BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 327 – May 30, 2014

NEWS HIGHLIGHTS:

Business

Rio Tinto to cut up to 300 jobs at Mongolia copper mine;

Rosneft signs two 5-year agreements in Mongolia;

Erdene reports on drilling at Altan Nar;

Rosneft chief signs oil exploration contract for Mongolia;

SouthGobi announces $10mn shareholder loan facility with Turquoise Hill;

MGG acquires centrally located retail center;

'Little TT' vows for MNT 40bn in dividends despite financial challenges;

Kincora Copper kicks off drilling at Bronze Fox;

Development Bank profits continue to grow;

Mongolia’s Hunnu Air e-tickets Asian routes with Abacus;

Mongolia to open new air routes this summer;

Trust opens meat sorting plant;

Eznis closes because of tough market conditions, says Newcom rep;

Mongolia accuses China's NPI of tax evasion;

Khan Bank awarded “Most Active Issuing Bank” for EBRD financing program;

Cabinet extends cooperation pact with Konrad Adenauer Foundation;

Mongolia looks to expand business relations with Taiwan at investment summit;

Energy Mongolia-2014 held in UB.

Economy

Mongol Bank: Swap agreements, 1-week bills, treasury bills;

Moody’s downgrades Mongolia’s government bond outlook to negative;

Government funds development of cement plants;

Tourism numbers are slipping annually, says tourism union official;

Mongolia sees $1bn of investments unlocked from doubling area for mines;

Prices for new apartments grew 30% in a year;

Mongolia already above debt limit, says Finance Ministry official;

Parliament frets over borrowing for redevelopment of UB's ger districts;

China’s global search for energy;

Gold outlook dim, says Credit Suisse investor poll;

China welcomes foreign investors;

Mongolia's economy has a hard landing – editorial;

Will Mongolia default? - editorial.

Politics

Minerals Law amendments to take center stage;

FRC approves regulations for mutual funds;

Mining Minister submits reworded petroleum bill;

Russia mulls Mongolia's accession to CU free trade zone;

Premier meets Russian Railways President Yakunin;

U.S. congressmen present awards to Mongolian soldiers;

Mongolian agency reps visit Elko;

Minnesota media fails home state man in Mongolia;

“Track 1.5” U.S.-N. Korea talks held in Mongolia;

Seoul urges N. Korea to abandon nuclear ambitions;

Missing Buddhist deities recovered;

Meet Mongolian reindeer herders fighting to save their way of life;

Catholic bishop details steady growth of congregation in Mongolia;

Unlocking Mongolia’s potential - editorial.

Others

New Mongolian Laws;

Announcements;

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

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

International SOS

Invest Mongolia Agency

Mongolian Economy Magazine

Oxford Business Group

Milestone GRP

MONTHLY MEETING RECAP

The BCM meeting on 26 May was held at Best Western Tuushin Premier Hotel with Bayanjargal

Byambasaikhan in the chair and attended by 165 members and invited guests—an all time high for

attendance.

The eight newest BCM members were introduced by Jim Dwyer. They are:

1. Adamas Mining LLC is a Mongolian national mineral exploration and mining company which has

been sustainably steering its operations since 2001.

2. Atlas Copco Mongolia is the mining equipment and services provider subsidiary of Atlas Copco

Group based in Sweden. The Group‘s products are sold and rented under different brands through a

world-wide sales and service network reaching more than 180 countries, half of which are served by

wholly or partly-owned sales companies.

Operating in Mongolia since 2005, its mission is to add value to customers' operations through the

development and supply of mining products, application knowledge, service and training.

3. Founded in 2000, Gunvor Group is one of the world‘s largest independent commodity trading

companies by turnover, providing integrated trading products and logistics services for participants

in the worldwide oil and energy markets. In recent years, we have focused on expanded operations

into Asia, the Middle East and the Americas.

4. IARUDI Consulting is an accounting firm which specializes in high quality but cost-effective

bookkeeping, reporting and compliance in the Mongolian marketplace. IARUDI'S core competency,

on an outsourced or advisory basis, is accounting and reporting for clients in a way that is compliant

with IFRS and Mongolian accounting and tax practice. Our broader aim is to help businesses manage

the compliance risks arising from operating in the Mongolian marketplace.

5. Liberty Partners was established in 2010 with a vision of assisting Mongolia in the development of

mining, infrastructure and industrial projects through its financial expertise. Liberty provides

financial advisory services as well as the structuring and arranging of debt and equity financing that

enables clients in Mongolia to grow their business by accessing global capital and loan markets.

6. MDS & KhanLex LLP is a large Ulaanbaatar, Mongolia-based law partnership. The firm has seven

prominent partners who are assisted by a team of associate lawyers. Core practice of MDS &

KhanLex consists of complex transactions and litigation in a number of areas and industries. The

mission of MDS & KhanLex is to assist both local businesses and international investors entering the

Mongolian market by blending international legal industry knowledge with local expertise.

7. Sumitomo Mitsui Banking Corporation (SMBC) is one of the largest Japanese banks with a client

base of over 210,000 companies in Japan. The history of the Sumitomo and Mitsui companies dates

back more than four centuries, and both established banks in the 19th century. The Ulaanbaatar

Representative Office opened in October 2013 to run a market research and support the

headquarters and other branches around the world.

8. Founded in 1979, University of the Humanities offers 29 undergraduate degree programs, 13

Master's programs and 7 Doctorate degree programs in Social Sciences, Arts, Business

Administration, Ecology, Environment Protection, Computer Sciences, Information Technology,

Linguistics and Cultural Studies.

University of the Humanities is one of the leading universities of Mongolia that Webmetrics ranks

the fourth among Mongolian universities. It is a member of the Asian Pacific Quality Network and

the International Association of Universities.

The day's presentations kicked off with a special visit by Prime Minister Norov Altankhuyag to

discuss details of his 100-Day Economic Revitalization Plan and the Policy Council he created to

engage the private sector directly. BCM Chairman Bayanjargal Byambasaikhan serves as Council

secretariat for the group, and he invited all of BCM's members to contact BCM to relay input to the

Council.

Key initiatives for the 100-day economic stimulus plan, said Altankhuyag, will include tax incentives

to companies and land ownership rights. ―We are committed to 100 percent transparency,‖ said

Altankhuyag.

B. Lakshmi, Director of Mongolia Economic Forum, gave the second presentation of the evening to

introduce the government's goals with the Mongolia Business Summit to be held in Ulaanbaatar on

19-21 June. At the summit, business representatives will share their experiences doing business in

Mongolia and take part in panel discussions about the progress made in the investment

environment. Representatives of multiple industries will take part in the summit, she said, including

tourism and hospitality, construction, and food production, said Lakhsmi. The event will also

include tours for guests to visit sites such as the Oyu Tolgoi copper mine, the APU beverage plant,

and the Mongolyn Alt Corp.(MAK) cement plant.

Nick Cousyn, Co-chair of BCM's Capital Markets Working Group, next presented on opportunities for

Mongolia's government to privatize state-owned assets on the Mongolian Stock Exchange. Cousyn,

who works as chief operating officer of brokerage BDSec JSC, argued that given the poor

performance of publicly-listed companies Mongolian Mining Corp. and SouthGobi Resources Ltd.,

now was not an optimal time for state-owned Erdenes Tavan Tolgoi LLC to list on either the Hong

Kong or London capital markets. Listing soon might set a bad precedent, he warned.

―The way in which ETT is privatized will be an important example for future transactions, its

success or failure will be watched very closely locally and by the international community,‖ read a

slide on Cousyn's presentation.

Given that it might take years until investment sentiment grows strong enough for Erdenes TT to list

abroad, Cousyn suggested Mongolia make good on the promise to distribute shares of the company

and raise capital on the local exchange.

The final speech of the evening came from Peter Benson, Team Leader for VicRoads in Mongolia

and the Asian Development Bank's (ADB's) capacity building project for Mongolia's road management

authorities. Roads that were once in great conditions, such as those from Ulaanbaatar to Darkhan or

Sainshand, are now in disrepair or even dangerous to drive. The reason: the absence of periodic

maintenance, said Benson.

Benson said he was working with ADB to help bring better training to road authorities and educate

the public and government on the need for regular maintenance. The costs for maintenance pale in

comparison with those for reconstruction or rehabilitation, said Benson, and Mongolia would be wise

to get to work right away on the road to Sainshand—or else face complete ruin, as is the state of

the road to Darkhan.

BUSINESS

RIO TINTO TO CUT UP TO 300 JOBS AT MONGOLIA COPPER MINE

Rio Tinto Ltd. plans to cut around 300 jobs at the Oyu Tolgoi copper and gold mine it operates in

Mongolia to cut costs as copper prices remain weak, the global miner told staff on Wednesday.

The cuts amount to just under 5 percent of the workers at the mine, which started producing last

year, and include full-time employees and contractors, said an Oyu Tolgoi employee, who declined

to be named as the issue was sensitive.

"Given where we are now in the lifecycle of our project and with the urgent need to reduce our

costs, it is critical to the success of the business to address this now," Rio Tinto said in a memo to

staff, dated May 28.

There were about 7,500 staff and contractors on the Oyu Tolgoi project as of the end of December

2013, most of whom were Mongolian, according to its website. The company, which has targeted

USD 1 billion worth of cost cuts from its global operations this year after slashing USD 2.3 billion last

year, said it needed to rake in savings as copper prices are hovering just above four-year lows.

"Copper operations around the world are facing significant challenges with volatile markets and

prices. Oyu Tolgoi is no different," said the memo to Oyu Tolgoi staff.

The latest layoffs follow the loss of around 1,700 jobs last year, when Rio Tinto stopped work on a

USD 5 billion-plus expansion of the mine due to a long-running dispute with the Mongolian

government over project financing and costs on the project. Mongolia has become more conciliatory

this year and the government and Rio Tinto have both said they expect issues to be resolved by

September, the deadline that prospective lenders have put on their project financing commitments.

Turquoise Hill reported net revenue of USD 108 million from Oyu Tolgoi for the first quarter.

Source: Reuters

ROSNEFT' SIGNS TWO 5-YEAR AGREEMENTS IN MONGOLIA

Rosneft OAO has expanded its cooperation with some of Mongolia‘s biggest oil importers and the

government.

Rosneft, the main supplier of fuel products to Mongolia, signed two five-year term contracts for oil

product supplies with leading importers of Mongolia—Magnai Trade LLC and Shunkhlai LLC. Rosneft

will receive a guaranteed distribution channel and will increase its market share in Mongolia.

Agreements will be signed in the near future.

Source: Reuters

ERDENE REPORTS ON DRILLING AT ALTAN NAR

Erdene Resource Development Corp. on 22 May gave an update on its 2014 exploration activities at

the Altan Nar gold-polymetallic project in southwest Mongolia.

Highlights were the discovery of multiple gold-silver-base metal zones intersected in drilling at the

Union exploration area. Erdene completed 11 drill holes over 4 high-priority targets. Results are

pending for 8 holes. Geophysical surveys identified intense chargeability anomalies below main

target zones. Exploration to date at Altan Nar has defined 12 target zones over an 8.4 square

kilometer area.

"These early results are very encouraging, particularly given that Union North represents only the

second target where multiple drill holes have been completed." said Peter Akerley, Erdene's

president and chief executive officer. "Altan Nar remains in the early stages of discovery with

multiple, highly prospective targets requiring detailed exploration and drilling. We believe these

results, coupled with our surface exploration results, continue to support the potential for

discovering and developing near-surface, gold-polymetallic deposits suitable for open-pit mining."

Source: Erdene Resource Development Corp.

ROSNEFT CHIEF SIGNS OIL EXPLORATION CONTRACT FOR MONGOLIA

Rosneft chief executive Igor Sechin has signed a contract for oil and gas exploration in Mongolia.

Sechin signed the contract along with a five-year contract to export 1 million tons of oil to

Mongolia, beginning 1 June.

Source: Zuunii Medee

SOUTHGOBI ANNOUNCES $10MN SHAREHOLDER LOAN FACILITY WITH TURQUOISE HILL

SouthGobi Resources Ltd. on 25 May announced that its majority shareholder, Turquoise Hill

Resources Ltd., would provide a USD 10 million revolving credit facility to meet short-term working

capital requirements.

Advances made under the facility will be used by SouthGobi to fund operations and meet its ongoing

obligations and future contractual commitments. As Turquoise Hill owns approximately 56 percent

of the company's outstanding common shares, its agreement to provide the facility is a related

party transaction under applicable Canadian securities laws. The facility is exempt from the formal

valuation and minority approval provisions of such laws. The credit facility is set to mature on

August 30, 2014.

As of 23 May, SouthGobi had cash of USD 2.8 million following the payment of approximately USD

7.9 million of interest to China Investment Corporation (CIC) under its USD 250 million convertible

debenture. The shareholder loan facility has been structured as permitted debt in compliance with

the provisions of the CIC convertible debenture requirements.

Notwithstanding the provision of the USD 10 million shareholder loan facility, SouthGobi continues

to experience negative impacts on its margins and liquidity and there can be no assurance that

SouthGobi will have sufficient funding for the balance of 2014 to be able to continue as a going

concern, as more fully detailed in its management's discussion and analysis for the quarter ended

March 31, 2014.

Source: Energy Business Review

MGG ACQUIRES CENTRALLY LOCATED RETAIL CENTER

Real-estate, investment and development company Mongolia Growth Group Ltd. (MGG) announced

the acquisition of a centrally located retail center along with an adjoining development site in two

separate transactions.

The total cost of the two transactions is approximately CAD 8.3 million (USD 7.7 million) consisting

of approximately CAD 5.95 million in cash and the transfer of MGG‘s two largest ―held for sale‖

assets along with one of its development sites. It is expected that this transaction will be accretive

to cash flow beginning in early 2015, as the three assets transferred in this transaction produced

negligible operating income over the past year. MGG is currently finalizing plans to modernize and

expand the recently acquired building structure and development site into a bustling retail shopping

center. MGG has partially financed the cash portion of the acquisition through a 5-year, USD 3

million dollar lending facility with one of the leading banks in Mongolia. To date, CAD 1.3 has been

drawn on this facility. It is anticipated that borrowings under the lending facility will be repaid

through the continuation of planned asset sales.

―From a strategic and operational standpoint, it is substantially easier to manage one larger asset,

compared to three smaller ones,‖ said Paul Byrne, chief executive officer of MGG. ―This transaction

continues our process of disposing of smaller and marginal assets while we upgrade our portfolio

into high quality assets in prime locations. In the case of this asset, we have the potential to

achieve accretive cash flows while we await the full blue-sky development potential of the site.

It is anticipated that the redevelopment of this location will begin during the second half of 2014.

Source: Mongolia Growth Group Ltd.

'LITTLE TT' VOWS FOR MNT 40BN IN DIVIDENDS DESPITE FINANCIAL CHALLENGES

Tavan Tolgoi JSC—or ‗Little TT‘ as locals call it to differentiate the company from the state-owned

neighboring miner—plans to distribute MNT 40 billion in dividends to shareholders this year, said the

companies chief executive.

―Although we currently have shares down at MNT 766 [each], owned by 28 thousand people, we

plan to spend MNT 40 billion on dividends,‖ said Chief Executive Officer R. Seddorj.

Seddorj said the company had managed to maintain positive revenue, despite technical challenges

and the soft coal market. Little TT exported 300,000 tons of coal, but could have delivered more if

not for bottlenecks at the Gashuun Sukhait border point. The construction of a railway line would

increase the capacity to 30 million tons, said Seddorj. Weak pricing for coal is also having dramatic

impact.

―We worked hard on getting MNT 37.5 per ton, but due to demand from Chinese partners we have

to decrease this price.‖

This year's dividends compare with MNT 131,000 in 2011.

Source: Zuunii Medee

KINCORA COPPER KICKS OFF DRILLING AT BRONZE FOX

Kincora Copper Ltd. has kicked off drilling activities at high-priority copper porphyry targets at its

Bronze Fox asset in Mongolia.

Drilling activities will focus on areas of known mineralization that remain largely untested, with

subsequent induced polarization, alternation and fertility analysis guiding the company to areas of

potential high grade mineralization. Trenching activities have also commenced at the Happy Geo

prospect following promising recent surface sample results and corresponding integrated

geophysical analysis.

Previous exploration work has identified outcropping gold veins (from rock chip grab and soil grid

sampling), cutting a folded and faulted Upper Carboniferous classic sequence, and this region is to

the south of a large fault that separates the more advanced copper porphyry targets to the north,

the company said.

―The primary focus remains large-scale copper porphyry targets that have been actively advanced

in the last 18 months since we last drilled at Bronze Fox, where we previously returned very

promising results,‖ declared Sam Spring, president and chief executive officer of Kincora.

The company also revealed that it has appointed Henry Tebar as principal geologist and a number of

other highly qualified local geologists to its existing team. Tebar is familiar with Bronze Fox via his

previous role as president and chief geologist of the Trafigura Origo joint venture in Mongolia, has

extensive knowledge of various regional opportunities and has an existing working relationship with

Kincora‘s director of exploration, Yawen Cao.

Meanwhile, Eric Zurrin, a former director of UBS Investment Bank‘s EMRA metals and mining team,

has joined the board of Kincora. He is currently a director of Mongolia-based merchant bank

Resource Investment Capital, and has extensive experience of capital sourcing through partner

distribution networks in the international markets as well as being well-versed in the Mongolian

investment scene.

At the same time, Stephen Fabian and David Cowan have stepped down from the board.

Lastly, the company confirmed it has completed the previously announced placing of USD 7.74

million units of Kincora with Khayam Minerals at a price of CAD 0.05 a unit, to raise CAD 387,000.

Source: Proactive Investors

DEVELOPMENT BANK PROFITS CONTINUE TO GROW

The Development Bank of Mongolia earned MNT 20.8 billion in profits before taxes profit in the first

four months of this year, reported the Ministry of Economic Development.

This year's profits compares with a MNT 700 million loss in 2011, and a MNT 4.9 billion loss in 2012.

The bank first became profitable last year, reporting earnings of MNT 35.2 billion. Liquid capital is

also up 98.1 percent from three years ago, currently standing at MNT 4.51 trillion. Total debt held

by the bank stands at MNT 2.5 trillion.

The bank is currently preparing its financing of projects to build up industry in Mongolia utilizing

proceeds from the 2012 Chinggis bond and 2013 Samurai bond.

Source: Undesnii Shuudan

MONGOLIA‟S HUNNU AIR E-TICKETS ASIAN ROUTES WITH ABACUS

Hunnu Air has hired an e-ticketing service provider to help bring in more passengers for its flights.

Mongolia‘s second largest airline has hired Abacus for its e-ticketing services to streamline business

and leisure bookings to build volumes from Hong Kong and Bangkok, as well as attracting new traffic

onto its Hailar and Inner Mongolian routes. Seasonal services to the fast-moving feeder markets of

Shanghai in June, Haneda (Tokyo) and Sanya (Hainan) this winter will also be made more accessible

with Abacus distributing the content to travel agents at over 20,000 locations in the region. Hunnu

Air also intends to use Abacus to promote charter flights from South Korea‘s popular Jeju into

Ulaanbaatar soon.

―We are working with the region‘s technology leader Abacus to make it easier to arrange travel to

Mongolia from Asia‘s main Hong Kong, Thai, Malaysian and Taiwanese feeder markets, as well as at

home with our domestic network,‖ said Margad Byambajav, vice president and chief

communications officer for Hunnu Air. ―We aim to encourage more corporate bookings and improve

access to the country‘s many unique tourism experiences, leveraging our nomadic cultural heritage,

especially through the summer peak with the July Naadam festival.‖

Hunnu Air is investing in a new Airbus A330-200 in anticipation of the increased demand, enhancing

its A319 fleet.

Source: Asia Travel Trips

MONGOLIA TO OPEN NEW AIR ROUTES THIS SUMMER

Mongolia made multiple deals this week to boost air traffic through Mongolia in the hopes of

stimulating activity in tourism.

A regular direct air route connecting Taiwan and Hohhot, capital of north China's Inner Mongolia

Autonomous Region, opened on Wednesday, said Dennis Tsai, deputy chief representative on the

Chinese mainland of the Taiwan airline. The 3.5 hour direct flight is the first between Taiwan and

Inner Mongolia, he said. The service will increase to twice per week in early August.

Mongolia will also see the relaunch of air service to Kazakhstan, Kazakhstan's Transport and

Communications Ministry said on 28 May. Kazakhstan's Air Astana airlines plans to open flights from

Astana to Ulaanbaatar soon and the Bek Air airlines is expected to open regular flights on the

Astana-Bayan Ulgi route this summer. The deputy chairman of Kazakhstan's Civil Aviation

Committee, Talgat Lastaev, said that a memorandum of understanding had been signed between

the two countries' aviation authorities contributed to the opening of the new flights. A

memorandum of understanding for the route was signed during the sixth meeting of the Kazakhstan-

Mongolia intergovernmental commission on trade, economic, scientific, technical and cultural

cooperation, he said.

"We have repeatedly discussed this issue with our colleagues. We initialed the text of the

memorandum in early April and now we have signed it. It is pleasant that this initiative was

supported by the Kazakh carriers and now the air service will simultaneously be created with

several Mongolian cities," Lastaev said.

Also this week, Latvia offered that Mongolia use Riga as an intermediate point for flights to Europe

during a meeting between Latvian Transport Minister Anrijs Matiss' and Minister of Transport

Amarjargal Gansukh at the International Transport Forum in Leipzig.

Source: Global Post, Trend.az, Baltic-Course.com

TRUST OPENS MEAT SORTING PLANT

Trust Trade LLC launched its meat sorting arm, Trust Med, on 16 May.

The new plant that opened last Friday grants Trust the capability to sort 10 to 15 tons of meat a

day and cold storage of 1,000 tons of meat products. Trust is using equipment from South Korea's

Jina Engineering Co., Ltd. South Korea has conferred to Trust a certificate for meeting HACCP food-

quality standards.

The company received MNT 2.5 billion from the government as part of the state's Price Stabilization

Program to open the plant. The government launched the program last year to expand and launch

industry in Mongolia to ease dependence on foreign imports for construction materials and food

staples.

Source: Unuudur

EZNIS CLOSES BECAUSE OF TOUGH MARKET CONDITIONS, SAYS NEWCOM REP

Eznis was forced to lay off staff and suspend operations last week because of challenges posed by

the small size of the Mongolian market and difficult external economic conditions, said a

spokesperson for the airline's parent company, Newcom Group.

―This market is small and competition is harsh,‖ said E. Zorigt, director of state public

communications for Newcom Group. ―Mongolia has a small population and buys the most expensive

airplane fuel in the world. Fuel importing, transporting and storing difficulty increased the price.‖

Eznis Airways laid off 225 employees last week when it announced the immediate suspension of

operations, citing financial difficulties brought on by tough market conditions. Zorigt said Eznis

received support from Newcom's founder despite the fact that the company had operated at a loss

for the past three years. The company was under financial stress because of the costs associated

with bringing in a new plane and for the training of staff.

Zorgit said Newcom would refund 1,800 plane tickets that had been purchased before the

announcement.

Source: Udriin Sonin

MONGOLIA ACCUSES CHINA'S NPI OF TAX EVASION

Chinese oil firm NPI is being accused by the government of evading value-added tax (VAT) in 2011.

NPI paid China-listed companies DQE and BGP companies to employ seismic work in 2011, but failed

to pay corresponding VAT to the government for these services. Sansriin Geology Khaiguul also

failed to pay tax on a MNT 2.4 billion payment to Sinopyek in 2011. NPI and Sansriin are suing the

government in response to the allegations.

Source: Unuudur

KHAN BANK AWARDED “MOST ACTIVE ISSUING BANK” FOR EBRD FINANCING PROGRAM

European Bank for Reconstruction and Development (EBRD) has again awarded Khan Bank LLC as

―Most Active Issuing Bank‖ for its Trade Facilitation Program (TFP) for the fourth time.

TFP held its yearly award ceremony at the EBRD‘s annual meeting on 16 May in Warsaw, Poland to

honor outperforming banks from 107 banks from 23 countries. The winners were announced based

on the number of guarantee transactions. EBRD named Khan Bank as ―Most Active Bank‖ under the

TFP in 2009, 2011, 2012 and 2013.

Khan Bank joined TFP in 2007 to provide its clients with support increase their access to import and

export trade. Since joining the TFP, Khan Bank increased its market share in trade finance business

to 23 percent. Through the program, EBRD provides guarantees to international confirming banks,

taking the political and commercial payment risk of international trade transactions undertaken by

Khan Bank.

Source: Khan Bank LLC

CABINET EXTENDS COOPERATION PACT WITH KONRAD ADENAUER FOUNDATION

The Cabinet Secretariat will extend its cooperation with the Konrad Adenauer Foundation (KAF).

Representatives of the government and the foundation signaled their intention to continue their

collaboration by signing a memorandum on Tuesday. Kh.Oyuntsetseg, a head bureaucrat for the

Cabinet Secretariat and Wolfgang Maier, deputy head of the foundation for its Europe office, signed

the memorandum.

Mongolia has partnered with KAF since 2003 to direct the development of Mongolia‘s Parliament,

democracy and economic growth. The Cabinet first established its pact with KAF in 2007.

Source: Montsame

MONGOLIA LOOKS TO EXPAND BUSINESS RELATIONS WITH TAIWAN AT INVESTMENT SUMMIT

Investors learned about synergies and investment opportunities for Mongolia and Taiwan at the 13th

Mongolia-Taiwan Trade and Economic Meeting in Ulaanbaatar on 22 May.

Peter W.J. Huang, president and chief executive of Taiwan External Trade and Development

Council, was among speakers at the summit to discuss investment opportunities between Mongolia

and Taiwan. A closer partnership would see Mongolia benefit from Taiwan‘s advanced technologies

while Mongolia can provide access to its rich mineral resources, he said. Javkhlanbaatar, the

director of the Invest Mongolia Agency, gave a presentation on the investment environment in

Mongolia. Taiwanese business representatives in turn presented on Taiwan‘s management of

recycling organic waste.

Officials hope to increase trade between Mongolia and Taiwan with the introduction of direct flights

between Mongolia and Taiwan. Mongolia has also expressed interest in importing more products

from Taiwan and taking out low-interest loans from the Export-Import Bank of Taiwan.

Source: Mongolian Economy

ENERGY MONGOLIA-2014 HELD IN UB

The Energy Mongolia-2014 International Conference and Expo was held in Ulaanbaatar on 24 and 25

May.

This exhibition was used as a platform for investors to discuss environmentally friendly technology

to boost the country‘s world energy competitiveness index, which currently stands at a score of

36.77, or 107th out of 146 countries, according to KPMG. Mongolia authorities presented on the

energy sector and discussed energy policy. Topics included competitiveness, tariff policy,

renewable energy resources, and efficient energy technology. The Mongolian government‘s aim is to

reduce the air pollution that plagues the capital with the introduction of environmentally friendly

energy generation capabilities. The government is researching possibilities for 8 power plants to

utilize hydro, solar, or wind energy. Currently 36 percent of a total of 794,000 Mongolian families

have access to the central energy grid, with 102,000 semi-nomadic families relying on solar energy.

Source: Mongolian Economy

ECONOMY

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

The Bank of Mongolia on 29 May reported that it received an equivalent of USD 53 million from swap

agreements with commercial banks.

The central bank reported on 29 May the issue of one-week bills worth MNT 127.4 billion at a

weighted interest of 10.5 percent a year.

The central bank reported on 28 May MNT 73 billion in bids for the issue of 12-week treasury bills

with a face value of MNT 30 billion. Each unit was sold at a discounted price with a weighted

average yield of 9.15 percent.

Source: Bank of Mongolia

MOODY‟S DOWNGRADES MONGOLIA‟S GOVERNMENT BOND OUTLOOK TO NEGATIVE

Global credit rater Moody‘s Investors Service on 26 May reported that it had lowered its outlook on

Mongolia‘s government bond rating to negative from stable.

Moody‘s has affirmed the government‘s issuer and bond B1 ratings and its short-term ―Not Prime‖

issuer rating. In a related rating action, Moody‘s changed the outlook on the rating of the

government-owned Development Bank of Mongolia LLC to negative from stable and affirmed the

bank‘s senior unsecured B1 rating. Since the Development Bank‘s payment obligations carry a credit

guarantee of the government of Mongolia, its debt obligations justify a rating at the same level as

the government, Moody‘s said.

Mongolia‘s long-term local currency country risk ceiling is affirmed at Ba3, while the long-term

foreign currency bond and bank deposit ceilings are affirmed at Ba3 and B2, respectively. The

foreign currency short-term debt and deposit ceilings are affirmed at Not Prime. These ceilings act

as a cap on ratings that can be assigned to the foreign and local currency obligations of entities

domiciled in the country.

A rating committee from Moody‘s met to discuss the rating for Mongolia on 21 May. Those involved

noted that Mongolia‘s financial strength had weakened and was more susceptible to risk.

Source: UB Post

GOVERNMENT FUNDS DEVELOPMENT OF CEMENT PLANTS

Government will finance three cement plants as it continues to fund projects to build up Mongolia's

industrial capacities, government spokesperson Ts. Munkhtur told the Cabinet Secretariat on 26

May.

Government will provide financing for a one-million ton cement plant to Mongolyn Alt Corp.'s Khukh

Tsaviin cement plant, Monpoliment Group's one-million ton Moncement plant, and Erchim LLC's 300

thousand-ton Cement Plant.

Source: Udriin Sonin

TOURISM NUMBERS ARE SLIPPING ANNUALLY, SAYS TOURISM UNION OFFICIAL

Mongolia is allowing the potential for profitable tourism business to slip between its fingers, said a

tourism union official.

Ch. Buyanbadrakh, director of the International Union Center, disputes claims by government that

tourism is growing in Mongolia as the industry has expanded from nature sightseeing to activities

such as mountain climbing, motorbike trips and horse riding—with attempts by the government even

attempting to draw in tourists during winter. She said the chief failing comes from government.

―The tourism sector needs a compact and active independent ministry,‖ she said.

Buyanbadrakh said businesses and attractions in the city should run past midnight and more effort

was needed to attract tourists traveling between Russia and China. In addition to building up the

skills of Mongolia's tour guides, tourist attractions needs to be improved and targeted toward

specific types of tourists. ―We also need to develop nomadic-culture centered tourism. Language

skill and other qualities are important for guides.‖

She said that while most tourists coming to Mongolia are from Europe, the number of Asian tourists

was on the decline.

Source: Undesnii Shuudan

MONGOLIA SEES $1BN OF INVESTMENTS UNLOCKED FROM DOUBLING AREA FOR MINES

Mongolia is seeking to expand its area available to mining to a fifth of the country, and by the close

of the decade to end its dependence on foreign oil, according to a senior government official.

The outlook hangs on the passage of laws governing mining and energy, Vice Minister for Mining

Erdenebulgan Oyun said last week in an interview. Both could be signed off by Parliament within a

month, he said. The mining plans alone could unlock USD 1 billion in developments this year, easing

pressure on Mongolia‘s mineral-dependent economy. Replacing Mongolia‘s 1991 Petroleum Law

would expand investment opportunities.

―The law is outdated and many industries are unregulated,‖ said Erdenebulgan. The new law is

based on the ―best international petroleum laws from different countries.‖

Erdenebulgan said the mining law amendments would increase Mongolia‘s area available to mining

and exploration to 20 percent from around 8 percent, by lifting a 2010 ban on new licenses. The

period of exploration would also increase from 9 years to 12 years. Extending the term to 12 years

―would be an improvement and potentially a competitive advantage to attract investors back to

Mongolia,‖ said Sam Spring, president of Kincora Copper Ltd.

Mongolia‘s shale oil belt, meanwhile, drew Newark-based Genie Energy Ltd. (GNE) into signing a

contract in 2013 to explore for deposits in central Mongolia. After five years, the deal can be

converted to a production sharing contract, which would give the government a share of any

projects, said Erdenebulgan. The U.S. Energy Information Administration estimates Mongolia‘s

technically recoverable shale oil resources at 3.4 billion barrels, of a total in the ground of about 85

billion barrels, according to a June 2013 report.

China Petroleum, known as Sinopec, signed an agreement in October to develop coal gasification

plants in Mongolia. Erdenebulgan said that, while most of that gas would be exported to China,

some would be used to help heat homes in the capital, where temperatures in winter plummet to

minus 30 degrees Celsius.

―Russia is a big exporter of gas products to China,‖ said Erdenebulgan. ―We also want to penetrate

the Chinese market.‖

Source: Bloomberg

PRICES FOR NEW APARTMENTS GREW 30% IN A YEAR

The price for a new apartment has risen by 30 percent per square meter, according to data from

the Bank of Mongolia. Real-estate firm Tenkhleg Zuuch reported to the central bank that the price

for a new apartment was averaging at MNT 1.8 million a square meter in January 2013 compared

with MNT 2.2 million in March 2014.

The Bank of Mongolia has begun cooperating with real estate companies to take over a

responsibility that used to be handled by the National Statistical Office to compile a quarterly

housing price index. The central bank has begun producing its own monthly index.

Source: Undesnii Shuudan

MONGOLIA ALREADY ABOVE DEBT LIMIT, SAYS FINANCE MINISTRY OFFICIAL

Mongolia's debt has already crept above its debt limit as the Finance Ministry submits to Parliament

a new bill that would allow for another MNT 2 trillion in borrowing, said a Finance Ministry official.

The new debt management bill submitted to Parliament would raise the debt limit to 70 percent of

gross domestic product (GDP) and change the way debt was calculated by government said B.

Nyamaa, director of debt management for the Ministry of Finance. As of 30 April the debt-to-GDP

ratio was 43 percent. The government has until the end of the year to reduce that ratio, as the

Budget Sustainability Law currently prohibits government debt from exceeding 40 percent of GDP

this year. Last year debt was capped at 50 percent of GDP.

Total debt includes lending by the government as well as loans taken out by state-owned companies

and government guarantees.

Source: Undesnii Shuudan

PARLIAMENT FRETS OVER BORROWING FOR REDEVELOPMENT OF UB'S GER DISTRICTS

Members of Parliament have criticized government officials for borrowing hundreds of millions of

dollars for the redevelopment of the so-called ger districts in Ulaanbaatar.

Parliament Member L. Enkh-Amgalan on 24 May criticized Ulaanbaatar Mayor Erdene Bat-Uul in

Parliament due to the excessive borrowing for redevelopment of the ger districts and the likelihood

that this borrowing will bring Mongolia above the 40 percent government debt-to-GDP ratio

mandated by law. Mongolia is borrowing money from international financial groups to help pay for

basic infrastructure and for mortgages to lend to families so they can buy new homes.

―It's questionable whether it's possible to provide housing to the number of households living in the

ger districts,‖ Enkhbold said to Bat-Uul in Parliament about a USD 224 million loan from the Asian

Development Bank. ―What about infrastructure expenses to be provided? Will those expenses be

covered by this loan? Can the debt amount be kept under 40 percent of GDP?‖

Mongolia will borrow from the Asian Development Bank for its initiative to relocate ger dwellers in

Ulaanbaatar to apartments. Relocating families will be done in areas with the highest concentration

of air pollution, said Ulaanbaatar Mayor Erdene Bat-Uul, such as the Bayankhoshuu and Selbe

Districts. Families will receive mortgages of between MNT 8 and 21 million while small businesses

will receive loans of between MNT 500,000 and MNT 14 million for the relocation. Meanwhile, Invest

Mongolia Agency Director S. Javkhlanbaatar is leading a working group negotiating for a EUR 50

million loan with the European Investment Bank in Luxembourg. The loans would pay for the

installation of sewage and heating systems, and provide micro loans to local groups so that they

might take part in the redevelopment process.

―Parliament members have expressed their concern that loan negotiations have two sides,‖ said

Bat-Uul. ―From the point of protecting the health of the people, it is good. From the point of the

Law on Fiscal Stability, it is against the law. After discussion the majority of Parliament approved

this project.‖

Source: Montsame

CHINA‟S GLOBAL SEARCH FOR ENERGY

Whether by diplomacy, investment or in extreme cases, force, China—Mongolia‘s top trade

partner—is going to great lengths to satisfy its growing hunger for energy to fuel its expanding car

fleet and electrify its swelling cities.

The Chinese government showed that desire on Wednesday when it reached a 30-year natural gas

deal with Russia, even as China was locked in a tense standoff with Vietnam over a Chinese oil rig

drilling in the contested South China Sea. Both developments demonstrate China‘s expansive

approach to energy, a political and economic strategy with significant implications for the rest of

the world. As its economy has rapidly expanded over the last decade, China‘s energy efforts have

come to dominate the global markets.

―The dynamic growth of China‘s economy and energy growth is reshaping global energy markets,

and both the economic and strategic implications are still being developed,‖ said Mark Finley, BP‘s

general manager for global energy markets and United States economics.

The shift has been swift. China used only half as much energy as the United States in 2000. Nine

years later, it surpassed the United States as the world‘s biggest energy user and last year it

leapfrogged the United States as the No. 1 oil importer. China now burns as much coal as the rest of

the world combined. The country‘s emissions of greenhouse gases, linked by scientists to global

warming, surged past the United States‘ emissions a decade ago and have risen ever higher since

then.

China has little choice but to look beyond its borders for its energy needs. While it consumed 10.1

million barrels of oil a day last year—one-ninth of the world‘s total—the country produced only 4.2

million barrels a day, according to a recent OPEC report. China has had mixed results drilling

offshore, and it has been slow to develop what many energy experts believe to be vast shale gas

resources on land, though Chinese energy executives express optimism.

Source: New York Times

GOLD OUTLOOK DIM, SAYS CREDIT SUISSE INVESTOR POLL

Gold has the worst prospects among commodities over the next 12 months and crude oil has the

best, according to an investor poll by Credit Suisse Group AG.

Seventy-one percent of respondents said gold has the worst outlook, and 16 percent said copper

will be the biggest loser, the bank said in a 22 May emailed report. Forty-nine percent expect crude

oil to be the best performer, according to a survey of about 160 participants conducted this week.

―Gold still absolutely dominates in terms of the vast majority of commodity specialists hating it,‖

Kamal Naqvi, global head of metals trading, said. ―There was a great increase in the belief,

particularly among hedge fund specialists and physical traders, that oil looked vulnerable to an

upside move, particularly over this summer in the peak season for demand and given the various

geopolitical risks.‖

Gold dropped 28 percent last year, the first annual decline since 2000 and the biggest drop since

1981, as the U.S. Federal Reserve indicated it would start cutting its stimulus program and some

investors lost faith in the metal as a store of value.

Investors were negative on iron ore, Naqvi said, adding that the bank expects it ―to continue to

grind lower on supply growth and concerns about the Chinese housing market.‖

Source: Mine Web

CHINA WELCOMES FOREIGN INVESTORS

China's top economic planner said Thursday that foreign investors can participate in a batch of

infrastructure projects that have been opened to private investment. China is enlisting the help of

private firms in a similar way and in similar areas to Mongolia.

The National Development and Reform Commission, China's top economic planning agency, on

Wednesday listed 80 projects covering railways, gas pipelines, telecommunications and clean

energy as part of Beijing's plan to let private capital in sectors of the economy that have long been

dominated by state companies. The list includes projects that address some of China's most urgent

strategic needs, including a facility to import liquefied natural gas and the construction of

advanced telecom networks.

The National Development and Reform Commission said Wednesday that private investors are

encouraged to participate as financial partners and play a role in the construction and operation of

projects on the list. It said private interests could take full or partial stakes and that these projects

could be open to public tenders. At the time it didn't specifically state that foreign investors could

participate.

Source: Wall Street Journal

MONGOLIA'S ECONOMY HAS A HARD LANDING - EDITORIAL

Parliament issued a resolution on 8 May for an action plan that includes measures to reinvigorate

the economy in 100 days. Authorities tend to like the phrase ―providing support to businesses.‖

Nevertheless, they usually do the opposite by increasing public expenditures and strangling market

competition.

Economic programs from our government usually include enterprises and business activities, but

they do not set out exactly who will do what. For this reason, new state-owned companies are

established. For example, what does the government mean when they say that they will create

equipment and machinery leasing in order to boost domestic production? Leasing services are

currently provided by large commercial banks. Leases would have to be cheaper than bank loans.

But that would weaken the tugrug and increase the price of equipment being imported from

abroad.

Or, are they going to establish a state-owned company? Who will set up the national insurance

corporation? Government? And the government‘s promise to develop a program to establish

ownership in large state-owned companies means nothing but confirming that public property has

no particular owner—thus, no oversight. The 100-day action plan also includes spending to promote

our tourism industry. Hopefully, the plan includes more specific actions, such as improving tourism

services and setting standards and requirements for tourist camps, hotels, and transportation.

It is time for us to carefully develop a long-term policy based on the principles of the free market in

order to keep us up in the air and prevent more hard landings.

Dambadarjaa “Defacto” Jargalsaikhan is an independent media representative of Mongolia. He is a

host of Interview DeFacto on NTV Mongolia and a host of Radio program Defacto.

Source: UB Post

WILL MONGOLIA DEFAULT? - EDITORIAL

In November 2012, Mongolia issued USD 1.5 billion of 5 and 10-year sovereign debt—cutely called

―Chinggis bonds‖ after the 13th century Mongol conqueror Genghis Khan. These were happily

snapped up by yield-hungry investors as Mongolia continued to post one of the world‘s fastest gross

domestic product (GDP) growth rates. The government, in theory, should have used this money to

invest in commercially-viable infrastructure to provide power, transport and logistical

infrastructure to support the country‘s continued growth. But with a substantial portion of this debt

maturing within the next three years, concerns have been mounting about the government‘s ability

to repay.

While some of the USD 1.5 billion bond was used to build useful social infrastructure within the

capital, Ulaanbaatar—including new roads and schools—an equally significant portion was spent on

pork-barrel and pump-priming programs. Moreover, the government has little to show in terms of

commercially viable investments that generate returns.

There are effectively three options for repayment. The first is that Oyu Tolgoi, a project which

alone is expected to account for more than 30 percent of GDP once it reaches full production,

finally gets underway. Another option would be to draw on Chinese funding. The Chinese

government recently doubled the size of its currency swap with the Mongolian central bank to CNY

20 billion, as a measure to help instill confidence in the currency and shore up foreign exchange

reserves. Nevertheless, Mongolia is unlikely to veer towards full dependency on Beijing for

sustenance.

A third option would be to draw on other sources of funding and development aid, including from

the World Bank, the Asian Development Bank, Korea Exim Bank, Japan International Cooperation

Agency (JICA), and the Japan Bank for International Cooperation (JBIC). However, new grants may

come with certain conditions and caveats attached that could prove tricky to enforce in Mongolia‘s

shaky political system, while new lending facilities may be deemed unfeasible if the debt ceiling is

not extended.

There is still time for Mongolia to bring its fiscal house in order, but the clock is ticking.

Gavin Bowring is a research director at Asean Confidential, a research company owned by the

Financial Times.

Source: Financial Times

POLITICS

MINERALS LAW AMENDMENTS TO TAKE CENTER STAGE

The proposed amendments to Mongolia's Minerals Law is expected to take center stage in

Parliament during this spring session of Parliament.

The Minerals Law to be discussed on 30 May is expected to supersede the attention given to

amendments for the 2013 budget amendments or the Prime Minister Norov Altankhuyag's 100-day

economic stimulus plan. Part of the reason is because it will include the promised resolution to the

106 licenses that were canceled by government.

During the 2014 PDAC organized in Toronto, Minister of Mining Davaajav Gankhuyag admitted that

policymakers‘ decisions had affected foreign investment and he promised that the government

would not repeat its mistakes. The Minerals Law and revisions to the so-called ―Long Name Law‖

would be discussed during this spring session, he said, which would resolve many of the issues in the

mining sector. The amendment to the Minerals Law would retain its original intent, he said, while

setting new provisions for better regulation. Topics to be addressed include ―strategic deposits,‖

responsible mining, special licensing and its fees, and relations between local governments and

miners, he said.

―We believe the amendments to the Minerals Law, if approved on Friday, May 30, will relieve major

uncertainty for foreign investors and give further upside potential to all junior mining companies

which operate in Mongolia,‖ said the Source. It adds, ―Lifting the ban on the issuance of exploration

licenses will likely reward those who have been committed to Mongolia.‖

Source: Mongolian Investment Banking Group

FRC APPROVES REGULATIONS FOR MUTUAL FUNDS

The Financial Regulatory Commission on 21 May approved new licensing procedures for mutual

investment funds. The new regulations will enable foreign and local companies to attract investors

to their funds and provide them with tax exemptions.

Source: Business-Mongolia.com

MINING MINISTER SUBMITS REWORDED PETROLEUM BILL

Minister Davaajav Gankhuyag on 23 May submitted to Parliament a revised oil bill after Parliament

struck down the first draft earlier this month.

Drafters have insisted that the current law regulating the petroleum industry must be altered to

make clear the duties and rights of the state and local governments. Revision is also needed for the

rates of royalties, taxes, and licensing fees, he said.

Source: Montsame

RUSSIA MULLS MONGOLIA'S ACCESSION TO CU FREE TRADE ZONE

Moscow and Ulaanbaatar have been considering a free trade zone with the participation of Mongolia

and the Customs Union (CU), Russian Minister of Economic Development Alexei Ulyukayev said

Friday.

"Alexei Ulyukayev and his Mongolian counterpart Nyamjav Batbayar held a meeting where they have

discussed prospective bilateral projects," Russian ministry's press said.

Among the projects, the ministers singled out the building of a modern railway infrastructure,

energy facilities, electricity grids and oil pipelines for Mongolian domestic needs and transit to

China.

According to Ulyukayev, the two countries look forward to switching to mutual accounting in their

national currencies and eventually, Mongolia's joining the CU free trade zone.

The CU currently comprises Russia, Kazakhstan and Belarus, while Armenia and Kyrgyzstan are

waiting to join the economic alliance.

Source: Xinhua

PREMIER MEETS RUSSIAN RAILWAYS PRESIDENT YAKUNIN

Prime Minister Norov Altankhuyag held a meeting with President of Russian Railways V. I. Yakunin in

Saint Petersburg.

Altankhuyag said he was pleased to share views on joint actions to be taken for improving the

efficiency of Ulaanbaatar Railways and stimulating mutually beneficial cooperation.

―Our nations have long friendly bonds. Today the global community is facing economic difficulties. I

am convinced that the present forum would play an important role in tackling our problems,‖

Yakunin said and added, ―Financial restraint is around the world now. I believe the St. Petersburg

International Economic Forum, which is being held in Russia, will play an important role to alleviate

this situation.‖

Source: UB Post

U.S. CONGRESSMEN PRESENT AWARDS TO MONGOLIAN SOLDIERS

Two members of the U.S. House of Representatives made an official visit to Ulaanbaatar last week.

The delegation discussed with senior Mongolian government officials what Democrat Massachusetts

Representative Stephen Lynch, a member of the House Committee on Oversight and Government

Reform, described as ―the strategic partnership between the U.S. and Mongolia, including

supporting greater bilateral trade and economic reforms, and further strengthening the U.S.-

Mongolian defense relationship.‖ Lynch was joined by Republican Ohio Representative Steve Chabo,

and with U.S. Ambassador Piper Campbell and Mongolian defense officials on 17 May presented U.S.

military decorations to Mongolian officers and soldiers. The awards recognized the Mongolian

soldiers‘ distinguished service when their units were deployed with NATO forces in Afghanistan.

A total of 4,000 Mongolian military personnel served in ―Operation Enduring Freedom‖ in

Afghanistan alongside U.S. forces. Two of the officers received the Legion of Merit, one of the

highest U.S. military decorations. Chabot and Lynch also met with other veterans who served in

Afghanistan.

The delegation, which also visited China and Ukraine, arrived about a month after Defense

Secretary Chuck Hagel‘s visit. As a member of the House Oversight Committee, Lynch also had

meetings to assess the progress of ongoing security upgrades and construction at the U.S. Embassy

in Ulaanbaatar.

Source: NAMBC

MONGOLIAN AGENCY REPS VISIT ELKO

Mongolians visited Elko, Nevada in the United States last week for ideas for social programs.

―They are trying to see how America does different family services,‖ said professional translator

Ellen Batjargal. ―They want to adapt what works in Mongolia, rather than adapt from one country.‖

The new social welfare agency in Mongolia sent representatives to Ruby Mountain Resource Center

and Meals on Wheels on Wednesday. The trip took place in collaboration with the University of

Nevada School of Medicine.

The General Authority of Social Welfare Service Government Implementing Agency was recently

formed in Mongolia, having once been part of the labor agency, Batjargal said. In Elko, the

department representatives learned about how Americans work with the elderly and the disabled.

Agency representatives were able to ask questions about the welfare system. For example, one

woman asked why a certain man and woman with disabilities would lose their government benefits

if they were married. Other questions included what kind of government money the program

receives.

Source: Elko Daily Free Press

MINNESOTA MEDIA FAILS HOME STATE MAN IN MONGOLIA

It is a reasonable hope for citizens of any country that if they are working or traveling abroad and

get into trouble, they will get help from their home country. For American Justin Kapla, he was

able to engender a brief moment of support from his home state local Minnesota media three

months into his now 19-month exit ban from Mongolia, but then the local Minnesota media dropped

his story.

What seems to have been the key difference from the situation for Kapla's colleague Sarah

Armstrong, who returned home just months after she was denied exit from the country, is

Australian media cared to report her story. Coverage of her story began on 24 October 2012, in

Australia‘s Herald Sun—the nation‘s largest newspaper by circulation—among others and continued

apace regularly in Australian papers, radio and television. While Armstrong‘s Australian government

officials worked in-kind for her release, the constant stream of negative publicity for Mongolia from

the Australian press seems to have eventually been unwelcome enough that she was released from

her exit ban on Christmas Day 2012 while the investigation and case against SouthGobi continues

still today despite the judge‘s recent ruling.

The story was first picked up after journalist Jon Springer reported on it on the website Seeking

Alpha in January 2013. It was subsequently picked up by the Associated Press in Minnesota and then

both of the major local newspapers—the Minnesota Star Tribune and the St. Paul Pioneer Press—

reprinted the Associated Press story. Unfortunately for Kapla, this reporting from 16 months ago

was the first and last time his story was reported in Minnesota.

A year later in January 2014, a journalist in Minnesota said there were ―no plans‖ to write another

story about Kapla, despite the offices of Senator Franken, Senator Klobuchar and Congresswoman

Bachmann all going on the record in support of Kapla in December 2013.

Source: Forbes

“TRACK 1.5” U.S.-N. KOREA TALKS HELD IN MONGOLIA

A ―Track 1.5‖ meeting between North Korea and the United States reportedly started in Mongolia

on 21 May.

Attendees at the half-government, half-private sector talks were said to have included Ri Yong-ho,

North Korea‘s vice minister of foreign affairs, and various former U.S. State Department officials.

The Track 1.5 meeting would be the first in 8 months, with the last being held in Germany and the

United Kingdom last September. It suggests that Pyongyang has resolved its internal issues in the

wake of last December‘s execution of former second-in-command Jang Song-thaek and is now

working once again to resume dialogue with Washington and the 6-party talks on its nuclear

program.

After proposing senior-level talks in June 2013, North Korea suggested a number of negotiation

plans to Washington through the ―Track 1.5‖ meetings and China. The situation halted abruptly in

December, around the time of Jang‘s execution, and remained quiet until very recently.

―The fact that Ri Yong-ho is himself attending the meeting suggests that North Korea is strongly

committed to resuming dialogue,‖ said a diplomatic source in Washington on the condition of

anonymity.

It isn‘t yet clear what will come of Pyongyang‘s diplomatic push. In terms of relations with

Washington, the key issue is the response from the Barack Obama administration, which insists that

its basic policy approach on North Korea hasn‘t changed. But the presence of some in the

administration arguing that North Korea‘s nuclear capabilities have only increased amid

Washington‗s emphasis on sanctions could be a new variable, while conciliatory gestures from North

Korea could give hope to U.S. dialogue proponents. During its talks with North Korea, Japan is

expected to try for an agreement on reopening the investigation of abductions of its citizens. As a

tradeoff, Pyongyang has been asking for it to lift some of its sanctions, including restrictions on

visitor traffic. It also appears likely to ask for a resolution to issues surrounding the sale of the

General Association of Korean Residents (Chongryon) headquarters to a Japanese company at a

below-market price.

Source: The Hankyoreh

SEOUL URGES N. KOREA TO ABANDON NUCLEAR AMBITIONS

South Korea called on North Korea on 22 May to abandon its nuclear ambitions and hold dialogue

with the international community for the good of all parties concerned. The call comes as North

Korea has threatened to conduct its fourth nuclear test in anger over the United Nations'

condemnation of its ballistic missile launches in March.

"It will be good for all if North Korea abandons its plan for a nuke test and nuclear programs and

holds dialogue with the international community, including with us," Cho Tai-young, spokesman at

the foreign ministry, told a press briefing.

Cho made the remark when asked about the prospect of an upcoming meeting between North

Korean and U.S. officials in Mongolia. North Korea's chief nuclear envoy Ri Yong-ho is scheduled to

hold an informal meeting with former U.S. government officials on the sidelines of an academic

conference in Mongolia this week. Although U.S. government officials will not attend the

conference in Mongolia, experts said that such informal meetings have served as an opportunity to

exchange ideas about resuming the six-party talks aimed at ending the North's nuclear weapons

program.

The six-party talks, involving the two Koreas, the U.S., China, Russia and Japan, have been dormant

since late 2008. North Korea conducted nuclear tests in 2006, 2009 and 2013, drawing international

condemnation and U.N. sanctions.

Source: Yonhap News Agency

MISSING BUDDHIST DEITIES RECOVERED

The seven gilded Buddhist deities that went missing on Monday last week have reportedly been

found.

The Uvurkhangai Aimag Police Department confirmed that the deity statues were recovered but

refused to give further information as the case is still under investigation. The deities were stolen

from Erdene Zuu Monastery in Kharkhorin, Uvurkhangai on the evening of 18 May, along with other

valuable and historically important religious artifacts.

The seven gilded deities date back to the 18th century and are worth over MNT 70 million in total,

according to the latest report from the museum‘s curators. The gilded Duinhor deity weighs 22.8

kilograms, and its base is gilded as well. The Jugdernamjil deity is also gilded and weighs almost 1.6

kilograms.

―The theft must have been the result of thorough planning in advance,‖ said Minister of Sport and

Tourism Ts. Oyungerel. ―An organized group of thieves who were aware of the museum‘s security

system and signals must have committed the crime.‖

Source: UB Post

MEET MONGOLIAN REINDEER HERDERS FIGHTING TO SAVE THEIR WAY OF LIFE

Deep in the Mongolian snow forest, the Dukha (also known as Tsaatan) people have herded reindeer

for thousands of years. They are one of the few remaining nomadic tribes still living remotely from

civilization, but their lives have changed rapidly over the last 15 years. Dutch photographer Jeroen

Toirkens—who has documented nomadic peoples for a decade —traveled to Mongolia a few years

ago to find out how life for the Dukha has changed and how it has remained the same.

When he got there, Toirkens found a traditional way of life at constant odds with a country

attempting to modernize. With the government contracting foreign mining companies to develop its

lucrative natural resources, the Dukha have often been left by the wayside. The Dukha live under

extreme circumstances in the taiga, or snow forests, of Northern Mongolia. During the winter

months, the temperatures can fall to 50 degrees below zero.

The Dukha families relocate their camps five to eight times a year.

Often, Dhuka families travel to cities to sell goods such as reindeer antlers and penises (which fetch

high prices from Chinese traders) in the marketplace and purchase things they can‘t find in the

taiga, like technology. The Dhuka have begun to utilize some aspects of modern life, including solar

panels for power, radios, and mobile phones.

When Toirkens visited, families gathered every day in one of the community‘s yurts (a traditional

Dukha tent) to watch the national soap opera on TV. Many of the Dhuka‘s children and young

people have begun to move away from the traditional way of life in search of better conditions in

the cities.

Source: Business Insider

CATHOLIC BISHOP DETAILS STEADY GROWTH OF CONGREGATION IN MONGOLIA

A Catholic bishop said he is seeing steady growth at his prefect of Ulaanbaatar.

―We started from scratch,‖ said Bishop Wenceslao Padilla, describing the return of Catholic

missionaries to the nation after the fall of communism. ―The first Holy Masses were read in a hotel.

After that we rented apartments and forged initial links with believers through international

organizations and embassies.‖

The first modern mission to Mongolia had been established in 1922, but under a communist

government religious expression was soon thereafter suppressed, until 1992. When the

democratically elected government invited the Church back to Mongolia, then-Friar Padilla was

accompanied there by two other priests of the Congregation of the Immaculate Heart of Mary. Ten

years later, the Ulaanbaatar mission was elevated to a prefecture apostolic, and Padilla, who was

its superior, was appointed prefect. At that time, there were 114 Catholics in the country. That

figure has slowly, but steadily grown to 960.

A little over half Mongolia's population is Buddhist, and most of the remainder is non-religious.

Islam, shamanism, and Christianity—primarily Protestantism—have mere footholds among the

people. Buddhism has come to be seen as a part of Mongolian identity, with other religions regarded

as foreign.

The Church in Mongolia currently has 20 priests, two monks, and 49 nuns serving there, from 12

religious congregations.

Source: Radio Vatican

UNLOCKING MONGOLIA‟S POTENTIAL - EDITORIAL

A small, well-educated, and open-to-the-world population living in a democracy with mineral

wealth? Mongolia‘s potential for development remains terrific. It‘s this potential that keeps

investors (foreign and domestic) interested in Mongolia. It‘s also this potential that makes

Mongolia‘s dynamic development fascinating to a social scientist.

Once Mongolians decided to embark on a path of democratization and some form of capitalist

development, mineral wealth has emerged as the strongest, if not the only basis on which to build

such development. The discovery of the Oyu Tolgoi copper mine made that potential all the more

possible. Yet, after some short years of growth built on Oyu Tolgoi investment, the Mongolian

economy has ground to a sputtering halt. Or, more accurately, the current government has

essentially stopped further development by scaring off foreign investment and delaying progress at

Oyu Tolgoi while borrowing funds to paper over the resulting decline in economic activity.

When President Elbegdorj initiated the current protracted dispute with Rio Tinto in his speech to

Parliament last year, he raised many important questions regarding the costs of construction and

the Oyu Tolgoi governance structure. Initially it looked like there was follow-up to those questions

by the shuffling of the government-appointed Oyu Tolgoi directors. The replacement of political

figures with individuals who offer some substantive expertise seemed like a good sign. However,

very little progress on many of the questions raised by Elbegdorj have been seen since then.

Prime Minister Altankhuyag has been surprisingly successful at keeping together a rag-tag coalition

with the Mongolian People‘s Revolutionary Party and Civil Will, a coalition that seemed like an odd

choice in 2012 in part because the likelihood of this coalition enduring seemed low. But despite the

recurring rumors of an imminent demise of the Altankhuyag government (intensifying once again in

the last several weeks), the prime minister has kept the cabinet together for the moment.

The top priority for any current government is to structure the environment around Oyu Tolgoi in a

way that allows that project to go ahead without inflicting environmental and social damage while

yielding tangible and significant benefits for Mongolians now and in the future. A well-managed Oyu

Tolgoi in any form will be the cornerstone of Mongolian development, so that management must

come first.

Julian Dierkes is an associate professor at the University of British Columbia in Vancouver, Canada.

Source: UB Post

NEW MONGOLIAN LAWS

The following laws were published in the latest weekly Government bulletin. Unless otherwise

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

Date Laws

26.05.2014 Law on Exemption from Customs Tax

Law on Exemption from Value Added Tax (VAT)

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

members who wish to access complete versions of the laws and regulations in Mongolian language

are welcome to email the BCM office.

ANNOUNCEMENTS

“MM TODAY” ON MNB-TV, FRIDAY, 19:00 TO 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.

BCM WORKING GROUP NEWS

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

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

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

Speakers and topics were:

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

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

Capital LLC.

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

erka@bcmongolia.org

___________________________________________

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

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

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

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

New members: Amarbayasgalan and Tuvshinbayar from Terra Energy.

Meeting agenda:

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

• Initial new tax policy thoughts from WG members.

BCM Tax Working Group‘s recommendations on Value Added Tax (VAT) was submitted today to the

100-Day Council.

If you have any comments on Tax Policy, please send us your recommendations with real fact and

Tax impact on the commercial bill before 26th of May.

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

___________________________________________

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

attending at Corporate Hotel meeting room.

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

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

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

Export Society.

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

The following 11 presentations were made:

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

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

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

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

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

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

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

Group and Deloitte Onch Audit;

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

Group and BDSec;

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

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

Embassy of the United States of America

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

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

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

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

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

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

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

Amendments."

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

Group.

„BCM IN THE UNIVERSITY CLASSROOM‟ NEWS

Business Council of Mongolia (BCM) has progressed 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 1,544 students and teachers

have participated to BCM in the University Classroom Project.

Thanks to all who have participated in BCM in the University classroom project. We are now

collecting specific lecture topics for the next year academic year until 1 June 2015.

University of the Humanities joined our BCM in the University Classroom project in May. So BCM‘s

project has expanded to 4 of Mongolia‘s largest universities -- National University of Mongolia,

Institute of Finance and Economics, Mongolian National University and University of the Humanities

-- with over 40,000 students collectively.

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

school term. Please contact: erka@bcmongolia.org

BCM WEBSITES

PRESENTATIONS (in Mongolian):

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

http://bcmongolia.org/mn/илтгэлүүд

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

статистикийн хороо

• Мандал Женерал Даатгал тайлан, 2014 оны 5 сар

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

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

статистикийн хороо

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

Public Awareness Department, Senior Commissioner, Independent Authority Against Corruption

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

ON TRANSPARENCY‖ Training seminar, Mar 06, 2014

The presentation below was made at Mongolian National University as part of the ―BCM in the

University Classroom series‖ on February 27, 2014:

• Ser-Od Inchinkhorloo, Vice Director, BCM, ―Investment environment: Past, Present, Future‖

(Mongolian)

The presentation below is from the February 24 BCM monthly meeting:

• О. Зоригт, Гүйцэтгэх захирал, Майн Инфо "Майн Инфо ХХК-ний товч танилцуулга", МБЗ-ийн 2

сарын 24-ний сарын хурал

Dr. Khashchuluun, Executive Director, National Council of Private Sector Support, ―Taxation Impact

Research‖ to BCM Tax Working Group, February 19, 2014

• ТАТВАРЫН БАГЦ ХУУЛИЙН ӨӨРЧЛӨЛТ: ХУВИЙН ХЭВШИЛД, Ч. Хашчулуун, Хувийн хэвшлийг

дэмжих үндэсний зөвлөлийн гүйцэтгэх захирал 2014.02.19

20 Presentations from Coal Mongolia, 20-21 February, 2014:

• Уул уурхайн сайд Д. Ганхуяг, Төрөөс Эрдэс Баялгийн Салбарт Баримтлах Бодлого, Нүүрсний

Салбарыг Хөгжүүлэх Стратегийн Чиг Хандлага, Коал Монголиа 2014, 2 сарын 20-21.

• Сангийн сайд Ч.Улаан, МОНГОЛ УЛСЫН САНГИЙН ЯАМ, Улсын төсөвт нүүрсний салбарын

үзүүлэх нөлөө, татварын орчин шинэчлэл, Коал Монголиа 2014, 2 сарын 20-21.

• Монгол орны нүүрсний салбар дахь байгаль орчны асуудал, Байгаль орчин, ногоон хөгжлийн

яам, ХБОБНГ-ын дарга Д.Энхбат Коал Монголиа 2014, 2 сарын 20-21.

• НҮҮРСНИЙ АЖ ҮЙЛДВЭРЛЭЛИЙГ ХӨГЖҮҮЛЭХ ТЭЭВЭР ЛОЖИСТИКИЙН АСУУДЛУУД:

Л.ПҮРЭВБААТАР ТӨМӨР ЗАМЫН ИНЖЕНЕРҮҮДИЙН ХОЛБООНЫ ЕРӨНХИЙЛӨГЧ, ―УУЛ УУРХАЙН

БҮТЭЭГДЭХҮҮНИЙ ТЭЭВЭРЛЭЛТ‖ Коал Монголиа 2014, 2 сарын 20-21.

• МОНГОЛ УЛСЫН НҮҮРСНИЙ САЛБАР ДАХЬ ХӨРӨНГӨ ОРУУЛАЛТ, ХУДАЛДААНЫ ТААТАЙ ОРЧИН

БҮРДҮҮЛЭХ НЬ,ЭДИЙН ЗАСГИЙН ХӨГЖЛИЙН ДЭД САЙД О.ЧУЛУУНБАТ Коал Монголиа 2014, 2

сарын 20-21.

• Уул уурхайн дэд сайд О. Эрдэнэбулган, Олон улсын нүүрсний зах зээл дэх Монгол улсын

өрсөлдөх чадварыг нэмэгдүүлэхэд төрийн оролцоо Коал Монголиа 2014, 2 сарын 20-21.

• Ж. Батцэнгэл, Монголын Уул Уурхайн Корпорацийн дарга, МОНГОЛЫН НҮҮРСНИЙ САЛБАРЫН

ӨНӨӨГИЙН НӨХЦӨЛ БАЙДАЛ, Тулгарч буй бэрхшээл ба шийдэх боломж Коал Монголиа 2014, 2

сарын 20-21.

• Аршад Саеид, Пийбоди Энержи компанийн Монгол ба Энэтхэг улсыг хариуцсан Ерөнхийлөгч,

Дэлхийн нүүрсний зах зээл, Монгол улсад үзүүлэх нөлөөлөл, Коал Монголиа 2014, 2 сарын 20-

21.

• МОЗА гүйцэтгэх захирал Ч. Хашчулуун, Занарын дэлхии ̆н хувьсгал ба Монголын эдии ̆н засагт

үр нөлөө, Коал Монголиа 2014, 2 сарын 20-21.

• Багануур Энержи Корпорэйшн ХХК, Нүүрс хийжүүлэх, шингэрүүлэх цогцолбор парк төслийн

товч танилцуулга, Коал Монголиа 2014, 2 сарын 20-21.

• АДУУНЧУЛУУНЫ ЦАХИЛГААН СТАНЦ, БЕНЗИНИЙ ҮЙЛДВЭРИЙН ТӨСӨЛ, Ж.Золжаргал –

Төслийн удирдагч, Коал Монголиа 2014, 2 сарын 20-21.

• Ц.Ганцог, Жени Ойл Шэйл Монголиа ХХК Гүйцэтгэх захирал, ШАТДАГ ЗАНАРЫГ АШИГЛАХ

БОЛОМЖ, Коал Монголиа 2014, 2 сарын 20-21.

• Фэн Вэй эрчим хүчний зөвлөгөө өгөх компани, 2014 оны хятадын нүүрсний зах зээлийн

шинжилгээ болон үнийн таамаглал, Коал Монголиа 2014, 2 сарын 20-21.

• Я. Батсуурь, Эрдэнэс Таван Толгой ХК, Танилцуулга, Коал Монголиа 2014, 2 сарын 20-21.

• Хишиг Арвин Индустриал ХХК, ҮНДЭСНИЙ КОМПАНИУДЫН ТӨЛӨВШИЛ, ӨРСӨЛДӨХ ЧАДВАР,

Коал Монголиа 2014, 2 сарын 20-21.

• Виртген Групп, МОНГОЛЫН НҮҮРСНИЙ ЗАХ ЗЭЭЛ ДЭХ WIRTGEN БРЭНДИЙН SURFACE MINER

БУЮУ АНГИЛАН ОЛБОРЛОГЧИЙН ТЕХНОЛОГИ БОЛОН АШИГЛАХ БОЛОМЖУУД, Коал Монголиа

2014, 2 сарын 20-21.

• ―Тавантолгой‖ ХК-ийн Гүйцэтгэх захирал Р.Сэддорж, Дэвшилтэт технологи ба инновацийг

нутагшуулах нь, Коал Монголиа 2014, 2 сарын 20-21.

• ―УУЛ УУРХАЙН ДЭД БҮТЦИЙН ХӨРӨНГӨ ОРУУЛАЛТЫГ ДЭМЖИХ ТӨСӨЛ‖ Төслийн Зохицуулагч

Б.Энхбаатар,Коал Монголиа 2014, 2 сарын 20-21.

• ДЭД САЙД Д.ДОРЖПҮРЭВ, Эрчим Хүчний Яам, 2014 ОНД ЭРЧИМ ХҮЧНИЙ САЛБАРЫН

ХИЙГДЭХЭЭР ТӨЛӨВЛӨСӨН АЖЛУУД БОЛОН ТӨРӨӨС БАРИМТАЛЖ БУЙ БОДЛОГО, Коал

Монголиа 2014, 2 сарын 20-21.

• Ай Эм Си Монтан Компани, Нүүрс баяжуулах талаар, Коал Монголиа 2014, 2 сарын 20-21.

The below presentation is from the January 27 BCM monthly meeting:

• ОЙ ХАМГААЛАЛД СУУРИЛСАН БИЗНЕС, Цэсэдийн БАНЗРАГЧ /Ph.D/, БОНЯ- ны ОЙ

ХАМГААЛАЛ, ОЙЖУУЛАЛТЫГ ЗОХИЦУУЛАХ ХЭЛТЭСИЙН ДАРГА, МБЗ-ийн 1 сарын 27-ны

гишүүдийн сарын хурал дээр

___________________________________________

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

BUSINESS NEWS‟, „PHOTO GALLERY‟

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

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

Monthly meeting May 26, 2014

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

at the BCM Monthly meeting May 26, 2014

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

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

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

Securities Limited

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

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

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

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

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

Banker, EBRD.

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

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

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

Ministry of Economic Development, Mongolia

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

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

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

Partner, Hogan Lovells, Mongolia

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

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

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

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

Mining Corporation, Mongolia

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

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

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

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

LLC, Mongolia

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

Chairman, Eurasia Capital, Mongolia

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

Power and Energy Utilities, EBRD, UK

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

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

Mongolia

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

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

Mongolia

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

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

Stock Exchange, UK

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

audience, Boldbaatar Lamjav, Board Member, Nuudelchin, Mongolia

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

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

Mongolia

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

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

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

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

Exchange, UK.

____________________________________________

•―BCM‘s Green Office Initiative: Starting from waste management and recycling‖, A. Bayarmaa,

Head of BCM Environmental Working Group/Senior Carbon Finance Specialist, Clean Energy LLC, at

the BCM monthly meeting April 28, 2014

•―Socio-Political Situation in Spring 2014‖, L. Sumati, Director, Sant Maral Foundation, at the BCM

monthly meeting April 28, 2014

• ―Public-Private Partnership in Mongolia: Now and Future Prospects‖, E. Enerelt, Investment

Officer, ADB and Ts. Batbayar, Director of Concession Division, Ministry of Economic Development

at BCM monthly meeting, March 24, 2014;

• ―Areva in Mongolia: 15 years of presence – New perspectives in uranium mining‖, Thierry Plaisant,

General Director, Areva Mongol at BCM monthly meeting, March 24, 2014;

• ―Impact of Corruption in Mongolia‖ by L. Sumati, Director of Sant Maral Foundation at the ―ANTI-

CORRUPTION LEGISLATION/POLICY, INTERNATIONAL BEST PRACTICE ON TRANSPARENCY‖ Training

seminar, Mar 06, 2014;

• ―Anglo American Business Integrity policy and its application within the Business Globally‖ , Dr.

Graeme Hancock, President and Chief Representative Mongolia of Anglo American at the ―ANTI-

CORRUPTION LEGISLATION/POLICY, INTERNATIONAL BEST PRACTICE ON TRANSPARENCY‖ Training

seminar, Mar 06, 2014;

• Change of the package of taxation laws: private sector, Dr. Ch. Khashchuluun, Executive Director,

National Council for Private Sector Support, at the BCM`s Tax working group's meeting Feb 19,

2014;

• Economic and Capital Markets Update, Nick Cousyn, Chief Operating Officer, BDSec at the BCM

Monthly Meeting, Feb 24, 2014

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

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

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

• Selected Macroeconomic Indicators as of Jan 2014, by International Monetary Fund;

• Monthly statistical bulletin, March, 2014 , by Mongol Bank;

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

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

оны 3 сарын байдлаар, Үндэсний статистикийн хороо)

• Polit Barometer, March 2014, by Sant Maral Foundation.

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

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

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

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

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

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

to develop the non-mining industrial sector‖;

• Jim Dwyer, Executive Director, BCM: ―Minerals Policy‖;

• D. Bayasgalan, Director of Golomt Bank: ―Golomt has no problem‖;

• From the Oxford Business Group, Mongolia Reports 2013 book;

• B. Byambasaikhan, Chairman, BCM: ―Talk is cheap‖;

• President Ts. Elbegdorj: ―Diversifying for growth‖;

• Jim Dwyer, Executive Director, BCM: ―Non-mining sectors budding‖;

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

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

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

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

BCM's English website includes the ―Mongolia Business News‖ section.

• 2014 Article IV staff report for Mongolia by International Monetary Fund;

• BCM comments on draft Amendments to the Minerals Law made to Mr. D.Gankhuyag, the Minister

of Mining, February, 2014;

• BCM 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 6th Anniversary BCM Renewal dinner on November

11, 2013.

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

en/album?albumid=200

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

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

SOCIAL NETWORK WITH BCM

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

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

improving each day with BCM.

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

latest announcements and comment on events carried in the NewsWire with the community.

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

https://twitter.com/bcmongolia.

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

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

LinkedIn page.

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

Social stats: BCM now has 5,540 fans on our Facebook fans page, 597 connections on LinkedIn

network, and 1,072 followers on Twitter.

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

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

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]

Year 2012 *14.0% [source: NSOM]

Year 2013 *12.5% [source: NSOM]

April 30, 2014 *12.3% [source: NSOM]

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

Note: 12.0% y-o-y, Ulaanbaatar city, April 30, 2014

CENTRAL BANK POLICY LOAN RATE

December 31, 2008 9.75% [source: IMF]

March 11, 2009 14.00% [source: IMF]

May 12, 2009 12.75% [source: IMF]

June 12, 2009 11.50% [source: IMF]

September 30, 2009 10.00% [source: IMF]

May 12, 2010 11.00% [source: IMF]

April 28, 2011 11.50% [source: IMF]

August 25, 2011 11.75% [source: IMF]

October 25, 2011 12.25% [source: IMF]

March 19, 2012 12.75% [source: Mongol Bank]

April 18, 2012 13.25% [source: Mongol Bank]

January 25, 2013 12.50% [source: Mongol Bank]

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

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

CURRENCY RATES – 29 MAY 2014

Currency Name Currency Rate

US Dollar USD 1,818.32

Euro EUR 2,471.73

Japanese yen JPY 17.90

British pound GBP 3,036.96

Hong Kong dollar HKD 234.53

Chinese Yuan CNY 291.05

Russian Ruble RUB 52.49

South Korean won KRW 1.78

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.