February 17 2012

1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
Issue 209 – February 17, 2012
BCM WOULD LIKE TO WISH ALL OF ITS READER'S A HAPPY TSAGAAN SAR WHILE
NEWSWIRE TAKES A SHORT HIATUS FOR THE HOLIDAY. THE NEXT ISSUE WILL
APPEAR 2 MARCH.
NEWS HIGHLIGHTS:
Business
 Junior miners share in Rio‟s glory over Ivanhoe majority purchase;
 Mongolian Growth Group to venture into construction;
 Centerra reports near 300,000 ounces of gold at Boroo;
 SouthGobi Resources opens coal processing plant;
 FLSmidth to construct cement plant for MAK;
 Coal Mongolia 2012 recap;
 Energy Resources head admits to losses due to infrastructure limitations;
 Southgobi Resources executive tells all;
 Domestic producer showcase at „Made in Mongolia‟ exhibition;
 MNCCI declares best investors at Silk Road Awards;
 Boroo Gold recognized as top member of MNMA;
 Oyu Tolgoi scholarship program invests in skilled workforce for tomorrow;
 Cameco outlook sours amid bitter sentiment for uranium;
 Rio Tinto carries the Alcan-can;
 Leighton Holdings digs hole in Middle East;
 Winsway steps into Canadian asset deal.
Economy
 Mongolia challenges Australia‟s reign over coking coal market;
 Mongolia opens wheat trade with China;
 More Government spending, more problems;
 Innovative development, investing in health;
 Unemployment perpetuates despite greater job availability;
 Mongolia as mine-golia pays the price;
 Banks strapped for cash as development projects heat up;
 Lack of equity poses hurdle for financial sector;
 How „Private Equity‟ does it;
 Big opportunities for energy export to China;
 Another chance to go long the Mongolian tugrug?;
 Trafigura Fund strategizes for growth for 2012 commodities market;
 Dire headlines but little cause for alarm for Chinese economy;
 Appreciating China's shift.
Politics
 The disappearing, reappearing HKEx Tavan Tolgoi listing;

2.  Initial E-TT share par value estimated at 60 cents;
 Parliament postpones recess;
 Vacant ministry positions to be filled in March;
 Government workers prepare to declare property holdings and incomes;
 Parliament approves USD 300 million loan from South Korea;
 MPRP and MRP form political union;
 DP commissions working group to investigate mining operations;
 Ger district residents take to energy efficient stoves;
 Parliament directs more funding towards air pollution;
 Government drags its feet with E-TT dealings;
 Short on financing, railway network suffers further delays;
 Road network to link provinces to UB;
 Canadian PM takes a reign check while Mongolia settles government affairs.
*Click on titles above to link to articles.
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BCM MONTHLY MEETING NOTICE
BCM‘s next monthly meeting for members will be Monday, February 27, at 5 pm at the Kempinski
Hotel Khan Palace, 2nd floor, Altai ballroom. Parking will be reserved in front of the hotel for BCM
members.

3. The bilingual meeting will feature the following presentations:
- Call to order/Business Council of Mongolia: Laurenz Melchers, Chairman, BCM
- BCM report: Jim Dwyer, Executive Director, BCM
- B. Naidalaa, Managing Director, Mongolia Economic Forum NGO –“Mongolia Economic Forum 2012”
- Christopher de Gruben, Managing Partner, M.A.D Investment Solutions – “Ulaanbaatar's real
estate market - opportunities and challenges”
- Philip S. Cargill, Consul, Consul Section of US Embassy in Ulaanbaatar - “US Embassy in
Ulaanbaatar – Consul Section services”
- Elisabeth Koppa, Director, Valiant Art & Interior LLC –“Face the challenge & opportunity”
- Dr. Ch. Khashchuluun, Chairman, National Development and Innovation Committee – “Cluster
Development of Mongolia”
A networking reception will be held for all attendees immediately following the business portion of
the meeting in ―Oasis‖ restaurant, 1st floor, Kempinski Hotel.
BUSINESS
JUNIOR MINERS SHARE IN RIO‟S GLORY OVER IVANHOE MAJORITY PURCHASE
Rio Tinto Group's decision to pay CAD 300 million (USD 299.4 million) to become the majority
shareholder in Ivanhoe Mines Ltd. last month was greeted by investors worldwide with open arms,
but junior minors in Mongolia are also welcoming the Anglo-Australian mining giant‘s latest move as
they expect more global attention to their projects as a result.
By increasing its shareholding in Vancouver-based Ivanhoe Mines to 51 percent, Rio Tinto will
effectively take ownership of the Canadian group's existing investment, including its crown jewel,
the Oyu Tolgoi copper and gold mine. The drama behind Oyu Tolgoi's change in ownership has also
placed Mongolia under the radar of investors across the globe, which is a ―great thing, there's no
doubt about that,‖ according to Igor Kovarsky, chief executive officer of Vancouver-based Kincora
Copper Ltd.
Kovarsky pointed out that the more interest and confidence that investors have in Oyu Tolgoi and
Mongolian investments in general, the more the local government will commit to building up
supporting infrastructure in addition to attracting more foreign capital. Kincora Copper's own
Bronze Fox project is 140 kilometers northeast of Oyu Tolgoi, and the company hopes to have
detailed results of feasibility studies by the end of the year.
Source: BusinessInsider.com
MONGOLIAN GROWTH GROUP TO VENTURE INTO CONSTRUCTION
Mongolian Growth Group (MGG) has decided to focus on larger property assets, having found
disproportionate revenue to time and effort needed for small apartment rentals to expatriates and
nationals in Ulaanbaatar, while indicating an interest in building properties. The company head said
that he is comfortable that the 22-person property team is capable enough to accept more
responsibility while he focuses on larger issues.
―A small residential unit takes just as much management time to administer as an entire floor of an
office building—while providing only a fraction of the revenue,‖ said Harris Kupperman, chief
executive officer and chairman of MGG.
The company found that although expatriates typically pay more for their rentals, since they are
likely to need furnishings, they need too much attention and are likely to leave Mongolia once the
harsh winter comes. The company said this aspect of the business requires too much time and
resources, thus it might be better suited to sell its down-town apartments instead. He added that
larger assets would be easier for lenders to identify to use as collateral as well.
The company plans to begin venturing into building properties, intending to start small and
minimize risks as the firm learns more about the construction industry. For 2012 the company plans

4. to include additions to existing properties and explore the construction of its first ―de novo‖
structure.
Source: Mongolia Growth Group Ltd.
CENTERRA REPORTS NEAR 300,000 OUNCES OF GOLD AT BOROO
Centerra Gold Inc. has reported a total reserve of 298,000 ounces of gold at its Boroo mine. The
Boroo operation could potentially feed the mill for over two years, utilizing existing low-grade
stockpiles.
―2011 was another successful exploration year for Centerra,‖ said Steve Lang, president and chief
executive officer of Centerra Gold.
Centerra Gold is a Canadian-based gold mining and exploration company engaged in the operation,
exploration, development and acquisition of gold properties in Asia, the former Soviet Union and
other emerging markets worldwide. In Mongolia it has interests at the Boroo and Gatsuurt mines. At
the Gatsuurt project, proven and probable reserves remain unchanged at 1.5 million ounces of
contained gold.
Source: Centerra Gold Inc.
SOUTHGOBI RESOURCES OPENS COAL PROCESSING PLANT
Operations have begun at SouthGobi Resources Ltd.'s dry coal-handling facility at the Ovoot Tolgoi
coal mine.
The plant is to process 9 million tons of run-of-mine coal per year. The facility includes a 300-ton-
capacity dump hopper, which will receive processed coal to feed a rotary breaker and screens that
will size coal to a maximum of 50 millimeters and reject oversize ash.
―The new dry coal-handling facility will improve the quality of our coal and enable us to achieve
better consistency,‖ said Alexander Molyneux, the President and Chief Executive Officer. ―It
represents the first step towards more integrated processing at Ovoot Tolgoi, which will create
more value than mining and selling raw coal.‖
The plant will be upgraded in 2012 to include dry air separation, as well as covered load-out
conveyors with fan stackers to transfer processed coals to stockpiles that will enable blending.
Source: Marketwire
FLSMIDTH TO CONSTRUCT CEMENT PLANT FOR MAK
Danish engineering group FLSmidth & Co. will supply a cement plant to Mongolia for about EUR 86
million (USD 114 million).
FLSmidth will deliver all the equipment, engineering and commissioning for the cement plant,
which will have a capacity of 3,000 tons per day, the company said.
―The order will contribute beneficially to FLSmidth's earnings until 2014,‖ FLSmidth said in a
statement.
The Greenfield plant for the Mongolyn Alt Group (MAK) will be located about 300 kilometers from
the Mongolian capital.
Source: Reuters
COAL MONGOLIA 2012 RECAP
Infrastructure was the word on everyone's tongue at
the Coal Mongolia 2012 event last week in
Ulaanbaatar. This year saw 1,703 participants from
250 companies from 25 countries at the annual
event held to promote investment into Mongolia's
coal sector, and encourage discussion and
cooperation within the sector community.
Highlights from government speakers include talks
by Ch. Khashchuluun, chairman of the National

5. Development and Innovation Committee, discussing key indicators for the macro economy; and B.
Enkhbaatar, the World Bank's director of mining infrastructure investment, who discussed the key
challenges facing the development of Mongolia's rail system, which included integrating regional
infrastructure policy (the hitch is energy and rail policies are separate), negotiating infrastructural
development with the private sector, expanding border capacity, and strengthening the currently
vague legal environment with mechanisms for the enforcement of policies.
Enkhbaatar explained that a limitation of the rails that would not allow for heavy loads of coal is
another challenge for the outdated Soviet-era rail system. China's cooled interest in developing the
Erlian border port, which resides on Chinese soil, has caused further delays.
From business the most anticipated speakers were from General Electric Co. (GE), Trade and
Development Bank of Mongolia (TDB), and Erdenes-Tavan Tolgoi (E-TT). TDB president Randolph
Koppa had the biggest surprise, having announced the 4.8 percent investment in his company by
Goldman Sachs Group Inc.
For B. Enebish, the head of E-TT, and Ts. Tumentsogt, GE's chief representative, the conversation
turned back to infrastructure. In addition to GE's partnership with Newcom Group to develop the
Salkhit wind farm, it also would like to be involved in the development of Mongolia's rail
infrastructure. Enebish said the lack of infrastructure would likely affect the float of shares. The
limited capacity at the border point also has the company settling with transporting only about half
of the one million tons of coal extracted thus far. For 2012 the company plans to extract up to 4
million tons.
Source: BCM
ENERGY RESOURCES HEAD ADMITS TO LOSSES DUE TO INFRASTRUCTURAL LIMITATIONS
The head of Energy Resources LLC, G. Battsengel warned that Mongolia's present infrastructure is
causing Mongolia's mining industry to lag behind its competitors during his presentation at the Coal
Mongolia 2012 forum. He said while Mongolia continues to hesitate on building up its railway
infrastructure, Russia is already putting rails in place to sell its own coal.
―In order to sell Mongolian coal, we have to discuss the problem with Russia and China to cross their
country on the government level,‖ said Battsengel, Energy Resource's executive director.
The executive said a main objective for the firm was to begin selling processed coal for better
profits. The company has exported 20,000 tons of coal to Japan through Russia at USD 280 per ton,
USD 170 of which is lost in transportation costs. Comparatively, coal sold to China is priced at USD
120 a ton with only USD 10 a ton lost from transport.
Battsengel added that the government has issued documents for the construction of railways, but
implementation has had problems.
―However,‖ said Battsengel, ―we understand the complexity of the problem. It is a really time
consuming job.‖
Source: Undesnii Shuudan
SOUTHGOBI RESOURCES EXECUTIVE TELLS ALL
SouthGobi Resource Ltd.'s chief executive officer Alex Molyneux spoke in depth about his company,
discussing how he plans to raise profits, possible good news about the potential of the Soumber
mine, and why he thinks SouthGobi Resource is undervalued.
The Canadian firm, which mines some 45 kilometers away from the Chinese border, is a coking coal
exporter that plans to be exporting 10 million tons of coking coal before the end of 2015. With a
supply of 535 million tons of coals resources, its mine has a projected lifespan of at least 25 years.
Molyneux said 2011 was an important year for his firm because it was able to reach its target of 4
million tons in sales and made headway into expanding the capacity at the Ceke border for greater
export. While seaborne coking coal demand fell this year, the demand, and prices, for dry-land-
based coking coal remained steady. Although operations are smooth at both the Soumber and
Ovoot Tolgoi mines, said Molyneux, he hinted that there might be a big surprise in store for
Soumber in particular.
―It's possible that Soumber will be a bigger mine that we expected,‖ said Molyneux. To give an idea

6. how much larger, he added, ―It's hard to say, but we're excited about what we're finding. ―As we
prove up additional tonnage at Soumber, we can either extend the projected mine life or increase
annual production.‖ He said he thought extending the life of Ovoot might be possible too.
Making the most out of the company's product being a major priority, the chief executive explained
the different value-adding processes the company plans to introduce to bring an addition USD 7.50
per million tons. Those would be on-site dry crushing and screening to begin by the end of the
month, and third-party wet washing in China starting in March. He also explained how new rail spurs
would reduce the extent the customers of his company rely on trucks and reduce trans-loading of
coal back and forth from the train to the trucks for better efficiency. These infrastructural aids
could bring USD 25 to USD 30 in savings per million tons, he said.
―There's a finite number of well-positioned, established mining companies that are located in highly
desired geographies and are selling highly sought after commodities,‖ said Molyneux. ―We're one of
them.‖
Read more…
Confident in the value of his company, Molyneux compared SouthGobi Resources to Macarthur Ltd.,
which was bought up by Peabody Coal Corp., and Riversdale Mining Ltd., acquired by Rio Tinto
Group. He said all three companies have had similar sales performance and expectations by
analysts. Given the whirlwind of merger and acquisition activity in the mining sector, he said he
thought it odd that there has been no ―discernible takeout premium‖ in SouthGobi Resource‘s share
value.
Source: Seeking Alpha
DOMESTIC PRODUCER SHOWCASE AT „MADE IN MONGOLIA‟ EXHIBITION
The ‗Made in Mongolia‘ exhibition at the Misheel Expo Center had over 180 individuals and private
companies with around 800 product brands taking part in the exhibition.
At the event were 41 companies from the food industry, 21 for wool, 28 for skin and hides. There
were also vendors selling jewelry and medicinal products. Some retailers had reduced their prices
by as much as 30 percent for the event.
―The ultimate goal of this exhibition is to show people the current progress of Mongolia's domestic
producers, and develop the domestic market by providing more information about domestic
production,‖ said Ts. Nyam-Osor, director of the Small-and Medium-Sized Enterprises (SME)
organization.
He added that an additional benefit was to provide people with discounted products just before
Tsagaan Sar, Mongolia's lunar New Year celebration.
Meeting domestic demand before exporting their products was a major priority, said Nyam-Osor. He
said his organization has spent at least USD 20 million on imports for dry milk and vegetable oil.
Source: UB Post
MNCCI DECLARES BEST INVESTORS AT SILK ROAD AWARDS
At the Silk Road Awards Mongolia recognized the efforts by foreign organizations, programs,
projects, and foreign-invested companies working for development here. Held once every two
years, the event is hosted by the Mongolian National Chamber of Commerce and Industry (MNCCI).
Highlights include the selection of Mongol Altan Tos Co., Ltd. as ―Best Investor and Introducer of
Advanced Technology in Mongolia,‖ and Sankou Solar Mongolia Co., Ltd. as ―Best Green Investor.‖
Mobicom took ―Best Socially Responsible Investor‖ and Oyu Tolgoi LLC took ―Best Investor on
Creating Employment.‖
Source: MNCCI
BOROO GOLD RECOGNIZED AS TOP MEMBER OF MNMA
Boroo Gold LLC was awarded as "Best Member of the Mongolian Mining Association for 2011" by the
Mongolian National Mining Association (MNMA).
The company has attributed its popularity within the mining sector to the implementation of its
standards in the general mining community.

7. "The Boroo employees are the people who most succeed in habituating safe operations among its
permanent and contractor staff and operating without the loss of human life since founded," said
the company.
In its code of ethics the company names objectives such as transparency, multi-stakeholder
participation, environmental and human safety, and benefits to Mongolia. With the award, the
MNMA recognizes Boroo Gold's efforts to develop safe and responsible mining in Mongolia as a leader
in the industry.
Source: Udriin Sonin
OYU TOLGOI SCHOLARSHIP PROGRAM INVESTS IN SKILLED WORKFORCE FOR TOMORROW
Oyu Tolgoi LLC has agreed to and signed a memorandum of understanding with the Ministry of
Education, Culture and Science to develop a training program as a part of its larger effort to
support education.
The company responsible for one of the world's largest gold and copper mines has launched a
student scholarship program to support education in mining engineering, mine operations, and
environmental studies. The company will sponsor the education of 120 students attending Mongolian
universities and 30 students at international universities. Additionally, the company is offering
internship opportunities for students majoring in the aforementioned studies.
The program has selected E. Enkhtaivan, a third year student from Otgon Tenger University, as the
best performing student from its staff of interns at an annual award ceremony by the Mongolian
Youth Federation honoring the achievements of students. Each year students are selected from a
pool of the nation's 70 best performing students at various universities. Students are selected based
on the criteria of a minimum 95 percent grade point average for three consecutive quarters and
having performed outstanding work in the fields of economics, social science, medical science,
linguistics, and technology, in addition to active participation in the community.
"Oyu Tolgoi's objective is to select interns and scholarship recipients from students who are key
pillars to the future development of Mongolia based on academic achievement, social participation,
initiative, and future perspective to contribute to the Mongolian mining sector in the long term; and
boost enthusiasm and the future confidence of the students," said Cameron McRae, president and
chief executive officer of Oyu Tolgoi.
Source: Montsame
CAMECO OUTLOOK SOURS AMID BITTER SENTIMENT FOR URANIUM
Uranium producer Cameco forecast lower sales and highlighted doubts about the takeup of nuclear
power in its stronger than expected quarterly results, and its shares edged lower on Friday, in line
with the overall market. Cameco owns a subsidiary exploration company in Mongolia‘s emerging
uranium market.
On the positive side, the Saskatoon, Saskatchewan-based uranium producer reported a 29 percent
increase in quarterly earnings and a 45 percent boost in revenues, late on Thursday. Quarterly sales
volumes hit their highest level since the fourth quarter of 2006, with full-year sales heavily weighed
to the final quarter. But Cameco, the worlds‘ number one publicly-listed uranium producer, also
lowered its 2012 uranium production outlook by 3 percent to 21.7 million pounds and said delays
and cancellations after last year‘s Fukushima nuclear disaster could hit prices.
Germany, which represents about 5 percent of the global market for uranium, plans to phase out its
reactors by 2022. Japan shut down most of its reactors for testing after the March 2011 earthquake
and tsunami that crippled the Fukushima Daiichi power plant, and is expected to take its remaining
three reactors offline for maintenance in the next few months.
In the long term, Cameco sees uranium demand gaining strength as construction of new reactors in
China outweighs the decommissioning of plants in Japan and Germany. China has some 27 reactors
under construction and plans to boost its nuclear output to 80 gigawatts from 11 gigawatts within a
decade. Cameco also plans to boost uranium production to 40 million pounds a year by 2018.
Source: Reuters

8. RIO TINTO CARRIES THE ALCAN-CAN
Rio Tinto, an indirect stakeholder in the Oyu Tolgoi copper-gold project, has been forced to write
off another USD 8.9 billion from its Canadian aluminum business Alcan, bringing total write downs
to half of its initial USD 38 billion investment in 2007. This turn of events is a timely reminder of
how badly wrong-mega deals can go in the mining sector.
Rio has offered investors an olive branch with a 34 percent dividend hike, despite a 59 percent fall
in full-year earnings. But it's not planning any more share buybacks beyond the current program due
to end in March. Chief executive Tom Albanese said the world is now a more ―somber, sober place‖
than when he sanctioned the Alcan deal. Rio's aluminum business has suffered from persistent
industry over capacity, driving down prices.
Even in iron ore, rising expenses are biting into earnings, rapidly reducing any benefit from higher
commodity prices—a trend other miners are suffering too. Despite this, Rio is confident enough in
emerging market demand for commodities to raise the dividend. But since Albanese took over at Rio
Tinto in May 2007, the company has provided investors with a 64 percent total return, compared
with BHP's 113.5 percent, highlighting their divergent performance.
Looking ahead, Albanese noted that growth in demand for aluminum remained strong, adding,
however, that the industry had been running surpluses for the past five years. He said that Rio was
working diligently on improving the performance of its aluminum business, and completed a
strategic review during 2011. Despite the uncertainty in the global economic markets, Rio would
continue with its investment in its high reward project portfolio, while also tackling cost issues. He
added that growth in excess of 8 percent in 2012 in China continued to underline the company‘s
expectations of a ―soft landing‖ the Chinese market.
Source: Wall Street Journal, Mining Weekly
LEIGHTON HOLDINGS DIGS HOLE IN MIDDLE EAST
Leighton Holdings Ltd. has lost AUD 154 million in the six months to 31 December. The construction
company, which has a major presence in Mongolia through the mining services firm Leighton Asia,
said it expects to collect only about half of what it has owed in outstanding contracts in the Middle
East over the next two years. Over the course of the past year, it has written down the value of its
Al Habtoor Leighton Group joint venture by 55 percent, or AUD 466 million. Worse still, Leighton
Holdings has disclosed a potential violation of Australian law over work-related payments in Iraq.
Despite these matters, Leighton Holdings' management is pouring more cash—and effort—into the
region. The firm, which has a market cap of about AUD 7.7 billion, said this week it extended an
additional USD 127 million of funding to the joint venture. The total investment will reportedly
reach AUD 1.25 billion. Management also said new work in the Middle East is one of its top priorities
for 2012. However complications due to the so-called "Arab Spring" call for democracy in the region
and a slow down for construction in the region will make that a difficult pledge to keep.
Leighton Holdings must find more fertile ground closer to home. Australia's mining boom is fueling
construction activity and the company is well-placed to reap the benefits. Leighton Holdings said
the total value of construction in Australia by the private sector could be almost USD 800 billion
between 2012 and 2016. Beyond that, projects in Mongolia, as well as Hong Kong, and India offer
promise too.
Source: Wall Street Journal
WINSWAY STEPS INTO CANADIAN ASSET DEAL
Winsway Coking Coal Holdings Limited has entered into a deal with Marunbeni Corporation to
acquire all of the shares of Grande Cache Coal Corporation.
The joint venture, 60 percent owned by Winsway and 40 percent by Marubeni, has received
approval from the Ministry of Industry in Canada for the arrangement under the Investment Canada
Act. The official said he was satisfied that the deal would benefit Canada.
Winsway was the largest offtaker of Mongolia coal in 2010. Winsway has procured approximately
some 11.5 million tons of coal between 2008 and 2010. It has cooperated with Mongolia-based
suppliers since 2006.

9. Source: Winsway Coking Coal Holdings Ltd.
ECONOMY
MONGOLIA CHALLENGES AUSTRALIA‟S REIGN OVER COKING COAL MARKET
Despite a decline in coking coal prices spurred by a market surplus, a variety of new projects and
market expansions will continue to swell global supply for the foreseeable future. Australia and
China are current heavy weights to the supply and demand game, but Mongolia may arrive as a third
contender (for supply) once the Tavan Tolgoi coal projects ramp up to sell to China and beyond.
Fortunately for coking coal producers, China returned to the market last year. The pace of imports
was somewhat slow in the first half but fairly strong in the second half. Yet an increasing portion of
China‘s imports—as much as half—is now coming from producers in neighboring Mongolia. Although
many industry observers are assuming that most or all of Mongolia‘s coking coal production will find
its way to China, Gerard McCloskey of McCloskey Group thinks differently.
―I have already seen one cargo [of Mongolian coking coal] go all the way up into Russia,‖ he said,
adding that Japanese interests are also getting involved in the land-locked country. ―I think we will
see Mongolian coal reach the sea… I think it will go to more markets.‖
China remains key to iron-ore demand, in part because demand in other markets is weak, especially
in Europe. If all but one European steelmaker (Arcelor Mittal) closed down, there would still be 14
percent overcapacity in the regional market, McCloskey said.
Despite the looming oversupply picture, many new players are waiting in the wings. Projects are in
various stages of development in regions as varied as Mongolia, Indonesia, Mozambique, Russia, and
Canada. The volumes these projects are likely to produce are expected to be relatively modest, and
much of it will not be a factor until the next decade, McCloskey said.
Australia is likely to continue to dominate the industry, however. McCloskey indicated that while
major producers are not likely to launch new coking coal operations if they think it would disrupt
the market, a number of projects are already in progress.
Source: ResourceInvestor.com
MONGOLIA OPENS WHEAT TRADE WITH CHINA
Mongolia has agreed to export 100,000 tons of wheat to China this year, said G. Gantulga, the
Minister of Finance.
Mongolia harvested some 430,000 tons of wheat this year, with 240,000 stored in reserves for a fund
to support agriculture, said Gantulga. With current prices stable, the government could declare a
surplus of wheat to sell abroad.
The minister said the agreement to sell 100,000 tons of wheat to China would aid the agriculture
sector as well as begin an effort to help feed the world. The minister admitted that the return for
the government would be very low, as the country buys wheat wholesale for MNT 350,000 a ton
from farmers to later sell abroad at MNT 400,000.
Source: Undesnii Shuudan
MORE GOVERNMENT SPENDING, MORE PROBLEMS
Although government may be aiming to reduce poverty with its furious spending habits, it may
actually be exacerbating the problem, said Steven Barnett, the International Monetary Fund‘s
(IMF‘s) Assistant Director for Asia and the Pacific.
Government spending increased 60 percent last year, resulting in more money in the hands of
people and more spending, said Barnett. Foreign companies benefit most, as most people are
buying imported products. For Mongolia, it only means higher inflation, he explained.
―The reason is when there‘s a 60 percent increase in spending, there cannot be a 60 percent
increase in domestic production, and you can‘t have 60 percent more restaurants or cafes. That
demand has to fall on some combination of people importing goods from abroad and higher prices
at home.

10. Barnett pointed to government handouts as a prime instigator for inflation. He said the best thing
for a government to do in many cases is to separate economics from politics, specifically monetary
policy. Opposition from the IMF allowed the 2012 budget to pass with reduced yet more
expenditures than the IMF would have liked. However, Barnett did mention decisions by
government to be happy about. He said the Fiscal Stability Law, a law to cut state spending
proportional to government revenue to take effect in 2013, is a huge change in attitude towards
state spending.
Currently the government is borrowing money from future mining profits to pay for cash handouts,
and this law would be the best defense against this from continuing. The economic debt crisis in
Europe and economic instability in the United States threatens to result in price falls for mining
commodities if growth slows, so to borrow from profits not yet received on current market trends is
risky.
Source: UB Post
INNOVATIVE DEVELOPMENT, INVESTING IN HEALTH
As Mongolia sits on the verge of a resource-related boom, government officials are hoping the
Human Development Fund (HDF) can channel revenues from mining projects to health and
education. D. Zorigt, the minister of minerals resources and a leader the HDF working group, told
local media in January that the fund is for building wealth for future generations and to bring
vulnerable social groups such as students and herders under the government's umbrellas of health
insurance.
―Mining and infrastructure are important,‖ said Zorigt. ―But more important is the development of
health, education, social insurance and a place to live. The money in the fund will be invested in
these.‖
Parliament endorsed the National Development Strategy in 2008 aiming to raise the country's human
development status to that of developed countries by 2020. Initial capital for the fund was drawn
from the Oyu Tolgoi copper and gold mine project, with the USD 2 billion Tavan Tolgoi coal project
to be an additional source.
The HDF will allocate MNT 128,000 to every citizen, with an additional MNT 1 million to go to senior
men and women, as well as the disabled. The government has directed MNT 9.3 billion from the
fund toward attracting new members to the country's health insurance scheme. As the world's least
densely populated country, Mongolia faces unique challenges for health care provision. As of 2009
there were 2.57 physicians per 1,000 heads in urban areas, with 2.75 physicians per 1,000 heads in
rural areas. The country then had 16 specialized hospitals, four regional diagnostic and treatment
centers, 17 provincial general hospitals, 12 ger district general hospitals and six rural general
hospitals.
While Mongolia's HDF has the potential to vastly contribute to the nation's well being through
improving health services, exactly where funds are to be allocated will continue to be a divisive
political issue, with implications to parliamentary elections this year, as well as presidential
elections in the next. Improving the long-term capacity of the country's health sector, however,
could prove a prudent way to invest the mining sector's forthcoming wealth back into the country.
Source: Oxford Business Group
UNEMPLOYMENT PERPETUATES DESPITE GREATER JOB AVAILABILITY
A study by the Central Labor Exchange has reported 10,000 vacant positions in the country and
projected growth of 7.4 percent, or 47,000 new jobs, by June. Despite these projections, a lack of
skills and qualifications among the country's workforce shows little reason for optimism for the
unemployed.
Commissioned by the Ministry of Social Welfare and Labor, the agency has conducted a study to
measure employment between 2011 and 2912. However, these projections may be more related to
positions without any currently qualified applicants. Efforts to find qualified people for the
vacancies related in the studies usually brings few results, said the report. Difficulties usually stem
from bad attitudes toward work, poor qualification, an inability to manage large workloads,

11. inconsistent work habits, poor responsibility and discipline demonstrated by workers, insufficient
abilities in foreign languages, inexperience or lack of skill with specialized equipment, and workers
unwilling to accept the salaries offered, said employers.
Data regarding unemployment has shown varying levels of education. It found 38.2 percent of
unemployed have only a secondary education, and 22.9 percent without even a secondary
education, and the lowest portion at the highest bracket with higher education. The study
attributes unemployment among educated people as related to a lack of communication skills,
computer literacy, skills in foreign languages, and an ability to work in teams.
Currently 47,068 Mongolian citizens are actively looking for employment, while another 10,640 have
been registered at the Central Labor Exchange. There are about 50 public and private organization
cooperating with the agency, of which more than 20 are engaged with labor mediation.
Source: Udriin Sonin
MONGOLIA AS MINE-GOLIA PAYS THE PRICE
There are two dueling worldviews concerning the effect the mining industry is having on Mongolia.
While environmental groups anticipate dire repercussions, proponents of the mining boom contend
it will result in great wealth for the country.
The potential environmental troubles on the open steppes, the site of much of the mining activity,
are mirrored by the dwindling of the country's forests, reported the World Bank. Ts. Munkhbayar, a
herder and environmental activist, and his environmental organization has sued the government for
failing to protect watersheds and forests as required by a 2009 law. Last fall the highest court ruled
that the government must enforce its environmental laws.
Yet the chief executive of E-TT has emphasized that the company will pass out shares to all
Mongolians when its initial public offering (IPO) is made this spring. The economic victories and
machinations around the country's mining bounty are reflected a bit more straightforwardly in daily
reports from the Mongolian Metal Exchange or the Business Council of Mongolia. The latter‘s Web
page has been buzzing with the news of the final steps in consolidation of control over the Oyu
Tolgoi mine and its gold and copper deposits by Rio Tinto Group.
At least one group, the Zorig Foundation, has tried to promote a future that is not a wasteland
environmentally or economically through its work with the Oyu Tolgoi LLC scholarship program.
While offering scholarships abroad for studies concerning the mining industry, it also aims to
identify and curb government corruption, which has been exacerbated by the mineral boom.
Source: New York Times
BANKS STRAPPED FOR CASH AS DEVELOPMENT PROJECTS HEAT UP
While the rest of the world talks about monetary easing, in Mongolia there is a credit crunch. Gross
domestic product (GDP) growth in excess of 15 percent last year has sparked fears of overheating
and inflation concerns that have prompted the government to tighten monetary policy. As a result
banks have faced a liquidity crunch since last autumn and commercial loans are hard to come by in
Ulaanbaatar these days.
Raised capital adequacy ratios and interest rates have come in a bid to cool inflation, which has
become a hot political issue with parliamentary elections coming up this summer.
―The banks are out of money now,‖ said Peter Morrow, former chief executive of Khan Bank.
―Liquidity was very high a year ago, but it's been burned up because there is such high growth and
high lending.‖
Bankers and analysts in Ulaanbaatar believe that in the current climate Mongolian banks will
increasingly look overseas for capital. Right now the banks have foreign liabilities of around 8
percent, but that is expected to increase as banks go abroad to issue bonds.
―Banking assets to GDP are around 87 percent, so one might get the impression that banks are well
capitalized,‖ said Sardor Koshnazarov, an economist at Eurasia Capital.
He said that the numerous mining projects, infrastructural developments and urbanization programs
taking off will require substantial investment, which would not be available from the banking
sector. However some foreign banks such as Goldman Sachs Group Inc., who recently purchased a

12. 4.8 percent stake in Trade and Development Bank of Mongolia (TDB), have already begun testing
the market.
Source: Financial Times
LACK OF EQUITY POSES HURDLE FOR FINANCIAL SECTOR
Following rapid economic growth and numerous proposals for development, Mongolia's banking
sector is rapidly attracting international investors. Although the financial sector is considered one
of the most geared to Mongolia's rapid economic growth, fueled by the development of its world
class mineral resources, banks will need greater capital if they will be able to keep up.
Investors from Japan, Russia, the United States, and the United Arab Emirates have already arrived,
representing about a third of Mongolia's banking sector. The recent 4.8 interest investment in Trade
and Development Bank of Mongolia (TDB) by Goldman Sachs Group Inc. will provide a needed
capital injection of up to USD 30 million in liquidity to one of Mongolia's top three banks during this
period of economic growth and high loan demand.
The Mongolian banking sector expanded at a record rate of 50.1 percent in 2011, with total net
earnings exceeding USD 130 million. Assets surged to USD 6.7 billion and the bank assets to gross
domestic production (GDP) ratio reached the new high of 86.5 percent. Current accounts and
deposits grew to USD 4.1 billion thanks to increasing disposable income and corporate profits as
well. Expanding businesses fueled lending growth with total loans outstanding increasing 73.4
percent to USD 4 billion. The source predicts growth in the banking sector to expand by about 30
percent year-on-year (y-o-y) in 2012. It said banks will need sources to long-term capital on
international markets to compensate for their current shortcomings. Domestic banks still do not
have the capital needed to finance the upcoming large-scale mining, infrastructure and housing
projects. XacBank plans to issues USD 150 million worth of Euro-medium term notes in Singapore in
2012, while Khan Bank and Golomt Bank may also turn to international markets later this year.
Source: Eurasia Capital
HOW „PRIVATE EQUITY‟ DOES IT
With banks currently unable to meet growing demand to finance a number of large resource
projects, Mongolia is ripe for ‗Private Equity‘ (PE). Looking at how firms are making due now may
provide some insight into how companies could enact the same strategies in Mongolia with two
resources known to exist here: shale and oil.
A deal earlier this month for a Gulf of Mexico oil producer offers a revealing glimpse into how PE
firms make money in the oil patch. SandRidge Energy Inc. agreed this month to pay nearly USD 1.28
billion in cash and stock for Dynamic Offshore Resources LLC (DOR), a private-equity-backed oil
producer. But before that deal had been struck, Dynamic hand been laying groundwork for an initial
public stock offering.
For this sort of scheme, PE firms often hire advisers for stock offering preparations and others to
look for a buyer. The goal for Riverstone Holdings LLC, the founding firm of DOR, was to combine
castoff Gulf of Mexico fields from which additional output could be squeezed. Now investors are
coming away with collective profits exceeding USD 880 million.
Advances in drilling techniques have made it easier to extract oil and natural gas from shale,
creating an opening for private-equity firms to place big bets. Firms can employ large sums of
capital for quick work to create large returns, but shale drilling is relatively new, which adds a bit
of uncertainty to the equation regarding the lifespan of wells. While those just entering now are
paying more for their late arrival to the game in the United States, exploitation of shale in Mongolia
is still largely untested and uncharted.
Volatile commodity prices make it hard to use debt in these investments, something private-equity
firms use to their advantage. The case of Laerdo Petroleum Holdings Inc. where it raised about USD
300 million in an initial public offering (IPO) to see shares rise 48 percent is an example of how the
gamble can pay off. There, Warburg Pincus LLC, the holding company behind the deal, took its
stake form USD 1.7 billion to USD 2.6 billion.
Source: Wall Street Journal

13. BIG OPPORTUNITIES FOR ENERGY EXPORT TO CHINA
Although Mongolia has taken steps to move towards alternative energy sources, coal-fired power
plants still provide the majority of power generation in Mongolia. The seven plants in Mongolia have
a total power capacity of 580 mega watts. The development of new coal-fired power plants should
still be a priority for the country. In addition to coking coal, Mongolia has a large supply of thermal
coal. Its demand for power necessitates that Mongolia develop new thermal coal power plants,
while its proximity to China, coupled with Chinese demand, also creates an opportunity for
Mongolia to export electricity rather than raw materials.
Since moving from a communist state to a democracy in the early 1990s, Mongolia has been moving
toward fully embracing a free-market economy. The Mongolian government facilitates a pro-
business environment through secure business practices, low taxes, and encouragement of foreign
direct investment (FDI) and trade with few limitations for the flow of capital across the border.
According to the Coal Industry Association of Mongolia, almost 100 percent of Mongolian coal and
copper exports went to China in 2009, 30.38 million tons of which was coking coal. Imports from
Mongolia to China increased from 30 percent to 45 percent in 2010, passing Australia as its top
coking coal supplier. Mongolia's competitive pricing, delays in production due to severe flooding in
Australia, and proximity to China all account for this change.
Due to high and imbalanced electricity demand, mainland China imports vast amounts of electricity
and sources of power from its neighbors. According to China Customs, electricity import reached
7.503 million kilowatts per hour between the months of January and November in 2011. With
enough electricity in a new coal-fired power plant, Mongolia would be in a position to export
electricity to China via existing Ultra High Voltage lines in its Eastern Energy System, which is
connected with the city Erlian, the largest China-Mongolia port.
Source: Mining.com
ANOTHER CHANCE TO GO LONG THE MONGOLIAN TUGRUG?
Investors who missed going long on the Mongolian tugrug now have a chance to make up for lost
time.
Despite a boom to the economy, largely driven by the Oyu Tolgoi and Tavan Tolgoi mining projects,
Mongolia is still underdeveloped. Its currency was the best-performing of 2010, up 15 percent for
the year, topping the Australian dollar, the Chinese Yuan, the Euro, and the Brazilian Real. At its
high point, one could only get MNT 1,233 for every dollar—but it has since cooled off. Meanwhile,
Mongolia's government is trying to curb double-digit inflation.
Easy come, easy go.
Source: Nada
TRAFIGURA FUND STRATEGIZES FOR GROWTH FOR 2012 COMMODITIES MARKET
The Galena Fund of Trafigura, a trader of Mongolian-borne iron ore and coal, aims to expand by
nearly 50 percent this year to around USD 3 billion as opportunities abound in a choppy market for
commodities and energy, the fund's head said in an interview.
―You've got to be large. The relationship between Trafigura and Galena is a good one, it works. We
want to continue to leverage off it,‖ Jeremy Weir, its chief executive and Trafigura board member
said.
Galena currently manages about USD 2.1 billion in assets, but Weir expects new funds and the
growth of existing funds to boost that amount. The fund manager expects this year, like 2011, to be
a challenging trade environment characterized by turbulent politics and a lack of clear trends. The
hedge fund had a mixed year in 2011, logging an 11.32 percent gain in its flagship Metals Fund but a
28.02 percent loss in its Special Situations Fund, which is invested in commodities and equities, due
partly to concerns about growth in China.
Weir is confident, however, that its agile traders will profit still through relative-value trades,
picking the best spot on futures curves and a mixture of long and short positions. A former metals
trader who has been at the helm of Galena since it started in 2003, Weir warned there are no clear
and easy trends emerging in commodities for 2012. However, there could be some potential for

14. longer-term trends for commodities such as copper.
So far, Galena's January estimates point to a muted start of the year with gains of 2 to 4 percent on
its metals fund, energy fund, and special situations fund. Despite the weak start to the year, Weir
sees this as a promising growth area for Galena as European banks withdraw from the sector
because of a lack of dollar funding and increasing regulatory pressures. By April Galena plans to
launch a private equity fund of up to USD 1 billion focused on spotting small to mid-sized companies
in the mining sector.
Source: Reuters
DIRE HEADLINES BUT LITTLE CAUSE FOR ALARM FOR CHINESE ECONOMY
Trade data for January has China economists howling at the Lunar New Year moon. The collapse in
export growth to -0.5 percent year-to-year in January—down from 13.4 percent in December—looks
like a disaster. A 15.3 percent year-to-year decline in imports looks even worse. A decline or ―hard
landing‖ for the Chinese economy would have a dramatic impact on Mongolia as its chief consumer
of Mongolian commodities.
But before giving up on the Chinese market, investors need to take account of the Chinese New
Year effect. Fewer working days this year than in January 2011 (when the New Year fell in
February) is a key factor explaining the decline. The month-to-month growth rate provides more
clarity. January's exports fell 14.2 percent from December, less than an average 17.6 percent
month-to-month fall in the comparable month in the last decade.
As the United States limps out of recession and the European crisis rumbles on China's exporters are
set for a tough year—but not nearly as bad as the January data suggests. Imports performed worse
with a 22.4 percent month-to-month fall compared with an average fall of 17.4 percent for the New
Year month in the past 10 years. Again, the details of China's commodity purchases suggest it is not
that bad. In volume, crude-oil imports are up and so is iron ore.
February's data will provide a clearer read on the direction of travel for the world's second-largest
economy. But delving beyond the headlines, January's data provides little cause for alarm.
Source: Wall Street Journal
APPRECIATING CHINA'S SHIFT
The trade imbalance that characterized China's economic relations with the rest of the world for
the best part of the past decade has all but disappeared. More sales to China‘s domestic population
and dwindling dependence on exports means a better defense against global economic downturns
for Mongolia‘s number one consumer of its goods.
China's current-account surplus for 2011 shrank to USD 201.1 billion, from USD 305.4 billion in 2010.
More important, as a ratio of gross domestic product (GDP), the surplus fell to about 2.7 percent,
that is close to a decade low and below the 4 percent threshold that suggests an exchange rate out
of whack with equilibrium. The argument in the past has been that the fall in China's surplus is
cyclical, the result of the investment-heavy domestic stimulus that led to a surge in commodity
imports, and recession in major trade partners that crimped exports.
But the International Monetary Fund (IMF) predicts China‘s current-account surplus will be 3.8
percent of GDP in 2013, way down from a forecast of 6.2 percent last September. Taken together
with an unusual fall in the value of China's foreign-exchange reserves in the financial quarter of
2011, it is a serious challenge to the argument that the yuan is undervalued.
Source: Wall Street Journal
POLITICS
THE DISAPPEARING, REAPPEARING HKEX TAVAN TOLGOI LISTING
A new amendment proposed to Parliament may allow the Erdenes-Tavan Tolgoi LLC (E-TT) initial
public offering (IPO) to list on the Hong Kong Exchange (HKEx) after recently being discounted
because of the distribution of shares to the population.

15. The amendment would have E-TT shares distributed to Mongolian citizens for free, with most to
receive 1,072 shares each. Citizens could next opt to take cash instead, in which case the
government would keep its shares. Some MPs complained that the government was not a good
manager, and if it ended up with too many shares it might not be able to sell the remaining share
on markets abroad. Other MPs warned that giving away 20 percent of shares could devalue the IPO.
Erdenes MGL LLC Director B. Enebish said the company plans to issue shares of E-TT on the London
Stock Exchange (LSE), in addition to the HKEx and the Mongolian Stock Exchange (MSE). The market
in London could issue as much as 25 percent of the shares.
Questions also arose about how shares should be allocated to students, who have already received
MNT 500,000 to MNT 1 million stipends for tuition fees. A working group said students who receive
MNT 500,000 stipend will be eligible to receive 536 shares, while those who take MNT 1 million will
still be eligible for a monthly allowance of MNT 21,000, but not shares.
Source: News.mn
INITIAL E-TT SHARE PAR VALUE ESTIMATED AT 60 CENTS
With Parliament having passed its amendment to the 39th resolution, an initial estimate for the
value of the Erdenes-Tavan Tolgoi LLC stock been stated to be about MNT 800, or USD 0.60 per
share.
Approved by the Economic Standing Committee, the amendment will allow Mongolians to accept
their promised shares of E-TT for free or take MNT 1 million cash instead. The government will buy
stocks from those who opt for cash instead, and afterwards will sell those shares to Mongolian
companies at an equal value. Students are able to receive MNT 1 million in tuition aid, while seniors
and disabled citizens can receive the same amount for living assistance.
The government said its research shows that there is a high probability that about 50 percent of all
citizens will choose to sell their shares to the government. While some have wondered how the
government could afford to pay citizens the money promised to them, in the scenario described the
government would have enough for those citizens, said the taskforce commissioned to look into the
matter.
Former MP S. Bayartsogt has said the money from shares sold to domestic firms would go into the
budget in the form of privatization revenues. The government has set aside MNT 330 billion to meet
the needs of senior citizens and disabled citizens.
MP D. Zorig, the former chairman of the Economic Standing committee has estimated a value of
some MNT 800 per share, but admitted that it was impossible to determine the true value at this
point. He added that this value could increase to a figure between MNT 1,500 and MNT 3,000 once
infrastructure and export management is improved.
Source: Frontier Securities
PARLIAMENT POSTPONES RECESS
Parliament has decided to extend the fall session to make time to decide on lingering issues.
Parliament Chairman D. Demberel announced the extension this week in a statement to the press
and signed a decree to make the decision official.
Parliament has decided it must discuss amendments and alterations to the 2012 budget, the Law on
the 2012 Social Insurance Fund, the Law on Local Elections and the legal package to determine the
status of judges. In addition to these affairs are lingering issues regarding the Tavan Tolgoi coal
deposit and an amendment to the 39th Resolution that would affect the initial public offering (IPO)
of Erdenes-Tavan Tolgoi LLC (E-TT), the state-owned firm operating there.
Source: Unuudur
VACANT MINISTRY POSITIONS TO BE FILLED IN MARCH
Government has ordered that the vacant positions within various ministries be filled by next month.
The selection of some will be delayed, however, while a court decides on the agencies those jobs
pertain to.
The Civil Service Council is considering applicants for vacant positions at the Ministry of Foreign

16. Relations, Ministry of Health, General Authority for State Registration, and the Department of
Roads. The selection process will be held from 15 to 16 March. Positions at the Nuclear Energy
Agency will remain vacant while the Sukhbaatar District Court comes to a decision regarding the
postponement of filling those positions. The same goes for the Center for Standardization and
Measurements until it decides on the reappointment of the agency's former director, who claims he
was dismissed unfairly. As for the council's ruling on the director of the Petroleum Authority, who
was dismissed because of the hike in gas prices last month, it found his dismissal illegal.
Source: Unuudur
GOVERNMENT WORKERS PREPARE TO DECLARE PROPERTY HOLDINGS AND INCOMES
The Law on Anti-Corruption is requiring 270 high-ranking government officials to now declare their
2011 property holdings and incomes to the Anti-Corruption Authority (ACA) by 15 February. By the
end of last week, 160 officials had already declared their incomes.
The law will also require another 58,000 lower-ranking state workers to report their earnings as
well by the same date. However, those minor government officials will have to report to the agency
they work for rather than the ACA. Thus far 46,000 of those workers have already done so.
Source: News.mn
PARLIAMENT APPROVES USD 300 MILLION LOAN FROM SOUTH KOREA
After initially rejecting a USD 300 million loan from South Korea for development projects,
Parliament made a last minute decision for its approval.
The government has ultimately decided to accept a USD 300 million 30-year loan with annual 0.15
percent interest from the government of South Korea. The loan will be used to fund a medical
center for diagnosis and treatment, a wholesale trade center, a coal gasification facility near the
Baganuur mine, and a new 1:25,000 scale map of the country, as proposed by South Korea.
Representatives from South Korea have suggested that Mongolia could fund two projects a year
from the above list.
Initially Parliament members voted against the loan, in a 24-26 decision. MP L. Gundalai questioned
how reliable of a partner South Korea has been. He called the proposals attached to the loan
"useless things" and said loan agreements should focus on projects necessary for the country's
development. He also objected to the fact that the wholesale shopping center would sell goods
from South Korea.
MPs Ya. Batsuuri and Su. Batbold chimed in for agreement and said the project would have been of
poor quality and would use outdated technology. They pointed to the power plant in Umnugobi that
often freezes as an example of this.
After the initial decision to reject the loan, Gundalai left the session room, exclaiming, "I won,"
before the decision was shortly reversed following his leave. Though members criticized the lack of
effectiveness of past loans from South Korea, they said they would put faith in its government one
more time.
Source: Undesnii Shuudan, News.mn
MPRP AND MRP FORM POLITICAL UNION
The Mongolian Republican Party (MRP) has entered into a pact with the Mongolian People's
Revolutionary Party (MPR), announced B. Jargalsaikhan, chairman of the MRP.
In a meeting with multiple parties, policy makers discussed that state of government and concluded
the situation was unfit. People questioned the safety of the people in a country without a properly
functioning government and claimed that curbed democracy had infringed upon people's rights.
During this meeting Jargalsaikhan announced his party's decision to cooperate with the MPRP for a
political union. Afterwards various party members from both parties gave presentations on
democracy and policies they believed were needed for Mongolia. Afterwards the two parties
decided they would meet in April.
Source: Unuudur

17. DP COMMISSIONS WORKING GROUP TO INVESTIGATE MINING OPERATIONS
A new working group formed by the Democratic Party (DP) will study the company Entrée Gold.
Currently there is some confusion whether Entrée Gold has relations to a new reserve found. If a
relationship is found, the group will look into future measures for use of the deposit.
The group will also investigate into some of the problems surrounding the Tavan Tolgoi coal
deposit. These include a transition from an exploration to a mining license for the company and the
process of separating the Ukhaa Khudag mine from the Tavan Tolgoi mine. Under the direction of
MP D. Gankhuyag, the group plans to present its findings to the DP in Parliament.
Source: Zuunii Medee
GER DISTRICT RESIDENTS TAKE TO ENERGY EFFICIENT STOVES
The Clean Air Project sponsored by the Millennium Challenge Account (MCA) plans to better insulate
the homes in ger districts and promote the use of energy efficient stoves to reduce air pollution in
Ulaanbaatar.
The project is making 80,000 energy efficient stoves at reduced prices available to households of
the ger districts this winter. Selenge Construction LLC has committed to supplying 70,000, with
another 10,000 from Royal Ocean LLC. So far the clear favorite is Royal Oceans ―Dul‖ model. People
prefer it because it is easy to set up and can be used with a traditional Mongolian wok. However,
because this particular model is not widely available, stores selling it often have long lines at their
stores.
The companies have supplied 50,000 stoves to residents of five districts of the capital so far. If a
typical household has four or five family members, the project is serving about 200,000 citizens. To
ensure safe and proper use, sales people are giving customers safety advice and lessons on how to
use the stoves, as well as receive feedback from customers.
These companies are also cooperating with states organizations, the Clear Air Project and the Clean
Air Fund to organize a public awareness campaign to teach people how to use the stoves properly.
Source: News.mn
PARLIAMENT DIRECTS MORE FUNDING TOWARDS AIR POLLUTION
Parliament passed a financial agreement that would direct USD 15 million towards a program to
reduce air pollution in Ulaanbaatar.
This week Parliament met with the Standing Committees on the Budget and the Economy to discuss
the details of the Ulaanbaatar Clean Air program. This project would need a USD 15 million loan
with 1.25 percent interest over 25 years. The program would provide water boilers for heating.
In addition to this program is an initiative by the Millennium Challenge Corporation (MCC) to supply
smoke-free stoves within the next two or three years. These stoves would reportedly reduced air
pollution by up to 90 percent in the next four years.
After concluding that these new heating devices would not be enough alone to reduce air pollution,
MPs also discussed a proposal to construct new apartment buildings through the 100,000 Families
program, an initiative to provide subsidized housing to potential home owners. However, that
project would not be completed until 2016 at the earliest.
After debating the issue and reasoning that migration from the countryside to the capital city would
certainly increase each year, Parliament voted in favor of the loan agreement.
Source: Unuudur
GOVERNMENT DRAGS ITS FEET WITH E-TT DEALINGS
Erdenes-Tavan Tolgoi LLC (E-TT) Chief Executive Officer B. Enebish has remained quiet on all
worries concerning the company while holding to a May date for the initial public offering (IPO).
To all questions concerning the distribution of E-TT shares and infrastructure, Enebish conceded
responsibility to the government. The government has become increasingly more involved in the IPO
of E-TT, a state-owned company, hoping to use it as tool for the upcoming June election. In regards
to an amendment to the 39th resolution before Parliament that would affect the issue of shares,
the chief executive said the company would follow the lead of the government.

18. "As our company is a state company, we will follow the decisions from the Mongolian Parliament
and the government," said Enebish.
Concerns for delays also stem from the fact that the selection of investors has still not been
finalized. Enebish said the government has been negotiating with companies from Korea, Japan,
and the United States for nine to 10 months.
He said this year the company hopes to extract between three million and four million tons of coal,
compared with one million last year. After two years of production, he said Mongolia could
negotiate a higher price.
Source: Zuunii Medee
SHORT ON FINANCING, RAILWAY NETWORK SUFFERS FURTHER DELAYS
The ambitious plan to build a railway network capable of delivering surging coal output to foreign
markets is likely to be delayed as a result of financing difficulties and bureaucratic deadlocks,
government officials said on Friday at the Coal Mongolia Conference.
P. Luvsandavag, vice-chairman of the Mongolia Railway Authority, said that the government had not
even raised the USD 50 million required to fund a series of feasibility studies and projects designs
drawn up last year.
―We still don‘t have permission from the government to announce an open tender to build the
railways, and in general there is still a deadlock when it comes to funding and building
infrastructure,‖ he said.
He said the government had sought funding for the projects through overseas equity markets,
instead of the railway authority‘s preferred option involving public-private partnerships with
investors from Japan and South Korea. J. Bat-Erdene, state secretary at Mongolia‘s transportation
ministry told the conference on Thursday that the government was planning to list 49 percent of
state-owned Mongolian Railway Corp. on the Mongolian Stock Exchange (MSE) to raise funds for
construction.
The government plans to build an extensive cross-country railway that would eventually connect its
huge Tavan Tolgoi coal project in the south Gobi desert to the rail networks of Russia, giving it
access to markets in Japan and South Korea, but critics have said the route is not economically
feasible. The government remains reluctant to give permission for Mongolian Mining Corp. (MMC) to
construct its own 267-kilometer private railway into China, saying a pre-existing route into China
would make it more difficult to attract financing for the route east into Russia.
Construction on the two routes—east into Russia and south in China—is expected to begin at the
same time, but B. Enkhbaatar of the World Bank‘s mining infrastructure investment support project
told the conference that neither project was likely to begin before 2017.
Source: Reuters
ROAD NETWORK TO LINK PROVINCES TO UB
Ts. Dashdorj, Minister of Road, Transportation, and Urban Development, has reported on plans to
build a total of 598.6 kilometers of road from Ulaanbaatar to six different provincial capitals.
The government has budgeted for a total of MNT 346.9 billion toward the construction of roads and
bridges. Although construction has not yet begun, the ministry has plans to connect Dornod,
Sukhbaatar, Umnugobi, Uvs, Zavkhan, and Khuvsgul Aimags to Ulaanbaatar for the cost of MNT 311
billion. The government plans to build a total of 2,919 kilometers of roads and 3,465 meters of
bridges in 2012.
Cabinet members have asked the minister to begin road construction for some provincial capitals to
Ulaanbaatar, finance bridge construction, and consider suggestions from other ministers on road
construction.
Source: News.mn
CANADIAN PM TAKES A RAIN CHECK WHILE MONGOLIA SETTLES GOVERNMENT AFFAIRS
Due to the recent cabinet reshuffle in Parliament and other factors, the Canadian government has
decided to reschedule Prime Minister Stephen Harper‘s visit to Ulaanbaatar to a later date instead

19. of immediately after his visit to China, as originally planned.
The prime minister is personally interested in successfully concluding a bilateral Foreign investment
Protection and Promotion Agreement (FIPA). The sixth round of FIPA negotiations with Mongolia was
held last January, with negotiations beginning in 2009.
At the end of his Beijing visit last week, Harper announced on 13 February that Canada and China
had concluded negotiations on a FIPA, in addition to 20 other bilateral agreements. Both countries
will now conduct a legal review of the agreement and then sign and ratify it, at which point the
FIPA will come into effect. Canada now has FIPA agreements with 24 countries and is engaged in
active negotiations with Mongolia and nine other nations.
Next year will also be the 40th anniversary of diplomatic relations between Canada and Mongolia.
Source: NAMBC
ANNOUNCEMENTS
MONGOLIA 2012: REPORT FROM OXFORD BUSINESS GROUP, LAUNCH EVENT, 1 MARCH
The Report: Mongolia 2012 from Oxford Business Group will be launched on the 1st of March. The
book includes interviews with the President of Mongolia, Tsakhiagiin Elbegdorj, and Prime Minister
Sükhbaataryn Batbold, as well as opinions from Minister for Foreign Affairs and Trade G.
Zandanshatar, Vice-minister of Finance Ch. Ganhuyag, Chairman of the Foreign Investment and
Foreign Trade Agency B. Ganzorig and the Executive Director of the Business Council of Mongolia
Jim Dwyer. Angela Merkel, German Chancellor, Joe Biden, US Vice-President are also contributors.
The report, which marks the culmination of more than six months of on-the-ground research by a
team of analysts from the group, has been produced in collaboration with the Foreign Investment
and Foreign Trade Agency (FIFTA), the Business Council of Mongolia, MICC, Ernst & Young and Hogan
Lovells and will be available in print form or online.
Registration for the official launch event: mongolia@oxfordbusinessgroup.comor +976 99040503.
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MONGOLIA ECONOMIC FORUM 2012, 5-6 MARCH
As Mongolia's largest venue for a dialogue on development among society's core stakeholders, this
year's Mongolia Economic Forum 2012 will be held from 5-6 March at the Government Palace in
Ulaanbaatar. As an official supporter, BCM is offering its members a special discount rate for
registration.
The forum brings together government, scholarly circles, businesses, the media, foreign partners,
and non-governmental and civic society bodies for a series of discussions and debates on pressing
issues to the Mongolian economy and society at large. Discussion topics for development include
―Inclusive Growth,‖ ―Competitiveness: Green Growth,‖ and ―Innovation Policy,‖ each held at
separate venues within the Government Palace.
As Mongolia attains development at an accelerating speed with growth maintained within double-
digit figures, Mongolia is seeking out the best practices and examples for development. BCM
members will receive a special discount (mailcode: BH650WANT), bringing the cost from MNT 1.5
million to MNT 999,000. For more information or registration, visit the website meforum.mn or
email registration@meforum.mn.
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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

20. 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
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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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NEW YORK INTERNATIONAL AUTO SHOW 2012 - APRIL 6-15
The Business Council of Mongolia in collaboration with the U.S. Embassy‘s Commercial Section is
now registering Mongolian business delegation to participate to ―New York International Auto Show
2012‖ which will be organized in the Jacob K. Javits Convention Center, New York, NY, USA
between April 6-15, 2012.
For over one hundred years, the ―New York International Auto Show 2012‖ continued its pioneering
tradition of bringing new and innovative ideas to a national and world stage, which makes the event
one of the most important automotive event in the world. The show offers virtually every make and
model vehicle sold in the U.S. under one roof giving consumers the unique opportunity to see
everything the auto industry has to offer.
Please contact 70114442 or tugi@bcMongolia.org for registration and any other additional
information about the event. Registration deadline is 5:00 PM, February 21.
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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.
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“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.
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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. About 10 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. Latest additions to this

21. section include a presentation entitled "Cracking the Commercial Oyster: Reflections on the 25th
Anniversary of US-Mongolia Bilateral Relations" by Jonathan Addleton, Ambassador extraordinary
and plenipotentiary of the United States of America to Mongolia.
Also on BCM‘s English website, ‗Resource, Mongolia Reports‘ section, please note "Mongolia's
Booming Economy" by Dr. Alicia Campi, Preident of US-Mongolia Advisory Group Inc, "Mongolia - The
World Bank Survey FY 2011" by the World Bank and Economic Policy & Competitiveness Research
Center and "Executive Summary of Mongolian Real Estate Report 2012" by M.A.D Investment
Solutions.
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.
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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

22. 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]

23. CURRENCY RATES – February 16, 2012
Currency Name Currency Rate
U.S. dollar USD 1,333.15
Euro EUR 1,735.96
Japanese yen JPY 16.95
British pound GBP 2,091.45
Hong Kong dollar HKD 172.02
Chinese yuan CNY 211.54
Russian ruble RUB 44.10
South Korean won KRW 1.19
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.