BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 195, November 25 2011

SPECIAL ISSUE: RISK MANAGEMENT FORUM - ULAANBAATAR HOTEL, 30 NOVEMBER

NEWS HIGHLIGHTS: Business

Progress unclear on TT IPO;

Government greenlights Prophecy power plant;

Xanadu to continue drilling through winter;

Garrison International to become Desert Eagle Resources;

Enkhgoviin acquires Khavtsgait project;

Suu’s entrepreneurial brothers seize opportunity in milk;

Japanese firm hopes to build recycling plant;

Rio spoils Cameco's bid for Canadian uranium miner;

Peabody approaches 100 percent ownership of Macarthur;

Mongolia Energy expects six month profit;

Russian Railways nine month revenue up, profit off;

New road project open for bids.

Economy

Tugrug fluctuations test Mongol Bank;

Fitch grades Mongolia “B+”;

Construction sector leads in job creation;

Meat exports on the rise;

Mining panel urges government to diversify economy;

World Bank looks to develop insurance industry;

BHP cautious on short term outlook for commodities;

Chile predicts decline in copper demand;

Disparity between copper and aluminum prices signal dark economic climate;

Gold continues to break records in 2011;

Silver shares in some of gold's glory;

EBRD and ADB partner for focus on development in Central Asia;

Australia's mining tax clears hurdle;

Yuan stumbles in its race for dominance.

Politics

MPP searches for additional revenue for 2012 budget;

New heads of Anti-Corruption Agency named;

Government to introduce electronic ID cards;

MPP headquarters destroyed in fire;

Japan cuts aid to Mongolia;

Construction on new bridge complete in 2012;

Japan builds modern school in rural community;

New KOICA volunteers to serve in Mongolia;

Mongolia applies to OSCE;

Government to measure pollution produced at power plants;

Disabled languish as society continues to ignore their plight;

Traffic incidents up 17.7 percent;

Police investigate murder at OT;

Mongolian fossils indicate rare behavior among dinosaurs;

Ancient horse returns to Mongolia.

*Click on titles above to link to articles

SPONSORS

Khan Bank Eznis Airways

Kempinski Hotel Khan Palace Mongolian National Broadcasting

Mongolian Star Melchers Breakthrough PR

Mongolian Properties Oxford Business Group

BUSINESS PROGRESS UNCLEAR ON TT IPO Although Mongolia still plans to list its Tavan Tolgoi coal mine in Hong Kong, London, and the Ulaanbaatar, it is still too early to say exactly when, said the newly appointed chief financial officer for the project, Angus Caithness. Prior to joining Erdenes Tavan Tolgoi, Caithness was chief financial officer of Hunnu Coal, which was bought this month for USD 493 million by Thailand's top coal miner, Banpu.

“Obviously with this (listing), there are a number of legal and technical issues to be overcome,” Caithness said. Ch. Khurelbaatar, chief of the Cabinet office and member of a government working group on Tavan Tolgoi, said that Mongolia plans to raise USD 3 billion from the triple listing. Senior politicians have said the eastern section of the Tavan Tolgoi project would be ready for its stock exchange debut at the end of the first quarter of 2012, but critics have cast doubt on the timetable. Before the initial public offering (IPO) can go ahead, Mongolia's Parliament first needs to reach a decision on an investment agreement for the western block of the project, but the deal remains contentious, especially ahead of elections next year. Bidders from Japan and South Korea complained the selection process was unfair after the government excluded them from the project. In July the government announced 40 percent of the project to China's Shenhua, 24 percent to the United States' Peabody Energy, and 36 percent shared within a Mongolian-Russian consortium led by Russian Railways, but that decision is now being revised. Mongolia has been keen to bring international expertise to Tavan Tolgoi. The coal deposit has estimated reserves of 7.5 billion tons of coal, including the world's largest untapped deposit of coking coal used to make steel. It has already shortlisted BNP Paribas, Deutsche Bank, Goldman Sachs, and Macquarie to handle the listing.

Source: Reuters

GOVERNMENT GREENLIGHTS PROPHECY POWER PLANT Prophecy Coal, the junior that graduated to the TSX main board last month, received the green light from the Mongolian government to build its 600-megawatt Chandgana coal-fired power plant in the east of the country. The license was the first the government has issued for that size power plant, and sets the project up to become the first new privately owned-coal fired plant in the country when it starts sending out electricity in early 2016. Growth in the mining sector may drive power consumption to nearly double by 2015. “There is an understanding among all stakeholders that Mongolia, being one of the world's fastest growing economies, needs additional power,” Prophecy Chairman and Chief Executive Officer John Lee said. The next steps for the company before production includes completing a feasibility study, which it anticipates by the end of the year, followed by a power purchase agreement in the first quarter of 2012. Prophecy then hopes to conclude project financing negotiations in the third quarter of next year and start building the Chandgana power plant and the mine that will feed it in the first quarter of 2013. The first 150 megawatt unit is planned to start producing power by January 2016. Prophecy's Chandgana Tal and Chandgana Khavtsgait coal deposits will supply coal for the plant. The company expects capital costs to run between USD 600 million and USD 800 million, though the feasibility study will provide firm estimates.

Source: Mining Weekly

XANADU TO CONTINUE DRILLING THROUGH WINTER Xanadu Mines Ltd. plans to soon commence drilling at its Javkhlant metallurgical coal exploration project, as part of its strategic alliance with Noble Group Limited. “For the first time our drilling program will run right through the Mongolian winter, with results released progressively over the next three months,” said Chairman Brian Thornton. The joint venture company Enkhgoviin Chuluu LLC can earn up to 80 percent of the Javklhant coal exploration license by meeting various spending commitments over two years. The large 1,005-square-kilometer exploration license is located in the South Gobi Basin. The basin is known is known for its thermal and coking coal deposits. The Javkhlant opportunity was recognized as part of a regional reconnaissance exploration program targeting coking coal, conduced by Xanadu's geologists over the last 18 months. The project is located in the southwest of Gobi Altai Aimag, approximately 22 kilometers from the Burgastai border crossing point into China and only 200 kilometers from the Chinese rail network at Hami. Xanadu is a Mongolian exploration company with two thermal coal assets, Galshar and Khar Tarvaga.

Source: Xanadu Mines Ltd.

GARRISON INTERNATIONAL TO BECOME DESERT EAGLE RESOURCES Garrison International Ltd. has announced its plans to consolidate its shares and change its name to Desert Eagle Resources Ltd., pending approval from shareholders in December. Garrison currently has about 173.3 million common shares outstanding. Garrison has proposed to consolidate its common shares so that one share would be issued for every 18 common shares outstanding, resulting in approximately 9.63 million common shares. The firm believes that consolidation would facilitate future financings through the issuance of additional common shares. Garrison is a junior mineral exploration company focused on acquiring and developing advanced stage gold properties in Mongolia. Source: Garrison International Ltd.

ENKHGOVIIN ACQUIRES KHAVTSGAIT PROJECT Xanadu Mines Ltd. has recently acquired the Khavtsgait coal project through its joint venture company with Noble Group, Enkhgoviin Chuluu LLC. “The Khavtsgait acquisition further underpins the core strategy of [Enkhgoviin]—to identify and develop significant metallurgical coal opportunities, close to existing structure, that will meet anticipated current and future demands from China and North Asian markets,” said Chairman Brian Thornton. The project is located in the Khuvsgul province of northern Mongolia approximately 60 kilometers east of provincial capital Murun and 230 kilometers west of the established rail spur at Erdenet. The exploration license overlies a coal deposit similarly aged to other projects in northern Mongolia, such as the Ovoot coking coal project owned by Aspire Mining Limited. The basin is known to hold hard coking coal deposits. The company recognized the Khavtsgait opportunity as part of its regional reconnaissance exploration project conducted by Enkhgoviin's experienced geologists. Initial exploration indicated materials at Khavtsgait as similar to EC's newly discovered Nuurstei coking coal project located approximately 60 kilometers to the west. The deal is Enkhgoviin's third major metallurgical coal acquisition in Mongolia since its creation in March 2011. Xanadu is a Mongolian exploration company with coal assets, Galshar in addition to Khar Tarvaga.

Source: Xanadu Mines Ltd.

SUU‟S ENTREPRENEURIAL BROTHERS SEIZE OPPORTUNITY IN MILK Mongolia's largest dairy firm, Suu LLC, is being transformed by the Dagvadorj family. Max purchased the plant, which first opened in 1958 when individual herders were still bringing containers of milk into the city, to keep it out of the hands of Russian oligarchs who wanted in on “privatization” in their former satellite. “They saw a great potential here,” says D. Munkhjargal, the plant's executive director. They were telling me if a Russian wants it, it must be valuable. They've got a different mindset—an entrepreneurial mindset.” It was clear to the Dagvadorj brothers that this could be another high-margin operation—a characteristic of every sector they've touched. The plant alone can do at least 15 percent net margins, but by adding satellites in remote locations—closer to the herds and to customers—they can leverage their expertise. With a small public float on top of the family stake and no-import duty on foreign machinery, Suu has been bringing equipment and global expertise. After two years Munkhjargal has snagged an expansion loan from the World Bank's International Finance Corp. at a mere 9 percent rate (compare with the 13 percent that is the going rate in Mongolia). Sales of USD 24 million are up from USD 1 million in 2005 and the staff size surged 70 percent in the past year.

Source: Forbes

JAPANESE FIRM HOPES TO BUILD RECYCLING PLANT Kawashima Group, a Japanese firm with 50 years of recycling experience in Japan, is looking into the possibility of building a recycling plant in Ulaanbaatar. Deputy Mayor B. Baatarzorig received representatives of the firm on Tuesday to discuss cooperating on the project. Kawashima recycles household waste into raw materials for industrial use. Baatarzorig supported the firm's suggestion and said construction should begin as soon as possible. If the plant is built, he said its outputs could replace raw materials that are currently imported.

Source: News.mn

RIO SPOILS CAMECO‟S BID FOR CANADIAN URANIUM MINER The Canadian Competition Bureau cleared Rio Tinto's deal to buy Hathor Exploration after the former upped its bid for CAD 4.70 (USD 4.52) a share, a four percent premium to Cameco's latest bid. Rio is a 49 percent stakeholder in Ivanhoe Mines and could possibly buy control of the majority stakeholder of the Oyu Tolgoi project. Rio said the lock-up agreement it entered into with Hathor's board as part of its earlier offer remains in effect. It reportedly owns 5.7 percent of Hathor's shares. New York-based Hallgarten & Company mining strategist Chris Ecclestone said he believed Cameco should back down, and avoid the risk of “being suckered into overbidding.” He also said Cameco's initial hostile offer represented “full and fair value” for Hathor's shareholders, and that it would be unwise to continue bidding and could lose credibility. Announcing its first bid, Cameco said it decided to go hostile with the CAD 520 million offer after Hathor's board rejected it. The uranium producer questioned Hathor's preliminary economic assessment of CAD 567 million of capital expenditures for a five-million-pound-a-year mine at Roughrider, which the junior announced on 13 September. The firm's revised offer expires just after midnight on 29 November. The spot price for uranium jumped nearly 10 percent last week to reach USD 55 a pound, before slipping to USD 52.50 a pound this week. The nuclear fuel had been selling for up to USD 73 a pound, before the Fukishima disaster caused the commodity's prices to head south. Ecclestone said uranium equities were still “dirt cheap.” Rio wants ownership to get a foot in the door of Saskatchewan's Athabasca basin, which produces around one-fifth of the world's uranium supplies.

Source: Mining Weekly, Zachs

PEABODY APPROACHES 100 PERCENT OWNERSHIP OF MACARTHUR Peabody Energy said last week that it had acquired more than 90 percent of Macarthur Coal of Australia. The announcement allows Peabody, the American coal company that will likely have up to a 24 percent stake in the Tavan Tolgoi Western Tsankhi project, to require Macarthur‟s remaining shareholders, including South Korean Steel maker Posco, to sell their stakes. Peabody is also increasing its offer to Macarthur by USD 100 million, to nearly USD 5 billion, as it raised its bid to USD 16.52 and gained a 90 percent stake. “We are very pleased to be acquiring 100 percent of Macarthur shares, which brings clear strategic and financial benefits,” said Peabody Chairman and Chief Executive Gregory H. Boyce. The announcement comes three weeks after ArcelorMittal, the world's largest steel manufacturer, pulled out of a joint bid with Peabody Energy for Macarthur.

Source: New York Times

MONGOLIA ENERGY EXPECTS SIX MONTH PROFIT Mongolia Energy Corporation expected to record a profit for the six months ended 30 September compared to a loss for the corresponding period in 2010. The company attributes its expected turnaround to profit to the accounting treatment on the convertible notes issued by Mongolia Energy. The firm plans to release its interim results by the end of this month.

Source: Etnet

RUSSIAN RAILWAYS NINE MONTH REVENUE UP, PROFIT OFF Russian Railways reported revenue from freight services up 6.9 percent year-on-year to RUB 744.1 billion (USD 23.7 billion) in the first nine months of 2011. Russian Railways was awarded 18 percent for the development of Tavan Tolgoi western block coal mine, but that decision is now being revised and is also involved in the development of the Mongolian rail system. The company attributes the growth to a 3 percent increase in freight volume to 921.7 million tons and a 3.8 percent increase in its revenue rate which generated respectively RUB 20.7 billion (USD 660 million) and RUB 27.4 billion (USD 900 million) of additional revenue. It also said volume increased primarily thanks to the growth of industrial production in the country. Freight turnover rose by 8.3 percent year-on-year to two trillion kilometers in the nine months. Revenues from passenger services plunged 86 percent to RUB 5.2 billion (USD 200 million) as long-distance services were handed over to subsidiary OJSC Federal Passenger Company as of 1 April 2010

and regional route services to suburban passenger companies as of 1 January 2011. Net profits fell 19.5 percent to RUB 56.1 billion (USD 1.9 billion) from core activities, with total revenue up 7.8 percent to RUB 962.3 billion (USD 30.6 billion). The company reported RUB 42.3 billion (USD1.3 billion) in government funding, including RUB 40 billion (USD 1.25 billion) as a contribution to charter capital for the construction of facilities for the 2014 Olympics in Sochi, RUB 800 million in subsidies for railroad safety and RUB 1.3 billion under a program to support freight shippers and passenger receiving social benefits.

Source: Steel Guru

NEW ROAD PROJECT OPEN FOR BIDS The Millennium Challenge Corporation (MCC) and the Mongolian Government have opened the door to bids for the construction of a 176.4 kilometer road between Choir and Sainshand at the border of China. Bidders will have the option of bidding on one of two lots for development or both. The first lot is for the construction of a 90-kilometer-long road, while the second is 86.4 kilometers. The bidding process will be governed by the MCC Program Procurement Guidelines, which restrict state-owned enterprises. All bids must be accompanied by a bid security of USD 1 million. Documents required for the bid will be accepted until 19 December. A site visit will be held on 23 November, followed by a pre-bid conference 25 November.

Source: Millennium Challenge Account-Mongolia

ECONOMY TUGRUG FLUCTUATIONS TEST MONGOL BANK Fluctuations in Mongolia‟s currency have created uncertainty in doing business, especially in loan and saving decisions. Reliance on natural resources has led to a widening trade deficit, as major investments lead to large imports of machinery, fuel, and mining transport equipment. The deficit reached USD 1.5 billion in October, more than six times the previous year. Rising inflation also puts the tugrug at risk as people tend to prefer U.S. dollars for the best value. Warnings from the International Monetary Fund (IMF) and World Bank of a possible return to 2008 conditions of economic crisis have encouraged the sale of tugrugs for dollars. The Bank of Mongolia set the conversion rate at MNT 1,336 a dollar, the tugrug's weakest point since last year. At the Naiman Sharga market, it reached MNT 1,370. “It's clearly speculation,” said U. Ganzorig, president of the Financial Market Association. He added that his expectation is for the tugrug to weaken a little more, but strengthen in the long term. The Law on the Central Bank tasks the Bank of Mongolia with ensuring stability to the national currency as its first priority. However, surging inflation puts it in a tough corner, and Mongolia's position as an importer of most goods does not help things. To return stability to the tugrug, the Bank may participate in the exchange market by FOREX auction, which takes place on Tuesdays and Thursday within the officially licensed banks in Mongolia. Before this year, the Central Bank had not actively participated, but during the last four FOREX auctions, the Bank sold dollars to commercial banks showing signs that the tugrug's rapid fall is heavy on its mind.

Source: UB Post

FITCH GRADES MONGOLIA “B+” Fitch Ratings affirmed Mongolia's Long-Term Foreign and Local Currency Issuer Default Ratings (IDR) at “B+” with “Stable Outlook”. The agency has also affirmed its Short-Term IDR at “B” and “Country Ceiling” at “B+.” “Mongolia's economy is set to expand rapidly as the mineral sector develops, but a stronger policy framework is needed to manage the boom,” said Andrew Coguhoun, head of Asia-Pacific Sovereigns at Fitch. “The economy currently risks overheating amid rapid growth in bank lending and government spending.” Mongolia emerged from its International Monetary Fund (IMF) program with a new fiscal policy framework, but savings have been negligible. Revision to the 2011 budget has exceeded its means as well, despite legislation put in place to defend against this scenario. Strong growth in entitlement

spending 2011 that will be hard to unwind leaves the budget exposed to future commodity-price volatility. However, the moderate level of government debt—expected at just 25 percent of its gross domestic product (GDP) by the end of 2011—supports the ratings. Real GDP grew 20.8 percent in the third quarter year-on-year, up 17.3 percent from the second quarter. Fitch projects 17 percent growth for the year. Foreign direct investment (FDI), overwhelmingly into the mining sector, totaled USD 2.7 billion or about 32 percent of GDP in the first nine months of the year. However, the boom has other drivers beyond mining: government spending was up 43 percent in October, while credit grew 79 percent. House prices rose a rapid 17 percent year-on-year in September, as well as inflation by 10 percent. Read more… Mongolia's core public institutions and quality of governance are in the “B” range,” although maintaining these strengths once mineral revenues start flowing strongly will be crucial. Per capita income of USD 3,100 in 2011 is near the “B” range median but below the “BB” median of USD 3,700. For the long term, building fiscal buffers against commodity price volatility would be positive for the ratings, although progress on this around elections for Parliament in 2012 and the presidency in 2013 will likely be slow. Completing banking sector reform and strengthening bank supervision could reduce risks of further banking crises.

Source: Fitch Ratings

CONSTRUCTION SECTOR LEADS IN JOB CREATION The Mongolian government has created 64,635 new jobs in observance of its “Year of Support for Employment” with a majority of jobs created in the construction sector. Mongolians have found new jobs throughout the country. The majority of Mongolians who have entered the workforce have taken up work in the construction sector. Over 28,000 of the newly hired are female. Approximately 31,000 people found work in Ulaanbaatar. Of the jobs created, 12,370 are in construction, 10,919 in agriculture, forestry and fishery, 8,184 in retail and wholesale, and between 6,000 and 7,400 in mining and exploration.

Source: Zuunii Medee

MEAT EXPORTS ON THE RISE Mongolia and China have signed a meat trade agreement for 8 million sheep within the next three years. Mongolian meat exports should contribute to the economy. Mongolia has a population of 2.7 million citizens compared to a domestic animal population over 40 million. Most exported meat is sent to either Russia or China, but requests were limited up until now because of international hygiene standards. The recent agreement will allow for the export of mutton, goat meat, and wheat. Beef and horse mean have yet to be decided upon while the two parties study the operations of Mongolian processing companies and how to tax their products. Mongolian will import chicken from China, but not pork while a ban on pork products from China remains. Russia recently announced it would lift its ban on meat products from Mongolia. The ban was a result of contaminated livestock found in Mongolia. Mongolia is preparing to export beef from 9,034 cows, horse meat from 11,424 horses, and mutton from 3,226 sheep. Russia has expressed great interest in importing more meat from Mongolia and will apparently dramatically increase the volume of its imports. Mongolia also exports meat products to Kazakhstan, Japan, Ukraine, Iran, and Vietnam. Last year's meat exports grew by 32.9 percent to 23,800 tons from the year before. Mongolia sent 12,400 of beef and horse meat to Russia; 8,100 tons of goat meat horsemeat, and mutton to Vietnam; and 1,300 tons of horse meat to China. Mongolian livestock has reached 45 million this year, while the country has the capacity to prepare 100,000 tons of meat, reported the Ministry of Food, Agriculture, and Light Industry. The meat processing industry includes 5 large and 62 small meat and sausage producers, of which 60 are located in Ulaanbaatar.

Source: UB Post

MINING PANEL URGES MONGOLIAN GOVERNMENT TO DIVERSIFY ECONOMY Experts in the mining sector have recommended that the government invest in other sectors before its

resources run out. A panel at the for “Sustainable Development and Urgent Issues of the Mineral Resource Industry” held at Mongolian University of Science and Technology last week criticized candidates running for office in Parliament and the presidency promising more than they can give by law and offering incorrect interpretations of laws and state policies. Panel members urged government to establish a firm basis of independent development in rural areas with benefits from mining projects throughout the lifespan of those projects.

Source: Ugluunii Sonin

WORLD BANK LOOKS TO BUILD UP INSURANCE INDUSTRY In vulnerable, poorer nations it is the government that bears the cost when disastrous weather hits. The World Bank and other multinational bodies are responding to these concerns by working with governments in countries like Costa Rica, Malawi and Mongolia to help them protect themselves financially against extreme weather and the destruction it can cause. “The aim is to try to develop the private insurance market, but also to protect insurer solvency in the early day of underwriting catastrophic risk, as the industry increases its exposure to catastrophic perils including hurricane and flood risks,” said a specialist at the World Bank. This kind of funding and support helps “catastrophe insurance markets develop far more rapidly than they would otherwise,” he added. Government necessarily takes on the role of insurer of last resort—but in those countries without developed insurance markets, the cost of disaster falls disproportionately on governments' immediate financial resources and international aid. Many developing countries also do not have the data or expertise to predict costs of a disaster—or the channels to sell insurance. This is one of the main areas where the World Bank invests its own money to promote development. A long lived and successful scheme is the Turkish Catastrophe Insurance Pool. Since 1985, the country has suffered a series of massive earthquakes costing billions of dollars in damage and aid requirements. More recently a similar but more specific scheme was set up in Mongolia when the government asked the World Bank for help with livestock losses after a string of severe winters and drought resulted in the death of 11 million livestock. The World Bank and the Government set up a scheme based on an index of livestock losses from the Mongolian National Statistics Office. The 2009-2010 season resulted in the largest ever payments, totaling over USD 1.3 million. The fund was exhausted, and approximately 84 percent of losses were paid from the contingent credit provided by the World Bank. This financing means the scheme can be refueled and it has continued to expand to cover more provinces and herders.

Source: Financial Times

BHP CAUTIOUS ON SHORT TERM OUTLOOK FOR COMMODITIES BHP Billiton, the world's largest diversified miner, said last week it was more cautious on short-term outlook for commodity markets, but stressed that it remained committed to its USD 80 billion organic growth plan. Chief Executive Officer Marius Kloppers said that while it was difficult to predict how the financial markets would perform in the short run, the company was still able to sell what it produced. “One thing we can probably say is that higher volatility is likely to remain until issues surrounding the European debt markets are definitely addressed,” Kloppers said. “We have seen production curtailments in some sectors, and we are generally seeing a more cautious approach in respect of inventory management by our customers.” BHP long-term outlook is unchanged, however, he said. Industrialization and urbanization in emerging markets will likely continue for several decades, he added. For this reason, future long-term demand will likely hold.

Source: Mining Weekly

CHILE PREDICTS DECLINE IN COPPER DEMAND According to a survey by the Chilean Copper Commission, copper prices should average at USD 3.62 a pound. Copper is a major export from Mongolia and its prices largely dictate the health of the Mongolian economy. Cochilco surveyed 19 local mining analysts to find an insight into the possible trend of the metal which is a key indicator of health. Chile produces almost 30 percent of global copper production. These results are lower than previous forecasts because of possible economic slowdown.

“The lower prices outlook shows analysts have incorporated the possibility of a recession in the Euro zone and the slower Chinese growth as a result of a reduced demand in the U.S. and Europe,” Andres Mclean, Cochilco executive said in a statement. Earlier, Codelco, Chile's top copper producer, offered a 4.3 percent cut in physical copper premiums to its Chinese buyers for 2012, possibly indicating a slightly weakening demand in China.

Source: Commodity Online

DISPARITY BETWEEN COPPER AND ALUMINUM PRICES SIGNAL DARK ECONOMIC CLIMATE Copper prices may indicate greater troubles down the road for the world economy. The trouble lies in the gap between the marginal cost of supply and the price at which demand gets destroyed. Copper, which is currently traded at USD 7,600 a ton, trades at 90 percent of its marginal costs of production. Meanwhile aluminum, which trades at around USD 2,100 a ton, is 16 percent below as demand grows nearly twice as fast as copper. Copper supply is much tighter and so prices rise until some consumers are forced to use less. Therefore, China's insatiable appetite for copper has pushed prices up to a point where demand in the industrialized world falls to accommodate it. Conversely, aluminum inventories are relatively high and China has an abundance of smelting capacity. Little fear of a supply squeeze leaves aluminum prices to languish near the marginal cost of production. If prices fall well below that, high-cost, unprofitable capacity will close, tightening supply. Investors who fear a China slowdown or Euro-zone credit crunch would be better off owning aluminum over copper, as the latter has much further to fall before it hits its marginal cost floor. Bulls, however, might prefer copper, as a commodity with constrained supply will do better when demand is growing.

Source: Wall Street Journal

GOLD CONTINUES TO BREAK RECORDS IN 2011 Gold demand climbed 6 percent to 1,053.9 tons in the third quarter, an all-time high of USD 57.7 billion in value terms, with European investment demand surging to a quarterly record of 118.1 tons. Gold is a major commodity of Mongolia, and its new valuations have convinced miners such as Kerry Mining to concentrate more focus on gold production. The European investment demand, which was up 135 percent year-on-year, was more than the combined investment demand from China, India and the United States. The World Gold Council has attributed the demand mainly to concerns over the Euro zone. Overall investment demand rose 33 percent year-on-year to 468.1 tons, earning USD 25.6 billion. “The Euro-zone crisis is at its peak, and will continue to drive gold demand further into the start of 2012.” managing director for investment Marcus Grub said. The crisis was causing investors to price in more factors, including the possible breakup of the 17-country Euro-zone. Yet, while European investors were using gold as an effective hedge for portfolio security investment, demand in China and India was also starting to increase for different reasons. This was owing to people hedging against inflation. Read more… In the United States debate over raising the federal debt and the sovereign credit downgrade drove third-quarter demand. China's demand for gold bars and coins expanded by 24 percent from year-earlier levels to 60.2 tons. Chinese jewelry demand was 13 percent higher year-on-year at 131 tons, while Indian demand was sluggish, declining by 26 percent to 125.3 tons. Although global production levels have recovered to levels of about a decade ago, there was a perceived geological constraint to more production. New finds tend to be smaller in scope and have lower ore grades. Global supply was 1,034.4 tons in the quarter, 2 percent higher than year-on-year levels, and mine production increased by 5 percent to 746.2 tons. The long-term fundamentals for gold remain strong with a diverse and growing demand base coupled with constrained supply-side activity,” Grubb concluded.

Source: Mining Weekly

SILVER SHARES IN SOME OF GOLD‟S GLORY Silver prices were expected to exceed USD 50 an ounce by the end of 2012, Thomas Reuters GFMS reported. Silver prices far this year have averaged 35.70, a rise of 88 percent year-on-year. In Mongolia, record breaking prices for precious metals have caused miners to reevaluate their production to allow for more gold and silver.

“We now forecast a full-year average price of USD 35.66 in 2011, and expect further price strength in 2012. The main driver of the price remains investment demand, which has absorbed the substantial market surplus that has characterized the silver market in 2011,” GFMS said. “The resultant silver market surplus is expected to once again be absorbed by investors. However, downside risks remain, including the potential for the sovereign debt crisis to precipitate a liquidity crunch, impacting the real economy.” Nevertheless, GFMS said that it expected to see silver's bull run to continue, with the average price expected to be in excess of USD 45 an ounce in 2012. World investment in silver may reach 278 million ounces in 2011, its second-highest volume in the GFMS data series. Read more… Although this represented a slight fall in ounces from 2010, it would set a new record high in value terms. Fabrication demand may also increase by some 4 percent in 2011, with industrial offtake set to rise in spite of the Japanese earthquake, weak economic growth in western economies, and the end of stock replenishment. Jewelry demand will like edge higher despite strong silver prices, while silverware and photography would weaken further. Demand for coins and medals, however, is set to establish a new record high. The report expects mine production to grow by 4 percent for the ninth consecutive year. Globally, output from primary silver mines was expected to increase marginally year-on-year.

Source: Mining.com

EBRD AND ADB PARTNER FOR FOCUS ON DEVELOPMENT IN CENTRAL ASIA The European Bank for Reconstruction and Development (EBRD) and the Asian Development Bank (ADB) have agreed to work together on a range of projects to build capacity and promote public and private partnerships across the Caucasus and Central Asia. The organizations aim to strengthen and deepen cooperation in the common countries of operation: Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Mongolia, Tajikistan, Turkmenistan, and Uzbekistan. “Both our institutions are strongly committed to helping unlock the region's vast economic potential by supporting market-oriented, private sector development, boosting public-private partnerships, and building road, rail and energy networks necessary to facilitate growth in trade and commerce,” said Thomas Mirow during a memorandum of understanding ceremony in London. The ADB and EBRD are partners in the Central Asian Regional Economic Cooperation (CAREC) program, which later this week celebrates its 10th anniversary with a Ministerial Conference in Baku, Azerbaijan. Over the past decade, the CAREC partnership has developed energy networks and transport corridors worth some USD 17 billion, connecting member countries to one another and to the booming markets of East and South Asia, Europe, and Russia.

Source: Trend News Agency

AUSTRALIA'S MINING TAX CLEARS HURDLE Australia's controversial tax on mining companies' profits cleared an important hurdle on Wednesday, passing through parliament's lower house after more than year of debates on how to claw back some of the growing profits made from natural resources. Such a tax will surely factor into Mongolia's competitive edge, as Australia's biggest competitor of coking coal to China. The government expects the tax, which has to pass through the Senate next year, to raise AUD 11 billion (USD 10.8 billion) in the first three years, although some analysts and companies question whether tax receipts will meet expectations. “The great advantage of the Minerals Resource Rent Tax is that the higher the mining company‟s profit, the more tax is paid,” said Deputy Prime Minister and Treasurer Wayne Swan. “The MRRT will allow us to spread the dividends of the boom.” Former Prime Minister Kevin Rudd had first proposed a 40 percent tax on mining companies' “super” profits last year in an effort to even out the growth in Australia's economy, where resource companies are prospering even as manufacturers and tourism operators struggle. Industry opposition to the tax helped force Rudd out of office. His successor, Julia Gillard, consulted with the major mining companies before unveiling the revamped profit tax. The legislation passed parliament and Gillard expects the bill to pass in the Senate. The bill currently taxes iron ore and coal miners 30 percent on profits of more than AUD 75 million, with write-offs for new investments and credits for past investments. The tax has been criticized most

vehemently by smaller miners, who say it is biased in favor of bigger groups who could be able to claim credits for their existing investments.

Source: Financial Times, Wall Street Journal

YUAN STUMBLES IN ITS RACE FOR DOMINANCE Current data suggests that the Chinese renminbi may be able to overtake the U.S. dollar as soon as some believe. In its latest monetary policy report, the People's Bank of China revealed that the amount of cross-border trade settled in the renminbi fell in the third quarter, the first decline since China started using its own currency for imports and exports in June 2009. China has campaigned to its surrounding nations, including Mongolia, to encourage more trade using Chinese currency. “It's quite shocking because things were going so well,” said Dariusz Kowalczyk, Hong Kong-based strategist at Crédit Agricole. “How fast the renminbi becomes an international currency will depend on how acceptable it is in trade.” After two years of uninterrupted increases, the total volume of renminbi-settled deals dropped by 2 percent to CNY 583 billion (USD 92 billion) in the third quarter compared with the previous three months. As a share of all China‟s current account transactions, the renminbi fell to 7.8 percent, from 8.5 percent in the second quarter. Bankers have said that only a small proportion of the CNY 2,050 billion of trade settled in renminbi since 2009 involved companies outside mainland China or Hong Kong. One of the key reasons for the spectacular boom in renminbi trade settlement is that mainland Chinese companies have been transacting with their own subsidiaries in Hong Kong in order to arbitrage between the two markets. This activity abated in the third quarter, causing renminbi-settled trade to decline. Read more… In recent months, however, as dollar liquidity has declined and concerns have risen about their exposure to China, Hong Kong banks have become less keen to lend dollars against letters of credit from the mainland. Meanwhile, the HKMA has cracked down on “illegitimate” renminbi payments, threatening banks with penalties if they fail to obtain robust evidence. As long as Chinese currency is embraced by international companies as well as opportunistic mainland groups, U.S. political strategists have little to worry about.

Source: Financial Times

POLITICS MPP SEARCHES FOR ADDITIONAL REVENUE FOR 2012 BUDGET Members of the Mongolian People's Party (MPP) recently discussed ways to earn additional revenue in order not to exceed the amount spent in 2011 in its 2012 Budget. Although the government would like to reduce its proportionate spending for 2012, it has been unable to make cuts in any programs. This includes MNT 70,000 monthly stipends for university students, MNT 12.4 billion for next year‟s election budget, MNT 16 billion for the distribution of new identification cards. Members suggested and approved a motion to sell licenses to the Olon Ovoot deposit for an addition MNT 65 billion in revenue. It also proposed to raise taxes on trucks that damage roads.

Source: Udriin Sonin

NEW HEADS OF ANTI-CORRUPTION AGENCY NAMED Government has selected N. Ganbold as the head of the Anti-Corruption Agency and B. Khurts as its deputy. Born in 1956 in Ulaanbaatar, Ganbold graduated from Mongolian Railway College before continuing his studies at the Academy of Internal Security in Russia. During his career he has headed the General Intelligence Agency and Ulaanbaatar police department, and acted as an advisor to the Mongolian embassy in Russia. B. Khurts, recently released from prison in Germany for the kidnapping and assault of D. Enkhbat, who eventually died in Mongolian prison, has been awarded the deputy position to the agency. Born in 1969 in Ulaanbaatar, he studied at the Construction College in Irkutsk, Russia, the University of Economics and Statistics in Moscow, and the Russian Academy of Security. He has worked as an economist and

lawyer. Source: Udriin Sonin

GOVERNMENT TO INTRODUCE ELECTRONIC ID CARDS The government plans to issue electronic identification cards to citizens beginning 20 December. The cards are a part of the government's plan to develop a database for its public services. The new form of identification will also provide more security, help the government track citizens, assist the voting process in elections, and inform officials of a citizen‟s tax status and duty served as a soldier. Citizens will be able to use the cards for obtaining welfare and security payments, health insurance identification, and education. The chip attached the card will be able to hold information such as fingerprints and digital photos of citizens from last year's civil registration.

Source: Zuunii Medee

MPP HEADQUARTERS DESTROYED IN FIRE The headquarters of the Mongolian People's Party (MPP) burned a week before its official opening. Firemen received a call at 11:37 a.m. Sunday 20 November to put out the fire. No one was injured or died in the fire. The fire occurred on the seventh and eighth floors of the Independence Palace Building located near Sukhbaatar Square. The cause of the fire is currently under investigation. “It is very suspicious,” said MPP Secretary General Ts. Sukhbaatar, “because the building was received for acceptance by the State Professional Inspection Committee on 21 November or tomorrow.” This is the second time the MPP's headquarter has been destroyed by fire. The building first burned in 2008 after riots broke out among those who opposed that year's election results. The party was able to rebuild the building with MNT 13 billion worth of donations for its construction in 2009. The party would have hosted an opening ceremony on 26 November. It suspects the fire may have been arson committed by competing party officials.

Source: Udriin Sonin

JAPAN CUTS AID TO MONGOLIA The Japanese government has reduced its aid to Mongolia. Japanese Ambassador to Mongolia Takenory Shimizu has explained that the Japanese government plans to focus its attention on health and education instead of non-repayable aid. The Japanese government was disappointed in July by Mongolia's decision to exclude Japanese firms from the development of the Tavan Tolgoi western block. Since then, however, the Mongolian government has decided to revise its decision, further delaying the deal.

Source: Udriin Sonin

CONSTRUCTION OF NEW BRIDGE TO COMPLETE IN 2012 The construction of a new bridge has been requested by the Ministry of Road, Transport, Construction and Urban Development to help better manage traffic in Ulaanbaatar. Construction of the Narny Bridge is currently on hold during the winter months and will begin once again in March, said project authorities. Mongolian companies Yalguusan and Ulaanbaatar Construction and the Japanese engineering firm JFE are participating on the project. JFE has said the project will finish by November 2012. The longevity of the bridge will depend on its maintenance, and the firm warned without proper maintenance the bridge could last only 20 years.

Source: Udriin Sonin

JAPAN BUILDS MODERN SCHOOL IN RURAL COMMUNITY The new 118th School in Khan-Uul Soum was built by the Japanese firm Di Nippon Konoike using materials from the Olympic stadium in London. Protective measures such as rubber linoleum for its floors and rounded edges to pillars and walls have been installed. It has an underground gym with its own heating stove as well. The school cost MNT 4.6 billion for construction. Officials from the Japanese Embassy said they would build four other schools similar to the Khan-Uul Soum school.

Source: Udriin Sonin

NEW KOICA VOLUNTEERS TO SERVE IN MONGOLIA Volunteers will participate in projects for construction, preliminary education, food technology, Korean language education and x-ray technology using their knowledge and experience. All volunteers will receive two months of training for language, history, and culture in addition to further activities with officials before they take up their assignments across the country. KOICA volunteers have served in Mongolia since 1992 and currently 94 volunteers serve throughout the country.

Source: Zuunii Medee

MONGOLIA APPLIES TO JOIN OSCE Mongolia's Ambassador to Austria and permanent representative to International Organizations in Vienna, J. Enkhsaikhan formally informed member nations of the Organization for Security and Cooperation in Europe (OSCE) of Mongolia's desire to join the organization. In making his request, Enkhsaikhan told the ministers about Mongolia's foreign policy, its “third neighbor policy”, and past cooperation with the OSCE. He also answered questions from the ministers. The ministers said they supported Mongolia's request, with some ministers noting that the OSCE should widen its activities to include the Euro-Atlantic and Euro-Asian regions. Mongolia's membership request will be discussed at a conference of foreign affairs ministers from OSCE member countries in Vilnius in December.

Source: News.mn

GOVERNMENT TO MEASURE POLLUTION PRODUCED AT POWER PLANTS The government has introduced new equipment to reduce air pollution in Ulaanbaatar. Ulaanbaatar's air quality agency has obtained a new tool that measures particulate matter with aid from Japan's Capacity Development Project for air pollution in the capital. The apparatus will measure the amount pollutants originating from power plants No. 1, No. 2, and No. 3, 200 boiler heaters, 1,000 coal fired water heaters, and 140,000 ger stoves. With support from the project, the City government can identify levels of pollutions in certain zones of the city to help in its effort to reduce air pollution, said specialist G. Davaajargal.

Source: Udriin Sonin

DISABLED LANGUISH AS SOCIETY CONTINUES TO IGNORE THEIR PLIGHT Mongolia is sorely lacking the capacities to assist its disabled population. Although Mongolia ratified the U.N. Convention on the Rights of Persons with Disabilities in 2009 to the benefit of disabled persons' rights, It has few mechanisms to implement or monitor the implementation of laws, says S. Selenge, director of the Association of Parent of Disabled Children (APDC), a non-profit that campaigns for legislation to address disabled children's needs. “There's nothing happening to properly survey and diagnose children and categorize their disabilities,” she said, “Often it's poorly qualified doctors or even teachers who decide if a child is disabled simply because the child is not doing well at school. Improper diagnosis is like closing the door on a child. ” Many children with physical disabilities are not accepted by mainstream schools and often end up segregated at special-needs schools where they are prepared for a life separate from society. Even worse, most children don't attend school at all. According to a 2008 survey by the Ministry of Social Welfare and Labor, only 21 percent of disabled children attend regular schools, while 5.8 percent attend special-needs schools. The rest simply don't attend school. Segregation often puts a vicious cycle of poverty into motion. The State Social Welfare Office estimates that nearly 80 percent of disabled persons in Mongolia live below the poverty line. With government benefits for disabled persons at MNT 30,000 per month and another MNT 30,000 per quarter to cover medical expenses, most of the disabled are unable to afford the treatment they need, activists have said. Read more… Only about 2 percent of the 69,000 adults with disabilities who took part in a survey by the Independent Trade Union of Disabled Persons of Mongolia hold a job. Most of those disabilities are “mild to moderate,” usually a result of injuries or accidents. Unemployment remains despite a government decree mandating companies to employ one disabled worker for every 25 able-bodied.

Failing that, employers are required to pay a fine equaling half the minimum salary to the Social Welfare Fund for Disabled Persons. However, most companies prefer to pay that fine than to accommodate a disabled worker.

Source: Eurasianet

TRAFFIC INCIDENTS UP 17.7 PERCENT A conference was recently held to address a spike in traffic incidents this year. Officials from the Crime Prevention Coordination Council at the Ministry of Justice presented the Problems Facing Traffic Safety conference in response to increased accidents and deaths caused by traffic and roadside incidents. Traffic offenses are up 17.7 percent to a total 1,533 offenses so far this year, said J. Nyamdavaa, a police colonel and the secretary director of the council. Additionally, 299 citizens have died as a result of these incidents.

Source: Zuunii Medee

POLICE INVESTIGATE MURDER AT OT Oyu Tolgoi LLC is participating in an investigation with police of a murder at its Oyu Tolgoi copper and gold project. A man's body was found on 18 November at Khanbogd Soum, Umnugobi Aimag. The man was an employee of the French firm, Catering International & Services. So far police have refused to comment on the incident before they know more about the incident. Many have blamed Chinese workers because of a recent incident when Chinese workers attacked a female employee a few days prior. The woman is currently at the SOS Medica hospital located at the Oyu Tolgoi site.

Source: Undesnii Shuudan, Nasdaq

MONGOLIAN FOSSILS INDICATE RARE BEHAVIOR AMONG DINOSAURS Scientists have discovered a 70-million-year-old nest filled with the remains of baby protoceratops dinosaurs, providing clues about the dinosaurs' early behavior. “I, for one, cannot think of another dinosaur specimen that preserved 15 juveniles at its nest in this way,” says lead author Dr. David Fastovsky, from the University of Rhode Island's Department of Geosciences. While large numbers of eggs have been associated with other dinosaurs, such as the carnivorous oviraptor or certain duck-billed hadrosaurs, finding multiple juveniles in the same dino nest is quite rare. Fastovsky and his colleagues analyzed the dinosaur remains along the nest, which measured about 70 centimeters in diameter and was round and bowl-shaped. All were found at Djadochta Formation, Tugrikinshire, where it is believed sand “rapidly overwhelmed and entombed” the youngsters while they were still alive. The researches conclude that the 15 dinosaurs all showed juvenile characteristics. These include short snouts, proportionately large eyes, and an absence of adult characteristics, such as the prominent horns and large frills associated with adults of this species. At least 10 of the 15 fossil sets are complete. The nest and its contents imply that protoceratops juveniles remained and grew in their nest during at least the early stages of postnatal development. It further implies that parental care was provided. The large number of offspring, however, also suggests that juvenile dinosaur mortality was high, not only from predation, but also from a potentially stressful environment.

Source: ABC

ANCIENT HORSE RETURNS TO MONGOLIA An ancient species known as Przewalski's horse has narrowly avoided extinction thanks to zoos worldwide and is cautiously being reintroduced to its homeland in Mongolia. Four of the horses returned home from the Prague Zoo in the Czech Republic this month. “We expect to move another four horses in 2012,” said the zoo's director, Moslav Bobek. The last of these horses in Mongolia were seen in 1969, but the zoo in Prague has been breeding them for decades. More than a third of the 1,800 Przewalski horses living in the world today, including 1,600 in captivity, are related to horses bred at the Prague zoo. Prezwalski's horses have thick necks, large heads and stocky bodies. They typically weight 550 to 750

pounds and stand about four feet tall at their withers (shoulders). Source: Washington Post

NEW MONGOLIAN LAWS AND REGULATIONS The following laws, addenda and amendments were published in the latest weekly Government bulletin. Unless otherwise decided by Parliament, it will take effect ten (10) days after publication. Date Laws, Addenda and Amendments 17.11.2011 Law on Driver's Insurance Amendments to Law on Insurance Addendum to Law on Traffic Security Amendments to Law on Auto Transportation Amendments to Civil Code Amendments to Law on Seed Plantation Amendments to Law on Economic Entity Income Tax Amendments to Law on Social Insurance Amendments to Law on Notary Addendum to Law on Advocacy Law on Ratification of Prisoner Transfer Treaty Please visit BCM's website, Legislative Working Group, for a summary of new Mongolian laws. BCM members who wish to access complete versions of the laws and regulations in Mongolian language are welcome to email the BCM office: info@bcmongolia.org.

ANNOUNCEMENTS RISK MANAGEMENT FORUM ON 30 NOVEMBER The Business Council of Mongolia and Mandal General Insurance are co-organizing the second annual Risk Management Forum to be held on Wednesday, 30 November 2011, at Ulaanbaatar Hotel. The forum allows business representatives and industry leaders to discuss policies, strategies and tactics to manage risk exposure, and provides an ideal setting for them to network and the exchange of ideas. This year the forum will feature speakers from various sectors to discuss relevant risk management topics within four panels: “General Risk Management,” “Financial Markets Risk Management,” “Risk and Society,” and “Mining Risk Management.” The fee is USD 100 for attendance. Please note that for company Directors there is a possibility to attend the

conference at no fee if they complete a "risk management survey" on the website www.riskforum.mn. Space is limited so register today at tuya@mandal.mn or at 99797908 and 70107007. For more information, please visit www.riskforum.mn. ___________________________________________ RUNGE'S TRAINING COURSE--”MINING FOR NON-MINERS,” 5-6 DECEMBER Runge, a world class mining consulting, software, and training company, is offering its third “Mining for Non-Miners” course to be held December 5-6 in Ulaanbaatar. BCM is assisting in the organization of the training course. The aim of the course is to provide those from a non-mining background with a comprehensive introductory understanding of the mining industry. The course duration is two days, with the first day focused on coal mining, and the second day on metal mining. The two day course will cost USD 700 per student and will be delivered in Mongolian. The number of participants is limited. Please register by Wednesday, November 30 at saruul@bcmongolia.org, or call 317027. ___________________________________________ MONGOLIA INVESTMENT SUMMIT 2011, LONDON, 8-9 DECEMBER Are you looking for the next frontier market to generate stable returns? Do you find it difficult to

access investment opportunities and forge partnerships in Mongolia? Do you need to be educated about Mongolia‟s capital markets and the effects of the stock exchange‟s modernization? Then you should attend the second annual Mongolia Investment Summit 2011, where government officials, mining companies, Mongolian businesses and European investors are coming together to discuss the opportunities and risks surrounding investing in Mongolia. What to expect: Over 100 investors, government officials and companies operating in Mongolia will come together to discuss the opportunities that Mongolia holds for foreign investment. With unique networking opportunities the Mongolia investment Summit is the meeting place for this market. Mongolia Investment Summit is taking place in two week‟s time from 8-9 December at the Hilton Tower Bridge Hotel in London. To find out more please contact Stacey Kelly at stacey.kelly@terrapinn.com. BCM is a Supporting Organization of the event and BCM members can receive a 15% discount off the conference ticket price. Please use the following link: https://secure.terrapinn.com/V5/rCalc.aspx?E=4306&C=1448VCRS. ___________________________________________ “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‟S ENGLISH WEBSITE 'PRESENTATIONS' AND 'MONGOLIA REPORTS' AND BCM‟S MONGOLIAN WEBSITE „NEWS‟ SECTIONS As a key component of BCM‟s Mongolian website, „News‟ section, articles from the Government‟s “Open-Government.mn” site are 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. On BCM‟s English website - „Resource, Presentations‟ section for your review are several speeches at Discover Mongolia 2011, speeches from BCM‟s 9 monthly meetings in 2011, and the address by Peter Nicholls, OT‟s VP-Operations, at Global MInES in Sydney on July 4. Also on BCM‟s English website, „Resource, Mongolia Reports‟ section please note "Blitz and Lead" by Sant Maral Foundation, August 2011, 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” - www.bcmongolia.org. 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. ___________________________________________ NETWORK WITH BCM The Business Council of Mongolia (BCM) is expanding 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 with the community. Hear breaking news and announcements as they happen when you follow BCM on Twitter at http://twitter.com/#!/bcmongolia. Connect with BCM on Linked-in to join the diverse group of professional contacts creating a better business environment in Mongolia today.

Of course for news information, interviews, and announcements regarding our organization, visit the official BCM website at bcmongolia.org and 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]

October 31, 2011 *10.9% [source: NSOM]

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

CENTRAL BANK POLICY RATE December 31, 2008 9.75% [source: IMF]

March 11, 2009 14.00% [source: IMF]

May 12, 2009 12.75% [source: IMF]

June 12, 2009 11.50% [source: IMF]

September 30, 2009 10.00% [source: IMF]

May 12, 2010 11.00% [source: IMF]

April 28, 2011 11.50% [source: IMF]

August 25, 2011 11.75% [source: IMF]

October 25, 2011 12.25% [source: IMF]

CURRENCY RATES – November 24, 2011 Currency Name Currency Rate U.S. dollar USD 1,321.79

Euro EUR 1,776.88

Japanese yen JPY 17.16

British pound GBP 2,058.56

Hong Kong dollar HKD 169.63

Chinese yuan CNY 207.90

Russian ruble RUB 42.31

South Korean won KRW 1.16

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.