BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 212 – March 9, 2012

NEWS HIGHLIGHTS:

Business

Mongolia considers pre-IPO convertible bonds for E-TT;

E-TT IPO pushed back at least until September;

Guildford Coal's estimates reach over 2 billion tons of coal;

SouthGobi to sell Tsagaan Tolgoi deposit for USD 30 million;

Energy Resources amends USD 180 million loan agreement;

Prophecy Coal’s USD 9 million equity offering;

Black Ridge Mining to tap into Mongolia's rare earths;

Mitsui still looks to secure more coal from Mongolia;

Oyu Tolgoi employs Ireland-based IT security firm;

Erdene announces 2012 exploration program;

Draig appoints drill team for mid-March program;

Altan Rio announces start of Khavchuu exploration;

National Life to insure Erdenet Mining employees;

Oxford Business Group launches 2012 Mongolia report;

Khan Investment director to focus on Mongolia equity fund;

The new GE way: go deep, not wide;

Cameco increases stake in Canadian uranium project.

Economy

Mongolia Economic Forum recap;

Parliament speaker calls green economy a national effort;

Food producers struggle to make ends “meat”;

What drives the tugrug?

Key political risks;

Proceed with caution, say international organizations;

Harvest Gold sees “upside” in Mongolia stocks;

Kiva loans financing dreams of female entrepreneurs;

Bronchitis and tuberculosis infections spread among health care workers;

Credit squeeze puts strain on iron-ore output, per Rio Tinto;

Rio sees continued demand for base metals from China;

Coal assets fuel dealmaking worldwide;

China speeds economic transformation;

China's real estate slowdown could shake up commodities demand.

Politics

MPs move to extend deadline for land privatization;

Importers sue agency for MNT 20 million fines;

Uvurkhangai province governor under suspicion of corruption;

Human Development Fund may come up short on allowance payments;

Batbold to visit Japan this weekend;

Mongolian delegation attends huge PDAC mining conference in Canada;

U.S. consul in Iraq nominated to be next U.S. ambassador to Mongolia;

Australia to award 38 scholarships to Mongolians;

Singapore and Mongolia agree to cooperate on technology;

Government officials look to build bridges between ministries;

Standing Committee pushes for end to capital punishment;

DP takes development focus outside city limits to provincial capitals;

Asian activists try to put a plug on Gobi sands with trees.

*Click on titles above to link to articles.

SPONSORS

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BUSINESS

MONGOLIA CONSIDERS PRE-IPO CONVERTIBLE BONDS FOR E-TT

Erdenes-Tavan Tolgoi (E-TT) may sell convertible bonds before listing, Minerals and Energy Minister

D. Zorigt said.

The bonds may be sold to a ―long-term, strategic investor,‖ Zorigt said today in an interview while

attending the Mongolia Economic Forum. The government will not press E-TT to complete the IPO

before a parliamentary election in June, allowing the timing and place of sale to be decided on a

commercial basis, he said.

E-TT produced about 1 million tons in its first year of mining at the Eastern block of the Tavan

Tolgoi field. Output will increase to at least three million tons this year, Chief Operating Officer

Graeme Hancock said in January. Aluminum Corp. of China is E-TT's main buyer after signing a six-

year accord that also stipulates that 30 percent of its purchase must be delivered to ports for resale

to Japanese trading companies Itochu Corp. and Mitsui & Co., and Korea Resources Corp.

Rail construction is due to start this spring, with the routes south to China and northeast to Russia

being ―very important‖ for Mongolia's development, Zorigt said. China buys about 80 percent of

Mongolia's exports, while Russia has touted a route via its Far East territories as an alternative way

to reach commodity buyers in Japan and South Korea.

Discussions over who will develop the western block, which could produce 15 million tons of coal a

year, the same as the east site, are still on and Mongolia expects a deal can be reached ―very

soon,‖ Zorigt said, without giving more details.

Source: Bloomberg

E-TT IPO PUSHED BACK AT LEAST UNTIL SEPTEMBER

Erdenes-Tavan Tolgoi LLC (E-TT) has said it would delay the foreign part of the deal for its initial

public offering (IPO) by at least two months to September to help win listings in London and Hong

Kong.

The state-run miner may list locally first as part of the government initiative to offer citizens shares

of the company and then pursue a sale overseas, Chief Executive Officer B. Enebish said in an

interview. Prime Minister S. Batbold's government had aimed to complete the IPO before June

elections.

Mining companies have lost 27 percent of their market value since April last year, the Bloomberg

World Mining Index shows, as global economic volatility curbed demand for resources. The IPO will

mark Mongolia's first listing of a state-run miner overseas as the country seeks to use its mineral

riches to support an economy that grew by a record 17.3 percent last year.

―Ideally, we'd like to go to Hong Kong and London together,‖ Enebish said, adding that Hong Kong

Law currently restricts accepting Mongolia as a jurisdiction for listed companies. ―And first we need

to clarify what percentage we can actually sell in the IPO.‖

Parliament is due to vote on a new securities law that should allow entities registered in the

country to be accepted by the Hong Kong Stock Exchange (HKEx), Enebish said. E-TT would list

shares or depositary receipts in Hong Kong. The London listing would be of global depositary

receipts, he said.

Source: Bloomberg

GUILDFORD COAL‟S ESTIMATES REACH OVER 2 BILLION TONS OF COAL

Guildford Coal Ltd. has reported a 63 percent increase of total JORC resources to 2.172 billion tons

of coal.

The company reported a maiden independently prepared JORC inferred resource of 262 million tons

of thermal coal at the White Mountain project. The company said the resource includes coal that

could be amendable to open cut mining methods. A pre-feasibility study has been ordered for the

project with a mining lease application for 2012.

The company also reported a 1.610 billion-ton increase of the JORC inferred resource at the

Hughenden project.

Guildford's Mongolian subsidiary, Terra Energy LLC, has been granted the first mining license for the

South Gobi Project and is on target to begin mining operation by mid-2012.

Source: Guildford Coal Ltd.

SOUTHGOBI TO SELL TSAGAAN TOLGOI DEPOSIT FOR USD 30 MILLION

SouthGobi Resources Ltd. announced a deal to sell the Tsagaan Tolgoi thermal coal deposit to

Modun Resources Ltd. The firm intends to facilitate the sale of the property through the transfer of

a wholly-owned subsidiary holding one mining license and one exploration license pertaining to that

deposit.

Under the transaction, SouthGobi Resources expects to receive USD 30 million of total

consideration, comprising USD 7.5 million up front in cash, USD 12.5 million up front in Modun

Resources shares, and deferred consideration of an additional USD 10 million also payable in Modun

Resources shares. As a result, the company will have a significant shareholding in Modun Resources

and will have the right to nominate one director to its board of.

―This sale will allow SouthGobi to focus on further developing our Ovoot Khural basin holdings,

including our flagship Ovoot Tolgoi complex and the nearby Soumber Deposit, while retaining an

indirect exposure to Tsagaan Tolgoi through our shareholding in Modun, said Alexander Molyneux,

president and chief executive officer. ―We also believe that Modun is well placed to be able to

bring Tsagaan Tolgoi into production in a timely manner.‖

SouthGobi Resources also felt it could benefit as the deposit has become less of a priority due to

the location being approximately 400 kilometers to the east of the company's core coking resources.

Modun's commitment to accelerate the development of Tsagaan Tolgoi into a mining operation also

provided encouragement to the deal.

Source: SouthGobi Resources Ltd.

ENERGY RESOURCES AMENDS USD 180 MILLION LOAN AGREEMENT

Energy Resources LLC, a subsidiary of Mongolian Mining Corp. (MMC) was able to add amendments to

a USD 180 million loan made to finance its coal processing plant. Those involved in the loan

agreement include the European Bank for Reconstruction and Development (―EBRD‖), the Bank of

Netherlands, and German Investment and Development Co.

The company will use the loan in part for the development of its coal handling and preparation

plant at its Ukhaa Khudag mine. The loan bears interest semi-annually at the floating rate of six

months plus agreed margin per year. The principal amount of the loan of USD 120 million is

repayable in 11 equal semiannual installments ending on 15 May 2016. The principal amount of the

loan of USD 60 million is repayable in two equal installments on 15 May 2015 and 16 May 2016. The

annual margin will be reduced to between 3.25 percent and 3.75 percent, and certain securities of

the loan will be released in replacement of security over fixed assets such as MMC's expansion of

the processing plant.

The company believes the amendments will allow it to reduce its cost of financing and increase its

credit profile, thus increasing its ability to fund its further expansion and development.

Source: Mongolian Mining Corp.

PROPHECY COAL‟S USD 9 MILLION EQUITY OFFERING

Coal miner and project developer for the Chandgana power plant Prophecy Coal Corp. has

announced a non-brokered placement financing worth USD 9 million as it seeks to advance

development of its thermal coal plant project in Mongolia.

The company plans to sell 20 million shares for USD 0.45 each. It said insiders and existing

shareholders have subscribed for a majority of this offering. The offering is slated to close on 7

March. It also announced that the USD 800,000 balance from the USD 7 million loan taken last

December has been paid, and the company is debt free.

The company has over 1.4 billion tons of near surface thermal coal resources on two coal properties

in Mongolia. Prophecy Coal's Chandgana 600 megawatt mine mouth power plant has received

approval, and its Ulaan Ovoo coal mine is now in production.

Source: Proactive Investors

BLACK RIDGE MINING TO TAP INTO MONGOLIA'S RARE EARTHS

Black Ridge Mining has entered into an agreement for an 80 percent increase in rare-earths projects

in Tuv Aimag in Mongolia. Black Ridge would spend some USD 5.5 million over the next three years

with a final payment of USD 750,000 to vendors for the deal.

In addition to rare earths, the project could produce minerals such as vanadium, tungsten, chrome,

and scandium, complementing Black Ridge's Unaly Hill Vandum project in Western Australia, where

the company has a maiden inferred resource of 86 million tons of 0.42 percent vanadium. The

Mongolian rare earths projects would benefit from their close proximity to transportation

infrastructure. Shipments by rail through Russia to the international port of Vladivostock would

enable rare earth ore to be exported to numerous international markets.

Manufacturing demand for rare earths and critical materials has risen sharply in the last 20 years,

and diminishing exports from China, the world's top supplier, have led to rising prices and supply

concerns.

Source: Proactive Investors

MITSUI STILL LOOKS TO SECURE MORE COAL FROM MONGOLIA

Mitsui & Co., holding a record USD 17 billion in cash, wants to buy mining stakes and expand

operations to triple copper output and more than double coal production, easing its reliance on

iron-ore sales. Mitsui is looking to secure more coal from Mongolia via participating in the TT-West

project.

The biggest Japanese iron-ore supplier is looking to buy 9 million metric tons of annual coal

production from Russia, Australia, South America and Africa, Fuminobu Kawashima, head of

resources of the Tokyo-based company said. Mitsui also wants to add 120,000 tons of copper a year

from South America, expecting Chinese demand will expand, he said.

Thermal coal sales to Japan, the world's second-biggest buyer of the power-station fuel, are set to

rebound this year, according to Citigroup Inc. Purchases may rise 3 percent to 104 million tons in

2012, exceeding last year and 2010, Daiwa Capital Market said. Finding coal projects at ―prices that

meet our expectations‖ is proving tough, Kawashima said. Mitsui still wants to persevere in

securing more coal from Mongolia, though a political ―reset there has stalled efforts,‖ he said.

State-run Erdenes-Tavan Tolgoi (E-TT) agreed to supply all of the coal from the East Tsankhi area to

Aluminum Corp. of China Ltd., which in turn is due to sell 30 percent of the total to Mitsui, Itochu,

and Korea Resources Corp. Mitsui will also continue to consider adding iron-ore production,

Kawashima said. The trader set up a department last year to search for projects also outside of

Australia, where all of its ore comes from, he said.

Source: Bloomberg

OYU TOLGOI EMPLOYS IRELAND-BASED IT SECURITY FIRM

Ireland's Minister for Enterprise Arlese Foster has announced a EUR 500,000 (USD 657,000) deal

made by Belfast-based CEM Systems with Oyu Tolgoi LLC. Part of Tyco Security Products, the

company is to supply its access control system to secure the Oyu Tolgoi copper and gold mine.

―The new business in Mongolia was certainly among the most challenging that we've secured in

recent years,‖ said Andrew Fulton, CEM's senior director of global sales. He added, ―The business

won at the Oyu Tolgoi copper and gold mine is a good example of how our market leading software,

together with CEM hardware, can meet and exceed the access control needs of even the most

complex site.

Source: MarketWire

ERDENE ANNOUNCES 2012 EXPLORATION PROGRAM

Erdene Resource Development Corp. (ERD) has announced its exploration plans for 2012 at Altan

Nar to begin in April.

ERD discovered the Altan Nar gold and silver prospect in 2011 during a regional exploration program

on its tenement blocks, covering approximately 200,000 hectares in southwestern Mongolia. Scout

drilling in the second half of 2011 confirmed the presence of near-surface gold and silver

mineralization over a strike length of 300 meters, with widths up to 125 meters. A wide intersection

of steeply-dipping mineralization (55 meters at 1.02 grams per ton of gold and 12 grams per ton of

silver) was encountered in an angled drill hole. A subsequent hole intersected 29 meters of 4.3

grams per ton of gold and silver mineralization.

Further drilling through a phased drill program is planned for the second quarter of 2012. The initial

focus will be on delineating grade and vertical extent of the mineralization at the discovery zone

with regional target testing. As results from the first phase of the drilling program provides the

company with confidence, the program will shift into defining the dimensions of the discovery zone

and additional areas being further advanced through the regional target testing.

Source: Erdene Resource Development Corp.

DRAIG APPOINTS DRILL TEAM FOR MID-MARCH PROGRAM

Draig Resources Ltd. has employed drill contractor Ellehcor LLC to undertake the first phase of the

drilling exploration program on two of its Mongolian coal licenses. Draig has also engaged two

experienced coal geologists to assist with the drill campaign, due to begin mid March.

Ellehcor will drill coal-bearing targets on the Teeg and Nariin Teeg licenses, located in the

Bayanteeg District, Uvurkhangai Aimag. Draig said the 200-meter program will comprise numerous

drill targets identified following the completion of a geophysical survey in February 2012, which

partially provided an initial geological assessment in both licenses.

Draig Managing Director Mark Earley said he expected the latest drill campaign to take

approximately five to six weeks, and would make the raw coal quality results available following

the completion of the drilling.

―We still firmly expect to announce completion of a JORC-compliant coal resource by the second

quarter of this year,‖ Earley said. ―This drill campaign will give us a much better indication of the

size and quality of the resource over these licenses.‖

Read more…

The drill targets on both licenses are relatively shallow and, at Teeg, could potentially include two

laterally continuous synclinal features. Draig said it chose local Mongolian drill company Ellehcor

due to its experience in the region and its ability to operate all year round, including through the

extreme temperatures of the Mongolian winter. Draig added that Ellehcor's core recovery

techniques are compatible with JORC Code standards, and it maintains environmentally conscious

work practices.

The Teeg and Nariin Teeg licenses are two of eight coal licenses being developed by Draig, located

within Uvurkhangai and Umnugobi aimags. Initial sample analysis at these licenses reportedly

indicated the potential for a high‐quality coal operation.

Source: Draig Resources Ltd.

ALTAN RIO ANNOUNCES START OF KHAVCHUU EXPLORATION

Altan Rio Minerals Ltd. has announced the start of its first drill campaign at the Khavchuu gold

exploration project to begin this month. Following its exploration, Altan Rio has the option to

acquire 100 percent interest of the northern Mongolian site.

The general geological setting at Khavchuu is reportedly very similar to Boroo and surrounding

deposits such as Ulaan Bulag. Altan Rio performed rock sampling and detailed soil geochemical grids

in 2011 in the northwestern quarter of the project, which showed arsenic anomalies and low level

gold anomalies.

Altan Rio has identified three main targets (area A, B, and C) for drilling to learn more about the

site. Area A in the northwest part of the project has recently been investigated by a large soil

geochemical grid, producing gold and arsenic anomalies. The exploration team took a rock chip

sample from target B in the northeast quarter and found strong sericite alteration. In the south part

of the site is target C, which is said to be geologically similar to area A.

For its 2012 campaign, Altan Rio will focus on the KY prophyry intrusion, and the Khuush zone. The

company called Ovoot an ―exciting target‖ due to the large tonnage of resource at the previously

unexplored target. It characterized the KY prophyry intrusions as ―under-explored‖ with many large

tonnages of copper and gold target zones.

Source: Altan Rio Minerals Ltd.

NATIONAL LIFE TO INSURE ERDENET MINING EMPLOYEES

National Life Insurance LLC has signed an agreement to act as the exclusive provider of life

insurance products to the employees of Erdenet Mining Corporation. The agreement has been

accepted and approved through ratification of a collective agreement between the management

and labor union representing the Erdenet Mining Corporation's employees.

―This agreement is a prime example of the cooperation that should take place between extraction-

based companies operating in Mongolia and the growing domestic insurance sector,‖ said G.

Mongolkhuu, National Life's chief executive.

The agreement outlines the provision of health insurance services, a non-mandatory pension plan to

supplement social insurance services, and life insurance coverage available to all employees.

Source: National Life Insurance LLC

OXFORD BUSINESS GROUP LAUNCHES 2012 MONGOLIA REPORT

Oxford Business Group (OBG) officially launched the release of its publication, The Report: Mongolia

2012, at the Blue Sky Tower last Thursday with 400 in attendance. The book provides in-depth and

informative analysis with comprehensive first-hand information on Mongolia's most important

sectors of today: energy, tourism, economy, banking, mining, construction, and

telecommunications.

―I would like to express my gratitude on behalf of the Mongolian government and businessmen to

the Oxford Business Group for publishing a very informative report on Mongolia's economic status

and opportunities during this time of economic growth,‖ said Prime Minister S. Batbold during his

keynote address. ―I believe the Mongolia 2012 report will contribute to Mongolia's economic

recognition worldwide by providing solid and real information to foreign investors and

businessmen.‖

OBG is a global publishing and consultancy company which publishes up-to-date business and

economic reports for more than 30 countries. The annual reports provide information for a large

audience that ranges from politicians, universities, diplomats, and companies looking to enter

foreign markets.

The regional editor for the Oxford Business Group, Paulius Kuncinas, said the book provides the

messages that ―Mongolia is open for business,‖ and that the nation can go beyond its mineral

resources. He characterized tourism in Mongolia as a ―long-hanging fruit‖ that can benefit from

already widespread knowledge of Mongolia's vast and remote landscapes.‖ He also noted the risks

present.

―We are acutely aware of risks,‖ said Kuncinas. ―Large in-flows of foreign capital from the mining

sector are already putting pressure on domestic prices. Procyclical fiscal policies have added a

strain on managing macroeconomic imbalances,‖ he said.

Source: UB Post

KHAN INVESTMENT DIRECTOR TO FOCUS ON MONGOLIA EQUITY FUND

S. Narantuguldur has resigned from his role as general manager of Asia Pacific Securities (APS), the

brokerage and deal arm of Asia Pacific Investment Partners (APIP), to focus on his role as director

of Khan Investment Management and investment advisor to the Khan Mongolia Equity Fund. Saijrakh

will manage Khan Investment's new representative office in Ulaanbaatar and continue to provide

strategic investment advice to the Khan Mongolia Equity Fund.

―Narantuguldur will add tremendous value to Khan,‖ said Travis Hamilton, managing director of

Khan Investment Management. ―He has extensive experience transacting on the Mongolian Stock

Exchange (MSE), including considerable experience in block trading in an illiquid market and valuing

domestic listed companies.‖

A Mongolian national based in Ulaanbaatar, Narantuguldur is a certified capital markets professional

registered with and regulated by the Financial Regulatory Commission (FRC). He is also a licensed

trader on the Mongolian Stock Exchange. Prior to APS, Saijrakh worked in the corporate finance

division of Frontier Securities. He earned a Bachelor degree in Business Administration and a minor

in Economics from the American University of Bulgaria. In addition, Saijrakh completed three

months training on Mongolian capital market development organized by the London Stock Exchange

Group Academy in London.

Source: Khan Investment Management

THE NEW GE WAY: GO DEEP, NOT WIDE

General Electric Co. is opening a new chapter in management philosophy. The conglomerate that

once groomed jack-of-all-trades generalists is now betting on deep industry experts instead. In

Mongolia General Electric has partnered with Newcom Group on the Salkhit wind farm and is

pursuing deals to facilitate expansion to the nation's railway network.

The shift is a change in philosophy at a corporation that for decades had made a rigorously applied

but generic management tool kit central to its identity. Like all companies, General Electric wants

some of both traits in its leaders, but the balance has tipped toward expertise. Rather than

purposely relocate its senior leaders every few years to expose them to more of the company, it

now is leaving them in their business units longer than it used to, in hopes their deeper

understanding of products and customers will help them win sales.

Executives seeking to ascend to the top are still expected to have a number of stints at several of

General Electric‘s businesses. And some jobs, like the chief executive of the locomotive unit, are

used to groom executives to run bigger business.

For years the company has produced senior managers able to seamlessly slip into the executive

suite at companies as varied as Boeing Co. and Nielsen Co. To shape executives, the conglomerate

spends about USD 1 billion a year on management training and has a rigorous annual performance

evaluation. Expertise is one of five qualities that executives are measured on in that process.

The company's latest shift toward putting greater value on subject-area expertise aligns with

Immelt's strategic repositioning of the company. He shed big businesses such as plastics, insurance,

and media to focus General Electric‘s portfolio around a few core businesses: energy, aircraft

engines, health care, and financial services.

Source: Wall Street Journal

CAMECO INCREASES STAKE IN CANADIAN URANIUM PROJECT

Cameco Corp., the biggest uranium producer in the world, has agreed to buy Areva SA's 28 percent

stake in the Millennium project in Saskatchewan, Canada, for CAD 150 million (USD ), sparking

speculation the French nuclear giant might put other Canadian assets up for sale. Both firms have

interest in uranium production in Mongolia as the nation looks for ways to open up the sector.

While Cameco spokesperson said the assets were ―high quality‖ and that the company ―would take

a long look at anything they were willing to sell,‖ Areva effectively said it is not considering any

more Canadian disposals.

Earlier on Friday, Versant Partners analyst Rob Chang said in a note to clients that it would not be a

stretch to believe if [Areva] would be open to selling its stakes in other projects that are further

away from production.‖ Cameco's acquisition will lift its ownership in the asset to nearly 70

percent, with Japan-Canada Uranium (JCU), a consortium of companies from Japan owning the

remaining 30 percent. JCU has a right of first refusal over the Areva stake, which would have

Cameco owning 58 percent of Millennium if exercised.

Cameco will submit an environmental impact statement for Millennium this year, as part of a

feasibility study that is currently underway. The assets is expected to begin producing around

2018—when Cameco believes it will double its annual uranium output to 40 million pounds.

Areva, meanwhile, was selling the stake in Millennium to fund other developments in Canada, said a

company spokesperson. That source declined to say whether Areva had received any interest from

companies potentially interested in buying other Canadian assets.

Read more…

The company, along with others in the uranium sector, has suffered in the wake of the Japanese

Fukushima disaster. Areva must also deal with a bitter spat between the firm and former Chief

Executive Officer Anne Lauvergeon that has boiled over into the public after the company withheld

her severance pay.

Source: Mining Weekly

ECONOMY

MONGOLIA ECONOMIC FORUM RECAP

While at other forums the mining industry seems to consume every conversation and topic, this year

at the Mongolia Economic Forum guests and presenters seemed to want to talk about anything other

than the booming mineral sector. While the mining sector fueled last year's 17.3 percent gross

domestic product (GDP) growth, diversification will help the nation avert sour side effects such as

―Dutch disease‖ and the ―resource curse.‖

Day One

At the discussion for ―Economic Development: Inclusive Growth,‖ participants discussed how

Mongolia must go beyond the Human Development Fund and establish a sovereign wealth fund that

can direct money generated from the mining industry to investments to develop other industries in

Mongolia. Chile was used as an example of a country that has benefited tremendously from its

mineral industry, but has managed to build up industries such as wine production, agriculture, and

fisheries. For Mongolia, eco-tourism, sea buckthorn, organic meats, and cashmere are all viable

opportunities discussed that could be used for diversification of the economy. During the

conversation S. Demberel, Director of the Mongolian National Chamber of Commerce and Industry

(MNCCI), called on representatives from industries unrelated to mining to speak loud and demand

support from government.

―Equal opportunity, especially for young people, is needed by government,‖ said Demberel. ―Only

when the proper environment is created can we see the benefit. Will it be only the mining sector,

while other sectors die?‖

The conversation took a similar tone at the ―Inclusive Growth: Risk Management‖ discussion.

However, instead of sovereign wealth fund, a fund for fiscal stability that would counteract

volatility to commodity prices was the mechanism most discussed.

―A currency turnover of three times means a shock to the economy that would hit Mongolia three

times harder,‖ said N. Zoljargal, deputy governor of the Bank of Mongolia. He added that

government interference exacerbates risks and urged that monetary policy be free from politics.

―We're not gods or fortunetellers. Better to be conservative and underestimate than to be overly

ambitious.‖

Participants echoed recommendations made by the World Bank and International Monetary Fund

(IMF) for a flexible exchange rate rather than wasting resources on a targeted value, potentially

exposing the economy to weakness. But perhaps special guest speaker Jonathan Greenberg, a

professor at Stanford University, summed up these sentiments of cooperatives efforts and the need

to go beyond mineral production best when he quoted the proverb ―100 friends are more precious

than 100 pieces of gold.‖ He lauded the passage of laws for prudent fiscal action, such as the

Integrated Budget Law.

―Overcoming the resource curse is not about luck,‖ said Greenberg. He added that being prepared

means listening to the opinions of experts from various sectors, and employing ―diversification,

reinvestment, and stable employment.‖

Day Two

The second day of the conference had more focus on transparency and citizen participation when

directing the investment of state funds. N. Dorjdari, manager of the Open Society Forum, suggested

open hearings while creating the budget and creating a forum for citizens to comment on what they

have learned. He stressed, however, making the information more available both in distribution and

in ease of understanding. Providing an international perspective, Klaus Rohland said he gathered

that his Mongolian peers had the right idea and that transparency is key.

―As Mongolia moves away from centralization, it's important that there is an authority to control

the budget,‖ said Rohland. ―That could be done through Parliament or citizen participation.‖

Members of the Partnering Against Corruption Initiative (PACI) spoke to introduce how they intend

to prevent the misuse of taxpayers' money. Organized in 2004, the group is led by prominent figures

of the business community interested in acting to deter corruption. Group representatives spent

their time discussing how to promote private sector participation in the fight against corruption,

and on developing public and private partnerships for this aim.

While there is no guarantee that the ideas and opinions expressed will be utilized appropriately, the

event is an important opportunity for experts that live in Mongolia and guests from abroad to

reflect on the progress and the mistakes made. The government has promised to listen to the voices

in attendance and use what they've learned as it moves forward to address problems that threaten

Mongolia's proper development, protect the country from the mistakes that can be avoided, and

develop a well-though-out plan for a bright future.

Source: BCM

PARLIAMENT SPEAKER CALLS GREEN ECONOMY A NATIONAL EFFORT

Mongolia should focus on developing a green economy by using its vast pastures, said Parliament

Speaker D. Demberel this week.

Speaking at the third Mongolia Economic Forum, Demberel said that it would take a national effort

to develop a green economy. He said that Mongolia should protect and utilize its 113 million

hectares of pasture using science and technology.

Apart from developing the mining industry, Demberel suggested the promotion of agriculture and

animal husbandry for a more balance economy. Experts at the forum said it was important to

strengthen the development and use of renewable energy, especially solar and wind power.

Participants at the forum also discussed such issues as the industrialization of natural resources,

and the relationship between economic development and poverty reduction.

Source: The People's Daily

FOOD PRODUCERS STRUGGLE TO MAKE ENDS “MEAT”

Meat production companies have voiced their dissatisfaction with the MNT 8 billion earned from the

sale of meat reserves to the government. Although meat is considered a major strategic commodity

to the people of Mongolia, just as rice is for Japan, and sugar to India, Mongolians in rural

communities have had to do without.

Although companies such as Makh Market of Just Group, Makhimpex, and Taij Trade, Sooton, Khuns

Trade, Baataruud Tenger, and Sergen Mandalt reportedly hold large surpluses of meat, they have

refused to sell their meats on the open market for the price of MNT 3,700, as agreed upon with the

government. Many of the listed companies are reportedly owned by prominent officials in

government. Instead, today's meat prices are approaching MNT 10,000 a kilograms.

Under pressure from the Prime Minister, companies sold about 400,000 kilograms of meat at a

reported loss in the days leading up to the Tsagaan Sar holiday. Companies have kept reserves of

12,000 tons of meat for MNT 500 per kilogram for a total return of MNT 8 billion. The Mongol Meat

Union, which is run by leaders in the meat industry, has proposed an increase to the originally

agreed upon price for reserves in light of current market conditions. The government has reportedly

signaled that it would consider the proposition.

Source: Udriin Sonin

WHAT DRIVES THE TUGRUG?

Before the global financial crisis, Mongolia's Central Bank heavily managed the tugrug-U.S. dollar

exchange rate. As a result the economy's vulnerability was harshly exposed when commodity prices

plunged in the second half of 2008.

However, the Bank of Mongolia authorities have changed their behavior since then. Since the

economic crisis, the tugrug's exchange rate has been much more volatile. However, with the central

bank having relaxed its control over the exchange rate and market forces now allowed greater

sway, the question arises, what market forces? The natural place to look is commodity prices.

Mineral exports—notably coal, copper, iron ore, gold and zinc—comprise over 80 percent of exports.

The tugrug is a commodity currency.

The correlation coefficients for all commodity prices declined when the period is truncated by six

months to start in 2010. However, the tugrug‘s correlation with the coal price falls less than its

correlation with the copper price. When the period is further truncated to start in 2011 the

correlation between the tugrug and the coal price actually increased to 0.99 while its correlation

with the copper price falls further to 0.69. The tugrug is negatively correlated with the

international price of gold during the final subperiod.

Coal has significantly increased in prominence among Mongolia's exports, to build a stronger

correlation between its value and the currency exchange rate. The international coal price has

rebounded from its low during the crisis. Production from new mines has also increased. And

demand from China has risen due to supply factors—the closure of small, environmentally unfriendly

mines—and demand factors—six percent to seven percent forecast annual growth in crude steel and

pig iron production.

Source: Washington Post

KEY POLITICAL RISKS

Political uncertainty ahead of parliamentary elections in June has investors worried. One of the

parties in Mongolia's shaky coalition government said it would pull out before the vote, and

politicians are under constant pressure to be seen to getting a good deal for the county from

resource investors. The pirouette for Mongolia is the development of its tiny economy, and foreign

investors want to know if the government can create a stable legal environment while handling the

pressures exerted by impatient citizens as well as its two giant neighbors, Russia and China. The

following is a summary of key political risks:

The government has given up on its idea to renegotiate the Oyu Tolgoi copper investment

agreement, which threatened to undermine confidence. As for Mongolia's other large project, Tavan

Tolgoi, sources said in January it has slated its dual listing initial public offering (IPO) in

Ulaanbaatar and London for May. However, later reports suggested it could be delayed to October

to win approval for a Hong Kong listing. The initial proposal to hand development rights in the

western block of the project to China's Shenhua, Peabody of the United States, and a Russian-

Mongolian consortium has been rejected, and the government must now devise another deal to

include Japanese and South Korean partners.

Mongolia's dependence on mining has alarmed environmentalists and opposition politicians, and the

country is already showing classic symptoms of ―Dutch disease,‖ including soaring inflation and high

interest rates. The government is trying to introduce protections against fluctuating commodity

prices, and is keen to use the proceeds from mining to pay for infrastructure, health and education

programs, and to develop several other promising sectors.

Many Mongolians are concerned about growing Chinese and Russian influences. Mongolia‘s growing

dependence on Russia and China for fuel, power and transportation also poses a major risk to its

mining sector. Russia has been known to turn off supply taps, and China is not averse to closing

crucial railway links. Mongolia also depends on Russia's railway network to fulfill plans to deliver

coal to Japan and South Korea.

Source: Reuters

PROCEED WITH CAUTION, SAY INTERNATIONAL ORGANIZATIONS

A multilateral consensus on the Mongolian economy's key short-term challenges in risks from the

World Bank and International Monetary Fund (IMF) seems to have emerged. As Mongolia is not

immune to global economic downturns, especially if commodity prices fall, Mongolia must not give

in to the temptations of wild economic growth and proceed with a cool head and with a strong

defense in mind

For the macro economy, both the World Bank and IMF have warned of overheating the economy, a

situation where negative consequences result from an economy that grows too fast. One of those

consequences is inflation, which rose to 11 percent last year.

Headline inflation is often volatile in Mongolia, due mainly to food price shocks. Looking at the

measure of underlying inflation, which removes the impact of changes to food and administered

prices, that figure is closer to 15 percent last year and 16 percent in December, said Frontier

Securities Chief Investment Strategist Dale Choi. He recommended a hike in interest rates by the

Bank of Mongolia to reign in credit growth and make the tugrug more attractive by maintaining

deposit sums of the currency. The central bank said it has made keeping inflation in the single digits

for 2012 one of its highest priorities.

Both the World Bank and IMF commended government for its passage of the Fiscal Stability Law and

Integrated Budget Law. However, IMF representative to Mongolia Steve Barnett worried Mongolia's

mix of loose fiscal and tight monetary policies could result in bigger government and a smaller

private sector. Although the exchange rate has been a difficult burden on the people in Mongolia,

Barnett and the World Bank both recommended that the Central Bank continue to maintain a

flexible exchange rate.

Read more…

According to the World Bank, the trade deficit reached record levels of USD 1.7 billion in December

as imports of mining-related equipment and fuel imports have surged. Last year the current account

deficit widened further to 35 percent of GDP from 14 percent in 2010 but was fully funded by

record foreign direct investment of MNT 5.3 billion, or 62 percent of GDP on a four-quarter rolling

sum basis.

Source: Frontier Securities

HARVEST GOLD SEES “UPSIDE” IN MONGOLIA STOCKS

Harvest Global Investments Ltd., a unit of China's second-largest money manager, plans to buy more

Mongolian stocks for its frontier-markets fund as rising consumption and a commodities boom spur

economic growth.

―From being unknown to being mildly known, Mongolia still offers upside,‖ Andrew Tan, deputy

chief investment officer at Harvest Global, said last month. ―We find the government has done all

the right things for the last five years in terms of opening up the market. The country has much

better fundamentals.‖

Mongolian stocks have rallied the past two years as investors bought shares of companies that are

benefiting most from exports of commodities such as coal and copper to China. The Mongolian Stock

Exchange (MSE) Top 20 Index is the world's best performing index among the 93 tracked by

Bloomberg with a combined 263 percent gain since the start of 2010. It climbed 0.2 percent today,

erasing this year's loss.

Alisher Ali, managing partner at Ulaanbaatar-based Silk Road Management Ltd., said corporate

governance and a lack of liquidity are challenges for Mongolia's stock market even as the economy

grows. Mongolia was ranked 120 out of 183 countries in the Transparency International Corruption

Index last year. Market volatility is likely to increase before Mongolia's parliamentary elections in

June and amid concerns China's economy is slowing, said Tan.

―One way to mitigate our risk is to invest in companies with understandable business models. That's

when we find consumer-related names such as [domestic private bottling firm] APU Company are

more straightforward than mining companies listed in Mongolia,‖ he said.

Source: Bloomberg

KIVA LOANS FINANCING DREAMS OF FEMALE ENTREPRENEURS

XacBank has granted loans to 4,000 Mongolians through the donations of 86,000 people living abroad

using its partnership with Kiva International. Kiva is an online lending platform allowing people to

finance micro loans for entrepreneurs.

Statistics show that the majority of lendees in Mongolia are females, such as Sh. Mungunsar who

sells miscellaneous goods such as leather crafts and rewritable CDs. In need of a computer to assist

her with her accounting, she applied for a Kiva loan through XacBank.

―Thanks to the loan, my business is growing,‖ said Mungunsar. ―I use the money I make from my

business for my children's school tuition fees and daily expenses.‖

P. Uranchimeg is a traveling salesperson for retail goods. She used her loan for the capital to buy

goods from the Erlian Mongolia-China border point at a cheaper price than what she could find at

domestic markets. Her next plan is to bring goods back from Beijing.

A third woman, R. Ganchimeg, has a sewing business she was able to expand with a Kiva micro loan

by allowing her to begin selling curtains. Her clients select the materials they like, and she can

order clothes to sell directly.

Source: Udriin Sonin

BRONCHITIS AND TUBERCULOSIS INFECTIONS SPREAD AMONG HEALTH CARE WORKERS

The government has recorded the widespread presence of tuberculosis in a study testing a sample

of 58,000 people.

The test has been carried out through x-rays, and in cases where tuberculosis may be present an

analysis of the patient's mucus will be made. Test results will be used to record the number of

people infected with the disease, details such as the gender of the patients, and the origins of their

sickness.

The number of tuberculosis cases in Southeast Asia is reportedly on the rise. According to recent

research, the number of patients with tuberculosis is 5.2 million people in China, with numbers also

growing in Vietnam, Laos, and Cambodia. Of the 37 countries in the Western Pacific region,

Mongolia is ranked number seven among countries with a high risk for infection. Additionally,

Mongolia has the highest mortality rate caused by the disease.

No study or survey focusing on the spread of tuberculosis has been made since large scale research

conducted by the Soviet Union between the years 1959 and 1961. Officials registered 4,213 cases of

tuberculosis in 2010, an equivalent of 155 illnesses and 34 deaths to every 100,000 people living in

Mongolia. Neither have health authorities employed any mobile x-ray analysis in the country in the

last 20 years.

The director of the Tuberculosis department of the National Center of Communicable diseases said

he was shocked by reports of how widespread infection was amongst health care workers. Research

on the presence of tuberculosis among 840 physicians and nursed found that nearly all were

infected with bronchitis. Preliminary results from an analysis of 400 people showed that 40

physicians may have tuberculosis. He predicted that a future study concerning air pollution would

show similar results.

Source: Udriin Sonin

CREDIT SQUEEZE PUTS STRAIN ON IRON-ORE OUTPUT, PER RIO TINTO

Tighter credit and labor shortages will thwart miners' plans to boost iron-ore output, global miner

Rio Tinto PLC said on Tuesday, joining other majors in playing down concerns the market would

soon be oversupplied. Although iron-ore is not one of Mongolia's top commodities, waning global

supply and the country's close proximity to China will maintain its importance to the market.

The number two iron-ore producer said the world needed 100 million tons of new capacity a year

for the next eight years, 600 million tons to fill expected demand growth, and 200 million to

replace lost supply in the seaborne market as mines run down.

―Project delays are occurring because of a range of factors, such as tightened credit, shortage of

skilled workforce, longer lead times on major items, and the sheer weight of pending approvals for

new project development,‖ Sam Walsh, the head of Rio Tinto's iron-ore department, said. He

added, ―If you delve into the detailed expansion project announcements, you will see quite clearly

that all of the projects that have been announced haven't come on in the time frame they've

announced.

Rio Tinto, which is ramping up its iron-ore production in Western Australia, said it was confident of

its own expansion plan and saw itself supplying a quarter of the 100 million tons per year of

forecast new capacity. Rio's comments echo those of Brazilian miner Vale SA and Australia's BHP

Billiton Ltd., who have warned price costs were delaying greenfield projects and huge expansions

were needed to replace aging mines. Industry sources have also said it was becoming harder for the

mining minnows to get financing from China, as investors were unwilling to pump millions into

inferior projects, especially those yielding the poorest grades of ore.

Source: Reuters

RIO SEES CONTINUED DEMAND FOR BASE METALS FROM CHINA

Rio Tinto PLC, the world's third-largest miner and head of operations at Oyu Tolgoi, said it sees

coking coal and copper markets remaining tight, while margins were being squeezed in aluminum.

Both copper and coking coal are crucial exports, with development hinging on the Oyu Tolgoi for

copper production and Tavan Tolgoi for thermal and coking coal production.

―Demand for commodities in 2012 will be supported by a through-the-year improvement in global

growth, although we cannot rule out periods of volatility similar to those in 2011,‖ Rio Tinto's chief

economist Vivek Tulpule, said in slides during a presentation in Sydney. He maintained his

company's outlook that economic growth in China would remain above 8 percent in 2012.

As a result, the market for coking coal, which is used for steel production, ―remains tightly

balanced, with countries outside China helping to pump up demand in 2012 and 2013. The ―copper

market remains tight despite supply growth.‖

Source: Reuters

COAL ASSETS FUEL DEALMAKING WORLDWIDE

Coal is taking some lumps in the United States, but the commodity is red hot globally. While copper

and gold have traditionally ruled the market, in recent years coal production has become an

increasingly more important commodity to Mongolia and greater worldwide demand would certainly

fuel development.

―Coal was the hottest area for [merger and acquisition (M&A)] in 2011, and it is only set to get

hotter in 2012,‖ said Mike Elliott, Ernst & Young's global mining & metals leader.

The exception seems to be the United States, where competition from natural gas has dampened

demand for coal. But while U.S. coal companies are idling some mines, more are opening elsewhere

around the globe to feed a growing appetite to produce electricity and steel, particularly in Asia.

The biggest bet on coal yet is the proposed USD 90 billion marriage between Glencore International

AG and Xstrata PLC, whose chief executives have spent big chunks of their careers managing coal

trading or mining. The combined business would be the biggest producer of seaborne coal shipped

around the world.

The coal-buying frenzy is driven by several factors, including its inexpensiveness and the room left

for consolidation in the fragmented industry. Coal could face growing challenges if more countries

adopt regulations that restrict emissions of carbon dioxide and pollutants, since other fuels burns

more cleanly than coal. Coal is the most fragmented of all commodities, produced in 24,000 mines

around the world and found in multiple grades and qualities. The top 50 coal miners controlled 46.5

percent of production in 2010 compared with the 83 percent held by the top 50 copper miners.

The most prized of the coal assets is high-grade steelmaking metallurgical coal, or coking coal,

which is relatively scarce and in high demand in China. Only a handful of regions in the world

generate plentiful quantities of high-quality coking coal for exports: Queensland, Australia; central

Appalachia; western Canada; Mongolia and parts of Russia. Last year, record metallurgical coal

prices helped drive four major acquisitions of North American coal companies, totaling about USD

18 billion.

Source: Wall Street Journal

CHINESE PREMIER SIGNALS ECONOMIC TRANSFORMATION

By lowering China's growth target to 7.5 percent this year, Premier Wen Jiabao has signaled that an

era of supercharged expansion may be coming to an end, a shift with profound implications to

nations such as Australia and Mongolia that have prospered from red-hot Chinese demand for

commodities.

The adjustment suggests that China's leaders have reached a comfort level with slower growth, and

that they do not intend to stimulate the economy through state-led investment, as they have in the

past. Instead they plan to let a long-touted shift away from export-led expansion take its course.

A reduced pace of investment in infrastructure, power generation and exports would likely mean

slower growing imports of copper and coking coal—potentially a blow to Mongolia, last year's

number one supplier of coking coal to China.

But with the shift will also come new opportunities, both at home and abroad. A China that relies

more on consumer spending may pollute less, easing global environmental worries, and produce

more jobs. The shift could also lift imports of software, entertainment, tourism, and high

technology goods and services produced by the United States, Europe and other wealthier nations.

China has announced it is lowering its target growth forecast to 7.5 percent from 8 percent. Not a

big move but enough to send a few tremors through the world's financial markets.

―Accelerating the transformation of the pattern of economic development... is both a long-term

task and our most pressing task at present,‖ Chinese Premier We Jiabo said to the National People's

Congress, China's version of parliament, which meets once a year.

China's official growth target has been set at 8 percent since 2006. The target is largely symbolic:

for the past seven years, the Chinese economy has grown at an average annual clip of 10.9 percent.

However, analysts say the 7.5 percent gross domestic product (GDP) growth target for 2012

indicates the direction of the economy sought by the government's most senior officials. The

International Monetary Fund (IMF) forecasts Chinese growth of 8.2 percent this year, and analysts

generally peg it at 8 percent to 8.5 percent.

Source: Wall Street Journal

CHINA'S REAL ESTATE SLOWDOWN COULD SHAKE UP COMMODITIES DEMAND

China's real estate slowdown may reveal that some miners are working richer seams than others. A

sharp downturn in China's housing is already underway. Wang Tao, China economist at UBS,

anticipates a double digit decline in private housing starts when data for January and February are

released. Commodity bulls, such as the numerous miners exploring and producing in Mongolia, are

counting on China's social-housing investment to take up the slack. The headline numbers do not

disappoint.

In his report to China's National People's Congress—delivered Monday—Premier Wen Jiabao promised

seven million new affordable homes will be started, and five million completed, by the end of 2012.

If only it were that simple. The evidence from past years is that many of the promised new homes

are refurbishments, or that projects reported as underway have progressed little past the drawing

board. That might be why a gap has appeared between China's numbers on floor space under

development and steel production.

Fading private construction—and insufficient public investment to take up the slack—is bad news for

Mongolia, where projects such as Oyu Tolgoi and Tavan Tolgoi target China as their number one

customer. The two key ingredients to steel production, coking coal and iron-ore, are important

exports driving economic growth for Mongolia. Diversified miners such as BHP Billiton, which took in

less than half of its earnings from iron ore in 2011, will fare better than miners such as Rio Tinto

PLC, with 83 percent of its earnings from iron ore.

Source: Wall Street Journal

POLITICS

MPS MOVE TO EXTEND DEADLINE FOR LAND PRIVATIZATION

A group of seven MPs have banded together to initiate a law that would expand the timetable for

land privatization by citizens.

The Law on Land privatization, approved in 2003, will expire 1 May next year. However, by then

only 10 percent of citizens will have officially privatized their land. The law provides 0.7 hectares

free to citizens.

MPs have suggested expanding the timetable for another five years until 1 May 2018.

Source: News.mn

IMPORTERS SUE AGENCY FOR MNT 20 MILLION FINES

Oil importers have banded together to sue the Fair Competition and Consumer Protection Authority

in response to the government agency's punitive measures to keep oil prices from rising.

The agency has fined each company MNT 20 million for raising oil prices. Oil importing firms have

opted to sue the agency before the Oil and Gas Association has ruled on the motion. Oil importers

have refused to pay the fine.

A date for a court hearing on the matter has not yet been set.

Source: Undesnii Shuudan

UVURKHANGAI PROVINCE GOVERNOR UNDER SUSPICION OF CORRUPTION

Officials from the Democratic Party (DP) in Uvurkhangai Aimag are currently investigating the

governor of the province through the Anti-Corruption Agency.

Party officials say they have evidence of Governor D. Tsogtokhsuren handing out favors and abusing

his powers in recorded documents. They claim the documents are evidence of the government head

giving away property under the name of ―estate A‖ to a friend at the provincial capital and the

illegal confiscation of land from a mining firm that was sold. The documents also reportedly shows

the misappropriation of MNT 200 billion from the budget for the construction of a statue of the

Mongolian historical figure Zanabazar and the wrongful appointment of the legal chief in the

Uvurkhangai Governor's Office and the chief of the Standardization and Measurement Authority.

T. Ariunjin, a political worker and local secretary to the DP speculated that the governor might

have falsified a technical assessment for the statue's design before its release. He said professionals

who have reviewed the proposal said the projects, which should have cost MNT 808.2 million, were

inflated to MNT 999.9 million after being contracted to the stock firm Undur Buyanga Holding for a

MNT 200 million profit.

Source: Undesnii Shuudan

HUMAN DEVELOPMENT FUND MAY COME UP SHORT ON ALLOWANCE PAYMENTS

Critics have speculated that the Human Development Fund currently holds MNT 11 billion, which

would not be enough to pay for the MNT 21,000 monthly allowances promised to every citizen.

Finance Minister D. Khayankhyarvaa has reported to the Mongolian People's Party that allowances

can be paid up until June without problem. However, he said the government may have difficulty

financing the MNT 334 billion promised to the disabled and elderly.

Suggested solutions at the meeting included the issuance of government bonds, advances from

investors of the Tavan Tolgoi project, and from state-owned Erdenes-Tavan Tolgoi LLC (E-TT). The

government has had trouble before with keeping the fund financially secure. Most of the money

currently in the fund has been drawn from an advance from investors of the Oyu Tolgoi project.

Source: Undesnii Shuudan

BATBOLD TO VISIT JAPAN THIS WEEKEND

Prime Minister S. Batbold will make a six-day visit to Japan beginning this weekend as the two

countries mark the 40th anniversary of the establishment of bilateral diplomatic relations, the

foreign ministry said Monday.

Japanese Prime Minister Yoshikhiko Noda and Batbold are likely to agree that the two countries will

enter negotiations on a bilateral free trade agreement. Batbold will hold talks with Noda possibly

on 12 March. He will also meet with Foreign Minister Koichiro Gemba and business executives during

the visit from Saturday.

Source: Bloomberg

MONGOLIAN DELEGATION ATTENDS HUGE PDAC MINING CONFERENCE IN CANADA

A large Mongolian delegation was among the 30,000 people attending the annual four-day

Prospectors and Developers Association of Canada (PDAC) global mining conference in Toronto,

which ended 7 March.

Attendance from Mongolia was facilitated by the North America-Mongolia Business Council's brother

organization, the Business Council of Mongolia (headed by its Administrator, E. Saruul), individual

Mongolia mining companies and the Ulaanbaatar-based Canadian Embassy to Mongolia. Additionally,

the embassy brought Mongolian journalists to cover the event.

Media coverage from the event reported high interest, with general industry sentiment that more

investment overseas is likely to been seen over the next year after a slow period for the world

economy. Economic pessimism may be perpetuated by concerns over increased taxes, a lack of

investor protection, and game-changing shifts in laws and regulations in some countries.

The meeting was sponsored by Centerra Gold LLC and the law firm Heenan Blaike LLP.

Source: NAMBC

U.S. CONSUL IN IRAQ NOMINATED TO BE NEXT U.S. AMBASSADOR TO MONGOLIA

The U.S. White House has nominated Piper Cambell, Consul General at the U.S. Consulate General

in Basra, Iraq, to the ambassadorship to Mongolia. Campbell, a career Foreign Service member, will

head the embassy in Ulaanbaatar following the leave of the current ambassador, Jonathan

Addleton.

Source: Washington Post

AUSTRALIA TO AWARD 38 SCHOLARSHIPS TO MONGOLIANS

Thirty eight people will receive the opportunity to study in Australia as part of the Mongolia-

Australia Scholarship program.

The program is an Australian government initiative managed through AusAID in cooperation with

Mongolia's Ministry of Finance. Scholarships are available in two separate categories. A category one

scholarship is available to individuals from target ministries and their associated agencies. A total of

21 category one scholarships will be awarded.

Source: UB Post

SINGAPORE AND MONGOLIA AGREE TO COOPERATE ON TECHNOLOGY

Singapore and Mongolia have strengthened their relations with an agreement to cooperate on

InfoComm Technology (ICT) activities to help develop a knowledge-based economy.

The two nations will collaborate through the public services of InfoComm and eGovernment over

the next three years. Their aims include information, communications and technology projects such

as the development of architecture enterprises, cloud computing, and project management. They

will also work on projects from eGovernment to benefit citizens and businesses in Mongolia.

Both organizations provide opportunities to explore activities and projects introduced by

eGovernment to promote mutually-beneficial collaboration. For its part, Singapore has promised to

share its own experience in the field with Mongolia.

Representatives from Mongolia's Information, Communications Technology and Post Authority

(ICTPA) and IDA International, a subsidiary of the InfoComm Development Authority of Singapore

(IDA), met together to make the agreement. The agreement was signed by Chairman of the ICTPA,

J. Bat-Erdene, and the chief executive officer of IDA International, Seah Chin Siong.

Source: Channel News Asia

GOVERNMENT OFFICIALS LOOK TO BUILD BRIDGES BETWEEN MINISTRIES

Government officials are looking for ways to streamline communications between agencies and to

employ government programs more efficiently.

Ministers from the Ministry of Food, Agriculture and Light Industry and Ministry of Education,

Culture and Science met at the invitation of Finance Minister D. Khayankhyarvaa to discuss the

progress of government programs. At the meeting Minister T. Badamunjai suggested that ministries

take more effort to cooperate with one another for more efficient spending of funds from foreign

aid and loans. The ministers proposed that they meet face-to-face more often or by phone rather

than through official letters.

Additionally, Minister Yo. Otgonbayar explained the progress made to the New Century of Education

program. He said his ministry has managed to streamline the decision-making process for finances

related to the housing to be provided at Buyant Ukhaa and the distribution of computers for

teachers beginning in April.

Source: Undesnii Shuudan

STANDING COMMITTEE PUSHES FOR END TO CAPITAL PUNISHMENT

A new law to Mongolia's justice system would allow for Mongolia to exchange prisoners between

itself and China to allow offenders to serve their time in their home countries. However, the

officials leading for this cause complained that the information that would allow them to move

forward is not available to them.

E. Munkh-Ochir, head of the Standing Committee on Security and Foreign Policy, reported to

Parliament that it was leading the movement for the passage of the second protocol for the

abolishment of the death penalty as part of a law adopted Parliament had adopted. If Mongolia

joins the international pact, it would be responsible for both halting executions and removing

capital punishment from its penal system.

The law would also allow for the exchange of prisoners between Mongolia and China. The official

reported that 22 Mongolian citizens had been jailed for drug charges related to opium distribution.

In addition, the law would allow family members of the prisoners to visit and would help reduce the

charges placed against them.

Munkh-Ochir complained about the lack of information given to his standing committee, and added

that the Ministry of Justice and Home Affairs holds information on the subject. He said the ministry

knows more about how China may decide and has information on the number of Chinese in

Mongolian prisons.

Source: Udriin Sonin

DP TAKES DEVELOPMENT FOCUS OUTSIDE CITY LIMITS TO PROVINCIAL CAPITALS

Democratic Party head N. Altankhyuag discussed his party's focus on building up provincial capitals

as part of his party's plan for Mongolia's development.

―The reason for people's movement to Ulaanbaatar is for the better public services, such as schools,

kindergartens, and hospitals,‖ said Altankhuyag. ―My party has decided to develop a policy to

develop the centers of provinces to address this problem.‖

The party official added that provincial capitals have developed far ahead of local soum

communities, which would make the task for further development easier. He identified the

provincial capitals of Sukhbaatar, Zavkhan, and Umnugobi as examples that should lead

development for all other provinces.

In Sukhbaatar the government has demonstrated property city planning through the construction of

new districts for people migrating from further in the countryside with centralized wells and open

land. The government bought construction materials from China at a cheaper price through a

cooperative effort.

The government of Zavkhan helped replace the outdoor supermarket with a three-story building.

Beforehand market workers were forced to work outside to face the harsh cold and heat of winter

and summer. Erdenes-Tavan Tolgoi LLC (E-TT) is one of many mining firms that have invested in the

communities of Umnugobi. For example, E-TT has distributed MNT 50,000 to each citizen from its

generated profits.

Source: Udriin Sonin

ASIAN ACTIVISTS TRY TO PUT A PLUG ON GOBI SAND WITH TREES

The Gobi is the nursery for East Asia's dust storms. The region has always been dry, but in recent

times it has gotten drier. That means more dust and a more difficult life for traditional Mongolian

livestock herders. Meanwhile, scientists say the nomads themselves have contributed to the

problem with oversized herds of camels, sheep, and goats, which are destroying the plain.

All of these growing difficulties are directly related to the dust storms that plague South Korea as

well. The harsh Mongolian winds pick up dust, carrying it first to nearby villages and then miles up

into the jet stream, eventually choking cities hundreds, even thousands of kilometers away in

Korea. And that's where Korean activist Dong Kyun Park comes in. For more than a decade, Park has

worked to prevent those dust storms, sometimes alongside Kwon Byon Hyon, the former Korean

Ambassador to China.

To Park, the best strategy for fighting these dust storms is to try to keep the soil from leaving

Mongolia in the first place. He began raising money a few years ago to plant trees—living

windbreaks—in the southern Gobi region. One experimental plantation, outside the dusty town of

Bulgan Soum, runs about 100 meters wide. Ultimately, Park and his assistant J. Tsogtbaatar hope

the forest shelter will become big enough to catch enough wind-borne dust to make a difference in

nearby Bulgan.

And the idea does seem to be taking root. There's high level government talk of reforesting denuded

areas, and a huge new nursery for native tree species has opened in Ulaanbaatar. Parker says as

more windbreaks sprout up, the benefits will reach all the way back to his home in Korea.

Source: The World

ANNOUNCEMENTS

MINER & SUPPLIER 2012 FORUM, 15-16 MARCH

The Mongolian Mining Exchange will hold its Miner & Supplier 2012 forum on 15 to 16 March at the

Chinggis Khan hotel. As an official supporting organization for this conference, BCM members will

receive a 10 percent discount when registering.

This year's slogan for the event is ―Eco Mine: Sustainable Development.‖ On par with its slogan, the

event aims to improve the mining industry's contributions to society and the economy, promote

environmental friendly products and technology, and increase business coherence between

suppliers and business people in the mining industry.

For more information or registration contact Buyanaa at Mongolian Mining Exchange at +976 9192

7088 or email buyanaa@infomine.mn.

___________________________________________

BCM TO HIRE WORKING GROUP COORDINATOR

The Business Council of Mongolia seeks to recruit a Working Group Coordinator.

The position would require the coordinator to take charge of managing the BCM working groups with

a total of approximately 90 volunteers. Tasks would include arranging meetings for the working

groups, including contacting speakers as necessary; taking minutes of meetings; communicating

with working group members; and updating BCM staff regularly on issues and recommendations

from working group members. In addition, the selected candidate would provide other assistance to

BCM officers as assigned.

Main requirements include excellent communication skills, fluency in both Mongolian and English

languages, strong knowledge of general business, excellent interpersonal and communication skills,

and good computer skills. Candidates should be self motivated, resourceful, and attentive to

details.

For more information please email your CV by 23 March 2012 to info@bcmonoglia.org. The position

could be either full or part time. Only short listed candidates will be contacted.

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U.S. EMBASSY NOW ACCEPTING FULBRIGHT APPLICATIONS

Masters Fellowship: 2013-2014 Fulbright Student Fellowship, The Public Affairs Section of the U.S.

Embassy to Mongolia is now accepting applications for the 2013 -2014 Fulbright Student Fellowship

Program. Fulbright Student Fellowships are part of a U.S. Government-funded academic exchange

program and fund graduate-level (M.A., M.S) studies at U.S. universities. Fulbright Student Fellows

are selected by the Public Affairs Section of the U.S. Embassy.

Applicants will be assessed on the contribution that their study would make to greater

understanding between the United States and Mongolia, and the likelihood of the applicant

performing successfully in a U.S. Academic setting. To qualify, applicants must: Hold a university

degree (at least B.A. or equivalent), be fluent in English (IBT score of 80, Institutional TOEFL 550.

(If you have not taken the test yet, it is important that you take the test as soon as possible.) Note:

Preference will be given to candidates who have not had extensive recent experience in the United

States. The Program supports study in most fields of social sciences and humanities, and some fields

in science and technology (for a full list visit the website). Interviews will take place late May or

early June, 2012.

Applicants must be present for the interview. Completed applications must be returned to Public

Affairs Section by 12 Noon on April 15, 2012: Entry House, U.S. Embassy, Big Ring Road, XI

Microdistrict, Ulaanbaatar. Visit: http://mongolia.usembassy.gov/fulbright_2013-2014.html

___________________________________________

SAFETY FIRST FORUM, 22-23 MARCH

The Safety First forum and exhibition will be held on from 22 to 23 March at the Chinggis Khan

Hotel to introduce mining sector safety to the Mongolian mining industry.

Although Mongolian mining firms have paid more attention to safety in their operations, there is no

consolidated policy on safety concerning standards and regulations, and many are outdated. The

Safety First event intends to bring the mining community together to find a solution to this

problem.

The forum will have sessions on topics such as government policy on safety, company practices

(case studies), safety management, and the best safety technologies.

For registration, visit safetyfirst.mn or for more information call 31 4877 or +976 9916 9954.

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“MM TODAY” on MNB-TV, Fridays at 18:30 [TONIGHT]

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

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

18:30 tonight! Tune in to watch this program that reports stories from today‘s BCM NewsWire.

____________________________________________

“BSPOT” ON B-TV, MONDAY TO FRIDAY AT 18:20

B-TV (Business TV) now telecasts a 10-minute English-language news program called BSPOT every

evening from Monday to Friday at 18:20, taking most of the stories from the BCM NewsWire.

____________________________________________

POSTINGS ON BCM‟S ENGLISH WEBSITE 'PRESENTATIONS' AND 'MONGOLIA REPORTS' SECTIONS

AND BCM‟S MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS

New for 2012 is a ‗Presentations‘ section on the BCM Mongolian website which can be reached via

link to bcm.mn/itgeluud. Several presentations already posted!

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

―Open-Government.mn‖ site are regularly posted.

On BCM‘s English website, ‗Resource, Presentations‘ section, for your review are 7 speeches from

the Mongolian Investment Summit on December 8-9 in London, several speeches at the Risk

Management Forum on November 8 co-organized by BCM and Mandal Insurance, speeches at

Discover Mongolia 2011, speeches from BCM‘s 10 monthly meetings in 2011, and the address by

Peter Nicholls, OT‘s VP-Operations, at Global MInES in Sydney on July 4.

Also on BCM‘s English website, ‗Resource, Mongolia Reports‘ section, please note "Blitz and Lead" by

Sant Maral Foundation on August 2011, Z. Batbayar, Deputy Director of the Water Authority, at

BCM‘s Environmental Working Group‘s recent meeting and the Polit Barometer-May 2011 from Sant

Maral Foundation.

We are now posting some news stories and analyses relevant to Mongolia on the BCM website's

‗Mongolian Business News‘ as they come, instead of waiting until Friday to put them all together in

the weekly NewsWire. The NewsWire will, however, continue to be issued on Friday, and will

incorporate items that are already on the home page, so that it presents a consolidated account of

the week‘s events.

___________________________________________

NETWORK WITH BCM

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

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

improving each day with BCM.

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

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

community. Hear breaking news and announcements as they happen when you follow BCM on

Twitter at http://twitter.com/#!/bcMongolia. Connect with BCM on Linked-in to join the diverse

group of professional contacts creating a better business environment in Mongolia today.

Of course for news information, interviews, and announcements regarding our organization, visit

the official BCM website at bcmongolia.org and bcm.mn.

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]

January 31, 2012 *10.2% [source: NSOM]

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

CENTRAL BANK POLICY 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]

CURRENCY RATES – March 7, 2012

Currency Name Currency Rate

U.S. dollar USD 1,335.08

Euro EUR 1,753.63

Japanese yen JPY 16.53

British pound GBP 2,099.75

Hong Kong dollar HKD 171.98

Chinese yuan CNY 211.55

South Korean won KRW ` 1.19

Russian ruble RUB 44.96

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.