November 5 2010

1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
Email: Jim@bcmongolia.org Issue 143, November 5, 2010
NEWS HIGHLIGHTS:
Business:
 “IPO‟s success means more responsibility for us,” says MMC official;
 Chinalco “seeking best time” to take part in Oyu Tolgoi;
 Peabody team calls on First Deputy PM to ask about TT tender date;
 Oyu Tolgoi LLC to lend USD1 million to SMEs in Umnugovi;
 Drilling to commence at Erdene's Zuun Mod molybdenum project;
 Petro Matad delays test program because of winter onset;
 North Asia issues USD13 million in bonds to acquire assets in Mongolia;
 Hunnu Coal issues 24 million Tranche 1 placement shares;
 Mo En Co issues notes to raise funds for Khushuut project;
 Prophecy makes coal a priority as it bids to generate cash flow at Ulaan Ovoo;
 Eurasia Capital becomes member of Global Alliance Partners;
 Deputy Finance Minister surprise choice as Ulaanbaatar Railway head;
 Gobi presents Fall/Winter collection;
 Gulfside Minerals sells stake in Erdenetsogt property, ends court case.
Economy:
 Coal train leaves on trial run to Russian port;
 Batbold promises more responsible budget, explains reform provisions;
 Elbegdorj tells World Bank officials of need for financial decentralization;
 Minister counters MPs‟ criticism of budget provisions;
 Cash allowance will not continue forever, say both MPRP and DP leaders;
 Businessmen demand cheaper credit;
 Senior EBRD delegation visits Mongolia;
 HBS report by Michael Porter recommends steps „mining services cluster‟ should take;
 Reclamation standards need to be reset;
 Since Mongolia‟s future lies in coal, the task is to make it cleaner;
 IFC to help identify public-private partnerships to develop infrastructure;
 40% of fish and marine products do not have health certificates;
 Emerging markets braced for flood of new money;
 No significant cut in rare earth quotas, China says;
 China to limit coal production output;
 China‟s copper demand may rise to 8.5 million tons by 2015;
 Mining leads Australia‟s recovery, says IMF.

2. Politics:
 Standing Committee rejects President‟s veto on his and others‟ salary raise;
 Next wage raise to be a routine decision, with no public debate;
 Rosatom chief says Mongolia will be admitted to uranium enrichment center;
 Mongolia recognized for improved budget transparency;
 TV, radio to be brought under regulatory guidelines;
 Russian Railway interested in developing infrastructure for minerals transport;
 Coal transporters warned against employing Chinese drivers;
 Russian firm offers to produce energy from garbage;
 Physical work on new airport yet to begin;
 Elbegdorj donates blood to dispel rumors and fears;
 Hospital gets Mongolia‟s first oxygen plant;
 Independence Square opened;
 Latter-day warriors take to the steppes in their Hummers;
 Shanghai Expo sets record with 73 million visitors.
*Click on titles above to link to articles.
_________________________________________________________________________________________
MONTHLY MEETING RECAP
The meeting on November 1 at the Kempinski Hotel Khan Palace was attended by 115 members. Mr.
Laurenz Melchers was in the chair and announced that the next meeting, the last in 2010, will be on
December 13. Executive Director Jim Dwyer welcomed the 4 new members since the last meeting. They
are the Noble Group, a market leader in managing the global supply chain of agricultural, industrial and
energy products, with more than 150 offices and plants in 38 countries across five continents, employing
over 11,000 employees from 68 nations; Integrated Financial Services, one of the premier financial and
economic services providers in Mongolia, offering expert advice and support to both local and
international clients; Friends of Mongolia, organized and operated exclusively for charitable,
educational, and developmental purposes, not-for-profit, conducting activities in both Mongolia and the
United States; and the Redpath Group, providing full and comprehensive expertise and experienced
services to the global mining industry since 1962. Redpath Mongolia was incorporated in 2004 with
headquarters in Ulaanbaatar and completed the deepest mine shaft ever sunk in Mongolia in January,
2008, at a depth of 1,385 meters at the Oyu Tolgoi copper gold deposit. BCM thus ends its year with 167
members, 36 more than when the year began.
Mr. D. Damba, President, Mongolian National Mining Association, mentioned how sustained advocacy is
slowly achieving results in changing the legal environment for the better. ―For the first time ever‖, a
Government working group invited an MNMA team to listen to its reservations about the sliding royalty
rate. If the Government does not change its decision to levy increased customs duty on mineral exports,
the MNMA ―does not rule out‖ asking the courts to resolve the issue. As 2010 draws to a close, some
improvement can be seen in the business environment in keeping with the Government‘s declared
intention to reform it this year, but much more was expected and needs to be done. For example, there
should be a single-window service for issue of mining licenses. There should also be just two kinds of
licenses in the sector – exploration and extraction – and not the many more needed at present for
smaller components of work.
Mr. L. Sumati, BCM Vice Chairman, spoke in his capacity of Director, Sant Maral Foundation, about the
way opinion polls through the years reveal how people‘s perceptions change or do not change with time.
It was interesting that while the number of households that said they had given a bribe to get something
done showed a considerable drop between September 2006 and September 2009, the percentage of
people who felt corruption affected personal, business, and political life in the country remained quite
stable in the same period for all three sectors.
Ms. Jigjidmaa Dugeree, Local Coordinator of the IFC-funded Mongolian Business Inspection Reform

3. Project, gave a presentation on the Investment Climate Program of IFC in Mongolia. How serious the
Government is about the program is seen by the fact that the Deputy Prime Minister himself is involved.
So far the program has focused on reforming the business inspection regimen, run by the Government
Agency for Specialized Inspection (GASI). A baseline survey was done and some amendments to the
inspection law were passed in July, but a lot more ground has to be covered before GASI abandons the
trivial for the significant, eliminates overlapping, and reduces its own powers of discretion, used mostly
selectively and arbitrarily. Information has to be made easy to access, clear and understandable. She
feels the political will for the necessary reforms is there, but there is resistance from the low- and
middle-level staff to letting go of their traditional mindset and power to impose fines without much
cause or on flimsy pretexts. At present the costs of compliance total USD15.5 million in a year.
Dr. Battsengel Gotov, Executive Director & Chief Executive Officer, Energy Resources, presented an
overview of Mongolian Mining Corporation, its holding company that raised USD650 million in a recent
IPO on the Hong Kong Exchange. As part of the development program, MMC is building a road to China
and is expecting a rail line to follow as part of the government‘s plans for an east-west arterial railway.
It is also building its own coal-washing plant and power generating unit.
The networking reception that follows the meeting was brief as there was little time left before the
Membership Renewal Dinner attended by 110 members in Kempinski Hotel‘s Oasis Restaurant. This, said
Mr. Melchers in his address, was actually the first of what he hoped would become annual dinners for all
members.
________________________________________________________________________________________
BUSINESS
“IPO’S SUCCESS MEANS MORE RESPONSIBILITY FOR US,” SAYS MMC OFFICIAL
Mr. G. Battsengel, Executive Director of Energy Resources, also known as the Mongolian Mining
Corporation, says the company sees its successful IPO as a mandate for working with a sense of
increased responsibility. The company now has to justify the faith reposed in its administration and
management by several hundred thousand new investors from all corners of the world, and ensure good
returns on their money. Asked who these investors are, Mr. Battsengel said 90% of the stocks issued
were reserved for institutional investors like big banks and funds, and state pension funds, while the
remaining 10% were for the retail or individual investment.
He said coal is all set to complement, if not to replace, copper as the main export earner for Mongolia,
but improving infrastructure was a paramount imperative. Coal can be transported only by the railway,
and road transportation is a limited and temporary option.
Source: Udriin Sonin
CHINALCO “SEEKING BEST TIME” TO TAKE PART IN OYU TOLGOI
Aluminum Corp. of China, the nation‘s biggest producer of the metal, is seeking to participate in the
Oyu Tolgoi project. ―We are seeking to find the best time to participate in its development,‖ Zhao
Zhengang, general manager of overseas investment at the state-owned company that‘s known as
Chinalco, said in an interview in Beijing. ―Mongolia is a very important region as it is rich in mineral
resources and the region is a good fit with Chinalco‘s plans to develop overseas.‖
Chinalco is the largest shareholder in Rio Tinto.
Source: Bloomberg News
PEABODY TEAM CALLS ON FIRST DEPUTY PM TO ASK ABOUT TT TENDER DATE
A team from Peabody Energy called on First Deputy Prime Minister N.Altankhuyag on Wednesday to
express the U.S. company‘s interest in mining the Tavan Tolgoi deposit, and seeking information on
"when exactly the international tender (for the job) will be announced‖.
Mr. Altankhuyag told them this will be soon and added, ―The more companies apply, the better."
However, he told his visitors that the tender will have some conditions other than just the mining. Apart
from details of the investment, such as pre-payment, these will include active participation in
negotiations on transit transport facilities, use of harbors, marketing and selling. ―I ask you to pay great
attention to them," Mr. Altankhuyag said.
Source: Montsame

4. OYU TOLGOI LLC TO LEND USD1 MILLION TO SMEs IN UMNUGOVI
Oyu Tolgoi LLC and XacBank have signed an agreement to provide credit worth USD1 million to be used
as capital for SMEs in Umnugovi province, where Oyu Tolgoi is. All businesses and cooperatives are
eligible to apply for the loan, as long as they meet the criteria for SMEs. The limit for each loan is
MNT30 million, with 1% monthly interest rate.
Source: Onoodor
DRILLING TO COMMENCE AT ERDENE’S ZUUN MOD MOLYBDENUM PROJECT
Erdene Resource Development Corp. has announced that a 4,000-meter drilling program will commence
this week on molybdenum and copper targets on the Khuvyn Khar License, which will include extension
and confirmation drilling of Erdene's 100% owned Zuun Mod molybdenum-copper deposit and drilling of
untested porphyry copper geophysical targets. Zuun Mod is one of the largest undeveloped molybdenum-
copper deposits in the Asia region.
The Zuun Mod drill program is designed to more fully outline the resource in areas expected to be
initially developed for mining and to expand resources in the higher grade zones in the North Racetrack
deposit area. The information derived from this program will be used to define a more extensive
prefeasibility drill program designed to upgrade the inferred resources to measured and indicated
resource categories.
Source: Erdene Resource Development Corp.
PETRO MATAD DELAYS TEST PROGRAM BECAUSE OF WINTER ONSET
Petro Matad Ltd. will delay until spring 2011 a test program on Block XX in eastern Mongolia‘s Tamtsag
basin because of winter onset after encountering hydrocarbons in all three wells drilled this year. The
company is negotiating a drilling contract that is expected to allow it to drill one and possibly two more
wells through as late as mid-December 2010.
Petro Matad will set production casing at the DT-3 well, which went to 1,266 m in basement on the
Davsan Tolgoi prospect on the 10,340 sq km block. The next step in the process is compilation and
assessment of drilling data, including reprocessing and remapping 3D seismic survey over Davsan Tolgoi
to update the resource and plan 2011 appraisal drilling. The company is also evaluating tenders for 2D
and 3D seismic surveys on Block XX with a view to shooting during winter.
In Blocks IV and V, which total 71,040 sq km in central Mongolia, the 4,000-station gravity infill survey
has just been completed, and the data will be integrated with 2D seismic survey now being processed.
Source: Oil & Gas Journal
NORTH ASIA ISSUES USD13 MILLION IN BONDS TO ACQUIRE ASSETS IN MONGOLIA
Iron and alluvial gold miner North Asia Resources Holdings Limited has entered into two convertible
bonds subscription agreements totaling USD13 million. The estimated net proceeds from the issue of the
bonds will be used for the general working capital of the Group, the acquisition of iron concessions in
Mongolia and/or other possible acquisitions in the future.
North Asia and its subsidiaries entered into the resources mining business in Mongolia in December 2009.
Subsequently, the Company acquired two alluvial gold mineral licenses in the country. The company now
owns and operates an iron/copper and an alluvial gold mining project here.
Source: North Asia Resources Holdings
HUNNU COAL ISSUES 24 MILLION TRANCHE 1 PLACEMENT SHARES
Hunnu Coal Ltd. issued 24 million Tranche 1 placement shares on October 27 to institutional and
sophisticated investors at an issue price of AUD0.80 each as part of the AUD40 million placement of 50
million shares earlier announced by it. The remaining 26 million shares are subject to shareholder
approval. The shareholders‘ meeting will be held ―as soon as practicable‖, according to the company.
Source: CPS Securities
MO EN CO ISSUES NOTES TO RAISE FUNDS FOR KHUSUUT PROJECT
The Mongolia Energy Corporation has entered into a subscription agreement under which the company (i)
agrees to issue a Note in the principal amount of HKD466,800,000(USD60.225 million): and (ii) grants
subscribers the option, exercisable within six months of the issue of the Note, to subscribe for a Second

5. Note in the principal amount of HKD311,200,000 (USD40.150 million). The initial conversion price under
the Note and the Second Note are HKD3.4 per share (subject to adjustments) and HKD4.4 per share
(subject to adjustments) respectively.
The net proceeds of the Note and the Second Note, if any, are intended to be used for the Khushuut
coking coal project and the general working capital of the Group, including any possible future
acquisitions.
The company is an energy and resources developer, currently focusing on the development of its initial
coking coal mining project in Khushuut, Khovd Province, western Mongolia. It has begun mining
operation there. To facilitate the coking coal production, the Group has substantially completed building
a 340-km asphalt-paved roadway and constructed some surface stations along the roadway. It is prudent
for the company to have additional working capital and funding for the Khushuut project and for the
general working capital of the Group. It will also provide cash flow for the Group in potential acquisition
(if any) which is beneficial to the development of the Group.
Source: Mongolia Energy Corporation
PROPHECY MAKES COAL A PRIORITY AS IT BIDS TO GENERATE CASH FLOW AT ULAAN OVOO
He wears a track suit to work, is careful about what he eats, and is chief executive officer of Prophecy
Resource Corp., a junior company with mining assets in Mongolia and Canada. But that doesn‘t mean Mr.
John Lee wants to be compared with Mr. Robert Friedland, the mine financier who also got his start in
Vancouver and is leading the international race to develop huge coal and copper-gold projects in
Mongolia.
In an interview, Mr. Lee said it‘s just ―pure coincidence‖ that Prophecy‘s key assets include two
Mongolian coal projects and a nickel-rich polymetallic property in the Canadian Yukon that once
belonged to former Friedland company Galactic Resources. ―It isn‘t so much that Robert Friedland was
there and I‘m following in his footsteps‘‘ said Mr. Lee. Rather, he wants to deliver on a strategy that
aims to offer financial leverage to rising commodity prices through the acquisition of overlooked coal,
platinum group metal and nickel assets.
Mr. Lee is the 36-year-old son of a Taiwanese diplomat who went to boarding school in England and has
developed a view of the world that is based on the experience of having lived in Asia, Europe and North
America. His involvement in Mongolia stems from the April merger of Red Hill Energy Inc. and Prophecy,
a shell company that Mr. Lee had dusted off in order to relieve an entrepreneurial itch that couldn‘t be
scratched when he was running MAU Capital Management of Point Roberts, Wash.
Mr. Lee was an early investor in Red Hill which had two coal properties in Mongolia, including:
* The Ulaan Ovoo, which hosts 209 million tons of thermal coal and is located about 10 km from the
border with Russia.
* The much larger Chandgana project, which hosts about 1.2 billion tons of coal, but is located ―in the
middle of nowhere‖ in eastern Mongolia, according to Mr. Lee.
Read more…
Ulaan Ovoo is the more advanced of the two. Having recently received permission to start production,
the company is already sending coal from Ulaan Ovoo to local power plants in the Mongolian cities of
Darkhan and Erdenet. The larger goal is to ship coal through Russia and the eastern seaboard, where it
will eventually be sold to buyers in Japan and Korea.
In keeping with that strategy, Prophecy is currently negotiating offtake agreements with a number of
Russian companies, and is waiting for final mining permits to be issued. ―We are very optimistic about
obtaining an offtake agreement by the end of this year,‘‘ Mr. Lee said.
With a production target of between 1.2 million tons and 1.4 million tons in 2011, Mr. Lee is hoping that
his company can generate about USD10 million of cash flow in 2011. That money will be used to finance
other projects in Prophecy‘s portfolio, including Chandgana, where the remote location appears to be
the main challenge.
―The problem with coal sitting in the middle of nowhere is that the transportation costs negate the
margins that we can command when we try to get to the eastern seaboard,‘‘ said Mr. Lee. Prophecy
hopes to overcome this problem by applying for a license to build a 600-mw power plant at the site. It
also hopes to have its environmental impact assessment approved by the end of this year.
Meanwhile, Prophecy has yet to structure an agreement that would give Mongolia an active stake in its
coal operations. Such an agreement could have a lifespan of 20 years. With the official opening

6. ceremony at Ulaan Ovoo just weeks away, Mr. Lee is actively looking for a chief operating officer, a
vice-president of exploration and vice-president, marketing. ―We have a lot of shoes to fill,‘‘ he said.
Aside from hiring, a key priority will be to gain a listing on the Mongolian Stock Exchange, a move that
should allow native Mongolians to invest in his company. ―It‘s our number one priority,‘‘ he said.
Source: Stockhouse
EURASIA CAPITAL BECOMES MEMBER OF GLOBAL ALLIANCE PARTNERS
Eurasia Capital has become a member of Global Alliance Partners (GAP), an international network of
stockbrokers and investment banks. GAP Chairman Toyoharu Tsutsui said the admission of Eurasia
Capital ―represents a unique opportunity to extend our services and exposure to Mongolia, one of most
exciting frontier markets globally". Mr. Alisher Ali Djumanov, Chairman of Eurasia Capital, said his firm
―intends to provide its partners and their clients extensive access to Mongolian domestic equities
market, source and execute M&A, private equity and pre-IPO deals and distribute share offerings of
Mongolian companies through partner network internationally".
Global Alliance Partners is an international network of financial services companies that leverage local
execution and distribution capabilities to expand cross-border services in capital raising, mergers and
acquisitions, private placements, IPOs and fund management. With its 1500 investment professionals,
the fast-growing network is comprised of partner firms whose local expertise and global reach span
strategic markets in Africa, Asia, Europe, the Middle East and North America.
Source: Eurasia Capital
DEPUTY FINANCE MINISTER SURPRISE CHOICE AS ULAANBAATAR RAILWAY HEAD
Deputy Minister of Finance T.Ochirkhuu is the new chief of Ulaanbaatar Railway (UR). The post has been
vacant for many months and Mr. D.Jigjidnyamaa‘s term as Acting Head was twice extended. The most
important item at the General Committee‘s meeting on October 27-28 was selecting a new head for UR,
but the selection was not made until October 29. According to tradition, a Russian should have held the
post. Mr. V.I.Yakunin, President of the Russian Railway, which owns 50% of UR, said at the meeting on
October 28 that the new chief‘s main qualification should be knowledge of and familiarity with railway
transportation, and not political connection. However, the final choice is not a railway professional. Mr.
Ochirkhuu is an economist and is a two-term MP and there is concern that he would not be able to resist
political pressure while upgrading UR services and equipment. He will also have to play a key role in
revising the agreement that governs the joint venture and controls the fate of 16,000 railway workers.
Source: Ardiin Erkh
GOBI PRESENTS FALL/WINTER COLLECTION
Gobi LLC recently presented its autumn and winter collection of cashmere apparel featuring 78 designs
for men, women, and children. They came in six new colors, now globally in demand, apart from the
traditional ones. The collection was divided into four main sections, Elegance, Classic, Sport, and
Casual.
Source: Zuunii Medee
GULFSIDE MINERALS SELLS STAKE IN ERDENETSOGT PROPERTY, ENDS COURT CASE
Gulfside Minerals Ltd. has signed a Share Purchase Agreement (SPA) with Mangreat Ltd., the majority
owner of ECM LLC, a Mongolian corporation which holds the exploration license to the Erdenetsogt
project, providing for the sale of the company's 5% interest in ECM. The company will receive up to
USD3,000,000 under certain conditions. Mangreat has paid USD500, 000 into escrow with a balance of
USD1,500,000 due within one year. The company will transfer its 5% interest in ECM and terminate its
current litigation in Mongolia upon receipt of the first USD2,000,000. If the property is sold or joint
ventured to a third party for a value greater than USD40,000,000, the company will receive an
additional USD1,000,000. Under the SPA the parties have also agreed to abandon all litigation over the
property and the license. The transaction is subject to receipt of all documentation and agreements
being executed and delivered to the Escrow Agent.
Gulfside took legal action against ECM in 2008 to protect its rights under the original Memorandum of
Understanding (MoU) signed in June, 2007. In early 2009, it prevailed in the Supreme Court of Mongolia
and was awarded a 5% interest in ECM. Later in 2009, the company commenced an action in Mongolian

7. courts to assert its rights of first refusal to additional shares of ECM. This action is currently pending in
the courts and will be abandoned under the new SPA. The Company had also commenced an arbitration
action in the Courts of England which action will also be terminated under this SPA once the sale
agreement is concluded.
Gulfside plans to concentrate its interest on the Onjuul project and seek funding to continue with the
Onjuul development program.
Source: Gulfside Minerals
ECONOMY
COAL TRAIN LEAVES ON TRIAL RUN TO RUSIAN PORT
The first trainload of coal from the Mongolian Gobi left last week on a trial run all the way from Choir to
the Vostochny port in Russia. The coal will first go to Naushki, 638 km from Choir, where Russian
Railway will take over from Ulaanbaatar Railway for the final 4,041 km of the total 4,679-km journey.
Among those who watched the train leave Choir were D.Jigjidnyamaa, Acting Head of Ulaanbaatar
Railway; V.I. Yakunin, President of Russian Railway, which holds half the share in it; V.V.Morozov and
L.Khangai, respectively Executive Director and Managing Council Chief of the Russia-Mongolia joint
venture, Infrastructure Development, which was responsible for the train run; Russian Ambassador
V.V.Samoilenko; South Korean Ambassador John Il, and Japanese Ambassador Takyo Kidokoro. The last
two represent countries that are likely to be the end buyers of Mongolian coal.
The train carries 2,000 tons of coal from Tavan Tolgoi. After a year of talks Russian Railway has agreed
on a 52% discount on freight tariff, making it three times cheaper than the rates charged by China.
Ulaanbaatar Railway, however, has not lowered its rates that were raised on September 25. The trial run
is to check if international transportation regulations can be met, and to try out the loading and
unloading process, and to see how much time all the paperwork takes. Altogether one million tons of
coal will be transported this way every year.
Source: Ardiin Erkh
BATBOLD PROMISES MORE RESPONSIBLE BUDGET, EXPLAINS REFORM PROVISIONS
Taking part in the debate on the draft combined budget for 2011, incorporating the state budget, the
local budgets, and also those of the Social Insurance Fund, and the Human Development Fund, Prime
Minister S. Batbold last week told Parliament that the Government was ―committed to reforming the
state budget structure, addressing issues in holistic way, facilitating sustainability, constituting a more
efficient system of preparing the budget, evaluating performance, decentralizing authority, and
monitoring the way goods and services are procured with budget resources‖. The decentralizing will
transfer more spending authority to local governments and the Ulaanbaatar administration, and give
citizens a role in ensuring that the money is spent on programs in health, education, business promotion,
and employment generation, and in monitoring the status of programs.
From now on, the budget will be planned more responsibly, and administered more prudently. The most
important change will be that the revenue from the mining sector will not be spent in its entirety. A
certain part will be accumulated in a stability fund, to be used only when the revenue declines and
there is a budgetary deficit. The money in the fund will be earmarked for this sole purpose. Once the
amount accrued in it is more than 5% of the GDP, the extra capital can be invested in domestic and
foreign markets.
Source: Zuunii Medee
ELBEGDORJ TELLS WORLD BANK OFFICIALS OF NEED FOR FINANCIAL DECENTRALIZATION
Mr. Klaus Rohland, Regional Director in Charge of Mongolia, last week called on President Ts. Elbegdorj
and introduced to him Ms. Coralie Gevers, the World Bank‘s new Country Manager and Resident
Representative in Mongolia. In a short speech to welcome Ms. Gevers, the President said Mongolia needs
to fight against corruption, improve the social environment, follow the rule of law, and implement
judicial reforms. He sought the World Bank‘s assistance to implement a project to transfer more
financial power and authority to local authorities, as only such decentralization actually empowered the
people.
Source: Montsame

8. MINISTER COUNTERS MPs’ CRITICISM OF BUDGET PROVISIONS
Criticism from MPs from the smaller parties marked the first reading of the draft combined budget for
2011 in Parliament last week. They said the MNT800 billion to be taken from the Human Development
Fund to pay cash to citizens, directly or indirectly, could be better used to build a well-equipped
medical complex in 20 provinces or 70 secondary schools. While members of the two major parties
thanked the Finance Minister for allocating MNT760 billion to several projects, other MPs complained
that most of these, as always, are concentrated in the electoral districts of ministers and high officials,
as happens every time. Some were unhappy with lopsided priorities, saying that new tourist camps
would have electricity connection while many areas in the country receive power for only 5 hours daily.
Some members questioned the Government policy of investing in projects, saying this closes the doors of
opportunity to the private sector and would mean import of more Chinese workers. Minister of Finance
S.Bayartsogt rejected the charges of bias against the private sector. He took the example of the 150-km
paved road that will cost more than MNT60 billion. It will be built in Selenge province because of the
coal there and will pass through wheat growing areas. The private sector will not take up the work as
the load on it would affect its longevity. He also said the Government does not support more jobs for
Chinese workers.
Source: English.News.mn
CASH ALLOWACE WILL NOT CONTINUE FOREVER, SAY BOTH MPRP AND DP LEADERS
The leaders of both major parties in Parliament, who are also partners in the coalition government,
have said the cash allowances in fulfillment of their monetary promises to the people at the 2008
election are not meant to continue forever. MPRP leader and Premier S.Batbold has said that in any case
much of the money is not going to be paid in cash, but will directly pay for people‘s health insurance
and students‘ fees. Arrangements will also be made to use this money for pension insurance and paying
for apartments. First Deputy Premier and DP leader N.Altankhuyag feels it is nothing unusual for a state
to support people by paying them in cash or paying for sectoral services for them. This is a way of
development. ―We have not said that the cash allowance will continue for an indefinite period. Our goal
is to ensure that every citizen has work and earns enough to have a decent life. For now, people need
the cash. Neither party in the coalition government has said anything about a lifetime allowance,‖ he
told media.
Source: Ardiin Erkh
BUSINESSMEN DEMAND CHEAPER CREDIT
There was strong demand for business loans at lower rates when entrepreneurs met with Central Bank
officials last week. The business representatives complained that the Central Bank‘s tight monetary
policy, followed ostensibly to keep inflation under control, posed problems for them. Its high policy
interest rate meant bank loans were limited and also too expensive.
Governor L.Purevdorj explained that interests on bank loans depended not only on policy interest rates
but also on the volume of savings in banks, Government and Central Bank bond interests, inflation rates,
and a bank‘s own liquidity. Banks also charge high rates as the financial infrastructure has not developed
in Mongolia. The private sector representatives then said they would be helped by access to measures
reducing financial risks, like loan insurance. They also wanted their views and needs to be heard before
the budget and the monetary policy are prepared, and suggested another meeting in April or May, 2011
before work on both begins for 2012.
Mr. Kh.Ganbaatar, Executive Director and Deputy President of the Mongolian Employers‘ Federation,
referred to a report from the National Trade and Industry Hall which warns of double-digit inflation,
calls for competition between commercial banks, and urges the Central Bank to use its increasing
foreign exchange reserves to stimulate domestic economic growth. The report feels loan interests can
be reduced by 50%-60%, and loan risks by 70%-80%.
Mr. B.Jargalsaikhan, Director of Buyan LLC, said his company has to buy 7,000 tons of cashmere for MNT
50,000 per kilo but did not know where to get the MNT350 trillion this needs. The Buyan representative
said the state should support exporters more than importers and the Central Bank and the Ministry of
Finance should establish a Loan Fund.
Source: Ardiin Erkh

9. SENIOR EBRD DELEGATION VISITS MONGOLIA
A senior delegation from the European Bank for Reconstruction and Development (EBRD), led by Mr.
Olivier Descamps, the Managing Director for Turkey, Eastern Europe, the Caucasus and Central Asia, and
including Mr. Jan Willem van den Wall Bake, the EBRD Board Director for the Netherlands and Mongolia,
visited Mongolia from October 25 to 29. The delegation met with the Mongolian authorities, including
Prime Minister S. Batbold, Minister of Finance S. Bayartsogt, Minister for Mineral Resources and Energy
D. Zorigt, the Governor of the Central Bank, Mr. L. Purevdorj and the State Secretary of the Ministry of
Justice, Mr. Bayasgalan. It also met with senior managers and owners of companies representing the
EBRD‘s existing as well as prospective clients.
Mr. Descamps signed a debt and equity transaction with a new client, Monos Holding, the largest
pharmaceutical company in Mongolia, which will help it expand its trade and manufacturing activities,
including the construction of a green-field GMP-standard production facility.
The visit reinforced the Bank‘s strong commitment to support the economic development of Mongolia
with a view to strengthening the country‘s financial sector and the development of the private sector,
including the promotion of micro, SME and large local enterprises and its continuing support for a
sustainable development of Mongolia‘s important natural resources sector. Since the beginning of its
operations in Mongolia in October 2006, the EBRD has invested approximately USD360 million in 29
projects, with currently 100 per cent of the projects representing investments into the private sector.
Source: The FINANCIAL
HBS REPORT BY MICHAEL PORTER RECOMMENDS STEPS ‘MINING SERVICES CLUSTER’ SHOULD TAKE
A report entitled ―Mongolia‘s Mining Services Cluster: The Microeconomics of Competitiveness‖ and
prepared by Dr. Michael E. Porter of the Harvard Business School in the USA, says Mongolia is home to
the world‘s largest undeveloped deposits of gold, copper, coal, uranium and iron ore, and is on the
verge of a mineral boom. With plans to fully begin exploiting its mineral wealth by 2013, the
government hopes to triple Mongolia‘s GDP (USD5.3 Billion in 2008) over the course of the next decade
and transform the economy. Since transitioning to democracy and enacting economic reforms in 1992,
Mongolia has attracted significant foreign investment but unemployment remains high and 35% of the
population continues to live under the poverty line.
The first half of the report analyzes Mongolia‘s national performance and recommends ways for it to
increase prosperity and equality. Landlocked between China and Russia, Mongolia needs to address a
series of unique challenges. It is one of the least densely populated countries in the world and is faced
with a severe rural urban divide where 50% of the population is concentrated in the capital of
Ulaanbaatar.
The primary constraints inhibiting Mongolia‘s growth are a human capital base ill equipped to meet
market needs and poor infrastructure. To move forward, Mongolia needs to find a way to turn its
location into an advantage and establish initiatives that attract private sector investment into education
and healthcare. The report recommends Mongolia invest in building transportation linkages and position
itself as a stable, regional hub for accessing the growing, large markets in its two neighbors, Russia and
China.
Ultimately, any attempts to increase Mongolia‘s prosperity will be built on a foundation of mining and
the second half of the report specifically discusses the emerging ‗mining services cluster‘. High levels of
sophisticated and diverse demand from mining companies who outsource a host of services are currently
driving the cluster. There are now 33 firms operating in the mining services space, earning USD154
million in revenue. The demand is expected to grow dramatically as new mines come up for
development.
To fully take advantage of the anticipated mining growth, the cluster needs to increase the
competitiveness of local players and overcome seasonality issues. The cluster lacks a cohesive, long-
term strategy and the report recommends establishing a ‗mining services cluster‘ initiative that creates
a forum for collaboration, establishes standards and aggregates and disseminates data. To address
seasonality specifically, it recommends giving tax incentives to foreign mining companies already in
Mongolia if they utilize the services of the local mining services firms abroad. Given Mongolia‘s strategic
location, the mining services cluster possesses potential to become the supplier of choice for the Asian
region.
Source: www.isc.hbs.edu

10. RECLAMATION STANDARDS NEED TO BE RESET
Mr. D. Munkhtamir, a senior inspector in the environment, geology, and mining section at the
Specialized Inspection Agency, feels that while monitoring standards applied to gold mines are
adequate, they need upgrading in the case of several other mineral resources, including gravel,
fluorspar and coal. Reclamation monitoring was begun in 2003. In the case of coal, enforcing regulations
becomes more problematic as reclamation can begin only when mining is finally and totally over, and
new laws are needed to keep control over miners even after the mines are officially closed down. One
solution could be to collect annual fees from mining license holders during production years, to be spent
later, when extraction is over.
According to Mr. Munkhtamir, in general, technical reclamation is satisfactory in about 60% of mined
areas but biological reclamation is lagging, meeting expected standards in about only 21% of the areas
inspected. He also said proper evaluation can be made only after several years have passed. For
example the water in the Orkhon had turned red and there was widespread concern about chemical
pollution and it was found that the coloration came from the loose soil used in the reclamation work.
Over months and years this had ended up in the water.
Source: Zuunii Medee
SINCE MONGOLIA’S FUTURE LIES IN COAL, THE TASK IS TO MAKE IT CLEANER
With the country‘s total coal reserves estimated at 150 billion metric tons, Mongolia‘s development
future may be very well spelled out in coal. However, under this glow of optimism and opportunity
hangs the sobering cloud of carbon emissions and climate change. Coal is undoubtedly the dirtiest of
fossil fuels, accounting for 25% of greenhouse gas (GHG) emission while coal plants generate 73% of CO2
emitted globally in the atmosphere by electricity generators, according to the U.S. Energy Information
Administration (EIA). In Asia alone, the burning of coal to meet energy demands is expected to emit 13
billion tons of CO2 into the atmosphere by 2030, according to an ADB report.
Though the country has no emission targets, as a signatory to the UNFCCC (1993) and the Kyoto Protocol
(1998), the Government of Mongolia developed and approved a national report on Climate and Strategic
Policy on GHG Emission Reduction, adaptation policy and strategic implementation program in July 2000
which led to the creation of a national CDM implementation project in 2004. However, bridging
Mongolia‘s abundant fossil fuel resources with climate change tackling tactics will be an astronomical
challenge.
Efficient power plants and new technologies to make combustion cleaner and increase efficiency of
coal-powered plants can slash emissions by 1 billion tons per year, states a USAID Eco-Asia Clean
Development and Climate Program discussion paper. The economics of scale makes some of these
technologies too expensive for Mongolia, but if it is serious about its goal to become an energy exporting
country this could be an ideal solution for Mongolia to use its coal resources for power generation and
meet climate change agenda by building cleaner and more efficient power generators.
For the full article by Pearly Jacob, please see BCM website – Resources, Mongolia Reports.
IFC TO HELP IDENTIFY PUBLIC-PRIVATE PARTNERSHIPS TO DEVELOP INFRASTRUCTURE
IFC, a member of the World Bank Group, last week signed a memorandum of understanding with the
government of Mongolia in support of its program to expand the country‘s infrastructure through the
implementation of three pilot public-private partnership (PPP) projects. "IFC, in cooperation with the
World Bank, will help Mongolia‘s State Property Committee (SPC) screen, prioritize, and identify out of a
pool of 121 projects three that are most viable for implementation by the private sector as public-
private partnerships. Subsequently, IFC will support the government in selecting the private partners by
helping to prepare, structure, market, and implement competitive tenders for each of the three pilot
projects. IFC will also train government officials in these tasks throughout the process," IFC reported.
―Increased private sector participation in infrastructure is a cornerstone for economic development,‖
said Mr. D. Sugar, Chairman of the SPC. ―Implementing public-private partnership transactions is both
timely and important for the growth of Mongolia‘s private sector.‖
Mr. Edgar Saravia, IFC Program Manager for Advisory Services in PPPs in East Asia & Pacific, said, ―IFC‘s
support for public-private partnerships is part of our larger program in Mongolia to support private
sector development. This includes both investments in key areas such as banking, general manufacturing
and services, and mining, as well as advice to improve corporate governance, access to finance and the

11. country‘s investment climate. Our work in helping to identify three viable and sustainable pilot public-
private partnership projects will benefit from IFC‘s global expertise in this field.‖
Source: The FINANCIAL
40% OF FISH AND MARINE PRODUCTS DO NOT HAVE HEALTH CERTIFICATES
Checks on markets following the outbreak of the foot-and-mouth disease in some provinces that supply
meat to Ulaanbaatar – where the daily consumption is 203 tons per day or 74,000 tons a year -- revealed
388 irregularities, of which 270 were immediately rectified. Altogether 14 companies and 65 individuals
were fined MNT3.7 million, and 479 samples were collected for laboratory tests. Besides, 29 businesses
have been asked for explanation. Suspension orders have been served on one meat trade center, one
laboratory and three slaughterhouses.
Deficiencies were discovered in a surprise area, however. Inspectors found that many big suppliers of
fish and marine food had no documents and health certificates. This covers over 40% of such products
sold to individual customers. Chinese and Korean food shops, as also stalls in the Mercury trade center,
were found to regularly import goods as personal baggage, without any import permission and tests.
Source: Zuunii Medee
EMERGING MARKETS BRACED FOR FLOOD OF NEW MONEY
After QE2, QT2? Quantitative tightening – or measures by emerging market countries to counter the
sometimes pernicious effects of capital inflows – began even before it became clear that the U.S.
Federal Reserve was preparing another massive bout of quantitative easing. Now with the prospect of
yet more money sloshing around the global financial system in search of higher returns, a string of
governments in Asia and Latin America are expected to consider introducing capital controls to stem the
side-effects of inflows.
Emerging markets are affected in several ways by the so-called carry trade, in which money moves from
low- to high-interest environments. Such inflows put upward pressure on exchange rates, making exports
less competitive, and threaten the possibility of a 1997-style balance-of-payments crisis if flows
suddenly reverse. Inflows also exacerbate inflation, particularly if central banks are leery of raising
interest rates for fear of attracting yet more ―hot money‖.
According to a research note published by HSBC on Tuesday, one of the unintended consequences of
loose monetary policy in the U.S. and Europe is the likely proliferation of capital controls across the
developing world. Emerging markets are struggling with what it calls the ―impossible trinity‖, an
inability to allow free flows of capital while simultaneously maintaining a grip over interest rates and
exchange rates. ―The more the west pursues quantitative easing, the more the emerging world, via
capital controls, will pursue quantitative tightening,‖ it said.
Whatever the causes of upward pressure on exchange rates and inflation in emerging markets, capital
controls had definitely become less taboo as a countermeasure. Even the International Monetary Fund
had dropped its strong objections.
Read more...
South Korean President Lee Myung-bak has said policies aimed at stemming excessive capital flows
should be considered within the framework of international co-operation. Each country had to ―take into
account their own domestic needs‖, he said, rejecting the suggestion that unilateral action could be
regarded as undermining collective action to rebalance the global economy and avoid a currency war.
The Korean government likes to draw a distinction between capital controls, aimed directly at
mitigating pressure on the exchange rate, and what it calls macro-prudential policies whose purpose is
to prevent volatile capital movements. But Korean policy experts conceded that the huge flows
generated by quantitative easing made it harder and harder to differentiate between the two.
Source: The Financial Times
NO SIGNIFICANT CUT IN RARE EARTH QUOTAS, CHINA SAYS
China's rare earth export quotas for 2011 will not be significantly cut from recent levels, a commerce
official said on Monday, reinforcing Beijing's efforts to soothe foreign companies and governments
worried about supply. A Chinese Vice Minister of Commerce, Chen Jian, made the comments at a news
conference after weeks of international jitters about whether China could use its chokehold on 97% of
global rare earths production to sharply reduce exports of the metals, which are used for many high-

12. tech applications.
Mr. Chen's comments came after Vietnam and Japan, a big consumer of rare earths from China, agreed
at an Asian regional meeting in Hanoi on Sunday to partner on mining the minerals in Vietnam. Japan
and other countries, including the USA, have said they are seeking to diversify their access to rare earth
supplies away from China, following indications that Chinese exports have been disrupted or blocked.
Beijing has repeatedly said it is within its rights to control exports and its foreign customers should not
be alarmed. "I don't think there will be a big cut in export quotas," Mr. Chen said, when asked whether
China would slash rare earth exports next year. "China has a management system, but China has no
embargoes," he said. "But that does not mean you can buy freely, there will be a quota system -- the
quota system is a way of management."
Read more…
This year, Beijing has slashed export quotas by around 40% from 2009 levels, saying it needs to protect
reserves from reckless exploitation. It mined about 120 000 t of rare earths in 2008. China holds about a
third of the known, exploitable global reserves of rare earths, but it worries that its supplies will be
depleted within decades at current rates of mining.
Mr. Chen repeated the government's position that its efforts to regulate exports of the metals were fair,
and needed for environmental reasons. "There are many countries and governments in the world, they
have rare earth resources, but they don't allow exploration, let alone exports," he said. "China's rare
earth industry is full of problems -- excessive exploitation, rampant smuggling and serious environmental
pollution," Mr. Chen added. "Don't you think the Chinese government has to step in and enhance
management?"
Source: www.miningweekly.com
CHINA TO LIMIT COAL PRODUCTION OUTPUT
China plans to limit its coal output and step up mines consolidation in its next five-year plan though
power capacity is expected to exceed 1.4-billion kilowatts by the middle of the next decade. It plans to
limit annual coal production to between 3.6 billion and 3.8 billion tons in its next five-year development
plan, compared with 3.2 billion tons mined in 2009, China's Century Business Herald said on Tuesday,
citing China Coal Research Institute's director He Youguo.
He said under the blueprint, large coal miners should account for around 66%, or about 2.5 billion tons,
of the targeted yearly production, while total output for mid-sized mines, those with a capacity of
above 300,000 tons would be limited at 800 million tons. Total output from small mines, classed as those
with annual capacity of lower than 300,000 tons, would be limited to 500 million tons, the paper said.
China is the world's largest coal producer and consumer, but its highly fragmented coal industry has long
been plagued with a poor safety record as well as inefficient and polluting mining operations. Rapid
growth in China's power demand will also boost the country's new-found voracious appetite for imported
coal.
Source: www.miningweekly.com
CHINA’S COPPER DEMAND MAY RISE TO 8.5 MILLION TONS BY 2015
China's real consumption for copper may rise to 8.5 million tons by 2015, a director at the Ministry of
Industry and Information Technology has said at a conference. Copper demand from the power, car and
home appliance industries would continue to push up consumption in China, the world's top copper
consumer, he said, but did not provide consumption estimates for this year. State-backed research firm
Antaike has predicted that consumption would rise to 6.8 million tons this year, from 6.1 million tons
last year.
Source: www.miningweekly.com
MINING LEADS AUSTRALIA’S RECOVERY, SAYS IMF
Australia may need to tighten monetary policy further to contain inflation pressures being generated by
a mining boom, the IMF has said, in its annual review of Australia's economy. It said the recovery was on
track, led by strong demand for its commodities from China and India.
It said inflation was projected to remain close to the top of the 2 to 3 percent target band and noted
authorities agreed in discussions that if further inflation pressures emerged, they will need to raise rates
further. The IMF said private investment in mining and commodity exports had overtaken public demand

13. as the main driver of growth in Australia. The mining boom was likely to be long lasting.
The IMF said the authorities agreed in discussions that the commodities boom will test the economy's
capacity and fiscal policy had so far played a key role in managing the boom. It also supported
government plans to return to a budget surplus of 0.2 percent of GDP by 2012/13. It noted that a larger
surplus than in the past may help avoid potential overheating and offer protection from sharp falls in
commodity prices.
Source: Reuters
POLITICS
STANDING COMMITTEE REJECTS PRESIDENT’S VETO ON HIS AND OTHERS’ SALARY RAISE
The Standing Committee on State Structure has rejected by majority decision President Ts.Elbegdorj‘s
partial veto on the Parliament resolution to raise the salary of state high officials by 30%. The President
had said resolving the issue of students‘ stipends was more important than the salary raise. The head of
the President‘s Office, Mr. D.Battulga, explained the veto at the Standing Committee meeting and
submitted a proposal to allot more money from the budget for students‘ stipends. It would need MNT115
billion a year to meet the President‘s proposal to pay 120,000 students at institutes and universities a
monthly stipend of MNT58,000 each. Non-DP members of the committee said they were not against
financial help for students, but felt the President was playing politics.
MPs from the DP have supported the President‘s stand and said they will not accept increased salaries.
The two DP members of the committee stayed away from the meeting. The fate of the veto will now be
decided in Parliament.
Source: News.mn
NEXT WAGE RAISE TO BE A ROUTINE DECISION, WITH NO PUBLIC DEBATE
Prime Minister S. Batbold told Parliament that USD560 million would be spent on improving services in
the provinces while Ulaanbaatar will get USD20 billion to strengthen its infrastructure. The recent 30%
raise in public servants‘ wages, pensions, and allowances will be further increased in 2012. Minister of
Finance S. Bayartsogt later clarified that this will be done as a routine administrative arrangement, and
without any public announcement, so that there is no political debate and economic repercussion.
Source: Zuunii Medee
ROSATOM CHIEF SAYS MONGOLIA WILL BE ADMITTED TO URANIUM ENRICHMENT CENTER
Mr. Sergei Kiriyenko, head of Russia's state-run nuclear corporation Rosatom, was reported to have said
in Moscow on October 29 that Mongolia would be joining the International Uranium Enrichment Center
when he visited Mongolia. ―The Mongolian government has been very interested, so we shall sign an
inter-governmental agreement on November 1," he said. (However, there has been no report in the
Mongolian media of any agreement being signed.)
The IUEC currently has three partners, Russia, Kazakhstan and Ukraine. Mongolia has been seeking
access since May 2008. Joining it will give Mongolia guaranteed access to the uranium-enrichment
facilities in Angarsk, a city in Russia.
Source: Xinhua
MONGOLIA RECOGNIZED FOR IMPROVED BUDGET TRANSPARENCY
FreeBalance, a global Government Resource Planning (GRP) software company in Canada, has said that
three of its government customers –- Mongolia, Afghanistan, and Liberia -- have been recognized by the
International Budget Partnership (IBP) for substantially increasing their levels of budget transparency.
The latest IBP Open Budget Survey (OBS) shows Mongolia's score doubling from 18 in 2006 to 36 in 2008
and further increasing by 24 points to 60 in 2010 Survey.
Mr. Manuel Pietra, President & CEO at FreeBalance, said they are pleased to be working with the three
governments as they demonstrate leadership in modernizing their public financial management systems.
―FreeBalance helps these governments improve transparency, governance, and accountability, which in
turn leads to improved economic activity and increased investment," he said.
Source: www.FreeBalance.com

14. TV, RADIO TO BE BROUGHT UNDER REGULATORY GUIDELINES
The Government has asked the Committee on Telecommunications to prepare by the first quarter of
2011 regulatory guidelines for TV and radio journalism. The need for state regulation was felt as both
media are powerful instruments to influence social behavior and are liable to be misused. With their
increasing audience, TV and radio can serve the nation by helping protect the national culture and
heritage. Their popularity among children can be used to form good and ethical habits in children. The
Government also wants more information on the source of funds and ownership of TV channels and radio
stations.
Source: News.mn
RUSSIAN RAILWAY INTERESTED IN DEVELOPING INFRASTRUCTURE FOR MINERALS TRANSPORT
At his recent meeting with First Deputy Premier N. Altankhuyag, Mr. V.I.Yakunin, President of Russian
Railway, which is the Mongolian Government‘s partner in Ulaanbaatar Railway, expressed satisfaction
that Mongolia was to build a Russian-specification wide-gauge railway to help export its coal. He also
reiterated the interest of Russian Railway to actively participate in the development of the railway to
help transport the output from both Tavan Tolgoi and Oyu Tolgoi.
Source: Zuunii Medee
COAL TRANSPORTERS WARNED AGAINST EMPLOYING CHINESE DRIVERS
Following an inspection of the operation of some 150 coal transportation companies on the southern
border, the Transportation Authority of Mongolia recently ordered 36 companies to close down, and
another 26 were asked to suspend work until they take corrective measures suggested by the Authority.
Most of the companies found at fault have no fleet of vehicles, and no proper pool of employees. While
80 percent of the total 3,150 vehicles tested for technical specifications were imported from China, the
transportation companies were strongly warned to hire more Mongolian drivers in place of the 1,800
Chinese drivers employed at present.
Source: UB Post
RUSSIAN FIRM OFFERS TO PRODUCE ENERGY FROM GARBAGE
Tarrell Estit Ltd of Russia has offered to build a garbage processing factory in Ulaanbaatar and has
assured Mayor G. Munkhbayar that the energy to be generated will be enough to meet the heating needs
of ger districts. The company‘s Executive Director, Ms. Tatyana Serpkova, says construction material can
also be produced by recycling construction garbage. The Mayor asked Ms. Serpkova to discuss the issue in
more detail with city officials and said the Civil Representatives Assembly can consider the proposal for
the garbage recycling plant when it discusses the city budget in December.
Source: Ardiin Erkh
PHYSICAL WORK ON NEW AIRPORT YET TO BEGIN
The new international airport in Khoshig Valley, to be built with concessional loan from the Japanese
government, is still confined to paper and talk. The announcement was made by the then Prime
Minister, Mr. M. Enkhbold, after a visit to Japan in 2006. The Japanese Bank for International
Cooperation (JBIC) conducted a technical and economic feasibility study between November 2006 and
April 2007, and the Japanese Ambassador announced in January 2008 that his government will give 28.8
billion yen in concessional credit. The Mongolian Parliament ratified the credit agreement in May 25,
and Japan said it would come into effect from August 22, 2008. It was a 40-year loan, bearing 0.2%
interest per annum, while the interest of the capital to be spent on consulting service was to be 0.01%.
Repayment would begin from the 11th
year.
It was agreed that not less than 30% of the material and services for the project will have to be from
Japan, the project implementation company should be registered in Japan, and all tenders for contract
would be in compliance with procedures of JBIC. Accordingly, a partnership consultancy of two Japanese
companies, Azusa Sekkei and Oriental Consultants, was chosen and it began work on August 3 last year.
So far they have prepared a preliminary plan for several facilities. The executor of the construction
work is to be chosen in 2011, and the airport should be operational in 2015.
But there are two major hurdles on the way. As the Parliament election of 2012 gets closer, we shall
have all sorts of political interference to convince the electorate how much every party cares for local

15. development and the environment. Also, the changes in the foreign exchange rates are likely to increase
Mongolia‘s burdens, with the first installment due to be repaid in 2018.
Source: Onoodor
ELBEGDORJ DONATES BLOOD TO DISPEL RUMORS AND FEARS
The National Center for Blood Analysis (NCBA) had three surprise blood donors on Saturday last week.
President Ts. Elbegdorj, Olympic champion E.Badar-Uugan and a popular musician, D.Bold, donated
blood there in a bid to dispel the fear among people following some recent rumors. The President said
donating blood was a social duty and a sacred responsibility and hoped 10-20% of students and troops
would come forward in the present crisis. The media should also publish free advertisements.
Source: English.News.mn
HOSPITAL GETS MONGOLIA’S FIRST OXYGEN PLANT
The State Clinical Central Hospital has inaugurated its own oxygen plant, the first ever in Mongolia.
Established at a cost of over 200,000 euros, provided by the Czech Republic, the plant has the capacity
to produce twice the amount of oxygen needed at the hospital every day, and some of the excess output
will be supplied to other hospitals. A statement from the Ministry of Health says the plant uses French
and German technology, and there is no longer any need to import oxygen.
Source: Onoodor
INDEPENDENCE SQUARE OPENED
Victory Square in front of Tengis Cinema has got a new look and a new name. The Civil Representatives
Assembly has changed its name to Independence Square, as suggested by Mayor G.Munkhbayar. The new-
look square, renovated at a cost of MNT400 million, was inaugurated last week, even though not all the
work is complete.
The square is where soldiers led by General D.Sukhbaatar were joined by Soviet Red Army troops. The
combined forces moved from the front of the present Chandmani Center to what is now Sukhbaatar
Square on July 6, 1921. The square was a center for the movement for democracy 20 years ago, and
hence Independence Square is an apt name.
Source: English.News.mn
LATTER-DAY WARRIORS TAKE TO THE STEPPES IN THEIR HUMMERS
On a recent drizzly day in the Mongolian capital Terbish Bolor-Erdene became de facto grand master in
an unlikely parade. The 30-year old entrepreneur led a procession of shiny new Hummers through the
Mongolian capital, pausing briefly at the city‘s central square before rumbling out to the vast steppes of
this north Asian country.
As president of Mongolia‘s Hummer Club, Bolor-Erdene is in the vanguard of an army of young Mongolians
leaping into this country‘s capitalist free-for-all and taking to its rough highways in flashy off-roaders.
Like many self-made Mongolian businessmen his career had modest beginnings - in Bolor-Erdene‘s case,
importing one vehicle at a time from the US. His business grew to include car servicing, spare parts and
detailing. Although he studied government management at university, the lure of owning his own
business proved too much and he launched the Hummer Club in 2007.
Bolor-Erdene says there are around 300 Hummers in Ulaanbaatar, a quarter of them coming through his
dealership. These outsized, US-built vehicles navigate the city‘s potholed roads with a crush of other
SUVs, including Land Cruisers, Lexus 480s, Ford Expeditions and Land Rovers. ―Mongolians love these
cars because they are big and strong, like the Mongolian people themselves,‖ says Bolor-Erdene from the
behind the wheel of his own Hummer H2, a custom-built orange behemoth.
Yet Hummer may also be destined for antique showrooms. General Motors no longer builds the iconic
trucks, with the last vehicle rolling off the assembly lines in May 2010. The demise of Hummer means
that importers like Bolor-Erdene will need to rely on used vehicles for future business. Still, Bolor-
Erdene holds out hope for continued business, seeing Hummer servicing as a niche market that he can
fill.
Read more…
In Soviet times Mongolians preferred Russian jeep-style vehicles, he says. But times have changed and a
free market economy has given them access to car markets in Japan, Korea, Europe and the US. He

16. alludes to warrior bloodlines and Mongolia‘s past military prowess as a reason for Hummers‘ success in
Mongolia. ―The Hummer started out as a military vehicle and we Mongols still think of ourselves as
warriors. It‘s just a perfect fit for out country and our people.‖
The vehicles are particularly popular with Mongolia‘s nouveau ―khans‖. Owners include pop singers,
CEOs and famous athletes. Sumo wrestler Davaagdorj Dolgorsuren, who became Japan‘s 68th Yokozuna,
drives a Hummer H1.
Mongolia‘s love affair with the Hummer started in the late 1990s when a brash cashmere magnate
named B. Jargalsaikhan started driving around Ulaanbaatar in a Humvee, one of the original military
vehicles designed and used by the US army. Hummers have since filtered into Mongolia‘s growing upper
class. Luvsandorj Magnaidorj, a policy director for the local traffic police office, was showing off his H2
at the Hummer parade. ―These cars are safe, comfortable and good for Mongolian roads,‖ he said. ―And
you don‘t have to be famous to drive one, they are becoming more and more common.‖ The brand has
become more accessible to Mongolian buyers in part because of falling prices in the US, where hard
economic times have made gas guzzlers unfashionable. Hummers start selling at around USD35,000.
Bolor-Erdene and other importers purchase the cars in the US and ship them to Mongolia, via China.
Shipping a vehicle costs around USD2,600 and once it arrives in Mongolia the importer will likely pay an
additional USD6,000 in import duties.
The Hummers are then shined up and sold in parking lots around the city, usually with the US license
plates still screwed on. High mark ups can result in big gains for importers. Bolor-Erdene says his asking
price for his latest import, a Hummer H2 SUT, is USD120,000. Street value for this vehicle in the US is
USD56,800.
In addition to parts and accessories the Hummer Club also acts as a social hub for Hummer owners.
There are countryside driving tours and, in mid-summer, the Hummer Parade around Ulaanbaatar‘s
central square.
The luxury SUVs are part and parcel with the rapid economic changes happening here. Mining
companies, both foreign and domestic, are tapping vast reserves of gold, copper, oil and other minerals.
The newfound wealth has brought not only cars but major construction projects - shopping malls, gated
communities and international hotels spring from the earth seemingly overnight. Shangri-La recently
opened a landmark tower in the city centre; the building includes offices, restaurants and high-end
clothing retailers, the likes of which include Armani and Burberry.
Pundits are calling this the ‗wolf economy‘, a Mongolian take on the ‗Asian Tigers‘. Mongolia‘s economy
is growing at a steady 8% a year and the IMF has said this could be the world‘s fastest growing economy
over the next decade. Mongolia‘s stock market, though still small, has grown 110 per cent this year. In
the midst of all this growth is a rising class of business leaders eager to shell out cash on expensive cars,
penthouse apartments and Italian suits.
But infrastructure has not been able to keep pace so roads in the countryside are still mostly rough jeep
tracks, making sturdy SUVs the vehicles of choice. Roads in Ulaanbaatar are also rough and pot-holed -
sedans and compact cars tend to disintegrate rapidly. Meanwhile, the dented Ladas and bullet-gray
Russian jeeps that once ruled the road are fast becoming rare antiques.
(This article is by Michael Kohn, who is now working on a new edition of Lonely Planet Mongolia.)
Source: The South China Morning Post
SHANGHAI EXPO SETS RECORD WITH 73 MILLION VISITORS
When city officials in Shanghai promised the biggest and best World Expo ever, they were not just
blowing smoke, as Tao Renran and 60 co-workers at a state-run garment factory found out recently
when they were asked to visit this year‘s Shanghai World Expo. That odd request, they said, quickly
became a threat. ―We were required to come, otherwise, they said, they would cut our wages,‖ the 46-
year-old Ms. Tao said last week, after traveling eight hours by bus to get a one-day glimpse of the Expo.
Ms. Tao and her co-workers had lots of company. According to tourism experts, state employees and
government bureaucrats from virtually every part of the nation were ordered to pile onto buses, trains
and planes and head to the Expo 2010 in Shanghai, this year‘s singular national event, which ended on
Sunday. State-run tourist agencies had travel quotas, and state companies handed out free vouchers
good for a one-day visit, all in the hopes of helping pump up the numbers.
This government campaign had a simple but noble objective: helping the six-month-long Shanghai Expo
reach its target of 70 million visitors, which would shatter Japan‘s Expo attendance record of 64 million,

17. set in Osaka in 1970. Breaking the record was a matter of national pride, and in a country with a history
of mass mobilizations and state propaganda, reaching the target was not a question of whether but
when.
That day arrived on Oct. 24, when Expo attendance eclipsed the 70 million mark, with a week to go. By
the time the Expo closed with a glittery ceremony attended by Prime Minister Wen Jiabao, just over 73
million visitors had passed through the Expo turnstiles; it is believed to be one of the biggest events ever
staged. Only 5.8 percent of the visitors — about 4.2 million — were foreigners, according to government
data.
Read more…
Still, visitors to the Expo were hardly lemmings being pushed solely by government handouts. There
seemed to be a genuine interest and curiosity about seeing a World Expo, and exploring a range of
pavilions and exhibition halls. With long lines at the American, French, German and British pavilions,
which were among the most elaborate, many visitors opted for those of Slovakia, the Maldives and North
Korea (which featured a fountain, Korean folk songs and an English sign that said ―Paradise for People‖).
Some desperate visitors tried to con their way into the special access line of pavilions by pretending to
be confined to a wheelchair. And there were reports that elderly women were standing near the
entrance gates offering to rent themselves out as Expo escorts for USD25 a day — a sure way to pass
through the special access line.
Source: The New York Times
ANNOUNCEMENTS
MONGOLIA INVESTMENT SUMMIT, NOVEMBER 23-25, LONDON
The Mongolia Investment Summit on 23-25 November in London will be bringing together companies
operating in Mongolia with the Mongolian government to discuss the opportunities and challenges
surrounding investing in this frontier economy.
Delegates will:
• Learn the best entry strategies into Mongolia
• Access partnership and investment opportunities
• Gain first hand insights into regulations and policies affecting foreign investment
• Understand how frontier market investment can work for you
• Get a clear picture of how the government is working to improve Mongolia's business environment.
Among the speakers will be:
• Andrew Harding, Chief Executive, Copper, Rio Tinto on the importance of emerging markets in
meeting global commodity demands.
• Robert Friedland, Executive Chairman, Ivanhoe Mines on how they worked with the Mongolian
government to come to an agreement on the Oyu Tolgoi mine, and how the mine will be developed.
• Kevin Bortz, Director, Natural Resources, EBRD about Mongolia's economic outlook and what remaining
reforms need to be made.
• G. Tsogtsaikhan, Director, MonAtom LLC about where the opportunities for Mongolia's uranium mining
are found.
• T. Amarzul, Executive Director, Petro Matad LLC on the development of Mongolia's petroleum
resources, and why they chose to list with LSE AIM.
• Daniel Broby, Chief Investment Officer, Silk Invest about their appetite for Mongolian investment,
what type of projects they are seeking and what restrictions and risk perceptions they have.
More information can be had at www.terrapinn.com/mongolia.
EISENHOWER FELLOWSHIPS 2011 NORTHEAST ASIA REGIONAL PROGRAM
The Mongolia Nominating Committee of the Eisenhower Fellowships, c/o USAID/Mongolia, is accepting
applications for the 2011 Northeast Asia Regional Program (NARP), to be held in the fall of 2011. The
program will include China, China (Taiwan), Japan, Korea, and Mongolia. It will build on the momentum

18. created in these countries, and the EF network in the region as a whole, as a result of the 2006 NARP.
Given the growing importance of these countries to each other and continuing importance to the United
States, this program comes at an ideal time. It will enhance existing relationships and foster new ones
among leaders in the region which will influence the future of Northeast Asia and its cooperation with
the United States.
NARP Fellows will pursue rigorous, individually-tailored programs in the United States that will provide
them with the opportunity to meet with leaders in their fields, attend pertinent conferences, and
participate in relevant site visits.
NARP Fellows will be selected based on their leadership achievements to date, potential for future
impact, and plans for tangible outcomes. The NARP will consist of Fellows diversified by gender and
profession from the public sector, private sector, and civil society.
Those who are interested in applying for the Program, please carefully review the application criteria
and background materials, and send your application in English and in electronic form to
hmendsaihan@usaid.gov. The submission deadline is 5:00 PM, Friday, November 26, 2010. Please find
the relevant documents on 2011 Northeast Asia Regional Program, Criteria for Eisenhower Fellows,
Information for 2011 NARP Eisenhower Fellowship Applicants, and the 2011 NARP Eisenhower Fellowships
Application from http://mongolia.usembassy.gov/eisenhower2011.html.
_________________________________________________________________________________________
“BSPOT" on B-TV
BTV (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.
__________________________________
“MM TODAY” on MNB-TV
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.
__________________________________________________________________
NEW POSTINGS ON BCM WEBSITE'S 'PRESENTATIONS' AND 'MONGOLIAN BUSINESS NEWS'
The speaker presentations which were presented at the Mining Investment Summit 2010 in Hong Kong,
October 14, 2010, are now posted on BCM's website (www.bcmongolia.org) in the "Resource,
Presentations " section for your review.
There are 17 new presentations made by Mongolian and foreign officials to the more than 200 attendees
at the highly successful conference.
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.
SPONSORS

19. ECONOMIC INDICATORS

20. INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
Year 2008 *22.1% [source: NSOM]
Year 2009 *4.2% [source: NSOM]
September 30, 2010 *10.6% [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]

21. CURRENCY RATES – November 4, 2010
Currency name Currency Rate
US dollars USD 1,285.70
Euro EUR 1,804.99
Japanese yen JPY 15.95
British pound GBP 2,062.58
Hong Kong dollar HKD 165.87
Chinese yuan CNY 192.73
Russian ruble RUB 41.81
South Korean won KRW 1.16
Disclaimer: Except for reporting on BCM‘s activities, all information in the BCM NewsWire is selected
from various news sources. Opinions are those of the respective news sources.