COMPETITIVESS

0 10 20 30 40 50 60 70

Мьянмар

Мозамбик

Монгол

Индонези

Орос

Хятад

Канад

Австрали

Mongolia

6

RESEARCH COMPARING MAIN COMPETITORS

Source: MM

Mongolia China Russia AustraliaMozambiqu

e Canada Indonesia Myanmar

From consumer standpoint: 12 15 15 20 11 20 18 101 Price 5 3 4 5 4 5 5 32 Product quality 5 4 4 5 4 5 3 33 Procurement situation 1 4 4 5 1 5 5 24 Payment terms 1 4 3 5 2 5 5 2From company standpoint: 15 26 25 27 15 25 19 165 Extraction cost 4 3 3 2 2 3 2 26 Salary expense 5 2 4 1 5 1 3 57 Transport cost 1 4 4 5 1 5 3 18 Financial capacity 1 4 4 5 1 5 2 19 Source of financing 1 4 4 4 2 4 3 310 Business skill 2 4 4 5 1 5 3 211 Number of buyers 1 5 2 5 3 2 3 2From state standpoint: 12 11 9 12 10 12 11 612 Tax environment 5 1 2 2 5 2 4 313 State policy 3 5 4 5 2 5 3 214 Legal environment 4 5 3 5 3 5 4 1

Нийт оноо 39 52 49 59 36 57 48 32

INDICATION OF COMPETITIVE ABILITY

3

Positive

1. Price2. Product quality3. Extraction cost4. Salary expense 5. Tax environment6. State policy7. Legal environment

Negative

1. Procurement situation 2. Payment terms3. Transportation cost4. Financial capability5. Source of financing6. Business skills7. Number of buyers

• based on the private sector transparency and accountability,to develop mining in the short and medium term, theeconomic structure of the balanced multi-establish and ensurethe vital national interests.

State Policy on Mineral sector (2014.01.16)

• Legalized the equal opportunities for foreign and domestic investments ..Investment Law (2013.10.03)

• Amendment to the Mineral law on January 24, 2014 reduced royalty fee to 2.5%Amendment of Mineral law

Legal environment

Legal environment

Draft law on amendment to the petroleum law

• The plan is being developed together with JICACoal sector master plan

• Working group is assigned by Minister of Mining“Coal Mongolia” program

• Helps to develop open and responsible miningExtractive Industries Transparency law

• Submitted to the Parliament

Cooperation

Memorandum signed

•15 billion cubic meter gasproduction project•1.0 billion tons of coalexport to China next 20years

Production, sales volume, exportProduction, sales volume, export /mln tn /

2009 2010 2011 2012 2013

Total production 13.2 25.3 32.9 31.9 33.3

Sales 13.2 25.3 32.9 26 25.8

Export 7.6 18.2 22.5 20.5 18.2

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35

2009 он 2010 он 2011 он 2012 он 2013 он

Олборлолт, борлуулалт, экспорт /сая тн/

Нийт олборлолт

Борлуулалт

Үүнээс: Экспортод

Production and export (2014-2018 projection)

Production and export /mln tn/

2014 2015 2016 2017 2018

Total production 53.3 64.6 69.6 74.0 76.4

Export 34.0 50.0 53.0 56.0 59.0

0

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90

2014 он 2015 он 2016 он 2017 он 2018 он

Олборлолт, экспорт /сая тн/

Нийт олборлолт

Үүнээс: Экспортод

The mining sector tends to contribute in total of 1.4 trillion Tugrug revenue to the state budget in 2014 and out of total sum of 41% (2,7 billion USD) will be solely coal exports

Government aims to undertake the following measures:

Come to mutual agreement on the inter-governmental level; render support in concluding trade agreements in relation to long term cooperation with neighboring countries.

Accelerate competitiveness of transport, logistics and other infrastructure in order to increase export efficiency.

Expand market and increase number of buyers. Set up ‘Commodity Exchange’ and trade coal by market principles. Diminish number of types of local taxes and eliminate other non-tariff restrictions on bilateral

trade. Improve work coordination of state and administrative authorities, eliminate functional

duplication and bureaucracy, and reduce intermediary stages. Extend entry capacity of border ports and bring them to international status. This will cover

Gashuunsukhait-Gantsmod, Shiveekhuren-Sekhee, Bichigt-ZuunKhatavch, Khangi-Mandal and Yarant (Bulgan)-Takashiken ports.

Agree on transit transport quota and tariff (according to norms of international law).

Private and state owned entities are required to payattention onto the following issues:

Introduce flexible structure of payment settlement; Strictly comply with contract liabilities and business ethics. Increase efficiency and reduce cost. Improve cash flow management Use appropriate market data and information in decision

making process

Coal ProductionProvision in State Policy in MineralSector related to the support of mineralprocessing states: “to beneficiate coal,develop coke-chemical complexes,promote new coal-fired powergeneration at coal mines, produce coalderived low-emission liquid fuels, andsynfuels from oil shale“. Successfulimplementation of such policies willresult in Mongolia not only meetingfully its domestic needs but alsobecoming a net exporter.

2014-2025

Become the major regional exporter in the coking coal market. Build appropriate infrastructure in the region. Work out coal quality classification and standard, and put into effect. Implement one-window export policy Produce liquid fuel and gas via comprehensive processing of coal. Put foundation of oil shale and coal chemical industry

THANK YOU FOR YOUR KIND ATTENTION