BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 271 – April 26, 2013

NEWS HIGHLIGHTS:

Business

Rio Copper names Bold Baatar as President of International Operations;

TT resumes export to China;

Erdenes TT CEO files claims against former board members;

Energy Resources to suspend operations at Ukhaa Khudag;

Areva discovers big uranium deposit in Mongolia;

Government and Genie Energy sign oil shale agreement;

Erdene closes private placement;

Sentosa makes Mongolian foray with acquisition of copper-gold project;

Hertz Equipment Rental expands into Mongolia;

Eznis opens route to western Mongolia;

Zara eyes Mongolian producer as supplier;

Erdenet opens cashmere factory;

Nongshim sees booming sales in Mongolia;

Erdenet Mining appoints new director general;

Aspire appoints Noble Group executive to board;

Brokers hope for positive end to Mongolian stand-off;

Is the dispute over Oyu Tolgoi nearly over?

Could things be looking up for Tavan Tolgoi?

Caterpillar: Scaredy Cat.

Economy

Mongolia stocks weaken to 28-month low;

S&P's Mongolia downgrade not hitting Central Asia ETF... yet;

Australia beats out Mongolia for coal exports to China;

Mongolian bourse eyes boom in stock market listings;

Major overhaul planned for Narnii Zam-Ikh Toiruu area;

Government-driven EFL Training: Is Mongolia falling behind?

From Mojave to Gobi;

Rain extinguishes forest, grassland fires;

Science team recommends conservation strategies for Asian bird;

A capital of contradictions not to miss;

Chasing vestiges of the Great Wall;

Copper evades bear terrain;

ABB/Power-One: shining example for solar energy;

In China, breathing becomes a childhood risk.

Politics

Mongolia’s Parliament approves changes to SEFIL;

Parties set for presidential race;

Bayartsogt dismissed as deputy speaker;

Prime Minister orders hastened activity for June launch of OT;

DP deliberates on TT’s Chalco agreement;

Mongolia to host conference for the Community of Democracies;

European Union’s top diplomat to visit Mongolia;

First Mongol origin conference held in Nepal;

U.S. receives new Mongolian ambassador;

North Korea asks Mongolia for food aid;

MPP and Green Party sign memorandum of cooperation.

ECONOMIC INDICATORS

MSE Top 20 Index by market Capitalization;

Foreign-listed Companies with Mongolian Assets;

Inflation;

Central bank policy rate;

Currency rates.

*Click on titles above to link to articles.

SPONSORS

Khan Bank

Major Drilling

International SOS

Wagner Asia Automotive

Wagner Asia Equipment

Techenomics

Oxford Business Group

Breakthrough PR

Mongolian National Broadcasting

BCM MONTHLY MEETING RECAP

The meeting on 22 April, with B. Byambasaikhan in the chair, was attended by 110 members and

invited guests. Executive Director Jim Dwyer gave a short summary for the audience on the

Mongolia Investment Summit in London, where spirits were high.

―The atmosphere was surprisingly upbeat,‖ said Dwyer. ―Hong Kong last October was not so, and we

weren't sure how it would go.‖

BCM membership now stands at 251, an all-time high. The four most recently joined members are:

1. Bloomberg Television, an award-winning, multi-platform 24-hour business and financial news

network, provides continuous coverage of the people, companies and ideas that move global

markets. Broadcasting from centers in New York, London, Singapore and Hong Kong and powered

with an unparalleled news gathering team of 2,300 news professionals in 146 bureaus across 72

countries worldwide, Bloomberg Television delivers real-time business news to over 310 million

households globally.

In addition to major cable and satellite providers are Bloomberg.com and Bloomberg Mobile. The

network is available on the Bloomberg Professional service, used by the most influential individuals,

corporations, and institutions around the world.

2. Mitsui & Co., one of Japan‘s major trading companies, has five principal functions - marketing,

financing, logistics, risk management, and process development capabilities. It combines these

functions and brings together its diverse strengths to create and optimize value chains in a wide

range of business fields. Maximizing its value-added content, the company strives to meet the

diverse needs of its customers around the world. Most of its gross profit comes from energy

businesses.

3. Santa Fe provides the full range of relocation services to support businesses with international

interests from diverse industry sectors. Santa Fe is located in 54 countries with 123 offices globally

and offers holistic relocation solutions to support businesses and relocate employees.

4. Taxand LLC, provides professional tax services to clients across industry sectors. The company

houses experts in corporate tax consulting and compliance, tax audit defense, tax litigation,

transfer pricing, tax due diligence, VAT and customs duties. In addition, it has considerable

experiences in outsourcing as well as advisory services for foreign investors.

Nick Cousyn, Chief Operating Officer of BDSec JSC, gave the first presentation of the evening,

speaking on the Gobi Deluxe Hotel and Resort. He suggested that the Gobi Resort was the perfect

place for busy business professionals to get away from the stress and hassles of the city—not to

mention the pollution of winter—and enjoy the quiet and serene nature Mongolia has to offer.

―We all find it difficult to relax and unwind,‖ said Cousyn, ―but to have a place to recharge our

batteries and get away from UB is very nice.‖

The hotel is 38 kilometers from the city and features nine rooms, a restaurant, gers for summer

holidays, and a variety of activities. He divided hotel guests into three categories: those for

business, family, and recreation; each with their own accommodations. While companies planning

staff retreats may like to take advantage of the VIP conference rooms and corporate dining room,

family-oriented patrons can make use of the kids rooms and winter activities, and those looking for

a fun party can enjoy the full disco and bar and karaoke.

Brian White, Editor of the blog The Mongolist, spoke next to give a detailed talk on his latest entry,

―The Middle Layer.‖ The title refers to the prevailing discussion and exchange of ideas that is

sandwiched in between ideas, both good and bad, and useful knowledge. He explained that

accurate data on Mongolia was difficult to find, allowing observers to make false presumptions.

He recalled the statements made by President Tsakhia Elbegdorj concerning Oyu Tolgoi that were

quoted by international news sources. His statement, ―It's time for Mongolia to have Mongolian

control and Mongolia representation,‖ seemed to be yet another piece of evidence that ―resource

nationalism‖ was taking hold of the government's policies. However another translation of the

speech suggests he merely felt that Mongolia should take greater responsibilities for itself.

―Mongolia's middle layer is thin, making it difficult to educate,‖ said White. ―As the economy grows

this may change.‖

Head of Foreign Investment Relations and Registration, Sereeter Javkhlanbaatar, spoke next to

clarify some uncertainties regarding the changes to the Strategic Entities Foreign Investment Law

(SEFIL).

"The amendment removed the MNT 100 billion threshold, firstly. Secondly it excluded the private

sector from getting approval from Parliament," said Javkhlanbaatar.

According the Javklhanbaatar the amendment would help expedite the regulation process for

foreign officials, as it's difficult to put short deadlines on decisions before Parliament.

Javkhlanbaatar also discussed a new law currently in the drafting stage at the Economic

Development Ministry that would essentially replace the law they just amended. The ministry's plan

is to introduce a new law that would wipe clean all the uncertainties – the Investment Law. The

draft indicates that the government is interested in introducing incentives so it could better direct

foreign investment to sectors outside of mining for a more round-about development model and a

diversified economy.

"We don't give any incentives to you. It causes some other issues,‖ he said. He later said, "What kind

of projects do you need to lead? What kind of judgments and also standards?‖

Finally Chuluuntseren Otgochuluu, Head of Strategic Policy and Planning at the Ministry of Mining,

concluding the speeches of the evening, presenting a brief introduction to Mongolia's mining policy.

He explained how he hoped mining would serve as a launch pad for a variety of different industries

in Mongolia to open up. However, with mining being as unpopular as it is among most people, many

politicians have taken on strong rhetoric in opposition to mining activity and foreign influence in

the sector.

―Local people find it easy to hate mining and don't understand, so politicians give them a populist

position,‖ said Otgochuluu.

He said Mongolia was taking on the difficult challenge of balancing the wants of the public and

keeping a fair business climate to attract investment in order to drive the country's development.

He noted that although exploration licenses were no longer being issued at the moment, mining

licenses were still being granted. He also noted that the government was working to develop its oil

industry, too, which hopefully would provide another form of income for the country.

BUSINESS

RIO COPPER NAMES BOLD BAATAR AS PRESIDENT OF INTERNATIONAL OPERATIONS

Rio Tinto PLC has appointed Baatar Bold as President of International Operations of its Copper

Group, effective from 3 June.

Bold, a native Mongolian who has served as an advisor to Rio Tinto for the past three years, will be

based in London. Bold comes to Rio Tinto from Golden East LLC, a gold exploration and mining

Company,

―Bold Baatar will be a strong addition to our copper product group,‖ said Rio Tinto Copper Chief

Executive Jean-Sebastian Jacques. ―His role will be to ensure safe and efficient operations at

projects and sites in Australia, South Africa, Papua New Guinea, Indonesia, Alaska; oversee specific

divestments within the copper group; and help to consolidate the copper portfolio. In addition, he

will establish strong partnerships between Copper International Operations and our service and

support functions and will be the catalyst for construction interactions with Rio Tinto Group

functions.‖

Prior to Golden East (Altan Dornod Mongolia), Bold was chief executive of Newcom, where he

managed and built a diverse investment portfolio across telecom, airlines, property management,

mining services, and renewable energy. Previously, he held senior-level positions with J.P. Morgan

in London, Moscow, and New York, where he acquired extensive experience in the mergers,

acquisitions, and divestment arena.

Bold is chair of the Mongolian National Mining Association board and a member of the executive

board of the Business Council of Mongolia.

Source: Oyu Tolgoi LLC

TT RESUMES EXPORTS TO CHINA

Mongolia's massive Tavan Tolgoi coal mine resumed exports of coking coal to China on Monday after

suspending deliveries in January due to cost pressures, the state firm in charge of the project said.

Erdenes Tavan Tolgoi LLC signed an initial USD 250 million coal sales agreement with Aluminum

Corp. of China in July 2011, but halted deliveries in January, saying the price paid for the coal was

below the cost of production. The firm, already saddled with huge debts, said it wanted to

renegotiate the terms of the Chalco deal.

Late in January, Chalco threatened to take legal action against Erdenes TT if it failed to comply

with the terms of the contract. Erdenes TT said in a statement on Monday that cost cutting at the

mine had allowed it to reduce its losses. It would resume deliveries to Chalco immediately, but was

still seeking to renegotiate the 2011 deal.

Source: Reuters

ERDENES TT CEO FILES CLAIMS AGAINST FORMER BOARD MEMBERS

Erdenes Tavan Tolgoi JSC's chief executive has initiated legal action against former board members

for the purchase of equipment at inflated costs.

Former board members J. Batzandan, who currently sits in Parliament, and E. Tamir, currently

deputy minister at the Ministry of Human Development and Social Welfare, are under some

suspicion regarding the case. Tamir was director of Comit Service, which Batsuuri said sold poor-

quality tires for MNT 1.2 billion.

Official sources say the investigation is underway, but police have not yet questioned Tamir or

Batzandan.

Source: Unuudur

ENERGY RESOURCES TO SUSPEND OPERATIONS AT UKHAA KHUDAG

Energy Resources LLC will suspend operations at its Ukhaa Khudag coking coal deposit beginning 1

May due to poor market conditions.

Night-shift workers at the mine have already taken leave, while the rest of staff is expected to do

the same next month. Poor market conditions and low prices for coal are believed to be the reason

for the halt of operations. The company has reportedly not sold any coal since March, reporting

losses of USD 2.5 million for 2012.

Source: Udriin Sonin

AREVA DISCOVERS BIG URANIUM DEPOSIT IN MONGOLIA

French nuclear giant Areva SA recently revealed information about a new uranium discovery in

Mongolia.

Areva Mongol LLC, its Mongolian subsidiary, reported 50,000 tons of uranium in inferred resources

with a trade of 0.01 percent as a result of ongoing exploration efforts at the Zoovch Ovoo project.

The project is located in Ulaanbadrakh Soum, in Dornogobi Aimag.

Uranium mineralization is characterized as roll-front type and potentially amenable for the most

effective lower-cost in-situ leaching (ISL) mining method. Thus by the volume of the uranium

resources in-situ, the Zoovch Ovoo project is comparable to the biggest deposits of that type in

Kazakhstan.

This is not the only Mongolia exploration success for Areva in recent years. Two years ago the

company announced the discovery of the Dulaan Uul deposit with 9,888 tons of uranium, following

field tests which confirmed the ISL mining method as preferable.

Areva Mongol has 28 exploration licenses covering more than 14,100 square kilometers in Dornogobi

Aimag. This huge sedimentary basin contains promising uranium deposits well-suited to ISL mining

technology. At this time Areva is investigating the feasibility of the Dulaan Uul uranium deposit.

Source: Mining.com

GOVERNMENT AND GENIE ENERGY SIGN OIL SHALE AGREEMENT

Genie Energy Ltd. said its subsidiary Genie Oil Shale Mongolia LLC and the Petroleum Authority of

Mongolia (PAM) have entered into an exclusive oil shale development agreement to explore and

evaluate the commercial potential of oil shale resources on a 34,470 square kilometer area in

central Mongolia.

The five-year agreement calls for Genie Mongolia to explore, identify and characterize the oil shale

resource in the exclusive survey area and to conduct a pilot test using in-situ technology on

appropriate oil shale deposits. Genie must seek to proceed to commercial development via a

production sharing agreement in accordance with Mongolian law. To date, Genie Energy is the only

recipient of an exclusive oil shale contract in Mongolia.

―Utilizing Mongolia's extensive oil shale reserves to reduce our dependence on imported oil is a

strategic priority of the government,‖ said O. Erdenbulgan, Mongolia's vice minister of mining. ―We

have been impressed by Genie's commitment to Mongolia. They have the technical expertise to

produce oil and gas from oil shale in an environmentally sensitive manner.‖

Source: Genie Energy Ltd.

ERDENE CLOSES PRIVATE PLACEMENT

Erdene Resource Development Corp. announced the completion of its USD 1 million initial tranche

of the non-brokered private placement financing with Teck Resources Ltd.

Under the terms of the agreement, Teck agreed to subscribe for up to USD 3 million of Erdene

shares by way of a non-brokered private placement. The initial tranche resulted in the issuance of

five million shares price at USD 0.20 per share for aggregate proceeds of USD 1 million.

Erdene will commit 85 percent of the proceeds from the private placement to exploration work,

primarily on the company's Khuvyn Khar copper porphyry project and regional exploration in the

Trans Altai Region of southwestern Mongolia. Teck has the option to acquire additional shares of

Erdene, priced at the then current market plus 10 percent, until it has invested USD 3 million or

acquired through subscriptions 19.9 percent of the outstanding shares of Erdene, whichever occurs

first. The balance of the private placement options is due within 30 days of Teck and Erdene being

satisfied that clarification of recent proposed changes to the mining law and foreign investment

laws of Mongolia have occurred and is subject to receipt of Toronto Stock Exchange approval.

Source: Erdene Resource Development Corp.

SENTOSA MAKES MONGOLIAN FORAY WITH ACQUISITION OF COPPER-GOLD PROJECT

Sentosa Mining is investing in Mongolia with the acquisition of the Darvii Naruu copper-gold project

where rock chip samples have returned peak assays of 5.8 percent copper and 34.4 grams per ton of

gold.

The Mushroom Reef prospect, like the Oyu Tolgoi copper-gold mine, is predominantly hosted by

Devonian-aged mafic extrusive rocks. Enrichment of copper and gold in soil occur along linear

corridors exceeding three kilometers in length. These linear features correlate with regional faults

and strike north-northwest to north-northeast. Elevated gold and copper soil concentrations usually

occur together. The characteristics of Mushroom Reef indicate that it is prospective for a partially

exposed, near-core position of a copper-gold porphyry system.

Sentosa is acquiring 100 percent interest in the project, which comprises seven semi-contiguous

licenses covering 62,753.8 hectares. It will undertake to spend AUD 150,000 (USD 154,260) on a

work program that will involve flying an aeromagnetic and radiometric survey. Should it do so,

Sentosa will issue 5.5 million fully paid ordinary shares and a 0.5 percent net smelter return royalty

as consideration for a 100 percent interest in all of those tenements.

Source: Proactive Investors

HERTZ EQUIPMENT RENTAL EXPANDS INTO MONGOLIA

Hertz Corp. has announced that Hertz Equipment Rental Corp. (HER) has entered into a franchise

agreement with Consolidation Services Inc., through its wholly-owned subsidiary, Mongolia

Equipment Rental Corp.

―We are very excited to launch in Mongolia through our partnership with Consolidation Services

Inc.,‖ said Lois Boyd, group president of HER. ―The nation is one of the most exciting new markets

for the world's mining industry. With its double digit GDP growth (estimated at 15.7 percent by the

IMF for 2013) and influx of foreign investments, the country is also experiencing a boom in

construction and infrastructure development.

The Mongolian Hertz Equipment distributor will offer a broad range of mining, construction and

infrastructure development equipment for rent and sale, along with spare parts, repair and other

services. Equipment categories include equipment for aerospace, paving, concrete and masonry,

and earthmoving.

Source: Hertz Corp.

EZNIS OPENS ROUTE TO WESTERN MONGOLIA

Eznis Airways LLC is to become the first scheduled carrier to serve Khatgal in western Mongolia

when it commences flights to the remote frontier hamlet effective from 15 June to 15 September.

The stopover will operate as part of a daily triangular Ulaanbaatar-Khatgal-Moron-Ulaanbaatar flight

and will use one of the Mongolian carrier's four Saab 340Bs. Previously an airstrip, the Mongolian

government built and completed a new terminal in 2007 in the hopes of boosting trade and tourism

to the area, famous for Lake Khovsgul.

Source: Ch-Aviation

ZARA EYES MONGOLIAN PRODUCER AS SUPPLIER

Designer clothing label Zara is considering Darkhan Nekhi JSC as a supplier of goods.

Zara made its offer during a visit to the company‘s operations, where they offered to cooperate on

the development of the company‘s production capabilities for goods such as shoes and leather

goods.

Zara plans to send company representatives to Mongolia again, this time with foreign technicians,

after a contract is made.

Source: Unuudur

ERDENET OPENS CASHMERE FACTORY

Ministry of Agriculture and Industry Kh. Battulga commemorated the opening of the Erdenet

Cashmere factory last Sunday during his visit to the Erdenet Khivis Carpet factory.

Erdenet Cashmere received government support as part of the national campaign to foster the

production of finished goods in Mongolia.

―Our nation will only prosper if we diversify our economy and decrease dependency on mining

products such as copper and coal. To achieve this, one of the most important steps we can take is

to begin processing animal-related products domestically,‖ said Battulga.

The factory is Mongolia's second-largest for textile. The government hopes that this factory will

help reduce the country's dependence on imported threads and yarn from Russia, and industry

representatives say it will help increase productivity within the cashmere industry.

Source: BDSec JSC

NONGSHIM SEES BOOMING SALES IN MONGOLIA

Food manufacturer Nongshim has grabbed a 40 percent share of the instant noodle market in

Mongolia.

The company on Wednesday said it sold USD 7 million worth of instant noodles last year to account

for a 40.5 percent market share. It started selling the instant noodles in Mongolia in 2002 and has

ranked at the top in terms of sales since 2007.

It sold USD 440 million worth of instant noodles in 82 countries last year. Nongshim is the top-selling

instant noodle brand in Korea and Mongolia, and ranks third in the United States with a 12 percent

market share.

―The popularity of our instant noodles spread by word of mouth from Mongolians who used to work

in Korea and the Korean wave also helped boost sales,‖ a Nongshim staffer said.

Source: The Chosunilbo

ERDENET MINING APPOINTS NEW DIRECTOR GENERAL

The Mongolian-Russian joint venture Erdenet Mining Corporation appointed Ts. Davaatseren as the

acting director general at a board meeting. Davaatseren was appointed as interim director general

in February.

The board meeting was held from 18 to 20 April where MonRostsvetmet and other joint venture

companies were discussed.

Source: News.mn

ASPIRE APPOINTS NOBLE GROUP EXECUTIVE TO BOARD

Aspire Mining has appointed Hannah Badenach as a non-executive director.

Badenach is currently vice president of asset development and operations for Noble Group

subsidiary Noble Resources. She has experience in management and development within Mongolia.

From 2006 she was managing director of QGX Mongol LLC, a coal explorer and developer prior to its

takeover in 2008 by Mongolia Holdings Corp.

Source: Proactive Investors

BROKERS HOPE FOR POSITIVE END TO MONGOLIAN STAND-OFF

Analysts at Resource Investment Capital (ResCap) say they are increasingly positive that a deal will

be struck to end a bitter stand-off between the government of Mongolia and Rio Tinto PLC over the

Oyu Tolgoi copper mine.

―This could in turn offer ―a significantly higher risk-reward scenario‖ to investors in the junior

copper space, they concluded. ResCap cites several positive indicators that ―a win-win agreement

will be struck for OT and that this event is scheduled to occur at a time when presidential elections

will conclude.‖

The government and miner are locked in an argument over the implementation of the Oyu Tolgoi

investment agreement. Disputes range from project development and costs, to the operating

budget, project financing management fees and governance. However ResCap noted that

―constructive progress is being made‖ regarding discussions with the government and Oyu Tolgoi

LLC (as of this week), and that ―bank funding in the form of project finance is now well advanced.‖

ResCap said pressure is on the government to do a deal after Standard & Poor's Ratings Services

downgraded Mongolia's sovereign credit outlook to negative, stating ―the likelihood of a sovereign

downgrade for Mongolia within the next six to eighteen months has increased to more than one-in-

three as the higher policy risk contributes to deterioration in the external and fiscal profiles.‖

Source: Proactive Investors

IS THE DISPUTE OVER OYU TOLGOI NEARLY OVER?

Over the weekend Prime Minister Norov Altankhuyag's cabinet met and gave specific directives to

all government officials involved with the Oyu Tolgoi copper gold project to do everything possible

to ensure production starts on time in June.

Mining Minister Davaajav Gankhuyag specifically instructed to ―speed-up the land, foreign labor

force, customs documentation permits and take actions on solving water, environmental, power

plant, third-party laboratory, and infrastructure issues.‖ In a press conference, Gankhuyag said Oyu

Tolgoi would begin its export in June, in a clear and unqualified statement.

―We can't help but notice a sense of urgency by the current administration, which is a very

encouraging development and suggests they want to put this issue behind them,‖ said Nick Cousyn,

chief operation officer at BDSec JSC.

The comments of Cameron McRae, chief executive officer of Oyu Tolgoi LLC, were also positive. He

said talks on bank financing for phase two of Oyu Tolgoi's mine expansion ―are now well advanced,‖

adding that his company and the government were making ―constructive progress,‖ to solve the

current impasse with the government.

While the finger is usually pointed at the government when negotiations are not successful, it is

noteworthy how much has changed since the investment agreement was signed. Former President

Nambar Enkhbayar, who was a strong supporter of the original Oyu Tolgoi agreement, is

incarcerated, and his party at the time (the Mongolian People's Party (MPP)) is now in opposition.

Many MPP parliamentarians (current and former) who originally supported the agreement now

attack it in the hopes of weakening the Democratic Party (DP) and Elbegdorj. Some DP members

have done the same.

―Typically when leadership changes, negotiations start back at square one and goal posts get

moved,‖ Cousyn said. He added, ―President Elbegdorj and PM Altankhuyag have evidently chosen to

put politics aside and do their best to resolve this dispute for the benefit of the economy and the

Mongolian people.‖

Source: BDSec

COULD THINGS BE LOOKING UP FOR TAVAN TOLGOI?

Sometimes an abundance of riches can be a headache. That has been the problem facing Mongolia

as it sorts out what to do with a huge coal deposit in the middle of the Gobi Desert.

The state-owned deposit, Tavan Tolgoi, has enough coking coal to feed China's import needs for

more than 40 years. However, due to mismanagement and weak coking coal prices, the mine has

fallen on hard times. In January, it was running so short of cash that it suspended shipments to its

main customer. That customer, China's state-owned Aluminum Corp. of China Ltd. (Chalco), is one

of the mine's biggest creditors, after a 2011 deal under which Chalco lent the mine USD 250 million

that was to be repaid in coal shipments.

So it is a sign of progress that Tavan Tolgoi resumed shipments to Chalco on Monday, ending a four-

month suspension during which Chalco had threatened legal action against the Mongolian mine.

However for Chalco the coal trucks that are once more ferrying the cargoes across the Gobi hardly

signal that end of the company's challenges in Mongolia. Tavan Tolgoi is still trying to renegotiate

its original contract with Chalco's ambitions to invest directly in Mongolia's vast resources of coking

coal, copper, and gold.

China and Mongolia have a somewhat fractious relationship. The resumption of coal shipments

between Tavan Tolgoi and Chalco highlights Mongolia's close economic dependence on neighboring

China, which is Mongolia's primary customer for commodities exports. Unfortunately for Chinese

resources companies, the relationship seems to end there.

Source: Financial Times

CATERPILLAR: SCAREDY CAT

It says something about Wall Street estimates when a big, important company cuts its sales target

to a level well below the analysts' consensus—and the stock rises. That is what happened at

Caterpillar Inc., distributed here by Wagner Asia Equipment LLC, on Monday morning. The maker of

life-sized Tonka Trucks and industrial generators cut its 2013 sales estimate by 8 percent, to USD 59

billion at the midpoint. The street had wanted USD 63 billion. The stock rose 3 percent.

Caterpillar's news was no surprise to those who follow the mining industry, which accounts for

roughly a third of the company's sales and where weak demand led to the lowest outlook. Mining

bosses have been signaling their intention to cut spending. As Glencore/Xstrata chief Ivan

Glasenberg bluntly put it: ―It's time to stop building.‖ The ―big four‖ miners (Xstrata, Anglo

American, BHP Billiton and Rio Tinto PLC) spend almost USD 50 billion on capex last year; USD 35

billion is expected for 2014.

The question is whether the share price now fits the outlook. There are reasons for hope. The

price/earnings multiple, at under 10, is now well below its long-term average. In the past two

decades, single-digit ratios have been rare outside of the 2008-2009 crisis. Operating margins have

come down towards normal levels as well. The company is right to point out that the awful sales

result in the first quarter (down 18 percent) would have been milder (down a mere 9 percent) were

it not for inventory shifts. And finally, Caterpillar's order backlog, which fell sharply in the third and

fourth quarters, seems to have stabilized.

The worry is that some investors are still harboring hope for a near-term rebound in sales or profit;

when it does not come, the optimists‘ capitulation could hit the shares again. Of course, Wall

Street estimates for 2014 and 2015 forecasts call for precisely such a rebound. But who would

believe them?

Source: Financial Times

ECONOMY

MONGOLIA STOCKS WEAKEN TO 28-MONTH LOW

Mongolia stocks weakened to a 28-month low despite good news being released lately.

Erdenes Tavan Tolgoi LLC has resumed shipments to China. At a prime minister's cabinet meeting, it

was resolved to accelerate the project construction of Oyu Tolgoi LLC in order to fulfill the

contractual obligations on time.

Tavantolgoi, also known as ―Little TT,‖ fell 10 percent to close at MNT 3,060, dragging down the

MSE TOP 20. Thermal coal miners Sharyn Gol JSC and Baganuur JSC dropped 8.6 and 6.7 percent,

respectively. Hermes JSC was the most actively traded stock on the exchange with MNT 24.6 million

worth of 234,000 shares traded.

Source: BDSec JSC

S&P'S MONGOLIA DOWNGRADE NOT HITTING CENTRAL ASIA ETF... YET

On Tuesday, Standard & Poor's Rating Services said that it lowered its ratings outlook on Mongolia to

―negative‖ from ―stable‖ while affirming the country's ―BB-‖ long-term and ―B-‖ short-term

sovereign credit ratings. Those are both junks ratings.

The one exchange-traded fund (ETF) that could be vulnerable to S&P's now dour view of Mongolia is

the newly minted Global X Central Asia & Mongolia Index ETF (AZIA), which debuted earlier this

month. AZIA is the one ETF currently on the market with noteworthy exposure to commodities-rich

Mongolia. The fund allocates 13.96 percent of its weight to the country, making Mongolia the ETF's

third-largest country exposure behind Kazakhstan and Russia, according to Global X data.

AZIA had not traded yet, but the new ETF had gained two percent in the past week. The ETF is the

first to give significant allocations to Kazakhstan (46.1 percent), Mongolia and Turkmenistan (5.9

percent). AZIA is the only ETF with any decent exposure to Kyrgyzstan and Tajikistan.

Source: Nasdaq

AUSTRALIA BEATS OUT MONGOLIA FOR COAL EXPORTS TO CHINA

Monthly statistics from the Chinese Customs Office showed that Australia surpassed Mongolia's

coking coal export to China in February.

Australia exported 2.58 million tons of coking coal to China that month, with Canada right behind it

at with 1.21 million tons, followed by Russia with 527,300 tons, and the United States with 408,700

tons. China, the world's largest consumer of coal, imported 5.4 million tons in February, a 116

percent increase year-on-year.

In 2012 Mongolia was the top supplier of coking coal to China, with Australia trailing far behind. But

Mongolia's exports to China dropped to 336,000 tons in February, a decrease of 76 percent from the

month before, and 80.7 percent lower for the same period last year.

The drop in Mongolia's coal exports is largely due to the halt in shipments to China that began this

year from Mongolia's largest coal mine, Tavan Tolgoi. Erdenes Tavan Tolgoi LLC, the state-owned

mining unit leading operations there, said it had to stop shipments because of financial troubles.

Source: UB Post

MONGOLIAN BOURSE EYES BOOM IN STOCK MARKET LISTINGS

The market capitalization of companies listed on the Mongolian Stock Exchange (MSE) could leap

more than 30-fold over the next three to five years, boosted by privatizations and new regulations,

the chief executive of the bourse said on Thursday.

Mineral-rich Mongolia, a massive landlocked nation of fewer than three million people, has

ambitions to become a destination for mining investment and has been working with the London

Stock Exchange (LSE) to modernize and develop its capital markets.

MSE Chief Executive Altai Khangai told a Mongolian Investment Summit in London that a new

Securities Law was expected to be passed in the next month, which would lay out rules for new

listings as well as enable dual listings. He predicted the combined size of companies on the MSE

could reach USD 45 billion in the next three to five years from about USD 1.3 billion currently,

helped by the government's plans for privatizations as well as flotations by Mongolian firms seeking

growth capital and dual listings from international companies.

Mongolia is on index provider FTSE's watch list for possible admission to Frontier Market status,

which would boost liquidity. Khangai said Mongolia was also discussing setting up a FTSE Mongolia

series of indices.

―The success in driving liquidity in the Mongolian market is going to depend both on the expansion

of the Mongolian domestic investor base... but also of course accessing the international investor

community given the constraints on size of the domestic investor base.‖

Alastair Walmsley, head of primary markets at the LSE, said the London exchange group had also

discussions with some Mongolian companies which might look to raise capital on London's

Alternative Investment Market (AIM) for smaller companies.

Source: Reuters

MAJOR OVERHAUL PLANNED FOR NARNII ZAM-IKH TOIRUU AREA

The City of Ulaanbaatar plans to renovate the landscape of 809 hectares between Narnii Zam and

Ikh Toiruu.

Landscaping activities will include planting grass, installing a fountain and street lights, and

building recreation space as well as an underpass for pedestrians and bike lanes. Development plans

for the project have Ikh Toiruu divided into six areas for renovation. Sidewalks will be paved in 29.3

hectares and bike lanes built in 9.9 hectares. There are also plans for the creations of 5.5 hectares

of green space. Additionally, 10 bridges and six underpasses are planned for construction.

Developers have planned for MNT 47.3 billion in costs.

Source: Undesnii Shuudan

GOVERNMENT-DRIVEN EFL TRAINING: IS MONGOLIA FALLING BEHIND?

Mongolia is an example of EFL, or English as a Foreign Language, country. The first and official

language here is Mongolian, and English is just one of the foreign languages that Mongolians speak

aside from Russian, Chinese, Korean, Japanese, and so on. In comparison there are also ESL, or

English as a Second Language, countries. The United Arab Emirates is an example where Arabic is

the official language, yet most, if not all, of its citizens and residents speak English.

Another EFL country is Tunisia, where the government has implemented a national training

initiative that targets its jobless youth for enhanced skills training. The Tunisian government has a

―free education for all‖ policy which has, on the one hand, enabled thousands of students to

receive university degrees over the past years. On the other hand, many of them have not acquired

key skills that employers are seeking. One job requirement is for a potential employee to have

adequate skills in English. Unfortunately, such demand has not been met by the already huge supply

of university graduates in the country. Thus the Tunisian government launched in 2006 a national

program aimed at helping unemployed university graduates learn English. It also provides tax

rebates for any sort of employee training.

Like Tunisia, Mongolia is an EFL country. But unlike Mongolia, Tunisia's economy is not growing at a

remarkable rate. Yet unlike their governments, the Mongolian government does not seem to be as

pro-active with regard to encouraging and promoting proficiency in the English language as a means

to have a more competitive labor force.

Source: UB Post

FROM MOJAVE TO GOBI

―This landscape looks very much like our Gobi Desert. I feel like I could be at home.‖ These words

were repeated numerous times by a group of visitors from Mongolia during a recent four-day field

trip to the Mojave Desert in California, United States, which was followed by a one-day trip to meet

with federal and state decision makers in Sacramento.

The Nature Conservancy's goal: to share with Mongolia's senior government officials the

conservation methods that California is using to protect the biodiversity of the Mojave Desert while

helping to inform the siting of renewable energy development, with the hope that our strategies

will be of use in the Gobi Desert.

The Mongolian government currently faces some tough decisions, as there is unprecedented interest

in developing the Gobi Desert to harvest the renewable resources of both sun and wind and to mine

some of the richest copper deposits in the world. The projects will not only fragment habitat and

produce pollutants, but they will also use water, which is a scarce resource in any desert. Because

the majority of the Gobi is in public ownership, the Mongolian government will decide its fate. The

income to be reaped from development and mining is not trivial, but there is a strong desire on the

part of the government to plan for future development projects in ways that will not harm the

ecological value of the wild landscape.

California has an energy mandate to have 33 percent of the state's electrical power come from

renewable energy sources by 2020. For the past five years, the Nature Conservancy has

spearheaded a unique approach to conservation of the Mojave Desert in the face of unparalleled

pressure from all sectors to develop renewable energy facilities as quickly as possible. The Nature

Conservancy spent five days sharing its smart-planning approach with Mongolia's government

officials in hopes that they will adopt similar strategies to guide future decisions about the Gobi

Desert, so that it can continue to provide the intact landscapes and water resources upon which

plants, animals, and people rely.

Source: Huffington Post

RAIN EXTINGUISHES FOREST, GRASSLAND FIRES

Mother nature has come to Mongolia's rescue, with heavy rain and snowfall extinguishing a series of

forest and grassland fires, according to the Environment and Green Development Ministry.

Since the start of this year, 18 fires have broken out, destroying 203.5 square kilometers of forest

and grassland. From 2010 to 2012, fires burned almost 82,000 square kilometers of forest and

grassland, causing a direct loss of USD 60 million.

Emergency authorities have warned the period between March and mid-June is peak fire season and

people should take preventative measures and prepare to fight fires.

Source: NZWeek

SCIENCE TEAM RECOMMENDS CONSERVATION STRATEGIES FOR ASIAN BIRD

An Arizona State University biologist and her team have found that the Asian subspecies of freat

bustard, one of the heaviest birds capable of flight, covers migratory routes of more than 2,000

miles, traveling to and from its breeding grounds in northern Mongolia and wintering groups in

Shaanxi province in China.

Great bustards are large birds found in grasslands from Spain to Mongolia. Males of the Asian

subspecies can weigh up to 35 pounds, but females only weigh up to 11 pounds. Known for their

elusive nature and wariness toward humans, Asian bustards are rarely seen with the naked eye.

Kessler and her colleagues use spotting-scopes on hillsides to scan valleys in Mongolia, but it may

take the team months to capture and tag a single bird.

―Asian great bustards are a threatened species in Mongolia,‖ Kessler said. ―They face several

dangers, including poaching for sport or sale of meat to exotic food markets in China. The birds

have a low reproductive rate; adults raise just one or two chicks to maturity every 10 years, making

hunting unsustainable. Bustards are no less maneuverable due to their large size which makes

collisions with power lines and overhead cables a serious threat.‖

Modern agriculture techniques also endanger the subspecies. Heavy machinery, used for tilling land

and harvesting crops can destroy nests and crush chicks. Pesticides kill protein-rich insects that

bustard chicks rely on for rapid growth to be able to migrate in fall.

Kessler's solution: implementing conservation strategies that span international borders, as well as

working within local communities to raise awareness about the subspecies while providing

education and employment opportunities.

Source: e! Science News

A CAPITAL OF CONTRADICTIONS NOT TO MISS

Though Ulaanbaatar is most often treated as a stepping-off point to the vast plains, the city is

undergoing rapid change—and it deserves more than a fleeting glance.

In many ways Ulaanbaatar has always been a city of contradictions—the permanent capital of a

country of nomadic herders. In the 17th and 18th centuries, it literally moved according to people's

needs and along with the seasons, and was known as the City of Felt in reference to the fabric of

the gers that made up the vast majority of its buildings. But today the busy streets are filled with

chaos of modern life and urban development, funded by the influx of cash that has accompanied

the discovery of natural resources including copper, gold and coal.

―Ulaanbaatar has changed so much in the last few years, it is a lot more accessible to visitors but

things have gotten more expensive and the new buildings are really sprawling out,‖ Batsuren

Byambasuren, a young, foreign-educated Mongolian said. ―The central area is much more organized

and clean now.‖

The Gandan Khiid Monastery, one of the few Buddhist monasteries to survive the Stalinist purges of

the 1930s, is about a 20 minute walk from downtown (travelers can take a bus). Travelers will pass

through the ger quarters that sprawl out from the city center. As recent migrants from the

countryside continue to arrive from the countryside, they pitch their tents in what have become

vast and ill-planned districts of semi-permanent dwellings; by some estimates 700,000 of the city's

1.2 million inhabitants live in these settlements.

In the south of the city, a war memorial perched on a small hilltop tells of a different period of

Ulaanbaatar's history. The communist-era Zaisan memorial features a large mural with scenes

celebrating the Russian victory over Germany in the Second World War, and the strong relationship

between the former Soviet Union and Mongolia. It also delivers imposing views of the entire city and

the Tuul River.

Those who can appreciate the grit and urban adventure on offer will find few other places like

Ulaanbaatar.

Source: The Globe and Mail

CHASING VESTIGES OF THE GREAT WALL

The Great Wall of China may have been the very first border control in the region. To some, the

structure constitutes the remains of a wall; to others, it is a trench and mound; and to others still,

a road. Yet one thing is apparent: It runs from southwest to northeast without any significant

breaks.

The longest part of the structure lies within Mongolia, and it became the latest destination in

explorer William Lindesay's quest to understand the Great Wall. In the summer of 2011, he

organized his first wall expedition to Umnugobi Aimag and used radiocarbon dating to prove that

the wall there dates back to the Western Xia Dynasty, built between the 11th and 12th centuries.

Maps of Mongolia name seven separate portions of this structure the ―Wall of Chinggis Khan.‖

―I established post stations so that our messengers can gallop swiftly toward their goal and

transport our necessities,‖ Chinggis Khan's son and successor, Ogodei, said. ―Being covetous and

fearing that the wild beasts, born with their destiny determined by Heaven and Earth, would

advance onto the lands of my brothers, I had fences and walls of pounded earth constructed,‖ he

said.

Lindesay eventually discovered the wall by finding its ―shadows.‖ A track, a shallow trench and a

slight mound stretched side by side, across the steppe, into the horizon. In Mongolia's wilds, early

travelers created markers by piling stone upon stone. These structures grew little by little, higher

and higher, as more explorers followed in their footsteps. These Mongolian markers, called ―ovoo,‖

eventually assumed religious significance outside their practical use. This amazing structure running

across the steppe, inviting people to follow it, became known as ―Kherm Zam‖ or Wall Road.

Source: China Daily

COPPER EVADES BEAR TERRAIN

Copper prices clawed out of bear-market territory for the second day in a row on 18 April, bouncing

off an 18-month low to finish with a slight gain.

The most actively traded copper contract, for May delivery, rose 1.7 cents, or 0.5 percent, to settle

at USD 3.2045 a pound on the Comex division of the New York Mercantile Exchange. Prices earlier

on Thursday had fallen to USD 3.06 a pound, the lowest intraday level since October 2011. But

copper turned higher, as traders who had bet on lower prices cashed out amid a rise in gold prices

and data showing manufacturing activity in the United States mid-Atlantic region continued to

expand.

―We‘re seeing [bearish traders‘] exits continue,‖ said George Gero, a vice president at RBC Capital

Markets.

Copper had been dragged lower this week by gold‘s record—setting selloff. The selling on Thursday

began during Asian trading hours, when investors pared holdings of copper, gold and oil. Recent

economic data and forecast related to China point to less demand for raw materials, including

copper, which is used in a variety of industrial goods. Meanwhile, stockpiles of copper continued to

rise, with the amount held in London Metal Exchange—monitored warehouses hitting a decade high

at 612,350 metric tons, up 91 percent in 2013.

Copper had dipped into bear-market territory last week on Thursday for a second day, notching a

roughly 20 percent drop from its February 2012 high of USD 3.9785 a pound. But on both Wednesday

and Thursday, prices settled above the threshold that would denote a bear market, which stood at

about USD 3.18 a pound.

Source: Wall Street Journal

ABB/POWER-ONE: SHINING EXAMPLE FOR SOLAR ENERGY

Is everyone bailing out of solar energy, with Mongolia soon hoping to tap into the energy-generating

potential in the Gobi desert? Siemens AG is selling its loss-making solar technology unit; Bosch says

that it too is retreating. Makers of solar panels wish they had never heard of them. So what is ABB

doing bailing in on Monday to an unloved industry with the USD 1 billion purchase of Power-One.

Think about it this way: The shakeout in the solar energy industry is becoming a blood sport, and

ABB is up in the grandstand alongside Warren Buffet and General Electric Co. They have the cash,

scale and patience to observe an industry in turmoil and pick their moment to pounce. True,

General Electric's solar power business ambitions look a bit stalled, but Buffet gave the industry a

fillip last year with his USD 2.5 billion investment in solar generation in sunny California. ABB's move

suggests that the Swiss power and automotive technology company also thinks things can only get

better.

The question is, given the problems facing solar power—from an over-reliance on subsidies to poor

returns for investors—will there ever be a right time for the sector. The answer may be yes, given

that Power-One is at the technology rather than production end of solar power. So it ticks a lot of

boxes for ABB, which predicts that solar will be 6 percent of annual installed power generation

capacity by 2035 globally. That would put the solar business on a par with nuclear power.

Source: Financial Times

IN CHINA, BREATHING BECOMES A CHILDHOOD RISK

Levels of deadly pollutants up to 40 times the recommended exposure limit in Beijing have struck

fear into parents and led them to take steps that are radically altering the nature of urban life for

their children. Mongolia is facing similar challenges, as Ulaanbaatar ranks among the most polluted

cities in the world.

Parents are confining sons and daughters to their homes, even if it means keeping them away from

friends. Schools are canceling outdoor activities and field trips. Parents with means are choosing

schools based on air-filtration systems, and some international schools have built gigantic domes

over sports fields to ensure healthy breathing.

―I hope in the future we'll move to a foreign country,‖ Zhang Zixuan, a parent to a son suffering

from chronic cold symptoms. ―Otherwise we'll choke to death.

She is not alone in looking to leave. Some middle-and upper-class Chinese parents and expatriates

have already begun leaving China, a trend that executives say could result in a huge loss of talent

and experience. Foreign parents are also turning down prestigious jobs or negotiating for hardship

pay from their employers, citing the pollution.

Analyses show little relief ahead if China does not change growth policies and strengthen

environmental regulation. A Deutsche Bank report released in February said the current trends of

coal use and automobile emissions meant air pollution was expected to worsen by an additional 70

percent by 2025.

Parents have scrambled to buy air purifiers, and face masks are now part of the urban dress code.

At the prestigious Beijing No. 4 High School, outdoor physical education classes are now canceled

when the pollution index is high. Teachers check the hourly air ratings from the U.S. Embassy to

determine whether children should play outside or beneath the domes.

Source: New York Times

POLITICS

MONGOLIA‟S PARLIAMENT APPROVES CHANGES TO SEFIL

Parliament approved changes to the Strategic Entities Foreign Investment Law (SEFIL), easing some

restrictions on overseas private companies while maintaining controls on state-owned groups, after

a slump in investments.

The changes remove the need for Parliament to review investments by non-state owned companies,

said Sereeter Javkhlanbaatar, director of foreign investment registration and regulations at the

Ministry of Economic Development. Deals involving state-controlled companies or companies with

government equity will still need to be reviewed for investments.

―The amendments are welcome but the damage has been done, and many investors' appetites have

moved on to more stable jurisdictions,‖ James Liotta a partner of MahoneyLiotta LLC in

Ulaanbaatar, said by email. ―Those who are locked in are likely to take a much more conservative

approach toward investing in Mongolia.

The law applies to companies in the strategic sectors of mining, banking and media, Chimed

Saikhanbileg, the government's cabinet secretary, said by phone from Ulaanbaatar. Today's changes

only apply to Parliamentary reviews and don't remove the need for both state and private

companies in those sectors to get approval from the government, the prime minister and his

cabinet, for investments, he said.

Source: Businessweek

PARTIES SET FOR PRESIDENTIAL RACE

The country is preparing for election season for this summer‘s election.

Campaigns for the 2013 presidential election is set to begin 22 May with candidates to be named on

17 May. Each party with representatives in Parliament is permitted to name a candidate. It will be

up to the General Election Committee to decide the campaign schedule.

Source: Udriin Sonin

BAYARTSOGT DISMISSED AS DEPUTY SPEAKER

MP S. Bayartsogt was sacked this week, with 87.5 percent of the 56 members in Parliament voting

for his dismissal.

Also under discussion is the dismissal of Prime Minister Norov Altankhuyag from his chairmanship.

Source: Info Mongolia

PRIME MINISTER ORDERS HASTENED ACTIVITY FOR JUNE LAUNCH OF OT

The Prime Minister has charged Mining Minister D. Gankhuyag with hastening activity to ensure that

Oyu Tolgoi LLC begins export to China in June.

The decision was in response to reported complaints by Oyu Tolgoi LLC that government agencies

were slow to grant approvals for mine development. Gankhuyag has been charged with picking up

the pace with the permit process for land and the labor force as well as customs documentation,

resolving water and other environmental issues, providing a long-term power source, creating a

third-party laboratory and resolving infrastructural issues.

Source: Business-Mongolia.com

DP DELIBERATES ON TT‟S CHALCO AGREEMENT

The Democratic Party decided at a party meeting that it will pursue contract negotiations with

Aluminum Corp. of China (Chalco) over the Tavan Tolgoi coking coal deposit so it can continue

production without losses.

Party Chairman D. Erdenbat said it had become apparent that the Tavan Tolgoi agreement has

presented many problems. However, when operations first began the company was able to run

profitable operations. The DP is now determined to create a win-win resolution for both parties.

Source: Zuunii Medee

MONGOLIA TO HOST CONFERENCE FOR THE COMMUNITY OF DEMOCRACIES

As Mongolia makes final preparations to host the seventh Ministerial Conference of the Community

of Democracies from 27 to 29 April, an air of excitement and buzz is palpable in Ulaanbaatar.

Among the hundreds of high-level delegates from the government, civil society, and the media

attending—both from abroad and from Mongolia—Nobel Peace Prize Laureate Aung San Suu Kyi, as

well as Yemen‘s Tawakoll Karman are also expected. Mongolia has been holding the presidency of

the community of democracies, a global intergovernmental coalition of over 100 democratic

countries, since July 2011. As a country Mongolia has successfully mastered the process of

democratization while undergoing simultaneous political, social, and economic transformation.

Mongolia serves as an example for other countries aspiring to achieve democracy in a peaceful

manner. During its two-year presidential term, which will end in June this year, Mongolia has

focused on promoting education for democracy, strengthening regional cooperation, fostering

collaboration with civil society, advancing women‘s empowerment, and countering corruption.

The seventh ministerial conference will consist of plenary sessions on topics such as harnessing open

governance for democracy and supporting democratic transition, as well as parallel sessions of five

specific fora: women‘s forum, parliamentary forum, civil society forum, corporate forum, and youth

forum. At the end of the conference, a resolution on the outcomes of the various plenary sessions

and fora is expected to be adopted.

Source: Asia Foundation

EUROPEAN UNION‟S TOP DIPLOMAT TO VISIT MONGOLIA

E.U. Foreign Affairs Head, Catherine Ashton, began a trip to China and Mongolia on Wednesday,

aiming to take stock of hugely important ties with the new leadership in Beijing.

―China has just completed its leadership change and this is a moment to renew ties, take stock of

events in the world and assess how we can best move forward and work together,‖ Ashton said in a

statement.

Ashton‘s visit to Mongolia is the first at this level, the statement said, adding she will meet

Mongolian President Tsakhia Elbegdorj and Prime Minister Norov Altankhuyag. She is to sign a

partnership and cooperation agreement with Mongolia,‖ paving the way for closer cooperation on

economic, environmental and other issues,‖ it added.

Source: AFP

FIRST MONGOL ORIGIN CONFERENCE HELD IN NEPAL

The first World Conference of People of Mongol Origin was held in Katmandu in Nepal on 4 April.

This year's conference, hosted jointly by the Ulaanbaatar based World Center for People of Mongol

Origin and the Indigenous Mongoloid Republican Forum of Nepal, was the first of what is hoped to

be many each year. At the conference were a number of speeches from noteworthy individuals,

screenings of documentaries focused on Mongolian culture, tradition, and history, as well as musical

performances featuring Mongolian throat singing and the horse-head fiddle.

The conference is expected to be held in Ulaanbaatar in 2015.

Source: News.mn

U.S. RECEIVES NEW MONGOLIAN AMBASSADOR

Mongolia appointed a new ambassador to the United States in December 2012. Bulgaa Altangerel

presented his credential to U.S. President Barack Obama on 14 January 2013, succeeding Bekhbat

Khasbazar, who had served since April 2008.

Born 25 October, 1955, in Khovd Aimag, Altangerel was handpicked at an early age by the Mongolian

Foreign Ministry to receive a university education and eventually work for it. He earned a Master's

degree in International Law and Political Science in Moscow, and a PhD in international Law at

Ukraine's Kiev National Taras Shevchenko University in 2003. In 1992, he was a visiting fellow for

international law and international public affairs at Columbia University.

Upon joining the Ministry of Foreign Affairs in 1979, Altangerel had two years of desk work before

taking a four-year stint at the Mongolian embassy in Kabul, Afghanistan, from 1981 to 1985.

Altangerel served the next 12 years based in Ulaanbaatar, at the Foreign Ministry, then as advisor to

Parliament, and finally as director of the Foreign Relations Division.

In 1997, Altangerel was assigned to his first ambassadorship, serving as the first-ever Mongolian

ambassador to Turkey, resident in Ankara and concurrently accredited to Bulgaria, Lebanon,

Romania and Uzbekistan, from 1997 to 2003. He also spent five years (2007-2013) as a member of

the board of directors of the Trust Fund for Victims of the International Criminal Court, from May

2008 to late 2012. Altangerel was ambassador to the United Kingdom, resident in London and

concurrently accredited to South Africa, Ireland and Iceland.

Source: Allgov.com

NORTH KOREA ASKS MONGOLIA FOR FOOD AID

As North Korea heads into the time of year when its food supplies run low, it appears to be looking

for new donors.

North Korean soldiers dug up plants on the banks of the Yalu River near the North Korean town of

Sinuiju, opposite the Chinese border city of Dandong, in 2010.

―North Korea may face severe food shortage,‖ Ambassador Hong Gyu told President Tsakhia

Elbegdorj, according to the account. Hong then asked for Mongolia to consider the possibility of

delivering food aid to North Korea, the account said.

North Korea's toughest part of the year for food begins in April and runs through September, when

the annual corn harvest begins. Kwon Tae-jin, a scholar on North Korean agriculture in Seoul said

that last year's yield was moderate, but not sufficient to tide the country over.

―We've learned that while rations are being delivered, it varies region by region,‖ said Kwon, a

director at the Korea Rural Economic Institute in Seoul. ―But it isn't sufficient to go around for

everyone.‖

There are other signs of food shortages. Daily NK, a news website staffed by North Korean

defectors, reported last week that Pyongyang did not distribute food to the northernmost province

for the biggest holiday of the year; the 15 April anniversary of the birthday of North Korean founder

Kim Il Sung.

Source: Wall Street Journal

MPP AND GREEN PARTY SIGN MEMORANDUM OF COOPERATION

The Mongolia People's Party (MPP) signed a memorandum for cooperation with the Green Party on

24 April.

The parties said they made the pact with the intention of combating election fraud in the upcoming

presidential election scheduled for 26 June as well as promoting democracy in the country and

opposing the exploration for uranium. The two parties have denied speculations that the two

parties may ally for the upcoming election.

Source: News.mn

ANNOUNCEMENTS

RISK MANAGEMENT FORUM 2013 - POSTPONEMENT NOTICE

Dear Forum attendees,

We regret to inform you that the ―Risk Management Forum 2013‖ scheduled for May 1st at 9:00

a.m. has been postponed.

The organizers‘ intention has always been to create a first class event where the audience and

speakers are of highest quality and quantity in order to make your time worthwhile. By postponing

this event to a later date, we hope to see a shifting sentiment from the various market sectors and

thus able to deliver a high quality forum in Fall 2013. We expect the potential participants would

show renewed interest in a risk management event once the Chalco situation is settled, OT project

is moving forward and the economy showing positive signs in general.

We sincerely apologize for any inconvenience this change may cause to your schedule. The

organizers will be updating you through the forum website www.riskforum.mn and email

notifications regarding the exact date and agenda of the upcoming Risk Forum 2013.

On behalf of the Risk Forum organizers,

Business Council of Mongolia and Mandal General Insurance.

___________________________________________

MINING FOR NON-MINERS COURSE, 13-14 MAY, ULAANBAATAR

The next Mining for Non-Miners course will be held on 13-14 May. The aim of this course is to

provide those from a non-mining background with a comprehensive introductory understanding of

the mining industry. RPM is offering this two-day course for USD 1,000 for BCM members and

USD1,200 for non-members.

RungePincockMinarco (RPM), is a world class mining consulting, software and training company with

an established office in Ulaanbaatar. RPM has been successfully conducting Mining for Non-Miners

Training courses in Mongolia since 2011. The course will be delivered in Mongolian language. Please

click here to see the agenda.

The course duration is two days, with the first day focused on ―Coal Mining‖ and the second day on

―Metal Mining‖.

The number of participants is limited. Please send your expression of interest via return email if

you are interested in attending this course to me at saruul@bcmongolia.org, 317027.

___________________________________________

2nd MONGOLIA TRADE & COMMODITY FINANCE CONFERENCE, 14 MAY, ULAANBAATAR

Exporta's second Mongolia Trade & Commodity Finance Conference will be held at the Chinggis Khan

Hotel in Ulaanbaatar on 14 May. The Business Council of Mongolia (BCM) is acting as an institutional

partner for the event and has negotiated a 15 percent discount for its members to attend.

The Mongolia Trade & Commodity Finance Conference is the only specifically organized event for

the Mongolian trade and commodity finance community. It provides an unrivaled platform for

discussion and networking for leading local businesses and institutions, as well as those

international practitioners looking to tap into the huge potential of this rapidly developing market.

Speakers include Chuluunbat Orchirbat, vice minister of the Ministry of Economic Development,

Battsengel Gotov, chief executive of Mongolian Mining Corp., and Jim Dwyer, executive director of

BCM.

To receive the discount quote BCM15 when booking. Click here for more information and booking

___________________________________________

COAL PROCESSING & MINING TECHNOLOGY EXPO, 4-5 JUNE, ULAANBAATAR

The Coal Processing & Mining Technology Expo will be held in Ulaanbaatar from 4 to 5 June 2013.

The expo is co-located with the Transportation & Logistics Expo, and because of this co-location you

will be able to meet with a more diverse and broader group of attendees. With many international

as well as local Mongolian companies already signed up to exhibit, you will be a part of what is

becoming the premier event for the mining and transportation industries serving Mongolia.

BCM members will receive a special 10 percent discount. To register and receive your discount

email Saruul at saruul@bcmongolia.org. For more information about the exhibition, contact Glenn

Scott atgscott@uexpos.com or visit the website coalexpomongolia.com.

___________________________________________

COALTRANS MONGOLIA, 19-20 JUNE, ULAANBAATAR

The Coaltrans Mongolia conference will be held at the Blue Sky Tower from 19 to 20 June. BCM

members will receive a 15% discount to attend the event, please use the discount code BCM.

Coaltrans Mongolia will explore the development of coal projects in the country and offer an insight

into what level of influence Mongolia will have over future international coal prices. Join us as we

return to this exciting market for the third year, to have an impact on how this new coal frontier

evolves and cement your position as a leading player in the market.

Speakers will include Batsuuri Yaichil, chief executive officer of Erdenes Tavan Tolgoi LLC, Graeme

Hancock, president and chief representative of Anglo American Development, and Bayanjargal

Byambasaikhan, chairman of the Business Council of Mongolia.

For more information, email coaltrans@euromoneyplc.com.

___________________________________________

FUTURE MONGOLIA, 19-22 JUNE, ULAANBAATAR

The Future Mongolia international trade fair will be held at the Buyant Ukhaa Sport Palace in

Ulaanbaatar, near the Chinggis Khaan International Airport, from 19 to 22 June, 2013.

After the successful premier with nearly 100 exhibitors from 14 nations and some 4,200 visitors, we

cordially invite you to the second Future Mongolia. This international trade fair offers the

opportunity on an enlarged exhibition space to present modern and sustainable solutions and

responses to the present needs of Mongolia and its population.

BCM members will get 5% discount on raw space. Please contact Saruul at saruul@bcmongolia.org

to get a special discount code. For more information, visit Future-Mongolia.com.

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“MM TODAY” on MNB-TV, Friday, 19:00-19:10

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 19:00 to 19:10 tonight. Tune in to watch this program that reports stories from

today‘s BCM NewsWire.

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BCM‟S MINING SUPPLY CHAIN DATABASE

The new version of BCM‘s Mining Supply Chain Database is in use. Following the initiative of Oyu

Tolgoi LLC, the BCM has maintained the Mining Supply Chain Database since March 2009. It is an

honor to introduce you to the new version of the database which is totally upgraded as to its

content and use of information technology opportunities.

As of December 31, 2012 suppliers registered on the database totaled 1,405. During 2012, 251 new

supplier entities joined the Database and 236 prior supplier registrants updated their company

profiles. In addition, 22 buyers were also registered and 82 tender announcements were posted.

We are inviting all Mongolian mining suppliers and buyer companies to join the Mining Supply Chain

Database. Please visit here for registration—FREE!

If you have any questions regarding the database, please contact 317027.

BCM WEBSITES

MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS

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

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

government website Open-Government.mn are regularly updated.

The following presentations were added from "Foreign Investment in Mongolia: Challenges, Risks

and Solutions" conference (in Mongolian) on April 19 at the Kempinski Hotel organized by the

Business Council of Mongolia (BCM) and UB Risk Management Consulting:

• Гадаадын хөрөнгө оруулалтын өнөөгийн байдал, хэтийн төлөв, Төв банкны ерөнхий эдийн

засагч С.Болд, ―МОНГОЛ УЛСДАХ ГАДААДЫН ХӨРӨНГӨ ОРУУЛАЛТ –ЭРСДЭЛ, СОРИЛТ,

ШИЙДВЭРЛЭХ АРГА ЗАМУУД‖сэдэвт эрдэм шинжилгээний бага хурал, 2013 оны 4 дүгээр сарын

19

• Шууд хөрөнгө оруулалтын өнөөгийн байдал, тулгамдсан асуудал, шийдвэрлэх арга зам,

Монголын Бизнесийн зөвлөлийн дэд дарга И.Сэр-Од, ―МОНГОЛ УЛСДАХ ГАДААДЫН ХӨРӨНГӨ

ОРУУЛАЛТ –ЭРСДЭЛ, СОРИЛТ, ШИЙДВЭРЛЭХ АРГА ЗАМУУД‖ сэдэвт эрдэм шинжилгээний бага

хурал, 2013 оны 4 дүгээр сарын 19

• Үнэт цаас, хувьцааны зах зээлийн хөрөнгө оруулалт: эрсдэл, сорилт, цаашдын хандлага,

Монгол банкны Ерөнхийлөгчийн зөвлөх, санхүүгийн тогтвортой байдлын зөвлөлийн ажлын

албаны дарга Д. Ган-Очир, ―МОНГОЛ УЛСДАХ ГАДААДЫН ХӨРӨНГӨ ОРУУЛАЛТ –ЭРСДЭЛ,

СОРИЛТ, ШИЙДВЭРЛЭХ АРГА ЗАМУУД‖ сэдэвт эрдэм шинжилгээний бага хурал, 2013 оны 4

дүгээр сарын 19

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ENGLISH WEBSITE: 'PRESENTATIONS', 'MONGOLIA REPORTS', „MONGOLIAN BUSINESS NEWS‟,

„PHOTO GALLERY‟

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

• Nick Cousyn, Chief Operating Officer, BDSec Joint Stock Company, ―Gobi‘s Resort‖ at the BCM

Monthly meeting Apr 22, 2013

• Brian White, Editor, The Mongolist – ―Analyzing Mongolian Politics from the "Middle Layer", at the

BCM Monthly meeting Apr 22, 2013

• Ch. Otgochuluu, Head of Strategic Policy and Planning Department, Ministry of Mining, ―Brief

introduction on mining policy‖ at the BCM monthly meeting Apr 22, 2013

• The current flow of investment into Mongolia, S. Bold, Chief Economist, Central Bank, at the

"Foreign Investment in Mongolia: Challenges, Risks and Solutions" conference on April 19, 2013 at

the Kempinski Hotel.

• About regulation on FDI, S. Javkhlanbaatar, Foreign Investment Regulations and Registration

Department Head, Ministry of Economic Development of Mongolia, at the "Foreign Investment in

Mongolia: Challenges, Risks and Solutions" conference on April 19, 2013 at the Kempinski Hotel.

• Legal issues of regulation of foreign investment, B. Amarsanaa, Academic Secretary of National

Legal Institute, at the "Foreign Investment in Mongolia: Challenges, Risks and Solutions" conference

on April 19, 2013 at the Kempinski Hotel.

• Investment in stocks and equities in Mongolia: risks, challenges and trends, D. Gan-Ochir, Head of

Financial Stability Council, Advisor to President of Central Bank, at the "Foreign Investment in

Mongolia: Challenges, Risks and Solutions" conference on April 19, 2013 at the Kempinski Hotel.

• On current state of equities foreign investment, D. Achit-Erdene, CEO, MICC, at the "Foreign

Investment in Mongolia: Challenges, Risks and Solutions" conference on April 19, 2013 at the

Kempinski Hotel.

• Market Update by Mandal General Insurance LLC

• Annual Report 2012 by International Monetary Fund

• Ruth Pulaski, Director Marketing & Development, American University of Mongolia – ―American

University of Mongolia: Integrating a Liberal Education Approach to Learning‖ at the BCM monthly

meeting, March 25, 2013

• B. Bayar, Managing Director, ELC LLC – ―Update on Legal Developments Regarding Foreign

Investment‖ at the BCM monthly meeting, March 25, 2013

• Tony Burchill, Australian Consul-General & Trade Commissioner, Austrade – ―The Business of Being

a Third Neighbour‖ at the BCM monthly meeting, March 25, 2013

Other recently added presentations:

• Dr. Brian Fisher, Managing Director, BAEconomics, "Economic Impact of draft Minerals Law" at the

Kempinski Hotel, March 18, 2013, Ulaanbaatar

• Dr. Ch. Khashchuluun, CEO of UBRM Consulting, Mongolia and Mining, The policy evolution: What's

the next? at the Kempinski Hotel, March 18, 2013, Ulaanbaatar

• Martin Pow, Partner, Enterprise Risk Services and Learning Leader, Deloitte Onch LLC, ―Black

Swans: Fact or Fiction,‖ A different risk management philosophy at the BCM Risk Management

Working Group meeting, March 14, 2013.

The following 3 presentations were added from Coal Mongolia, 21-22 February:

- ―Current state of coal sector of Mongolia and future trends‖ by Minister of Mining D. Gankhuyag at

the Coal Mongolia 2013, Feb 21, SS Convention Center, Ulaanbaatar;

- ―Economic Reform Objectives‖ by Vice Minister, Economic Development, H.E. Mr. O. Chuluunbat

at the Coal Mongolia 2013, Feb 21, SS Convention center, Ulaanbaatar;

- ―Presentation for Coal Mongolia 2013‖, Norihiko Kato, CEO of Khan Bank, Feb 21 at the SS

Convention Center, Ulaanbaatar, Mongolia.

- Presentation by Bold Baatar, CEO of Altan Dornod Mongol, ―Mongolian Mining Investment

Environment‖ at the Mining Industry Open Discussion, February 1, 2013, at Kempinski Khan Palace

Hotel.

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

The ―Mongolia Reports‖ section includes ―Highlights of 2012, Mongolia‖ by European Bank for

Reconstruction and Development (EBRD); the ―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‖; ―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; ―Mongolia-a supplement to Mining

Journal‖ from Mining Journal October, 2012; ―Macro Overview‖ September, 2012 by EPCRC; ―Taxes

for Expatriates in Mongolia‖ by PricewaterhouseCoopers.

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

Parliament and Government is available for download.

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

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

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

The BCM NewsWire will continue to be issued each Friday, incorporating items already on the home

page for a consolidated account of the week‘s events.

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SOCIAL NETWORK WITH BCM

The Business Council of Mongolia (BCM) has expanded its reach to your favorite social networks.

Keep up to date on the latest business deals in Mongolia and how the climate for investment is

improving each day with BCM.

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

business environment in Mongolia today.

Add BCM on Facebook at http://www.facebook.com/pages/THE-BUSINESS-COUNCIL-OF-

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

the NewsWire with the community.

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

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

We have now 1,095 fans on our Facebook fans page, 1,193 connections on LinkedIn network, and

662 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.

BCM WORKING GROUP NEWS

We thank all BCM members who are currently volunteering their time as members of BCM‘s 6

Working Groups. The total number of BCM Working Group participants increased to 206 at June 30,

2013, up from 151 at December 31, 2012.

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BCM IN THE UNIVERSITY CLASSROOM PROJECT

Business Council of Mongolia (BCM) has been pushing forward with its BCM in the University

Classroom series since March 2012. Led by BCM‘s Education Working Group, the program provides

lectures at universities to help inspire students and give them direction for their future careers.

The series has grown to include an average of 10 lectures per academic year. Now 691 students and

teachers have participated with BCM in the University Classroom Project.

Most recently Nick Cousyn, Chief Operating Officer of BDSec gave a presentation entitled ―BDSec

and Research Best Practices‘‘ to an audience of 57 students and teachers at Institute of Finance and

Economics, at 19th of April 2013. His presentation was very open and he answered students‘

questions for one hour after his presentation.

If you like to share your experience on some specific topic, you can discuss with us.

Please erka@bcmongolia.org

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The BCM Environmental Working Group met on Thursday, 25 April 2013 with 21 members attending.

Bayarmaa A, of Clean Energy, Newcom Group, moderated the session.

New members: Michele Ryan, Minter Ellison; Erdenebileg S, ADEN Services; Sara K. Phillips,

Anderson&Anderson LLP Mongolia; Bayarjargal Y, The Nature Conservancy; Munkhzul R, Eurofeu

Asia; Gregory Hess, Tree Global; Ongonsar P, ADB; Enkhee D, Clean Air Initiative; David Beckstead,

Lehman Lee&Xu Mongolia; Tsendsuren, Ministry of Green Development; Bayarjargal B, South Gobi

Sands; Tserendavaa O, RPS; and Marc Tasse, ACMS. Guest: Bayarlkham B, JICA.

Speakers and topics were:

- Planning Meeting, Chair A. Bayarmaa briefly introduced past activities and meetings of the EWG

and discuss potential topics of interest to the group for next meetings

- Wildlife Conversation Society‘s recent works - Impacts of roads on wildlife, Mongolian gazelle, by

Buuveebaatar B.

- ―Sustainability‘s 10 years of service in Mongolia: Environmental, social, safety and training

services‖ by B. Bayarmaa, Senior Consultant

- Eurofeu Asia, Brief Introduction by Munkhzul R.

- ―South Gobi‘s Environmental Prospect‖ by B. Bayarjargal,

- Mongolia`s Forests: Opportunities for Profits & Preservation by Gregory Hess, Tree Global Inc

Presentations available on BCM Environmental WG web page.

Please contact: erka@bcmongolia.org

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]

March 31, 2013 *9.8% [source: NSOM]

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

Note: 9.4% y-o-y, Ulaanbaatar city, March 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]

CURRENCY RATES – APRIL 25, 2013

Currency Name Currency Rate

US dollar USD 1,428.26

Euro EUR 1,861.67

Japanese yen JPY 14.33

British pound GBP 2,184.02

Hong Kong dollar HKD 183.64

Chinese Yuan CNY 231.48

Russian Ruble RUB 45.63

South Korean won KRW 1.28

Disclaimer: Except for reporting on BCM‘s activities, all information in the BCM NewsWire is

selected from various news sources. Opinions are those of the respective news sources.