corporate representative.

The Nuurstei sites are 3,000 hectares, located in a recently identified coking coal basin between Murun and Erdenet in northern Mongolia. The development of Nuurstei is Enkhgoviin Chuluu's first venture for coking coal and iron ore opportunities. The conglomerate committed USD 1.5 million for exploration.

Source: Proactive Investors

PROPHECY COAL UNCOVERS NEW COAL DEPOSIT NEAR ULAAN OVOO A new coal discovery was made near Ulaan Ovoo. Prophecy Coal uncovered 19-meter-thick coal seams just 17 kilometers away from its Ulaan Ovoo coal mining site. “Due to its shallow nature, the coal seam has the potential for mining. This new information is being reviewed and additional surface mapping will be performed to plan additional drilling,” the company said in a statement.” The coal was discovered on its 4,773-hectare Ilch Khujirt property. The company said that thought these are preliminary results because core recovery was poor and more drilling is necessary. Prophecy Coal is a diversified thermal coal production company. It controls 1.4 billion tons of surface thermal coal resources on two coal properties in Mongolia. Source: Proactive Investors

POSITIVE REPORTS EMERGE FOR TVN STOCK TVN Corporation shares have soared 17 percent thanks to the positive drilling results at the Nuurst Thermal Coal Project, said market reporter John Phillips. Better still, these results came shortly after positive reports from a month earlier. The company placed 90 million shares at USD 0.04, hoping the bargain will raise AUD 3.6 million and accelerate exploration activities at a JORC site. TVN will also use funds for a review of its acquisition for further coking and thermal coal opportunities in Mongolia. The possibility of 50 to 100 million tons of high-quality coal (with a thickness of eight meters) is what's really attracting investors, reported Phillips. The project is also strategically located six kilometers from an existing rail line, providing low transportation costs to hungry China.

Source: Proactive Investors

TOURISM IN MONGOLIA ADAPTS TO HIGH-CULTURED TASTES Tourism trends are shifting from rough and tumble excursions to romantic, fantasy get-aways in Mongolia, reported The Guardian. Foreign tourists are coming to Mongolia for the luxury camping experience in gers to escape the anxiety of modern life and live out fantasies of secluded living. While most tours in Mongolia involve traveling by jeep through an extensive itinerary of spectacles of nature's beauty, historically significant landmarks, and modest Mongolian communities, a new trend has emerged allowing travelers to stay in gers in remote spots in the countryside. A reporter for The Guardian visited one such ger camp in Khan Soum, Khenti Aimag, offering a king-sized bed in a clean ger with warm blankets, and quaint furniture hand painted in the Mongolian fashion. These companies offer guests the opportunity to live out a fantasy that resembles the Mongolian way of life, but is a bit more fantastical and posh. The experience features living amongst livestock, tramping through Mongolia's impressive terrain, and taking longer tracks on horseback. Restaurants supply local food and cold beverages. Mongolian tourism season usually runs summer-long, June through September. Travelers tend to enjoy a luxury experience such as this for the remote locations, natural beauty, and the simple pleasures nomadic life can afford.

Source: The Guardian

RUSSIA LAUNCHES NEW TOURIST ROUTE ON RAILS Setting off from Moscow, 400 passengers traveled towards Beijing on Russia's new tourist route. Tourists from 20 countries and regions will spend two weeks traveling through major cities along the Trans-Siberian rail. A good portion of the journey will include sights in Mongolia. The passengers will be served in seven languages before they arrive in Beijing on 29 August. One tourist from Italy claimed he spent EUR 5,000 on his trip. “I expect to travel along the Trans-Siberian railway and see the scenery of different cities,” said traveler Franco Orsoni. “I will also spend several days in Beijing and see the city sights.” The tour includes opportunities to see communities at a leisurely place. Travelers will stop in several cities circumnavigating Baikal Lake and spend a night in a Mongolian ger. The carriages include accommodations such as showers, a cafeteria, a bar, and two restaurants. Source: Xinhuanet

MONGOLIA LAYS THE FOUNDATION FOR A DEVELOPED NATION WITH A CEMENT FACTORY A German firm will invest in a cement and chalk factory in Khutul using modern technology to create a competitive product. It will invest USD 100 million and aid Mongolian partners with advisory. The government is encouraging private investment in infrastructure to initiate greater development for the country. The German firm, Basement, will advise on the implementation on this particular project. “The factory is going to be transferred into dry technology, which will increase production and reduce pollution,” said a company representative. The Chinese firm, Jinsu Pengei, is the fourth largest cement equipment production in the world. It promised to supply equipment to aid in the project's implementation.

Source: Unuudur

ECONOMY MINISTER OF RESOURCES AND ENERGY ENCOURAGES FOREIGN INVESTMENT Minister of Mineral Resources and Energy D. Zorigt made a series of commitments to foreign investors to promote investment in Mongolia. Zorigt appeared at the Mongolian Capital Raising and Investment Conference to an audience of investors from around the world, emphasizing the important of stability and transparency. Zorigt first recalled the repeal of a 68 percent windfall tax and the adoption of a new law promoting fiscal responsibility. He also promised to continue fiscal care in a new integrated budget law. Although Parliament decided to extend its ban on issuing new mining exploration licenses until the end of 2011, he predicted that by then Mongolia will be better equipped with an improved system for license issuing with the passage of new laws. Zorigt ended his statement with a few words on his hopes for the future. He spoke of the importance of mining and infrastructure to Mongolia's economy. He stressed the importance of developing the energy sector, hoping to double the country's energy capacity from its current output. He even supposed Mongolia could someday export energy to neighbors such as China. Finally, he also called for an expansion to the nation's rail system to give Mongolia leverage in export negotiations with its neighbors. The conference was the fifth annual event hosted by Frontier Securities. Its function is to share the development of Mongolia's business environment. This year's conference focused on raising capital for the government and the local private sector through privatization and bond issue.

Source: ABN News Wire

NEW RAILROAD ROUTE TO AID DEVELOPMENT AND MINING SECTOR Mongolia's Deputy Premier discussed future plans for Mongolia's railways. N. Altankhuyag, Mongolia's First Deputy Premier, together with railroad officials from the Mongolian-Russian railway consortium and a foreign advisory group made decisions to attract investments and benefit Mongolia's mining industry. Plans for a new railway route are underway, intending it for the use of infrastructural development and mineral distribution. Officials estimate it will cost USD 5.5 billion for its construction and needs a USD 50 million investment from the government. Railroad officials have a second phase to this plan to attract investment, but this plan was not clearly outlined. On his part, Altankhuyag promised to represent these interests to the Cabinet and try and manage the financial aspects.

Source: Montsame

“TOP-3” STOCKS OF MONGOLIA'S MINING INDUSTRY Ivanhoe Mines, Mongolian Mining, and Hunnu Coal were selected on the American television channel CNBC as the best Mongolian companies to invest in regarding Mongolia's mining industry. Mining opportunities were discussed, trumpeting companies listed internationally, but with assets in Mongolia. "Mongolia will emerge as one of the most significant resource producers in Asia," Alisher Ali, managing partner of Silk Road Management told CNBC. Ali chose Ivanhoe first because of its prestigious Oyu Tolgoi project, expected to produce 650,0544,000 metric tons of copper and 650,000 ounces of gold a year in its first ten years beginning 2013. The site is also expected to yield in those same ten years an additional 3 million ounces of silver annually.

Mongolia Mining was bolstered because it is liable to make Mongolia China's biggest coking coal exporter. “The miner has an edge over its competitors mainly because of the quality of its coal assets in South Gobi and the proximity of its deposits to China,” Ali said. His third pick, Hunnu Coal currently holds nine exploration licenses in Mongolia. An investment in this company, which is still in the exploration stage, Ali felt would pay off once it brings its coal assets to production.

Source: Eurasia Capital

FRONTIER SECURITIES FORETELLS A GRAND FUTURE FOR MONGOLIA'S ECONONOMY A Mongolian securities firm predicted that Mongolia is may become the world's fastest growing economy. Frontier Securities based its expectations on its continued robust growth through 2011.The company estimated that Mongolia's GDP after five years will grow on average 20 percent each year, compared to the IMF's prediction of 25 percent. The IMF goes further to estimate that Mongolia's GDP will grow to 80 percent by 2014. Weaknesses in Mongolia include double-digit inflation and unstable commodity prices. However, the firm has confidence in the Mongol Bank's adherence to a strict monetary policy to counter inflation and an increase in mineral exports to help to lower cash costs. “Fundamentally, we view that weakness in developed markets increases the attractiveness of frontier markets such as Mongolia,” said the company in an official press release. The firm advised investors to pay particular attention to liquid equities linked to the Mongolian Stock Exchange (MSE), Mongolia fixed income assets (both government and corporate), and the likely appreciation of the Mongolian tugrug. Source: Frontier Securities

MSE GETS INSTRUCTION IN MARKET DEVELOPMENT Financial experts listed the goals and problems to address with the Mongolian Stock Exchange's (MSE) upgrade to global standard. In conjunction with London Stock Exchange (LSE) officials, market officials and Parliament plan to upgrade technology used by the MSE, develop adequate regulations, and transition the MSE from a State-owned to a privatized market. Vice Chairman of the Board of the MSE Peter Morrow listed his hopes to make the market more available to Mongolian citizens and attract investment with the greater participation from locals. Financial expert David Neauville listed three factors necessary for the success of the MSE - the development of accounting standards, greater corporate governance, and corporate transparency via reports to investors. Legal expert Sarah Armstrong listed legal impunities, including the MSE's exclusive accountability to Mongolian law alone, the lack of legal certainty on officer's criminal liability, and ambiguous legislation. Speakers kept a positive outlook on the future of Mongolia's economy, Frontier Security's public relations reported. However, the speakers made it clear that these were the minimum requirements for success and it is likely much more will be needed for success.

Source: ABN

MONGOLIA MAKES THE CUT An investment firm is encouraging business to turn its attention to countries such as Mongolia, outside the sphere of BRIC (Brazil, Russia, India, and China). Citi Investment Research & Analysts (CIRA) introduced a “3G” (global, growth, and generators) list, which includes Mongolia, to direct the attention of investors towards nations with market potential. “Many countries with emerging markets have reached a threshold level of institutional quality and political stability, and are already posted well for growth,” said a CIRA representative. Mongolia was likely placed on this list for its successful transition to a democracy, political stability, and emerging young workforce. Other countries included on the list are Bangladesh, Egypt, Indonesia, Iraq, Nigeria, the Philippines, Sri Lanka, Vietnam, India, and China. Interestingly, India and China are the only BRIC countries to be included on that list. Source: Frontier Securities

MONGOLIAN ECONOMY WILL WEATHER ECONOMIC STORM The Mongolian economy will maintain strong growth despite a possible crisis initiated by the United States' downgrade from an AAA to AA+ credit rating said Eurasia Capital. The investment bank believes that the S&P's downgrade changes little and described the current panic to sell U.S. debt as a temporary “crisis of confidence.” The firm believes that the impact on Mongolia to be minimal.

“Confidence crisis in the West is unlikely to have an immediate effect on Mongolia,” said Dosbergen Musaev, a strategy analyst at Eurasia Capital. “We do not believe the current crisis will degenerate into global downturn akin to 2008, which brought fiscal shock to Mongolia. Commodity prices are to remain strong due to demand from emerging Asian economies. Copper and coal are the core export revenue generators for Mongolia.” The firm based its predictions on Mongolia's ability to withstand the volatility of the market. This includes an 11 percent fall in the price of copper, a strong indicator of the Mongolian tugrug's value. The Silk Road Mongolia Index, a listing following international and domestic listings in Mongolia, reported a 6.4 percent decline and a net loss about of approximately USD 2 billion. Read more… Yet, it was the firm‟s belief that Mongolia is isolated enough to not be influenced by global economic turmoil. It reported no impact on low free-float and valuation on domestic stocks and no affect from the events that took place in the US, Europe and the Middle East. Although Mongolia's resource export-driven economy may be affected,” Musaey commented, “in the short term, we hold a positive long-term outlook. We do not believe the current crisis will lead to the repeat of 2008. Mongolian economy is to continue its breathtaking transformation. We believe that Mongolia's equities market is in an oversold situation and selected stocks are still attractively priced.”

Source: Eurasia Capital

GOVERNMENT PREPARES FOR WINTER WITH FINANCIAL AID As summer comes to an end, the Mongolian government is making preparations for the winter season. This includes the harvest of hay for herders and aid for communities in the countryside. Due to a string of especially harsh winters, the Mongolian government is aiming to be well prepared for this year's winter. It will plant 1.2 million tons of have and 48,000 tons of green forage, said Minister of Food, Agriculture and Light Industry T. Badamjunai. He said extra attention will be taken in the quality of seeds planted. They will repeat last year's strategy, purchasing high-quality seeds domestically. In addition, farmers will be given financial incentives for the quality of their wheat harvests. The government decided to increase aid to the countryside from MNT 50 billion to MNT 100 billion. Additionally, the government is also working with community members and banks on a variety of small projects aimed at small businesses.

Source: News.mn

MONGOLIAN GOVERNMMENT DEBATES ITS GOLD STANDARDS As investors run to gold as a safe investment, the Mongolian government is determining how much support it will give to its gold market. The price of copper and gold has historically had a dramatic influence on Mongolia's economy. In the period between 2002 and 2010, the Mongol Bank purchased 84.8 tons of gold, 52 percent of which is traded within the banking sector. Bank reports indicate that the value of gold is decreasing and may continue to fall, however. At this critical junction, it is up to the government to determine its policy on its gold market. Parliament ministers are currently debating how to deal with its gold supply at the Mongol Bank and are considering barring commercial banks from trading gold. However, there is dispute because this sort of regulation would only encourage people to trade gold in the private market rather than with the Mongol Bank to avoid taxes. Furthermore, commercial banks are protesting because it contradicts existing laws. Source: Zuunii Medee

INVESTING FLOOR MAY COLLAPSE UNDER THE WEIGHT OF ALL THIS GOLD Following the United State's downgrade by Standard and Poor (S&P) from “AAA” to “AA+”, panicky investors have run towards gold as a safe bet, Its price has soared in the international markets and resulted in 70,000 contracts per day and up to 900 kilograms of volume trades as opposed to 30,000 contracts per day and 500 kilograms. Overall, gold exports rose to USD 752.36 million this year, mainly from the US, Hong Kong, Italy and India. However, amidst this rush for gold, gold traders warned that prices may fall. Prices could fall as low as $1,680 per ounce. "Investors should only consider investing 20 percent of their portfolio in gold to diversify their risk away from any one particular commodity,” advised secretary-general of the Gold Trade Association Kricharat Hiruynyasiri.

Gold reached record highs at USD 1,815.50 per ounce, but experts predict prices will hit the ceiling at 1,900 per ounce. This will most likely result from an economic slow-down from the United State's downgrade by the credit-rating agency S&P and economic crisis in the European Union. Read more… Many Asian countries are turning to gold for their foreign reserves rather than US dollars or any other countries. Under normal conditions, the US and European countries might hold up to or more than 50 percent of their reserves in gold while Asian countries would typically hold just 3 percent. "Due to the volatile price of gold and its higher value, domestic trading of gold has dropped each year by 30 percent," added Kricharat. Kricharat also noted that over the past 20 years small traders and goldsmiths were leaving the business because of slow trade. Only 20 percent of the 10,000 that once existed still remains. In the modern market, most gold traders focus their business on pledging rather than the sale of jewelry and other luxuries.

Source: The Nation

ASIAN DEMAND FOR OIL FLOATS AS THE WORLD SINKS Despite a sharp decline in demand, analysts predict the demand for oil will remain strong in Asia. Energy demand has wavered due to a shaky global economy, but some are betting that Asia will not follow the trend. The International Energy Agency (IEA) recently estimated that the 2011 global demand for oil will be 60,000 barrels less than previous speculations. Meanwhile, the drop in demand resulted in a fall (nearly 15 percent) in prices. However, in Asia, the story is a little different. China is the leader in oil consumption and doesn't show any signs of letting up. Although the IEA cut its estimates by 80,000 barrels per day, the resultant 9.62 million barrels a day is a marked increase from 2010. Even taking this erosion of China's demand into account, experts believe Japan can make up the difference. After the Tsunami disaster in Japan and the damage to nuclear facilities that followed, the demand for oil sharply increased. “The fundamentals in China suggest that there is a lot of demand still there. [Recent] import prices for copper came in above expectations. The confidence in China is still good. Confidence, generally, in Asia still positive, however the East is being affected by the confidence in the West.” Managing director of Commodity Broking Services in Sydney, Australia, said Jonathan Barret. “Once you get confidence in the West, then that will only invigorate more demand in the East.” Demand in Asia seems to indicate the growth of Asian economies. As wealth increases, so does the demand for oil, supposed market analyst group MarketWatch.com.

Source: MarketWatch.com

ASIAN CURRENCIES REMAIN ROCK SOLID WHILE THE WEST‟S WAIVER World stock traders are turning to emerging Asian currencies amidst the decline of western currencies. Asian currencies have reacted minimally since the US credit rating was down-graded from “AAA” to “AA+,” propagating the idea they may be a “safe haven.” At a time when most expected Asian currencies to strengthen against the US dollar, the Thai baht, Malaysian ringgit, and Indonesian rupiah all remained largely unchanged. Safe balance sheets and continued growth inspire greater confidence, reported the Wall Street Journal. China allowed the yuan to increase 0.8 percent against the US dollar, quite a drastic appreciation for China. Meanwhile, governments in the west have raised interest rates and made lending more difficult. China's strict control over the stock market and limits to foreign investors gives them less hope; thus investors are turning to countries with close ties to china. Due to its “free-floating currency” and short-term investments, Australia is a winner. The strategy bottlenecks at the limit of assets available for investment, reported the Wall Street Journal. The Asian Development bank estimates the local currencies at USD 5 trillion compared to the USD 31 trillion worth of US bonds. Worse still, at least half of that figure belongs to the well-guarded Chinese market.

Source: Wall Street Journal

SMOOTH SAILING FOR RUSSIAN ECONOMY, BUT COMMODITY DEPENCY THREATENS TO SINK IT The Russian economy has experienced only a small affect from the economic downturn in financial markets, but is too dependent on the price of oil, said an expert on the Russian economy. Sergei Seninsky, an economic analyst for the Russian Service, spoke on the radio about the current

economic conditions of Russia and its policies. The Russian economy is very isolated from the world, thus fluctuations in Western markets will not necessarily affect Russia, said Seninsky. The demand for Russian oil grew rather than declined recently. He further commented that it has been a long held belief that the Russian economy grows each time the price of oil rises USD 10. However, in present times, it takes more than that for a 1 percent gain in the. One of the underlying problems with the Russian economy is how commodities dominate it, he said. Diversification was his prescription for a cure. “That means the development of new high-tech industries that are capable of producing modern products and services that are in demand not only for the commodities industries, but also for many others,” said Seninsky. “They also must be competitive in the global market.” Source: Radio Free Europe Radio Liberty

OIL PRICES MAY SLIP UP RUSSIAN ECONOMY Russian economics will depend heavily on the stability of oil prices this year, reported the Voice of Russia. Volatile prices may be to the benefit of speculators, but to producers and consumers it creates only difficulty. The price of oil has a direct, negative effect on drilling and exploration for oil. As the global demand for oil wavers, Russia is looking at the possibility of economic stagnation. “The oil market is overloaded today, so the price will sooner or later fall,” said Russia's head of the Institute for Energy Strategy Vitaly Bushuyev. “Meanwhile the price remains high since there is a constant demand for oil and a huge amount of free money. We see that a peak price of $120 has already taken place, while at the end of the year we expect $80 per barrel as all resources that could have kept the price stable have been exhausted. The question remains whether this will happen at once or gradually." Since oil prices rely on so many factors, oil prices are tough to predict. However, as Voice of Russia reported, Russia is betting they will remain stable (as well as the rest of the world, says this report).

Source: East Media Group, Voice of Russia

POLITICS MONGOLIAN MEDIA SPEAKS OUT ON TAVAN TOLGOI CONTROVERSY Many were left dumbfounded and angry after the Mongolian government chose its investors for the Tavan Tolgoi mining site. This month, both the Mongolian Mining Journal (MMJ) and Mongolian Economy (ME) discussed the issue, raising far more questions than answers. Mongolians and investors alike seem to be unhappy with a decision that provides substantial short-term gains, but short long-term benefits. The most confounding issue here is the entrance of a new bidder that did not participate in the first round of bids. A mysterious Mongolian-Russian consortium has taken 36 percent of Tavan Tolgoi's West Tsankhi, to the anger of foreign competitors and disappointment of international observers. “Has the world ever seen anything like this projected super consortium?” said Mongolian Mining Editor-in-Chief L. Bolormaa. “If the Mongolian government was going to behave so strangely, why did they begin under the ruse of a fair competition?” asked Staff Journalist D. Monkhchimeg. The bid for Tavan Tolgoi's Western Tsankhi resulted as follows: 40 percent to the Chinese firm Shenhua Energy; 24 percent to the US firm Peabody Energy; 36 percent to the Mongolian-Russian Consortium. The consortium will divide its share in half, so 18 percent will go to Russian Railway and the other half to Mongolian firms. The biggest concerns here are if Mongolia has forfeited too much responsibility to foreign investors, such as China. For USD 250 million, the Chinese have the rights to the extraction and sale of the site's resources. The agreement lasts until China has taken USD 250 million worth of coal. Read more… Some worry the government has behaved selfishly and without foresight. Japan and Korea are upset and have complained. Monkhchimeg's article raises the point that Mongolia is violating its good neighbor policy allowing 40 percent to China and just 18 percent to Russia. There is also concern Russia may forget about its promises to aid the development of Mongolia's transit infrastructure due to its unfavorable winnings. Meanwhile, Bolormaa at MMJ awaits for President Ts. Elbegdorj's response, hoping he can persuade the Mongolian government to rethink its actions as a neutral figure head. MMJ's editor believes the president is unhappy with this outcome, but is uncertain if he can direct any changes.

Source: Mongolian Mining Journal, Mongolian Economy

MINISTRY ANNOUNCES PLAN FOR THERMAL ENERGY PLANT The government is beginning to plan for a thermal power station to power the Gobi region. The government hopes to complete construction by 2012. The Deputy Chief of the Energy Policy Board of the Ministry of Mineral Resources and Energy, D. Purevbayar, told the Mongolian Mining Journal that Oyu Tolgoi LLC and Erdenes Tavan Tolgoi LLC cooperated on a memorandum for a thermal power station to with a capacity of 600 megawatts. Foreign advisors have conducted studies to determine whether the plant should be built in Tavan Tolgoi or Oyu Tolgoi. According to one report, a station built in TT would open four years before another one is built in OT. However, if the plant is built in TT, OT could still be connected to the energy system. Although the ministry has expressed interest in the Tavan Tolgoi mining site, no location was officially announced.

Source: News.mn

GOVERNMENT AIMS TO ELIMINATE HUMAN RIGHTS VIOLATIONS IN LEGAL SYSTEM An American law expert will instruct over 50 Mongolian prosecutors. The prosecutors will travel from Darkhan, Selenge, and Bulgan provinces to participate in an instructional course. U.S. Texas State Court Jude Ed Winfrey will teach prosecutors how to implement laws while observing human rights laws and constitutional law. The course comes in response to complaints of violations of human right violations during criminal investigations and detainments in Mongolia. Law officials hope this course will bring an end to such violations.

Source: News.mn

MONGOLIA SAYS PHOOEY TO CHINA‟S CLAIM TO KHOOMEI China's claim to the traditional form of Mongolian throat singing has generated outrage and despair from at least one Mongolian artist. The controversy stems from the United Nations Educational, Scientific and Cultural Organization's (UNESCO) decision to approve China's claim to Khoomei, the difficult practice of producing two pitches for song commonly known as throat singing, for the “Intangible Cultural Heritage of Humanity” listing. A master of the art, B. Odsuren, claimed he has been traveling to China for the last twenty years to teach the skill to Chinese students. Although his students were eager, they were very much beginners because the practice was foreign to Chinese culture. China's claim to the cultural practice seems to follow a general trend to usurping the arts of places such as Tibet, Kyrgyzstan, and Korea in an effort to rally support from China's ethnic minorities, reported the Seattle Times. In 2009 and 2010, more than a quarter of all items listed on the roster were attributed to China. "I was in shock. I taught them, and then they say it is theirs," told Odsuren to the Seattle Times. "I don't like people lying and claiming something that everyone knows is Mongolian." A representative of UNESCO responded that an item's listing doesn't necessarily mean it belongs to China, but the group is reviewing its decision. Currently, both Mongolia and China share credit for khoomei. Source: The Seattle Times

MPRP PLAYS THE NAME GAME Mongolia's People's Revolutionary Party is in a critical dispute with its former associate Ts. Shinebayar. The dispute is over where the right to the party's name belongs, since Shinebayar left the party. Shinebayar is claiming authority over the name “People's Revolutionary Party” as the founding member of the party, while currently sitting ministers argue it was they who worked hard to establish the party's legitimacy. Shinebayar is said to be currently unhappy with his new appointment as Deputy Chairman. The same goes for S. Molor-Erdene and his appointment as Secretary. Some speculate that this unhappiness may be a result of former-president Enkhbayar's failure to meet expectations.

Source: Unuudur

FORMER DEPUTY ANSWERS FOR HIS DESERTION FROM MPRP Ts. Shinebayar left the Mongolian People's Revolutionary Party (MPRP) to pursue other interests, said the recently-resigned Deputy Chairman of the MPRP. Shinebayar is currently focusing his attentions to the Khamug Mongol Coalition he founded last December. Shinebayar stressed his needs for privacy and for others to respect his decision when discussing his decision to leave. He wished his former-colleagues well, but says he is dedicated to his fight against corruption in government. He claims his work has endangered his life, pointing to “officials in authority,” but without naming anyone specifically. The former-party member said he still believes in the work of the MPRP. As for his new line of work, he is happy with the goals of the Khamug Mongol Coalition and it is enjoying growing support.

Source: Business-Mongolia.com

U.S. VP‟S VISIT TO MONGOLIA AND ASIA IS CHINA FOCUSED U.S. Vice President Joe Biden will spend the majority of his time and energy on wooing Chinese officials on his tour of Asia, reported Reuters. Biden will make a short visit to Mongolia during this tour, but with the stakes so high, his real focus must lie with China. Biden has a multitude of top priorities to attend to in China. Once again the U.S. will attempt to convince Chinese official to allow the yuan to rise against the U.S. dollar. However, he will also spend time trying to build a relationship with his Chinese counterpart Vice-President Xi Jinping, who is expected to succeed China's current president, Hu Jintao, in 2013. "One of the primary purposes of the trip is to get to know China's future leadership, to build a relationship with Vice President Xi, and to discuss with him and other Chinese leaders the full breadth of issues in the U.S.-China relationship," told Tony Blinken, Biden's national security adviser told Reuters. China holds more of the United States' debt than any other nation in the world, so it is demanding fiscal responsibility. Earlier this month, after weeks of uncertainty, a deal was struck to raise the U.S. debt ceiling and reduce its annual deficit. Despite this, the U.S. credit rating was downgraded by Standard and Poor (S&P). Other issues, such as human rights offenses, the future of Tibet, and relations with Taiwan will take a back seat, Reuters reported. However, Biden will spend at least a bit of his time congratulating Mongolia on its success as a democracy and encourage its development towards a bright future. Source: Reuters

PUBLIC FEARS NUCLEAR WASTE DISPOSAL AGREEMENT United States Vice President Joe Biden might encounter some protesters when he visits Mongolia on Monday, August 22. Although, official Prime Minister S. Batbold invited Biden to demonstrate Mongolia's regard for the U.S. as a “third neighbor,” some fear there more nefarious talks behind closed doors. During Mr. Biden‟s visit, the two sides will discuss political and economic issues, said an official. But the Green Coalition and some activists suspect the real purpose of the visit is to discuss the possibility of burying nuclear waste in Mongolia. The Ministry of Foreign Affairs denies this. A Foreign Affairs official said, “There is no nuclear waste deal between the two nations. An official statement will be issued soon.” Mr. Biden‟s visit is the second by a U.S. vice president and comes 67 years after a former U.S. vice president, Henry Wallace, visited Mongolia in 1944.

Source: News.mn

SOUTH KOREAN PRESIDENT TO COME TO MONGOLIA South Korean President Lee Myung-bak will visit Mongolia on this three-nation Asian tour. The president will meet with Mongolian President Ts. Elbegdorj to discuss bilateral cooperation in energy, resources, and health. The two heads of state are also expected to adopt a joint action plan on the development of bilateral ties, according to the Blue House. The tour will take the South Korean President to Uzbekistan, Mongolia, and conclude in Kazakhstan. Lee will discuss ways each country can help one another to develop In Uzbekistan and energy and economic cooperation in Kazakhstan with each respective head of state. South Korea and Mongolia have a long history of international cooperation with one another. Korea holds the largest population of Mongolians living abroad.

Source: Korean Joonang Daily

DISASTER EFFECTS REDUCTION IN CHINESE RAIL SERVICE A lack of confidence in the safety of China's rails has forced it to withdraw a portion of its services from its coveted Beijing-to-Shanghai high-speed rail, reported the Wall Street Journal. Only two months since the rail's opening, this announcement comes as a result of the accident outside Wenzhou in July. Service will be scaled back from 88 trains per day to 66 beginning 16 August. The trains' manufacturer also plans to delay the delivery of 17 additional trains worth USD 1 billion while it makes additional inspections on safety. Popularity had already been faltering due to high ticket prices and operating difficulties. In the wake of this disaster, airlines are benefiting, said analysts.

Source: Wall Street Journal

CHINESE RAIL PROJECTS CHUG ON DESPITE DISASTER The accident on China's rails last July will not impede projects currently in development, reported the New York Times. While promising an increase in safety priorities, China's leadership does not plan for any delays. Some fear China is brazenly continuing operations in the face of tragedies that suggest more care is needed. China's State Council suspended the approval of a new rail lines for additional safety reviews, but work will continue as planned on previously approved projects. China's rail ministry has fallen behind on rail projects from three to four years ago, said industry experts. Thus it is possible China is still in a hurry to catch up on these works. The Chinese government's speaks about prioritizing safety, but its actions say otherwise. This behavior mirrors China's actions after the threat of nuclear disaster following Japan's Tsunami crisis last spring. Streaming lining projects in China is nothing new and beginning construction at a nuclear power plant before receiving official approval is the norm in China. This was the case at China's largest electric utility, where the foundation and office buildings were built months before approval for the project. “There‟s such a demand in China for energy, and nuclear power has such a central role in their plans that nothing is going to get in the way of it,” nuclear power specialist Michael Friedlander told the New York Times. Back to the rail industry, The State Council announced it will only allow high-speed rails to reach a top-speed of 300 kilometer per hour, supposedly in response to the Wuhan accident. In reality, this decision was made as far back as last spring.

Source: The New York Times

RUSSIA AIMS HIGH FOR RAILWAY GOAL BEFORE 2018 WORLD CUP Russia is hoping to bring its rails up to international standards before the 2018 World Cup. It will need to invest nearly USD 100 billion in its Soviet-era rail system, said the head of the state rail company. Russia feels hosting the World Cup will be its chance to ignite a long secession of infrastructural projects for its development. Russia currently has the world's largest railway system, but suffers from decades of neglect, reported AFP. The possibility of a high-speed rail is also on the table, but at a dramatic cost of about 2.6 trillion rubles, Yakunin told the RIA Novosti news Agency. The Russian government is currently encouraging private industry to invest in various construction projects associated with the soccer event. Yakunin said international practice suggests major projects such as railways should be jointly developed by government and private enterprises. He said between 30 and 40 percent of the proposed railway funding could come from private investment.” Russia will also host the 2014 Winter Olympic Games in the southern city of Sochi, where the country‟s tycoons are playing a major role in construction and investment.

Source: New Age

DESERTIFICATION THREATENS MONGOLIA The UB Post recently reported on the risk global climate change may have on Mongolia. Human activity is reported to be having a dramatic effect on the Mongolian landscape. Desertification can result in the loss of rivers and lakes, plant life, and the erosion of soil. In Mongolia, 90 percent of the landscape is vulnerable to desertification, said the UB Post. This is the same land used for grazing in Mongolia, so the impact on herders would be immense. Currently, this land is occupied by approximately 30 million livestock in addition to wild animals. Harsh winters with great amounts of snow fall in Mongolia, known as dzuds, and annual droughts are both

a symptom of climate change and a cause for desertification. Both are also the cause of mass death to livestock, corning herders into small pieces of countryside where livestock can survive. Unfortunately this leads to over-grazing, exacerbating the problem. With the addition of extreme fluctuations in temperature that damages soil, and other human activities, desertification severely threatens the Mongolian way of life. The UB Post calls on government for specific policies to avoid this environmental tragedy. This includes placing limitations on herders to prevent overgrazing, managing water irrigation and crop cultivation, and enforcing laws upon miners and mining companies. Vehicle tracks are another cause that most people overlook. Without proper roads, drivers are damaging the earth and its soil, making it more vulnerable to desertification. Thus the construction of roads could help prevent these effects. The threat of desertification to Mongolia is expected to increase due to Mongolia's “extreme continental climate in conjunction with factors resulting in climate change. Without immediate and effective policies, life will change very soon in Mongolia, and not for the better”, reported the UB Post.

Source: UB Post

ALTAI REGION NATIONS FORM A COOPERATIVE COUNCIL Mongolia, Russia, Kazakhstan, and the People's Republic of China have banded together to create a federdation for education. The Council of Rectors will promote the education establishments uniting the six transborder regions. The council aims to work together to reach shared goals in education. The first of which will be to establish an association of young scientists to support and launch studies and projects. Some of which include the study of climate change on the Altai biosphere, development of new and compact forms of energy, and production of ecologically healthy agriculture and biofuel.

Source: Trend.az

GOVERNMENT WILL FOCUS ON MERIT-BASED GRANTS FOR EDUCATION, SAYS MP A new grant will focus on the student's who study hardest, said B. Baasankhuu, head of the Department of Education in Mongolia. Last month Parliament passed a law to provide students with MNT 70,000 per month. The grant will take effect on January 2012, said the education head. Financing will be discussed within Parliament during its autumn session. This grant will have no effect on previously decided upon grants, specifically one that distributes MNT 500,000 to students annually. Other issues, such as the grants availability to foreign students, are to be decided. The education head stressed that this will not be a form of “social welfare”. Currently, the children of government workers and children-at-need receive assistance for education fees. He said programs such as these may be cut.

Source: MAD-Mongolia, News.mn

ANNOUNCEMENTS BCM MEMBERS WILL RECEIVE DISCOUNT FOR ATTENDANCE AT INVESTMENT SUMMIT-HONG KONG The second annual Mongolia Investment Summit 2011 will be held at Conrad Hong Kong, on 25-27 October. This year, the event planners are doubling the program in size and scope. The program will feature updates on Mongolia‟s growing array of investment opportunities. At the conference will be news on high-profile mining projects, such as Tavan Tolgoi and Oyu Tolgoi, as well as other juniors and explorers. Additionally will be information on opportunities in other non-mining sectors that are benefiting from the natural resources windfall, such as energy, power generation, infrastructure, mining services, financial services, property and more. A wide array of companies will attend in addition to insights from seasoned investors and analysts, such as Chief Executive Officer of Newcom Group and Chairman of the Mongolian Stock Exchange Bold Baatar. Guests will also hear from Zandanshatar Gomboav, the Minister of Foreign Affairs and Trade, in his opening address. For its support for the event, members of the Business Council of Mongolia will receive a 15 percent discount. For the discount, members should quote their mail code BH605OLD when registering. For registration or more information, call +852 2219 0111, email info@beaconevents.com. Visit the website to download a full brochure and registration at beaconevents.com. _____________________________________________________________________________________________

INVESTMENT FORUM, ZUUNMOD, TUV PROVINCE, AUGUST 30 The government of Tuv province, the National Committee for Regional Development, and the GIZ Investment Policy and Advisory Service Project are jointly organizing the Investment Forum aimed at promoting investment in Mongolia. Detailed business plans will be presented to allow a focused dialogue between potential investors and Mongolian companies seeking capital for further expansion. Targeted presentations by experts from the business community and public administration will highlight the relevant framework. BCM is a Supporting Organization of this event. For further information, please contact ipas@giz.de. ____________________________________________________________________________________ COMPETITIVENESS AND CORPORATE SOCIAL RESPONSIBILITY CONFERENCE, ULAANBAATAR, SEPT 6-7 This conference, organized by GIZ Integrated Mineral Resource Initiative, will be focused on debating whether corporate social responsibility increases the competitiveness of an economy and its players in the long run or whether it is rather a disadvantage that, particularly in structurally weak economies such as Mongolia, prevents the establishment of globally competitive value chains. The main areas for discussion will be: •CSR and Sustainable Economic Development •Economic Globalization and CSR •CSR and Enterprises. BCM is a Supporting Organization for this event. For any questions please contact imri@giz.de.

DISCOVER MONGOLIA 2011, ULAANBAATAR, SEPTEMBER 8-9 Discover Mongolia is partnering with Behre Dolbear Mongolia to hold a pre-conference workshop, "ABC's of Mining”, on September 5 and 6." The workshop is designed for non-mining professionals. This year‟s international mining investors' forum is the 9th edition of the annual hallmark event in the mining sector in Mongolia. It will see domestic as well as multinational mining companies and global resource financiers gather in Mongolia. The conference provides the opportunity for these companies to introduce their projects and share views on Mongolia's emergence as a major resource exploration frontier in the world. "We have tried to create a balanced and highly informative agenda so that existing and new investors and investment professionals can get the maximum understanding on Mongolia's investment environment around its mining and resource sector" said Mr. P. Ochirbat, chairman of the organizing committee. This year's forum is being sponsored by SouthGobi Resources, Erdene Resource Development, Hunnu Resources, PwC, Oyu Tolgoi LLC, Rio Tinto, Monnis LLC, Micro Mine, Prophecy Coal, Runge, Aspire Mining, Transwest, Voyager Resources, Haranga Resources, and Golomt Bank. BCM is the official supporting organization and its members will get a special discount. Online registration has started at www.discovermongoliaforum.com. ____________________________________________________________________________________ RETAIL LOGISTICS AND SUPPLY CHAIN MANAGEMENT, ULAANBAATAR, SEPTEMBER 27-28 The goal of this international conference, organized by the GIZ Integrated Mineral Resource Initiative,is to familiarize Mongolian businesses with a more expansive terminology of logistics and the functions of modern supply chain management. Certain prospects for services shall be highlighted in the context of Mongolia, with particular focus on trade-logistics. The main areas for discussion will be

Transport and Infrastructure

Logistics and Supply Chain Management for Retail and Wholesale Businesses. In addition, Mongolian and German firms will have the opportunity to solicit and discuss business opportunities together. BCM is a Supporting Organization of this event. For any questions please contact imri@giz.de. ____________________________________________________________________________________ MONGOLIA TRADE & COMMODITY FINANCE CONFERENCE, ULAANBAATAR, OCTOBER 13 This landmark conference at the Chinggis Khaan Hotel will only welcome leading experts within the trade and commodity finance sector, utilizing a format that includes detailed case studies, informed debate and invaluable networking opportunities. Among topics to be discussed:

•Considering the threat posed by volatile commodity prices •Utilizing Mongolia‟s competitive advantage to improve product diversification •Improving underdeveloped promotion services to demonstrate the unique appeal of Mongolia •Raising capital from foreign investors to develop projects and infrastructure •Developing an export financing structure •Expanding trading relations beyond traditional allies to become a truly global trade partner •Reducing dependence on foreign imports •Forging relationships between local and international banks to provide vital liquidity. Speakers include:

Ganhuyag Chuluun Hutagt, Vice Minister, Ministry of Finance of Mongolia Alisher Ali, Chief Executive Officer, Eurasia Capital Bat-Ochir Dugersuren, Chief Executive Officer, XacBank Randolph Koppa, President, Trade & Development Bank of Mongolia Jim Dwyer, Executive Director, Business Council of Mongolia Laurenz Melchers, Director, Mongolian Star Melchers Marat Utegenov, Executive Director, Mongolia Development Resources James Polson, Executive Director, AIDD B. Byambasaikhan, Managing Director, Newcom Group B. Enkhbat, Vice-President, Operations, Just Group Vincent O'Brien, Chair, Market Intelligence Group, ICC Banking Commission

BCM is a Supporting Organization for this event and special offers are available for BCM members. The conference brochures with agenda will be available in BCM office and will also be distributed at BCM‟s next monthly meeting on August 22. Please contact Ms. Monika Kuzniewska, Marketing Executive, at monika@exportagroup.com or by phone at +44 (0) 20 8772 3013 for further information. ____________________________________________________________________________________ MM TODAY” on MNB-TV, Fridays at 21:15 BCM is pleased to announce that Mongolian National Broadcasting continues its cooperation with BCM on “MM Today”. This English news program is aired every Friday for 10 minutes and is scheduled for 21:15 tonight. Tune in to watch this program that reports stories from today‟s BCM NewsWire. ____________________________________________________________________________________ “BSPOT” on B-TV, Monday to Friday at 21:30 B-TV (Business TV) now telecasts a 10-minute English-language news program called BSPOT every evening from Monday to Friday at 21:30, taking most of the stories from the BCM NewsWire. ____________________________________________________________________________________ POSTINGS ON BCM ENGLISH WEBSITE'S 'PRESENTATIONS' AND 'MONGOLIA REPORTS' and BCM MONGOLIAN WEBSITE‟S „NEWS‟ SECTIONS As a key component of BCM‟s Mongolian website‟s „News‟ section, articles from the Government‟s „Open-Government.mn‟ site are now regularly posted. Also several draft laws, still to be discussed in Parliament, are posted on BCM‟s English website in the Legislative Working Group section. „Presentations‟ from BCM‟s 6 monthly meetings in 2011, Peter Nicholls, OT‟s new EVP-Operations at Global MI‟n‟ES in Sydney on July 4, summaries of the key addresses at Eurasia Capital‟s Mongolian Investment Conference on May 25, Jim Dwyer of BCM‟s interview on Mongolia National Broadcasting‟s “Face to Face” on May 16, and the very successful Mines and Money Hong Kong‟s „Mongolia Investment Summit‟ morning on March 25 are posted in BCM website‟s „Resource, Presentations‟ for your review. „Mongolia Reports‟ including Z. Batbayar, Deputy Director of the Water Authority, at BCM‟s Environmental Working Group‟s recent meeting, the Polit Barometer-May 2011 from Sant Maral Foundation and the U.S. Embassy Mongolia‟s Commercial Section‟s “2011 Mongolia Investment Climate Statement” are among the reports posted on BCM's website (www.bcmongolia.org) in the “Resource, Mongolia Reports” section. We are now posting some news stories and analyses relevant to Mongolia on the BCM website's „Mongolian Business News‟ as they come, instead of waiting until Friday to put them all together in

the weekly NewsWire. The NewsWire will, however, continue to be issued on Friday, and will incorporate items that are already on the home page, so that it presents a consolidated account of the week‟s events.

ECONOMIC INDICATORS

INFLATION Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]

Year 2007 *15.1% [source: NSOM]

Year 2008 *22.1% [source: NSOM]

Year 2009 *4.2% [source: NSOM]

Year 2010 *13.0% [Source: NSOM]

July 31, 2011 *10.1% [source: NSOM]

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

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]

CURRENCY RATES – August 18, 2011 Currency Name Currency Rate US dollar USD 1,237.12

Euro EUR 1,782.07

Japanese yen JPY 16.14

British pound GBP 2,042.24

Hong Kong dollar HKD 158.60

Chinese Yuan CNY 193.59

Russian Ruble RUB 42.75

South Korean won KRW 1.15

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.