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MONGOLIA is OPEN for BUSINESS

• History of mining sector in Mongolia• Assessment of the current situation • Business opportunities • State policy of the mineral sector• Conclusion

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ContentOPEN for BUSINESSMONGOLIA is

Mongolian mining industry has history of

101 years

Free market-oriented legal environment and favorable investment environment

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1923 - 1990

1913 - 1921

1990-

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Large-scale state-run mining and infrastructure projects

Mongolia is one of the fastest growing economies

Ministry of Finance forecasts Mongolia to continue enjoying double digit growth in the coming years.

3.9 3.9 3.5 6.9 8.8 10.6 11.7 14.7

6.4%

17.5%

12.4%11.7%

12.9%

5%

7%

9%

11%

13%

15%

17%

19%

0

2

4

6

8

10

12

14

16

2007 2008 2009 2010 2011 2012 2013 2014

GDP, billion USD

GDP growth by percent

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GD

P g

row

th b

y pe

rcen

t

GD

P,

billi

on U

SD

GDP

%

Export Budget FDI

17% 81% 23% 73%

2011

5

2012 2013 2011 2012 2013 2011 2012 2013 2011 2012 2013

172120 89 91 81 20 21 23 78 81 73

CONTRIBUTION OF THE MINING SECTOR (%)

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Investment and production

The production of the mining industry is rapidly growing in the last years due to the investment. Therefore, the Ministry of Mining supports a policy to promote and encourage investors.

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Inve

stm

ent,

mill

ion

US

D

Pro

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ion,

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MN

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Main Minerals Resources (2013) World Rank

Gold (tons)

Zinc (thousand tons)

Iron ore (mln tons)

Crude oil (mln barrel)

Copper (thousand tons)

Coal (mln tons)

Shale oil (bln tons)

2,4932,493

1,7401,740

1,1661,166

2,4382,438

117,000117,000

175,500175,500

788788

Top 10Top 10

Top 10Top 10

Top 10Top 10

Uranium (ths tons) U 170170

OPPORTUNITIES: Why invest in Mongolia? (1)1950 deposits and 8150 discoveries are registered in the State inventory of mineral resources, and 300 of them are under utilization.

The Central and Eastern parts of Mongolia relatively well studied. While western part of country is untapped, which has a great potential for discovery of new deposits.

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Source: World Bank, 2013

RUSSIA$2.118 Trillion GDP

143.500.000 Population 8th Largest Economy

KOREA$1.198 Trillion GDP

50.129.669 Population 15th Largest Economy

JAPAN$5.007 Trillion GDP

126.659.683 Population 3rd Largest Economy

CHINA$8.939 Trillion GDP

1.344.130.000 Population 2nd Largest Economy

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OPPORTUNITIES: Why invest in Mongolia? (2)

MONGOLIA is OPEN for BUSINESS

Railways $16.0 bln Railways $16.0 bln

Highways $0.46 bln Highways $0.46 bln

Oil refinery $1.20 bln Oil refinery $1.20 bln

Copper Smelter $2.0 bln

Copper Smelter $2.0 bln

Oil production $0.8 bln Oil production $0.8 bln

Coal to Liquids $2.5 bln Coal to Liquids $2.5 bln

Coal washing $0.8 bln Coal washing $0.8 bln

Coal to Gas $30.0 bln Coal to Gas $30.0 bln

Iron Ore processing $1.0 bln

Iron Ore processing $1.0 bln

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OPPORTUNITIES: Why invest in Mongolia? (3)

Power plant on Tavantolgoi coal mine $ 1.0 Bln

Power plant on Tavantolgoi coal mine $ 1.0 Bln

Power plant V $1.2 bln Power plant V $1.2 bln

Total investment: $ 56.96 Billion

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• Activities of special licenses, which issued before the law, shall be continued under the contract.

• Intensify the explorations of shale oil and crude oil.

• The rights of an issuance of the special license transferred to the province and local authority;

• The area will be allocated without competitive tender;• Royalty rate is 2.5%.

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Legal reform:

• Provide sustainable investment environments (stabilize the investment)• Non- discrimination between foreign and domestic investors.

Investment law (2013/10/03)

• Improve the competitiveness and development of the mining sector, encourage the transparent and responsible mining industry based on private sectors.

State Policy on the Mineral sector (2014/01/16)

• Royalty fee is 2.5%, when gold sells to the Central Bank or commercial banks. • Current royalty rate will apply when export the Gold.

Amendment in Minerals law (1) (2014/01/24)

• Improved border point management• Better port regulation allows to accelerate trade and reduce bureaucracy

• No VAT and customs until 2018 for the equipment of oil, shale and coal processing projects.

Law of Mongolia on exemptions from custom and VAT taxes,

(2013/06/07)

Law on border ports (2013/12/26) Law on border ports (2013/12/26)

Law of Mongolian on common – occurrence mineral resource

(2014/01/09)

Petroleum Law

(2014/07/01)

Regulation for long named law*

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* Prohibit mineral exploration and mining operations at headwaters of rivers, protected zones of water reservoirs

CONCLUSION

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OPEN for BUSINESSMONGOLIA is

1. Democratic country with open market economy.

2. Stable political environment.

3. Great potential of minerals.

4. Neighboring with two giant markets.

5. Created a long-term, easy to understand and stable legal environment in the mining sector.

6. Favorable tax environment.

We are warmly welcoming you

to MONGOLIA

OPEN for BUSINESSMONGOLIA is