BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 301 – November 22, 2013

NEWS HIGHLIGHTS:

Business

Erdenes Oyu Tolgoi reports progress made;

Mongolia says committed to resolving OT financing delays;

Turquoise Hill to raise up to $2.4bn to repay Rio funding at OT;

US law firm investigates claims for Turquoise Hill minority shareholders;

Ulaanbaatar Railway accused of MNT 11 billion in tax avoidance;

Modun feasability study shows $11.50 a ton cost at Nuurst coal project;

Erdene completes trenching at Altan Nar;

Viking Ashanti brings Mongolian coal developer into its fold;

Moody's cuts MMC‟s rating on debt payment concern;

Fitch affirms Khan Bank and XacBank at 'B'; „Outlook Stable‟;

Khan Bank to cooperate with Russia‟s International Investment Bank;

Israeli university and Chinese group plan desert research institute in Mongolia;

Finnish metals refiner, Outetec, seeks metallurgical cooperation;

Mongolia Investment Summit in Hong Kong;

BCM leads 3rd business mission to London;

Japan-Mongolia Business Forum on 3 December;

Rio Tinto making last job cuts of the year in Australia.

Economy

Mongolia opens paved road from UB to China;

Forex auction;

Mongolia to ramp up iron ore exploration;

Mongolia to introduce digital television system by July 2014;

City plans for elevated cross walk;

Mongolia takes steps to boost FDI;

Deals continue despite poor sentiment;

Zavkhan Aimag sees decline in young herders;

Semi-coking coal plant faces challenges ahead, says mining minister;

Metals Mongolia shines a light on policy-less governance;

Copper falls after China meeting;

Coal industry heats climate change debate with fossil fuel push;

Emerging economies can break through reform stagnation, says EBRD.

Politics

Parliament rejects bill to raise debt ceiling;

First discussion of the Common Minerals Law;

EU's Barroso hails Mongolia's transformation on historic visit;

Elbegdorj makes Southeast Asia tour;

Elbegdorj meets Suu Kyi;

Cooperation agreement established between Mongolia and Myanmar;

Elbegdorj makes “unusual” comments about tyranny while in N. Korea;

The other budget (UB City);

Elbegdorj receives credentials of incoming Kuwaiti envoy;

MIAT money laundering convicts sentences reduced;

Former chairman of Metropolitan Police released on parole;

Four Kyrgyz deported;

New law proposes ban on right-side steering wheels;

Khentii capital changes name to Chinggis.

ECONOMIC INDICATORS

MSE Top 20 Index by market Capitalization;

Foreign-listed Companies with Mongolian Assets;

Inflation;

Central bank policy rate;

Currency rates.

*Click on titles above to link to articles.

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BUSINESS

ERDENES OYU TOLGOI REPORTS PROGRESS MADE

Government-owned Erdenes Oyu Tolgoi LLC reported 18 November on the strong progress in

resolving issues concerning the Oyu Tolgoi mine.

The 34 percent stakeholder in Oyu Tolgoi said continued development of the underground mine was

critical to the overall success of the mine and that the government of Mongolia looked forward to

working with Turquoise Hill and Rio Tinto PLC toward that goal. Through ongoing discussions, the

government and its private partners are working to resolve all outstanding issues and are working

together through a joint committee.

The government remains fully committed to the continued and successful operation of the open pit

mine, the financing and development of the underground mine, and the terms of the 2009

investment agreement, said the Source. It added that the government would be flexible and

continue discussions on terms and conditions of the project financing separate from any other

issues.

―The Mongolian shareholder remains committed to continue the constructive discussions with [Rio

Tinto] in order to structure and complete the project financing to fund the underground mine

development,‖ said the source.

Source: Montsame

MONGOLIA SAYS COMMITTED TO RESOLVING OT FINANCING DELAYS

Mongolia is committed to resolving issues delaying expansion of the USD 6.6 billion Oyu Tolgoi

copper and gold mine, the government said in a statement after a Rio Tinto Group unit failed to

arrange funding for their joint project.

―The Government of Mongolia is flexibly available to prioritize and continue the discussions on

terms and conditions of the project financing separate from any other issues,‖ according to a press

release issued today by Erdenes Oyu Tolgoi LLC, the state-owned company that holds 34 percent of

the mine.

Turquoise Hill Resources Ltd., the Rio Tinto unit which holds 66 percent of the mine, was unable to

obtain long-term project financing for the project due to uncertainty over negotiations with the

Mongolian government, the Vancouver-based company said in a statement on November 14. Rio

Tinto, which manages the project through its 51 percent stake in Turquoise Hill, halted

development of the mine‘s underground expansion and laid off about 1,700 workers until

discussions with the government on funding and other issues are resolved. Talks will continue to

resolve all issues, Erdenes OT said in the statement, adding that ―the timing of shareholder

approval and continuation of the underground expansion are dependent on the completion of the

feasibility study and therefore not certain.‖

The feasibility study is expected to be complete in the first half of 2014, Turquoise Hill said in its 14

November press release.

Source: BusinessWeek

TURQUOISE HILL TO RAISE UP TO $2.4BN TO REPAY RIO FUNDING AT OT

Turquoise Hill Resources Ltd. said Thursday it was planning a rights offering of up to USD 2.4 billion,

citing delays at Rio Tinto PLC‘s Oyu Tolgoi copper and gold mine in Mongolia that have stopped it

from financing the mine's next phase.

Shares of Vancouver-based Turquoise Hill, which owns 66 percent of Oyu Tolgoi, fell more than 6

percent to CAD 4.35 in afternoon trading on the Toronto Stock Exchange. Diversified miner Rio

Tinto owns 50.8 percent of Turquoise Hill and operates Oyu Tolgoi. Turquoise Hill filed a

preliminary prospectus for the rights offering. Rights offerings raise funds from existing

shareholders.

Rio Tinto put Oyu Tolgoi's more than USD 5 billion underground expansion on hold in July, saying the

Mongolian government wanted parliament to approve the project's financing. Turquoise Hill said

progress was being made with the government, but it was not clear when the project would be

approved or when a feasibility study would be final. The company said it did not expect to

complete project financing this year. Under an agreement with Turquoise Hill, Rio Tinto will be

required to buy shares that are not taken up under the rights offering, subject to some conditions.

Turquoise Hill needs the funds to repay Rio Tinto under two funding facilities. The facilities'

maturity dates have been extended to 15 January, 2014, so the rights offering can be completed.

Turquoise Hill also reported its financial results for the third quarter on Thursday. It posted a net

loss of USD 94 million, or 9 cents a share.

Source: Reuters

US LAW FIRM INVESTIGATES CLAIMS FOR TURQUOISE HILL MINORITY SHAREHOLDERS

Pomerantz Grossman Hufford Dahlstrom & Gross LLP is investigating claims on behalf of investors of

Turquoise Hill Resources Ltd.

The investigation concerns whether Turquoise Hill and certain of its officers or directors have

violated the U.S. Securities Exchange Act of 1934. On 8 November 2013, Turquoise Hill announced

that it would restate its consolidated financial results for the years ended 31 December 31 2010,

2011, 2012 and the affected quarters, including 2013. Turquoise plans to effect this restatement by

filing restated annual consolidated financial statements and management's discussion and analysis

for the year ended 31 December 2012, including comparative periods presented therein.

On this news, shares of Turquoise Hill fell USD 0.15 per share, more than 3 percent, on intraday

trading to a price of USD 4.93 on 8 November 2013.

Source: Pomerantz Grossman Hufford Dahlstrom & Gross LLP

ULAANBAATAR RAILWAY ACCUSED OF MNT 11 BILLION IN TAX AVOIDANCE

Mongolia's Customs Office reported that Ulaanbaatar Railway JSC owes MNT 11 billion in unpaid

taxes.

Ulaanbaatar Railway is exempt from customs and value-added tax for imported locomotive parts

from Russia. Customs officials alleges, however, that the company had imported equipment and

parts from China and other Southeast Asian countries but reported the origin as Russia for five years

to avoid the fees.

Source: Undesnii Shuudan

MODUN FEASABILITY STUDY SHOWS $11.50 A TON COST AT NUURST COAL PROJECT

Modun Resources Ltd. has submitted a feasibility study for the Nuurst thermal coal project in

Mongolia that highlights its low production costs—estimated at USD 11.50 per ton of raw coal.

The study by Absolute Mining has identified the potential for a 136.9 million ton mine producing up

to 4.9 million tons of raw coal per annum and 500,000 tons of dried coal briquettes by year four.

This will have a mine life of about 30 years.

―The results from the Mongolian feasibility study provide further confidence in the viability of

developing the Nuurst Coal Project into a low cost producing mine,‖ managing director Rick Dalton

said. ―This study will also be used as a basis for completing the more detailed feasibility work

required to secure financing for the development of the Project.‖

Modun continues to progress its Nuurst thermal coal project towards development with the

Mongolian Feasibility Study highlighting the low USD 11.50 per ton cost to produce raw coal which

would provide a significant operating profit margin even at current thermal coal prices. Besides

representing a key step in securing its mining permits, the study also provides the basis for a

bankable feasibility study that will allow the company to secure financing for the project. To top it

off, Nuurst has many advantages over other coal projects in the country, including proximity to

infrastructure and an agreement to supply coal briquettes to the Mongolian government.

Source: Proactive Investors

ERDENE COMPLETES TRENCHING AT ALTAN NAR

Erdene Resource Development Corp. reported significant gold and silver results from the first phase

of trenching completed earlier this month at the Altan Nar gold-polymetallic project in southwest

Mongolia. Results have been obtained for the first four out of 28 trenches designed to test ten

distinct mineralized zones across the 5.5 kilometer long Altan Nar target area.

"We believe the combination of these results and the extent of stockwork breccia uncovered in the

remaining twenty-four trenches, combined with our previous results, demonstrate the potential for

Altan Nar to host multiple, near-surface, gold-polymetallic deposits conducive to open pit mine

development," said Peter Akerley, Erdene president and chief executive officer.

Results include three of four trenches returning excellent results over a 250 meter portion of the

400 meter long Discovery Zone. Gold-silver mineralized stockwork breccia zones were uncovered

over wide intervals of 44 to 50 meters in each of the three trenches, all containing an average gold

content of greater than one gram per ton. Each contained wide, higher-grade, intervals of 11 to 15

meters grading 2.4 to three grams per tons of gold accompanied by eight to 20 grams per ton of

silver.

Source: Erdene Resource Development Corp.

VIKING ASHANTI BRINGS MONGOLIAN COAL DEVELOPER INTO ITS FOLD

Junior gold developer Viking Ashanti has announced a merger with emerging Mongolia-based coal

developer Auminco Mines.

Viking would issue more than 129.7-million shares to Auminco shareholders, resulting in that

company holding a 59 percent interest in the enlarged entity, with Viking‘s current shareholder

base retaining a 41 percent interest. The gold developer would also undertake a minimal capital

raising of AUD 4.5 million (USD 4.18 million) early in 2014, to fund operations, complete internal

production feasibility studies, and to make development decisions.

―Mongolia is host to vast coal and mineral wealth and has excellent proximity to Chinese and

Russian coal offtake markets, where steel production continues to grow,‖ said Viking Ashanti

chairperson Jack Gardner. ―The achievement of Auminco in gaining quality assets and mining

approvals in Mongolia gives Viking excellent prospects of early production and positive cash flow.‖

Gardner added that combined with Viking Ashanti‘s Ghanaian gold assets and its management team,

the merger augured well for Viking‘s successful and sustainable growth in the challenging global

equities environment. The merger is subject to a number of conditions, including due diligence by

both parties and shareholder and government approval. The merger is also conditional on Viking

raising no less than AUD 4.5 million in equity capital.

Source: Mining Weekly

MOODY'S CUTS MMC‟S RATING ON DEBT PAYMENT CONCERN

Mongolian Mining Corp. (MMC) which sells 42 percent of the nation‘s coal to China, was downgraded

by Moody‘s Investors Service because of concern it may not be able to pay its debt.

The rating was cut by a level to Caa2, Moody‘s said today in a statement, the fourth-lowest non-

investment grade. The Ulaanbaatar-based company is negotiating waivers and relaxation of its bank

covenants, Moody‘s said. Miners in Mongolia are under pressure as the nation‘s coal exports dropped

20 percent in the first nine months of this year and as prices of the commodity declined. MMC is

seeking to reschedule loan repayments after it reported a first-half loss of USD 25.2 million, Chief

Executive Officer Battsengel Gotov said in August. The company expects to increase cash and

reduce debt-servicing requirements next year after a possible loan restructuring and sale of its

paved road, MMC Chief Financial Officer Ulemj Baskhuu said today in an e-mail reply to questions.

―The coking coal price weakness has impacted the company earnings and liquidity position,‖

Baskhuu said. ―However, because of the successful cost cutting measures and improvements in

operational efficiencies, we were able to mitigate this impact. With regards to the downgrade, I

believe that agency opinion and timing is an independent view.‖

Moody‘s said, ―There are some other possible avenues for MMC to enhance its liquidity position in

the next 12 months, such as a significant asset divestment, or equity injection, particularly after

the relaxation of foreign investment laws in Mongolia. However, these options may be limited by its

low share price and weakened asset valuation.‖

Source: Bloomberg

FITCH AFFIRMS KHAN BANK AND XACBANK AT 'B'; „OUTLOOK STABLE‟

Fitch Ratings 14 November affirmed the ratings of two Mongolian banks—Khan Bank LLC and

XacBank LLC. The Long-Term Issuer Default Ratings (IDRs) and Viability Ratings (VRs) are 'B' and 'b'

for both banks. The Outlook on each bank's international depository receipt (IDR) is ―Stable.‖

The IDRs of both banks capture the volatile operating environment in Mongolia and the banks'

limited loss absorption capabilities in the event of a sharp deterioration in the operating

environment. Pre-impairment profits—the banks' first line of defense—and capital are under

pressure in part due to rapid loan expansion at rates that are capped under the government's loan

program. Heightened currency risk and tighter liquidity from strong loan growth are

counterbalanced by various actions by the government, including providing a swap facility and

cheaper funding.

Khan Bank's and XacBank's ratings are vulnerable to negative rating actions if the operating

environment deteriorates. In particular, a material revision to Fitch's expectations for the

economy's performance and the outlook for external liquidity could lead to a revision to the

outlooks. The ratings are also sensitive to changes around the government's credit stimulus and its

approach to foreign exchange intervention. This is based on the Source‘s view that the withdrawal

of the stimulus could result in asset quality deterioration as economic growth slows and-or inflation

accelerates. The banks may also be exposed to potential foreign-currency deposit withdrawals if

the government itself has limited access to foreign currency and imposes restrictions on currency

conversion. Both banks' ratings will also come under pressure if there are any changes in their

steady access to capital from private-sector owners.

Source: Reuters

KHAN BANK TO COOPERATE WITH RUSSIA‟S INTERNATIONAL INVESTMENT BANK

Khan Bank LLC will cooperate with the International Investment Bank (IIB) on November 15 for a

long-term strategy partnership.

Khan‘s executive director, Norihiko Kato, and the IIB chairman, Nikolay Kosov, signed a partnership

agreement with both sides expressing intent to cooperate in loans granting, small and medium

businesses support, trade finance, the IIB's member-countries foreign trade support, inter-banks

loans, foreign exchange market, and in banks' hi-tech technology sector. IIB, headquartered in

Moscow, Russia, supports small-and medium-sized businesses and infrastructure projects in

Bulgaria, Vietnam, Cuba, Mongolia, Russia, Romania, the Slovak Republic and the Czech Republic.

Source: Montsame

ISRAELI UNIVERSITY AND CHINESE GROUP PLAN DESERT RESEARCH INSTITUTE IN MONGOLIA

Ben Gurion University (BGU) recently signed a memorandum of understanding with China's Elion

Resources Group to create a research institute for combating desertification in Mongolia, the

university announced on Sunday.

Wang Wenbiao, chairman and president of Elion, visited BGU‘s Sde Boker and Beershbea campuses

with a team of executives, and a delegation from the university's Jacob Blaustein Institutes for

Desert Research will soon travel to China to help cement the plans. The new center, to be called

the Kubuqi Desert Research Institute, will aim to develop China's desert economy, and will

cooperate with Ben Gurion University on water saving irrigation, wastewater treatment, microalgae

production and solar energy utilization, the university said.

Source: Jerusalem Post

FINNISH METALS REFINER, OUTETEC, SEEKS METALLURGICAL COOPERATION

Finland's Outotec shared its experience in ferrous and non-ferrous metals processing with Mongolia

in a bid to attract joint venture opportunities. Outotec Mongolia said Mongolia could develop its

own metallurgical processing industry with its help. Other companies making similar pitches include

Korea's POSCO and Japan's Kobe Steel Ltd.

Source: Zuunii Medee

MONGOLIA INVESTMENT SUMMIT IN HONG KONG

The 4th annual Mongolian Investment Summit registered 400 participants with more than 200

attending its sessions from 19 to 20 November at the Four Seasons Hotel, Hong Kong.

The two-day event was well organized by Beacon Events and BCM‘s Jim Dwyer was Chairman.

Investors were provided an overview of the improvements made to Mongolian laws and how

investing in Mongolia has been made easier for foreign investors. Mongolia's ―Win Win with

Mongolia‖ (www.Mongolia) video presentation was a highlight of the event, presenting a powerful

general overview of the business opportunities in Mongolia. Central Bank governor N. Zoljargal

echoed those sentiments during his presentation, giving an outlook that Mongolia was certain to

sustain its double-digit growth—projecting 12 percent for next year coupled with 10 percent

inflation. Representatives of Mongolia's two most famous mines also made appearances. Oyu Tolgoi

LLC's new president and chief executive, Craig Kinnell, made his first public appearance since

taking his new position this month, providing an update on shipments of copper concentrate

underway since July, but no news on when phase two financing would be resolved. From Erdenes

Tavan Tolgoi LLC was Chief Executive Officer Yachil Batsuuri, presenting a long-term outlook and

benchmarks for infrastructure, power, washing plants and financing.

The new Investment Law that took effective 1 November has replaced the Strategic Entities Foreign

Investment Law, enabling private investors to receive approvals in less than two weeks for all

investments. The law also provides stability in fees for five to 22 years for taxes, customs duties

and royalties.

Mongolia is expecting an uptick in asset valuations in January 2014, when the new Securities Law

takes effect, said James Passin, managing director of Firebird Mongolia Fund. Funds of USD 60

billion would aid continued growth over the next five years, said Randolph Koppa, president of

Trade and Development Bank (TDB) of Mongolia LLCs, of which USD 20 billion would come from

foreign investors.

Source: BCM

BCM LEADS 3RD BUSINESS MISSION TO LONDON

The Business Council of Mongolia (BCM) hosted its third business mission to London, Great Britain

from 12 to 18 November.

The mission is an annual event with the support of Britain-Mongolia Chamber of Commerce and

British Embassy in Ulaanbaatar. Mongolian business delegates from Amar Power, Amar Travel, Gazar

Shim, Sky Motors, Patmon and Asia Pacific Investment Partners joined the group and visited the

PricewaterhouseCoopers (PwC) office in London, the British Parliament house, the Ideal home show

Christmas international trade fair, the "Doing business in Mongolia" forum. The forum saw more than

130 British investors at the Anglo American PLC headquarters. Speaking at the meeting were

Mongolian Ambassador Tulga, Anglo American Chief Representative Graeme Hancock, and Deputy

Head of the British Diplomatic Mission to Mongolia Julian Pearson.

"Mongolia is challenging, learning from the experience and mistakes and we have an advantage to

change the things to the right way. There are good signs that both leading parties, the government

of Mongolia and MPs—including the populists—agree that the investment condition should be

stabilized,‖ said BCM Vice Director Ser-Od Ichinkhorloo, who led the delegation. ―Basically, it is the

right message to the investors that the atmosphere will not be changed when or if there's another

political party in power."

Ser-Od was also invited to meet with the Mongolian community in Britain, where Ambassador Tulga

spoke about the Mongolian investment environment.

―BCM deeply appreciate John Grogan, Chairman of the Britain-Mongolia Chamber of Commerce and

a former MP, for his continuous great support on this mission,‖ said Ser-Od.

Source: BCM

JAPAN-MONGOLIA BUSINESS FORUM ON 3 DECEMBER

Mongolian National Chamber of Commerce and Industry Chairman and Parliamentarian S. Demberel

will make an official visit to Tokyo, Japan 1 December for the Japan-Mongolia Business forum on 3

December.

The aim for the visit is to make connections with Japanese entrepreneurs and discuss the projects

introduced for Mongolia during the 6th Japan-Mongolia Joint Consultation with the government and

private sector on Trade and Investment in Ulaanbaatar last May. Demberel will also meet Japanese

authorities in trade and representatives of Japan‘s parliament

Source: Info Mongolia

RIO TINTO MAKING LAST JOB CUTS OF THE YEAR IN AUSTRALIA

Lead Oyu Tolgoi developer Rio Tinto PLC is said to be sharpening the job-cutting knife this week,

with an unconfirmed number of contractors shown the door at its Argyle diamond mine and at least

30 positions on the line at its coal operations in the Hunter Valley.

Since September last year Rio Tinto has cut at least 500 jobs at its Argyle mine in Western

Australia, according to Ferrest‘s estimations. Meanwhile, the company‘s subsidiary Coal & Allied is

set to slash about 30 jobs by the end of the month at its Hunter Valley Operations, according to

sources quoted by Australian Mining. Both moves come as Rio pushes ahead with plans to reduce

operating and support costs by USD 5 billion this year, as part of an austerity program first

announced in April 2012.

Since assuming the company‘s leadership in January this year, Chief Executive Sam Walsh has taken

several measures to build a more focused and accountable business. In the last 14 months, Rio has

cut hundreds of jobs at its Western Australia iron ore operations, let go nearly 500 workers at

Argyle since September 2012, and axed positions at its other Hunter Valley coal projects. It also got

rid of an 80 percent stake in the Northparkes copper mine in Australia and slashed almost 2,000

jobs at its Oyu Tolgoi copper mine in Mongolia. This summer, the miner sold its South African

copper producer Palabora Mining to Chinese and South African firms and dropped its Eagle nickel

project in the United States. And that‘s not all. Last month Rio Tinto sold its mothballed Blair Athol

coal mine in Queensland and even the company‘s head office in London saw 200 people depart.

Source: Mining Weekly

ECONOMY

MONGOLIA OPENS PAVED ROAD FROM UB TO CHINA

Mongolia completed its first paved road connecting Ulaanbaatar to the border with China, which

buys more than 80 percent of the nation‘s exports.

Prime Minister Norovyn Altankhuyag attended a ribbon cutting ceremony to open the final 116.25

kilometers (72 miles) of highway stretching from the city of Sainshand to the border town of Zamyn-

Uud, the state-run Montsame News Agency reported yesterday. The total distance of the highway is

about 630 kilometers, according to Mongolia‘s Ministry of Roads.

Source: Bloomberg

FOREX AUCTION

The Bank of Mongolia received bid offers of USD 71 million and CNY 178.75 million from local

commercial banks at the foreign exchange auction held Tuesday.

The central bank sold to local commercial banks USD 65.4 million at a closing rate of 1745.00 and

CNY 178.75 million at a closing rate of 286.20. That same day, the Bank of Mongolia sold USD 60.9

million through a swap agreement from local commercial banks.

Source: Montsame

MONGOLIA TO RAMP UP IRON ORE EXPLORATION

Mongolia is planning to increase its iron ore exploration, targeting reserves of 14.7 million tons a

year, beginning 2014.

Mongolia exports iron ore and iron concentrate for export, but imports finished iron materials from

abroad. Last year Mongolia exported 6.5 million tons of iron ore for USD 650 million, and imported

400,000 tons of so-called ―pig iron‖—the intermediate product from iron ore before smelting—for

USD 600 million. The government plans to add another link to the supply chain for iron ore at the

Sainshand industrial complex.

Source: Montsame

MONGOLIA TO INTRODUCE DIGITAL TELEVISION SYSTEM BY JULY 2014

Preparation is underway to transition Mongolia from analog television broadcasting to digital by 31

July 2014.

Digital television aerials had been installed at 89 counties throughout Mongolia by 9 November, with

48 beginning trial runs. The digital broadcasting will allow viewers in Mongolia to watch channels

with higher resolution, regardless of their location. The digital service is set to resolve issues of

―ghost‖ images, interferences from weak signals, and many other issues that degrade the quality of

picture and sound from broadcasts will be.

Households currently using analog television via antennas will be able to make the leap to digital

with the installation of small conversion devices for their television sets. Officials said there are

already trial runs for the conversion underway. Officials estimated that each convertor device will

cost between MNT 25,000 and MNT 50,000.

Source: UB Post

CITY PLANS FOR ELEVATED CROSS WALK

The Ulaanbaatar Roads Department reported that it will install a new crosswalk for pedestrians

featuring an elevator this year at the 120 Myangat bus station in Khan Uul District.

The city has approved the budget for the project, which is currently in the blue prints stage for the

elevator. The above-ground construction will look similar to the facilities at the Kharakhorin

market, but will have an elevator rather than stairs.

Construction work for the cross walk is already underway.

Source: Zuunii Medee

MONGOLIA TAKES STEPS TO BOOST FDI

In a move aimed at reviving flagging foreign direct investment (FDI) levels, Parliament has approved

legislation it hopes will remove uncertainty over investor rights and facilitates the flow of overseas

capital into key sectors of the economy.

FDI inflows have fallen sharply in 2013, weighed down by investor caution which was heightened by

previous legal changes introduced last year. However, while regulatory reforms under the new

legislation should bring greater clarity regarding tax rates on foreign-owned enterprises, slowing

global demand for commodities and ongoing investor wariness could lengthen the time it takes for

FDI to regain momentum. The legislation, which went into effect on 1 November, introduces so-

called tax stabilization certificates that ensure stable tax treatment for a defined period of time,

ranging from five to 22 years, depending on the industry. The new rules will apply to value added

tax (VAT), corporate income tax, mining royalties and Customs duties. Under the law, local and

foreign investors will be charged the same rates.

―Tax stabilization measures and provisions that will help to prevent future changes to the

legislation should provide investors with the confidence that they need to return to the market,‖

said Chris MacDougall, managing director of Mongolian Investment Banking Group.

While Mongolia‘s revised regulations governing investment could help boost FDI levels, a recent

report by a parliament working group highlighted a number of obstacles to investment. The report,

submitted to the Standing Committee on Economics in late September, concluded that while the

tax rates Mongolia imposed on foreign investors, alongside its regulations and tariffs, were similar

to those of other developing economies, the country was still perceived as a risky destination.

Other factors keeping investors away, on top of uncertainty over tax issues, included inadequate

infrastructure, excessive bureaucracy and an underdeveloped financial sector, the report said.

Some of these issues, such as providing clarification about the tax regime and improving access to

more economic sectors, look to have been addressed by the new law. However, investors may well

still opt to wait until the amended legislation begins producing results before returning to Mongolia.

Source: Oxford Business Group

DEALS CONTINUE DESPITE POOR SENTIMENT

While many were under the impression that Mongolia had lost its growth momentum other parties

are still confident that Mongolia has enormous potential and continued business ‗as usual‘. In

reality, many strategic cooperative agreements have been signed or started during this time.

One example is Baganuur Energy Corporation, which signed a co-operative agreement between MCS

Group and Korea‘s POSCO, to build a coal-to-liquid factory based on Baganuur thermal coal and

Ukhaa Khudag thermal coal deposits. Plans are to have the plants operational by 2017. China‘s

SINOPEC has signed a cooperation agreement to build a coal-to-gas factory with the Ministry of

Mining, during the Prime Minister‘s visit to China.

Japan‘s Marubeni and Mongolia‘s Beren Group have agreed to build a steel smelter factory.

Mongolian Mining Corporation (MMC) has secured a supply contract for fuel, office and site supplies

and security services with other Mongolian companies for about USD 1 billion, which include NIC,

Shunkhlai and Transgobi as fuel suppliers (USD 953.6 million), USS and Energy Resources as office

and site suppliers (USD 43 million) and MCS Armor and Energy Resources as security services

provider (USD 7.6 million).

Other sectors such as banking and private investment sectors have been providing good news

stories. Three weeks ago Overseas Private Investment Corporation (OPIC) and Schultze Global

Investments (SGI) signed for the U.S. government to provide USD 20 million through SGI to local

small businesses. Khan Bank LLC and the International Monetary Fund have announced USD 111

million in new loan commitments. This includes USD 71 million in syndicated senior debt and USD 40

million in subordinated debt. The funds will be used for long term funding to Khan Bank‘s customers

as well as improve the bank‘s capital base. Separately, USD 31 million will be made available as

part of a syndicated loan from Sumitomo Mitsui Banking Corporation (SMBC), AKA Export Finance

Bank, DHB Bank (Netherlands) N.V., Intesa Sanpaolo S.p.A., ING Bank N.V., and RosEvroBank JSCB.

The OPIC Fund for International Development is expected to contribute another USD 20 million

parallel type loan.

Another highlight from the banking sector was the cooperation agreement between Golomt Bank

LLC and American Express (AMEX) that will make Golomt the issuer and credit manager of AMEX

cards held by Mongolian customers. Opening of the representative office of the SMBC in Ulaanbaatar

was also significant, with another Japanese banking group MUFG Bank of Tokyo Mitsubishi UFJ Ltd.

also preparing to open a representative office in Ulaanbaatar.

Source: National Securities

ZAVKHAN AIMAG SEES DECLINE IN YOUNG HERDERS

The number of young herders in Mongolia has fallen by a quarter from 2009 to 2012 in Zavkhan

Aimag, said the province's minister of labor.

More than 360 herders from 24 counties of Zavkhan gathered together at a forum to discuss policy

and herder rights. Zavkhan Labor Minister Ya. Sanjmyatav noted policies passed by government for

herders including the 2009 State Policy on Herders, the introduction of trade for herder goods on

the Mongolian Stock Exchange. He also noted that although herders represented 37 percent of the

eligible employed their numbers were quickly falling. The number of herders between the ages of

16 to 35 had fallen from 157,000 in 2009 to 117,000 in 2012.

Source: Unuudur

SEMI-COKING COAL PLANT FACES CHALLENGES AHEAD, SAYS MINING MINISTER

Technical problems made it impossible for Mongolia to establish a refinery to create fuel from

coking coal in 2012 as promised, said Mining Minister Davaajav Gankhuyag.

―In 2011 budget we had MNT 11 billion to a build a semi-coking coal fuel factory. The original plan

was to finish the factory in 2012, however, we still cannot produce the fuel because of

technological problems,‖ said Gankhuyag

Gankhuyag said a problem arose in the decision making, where government energy specialists

advised the use of Russian technology and a Russian partner.

―It is a complicated problem now, who will be responsible for the problem?‖ asked Gankhuyag.

Source: Udriin Sonin

METALS MONGOLIA SHINES A LIGHT ON POLICY-LESS GOVERNANCE

The second ―Metals Mongolia‖ conference on mining investment was held this month in

Ulaanbaatar. While the first conference, held two years ago, was attended by 1,200 representatives

from 25 countries, there were only around 240 attendees at this year‘s event. Attended by only a

few expatriates, the conference seemed to be indicative of the fact that foreign investors are not

rushing to invest into Mongolia‘s mineral processing industry.

Participants of Metals Mongolia emphasized that the absence of a governing policy for the resource

sector has held back development and pushed foreign investment away. Furthermore, the

subsequent amendments to those laws have wasted much time and harmed Mongolia‘s reputation.

The experience for gold miners Mongolia clearly illustrates what kind of damage poor policy and

non-transparent lawmaking can have on investment. The gold mining industry went underground

after the passage of the Windfall Profits Tax in 2007, and encouraged the smuggling of smuggling

and so-called ―ninjas‖ (unauthorized individual gold miners). The environment suffered even more

for that mistake.

D. Ganbold, the Director of Heavy Industry Policy Implementation Department of the Ministry of

Industry and Agriculture, spoke about the government‘s decision to establish an industrial park in

Sainshand and build a power plant along with steel, coking coal, copper and cement plants. Iron ore

will be transported from Selenge to Darkhan for wet processing and then sent to Sainshand for final

processing. It was unclear, however, what role the private sector would play. O. Sainbuyan said he

hoped Erdenes Mongolia would follow the path of Temasek, a multinational investment fund with a

net portfolio of USD 170 billion and owned by the government of Singapore. But for that to happen

there must be transparent public governance, a business-friendly environment and much less

corruption, like Singapore. Mongolia currently ranks 94 out of 178 countries on the Corruption

Perceptions Index while Singapore stands among the top five.

When the government takes part in industrialization, for example, by building an industrial park,

the principles of public-private partnerships should be applied. There is absolutely no need for the

government to build those plants by issuing bonds, putting the economy at risk, and laying a huge

debt burden on the people.

Dambadarjaa “De Facto” Jargalsaikhan is an independent media representative; a columnist and

TV host of the “Defacto” interview program on NTV Mongolia.

Source: UB Post

COPPER FALLS AFTER CHINA MEETING

Copper futures fell to a three-month low as investors bet that the economic policies laid out by

China's leadership wouldn't do enough to boost growth in the world's top metals consumer.

Major Mongolian export copper had been sliding since Tuesday after China's Third Plenum—a four-

day meeting that sets government economic policy for the world's second-largest economy—

released a broad blueprint calling for markets to play a more "decisive" role in economic matters.

On Wednesday, copper fell 2.3 percent to USD 3.1595 a pound on the Comex division of the New

York Mercantile Exchange, the lowest price since 31 July. Economic reforms are widely seen as

necessary for China to revive economic growth, which is expected to sag to 7.5 percent this year,

its slowest rate in over two decades. Copper prices are tied to China's fortunes, as the country

accounts for 40 percent of global demand for the metal and nearly all of Mongolia‘s copper exports.

Some market watchers worried that the proposal, which contained few specific policy changes,

would translate to reduced government support for state-owned enterprises and tighter monetary

policy. Less cash flowing to state-controlled giants—and through the broader financial system—could

limit the ability of manufacturers to finance copper purchases. Copper tracked a retreat in Chinese

stocks as investors sensed a lack of immediate economic support from Beijing. The metal has

dropped 3 percent over the last two days.

Copper's losses accelerated as the declines took prices through a series of closely watched levels

and triggered automatic sell orders, brokers and analysts said. Copper also was under pressure from

lingering concerns that the Federal Reserve may start to rein in its economic stimulus measures.

Source: Wall Street Journal

COAL INDUSTRY HEATS CLIMATE CHANGE DEBATE WITH FOSSIL FUEL PUSH

The global coal industry will court controversy on Monday by insisting that the world‘s most

abundant fossil fuel can play a part in curbing greenhouse gases through the use of new technology

at power plants. Coal is a major mining commodity for Mongolia.

The World Coal Association, representing most of the largest companies in the sector, says its call

for more government support for research to make coal burning more efficient is an answer to

―policy fatigue‖ surrounding climate change talks. The comments, coming amid the latest round of

global climate change negotiations taking place in Warsaw, are strongly contested by environmental

groups. They say further fossil fuel use will push the world closer to potentially catastrophic climate

change. Coal use has been growing strongly on the back of rising power generation and

industrialization in China. Coal provided almost half the increase in global primary energy

consumption over the decade to 2012, according to the International Energy Agency – which this

month said coal was still likely to be the leading electricity-generating fuel in 2035, accounting for

a third of generation. This month Japan said it would miss its target to reduce greenhouse gases

after the Fukushima disaster led to a switch from nuclear energy.

Zhang Xiwu, chairman of both the WCA and Shenhua, the Chinese coal producer, said there was ―a

growing sense of policy fatigue‖ in efforts to curb carbon emissions and that more use of technology

to curb emissions was ―a bold proposal‖. However, Asad Rehman of Friends of the Earth said the

association‘s position was a ―distraction from the real issue‖ and an ―intent to confuse‖.

The WCA‘s members account for about 28 per cent of coal output and a third of internationally

traded coal. They include most of the largest coal miners including BHP Billiton, Glencore Xstrata

and Peabody Energy Corp. Organizations such as Greenpeace and Oxfam have called for Christiana

Figueres, executive secretary of the U.N. Framework Convention on Climate Change, to withdraw

from addressing the coal and climate summit.

Source: Financial Times

EMERGING ECONOMIES CAN BREAK THROUGH REFORM STAGNATION, SAYS EBRD

Emerging countries are in danger of forever trailing the living standards of more advanced market

economies, but the European Bank for Reconstruction and Development (EBRD) argues in its

Transition Report 2013 that they can still break through obstacles that stand in the way of greater

prosperity.

The publication notes that the reform process has been stalling since before the onset of the global

crisis and that this lack of reform has weighed on both the investment climate and economic

growth. The report—―Stuck in Transition?‖ identifies a clear correlation between insufficient

economic and political reform and a lack of economic progress. However, it argues that countries

can escape this vicious circle.

―The evidence suggests not only that time is on the side of reform, but that the return of reform

can be promoted and accelerated, particularly if international integration, domestic leadership and

broader social movements work hand in hand,‖ the Chief Economist of the EBRD, Erik Berglof,

writes in the foreword to the report.

EBRD economists say that without further improvements in economic and political institutions, the

convergence process, whereby developing economies gradually align with the most advanced

economies, will stall in some countries, and will slow to a crawl in many others. Economic

institutions can see improvements on the back of political reforms. The report points out that even

if political change is difficult at the national level, it is often more feasible at the regional or local

level. International integration is also seen as a key element in strengthening the reform process

through enhanced trade and financial links and by reaching out to higher international standards of

education and training. In this context, the report shows how countries can enhance their reform-

supporting education systems by providing universities with better funding and by freeing them

from political interference.

Drawing on new data, the Transition Report also explains the importance of social inclusiveness in

the reform process. ―Reforms that benefit only a minority will sooner or later lose support,‖ it says.

Source: European Bank for Reconstruction and Development

POLITICS

PARLIAMENT REJECTS BILL TO RAISE DEBT CEILING

Parliament blocked a bill to raise the debt ceiling, a move that could limit the government‘s ability

to raise money for infrastructure needed to develop the mining sector.

The bill to amend the Fiscal Stability Law and raise the debt limit to 60 percent of gross domestic

product from 40 percent failed to muster the necessary two-thirds approval yesterday, said

Purevbaatar Gantsogt, the State Secretary for the Ministry of Finance. Mongolia is increasing its

spending on road, rail and power projects as mining companies including Rio Tinto Group invest

billions in mineral deposits. Much of the country‘s spending on infrastructure this year has been

facilitated by proceeds from the sale of dollar bonds in 2012. Government debt this year will be

49.5 percent of gross domestic product (GDP), just shy of the 50 percent mark allowed for 2013,

Gantsogt said. The 40 percent limit goes into effect starting from 2014.

―The plan was to issue more bonds to finance infrastructure development so yesterday‘s decision

restricts this,‖ Gantsogt said. ―Next year we will probably not do what we had planned.‖

Mongolia‘s Fiscal Stability Law, adopted in 2010 as a way to smooth spending habits and generate

savings from mineral revenues, imposes limits on expenditure growth and caps the structural

budget deficit to two percent of GDP, separate from the 40 percent cap on outstanding debt.

Mongolia‘s currency, the tugrug, fell to the lowest since at least 1993 today, reaching 1742.50 to

the dollar and foreign direct investment has been cut in half this year.

Instead of selling international debt, Gantsogt said parliament is planning to approve the sale of 1.4

trillion tugrug in local bonds, to be issued in 2014. The bonds, issued in tugrug, will be used to plug

revenue shortfalls, Gantsogt said. Mongolia posted 17.4 percent growth in 2011 and 12.4 percent

growth in 2012. Growth over the first three quarters of this year stood at 11.5 percent. By stopping

the sale of international bonds Mongolia‘s GDP to debt ratio is forecast to fall to 40 percent by the

end of next year from 49.5 percent because of increases to GDP, Gantsogt said.

Source: BusinessWeek

FIRST DISCUSSION OF THE COMMON MINERALS LAW

The Economic Standing Committee opened the first discussions on the Common Minerals Law in

Parliament.

When construction and mining activity picks up next year in March, construction companies will

need gravel and sand, argued the standing committee, which the law says belongs to the local

communities. However research and exploration was necessary before mining can begin. The

standing committee said the law grants title holders of land the right to use common minerals at

their own discretion. If a deposit of common minerals is discovered using financing from the

government, the government should receive compensation for that expenditure.

Ts. Bayarsaikhan, minister of construction and urban development, insisted the law be discussed

despite protests that MPs did not have copies, saying 2014 would be an important year for large

development projects and there was no time to waste so work could begin before the start of the

construction season in 2014.

Source: Undesnii Shuudan

EU'S BARROSO HAILS MONGOLIA'S TRANSFORMATION ON HISTORIC VISIT

European Commission President Jose Manuel Barroso on Sunday hailed Mongolia's transformation

from Soviet satellite to economic and democratic dynamo on a historic trip to the resource-rich

country.

Barroso, making the first visit to Mongolia by a Commission president, expressed admiration for

what he called its "remarkable achievements" in economic growth, democratic progress and the rule

of law. The visit marked a "historic day in relations between the EU and Mongolia", he said at a

press conference with Mongolian President Tsakhia Elbegdorj. Barroso said a Partnership and

Cooperation Agreement with Mongolia signed in April would broaden the scope of relations as well

as increase trade and cooperation. He also said that the European Union would double its

cooperation budget with Mongolia for the period covering 2014-2020. Barroso did not provide a

figure, but Mongolia's foreign ministry said the amount would total USD 100 million. The two sides

also discussed opening an E.U. diplomatic mission in Mongolia, officials said.

"Developing relations with the EU and its member states is one of the strategic objectives of

Mongolia‘s foreign policy," Elbegdorj said.

Barroso also met Prime Minister Norov Altankhuyag and planned to deliver a lecture at the

Mongolian National University on prospects for Mongolia-Europe relations as well as open a

European film festival.

Source: AFP

ELBEGDORJ MAKES SOUTHEAST ASIA TOUR

President Tsakhia Elbegdorj will pay a state visit to Southeastern Asian countries from 18 to 29

November.

The president will be accompanied by Foreign Minister Luvsanvandan Bold, Mining Minister Davaajav

Gankhuyag, and a business delegation as the president makes state visits to Myanmar, Vietnam, and

Singapore. He will also make a trip to Hong Kong for the International Conference of Economy,

where he will be a keynote speaker to deliver a speech on the business and economy of Mongolia.

Elbegdorj will hold private meetings and official talks with Myanmar President U Thein Sein,

Vietnam President Truong Tan Sang and Singapore President Tony Tan Keng Yam and take part in

official events. This will be the first-ever visit by a Mongolian leader to Myanmar at the state level

since the establishment of diplomatic relations in 1959.

Mongolia notes the state visits by Elbegdorj to the Association of Southeast Asian Nations (ASEAN)

and as a participant at the East Asia Summit.

Source: Montsame

ELBEGDORJ MEETS SUU KYI

President Tsakhia Elbegdorj and his visiting delegation met with Myanmar‘s opposition leader Aung

San Suu Kyi in the nation‘s capital, Nay Pyi Taw, 19 November.

The Mongolian delegation was also comprised of the foreign affairs minister, the finance minister

and government officials. Suu Kyi, leader of the National League for Democracy and chairperson of

Lower House‘s Rule of Law and Stability Committee, attended the meeting with 15 parliamentarians

from her party. MP Win Htein, who attended the meeting, quoted the Mongolian president as saying

that his country had to struggle for independence from the Soviet Union and became a democracy

after adopting a constitution and holding elections. His country has guaranteed freedom of the

press and recognizes Suu Kyi‘s democracy movement, he said, quoting the Mongolian president‘s

speech.

For her part, the opposition leader said that Myanmar could learn from Mongolia, adding that while

in the past it was extremely difficult to carry out political activities in Myanmar, politicians still

have to struggle even now, said Win Htein. The Mongolian president, extending an invitation to the

government and parliamentarians from Myanmar to visit his country, said he was encouraged by the

fact that the two governments have agreed to visa-free travel between them.

Suu Kyi visited Mongolia earlier this year and met the Mongolian president, a former journalist.

Source: Eleven

COOPERATION AGREEMENT ESTABLISHED BETWEEN MONGOLIA AND MYANMAR

The leaders of Mongolia and Myanmar Ts. Elbegdorj and Thein Sein Monday took part in a ceremony

of signing a bilateral relations and cooperation document 18 November.

Foreign Minister Luvsanvandan Bold and his Myanmar counterpart Wunna Maung Lwin inked the

agreement on mutual visa exemption for holders of diplomatic and official passports. After this,

Sein gave a banquet in honor of Mongolia's President. The dignitaries presented gifts to each other.

Source: Montsame

ELBEGDORJ MAKES “UNUSUAL” COMMENTS ABOUT TYRANNY WHILE IN N. KOREA

During a speech at the end of October at Kim Il-sung University in Pyongyang, North Korea,

President Elbegdorj said that tyranny cannot endure forever, the Mongolian government confirmed.

―Mongolia is a country respecting human rights and freedoms, upholding rule of law and pursuing

open policies… Freedom enables every human to discover and realize his or her opportunities and

chances for development. This leads a human society to progress and prosperity,‖ Elbegdorj said in

the speech. ―No tyranny lasts forever [sic]. It is the desire of the people to live free that is the

eternal power.‖

In regard to the speech, the office of the Mongolian president explained that the topic of the

speech had been suggested by North Korea, and the North had only advised that they refrain from

using the words ―democracy‖ and ―market economy.‖ The office also noted that no one had asked

any questions after the speech was over and that audience members had risen and given a length

round of applause as Elbegdorj left the auditorium. Elbegdorj also explained the efforts Mongolia

had made to reform the judicial system in the country.

On 31 October, North Korea‘s official news agency, Korean Central News Agency, reported that

Elbegdorj had visited Kim Il-sung University on the final day of his trip to North Korea and had made

a speech there. The report said that the Mongolian president had mentioned Mongolia‘s politics,

economy, history, and culture, but it did not provide any details of what he said.

―It is extremely unusual for a foreign leader to say this sort of thing in a speech during a visit to

North Korea,‖ said an official at South Korea‘s Unification Ministry who spoke on the condition of

anonymity. ―This is even more unusual when you consider that it is customary for both countries to

adjust the content of each other‘s speeches.‖

Source: The Hankyoreh

ELBEGDORJ RECEIVES CREDENTIALS OF INCOMING KUWAITI ENVOY

Kuwait's new ambassador to Mongolia Khaled Al-Fadhli has presented his credentials to Mongolian

President Tsakhia Elbegdorj.

A protocol ceremony was held on the occasion at Chinggis Khaan square in Ulaanbaatar early Friday,

with Mongolian Foreign Minister Luvsanvandan Bold and several other Mongolian officials attending.

During the ceremony, the Kuwaiti ambassador conveyed greetings from Amir Sheikh Sabah Al-Ahmad

Al-Jaber Al-Sabah, the crown prince, the prime minister, and the deputy prime minister and foreign

minister to the Mongolian president, wishing Mongolia more progress and welfare.

The Mongolian leader, in turn, asked the ambassador to convey his greetings to the amir, hoping

that bilateral relations would be reinforced and cemented in all cooperative areas.

Source: Kuna

THE OTHER BUDGET (UB CITY)

The budget for Ulaanbaatar has long suffered from a lack of transparency, according to the 2011

―Budget Transparency Rating of Local Governments in Mongolia‖ report by the Open Society Forum,

which describes the budget drafting process in Mongolia as ―undisclosed.‖ This year, however, the

budget is being discussed openly as part of a new initiative to gather the opinions of citizens. Yet, if

any difference is to be made people will have to take an interest.

In the past, Ulaanbaatar's citizens were kept in the dark on the budget. Budgetary controls and the

system for accountability have been little more than symbolic in the past, and the budgets of those

years were largely squandered. The development of Ulaanbaatar has been significantly hampered

by the lack of accountability in government.

Operating costs in the city budgets have doubled while asset values have grown six times. This year

the city will receive MNT 1.1 trillion of investment, including MNT 2.5 billion from the Local

Development Fund, which is used to create green spaces. According to a preliminary estimate by

the city council, the 2014 budget will be worth MNT 443.3 billion, of which MNT 416.7 billion will

come from taxes. About nine of Ulaanbaatar's districts and 43 agencies have requested a total MNT

354.1 billion for costs in 2014.

―Approximately 80 percent of Ulaanbaatar‘s total revenue came from its own resources while 21

percent of financial support has come from the state budget‖, reported the World Bank in its report

―City Finances of Ulaanbaatar‖ from this year.

Total expenditures for Ulaanbaatar in 2008 was MNT 39 billion and grew to to MNT 141 billion in

2011. The majority of costs were for transport subsidies for students and the elderly, representing

49 percent of the total city budget and 25 percent of administrative cost.

For most, the state budget is of greater concern to Ulaanbaatar's citizens than the city budget.

Although some people may choose to skip news on the local budget, it means more to them than

they might first realize.

Source: Mongolian Economy

MIAT MONEY LAUNDERING CONVICTS SENTENCES REDUCED

A panel of the Supreme Court 13 November reduced the sentences of those convicted of crimes

related the MIAT Mongolian Airlines embezzlement scandal.

The Chamber for Criminal Cases of the Supreme Court reduced the sentence of 11 years to former

MIAT executive G. Saranchimeg to 6 years, with all charges dropped except for damages to the

state and violations against the Law on Banking. Mongolia‘s Law on Mercy, however, will likely see

her serve 3 years.

Saranchimeg and her colleagues B. Erdenebileg and Ts. Orkhon were each sentenced to 11 years.

Orkhon, too, saw his sentence reduced to just 3 years, after the court ruled he had not been

involved in the embezzlement conspiracy but only participated in the illegal money transfers.

Erdenebileg saw his sentence cut by only 4 years, to serve out a 7-year sentence. Ch. Khorolsuren

saw his sentence cut from 13 years and one month to 8 years. A fifth convicted MIAT official, R.

Bat-Erdene, saw his sentence reduced from 12 years to 3 years.

In addition to their jail time, Orkhon and Bat-Erdene have been barred from taking a post [Source

does not specify meaning -ed] in addition to fines of MNT 6.3 billion and MNT 2 billion to

Khorolsuren and Erdenebileg, respectively.

Source: News.mn

FORMER CHAIRMAN OF METROPOLITAN POLICE RELEASED ON PAROLE

Parole has been granted to a senior police officers and former chairman of the Metropolitan Police

Authority after for allegedly ordering officer to fire into a crowd at the Sukhbaatar riots on 1 July

2008, following parliamentary elections.

O. Zorigt had been sentenced to two years and six months after being found guilty for abuse of his

powers. An unnamed source reported that Zorigt was released after serving two-thirds of his prison

sentence, which began 17 October 2012. The former police chair left prison without any recorded

disciplinary violations.

Zorigt originally received a five and a half year sentence along with six years and six months to

former Major General Ch. Amarbold and Colonel Sh. Batsukh for the incident. Zorigt saw his

sentenced reduced after he appealed to Mongolia‘s Law on Mercy. Amarbold and Batsukh saw their

sentences reduced to three years, six months.

Source: News.mn

FOUR KYRGYZ DEPORTED

The Mongolian Immigration Agency deported four Kyrgyz citizens on 6 November.

Lohuza Kerin Yanurovich, Tursunbayev Kurarbek Kuramayevich, Abdrayev Dervishali, and Musoyev

Ahmad were forced to exit Mongolia via the Sukhbaatar border port of Selenge Aimag after

allegedly acting against the national security of Mongolia. Those citizens were alleged to be

secretly promoting Tablighi Jamaat, a religious movement based on the principle of the "Work of

the Prophets" and the prophet Muhammed.

The deported individuals allegedly entered Mongolia with tourist visas and began lecturing their

creeds at mosques in Bayan-Ulgii Aimag and Ulaanbaatar.

Source: Info Mongolia

NEW LAW PROPOSES BAN ON RIGHT-SIDE STEERING WHEELS

MP M. Zorigt has proposed a new law that would prohibit the use of cars from Japan with the

steering wheel on the right side.

Sixty-six percent of all cars in Mongolia have steering wheels on the ―wrong‖, said Zorigt, adding

that Parliament needed to make a final decision on which side should be legal. He argued that cars

should conform to the traffic infrastructure already in place, so cars motorists should only be

permitted to drive cars with steering wheels placed on the left-hand side.

He said companies that import cars from Japan would have to reorganize the structure of imports to

maintain stability in automobile prices.

Source: Unuudur

KHENTII CAPITAL CHANGES NAME TO CHINGGIS

The Citizens Council of Khentii Aimag has renamed the provincial city of Undurkhaan to Chinggis.

Parliament members B. Bat-Erdene and B. Garamgaibaatar for the decision. The Provincial Council

met with local residents about the change to name and decided it would have a positive effect on

tourism to the city.

Before it was known as Undurkhaan, the city was called Kherlen city.

Source: Info Mongolia

NEW MONGOLIAN LAWS

The following amendment and addendum to laws were published in the latest weekly Government

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

publication.

Date Laws

15.11.2013 Addendum to Law on Diplomatic service

Amendments to Law on Government of Mongolia

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: info@bcmongolia.org.

ANNOUNCEMENTS

AUSTRALIAN UNDERGROUND MINING INDUSTRY PROGRAM, NOVEMBER 21-29

The Australian Trade Commission and the Underground Mining Engineer‘s Association of Mongolia

(UMEAM), is now registering companies and organizations to participate in an Australian

Underground Mining Industry Program, which will take place in Sydney and Brisbane on 21 to 29

November. The program consists of eetings with Australian mining equipment, technology and

service supplier companies in Sydney and Brisbane. Attending the 2013 Underground Mining

Excellence Conference and exhibition will provide an opportunity to engage with the latest

underground mining innovations and technology providers and a possible visit to the North Parkes

underground mine site.

Attendance is limited. For more information, call 9910 6102 or send an email to

bart.gurbazar@austrade.gov.au.

___________________________________________

“MM TODAY” ON MNB-TV, FRIDAY, 18:50-19:00

BCM is pleased to announce that Mongolian National Broadcasting continues its cooperation with

BCM on ―MM Today‖. This English news program is aired every Friday for 10 minutes and is

scheduled from 18:50 to 19:00 tonight. Tune in to watch this program that reports stories from

today‘s BCM NewsWire.

BCM WEBSITES

MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS

The ‗Presentations‘ section on BCM‘s Mongolian website can be reached via bcm.mn/itgeluud.

As a key component of BCM‘s Mongolian website, articles from the ‗News‘ section and the

government website Open-Government.mn are regularly updated.

S. Oyun, Minister of Environment and Green Development, presentation at BCM monthly meeting on

May 27 added to Mongolian website, bcmongolia.org/mn/илтгэлүүд.

- Байгаль орчин, ногоон хөгжлийн сайд С.Оюун, Байгаль орчин, ногоон хөгжлийн шинэчлэлийн

бодлого, үйл ажиллагаа, МБЗ-ийн сарын уулзалт 5 сарын 27, 2013

___________________________________________

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

BUSINESS NEWS‟, „PHOTO GALLERY‟

On BCM‘s English website, the ―Resources‖ and ―Presentations‖ sections are available:

The following are presentations from the Mongolia Mining Summit, Perth, Australia, October 29-31,

2013:

• Mongolia‘s Minerals Future and Development by Otgochuluu Ch, Director General, Department of

strategic policy and planning at Ministry of Mining, Mongolia at the Mongolian Mining Summit 2013,

Perth, Australia, Oct 29-31, 2013

• Mongolian Economy: Investment Opportunities /Challenges, Jim Dwyer, Executive Director,

Business Council of Mongolia at the Mongolian Mining Summit 2013, Perth, Australia, Oct 29-31,

2013

• Oyu Tolgoi: Lessons from the Gobi, Houston Spencer Vice President, Communications and Media

Relations, Oyu Tolgoi at the Mongolian Mining Summit 2013, Perth, Australia, Oct 29-31, 2013

• Market dynamics for Mongolian coking coal in the Chinese market, Graeme Hancock, President

and Chief Representative at Anglo American, Mongolia at the Mongolian Mining Summit 2013, Perth,

Australia, Oct 29-31, 2013

• Speech by Mr. Ariunbold Byamba, Deputy Director, Erdenes MGL LLC at the Mongolian Mining

Summit 2013, Perth, Australia, Oct 29-31, 2013

• Launching Mining Projects in Mongolia–A Major Contractor‘s Perspective, Eric Erdenebat

Tseveendorj, Country Manager, Orica Limited at the Mongolian Mining Summit 2013, Perth,

Australia, Oct 29-31, 2013

• Investing in a dynamic legislative environment, Elisabeth Ellis, Managing Partner Ulaanbaatar,

Minter Ellison at the Mongolian Mining Summit 2013, Perth, Australia, Oct 29-31, 2013

• Sandvik In Pit Crushing & Conveying (IPCC), Doug Turnbull, Principal Mining Engineer, Sandvik

Mining Systems, at the Mongolian Mining Summit 2013, Perth, Australia, Oct 29-31, 2013

• Ovoot Coking Coal Project, David Paull, Managing Director Aspire Mining, at the Mongolian Mining

Summit 2013, Perth, Australia, Oct 29-31, 2013

• The business of being a third neighbor, David Landers, General Manager, East Asian Growth

Markets at the Mongolian Mining Summit 2013, Perth, Australia, Oct 29-31, 2013

• Nuurst Thermal Coal Project, Daniel Rohr, Chief Financial Officer, Modun Resources Ltd, at the

Mongolian Mining Summit 2013, Perth, Australia, Oct 29-31, 2013

• Culture matters in building sustainable long-term business relationships, Hana Tserenkhand

Byambadash Business Development Consultant. AusMon Consulting and Dr Christine Hogan Adjunct

Professor, Curtin University. Consultant & Author at the Mongolian Mining Summit 2013, Perth,

Australia, Oct 29-31, 2013

• Maximizing Business Benefits from Your IT Investment, Brad Skeggs, Executive Director, COSOL, at

the Mongolian Mining Summit 2013, Perth, Australia, Oct 29-31, 2013

• Presentation by Battsengel Gotov, CEO, Mongolian Mining Corporation, at the Mongolian Mining

Summit 2013, Perth, Australia, Oct 29-31, 2013

• Mongolian Mining Sector "Present and Future Developments", N.Algaa, Executive Director,

Mongolian National Mining Association, at the Mongolian Mining Summit 2013, Perth, Australia, Oct

29-31, 2013

• Jim Dwyer, Executive Director of BCM – ―Mongolian Economy: Investment

Opportunity/Challenges‖ at the 16th Annual NAMBC Investors Conference, Sept 24, 2013

• Business-mongolia.com: ―Working group‘s conclusion on the economy‖

• Joshua Sunga, Internship Program Director, AIESEC- "Youth Leadership Development" at the BCM

Monthly Meeting Aug 26. 2013

• G. Zorig, Country Manager, Tree Global Mongolia – ―Tree Global Mongolia Overview Presentation‖

at the BCM Monthly meeting Aug 26, 2013

• G. Saruul, Deputy CEO, Mongolian Stock Exchange – ―Securities Law Overview‖ at the BCM Monthly

meeting Aug 26, 2013

• Bilguun Ankhbayar, Chief Executive Officer, Mongolian Investment Banking Group LLC,

―MIBG Review‖, at the MSE-BCM Securities Law Overview Session, July 4, 2013

• Robert Rooks, Director, PwC Hong Kong, ―A brief Overview of Custody Services‖, at the MSE-BCM

Securities Law Overview Session, July 4, 2013

• Anthony Woolley, Senior Associate, Hogan Lovells, ―The Revised Securities Market Law‖, at the

MSE-BCM Securities Law Overview Session, July 4, 2013

• B. Saruul, Director General, Securities Department, Financial Regulatory Commission of Mongolia,

―Securities Markets Law – Path to Market Reforms‖, at the MSE-BCM Securities Law Overview

Session, July 4, 2013

Please note the presentations from each of the BCM monthly meetings.

The ―Mongolia Reports‖ section includes the following:

- ―Monthly Macroeconomic Overview, Sep 2013,‖ by EPCRC

- ―Selected Macroeconomic Indicators; data through October 16, 2013‖ by International Monetary

Fund;

- ―IMF Completes 2013 Article IV Mission to Mongolia‖ by International Monetary Fund;

- ―Mongolia Macro Flash‖, Adrienne Lui, Asia Pacific Economics Research, Citigroup Global Markets

Asia Ltd;

- ―Selected Macroeconomic Indicators for Mongolia, as of June 2013‖ by International Monetary

Fund;

- ―Polit Barometer April, 2013‖ by Sant Maral Foundation;

- ―Market Update‖ by Mandal General Insurance LLC;

- ―Annual Report 2012‖ by International Monetary Fund;

- ―Regional Economic Outlook: Asia and Pacific‖, April 2013 by International Monetary Fund;

- ―Highlights of 2012, Mongolia‖ by European Bank for Reconstruction and Development (EBRD);

- ―Official statement of Oyu Tolgoi LLC in relation to information, data and facts related to Oyu

Tolgoi‖ discussed during open session of the State Great Khural‖, dated 1 February, 2013‖;

- ―Mongolia Investment Climate Statement‖, by the Economic and Commercial Section of the U.S.

Embassy;

- ―Mongolia Foreign Labor Force Ratio for 2013‖ by Hogan Lovells International LLP;

- ―How Mongolia will perform in 2013?‖ by Mandal Asset Management;

- ―Mongolia Business Owner and CFO Survey result‖ by BDSec JSC;

- ―The fiscal regime for mining - a way forward‖ by IMF Fiscal Affairs Department;

- ―Taxes for Expatriates in Mongolia‖ by PricewaterhouseCoopers.

The following interviews are added to Interview Section from the Oxford Business Group, Mongolia

Reports 2013 book:

• B. Byambasaikhan, Chairman, Business Council of Mongolia: ―Talk is cheap‖;

• President Ts. Elbegdorj: ―Diversifying for growth‖

• Jim Dwyer, Executive Director, Business Council of Mongolia: ―Non-mining sectors budding‖;

• Peter Morrow, Chairman, American University of Mongolia: ―Filling in the blanks‖;

• N. Zoljargal, Governor, Bank of Mongolia: ―Sustainable vision‖;

• Gansukh, Minister of Roads and Transportation: ―Accessing new markets‖;

• J. Od, President, MCS Group: ―Building interest‖;

• B. Chuluunbaatar, President and CEO of Monnis Group: ―Climbing the ranks‖;

• Cameron McRae, President and CEO, Oyu Tolgoi: ―Sitting on a copper mine‖.

BCM's English website includes the ―Mongolia Business News‖ section where the Open Letter to

Parliament and Government is available for download.

BCM continuously posts news stories and analysis of relevance to Mongolia at ‗Mongolian Business

News‖ before they are all put together each week for Friday's weekly NewsWire.

The ―Photo Gallery‖ contains photos from the 5th Anniversary BCM Gala dinner on November 5.

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 http://www.facebook.com/pages/THE-BUSINESS-COUNCIL-OF-

MONGOLIA/129826330435540 to read the latest announcements and comment on events carried in

the NewsWire with the community.

Connect with BCM on Linked-in to join the diverse group of professional contacts creating a better

business environment in Mongolia today.

Hear breaking news and announcements as they happen when you follow BCM on Twitter at

http://twitter.com/#!/bcMongolia.

We have now 1,822 fans on our Facebook fans page, 1,521 connections on LinkedIn network, and

804 followers on Twitter.

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

organization, visit the official BCM website at www.bcmongolia.org and www.bcm.mn

ECONOMIC INDICATORS

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]

October 31, 2013 *10.8% [source: NSOM]

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

Note: 9.5% y-o-y, Ulaanbaatar city, October 31, 2013

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 – NOVEMBER 21, 2013

Currency Name Currency Rate

US dollar USD 1,748.49

Euro EUR 2,343.85

Japanese yen JPY 17.35

British pound GBP 2,812.97

Hong Kong dollar HKD 225.56

Chinese Yuan CNY 286.96

Russian Ruble RUB 52.88

South Korean won KRW 1.65

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.