BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 278 – June 14, 2013

NEWS HIGHLIGHTS:

Business

Mongolian miners' operation at Tavan Tolgoi may foil int'l bidding;

Launch of Mongolian copper mine on hold pending authorization;

USD 122 million Salkhit wind farm to open in June;

Khushuut not a strategic deposit, says MEC;

Modun Resources wins preferred coal briquettes supplier to government;

Xanadu revises terms of Oyut Ulaan acquisition;

India firm completes test delivery of Mongolian iron ore;

CPS Securities and Indian Ocean Capital merge;

Petro Matad raises USD 5 million through share issue to Petrovis;

Golomt Bank named “Employer of the Year 2012”;

Good news from Mongolia’s equity market;

Major Drilling cuts staff by 38% as weak market hurts earnings;

Rio Tinto coal assets garner interest from Indian, Chinese firms.

Economy

USD 31 million paid for first Chinggis bond interest payment;

New mortgage plan to encourage homeownership in UB;

Tugrik strengthens;

Fuel prices fall by MNT 50;

MNT 40 million in mortgages offered to civil servants;

Putting global food on the map;

Mongolia protects the Snow leopard;

Dutch DTAs lead to huge revenue losses in developing countries;

Cash woes top “business risk” list for minerals companies;

New mining companies to launch in Kazakhstan;

Copper falls to 1-month low on China, Central Bank fears;

China’s economic shift not bad news for all commodities, bank argues;

China’s tough policy choices.

Politics

Tony Blair strikes gold in Mongolia;

Presidential candidates speak on OT;

Mongolia enlists 300 observers for June election;

“Warriors Tyrannosaurus” debuts in UB;

China grants CNY 30 million in aid;

Canada provides Mongolians with new visa options;

Finland’s speaker visits Mongolia;

India, Mongolia engage in joint military exercises;

Japan, Mongolia agree to cooperate over N. Korea's abductions;

Mongolia joins international environment group;

Former education minister accused of corruption;

MP’s wife under investigation;

Former health minister arrested for corruption;

Former Petroleum Authority chairman suspected of bribery and extortion;

Court rules against MPP claim for Lenin Museum;

AFCCP prohibits the use of foreign currencies;

MIAT scandal suspects convicted and sentenced;

Farmers protest excessive use of imported powdered milk.

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

Khan Bank

Major Drilling

International SOS

Wagner Asia Automotive

Wagner Asia Equipment

Oxford Business Group

Mongolian National Broadcasting

Breakthrough PR

BUSINESS

MONGOLIAN MINERS' OPERATION AT TAVAN TOLGOI MAY FOIL INT'L BIDDING

State-owned Erdenes Tavan Tolgoi LLC plans to start mining operations at the country‘s Tavan

Tolgoi coal mine, a move that would raise uncertainty over the international bidding for rights to

developing one of the world‘s largest coal deposits.

Yaichil Batsuuri, Chief Executive Officer of Erdenes TT, told Kyodo News on Saturday that the miner

plans to start and continue operations at the mine with other Mongolian companies until the

selection of a successful bidder. Batsuuri said the Mongolian government has approved the tentative

operation by the Mongolian companies and that they plan to produce 2.6 million tons of coal by the

end of this year. The operation could start as early as this month, and the coal produced is

expected to be exported to China.

The Mongolian side has apparently chosen to prioritize early development of the mine instead of

waiting for the completion of the international bidding. But concerns are spreading over how the

operation by the Mongolian side on its own would affect the bidding procedure.

An official at a Japanese company said the move may lead to cancellation of the international

bidding. The bidding procedure for the Tavan Tolgoi mine began in December 2010, and the major

Japanese trading houses Itochu Corp. and Marubeni Corp. are among the bidders.

Source: Global Post

LAUNCH OF MONGOLIAN COPPER MINE ON HOLD PENDING AUTHORIZATION

The first export from Mongolia‘s $6.2 billion Oyu Tolgoi copper and gold mine is being held at a

later date than expected as project developers await final authorization from the government for

the launch of export.

A number of journalists were contacted to express their interest in a ceremony mooted for 14 June.

That event appears not to be taking place. Oyu Tolgoi LLC said nothing had changed from previous

statement that it was expecting first exports before the end of June. The opening of Oyu Tolgoi is

vital for Mongolia as it is expected to make up a third of the country‘s economy by 2020. The mine

is also a crucial source for growth for operator Rio Tinto as it aims to ease its dependence on iron

ore and cast off small unprofitable assets.

Mongolia‘s Prime Minister Norov Altankhuyag had planned to attend the event at the mine, a

government spokesperson said. A spokesperson for President Tsakhia Elbegdorj had said it was

unlikely he could attend because of activities related to his re-election campaign. Elbegdorj, who is

seen as more supportive of foreign investment than opposition candidates, is expected to win the

poll, scheduled for 26 June.

―We‘re hopeful come the second half of the year people will become a bit more positive on

Mongolia,‖ said Sam Spring, chief executive of Kincora Copper Ltd., a copper explorer with a

project near Oyu Tolgoi. ―Hopefully, Oyu Tolgoi ramping up and the completion of the project

financing helps, as does the presidential election.‖

Source: Reuters

USD 122 MILLION SALKHIT WIND FARM TO OPEN IN JUNE

Mongolia is scheduled to start operations at its first wind farm this month, a USD 122 million project

that is the biggest power plant in 30 years.

The 50-megawatt facility developed by Clean Energy LLC, a subsidiary of Newcom Group, using 31

turbines from General Electric Co. is located on a wind-raked ridge about 45 miles southwest of

Ulaanbaatar. Sengee Enkh-Amgalan, the company‘s Chief Executive Officer, plans to officially start

the plant on 20 June. The government has set a target to get 20 percent to 25 percent of its energy

from renewable by 2020, up from less than 2 percent currently. Coal supplies about 80 percent of

the nation‘s energy.

―In order to meet the 20 percent goal, the government really has to support these kinds of

enterprises,‖ said Enkh-Amgalan, adding that he expects the government will subsidize the costs of

wind power in order to make it affordable.

Clean Energy says the wind park will save 122,000 tons of coal, 1.6 million tons of water, and will

eliminate 180,000 tons of carbon dioxide emissions each year. The government agreed to a power

purchase agreement with Clean Energy, which will receive 9.5 cents a kilowatt-hour for power from

the wind for the lifetime of the project. Enkh-Amgalan said the power station can produce 140

million to 160 million kilowatt-hours per year, which gives the plant revenue of USD 15 million a

year. Turbines at the plant will last about 20 years, he said.

A similar project in China would cost 30 percent less said Enkh-Amgalan, due to the vast distances

and lack of roads in Mongolia, where most highways are little more than vague jeep tracks across

the desert. Clean Energy Asia and Tokyo-based SoftBank Corp. have 200,000 hectares of land in the

Gobi Desert and plan to construct a wind park with a capacity of 200-megawatts to 300-megawatts,

said Enkh-Amgalan. Wind speeds in Salkhit average 8.2 meters per second, while Gobi Desert speeds

exceed nine meters per second. The Gobi has the potential to yield 11 gigawatts per year of solar

energy and 300,000 megawatts of wind power, Enkh-Amgalan said.

Source: Bloomberg

KHUSHUUT NOT A STRATEGIC DEPOSIT, SAYS MEC

Mongolia Energy Corp. (MEC) has responded to news reports that the Khushuut mine has been

declared a strategic deposit, saying the matter is still under debate by Parliament.

It came to the Source‘s knowledge on 3 June that there were Mongolian news articles reporting the

proposal regarding strategic deposits had been made by the Mongolian government. Upon inquiries

made with a Mongolian legal advisor, the Source learned that the government had made the

following progress recently:

―The government of Mongolia has decided to submit to Parliament a draft resolution which will

amend the attachments of Resolution No. 27 dated 6 February 2010 regarding ‗Declaration of

Certainty Deposits as being Strategically Important.‘ The resolution draft states that the deposits

pertaining to the coal of Khushuut and Tsadamnuur, gold of Gatsuurt, and rare elements of

Khalzanburgedei, Lugiin Gol, Mushgia Khudag and Khotgor are classified as mineral deposits of

strategic importance.‖

The Minerals Law states that a mineral deposit is of strategic importance if it has a potential impact

on national security, economic and-or social development of the country at regional and/or national

levels, or that it is capable of producing greater than 5 percent of the gross domestic product (GDP)

of any given year. Under the said Minerals Law, the size of the government participation is

determined largely by the level of state funding which had been provided for the exploration and

development of any deposit, with the government of Mongolia entitled to participate up to 50

percent in the event that there has been state funding of such deposit and up to 34 percent if such

deposit was discovered with private funds.

If a strategic deposit is ruled, Mongolia may negotiate for up to 50 percent of its interest. Even if

the Khushuut coal mine is designated as a strategic deposit by Parliament, such designation would

not automatically grant the government to participate into the mine or allot any shares of MoEnCo,

the MEC subsidiary holding the license, to the government. The government would also need to

discuss with MoEnCo for the terms of the arrangement.

Source: Mongolia Energy Corp.

MODUN RESOURCES WINS PREFERRED COAL BRIQUETTES SUPPLIER TO GOVERNMENT

Modun Resources Ltd. is on the road to commercializing the wholly-owned Nuurst coal project in

central Mongolia, with the company‘s subsidiary (Modun Resources LLC) being selected as a

preferred supplier of coal briquettes to the Mongolian government.

Modun was one of four tenderers through the Mongolian National Committee for Air Pollution

Reduction that sought domestic and international expressions of interest to establish a new cleaner

fuel production facility. The next step for Modun is that the key terms and conditions of the product

sale and purchase agreement will be negotiated directly with the Mongolian government, with the

briquette plant to have an initial name plate capacity of 200,000 to 250,000 tons per year.

―Discussions with the Mongolian government about formalizing this arrangement into an off-take

agreement for the supply of Nuurst coal briquettes will commence immediately,‖ said Rick Dalton,

Managing Director of Modun.

Mongolia hopes to be using the cleaner coal by November 2014 for its commitment to reducing

pollution, which has come to the center of President Elbegdorj‘s re-election campaign. Modun was

selected as one of four preferred suppliers as part of the government‘s Clean Air Initiative to

reduce air pollution in Ulaanbaatar. The company‘s successful proposal was based on using thermal

coal from its Nuurst project and creating briquettes using a binderless coal briquetting process,

which after being independently tested in Australia and Mongolia, has resulted in a substantial

increase in energy end decrease in emissions.

Source: Proactive Investors

XANADU REVISES TERMS OF OYUT ULAAN ACQUISITION

Xanadu Mines Ltd. will pay less upfront for the acquisition of the Oyut Ulaan copper and gold

porphyry project in Mongolia in return for a modest cash payment, some shares, and issuance of

performance share options.

Drilling by Xanadu has also intersected thick zones of gold rich porphyry copper mineralization from

released results. The porphyry copper project covers a large district of around 40 square kilometers

comprising numerous mineralized porphyry centers. The agreement struck with Temujin Mining

Corp. replaces an earlier agreement in May 2012 and its initial implementation which was delayed

by changes in Mongolia‘s foreign investment law.

Parliament recently approved amendments to the law allowing the acquisition to proceed. The

consideration for a 90 percent interest in the project located in the South Gobi region is now a

payment of USD 600,000, the issue of 5 million Xanadu shares and the issue of performance share

options once a JORC resource of 900,000 tons of contained copper equivalent is achieved at the

project. The Oyut Ulaan mining license has been granted and Xanadu has earned a 25 percent

interest. The completion of the transaction is conditional upon approval by Xanadu‘s shareholders

and the government.

Source: Proactive Investors

INDIA FIRM COMPLETES TEST DELIVERY OF MONGOLIAN IRON ORE

India Globalization Capital (IGC) Inc. announced the achievement of a milestone in the execution of

its strategic plan of establishing a shipping hub at the border of Mongolia and China to provide iron

ore to its customers in China and source raw materials.

―Importing from Mongolia has important strategic value,‖ said Ram Mukunda, chief executive of

IGC. ―Our beneficiation plants process low-grade ore into high-grade ore. It has been our plan to

diversify the source of raw materials, from India, and Mongolia, to include grades of ore that are of

substantially better quality than our reserves. This test delivery has been a big step for IGC in

delivering on the opportunities before us.‖

Mukunda said process would help produce higher-grade ore that would deliver higher levels of iron

ore processing. Processing of ore brought base level iron content from 2 to 3 percent to 66 percent.

Comparatively Mongolian and Indian ore having a base level of between 40 and 50 percent.

Source: India Globalization Capital

CPS SECURITIES AND INDIAN OCEAN CAPITAL MERGE

Australian-based stockbroking firm CPS Securities and Indian Ocean Capital have executed a merger

agreement to create arguably Perth‘s leading boutique stockbroking securities and investment firm.

The merged entity will be rebranded CPS Capital Group.

The merger is effective immediately, with the merged entity to offer full stockbroking and

corporate advisory services to clients domestically and internationally, as well as focusing on its

investment banking strategy. CPS Capital Group will have an advisory and marketing team of 29 in

Australia and overseas, together with an additional 13 administrative and compliance team

members. It is expected to significantly grow its advisor team, both locally and nationally, in the

coming months and also add a dedicated research offering. It will also build on the already strong

affiliations the two firms have individually established in Mongolia, Singapore, Hong Kong, United

Kingdom, South America, Toronto, and the United States.

―It‘s a very exciting time for our clients and staff, as both companies bring a wealth of experience

and expertise to the table, which when combined cement our position as a significant stockbroking

and corporate advisory business in [Western Australia],‖ said Tony Cunningham, managing director

of CPS Capital Group. He added ―CPS Capital Group will be focused primarily on clients interested

in and companies operating in the resources sector or in the junior to mid-cap space, a part of the

market that in our view will see significant value creation in the future.‖

Source: CPS Capital Group

PETRO MATAD RAISES USD 5 MILLION THROUGH SHARE ISSUE TO PETROVIS

Petro Matad Ltd., the parent company of a group concentrating on oil exploration, as well as future

development and production, in Mongolia, has raised USD 5 million before expenses.

This has been done through the issue of some 90.6 million ordinary shares of USD 0.091 each to its

largest shareholder, Petrovis. The new shares have been issued to Petrovis at an issue price of 3.56

pence per ordinary share. The net proceeds of the funding, along with the company‘s existing cash

reserves of approximately USD 2.1 million, will enable Petro Matad to undertake field operations

during the current 2013 field season.

As previously notified to the market, the company is in the process of conducting a farm out. The

company has had a number of international companies visit the farm-out data room. It is now

closed and Petro Matad is continuing discussions with interested parties. It is anticipated that the

company will be in a position to make a further statement on the progress of this transaction during

the third quarter.

Source: Stock Market Wire

GOLOMT BANK NAMED “EMPLOYER OF THE YEAR 2012”

Golomt Bank LLC was ranked first in Mongolia Talent Network‘s ―Employer of the Year 2012‖ report,

which ranked the most preferred companies by employees.

Employees throughout Mongolia voted for the poll, with nearly 1,500 from 272 companies sharing

their views. The top employers were determined using a combination of the number of votes and

strength of the agreement with the following statements, ―My Employer Deserves to be Employer of

the Year.‖ Points were allocated per respondent based on their individual responses, with two

points added for the response ―Strongly Agree,‖ one point added for ―Agree,‖ no points added for

―Neither Agree nor Disagree,‖ onepoint subtracted for ―Disagree,‖ and two points subtracted for

―Strongly Disagree.‖

Golomt was voted as ―Top Employer 2012,‖ driven by positivity of response, but also an

overwhelming level of participation from Golomt employees. Employees were particiuarly positive

about the company‘s people management, in addition to team and company atmosphere and

promotion and advancement.

―I think our employees are so motivated because working in this company allows them to develop in

their professional fields, in a good work environment, with long-term stability, and a fair chance of

promotion and advancement, earning fair salaries and bonuses, and with good community

strategy,‖ said Golomt Bank‘s human resources director.

Wagner Asia Equipment LLC and XacBank LLC also performed extremely well, earning them the

second and third places, respectively.

Source: Mongolia Talent Network

GOOD NEWS FROM MONGOLIA‟S EQUITY MARKET

Several Mongolian focused equities stepped out of the shadows last week with a range of

announcements setting the stage for increased activities in the second half of 2013. Prophecy Coal

Corp., Xanadu Mines Ltd., and Undur Tolgoi Ltd. all released positive information regarding their

activities in country. This included signals of impending investment and acquisition in prospective

projects.

Prophecy reported that its Chandgana coal project in northern Mongolia signed a 25-year coal-

offtake agreement with Prophecy Power Generation LLC. It followed up the announcement with

more positive new on Friday stating that they had closed a final tranche of financing through

private placement for a total contribution of USD 1.14 million.

Xanadu also brought good news to the market with an update on work at the Oyut Ulaan copper-

gold project. With legislative changes allowing the transaction to be processed, Xanadu has gained

a consideration for 90 percent interest in the project. The consideration is subject to a cash

payment of USD 600,000, plus 5 million Xanadu shares, and milestone payments upon the

completion of a 900,000-ton JORC resource. This follows a May announcement when Xanadu

announced its pursuit of terms with Temujin Mining Corp. to acquire the project through the

purchase of Temujin‘s wholly owned subsidiary Vantage LLC.

Lastly, Undur Tolgoi announced the acquisition of interest in the Ochiriin Bulag gold prospect.

Through an initial investment of USD 125,000, Undur Tolgoi acquired 5.05 percent of Anya-2 Sarl, a

private Luxembourg company. Anya holds 66 percent of Western Minex LLC, a private Mongolian

company that owns the Ochiriin Bulag project. Two additional tranches of USD 300,000 will follow

60 days and 120 days after both companies have received approval from their boards of directors

and respective regulatory bodies.

Source: Mongolian Investment Banking Group

MAJOR DRILLING CUTS STAFF BY 38% AS WEAK MARKET HURTS EARNINGS

Canadian mine drilling equipment and services provider to Mongolian mining and exploration

operations Major Drilling Group International Inc. on Thursday said it had cut its weekly payroll staff

by 38 percent to conserve funds, as mining companies slash exploration budgets.

―In February, due to the uncertainty around economic matters impacting the mining market, some

customers delayed or cancelled their exploration drilling plans. In a number of jurisdictions,

uncertainty as to the policies of host governments or issues of land tenure also had a compounding

impact on this quarter‘s results. These factors, combined with the fact that sources of funding for

junior mining companies remain limited, have led to significantly decreased activity in certain

regions,‖ Chief Executive Officer Francis McGuire said during an analyst conference call on

Thursday morning.

He added that, in light of the slowdown in activity, the company had undertaken a review and

restructuring of certain operations and had implemented reductions of salaried employees. The

market was expected to remain depressed during the rest of the financial year, especially in the

gold sector.

Major Drilling also said it would cut senior executives‘ salaries and directors‘ fees, as it aimed to

reduce general and administrative costs by 20 percent from their peak in the first quarter.

Source: Mining Weekly

RIO TINTO COAL ASSETS GARNER INTEREST FROM INDIAN, CHINESE FIRMS

Rio Tinto PLC moved closer to selling about USD 3 billion in coal assets, receiving expressions of

interest from three potential bidders, a person familiar with the matter said.

Coal India Ltd., China‘s Shenhua Group Corp. and India‘s Aditya Birla Group have indicated that

they would bid for the Australian properties, the person said. First-round bids are due this week.

Rio Tinto in April hired Deutsche Bank AG to sell stakes in several mines that produce thermal coal,

which is used for producing energy. The stakes include up to 29 percent in the New South Wales

Coal & Allied unit, which Rio owns with Japan‘s Mitsubishi Corp. The Anglo-Australian company also

is selling interest in tint Clermont and Blair Athol thermal-coal mines in neighboring Queensland.

Global mining companies are responding to weak demand for commodities such as coal by selling

smaller or less-profitable assets. BHP Billiton and Mitsubishi are trying to sell the Gregory Crinum

metallurgical-coal complex in Queensland. And Brazil‘s Vale SA is seeking to sell minority stakes in

two undeveloped coal deposits in Queensland. Coal India, the world‘s biggest coal company by

output, has said it wanted to secure offshore coal supplies to satisfy increasing demand from

consumers such as Indian power producers. Coal India has set aside about USD 1 billion for foreign

acquisitions for the fiscal year through next March. Currently, its only assets outside India are two

coal blocks in Mozambique.

Source: Wall Street Journal

ECONOMY

USD 31 MILLION PAID FOR FIRST CHINGGIS BOND INTEREST PAYMENT

Economic Development Minister Nyamjav Batbayar reported that Mongolia had paid USD 31 million

for its first interest payment on last year‘s USD 1.5 billion Chinggis bond.

According to the agreement made between the Bank of Mongolia and the government, the Central

Bank is responsible for paying interest payments before funds generated from the bond sale are

allocated. Interest is due every six months following the bond‘s sale. Batbayar did not comment on

where the Central Bank would take funds for this first payment.

The government invested its money in securities with average interest of some 4.624 percent, with

MNT 900 billion given to commercial banks to hold for 12 months for 7 percent interest. The Central

Bank was thus responsible for making up the difference between interest owed for this payment and

interest generated from the government‘s investments.

The government looks to have transferred funds of USD 450 million for the power plant, railroad

and road infrastructure. The government has made plans to for spending of all but USD 347 million.

USD 50 million has been allocated to the Tavan Tolgoi power plant project, MNT 200 million for a

road network connecting Ulaanbaatar with six additional provincial capital as well as roads in the

capital. Funds not yet paid include USD 68.8 million for development of Mongolia‘s ger districts,

USD 27.7 million for green house complexes at Mongolia‘s 21 provincial capitals, USD 16.7 million

for investment into the textile industry, USD 45 million for a factory to produce construction

materials, and USD 14 billion for housing projects. Other planned funding includes MNT 570 billion

for investment into the wool and cashmere industry and MNT 200 billion for a dairy plant to be

located near Ulaanbaatar.

Source: Undesnii Shuudan

NEW MORTGAGE PLAN TO ENCOURAGE HOMEOWNERSHIP IN UB

The government approved a long-awaited mortgage plan.

The scheme offers 20-year mortgages for 80 square meter apartments that have been commissioned

as well as previously built apartments. The government has promised that the mortgages would be

available to everyone who held a permanent job and could be paid off in 20 years.

The mortgages will be offered through every commercial bank in Mongolia through agreements

made by the Bank of Mongolia. Monthly payments will not exceed a household‘s income by 45

percent. Homeowners already holding mortgages will have the opportunity to convert to this new

type of mortgage after seven months.

The government said MTN 360 billion would be loaned to construction companies before the

issuance of mortgages. Central Bank President Naidansuren Zoljargal said the mortgage plan would

increase monetary circulation by 30 to 40 percent in Mongolia. In an effort to prevent inflation, the

main concentration of funds will be directed into the Social Insurance Fund.

Source: Eurasia Capital

TUGRIK STRENGTHENS

The Mongolian tugrik appreciated by 0.61 percent in a week‘s time, reported the Bank of Mongolia

last week on Thursday.

The tugrik sold U.S. dollars to commercial banks at a rate of MNT 1,433.84 per dollar. The tugrik

appreciated by 0.61 percent from a week before after long-term depreciation against the dollar.

The Central Bank posted an official currency rate of MNT 1,433.43 at the auction‘s close.

Source: Eurasia Capital

FUEL PRICES FALL BY MNT 50

Prime Minister Norov Altankhuyag and Mining Minister Davaajav Gankhuyag announced on Friday

that fuel prices had fallen by MNT 50 per liter.

The officials made their announcements during a meeting at a Magnai Trade fuel station.

Altankhuyag credited the Mining Ministry and Petroleum Authority for the price reduction, saying,

―This will also make it possible for the start of other beneficial projects.‖

Petroleum Authority Director G. Olziiburen said the price reduction would save people some MNT 4

billion a month. Currently Mongolia consumes some 80 million liters of fuel a month.

Source: Montsame

MNT 40 MILLION IN MORTGAGES OFFERED TO CIVIL SERVANTS

The Housing Mortgage Corporation will provide up to MNT 40 million in mortgages to government

workers for the government‘s 4,000 Homes program.

Currently 1,251 state workers have submitted applications for the loans, with 404 requesting a total

of MNT 12 billion for apartments. The remaining MNT 33.8 billion for the 847 others is soon to be

decided upon.

The Ministry of Finance plans to release a MNT 6 billion bond for a second round of financing for the

program. A third round of financing is also planned.

Source: Business-Mongolia.com

PUTTING GLOBAL FOOD ON THE MAP

Researchers hailing from Mongolia, India, Turkey, western Europe, New Hampshire, Maryland and

Northern Arizona University have just started mapping the world‘s crops in the finest detail ever.

Ultimately, about 20 people will spend the next five years using satellite data to piece together

what grows where around the globe, and whether it is irrigated or rain-fed. A handful of the

primary researchers met at the U.S. Geological Survey this week to plot how they will proceed with

a USD 3.5 million NASA grant.

The general idea is to look at where the Earth grows food now, and where it might come from in

the future, when water supplies are more heavily demanded. Worldwide population could grow by

about two billion from now to 2050, the United Nations projects. One worry: Where will food

originate for all these people, particularly a growing global middle class with a taste for diverse and

meaty foods?

―Everybody‘s concerned about food security going forward because of population growth,‖ said

Prasad Thenkabail, a research geographer with the U.S. Geological Survey in Flagstaff and a lead

investigator.

So researchers are going to take sophisticated software (software that can match areas of corn, for

example, and realize it‘s seeing a crop), and land-based surveys, and make maps of what the world

looked like in 2010. This would allow governments and industries to see what is growing where,

what crops have multiplied or shrunk over time in a region, and to plan where best to invest limited

aid money for crops in Africa, for example. The data will also feed into bigger forecasts about what

could happen amid climate change, with agriculture serving as both a major producer and victim of

the gases driving climate change.

Source: Arizona Daily Sun

MONGOLIA PROTECTS THE SNOW LEOPARD

The Ministry of Environment and Green Development hosted a seminar last week on Thursday to

discuss ways to further strengthen snow leopard conservation.

More than 30 experts, scholars and officials from Mongolia‘s environmental protection departments,

the World Environment Foundation, the Snow Leopard Conservation Foundation and other institutes

discussed conservation measures and shared experience from other countries. Experts said that,

due to habitat loss, poaching conflicts with humans and other reasons in recent years, the snow

leopard had been listed as endangered.

Snow leopards are targeted by hunters for their beautiful fur. Mongolia‘s southern Gobi region is

implementing a project to protect the species. The Snow leopard is mainly distributed in China‘s

Xinjiang region, Mongolia, and other countries in the Central Asia plateau.

Source: Xinhua

DUTCH DTAS LEAD TO HUGE REVENUE LOSSES IN DEVELOPING COUNTRIES

The Netherlands serves as a conduit country for international tax dodging, leading to huge revenue

losses in developing countries, a Dutch research agency stated in a report published Tuesday. Last

year, Mongolia annulled its tax agreement with The Netherlands following claims that the deal

allows multinationals to avoid paying tax.

According to the report, published by SOMO under the name ―Should Netherlands sign tax treaties

with developing countries?‖ Dutch double taxation treaties (DTAs) lead to huge revenue losses in

developing countries because they reduce taxation on passive income.

―This is in contradiction to the Dutch government‘s policy coherence for development,‖ SOMO said

in a statement.

Research showed that out of the 36 researched countries, 28 countries together lose 771 million

euros (USD 1.023 billion) on dividend and interest tax income alone every year. But SOMO thinks

that the total revenue loss resulting from Dutch DTAs will be much higher. ―This is because tax

avoidance through profit sharing with the use of royalties and capital gains are not included in the

same calculations,‖ the statement said.

―The Dutch governments‘ claim that treaties are beneficial for developing countries is simply not

true. This report shows that Dutch tax treaties have a seriously negative impact on poor countries‘

revenue and that there is no evidence that these tax losses are compensated with an increase in

investment as a result of having DTAs,‖ said SOMO researcher Katrin McGauran.

State Secretary of Finance Frans Weekers and a majority of the House recently denied that the

Netherlands is a tax haven. According to Weekers, Dutch tax treaties with developing countries

have a beneficial effect because they provide more investment.

Source: Xinhua

CASH WOES TOP “BUSINESS RISK” LIST FOR MINERALS COMPANIES

Capital liquidity has surpassed resource nationalism and skills shortages to be the biggest risk for

mining and metals companies according to a report by Ernst & Young. Mining is Mongolia‘s biggest

industry, with the Oyu Tolgoi copper-gold mine alone expected to represent a third of its gross

domestic product.

Capital allocation and access to capital topped the business risk list, up from eighth position last

year. The findings were contained in an Ernst & Young report entitles, ―Business Risks Facing Mining

and Metals 2013-2014. Ernst & Young global mining and metals leaders Mike Elliott said capital

dilemmas threatened the long-term growth prospects of larger miners, and the short-term survival

of cash-strapped juniors.

―The rising business risks that are top of mind with mining and metals CEOs and boards today are

being driven by the need to protect returns and manage the interests of varied and often competing

stakeholders,‖ Elliot said. He added, ―This is in stark contrast to just 12 [to] 18 months ago when

fast-tracking production was still top of the agenda and capacity constraints defined the key

business risks.‖

Margin protection and productivity improvement was placed second in the report, up from fourth

position last year, and resource nationalism was considered the third biggest risk after topping the

list in 2012. Skill shortage was placed fifth, down from second position. The report said a decline in

commodity prices in 2012 cost inflation and falling returns had created a mismatch between larger

companies‘ long-term investment plans and the short-term expectations of shareholders, who are

increasingly demanding higher dividends.

Source: Mining Journal

NEW MINING COMPANIES TO LAUNCH IN KAZAKHSTAN

Mongolia‘s neighbor to the west, Kazakhstan, plans to launch around 20 new companies in the

mining sector, despite a global slowdown that is affecting the industry. Minister for Industry and

New Technologies Asset Issekeshev announced 12 June.

Speaking at the IV Astana Mining & Metallurgy International Congress, Issekeshev said the new

enterprises would be launched as part of the ongoing state industrialization program.

―In Kazakhstan, mining and metals sector is one of the key sectors of the economy, accounting for

about 9 percent of GDP, about 18 percent of the total industrial production and almost a quarter of

exports,‖ Issekeshev told delegates.

Source: BNE

COPPER FALLS TO 1-MONTH LOW ON CHINA, CENTRAL BANK FEARS

Copper hit its lowest in more than a month on Tuesday, pressured by worries that central banks

could soon start scaling back on stimulus measures and concerns about the outlook for demand from

top consumer China.

Three-month copper on the London Metals Exchange ended at USD 7,065, down from a close of USD

7,230 on Monday. It earlier touched its lowest since early May at USD 7,032 a ton intraday trade.

Copper‘s fall echoed other markets, as concerns over China added to worries that central banks

could soon start tightening the ultra-loose monetary policies that have fuelled rapid gains in asset

prices this year. World shares fell and yields on riskier European debt rose on Tuesday after the

Bank of Japan‘s decision not to follow up its USD 1.4 trillion stimulus program announced in April.

Also adding pressure to prices was data at the weekend from China, the world‘s biggest consumer

of copper, showed unexpected weakness in May trade and domestic activity struggling to pick up.

―There‘s really no incentive for anybody to look to the buy side at the moment. In the short term,

the weak Chinese data was clearly a negative,‖ said Wiktor Bielski, an analyst at VTB Capital.

Keeping prices in check were concerns about the outlook for supply of the metal used in power and

construction.

―A lot of the big production increases over the next few years are now in jeopardy because of

financial pressure on miners, or environmental problems for example,‖ said Matt Fusarelli of

Sydney-based consultancy AME Group.

More supply is expected to hit the market, however. Global miner Rio Tinto PLC plans to start

exporting copper from the USD 6.2 billion Oyu Tolgoi mine in Mongolia on Friday, marking the

opening of a mine that will eventually make up one-third of the country‘s economy.

Source: Reuters

CHINA‟S ECONOMIC SHIFT NOT BAD NEWS FOR ALL COMMODITIES, BANK ARGUES

Not all commodities will lose out should China succeed in changing its growth model from one based

on resources-intensive infrastructure investment towards one supported by higher levels of

domestic consumption, new research by Barclays indicates. China gobble up more than 90 percent

of the mineral resources extracted from Mongolia.

China‘s twelfth five-year plan, endorsed in March, prioritizes economic rebalancing and the current

poor commodity market sentiment is often attributed to this transition, owing to the fact that the

giant Asian economy is the biggest consumer of many of the world‘s commodities. However,

Barclays commodities research Managing Director Kevin Norrish says usage intensity of several

commodities, including gasoline, nickel and aluminum, could grow robustly as a result of China‘s

proposed transition. By contrast, silver, platinum and several agricultural commodities are

vulnerable, while the usage-intensity downside for commodities such as coal, steel, copper and zinc

is expected to be relatively modest.

Norrish believes that the prevailing weak sentiment is probably driven more by cyclical factors than

the structural issues being cited, including China‘s economic shift and perceptions that the supply-

side risks have dissipated.

―In my opinion, many in the commodities business are confusing the cyclical and the structural,‖ he

said, noting that commodities have performed poorly historically when growth and interest rates

are low.

A new commodities outlook statement by the bank argues that it is seeing signs of a ―return of

fundamentals‖ and a breaking free from established ties with other asset classes. A modest

differentiated recovery is being forecast for 2013, while Norrish and his team believe commodities

are on the ―brink of a great rotation in price performance.‖

Source: Mining Weekly

CHINA‟S TOUGH POLICY CHOICES

China‘s monthly data releases continue to show a trend of slowing growth and economic activity.

Given that we are now in the last month of the second quarter, it is likely that the second quarter

GDP growth figure is going to continue the disappointment.

Already expectations are building for the government to ride to the rescue once again, but a

slowdown in headline growth and especially investment is almost certainly necessary if economic

rebalancing is to get seriously underway. As China moves into its famous Dragon Boat Festival

holiday, a slew of data has already been released covering the month of May. The picture being

painted is not particularly encouraging for those expecting an imminent recovery in China‘s

headline GDP rates. Most disturbing of all perhaps was China‘s trade data for May. Year-on-year

growth in exports fell well short of expectations at only 1 percent whilst imports (which would

theoretically rise faster as China rebuilds towards its much heralded consumption-driven economic

model) actually fell by 0.3 percent.

The trade slowdown is not as bad as it seems though, or to put it more accurately, the previous

months‘ strong performance was not as strong as it seemed. A crackdown on the recent anomalies

in Chinese trade data, now believed to have included large amounts of false invoices due to the

misuse of ―bonded areas‖ and special trade finance channels by entrepreneurs engaging in hidden

capital movements and ―carry trade,‖ has probably returned the data to a much more reliable

picture.

Despite having made statements stressing that the government is willing to endure lower growth

rates, there is building expectations (read: ―hope‖) after this latest batch of data that Li Keqiang

and his administration are planning to provide some sort of stimulus again. Since the government

has proven much more effective in the past at stimulating investment-driven growth than

consumption, there are some hard choices to be made.

Source: The Diplomat

POLITICS

TONY BLAIR STRIKES GOLD IN MONGOLIA

Former Prime Minister Tony Blair has negotiated a contract to advise the Mongolian government just

as the country strikes it rich from a vast copper and gold mine in the Gobi desert.

Blair‘s diplomatic skills will be needed in a country undergoing rapid economic transformation. The

Mongolian government has been in dispute with Rio Tinto PLC over the operation of the country‘s

biggest mine. Sources have suggested Blair was called in to mediate between the two although Blair

and Rio Tinto both denied that was true. The addition of Mongolia to Blair‘s portfolio will bolster

the income of Blair‘s Government Advisory Practice, which operates as part of Tony Blair

Associates, ―the umbrella organization‖ for Blair‘s ―commercial operations.‖ The Source‘s

investigations have shown Blair and a team of consultants are now paid millions of pounds to advise

governments in Kazakhstan, Kuwait, Colombia, Brazil and has a deal to work in Albania as well.

It is estimated that Blair, who owns eight homes in the United Kingdom, has earned in the region of

GBP 50 million (USD 78.5 million) since leaving Downing Street in 2007. He makes his money through

his consultancy work, speeches and paid posts with JP Morgan, the investment bank, among others.

Blair points out a large amount of his money is ploughed back into philanthropic work including two

international charities he set up after leaving office. Blair refuses to reveal the full extent of his

government consultancy empire, but the deal in oil and gas-rich Kazakhstan alone is said to be

worth as much as GBP 13 million (USD 20.4 million). No figure has ever been confirmed.

Blair travelled with his entourage to Ulaanbaatar on 22 March for a two-day visit. He was

accompanied on the trip by John Grogan, a former Labour MP from Selby and who is now chairman

of the Mongolian-British Chamber of Commerce. During the trip, Blair met with President Tsakhia

Elbegdorj and Prime Minister Norov Altankhuyag. A senior Mongolian official confirmed that Blair

had pitched his firm‘s services to the government during the visit in March. The official said: ―He

offered technical assistance to the Cabinet Secretary for his delivery unit concept. That‘s from his

years as prime minister, a structure to implement policy reforms.‖ The official said the matter

would be discussed again after the 26 June presidential election.

Last night a spokesman for Blair said, ―We will be working with the Mongolian government, helping

them deliver their reform program.‖ But the spokesman insisted Blair‘s company would not make

millions of pounds of profit, saying ―The cost of the program is to cover a full-time, highly qualified

team living and working in the country. It is done on the same basis as the many other consultants

that work there.‖

Source: The Telegraph

PRESIDENTIAL CANDIDATES SPEAK ON OT

The candidates for Mongolia‘s June 26 presidential election have made their statements to how

they would approach the Oyu Tolgoi investment agreement as president.

Incumbent President Taskhia Elbegdorj said he could not state any conclusions on the investment

agreement or make any promises. Mongolian People‘s Party presidential candidate has promised to

improve the Oyu Tolgoi Investment Agreement with an option [not further explained by the source]

that is mutually beneficial and balanced. Mongolian People‘s Revolutionary Party Naatsag Udval has

stated that the investment agreement was passed under corrupt intentions for election purposes.

She said as president she would resolve issues concerning the Oyu Tolgoi mine and other strategic

deposits with the best possible outcomes for the people of Mongolia.

Source: Zuunii Medee

MONGOLIA ENLISTS 300 OBSERVERS FOR JUNE ELECTION

Over 300 observers from 32 countries have been granted certificates for short-term observation

during the election of the president.

According a report by the General Election Committee, foreign observers will visit electoral districts

in the cities and provinces and observe the printing process of ballot papers and programming of

the voting machines. Observers are expected to take note of advertising practices, voter

participating as well as the preparations made in the lead up to the election.

Source: News.mn

“WARRIORS TYRANNOSAURUS” DEBUTS IN UB

Hundreds of spectators and reporters gathered at Sukhbaatar Square Saturday to have their first

look at an exhibition of ―Warriors Tyrannosaurus‖ fossils returned from the United States.

The Mongolian fossils had been smuggled into the United States, but they would soon become a

valuable heritage of Mongolia, Tsedevdamba Oyungerel, minister of culture, sport and tourism, said

at an opening ceremony. In order to effectively protect the country‘s abundant dinosaur fossils

resources, the government has decided to build a Mongolian dinosaur museum, with the temporary

exhibition open until September, said the minister.

A large number of Mongolia‘s dinosaur fossils have been smuggled into Europe, North America and

Asia. More than 120 pieces of them are expected be returned to their homeland in the near future.

Source: Xinhua

CHINA GRANTS CNY 30 MILLION IN AID

China has agreed to a grant of CNY 30 million (USD 4.9 million) to Mongolia.

The agreement for the aid was signed by Economic Development Minister Nyamjav Batbayar and

Chinese Ambassador Wang Xiaolong. The aid was promised during last month‘s visit by Chinese State

Councilor Yang Jiechi [Yang was visiting to discuss development strategies for Mongolia‘s rails –ed].

―China has been helping Mongolia and the aid would be useful for the improvement of the lives of

Mongolian people,‖ said Wang.

Source: Unuudur

CANADA PROVIDES MONGOLIANS WITH NEW VISA OPTIONS

The Canadian embassy announced plans to provide Mongolians with long-term multiple-entry visas.

Canadian Ambassador Gregory Goldhawk announced the visa during a meeting with Foreign Minister

L. Bold. Goldhawk said Canada would provide 10-year visas to Mongolian civilians with normal

passports and four-year multiple-entry visas to diplomats. Goldhawk said it was a joy to see the

number of Mongolians heading to Canada grow each year and that the introduction of the new long-

term visas was an important step to encouraging travel.

The two officials also discussed measures to increase bilateral relations and cooperation between

their countries. This year Canada and Mongolia celebrate 40 years of diplomatic relations and the

fifth year anniversary of the establishment of the resident Canadian Embassy in Ulaanbaatar.

Source: News.mn

FINLAND‟S SPEAKER VISITS MONGOLIA

Parliament Speaker Zandakhuu Enkhbold met Monday with his counterpart from Finland Eero

Heineluoma during an official visit to Mongolia.

The Mongolia-Finland inter-parliamentary group, set up in 2012 with 11 members and led by MP N.

Battsereg, plays a big role in activating of the collaboration between the parliaments, he said, and

added that Mongolia‘s Parliament desired widened political and economic ties. Battsereg also noted

that Finland had sent its representatives, headed by the justice minister, to the seventh ministerial

conference of the Community of Democracies, lauding Finland as a leading country of education and

science.

―Mongolia is willing to study Finland‘s experience in the education and on innovation

development,‖ said Battsereg.

Heineluoma said Finland would like to collaborate with Mongolia in mining and agriculture. He also

inquired about the structure of Mongolia‘s court system as well as the state of agriculture.

Source: Montsame

INDIA, MONGOLIA ENGAGE IN JOINT MILITARY EXERCISES

In an effort to develop international cooperation and joint training for U.N. peacekeeping missions,

the Indian Army is participating in a joint exercise with its Mongolian counterpart from 10 to 24

June.

The Indian Army is represented by 28 personnel, who are participating in several joint counter-

insurgency and counter-terrorism operations, in Mongolia. Codenamed ―Nomadic Elephant – 2013,‖

the exercise will focus especially on the needs of the peacekeeping missions under the U.N. flag

and will help in increasing the coordination and understanding between troops of the two nations.

Defense cooperation and relations between India and Mongolia have seen a steady growth over the

last decade with the first joint exercise in 2004. For the last few years, the joint drills are being

held every year. In 2012, the joint training was held at Belgium, in Karnataka.

Source: Business Standard

JAPAN, MONGOLIA AGREE TO COOPERATE OVER N. KOREA'S ABDUCTIONS

Foreign Minister Luvsanvandan Bold and his Japanese counterpart Fumio Kishida agreed on Tuesday

to cooperate in dealing with North Korea, including its abductions of Japanese nationals decades

ago, the Japanese Foreign Ministry said.

Mongolia hosted talks between senior diplomats of Japan and North Korea on the thorny bilateral

issue in Ulaanbaatar last November. In a separate meeting in Tokyo, Japanese Prime Minister Shizo

Abe and Bold confirmed plans to deepen economic cooperation between the two countries, with

Abe saying he hopes Mongolian Prime Minister Norov Altankhuyag will visit Japan soon, possibly in

fall, to advance economic exchanges, according to a participant.

The two sides also agreed to work together to build a ―strategic partnership,‖ following Abe‘s trip

to Mongolia in March, during which he agreed with Mongolian leaders to advance cooperation on

mineral resource development and the environment. Mongolia borders China and maintains

diplomatic relations with North Korea, with which Japan does not have diplomatic ties, due partly

to the abduction issue. With the whereabouts of Japanese nationals abducted by North Korea in the

1970s and 1980s still unclear, Abe has vowed to resolve the long-standing issue while he is prime

minister, and bring back all abductees.

Source: Kyodo News International

MONGOLIA JOINS INTERNATIONAL ENVIRONMENT GROUP

Environment and Green Development Minister Sanjaasuren Oyun signed an agreement for Mongolia

to join the Global Green Growth Institute during the 2013 Global Green Growth Summit in South

Korea.

Over 500 representatives of governments, non-government organizations and private entities

attended the summit where she signed the agreement. The institute is a new international

organization driven by needs of emerging and developing countries. It is designed as an open global

platform to support experimentation and collective learning by developing countries seeking to

leapfrog the resource-intensive and environmentally unsustainable model of industrial development

pioneered by advanced economies in an earlier era.

Source: Info Mongolia

FORMER EDUCATION MINISTER ACCUSED OF CORRUPTION

MP Yo. Otgonbayar has been accused of extortion by an anonymous source from an investigation.

Otgonbayar stands accused of demanding a MNT 230 million bribe in order for a Nalaikh school to

pass state inspection during his tenure as education minister. The source said that after he refused

to pay the bribe he was beaten by a gang of individuals on Peace Bridge and had his car taken.

Source: Udriin Sonin

MP‟S WIFE UNDER INVESTIGATION

The wife of MP and former Education Minister Yo. Otgonbayar is being investigated as an accessory

of white-collar crime.

At a press conference last Friday, City Deputy Prosecutor Ts. Batbold announced O. Erdensolongo

was under investigation by the Anti-economic Crime Division of Police and is under the authority of

the Attorney‘s Office. Investigators are looking at transactions made by Erdenesolongo in her 21

bank accounts at Golomt, Zoos, Toriin Bank, and Ulaanbaatar Bank.

Batbold also corrected erroneous news reports, saying the Bank of Mongolia checks all information

coming from commercial banks and inspections were being made to determine the source of

payments, their legitimacy, and if taxes were paid for the transactions and funds in question.

Otgonbayar has not yet made a request for visitation with his wife.

Source: Undesnii Shuudan

FORMER HEALTH MINISTER ARRESTED FOR CORRUPTION

Police arrested former Health Minister N. Khurelbaatar upon his arrival at the Chinggis Khaan

International Airport from abroad on 7 June.

Khurelbaatar is under investigation by the Special Investigation Unit of the Prosecutor General and

Interpol for accepting bribes and embezzlement.

―I hope that the legal and inspection organizations find me not guilty,‖ said Khurelbaatar during his

arrest. ―The truth will overcome all. Maybe there are political motivations.‖

A safe containing MNT 600 million in bills denominated in Chinese yuan was stolen from the home of

Khurelbaatar‘s son. Investigators believe that money may have been attained through illegal means.

Source: Unuudur

FORMER PETROLEUM AUTHORITY CHAIRMAN SUSPECTED OF BRIBERY AND EXTORTION

A former Petroleum Authority Chairman has been accused of accepting bribes from PetroChina

Daqing Tamsag and extortion.

Former Chairman D. Amarsaikhan has been accused of receiving bribes to ensure that a production

sharing agreement was permitted for the extraction of petroleum on the Menengiin steppe of

Dornod Aimag. The agreement provides the Chinese investors 76 percent of profits and the

Mongolian government 24 percent. A recent audit shows, however, that between 2005 and 2012 the

former chairman allegedly received 1 percent of Mongolia‘s 24 percent.

The unaccounted for 1 percent was automatically transferred to a bank account in Hong Kong,

where no taxes would be due, for money laundering. Further investigation found allegations that

Amarsaikhan demanded funds from a Korean firm in return for the delivery of cheap fuel supplies to

Mongolia.

Source: Udriin Sonin

COURT RULES AGAINST MPP CLAIM FOR LENIN MUSEUM

The Chingeltei District Court on Wednesday ruled against the Mongolian People‘s Party‘s (MPP‘s)

claim of ownership over the Lenin museum.

The judge panel delivered its decision pointing out that the museum building must be used in

accordance with its museum specifications, not as a commercial building. The panel removed any

claim of ownership by the Mongolian People‘s Party, which has used the building for its own

commercial use for years.

The hearing for the property was postponed several times because the defense representing the

MPP failed to arrive at court. However, the judge decided it would not delay the matter any further

and held the hearing anyway. The government has selected the Lenin Museum for the site of a now-

planned dinosaur museum, which would house the recently repatriated Tyrannosaurus baatar from

the United States.

The Lenin museum was built using government funds under the authority of the Ministry of Culture

in 1974. Since the abolishment of the Historical Institute of the Mongolian People‘s Revolutionary

Party, the now renamed MPP has used the building for private rental [-The current MPRP was a

break off sect from the MPP formed in 2010 and has no claim over the property –ed].

Currently, 200 exhibits are found in the Paleontological Center of the Science and Technology

Academy in addition to 90 exhibited fossils in Europe, 25 in Asia, and 150 at the Natural History

Museum.

Source: News.mn

AFCCP PROHIBITS THE USE OF FOREIGN CURRENCIES

The Authority for Fair Competition and Consumer Protection (AFCCP) has introduced a new rule that

all domestic currency may be used for transactions.

AFCCP delivered a notice to companies last month that foreign currencies could not be used for

transactions. The new regulation addresses complaints received by AFFCP that paying fees in a

foreign currency was in violation of Mongolian law. The law will restrict people from paying for

services such as public transportation and school tuition in foreign currencies.

O. Magnai, chief of the authority, said inspections had been made to ensure that the law was being

followed and that punitive measures would be taken against any person or entity found in violation

of the new regulation.

―If there are any violations regarding the rule, a civilian can complain about it to the Authority for

Fair Competition and Consumer Protection,‖ he said. We will take direct measures.‖

Source: News.mn

MIAT SCANDAL SUSPECTS CONVICTED AND SENTENCED

A judges‘ panel sentenced the former directors of MIAT Mongolian Airlines accused of embezzling

funds from a War Risk Insurance account to between 10 and 14 years.

Former Director B. Erdenbileg received a sentence of 14 years and one month, B. Bat-Erdene got 12

years and two months, Ts. Orkhon got 11 years, former Vice Director Ch. Khorolsuren got 13 years

and one month, Ch. Khorolsuren‘s brother and former director of Mongolian Airlines Group Ch.

Suuritogtok got 10 years and one month, and former branch director of Branch No. 6 of Golomt

Bank G. Saranchimeg got 11 years and one month. The judges‘ panel sentenced six out of seven

suspects believed to be involved with the embezzlement. The company‘s former accountant, N.

Gantumur, will receive a separate hearing because his attorney failed to appear at trial.

The court ordered the seizure of assets of those convicted. It also ordered that charges against all

other suspects related to this hearing be dropped. That included charges against Orkhon‘s wife

Tsetsegmaa and Erdenebileg‘s brother Mandakhbayar because no evidence was provided by the

prosecutor on behalf of his allegations of guilt.

Additional investigations are still pending, however, for D. Sugar, former chairman of the State

Property Committee, S. Batkhishig, a former member of the Constitutional Court, and civil servant

N. Galt, who allegedly established a false insurance company in Japan.

Source: News.mn

FARMERS PROTEST EXCESSIVE USE OF IMPORTED POWDERED MILK

The Mongolian Milk Farmers Union held a peaceful demonstration at Sukhbaatar square at 10 a.m.

on 10 June.

Over 500 demonstrators representing 5,000 farmers were expected to attend the demonstration.

The Mongolian Milk Farmers Union claims that milk producers give them less than market price for

the milk they provide. They demanded that the government support milk farmers to increase

domestic dairy production and halt the import of powdered milk.

Estimates shows that almost 80 percent of dairy products sold in Ulaanbaatar are made from

imported powdered milk, while only 20 percent comes from local sources. The Ministry of Health

recommends 430 grams of milk per capita in Mongolia compared with the current volume of 100

grams per capita in Ulaanbaatar.

Source: News.mn

NEW MONGOLIAN LAWS

The following laws, amendments were published in the latest weekly Government bulletin. Unless otherwise decided by Parliament, they will take effect ten (10) days after publication. Date Laws 10.06.2013 Law on Budget - 2014 Mongolia consolidated budget, 2015-2016 budget conception Amendments to Law on Government's Special Fund Please visit BCM's website, Legislative Working Group, for a summary of new Mongolian laws. BCM

members who wish to access complete versions of the laws and regulations in Mongolian language

are welcome to email the BCM office: info@bcmongolia.org.

ANNOUNCEMENTS

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.

___________________________________________

"MSE-BCM SECURITIES LAW OVERVIEW SESSION", 4 JULY, KEMPINSKI HOTEL

BCM and Mongolian Stock Exchange are organizing a "MSE-BCM Securities Law overview session"

on July 4 from 9:30 am – 12:30 pm in the "Altai" conference room at the Kempinski Hotel.

Speakers will elaborate on key items in this new Securities Law. MSE speakers will also detail the

planning to be undertaken by January 1, 2014 when the law becomes effective.

Speakers include:

- Altai.Kh, Mongolian Stock Exchange (confirmed)

- Saruul.G, Mongolian Stock Exchange (confirmed)

- Randolph Koppa, Trade and Development Bank (invited)

- Michael Aldrich, Hogan Lovells (invited)

Registration is FREE. For registration, please contact Tugi at tugi@bcmongolia.org. The first 125

members registered will be admitted. The deadline for registration is Friday, June 28.

___________________________________________

BCM FOOTBALL CUP 2013, 6 JULY - Sponsorship Package is available

BCM successfully organized the first ―BCM Football Cup 2012‖ as part of BCM‘s 5th year anniversary

on July 7, 2012. BCM would like to invite you to participate in the "BCM Football Cup 2013"

tournament which will be held on High School # 5's football field on Saturday July 6, 2013 as a team

or as a spectator.

BCM Football Cup 2013 Registration procedures:

- Will register 10 teams from BCM members by June 28 (application fee is 250,000 MNT) on a first

come, first registered basis.

- Please list each player‘s name and position at your company. Each team can have 11 or more

players named, but just 9 players including the goalkeeper on the field due to size of the field.

Note: Professional players will not be accepted.

- The competition will be among 12 teams in two Groups.

- Will announce the teams for the competition on Monday, July 1, 2013. We will have a lottery for

the groups and technical session on Thursday, July 4 with the captains of the teams.

Awards will be given to the top 3 teams, the "Most Valuable Player" and ―Most Valuable

Goalkeeper‖.

We are seeking one main sponsor/partner for this event which will have a specific sponsorship

package.

Please contact Otgoo at otgoo@bcmongolia.org and 99197985, 317027 for registration and

additional information.

___________________________________________

“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. It is an

honor to introduce you to the new version of the database which is 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.

S. Oyun‘s, Minister of Environment and Green Development, presentation at the BCM monthly

meeting on May 27 has been added to BCM‘s Mongolian website, bcmongolia.org/mn/илтгэлүүд.

- Байгаль орчин, ногоон хөгжлийн сайд С.Оюун, Байгаль орчин, ногоон хөгжлийн шинэчлэлийн

бодлого, үйл ажиллагаа, МБЗ-ийн сарын уулзалт 5 сарын 27, 2013

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

___________________________________________

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

„PHOTO GALLERY‟

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

• ―Update on the issue of strategic deposits‖ by Mongolia Energy Corporation Limited

• 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: - ―Selected Macroeconomic Indicators for

Mongolia, as of June 2013‖ by International Monetary Fund; ―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 Mongolia Stock

Exchange: New Securities Law explained is posted and 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.

___________________________________________

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 1,182 fans on our Facebook fans page, 1,245 connections on LinkedIn network, and

692 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.

BCM WORKING GROUP MEETING

The BCM Capital Markets Working Group met on Wednesday, June 12, with 18 members attending.

Howard Lambert /ING Bank/ and Nick Cousin /BDSec/ moderated the session.

New Member: Zulbayar Badral /Lehman Bush/

Participants: Anastasia Zherbakhanova/Anderson Anderson/ Erdenedelger/Khan Bank/ Anar-Erdene

J/ING/ Oyundari G/Embassy of Canada/, Shaukat Tapia/PWC/ Enerelt E /ADB/.

Speakers and topics were:

- Update on the US road show for MGG.- Nick Cousin/BCSec Chief Operating Officer/

- Securities Law highlights and overview MSE planning to Jan 1, 2014.- Saruul.G /CRO,

Mongolian Stock Exchange/

- Coking coal market for Mongolia – Dr. Graeme Hancock /President and Chief Representative,

Mongolia Anglo American Development LLC/

Note: Mr. Saruul`s presentation is available on BCM‘s Capital Markets Working Group web page.

Please contact: erka@bcmongolia.org

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]

May 31, 2013 *9.7% [source: NSOM]

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

Note: 8.4% y-o-y, Ulaanbaatar city, May 31, 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 – JUNE 13, 2013

Currency Name Currency Rate

US dollar USD 1,433.73

Euro EUR 1,913.31

Japanese yen JPY 14.80

British pound GBP 2,245.58

Hong Kong dollar HKD 184.57

Chinese Yuan CNY 233.51

Russian Ruble RUB 44.29

South Korean won KRW 1.26

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.