December 27 2013

1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
YearEnder Issue – December 27, 2013
The Business Council of Mongolia wishes its members and all readers of the Newswire a
healthy, happy and prosperous New Year!
2013 – The Year that Was...
This year-ending issue comprises eight broad sections containing articles from the passing year's
previous issues of BCM's NewsWire which unfold the chain of events that lead to today's state of
affairs. This is a chronological compilation of reports as they appeared, not a summary or post
analysis. Readers should bear in mind that the issues each week collect reports from various media
sources, and these reports, especially those in the Mongolian media, can often be distressingly
vague or tantalizingly incomplete. We give them as they were published, recording how events
developed. This issue is meant to be used as a primary source document, not organized history. The
items appear here as they did originally. The issue number and the source are given for those
seeking further information.
I. BCM MEETING RECAP
BCM in 2013
January
Issue 259
The meeting on 28 January with B Byambasaikhan in the chair for the first time was attended by
125 150 members and invited guests.
BCM membership now stands at 231 members, up 48 from 183 members a year ago. The 14 recently
joined members are:
1. Global Ideas is an architecture and construction company based in Ulaanbaatar. It provides a
wide array of services, from design and planning services, to tailored construction and renovation
services to foreign and local clients alike. Its goal is to provide better quality housing to the people
of Mongolia.
2. Golder Associates, established in 1960, is a global, employee-owned company driven the purpose
to engineer earth‘s development while preserving earth‘s integrity. From over 180 offices
worldwide, its more than 8,000 employees help its clients find solutions to the challenges society
faces today including extraction of finite resources, energy and water supply and management,
waste management, urbanization, and climate change.
3. Grata Law Firm, founded in 1992, is one of the leading professional law firms in Central Asia
including Mongolia. It provides full services in Mongolian laws and is engaged in the international
practices of commercial and business law.
The office opened in 2011 and is one of the first truly full-service international law firms in
Ulaanbaatar, Mongolia.

2. 4. Interconsulting LLC is a professional consulting company which is uniquely positioned between
the development project consulting and traditional market research, investment advisory and
management consultancy services.
They are specialists in Mongolia strategy and advise foreign companies, international development
organizations, government and non-government institutions on development projects
implementation and Mongolia investment strategies.
5. ISG Mine Elect has concentrated on establishing successful alliances with clients and suppliers
throughout Australia. Now based in Australia and Mongolia we poised to deliver outstanding services
to our existing and new clients.
The Infrastructure Services Group (ISG) of companies provides complete ―turn-key‖ infrastructure
solutions to all areas of Industry. With ISG Holdings providing streamlined cost effective
administrative, quality and safety systems to its subsidiary companies.
6. Lehman Bush offers a broad range of accounting, tax, payroll and corporate services to clients
seeking to enter Mongolia‘s thriving business market. It provides high value added consulting
support for companies with initial and second stage development programs in Asia and abroad,
ranging from investment in manufacturing, mining, minerals, governmental relations, to the
development of sales distribution and logistics.
In Ulaanbaatar, Lehman Bush offers a broad range of accounting, tax, payroll and corporate services
to clients seeking to enter Mongolia‘s thriving business market.
7. Mining National Operator (MNO) is a privately invested national mining company founded in 2010.
Its operational fields include mining operations (mine planning and mining), consulting (project
start-up, process of mining operation, etc), project estimation (long, medium and short term mine
planning), project management(management contract), environment management (assessment and
planning), contract mining (overburden removal and mineral resource mining contract works, pre-
striping waste), construction of infrastructure (paved road construction, gravel dam of the road,
gravel dam of the railway), construction of water pond facility (construction of plant tailings dam
and reservoir ponds), reclamation work (technical and biological reclamation for disturbed land),
and mine closure plans & execution.
8. Monroad LLC is the leading Mongolian road, bridge construction and road maintenance company,
established on 24 November 2001. It has grown into a highly respected regional contractor by
utilizing the most current innovations in construction technology and employing a highly skilled
workforce of operating engineers and field support personnel.
9. New Logistics LLC is a group of skilled and experienced professionals who combine an
understanding of effective logistics systems with local experience and awareness of the operating
environment, thereby being able to deliver the following services to our customers.
They aim to deliver an outcome that maximizes its contribution to client‘s objectives and go
beyond expectations with a view to creating value to the client.
10. Origo Partners MGL is a member of the China-focused private equity investment company,
Origo. It specializes in permanent capital and fund management. It has experienced local managers
backed by a blue-chip base of shareholders
Its key portfolio assets include Gobi Coal & Energy; Celadon Mining; R.M. Williams; China Rice;
Unipower Batteries, and NiuTech Energy.
11. Save the Children (Japan) in Mongolia is one of the world's leading independent organizations
for children. Its vision is a world in which every child attains the right to survival, protection,
development and participation. Its mission is to inspire breakthroughs in the way the world treats
children, and to achieve immediate and lasting change in their lives.

3. Save the Children started operating in Mongolia in 1994. And now has funding of approximately USD
4 million dollars for the wellbeing of children in Mongolia.
12. Sumitomo Corporation Ulaanbaatar Representative Office engages in multifaceted business
activities benefiting from its integrated corporate strength, selling a variety of domestic products
and services, conducting import-export and trilateral business transactions, providing domestic and
international business investment, and participating in numerous other profitable activities
facilitated by our global network and the relationships of trust.
It opened in Mongolia in 1992 and now has 5 local staff focused on investment and gathering
information. Its investments in Mongolia are Mobicom Corp. and Transwest Mongolia.
13. Summit strives to become the best and top company among other players in information
technology and a permanent partner to its customers by persistently meeting their needs in
addition to introducing and delivering high quality products and service to our customers.
14. Worley Parsons Mongolia service capabilities cover the entire asset lifecycle: from identifying
the opportunity to the operating phase. WorleyParsons extensive experience ensures that we
provide project solutions with the lowest total lifecycle cost while meeting each customer‘s specific
requirements.
WorleyParsons‘ scope of work will be delivered from its Brisbane office with support from its other
offices in China and Ulaanbaatar.
N. Algaa, Executive Director of the Mongolian National Mining Association, presented first for the
evening, providing his thoughts on the recently released draft Minerals Law from the Office of the
President.
He discussed the importance in providing provisions in the law concerning the ownership of mineral
deposit reserves, the bureaucracy for licensing, and the transferring of rights for licensing. Algaa
was also quick to point out that Mongolian companies would not go unscathed, as investors would
likely be leery about investing in any company that must operate under such conditions. He said
that developing the law that was most beneficial would take a cooperative act between all
stakeholders.
―Today Mongolia needs consensus between government and the private sector. Without consensus,
we cannot grow.‖
Algaa said there was still time for the private sector to help change the law for the better, echoing
the words of P. Tsagaan, the Chief of Staff of the Office of the President, who said ―there should be
no rush to pass the law and it should not be used as a political device for candidates to campaign on
in the upcoming presidential election.‖
―Instead of just saying it's a bad law, we should seek out alternative provisions. We set up our
working group to find those alternative provisions.‖
The next speaker was Jay Liotta of the law firm MahoneyLiotta LLC. He brought to the audience's
attention two pieces of legislation recently passed by Parliament that would restrict the
professional abilities of lawyers and auditors in Mongolia.
―Today auditors and law firms can no longer give tax advice,‖ said Liotta explaining the effects of
the Law on Auditing and Tax Advisory.
According to Liotta, the law, which passed early this month and took effect 28 January,
restructures the auditing and tax advisory professions. Auditing firms are given three months to
restructure and establish tax consulting firms with five licensed tax advisors. He stressed it was how
quickly companies were expected to implement the changes that was the crux of the issue.
Although the second law passed, the Law on Lawyers was originally scheduled for 1 January 2014,
the date had been pushed forward to 15 April, again giving very little time for companies to
implement the changes asked for in the law. The law also provided very little clarity on how
lawyers could operate and what the actual licensing requirements were. He speculated that even

4. the Mongolian attorneys that had practiced for decades would no longer be able to operate as they
had been after the law takes effect.
―We're really trying to understand how the legislation is going to work and how it will be
implemented. As we saw with the draft Minerals Law and the Strategic Entities Foreign Investment
Law, we're curious on the social and economic impact assessments,‖ Liotta said. He added, ―If I try
and take a perspective of what's going on in Mongolia... I think part of it can be viewed as reform...
From another perspective, with some of the extremes in it, I guess it looks like legislative chaos.‖
Katsuhide Nagayama, Japan International Cooperation Agency (JICA) team leader of the JICA
Project Team, spoke next to present plans for developing Ulaanbaatar's public transportation
network with a metro system.
The JICA team had first submitted its master plan in 2009, targeting a completion date of 2030 for
the entire project. Nagayama said his team hoped to complete the first phase by 2020, with
operations transport to begin that year. The basic plan structure revolves around developing an
east-west metro line in Ulaanbaatar. Also included would be a north-south line, to be developed by
the Asian Development Bank (ADB). In total the metro network would include three east-west lines,
one north-south lines, and seven subordinate lines. Stations would include the Ulaanbaatar city
center, the now-under-development Zuunmod International Airport, Nalaikh Soum, the Tolgoit
logistics park, and the Bagakhangai agro-industrial center.
―After completion of the bypass for freight railway, the UB railway will provide a metropolitan
commuter rail service exclusively for passengers,‖ reads one of the slides in his presentation.
The plan calls for a public-private partnership with USD 200 million of investment from a private
partner firm and USD 1.5 billion from the government. The government and private firm could then
establish a public-private joint company to rent the infrastructure for use.
―This is a dream project but not really just a dream because with the economy blowing up from
investment into Mongolia's mineral sector, this city will be a hub of activity. In that city, this metro
is necessary.‖
Chris Adsett, Chief Executive Officer, Techenomics Mongolia, spoke next on the importance of oil
analysis to industry. Adsett said his company tailors itself to the Mongolian market, offering a range
of services. He explained that oil analysis was important, as it could help save companies money,
improve operating performance, and lower the frequency of unscheduled maintenance.
―If at the beginning, the lubricant stays clean from the start and cleanliness is maintained, the crew
can extend the life quite dramatically of compartments and lubricants.‖
Going forwards, Adsett said Techenomics aimed to provide companies with its fully-commissioned
monitoring services with regional labs—including one in Tsogtsettsii Soum, Umnugobi Aimag—
filtration units for oil refurbishing, and vibration analysis.
Mandar Jayawant, Managing Director of the Mongolian Opportunities Fund, gave the final
presentation, explaining the importance of private equity in a developing economy such as
Mongolia's.
Jayawant said his fund had already met its target financial goal of USD 50 million, with USD 13
million deployed already and 8 years to allocate the remaining USD 37 million. A fund such as his
needs companies to invest in that will grow fast and need upgraded technology, better
management, and financing. His funds, and others like it, are essential to help companies meet
their potential as there is a shortage of local lending options, limited expertise and difficulty in
making international connections. Private equity is particularly advantageous to firms as it aligns
the interest of the investor and the firm being invested into. It also provides outside perspective
and grants expert support, he added.
―Owners can be comfortable with interests of investment fully aligned; the demand of investment
on cash flow won't be overly demanding,‖ said Jayawant.
He noted that his fund was not a venture capital firm and was not investing for the long haul. There
is always an exit strategy, he said, with the intention of leaving the company better off than when

5. the fund found it. Growth is key, not control, he stressed.
―If the exit is not clear, it is better not to go with the investment at all.‖
___________________________________________
February
Issue 263
The meeting on 25 February, with B. Byambasaikhan in the chair of the first meeting in the ―Year of
the Water Snake,‖ was attended by 90 members and invited guests.
Byambasaikhan reminded members of the scheduled presentation by Brian Fisher, Managing
Director of BAEconomics Pty Ltd, ―Economic Impact Assessment of draft Minerals Law‖ on 18 March.
Next he invited Adrienne Youngman, Partner at Mongolia Talent Network, to update members on
the progress of a survey her firm was administering to identify Mongolia's best employer. She said
work was progressing well and they were still accepting survey submissions.
"We've gone through the strategic threshold, but now it's time to make through to the data to
identify the top employer."
BCM membership now stands at 244, with 44 more members than a year ago.
―Despite the economic turmoil, we have more new members joining BCM than ever before,‖ said
Executive Director Jim Dwyer. ―We're up this year 20 percent from a year ago.‖
The seven most recently joined members are:
1. Anglo American is one of the world‘s 5 largest mining companies, headquartered in the UK and
listed on the London and Johannesburg stock exchanges. Its portfolio of mining businesses spans
bulk commodities—iron ore and manganese, metallurgical coal and thermal coal; base metals—
copper and nickel; and precious metals and minerals.
2. Erdenes Tavan Tolgoi JSC owns licenses over a majority of the Tavan Tolgoi coalfield, one of the
largest open pittable coking coal deposits in the world.
Tavan Tolgoi has 7.4 billion tons of measured indicated and inferred coal reserves and resources
and 1.8 billion tons of proven probable coal reserves in accordance with JORC. The company
commenced commercial production in July 2011.
3. The Capital Market Research Centre is a non-profit and non-membership NGO which was founded
in September 2008 and based in Ulaanbaatar. Its general activities include studying the activities of
Mongolian companies listed on the Mongolian and foreign stock exchanges and their influence on
Mongolia's economic growth and foreign investment.
4. The German-Mongolian Entrepreneurs Association represents the interests of enterprises that are
involved in bilateral German-Mongolian trade and investment. It is the biggest bilateral economic
association in Mongolia and supports its members and other organizations as a platform for
commercial contacts, business information and offers a wide range of services.
5. Modun Resources is a company listed on the Australian Stock Exchange (ASX) which is developing
its 100 percent-owned Nuurst coal project in central Mongolia. Nuurst is a thermal coal project,
which encompasses a 34.5 square kilometer licensed area, with a 478 million-ton JORC reported
coal resource at Nuurst (326 million tons Measured, 104 million tons Indicated, 48 million tons
Inferred).
6. Practical Daatgal LLC, established in 2003, is insuring all kinds of risks through its skilled
insurance experts while gaining the gratitude of its customers.
7. Sandvik Mining is a business area within the Sandvik Group, based in Sweden, which is a leading
global supplier of equipment and tools, service and technical solutions for the mining industry. The
offering covers rock drilling, rock cutting, rock crushing, loading and hauling and materials

6. handling.
Ch. Khashchuluun, Chief Executive Officer of UBRM Consulting, gave the first presentation on
improving the current business climate in Mongolia.
―There have recently been many changes to the economic climate in Mongolia. Investment projects
take years, so it's not good to change so much,‖ said Khashchuluun. He added, ―Probably
government shouldn't meddle much in investment affairs and leave it to private capital.‖
Khashchuluun noted how foreign investment was a chief driver of Mongolia's world-beating growth.
He said the government would be wise to take a long-term approach to the situation rather than
settle on short-term prizes.
―Capital is like oil or gas for an engine. If it stops, the engine will as well.‖
Columnist and television host D. ―De Facto‖ Jargalsaikhan spoke next with his presentation titled
―Five Hills and Five Challenges.‖ He explained how poor governance had crippled the operations of
Mongolia's prized Tavan Tolgoi coal mine. Worse, politicizing the deposit had allowed enterprising
government officials to make off with the short-term gains, while society at large saw very little
benefit.
Jargalsaikhan named five challenges that held back such projects from success. The first was the
unsustainable growth of government. In the past government could grow on the back of mining
revenues, but now that prices are falling and foreign investment is sputtering that growth is no
longer manageable.
The second issue was the lack of accountability in government, allowing politicians to put their own
agendas ahead of the economy.
―We expected more transparency and after that accountability. This is not the case,‖ said
Jargalsaikhan.
Tavan Tolgoi and other projects were also suffering from poor governance. Mongolia is still scarred
by corruption, Jargalsaikhan said, and volatility in government—especially after elections. Even
attempting to resolve corruption only exacerbated the fourth issue of authoritarian governance,
which has many government officials overly preoccupied by possible corruption accusations.
Finally, the last challenge was the fact that all the actions of policy makers are governed by
elections. This kind of thinking, he said, has thus far resulted in the squandering of assets such as
Tavan Tolgoi, misuse of pension funds, and inability to launch crucial projects such as the
construction of Power Plant No. 5.
___________________________________________
March
Issue 267
The meeting on 25 March, with Executive Director Jim Dwyer in the chair, was attended by 110
members and invited guests.
Dwyer summarized past events during March, including a presentation by Brian Fisher of
BAEconomics on the projected impact of the draft Minerals Law released to the public by the Office
of the President. Fisher's presentation focused on the significance of the mining sector in Mongolia,
noting aggressive legislation would be a detriment to both Mongolia's mining sector and the
Mongolian economy as a whole. He noted that if passed in its current it would result in 4 percentage
points less gross domestic product (GDP) growth per annum over the course of the next 20 years.
Dwyer also noted developments concerning the Strategic Entities Foreign Investment Law (SEFIL),
which was reportedly ready for amendment by the government, and the draft Minerals Law.
―We hope to see the SEFIL changed to apply just to foreign state-owned enterprises,‖ said Dwyer.
―We hope to see the draft Minerals Law vastly improved, but after allowing considerable time for
public comments and no sooner than in the fall session of Parliament.‖
BCM membership now stands at 247, up from 211 members a year ago. The three most recently
joined members are:

7. 1. Alfred H Knight Ltd (AHK), established in the United Kingdom in 1881 and still remaining in the
ownership of the founding family, has been at the center of the global metals and minerals industry
throughout its history. The company has more than 2,000 staff with offices in 35 different
countries.
2. The Mongolian Coal Association is a national association for the coal sector of Mongolia,
established in January 1998. It is a not-for-profit and non-government organization with members
from coal producers, coal enterprises, coal related institutions, and professionals.
The association aims to participate in activities to direct the legal conditions of the Mongolian coal
sector through participating in policy drafting, implementation of state industrial policies,
developing rules and regulations, safeguarding the members' rights, providing services, developing
international cooperation, raising efficiency, introducing modern technologies, and strengthening
the management and personnel of the coal industry of the country.
3. ProCURE Global Development and Consulting LLC is an expert resource for both developed and
emerging market nations who desire to plan, build, staff, and operate sustainable hospitals and
specialty centers of excellence. Its mission is to work collaboratively with governments and private
entities to meet their growing patient care needs using resources within their own country.
The first speaker of the day was Ruth Pulaski, Director of Marketing and Development at the
American University of Mongolia (AUM), to present the plans of the newly established university.
―Although predicted growth is bringing increased wealth and increased standards of living, it also
brings potential risks‖ said Pulaski.
She noted the importance of a liberal arts education in ―educating the whole person‖ while
instilling broad knowledge of the world, social responsibility, and strong intelligence and practical
skills.
Though a four year undergraduate program was scheduled to begin in 2014, the school may have to
delay that event. Until then, the school will focus on its executive education course, English
language institute, and global executive MBA program with the Kelley School of Business, Indiana
University. A fourth program is planned for engineering that will rely on a partnership with the
University of Alaska, Fairbanks.
AUM was established in 2011 by five U.S. and five Mongolian businessmen, educators, and
community leaders. She noted that Newcom LLC was the university's first sponsor when Pete
Morrow, the current chairman of the school, resided on the board. Newcom has been followed by
Rio Tinto PLC, the GE Foundation, and DAI.
The next speaker was Bayar Budragchaa, Managing Director of Economic and Legal Consultancy
(ELC) LLC, who provided an update to the Strategic Entities Foreign Investment Law (SEFIL).
Bayar presented on a letter distributed by his firm to clients that reported on a recent regulation
approved by the Cabinet of Ministers. The Regulation Regarding Receiving and Making Decisions on
Request of Entities Carrying Out Activities in Sectors of Strategic Importance was approved to
compliment SEFIL and provide more clarity to the law. The new regulation has the law apply only to
state-owned enterprises. It also designates the required approval from the minister of economic
development and the minister overseeing the sector from which the company in question operates.
―If approved, it is good news because it means Cabinet approval for these transactions,‖ said Bayar.
He added, ―It's our hope the project will be looked at again, but from a different angle.‖
Tony Burchill, Australian Consul-General and Trade Commissioner, gave the final presentation,
explaining the importance of Australia and other nations' third-neighbor relationships with Mongolia.
―We're entering the economic stage of a third neighbor policy, and I think we'll see a lot of
challenges come out of this,‖ he said.
Burchill explained that to Australia the third-neighbor policy is a bipartisan tenet of its foreign
policy to present excellent person-to-person links, expanding the presence of the Australian

8. government, and bringing together two great mining nations.
―The two countries have enormous things to offer each other,‖ he said. ―A lot of people comment
that Mongolia is a competitor. We don't rescind from that, but we want to work towards its
success.‖
___________________________________________
April
Issue 271
The meeting on 22 April, with B. Byambasaikhan in the chair, was attended by 110 members and
invited guests. Executive Director Jim Dwyer gave a short summary for the audience on the
Mongolia Investment Summit in London, where spirits were high.
―The atmosphere was surprisingly upbeat,‖ said Dwyer. ―Hong Kong last October was not so, and we
weren't sure how it would go.‖
BCM membership now stands at 251, an all-time high. The four most recently joined members are:
1. Bloomberg Television, an award-winning, multi-platform 24-hour business and financial news
network, provides continuous coverage of the people, companies and ideas that move global
markets. Broadcasting from centers in New York, London, Singapore and Hong Kong and powered
with an unparalleled news gathering team of 2,300 news professionals in 146 bureaus across 72
countries worldwide, Bloomberg Television delivers real-time business news to over 310 million
households globally.
In addition to major cable and satellite providers are Bloomberg.com and Bloomberg Mobile. The
network is available on the Bloomberg Professional service, used by the most influential individuals,
corporations, and institutions around the world.
2. Mitsui & Co., one of Japan‘s major trading companies, has five principal functions - marketing,
financing, logistics, risk management, and process development capabilities. It combines these
functions and brings together its diverse strengths to create and optimize value chains in a wide
range of business fields. Maximizing its value-added content, the company strives to meet the
diverse needs of its customers around the world. Most of its gross profit comes from energy
businesses.
3. Santa Fe provides the full range of relocation services to support businesses with international
interests from diverse industry sectors. Santa Fe is located in 54 countries with 123 offices globally
and offers holistic relocation solutions to support businesses and relocate employees.
4. Taxand LLC, provides professional tax services to clients across industry sectors. The company
houses experts in corporate tax consulting and compliance, tax audit defense, tax litigation,
transfer pricing, tax due diligence, VAT and customs duties. In addition, it has considerable
experiences in outsourcing as well as advisory services for foreign investors.
Nick Cousyn, Chief Operating Officer of BDSec JSC, gave the first presentation of the evening,
speaking on the Gobi Deluxe Hotel and Resort. He suggested that the Gobi Resort was the perfect
place for busy business professionals to get away from the stress and hassles of the city—not to
mention the pollution of winter—and enjoy the quiet and serene nature Mongolia has to offer.
―We all find it difficult to relax and unwind,‖ said Cousyn, ―but to have a place to recharge our
batteries and get away from UB is very nice.‖
The hotel is 38 kilometers from the city and features nine rooms, a restaurant, gers for summer
holidays, and a variety of activities. He divided hotel guests into three categories: those for
business, family, and recreation; each with their own accommodations. While companies planning
staff retreats may like to take advantage of the VIP conference rooms and corporate dining room,
family-oriented patrons can make use of the kids rooms and winter activities, and those looking for
a fun party can enjoy the full disco and bar and karaoke.

9. Brian White, Editor of the blog The Mongolist, spoke next to give a detailed talk on his latest entry,
―The Middle Layer.‖ The title refers to the prevailing discussion and exchange of ideas that is
sandwiched in between ideas, both good and bad, and useful knowledge. He explained that
accurate data on Mongolia was difficult to find, allowing observers to make false presumptions.
He recalled the statements made by President Tsakhia Elbegdorj concerning Oyu Tolgoi that were
quoted by international news sources. His statement, ―It's time for Mongolia to have Mongolian
control and Mongolia representation,‖ seemed to be yet another piece of evidence that ―resource
nationalism‖ was taking hold of the government's policies. However another translation of the
speech suggests he merely felt that Mongolia should take greater responsibilities for itself.
―Mongolia's middle layer is thin, making it difficult to educate,‖ said White. ―As the economy grows
this may change.‖
Head of Foreign Investment Relations and Registration, Sereeter Javkhlanbaatar, spoke next to
clarify some uncertainties regarding the changes to the Strategic Entities Foreign Investment Law
(SEFIL).
"The amendment removed the MNT 100 billion threshold, firstly. Secondly it excluded the private
sector from getting approval from Parliament," said Javkhlanbaatar.
According the Javkhlanbaatar the amendment would help expedite the regulation process for
foreign officials, as it's difficult to put short deadlines on decisions before Parliament.
Javkhlanbaatar also discussed a new law currently in the drafting stage at the Economic
Development Ministry that would essentially replace the law they just amended. The ministry's plan
is to introduce a new law that would wipe clean all the uncertainties – the Investment Law. The
draft indicates that the government is interested in introducing incentives so it could better direct
foreign investment to sectors outside of mining for a more round-about development model and a
diversified economy.
"We don't give any incentives to you. It causes some other issues,‖ he said. He later said, "What kind
of projects do you need to lead? What kind of judgments and also standards?‖
Finally Chuluuntseren Otgochuluu, Head of Strategic Policy and Planning at the Ministry of Mining,
concluding the speeches of the evening, presenting a brief introduction to Mongolia's mining policy.
He explained how he hoped mining would serve as a launch pad for a variety of different industries
in Mongolia to open up. However, with mining being as unpopular as it is among most people, many
politicians have taken on strong rhetoric in opposition to mining activity and foreign influence in
the sector.
―Local people find it easy to hate mining and don't understand, so politicians give them a populist
position,‖ said Otgochuluu.
He said Mongolia was taking on the difficult challenge of balancing the wants of the public and
keeping a fair business climate to attract investment in order to drive the country's development.
He noted that although exploration licenses were no longer being issued at the moment, mining
licenses were still being granted. He also noted that the government was working to develop its oil
industry, too, which hopefully would provide another form of income for the country.
___________________________________________
May
Issue 276
The BCM meeting on 27 May, with Bayanjargal Byambasaikhan in the chair, was attended by 85
members and invited guests. Executive Director Jim Dwyer reported that the Environment Working
Group, chaired by Amarjargal Bayarmaa of Clean Energy LLC, has added 16 new volunteers, bringing
the total to 35. The Working Group is currently awaiting the celebration of World Environment Day
on 5 June.
BCM membership now stands at 256, an all-time high, compared with 223 in May 2012.
―For every additional new member, we set a new record,‖ said Dwyer.

10. The four most recently joined members are:
1. Cover Mongolia is an Ulaanbaatar-based news service and consulting firm focused on Mongolia. It
was founded by Munkhdul ‗Mogi‘ Badral with the vision of providing accurate and timely information
to private, public and social stakeholders of Mongolia.
Cover Mongolia is a culmination of Mogi‘s five years of experience in the financial and brokerage
industry in Mongolia. Cover Mongolia‘s news service comprises of CoverMongolia NewsWire email
newsletter, as well as its Cover Mongolia Facebook (/CoverMongolia) and Twitter (@CoverMongolia)
feeds.
2. Khan Investment Management Ltd. is a single-country Mongolia-focused investment house with
offices in Ulaanbaatar, Singapore and Grand Cayman. Khan Investment Management is the
Investment Adviser to the Khan Mongolia Equity Fund.
Conceived to create, structure and promote the Khan Mongolia Equity Fund, Khan provides global
investors with access to a wide range of investment opportunities in fast growing Mongolia.
3. The Mongolian Exporters‘ Association is a non-Governmental organization, established in 2006. It
aims to connect local producers and exporters with the international market, assist producers with
trading export commodities, assist in networking with regional and international commodity
exchanges and specialized research companies, arrange training on mineral economics, design,
technology, operations and management, and teach mining business English.
The Association has been actively helping the Mongolian mineral exporters to enter the
international market since 2006. It is also providing supply and demand analysis of the mineral
products as well as price forecasts.
4. Very Important News aims to improve the state governing system using information technology to
increase the involvement of civil society organizations and provide conditions to organist their
activities openly to the public.
―Speaker Group‖ Co., Ltd. was founded in 2001 and operates in software and media relations. It has
operated Vip76.mn for five years with the aim to act as a bridge between government officials,
citizens, professional experts and civil society representatives.
The first speaker of the evening was Stephan A. Fischer, managing director of VF Messen GmbH, to
update members on the Future Mongolia 2013 Expo. The event is scheduled for 19 to 22 June at the
Buyant Ukhaa Sport Complex, located near the Chinggis Khaan International Airport.
―We are not just a mining exhibition or for infrastructure development. We cover the entire
spectrum of development,‖ said Fischer.
Fischer said vendors and company representatives from around the world would come to Mongolia
to share their know-how and build partnerships.
―We do not want to teach everyone how to do everything. We want to do it together with the
industry.‖
Jonathan Addleton, former U.S. ambassador to Mongolia, spoke next on his new book Mongolia and
the United States: A Diplomatic History. Addleton came to Mongolia in two separate roles, the first
from 2001 to 2004 with USAID, and again from 2009 to 2011 as ambassador.
Addleton took listeners back through Mongolia's history of diplomacy with the United States. U.S.-
Mongolian relations stretch as far as 150 years ago in 1863 when the first U.S. citizen traveled to
Mongolia.
―Actually the 1900s had much more vibrant U.S. Mongolian commercial relations than people
realize,‖ said Addleton.
He recalled that in 1919, when the United States was in the midst of the Jazz Age, it imported
silent films and Harley Davidson motorcycles to Mongolia. He also noted that in 1921 the U.S. had
one million rabbit skins arrive from Mongolia. Noting how much has remained the same, he

11. commented, ―Some of the issued faced now were faced back then.‖
However, the most important events in history of the United States and Mongolia's partnership took
place in the 1990s and 2000s, when USAID took action to create deep roots through Khan Bank and
XacBank. Also it was during this time, in 2007, that the Business Council of Mongolia spun off from
the North America-Mongolia Business Council and was established.
―Over the long-term, people to people relations are vital, but long-term commercial ties are just as
much so,‖ said Addleton.
Ulaanbaatar Deputy Mayor T. Bat-Erdene spoke next to share with members the city's landscaping
development plans. Bat-Erdene noted that currently UB has a population of 1.1 million with
expected growth to bring that figure to 1.7 million by 2020. With that in mind the city's urban
planners hope to utilize Ulaanbaatar's 470,000 hectares of land by dividing it into 4 zones:
protected areas, commercial business, parks green space, and animal husbandry.
Planners hope an expansion of 800 hectares of green space will help tourism, with plans for a 960-
hectare national park in southern Ulaanbaatar. There are also plans to bring greenery to 109
streets, including in the city's ger districts. To finance the work, the government is hoping to utilize
public-private partnerships.
―PPP is a very positive approach to using resources effectively,‖ said Bat-Erdene. ―Last week
consultations were held with NGOs and environmental representatives for landscape planning. ―We
hope these partnerships will continue.‖
Landscaping activities are expected to begin in June this year.
Environment and Green Development Minister Sanjaasuren Oyun gave the final presentation of the
evening, noting that she would discuss a similar topic to Bat-Erdene's: policy reform for Mongolia's
environment. Today, the 8 percent of forest-covered territory is shrinking due to development
throughout the country. The government is now implementing reforestation plans to revitalize aging
forests by planting younger trees and maintaining the environment.
One step the government is taking is the privatization of forested land, where people can build a
home and employ some commercial activity and eventually resell to the government at a profit.
The government is offering land at MNT 200,000 per hectare for eventual sale of MNT 350,000, said
Oyun.
―This week we discuss the plan with the Cabinet. It could sound ambitious, but we have rich
traditions of co-existing with the environment so that traditions should be intertwined with modern
technology and breakthroughs,‖ said Oyun.
She noted that Mongolia had seen tremendous environmental change for the worse in the last two
decades, as miners have failed to hold to their reclamation responsibilities, the air in the capital
has grown toxic, and authorities struggle with garbage and toxic material waste management.
However, the government is becoming more proactive, first by replacing stoves with more efficient
models in 120,000 homes, and raising the standards of its fuel. In the near term the government
plans to revisit the so-called ―Long Name Law,‖ which in 2009 halted the exploration activities of
mines located near forested areas and headwaters, and a new payment scheme for water
management.
___________________________________________
June
Issue 280
The BCM meeting on 24 June, with Bayanjargal Byambasaikhan in the chair, was attended by 92
members and invited guests. BCM membership now stands at 257, an all-time high, compared with
223 in May 2012.
―For every additional new member, we set a new record,‖ said Executive Director Jim Dwyer.
The most recently joined member is:
1. Namaste Indian Restaurant is a family business owned by Ch. Oyunbileg and her husband S.

12. Kumar. Since Namaste Restaurant opened in August 2010, they have enjoyed the support of their
loyal guests who voted their restaurant as the ―Top Choice Indian Restaurant of Ulaanbaatar‖ in the
2011 edition of Lonely Planet Magazine. It also received the ―Certificate of Excellence – 2013‖
award from Tripadvisor.com.
There are currently two Namaste restaurants, one inside the Flower Hotel in Sansar and the other
on Baga Toiruu. Together they employ more than 40 employees, of which five are professional
Indian chefs. Supervising the restaurants is Kumar, who has spent 13 years in various Indian kitchens
in Mongolia and India.
First to speak was Yana Stankova, Country Director of Oxford Business Group, to reintroduce
members to her organization's aims and renew its partnership with the Business Council of Mongolia
with the signing of the third memorandum of understanding in three years. She also noted that she
and her staff were hard at work on the 2014 Report to include all the latest developments in the
Mongolia investment market.
The second presentation was given by Luvsandendev Sumati, Director of Sant Maral Foundation, to
discuss their latest poll before the election. This was the second poll released before this year's
presidential election, but the only one following the announcement of the candidates challenging
incumbent President Tsakhia Elbegdorj.
―If you refer to the March poll, no candidates were nominated, but it's quite normal that Elbegdorj
was ahead of any possible rival,‖ said Sumati. He added, ―Since then, nothing has changed in the
rating of the party... I'd say in this election, Elbegdorj is quite safe.‖
Sumati noted that more than half of those polled felt elections in Mongolia had improved since the
introduction of the electronic voting machines. He also noted that his poll indicated that 70 percent
of those questioned were interested in voting, but the actual turnout might be lower because of the
usual migration of people during this time of the year.
Next to speak was Adrienne Youngman of Mongolia Talent Network to introduce Golomt Bank as the
winner of the ―Employer of the Year‖ title for 2012.
―I am very honored to receive this award on behalf of our employees. Golomt is proud to be the
first to win this award,‖ said Dagva Munkhtur, the Operations Director.
Ambassador of the Japanese Embassy Takenori Shimizu spoke next to give a presentation on the
history of relations between Mongolia and Japan as well as a detailed description of their moves
towards closer relations in trade and diplomacy.
Shimizu's experience in Mongolia spans a large portion of Mongolia's history following the 1991
democratic revolution, and he has witnessed firsthand Mongolia's transition towards a capitalist
economic system. Japan's largest contribution to Mongolia, he said, is probably in education and
human development. Japan provides 70 scholarships to Mongolian students annually and currently
has 1,300 Mongolian students studying at its universities.
―Unfortunately, economic relations are not as good regarding trade, and the current volumes are
low,‖ said the ambassador. He said, ―Both sides—Mongolian and Japan—are equally unhappy with
this current situation.‖
He noted the importance of the Erch initiative introduced during Japanese Prime Minister Shinzo
Abe's visit to Mongolia earlier this year. He explained that two of its major aims were to enhance
business relations and expand growth in Mongolia. He also brought attention to the efforts of the
JICA volunteers on the ground in Mongolia working to implement infrastructure projects such as the
metro project planned for Ulaanbaatar.
―Mongolia is developing rapidly, with the mining sector in the most important role,‖ he said.
―However, what's more important is how you use the income from mining. I hope Mongolia will use
it [the revenues from mining] wisely and Japan is happy to assist in this area.‖
For the last presentation was U. Ganzorig, President of Mandal General Insurance, to speak on risks

13. in Mongolia. He introduced to the audience Mandal's 2013 Risk Report, with a number of copies in
Mongolian language made available free to members. That report includes 10 risks facing Mongolia
today, but for the evening's presentation he would introduce a select few.
The first and most pressing risk was the deficit in the budget born out of too-optimistic projections
for commodity prices. He said Mongolia's economy was weighing heavily in the mining sector, an
unpredictable source of income, with 17 percent of total gross domestic product (GDP) sourced
from that sector.
―There is a very huge correlation with copper price and coal price in relation to the budget,‖ said
Ganzorig while pointing to a chart that showed budgets and surpluses that closely followed
commodity prices. ―The effect of coal prices in recent months, you've all noticed that.‖
Other risks included the air pollution that was causing respiratory problems in the short run but in
the long run would likely lead to cancers and strokes. Poor driving was responsible for 90 percent of
accidents, he said, and many of the city's buildings were ill-equipped for earthquakes. Another
pressing worry was a likely energy crisis to hit Mongolia this winter. He noted that Mongolia had
exceeded the nation's power generation capabilities first in 2010, and this year would likely see the
displacement of more than 700 people in the event of wide-scale energy and heat failures.
___________________________________________
August
Issue 289
The BCM meeting on 26 August, with Bayanjargal Byambasaikhan in the chair, was attended by 95
members and invited guests.
―It's September, and in a few days school is starting, but we have more important events in the
economy going on,‖ said Byambasaikhan. ―A new Investment law to replace SEFIL is expected to
be passed this September, out of the special session of Parliament.‖
BCM membership now stands at 264, an all-time high, compared with 239 in August 2012. The six
newest members are:
1. Archon LLC is a trading and consulting company based in the Ulaanbaatar, founded in 2012. Its
mission is to expose the businesses of its parent company, Kito LLC, to new sectors of the economy.
The company has quickly seen success in penetrating several emerging markets and pioneering new
technologies in Mongolia. It also is set to become an exporter of a Mongolian national treasure—
cashmere textile.
2. Bodi Insurance LLC, a member of Bodi Group for 18 years, is a leading insurer who has been
introducing new ideas for commercial insurance products and services to individuals at any location.
In 2012, the Mongolian Chamber of Trade and Industry selected Bodi Insurance LLC as ―Top
Insurance Company,‖ in addition it won the ―International Star for Leadership in Quality‖ award in
Paris.
3. Established in 1996, Geosan has achieved steady growth while earning a reputation for offering
high quality professional service. The company offers a complete range of services in geophysical
survey and mapping, and leverages the latest technology in the field. Geosan completed its first
contract in 1998 for locations near the Oyu Tolgoi and Gatsuurt deposits using a single magnetic
system. Since then, Geosan has grown the capability to conduct nearly the entire gamut of ground
and airborne surveys available today.
4. Global Investment and Equity Advisory Partners was founded in 2013 by the two partners, both of
whom had previously worked at Mongolia‘s leading law firms. The firm‘s partners comprise of the
most experienced and knowledgeable legal practitioners in Mongolia. The partners each specialize
in their own respective fields whether it be banking and finance, minerals and mining or corporate
law. The firm focuses on the business needs of its clients and finding the most favorable solutions
available within the framework of the law.

14. 5. Nomads Catering & Integrated Services is a 100 percent privately owned Mongolian entity based
in Ulaanbaatar. It has opened a chain of 22 restaurants and two hotels since 2003. Today, it is a
leading food, beverage and catering service provider in Mongolia offering a wide range of services
including supply chain and logistics management, construction, remote site catering, in-flight
catering, fast food chain and hotel management. More than 1,500 dynamic young people work with
Nomads in Mongolia, Russia and China.
6. World Nixes LLC strives to be the most effective, efficient, and socially responsible nationwide
leader in sourcing and delivering of goods and products. It strive to contribute to the mining sector
as it is the key sector of the development of Mongolia. World Nixes supplies a wide range of light
trucks and truck tires.
Joshua Sunga, internship program director at AIESEC, gave the first presentation of the day,
describing the role of AIESEC in Mongolia in developing Mongolia's population of young people into
an efficient and capable workforce.
―Youth leadership development is crucial to the economy, especially with the growth of today,‖ he
said.‖
He noted the importance of presenting young people in Mongolia with opportunities for practical
experience because of the sparse opportunities found in the university curricula of today. AIESEC
operates in 124 countries and territories around the world, with 86,000 members and one million
alumni worldwide. Thus far it has sent 49 Mongolian students and recent graduates abroad for
internship experience. Internships typically last between two and 18 months, giving participants
global mindsets and instilling unique skills from each country.
The next speaker was G. Saruul, deputy chief executive officer at the Mongolia Stock Exchange, to
provide a brief summary of the Securities Law, due to come into effect on 1 January 2014.
―The goal of the law,‖ said Saruul,‖ was to create a transparent market place and provide equal
opportunity to investors.‖
To do that means going into greater detail than the previous law to define key terms and the
process for making basic transactions; as well as introducing mechanisms to ensure transparency in
the market. With these in place investors could expect a market that operates more fairly, having
greater liquidity, and providing investor protections. It also means cracking down on insider trading.
Saruul also mentioned that a Fund Law had been approved by Cabinet on Friday, 23 August, and was
expected to pass in Parliament during the extraordinary session of Parliament in September.
Presenting third was G. Zorig, country manager of Tree Global Mongolia, to describe his company's
activities to help Mongolia succeed in its land reclamation efforts and combat the debilitating
effects from human activities to the environment in Mongolia.
―Looking back at the past two years, our work looks to have been effective, with three times faster
growth to plants, and 95 percent greater survivability compared with 10 percent before.‖
His company boasts earlier maturation for trees, faster soil restoration, and two-to-four times
greater carbon sequestration. Tree Global Mongolia has assisted Boroo Gold in its own land
reclamation efforts, and received high praise, noting an ―exceptional survival rate for this type of
planting and far better than we had anticipated.‖
According to Zorig, the issue is a deeply important one to the country as the Mongolian people
witness the disappearance of its wildlife and fauna. Mongolia has seen the disappearance of 13.1
percent in forest coverage since 1990. Tree Global has done its own part in Mongolia with the
reforestation of 150,000 hectares of land, or 150 million seedlings planted a year.
The following speaker was Daniela Zadrozny, consul at the U.S. Embassy, to give a crash course in
attaining U.S. visas. She explained the process—from applications, to interviews, and background
checks—while providing some ―myth busting‖ along the way.
―I know in Mongolia a lot of misinformation about the U.S. visa process is out there. In many ways

15. it's because the U.S. visa process is different than other countries,‖ she said.
The visa appointment, a mandatory step enforced worldwide, is the first step. The U.S. Embassy
allows for group appointments as well as expedition for emergencies. Next is the interview—which
probably is the most difficult step for most people. She recommended that applicants bring a filled-
out DS1 document, their passport, a passport photo, and their visa application. Other materials,
such as invitations and high school records, are not normally necessary. She stressed the importance
of honesty during the interview, and that applicants should focus on making a reasonable argument
that they have a valid purpose for their trip and the funds needed to stay there and return. It's also
important that applicants disclose any family ties to persons living in the United States.
Zadrozny made special mention that decisions were not personal and emotions were set aside for
making decisions on whether to permit visas. She also noted that any information discovered that
was withheld beforehand would cast doubt upon the applicant and work against their case.
The final presentation for the day came from Sereeter Javkhlanbaatar, director of foreign
investment at the Economic Development Ministry, to discuss a highly anticipated Investment Law
to replace both the 1993 Investment Law and 2012 Strategic Entities Foreign Investment Law.
Although Javkhlanbaatar could not reveal everything about the law, as it was still incomplete, he
did explain a few key concepts to demonstrate the intentions of the law. The first was to tear down
the division between ―strategic‖ and non-strategic sectors, treating the economy as an equal
playing field. Rather than curb foreign ownership through restrictive and vague policies, the
government is now set out to only put checks on state-owned companies. Various sector
requirements would instead be regulated via the licensing process. The process for registering a
company in Mongolia would also be made more efficient.
―We are going to save your time,‖ said Javkhlanbaatar. He added ―We won't have approval systems
for strategic sectors, but we will have approvals for state-owned companies.‖
He said the government intended to create new agencies, including a review board, similar to what
exists in Australia, and the Invest Mongolia Agency, which would have the main purpose of
attracting foreign investment. There would also be certain guarantees on taxes, with specific
mention by Javkhlanbaatar made regarding income, royalty, customs and value-added taxes.
___________________________________________
September
Issue 293
The BCM meeting on 23 September with Peter Morrow, founding Chairman, in the chair was
attended by 105 members and invited guests. Morrow announced the resignation of Vice Chairman
Tim O'Neil, who has left Mongolia to return to his home in Canada, and that BCM will soon seek a
replacement. Other tasks under consideration by BCM are membership renewal planning and its
search for a local social media consultant.
Morrow also discussed findings from a recent translation of the draft Minerals Policy, saying the
latest draft was still falling short of hopes. ―All is not there. It's not where we'd like it to be yet,‖
said Morrow.
BCM membership now stands at 265, an all-time high, compared with 250 in October 2012. The
newest member is COSOL, a global service provider specializing in optimizing business processes
and technology systems for the mining and minerals processing sector. Since April 2000, COSOL has
worked in emerging mining regions including Mongolia, Chile, Peru Colombia and Kazakhstan, with
over 135 clients including Xstrata, BHP Billiton and Rio Tinto. From Greenfield to established sites,
emerging mine operators to tier-one organizations, COSOL combines extensive mining industry
knowledge with expertise on a range of operational and ERP systems to deliver best-practice
services and solutions.
Alaia Telleria, project director of Milestone GRP spoke first to introduce her company's Mongolia
book and research. Milestone is the exclusive partner of the Center for Global Dialogue and

16. Cooperation (CGDC), a business club based in Austria, delivering thorough research guides covering
markets from around the world. Whenever CGDC's interest is peaked by a new market, said Telleria,
it is Milestone's job to produce a 250-page guide filled with development trend reports, interviews
with key newsmakers of the area, and expert contributions gathered locally and from global
experts.
―Our mission is to close the gap between the perception and the reality on the ground,‖ said
Telleria.
Since arriving in Mongolia, the Milestone team has gathered local partners such as the Ministry of
Education, the Business Council of Mongolia, the Mongolian National Chamber of Commerce and
Industry, and the Mongolian National Mining Association.
The next guest speaker for the evening was Miki Kubota, attaché at the Japanese Embassy, to
discuss the recent visit by Prime Minister Norov Altankhuyag to Japan. Altankhuyag summarized the
discussions Altankhuyag had with his Japanese counterpart Shinzo Abe, including the multi-tiered
strategic dialogue between the two nations, the promotion of their economic relationship, and the
promotion of people-to-people exchanges.
―This visit was the first where Mongolia didn't receive any souvenir because the two are now
mutually beneficial partners,‖ said Kubota, noting that Mongolia was now classified as a nation no
longer in need of grants.
Kubota also expressed Japan's hope that Mongolia would look to Japan as its ―third neighbor,‖ as
Japan continues to prop for itself a stronger role in the region, and continue its welcoming attitude
toward investment.
Chris McDougall, managing director of Mongolian Investment Banking Group, gave the next
presentation to speak on the current state of the economy and the trajectory it is heading toward.
He began by repeating some of the gloomy statistics and facts that have become so common place:
43 percent less foreign investment, year-on-year; a currency depreciation of some 20 percent, year-
to-date; falling imports; and impending job losses.
However, Mongolia is taking impressive action, said McDougall, by rolling out an Investment Law to
replace the Strategic Entities Foreign Investment Law and a new Gold Transparency Law. He lauded
the former as it will ―create a level playing field,‖ putting foreign and domestic investors at equal
terms. He also called the Gold Transparency Law a ―fantastic set of rules‖ to create economic
incentives comparable to what is seen on the Toronto Stock Exchange. He also noted that Mongolia's
flagship Oyu Tolgoi mine was no longer the be-all, as Mongolia has grown to become a more
complex and multi-faceted market.
―OT [Oyu Tolgoi] is decoupling; it's not longer a cornerstone as investors realize that Mongolia is not
the only one causing delay, and not the only opportunity.‖
___________________________________________
November
Issue 300
The BCM meeting on 11 November with Bayanjargal Byambasaikhan in the chair was attended by
150 members and invited guests. The meeting observed BCM's 6th-year anniversary and was
followed by BCM‘s Annual Membership Renewal Dinner seating 185 members.
Jim Dwyer, Executive Director, spoke on the importance of BCM‘s members, ―our lifeblood.‖ Jim
announced a special offer for subsidiaries and divisions of current BCM members to join at a 50%
dues discount. This dovetails with a BCM goal to attract more medium-sized entities to its
membership.
BCM membership now stands at 268, an all-time high, compared with 250 in October 2012. The 5
newest members are:
1. Clear Lakes Capital was established in 2011 to manage offices and apartments in Mongolia. It
focuses on the central parts of Ulaanbaatar offering well-furnished properties and improves the

17. properties by replacing kitchens and fridges, installing flat screen TVs, ovens and dishwashers. All
apartments have emergency water heaters and most properties have LED lighting and smoke
detectors installed. Above all Clear Lakes responds to occasional breakdowns in a matter of hours.
Its properties are to be found in Park View, Regency Residence, Four Seasons Gardens and Temple
View.
2. Since its establishment in 1924, the Institute of Finance & Economics (IF&E) has been one of the
leading economic and business development centers in Mongolia offering high quality programs.
Students are offered new opportunities and the latest knowledge reflecting current market
developments. IFE is on its way of becoming a highly competitive business school in Asia.
IF&E offers a wide range of Business programs such as Financial Management, Business
Administration, Tourism & Hospitality Management and, Business Economics, Business Law, and
Marketing Management.
3. Ramada Ulaanbaatar City Center is a premier international hotel in Ulaanbaatar. The hotel is set
in a luxury shopping mall complex, standing 17 stories tall with a new modern architecture. It
features 128 guest rooms and suits, and inclusive executive floors with its own lounge. The hotel is
located in the heart of the Ulaanbaatar downtown and 20 minutes away from Chinggis Khan
International Airport.
4. Established in 1998, the Mongolian National University is the second biggest private institution of
higher education in Mongolia. Its distinguished history of excellence and hard work continues to
provide students with unique opportunities to make difference through academic teaching, research
and professional programs. Currently 5,200 students study in the 58 undergraduate and three
graduate programs.
Mongolian National University has established cooperative relationships with 18 universities and
research institutions abroad. The university pays close attention to foreign language education. In
Mongolia only MNU students are trained for seven semesters in advanced specialized knowledge of
English education and curriculum contents, and the ability to use English.
5. Salmira Investment Fund is a U.S.-based investment partnership formed by three brothers. The
fund is an expression of the three principals‘ profound interest in emerging and frontier market
investing. Ultimately, Salmira is a fledgling family office that the brothers hope will continue to
grow as it positions itself in Mongolia and other Asian economies on the verge of exciting expansion.
The fund has active investments in Mongolia‘s transportation and financial sectors; its principals
continue to evaluate opportunities across most sectors of the Mongolian economy. In addition to its
Mongolia-based projects, Salmira evaluates and has participated in various private market
opportunities in Southeast Asia as well as real estate and resource-related investments in the
United States.
Nick Cousyn, Chief Operating Officer of BDSec JSC, presented ―A Westerner‘s Journey to the DPRK,‖
where he discussed his recent visit to North Korea for a site visit to the Rason port and the Sungri
oil refinery recently acquired by Mongolia-listed HBOil JSC. HBOil is participating in an oil
exploration and production joint venture with North Korea's state-owned oil company and is set to
purchase a company with oil exploration rights in North Korea's East Sea.
Matthew Pottle, Managing Partner, PwC, presented ―PwC CEO Survey 2013 – Confidence in Growth‖
where he discussed data collected from two years of surveys and interviews from company heads
based in Mongolia benchmarked against international responses. He said that although chief
executives had short-term concerns for the economy, there was greater confidence for the long
term.
David L. Wyche, Economic and Commercial Section Chief at the U.S. Embassy, presented ―The U.S.-

18. Mongolia Transparency Agreement.‖ The agreement signed this year is a result of years of
cooperation for a trade and investment framework agreement (TIFA) and was a key step toward
establishing a free trade agreement.
Sereeter Javkhlanbaatar, Director General, Foreign Investment Regulations and Registration
Department of the Ministry of Economic Development, gave an update on the new Investment Law,
which took effect this month. The new law, he said, removes distinctions between foreign and
domestic investors, providing many equal provisions. One dramatic change, some audience
members noted, was a new rule for establishing a foreign invested company. While in the past a
start-up in Mongolia needed USD 100,000 in assets, now USD 100,000 is required per investor.
Javkhlanbaatar noted many improvements, however, including the removal of restrictions for
investment by private companies. Any entity 50 percent or more owned by a foreign government,
however, will need ministry approval for more than 33 percent acquisition for any company
operating within banking and finance, telecommunications and media, or mining.
___________________________________________
December
Issue 304-305
The BCM meeting on 9 December with Bayanjargal Byambasaikhan in the chair was attended by 80
members and invited guests. Byambasaikhan made reference to the changes made to the legal
environment for investors and how the president is putting his efforts into creating a ―smart‖
government to improve things even further.
―I think this message is of a change for the economic life of Mongolia,‖ said Byambasaikhan.
―Everyone is saying government is an obstacle and it needs to be changed. That's what's being
discussed now.‖
BCM membership now stands at an all-time high. The seven most recently joined members are:
1. Amar Power LLC operates in the fields of construction of power plant and facilities, relevant
configuration services, consulting service, sales and supply of electrical equipments. Its skillful
engineering team cooperates with several organizations, companies and research institutes of
Russia, China, the United States, Canada, Australia, Turkey and Poland that perform similar
operations and activities.
2. AREC Mortgage Corporation is a non-banking financial institution that specializes in real estate
finance in Ulaanbaatar. AMC provides finance on mortgaged property and provides project finance
to real estate developers for their development projects.
The banking system in Mongolia is still relatively underdeveloped. AMC provides loans to SMEs at
lower rates than would otherwise be available to them. All loans are well secured by property
mortgage. AREC has a team in Ulaanbaatar that performs property management and asset
management for the assets AREC manages.
3. Fiscal Audit provides audit consulting, financial statement analyzing, tax consulting and financial
statement assurance services from independent position to legal entities and business owners in line
with the Law of Mongolian Auditing, Law of Mongolian Accounting and other International Auditing
and Financial statement preparation standards using with professional ethics of auditors.
4. Fluor is one of the world‘s leading publicly-traded engineering, procurement, construction,
maintenance, and project management companies. It was ranked No. 1 on Fortune magazine‘s
―Engineering, Construction‖ industry list of America‘s largest corporations and #1 in the same
category on Fortune‘s annual survey of ―World‘s Most Admired Companies.‖
It operates over 1,000 projects annually, serving more than 600 clients in 79 different countries
with 41,000 employees executing projects globally. It has offices in 29 countries on six continents
and in 2012 celebrated 100 years of exceeding client expectations.

19. 5. Khaan Insurance LLC is a national investor-owned insurance company in Mongolia.
Khaan Insurance was formed in 2012 to write insurance throughout the Mongolia. It has 18 active
branches and was listed in the top 10 entities in terms of equity—all in just a year since its
establishment. Khaan Insurance's reinsurance partners are globally accredited companies.
Its core businesses are property, casualty and liability insurance.
6. NovaTerra advises entrepreneurs, large corporations, governments, financial institutions and
private equity firms. Its approach is to be deeply involved with clients in long-term relationships.
NovaTerra can invest alongside its clients and further invest part of its success fees into deals or
companies. NovaTerra has a proven record in negotiating and closing projects and agreements with
the Mongolian Government
7. Outotec Oyj provides customers with technology solutions and services that support the entire
life cycle of operations. Outotec tailors solutions to customers‘ needs to ensure that they receive
the smartest value from virtually all types of ore while making the least impact on the
environment. In addition, its global sales and service network guarantees that there is always an
experienced Outotec professional on hand for support.
Outotec Mongolia LLC was officially formed in Mongolia from January 2013. It now cooperates with
Erdenet Mining Co., Oyu Tolgoi LLC, Energy Resources LLC and Boroo Gold.
J. Bayarmagnai, executive director of the Quality Supplier Development Center (a USAID grantee)
spoke first on his organization and its missions to increase the productivity and competitiveness of
small- and medium-size enterprises. He said the center acts by intervening to facilitate in
relationships between buyers and suppliers, and that its impact can be determined by looking at
added sales as indicators. They also look to remove bottle necks that producers face in meeting the
needs of buyers.
―This is very exciting because I believe it can bring real quality and value to business,‖ said
Bayarmagnai.
One example offered was the center's experience with Wagner Asia Equipment LLC, which required
a local company able to repair or salvage parts back to specifications. The center sought out a
company and found Geomach which assisted in removing bottlenecks, such as attaining financing
for a welding machine.
―Basically, we have no limit,‖ he said. ―We can help SMEs deliver quality products and services to
buyers.‖
L. Sumati, director of the Sant Maral Foundation, spoke next to discuss progress made in Mongolia's
battle against corruption. He said it was impossible to deny all the progress made given all the
positive responses in his latest poll, which surveyed 1,200 people in the business community about
corruption.
Sant Maral found that land access to be a leading challenge for businesses in Mongolia, leading the
list of grievances since 2006. Other issues included mining licensing, customs, and regulations.
Respondents said the most difficult agencies to work with were the Tax Office, Special Inspection
Agency, Customs, and local authorities. ―There may be some optimal time for development for the
future, but for today it remains difficult,‖ he said.
Meanwhile, at the household level, people reported dramatically less experiences with corruption,
with the number of responders who said they had paid bribes falling from a high of 28 percent in
2007 to 8 percent this year. He said there were generally positive feelings about the Independent
Agency Against Corruption and the arrests they had made, too.
D. Jigjidmaa, investment promotion program manager at the World Bank's International Finance
Corp. in Mongolia gave the final presentation on investment protections.
―Mongolia is not so different from other developing countries, especially regarding the political risks
of the last four to five years,‖ said Jigjidmaa.

20. She said IFC had been engaged with the Mongolian government since March 2013 to collaborate on
the Investment Law that took effect in November. It has also signed a cooperative agreement with
the Ministry of Economic Development to help improve the investment environment. This includes
the establishment of a reference guide for complaints made by investors and how government
responded. They hope to work closely with the government to improve grievance management and
dispute resolution.
―Now we're fine-tuning how the mechanism will work. Every minister wants control over
investments in the sectors they oversee.‖
The plan, she said, is to work from January 2014 to the following July to build awareness and a
stakeholder network. Afterward, they will then benchmark international experiences, such as the
improvements made to South Korea's investment environment since 2009, to help direct the
evolution of Mongolia's dispute resolution mechanism.
II. OYU TOLGOI
Starts and stops
January
Issue 254-255
OT CONCENTRATOR ONLINE
As the Oyu Tolgoi copper and gold mine prepares to begin commercial production in 2013, it has
taken a major step forward with the completion of the concentrator—the largest and most
technologically advanced machine ever built in Mongolia.
To mark the major milestone, Oyu Tolgoi LLC celebrated the commissioning of the concentrator
with Mining Minister D. Gankhuyag, who commemorated the occasion by pressing the activation
button on the concentrator for the first time. MPs, cabinet members, and ambassadors also were in
attendance for the event.
―I am pleased to be participating in the ceremony to commission the concentrator at Oyu Tolgoi's
world-class mine. On behalf of the Mongolian government, I congratulate all who contributed to the
project, which is being constructed on schedule,‖ said Gankhuyag. ―Oyu Tolgoi's progress as the
guarantee of our mineral wealth left for us by our ancestors is the result of Rio Tinto's effective
project management and financial capabilities.‖
Completed in record time, the commissioning of the concentrator represents a significant advance
for Mongolia. Oyu Tolgoi brought the specialized expertise of over 18,000 people from 44 countries
to the complex project.
―From the signing of the investment agreement to activating the concentrator, Oyu Tolgoi's
progress has been remarkable,‖ said Cameron McRae, Oyu Tolgoi President and Chief Executive
Officer. ―We are doing more than just constructing the most technologically advanced mine in
Mongolia's history. We are also helping to usher in a new wave of economic development.‖
With the concentrator online, Oyu Tolgoi will begin producing the copper concentrate in the early
stage of the first quarter of 2013. Commercial production is expected within the first half of next
year. The ore is coming from Oyu Tolgoi's open pit mine, which began producing raw ore earlier this
year. Eighty percent of the value of Oyu Tolgoi is in the extensive underground mine, which is still
in the early stages of development and expected to begin producing in 2016.
Source: Oyu Tolgoi LLC
OYU TOLGOI‟S GOVERNMENT BOARD MEMBERS CALL FOR NEW FEASIBILITY STUDY
Government representatives on Oyu Tolgoi LLC's board of directors have called for a renewed
feasibility study in light of larger-than-expected expenses.
Board member P. Tsagaan said a board meeting for 24 December was postponed due to the need for
an updated feasibility report. He said that although the project is on track, with an energy
purchasing agreement recently made with an Inner Mongolian energy producer and the ore

21. concentrator ready for commissioning, the expenses have not reflected the original report.
―The increase of investment could be connected with overall price increases, but it should be
explained and presented in the feasibility study,‖ said Tsagaan. ―Therefore we request a renewed
feasibility study before discussions are made on the approval of next year's budget.‖
Source: Undesnii Shuudan
ERDENES OYU TOLGOI CEO APPOINTED
Former MP Ts. Sedvanchig was appointed as Chief Executive Officer of Erdenes Oyu Tolgoi LLC.
Erdenes Oyu Tolgoi is the state holding company with the government's 34 percent stake in Oyu
Tolgoi LLC. There are reports that Sedbanchig has in the past made demands for a greater stake for
the government in Oyu Tolgoi. However, his appointment suggests that he will fall in line with the
government's demands.
Source: Mongolia International Capital Corp.
Issue 256
OYU TOLGOI'S AIRPORT COMPLETE
Oyu Tolgoi LLC has finished construction of its Khanbumbat Airport.
The airport is located 36 kilometers from Khanbogd. It was built by Artzsuvraga, who employed
more than 700 engineers and professionals for the project. The airport's construction features a
traditional ger design with a runway length of 3,250 meters and width of 45 meters.
The airport was completed within three months of construction. It has the capacity for 240
passengers an hour while servicing passenger and cargo planes such as the Boeing 737. The cost for
construction came to MNT 2.5 billion.
Source: Unuudur
Issue 257
RIO TINTO SEEKS USD 4 BILLION OYU TOLGOI PROJECT FINANCING
Rio Tinto PLC is said to have invited bankers to Mongolia in connection with a project financing of
USD 4 billion of debt for the Oyu Tolgoi copper-gold site, the country's biggest-ever mine.
The world's second largest mining company has invited lenders as it seeks to finalize terms of the
project financing, according to three people with knowledge of the transaction who wished not to
be named. A so-called request for proposal, setting out details of the debt sought, will be sent to
lenders following the meeting, two of the people said.
The meeting will take place on 27 January and include a visit to the mine, in the south Gobi Desert
80 kilometers from Mongolia's border with China, one of the people said. Rio Tinto is seeking to
raise as much as USD 2 billion from commercial banks, with the remainder provided by export credit
agencies and international development funds, another said.
BNP Paribas and Standard Chartered Bank were selected by Turquoise Hill Resources Ltd. when it
was known as Ivanhoe Mines Ltd., alongside the European Bank for Reconstruction and Development
(EBRD), the World Bank's International Finance Corp. (IFC), and Export Development Canada to
arrange the financing, it said in July 2010. They have been joined by Export-Import Bank of the
United States, Australia's Export Finance & Insurance Corp. and the World Bank's Multilateral
Investment Guarantee Agency, according to IFC's website. IFC is considering a loan contribution of
about USD 800 million, including a syndicated portion, according to its website.
Rio Tinto provided USD 1.5 billion of bridge financing to support the development of the mine, and
has provided USD 3.5 billion of funding in total, it said 18 April. The loan would be repaid when the
project financing is in place, it said at the time.
Source: Mine Web
February
Issue 260
PRESIDENT MAKES PUBLIC DEMANDS OF OT INVESTORS
President Ts. Elbegdorj made demands to the investors of the Oyu Tolgoi copper-gold project at an

22. open meeting of Parliament last Friday, saying Mongolians had to take the project back in their
hands.
Elbegdorj took issue with the ever-growing spending costs of the project. The Mongolian
government has yet to approve the spending plan for Oyu Tolgoi for 2013 as spending has exceeded
Turquoise Hill Resources Ltd.'s projections. He said the company requested and additional USD 2
billion, a 47 percent increase from the original prediction of USD 5.1 billion.
―The initial estimate for the underground mine's financing was USD 14.6 billion, but the company is
planning to spend USD 24.4 billion,‖ said the president. He added, ―The investment agreement is
that the initial investment will be used to produce ore concentrate and the commercial profit will
be used for operational expenses... The time has come for the Mongolian government to take Oyu
Tolgoi matters into its own hands.‖
Elbegdorj said the government was not made aware of these facts, despite its position as a 34
percent stakeholder in the project. He demanded a Mongolian representative sit on the managing
board and an audit of the project, saying Turquoise Hill delays its reports for months at a time. The
government approved USD 153 million for management expenses on 31 January 2013, he said, by
that time having spent USD 3.2 billion in total. The president also took issue with management
costs, which he said comprised 6 percent of the total investment and was 2.5 times higher than the
international rate. He said this was unacceptable as Mongolia comparatively only receives 5 percent
in royalties for minerals produced from the project.
He also pushed for greater participation from Mongolian companies to provide support to the
project and transactions via Mongolia's banks. Furthermore he noted that Oyu Tolgoi has still yet to
meet the 90 percent mark for Mongolian employees at Oyu Tolgoi and foreign wages almost double
that of Mongolian workers. The investment agreement calls for 90 percent Mongolian personnel
after development begins, with commercial production slated to begin by June this year.
―We must learn from the mistakes of Oyu Tolgoi,‖ said the president. ―Mongolia has laws and they
must be upheld. They must realize that they cannot just take our wealth and go. They must realize
that they are investing in a country with laws.‖
Source: UB Post
Issue 261-262
RIO SAYS OT'S START DEPENDS ON END TO DISPUTE
Rio Tinto PLC, the world's second-largest mining company, said its USD 6.6 billion Oyu Tolgoi copper
mine in Mongolia will not start until disagreements with the government are resolved.
―A number of substantive issues have recently been raised by the government of Mongolia, including
the implementation of the investment and shareholder agreements and project finance,‖ Rio Tinto
said in a statement. ―Subject to the resolution of these issues, first commercial production from
Oyu Tolgoi is scheduled to commence by the end of June 2013.‖
Rio Tinto, which named Jean-Sebastien Jacques as the new head of its copper unit, twice rejected
Mongolia's demands in the past 18 months for a greater share of profits from the mine. President Ts.
Elbegdorj said this month Mongolia should have more control of the copper-gold operation that will
be the biggest contributor to its economy once it's in full production.
―I'm concerned by recent political signals within Mongolia calling into question some aspects of the
investment agreement,‖ Rio Chief Executive Officer Sam Walsh said during a webcast presentation.
―This undermines the partnership we've built and the stability on which a project of this size and
scale depends.‖
The government is seeking to boost Mongolian participation in management and increase the
number of local companies that can benefit from the project, including the use of Mongolian banks.
Rio Tinto reported a lower-than-expected second half loss as earnings at its iron ore unit beat
analysts‘ estimates and it raised its dividend. The loss was USD 8.9 billion in the six months ended
31 December from a USD 1.76 billion loss a year ago, Rio Tinto said in an email. The loss, the
biggest in at least 15 years, was driven by USD 14 billion in writedowns on the value of its aluminum
and coal business and offset by an almost USD 1 billion benefit from its mineral sands operations.
Source: Bloomberg

23. March
Issue 263
OT INVESTORS RESPOND TO WEEK‟S MEETINGS
This week saw the continuation of a closed-door shareholders meeting for the Oyu Tolgoi copper-
gold project and a meeting of the project‘s board of directors. The meetings were used as a venue
to resolve a number of grievances from both private investors and the Mongolian government.
Turquoise Hill Resources Ltd. said it would continue to have productive discussions with the
government of Mongolia on a range of issues related to the implementation of the 2009 Oyu Tolgoi
investment agreement, including project development and costs, operating budget, project
financing, management fees and governance. While progress on these issues was made during the
last meetings, all parties have agreed to continue discussions during March 2013 with a goal of
resolving the issue in the near terms.
―Given Oyu Tolgoi‘s significant economic and social benefits to Mongolia, it is in the best interest of
all stakeholders to swiftly resolve these important issues and keep the project on schedule,‖ said
Kay Priestly, Turquoise Hill‘s chief executive officer. ―We are open and willing to consider
opportunities related to the implementation of the investment agreement and companion
shareholders‘ agreement that will assist the government as long as it preserves the respective
agreements.‖
Oyu Tolgoi LLC responded with similar remarks from its president and chief executive officer,
Cameron McRae regarding the meeting. He noted that the talks were helping parties reach some
resolution and encourage greater cooperation.
―Our shareholders have been working through a number of issues, but everyone shares a strong
commitment to the success of Oyu Tolgoi. Some of these issues are complex, so it‘s natural that
resolution is taking some time. But the talks are constructive, both shareholders are working hard
to see resolution, and real progress is being made.
Source: Oyu Tolgoi LLC, Turquoise Hill Resources Ltd.
MONGOLIA PLANS TO CHARGE RIO'S OT INTEREST ON TAX
Mongolia plans to start charging interest on allegedly unpaid tax owed by Rio Tinto Group's Oyu
Tolgoi LLC, as talks continue over the future of the USD 6.6 billion copper and gold mine, the
mining minister said.
Mongolia wants Oyu Tolgoi LLC, in which Rio Tinto controls 66 percent and the government the rest,
to pay interest, even as the two sides disagree on whether the tax payment was made. Oyu Tolgoi
said 5 February that it pre-paid USD 150 million in tax in 2010 and 2011 and was due to receive
credit for it last year. Mines Minister D. Gankhuyag said that the payment was a loan and tax
obligations are still outstanding.
―Their tax payment will now be charged with interest,‖ which has yet to be worked out, Gankhuyag
said. ―The Mongolia government did not do anything wrong. It's the investor side.‖
Oyu Tolgoi's budget is only approved by both sides until the end of the month, while London-based
Rio Tinto has said commercial scale operations are due to start by mid-year.
In addition to Oyu Tolgoi's tax prepayment, the company also made a USD 100 million prepayment
of dividends in 2010 and 2011, it said in its February statement. Separately, in 2012 Oyu Tolgoi paid
a total of USD 280 million to Mongolia in taxes and other fees, according to the statement. The USD
250 million that Oyu Tolgoi said were tax and dividend prepayments was actually a loan to the
Mongolian government that the country plans to repay in 2014 and 2015, with interest, minister
Gankhuyag said.
Source: Bloomberg
Issue 265
U.S. RAISES SERIOUS CONCERNS OVER OT'S ENVIRONMENTAL, SOCIAL IMPACT
World number two miner Rio Tinto PLC has suffered another setback at the Oyu Tolgoi copper mine
in Mongolia after the United States refused to vote on World Bank funding to expand the massive
copper-gold project in Mongolia.

24. Operator Turquoise Hill Resources, which is controlled by Rio Tinto, has already spent more than
USD 6 billion on the mine in the south Gobi Desert, where it hopes to start commercial production
by June. The additional USD 4.5 billion debt package being negotiated with the International
Finance Corporation (IFC), the World Bank's private sector arm, the European Bank for
Reconstruction and Development and several private institutions is needed to develop Oyu Tolgoi to
full capacity with an underground mine to compliment the open pit.
The Inter Press Service reported Friday the U.S. decision to abstain from voting would not derail IFC
funding of the giant mine, but would add further pressure to make substantial changes to the
controversial project.
―[T]he United States' review of the Environment and Social Impact Assessment (ESIA) for the project
has raised concerns in a number of areas,‖ a position paper, dated last February but publicly
released this week, states.
―First, the United States believes the ESIA has gaps in critically important information, particularly
related to the operations phase of the project and mine closure... Second, the ESIA does not
provide a sufficiently detailed analysis of associated facilities and cumulative impacts.
―In particular, the policy statement notes that the impact assessment, which currently focuses
almost exclusively on the project's construction rather than its potential operation, covers this
planned expansion ‗only lightly.‘ The document also draws attention to longstanding complaints
from local herder communities, currently pending before a World Bank Group auditor. The U.S. says
it is ‗keenly interested in the outcome of this review.‘‖
Source: Mining.com
GOVERNMENT MAKES DEMANDS FOR OT
Though the government has taken time out again from its Oyu Tolgoi negotiations with its private
partners, it has released a number of requirements it says are needed for compliance with the 2009
investment agreement and Mongolian law.
The Mongolian government has demanded from investors an explanation for increased investment
into the project and proper implementation of the feasibility study. It believes that investors have
deliberately breached the agreement made on 2009, claiming costs had soared USD 2 billion above
the initial USD 5.1 billion projection. Government has also demanded a breakdown of all expenses.
The added costs would have the government wait longer before it could collect dividends for its
shares from the original expected date of 2019.
Another allegation is that management costs are two to 2.5 times higher than international
standards. Although spending for management was originally projected at USD 321.4 million for the
2010-2013 period, that figure nearly doubled. The investment agreement mandates management
costs stay below 3 percent of investment.
The government has also claimed that prime investor Rio Tinto PLC hid a point of conflict of
interest regarding its legal advisor Goldman Sachs Group Inc. Government laid fault onto Rio Tinto
for not informing it that Goldman Sachs held shares of 66 percent-stakeholder in the Oyu Tolgoi
project Ivanhoe Mines Ltd. (now called Turquoise Hill Resources Ltd.) and its majority stakeholder
Rio Tinto while acting as its legal advisor.
Another claim alleges that Entree Gold Inc.'s 30 percent ownership of special licenses held by Oyu
Tolgoi LLC was in breach of Mongolian law. Under the 2009 investment agreement, the former
minister of mineral resources was permitted to transition the 3148X and 3150X licenses for
exploration to mining, which took effect three weeks after signing of the agreement. However, the
government has found this to be in violation of the Minerals Law, which only allows for such
decisions to be made by the Mineral Resource Authority. Acting in this way resulted in a stake of 26
percent rather than 34 percent, which would eventually mean a loss of USD 1.4 billion for the
Mongolian government in dividends earned.
Rio Tinto must operate in line with projections outlined in the feasibility study, said the
government, and in full compliance with the Minerals Law and Companies Law. That includes mining
the deposit without exhausting its resources and abstaining from mining activity at select areas with
high-grade mineralization. The feasibility study outlines the extraction of a quarter of copper

25. reserves and a third of gold reserves. It has also alleged that investors constructed concentrate
containers in China without permission from the Representative Leading Council and is in violation
of Clause 8.1 of the investment agreement by not providing equal payment to Mongolian and foreign
employees.
The government has also called for talks to address the issue of Resolution No. 57, which would
allow it to increase its stake in the project from 34 percent to 51 percent. It also feels it is owed
compensation for Rio Tinto's USD 4 billion in purchases for 51 percent interest in Turquoise Hill
Resources Ltd. (then called Ivanhoe Mines Ltd.)
The compound violations are reason enough for review of the agreement, said the government.
Source: Cover Mongolia
Issue 266
RIO PAYS NEARLY USD 12BN IN TAXES
Mining giant Rio Tinto PLC on Friday reported that it had paid some USD 11.6 billion in global taxes
during 2012.
In its voluntary tax report, the miner noted most of the taxes were paid in Australia, with more
than USD 8.9 billion outlaid to all levels of Australian government last year. Rio Tinto's Mongolian
operation added USD 280 million in taxes, with Canada accounting for USD 1 billion, the United
States for USD 376 million, Chile for USD 331 million, and the United Kingdom for USD 150 million. A
further USD 140 million was paid in France and South Africa accounted for USD 130 million in taxes.
Corporate income tax was the largest component of Rio Tinto's tax payments around the world,
followed by government royalties and payroll tax.
―Rio Tinto makes significant contributions to public finances in all the countries where we are doing
business,‖ said chief financial officer Guy Elliott. ―We believe it is important to disclose this tax
information because this level of transparency helps us to retain our license to operate, promotes
government accountability and plays a key role in combating corruption.‖
Source: Minnig Weekly
OT SAID TO GET USD 3.7BN FROM BANKS
Rio Tinto PLC attracted nearly double the USD 2 billion sought from commercial banks for the Oyu
Tolgoi project finance deal, according to three people familiar with the matter.
The Mongolian mine has attracted about 3.65 billion from banks, including 11 lenders committing
USD 300 million each, said the people, who asked not to be identified because the transaction isn't
public. Further banks may participate in the loan before it closes next month, they said.
Rio Tinto is seeking about USD 2 billion of 12-year loans from banks and a further USD 2 billion from
export credit agencies and international development lenders. The boards of International Finance
Corp. (IFC) and the European Bank for Reconstruction and Development (EBRD) granted approval to
join the USD 4 billion project finance deal last month.
HSBC Holdings PLC, Intesa Sanpaolo SpA and Natixis have committed USD 300 million to the deal,
said the people. They join Australia & New Zealand Banking Group Ltd., BNP Paribas SA,
Commonwealth Bank of Australia, Credit Agricole SA, ING Groep NV, Sumitomo Mitsui Banking
Corp., Societe Generale SA and Standard Chartered PLC in providing the biggest amount, people
familiar with the matter said last week.
Bank of Tokyo-Mitsubishi UFJ Ltd. and National Australia Bank Ltd. have committed USD 150 million
each, and Nederlandse FMO NV has pledged USD 50 million, they said.
David Outhwaite, a London-based spokesman for Rio Tinto, declined to comment on the financing.
The bank commitments come amid a tussle for control of the USD 6.6 billion copper and gold
project, Mongolia's single biggest investment. At full capacity the mine, which is suffering from cost
overruns, will account for almost a third of the economy.
Source: Bloomberg

26. Issue 267
STACKING OT'S RESERVES AGAINST ERDENET‟S RESERVES
The reserves found at the Oyu Tolgoi copper-gold mine dwarf those found today at the Erdenet
Copper mine, which currently generates Mongolia's largest copper-export revenues.
A feasibility study approved in March 2010 reported indicated resources at OT of 3.775 billion tons
of iron ore, with 19.7 billion tons of copper, 810 tons of gold, 5,905 tons of silver, and 75,600 tons
of molybdenum. Also reported were inferred resources of 3.38 billion tons of iron ore, with 380
million tons of copper, 1,328 tons of gold, 7,601 tons of silver, and 81,600 tons of molybdenum. The
study also showed Oyu Tolgoi's reserves are three to four times larger than the iron ore found at the
Erdenet copper mine, including seven times as much copper resources.
The Erdenet mine had total indicated resources of 1.544 billion tons of iron ore, with 8.058 billion
tons of copper and 2,223,874 tons of molybdenum. After 30 years of commercial production,
Erdenet Copper Corp. reported in 2009 inferred resources of 1.087 billion tons of iron ore, 4.79
billion tons of copper and 131,034 tons million tons of molybdenum.
Source: News.mn
April
Issue 268
OT GETS CONTINUED FUNDING THROUGH APRIL
The board of Mongolia's Oyu Tolgoi copper and gold mine agreed to continue funding the project
through April, Mining Minister Davaajav Gankhuyag said in mobile phone text message.
The mine is operating on a month-to-month budget and requires approval from the board of
directors. International investors currently cash fund the entire project.
Putsag Tsagaan, an Oyu Tolgoi board member, said earlier this month that Mongolia will not
approve the budget for the entire year until the company produces a feasibility study for phase two
of the project.
Source: Bloomberg
Issue 269
MONGOLIA DEBATES THE INTERESTS OF GOLDMAN SACHS
Mongolia‘s parliament is deliberating on its past dealing with Goldman Sachs (Asia) LLC to decide
whether or not there was a conflict of interest.
Goldman Sachs acted as an advisor to the Mongolian government during the drafting of the Oyu
Tolgoi investment agreement, advising on financial aspects such as the development of a financial
model. The World Bank and other organizations, meanwhile, provided their own brand of financial
and legal advice, some without charge, while Goldman Sachs left a bill of USD 250,000, according to
Erdenes Oyu Tolgoi LLC at a session of Parliament.
Mining Minister Davaajav Gankhuyag concluded that session, remarking upon the need for a court‘s
opinion. However, what court the case should be introduced to has yet to be decided. One possibly
regulatory body is the U.S. Securities and Exchange Commission.
Source: Business-Mongolia.com
Issue 270
AUDIT SEEKS TO SETTLE USD 2 BILLION COST OVER-RUN CLAIMS
Mongolia said it is undertaking an audit of Rio Tinto PLC's Oyu Tolgoi operation as it seeks to
understand the reasons for an alleged USD 2 billion cost overrun at the mine where output is due to
start in June.
―We are checking procurement documents and expenditures,‖ Finance Minister Chultem Ulaan told
reporters in Ulaanbaatar. ―No one understands why the project has gone USD 2 billion over budget,
so we are checking this.‖
The USD 6.6 billion Oyu Tolgoi mine will be the largest contributor to Mongolia's economy and is
estimated to account for one-third of the nation's gross domestic product in 2020. The government's
audit team is studying what equipment was bought for the mine and its cost, said Ulaan. The