August 23 2013

1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
Issue 288 – August 23, 2013
NEWS HIGHLIGHTS:
Business
 Erdenes OT executive director fired following Rio dispute;
 Erdenes TT coal price to Chalco falls to $43 a ton;
 Erdenes TT experiments with new coal-processing technology;
 Areva announces 63,000 tons of uranium discovered;
 Modun raises funds to advance Nuurst project;
 Government to buy MMC’s coal-route road;
 Thai hospital group looks to acquire Mongolian hospital;
 International lab-testing group opens facility in UB;
 Sumitomo Mitsui Banking to open representative office in UB;
 Clarins to open in UB;
 Wolf continues oil exploration at Sukhbaatar;
 Moody's downgrades MMC bond rating;
 Origo launches strategic review amid uncertainty;
 FMG Mongolia Fund loses 4.5% in July;
 ABA to host 30th general meeting;
 Kyrgyzstan opens a new round of Kumtor talks.
Economy
 Mandal predicts 8% growth for 2013;
 Central bank VP points out brights spots in gloomy economy;
 EIU outlook for 2013-2014 period;
 Why is the tugrug falling?
 “Mongolia can survive without OT for a while”, says headof DP Parliamentary Group;
 Mining setback weighs on Mongolia oil project hopes;
 Cursed mine claims another deadbeat bank;
 Mongolia’s hesitates toward its top investor;
 Rolling stone: helping Mongolian families with a mobile kindergarten;
 Demand surges for copper in China;
 China's central bank chief confident on outlook;
 Asia’s debt conundrum reawakens ghosts of 1990s crisis.
Politics
 Parliament recalled as falling foreign investment threatens economy;
 Legislative changes on the horizon;
 OT briefs labor minister on redundancies;
 Savings Insurance Corp. waits in the wings to insure savings;
 Cabinet moves in support of coal sector;
 Cabinet approves structure for housing agency;
 Mongolian delegation visits Scotland;
 Mongolian delegation meets CPC official;
 Incheon mayor visits Ulaanbaatar;
 Khaan Quest 2013 closes;
 Elbegdorj visits Kuwait;

2.  New Zealand Premier to visit Mongolia;
 Students will have to follow new visa regulations for Ukraine;
 Temporary traffic restrictions to begin 24 August;
 Why Hasn’t Mongolia Developed Stronger Ties with Kazakhstan?;
 3,000-year-old nomad shields excavated near China-Mongolia border.
ECONOMIC INDICATORS
 MSE Top 20 Index by market Capitalization;
 Foreign-listed Companies with Mongolian Assets;
 Monthly Macroeconomic Overview – July 2013;
 Inflation;
 Central bank policy rate;
 Currency rates.
*Click on titles above to link to articles.
SPONSORS
Khan Bank
International SOS
Wagner Asia Automotive Oxford Business Group
Mongolian National Broadcasting Breakthrough PR
BCM MONTHLY MEETING NOTICE
BCM‘s monthly meeting for members will be on Monday, August 26, 2013 at 5PM at the KEMPINSKI
HOTEL KHAN PALACE, 2nd floor, Altai Ballroom.
The bilingual meeting will feature the following presentations:
- Call to Order/Business Council of Mongolia: B. Byambasaikhan, Chairman, BCM
- BCM Report: I. Ser-Od, Vice Director, BCM
- Joshua Sunga, Internship Porgram Director, AIESEC – ―Youth Leadership Development‖
- G. Zorig, Country Manager, Tree Global Mongolia – ―Tree Global Mongolia Overview Pressentation‖
- Daniela G. Zadrozny, Consul Chief, US Embassy – ―American Visas 101‖
- G. Saruul, Deputy CEO, Mongolian Stock Exchange – ―Securities Law Overview‖

3. A networking reception will be held for all attendees immediately following the business portion of
the meeting in the same Altai Ballroom.
BUSINESS
ERDENES OT EXECUTIVE DIRECTOR FIRED FOLLOWING RIO DISPUTE
The executive director for Erdenes Oyu Tolgoi LLC, Tserenbat Sedvanchig, has been fired after nine
months at the state-owned company, a period marked by disputes over mine costs and funding with
partner Rio Tinto PLC.
He was replaced by former deputy prime minister and member of Parliament Davaadorj Ganbold,
56, at a board meeting today, the national Montsame News Agency reported on its website.
―The project should work for both sides, Mongolia and Rio Tinto. Something should be done to find
consensus,‖ Ganbold said today in an interview. ―It's a marriage between the two sides and I will try
to make it work, to push the project forward.‖
Sedvanchig last month told Rio Tinto that Parliament is responsible for approving a multi-billion
dollar package to finance the second stage expansion of the mine. The news, announced in a 29
July press release by Rio Tinto, triggered a 20 percent drop in the share price of Turquoise Hill
Resources Ltd. Prime Minister Norov Altankhuyag had to step in and overrule Sedvanchig, saying the
decision to approve project financing could be made by the board of Oyu Tolgoi LLC.
Ganbold ―may be an ideal candidate to do what needs to be done as it relates to getting OT back on
track,‖ Nick Cousyn, chief operating officer at brokerage BDSec, wrote in a note to clients.
Source: Bloomberg
ERDENES TT COAL PRICE TO CHALCO FALLS TO $43 A TON
Erdenes Tavan Tolgoi LLC has agreed to a price point of USD 43 per ton of coal sold to Aluminum
Corp. of China Ltd. (Chalco)
The agreed price is reportedly higher than other coal companies operating in Mongolia. The
government is pushing both private and state coal companies to continue exporting coal, however,
to keep the budget deficit from growing wider. It also has decided to purchase the road between
Tavan Tolgoi and the Gashuun Sukhait border point to China to help encourage coal export activity.
Erdenes TT is locked into an agreement to pay USD 350 million in debts to Chalco via coal. The
government threatened to cancel its contract with Chalco in February this year when the price hit
USD 70 a ton. Chalco hinted that the price could go as low as USD 30 a ton.
Source: Udriin Sonin
ERDENES TT EXPERIMENTS WITH NEW COAL-PROCESSING TECHNOLOGY
Erdenes Tavan Tolgoi LLC has partnered with Japan Coal Energy Center and Nagata Engineering to
test an experimental coal drying process. If successful next year, the company will move toward
establishing a coal preparation plant using the technology within 2014.
Source: Undesnii Shuudan
AREVA ANNOUNCES 63,000 TONS OF URANIUM DISCOVERED
Areva Mongolia LLC announced the discovery of uranium deposits in Dornogobi Aimag large enough
to meet global demand for 20 years,
Thiery Plaisant, chief executive of Areva Mongolia, said his company and its subsidiary Kojegobi
Mongolia has registered 6,000 and 57,000 tons of uranium with the Mineral Resources Authority at
Dulaan Uul and Zuuvch Ovoo, respectively. Areva now has plans to develop a large-scale project in
both cities, with about 30 kilometers in between each deposit. The company hopes to bring its total
uranium reserves to 100,000 through further exploration.
Plaisant also took the time to deny rumors that Areva's activities in the area were responsible for
animal deformities. He stressed the fact that Areva had only conducted exploration activities, not

4. processing, and would not be creating yellow cake from uranium in Mongolia. He added that Areva
had temporarily halted its operations to look into the matter, and that it was willing to fund
research to investigate the reasons behind alleged animal deaths in the area.
In total, Areva has spent approximately USD 140 million on exploration in Mongolia. Areva, in 2011,
sold 34 percent of Areva Mongolia shares to Mitsubishi Corp and now plans to negotiate a strategic
cooperation agreement with the Mongolian government.
Source: Udriin Sonin
CLARINS TO OPEN IN UB
The French luxury company Clarins Group will open its first branch in Ulaanbaatar on 21 August.
The event will be marked by the arrival of the son of the store brand's founder, Clarins Christian
Courtin. Clarins will open its store at the SPA Center in Ulaanbaatar. This Ulaanbaatar branch will
have seven rooms, the most among its stores in Asia.
Source: Udriin Sonin
MODUN RAISES FUNDS TO ADVANCE NUURST PROJECT
Modun Resources Ltd. has raised funds for the ongoing feasibility study on the Nuurst thermal coal
project in Mongolia, as discussions with the government for an off-take agreement for Nuurst coal
briquettes continues to progress.
Modun attracted sophisticated investors in the placement at the market price of USD 0.007 to raise
USD 375,000. Recently the company achieved another significant milestone on the road to
production at Nuurst, following the approval of its application for a mining license. The project is
strategically located and is just six kilometers from existing railway infrastructure, with Modun the
only international company recently selected as a preferred supplier of coal to the Mongolian
government under their ―Clean Air Initiative.‖
The initiative is to reduce air pollution in Ulaanbaatar, which has been ranked as the second-most
polluted city in the world, according to the Worth Health Organization, following Ahwaz in Iran.
Modun is the only preferred supplier who owns their coal reserve, which importantly guarantees
coal supply for making the briquettes and greater control, while also placing the company in a
position to have compelling economics by reducing the coal acquisitions costs over its competitors.
Source: Proactive Investors
GOVERNMENT TO BUY MMC COAL-ROUTE ROAD
Mongolian Mining Corp. (MMC) announced the government's intention to purchase the road it
constructed in 2011 to facilitate coal export.
At a Cabinet meeting on 16 August, the Mongolian government discussed the importance of the
Ukhaa Khudag-Gashuun Sukhait road for coal exports and has opted to purchase the road from MMC
subsidiary Gobi Road LLC. With the purchase, the government hopes to decrease transportation
costs.
An amount for purchase had not yet been made at the time of the announcement.
Source: Mongolian Mining Corp.
THAI HOSPITAL GROUP LOOKS TO ACQUIRE MONGOLIAN HOSPITAL
Thailand's Bumrungrad Hospital is in talks to acquire a private hospital in Mongolia.
Chai Sophonpanich, chairman of Bumrungrad, said the number of Mongolian patients at its Bangkok
facility was increasing, so having a presence in their own country would help serve them. Expanding
into Mongolia would strengthen revenue in the future, he added.
―We want to be the majority shareholder in the hospital in Mongolia in order to oversee the
management. However, Mongolian regulations do not allow foreigners to hold a 51 percent stake in
a private company, so we might seek local partners and jointly acquire shares of more than 51
percent,‖ he said.
Chai said that if the deal were completed, the company would not change the management team
because they would be familiar with their customers. He said the cost of acquiring a 51 percent

5. stake in the hospital in Mongolia would be about THB 2 billion (USD 63.2 million).
Source: National Multimedia
INTERNATIONAL LAB-TESTING GROUP OPENS FACILITY IN UB
Global laboratory giant Bureau Veritas opened a comprehensive laboratory in Ulaanbaatar on 15
August.
Nearly all of the lab employees at Bureau Veritas Inspection and Testing Mongolia LLC will be
Mongolian, said Sebastian Dannaud, president in charge of North Asia for Bureau Veritas'
commodities division. Currently, the new Mongolian employees are being trained by personnel with
over 25 years‘ experience in the industry. Dannaud added that the facility would be stocked with
state-of-the-art equipment, and that the lab could cover a full cycle of coal from exploration to
commercial export. The comprehensive range of tests for coking coal includes washability test
work.
The lab will meet ISO accrediting standards and NATA Supplementary Requirements for Chemical
Testing. It is the first comprehensively equipped lab dedicated to coal test work in Mongolia. B.
Altsukh, director of the coal division at the Mineral Resources Authority, said over 200 samples have
been sent abroad for testing and confirmation. The local lab will keep this work in the local
economy.
Source: Business Mongolia
SUMITOMO MITSUI BANKING TO OPEN REPRESENTATIVE OFFICE IN UB
Sumitomo Mitsui Banking Corp. (SMBC) announced it had received permission from the Bank of
Mongolia on 15 August to open a permanent representative office in Ulaanbaatar. This follows the
announcement by TenGer Financial Group that the central bank gave permission for Japan‘s Orix
Corp. to purchase a 16 percent stake in the Mongolian holding company on 14 August.
Source: Info Mongolia
WOLF CONTINUES OIL EXPLORATION AT SUKHBAATAR
Mongolian oil explorer Wolf Petroleum Ltd. reported successful progress at the Sukhbaatar block in
line for a completion date of late September.
Wolf has completed 185 kilometers of its 450-kilometer 2D seismic acquisition program. The
program has now commenced in the region spanning from the Talbulag area of the Toson Tolgoi
(Oily Hill) area of Sukhbaatar Aimag. About 2,500 shot hole samples have been collected for
geochemical analysis at Vistageoscience Lab in the United States. Indications of oil have been
identified on the surface and in shot holes.
Samples have been taken and the results of geochemicals analysis will be announced once
available.
Source: Wolf Petroleum Ltd.
MOODY'S DOWNGRADES MMC BOND RATING
Moody's Investors Service has downgraded the corporate family and senior unsecured bond ratings of
Mongolian Mining Corp. (MMC) to Caa1 from B2.
Moody's considers that declining coking coal prices are expected to reduce financial year 2013
earnings before interest, tax, depreciation and amortization (EBITDA) to near-breakeven levels and
significantly increased liquidity pressure for the next 12 to 18 months. Moody's is also reviewing the
rating for further downgrade.
―The latest downgrade was premised on MMC's tightening liquidity profile and weakened credit
metrics, resulting from weaker-than-expected coking coal prices, which are unlikely to recover in
the next 12 to 18 months, due to oversupply in the market. Despite our expectation of cost cuts to
preserve EBITDA at breakeven levels, the company's existing debt and interest-servicing
requirements will significantly reduce its remaining cash on hand,‖ said Simon Won, a Moody's vice
president and senior credit officer.
Against this backdrop and based on an assumed benchmark Queensland coking price of USD 145 per

6. ton for the second half of 2013, Moody's expects MMC to operate with a consolidated net loss,
including near-break even EBITDA and negative cash flow from operations for fiscal year 2013.
MMC has scheduled debt maturities of USD 207 million and interest expenses of approximately USD
70 million in fiscal year 2014, including its USD 105 million promissory note. Moody's review will
focus on development in the coking coal market as well as MMC's plans to conserve its capital, and
which may in turn bolster its liquidity requirements for the next 12 to 18 months. If these measures
fail to materialize during the review period, the ratings will face further downward pressure.
Source: Moody's Investors Service
ORIGO LAUNCHES STRATEGIC REVIEW AMID UNCERTAINTY
Origo Partners has undertaken a strategic review in light of the continuing weakening of growth in
Mongolia and China as well as the company's financial position.
Origo has concluded that the underlying performance of the portfolio is generally satisfactory and
valuation of the company's assets is sound. However, in order to maximize value to shareholders a
number of decisions have been reached to adjust the company's strategy, given the impact of
continued volatility in its core markets.
―We believe that the revised strategy announced today will enable Origo to maximize value for
shareholders whilst positioning the company to weather this period of uncertainty,‖ said Chris
Rynning, Origo's chief executive. ―Whilst the current market is challenging, particularly for exits,
we remain confident in of the quality our investments and the medium term potential of our
portfolio.‖
The unaudited net asset value of the Origo at the end of June was USD 157.4 million, compared to
USD 160.8 million for the period ending 31 March.
Source: Stock Market Wire
FMG MONGOLIA FUND LOSES 4.5% IN JULY
The Mongolian Stock Exchange was flat in July but the tugrug lost 3.7 percent. Most of the FMG
Mongolian Fund holdings in the consumer sector managed to stay in positive territory, while
resource stocks were a drag on performance. In anticipation of the market showing signs of a
bottom, the Source is keeping some cash on the sideline, which it says it will allocate
opportunistically.
The giant Oyu Tolgoi mine finally began exporting copper concentrate last month after several
delays, however the stock failed to stage a rally as a lack of clarity regarding continued
development of the last stages of the mine exists.
Source: FMG
ABA TO HOST 30TH GENERAL MEETING
The Mongolian Bankers Association (MBA) will host the 30th Asian Bankers Association (ABA) general
meeting and a conference, the ABA reported on its website, in Ulaanbaatar from 12 to 13
September.
The dates and venue of these gatherings were confirmed by the ABA Planning Committee when it
met in Mongolia on 11 April at The Blue Sky Hotel and Tower, which will also be the venue for this
year‘s conference. Chaired by ABA Chairman Lorenzo V. Tan, president and chief executive officer
of Rizal Commercial Banking Corp. from the Philippines, the Planning Committee has agreed that
the September Conference will focus on the theme ―Asia: Growth Engine of the Global Economy.‖
Intended to provide a platform for ABA members, the upcoming conference has invited experts to
discuss how major developments in the global and regional markets will impact on the Asian
banking sector and to exchange views on measures the Asian banking sector can undertake to help
sustain growth.
Speakers from both government and the private sector will share their views and insights on topics
such as ―Global Macroeconomics: Key factors for Asian Banks,‖ ―Investment Opportunities and
Challenges in Emerging Asian Markets,‖ and ―Electronic Channels: Reshaping the Financial Services
Industry.‖

7. Source: Bernama
KYRGYZSTAN OPENS A NEW ROUND OF KUMTOR TALKS
The Kyrgyz government has launched a new round of talks with Canadian mining company Centerra
Gold Inc, which operates the Boroo gold mine in Mongolia, on the future of the Kumtor gold
project.
A revised investment agreement for Kumtor, Kyrgyzstan's largest gold mine, is due to be submitted
to the parliament in September. Top government officials have started meeting with
representatives of Centerra and international consultants working on the project, Kyrgyzstan's
prime minister, Zhantoro Satybaldiyev, said 20 August.
―As for Kumtor issue, the sides are oriented at constructive rapprochement,‖ 24.kg quotes
Satybaldiyev as saying.
Kumtor, which account for around 12 percent of Kyrgyzstan's gross domestic product (GDP); is the
largest foreign-owned gold mine in the CIS region, which is a long-standing grievance for many
within the country. Rising resource nationalism has put increasing pressure on Bishkek to
renegotiate—or scrap all together—the investment agreement signed under former President
Kurmanbek Bakiyev in 2009.
The government announced earlier this year that it would seek to renegotiate the agreement,
following a 2012 report commissioned by the government, which said that the current agreement is
not in the country's interests. A proposal announced June is for the government to give up the
minority stake it holds in Toronto-listed Centerra in exchange for a stake of equal value in a new
company that will own and operate Kumtor. This would give Bishkek a majority stake in the mine.
Source: BNE
ECONOMY
MANDAL PREDICTS 8% GROWTH FOR 2013
Mandal Asset Management released a comprehensive assessment of the first half of 2013, updating
its gross domestic production (GDP) projection to 8 percent.
In the first half of 2013, on the surface the country seems to perform fairly well, despite
unfavorable external conditions. However, fundamental structural weaknesses exist in the
economy. Subsiding inflation, stable exchange and low non-performing loan rates have contributed
to positive results. Downward moves were resulted by sliding a GDP growth rate, high foreign trade
deficit and state budget deficits.
As predicted, there were a few major factors influencing the economy in 2013. Issues have not been
settled regarding the Oyu Tolgoi copper mine and its operations, creating a drag on the
performance of the overall economy as well as on investor sentiment. Additionally, the role of the
government in the economy is growing as the government pursues a policy to increase the size of
public investments from the state budget funds, and government euro bond proceeds. Even stronger
involvement can be seen through the central bank policy programs. On monetary policy and
inflation targeting, the Bank of Mongolia has taken some bold actions and was able to reach
concrete results (the annual inflation rate is down to the single digits), however sustainability of
this raises doubts with loosening policy as money supply grows and policy rates are lowered. The
ever-increasing deficit did not have a steep reversal in the first half of 2013, with trade turnover
falling by some 9 percent year-on-year to stand at USD 1 billion.
The Source updated its GDP growth forecast in 2013 from 10 percent to around 8 percent. While
Oyu Tolgoi copper mine production will contribute to GDP, other mining, especially junior mining
and exploration projects, will continue to shrink. Substantial shifts will continue to occur in 2013,
from a private-sector to increased public-sector role, from mining sector growth to a larger share of
infrastructure, logistics and construction, from predominantly foreign investment and international
financial institutions.
Source: Mandal Asset Management

8. EIU OUTLOOK FOR 2013-2014 PERIOD
The Economist Intelligence Unit has released its assessment of the first half of 2013 and a forecast
for the 2013-2014 period.
Disagreements between the Democratic Party and the formerly ruling Mongolian People's Party
could pose risks to political stability in the forecast period. Policy toward foreign investment in the
mining sector will continue to vacillate alarmingly. New legislation covering the issue is set to be
passed, possibly before the end of 2013, but will not resolve the uncertainty. Despite strong GDP
growth and higher tax receipts, rapidly rising government expenditure will result in wide fiscal
deficits in 2013 and 2014.
Factors have continued to weigh on growth in the first half of 2013, but the pickup in economic
growth in the April-June periods shows that they are beginning to be offset by other factors. The
overall outlook for Mongolia's economy is likely to improve in the coming months as external
demand conditions strengthen and export shipments from the Oyu Tolgoi copper and gold mine
gather pace. Recent data from China, the destination for 86 percent of Mongolia's exports in July,
have suggested that the worst of threat country's economic slowdown may be past.
Second-quarter GDP data suggests that there are upside risks to the Source's forecast that the
economy will expand by 12.2 percent in 2013, but assessment of other measures of economic
performance in the next few weeks will be needed before making a decision on whether an
adjustment will be needed.
Source: Economic Intelligence Unit
CENTRAL BANK VP POINTS OUT BRIGHTS SPOTS IN GLOOMY ECONOMY
The Mongolian economy has seen some success amid economic downturn by bringing real growth
from 7 percent in the first quarter to 14.3 percent in the second, said Enkhbayar Batshugar, vice
president of the Bank of Mongolia.
The Mongolian economy find itself in great stress with reports of 43 percent decline in foreign
investment, the continued dispute at the Oyu Tolgoi copper mine, and problems surrounding the
2012 Strategic Entities Foreign Investment Law and a proposed Minerals Law that at one point
promised greater restrictions. Stresses from the global economy were also having their impact with
the fall of commodity prices. However, Batshugar pointed out the improvement in growth seen with
it breaking into the double digits and that inflation fell to 8.3 percent in July compared with 14
percent in 2012.
―It gives an opportunity to protect the real income earnings of citizens,‖ said Batshugar.
―Accordingly, the mid-term bank interest rates will decrease. The current low price of the tugrug
does not directly affect inflation, though the price of some goods may increase in the long run.‖
Batshugar attributed the growth to successes made in the private sector as well as good monetary
policy coming from the central bank.
Source: Zuunii Medee
“MONGOLIA CAN SURVIVE WITHOUT OT FOR A WHILE”, SAYS HEAD OF DP PARLIAMENTARY
GROUP
The head of the Democratic Party Parliamentary Group has brushed off concerns that the full
curtailing of developing of the underground mine at Oyu Tolgoi has created economic crisis in
Mongolia in a press conference.
Speaking on current economic conditions, D. Erdenebat commented, ―I personally don't feel
Mongolia is facing economic crisis. Crisis itself is a severe matter. For instance, it will be considered
a crisis if there's a drop in GDP percentage, increased unemployment, and less cash flow. Such
things haven't occurred at the moment. Therefore, there is no need for random political talks about
the economy.‖
He noted that Cabinet approval was still necessary before an extraordinary session of Parliament
was called. He admitted that the situation looked bad because of the decline in activity at Oyu
Tolgoi and Tavan Tolgoi and less foreign investment coming in, but there was also encouraging data

9. from the central bank such as 11 percent GDP growth, available employment, and normal
conditions within the domestic market. He also noted that Mongolia has USD 2.7 billion and CNY 800
million in reserves, in addition to USD 1.2 billion from the 2012 Chinggis bond.
‖The country is not facing any difficulties,‖ said Erdenebat. He added, ―Nevertheless, we can
survive without Oyu Tolgoi for a while. We have survived this long with our livestock. We are
striving to resolve all matters within the legal framework. I don't consider the government actions
to be wrong. Moreover, I don't think Rio Tinto would just abandon its USD 7.5 billion in Mongolia
soil. Therefore, it's important for both sides to compromise and understand each other.‖
Source: Info Mongolia
WHY IS THE TUGRUG FALLING?
The exchange rate for the tugrug tumbled all throughout Naadam and afterwards, with the dollar
appreciating well above MNT 1,550—an 11 percent increase from the start of 2013.
Five primary market factors have led to the current state of the economy. One: A sudden increase
in the circulation of money with a cash injection by the Bank of Mongolia in its aim to combat
inflation, provide loans with lower interest rates, and preventative measures from rising fuel prices.
Cash supply grew 12.6 percent from the start of the year, reaching MNT 836 billion. Two: Mongolia's
balance of payments hit a deficit of MNT 1.6 billion, or 8 percent more than the same period last
year. The trade deficit climbed further, with imports and exports falling by 10 and 7.7 percent,
respectively.
Three: The government continues to drag it's feet allocating only half of the USD 1.5 billion earned
from last year's Chinggis bond offering. Meanwhile the Development Bank of Mongolia has free reign
for spending, forgoing any tender process and tarnishing competitiveness within the country. Four:
This year's 47 currency auctions held by the central bank for commercial banks are proving
ineffective. Fifth: The slow down in growth seen in Chinas has had significant impact on Mongolia's
mineral exports. Coal exports, which represents 17 percent of total export, fell 50 percent in the
first half of 2013 compared with the same period in 2012.
The volume of transactions using the domestic currency will likely see some growth with the start
of a new school year. Yet vendors are likely to convert those tugrugs into foreign currencies as they
prepare for the next business cycle. Students studying abroad will also be exchanging their tugrugs
to pay their tuitions. Though some activity prompted by the Chinggis bond has begun with the
construction of roads, it will be years down the road before the beginning of larger projects, such
as construction of an electric plant and railways. Meanwhile the budget deficit continues to grow.
All this leads one to believe that the tugrug could reach well above MNT 1,650 by the end of this
year.
Author “De Facto” Jargalsaikhan Dambadarjaa is an economist and television interviewer with an
MBA specialized in financial markets. He was a management consultant in banking, marketing,
strategic planning, competitiveness and HRM.
Source: UB Post
ASIA‟S DEBT CONUNDRUM REAWAKENS GHOSTS OF 1990S CRISIS
When China unleashed the largest stimulus package in its history in response to the 2008 crisis and
slowing export markets in the West, it came at a price. Today China is grappling with a bill that
some economists say has driven total debt to gross domestic product past 200 percent.
While China offers the most extreme example of using debt to fund growth, it is a pattern that has
been repeated across Asia. Without exports, central banks turned on the taps, leading to a jump in
household and corporate borrowing. Now, as the U.S. Federal Reserve considers a reversal of its
ultra-loose monetary policy, the region faces a new challenge: coping with life after debt. And as
investors gauge the impact of that transition, the ghosts of the 1997-98 Asian financial crisis has
been reawakened.
―All this QE [quantitative easing] money has led to a massive credit inflation bubble in Asia,‖ said
Kevin Lai, chief regional economist at Daiwa Securities. ―The crime has been committed, we just
have to deal with the aftermath.‖

10. Echoes of the Asian financial crisis include rapid credit growth since 2008 that have led to a run-up
in house prices, high growth rates and corporate mega-deals. But as the tide of cheap money from
overseas rolls back from emerging economies across the region, analysts warn that Asia could be at
the start of a series of currency and credit crises, not unlike the experience of the 1990s.
Though the fears may be familiar, much has changed in the past 15 years. The debt burden in 1997
fell mostly on large, over-stretched companies, rather than the households and small enterprises,
currently enjoying rising incomes and healthy profits. Asia's bond markets have also seen major
development, with much more long-term and local currency borrowing, rather than the short
duration dollar credit of the past. And the region's institutions provide local financial systems with
far stronger buffers, helped by the fact that most Asian economics save more than they spend. But
that does not mean some fresh trauma is impossible.
Source: Financial Times
MINING SETBACK WEIGHS ON MONGOLIA OIL PROJECT HOPES
Mongolia's oil reserves are on a scale with Britain's and Argentina's, but finding investors brave
enough to exploit them is proving tough, and cracks appears in the country's mining industry could
make it tougher.
―The sparsely populated and landlocked country bordered by Russia and China has proven reserves
of 2.4 billion barrels, but shortcomings in infrastructure mean the vast wealth has yet to be
exploited.‖
Australian-owned Wolf Petroleum Ltd. is hoping to showcase Mongolia's potential to foreign
investors, but it is up against concerns over the ongoing Oyu Tolgoi copper mine saga, where Rio
Tinto PLC's expansion plans have stalled in recent weeks. Mongolia has raised concerns about the
costs of the Oyu Tolgoi expansion and the potential that rising expenditure will delay when it starts
receiving its share of profits. But Wolf's management is upbeat.
―Mongolia is one of the last onshore frontiers where multi-billion barrels of oil can still be
discovered and produced,‖ said Chief Executive Tumur-Ochir Bataa. ―Lately the government of
Mongolia and the people are starting to really feel and understand the importance of foreign
investment.‖
But investors are not sure. ―As it stands, Mongolia simply does not have the infrastructure to
support any kind of significant oil discovery,‖ said Svetoslav Vardzhakov, vice president at London-
based Collabrium Capital. ―Big oil companies looking to buy up any discoveries are going to look at
what's happened [to Rio Tinto's project] and draw their own conclusions.
A country where cattle outnumber people fifteen to one, Mongolia has only 3,000 kilometers of
paved road and just one oil refinery, owned and operated by PetroChina. Hoping to build on the
success of PetroChina and fellow Chinese group Sinopec, which are exporting about 4.5 million
barrels a year to China by road, Wolf Petroleum is Mongolia's largest exploration company, with
74,000 square kilometers of exploration licenses. China, now the world's second biggest oil
consumer, represents a ready market.
Source: Reuters
CURSED MINE CLAIMS ANOTHER DEADBEAT BANK
A gold mine in Mongolia locals are calling jinxed has laid claim to a third banking victim, and
highlighted a potential problem in the banking sector of mineral rights being used as collateral for
loans.
Khadgalamj Bank LLC, or Savings Bank as it is called in English, saw a takeover on 19 July by the
government-owned State Bank (Toriin Bank). The majority shareholder of Savings Bank‘s parent
company Just Group, Sh. Batkhuu, took out a loan of USD 109 million using the Olon Ovoot gold
mine. Just Group purchased the mining rights to what Batkhuu thought was 13.4 tons of gold at
Olon Ovoot in 2009, but he says the mine didn‘t have as much as reserves registered and he found
himself in a position where he could no longer service his debts.
―It was clear from the outset after its merger with Mongol Post Bank in 2009 that Savings Bank had
high levels of non-performing loans,‖ said Randolph Koppa, president of competing bank Trade and

11. Development (TDB) of Mongolia LLC. ―Earnings levels had been low and as the central bank stepped
up capital requirements, the bank didn‘t seem to either generate enough earnings or to attract
additional capital investment.‖
Mongolia‘s banking sector has been an area of concern for investors throughout the mining boom, as
bank loans have been the most readily available source for capital in the country. Moody‘s Investors
Service gave Mongolia‘s banking sector a negative outlook amid the rapid growth in lending,
describing the situation on the ground as ―an economy that is increasingly exposed to commodity-
driven boom-bust cycles.‖
According to 2013 data from the Mineral Resources Authority (MRA), the largest lender TDB has 40
loans backed by mineral deposits, while number-two bank Golomt has 26, followed by the third
largest Khan with 27. Savings Bank had just seven loans using mines as collateral, but it only took
the one to send the whole institution crumbling.
TDB‘s Koppa defends the practice, though: ―When lending to operating mining companies, it is
common practice to take the mining licenses as part of the collateral package. The security interest
in such licenses can be perfected by registration of the lien, and the value of the mine can be
determined based on the volume of reserves recognized by the mining authority.‖
On a brighter note, the same Moody‘s report noted that the negative outlook for this sector as a
whole contrasts with the stable outlook on Mongolia‘s top-four banks. Koppa, too, says the failure
at Savings Bank should not be taken as representative of the sector as a whole, given that TDB‘s
business model differs greatly, and that although Savings Bank represented 8 percent of the market,
it was not a significant lender.
Source: BNE
MONGOLIA‟S HESITATES TOWARD ITS TOP INVESTOR
You don‘t‘ have to travel far in Mongolia to see Chinese investment. The new sports stadium by the
airport? It‘s here, thanks to China. The Mongolian Chamber of Commerce and Industry building? A
gift. And downtown‘s Central Tower—built using Chinese construction. And that‘s not all.
―The Chinese have invested heavily in infrastructure, especially the energy sector. For example,
hydropower and thermal-power projects,‖ Bolormaa Luntan, editor of Mongolian Mining journal
said.
Roughly half of all foreign direct investment in Mongolia now comes from China. As its large,
consuming neighbor, China now accounts for three-quarters of all of Mongolia‘s economic activity.
Ninety percent of all outbound Mongolian goods go directly to China. But there was a time that
those goods headed north, to Russia. Now there is a hot debate over whether to install new rail that
matches China or Russia‘s rail gauge.
―If you force mining companies to use wider gauges to export to China, it‘ll be more expensive than
building, of course, than a narrow gauge,‖ said Badral Munkhdul, chief executive of Cover Mongolia.
He said that it is not sustainable in the long run and warns, as Chinese invest more here, a better,
cheaper solution to getting its return out will have to be found.
Source: China Daily
ROLLING STONE: HELPING MONGOLIAN FAMILIES WITH A MOBILE KINDERGARTEN
Six-year-old Erdenbayar, or Erka for short, lives with a semi-nomadic herder family in the remote
Khuvsgul province of Mongolia, about 20 kilometers from the nearest settlement, Tsagaan-Uur
Soum. There are no proper roads, and her parents have to tend to their livestock. Luckily, there's a
mobile kindergarten that she can attend.
―I like coming to the kindergarten,‖ Erka said. ―I enjoy singing songs, playing with puzzle games and
reading poems. My favorite poem is about a baby chicken and my favorite song is about getting an
excellent mark at kindergarten.‖
The kindergarten is in a traditional Mongolian ger that was supplied to the community by UNICEF
Mongolia, fully equipped with toys, learning materials and furniture. It is run by Dolzodmaa, a
teacher from the main kindergarten in the county center, who now spends the summer taking the
ger around the districts linked to the county. Currently, 24 children attend the ger kindergarten.

12. The mobile ger kindergartens are a unique solution to the problem of providing education to a
nomadic population. They function in rural areas from June to August and, where weather permits,
from May to November. As well as providing early childhood education, they give children the
opportunity to socialize with others.
UNICEF is working with education authorities throughout: Khuvsgul Aimag ―We are supporting early
childhood development in each soum [county], by training teachers and officials, providing toys and
learning materials for kindergartens, and supplying mobile gers,‖ Zoya Baduan, UNICEF community
development officer for Khuvsgul said.
Source: UNICEF
DEMAND SURGES FOR COPPER IN CHINA
One of the most closely watched indicators of the strength of the Chinese copper market has risen
to the highest level on record, in a further sign that the country's industrial economy is
outperforming gloomy expectations. China is the destination for copper from the Oyu Tolgoi mine.
Chinese copper premiums—that is, the cost of physical copper over and above the benchmark
futures prices—have more than tripled since the start of the year to a high of more than USD 200 a
ton, traders said. These rise in premiums, which are closely tracked by traders and analysts as an
indicator of the strength of the physical market, reflects surprisingly robust demand in China,
traders say, though it has also been underpinned by a variety of other factors.
―Everybody got themselves a little bit over-bearish,‖ said one senior metals trader. ―There is an
increasing chance we are underestimating Chinese copper consumption.‖
The rise in copper premiums will reinforce the recent shift in sentiment towards China, about which
the Western investor community had become deeply pessimistic over the summer. A raft of data on
Chinese trade, industrial production, and investment came in stronger-than-expected in July, with
the country's copper imports hitting a 14-month high and iron ore imports at a record level.
China is the main driver of global—and Mongolian—metals demands, accounting for two-fifths of
global consumption. The shift in sentiment has triggered a rally in metals prices and mining shares
in the past week, with copper prices, which had slid 20 percent since February, rallying 8.7 percent
in the past fortnight. Traders said premiums in China were the highest they could remember,
comparable only with a spike in early 2009 as the country's purchases soared. According to data
from Macquarie, an investment bank specializing in natural resources, the premiums are the highest
since at least 2000, when China accounted for only 12 percent of global copper demand.
Source: Financial Times
CHINA'S CENTRAL BANK CHIEF CONFIDENT ON OUTLOOK
China's central bank governor signaled confidence in the nation's economic outlook with little need
for major shifts in monetary policy, and raised the prospect that policy makers could accelerate
reforms to the financial sector.
Zhou said the central bank will broadly keep its monetary policy stance unchanged in the second
half of the year. ―I don't think we'll have big adjustments,‖ he said, ―Even if there are any, they'll
be fine-turning measures.‖
Zhou's remarks are the latest evidence that China's leadership is comfortable with the slower pace
of growth, especially as the economy continues to create jobs. The economy expanded 7.5 percent
on year in the second quarter, lower than a growth rate of 7.7 percent in the first quarter. If it
posts a 7.5 percent growth rate for the year, it would be the slowest growth since 1990.
Echoing remarks from Premier Li Keqiang earlier in the summer, Zhou argued pushing reform could
help boost growth, rather than weighing on the economy. China's government, concerned about the
pace of loan growth from informal lenders broadly known as China's shadow-banking sector, has
moved to rein in booming credit growth. In June a credit crunch nurtured in part by the government
pushed short-term borrowing rates close to 30 percent, raising fears that financial instability would
add to China's growth woes. In the interview, Zhou said conditions for moving ahead on deposit rate
liberalization are in place. In a July statement, the central bank had pointed to further work
required to prepare the ground.

13. Market-set interest rates are seen as essential to raising income for household savers, boosting
China's consumption, and allowing markets to play a bigger role in allocating credit. Currently,
China caps deposit rates at 10 percent above a benchmark rate set by the central bank, which is
currently 3 percent for one-year fixed deposits. Beijing in July removed a floor on lending interest
rates, allowing banks to offer cheaper credit. With monetary policy likely to hold, some analysts
expected the government to step up public spending or cut taxes to give the economy a boost. ―The
government will be more likely to use fiscal measures to support the growth,‖ said Fan Zhang, an
economist at UOB KayHian, a brokerage.
Source: Wall Street Journal
POLITICS
PARLIAMENT RECALLED AS FALLING FOREIGN INVESTMENT THREATENS ECONOMY
Parliament announced on Friday it would hold an emergency session next month, as the country
looks to ward off an economic crisis sparked by uncertainty over its biggest mining project and
falling foreign investment.
A government official had said on 16 August that the National Security Council, headed by the
country's president, was debating recalling parliament, currently in summer recess. According to its
website, Parliament will now meet for a week-long session from 2 September and is set to discuss,
among other things, legislation governing foreign investment. The extraordinary session could also
accelerate the approval of financing for a USD 5 billion expansion to global miner Rio Tinto PLC's
giant Oyu Tolgoi gold and copper mine.
Rio earlier that week announced mass lay-offs at Oyu Tolgoi, where it has put an underground
expansion on ice due to a dispute with the government. The job cuts have been read by some in
Mongolia as an attempt to pressure the government into easing its demands on the miner over
project financing, and the extra session of Parliament could spur progress. Dale Choi, an analyst at
Mongolian Metals & Mining Research, said in a note on Friday that the recall was a ―Long overdue
significant message from Mongolian authorities that the country wants back investment, both
foreign and domestic.‖
Source: Reuters
LEGISLATIVE CHANGES ON THE HORIZON
Mongolian policy makers have made mistakes in the past two years, but they continue to
demonstrate a commitment to fixing the problems at hand and creating a positive investment
environment. This scenario will likely be proven once more as Parliament has called an
extraordinary session, which is expected to take place from 2 to 6 September.
The Strategic Entities Foreign Investment Law will be a main issue for discussion in the upcoming
extraordinary session.
―We believe that the public‘s perception towards populist politicians may be deteriorating as well
with various local newspapers calling for populist politicians to be held accountable for the current
‗Crisis,‖ said the Source. ―We believe that coming changes to the legal environment will positively
impact FDI in Mongolia which will improve dramatically by the end of 2013.‖
The source noted a similar shift take place in 2009 when the Oyu Tolgoi investment agreement was
signed and the Windfall Profits Tax was abolished. However, a flagship investment deal will be
needed to fuel another bull market for Mongolia. The suggestion by government of a possible float
of state-owned Erdenes Tavan Tolgoi and Erdenes Oyu Tolgoi on the public markets may signal that
government understands of this.
Source: Mongolian Investment Banking Group
OT BRIEFS LABOR MINISTER ON REDUNDANCIES
Representatives of Oyu Tolgoi LLC assured the labor minister that work would continue without
interference at Oyu Tolgoi during the delay to development of the underground mine.

14. Oyu Tolgoi's vice president of human resources and capability development, Michael Beck, and the
executive director, R. Sodkhuu, said the open pit, concentration plant and other departments
would run normally, and that the some 7,000 Mongolian workers would hold onto their jobs.
―The information about firing some 2,000 employees at the company due to shutting down of the
underground mine was received rather negatively by society,‖ said Minister Ya. Sanjmyatav, adding
that he wanted to get accurate information on the present situation.
Beck said in response that the company was currently dealing with a problem with the additional
financing for the underground mine, and that 22 contractors were still working at Oyu Tolgoi. Oyu
Tolgoi has let go of 61 employees that it is currently looking to transfer to different roles within the
company. The Minster requested from beck information on the number of employees fired as soon
as possible as well as ways of increasing job security for contract employees.
Source: Montsame
SAVINGS INSURANCE CORP. WAITS IN THE WINGS TO INSURE SAVINGS
Government-owned Savings Insurance Corp. is prepared to insure up to MNT 20 million in bank
accounts.
Parliament in January approved its Law on Savings Insurance, which established Savings to receive
0.5 percent commission from banks' total deposits to build up reserves. It also received MNT 50
billion from government and the Bank of Mongolia.
Mongolia has seen the failure of three banks since 2008, with the most recent being Khadgalamj
Bank LLC in July.
Source: Undesnii Shuudan
CABINET MOVES IN SUPPORT OF COAL SECTOR
The Cabinet on Friday approved a series of decisions aimed at supporting the coal industry in
Mongolia.
Economic Development Minister N. Batbayar and Road and Transportation Minister A. Gansukh have
been ordered to install medium-gauge [source doesn‘t specify, but likely means Russian gauge] rail
tracks for the Shiveekhuren and Gashuun Sukhait border checkpoints. Moreover, Cabinet Minister
Ch. Saikhanbileg and Batbayar received orders to purchase the paved road between Tavan Tolgoi
and Gashuun Sukhait, which was constructed by Mongolian Mining Corp. subsidiary Gobi Road LLC.
The acquisition will be made on behalf of Erdenes MGL LLC.
Source: Montsame
CABINET APPROVES STRUCTURE FOR HOUSING AGENCY
The Cabinet approved a set of regulations and an organizational structure for the State-owned
Housing Corp. (SOHC) on Friday.
SOHC‘s main function is to construct, sell and purchase apartments on behalf of the state, to
constitute a state-owned housing fund, and to implement its ownership, exploitation and
management. In addition, the corporation is to realize housing projects with domestic and foreign
investments after researching their opportunities and feasibility studies, and maintain discount and
support policies for shelter for the most vulnerable of the population.
Source: Montsame
MONGOLIAN DELEGATION VISITS SCOTLAND
A Mongolian hoard descended on Hawick, Scotland last week, to sing and dance their Edinburgh
Tattoo routine, and treck on a cashmere trade mission.
The 70-strong Central Orchestra of the Mongolian Armed Forces from Ulaanbaatar, appearing at the
Royal Edinburgh Military Tattoo until 24 August, told the story of Chinggis Khaan through the
medium of dance and traditional throat singing at the Heart of Hawick last Wednesday. Mongolian
Ambassador Tulga, Tattoo chief executive David Allfrey and Scottish Secretary Michael Moore
accompanied to the troupe Hawick Cashmere, where they watched how the Cashmere goat‘s fine,
super soft undercoat is turned into luxury knitwear in Scotland, and also discussed how the fabric‘s

15. supply chain can be improved between the two countries.
―It was an initial meeting to exchange contacts, and see how Scotland and Mongolia can work
better in the future,‖ a spokesperson for Moore, a member of Scotland‘s parliament, explained.
Hawick Cashmere‘s managing director David Sanderson added: ―Clearly, we are hugely interested in
all the components that go into high-quality cashmere goods. Indirectly, we have strong links with
Asia and its cashmere supply routes, and this visit offers us the opportunity to explore direct
contracts with the cashmere supply from Mongolia.‖
Source: The Southern Reporter
MONGOLIAN DELEGATION MEETS CPC OFFICIAL
Senior Communist Party of China official Zhao Leji met with a delegation headed by Democratic
Party (DP) General Secretary Ts. Oyundari on Wednesday.
Zhao, a member of the Political Bureau of the CPC Central Committee, said he was appreciative of
the Mongolian Democratic Party's contribution to friendly cooperation between the two countries.
The CPC as well as the Chinese government looks at China-Mongolia ties from a a strategic
perspective and will make joint efforts with the Mongolian side to advance the strategic partnership
between the two countries in a healthy and stable way, said Zhao, also head of the Organizational
Department of the CPC Central Committee.
Oyundari said the DP attached great importance to the friendship with the CPC and is willing to
expand exchanges and cooperation with the Chinese side to further enhance the bilateral
relationship.
Source: Xinhua
INCHEON MAYOR VISITS ULAANBAATAR
A Korean delegation arrived in Mongolia to discuss urban development and cooperation.
Environment and Green Development Minister Sanjaasuren Oyun and Ulaanbaatar Mayor E. Bat-Uul
met with the mayor of Incheon, Korea, Son Yong-Gil, in Ulaanbaatar during his visit from 8 to 11
August, where the shared thoughts on urban development, construction and green development.
During the meeting the Korean delegation also proposed the ―Incheon Dream Park,‖ and an
investment summit aimed at establishing closer relations. Foreign delegates also visited the
Olympic House and met with sporting officials.
Source: Info Mongolia
KHAAN QUEST 2013 CLOSES
Service members from 13 participating nations and four observer countries—China, Russia, Turkey,
and Kazakhstan—gathered in Mongolia for the exercise Khaan Quest 2013 closing ceremony, 14
August.
Hosted by the Mongolian Armed Forces with co-sponsorship alternating between U.S. Marine Corps
Forces, Pacific and U.S. Army Pacific, approximately 1,000 troops from Mongolia, U.S. Australia,
Canada, France, Germany, Japan, India, Nepal, Korea, Tajikistan, United Kingdom, and Vietnam
took part in the exercise. Throughout Khaan Quest, participants engaged one another through field
training and command post exercises in the Tavan Tolgoi Training Area. Medical subject matter
expertise exchanges and cooperative health engagements, as well as engineering civic action
program (ENCAP projects, took place in nearby Nalaikh District, Ulaanbaatar. The four separate
components of the exercise all focused on enhancing international peace-keeping operations and
strengthening joint-combined capabilities through military-to-military cooperation.
―I'm truly pleased greeting the peacekeepers, who share the same goal despite speaking different
languages and having different cultures,‖ said Puntsag Tsagaan, chief of staff of the president of
Mongolia.
Source: Defense Video & Imagery Distribution System
ELBEGDORJ VISITS KUWAIT
Kuwait's Amir Sheik Sabah Al-Ahbad Al-Jaber Al-Sabah received President Tsakhia Elbegdorj during

16. an official visit on 18 August.
The amir and the president held a cordial conversation depicting the good ties binding the two
friendly countries and people. The discussion addresses means of cooperation between them in
various sectors.
Source: Kuwaiti News Agency
NZ PREMIER TO VISIT MONGOLIA
New Zealand Foreign Affairs Minister Murray McCully will travel to Mongolia, en-route from China
and to Hong Kong, this week for a series of bilateral meetings.
―This visit, which has been planned for some time, will enable me to update authorities on the
response to recent meat and dairy issues,‖ McCully said.
This will be McCully's first visit to Mongolia, where he will meet President Tsakhia Elbegdorj and
Foreign Minister Luvsanvandan Bold to discuss possible cooperation in agriculture and education.
Source: Voxy.co.nz
TEMPORARY TRAFFIC RESTRICTIONS TO BEGIN 24 AUGUST
Ulaanbaatar will be introducing new traffic restrictions with the start of the new school year in
September.
The Ulaanbaatar City Council a has issued new traffic regulation that separates cars by whether the
last digit on the license plate is even or odd, taking effect 24 August [the Source does not specify
whether those cars are permitted on roads or on which days -ed]. The new regulation is meant to
deal with worsening traffic conditions during the new school year and will run eight days until 31
August.
During the time of traffic restrictions, several roads will undergo maintenance. Trolley buses will be
free during those days.
Source: News.mn
STUDENTS WILL HAVE TO FOLLOW NEW VISA REGULATIONS FOR UKRAINE
New visa regulation has Mongolian students attending university in Ukraine applying for visas.
Ukraine has yet to decide on whether or not to grant non-residency permits in the country based on
visas. Visitors to Ukraine do not need to apply for a visa for the years following, as there will be
arrangements possible to be made for non-residency permits.
Student visas will be issued based on a university invitation at the Embassy of Ukraine in Beijing,
China.
Source: News.mn
WHY HASN‟T MONGOLIA DEVELOPED STRONGER TIES WITH KAZAKHSTAN?
Since 1990, Mongolia has pursued a multi-directional foreign policy, forging strong ties with such
global players as the United States, European Union, Japan, South Korea, and India. The so-called
―third neighbor policy‖ has given Mongolia much greater reach than might be expected as a small
state sandwiched between Russia and China, but the lack of relations with Kazakhstan is a
noticeably absent.
Mongolia is separated from Kazakhstan by only a thin strip of land, less than 40 kilometers across.
There are approximately 160,000 Kazakhs living in Mongolia, most of them in the far western
province of Bayan-Ulgii. Some 60,000 Kazakhs returned to Kazakhstan as part of the Oralmandar
program from 1990 to 1992, but some 100,000 returned after finding life in Kazakhstan too difficult
for non-Russian speakers.
Mongolia established formal diplomatic relations with Kazakhstan in 1992. A brief look shows that
relations between the two countries have been unimpressive. A number of high-level visits between
heads of state have failed to result in economic or institutional engagement. Trade currently stands
at a little over USD 43 million (USD 26 million in exports from Mongolia, USD 18 million imports). No
more than five Mongolian students study in Kazakhstan annually. Direct investment from Kazakhstan
stands at only USD 12 million, making it the 35th largest investor in Mongolia, with only 34 Kazakh

17. companies operating in the country.
Three primary barriers exist to block political and economic ties: historical, political boundaries,
Kazakh-Russian relations, and the limitations of authoritarian-democratic interaction. In the
foreseeable future, Mongolia and Kazakhstan will continue to share cultural ties and develop more
people-to-people relations. As Mongolia continues to develop economically, Kazakhstan may
become more important as a fellow resource-based economy. However, political and-or military
ties are unlikely to develop, given Kazakhstan's continued close engagement with the Russian
Federation and authoritarian government, coupled with Mongolia's reluctance to befriends such
states [though Mongolia makes exceptions for nations such as North Korea -ed].
Source: The Diplomat
3,000-YEAR-OLD NOMAD SHIELDS EXCAVATED NEAR CHINA-MONGOLIA BORDER
Archaeologists have excavated a set of stone shields in northwest China's Xinjiang Uighur
Autonomous Region, near the China-Mongolia border, which they believe were used in sacrifices by
nomads nearly 3,000 years ago.
The shields were discovered by Huahaizi (sea of flowers) Lake in the Altai Mountains, which borders
Mongolia. The lake shore meadow is home to huge stone relics, including what archaeologists
believe to be the largest temple of sun on the Eurasian steppe. The shields are pentagonal stones,
one with a circle carved in the center, surrounded by a herringbone pattern.
―Initial researches show the shields could date back to the late Bronze Age, roughly 3,000 years
ago,‖ said Lyu Enguo, researcher with Xinjiang's archaeological institute. Lyu describes the
discovery as a ―breakthrough‖ for research on the life of ancient nomads.
Archaeologists have compared the patterns carved on the shield with those on deer stones, which
are found at Huahaizi. Deer stones are ancient megaliths carved with symbols that can be found all
over the world, but are largely concentrated in Siberia and Mongolia. The name comes from their
carved depictions of flying deer.
Experts believe the stone shields were not used for combat, but for sacrifices after they were
blessed and dedicated. Modern Shaman often wear small shields as ritual objects. The discovery of
these shields may show that such practices date back to at least 1,000 years ago. Between the late
Bronze Age and early Iron Age, residents on the steppe switched from a society based on livestock—
or mobile pastoralism—to nomadic. Nomadic culture was prosperous at the time in the Altai
Mountains.
Source: Xinhua
NEW MONGOLIAN LAWS
The following law, amendments and addendum to laws were published in the latest weekly
Government bulletin. Unless otherwise decided by Parliament, they will take effect ten (10) days
after publication.
Date Laws
15.08.2013 Law on Marshal service
Addendum to Law on Intelligence activity
Amendments to Law on Court decision implementation
Amendments to Law on Court of Mongolia
Addendum to Law on Border of Mongolia
Addendum to Law on Environment protection
Amendments to Law on Administrative, territorial unit of Mongolia, its management
Addendum to Law on Defense of Mongolia
Amendments to Law on Civil case judgement
Amendments to Law on Administrative case judgement

18. 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
“MM TODAY” ON MNB-TV, FRIDAY, 19:05-19:15
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 19:05 to 19:15 tonight. Tune in to watch this program that reports stories from
today‘s BCM NewsWire.
___________________________________________
DISCOVER MONGOLIA, 5-7 SEPTEMBER, ULAANBAATAR
The 11th annual Discover Mongolia international investors' forum will be held from 5 to 7 September
in Ulaanbaatar, Mongolia.
The forum is Mongolia's main venue for the widest international exchange on Mongolia's minerals
developments. Throughout its 10 years of history, the forum has become one of the hallmark events
in Mongolia's minerals exploration and development sector. The primary mission of the forum is to
support the development of the Mongolian mining sector by connecting people, providing
information, building networks, and realizes the importance of mining exploration sector and its
legal environment. It also acts as a bridge between the Mongolian government and private sector
investors through its "Government Hour" sessions.
BCM is a supporting organization again for this year‘s forum. For more information, log on
discovermongoliaforum.com.
___________________________________________
30TH ABA GENERAL MEETING AND CONFERENCE, 12-13 SEPTEMBER, ULAANBAATAR
The 30th Asian Bankers Association (ABA) General Meeting and Conference will be held from 12 to
13 September in Ulaanbaatar at the Blue Sky Hotel and Tower.
This year's conference will focus on the theme ―Asia: Growth Engine of the Global Economy.‖ The
two-day event aims to provide another platform for ABA members and invited experts to discuss
how major developments in the global and regional markets will impact on the Asian banking sector
and to exchange views on measures that the Asian banking sector can undertake to help sustain
growth and enable the Asia-Pacific region to play a catalytic role in the global economic growth and
recovery.
To register, complete the form and send it back to the Professional Conference Organizer c/o fax
+976 11 323581 or email abamongolia@mba.n no later than 20 August 2013. For more information
email nomindari@mba.mn or call +976 9917 7149.
___________________________________________
MINING MONGOLIA AND POWER AND RENEWABLE ENERGY MONGOLIA, 19-21 SEPTEMBER, UB
Mining Mongolia and Power and Renewable Energy Mongolia will be held from 19 to 21 September at
the Buyant-Ukhaa Sports Complex in Ulaanbaatar.
120 companies from 18 countries including pavilions from Australia, Canada, Korea and Germany
will display a wide range of technology, supplies and services for the mining and electric power
generation and transmission sector; on a scale never before seen in Mongolia. Inside and outside
displays, providing a first opportunity for buyers to see technology and learn about new mining and
electric engineering service from industry experts.
BCM is a supporting organization. Register at miningandconstructionmongolia.com or for priority
booking email mongolia@chinaallworld.com.
___________________________________________

19. TOP GOVERNMENT OFFICIALS TO ATTEND NAMBC INVESTORS CONFERENCE
Minister of Environment and Green Development Sanjaasuren Oyun and Ulaanbaatar Mayor Erdene
Bat-Uul will be featured speakers at the North American Business Council's (NAMBC's) 16th Annual
Investors Conference, to be held from 24 to 26 September at the Kempinski Khan Palace Hotel in
Ulaanbaatar. Registration deadline is September 6
The investors conference will celebrate the 40th anniversary of Mongolia-Canada diplomatic
relations this year. Full simultaneous interpretation will be provided. This conference is the
longest-running international investors forum in or about Mongolia, held annually in Ulaanbaatar
since 1998.
Non-members from any country are welcome. For more information visit nambc.org. Find a
registration form here.
___________________________________________
MONGOLIAN MINING SUMMIT 2013, 29-31 OCTOBER, PERTH, AUSTRALIA
Mining IQ's Mongolian Mining Summit will be held at from 30 to 31 October at Crown Perth, Western
Australia, Australia.
The Mongolian Mining Summit is the perfect forum to bring together senior level executives from
Mongolia and Australia to further business relationships in the resources sector. Send your senior
executives to attend this summit to meet with CEOs, executive directors, MDs, VP, and GMs, and
heads of investment from Australian organizations interested in entering the Mongolian mining
industry.
Speakers include:
- Graeme Hancock, President and chief representative of Anglo American in Mongolia,
- Dr. Battsengel Gotov, Executive director and CEO of Mongolian Mining Corporation.
- Jim Dwyer, Executive director of the Business Council of Mongolia.
BCM is a supporting organization of this event. Register now and pay only AUD $999 for Mining and
Government Companies—register by 23 August 2013.
To register call +61 2 9229 1000 or email registration@iqpc.com.au.
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MONGOLIA INVESTMENT SUMMIT HONG KONG 2013, 18-20 NOVEMBER, HONG KONG
Bringing the best of Mongolia‘s investment opportunities to Asia‘s leading investment hub.
Featuring a line-up of Government representatives, business leaders and international investors, the
4th Annual Mongolia Investment Summit provides investors and companies seeking to do business in
Mongolia with a thorough update of Mongolia‘s investment and business climate and showcases its
actual investment opportunities. Key sectors covered include Mining and Mining Services,
Infrastructure, Energy, Financial Services, Retail, Real Estate, Construction and Agribusiness.
Mongolian companies and Mongolia-focused funds seeking to meet with investors and potential
business partners, should make attendance at Mongolia Investment Summit Hong Kong 2013 their
number one priority. Click here to download the latest brochure.
BCM is a supporting partner organization. BCM members will enjoy 15% discount; please quote
Priority Code 695BCM15D during registration.
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, Minister of Environment and Green Development, presentation at BCM monthly meeting on

20. May 27 added to 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:
• Bilguun Ankhbayar, Chief Executive Officer, Mongolian Investment Banking Group LLC,
―MIBG Review‖, at the MSE-BCM Securities Law Overview Session, July 4, 2013
• Robert Rooks, Director, PwC Hong Kong, ―A brief Overview of Custody Services‖, at the MSE-BCM
Securities Law Overview Session, July 4, 2013
• Anthony Woolley, Senior Associate, Hogan Lovells, ―The Revised Securities Market Law‖, at the
MSE-BCM Securities Law Overview Session, July 4, 2013
• B. Saruul, Director General, Securities Department, Financial Regulatory Commission of Mongolia,
―Securities Markets Law – Path to Market Reforms‖, at the MSE-BCM Securities Law Overview
Session, July 4, 2013
• 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
• S. Bold, Chief Economist, Central Bank, ―The current flow of investment into Mongolia‖, at the
"Foreign Investment in Mongolia: Challenges, Risks and Solutions" conference on April 19, 2013 at
the Kempinski Hotel.
• S. Javkhlanbaatar, Foreign Investment Regulations and Registration Department Head, Ministry of
Economic Development of Mongolia, ―About regulation on FDI‖, at the "Foreign Investment in
Mongolia: Challenges, Risks and Solutions" conference on April 19, 2013 at the Kempinski Hotel.
• B. Amarsanaa, Academic Secretary of National Legal Institute, ―Legal issues of regulation of
foreign investment‖, at the "Foreign Investment in Mongolia: Challenges, Risks and Solutions"
conference on April 19, 2013 at the Kempinski Hotel.
• D. Gan-Ochir, Head of Financial Stability Council, Advisor to President of Central Bank,
―Investment in stocks and equities in Mongolia: risks, challenges and trends‖, at the "Foreign
Investment in Mongolia: Challenges, Risks and Solutions" conference on April 19, 2013 at the
Kempinski Hotel.

21. • D. Achit-Erdene, CEO, MICC, ―On current state of equities foreign investment‖, at the "Foreign
Investment in Mongolia: Challenges, Risks and Solutions" conference on April 19, 2013 at the
Kempinski Hotel.
• 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 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
Please note the presentations from each of the BCM monthly meetings.
The ―Mongolia Reports‖ section includes the following:
- ―Mongolia Macro Flash‖, Adrienne Lui, Asia Pacific Economics Research, Citigroup Global Markets
Asia Ltd;
- ―Selected Macroeconomic Indicators for Mongolia, as of June 2013‖ by International Monetary
Fund;
- ―Polit Barometer April, 2013‖ by Sant Maral Foundation;
- ―Market Update‖ by Mandal General Insurance LLC;
- ―Annual Report 2012‖ by International Monetary Fund;
- ―Regional Economic Outlook: Asia and Pacific‖, April 2013 by International Monetary Fund;
- ―Highlights of 2012, Mongolia‖ by European Bank for Reconstruction and Development (EBRD);
- ―Official statement of Oyu Tolgoi LLC in relation to information, data and facts related to Oyu
Tolgoi -―2013discussed during open session of the State Great Khural‖, dated 1 February, 2013‖;
- ―Mongolia Investment Climate Statement‖, by the Economic and Commercial Section of the U.S.
Embassy;
- ―Mongolia Foreign Labor Force Ratio for 2013‖ by Hogan Lovells International LLP;
- ―How Mongolia will perform in 2013?‖ by Mandal Asset Management;
- ―Mongolia Business Owner and CFO Survey result‖ by BDSec JSC;
- ―The fiscal regime for mining - a way forward‖ by IMF Fiscal Affairs Department;
- ―Taxes for Expatriates in Mongolia‖ by PricewaterhouseCoopers.
BCM's English website includes the ―Mongolia Business News‖ section where the Open Letter to
Parliament and Government is available for download.
BCM continuously posts news stories and analysis of relevance to Mongolia at ‗Mongolian Business
News‖ before they are all put together each week for Friday's weekly NewsWire.
The ―Photo Gallery‖ contains photos from the 5th Anniversary BCM Gala dinner on November 5.
BCM Football Cup 2013 pictures are posted to the website - http://bcmongolia.org/en/photos/350-
en/album?albumid=200
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.
___________________________________________

22. 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.
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.
Connect with BCM on Linked-in to join the diverse group of professional contacts creating a better
business environment in Mongolia today.
Hear breaking news and announcements as they happen when you follow BCM on Twitter at
http://twitter.com/#!/bcMongolia.
We have now 1,318 fans on our Facebook fans page, 1,328 connections on LinkedIn network, and
736 followers on Twitter.
Of course for news information, interviews, event photos, and announcements regarding our
organization, visit the official BCM website at www.bcmongolia.org and www.bcm.mn.
ECONOMIC INDICATORS

26. 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]
July 31, 2013 *8.3% [source: NSOM]
*Year-over-year (y-o-y), nationwide
Note: 7.0% y-o-y, Ulaanbaatar city, July 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]
June 25, 2013 10.50%[source: Mongol Bank]
CURRENCY RATES – AUGUST 8, 2013
Currency Name Currency Rate
US dollar USD 1,584.77
Euro EUR 2,115.83
Japanese yen JPY 16.19
British pound GBP 2,472.80
Hong Kong dollar HKD 203.63
Chinese Yuan CNY 258.91
Russian Ruble RUB 47.75
South Korean won KRW 1.41
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.