BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 251 – December 7, 2012

NEWS HIGHLIGHTS:

Business

Steinbock to build fluorspar plant;

Voyager returns to operations at Khul Morit;

Petro Matad Chief Douglas McGay retires;

Central Asia Metals continues sale of Mongolian projects;

Gemalto to help egovernance project in Mongolia;

25 alcohol producers have licenses revoked;

Mongolian Mining Journal to name “Person of the Year”;

Clean Coal Asia Summit in Shanghai;

Mongolian Investment Group releases interim results;

Vale to scale back investment as global economy bites;

Posco seeks stake in Canada iron ore mine.

Economy

Mongolia bonds in tailspin as coalition government teeters;

Government transfers bond proceeds to state account;

Is Mongolia a solid bet or bubble?

MNT 200 billion bond issuance to support tanneries;

Mongol Bank auctions MNT10 billion of 12-week government bills;

Mongol Bank issues one-week bills;

Economists see a rebound for the tugrug;

Government plans for new power plant in UB;

Mongolia's growing wealthy population;

City to continue with public transport lane;

Severely polluted Mongolia tries cleaner power source;

Mongolia pays the price for Russian fuel supply;

Show and tell;

Winter brings hardship to provinces;

Mining saps a thirsty desert;

Cost inflation to weigh heavily on mining in 2013;

Learn from what Mongolia got wrong, cautions Canadian think tank.

Politics

MPRP might exit government coalition;

Mongolia's CIA receives new deputy director;

Scientists receive honors;

Altankhuyag travels to Kyrgyzstan for premier's gathering;

Altankhuyag meets Russia's prime minister;

Chinese premier pledges to strengthen cooperation with Mongolia, Kazakhstan;

Mongolia makes splash at Hong Kong investment roundtable;

Mongolia among year's highlights for OSCE;

Scoring the scorekeepers;

Too close for comfort;

U.N. to continue cooperation with Mongolia in fighting HIV/AIDS;

The hunt for Chinggis' tomb;

U.S. authorities seize another fossil.

ECONOMIC INDICATORS

MSE Top 20 Index by market Capitalization;

Foreign-listed Companies with Mongolian Assets;

Inflation;

Central bank policy rate;

Currency rates.

*Click on titles above to link to articles.

SPONSORS

Khan Bank Eznis Airways

Kempinski Hotel Khan Palace Mongolian National Broadcasting

Breakthrough PR Oxford Business Group

BCM MONTHLY MEETING NOTICE

BCM‘s next monthly meeting for members will be Monday, December 10, 2012 at 5PM at the

KEMPINSKI HOTEL KHAN PALACE, 2nd floor, Altai Ballroom.

The bilingual meeting will feature the following presentations:

- Call to Order/Business Council of Mongolia: Laurenz Melchers, Chairman, BCM

- BCM Report: Jim Dwyer, Executive Director, BCM

- Adrienne Youngman, Executive Director, Mongolia Talent Network – ―Human Talent In Mongolia‖

- Jan Hansen, Senior Country Economist, Mongolia Resident Mission, ADB & Enerelt Enkhbold,

Associate Investment Officer, MNRM, ADB – ―Outlook for the Mongolian Economy―

- Tsendsuren Batsuuri, Head of CDM National Bureau, Climate Change Coordination Office, Ministry

of Environment and Green Development – ―Carbon Market Mechanisms: current status and

opportunities for Mongolia‖

- Efrain J Laureano, Chief of Party, Business Plus Initiative (BPI) – USAID Contractor - "Supplier

Development in Mongolia‖

A networking reception will be held for all attendees immediately following the business portion of

the meeting in the ―Oasis‖restaurant, 1st floor.

BUSINESS

STEINBOCK TO BUILD FLUORSPAR PLANT

Switzerland's Steinbock Minerals Ltd. has purchased the rights to mine fluorspar in Baganuur and is

planning to build a processing facility.

The plant would have the capacity to process 14,000 tons of fluorspar a year. The biggest investor

in the fluorspar extraction industry, Tianjin Steyuan Minerals, noted that building this factory would

help cover China's international demand for fluorspar.

According to the Mongolian National Chamber of Commerce and Industry, Mongolia provides 30

percent of all fluorspar exports, making it the top exporter. Of the fluorspar extracted and sold

abroad, 66.1 percent goes to Russia, 15 percent to Ukraine, 8.2 percent to China, 5.3 percent to

Holland, and 4.2 percent to South Korea. The rest is divided among Kyrgyzstan, Japan, Hungary,

Thailand, Romania, and the Slovak Republic.

Mongolia sells fluorspar at the highest price to Ukraine at USD 389 and the cheapest to China at USD

113.

Source: Undesnii Shuudan

VOYAGER RETURNS TO OPERATIONS AT KHUL MORIT

Voyager Resources has restarted its Khul Morit copper project in Mongolia.

The re-commencement of exploration at the project is buoyed by assay results that demonstrate

the strongest indication yet of the Khul Morit project‘s suitability to host a copper porphyry system.

The current drill program will focus on initial targets identified from an extensive audit that the

company completed in recent months. Voyager is well capitalized to undertake and complete this

drill program and is equipped to conduct drilling throughout the winter season.

The Khul Morit project is located on the Erdene Island Arc Terrain, which is one of the tectonic

terrains extending across the Gobi and southern regions of Mongolia. The region is known to host a

number of mineralized copper porphyry systems including the giant Oyu Tolgoi deposit.

Source: Proactive Investors

PETRO MATAD CHIEF DOUGLAS MCGAY RETIRES

A new chief executive will be recruited by Petro Matad Ltd. once the exploration and work

programs have been finalized.

Petro Matad this morning said that Chief Executive Douglas McGay is retiring with immediate effect.

The company said that a new chief executive will be recruited once the exploration and work

programs have been finalized. In the meantime, Chief Financial Officer John Henricksen and

Exploration Manger Ridvan Karpuz will take over the management responsibilities in Mongolia.

―Following the company‘s board and management restructuring it is a fitting moment for me to

retire from my duties and responsibilities at Petro Matad,‖ McGay said in a statement. ―I believe

that Petro Matad has a sound future and am confident that its diverse assets in the progressive

country of Mongolia will be explored by a team of high-quality professionals supported by some of

Mongolia‘s finest staff.‖

Meanwhile Chairman George Watkins said, ―The company is fortunate in having another

experienced oil industry executive John Henricksen, as chief financial officer. Together Ridvan and

John form a strong management team to take the company forward over the coming months.‖

Source: Proactive Investors

CENTRAL ASIA METALS CONTINUES SALE OF MONGOLIAN PROJECTS

Central Asia Metals PLC (CAML) announced that it has now ended the exclusivity period with

Mongolian Resource Corp. (MRC) for the sale of two of the company‘s Mongolian projects, Ereen and

Handgait.

Discussions remain ongoing between CAML and MRC over the sale, but MRC has been unable to raise

the funding required at this stage. CAML will continue the sale process with other interested third

parties and has maintained the services of Cutfield Freeman & Co. as financial advisor.

Source: News.mn

GEMALTO TO HELP EGOVERNANCE PROJECT IN MONGOLIA

Digital security company Gemalto has said that Mongolia‘s Ministry of Justice and Home Affairs has

selected its Sealys secure multi-service electronic ID cards for their national identity program. This

new eID program will secure Mongolian citizens‘ identities as well as pave the way for new

eGovernment services, Gemalto said.

Mongolia has approximately three million inhabitants and all citizens above 18 years of age are to

carry these smart cards as their national identity document. In addition, the national eID card will

allow for more efficient updating of the national registry and to enhance both the process and

security level of verifying identities.

Gemalto worked with Bodi International, the program prime contractor and a leading IT company in

Mongolia on this project.

Source: Times of India

25 ALCOHOL PRODUCERS HAVE LICENSES REVOKED

The government has canceled the operating licenses of 25 alcoholic beverage producers following

inspections by the Professional Inspection Agency (PIA).

The PIA proposed the licenses be canceled after a meeting of the agency's board of directors on 10

October where they decided the recommendation should be made. The decision by government to

follow through in the recommendation will cancel the licenses of three spirits, 17 alcohol, 4 wine,

and 5 beer production licenses.

The number of specially license food producers has declined by 60 percent since 2004. No new

special licenses for the alcohol industry have been granted since 2008.

Source: News.mn

MONGOLIA MINING JOURNAL TO NAME “PERSON OF THE YEAR”

Mongolia Mining Journal is set to name the recipient of its ―Person of the Year‖ awards at its annual

award ceremony.

The choices are among those who have made valuable contributions to the mining sector's

development in any of several ways—improving its regulating laws, stabilizing the investment

environment, contributing to theoretical research or field practices, installing better management

practices, or ensuring responsible mining operations.

The candidates for company representatives are:

B. Batmunkh, executive director of Sharyn Gol JSC

G. Battsengel, executive director of Energy Resources LLC

Ts. Garamjav, general Director of Monpolymet Group

James Passin, founder of Firebird Management Fund

Cameron McRae, president and chief executive officer of Oyu Tolgoi LLC

Randolph Koppa, president of Trade and Development Bank LLC

B. Nyamtaishir, president of Mongolyn Alt (MAK) Group

J. Odjargal, director of board, Mongolian Mining Corporation and president of MCS Group

B. Enebish, former executive director of Erdenes Tavan Tolgoi JSC

The candidates for academics, scientists, and representatives of professional organizations are:

D. Achit-Erdene, president of Mongolia International Capital Corporation (MICC)

D. Bat-Erdene, president of Mongolian Industrial Geologists‘ Association

D. Damba, president, Mongolian National Mining Association

S. Davaanyam, head of the Labor Safety and Environment Department at Erdenet Factory and

professor of mining exploration and processing, Technical University

N. Dorjdari, Manager & Researcher, Open Society Forum

L. Dugerjav, Ph. D, professor, Mongolian University of Science and Technology, and president,

Mongolia‘s Antarctica Research Association

J. Zoljargal, Director of Technology and Research Centre, Mongolyn Alt Corporation

T. Naran, Executive Director, Mongol Coal Association

Source: Mongolian Mining Journal

CLEAN COAL ASIA SUMMIT IN SHANGHAI

Mongolia Investment Congress-Clean Coal Asia Summit 2012 will be held from 10 to 12 December in

Shanghai.

The summit, organized by INBC Global in cooperation with the Mongolian Stock Exchange, will be

attended by world-class investors and representatives from international organization to discuss

mining, energy, infrastructure, financial services as well as Mongolia's investment opportunities.

This year Mongolia Investment Congress will address investment opportunities in Mongolia's mining

industry, the problems it faces, and its finances. There is also certain to be debate over issues

concerning Mongolia's coal reserves and resources.

Presenters will include leading figures from Newcom Group Ltd., Millennium Challenge Account-

Mongolia, and PricewaterhouseCoopers Inc. to discuss investment opportunities, the latest

technology for coal gasification and liquefaction and visions for clean energy. Also in attendance

will be the Business Council of Mongolia and Anderson and Anderson.

Source: Mongolian Economy

MONGOLIAN INVESTMENT GROUP RELEASES INTERIM RESULTS

Despite facing a more challenging environment underpinned by overall lackluster global economy,

Mongolia Investment Group Ltd. and its subsidiaries continued to gain steady revenue for its

waterworks business while dedicating efforts to ramp up production at its Mongolia mine site for

the six months ended 30 September.

MIG continued with preparatory work at the Tugrug coal mine, including the leasing of relevant

equipment and machineries, and commissioning of the power supply and dewatering process. Based

on an independent report, the mine has approximately 64 million tons of measured and indicated

resource and additional 27.9 million tons of inferred resources.

Exploration activities at other regions where MIG holds exploration licenses also continues. As a

result of failure in discovering commercially viable quantities of minerals at the gold and copper

deposits located in Gobi-Altai and Zavkhan Aimags, an impairment loss amounting to HKD 24.6

million on the exploration licenses and related exploration costs capitalized is recognized to the

consolidated result. The licenses will expire in the first half of 2013.

Source: Mongolian Investment Group Ltd.

VALE TO SCALE BACK INVESTMENT AS GLOBAL ECONOMY BITES

Brazil's Vale SA, coal explorer in Mongolia and the world's second-largest mining company, cut

estimated 2013 capital spending by 24 percent after a global slowdown and a drop in iron-ore prices

led the company to rethink its outlook for expansion.

Vale's 2013 investment plan is the smallest since 2010. Among cuts, Vale confirmed the removal of

its Simandou iron-ore mine, in Guinea, and the Samarco IV pellet plant with Australia's BHP Billiton,

in Brazil, from the list of active projects. The Lumbambe copper mine, in Zambia, was removed

from the project list after output successfully started, Vale said. Vale is also considering selling its

22 percent stake in Norwegian aluminum group Norsek Hydro.

―It would be more significant if there were significant changes to capex on core projects,

particularly Brazil,‖ said Wiktor Bielski, head of commodity research at VTB Capital in London.

BHP Billiton has halved capital spending over the next five years, a posture that offers better

returns to shareholders, he said. Vale is still concentrating on too many new mining projects and

not looking for enough ways to increase output from existing assets, Bielski added.

―Vale should follow this business model,‖ he said, referring to what he called BHP Billiton's more

aggressive shedding of new, so-called greenfield projects and focus on older assets. Vale, though,

trumpeted a sharp tightening of financial discipline and a willingness to consider the sale of any and

all assets that fail to provide an adequate return.

Read more…

Vale plans to focus on iron ore, dedicating 47 percent of 2013 capital spending to the mineral. That

is about the same percentage as budgeted in 2012 despite a 22 percent cut in overall spending on

iron-ore mines, processing and transport facilities and iron-ore pellet plants. Vale accounts for

more than a quarter of the world's seaborne iron-ore exports. Spending on coal projects next year is

expected to rise to 10.6 percent of the total from 6.9 percent this year. Vale expects to sell 12.4

million tons of coal in 2013, a quarter less than its 2012 estimate. Production is unlikely to pick up

until 2014, Vale said.

Source: Reuters

POSCO SEEKS STAKE IN CANADA IRON ORE MINE

Posco, the world's fourth-largest steelmaker by output and a company seeking participation in the

Tavan Tolgoi coking coal project, has secured exclusive negotiating rights for a 15 percent stake in

a Canadian iron ore-miner operated by ArcelorMittal.

Posco has been named the preferred bidder for the stake, worth more than USD 1 billion, in

ArcelorMittal Mines Canada. It plans the purchase as a part of a consortium that includes the

country's public pension fund.

The Korean company has been actively acquiring overseas miners in recent years as it seeks greater

control over supply of raw materials. It has made investments in Australia, Brazil, Canada and

Africa. Here in Mongolia it has been selected as a preferred bidder in Newcom Group's consortium

for the Power Plant No. 5 project.

Last year, Posco and South Korea's state-run National Pension Service set up a KRW 800 billion (USD

738 million) fund for overseas acquisitions. The two joined forces with a consortium of Japanese

steelmakers to buy a 15 percent stake in a Brazilian rare metal miner for about USD 1.8 billion.

Posco is also eying Arrium, Australia's second-largest steelmaker, but Arrium has rejected an offer

of AUD 1 billion (USD 1 billion) from a Posco-led consortium.

Source: Financial Times

ECONOMY

MONGOLIA BONDS IN TAILSPIN AS COALITION GOVERNMENT TEETERS

One of the members of Mongolia's fragile coalition government has ordered its ministers to leave

their posts, a move that has sent the country's bonds into a tailspin and could threaten the passage

of crucial legislation.

Mongolian bonds plunged between USD 7 and USD 8 on Wednesday on the news that the populist

Mongolian People's Revolutionary Party (MPRP) was no longer prepared to work with the Democratic

Party. Prime Minister Norov Altankhuyag was in Kyrgyzstan and no one has yet officially accepted

the MPRP's resignation.

An end to the coalition, formed after a week of tense negotiations in July, would reflect the

country's struggle to balance the interests of foreign investors with the need to appease growing

nationalist sentiment at home, but tensions have also been stoked by the imprisonment of the

MPRP's leader, Nambar Enkhbayar, on corruption charges.

Last week, Mongolia's USD 1.5 billion debt offering was 10 times oversubscribed. The new round of

political instability has not only sent bond prices plummeting, but could also dissuade investors to

participate in any future offerings. Mongolia's government has stated plans to sell a total of USD 5

billion in bonds to finance the infrastructure required to develop its flourishing mining sector.

The final outcome of the MPRP's departure could ―depend on how the exit is handled,‖ said Vidur

Jain, an analyst at local investment bank Monet Capital. ―This may affect the yields on the recent

issued bonds, and make a second bond issuance more expensive,‖ he said.

The Democratic Party has 34 seats in Parliament, five short of an overall majority. The Justice

Coalition won 11 seats, including seven allocated to it through a system of proportional

representation. Those would be reallocated if the Justice Coalition dissolved.

Source: Reuters

GOVERNMENT TRANSFERS BOND PROCEEDS TO STATE ACCOUNT

The government transferred the USD 1.5 billion raised from its recent sovereign debt offering into

its state account on Wednesday.

At a press conference last Saturday, Minister of Economic Development N. Batbayar and Finance

Minister Ch. Ulaan said two teams traveled separately to Asia, Europe and North America, both

ending up in New York, to market the bond to investors. The ministers said this was Mongolia‘s first

experience selling bonds abroad which was met with great success, a sign of global interest in the

growing nation.

The proceeds from the offering will be used to develop infrastructure for mines, the railway

network, and the Sainshand industrial park, among others.

With the money now in the state account, its use will be determined by a temporary standing

committee.

Source: Udriin Sonin

IS MONGOLIA A SOLID BET OR BUBBLE?

Is Mongolia, a country that has been rescued five times in the past 22 years by the International

Monetary Fund (IMF), a better investment thesis than Spain?

Mongolia succeeded in raising USD 1.5 billion in a two-part offering. The USD 500 million five-year

tranche, sold at 4.125 percent yield while the larger 10-year USD 1 billion tranche period priced at

a yield of 5.125 percent. Spain‘s 10-year bond is at 5.03 percent. The Mongolian offer was 10 times

oversubscribed, attracting USD 15 billion in bids.

―The sub-5 percent on that particular deal came as a surprise to EM veterans,‖ said Robert Abad,

emerging markets specialist at Western Asset Management. ―But as we all know, the market has a

very short memory, so it is not as surprising to see Mongolia accessing the markets as yields that do

not fully capture the risks inherent in a fast-growing country with a limited history of managing

economic cycles.‖

Although Abad said the yield was not enough for the risk, others saw it differently. With the returns

on investment grade emerging markets such as Mexico and Brazil no longer as attractive as they

once were, investors have started to take their money to riskier places like Zambia, Bolivia, and

now Mongolia and El Salvador.

―In the case of Mongolia, one way to think about it is would you rather have the financial surpluses

but political risk of Mongolia or the euro blow-up risk of Spain?‖ asked Gabriel Steme, an economist

at Exotix. ―I guess the market‘s verdict is the former, and I for one wouldn‘t quarrel too much with

that.‖

While some critics will point to signs of a bubble forming in the emerging market debt space, Abad

thinks it is nowhere close to bursting yet.

―Rates in the developed world will remain low for some time allowing for more yield and spread

compression in risk assets,‖ he said. ―However, because technical considerations are overwhelming

fundamentals, the job for investors is to remain disciplined and alert. Without such restrained, they

risk chasing yield and falling into an abyss once fundamentals reassert themselves.‖

Source: Financial Times

MNT 200 BILLION BOND ISSUANCE TO SUPPORT TANNERIES

The Standing Committee on the Economy in Parliament has approved a MNT 200 billion five-year

bond issuance.

Proceeds from the local offering would go to Mongolia's 35 tanneries and 178 processing factories

operating in Mongolia. Herders supply 178 million skins to these tanneries. Domestic producers

process only 25 percent of this supply and foreign tanneries buy 75 percent. Small domestic

production comes as a result of capital and producers' inability to build up enough production stock

during peak periods of sale.

The standing committee estimates that the financial support could generate as much as 25,000 jobs

and MNT 460 million for a total capital gain of MNT 1 trillion.

Source: News.mn

MONGOL BANK AUCTIONS MNT10 BILLION OF 12-WEEK GOVERNMENT BILLS

The Bank of Mongolia received MNT29 billion in bids for MNT10 billion of 12-week government bills.

Five domestic banks submitted bids in the auction. Winning bids ranged from 12.2% to 12.74%.

Interest on the bills is exempt from Mongolian taxes. The auction will settle on Monday, December

10 (T+3). Bills will be held in the names of the purchasers at the Securities Clearing House and

Central Depository.

The auction was the first managed by MongolBank on behalf of the Ministry of Finance. MongolBank

will manage two additional auctions, of 28-week bills and another issue of 12-week bills, before the

end of the year. The government is seeking to raise MNT270 billion to help finance the government

deficit.

Source: Bank of Mongolia

MONGOL BANK ISSUES ONE-WEEK BILLS

The Bank of Mongolia issued one-week bills worth MNT 137.6 billion at a weighted interest rate of

13.24 percent per annum.

One-week CBBs, a main monetary policy instrument of the Central Bank, play an important role in

managing the reserves of the banks. This CBB rate represents the Central Bank's policy rate guides

for interbank money market.

In July 2007, the CBB, with a stable rate and unlimited bidding, was introduced with auctions to be

held on every Wednesday. This really had attracted the banks' interest providing the possibility for

the banks to place their excess reserve in a short-term asset. There has been a substantial change

in the way banks manage their reserves since then.

Source: Bank of Mongolia

ECONOMISTS SEE A REBOUND FOR THE TUGRUG

There has been a great deal of speculation among Mongolian economists that the tugrug could begin

strengthening.

The Mongolian government has discussed increasing its currency reserves following its own

sovereign debt offering as well as that of Trade and Development Bank of Mongolia LLC. The

government believes a higher exchange rate for the tugrug could help bring down inflation.

Also, the recently passed 2013 budget calls for MNT 7.44 trillion in expenses, or 42.2 percent of

GDP.

Source: Zuunii Medee

GOVERNMENT PLANS FOR NEW POWER PLANT IN UB

Members of the Cabinet of Ministries have agreed for the establishment of a new power plant that

would supplement the energy and heat needs for the eastern part of Ulaanbaatar.

Bayanzurkh District was chosen as the location for the new plant, next to an outdated heat plant

called US-15. The ministers for economic development and finance were tasked with developing a

budget of MNT 200 million for the feasibility study for the construction of the 300-megawatt power

plant. Meanwhile Ulaanbaatar Mayor E. Bat-Uul, Energy Minister M. Sonimpil and Environment and

Green Development Minister S. Oyun are responsible for attaining the land where construction will

take place and researching the resources that will be needed.

The plant would supply heat to an additional 20,000 households and significantly add to electricity

generation, said a government statement.

Source: Business-Mongolia.com

MONGOLIA'S GROWING WEALTHY POPULATION

International finance research group Wealth X reported that Mongolia is currently home to 40

individuals with capital assets above USD 30 million.

Those assets include cars, planes, savings, and works of arts. In Central Asia, Kazakhstan has the

most wealthy individuals with 140 people with USD 20 billion. That number has fallen by 20

percent, however, since last year.

Uzbekistan falls next with 80 wealthy individuals with holdings of more than USD 12 billion, and

Azerbaijan comes third with 60 people with holdings above USD 6 billion.

Mongolia's enormous mining projects have attracted heavy investment from abroad. Further

developing of the mining industry is likely to bring even more millionaires and possibly billionaires.

Source: Unuudur

CITY TO CONTINUE WITH PUBLIC TRANSPORT LANE

The City of Ulaanbaatar has extended the enforcement of its rule that dedicates the most right lane

of traffic to public transportation.

―Only public transportation buses and taxis in standard service and staff buses will be allowed to

drive in the first lane of [Peace Avenue] in Ulaanbaatar from the Officer's Palace to Tavanshar,

beginning from 10 December,‖ said G. Dorjpalam, chief of the Dispatch Department of the city's

public transportation.

The city also plans to launch an express bus service along the city's horizontal and vertical axes

beginning from February 2013, said Dorjpalam. It also plans to provide a greater number of buses

running for public transport.

Source: News.mn

SEVERELY POLLUTED MONGOLIA TRIES CLEANER POWER SOURCE

On a desolate, wind-raked hilltop not far from the capital are 80-meter poles being lifted and fitted

with enormous pinwheel-like turbines in Mongolia‘s first foray into wind-generated power.

With 31 of these 260-foot, or 79-meter, turbines made by General Electric Co., the Salkhit wind

farm will be able to produce 50 megawatts of power when it goes online in early 2013. That is

enough to supply Mongolia‘s 860-megawatt central grid with approximately 5 percent of its energy

needs. The eco-friendly plant will save Mongolia 150,000 tons of coal and reduce carbon dioxide

emissions 180,000 tons annually.

The push to develop cleaner energy is fueled by an environmental disaster in Ulaanbaatar,

identified by the World Health Organization as the world‘s second-most polluted city. That pollution

is largely attributed from ger-district residents who burn raw coal in winter to keep warm as well as

coal-fired power stations, exhaust from vehicles and dust from construction sites. According to

studies, the number of peopled sickened by respiratory disease increased 45 percent between 2004

and 2009, and one in 10 deaths in the city can be attributed to air pollution.

―Mongolia has tremendous potential for solar and wind, but this is something that has to be

carefully approached because of the nature of renewables. They don‘t provide the same reliability

as more conventional sources of energy,‖ said Shane Rosenthal, deputy director for the Asian

Development Bank in Ulaanbaatar.

In November Mongolia was host to a conference, Renewable Energy in North East Asia, which

highlighted a proposed Asian supergrid to connect power grids from Japan to India. As part of the

efforts, Newcom is working with Japan‘s Softbank to develop a 300-megawatt wind farm in the Gobi

Desert.

―They see the potential for generating large-scale power generation based on wind to export power

to China and Korea, and eventually to Japan,‖ said Ts. Tsevegmid, General Electric Co.‘s chief

representative to Mongolia. ―After Fukushima, the Japanese said they want to shut down their

nuclear program, so they need additional power. Mongolia can help.‖

Source: New York Times

MONGOLIA PAYS THE PRICE FOR RUSSIAN FUEL SUPPLY

An expected price increase of gasoline by Mongolian distributors presents new challenges for the

coalition government and worries for the public and businesses. Rosneft, the largest Russian oil

company, has begun to charge extra for the popular gasoline brand AI-92 as well as for diesel

because of recent structural changes and production expansion costs from 1 November.

Any slight change in the gasoline retail price often leads to price increases in Mongolia for other

goods and services, as well as panic buying due to fuel shortage fears. Many rural communities are

still dependent on diesel power generators, too. This comes as the country is experiencing

increased consumption of fuel in the mining sector, agriculture, freight forwarding companies as

well as due to the growing number of vehicle owners.

To avoid potential market panic, Prime Minister N. Altankhuyag has engaged in discussions with the

key Mongolian distributors, encouraging them not to increase the retail price, while the Authority

for Fair Competition and Consumer Protection (AFCCP) has criticized distributors for suggesting

unreasonable price increases. Although the government has promised several financial incentives to

fuel distributors, these are only short-term solutions and may even become hostage to domestic

politics around the presidential election in 2013.

Officials and the public have discussed diversifying fuel suppliers, constructing facilities to refine its

limited oil reserves or to liquefy coal sources, and increasing the country's oil reserves.

Mongolia has been dependent on Russian state-owned Rosneft for over 90 percent of its total fuel

imports. Sometimes, high-level meetings between Ulaanbaatar and Moscow appear to be dominated

by the Russian state-owned oil company.

Also, joint ventures such as the Erdenet copper mine provide additional leverage to Mongolian

politics. However, Rosneft's monopolistic policy over Mongolia's fuel market has begun to intensify

Mongolia's efforts to find alternative fuel suppliers, such as Kazakhstan and the Gulf states, as well

as to refine its crude oil rather than exporting to China. But for the time being, Mongolia's

burgeoning economy will remain vulnerable to imports of Russian gasoline.

Source: Asia Times

SHOW AND TELL

Privatization has become a top headline in Russia, while its government sells off nine of its state-

owned ―strategically important‖ assets. One of those is oil giant Rosneft, which is responsible for

quenching most of Mongolia's thirst for oil.

To lessen it petroleum dependency on Russia, Mongolia needs to take control over the petroleum

industry that has been in Rosneft's hands for almost a half century. If Russia remains the main

supplier of petroleum it will continue imposing higher prices on its oil exports. Panic has started to

set in, and many are wondering how the government will respond.

Mongolia's crude oil reserve is estimated at 1.6 billion tons, with 196 tons of proven reserves. About

30 million tons of that crude oil can be extracted now if Mongolia can find the right key to its

locked reserves. Exploration and extraction requires a lot of time and money—about five years and

USD 30 million for the former and USD 100 million for the initial cost of the latter. Currently about

USD 1.3 billion has been invested in the Tamsag and Zuunbayan basins. Industry officials note that

more needs to be done, however, if Mongolia is ever to meet even its own domestic demand.

The country's petroleum law, hailed as one of its strongest when passed in 1991, is now aged and

ill-suited for the market. It also still lacks the infrastructure to refine its own gas supply, despite

many proposals to do so. There is also the possibility of coal-to-liquid technology, but the

technology is still in the early stages. China claims to have mastered the process, but experts are

skeptical. Today, some of Mongolia's most prominent companies are collaborating in processes to

extract synthetic fuel from brown coal. At the very least Mongolia could do more to build its

reserves. Thus far it only has enough fuel for 44 days, though Parliament has ordered enough for 60.

Government policy that spans to 2017 includes various regulations for creating a sufficient supply of

oil. Bright prospects can be seen in such policy. But in the end, all these options must somehow

come together to form a single vision that establishes an ample supply of fuels as well as the

development of oil refineries.

Source: Mongolian Economy

WINTER BRINGS HARDSHIP TO PROVINCES

The Ministry of Food, Agriculture and Light Industry has reported that a difficult winter may

extinguish the optimism felt from Mongolia's most fruitful summer.

―The summer was great. The hay and feed for cattle is prepared well, as the summer was wet and

rainy,‖ said a participant in a video conference between heads of agriculture departments from

Mongolia's 21 provinces. ―However, this winter seems already to be harsh and the provinces might

suffer from winter drought.‖

This year the government registered 4.7 million livestock belonging to 155,000 households in

Mongolia. Last summer's particularly fair conditions due to greater than average rain fall allowed 95

percent of total livestock to fatten past averages this year. Also, the government already has 90

percent of livestock feed ready for distribution beginning after the new year.

Weather conditions in local areas have been poor, covering 80 percent of Mongolia's territory with

snow. The excess snow made pasture grass in seven provinces insufficient to feed livestock. Even

colder temperatures are expected for this month.

Local traffic officials have reported that weather has prevented cars from traveling on the roads

from Arkhangai to Zavkhan and in Baganuur due to road blockages from snow. An official from the

Department of the Traffic Police Administration advised drivers to follow road traffic safety rules

and maintain their cars before and during trips to the countryside. He also warned against driving

through the countryside without good reason.

Source: UB Post

MINING SAPS A THIRSTY DESERT

The Oyu Tolgoi copper-gold mine has been a symbol of a looming crisis: a limited water supply that

could be exhausted within a decade, seriously threatening the lives and livelihoods of the local

population.

A 2010 World Bank water assessment report for the southern Gobi region projected a ―lifespan‖ for

water resources based on the number of mining projects in the pipeline, as well as a study of the

region's growing population whose primary occupation is herding and rearing livestock. The sparsely

populated region, which consists of three provinces occupying a combined area of 350,000 square

kilometers, is home to 3.8 million livestock: 120,000 camels, 260,000 horses, 100,000 cows, and 3.4

million sheep and goats. Together these animals require an estimated 31,600 cubic meters of water

daily. Human consumption among the 150,000 residents in rural and urban settings across the

southern Gobi is estimated at 10,000 cubic meters per day.

The World Bank assessment found that in 2010, Oyu Tolgoi used about 67,000 cubic meters of water

a day, while the government-owned Tavan Tolgoi coal mine consumed 76,000 cubic meters daily.

Although the Ministry of Environment monitors Oyu Tolgoi to ensure it remains within its water

allowance of 870 liters a second during construction, the fact remains that each mine's water

consumption was more than double that of all the livestock in the entire region.

The bank projects that known water resources could last just 10 to 12 years, unless additional

sources are promptly located and utilized. One option is to divert water from the Orkhon River, and

Oyu Tolgoi has tapped into a saline aquifer.

It is unlikely that residents in the southern Gobi region will share in the spoils of these extraction

projects. Khanbogd, the town located closest to Oyu Tolgoi, is very poor in comparison to

Ulaanbaatar, which has been the recipient of generous government funding. In fact, according to

local researchers, Khanbogd receives the smallest revenue from the central government of any

town or province.

Source: IPS News

COST INFLATION TO WEIGH HEAVILY ON MINING IN 2013

Fitch Ratings on Thursday warned that cost inflation would have a more ―visible‖ negative impact

on mining companies in 2013 than has been the case in recent years.

A bleak macroeconomic outlook in western economies and concerns about growth In China would

impact on commodity prices, which have remained weak since last year, but wage inflation and

rising energy prices continued to drive mining cost inflation. Having masked the impact during prior

periods of cost inflation, Fitch expected the higher costs to be much more evident in miners'

earnings.

Generally, labor costs for mines in developed economies account for about 40 percent of total

costs, while labor costs in developing economies reached 20 percent.

Source: Mining Weekly

LEARN FROM WHAT MONGOLIA GOT WRONG, CAUTIONS CANADIAN THINK TANK

With two big foreign deals in the balance, Canada is now being advised by a Calgary think tank not

to follow in the path of another resource-rich nation that's recently scared off international

investors: Mongolia.

In a paper, the Canadian Defense and Foreign Affairs Institute cited Mongolia's failed attempt last

spring to clarify foreign-investment rules, in light of deep-seated concern in the country about the

role Chinese state-owned enterprises should play in the resource-heavy economy. Canada's

Conservative government is undergoing a similar process, promising to release ―general‖ guidelines

on future foreign takeovers, at or around the same time it issues its much-anticipated rulings on

two key energy deals: CNOOC Ltd.'s USD 15.1 billion planned purchase of Nexen Inc. and the

proposed USD 5 billion-plus deal for Progress Energy Resources Corp., led by Malaysia's Petronas.

Mongolia policymakers implemented a law that requires a government review of foreign-led

investments in sectors deemed to have ―strategic importance,‖ including mining, banking and

media. But it has been difficult to decipher. Mongolia's approach has ―significantly raised the risks

for foreign investors,‖ the paper argues, claiming a number of foreign investors have reportedly

withdrawn from proposed resource projects.

That should be a wake-up call for Ottawa, the report's authors say. The pending foreign-takeover

guidelines from Ottawa must bring some ―predictability‖ to rules regarding state-owned enterprises

to avoid a Mongolia-like quagmire, the authors argue.

―As we have seen in the case of Mongolia, resource nationalism can trigger knee-jerk reactions

bordering at times on the irrational,‖ the paper's authors said. ―Mongolia's current resource policy is

an example of getting it wrong. Let's hope that Canada gets it right.‖

Source: Canadian Defense & Foreign Affairs Institute

POLITICS

MPRP MIGHT EXIT GOVERNMENT COALITION

The Mongolia People‘s Revolutionary Party (MPRP) on Monday asked its members who hold cabinet

positions to withdraw from the coalition government led by the Democratic Party (DP)

In a press release, the MPRP said it had made the decision after the executive bureau of the party

reviewed legal proceedings against party chairman N. Enkhbayar, who was jailed for corruption.

The party said the jailing of Enkhbayar, also the ex-president of Mongolia, was illegal and a political

repression with fake charges.

―Since this repression was not stopped and continued until today, we ask the members of the

Mongolian People‘s Revolutionary Party who are in the government to withdraw from the coalition

government,‖ The MPRP said.

It also said the MPRP would not be responsible for any instability in the country which might emerge

as result of this withdrawal. Currently MPRP has three members as cabinet members in the coalition

government, formed by the Justice Coalition, Civil Will-Green Party and the DP. The MPRP did not

elaborate if the executive bureau of the party consulted with the party members who are working

in the government.

Source: Global Times

MONGOLIA'S CIA RECEIVES NEW DEPUTY DIRECTOR

The government has appointed the former deputy minister for the Mineral Resource and Energy

Ministry as deputy director to the Central Intelligence Agency.

D. Ariunsan received approval from his appointment during a Sunday government meeting. The post

has been vacant since last spring.

Source: News.mn

SCIENTISTS RECEIVE HONORS

Twenty-eight individuals received awards for ―The Best Scientific Researcher‖ on 30 November.

Mongolia selected S. Shatar as the first-place winner of best scientific research. Shatar received a

MNT 4 million prize for his series research on terpenoid chemistry. Second place went to D. Regdel

and S. Enkhtuya.

Six scientists took the ―Honorary Credentials‖ award while two researchers received the ―Best

Young Researchers of 2012‖ award. Sh. Tsend-Ayush won the ―Scientist Writer‖ certification.

The government budgeted MNT 25.8 billion towards the sciences in 2012, MNT 9.2 billion of which

will be used for technological projects.

Source: UB Post

ALTANKHUYAG TRAVELS TO KYRGYZSTAN FOR PREMIER'S GATHERING

Prime Minister N. Altankhuyag left Ulaanbaatar this week for Bishkek to attend the 11th Prime

Ministers' meeting of the Shanghai Cooperation Organization (SCO).

The two-day visit to Kyrgyzstan by the premier ran until Thursday. There, Altankhuayg discussed

issues promoting further cooperation between members of the SCO for transport, trade, energy,

telecommunication, science and technology, and emergency response.

The SCO is an intergovernmental mutual-security organization which was founded in 2001 in

Shanghai, China by the leaders of China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and

Uzbekistan.

Source: Info Mongolia

ALTANKHUAYG MEETS RUSSIA'S PRIME MINISTER

Prime Minister N. Altankhuayg met Wednesday with Russian counterpart D. Medvedev after the

Shanghai Cooperation Organization's (SCO) meeting of premiers.

Altankhuayg noted that the 2009 visit by Medvedev to Mongolia as president resparked ties between

the two nations. He said the development of relations with neighboring countries in all sectors is

one of the priorities of Mongolia's foreign policy strategy and expressed his interest in closer

bilateral relations and cooperation in the hope of solving pressing issues.

The government leaders also discussed issues concerning Erdenet Mining Corp., Mongolrostsvetment

and Ulaanbaatar Railways, three joint ventures between Mongolia and Russia. Medvedev said Russia

was ready to cooperate in tackling issues concerning these companies.

Source: Info Mongolia

CHINESE PREMIER PLEDGES TO STRENGTHEN COOPERATION WITH MONGOLIA, KAZAKHSTAN

Chinese Premier Wen Jiabao on Wednesday pledged to strengthen cooperation with Kazakhstan and

Mongolia during bilateral meetings with his counterparts.

At a meeting with Mongolian Prime Minister N. Altankhuyag, Wen said China and Mongolia have

established a strategic partnership and the two nations should sincerely implement the agreements

they have reached. The two countries should respect and accommodate each other's core interests

and deepen their political and strategic mutual trust, Wen said. The Chinese government supports

local companies to increase investment in Mongolia, and is willing to work with the Mongolian side

to enhance bilateral cooperation in energy and resources, infrastructure and agriculture, he added.

He also expressed the hope that Mongolia could provide more policy support for Chinese business.

Altankhuyag commended the frequent high-level exchanges between Mongolia and China and

fruitful results of cooperation in various fields. He also thanked China for its assistance and support

to Mongolia, and said his country is willing to strengthen cooperation with Beijing in a

comprehensive way and make new progress in advancing the Mongolia-China strategic partnership

At a separate meeting with Kazakh Prime Minister Serik Akhmetov, Wen noted that China and

Kazakhstan have worked closely in recent years in addressing various challenges such as the global

financial crisis and have established a comprehensive strategic partnership. China is willing to

maintain high-level contact with Kazakhstan and to increase mutual trust. It also aims to make mid-

long term plans for bilateral economic and trade cooperation and speed up efforts on a guideline

for cooperation in bordering areas, the premier said.

Source: Xinhuanet

MONGOLIA MAKES SPLASH AT HONG KONG INVESTMENT ROUNDTABLE

Mongolia's Consulate General to Hong Kong held a roundtable gathering for investors to learn about

investment opportunities in Mongolia.

The event was the first round table gathering of officials and business leaders from Mongolia and

Hong Kong. Nearly 300 delegates were in attendance for the event to hear speakers talk on politics,

regulatory updates to investment policy and major infrastructure projects.

Mongolia's national broadcasters televised the event for audiences back home. Also a quarterly

magazine published in Hong Kong focused on Mongolian affairs as a result.

Mongolia's Consulate General and the Mongolia Club will organize investor trips to Mongolia every

quarter beginning from January 2013. The trips will feature visits to government offices as well as

meeting with private companies and entrepreneurs. The consulate is making efforts to promote

economic cooperation between Mongolia and Hong Kong.

Source: Consulate General of Mongolia to Hong Kong

MONGOLIA AMONG YEAR'S HIGHLIGHTS FOR OSCE

Ireland can count the addition of Mongolia as the 57th member state to the Organization for

Security and Co-operation (OSCE) in Europe as one of its achievements during its year at the helm.

The chairmanship of the OSCE is estimated to have cost Ireland some EUR 4.5 million—compared to

a prediction of EUR 7 million at the start of the year—and it has managed with a relatively small

team of officials dedicated to the many and varied tasks presented by the role.

Ireland was able to keep down the bill partly because this was a relatively uneventful year in the

OSCE area: recent chairmen-in-office have had to scramble to deal with, among other crises, mass

ethnic riots in Uzbekhistan and a brief but intense war between George and Russia. Perhaps of more

concern was an intensification of belligerent rhetoric between Armenia and Azerbaijan over

Nagorno-Karabakh—a region officially within Azeri territory that is populated by ethnic Armenians

and has been under separatist control since a vicious war in the early 1990s.

Mongolia's addition to the OSCE's membership adds further to the diversity of an organization that

prides itself on including states that stretch from Vancouver to Vladivostok. Ireland has also helped

Ukraine with preparatory work for its own chairmanship year in 2013.

―A number of important decisions were taken through the year, with one particular decision

standing out—accession of Mongolia as the 57th OSCE participating state,‖ said Ukraine's foreign

minister Kostyantyn Gryshchenko. ―This is a remarkable development and the persistent efforts of

the Irish chairmanship deserves our high appreciation.‖

Source: Irish Times

SCORING THE SCOREKEEPERS

Following the debate between S. Bayartsogt and S. Ganbaatar, local media printed editorials and

analyses to assess who won. The overall verdict from these newspapers ranged from a tie to a win,

but the editorials themselves look to be losses.

Uuls Turin Toim, for example, employed ―ad Hominem‖ (attack the man, not the argument‖ and

―not invented here‖ (foreign is inferior to national) fallacy arguments to declare Deputy Speaker

Bayartsogt the loser in the debate. Uls Turriin Toim's criticized Bayartsogt as looking unusual from

the equipment he used to the clothes he wore. The newspaper graded his performance as poor,

describing him as an elitist snob rather than refuting his positions point by point.

Zuunii Medee was a bit more equivocal in their assessment, describing the debate a draw on the

basis of Bayartsogt appearing ―arrogant‖ and Ganbaatar appearing ―unprepared‖ and ―failing to

make his point.‖ This looks to be a ―false compromise‖ fallacy, meaning the newspaper could not

reconcile its apples-to-oranges comparison of performance and settled on the compromise of a tie.

Unuudur dedicated a full page to fact-checking statements by both debates, scoring each with true,

uncertain, or false. But it too had many fallacies in its arguments for its scores. Ganbaatar was the

clear winner on the Unuudur scale. But close examination of the logic employed is telling.

For example, one of Bayartsogt's false statements is: ―There isn't a single provision in the

established agreement that violates the law. If elements violated the law, the agreement would

have not been implemented over three years, would it? The investment has been sufficient, and the

mine is beginning production.‖

The newspaper disappointingly did not catch the circular logic here, rather it declares it a false

statement, reasoning, ―Oyu Tolgoi's production has not started up to now. The first extraction of

ore has been postponed three times.‖ Here, the first part of the statement is irrelevant to the

scoring of the second. Unuudur tied two statements with independent meanings to judge the

statement false by association with an arguably semantic error in the second statement.

However, the truly astonishing leap in logic comes from Ganbaatar's statement: ―This agreement

won't follow the law.‖

This statement was scored true with the reasoning, ―There is no basis for saying the agreement has

violated the law now. However, it is natural to surmise the provisions of the agreement, as well as

conforming to the agreement, will have no benefit for Mongolians.‖

There are other scores that employ equally astonishing abuses of logic to determine the winner of

the debate, and the choice of statements to score seem very much designed to tip the scale one

way or the other rather than an objective assessment of each debater's performance.

Source: The Mongolist

TOO CLOSE FOR COMFORT

After years of testy debate, Mongolia broke ground this spring for a railroad that will haul coal

across the pebbled Gobi desert to China, but with one costly condition.

Citing national security, the government ordered the rails be laid 1,520 millimeters apart,

Mongolia's standard gauge inherited from the Soviets. The width ensures that the rails cannot

connect to China's, which are 85 millimeters close together. So at the border, either the train

undercarriages will need to be changed or the coal transferred to truck, adding costs in delivering

the fuel to Mongolia's biggest customer.

―This is a political decision,‖ shrugs Battsengel Gotov, the tall, boyish-looking Chief Executive

Officer of Mongolian Mining Corp., which is building the railway from its prized coal mine.

In the world's rust to get rich off China, Mongolia works mightily to ensure that Chinese investment

does not become Chinese dominance. It's a balancing act shared by many countries, especially on

China's periphery. Mongolia has sought to minimize both Moscow's and Beijing's influence by forging

links with other world powers.

―We will not be another Africa,‖ said Ch. Hutagt, a banker and former vice finance minister who

wants to turn Mongolia into an international center of finance. ―We cannot afford to have one

particular nation control our business.‖

Requiring MMC to use a different railway gauge than China is adding USD 2 to USD 4 in costs to every

tons of coal, or about USD 120 million each year. The railroad was debated for more than two years

in Parliament. A transport minister and other powerful politicians argued the railway should first

connect with existing tracks to Russia.

In a compromise both are being built, though Russia doesn't need the coal and its nearest port is

4,000 kilometers (2,500 miles) away. The coal could be shipped via the port to Japan or South

Korea, but the trip would add USD 100 to every ton.

Source: AP

U.N. TO CONTINUE COOPERATION WITH MONGOLIA IN FIGHTING HIV/AIDS

U.N. representative Sezin Sinanoglu said Friday that the U.N. team in Mongolia will continue

cooperation with the Mongolian government in fighting HIV/AIDS.

At a press conference held to observe the World AIDS Day, Sinanoglu said significant progress had

been made in halting and reducing HIV/AIDS worldwide in recent years. According to a 2012 AIDS

report released by UNAIDS, there has been over 50 percent reduction in the rate of new HIV

infections across 25 low-and middle-income countries, and more than half of the countries are in

Africa, the region most affected by HIV/AIDS.

However, Sinanoglu noted that countries in East Europe and Central Asia have witnessed increasing

numbers of new HIV/AIDS cases and AIDS-related deaths. Unfortunately, Mongolia, another low-

prevalence country, has experienced a similar trend with a significant increase in the cumulative

number of HIV/AIDS cases from 11 in 2005 to 121 as of today, she pointed out.

She suggested that the Mongolian government invest more money in HIV/AIDS prevention programs,

improve its legal environment in protecting the rights of HIV/AIDS patients, and provide more

service for the population with higher risks.

D. Munkhbat, director of the Policy Department of the Mongolian Ministry of Health, said the

government will further increase its investment in the HIV/AIDS prevention programs.

Source: Xinhuanet

THE HUNT FOR CHINGGIS' TOMB

For centuries historians and treasure seekers have searched for the burial site of history's most

famous conqueror. New findings offer compelling evidence that it's been found.

In the 800 years since his death, people have sought in vain for the grave of Chinggis Khaan. But

while the life of the conqueror is the stuff of legends, his death is shrouded in the mist of myths.

There are debates whether he died in battle or illness and great steps were taken to hide the

location of his grave.

But now a multidisciplinary research project uniting scientists in America with Mongolian scholars

and archaeologists has the first compelling evidence of the location of his burial site and the

necropolis of the Mongolian imperial family on a mountain range in a remote area in northwestern

Mongolia. Among the discoveries are the foundations of what appears to be a large structure of the

13th or 14th century, in an area that has historically been associated with his grave.

―Everything lines up in a very compelling way,‖ said Albert Lin, National Geographic explorer and

principal investigator of the project.‖

However, there are reasons why some believe the tomb should be left undisturbed. Worshippers

and the superstitious believe it may lead to disaster while political scientists see it as a source of

geopolitical tensions, as many Chinese believe Chinggis to be Chinese. China claims the ancient

conqueror as its own.

―Many people in China believe Mongolia, like Tibet, should be part of China, as it was under Khublai

Khaan. If China succeeds in establishing mining rights in Mongolia and dominance over that industry,

then Chinggis' tomb might become a focal point for political ambitions, the likes of which we have

never seen.‖

Many in search of the tomb are in search of treasures said to be buried with him. But for decades,

scholars and adventurers alike were thwarted by the inaccessibility of the country. More recently,

grave robbing in Mongolia has become a growing problem, with middlemen driving around the

countryside and paying locals to dig up burial sites. The looted artifacts are then smuggled out of

the country and sold at markets in Hong Kong and China.

In Ulaanbaatar it is clear that Mongolia is still in the throes of the Chinggis mania that began after

the fall of the Soviet Union as many sought to reestablish their own identity; many Mongolians see

Chinggis as the father of modern Mongolia and as a symbol of their independence. In the heart of

the capital, he sits, like Abraham Lincoln, near the seat of government.

Source: Daily Beast

U.S. AUTHORITIES SEIZE ANOTHER FOSSIL

A dinosaur skull seized from a Wyoming, United States home is related to an investigation into fossil

smuggling from Mongolia, indicating that efforts to stem the illegal trade are making progress, an

attorney said Monday.

Robert Painter, a Houston attorney representing President Ts. Elbegdorj said officials hoped that

such seizures will have a chilling effect on smuggling.

―It‘s really part of what we hoped that would happen… there would be increased awareness across

the country of Mongolian law, and the U.S. government is cooperating in protecting these cultural

treasures,‖ Painter said.

He predicted there will be more such cases as word gets out about the illegal sale of Mongolian

dinosaur bones.

The case has been confirmed by a U.S. official to be related to case concerning a Florida fossil

dealer who was recently charged with smuggling dinosaur bones, including a Tyrannosaurus Baatar

skeleton that was seized by the government in June in a civil forfeiture action. The skeleton was

sold at auction for USD 1.05 million before being seized by the government.

The Wyoming fossil came from the same dinosaur species as the one from Florida. Painter said some

people are willing to pay big money on the black market for dinosaur bones and Mongolia is one of

the places where many bones were being dug up and transported against the law.

―The Mongolian government has learned that there is really a global marketplace for these illicit

fossils and it was really something that was ongoing on a much larger scale than we were originally

aware of,‖ he said.

Source: AP

NEW MONGOLIAN LAWS

The following laws and amendment to a law were published in the latest weekly Government

bulletin. Unless otherwise decided by Parliament, they will take effect ten (10) days after

publication.

Date Laws

04.12.2012 Amendments to Law on Mongolia's consolidated budget's 2013 budget scope statement,

2014-2015 budget concept

Mongolia's Budget for 2013

Social Insurance Fund Budget for 2013

Human Development Fund Budget for 2013

Some provisions of law on budget not applying on law on Mongolia's Budget for 2013

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

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

are welcome to email the BCM office: info@bcmongolia.org.

ANNOUNCEMENTS

WASHINGTON AUTO SHOW 2013 - February 1-10, 2013

The Business Council of Mongolia with support of the U.S. Embassy‘s Commercial Section is now

registering a Mongolian business delegation to participate in the ―Washington Auto Show 2013‖

which will be organized in Washington DC, USA on February 1-10, 2013.

The Washington Auto Show has firmly earned its title as one of the industry‘s most prominent and

pivotal events and is the premier address for showcasing the latest innovations in sustainable

technologies and drawing the most influential leaders in the industry. More new models, more

concepts and prototypes, more high-tech breakthroughs and more entertainment, celebrity guests

and contests await visitors. This year, the show features more than 700 new makes and models from

over 42 manufacturers at the Walter E. Washington Convention Center.

Please call 70114442 or email tugi@bcmongolia.org for registration and additional information about

the event.

Registration deadline is 5:00 pm, December 14, 2012.

___________________________________________

MINISTRY OF MINING IS OFFICIALLY IN COOPERATION WITH “COAL MONGOLIA -2013”

INTERNATIONAL CONFERENCE AND EXHIBITION

Dear BCM members,

It is a pleasure to announce that Mining.mn is organizing ―Coal Mongolia -2013‖, the 3rd

International Conference and Exhibition together with Ministry of Mining. Now the Reform

Government representatives will present a new policies and the future of Mongolian coal?

Join us at the 21 – 22 February, 2013 at SS Convention Center and get your questions answered from

our keynote Speaker, Minister of Mining D.Gankhuyag, as he raises a huge question ―Coal Industry:

Where are we now?‖. Other Ministries such as Ministry of Energy, Ministry of Economic Development

and Ministry of Environment and Green Development are also participating as supporting

government agencies.

And that‘s not all! Our keynote session is will be from the Leaders in Mongolian Coal Mining sectors

and Ambassadors Victor V. Samoilenko, Russian Federation and Takenori Shimizu, Japan, Wang

Xialong, Peoples Republic of China, Gregory Goldhawk, Canada and Piper Ann Wind Campbell, USA

are invited as Honorary Speakers of the Event to express their future cooperation in coal mining

sector.

Mining.mn expressed its gratitude to the following Sponsor and Supporting companies:

Platinum Sponsor – ―Mongolian Mining Corporation‖

Diamond Sponsor – ―Hunnu Coal‖

Gold Sponsors - ―Erdenes Tavan Tolgoi‖, ―Aspire Mining‖, ―XacBank‖, ―Gemcom‖, ―Terra Energy‖,

―Glogex LLC‖

Bank of the Event – ―Trade and Development Bank‖

Official Media Sponsor – ―Bloomberg TV Mongolia‖

Event Sponsors – ―Monnis International‖, ―Transwest Mongolia‖, ―Khan Bank‖, ―Wagner Asia

Equipment‖, ―Mines Up‖ and ―Ayanchin Outfitters‖ the official distributor of ―CARHARTT‖ and

―Mobinet‖

Supporting Organizations - BCM, ―ZAZA Corporate Counsel LLC‖, NAMBC, Mongolian Mining Club,

Mongolian National Mining Association

Register by December 15th 2012 and SAVE up to US $400*!

Display your solutions to hundreds of qualified prospects. The Coal Mongolia 2013 3rd international

conference and exhibition is the perfect place to renew existing relationships, showcase your

products and services, and reach your target audience. We combine all the right elements to

attract attendees to the Exhibit Hall and move them toward your booth. Space is limited. Sign up

today!

___________________________________________

3RD RISK FORUM, 27-28 FEBRUARY, BLUE SKY TOWER

BCM is hosting the third annual Risk Forum of Mongolia from 27 to 28 February at the Blue Sky

Tower.

The forum is co-organized by BCM and Mandal Insurance. It is the most focused and informative risk

management event in Mongolia. This year, the forum will feature excellent participation of key

stakeholders of risk management and aims to become the catapult of change in Risk Management

practice of Mongolia.

For more information call 11 317 027.

___________________________________________

REGISTER NOW FOR MONGOLIAN MINING DIRECTORY - 2013

Mongolian Mining Directory-2013 which provides information database for mining companies,

investors, suppliers, service companies, government and non government organizations will be

published for the fourth year to commemorate the 90th anniversary of the Mongolian mining

industry. The MMD is distributed free of charge to international and domestic mining companies,

international conferences and exhibition, embassy offices in Mongolia and foreign countries to

investors.

BCM is a Supporting Organization of the MMD and welcomes Mongolian mining industry participants

who are interested in advertising their products and services in Mongolian Mining Directory-2013.

For more information please visit: www.mining.mn, www.mongolianminingdirectory.mn or call

+976-7011 5590.

___________________________________________

REGISTER FOR BCM‟S MINING SUPPLY CHAIN DATABASE AT NO COST

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

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

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

content and use of information technology opportunities.

As of November 30, suppliers registered on the BCM database totaled 1,402 with 20 buyers also

registered. During October and November, 72 tender announcements were posted.

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

Database. Please visit here for registration.

If you have any questions regarding the database, please contact Undral at undral@bcmongolia.org

or 317027.

___________________________________________

“MM TODAY” on MNB-TV, Friday‟s at 18:50

BCM is pleased to announce that Mongolian National Broadcasting continues its cooperation with

BCM on ―MM Today‖. This English news program is aired every Friday for 10 minutes and is

scheduled from 18:50 to 19:05 tonight. Tune in to watch this program that reports stories from

today‘s BCM NewsWire.

BCM WEBSITES

MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS

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

Several presentations already posted include the World Bank‘s Mongolia Quarterly Economic

Update–June 2012 and 11 speeches from the 2nd Coaltrans Forum, held on 23 to 24 May in

Ulaanbaatar.

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

government website Open-Government.mn are regularly updated.

___________________________________________

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

„PHOTO GALLERY‟

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

uploaded are 25 presentations from the Mongolian Investment Summit 2012 on 30-31 October in

Hong Kong; recent postings from BCM‘s 5 November and 24 September monthly meetings; and 9

presentations from Discover Mongolia 2012.

The ―Mongolia Reports‖ section includes ―Mongolia Business Owner and CFO Survey result‖ by BDSec

JSC; ―The fiscal regime for mining - a way forward‖ by IMF Fiscal Affairs Department; ―Mongolia-a

supplement to Mining Journal‖ from Mining Journal October, 2012; ―Macro Overview‖ September,

2012 by EPCRC; ―Taxes for Expatriates in Mongolia‖ from PricewaterhouseCoopers and the ―2012

Mongolia Investment Climate Statement‖ by the Economic and Commercial Section of the U.S.

Embassy.

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

Parliament and Government is available for download.

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

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

The ―Photo Gallery‖ contains photos from the 5th Anniversary BCM Gala dinner attended by 220

individuals from BCM members held on November 5.

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

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

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SOCIAL NETWORK WITH BCM

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

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

improving each day with BCM.

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

business environment in Mongolia today.

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

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

the NewsWire with the community.

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

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

We have now 756 fans on our Facebook fans page, 904 connections on LinkedIn network, and 500+

followers following us on Twitter.

Of course for news information, interviews, event photos, and announcements regarding our

organization, visit the official BCM website at www.bcmongolia.org and www.bcm.mn.

BCM WORKING GROUP MEETINGS

The BCM Tax Working Group met Monday, December 3, with 15 members attending.

Co-chairs Arthur Cookson, OT, and Onchinsuren D, Deloitte Onch, moderated the session.

New member Bolormaa Volodya, / GRATA Law Firm /, was welcomed.

Meeting discussion was on the following topics:

-DTA`s –has advance notice been properly given to terminate the 4 treaties

-BCM and Government communications.

-BCM tax committee and MTA Large Taxpayers Office mining sector debt forthcoming meeting

missions, participants, representative.

Next meeting: -Permanent Establishment. February 2013.

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The BCM Education Working Group met on Wednesday, December 3, with 10 members attending.

Saha Meyanathan,/DAS/,moderated the session.

Participants: Batchimeg G. TVET

Topics and Speakers were:

-OT project mission on TVET - Kern Von Hagen /Oyu Tolgoi LLC /

-KOICA Mongolia`s country strategy and Operations - Eo Kyu Cheol /Programme Specialist,

Embassy of the Republic of Korea./

-Outline of India's Contributions in TVET and Higher Education in Mongolia - Saha

Meyanathan/Development Advisory /on behalf of Indian Embassy/

Next meeting: Higher Education Sector.

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The BCM Legislative Working Group met on Wednesday, December 5, with 19 members attending.

Co-chairs Bayar B, ELC LLC, James Liotta, MahoneyLiotta, moderated the session.

Meeting discussion was on the following topics:

-SEFIL report and introduction of the procedural regulations.

-Review of the UN International Standard Industrial Classification of All Economic Activities (ISIC)

as the international classification of productive activities to possibly recommend to the FIRRD as

core sectors of strategic importance.

-Discussion on the current topics.

Please contact erka@bcmongolia.org.

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The BCM Environmental Working Group met Thursday, December 6 with 13 members attending.

Bayarmaa A /Newcom Group/ moderated the session.

Speaker - Tsendsuren, Head of CDM National Bureau

Topics:

-Ideas on setting Crediting Mechanism (BOCM) in Mongolia, and how private sector/project

developers can benefit from these mechanisms.-

-Discussion of Clean Development Mechanism and New Market Mechanism

-Updates on EIA Law guidelines

Next meeting: Jan 2013. At Express Tower, 12th floor, BPI meeting room.

ECONOMIC INDICATORS

INFLATION

Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]

Year 2007 *15.1% [source: NSOM]

Year 2008 *22.1% [source: NSOM]

Year 2009 *4.2% [source: NSOM]

Year 2010 *13.0% [source: NSOM]

Year 2011 *10.2% [source: NSOM]

October 31, 2012 *15.0% [source: NSOM]

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

Note: 15.0% y-o-y, Ulaanbaatar city, October 31, 2012

CENTRAL BANK POLICY LOAN RATE

December 31, 2008 9.75% [source: IMF]

March 11, 2009 14.00% [source: IMF]

May 12, 2009 12.75% [source: IMF]

June 12, 2009 11.50% [source: IMF]

September 30, 2009 10.00% [source: IMF]

May 12, 2010 11.00% [source: IMF]

April 28, 2011 11.50% [source: IMF]

August 25, 2011 11.75% [source: IMF]

October 25, 2011 12.25% [source: IMF]

March 19, 2012 12.75% [source: Mongol Bank]

April 18, 2012 13.25% [source: Mongol bank]

CURRENCY RATES – DECEMBER 6, 2012

Currency Name Currency Rate

US dollar USD 1,401.64

Euro EUR 1,829.35

Japanese yen JPY 17.05

British pound GBP 2,254.33

Hong Kong dollar HKD 180.91

Chinese Yuan CNY 225.04

Russian Ruble RUB 45.35

South Korean won KRW 1.30

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

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