BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 274 – May 17, 2013

NEWS HIGHLIGHTS:

Business

Turquoise Hill to ink $4 bn financing for Mongolian flagship;

Mongolia to begin OT investigation;

Mongolia’s Erdenes TT to mine coal coveted by Peabody, Shenhua;

Khushuut declared strategic reserve;

Japanese firms to build Mongolian international airport;

Boeing delivers first direct purchase aircraft to MIAT;

Mongolian Airlines Group becomes Hunnu Air;

EBRD lends $20 mn for Mongolian cement plant build;

Broad-gauge rail plan to boost costs for exporters;

Kincora commences field season activities;

Newera Resources' South Gobi coal exploration license renewed;

S&P lowers MMC rating to 'B', outlook to 'Negative';

Golomt studies Chinese bond market;

SouthGobi posts Q1 loss;

Centerra Q1 profit rises on strong gold output;

MMC re-designates CFO as chief audit executive;

MRC directors resign;

Rio Tinto makes strategic appointment.

Economy

GDP growth slows to 7.2 percent in Q1 as coal exports decline;

Mongolia to receive microcredits aid;

Gold production sees growth;

Mongolia makes push for fruit production;

Provinces see fall in gas prices;

Australia to send tax dollars to OT;

Coking coal prices seen slipping to record low in Q3;

OT likely to bring rise in copper supply;

Mining M&A appetite remains subdued;

Emerging market economic growth slows to weakest in 18 months.

Politics

Three presidential candidates named;

Enkhbayar clinches Udval’s nomination for MPRP;

OSCE to observe election;

Parliament hears initial reading of draft Securities Law;

Mongolia publishes SEFIL regulations;

USD 85 million from Chinggis bond delivered for rail development;

Two new members of Parliament fill last vacant seats;

Gonchigdorj replaces Bayartsogt as deputy speaker;

Government mandates majority ownership of Darkhan oil refinery;

Earnings report reveals incomes of top officials and richest MPs;

Justice Minister presents “white collar” crime legislation;

Japan makes another request for TT participation;

Japan abduction official looks to Mongolia for help;

Senior Chinese, Mongolian political leaders look to build ties;

Mongolia poised to deliver food aid to N. Korea;

U.S. to return more smuggled dinosaurs to Mongolia;

This alliance is brought to you by the letter 'M';

UB Court to determine MIAT case jurisdiction;

Mongolia Economic Forum comes to Orkhon;

Government bans outdoor activities that may cause fires.

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

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Mongolian National Broadcasting

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BUSINESS

TURQUOISE HILL TO INK USD 4 BN FINANCING FOR MONGOLIAN FLAGSHIP

Canadian miner Turquoise Hill Resources Ltd. and its majority owner Rio Tinto PLC expect to sign a

USD 4 billion project financing plan and term sheet at the end of June, which will allow for the

necessary future financial flexibility to develop the second phase of the giant Oyu Tolgoi mine in

Mongolia.

Turquoise Hill late on Monday said it was actively engaged with lenders to finalize the financing

deal. By February, it had secured debt approval from the European Bank of Reconstruction and

Development (EBRD) and the World Bank Group's International Finance Corp. (IFC) During April, Rio

Tinto had also signed commitment letters with 15 global banks that locked in pricing and terms for

financing. The boards of Export Development Canada, Australia's Export Finance and Insurance

Corp., and Export-Import Bank of the United States also conditionally approved Oyu Tolgoi's project

financing. Turquoise noted project financing was still subject to board approval, which included

representatives from the Mongolian government.

Meanwhile, the Mongolian government, Turquoise Hill and Rio Tinto remained in disagreement over

taxes and rising costs at the project, which Mongolia feared would erode prospective earnings.

While the issues were being ironed out, the Oyu Tolgoi board had approved a temporary budget for

the mine, which is ramping up to commercial production.

Source: Mining Weekly

MONGOLIA TO BEGIN OT INVESTIGATION

Mongolian media sources reported that the State Budget Standing Committee approved the start of

an investigation into Oyu Tolgoi LLC's compliance with company tax and contractual obligations.

―We believe this development is negative for Turquoise Hill Resources, as it increases the sovereign

risk of investment.‖ said Visor Capital. It added, ―As we believe that the vital issues for the

company remain the discussions with the Mongolian government of the OT project and signing of

the USD 4 billion project finance facility, we expect negative share impact.‖

Source: BNE

MONGOLIA‟S ERDENES TT TO MINE COAL COVETED BY PEABODY, SHENHUA

Erdenes Tavan Tolgoi LLC will begin this year to mine Mongolia's West Tsankhi coal area as part of

the debt-laden company's plan to ramp up output and pay off money owed to Aluminum Corp. of

China Ltd.

Erdenes TT will pick a contractor in the next few months to start work at West Tsankhi with target

output of 2.6 million metric tons for 2013, chief executive officer Yaichil Batsuuri said. The miner

resumed deliveries last month after a three-month suspension over a dispute regarding price, and

may be able to repay Aluminum Corp. of China Ltd. (Chalco) the USD 186 million it owes, which is

to be paid in coal deliveries, about six months from now, he said. Erdenes TT also owes about USD

200 million to the Development Bank of Mongolia LLC, he said.

The company envisions increasing output to 15 million tons next year and more than 30 million tons

by 2017, he said. As production rates increase, Erdenes may still pursue some form of partnership

with foreign companies as Mongolian coal miners have no experience producing more than 10

million tons a year, he said.

―We would like to work with one of these international mining companies,‖ such as Peabody Energy

Corp., Anglo American PLC and Chinese firms including Shenhua Energy, Batsuuri said. ―They have

good management engineering and equipment. We need them. We would like to work with them on

marketing.‖

Erdenes TT has scaled down its investment program as the rail line will be built by other Mongolian

state entities, he said, which could cut transport costs by half. Forty percent of Erdenes TT costs

are currently tied up in paying for trucks to take the fuel about 260 kilometers (162 miles) south to

China, he said. This leaves Erdenes TT to focus on a USD 400 million plant to wash coal, which

produces a more value-added product, and a USD 100 million water supply project, he said. The

company plans to pick the builder for the washing facility this year and start operating it in two or

three years, he said.

Once Erdenes TT increases output, adds the washing plant and other infrastructure, and improves

management and efficiencies, the company will return to the idea of an initial public offering,

Batsuuri said. The share sale, which was initially planned in 2011 and estimated to raise USD 3

billion, is still about a year or two years away, he said.

Source: Bloomberg

KHUSHUUT DECLARED STRATEGIC RESERVE

The government has officially added Mongolia Energy Corp.'s Khushuut coal deposit to its list of

strategic deposits

The decision follows an investigation led by a working group appointed by Parliament. The working

group found the mine has a proven reserve of 85.7 million tons and probable reserve of 1.8 million

tons, or a 88 million ton JORC reserve. That compares with a 2.4 billion-ton reserve MEC reported

to the Hong Kong exchange.

Source: Zuunii Medee

JAPANESE FIRMS TO BUILD MONGOLIAN INTERNATIONAL AIRPORT

Two Japanese companies said on Monday they will build Mongolia's second international airport as

Tokyo steps up business ties with the mineral-rich country.

Trading house Mitsubishi Corp. and engineering firm Chiyoda Corp. said in a statement that they

had been awarded the construction contract worth 50 billion yen (USD 493 million) by the Civil

Aviation Authority of Mongolia. Construction of a 3.6-kilometer (2.2 mile) runway and terminal

buildings with a capacity to handle up to two million passengers a year was scheduled to be

completed by October 2015, a Chiyoda spokesman said.

The project will be about 90 percent financed by Japanese government loans to Mongolia, the

spokesman said. The Japan International Cooperation Agency (JICA) has issued a low-interest 40-

year loan. The first decade would accrue zero interest, which would be followed by 0.2 percent

interest for the remaining 30 years. The Mongolian government will be responsible for installing

electric lines, optic fiber, and roads.

Source: News.mn, AFP

BOEING DELIVERS FIRST DIRECT PURCHASE AIRCRAFT TO MIAT

Boeing delivered a 767-300ER (extended range) to MIAT Mongolian Airlines on 13 May, the first-ever

direct purchase delivery to the state airline.

―This is a momentous step forward for MIAT Mongolian Airlines as we continue to enhance our

fleet,‖ said Jargalsaikhan Gungaa, president and chief executive. ―We are pleased with the comfort

range and payload of the new 767-300ER and we look forward to introducing it into our long-haul

fleet.‖

Source: Boeing

MONGOLIAN AIRLINES GROUP BECOMES HUNNU AIR

Mongolian Airlines Group LLC has changed its name to Hunnu Air after MIAT Mongolian Airlines

complained its competitor's brand were too similar to its own.

―We are announcing that following a group board meeting, the former name of Mongolian Airlines

Group will now have its new logo under Hunnu Air, according to procedures to renew all paper work

is carried out, and we are delivering notice to all our domestic and foreign partner companies,‖

said a company statement.

MIAT filed a complaint with the Agency for Fair Competition and Consumer Rights that Bodi Group's

Mongolian Airlines was in breach of the Consumer Protection Law by copying MIAT's name brand.

The complaint made specific reference to the phrase ―Since 1956‖ painted on the side of Mongolian

Airlines' aircraft, when the company had been operating only since 2011.

The statement added that all agreements made before the change and all prior held licenses had

not been changed.

Source: Info Mongolia

EBRD LENDS USD 20 MN FOR MONGOLIAN CEMENT PLANT BUILD

The European Bank of Reconstruction and Development (EBRD) has signed an agreement to provide

a USD 20 million equity investment to Senj Sant, which will build and operate a 1 million ton per

year green-field cement plant in Mongolia.

This equity investment is part of a financing package that also includes a loan of up to USD 130

million. Half of the loan will be syndicated to other lenders.

―This investment marks a milestone in our activities in Mongolia. Not only is the volume of funds we

are providing significant, but it also signifies an important step in the diversification of the local

economy,‖ said EBRD First Vice President Phil Bennett.

Source: European Bank of Reconstruction and Development

BROAD-GAUGE RAIL PLAN TO BOOST COSTS FOR EXPORTERS

Mongolia's decision to use broad-gauge rail for a new line to China will increase costs for coal

exporters, including Hong Kong-traded Mongolia Mining Corp. (MMC) according to a research firm.

The use of the broader gauge rail will add USD 3 to the cost of each metric ton of delivered coal

because the fuel has to be transferred at the border to wagons that fit the smaller-gauge rail used

in China, Dale Choi, founder of Ulaanbaatar-based Independent Mongolian Metals and Mining

Research, said by phone. Samsung C&T Corp., South Korea's second-largest builder, was awarded a

USD 483 million contract this week to build the 267-kilometer (166-mile) railway from the Tavan

Tolgoi coal field to the Chinese border.

Mongolia's rail network is broad gauge, a legacy of its Communist-era when most of its

infrastructure was developed by the Soviet Union, that's 85 millimeters wider than the standard

gauge used in China, the largest energy consumer.

―The business community would have preferred the standard gauge,‖ Choi said. ―The government is

taking some steps to increase efficiency, such as mine site customs, so one wonders why they would

choose the Russian gauge. I guess the geo-political consideration is much more important to

authorities.‖

It's possible to export 8-9 million tons a year to the border by road while rail can transport 28

million tons, Delgersaikhan Tsagaan-Uvgun, head of mining planning and technical coordination at

Erdenes Tavan Tolgoi LLC, said in an interview. Mongolia has 1,908 kilometers of broad-gauge track

with plans to expand the network by 5,600 kilometers to help mining companies export their

products. The 267-kilometer section from Tavan Tolgoi to the Chinese border will be the first part

of this expansion. The next section is planned to connect Tavan Tolgoi and the city of Sainshand,

the site of a USD 10 billion planned industrial complex.

Source: Bloomberg

KINCORA COMMENCES FIELD SEASON ACTIVITIES

Kincora Copper Ltd. announced the commencement of its 2013 field season activities at the Bronze

Fox project.

Initial activities will include a detailed mapping of veins, hydrothermal alteration and mineralized

zones, advancing the project from a technical perspective via a systematic exploration program

noting that its licenses are only in their fourth year. Recent petrography and mineralogy results

have illustrated bornite, chalcocite and gold mineralogy which is often closely linked to the

moderate and high-grade copper zones encountered around the West Kasulu prospect. Subject to

board approval, these first phase activities will potentially support a deep induced polarization

program and further drilling at identified high-priority targets in the second half of the year.

Kincora‘s board also recently adopted a new remuneration policy for directors‘ fees such that there

is a commitment for the on-market acquisition of shares.

―The company continues to review all aspects of our strategy, but the new remuneration policy for

non-executive directors is a clear illustration in the board‘s continued belief in our flagship Bronze

Fox project, strategy, and current favorable valuation.‖

Source: Kincora Copper Ltd.

NEWERA RESOURCES' SOUTH GOBI COAL EXPLORATION LICENSE RENEWED

Newera Resources has had a key South Gobi exploration license renewed for a three-year term from

January 2013.

The Mineral Resource Authority has renewed the license, while Newera undertakes due diligence

over the Ulaan Tolgoi project. In March 2013 Newera entered into a binding memorandum of

understanding toward completing a formal joint venture agreement covering an exploration license

for the Ulaan project in Umnugobi Aimag, which lies 100 kilometers from the Chinese border.

Source: Proactive Investors

S&P LOWERS MMC RATING TO 'B', OUTLOOK TO 'NEGATIVE'

Standard & Poor's Rating Services lowered its long-term corporate credit rating on Mongolia-based

coal mining company Mongolian Mining Corp. (MMC) to ―B‖ from ―B+.‖ The outlook is negative. At

the same time, it lowered its issues rating on MMC's senior unsecured notes to ―B‖ from ―B+.‖

―We downgraded MMC to reflect our view that the company's cash flow adequacy ratios will likely

be weaker than we had earlier anticipated for the rest of 2013 and 2014,‖ said Standard & Poor's

credit analyst Xavier Jean.

The Source said it expected MMC's ratio of funds from operations to debt to be between negative

2.5 percent and 0 percent, and the company's debt-to-EBITDA (earnings before interest, taxes,

depreciation, and amortization) ratio to exceed 15 times for the next 12 months. These ratios are

consistent with a ―highly leveraged‖ financial risk profile, compared with its previous assessment

that the company's financial risk profile is ―aggressive.‖ The assessment is despite an expectation

for MMC's absolute debt to reduce after the company repays about USD 167 million in convertible

bonds and bank loans in 2013.

MMC's cash-flow-adequacy ratios are likely to remain weak in 2014, even with a possible

improvement in coal prices. The company's sizable debt due in the first half of 2014 has reduced its

liquidity buffer to absorb a decline in coal prices. The Source could lower the rating if MMC's

liquidity weakens further. This is possible if average selling prices for hard coking coal drop below

USD 95 a ton for more than four months, if working capital requirements rise unexpectedly, or if

the company faces difficulties or delays in refinancing or postponing maturities in the first half of

2014. The outlook would be revised to stable if MMC's liquidity and refinancing risks diminish. This

is possible if it rebuilds its liquidity buffer by refinancing or postponing debt due in 2014, and

coking coal prices sustainably increase above USD 115 a ton.

Source: Standard & Poor's Ratings Services

GOLOMT STUDIES CHINESE BOND MARKET

Golomt Bank of Mongolia LLC is studying the offshore yuan bond market, according to Agal

Badamgerel, a vice president and director in the lender's investment banking division.

China's Ministry of Finance, Citic Securities Co. and China Development Bank are among issuers that

may sell bonds denominated in yuan.

Source: Bloomberg

SOUTHGOBI POSTS Q1 LOSS

SouthGobi Resources Ltd. says it generated USD 3.3 million of revenue in the first quarter, a period

when most of the Canadian company's coal mining activities in Mongolia were shut down.

The Vancouver-based company's revenue was down from USD 40.1 million a year earlier, before the

curtailment began in June 2012. SouthGobi's net loss in the three months ended 31 March, reported

in U.S. currency, was USD 24.9 million, or 14 cents per share. A year earlier, SouthGobi had a profit

of USD 3.1 million of net income, or two cents per share, and USD 7 million of adjusted net income.

Source: Stockhouse.com

CENTERRA Q1 PROFIT RISES ON STRONG GOLD OUTPUT

Canadian miner Centerra Gold Inc. reported a jump in first-quarter profit on strong gold production

at its Kumtor mine in Kyrgyzstan and Boroo mine in Mongolia.

Centerra, which is in talks with Kyrgyz authorities on an alternative waste dumping plan at Kumtor,

said net profit for the March quarter rose to USD 51.4 million, or 22 cents per share, from USD 9.6

million, or 4 percent share, a year earlier. Revenue rose 44 percent to USD 192.3 million.

The Kumtor mine is the largest gold mine in Central Asia operated by a Western company and last

year accounted for 5.5 percent of Kyrgyz gross domestic product (GDP) and 18.9 percent of

industrial output. Centerra said last week a waste-rock dump at Kumtor had moved at a greater-

than expected rate, and warned that any delays to alternative plans would hurt its operations and

results.

Centerra said gold production rose 58 percent in the first quarter to about 115,220 ounces, while

the company's average realized gold price fell about 6 percent to USD 1,619 per ounce.

Source: Reuters

MMC RE-DESIGNATES CFO AS CHIEF AUDIT EXECUTIVE

Mongolia Mining Corp. (MMC) announced the re-designation and appointment of Enkhzaya Nyamdorj

from her current position of chief financial officer (CFO) to be the chief audit executive (CAE) of

the company with effect from 9 May.

Nyamdorj, 38, joined the company as deputy CFO in August 2011 and was appointed as CFO on 4

November 2011. Prior to joining the company, Nyamdorj was a senior manager at Ernst & Young

LLP's Chicago office where she had been working since 2000. With over 10 years' experience in

public accounting, finance and business development, Nyamdorj is a certified accountant in the

United States and a member of the California Society of Certified Public Accountants.

As CAE Nyamdorj will report directly to MMC's audit committee of the board and the chief executive

officer. MMC will initiate the process of identifying a suitable replacement for the position of the

CFO of the company, and Battsengel Gotov, an executive director and chief executive officer, will

assume the duties and responsibilities of the CFO during the interim period.

Source: Mongolia Mining Corp.

MRC DIRECTORS RESIGN

Mongolian Resource Corp. Ltd. announced the resignation of three directors.

Naidansuren Jargalsaikhan stepped down as chairman, Galsan Sereeter as non-executive director,

and Tony Bainbridge as former managing director. The Source noted that the sole remaining

director, Tanan Jargalsaikhan, is aware of the requirement for Australian Securities Exchange-listed

companies to have a minimum of three directors, two of which must ordinarily reside in Australia.

Source: Mongolia Resource Corp. Ltd.

RIO TINTO MAKES STRATEGIC APPOINTMENT

When the Mongol conqueror Genghis Khan was expanding his empire in the 13th century, he made it

a habit to take wives from the conquered people to help fortify their new bonds. Rio Tinto PLC

might have taken a page from Genghis' strategy book with the high-level appointment of a

prominent Mongolian businessman as it looks to engineer a smooth launch of commercial exports

from the USD 6.2 billion Oyu Tolgoi copper-gold mine.

Rio Tinto's bride-to-be is Baatar Bold, a native Mongolian who has served as an advisor to the Anglo-

Australian diversified miner for the past three years. He will act as president of international

operations of Rio Tinto's copper group from London, effective 3 June.

Baatar's appointment, which will have him report directly to Rio Tinto's chief executive of copper,

Jean-Sebastian Jacques, will go some way to satisfying one of the government's main complaints at

a stakeholders' meeting held in February, which was for more local representation in management.

Bold is well known in Mongolia as an active figure in Mongolia's private sector, participating on the

executive committee of the board of the Business Council of Mongolia as well as being chairman of

the Mongolian National Mining Association and former chairman of the Mongolian Stock Exchange.

―As a respected business and civic leader, his advice often is sought by government, industry and

civil society organization as they work to balance a business-friendly investment environment with

protecting Mongolia's interests,‖ said Cameron McRae, Oyu Tolgoi's chief executive officer and

president, in a statement.

Though the appointment may appear purely a political move, Bold is a field-tested manager who

has a lot of experience in the mining sector. His achievements include transforming Altan Dornod

Mongol from a company owing millions in back taxes to the Mongolian National Chamber of

Commerce and Industry's 19th most admired company in its ―Top 150 Enterprises‖ list for 2012.

Source: BNE

ECONOMY

GDP GROWTH SLOWS TO 7.2 PERCENT IN Q1 AS COAL EXPORTS DECLINE

Mongolia's economic growth slowed in the first quarter after coal prices fell and moderating Chinese

demand reduced the nation's exports.

Gross domestic product (GDP), as measured by production in constant prices, grew 7.2 percent from

a year ago, the National Statistical Office said on its website. That compares with the 16.7 percent

pace of expansion for the same period last year and a 12.3 percent annual rate for 2012. The World

Bank last month cut its forecast for 2013 Mongolian economic growth to 13 percent from 16.2

percent, citing declines in exports and foreign investment. Economic growth in China, which buys

more than 90 percent of Mongolian exports, slowed to 7.7 percent in the first quarter from 7.9

percent in the last three months of 2012.

Mongolia's exports for the first four months of this year fell 5.5 percent from a year earlier, the

statistics office said. Shipments of coal, the nation's biggest export, fell by volume to 5 million tons

from 5.3 million tons in the same period in 2012, the agency said. The value of the coal exports fell

to USD 338.9 million from USD 580.3 million a year ago, according to a statement. The volume of

copper concentrate export was little changed at 186,000 tons in the first four months compared to

186,500 tons a year earlier. The value of the shipments rose to USD 276.6 million from USD 269.5

million a year ago.

Mongolia's trade deficit narrowed to USD 528.3 million, 33.7 percent smaller than a year ago. The

nation's consumer prices rose 10.4 percent in April from a year earlier and gained 1.1 percent from

March, according to the agency.

Source: Bloomberg

MONGOLIA TO RECEIVE MICROCREDITS AID

The Whole Planet Foundation (WPF) will support Vision Fund Mongolia (VFM) with a USD 300,000

grant over three years to support the expansion of the ―starter‖ loan product in all 10 of VFM's

planned branches.

Mongolia is now the 57th country WPF helps fund microcredits. The support will serve 1,980

borrowers and leverage USD 552,302 in loans. Whole Planet Foundation has partnered with Vision

Fund Mongolia in Ulaanbaatar and Central Mongolia where Whole Foods Market sources camel wool.

VFM provides loans utilizing both the individual and group lending methodology and has maintained

a strong portfolio. VFM currently operates nine branches and has established client savings

accounts. As of December 2012, VFM was serving 6,734 active borrowers.

Source: Whole Planet Foundation

GOLD PRODUCTION SEES GROWTH

A head of macro-economic statistics at the National Statistical Office reported on the first four

months of 2013.

The gold mining sector experienced the highest growth during the period with 2.2 tons produced as

compared with 1.2 tons in the same period for 2012, although the mining sector experienced a drop

off in exports, said B. Badamtsetseg. Iron ore production fell significantly, while petroleum and

other products stayed relatively the same [the source does not provide figures -ed]

Mongolia experienced 7.2 percent growth in the first quarter of 2013, falling behind that of previous

years. Meanwhile inflation saw a slight increase in April after three months of decreases. Inflation

stood at 10.4 percent compared with 9.8 percent in March. Inflation is also in the countryside than

Ulaanbaatar.

Foreign trade has fallen off since the beginning of the year and is expected to fall further. Imports

fell in terms of petroleum, automobiles, and car parts. Exports fell due to effects from

transportation, specifically rail.

Source: Undesnii Shuudan

MONGOLIA MAKES PUSH FOR FRUIT PRODUCTION

Last year Mongolia was able to meet domestic demand for wheat and potatoes, and this year

Mongolia is putting similar efforts into fruit production.

This spring the Ministry of Industry and Agriculture distributed 770,000 sea buckthorn saplings and

60,000 strawberry seeds to small farmers and businesses, which was enough to cover 1.4 hectares of

land. Also, select farmers were given five-year loans to develop their crops. MIA now plans to

establish 11 flash-freeze facilities and 52 greenhouses.

In Mongolia sea buckthorn, gooseberry, and red bilberry have become common fruit crops, but now

the government is hoping to encourage more diversity, including apples, plums, cherries,

raspberries, and strawberries.

Source: UB Post

PROVINCES SEE FALL IN GAS PRICES

Gas prices have fallen by some MNT 80 per liter in some provinces, reported local newspaper

Undesnii Shuudan.

―We have just recently received reports that fuel suppliers in Uvs and Bayan-Ulgii Aimags have

reduced gasoline prices by MNT 80 per liter,‖ said L. Padnaasuren, head of supply and management

at the Petroleum Authority. ―Gasoline prices are higher in the rural areas than in Ulaanbaatar. For

instance, a liter of A-80 in the provinces costs MNT 1,480 whereas it‘s sold for MNT 1,450 in the

capital.‖

Last month the government announced that retail gasoline prices would be reduced by around MNT

50 to MNT 60 per liter in May as new fuel suppliers from Belarus, China and South Korea were being

contracted. Russia‘s Rosneft was previously Mongolia‘s sole supplier. This year the government and

Central Bank granted low-interest loans to fuel suppliers to stabilize fuel prices, as part of a larger

scheme to fight inflation rates.

Usually petroleum prices increase around spring each year, as the nation faces shortages from road

construction and other development activities, but this year Mongolia is witnessing a new scenario.

―Chinese fuel supplier China Oil has already made contracts with domestic fuel suppliers Shunkhlai,

NIK, and Magnai Trade,‖ said Padnaasuren. ―The fuel has already been transported to Mongolia. It

will be distributed next week.‖

Source: UB Post

AUSTRALIA TO SEND TAX DOLLARS TO OT

Australian taxpayers will help Rio Tinto PLC fund a USD 5.1 billion mine expansion in Mongolia, after

Australia's export credit agency decided to continue its controversial habit of lending to

multinational corporations.

Despite pleas for it to focus on small and medium exporters that cannot source loans elsewhere in

the market, Australia's Export Finance and Insurance Corp. (EFIC) confirmed that it would

participate in financing the second phase of Rio Tinto's Oyu Tolgoi mine. A spokeswoman for EFIC

would not reveal the size of the loan, but the organization typically lends in the tens or hundreds of

millions of dollars.

Rio Tinto has reportedly secured at least half of the USD 5.1 billion required to finance the

expansion, with the World Bank's International Finance Corp. (IFC) among those committed to the

project. EFIC‘s decision to lend money to Rio Tinto comes despite Australia's Productivity

Commission urging the organization to ―substantially reorient‖ its focus toward small exporters,

rather than big companies that can easily source money elsewhere at low interest rates.

During its recent deliberations, EFIC had ranked Oyu Tolgoi as a ―Category A‖ project; a

classification reserved for proposals that have ―potential for significant adverse environmental

and/or social impacts.‖

Source: Brisbane Times

COKING COAL PRICES SEEN SLIPPING TO RECORD LOW IN Q3

BHP Billiton Ltd., the world's biggest exporter of steelmaking coal, may face a drop in contract

prices to a record low in the third quarter amid rising supply and weaker Asian demand. Coking coal

is a top export in commodity for Mongolia and is already feeling the burn from slumping prices.

Asian buyers will probably pay USD 165 a metric ton for hard coking coal in the three-month period

starting 1 July, according to the median estimate of five analysts surveyed by Bloomberg News.

That would match the record low for contracts set in the first quarter and compare with USD 172 a

ton in the second quarter. Spot prices have slid 11 percent since March, Bloomberg data shows.

Rising supply from Mongolia and South Africa has added to an increase from Australia, which is

rebounding from January floods that shuttered rail lines and crimped exports. Erdenes Tavan Tolgoi

LLC resumed shipments to China in late April after a three-month standoff with its biggest

customer, according to a government statement on Prime Minister Norov Altankhuyag's comments in

Parliament on 19 April. A slowing Chinese economy is also causing weakness in price, Shuma Uchino,

the chief financial officer of Mitsubishi Corp. said in Tokyo on 8 May. The Japanese company is a

partner in the world's biggest exporter, the BHP Billiton Mitsubishi Alliance.

―There's too much supply,‖ said Daniel Hynes, the Sydney-based head of commodity strategy at

CIMB Group Holdings BHD who predicts contracts may be settled at USD 180 a ton. ―There's a

recovery from the Australian market, which is compounding weak demand from China and Japan,

the biggest importer of premium hard coking coal. That has meant that the market has remained

relatively weak.‖

Hard coking coal closed at USD 152 a ton on 1 May. The forecasts for the third quarter ranged from

USD 155 to USD 180 a ton in a survey from 6 May to 9 May. Contract prices averaged USD 210 a ton

last year.

Source: Bloomberg

OT LIKELY TO BRING RISE IN COPPER SUPPLY

Rio Tinto PLC will meet its target of commencing copper production at Oyu Tolgoi, its Mongolian

mine, confirming a widely expected rise in the supply of the red metal later this year.

Concerns about leading copper projects coming online have weighed on the copper price for most of

this year. Although uncertainty had heightened about production at Oyu Tolgoi after Rio Tinto and

the Mongolian government were locked in negotiations over management fees, cost overruns and

transparency, Sam Walsh, chief executive of the miner, said on Thursday that it was weeks away

from gaining government approval to ship copper.

―The pace of the inventory increase will pick up in the fourth quarter when new mine projects

come on line and demand is seasonally weaker,‖ said Ryan Belshaw, copper analyst at Macquarie in

London.

Sluggish global demand for the red metal amid rising supplies has been a concern for analysts and

traders. Demand from the United States, Europe and Japan has been extremely weak for the large

part of this year, said analysts. The Chinese, the largest consumer of copper, have also been

refraining from buying so far this year. The latest monthly trade data showed that in April, China‘s

imports of refined copper and copper products had fallen 7.4 percent from a month before and 21

percent from a year earlier. For the first four months of the year, copper imports fell 27.2 percent.

While some traders and analysts see China‘s stricter controls over financing deals using copper as

collateral affecting import levels of the metal, other expect Chinese buyers to return to the market

now that prices on the London Metal Exchange have fallen below those in Shanghai.

Source: Financial Times

MINING M&A APPETITE REMAINS SUBDUED

Despite mining executives being more optimistic about the global economy, merger and acquisitions

(M&A) appetite is expected to remain subdued, advisory firm Ernst & Young reported this week.

In its latest six-monthly Capital Confidence Barometer, Ernst & Young noted that some 57 percent

of mining and metals respondents considered the global economy to be improving, compared with

just 21 percent in the October 2012 report. The barometer further showed that growth was the

main focus for some 44 percent of companies in the sector, up from 38 percent six months before,

while 46 percent of respondents viewed credit availability as improving, up from 30 percent in the

previous report.

However, Ernst & Young noted that, despite the more positive sentiment, M&A appetite remains

subdued, with 24 percent of respondents planning to pursue an acquisition in the next 12 months,

down from 28 percent in October. The findings were consistent with the first quarter M&A data for

the sector globally, with total deal value down 45 percent year-on-year to USD 16.3 billion and deal

volume down 35 percent to 168 deals.

―The window for opportunistic acquisitions for those with access to capital is narrowing,‖ said Paul

Murphy, Ernst & Young Oceania mining and metals transactions advisory leader. ―Investors are

continuing to chase yield and minimize risks, which has skewed investor preferences towards high-

yield debt and away from equities. However, as high-risk coupons decline the attractiveness of

equities relative to their risks improves, suggesting a move back to equities may be getting closer.‖

Murphy noted there was confidence in the global economic outlook, and that the syndicated bank

loan market had picked up and the market had already seen a move by financial investors into

mining and metals assets, usually first movers. Although the funding situation for many exploration

and development companies was dire, said Murphy, an opening in the initial public offering market

in Australia by the end of the year was not out of the question.

Source: Mining Weekly

EMERGING MARKET ECONOMIC GROWTH SLOWS TO WEAKEST IN 18 MONTHS

The HSBC Emerging Markets Index (EMI), a monthly economic indicator derived from countries'

Purchasing Managers' Index (PMI) surveys, fell to 51.3 in April from the 52.5 reading in March. That

signals a slowdown in economic growth in global emerging markets to their weakest level for over

18 months, a period when they were climbing out of the depths of the crisis.

Data broken down by broad sector showed similarly weak growth rates for manufacturing output

and services activity. Three of the four BRIC nations registered slower output growth in April, most

notably China. The exception was Brazil, although its rate of expansion remained modest overall.

Elsewhere, manufacturing output growth slowed in the majority of the 16 economies covered.

―Weaker economic growth across most advanced markets is now being felt in the emerging world as

well,‖ said Frederic Neumann, co-head of HSBC's Asian economic research. ―New export orders in

the manufacturing sector, for example, contracted in April after expanding throughout the first

quarter of the year. While this could be shrugged off as a temporary correction in the trade cycle,

the softness of service sector PMIs suggests that a broader, more home-grown deceleration is

occurring across emerging markets as well, even if they are still expanding for the most part.‖

Source: BNE

POLITICS

THREE PRESIDENTIAL CANDIDATES NAMED

This year's presidential election has become a three-way race, with the first female presidential

candidate in Mongolia's history.

The Mongolian People's Party was the first to announce a candidate to oppose incumbent president

Tsakhia Elbegdorj. MP B. Bat-Erdene won the nomination after four party votes, with three

consecutive ties with MP O. Enkhtuvshin. Bat-Erdene beat his opponent by nine votes during an MPP

assembly. The presidential hopeful is seen widely as an opponent against illegal mining activity.

Natsag Udval received the Mongolian People's Revolutionary Party nomination on Saturday 11 May,

making her the country's first female candidate for president. She is currently serving her second

appointment as minister of health and is secretary general of her party.

Elbegdorj is seen as the front-runner for the election and is portrayed as the most experienced of

the three with two non-consecutive terms as prime minister. The Mongolian National Democratic

Party and Civil Will-Green Party have opted not to endorse any of their own candidates, instead

throwing their support behind Elbegdorj.

Source: News.mn

ENKHBAYAR CLINCHES UDVAL‟S NOMINATION FOR MPRP

The Mongolian People's Revolutionary Party nominated Health Minister Natsag Udval as its

presidential candidate after she received an endorsement from incarcerated former President

Nambar Enkhbayar.

The MPRP chose Udval over four other candidates. First consensus was for D. Terbishdagava, but he

declined the offer. Enkhbayar, who is the party's leader, made his endorsement of Udval from

prison.

Source: Udriin Sonin

OSCE TO OBSERVE ELECTION

The Organization for Co-operation in Europe (OSCE) Office for Democratic Institutions and Human

Rights (ODIHR) on 13 May opened an election observation mission to monitor the 26 June

presidential election in Mongolia.

ODIHR was invited by the government of Mongolia to observe the presidential election, in line with

the country's commitments as an OSCE participation state. This is the first ODIHR election

observation mission deployed to Mongolia. The mission, which draws 39 experts and observers from

24 countries. will assess the presidential election for compliance with OSCE commitments and other

international standards for democratic elections, as well as with domestic legislation. Observers

will follow campaign activities, the work of the election administration and relevant state bodies,

implementation of the legislative framework and the resolution of election disputes. The mission

will also monitor the media coverage of the campaign.

A statement of preliminary findings and conclusions will be issued the day after the election. A final

report on the observation of the entire electoral process will be published approximately two

months after the completion of the election process.

Source: Organization for Security and Co-operation in Europe

PARLIAMENT HEARS INITIAL READING OF DRAFT SECURITIES LAW

Parliament heard its initial reading of the draft Securities Law on Thursday.

―The third and final reading is expected to be held next Thursday and the bill, which has been

vetted by all stakeholders for I believe two years now, is expected to pass without delay,‖ said

Badral Bontoi Munkdul, head of media group, Cover Mongolia.

Source: Cover Mongolia

MONGOLIA PUBLISHES SEFIL REGULATIONS

The government of Mongolia published the regulations for the Strategic Entities Foreign Investment

Law (SEFIL) and is accepting applications for review.

The Ministry of Economic Development (MED) issued regulations implementing SEFIL, but questions

and uncertainties still remain. The implementing agency, the Foreign Investment Regulation and

Registration Department (FIRRD) of MED, says they are now ready to receive applications. SEFIL was

passed in May 2012, just prior to the June parliamentary elections. More recently, parliament

amended the law to narrow its primary application to investments by foreign state-owned

enterprises, and to reduce the number of cases requiring parliamentary approval.

In SEFIL, it was unclear which specific business activities would be included in each of four strategic

sectors specified in the law: banking and finance, mining, media and communications. The SEFIL

regulations explain that the scope of business activities is covered in the Valued-Added Tax Law,

which in turn follows the current International Standard Industrial Classification of All Economic

Activities (ISIC) adopted by the United Nations.

―Unfortunately, this induces more uncertainty: ISIC has no 'minerals sector,' but instead only lists

mining, extraction and refining,'‖ said Steve Saunders, president of the North American Business

Council of Mongolia. He added that guidance would have to come from FIRRD on a case-by-case

basis when there was uncertainty, ―which by itself accords FIRRD a broad grant of discretionary

authority.‖

The regulations say the ministry must deliver to the full Cabinet its opinion on whether or not to

approve the transaction within 30 days of receipt. The Cabinet, in turn, must take up the opinion

within seven days of receipt and make a decision within 30 days. Once a decision has been reached

by the Cabinet, the Ministry must inform the applicant within five working days.

Source: NAMBC

USD 85 MILLION FROM CHINGGIS BOND DELIVERED FOR RAIL DEVELOPMENT

Economic Development Minister Nyamjav Batbayar signed a contract with the Development Bank of

Mongolia, cementing USD 85 million for the New Railroad project.

The project will be for the construction of 267-kilometers of rail between Tavan Tolgoi and Gashuun

Sukhait. The USD 85 million is the first sum allotted for the rail as well as a 450-megawatt power

plant and 60 kilometers of highway in Ulaanbaatar and the renovation of over 30 intersections. The

head of the governing board of the Development Bank, B. Shinebaatar, also signed the contract.

Source: Zuunii Medee

TWO NEW MEMBERS OF PARLIAMENT FILL LAST VACANT SEATS

D. Zorigt and D. Sumiyabazar took oaths to enter Parliament, filling the final vacancies in

Parliament.

The disputes had kept the 76-seat Parliament incomplete, starting from June 2012 with last year's

parliamentary elections. Zorigt of the Democratic Party (DP) contested election results in favor of

his opponent for Uvurkhangai Aimag, S. Chinzorig, with final results of 23,000 against 16,000. The

matter was brought to an Uvurkhangai court, but it was the General Election Committee that finally

ruled in favor of Zorigt.

D. Sumiyabazar was the winner of a run-off election for the 26th electoral district.

Source: Udriin Sonin, Eurasia Capital

GONCHIGDORJ REPLACES BAYARTSOGT AS DEPUTY SPEAKER

Parliament confirmed R. Gonchigdorj as deputy speaker on Friday, 10 May.

The new deputy speaker received 53.7 percent approval, with 31 MPs confirming his appointment.

The Mongolian People's Party motioned that the decision be delayed until a winner from the Songino

Khairkhan runoff election was declared, but that motion was denied by Speaker Z. Enkhbold.

Gonchigdorj, a former mathematician from the National University of Mongolia, started his political

career in 1990 as a member and chairman of the lower house of Parliament. He was elected into

Parliament from 1992 to 2000 while leading the Social Democrat Party. In 2001 he was named

speaker of Parliament. In 2012 Gonchigdorj was elected for a sixth non-consecutive term in

Parliament.

Source: News.mn

GOVERNMENT MANDATES MAJORITY OWNERSHIP OF DARKHAN OIL REFINERY

The Cabinet of Ministers declared during a Saturday session that the government would own no less

than 51 percent of the now-planned Darkhan oil refinery.

Mining Minister Davaajav Gankhuyag received orders to ensure that government maintains 51

percent or higher interest in the refinery. Japanese banks and financial institutions have already

agreed to provide investment.

Source: Udriin Sonin

EARNINGS REPORT REVEALS INCOMES OF TOP OFFICIALS AND RICHEST MPS

The asset holdings of Mongolia's public figures have been published.

President Tsakhia Elbegdorj disclosed MNT 118.5 million in earnings for 2012, seven times greater

than the year before. The income from family members totaled MNT 6 million. The president owns

three cows, 20 sheep, 25 horses and 15 goats as well as an apartment worth MNT 417.9 million. He

holds shares of Mushaag, Ankh Erdene, ASU, Genco Tour Bureau and Remicom, and the Liberty

Institute. His savings totaled MNT 75.46 million. He declared that he had no cars or private land.

Parliament Speaker Zandaakhu Enkhbold reported earnings of MNT 75 million for 2012. He declared

he owned no private cars or cattle, but did own three apartment and shares of the company Inter.

Prime Minister Norov Altankhuyag reported MNT 302 million in earnings, two apartments, a Lexus

570 and Lexus 470. He declared ownership of four companies, and was the highest earner among

the three heads of state for 2012 with a total income from family of MNT 180 million.

MP and Defense Minister D. Bat-Erdene led Parliament in terms of income for 2012, with reported

earnings of MNT 20 billion. He is one of the richest men in Mongolia, owning three apartments and

250 horses. He holds shares of Ajnai Invest Capital and Mongolyn Alt (MAK). He was followed by MP

B. Choijilsuren with total earnings of MNT 6 billion and J. Enkhbayar who reported an income of

MNT 4.25 billion.

Source: UB Post

JUSTICE MINISTER PRESENTS NEW “WHITE COLLAR” CRIME LEGISLATION

Minister of Justice Khishigdemberel Temuujin submitted to Parliament a new bill that aims to

combat against ―white collar‖ crimes.

The bill is a revision of previous legislation that was taken from specific recommendations given by

international organizations after monitoring the anti-money laundering and white collar crime

defense system in Mongolia.

Also on that day, Temuujin presented an amendment to the agreement for the European Bank for

Reconstruction and Development (EBRD) in Mongolia, when it became the 61st member of the EBRD

by adopting the agreement in July 2000.

Source: Montsame

JAPAN MAKES ANOTHER REQUEST FOR TT PARTICIPATION

Mongolia and Japan made agreements on a number of issues during the sixth Japan-Mongolia Joint

Consultation with Government and the Private Sector for Trade in Investment in Ulaanbaatar.

Over 100 Japanese entrepreneurs arrived in Mongolia for the events, where Mongolia proposed

collaboration in the mineral processing, the development of infrastructure and human resources,

and broader foreign trade. Japan announced its interests in the purchase of high-quality, reasonably

priced coal, involvement in Tavan Tolgoi that would include shareholdings by Japan, and a Japan-

Mongolia Trade Corporation for increased coal exports.

The event also included the signing of three memorandums. Those were signed by the Ministry of

Economic Development and Japan's Ministry of Economy, Trade and Industry; the Ministry of Energy

and Japan's Ministry of Economy, Trade and Industry for the Bilateral Carbon Offset Credit

Mechanism; and the Ministry of Energy and Japan's Hitachi Ltd.

Source: info Mongolia

JAPAN ABDUCTION OFFICIAL LOOKS TO MONGOLIA FOR HELP

Keiji Furuya, Japan's state minister in charge of the abduction dispute with North Korea, is

considering visiting Mongolia as a way to kick start negotiations, a diplomatic source said.

It is the government's hope that Mongolia's diplomatic ties with North Korea can be used to move

the long-stalled issue forward, the source said, adding that the time for such a trip is still being

discussed. With Mongolia having a strong desire to engage in issues concerning North Korea, the

government views Japan's ties with it as another ―important channel‖ outside the six-party

framework, a government official said.

North Korea's abductions of Japanese citizens in the 1970s and 1980s remain an obstacle to the

normalization of diplomatic ties. The North has yet to re-investigate the cases as promised.

Source: Japan Times

SENIOR CHINESE, MONGOLIAN POLITICAL LEADERS LOOK TO BUILD TIES

Visiting Chinese State Councilor Yang Jiechi discussed strengthening cooperation in various fields

with Mongolian Deputy Prime Minister Dendev Terbishdagva on 8 May,

Yang said China-Mongolia cooperation was for mutual benefit, and China never sought unilateral

wins for itself in international cooperation at the expense of its cooperation partner. Both sides

needed to adhere to the policy of promoting the overall development of mineral resources,

infrastructure facilities construction and financial cooperation, and to explore new cooperation in

such fields as deep processing of mineral products, new energy, agriculture and animal husbandry,

he said. China was willing to take an active part in the construction of railroads and highways in

Mongolia, promote interconnection and mutual access between the two countries, and enable

Mongolian products to go global more conveniently and most swiftly via China, Yang said. He said

the two sides needed to strengthen the construction frontier ports on their common border, to

promote the exchange of human resources and transportation of goods between the two countries.

Terbishdagva said vast potential existed for cooperation between Mongolia and China. Mongolia

agreed to the Chinese ideas for bilateral cooperation, and he hoped China would work out an

outline for development of relations as early as possible. He added Mongolia hoped to further

promote convertibility between the two countries‘ currencies and welcome investment from China,

he said.

On China‘s foreign policy, Yang said China was Mongolia‘s worry-free, trustworthy and responsible

strategic partner, and that China always adhered to a foreign policy of building good neighborly

relationships and partnerships with neighboring countries. Terbishdagva said Mongolia lauded

China‘s diplomatic policy with its neighbors, and would like to commit itself to strengthening the

Mongolia-China strategic partnership based on the principles of equality and mutual benefit. On

people exchanges, Yang said China expected more Mongolians to come to China for business, study

and tourism, and invited Mongolia to send a delegation of 100 Mongolian youths to China.

Yang also noted that there was a need for both sides to properly organize celebrations marking the

65th anniversary of diplomatic ties in 2014.

Source: Xinhua

MONGOLIA POISED TO DELIVER FOOD AID TO N. KOREA

The government of Mongolia resolved to deliver food aid to the people of North Korea at a 11 May

Cabinet meeting, reported Japanese agency FNN.

North Korea is conducting a nuclear test, but its civilians are facing severe food shortages, said the

agency. It added that the April-September period is a particularly tough time, during the annual

corn harvest. The country used to receive food aid from China, but strained relations led North

Korea to request assistance from Mongolia, with whom it has had historically friendly relations.

The aid was first discussed during a meeting with North Korean Ambassador Hong Gyu and President

Tsakhia Elbegdorj on 16 April. The government has not yet made an official statement on the issue.

It was also not included on the agenda for that day's meeting of the Cabinet of Ministers.

Source: Info Mongolia

U.S. TO RETURN MORE SMUGGLED DINOSAURS TO MONGOLIA

The United States is to return more than a dozen illegally smuggled dinosaur skeletons to Mongolia.

The announcement follows the handing over to Mongolian officials on 6 May of a 70-million-year-old

Tyrannosaurus bataar at a ceremony in New York. The latest group includes two more

Tyrannosaurus bataars, six Oviraptors and several Gallimimuses. The Mongolian government has

announced its intention to open a dinosaur museum to display the skeletons.

―We simply cannot allow the greed of a few looters and schemers to trump the cultural interests of

an entire nation... We look forward to returning these fossils to their rightful owners—the

government of Mongolia,‖ U.S. customs official James T. Hayes said. A Florida fossils dealer

admitted smuggling the bones of the Tyrannosaurus, which sold at auction for more than USD 1

million. U.S. officials say the dinosaurs were smuggled into the U.S. between 2010 and 2012.

Source: BBC

THIS ALLIANCE IS BROUGHT TO YOU BY THE LETTER 'M'

As a basis for an international alliance, a common first letter might now seem as natural as a

common language, religion, or geography. But Mongolia needs all the friends it can get.

As Mongolia begins to monetize the trillions of dollars in mineral wealth beneath its soil, the stakes

have risen. Purevsuren Lundeg, the foreign policy advisor to the president, was brooding over the

displeasure of being sandwiched between China and Russia when across his desk came a news

release issued by Silk Road Management that announced the creations of something called the M3

Fund: ―the first ever investment fund to be focused on Myanmar, Mongolia, and Mozambique, three

resource rich countries which we term as M3.‖

―We're looking at the similarities, to bring to the forefront what we have in common and coordinate

common goals and interests,‖ Purevsuren said. ―This idea is brand-new. Mongolia is going to show

leadership on this.‖

Mongolia is now initiating trilateral talks to be held this June at the World Economic Forum's East

Asia summit in Naypyidaw. There are also preliminary plans for the presidents of the three

countries to convene for talks in Ulaanbaatar. In March, Purevsuren and Mongolia's deputy minister

of foreign affairs, Dambaa Gankhuyag, made an official visit to Myanmar.

One starting point might be new mining laws, which in December Mongolia published draft revisions

of for itself. The changes would appear to steer Mongolia away from free market practices by

granting the government free stakes in numerous mining developments. This sort of resource

nationalism may not win Mongolia plaudits at Davos, but the M3 nations may believe they are

necessary to avert domination at the hands of stronger nations.

It may seem ironic that a political union dedicated to protecting against dangers of foreign

investment was inspired by a foreign investor. Then again, the BRICS, now a formal political

grouping with regular summit meetings, started out as a cheeky acronym in a Goldman Sachs

report. And Mongolia, eager for solutions to its geopolitical challenges, will take inspiration where

it can find it.

Source: Foreign Policy

UB COURT TO DETERMINE MIAT CASE JURISDICTION

The City of Ulaanbaatar Prosecutor's Office has transferred the MIAT money laundering case to the

Ulaanbaatar Court to determine jurisdiction.

The court will be responsible for determining how the suspects should be tried, according to

citizenship. The suspects are former MIAT Chief Executive Ts. Orkohn and his wife, Vice Director R.

Bat-Erdene, and Director of Mongolian Airlines Group Ch. Khorolsuren.

The case involved a War Insurance account where money from ticket sales was transferred into the

account in case of a state of national emergency. The suspects are being tried for the alleged

divergence of about USD 6.9 million transferred into to an overseas shared account instead of the

insurance account.

Source: News.mn

MONGOLIA ECONOMIC FORUM COMES TO ORKHON

Orkhon Aimag hosted its first Mongolia Economic Forum last week.

―Economic development issues are only talked about in Ulaanbaatar,‖ said Prime Minister Norov

Altankhuyag. ―Every provincial center will be a point for development.‖ He said the government

was planning to introduce analytics centers in every province in addition to a road network that

would connect each provincial capital with Ulaanbaatar to help better coordinate development

throughout the country.

At the forum representatives of government and the private sector discussed revising the district of

Orkhon, suggesting that the entire province be named the City of Erdenet, as it was previously

known. Participants also reviewed the region's economic competitiveness capacity, state and

private cooperation, and industry.

Source: UB Post

GOVERNMENT BANS OUTDOOR ACTIVITIES THAT MAY CAUSE FIRES

The government has banned all outdoor picnics at or around cities until 10 June in an effort to

prevent forest fires.

There have already been four reported fires this spring season because of drought and outdoor

activities. This time of the year is particularly popular for picnics and camping because of

celebrations for high school and university graduations.

The National Emergency Management Agency has advised citizens to take care to prevent fires and

herders not to leave fires unattended. Heavy machinery operators and motorists are also advised to

be aware of any sparks they may be producing.

Source: Undesnii Shuudan

ANNOUNCEMENTS

MONGOLIA RENEWABLE ENERGY FUTURES & GREEN DEVELOPMENT, JUNE 4, UB

Mongolia Renewable Energy Futures & Green Development will be held on 4 June in Ulaanbaatar.

BCM is supporting this conference and its members will receive a 10 percent discount for admission.

Selected to be part of the United Nations Environment Program‘s events to promote the 2013 World

Environment Day, Mongolia Renewable Energy Futures & Green Development will demonstrate to

the world Mongolia‘s commitment to the environment and clean, renewable energy. Keynote

addresses from distinguished local government officials, senior industry executives and noteworthy

speakers from throughout the region will reveal and promote emerging green energy development

opportunities. This one day event on June 4th will take place at Salkhit wind farm, Blue Sky Tower

and the Mongolia State House, with a limited attendance to invited VIP diplomats, government

officials and partners of ORRO.CO.

Contact chris@orro.co for more information and remember to let him know that you are a member

of the Business Council Mongolia to get a special 10% discount.

___________________________________________

COAL PROCESSING & MINING TECHNOLOGY EXPO, 4-5 JUNE, ULAANBAATAR

The Coal Processing & Mining Technology Expo will be held in Ulaanbaatar from 4 to 5 June 2013.

The expo is co-located with the Transportation & Logistics Expo, and because of this co-location you

will be able to meet with a more diverse and broader group of attendees. With many international

as well as local Mongolian companies already signed up to exhibit, you will be a part of what is

becoming the premier event for the mining and transportation industries serving Mongolia.

BCM members will receive a special 10 percent discount. To register and receive your discount

email Saruul at saruul@bcmongolia.org. For more information about the exhibition, contact Glenn

Scott atgscott@uexpos.com or visit the website coalexpomongolia.com.

___________________________________________

COALTRANS MONGOLIA, 19-20 JUNE, ULAANBAATAR

The Coaltrans Mongolia conference will be held at the Blue Sky Tower from 19 to 20 June. BCM

members will receive a 15% discount to attend the event, please use the discount code BCM.

Coaltrans Mongolia will explore the development of coal projects in the country and offer an insight

into what level of influence Mongolia will have over future international coal prices. Join us as we

return to this exciting market for the third year, to have an impact on how this new coal frontier

evolves and cement your position as a leading player in the market.

Speakers will include Batsuuri Yaichil, chief executive officer of Erdenes Tavan Tolgoi LLC, Graeme

Hancock, president and chief representative of Anglo American Development, and Bayanjargal

Byambasaikhan, chairman of the Business Council of Mongolia.

For more information, email coaltrans@euromoneyplc.com.

___________________________________________

FUTURE MONGOLIA, 19-22 JUNE, ULAANBAATAR

The Future Mongolia international trade fair will be held at the Buyant Ukhaa Sport Palace in

Ulaanbaatar, near the Chinggis Khaan International Airport, from 19 to 22 June, 2013.

After the successful premier with nearly 100 exhibitors from 14 nations and some 4,200 visitors, we

cordially invite you to the second Future Mongolia. This international trade fair offers the

opportunity on an enlarged exhibition space to present modern and sustainable solutions and

responses to the present needs of Mongolia and its population.

BCM members will get 5% discount on raw space. Please contact Saruul at saruul@bcmongolia.org

to get a special discount code. For more information, visit Future-Mongolia.com.

___________________________________________

“MM TODAY” on MNB-TV, Friday, 19:00-19:10

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 19:00 to 19:10 tonight. Tune in to watch this program that reports stories from

today‘s BCM NewsWire.

___________________________________________

BCM‟S MINING SUPPLY CHAIN DATABASE

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. The new

version of the database has been totally upgraded as to its content and use of information

technology opportunities.

As of December 31, 2012 suppliers registered on the database totaled 1,405. During 2012, 251 new

supplier entities joined the Database and 236 prior supplier registrants updated their company

profiles. In addition, 22 buyers were also registered and 82 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—FREE!

If you have any questions regarding the database, please contact 317027.

BCM WEBSITES

MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS

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

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

government website Open-Government.mn are regularly updated.

The following presentations were added from "Foreign Investment in Mongolia: Challenges, Risks

and Solutions" conference (in Mongolian) on April 19 at the Kempinski Hotel organized by the

Business Council of Mongolia (BCM) and UB Risk Management Consulting:

• Гадаадын хөрөнгө оруулалтын өнөөгийн байдал, хэтийн төлөв, Төв банкны ерөнхий эдийн

засагч С.Болд, ―МОНГОЛ УЛСДАХ ГАДААДЫН ХӨРӨНГӨ ОРУУЛАЛТ –ЭРСДЭЛ, СОРИЛТ,

ШИЙДВЭРЛЭХ АРГА ЗАМУУД‖сэдэвт эрдэм шинжилгээний бага хурал, 2013 оны 4 дүгээр сарын

19

• Шууд хөрөнгө оруулалтын өнөөгийн байдал, тулгамдсан асуудал, шийдвэрлэх арга зам,

Монголын Бизнесийн зөвлөлийн дэд дарга И.Сэр-Од, ―МОНГОЛ УЛСДАХ ГАДААДЫН ХӨРӨНГӨ

ОРУУЛАЛТ –ЭРСДЭЛ, СОРИЛТ, ШИЙДВЭРЛЭХ АРГА ЗАМУУД‖сэдэвт эрдэм шинжилгээний бага

хурал, 2013 оны 4 дүгээр сарын 19

• Үнэт цаас, хувьцааны зах зээлийн хөрөнгө оруулалт: эрсдэл, сорилт, цаашдын хандлага,

Монгол банкны Ерөнхийлөгчийн зөвлөх, санхүүгийн тогтвортой байдлын зөвлөлийн ажлын

албаны дарга Д. Ган-Очир, ―МОНГОЛ УЛСДАХ ГАДААДЫН ХӨРӨНГӨ ОРУУЛАЛТ –ЭРСДЭЛ,

СОРИЛТ, ШИЙДВЭРЛЭХ АРГА ЗАМУУД‖сэдэвт эрдэм шинжилгээний бага хурал, 2013 оны 4

дүгээр сарын 19

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

„PHOTO GALLERY‟

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

• Nick Cousyn, Chief Operating Officer, BDSec JSC, ―Gobi‘s Resort‖ at the BCM Monthly meeting

April 22, 2013

• Brian White, Editor, The Mongolist – ―Analyzing Mongolian Politics from the "Middle Layer", at the

BCM Monthly meeting Apr 22, 2013

• Ch. Otgochuluu, Head of Strategic Policy and Planning Department, Ministry of Mining, ―Brief

introduction on mining policy‖ at the BCM monthly meeting Apr 22, 2013

• ―The current flow of investment into Mongolia‖, S. Bold, Chief Economist, Central Bank, at the

"Foreign Investment in Mongolia: Challenges, Risks and Solutions" conference on April 19, 2013 at

the Kempinski Hotel.

• ―About regulation on FDI‖, S. Javkhlanbaatar, Foreign Investment Regulations and Registration

Department Head, Ministry of Economic Development of Mongolia, at the "Foreign Investment in

Mongolia: Challenges, Risks and Solutions" conference on April 19, 2013 at the Kempinski Hotel.

• ―Legal issues of regulation of foreign investment‖, B. Amarsanaa, Academic Secretary of National

Legal Institute, at the "Foreign Investment in Mongolia: Challenges, Risks and Solutions" conference

on April 19, 2013 at the Kempinski Hotel.

• ―Investment in stocks and equities in Mongolia: risks, challenges and trends‖, D. Gan-Ochir, Head

of Financial Stability Council, Advisor to President of Central Bank, at the "Foreign Investment in

Mongolia: Challenges, Risks and Solutions" conference on April 19, 2013 at the Kempinski Hotel.

• ―On current state of equities foreign investment‖, D. Achit-Erdene, CEO, MICC, at the "Foreign

Investment in Mongolia: Challenges, Risks and Solutions" conference on April 19, 2013 at the

Kempinski Hotel.

• ―Market Update‖ by Mandal General Insurance LLC

• ―Annual Report 2012‖ by International Monetary Fund

• Ruth Pulaski, Director Marketing & Development, American University of Mongolia – ―American

University of Mongolia: Integrating a Liberal Education Approach to Learning‖ at the BCM monthly

meeting, March 25, 2013

• B. Bayar, Managing Director, ELC LLC – ―Update on Legal Developments Regarding Foreign

Investment‖ at the BCM monthly meeting, March 25, 2013

• Tony Burchill, Australian Consul-General & Trade Commissioner, Austrade – ―The Business of Being

a Third Neighbor‖ at the BCM monthly meeting, March 25, 2013

Other recently added presentations:

• Dr. Brian Fisher, Managing Director, BAEconomics, "Economic Impact of draft Minerals Law" at the

Kempinski Hotel, March 18, 2013, Ulaanbaatar

• Dr. Ch. Khashchuluun, CEO of UBRM Consulting, ―Mongolia and Mining, The policy evolution:

What's the next?‖ at the Kempinski Hotel, March 18, 2013, Ulaanbaatar

• Martin Pow, Partner, Enterprise Risk Services and Learning Leader, Deloitte Onch LLC, ―Black

Swans: Fact or Fiction,‖ A different risk management philosophy at the BCM Risk Management

Working Group meeting, March 14, 2013

The following 3 presentations were added from Coal Mongolia, 21-22 February:

• ―Current state of coal sector of Mongolia and future trends‖ by Minister of Mining D. Gankhuyag at

the Coal Mongolia 2013, Feb 21, SS Convention Center, Ulaanbaatar;

• ―Economic Reform Objectives‖ by Vice Minister, Economic Development, H.E. Mr. O. Chuluunbat

at the Coal Mongolia 2013, Feb 21, SS Convention center, Ulaanbaatar;

• ―Presentation for Coal Mongolia 2013‖, Norihiko Kato, CEO of Khan Bank, Feb 21 at the SS

Convention Center, Ulaanbaatar, Mongolia.

• Presentation by Bold Baatar, CEO of Altan Dornod Mongol, ―Mongolian Mining Investment

Environment‖ at the Mining Industry Open Discussion, February 1, 2013, at Kempinski Khan Palace

Hotel.

Please note the presentations from each of the BCM monthly meetings.

The ―Mongolia Reports‖ section includes the following: ―Polit Barometer April, 2013‖ by Sant Maral

Foundation; ―Regional Economic Outlook: Asia and Pacific‖, April 2013 by International Monetary

Fund; ―Highlights of 2012, Mongolia‖ by European Bank for Reconstruction and Development

(EBRD); the ―Official statement of Oyu Tolgoi LLC in relation to information, data and facts related

to Oyu Tolgoi discussed during open session of the State Great Khural‖, dated 1 February, 2013‖;

―2013 Mongolia Investment Climate Statement‖, by the Economic and Commercial Section of the

U.S. Embassy; ―Mongolia Foreign Labor Force Ratio for 2013‖ by Hogan Lovells International LLP;

―How Mongolia will perform in 2013?‖ by Mandal Asset Management; ―Mongolia Business Owner and

CFO Survey result‖ by BDSec JSC; ―The fiscal regime for mining-a way forward‖ by IMF Fiscal Affairs

Department; ―Taxes for Expatriates in Mongolia‖ by PricewaterhouseCoopers.

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 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 1,136 fans on our Facebook fans page, 1,232 connections on LinkedIn network, and

682 followers 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.

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]

April 30, 2013 *10.4% [source: NSOM]

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

Note: 9.8% y-o-y, Ulaanbaatar city, April 30, 2013

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]

January 25, 2013 12.50% [source: Mongol Bank]

April 8, 2013 11.50% [source: Mongol Bank]

CURRENCY RATES – MAY 16, 2013

Currency Name Currency Rate

US dollar USD 1,438.96

Euro EUR 1,850.21

Japanese yen JPY 14.06

British pound GBP 2,187.94

Hong Kong dollar HKD 185.40

Chinese Yuan CNY 234.02

Russian Ruble RUB 45.75

South Korean won KRW 1.29

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.