17.06.2014, NEWSWIRE, Issue 172

BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
Issue 172, June 17 2011
SPECIAL ISSUE – COALTRANS MONGOLIA
CHINGGIS KHAAN HOTEL, 21-22 JUNE, 2011
NEWS HIGHLIGHTS:
Business:
 Ivanhoe, Rio heading back to arbitration;
 MMC commissions coal handling and preparation plant;
 Prophecy secures access to Russian port;
 Xanadu-Noble JV acquires first major coking coal assets;
 SouthGobi aims to be first foreign company to list on MSE;
 U.S company to manage MIAT;
 OT construction costs USD7 million a day;
 Another spud for Petro Matad;
 Ivanhoe Energy subsidiary to spud first well on Nyalga Block in July;
 MCS Group gets USD150-million loan from Standard Bank;
 MAK buys 9 excavators from Bucyrus;
 Fitch affirms its “B” rating of Khan Bank and XacBank;
 SouthGobi renews common share repurchase program;
 MICC raises USD2.5 million for Altan Rio as pre-IPO private placement;
 Garrison announces private placement;
 Voyager pushes OT comparison at Khongor copper-gold project;
 Guildford opens Ulaanbaatar office;
 OT mining simulators to train and up-skill local operators;
 Major Drilling scrambles to fill crews as exploration demand rockets;
 Rio doubles driverless truck fleet at operations in Australia.
Economy:
 Tavan Tolgoi talks deadlocked over infrastructure development;
 Mon-Atom official says others see uranium law as “robbery in broad daylight”;
 Social, economic data released;
 Parliament reduces stamp fees;
 Bonds for MNT36 billion sold within minutes;
 Government responsible for the present fuel shortage;
 Japanese bank “ready to support” oil refinery project;
 TT choices “will have to commit to a long-term agreement”, says Batbold;
 No hurry to raise money through bonds, asserts Deputy Finance Minister;
 PM expects decision on sovereign bond issue in autumn session;
 Outstanding loans rise 6.8% m-o-m, 48.8% y-o-y;
 Further USD11 million from World Bank for livelihood promotion program;
 Mongolia’s unique way of taming inflation has worked;
 Need to increase local production, manufacture;
 Mongolian coal producers will see “margins improve”;

 Tax structure criticized as favoring those who earn more;
 Mongolia well worth the risks, feels Emirates investment analyst;
 U.S. plans coal mining trade mission to Mongolia in October;
 Controversial Australian mining tax law moves closer;
 China energy imports robust in May, but copper weak;
 Chinese inflation speeds up;
 China’s trade surplus in May smaller than forecast.
Politics:
 PM hopes for progress on “serious projects” in China talks;
 Mongolia, China pledge closer relations;
 Elbegdorj talks democracy with Stanford scholars;
 MPs want to cripple Anti-Corruption Authority, says ACA official;
 Deputy PM says no one Minister can be blamed for OT agreement;
 MP blames Zorigt for inaction on mining ban law;
 Government keeps details of official visits secret;
 Mine staff against political appointment as Baganuur chief;
 Court absolves Government of causing damage to nature;
 Meeting stresses need for proper recovery of nature;
 PM claims 80.8% implementation of program;
 DP MP seeks redress against allegation he is working for Enkhbayar;
 Minister to decide on location of health service centers near mines;
 Anti-Corruption officials begin prison term;
 Minister spends constituency allowance to popularize greenhouses;
 Supreme Court again refuses to let Green Party die;
 One Mongolian team among Ecopreneur-2011 winners;
 Australia hints at prisoner swap with China in Rio Tinto case.
*Click on titles above to link to articles.
BUSINESS
IVANHOE, RIO HEADING BACK TO ARBITRATION
Rio Tinto and Ivanhoe Mines, which are together building the giant Oyu Tolgoi copper/gold/silver
mine, will likely go back to arbitration later this month, after a six-month suspension on the
proceedings expires, Ivanhoe said last week. Construction at the USD6-billion project, which is now
more than 23% complete, will not be affected by the arbitration, Ivanhoe CEO Robert Friedland
said.
Rio currently holds a 34.9% stake in Ivanhoe, and, under a 2006 agreement, could have increased its
holding in Ivanhoe to about 46.6% until October 2011. But Ivanhoe this year implemented a
shareholder rights plan that would prevent the bigger firm from increasing its stake even after the
agreement expires next year, unless it makes an offer to all shareholders. Rio Tinto disputed the
shareholder rights plan and the two parties headed to arbitration over the issue.
In December last year, the two companies announced they had reached a new agreement that
would result in Rio assuming management of the big copper/gold project, as well as taking a bigger
stake in Ivanhoe. The new deal includes support from Rio for a previously disputed rights offering
and help with arranging project funding, as well as a six-month suspension of the arbitration
process.
Mr. Friedland said in a statement on June 9 the company remains ―highly confident‖ that the
shareholder rights plan does not breach Rio Tinto's contractual rights. ―We are committed to
vigorously protecting the rights of all of our shareholders and have received very strong support
from institutional shareholders for our insistence that all shareholders be treated fairly during any
takeover bid."
Mr. Friedland said Ivanhoe also continues to assess ―potential strategic initiatives‖ and was

negotiating with several parties. Ivanhoe owns 66% of the Oyu Tolgoi project and the Mongolian
government holds the balance, after the two signed a long-awaited investment agreement in
October 2009. Rio's interest in the asset is indirect only, through its shareholding in Ivanhoe, but
there has been speculation that CEO Tom Albanese wants either a direct stake in the project or
control of Ivanhoe itself.
Source: The Mining Weekly
MMC COMMISSIONS COAL HANDLING AND PREPARATION PLANT
The first module of the coal handling and preparation plant (CHPP) at the Ukhaa Khudag coking coal
mine of the Mongolian Mining Corporation is now ready to commence its commercial operations
following formal approval issued by the State Professional Inspection Authority on June 10 as
scheduled. The CHPP, comprising three processing modules and a single product handling system, is
the first of its kind in Mongolia.
The first module has the capacity to process around 5 million tons of run-of-mine coal per annum,
to produce washed hard coking coal for export with 8-10% ash content as well as thermal coal for
the on-site power plant‘s use. Trial run started on May 12 and the company expects full production
capacity of approximately 900 tons as received coal per hour to be reached in June itself.
The design, procurement and construction management of the CHPP was undertaken by Sedgman
Limited, Australia. The physical construction process took approximately a year. Capital
expenditure totaled around USD111.6 million as originally estimated. The project involved
altogether about 600 workers from over 20 different contractors and the CHPP will work on 2 by 12-
hours shifts employing around 96 workers. The company has already commenced construction of the
second module and expects it to be completed and commissioned by the 4th quarter of 2011.
Source: Mongolian Mining Corporation
PROPHECY SECURES ACCESS TO RUSSIAN PORT
Prophecy Coal Corp. has arranged with the port of Sovgavan in Russia to have initial access to it for
25,000 tons per month starting in June, offering the company's Ulaan Ovoo thermal coal mine
access to the Asian seaborne export coal markets. The port, located at the Russian Far Eastern
seaboard, is privately-owned and can handle seagoing vessels up to 160 meters in length, and has a
loading capacity of 6,000 tons per day, offering direct connections to Trans-Siberian railroads and
Russian state highways.
Prophecy said that access to port allocation could expand to 50,000 tons per month, reflecting
300,000 to 600,000 tons annually. The coal company has also been assigned a coal storage area at
the port.
The Ulaan Ovoo mine, which began production this year, has so far produced 200,000 tons of coal,
of which 50,000 tons is being stockpiled at the mine and at Sukhbaatar rail siding destined for
Sovgavan port. The mine has measured and indicated mineral resources of 208 million tons. Thus
far, over USD25 million has been committed or invested in the equipment and commissioning of the
mine. Following the fuel rationing imposed by the Mongolian Government, the company is
monitoring its fuel consumption and optimizing production rates to sustain mining and coal
transportation activities for the remainder of the year.
Source: Prophecy Coal Corp.
XANADU-NOBLE JV ACQUIRES FIRST MAJOR COKING COAL ASSETS
Xanadu Mines has finalized a farm-in agreement on the Nuurstei coking coal project in Northern
Mongolia as part of its strategic alliance with Noble Group, Asia's largest diversified commodities
trading company. The deal represents the first major coking coal acquisition for the Xanadu-Noble
alliance which was formed in March 2011. Mr. Brian Thornton, Xanadu‘s chairman, has said Nuurstei
demonstrates ―determination by the alliance to become the principal mid-tier coking coal group
operating in Mongolia‖.
The earn-in agreement will be undertaken via Ekhgoviin Chuluu LLC (EC), a vehicle established to
seek out and develop new coking coal opportunities as part of the strategic alliance. EC can earn up
to 80% of the Nuurstei coking coal licenses by meeting various spending commitments over 4 years,
under the terms of the agreement. These include up to USD1.5 million on drilling to earn the first
60%, followed by a commitment to complete a JORC resource to earn a further 20%, taking EC‘s
interest to 80% of the Project.
A reconnaissance drill program has already commenced at Nuurstei with one multipurpose drill rig
operating on a double shift basis. The company expects the first phase will include 3,500 meters of
diamond and mud rotary drilling and will take at least two months to complete. Preliminary coal

quality results will be available in early July 2011.
Xanadu recently completed a detailed 74 hole diamond drilling program at its 100% owned Galshar
thermal coal project as part of its strategy to convert the resource to JORC code classification. The
company's other main asset in Mongolia is the Khar Tarvaga coal project which contains a large
JORC compliant coal resource of 327 million tons.
Source: Xanadu Mines
SOUTHGOBI AIMS TO BE FIRST FOREIGN COMPANY TO LIST ON MSE
A careful analysis of the feasibility of listing its common shares on the Mongolian Stock Exchange
has persuaded SouthGobi Resources Ltd, a publicly listed company incorporated in British Columbia,
and with a primary listing on the Toronto Stock Exchange and a secondary listing on the Hong Kong
Stock Exchange, that the current Mongolian regulatory regime is not yet ready to accommodate
such a move. This conclusion was based primarily on the institutional barriers that prevent
SouthGobi (and potentially other foreign companies, particularly those whose shares are listed on
other exchanges) from listing shares on the MSE.
Some of the institutional barriers identified include: (i) the lack of recognition of foreign companies
under Mongolian corporate law, (ii) the ambiguity surrounding the interpretation and
implementation of Mongolian laws and the high level of discretion afforded to Mongolian
administrators, and (iii) the lack of recognition of a beneficial and registered share ownership
split. Although SouthGobi is currently unable to list on the MSE, they still remain positive of being
able to do so in the not too distant future with the recent commitment of the Mongolian
government to modernizing its capital markets and the strategic partnership between the MSE and
the London Stock Exchange
SouthGobi concluded in their analysis that one possible method of achieving a listing could be to
emulate the approach taken by the Hong Kong Stock Exchange, which SouthGobi experienced first-
hand as part of its successful secondary listing in January 2010. Under this approach, the Hong
Kong regulatory authorities may grant relief from complying with certain rules and regulations,
provided it can be shown that the rules and regulations of the foreign company‘s home jurisdiction
ensure corporate accountability and afford adequate protection to shareholders.
Source: SouthGobi Resources
U.S. COMPANY TO MANAGE MIAT
The State Property Committee (SPC) has decided to entrust Seabury Aviation & Aerospace of the
USA to run MIAT, in pursuance of its policy to improve the management of State-owned companies
and to take them to international standards before being offered for privatization. A tender was
floated before Seabury was chosen for the job beginning this summer. The company will be
responsible for executing certain decisions already taken, like buying new aircraft and flying on new
international routes.
Source: Ardiin Erkh
OT CONSTRUCTION COSTS USD7 MILLION A DAY
The construction activity at Oyu Tolgoi will likely reach a peak in the third quarter of this year,
Ivanhoe Mines said last week. Ivanhoe and Rio Tinto are investing an average of USD7 million a day
at the moment, much of it in Mongolia, on purchases of goods and services to advance the project.
The firms have set a total capital budget this year of USD2.3 billion for Oyu Tolgoi.
The concentrator is more than 32% complete, and the first line will be ready to start commissioning
in the second quarter of 2012. The overall project is still ahead of schedule, and pre-stripping of
the open pit mine will start in the third quarter of this year, with commercial production scheduled
for the first half of 2013.
The company also said it has received approvals for and started work on a 95-km high-voltage
power line from the Oyu Tolgoi site to the Mongolia-China border, where it will connect to a
proposed supply line in China. ―Discussions to secure electricity imports from China during Oyu
Tolgoi's initial four years of commercial production are continuing between Chinese and Mongolian
representatives,‖ Ivanhoe said.
ANOTHER SPUD FOR PETRO MATAD
The London-AIM listed independent and Mongolia-focused explorer Petro Matad has spudded its
second exploration well in less than a month as it began drilling at the Davsan Tolgoi-6 well on June
9 afternoon. The well, being drilled by DQE International, will be vertically drilled to a target depth

of 2,100 meters.
The latest development follows the spudding of the Davsan Tolgoi-5 well in mid-May. Also last
month Petro Matad announced that it had found oil at its Davsan-Tolgoi-4 (DT-4) well with an initial
analysis pointing to six meters of net pay.
Source: upstreamonline.com
IVANHOE ENERGY SUBSIDIARY TO SPUD FIRST WELL IN NYALGA BLOCK IN JULY
Sunwing, a wholly-owned subsidiary of Ivanhoe Energy, has recently instructed its drilling
contractor to mobilize the drilling rig and associated equipment to the first selected location in the
Nyalga Basin in Mongolia. Mobilization activities will take approximately one month to complete.
Sunwing will spud its first Mongolian oil well on a 15 sq km structure identified by 2D seismic in late
July. The second drilling location will be centered on an adjacent structure with follow-on locations
contingent on progressive drilling success. The current focus of exploration represents just a small
portion of the total basin area. Detailed evaluation and testing, as required, will be conducted on
our initial wells following drilling.
While existing seismic data has assisted in the selection of the first two locations, Sunwing intends
to acquire additional 2D seismic on other portions of the block, and if necessary, acquire 3D seismic
to better assess future drilling locations and trapping systems. The drilling rig has been contracted
for two initial locations, with an option for three additional wells in 2011, weather permitting.
Drilling on these two structures should provide a reasonable assessment on the overall potential of
the Block which is over 12,000 sq. km in size with very little seismic detail. Given the main
Mongolia to China railway and highway crosses through the eastern side of Block XVI, logistical
activities can leverage off this proximity to existing infrastructure.
Source: Ivanhoe Energy
MCS GROUP GETS USD150-MILLION LOAN FROM STANDARD BANK
Standard Bank has agreed to lend the MCS Group up to USD150 million, primarily to finance the
construction of the 220-kW electric power line connecting Mandalgovi, Tavan Tolgoi and Oyu Tolgoi
projects. The loan will also finance a number of other projects that include the construction of
residential complexes suited to the needs and financial capacities of young adults in the capital
city, introduction of the latest information and communications technology, and development and
construction of healthcare and sports resorts.
This is the third loan from Standard Bank to the Group, and its size ―is an affirmation of the
strength of MCS Group‘s activities, management and organization, meeting with the highest
international standards,‖ said Mr. L. Gantumur, VP of MCS Group. Mr. Andrew King, CEO Standard
Bank Asia, also said the ―quantum of the facility amount is a reflection of MCS Group‘s leading
position in the Mongolian market and the high quality of its operations and management teams.‖
Source: MCS Group
MAK BUYS 9 EXCAVATORS FROM BUCYRUS
Mr. Nyamtaishir, President of Mongolyn Alt Corporation (MAK), and Mr. Dieter Gessner, Vice
President of Bucyrus, recently signed an agreement under which MAK will purchase nine excavators
at a total cost of EUR38.7 million from Bucyrus. The ceremony to mark the signing of the agreement
was attended by, among others, Mr. Bernd Pfaffenbach, State Secretary of Germany's Federal
Ministry of Economics and Technology, Mr. Pius Fischer, German ambassador in Mongolia, and senior
officials at the Mongolian Ministry of Mineral Resources and Energy. The agreement is yet another
example of how private sector firms in Germany and Mongolia are increasing their cooperation.
Mongolyn Alt has indicated that it will purchase more machinery and equipment from Germany as it
expands in the coming years.
MAK last year exported five million tons of coal from the Nariinsukhait mine of South Gobi province,
setting a record. It has set its export target at seven million tons this year and also plans to start
operations at its Tsagaan Suvarga copper-gold deposit. To reach both ambitious goals, the company
must update its excavating techniques and use more advanced equipment.
Source: The Mongolian Mining Journal
FITCH AFFIRMS ITS “B” RATING OF KHAN BANK AND XacBank
Fitch announced on June 7 that it affirms its ―B‖ rating of Khan Bank and XacBank, with Positive
and Stable outlooks respectively. Khan Bank‘s affirmed ratings are long-term foreign and local
currency issuer default ratings (IDR) at B with a positive outlook, and short-term foreign currency
IDR is at B. The agency said the positive outlook reflects its expectation of continued improvement

in the bank's profitability, bolstering its capitalization, as well as the strong possibility that the
bank would be able to raise additional capital.
XacBank‘s affirmed ratings are long-term foreign currency and local currency IDRs at B with stable
outlooks and short-term foreign currency IDR at B. According to the agency announcement, XacBank
issued USD12-million of common equity in Q1 2011. However, this was only to restore its capital
adequacy ratio because of rapid loan growth, Fitch said, adding it expects XacBank to raise further
capital in the near-term to fund its strong loan growth and to preserve capitalization.
Source: Eurasia Capital
SOUTHGOBI RENEWS COMMON SHARE REPURCHASE PROGRAM
SouthGobi Resources Ltd. has authorized the renewal of its share repurchase program to purchase
up to a total of 3,183,650 common shares of the company on either the Toronto Stock Exchange or
the Stock Exchange of Hong Kong, representing approximately 1.7% of its current outstanding
common shares. The share repurchase program will commence on June 15 and will remain until
June 14 next year, or until the purchases are completed or the program is terminated by the
company.
SouthGobi's Board of Directors believes that having the capability to repurchase common shares
increases the investment alternatives that can be undertaken for the benefit of all shareholders.
The program will not impact on SouthGobi's growth plans. Any shares purchased under the program
will increase the proportionate interest of, and may be advantageous to, all remaining shareholders
of SouthGobi.
From time to time, SouthGobi may not be active in the market due to its own internal trading
blackout periods, insider trading rules or otherwise. For example, according to applicable Hong
Kong securities laws the Company is deemed to be an 'insider' in its own stock for four weeks in
advance of any board meeting to receive quarterly results.
Source: SouthGobi Resources
MICC RAISES USD2.5 MILLION FOR ALTAN RIO AS PRE-IPO PRIVATE PLACEMENT
Mongolia International Capital Corporation (MICC) has successfully completed a USD2.5-million pre-
IPO private fund raising for Altan Rio Minerals Limited, a copper and gold exploration company in
Mongolia. Altan Rio now plans to list on the Toronto Stock Exchange Venture within the 3rd
quarter
of 2011. The money now raised will help the company to fund its ongoing exploration programs.
Altan Rio has a portfolio of exploration projects around Mongolia and its flagship project is located
in Khovd.
It has also welcomed its first Mongolian investors on board. President and CEO Evan Jones has said,
―It is indeed a strategic milestone for our company and we believe that our Mongolian investor base
will be an important asset for our company moving forward.‖
MICC Vice President O. Batnairamdal noted the pre-IPO fund raising was closed in one month with
oversubscription. Within the last 18 months, MICC has placed a number of high profile Mongolian
company IPOs, including Hunnu Coal and Haranga Resources on the Australian Stock Exchange and
Mongolian Mining Corporation on the Hong Kong Stock Exchange. Since its establishment in 2005,
MICC has completed over 40 transactions totaling over USD900 million.
Source: MICC
GARRISON ANNOUNCES PRIVATE PLACEMENT
Garrison International Ltd. intends to undertake a non-brokered private placement of up to
100,000,000 units at a price of CAD0.05 per unit for aggregate gross proceeds of up to
CAD5,000,000. Each unit will consist of one common share of the company and one common share
purchase warrant. Each whole warrant will entitle the holder to purchase one further common
share at a price of CAD0.10 per share for a period of two years from the close of the offering.
Source: Garrison International
VOYAGER PUSHES OT COMPARISON AT KHONGOR COPPER-GOLD PROJECT
Voyager Resources began trading on the ASX in 2009, the company emerging from Philippines-
focused miner Lafayette Mining which went into voluntary administration at the end of 2007. Its
focus was initially on Gabon in Africa, but the global explorer re-set its sights on Mongolia, with
managing director Kell Nielsen spending 18 months searching for prospective projects. His efforts
spanned a time when Mongolia went from being a relative backwater to one of the premier
exploration locations. They bore fruit with the acquisition of the Khongor copper gold project in
December 2010.

―We got in early at a time when there weren‘t too many expats flying in and out,‖ he said. ―This
year during winter the planes and restaurants were full. It really is a changing country.‖ While
much of the present buzz surrounds the Mongolian Government‘s auction of the giant Tavan Tolgoi
coal resource, which has attracted huge interest from miners, trading houses and banks, it is
Ivanhoe Mines and Rio Tinto‘s vast Oyu Tolgoi copper gold project which has done most to put
Mongolia on the mining map.
Kell Nielsen and Voyager are keen to play up similarities between Khongor and Oyu Tolgoi. Both are
located in the South Gobi Arc Terrain which has spawned many huge deposits across the region,
with Khongor 250 km to the west of Oyu Tolgoi. ―I see Khongor as an early stage project similar to
what BHP would have had when it exited Oyu Tolgoi,‖ said Nielsen.
Kell Nielsen is a geologist with 20 years‘ experience. Other directors at Voyager include Nicholas
Lindsay, Matthew Wood (chairman), Tim Flavel and George Tumur, the latter being a well
experienced local who is acting as operations director.
Read more…
BHP, through its Magma Copper acquisition, performed early and promising exploration drilling on
Oyu Tolgoi. However, before the Big Australian could fully exploit Oyu Tolgoi‘s potential, financial
pressures and a consequent slashing of exploration budgets saw it offload the project to Canada‘s
Ivanhoe Mines in 1999. It was only in 2001 that Oyu Tolgoi‘s potential was revealed when Ivanhoe
began to drill far more deeply than before. The breakthrough came with Hole OTD-150, drilled to a
depth of 590 meters. It averaged in excess of one gram of gold per ton and 0.81% copper over a
distance of 508 meters, from 70 meters to 578 meters.
Nielsen believes that it‘s deep drilling that will reveal Khongor‘s potential. ―The top 188 m of that
hole was all 0.5% and 0.6% copper; it wasn‘t until they got below 188 meters that they started
intercepting porphyry stock within that system and then their copper grades went up. That‘s where
we think that we sit at the moment,‖ said Nielsen.
Khongor‘s drilling results from 2005 onward, under the project‘s previous owner, whose identity
Voyager wouldn‘t disclose, included fairly broad porphyry mineralization with one hole returning 50
meters @ 1.0% copper and 0.3 g/t gold from 64 meters and another 70.3 meters at 0.7% copper and
0.2 g/t gold from surface. Plans are in hand to progress exploration with an April placement raising
AUD4.1 million and a rights issue expected to bring in another AUD6.3 million. Funds are earmarked
for deep IP work and commencement of more drilling. Voyager has a target of 100 to 200 million
tons at 0.7% to 1.0% copper.
While Nielsen is cryptic on details of the acquisition of Khongor, he said that it was ―a complex
agreement‖ involving a number of parties. ―We own it 100%. This is our main project. We went to
Mongolia to acquire a project like this and spent two years looking. We started negotiations in
Mongolia when we were pretty much one of the only Australian groups. There‘s a big rush on now.
There‘s news coming out now that people are looking for projects in Mongolia – not acquired – but
looking!‖
Source: The Australian Journal of Mining
GUILDFORD OPENS ULAANBAATAR OFFICE
Guildford Coal acquired in March a 20% stake in Terra Energy LLC with the option to increase its
shareholding to 70%. Terra Energy holds a 100% interest in 6 exploration permits that are
prospective for thermal and coking coal in the South Gobi and Middle Gobi regions of Mongolia.
There are currently 4 drill rigs operating on the South Gobi tenements and 1 drill rig operating on
the Middle Gobi tenements with the goal of defining mineral resources on both projects by the end
of the summer.
As part of the advancement and commercialization of these projects, a Terra Energy office and
management team has been established in Ulaanbaatar, and it opened its office on June 10, with
representatives from Guildford, Terra Energy and the Mongolian Government attending the
ceremony.
Source: Guildford Coal
OT MINING SIMULATORS TO TRAIN AND UP-SKILL LOCAL OPERATORS
Oyu Tolgoi LLC has selected the South African company ThoroughTec's latest generation
CYBERMINE4 mining simulators to enhance operator skill and safety. Mr. Richard Storrie, the
Technical Services Manager at Oyu Tolgoi, has said ―there is excellent integration of mining best
practices‖ between Ivanhoe Mines and Rio Tinto ―to ensure that the best possible standards are
adopted and successfully implemented in the Oyu Tolgoi operation. We see employee safety as the
number one priority and simulator based training will be one of the key contributors in achieving

our goals in this regard."
Oyu Tolgoi's present development workforce includes local employees and highly skilled expatriates
entrusted with training and supervision. ―As mine development morphs into full-scale production,
more and more experienced local operators will be needed and Oyu Tolgoi is committed to having a
minimum of ninety percent of its workforce employed from the local (Mongolian) community. To
effectively train and up-skill these local operators for a mega-mine like Oyu Tolgoi will require
specialized training equipment and an exceptional training program," said Mr. Storrie.
He added that the choice of equipment was guided by system reliability and maintainability, as Oyu
Tolgoi is in a remote area. Although Oyu Tolgoi has purchased underground mining simulator base
units, the operation has both underground and surface mining components. The new simulators
allow both in the same base unit, making use of a unique cross-platform adaptor kit. Oyu Tolgoi will
therefore still be able to purchase surface mining cabs in the future as the need arises, significantly
lowering the total cost of ownership. Student operators of each of the equipment variants will be
familiar with Oyu Tolgoi's underground mining environment even before venturing underground.
Source: Mineweb.com
MAJOR DRILLING SCRAMBLES TO FILL CREWS AS EXPLORATION DEMAND ROCKETS
The mining industry is facing a shortfall of available and experienced drill rig operators, as cashed-
up juniors and growth-hungry majors ramp up their exploration plans, Major Drilling CEO Francis
McGuire has said. ―Everywhere is busy, there is no area that's not busy. It's causing strain, and the
real choke point is drillers,‖ he said.
Major mining companies have announced huge increases in exploration spending and junior firms
have also now come back strongly in terms of exploration activity, he said. The good news for the
company, though, is that the increased demand is also translating into higher contract prices for its
services, and Mr. McGuire expects that should continue into the second half of this year.
Major Drilling is boosting wages to attract and retain experienced drillers, as well as increasing the
number of trainees. However, the increased percentage of inexperienced drillers inevitably has an
effect on productivity, Mr. McGuire said. The company is also buying new rigs that should help
improve productivity and safety and cut training time for crews. The firm bought 25 rigs in the
three months ended April 2011, and plans to buy another 40 over the next 12 months, 30 of which
will replace older, less productive equipment.
Major Drilling reported fourth quarter net earnings of USD9.4 million for the three months ended
April 30, compared with USD3.2 million a year earlier. On contract pricing, Mr. McGuire said the
market has not returned to the levels experienced during the height of the market in 2008, but that
there is definitely ―substantial progress‖ in pricing for new contracts. Rates for specialized drilling
will probably move up more quickly than for conventional drilling services, Mr. McGuire said.
RIO DOUBLES DRIVERLESS TRUCK FLEET OPERATIONS IN AUSTRALIA
Rio Tinto will double its fleet of driverless haul trucks at its iron-ore operations in Western
Australia, following a two-year trial of the autonomous haulage system (AHS) technology that
performed above expectations. The trucks, which previously only dumped waste product, will now
dump ore for the first time.
―It will be the first operational deployment of this technology in Australia, or anywhere on this
scale. The trucks will be used for all haulage requirements, moving high-grade, low-grade and
waste material from multiple loading units,‖ said a Rio Tinto official. The AHS technology has
demonstrated its value to the business, especially in the areas of health, safety and productivity,
he said.
The AHS trucks use pre-defined courses and navigate autonomously from loading units to dump
locations, including waste dumps, stockpiles and crushers. The main navigation system is GPS,
combined with a secondary navigation process. They are expected to be fully deployed by April
next year. The deployment of the driverless truck fleet forms part of Rio Tinto‘s the Mine of the
FutureTM program, which was launched in 2008.

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ECONOMY
TAVAN TOLGOI TALKS DEADLOCKED OVER INFRASTRUCTURE DEVELOPMENT
The continuing negotiations between the Mongolian Government and various bidders seeking to
operate the huge Tavan Tolgoi coal mine have hit a roadblock after reaching an advanced stage,
with issues surrounding infrastructure facilities defying resolution. "They are taking into account all
different implications of the mine and related infrastructure and related political issues," a person
familiar with the situation has said. The talks have also involved engaging with the governments of
China, Russia, Japan and South Korea.
"I believe the talks [with the bidders] are in pretty advanced stages," the person said, but declined
to give an exact timeframe as to when a final bidder would be selected. The person said that the
Mongolian government has already initiated some work toward the development of railway lines
linked to the project, enhancing its ability to tap various export markets.
"The railway that will be put first will link it [Tavan Tolgoi mine] to Russian ports so that they can
target markets such as Korea and Japan and even further in the future," the person said. "The
government decided to first build a railway connecting to a new port so that they can diversify and
mitigate the risks associated with having a single target destination, which is currently China."
As part of a specific time-table associated with infrastructure developments for the Tavan Tolgoi
project, the person said that the Mongolian government is planning to have a direct railway line
from South Gobi to China by 2015 and also looking to connect South Gobi to North East of Russia.
The person said even as the Mongolian government has plans for an initial public offering of
Erdenes-Tavan Tolgoi, but the offering may happen only once the company becomes "operational".
"They are looking to find the right formula to maximize the value," the person said.
Source: Dow Jones Newswires
MON-ATOM OFFICIAL SAYS OTHERS SEE URANIUM LAW AS “ROBBERY IN BROAD DAYLIGHT”
Mon-Atom Deputy Director G.Tsogtsaikhan has said foreign companies and nations interested in
investing in the uranium sector as a partner of Mon-Atom see the 2009 law that governs its
operations as ―robbery in broad daylight‖. They have suggested an amendment to the law as it
stands as these ―do not accord with the ways of the world market‖. Their main grouse is that it
gives the Mongolian State free ownership of between 34-51 per cent share in all companies in the
nuclear sector.
Mr. Tsogtsaikhan says Mon-Atom has not made much progress because of this and also because it
has neither the financial capital nor skilled professional people to do anything on its own, while

foreign partners are loath to come. ―The law has given us the responsibility to produce nuclear fuel
for use in the nuclear power station, but with no manpower, no active uranium mining, and no
processing plant, we have to proceed from scratch,‖ he has said.
Source: The Mongolian Mining Journal
SOCIAL, ECONOMIC DATA RELEASED
The data relate to May 2011 or to the five months up to the end of May, unless otherwise stated.
Comparisons are either with April, or the corresponding period last year, unless, again, otherwise
stated.
Consumer price index
The national consumer price index in May increased by 1.8 percent against the previous month, by
4.3 percent over December 2010, and by 4.2 percent over May, 2010.
Unemployment
The number of unemployed people registered at Labor and Welfare Service Divisions as actively
looking for a job stood at 42,800 at the end of May, 2011, rising 10.6 percent over the same period
last year.
Household income, expenditure
Average household monetary income per month in the 1st quarter of 2011 stood at MNT 453,500,
increasing by MNT 60,500 or 15.4 percent over the corresponding period last year. The average
expenditure was MNT 487,200, a rise of MNT 109,100 or 28.9 percent.
Budget and tax receipts
The General Government Budget showed a surplus of MNT89.0 billion in the first 5 months of 2011.
The corresponding period in 2010 had shown a deficit of MNT169.8 billion. The surplus in the
current account amounted to MNT269.2 billion.
Compared to the same period last year, tax revenue increased by 58.0 percent. Tax receipts from
goods and services rose 77.6 percent, from others 2.6 times, from foreign trade 97.7 percent, from
social security contributions 46.3 percent, and from income tax 1.9 times.
Foreign trade
Turnover of trade with 110 countries in the first 5 months of 2011 reached USD3,695.6 million, with
exports accounting for USD1,578.0 million and imports for USD2,117.6 million. The deficit balance
of USD539.5 million was 9 times more than in the same period of 2010. The deficit in May was
USD118.1 million, against a surplus of USD33.2 million in May 2010.
Industrial output
Industrial output in the first 5 months of 2011 rose 8.6 percent, at 2005 constant prices.
Freight, passenger traffic
Freight carried by the railway in the first 5 months of 2011 rose 14.4 percent over the same period
of 2010, and the number of passengers rose 8.2 percent. Railway revenue increased 33.4 percent in
a similar comparison. The volume of air freight rose 27.5 percent, while the increase in the number
of passengers was 54.1 percent. Revenue was 32.9 percent higher.
Social insurance, social welfare
Workers at Government-budgeted organizations accounted for 39.1 percent of the total 488,500
persons registered under social insurance in the first five months of 2011, while the remaining 60.9
percent were from private establishments. Compared to the same period last year, the number of
insured people increased by 11.0 percent, that of insured private establishments by 13.0 percent,
and that of insured government-budgeted organization by 7.9 percent.
The number of people receiving social welfare pensions and benefits in the first five months was 0.3
percent less than in the corresponding period last year, but the total amount paid showed an
increase of 26.4 percent. MNT 285.7 billion was distributed to 2.5 million people from the Human
Development Fund.
Share trading
Altogether 2.1 million shares valued at MNT 2.2 billion were traded in May, which had 22 trading

days.
Source: The National Statistics Office
PARLIAMENT REDUCES STAMP FEES
Parliament last week amended the law on registration fees, following widespread criticism that
they had been fixed too high. The amendments take immediate effect. During the debate, former
Health Minister L.Gundalai said the Government cannot levy exorbitant charges for services citizens
are entitled to receive from it. Speaker D.Demberel said the state has to impose taxes, but the
revenue should be spent on people‘s welfare. He asked MPs to keep the general interest in mind
and said people should not feel that MPs demand a reduction in tax only when it serves their own
interest.
Source: News.mn
BONDS FOR MNT36 BILLION SOLD WITHIN MINUTES
Government bonds worth MNT36 billion were oversubscribed and mopped up within minutes of
being offered at the Mongolian Stock Exchange on Wednesday last week. Revealing that most of the
buyers were foreign investment firms, the Ministry of Finance said this indicated ―the international
trust in the Mongolian Government and in the strength of the MNT‖.
This was the first of several such bond sales the Ministry plans this year. The money raised last
week will be transferred to the Micro-Housing Finance Corporation to pay for the building of 4,000
apartments for government employees.
Source: The UB Post
GOVERNMENT RESPONSIBLE FOR THE PRESENT FUEL SHORTAGE
The Government bears the major responsibility for the present fuel shortage. For one, it has made
no efforts to build adequate storage facilities to cope with an emergency, ever since the
privatization of NIC for MNT8 billion, which gave the company 100 containers with a capacity of
400,000 tons each. For another, there has been no real effort to set up an oil refinery. It seems the
Ministry of Natural Resources and Energy has been waiting for the national private sector to take up
the job. Blaming all our woes on the situation in Russia is just a way of hiding our own lack of policy
and priorities.
Rising oil prices from 2007 finally forced former Prime Minister S.Bayar to negotiate a stable pricing
system with Russia. An agreement was reached in 2008 whereby Russia was to charge USD100 until
the global price crossed USD120. Russia followed this for some time. Then in April, 2008, Mongolia
decided to stabilize fuel price domestically, by paying importers up to MNT15 million each to make
up for the difference between import costs and selling costs at fixed rates. Parliament also asked
the Government to stock fuel to meet two months‘ needs, which was later raised to three months.
This would be around 180,000 tons, and the Petroleum Authority was seeking storage space. Those
with space had been waiting for such a chance and wanted up to MNT1,000 per night of storage.
The Government says it plans to spend MNT60 billion on building storage facilities and will float
tenders soon. We have no doubt that the choice will fall on companies with the right political
connection and after the facilities are built with State funds, they will be privatized, again to
benefit a coterie. That is how the cake is always shared in Mongolia.
Source: Udriin Sonin
JAPANESE BANK “READY TO SUPPORT” OIL REFINERY PROJECT
The Japan Bank for International Cooperation (JBIC) is ready to support an oil refinery project in
Mongolia, Mr. Ryuichi Kaga, its Resident Executive Officer for Asia and Oceania, told Parliament
Speaker D. Demberel, when they met last week in Ulaanbaatar. Representatives from JBIC and two
private corporations, Marubeni and Toyo Engineering, also attended the meeting.
The Government has decided in principle to stand guarantee for loans taken for the project, said
Mr. Demberel, adding that all legal and other issues relating to the project are likely to be settled
soon. Mr. Kakuma Hatano, Vice-President of Toyo Engineering, stressed that Tokyo can not only
build the refinery once the financing issue is solved, but also can train Mongolians to run the
refinery in their own.
Work on the refinery to produce 44,000 barrels of oil per day has long been expected to begin this
year but the USD600 million needed to build it over three years has proved elusive. It will be built
in Darkhan-Uul province.
Source: Montsame

TT CHOICES “WILL HAVE TO COMMIT TO A LONG-TERM AGREEMENT”, SAYS BATBOLD
Prime Minister S. Batbold has said that his government hopes to finalize the first round of
negotiations with bidders to pick the operator of the Tavan Tolgoi coal mine project by the end of
June, although the timeline could be stretched. "This, however, could be carried out for a longer
period of time if required. The final decision of the process hasn't been made," Mr. Batbold told
reporters at a press conference on Sunday in Jakarta where the World Economic Forum on East Asia
was being held.
The Prime Minister also said the government could select three to four major parties to create a
consortium to operate Tavan Tolgoi. "Ownership will be retained [by the government] completely,"
Mr. Batbold said, adding that the companies will have to commit to a long-term agreement.
Negotiations with various governments for creating an infrastructure network was under way and
this had an indirect impact on the process to select the mine's operator. "The government has to
make sure that we have access to connectivity," he said.
On the initial public offering for Tavan Tolgoi, Mr. Batbold said the aim was to go to the market
soon, but launching an IPO will require "certain processes" to be followed. "We'd like to lift up the
quality of our stock exchange and also plan to list major assets in international stock exchanges,"
Mr. Batbold said.
Source: The Wall Street Journal
NO HURRY TO RAISE MONEY THROUGH BONDS, ASSERTS DEPUTY FINANCE MINISTER
With a budget surplus and no need of funds at the moment, Mongolia is in no hurry to issue its first
sovereign bonds, says Deputy Finance Minister Ch.Gankhuyag. The debate over whether to make the
move is "pretty strong", Mr. Gankhuyag has said in an interview, adding that issuance will take
some time. "The budget is in surplus, we have a record high level of cash in our coffers, and we
have set up a stabilization fund," said Mr. Gankhuyag, who was in Indonesia to attend the World
Economic Forum East Asia Summit. "There is no immediate, urgent need for additional funds." In its
first year of operation, Mongolia's stabilization fund stands at USD50 million, and is expected to
grow to USD200 million by year-end.
"The debate is around whether our economy can handle another large inflow of foreign currency
without negative consequences on the exchange rate, inflation and the local industry," Mr.
Gankhuyag explained. Calling the global bonds "Wolf Bonds," he said his ministry was looking to
create a benchmark in the international market to encourage the private sector to issue bonds and
so get access to global capital. "Because of a lack of benchmark sovereign issues, the economy is
not performing at its optimum," he said, and the companies can raise funds only through
international equity markets. But his ministry is issuing local bonds whose proceeds would be used
to fund housing needs and support small and medium enterprises and the cashmere industry.
Mongolia is exposed to any potential downturn in China, where 70% of its exports go, but Mr.
Gankhuyag said that doesn't greatly weigh on him. "There is a risk that we will be completely hit by
whatever happens in China," he said. But with the country moving over time to ramp a diverse
range of exports—brown coal, coking coal, copper, silver, uranium and gold among them—Mongolia
is likely to be resilient in the face of a Chinese slowdown, he added. "It is enough for us not to
worry too much," he said.
PM EXPECTS DECISION ON SOVEREIGN BOND ISSUE IN AUTUMN SESSION
Prime Minister S. Batbold expects Mongolia to issue a debut sovereign bond by autumn, and aimed
to develop its infrastructure to export power to neighbor China. The amount for the bond has not
been finalized. "There are some discussions and ideas, but it has not been finalized yet," Mr.
Batbold told reporters at a World Economic Forum event in Jakarta. "Probably the autumn session
of our Parliament will take the final decision."
He did not specify what the proceeds would be used for, saying only that his landlocked country
plans to build railway lines and roads to neighbors China and Russia, plus power plants. "We have a
demand for power and electricity, and we have a plan to build a major power generation system in
the mineral development areas," he said. "There is growing demand inside Mongolia and also huge
demand inside China, so we could export energy to China."
Mongolia sits on vast quantities of untapped mineral wealth and analysts say it could be one of the
fastest growing economies of the next decade, as well as a key investment target for mining giants.
China and other emerging states have been snapping up coal to help feed booming demand for
power, though poor infrastructure is a stumbling block to Mongolia's commodity expansion plans.

OUTSTANDING LOANS RISE 6.8% M-O-M, 48.8% Y-O-Y
The Central Bank reports that money supply (broad money or M2) at the end of May 2011 reflected
an increase of 1.5 percent over the previous month, and 66.8 percent over the same period last
year. Loans outstanding at the end of May 2011 increased by 6.8 percent against the previous
month, and by 48.8 percent against May, 2010. Principal in arrears at the end of May fell 6.9
percent from the previous month, and 40.0 percent from May last year. Non-performing loans
increased 4.4 percent over the previous month, but were 4.0 percent less than in May, 2010.
Source: Montsame
FURTHER USD11 MILLION FROM WORLD BANK FOR LIVELIHOOD PROMOTION PROGRAM
The World Bank has approved an investment credit of USD11.0 million as additional financing for
the Sustainable Livelihoods Project II (SLP II) in Mongolia. The money will be used to scale up
institutional mechanisms that reduce vulnerability and promote livelihoods in communities
throughout the country. Poverty incidence in Mongolia is higher in rural areas, where almost half of
the population lives. Semi-nomadic herder households constitute the single largest group amongst
the poor.
SLAP II is the second phase of the three-phase Sustainable Livelihoods Program and is supported by
the World Bank, the European Union and the Japanese Government. Its first phase from 2002-2007
piloted innovative approaches to reducing herder risk, building local-level assets through citizens'
engagement and contributions and increasing access to financial products. These tested approaches
and institutional mechanisms have been scaled up nationwide during the second phase of the
program since 2007. The final phase of the program, if approved, would aim to institutionalize the
approaches and mechanisms developed and demonstrated under the program.
Source: The World Bank
MONGOLIA’S UNIQUE WAY OF TAMING INFLATION HAS WORKED
That inflation touched 15% in 2007 and peaked at 22% in 2008 in Mongolia, when production from
Oyu Tolgoi and Tavan Tolgoi was still over 5 years away, is a stark reminder of a bubble that could
be growing in Mongolia if close attention is not paid to inflation. Steps so far taken to tame
inflation in Mongolia include recent tightening of monetary policy. In February, the reserves
requirement ratio was increased to 9%, nearly double the previous 5% level. And in April, the policy
rate was increased to 11.5%, the second increase in 12 months.
But less obvious to the western world is the active domestic management of food supply. In
Mongolia, food prices are the main constituent of inflation and meat accounts for 40% of the food
basket. Normal reserves of meat supply amount to approximately 8,000 tons annually and this year
the Government had prepared around 16,000 tons. The Ministry of Agriculture and Food coordinates
with municipalities to stock meat with local meat vendors or meat factories. They store negotiated
amounts in their own facilities and release the stock as and when required to keep the market well
supplied at all times.
Stockpiling of meat as a tool to manage inflation? In Mongolia, where tools such as fiscal policy
(increasing taxes, decreasing government spending), wage control caps and labor market reforms
are relatively meaningless because of their already terribly low levels, going directly to the source
of the inflation problem is the inherent solution. The Central Bank estimated that inflation would
have reached 15-20% by December 2011, if this kind of active inflation management had not been
implemented. The outlook is now much brighter. Notwithstanding outstanding loans and money
supply growth rates remaining high, annual CPI decreased to 8% in March and dropped to 5.5% in
April 2011.
Source: ResCap
NEED TO INCREASE LOCAL PRODUCTION, MANUFACTURE
The recently revealed foreign trade deficit figures owe much to the radical increase in imports.
Much of our import bill comes from petroleum and this, and the resultant deficit, will not change
until we have our own refinery to process the crude we produce. Since we do not have one, China
takes our crude and we retain our abject dependence on Russia for our petroleum product needs,
agreeing to whatever price they ask for.
There are other suggestions to keep the trade deficit under control. These include a higher import
tax on non-essential goods and expediting the establishment of units to process raw livestock
products. Mining projects may have begun earning money for the country, but they have not
created a sufficient number of jobs. Maybe we should train more craftsmen, and have more, say,
tailors, to stop buying all our needs from abroad. Local production and manufacture is the only way

to create jobs and avert trade deficits.
MONGOLIAN COAL PRODUCERS WILL SEE “MARGINS IMPROVE”
The Mongolian coal sector can be summarized in two words: quality travels. There is no shortage of
coal in the country, but distance and cost to market, and coal quality are the differentiators
between companies. The change from dirt roads to rail roads will increase the reach of Mongolian
coal and its competitiveness in the international market, but this will take time. In the short term,
China remains the natural market for Mongolian coal and coal prices will continue to be based on
prices in Inner Mongolia, Gansu and Xinjiang.
Mongolian coal producers will see margins improve in the next few years as transport costs fall, coal
quality improves with downstream processing, and better and more infrastructure allows them to
access broader regional markets. Margin expansion will be magnified by aggressive production
growth plans from all companies.
Source: Renaissance Capital
TAX STRUCTURE CRITICIZED AS FAVORING THOSE WHO EARN MORE
Several participants at a meeting on Tuesday in the General Tax Office (GTO) referred to anomalies
in the tax structure, specially criticizing the state of affairs that sees citizens with high income
paying less tax than low-income groups. For example, wholesale traders who make MNT25 million a
month pay just MNT10,000 as trade tax while office workers earning 20 times less than the traders
pay MNT105,000 as tax. They pressed for amendments to the tax law to make the system more
equitable.
MPs, senior officials of the Ministry of Finance and the GTO, business representatives, economic
analysts, accountants and financial lawyers took part in the meeting.
Source: Undesnii Shuudan
MONGOLIA WELL WORTH THE RISKS, FEELS EMIRATES INVESTMENT ANALYST
Commodity-rich Mongolia is surging ahead to slowly catch the attention of investors from different
parts of the world, even Dubai. For the Emirates NBD's chief investment officer, the business trip to
Mongolia two weeks ago ignited enough interest to explore investment opportunities there. Medium
to long-term investors — with a horizon of at least two to three years — could do well to start
taking an interest, do research and invest in some of the commodity companies that are expected
to achieve high profits, according to Gary Dugan. Mongolia is still a new story — barely a year old —
within the arena of frontier markets for international investors like him and his colleagues. Risks,
including from overheated growth and poor infrastructure, remain.
Geologists, engineers and financiers are rapidly discovering the country. During his visit, Dugan
attended a conference that had a presence of 60 delegates. Recently, one of his colleagues visiting
Ulaanbaatar called him to say he was part of another conference with about 200 delegates.
Mongolia was the best performing stock market in Asia last year.
There were three motivations, according to Dugan, for him and his team to explore the landlocked
country that is snowbound for about seven months in a year. One, many of the emerging markets
are well picked over. There are hundreds of analysts covering places like China, Russia, India, Brazil
and others these days. Secondly those markets typically have done well and valuations are already
higher than the developed world. Thirdly, most of the same markets are facing problems such as
rampant inflation that may mean that they may not really give much substantial performance over
the coming one to two years, he said. Also of interest is the fact that about USD40 billion of the
stock market value is quoted on well-known global stock markets such as Toronto, Hong Kong, or
New York, Dugan said. That means an investor can gain access to the Mongolian stocks without
taking the country-specific risk within the stock market there.
Dugan added he has never seen such a concentration of good talented people from international
markets already in a frontier country. "Mongolians are very embracing of international management
and they are embracing an international community of top geologists, top capital, and top
investors. They are very investor focused. Also, a number of very well educated Mongolians are
coming back now."
Read more…
The country has something that the world needs — metals and raw materials such as iron ore, gold
and copper and coal and "rare earths". Most of those metals, in raw ore, are just sitting on the
surface of the ground, Dugan said. Selective Mongolian mining and metals companies could well
represent a high-growth diversification story within the commodity markets space, he said. With

economic growth, investments in property will come about. "There isn't a shopping mall of any kind
and the country needs one," Dugan said.
Retail investors can buy some of those companies that are quoted on stock markets such as in
Canada and Hong Kong. Referring to commentators who think that some of the companies already
look pricey, Dugan noted that the ones traded internationally don't. The companies had a massive
run locally and some have had P/E multiples of 50 or 60 or 70. "If you look at the projections of the
next two years, growth of the economy and sales growth of those companies you can see those
multiples coming down and they halve every year, or just because profit growth is going to be so
spectacular. But it's fair to say there's more of the growth discounted than ever before in the
Mongolian stock market. But you could still be really surprised I think by how much GDP growth is
achieved and by how much profit growth is achieved in that region over the coming couple of
years."
Risks remain and that's a common trait of all frontier markets. In Mongolia, those include poor
infrastructure that could hamper growth of companies in terms of meeting production targets.
While Dugan agrees that there is a risk associated with its infrastructure growth, he has noticed
that with general elections to be held next year, the government has accelerated its spending on
infrastructure.
Dugan is sanguine about continuing growth in China and India. "Commodities are a medium term
positive story, even if readers read scary stories about the market in India and China slowing down,"
Dugan said. "India and China are not going into negative growth. Every year they have a positive
growth they take more of these raw materials away from the market and force prices higher."
There could be other surprises. "This isn't a place that's over analyzed where you know all the
information, but having said this [it] is a market that has gone up 100 per cent locally, in straight
line and where many companies in mining have given strong performances," Dugan said. One needs
to be cautious. "Things can go up 100 per cent, and they could also halve, they should be only a
small part of the portfolio if they want to — normally that is five maximum 10 per cent in frontier
markets as a whole," Dugan said. "You got to kind of commit to these markets for at least two to
three years."
Also he pointed out that in five to 10 years from now, the stock market could go up maybe 1,000
per cent and that has a risk of a bubble which eventually bursts. "Like every frontier market if it
gets over-excited and too much liquidity goes in and too many local investors who know nothing
about stocks and buy the market, these things are almost inevitable because these markets are
growing and that's why investors should see these as small part of their allocation and not all their
allocation or 50 per cent of their allocation," Dugan said.
Mongolia is more sensitive to inflation because they have to import basic materials. Cash handouts
and increase in government employee salaries exacerbates the inflationary situation. Money supply
growth has been running at 50 per cent per annum, said Dugan, adding that in tackling the surging
inflation, they are getting it "half right". A Eurasia Capital report said, "The Central Bank of
Mongolia is in a difficult position trying to balance the need to control inflation as well as manage
currency fluctuations." Dugan feels these are ―the growing pains of an emerging economy, monetary
policy is quite sensible‖ and local interest rates are somewhere between 8 and 15 per cent.
"There's no real credit market at the moment, it still has to be developed but they do have the
institutions, they have the central bank and they are about to issue some bonds, and the
government at worst is running a small deficit." Research on the companies is of utmost
importance, Dugan said. "You really do need to know people on the ground, people who have a
consistent interest in maintaining a contact in Mongolia, because you really need to have local
knowledge," he said. "Knowledge about the legal practices there, about regulations is very
necessary."
In Mongolia, Dugan and his colleague toured a couple of mines, met the entrepreneurs who run
these mines, consulted about the conditions of the workers and checked the international standards
of the geological results. "We found that many of the companies are run by geologists — people who
had dug up Canada, dug up Australia — now they are digging up Mongolia. They never found it so
easy to find the minerals and also never found minerals in such quality and in such accessible
places," he said. "Always in a frontier market, it looks great on paper but it's possible it may not
exist," he says.
Emirates NBD is more likely to be looking at private equity opportunities and keeping on top of
some of new individual equities. For the fund, the bankers are talking to a couple of fund providers,
but also are talking to a number of clients, Dugan said.
Source: gulfnews.com

U.S. PLANS COAL MINING TRADE MISSION TO MONGOLIA IN OCTOBER
The U.S. Commerce Department's International Trade Administration, the U.S. and Foreign
Commercial Service, is organizing an executive-led trade mission to China and Mongolia in October
for at least 15 U.S. companies that manufacture or distribute mining and mining safety equipment.
"U.S. companies enjoy their greatest competitive advantage in supplying heavy coal mining
machines and systems. For underground mining operations, U.S. firms compete well in the following
categories: long-wall shearers, stage-loaders, continuous miners, batch haulage vehicles, road
headers, hydraulic roof support systems and conveyor systems. For open-pit mining, U.S. firms' best
opportunities include electric mining shovels, walking draglines, blast hole drills, and heavy mining
trucks," a statement says.
The trade mission will begin October 23 in Ulaanbaatar and continue in two cities in China, Xi'an
and Beijing, concluding at the China Coal and Mining Expo taking place October 28-31 in Beijing.
Source: Occupational Health & Safety
CONTROVERSIAL AUSTRALIAN MINING TAX LAW MOVES CLOSER
Australia moved closer to introducing a contentious 30% mining tax being eyed by other countries,
releasing draft laws and seeking reaction from resource companies to legislation expected to be
passed later this year. The government unveiled the mining tax over a year ago but modified its
plan before last August' s elections after global miners including BHP Billiton, Rio Tinto, and Xstrata
launched a public campaign against it. Big miners and minority lawmakers are now broadly
supportive and the legislation is expected to pass parliament and take effect on July 1, 2012.
Treasury forecasts the tax will reap AUD7.7 billion in its first two years, helping the budget return
to surplus by fiscal 2012/13. "These reforms will ensure Australians receive a better return from
their non-renewable resources and will help strengthen our economy through increased
superannuation, new and better infrastructure, and business tax cuts," Treasurer Wayne Swan said
in a statement last week.
Greens lawmakers who will control the balance of power in the upper house Senate from July this
year said they would try to harden the tax to reap more from miners, but would not threaten
passage of the legislation by insisting on changes. Private consultations with miners over the past
few months helped iron out differences over the tax, which applies only to coal and iron ore, but
some sticking points remain before the bills go to parliament, after a second drafting round.
Other resource countries are also looking closely at following suit, including Tanzania, which is
considering introducing a mining super profit tax closely aligned to Canberra's resource rent tax.
Peru's newly elected president, Mr. Ollanta Humala, has also flagged higher mining taxes.
CHINA ENERGY IMPORTS ROBUST IN MAY, BUT COPPER WEAK
China showed robust demand for crude oil and coal in May, shrugging off higher prices to boost
imports by more than 20 percent, but its appetite for overseas copper supplies remained sickly and
iron ore buying showed signs of ending a strong run. Economists are watching closely for signs of
slowing economic growth in China, which would reduce demand for raw materials, as the
government tightens the money supply to prevent inflation. But many analysts see commodity
demand continuing strongly, as the country ploughs money into massive development projects and
struggles to overcome power shortages which could prompt fuel imports and cut China's own output
of industrial metals.
The main disappointment for commodity markets in the May trade data, issued last week by China's
General Administration of Customs, was copper. Shipments to China, the world's biggest user of the
metal, were even thinner than expected, at 254,738 tons of unwrought copper and semi-finished
copper products. Analysts say that was caused by buyers turning to stockpiles to meet demand and
expect imports to revive in the second half of the year. However, the decline in May, when many
had expected a modest increase, ups the ante for June.
A more serious threat to China's suppliers than the apparent lack of copper buying may be the
slowing of iron ore imports, which hit 53.3 million tons, just 0.8 percent up from the shorter month
of April. China's steel sector, which accounts for almost half of world steel output, normally slows
in the second half of the year and faces twin headwinds in 2011: monetary tightening and power
shortages. Stockpiles of iron ore at China's ports soared to a record, signaling an increasingly sated
market.
Read more…
While copper wilted and iron ore wobbled, crude oil imports held up despite high prices following
the turmoil in Libya and topped 5 million barrels per day for the fifth month in a row. "There are

signs that China's economic growth is moderating, but its oil appetite may not slow that much,
because China is expanding its emergency oil reserves," said an analyst.
In coal, China imported 13.4 million tons in May, 20.7 percent up from the 11.1 million tons
imported in April. Net coal imports grew even faster, since coal exports fell to a four-year low. "The
rise of domestic prices and the emergency need from coal-fired power plants have discouraged
exports. One of the policy responses to the ongoing power shortage is to increase coal inventory,"
ANZ analysts said in a research note. The increase in May consolidated a resurgence in coal imports
after a slow start to the year. Coal imports for June are poised to rise further and could top 16
million tons, according to some trade estimates, as domestic prices soared to a 2-1/2 year high and
power plants boosted run rates to cope with peak summer demand that will stretch on until August.
Domestic thermal coal prices climbed for a 12th week to above USD130 per ton.
CHINESE INFLATION SPEEDS UP
China said inflation accelerated last month, reinforcing expectations that the Government is likely
to keep tightening despite widening signs that activity is already slowing in the world's No. 2
economy. The consumer price index rose 5.5% in May from a year earlier, outpacing the recent high
of 5.4%, hit in March, and marked the fastest clip since the index rose 6.3% in July 2008.
The inflation reading came after China's central bank a day earlier reported a sharp slowdown in
credit growth, with Chinese banks issuing 551.6 billion yuan (USD85.1 billion) of new loans in May,
down from 739.6 billion yuan in April and below economists' expectations.
The credit data, along with unexpectedly slow growth in the money supply, offered the latest sign
that the series of interest rate hikes and other tightening moves aimed at taming prices have
started to take hold in China's economy—a major source of global growth. Already, a drop in housing
prices in some big cities threatens to cool activity in construction, which has propelled China's
expansion and fed demand for commodities such as iron ore and copper.
The present data also made for mixed signals on the pace of the slowdown, with the benchmark
measure of industrial output increasing 13.3% in May, down slightly from a 13.4% rise in April.
Investment in factories, building construction and other fixed-asset investment accelerated,
however, rising 25.8% in the first five months, from 25.4% pace in the January-April period.
The stubbornly high inflation reading is likely to remain the primary focus of China's monetary
policymakers, analysts said. Despite the slowdown, most analysts still expect the economy to grow
at 9% or faster this year. Inflation, meanwhile, has been a source of growing public anger that has
worried a government obsessed with maintaining social stability.
CHINA’S TRADE SURPLUS IN MAY SMALLER THAN FORECAST
China‘s trade surplus in May was smaller than expected, adding to evidence that the country is
slowly cutting its reliance on exports, in a development that is seen as necessary for rebalancing
the global economy. The surplus of USD13.05 billion in May was larger than the USD11.4-billion
surplus the previous month, but well below market forecasts that had ranged from USD18-20 billion.
The surprisingly narrow surplus was largely due to import strength. Imports rose 28.4 percent in May
from a year earlier, up from a 21.8 percent pace in April. Exports slowed to 19.4 percent year-on-
year growth, down from a 29.9 percent increase in April. An economist at Deutsche Bank cautioned
against reading too much into the data, noting that monthly changes were very volatile, but he
added that the overall trend was clear. ―Longer term, I think China will continue to see some
moderation in export growth because of currency appreciation and labor cost pressure,‖ he said.
China‘s overall trade surplus in the first five months of the year was USD22.97 billion, just over one
third smaller than the same period last year. Critics have long pointed at China‘s large trade surplus
as proof that the country is unfairly benefiting from a policy of holding down the value of its
currency. Economists have said that Beijing‘s over-reliance on exports has made global growth less
stable. China‘s trade surplus hit a record of nearly USD300 billion in 2008 and has steadily
diminished since then as demand for its products has collapsed under the weight of the global
financial crisis.
Faced with stubborn inflation, China has also been guiding up the value of its currency, the
renminbi, as a way of blunting price pressures. While still tightly controlled, the Chinese currency
has risen more than 5 percent against the dollar over the past year. Speaking in Beijing Recently,
Mr. John Lipsky, acting head of the International Monetary Fund, said that a stronger currency was
―one ingredient of a comprehensive package of reforms‖ that would encourage Chinese
consumption and help the global economy.

Source: The Financial Times
POLITICS
PM HOPES FOR PROGRESS ON “SERIOUS PROJECTS” IN CHINA TALKS
Prime Minister S. Batbold hopes to make progress on several "serious projects" under discussion with
China during meetings with leaders in Beijing. "On this trip, it's our intention to move forward with
particular projects, especially in mining and infrastructure," he said in Hong Kong, from where he
was later to go to the mainland. While not saying exactly what deals he hoped to reach, Mr. Batbold
referred to a "major mining project" and China's demand for energy.
Mr. Batbold said Hong Kong remains a candidate to host a much-anticipated listing of the state-
owned Tavan Tolgoi assets, but that the government was still working with its financial advisers on
the plan. He said a dual listing in Hong Kong and London was also a possibility.
While in Hong Kong, Mr. Batbold presided over the opening of Mongolia's first Hong Kong consulate
and met with the territory's chief executive, Mr. Donald Tsang. Mr. Batbold warned that "if there is
a slowdown in China, it will definitely have its impact on Mongolia", given the country's dependence
on Chinese demand for its resources.
He also said that demand for gold should remain strong at a time when the global economy was
looking shaky. "We don't think the [sense of] crisis is over. Confidence is not completely there," Mr.
Batbold said, adding "to some extent, we believe gold will remain a very important asset."
MONGOLIA, CHINA PLEDGE CLOSER RELATIONS
Prime Minister S. Batbold arrived in Beijing on Wednesday for a three-day visit as guest of Premier
Wen Jiabao. His first meeting was with Mr. Wu Bangguo, chairman of the Standing Committee of
China's National People's Congress (NPC), the country's top legislature, and at the end of it both
leaders pledged to work more closely to enhance good-neighbor relations.
Mr. Wu said China-Mongolia relations had withstood the test of profound changes in the
international sphere and sought solid development, citing frequent high-level exchanges, deep
political trust, close economic cooperation and active people-to-people exchanges. He underscored
China's commitment to stronger ties with Mongolia, saying their geographical closeness and
complementing economies put the two countries in a good position to step up trade and economic
cooperation. He called on both sides to step up cooperation in mineral development, infrastructure
construction and technology sharing on animal husbandry.
Mr. Batbold appreciated China's long-term support to Mongolia's economic and social development,
and said his country would like to work closely with China in the trade, minerals, education,
science and technology sectors as well as on infrastructure and people-to-people exchanges.
Source: Xinhua
ELBEGDORJ TALKS DEMOCRACY WITH STANFORD SCHOLARS
Before getting down to serious affairs of state in Washington DC, President Ts.Elbegdorj spent the
first days of his visit to the USA in California, meeting Mongolians there, visiting museums that
contain rare items of ancient Mongolian art and artifact, and meeting the President and professors
at Stanford University. He urged University President John Hennessy to offer more opportunities for
Mongolian students to enroll in mining, renewable energy, agriculture and environmental studies
courses.
Among the faculty with whom he interacted on democracy and its challenges were Mr. Francis
Fukuyama of ―the end of history‖ fame, Mr. Larry Diamond, a leading contemporary scholar in the
field of democracy studies. Mr. Stephen D. Krasner, Mr. Michael Armacost, a former president of
the Brookings Institution, Mr. Coit D. Blacker and Ms. Beatriz Magaloni. Mr. Fukuyama revealed he is
at work on a book on Mongolia‘s adoption of democracy. Prof. Diamond emphasized the need for
universal education to strengthen any democratic society, and pointed out that only a transparent
and corruption-free government could guarantee the success of democracy in the long run. Ms.
Magaloni warned that economic inequality could overshadow the apparent success of democracy.
Mr. Elbegdorj invited all of them to visit Mongolia.
Source: Montsame
MPs WANT TO CRIPPLE ANTI-CORRUPTION AUTHORITY, SAYS ACA OFFICIAL
Mr. D.Sukhbaatar, a divisional head at the Anti-Corruption Authority (ACA), has said the failure to
appoint a new person to lead the ACA in succession to its jailed incumbent has strengthened the

perception that Parliament is not serious about combating corruption. The ACA has been headless,
and also without its deputy chief, similarly in prison, since March 22, and this is a clear violation of
rules. Mr. Sukhbaatar lays the blame for this on the more powerful and larger of the coalition
partners, saying it prefers to cripple the ACA. Complaints cannot be attended to, and monitoring is
not possible. More important, no progress can be made in seeking help from foreign organizations,
though the trail often begins or leads abroad. This becomes all the more important as more and
more foreign mining companies are getting interested in Mongolia.
The Prosecutor General urged Parliament to act as soon as the chief and the deputy chief were
arrested, but MPs stalled and took no action whatever, defying norms and regulations. Even now,
after an appeals court has upheld the sentences passed on them, there is no move to choose new
people to run the ACA. This has made the people lose their faith in the ACA‘s ability to do its work
and the Authority cannot also fulfill its international obligations. The Speaker of Parliament once
said that no new appointments will be made and asked ACA staff to carry on with their work. Mr.
Sukhbaatar calls this ―very unprofessional advice‖ and wonders who will be held responsible for
―abandoning and destroying‖ an organization always deemed essential to ensure good governance.
DEPUTY PM SAYS NO ONE MINISTER CAN BE BLAMED FOR OT AGREEMENT
Mr. N.Altankhuyag, First Deputy Prime Minister and Democratic Party Chairman, has said any
Government works on the principle of collective responsibility and thus there is no justification for
demanding the resignation of Mineral Resources Minister D.Zorigt for the perceived failure to
protect national interests in the Oyu Tolgoi agreement. ―If the agreement has faults, I am as much
to blame for them as the three Ministers who conducted the negotiations, and I am ready to resign
along with them,‖ he said, adding, ―But why did MPs approve the agreement if it was flawed?‖
Looking back, Mr. Altankhuyag said neither of the two major parties had been prepared for a
coalition government after the last election, but this became an imperative after the July 1
incidents. Only by joining hands could the political parties calm the popular mood and heal national
differences. ―The people have also accepted our work together to implement a big strategic plan,‖
he said.
Asked how coalition partners will fight each other to win votes, Mr. Altankhuyag said, an election
campaign does not have to mean mutual mudslinging and badmouthing. ―This we have done for the
last 20 years, and it is time for a change. Both parties should take credit for all the achievements of
the coalition government, and also share the blame for its failures. The two parties differ in the
way they want to do things, in their plans and policies, and it is here that the voters will make their
choice. In that way, the next election will be focused more on the future than on the past,‖ the DP
leader said.
Three different surveys have put the DP ahead of the MPP, though by only a small percentage. Mr.
Altankhuyag feels the almost similar rating is because people see the coalition government as an
―enterprise of togetherness‖. Their differences have not been made public and should not be aired,
too. ―If I reveal the various differences between the two parties as they run the government, there
will be chaos tomorrow, simply making life worse for all of us,‖ he said.
Source: business-mongolia.com
MP BLAMES ZORIGT FOR INACTION ON MINING BAN LAW
In a conversation with media, MP B.Bat-Erdene has blamed Minister of Mineral Resources and Energy
D.Zorigt for not seriously trying to implement the law banning mineral exploration and exploitation
in river and forest basins. He said the Government has had enough time to study the license holding
companies‘ statement of expenses and check their accounts and tax records, and also what
rehabilitation work they have done. There are set procedures to do all this but the Ministry took no
steps after Mr. Zorigt had announced in 2010 the cancellation of 254 licenses, letting the matter
rest there. Some MPs are now seeking a repeal of the law.
The MP, who was one of the initiators of the law, said they would make fresh demands for the
resignation of Mr. Zorigt. He regretted that all politicians had pledged during the 2008 election that
they would protect the country against natural and environmental degradation but all this has now
been forgotten, with the Government deliberately not implementing a law passed according to its
own action program.
Source: Udriin Soniin
GOVERNMENT KEEPS DETAILS OF OFFICIAL VISITS SECRET
The media were not given any details of what was discussed at a special meeting of the

Government last week on the visits to the USA and China respectively of President Ts.Elbegdorj and
Prime Minister S.Batbold, as the issues were secret. It is believed the discussions covered the
expenses of the visits, the teams that would accompany them, and the agreements planned to be
signed during the visits.
Source: Unuduur
MINE STAFF AGAINST POLITICAL APPOINTMENT AS BAGANUUR CHIEF
Senior officials and workers of Baganuur mine are against somebody chosen on political grounds
succeeding the present Executive Director who retires soon. They held a meeting on Monday to
formulate their views on the impending succession and then sent a letter to Minister for Mineral
Resources and Energy D.Zorigt and Chief of the State Property Committee D.Sugar. It says the
appointment should not be influenced by political lobbying and workers at the mine would not
accept anybody from outside the coal sector.
Source: Zuunii Medee
COURT ABSOLVES GOVERNMENT OF CAUSING DAMAGE TO NATURE
A Court of Appeals last week upheld the decision of a lower court that the Government cannot be
held responsible for any damage so far caused to the nature and the environment. The United
Movements for Rivers and Lakes had appealed against the judgment, claiming that illegal grant of
mining licenses and inadequate monitoring of mining operations had resulted in water sources
drying up.
Source: Zuunii Medee
MEETING STRESSES NEED FOR PROPER RECOVERY OF NATURE
U.S. and Mongolian conservation experts held a two-day meeting on the economic value of nature
and the ecosystem at the Civil Chamber last week. They discussed aspects of their work, including
the costs of running environmental recovery programs, ecosystem legislation, budget planning, the
economics of ecology, citizens‘ participation, and improvement of coordination between
Government organizations. Inadequate or incomplete rehabilitation, as mostly seen in Mongolia, is
of little use. So far only 4,000 of the 14,000 hectares damaged by mining have been recovered. The
outdated technology used in agriculture has led to much waste of water.
PM CLAIMS 80.8% IMPLEMENTATION OF PROGRAM
Speaking in Parliament on June 10, Prime Minister S.Batbold said 80.8% of the measures planned to
develop economic and social conditions in 2010 had been successfully implemented. This is,
however, disputed by an evaluation by the National Audit Authority. Its head, Mr. R.Radnaa, has
said that according to their assessment, the complete implementation rate was 30%, partial
implementation 60% and non-implementation 10%.
Source: Ardiin Erkh
DP MP SEEKS REDRESS AGAINST ALLEGATION HE IS WORKING FOR ENKHBAYAR
The Privileges Sub-Committee of Parliament could not discuss on Tuesday the complaint of Mr.
S.Erdene against First Deputy Prime Minister N.Altankhuyag as the latter was not present. Mr.
Erdene, a Democratic Party MP known for his opposition to the coalition government and criticism
of Minerals Minister D.Zorigt, had complained that Mr. Altankhuyag, who is also head of the DP, had
said at a meeting of the party that some members were being used by outside elements to create
disorder in the DP, giving as an example Mr. Erdene‘s 9 meetings with former President
N.Enkhbayar in recent days.
Source: Ardiin Erkh
MINISTER TO DECIDE ON LOCATION OF HEALTH SERVICE CENTERS NEAR MINES
Health Minister S.Lambaa will lead a team to Umnugobi province to sort out the problem about
where to locate the new diagnostic and medical centers. These have been planned because of the
growing influx of people in Khanbogd and Tsogttsetsii districts following the development of mines
at Oyu Tolgoi and Tavan Tolgoi. Officials of the province want the diagnostic center and the
hospital to be separately located. If their demand is accepted, it will mean the Government would
have to spend more and that is why the Minister wants to study the situation on the ground.
Source: Ardiin Erkh

ANTI-CORRUPTION OFFICIALS BEGIN PRISON TERM
The Chief of the Anti-Corruption Authority, Mr. Ch.Sangaragchaa, its Deputy Chief, Mr.
D.Sunduisuren, and its Executive Department head, Mr. U.Altangadas, formally began their prison
term on June 15. They had been in a detention center until the disposal in late May of their appeal
against conviction some two months ago. Their sentence was confirmed by the appeals court,
though they have been granted leave to appeal to the Supreme Court. This may take some time.
The three were taken from their detention centers to a camp on June 10 before being sent to a
prison proper.
Source: News.mn
MINISTER SPENDS CONSTITUENCY ALLOWANCE TO POPULARIZE GREENHOUSES
Minister for Defense L.Bold has used his constituency allowance to establish greenhouses to provide
vegetables to households and also to increase family income. MNT400 million has so far been spent
on 20 greenhouses spread over 15 hectares, digging wells and laying out an irrigation system,
building storage facilities for 100 tons of produce, and buying tractors and equipment. Each of 100
families has been allotted 0.1 hectare and the whole program has been made part of ―the food
security for vulnerable people‖ project. Each family is expected to make a profit of MNT1 million.
Interested citizens can receive free training in greenhouse farming techniques and growers will
receive free seeds.
Source: Unuudur
SUPREME COURT AGAIN REFUSES TO LET GREEN PARTY DIE
The State Supreme Court yesterday once again refused to allow the Green Party to disband itself
following its merger with the Civil Will. Its leader, MP D.Enkhbat, had asked the court to annul its
certificate of registration as it has ceased to be active as a separate grouping. As once before, the
judges said they would consider the request only when all relevant material was placed before
them. This time, they said they needed to see what the GP Assembly had decided on the disposal of
the party‘s assets.
ONE MONGOLIAN TEAM AMONG ECOPRENEUR-2011 WINNERS
Ecopreneur-2011, ―an international green contest‖, ended last week in Ulaanbaatar after choosing
five projects in different categories for an award of USD3,000 each from competing teams, both
Mongolian and foreign. The contest was jointly organized by the Mongolian National Chamber of
Commerce and Industry, the International Union of Ecopreneurs and Global TIC, an organization
promoting innovation and collaboration between academic institutions and industry. Participation
in the contest was limited to entrepreneurs aged between 16 and 35, with the slogan ―Planet first‖.
Altogether 33 teams from Argentina, Colombia, Panama, Indonesia, South Korea, the USA, Taiwan,
the Philippines, South Africa, India and Mongolia presented their business plans. Among the more
interesting projects was one from a Khuvsgul team to use the newest technology to recycle all types
of plastic waste. The team from Argentina wants to obtain fuel from algae. The team from the
National University of Mongolia showed how fuel from cow dung and other animal waste can help
decrease air pollution. The Colombian project was on telephony posing no harm to human health.
The five winners were from South Africa, the Philippines, Indonesia, Mongolia, and Taiwan. Four
Seasons, the local team, has planted fresh grass in 10 hectares in Sumber district of Tuv province as
part of its conservation program. It intends to show to foreign tourists the traditional Mongol way of
life and plans to transfer its work to local citizens after three years.
Source: Unuudur
AUSTRALIA HINTS AT PRISONER SWAP WITH CHINA IN RIO TINTO CASE
The Australian Government is considering approval of a prisoner transfer treaty that could
eventually allow Mr. Stern Hu, a former executive at the British-Australian mining giant Rio Tinto,
to leave China and serve out the rest of his 10-year prison term in Australia. It would also allow
Chinese prisoners serving time in Australia to complete their terms in China.
The arrest of Mr. Hu, a Chinese-born Australian citizen, strained diplomatic relations between
Australia and China in 2009 and 2010 because of disputes about whether he and three other Rio
Tinto employees had been fairly prosecuted over allegations that they had stolen secrets from
Chinese state-owned companies. The prosecution of Mr. Hu and the others also raised anxieties
among other foreign companies that do business in China.
Mr. Hu and the three Chinese employees were found guilty in Shanghai of accepting millions of

dollars in bribes and stealing commercial secrets while working for Rio Tinto. The four men, who
each confessed to taking bribes, were sentenced to between 7 to 14 years in prison. After the men
had been arrested in July 2009, the Australian government pressed for an open and fair trial and Rio
Tinto said it had no evidence they had engaged in wrongdoing. Later, Rio Tinto said it was
disappointed that the men had engaged in bribery.
Source: The New York Times
ANNOUNCEMENTS
COALTRANS MONGOLIA, ULAANBAATAR, JUNE 21-22
Coaltrans Mongolia will be a unique opportunity to see and understand at first hand the
development of one of the last remaining coal frontiers. It will address:
- Spectacular growth prospects for the Mongolian economy, coming on the back of the development
of the country‘s wealth of mineral assets with reserves estimated in value of USD1.3 trillion.
- Opportunities that many large scale coal investments offer – in particular the Tavan Tolgoi coal
deposit containing 6.4bt of coking and thermal coal which will be privatized.
- The prospects for exports of 25-40mt per annum of coal into China and in the longer term through
Russia to Pacific markets.
- The considerable challenges facing Mongolian transport infrastructure in delivering coal exports
across the border into China‘s burgeoning steel industry and power sector.
The challenge of operating coal mines in extreme weather conditions as well as the scarcity of
water supply.
Among the speakers will be:
- D. Zorigt, Minister of Mineral Resources and Energy
- B.Enebish, Executive Director, Erdenes MGL
- D.Batkhuyag, Chairman, The Minerals Authority of Mongolia
- G.Battsengel, Chief Executive Officer, Mongolian Mining Corporation.
Business Council of Mongolia is a Supporting Organization of the event.
Enquiries about speaking opportunities are to be addressed to Gerard Strahan at
gstrahan@euromoneyplc.com, and about benefits available in relation to sponsorship opportunities
to David-Griffiths, at cdavid-griffiths@euromoneyplc.com.
________________________________________________
GLOBAL MINING INVESTORS “N” EXPLORERS SHOW, SYDNEY, JULY 4-6
The Global Mining Investors 'n' Explorers Show Sydney 2011 (Global MInES Sydney 2011 for short),
will bring together investors and mining companies from around the world, making this a truly
unique networking and business development opportunity on the international mining investment
calendar.
Investors will:
• Hear about the hottest global investment opportunities in the mining sector all under one roof
• Forecast commodity prices to ensure one makes the best investment choice
• Maximize investment returns and minimize investment risk through key learning and insight not
found anywhere else
• Learn about regulatory developments impacting investment decisions, including mining taxes
• Be offered a special discount rate to attend.
Mining companies will get a chance to:
• Raise the profile of their project within the investor community
• Gain perspectives from investors on the criteria they use to assess projects
• Network with financiers and investors, including investors from US, Europe and Asia, including
countries of increasing outbound investment, such as China, India, Japan and Korea
• Assess project financing options, including which stock exchange to list on
• Learn how to raise finance for their project and access hidden sources of capital.
All others will be able to:
• Network and position their business at the heart of the mining investment community
• Raise their profile among mining companies and investors alike
• Demonstrate their capabilities to a broad cross section of existing and potential clients through
high value event exhibition and sponsorship opportunities.
BCM is an Endorser of the event and Executive Director Jim Dwyer will moderate a panel discussion
"Why Mongolia is an increasingly attractive destination for mining investment".
More information is available at www.acevents.com.au/mines2011 or from

jamie@acevents.com.au.
_________________________________________________
2011 CHINA CLEAN COAL TECHNOLOGY CONFERENCE, BEIJING, JULY 12-13
Organized by CBI Energy and supported by the coal sector of Mongolia, the Mongolian National
Mining Association and the Indonesian Coal Mining Association, the 2011 China Clean Coal
Technology Conference will be held in Beijing on July 12-13. China‘s clean coal technology
innovations will continue during the 12th Five-year Plan period (2011-2015). In 2010, China‘s
demand for ethylene equivalent was 24.84 million tons, larger than its domestic production; the
demand for propylene equivalent was 19.05 million tons, 5.90 million tons more than the national
output. This indicates a significant demand-supply gap in China‘s ethylene and propylene markets.
While the edge of petroleum to low-carbon olefin was blunted by the rising oil prices, the MTO
technology using coal as the raw material will give the Chinese producers more advantages. The
conference will discuss all aspects of the issue.
________________________________________________
“MM TODAY” on MNB-TV, Fridays at 21:15
BCM is pleased to announce that Mongolian National Broadcasting continues its cooperation with
BCM on ―MM Today‖. This English news program is aired every Friday for 10 minutes and is
scheduled for 21:15 tonight. Tune in to watch this program that reports stories from today‘s BCM
NewsWire.
___________________________________________
“BSPOT” on B-TV, Monday to Friday at 21:30
B-TV (Business TV) now telecasts a 10-minute English-language news program called BSPOT every
evening from Monday to Friday at 21:30, taking most of the stories from the BCM NewsWire.
__________________________________________
NEW POSTINGS ON BCM WEBSITE'S 'PRESENTATIONS' AND 'MONGOLIA REPORTS'
Several draft laws, still to be discussed in Parliament, are posted on our website, in the Legislative
Working Group section.
‗Presentations‘ from BCM‘s 5 monthly meetings in 2011, summaries of the key addresses at Eurasia
Capital‘s Mongolian Investment Conference on May 25, Jim Dwyer of BCM‘s interview on Mongolia
National Broadcasting‘s ―Face to Face‖ on May 16, and the very successful Mines and Money Hong
Kong‘s ‗Mongolia Investment Summit‘ morning on March 25 are posted in BCM website‘s "Resource,
Presentations" for your review.
‗Mongolia Reports‘ including the Polit Barometer-May 2011 from Sant Maral Foundation and the U.S.
Embassy Mongolia‘s Commercial Section‘s ―2011 Mongolia Investment Climate Statement‖ are
among the reports posted on BCM's website (www.bcmongolia.org) in the ―Resource, Mongolia
Reports‖ section.
We are now posting some news stories and analyses relevant to Mongolia on the BCM website's
‗Mongolian Business News‘ as they come, instead of waiting until Friday to put them all together in
the weekly NewsWire. The NewsWire will, however, continue to be issued on Friday, and will
incorporate items that are already on the home page, so that it presents a consolidated account of
the week‘s events.

INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
Year 2010 *13.0% [Source: NSOM]
May 31, 2011 *4.2% [source: NSOM]
*Year-over-year (y-o-y)
CENTRAL BANK POLICY LOAN RATE
December 31, 2008 9.75% [source: IMF]
March 11, 2009 14.00% [source: IMF]
May 12, 2009 12.75% [source: IMF]
June 12, 2009 11.50% [source: IMF]
September 30, 2009 10.00% [source: IMF]
May 12, 2010 11.00% [source: IMF]
April 28, 2011 11.50% [source: IMF]
CURRENCY RATES – June 16, 2011
Currency Name Currency Rate
US dollar USD 1,256.72
Euro EUR 1,776.69
Japanese yen JPY 15.59
British pound GBP 2,028.66
Hong Kong dollar HKD 161.23
Chinese Yuan CNY 194.04
Russian Ruble RUB 44.60
South Korean won KRW 1.15
Disclaimer: Except for reporting on BCM‘s activities, all information in the BCM NewsWire is
selected from various news sources. Opinions are those of the respective news sources.

17.06.2014, NEWSWIRE, Issue 172

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17.06.2014, NEWSWIRE, Issue 172