BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 329 – June 13, 2014

NEWS HIGHLIGHTS:

Business

Mongolia miner, SouthGobi Resources’ filing indicates pending sale;

Eznis Airways flights divided among Aero Mongolia, Hunnu Air;

Hunnu Air arrives in Paris;

MIAT to open direct flight to Tokyo in August;

ITZone launches Mongolia's first brand of smart phone;

U.S. company to export its first rugged travel vehicle to Mongolia;

Soccer magazine launched;

Premier visits cattle farm;

Mongolia to receive Slovakian cattle;

Erdenet Mining's accounts receivable totals MNT 36bn;

Mongolia Growth Group’s April revenue jumps 22.7 percent;

Minter represented Xanadu Mines on recent Mongolian acquisition;

Mongolia hosts India, Inner Mongolia, S. Korea business forums;

Kyrgyzstan OKs Centerra Gold's 2014 mine plan to avoid shutdown.

Economy

Mongol Bank: FX auction, swap agreements, 1-week bills, treasury bills;

FDI falls 64% y-o-y;

FRC partners for licensing and securities trade regulation;

Mongolia’s rejuvenation begins at the drill rigs;

Bread prices jump 9%;

Prices jump, purchasing power stands still;

Mongolia earns MNT 279mn from ships' use of Mongolian flag;

Mongolia to spend MNT 2.2bn on summer celebrations;

World Bank approves $93.7mn package for development projects;

Japan grant to fund training of civil servants;

City railbus launched;

2013 global mine profits lowest in a decade, says PwC;

Copper retreats on China financing fears;

Coal cargo price slips to 4-year low;

Don’t bet against China, says Fortescue chairman, on iron ore;

World Bank says China’s growth Is on track.

Politics

MAK owes Government no equity in Tsagaan Suvarga, says working group;

Government announces bidding for state-owned assets;

Parliament extends tax exemptions for small businesses;

Minister of Justice submits bills for movable property and tax amnesty;

Prime minister explains PM Office’s budget spending;

UAE foreign minister visits Mongolia;

Russia, Mongolia agree to step up cooperation, says Russian official;

President eyes Japan visit in July, Abe to discuss abductions;

Ulaanbaatar to host dialogue on Northeast Asian security;

Director of National University found guilty of embezzling MNT 347mn;

Khuvsgul Citizens Council extends license bans;

Former premier under possible investigation for uranium licenses;

The black market for dinosaurs.

Others

Announcements;

BCM Updates - Working Groups; Websites; Social Networks; Photo Gallery.

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

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International SOS

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Invest Mongolia Agency

BUSINESS

MONGOLIA MINER, SOUTHGOBI RESOURCES‟ FILING INDICATES PENDING SALE

The sale of Hong Kong-listed SouthGobi Resources Ltd. may be agreed by June 30, according to a

filing by the company on 3 June.

The term sheet has sections redacted, including the name of a third party that is ―contemplating‖

purchase of all shares owned by Turquoise Hill Resources Ltd. The potential sale of SouthGobi is a

stress test for Mongolia, which saw a flight of investment following two years of nationalist-fueled

legislation and strained relations with key investors. Prime Minister Altankhuyag Norov last month

began a 100-day economic acceleration campaign to jump start the economy. The filing explains

the terms of a USD 10 million revolving credit facility for short-term working capital requirements.

SouthGobi last month said it was seeking additional financing to continue operations and pay

interest due on a USD 250 million debenture held by China Investment Corp (CIC), which owns more

than 16 percent of the company.

In 2012, Chinese state-owned Aluminum Corp of China Ltd., also known as Chalco, offered to buy

SouthGobi for USD 926 million. That led to new legislation in Mongolia, the Strategic Entities

Foreign Investment Law (SEFIL), which ultimately blocked the deal. Weak coal prices and SEFIL

combined to drive down the share price of SouthGobi from a peak of USD 20 in January 2010 to the

current price of USD 0.64 on the Toronto Stock Exchange. SouthGobi is planning to furlough

approximately half of its 405 workers until mid-July, due to ―management of financial resources

and the demand for coal‖, Chief Executive Officer Ross Tromans said in a phone interview

yesterday.

The company produced 640,000 tons of raw coal in the first quarter at its flagship Ovoot Tolgoi

mine, located 40 kilometers (25 miles) north of the Mongolian-Chinese border. Revenue reached

USD 5.1 million in the first quarter, according to operating results published on May 12. SouthGobi is

embroiled in a lawsuit with the Mongolian government, as the nation‘s anti-corruption body has

investigated the company for tax evasion. The government says it‘s owed USD 50 million in unpaid

taxes, which the company denies.

Source: Bloomberg

EZNIS AIRWAYS FLIGHTS DIVIDED AMONG AERO MONGOLIA, HUNNU AIR

Hunnu Air LLC and Aero Mongolia LLC have divvied up the routes of Eznis Airways LLC amongst

themselves following Eznis' announcement that it would suspend its operations.

All of the routes run by Eznis and 1,800 of its bookings would be transferred to the airlines Hunnu

and Aero, said P. Ganbold, head of the the Aeronautical Information Services. The Civil Aviation

Authority approved Hunnu and Aero's flights from 2 June through to 25 October. he said.

Furthermore, Hunnu and Aero have opened round-trip flights from Ulaanbaatar to Uvs and Bayan

Ulgi Aimags. Aero Mongolia and MIAT Mongolian Airlines LLC will conduct flights from Ulaanbaatar to

Oyu Tolgoi.

Eznis announced the suspension of its operations in May due to financial difficulties.

Source: Info Mongolia

HUNNU AIR ARRIVES IN PARIS

Hunnu Air LLC celebrated the launch of its first long-distance flight from Ulaanbaatar‘s Chinggis

Khaan International Airport to Paris's Charles de Gaulle Airport with a ribbon-cutting ceremony on 9

June.

Those present at the ceremony included airline executives and the former French Ambassador Yves

Delaunay. The airline will make the 7,040-kilometer flight to Paris twice a week using the airline‘s

A319, with one stop over in Ekaterinburg, Russia.

Hunnu plans to acquire an A330 to enable non-stop service beginning 2015. No other carrier

currently operates this route.

Source: Anna Aero

MIAT TO OPEN DIRECT FLIGHT TO TOKYO IN AUGUST

State-owned MIAT Mongolian Airlines will service direct flights from Ulaanbaatar to Haneda Airport

in Tokyo, Japan between 1 August and 25 October.

MIAT is reportedly opening the route to fly twice a week, on Tuesdays and Saturdays, to meet travel

demand during the peak tourist season. The airline is utilizing its Boeing 737-800 aircraft, which has

12 business and 150 economy seats.

MIAT flew this route previously in 2009.

Source: Info Mongolia

ITZONE LAUNCHES MONGOLIA'S FIRST BRAND OF SMART PHONE

ITZone released its Mogul brand Sonor phone as the first Mongolia-developed smart phone on 5

June.

The phone will run on the Android 4.2 (Jelly Bean) operating system and enters the market as the

cheapest priced phone at a cost of MNT 149,000. The Mogul phone can be used for all cellular phone

service providers and supports Dual SIM (WCDMA+GSM) card use. It also comes pre-installed with

Mongolia‘s first Application store. Although the operating system currently only runs in English,

developers said it would be updated in the near future to offer Mongolian-language support.

The phone is available for purchase at the Mogul and Canon centers in Ulaanbaatar.

Source: Info Mongolia

U.S. COMPANY TO EXPORT ITS FIRST RUGGED TRAVEL VEHICLE TO MONGOLIA

A Bend, Oregon, USA company that makes vehicles for remote, rugged travel is preparing to export

its first vehicle to Mongolia.

EarthCruiser USA owner Lance Gillies said his company delivered its first vehicle to an American

customer about two months ago. He says the plant in Bend has two or three vehicles in production

at any given time, but he hopes to eventually ramp up to 50. The vehicles are priced on average at

USD 210,000. They're made to cross deserts and travel on washboard roads, or through places

without roads.

Source: Greenfield Reporter

SOCCER MAGAZINE LAUNCHED

IPC Media 6 June announced a partnership with Amin Media Group for the launch of World Soccer

magazine in Mongolia.

With football becoming the most watched sport in Mongolia in the past five years, the magazine will

feature content from the British edition as well as relevant local content, such as information on

local football clubs, national players and news.

"After we aired our first TV commercial, fans were calling from all corners of Mongolia and even

from abroad asking us for the launch date,‖ said Bayarmagnai Puntsag, chief executive officer of

Amin Media Group. ―Football fans are so excited that we're launching World Soccer in Mongolia."

The first issue of World Soccer Mongolia launched 6 June, along with the website worldsoccer.mn.

The magazine will print monthly with a cover price of MNT 5,000.

Source: IPC Media

PREMIER VISITS CATTLE FARM

Prime Minister Norov Altankhuyag Thursday inspected the Khishikhten Nuudelchin LLC cattle farm

where Montbeliarde cattle are being breed.

The government provided MNT 2.8 billion this year to finance the dairy farm. The farm imported

150 heads of the Montbeliarde cattle from France for dairy and beef production. Altankhuyag said

10 farms like the owned by Khishikhten Nuudeelchin would produce enough milk to meet 50 percent

of demand from Ulaanbaatar. Vice Minister of Agriculture Ts. Tsuvaan added that 15 companies had

received MNT 10.5 billion in government financing from proceeds of the 2012 Chinggis bond.

The head of the Khishikhten Nuudelchin, J. Battogs, said he hoped to utilize traditional Mongolian

practices to breed the species of cattle, which is more resilient to disease and provides more milk

than their Mongolian counterparts. "The Mongolian cow gives 4.5 liters milk a day, whereas her

French counterpart gives between 20 and 25 liters, with high protein," said Battogs. ―We've learned

that the Montbeliarde mountainous region has had no animal disease in the last 20 years."

Battogs said he hoped to utilize traditional Mongolian practices for the cattle, and that he hoped to

import another 160 heads of cattle in the near future.

Source: Montsame

MONGOLIA TO RECEIVE SLOVAKIAN CATTLE

Govi Khurakh LLC will receive its first shipment of a total 600 Simmental cows from Slovakia in July.

The first shipment will see the arrival of 165 three-year old cows. Slovak Ambassador D.

Zumberllkham on 5 June in Bratislav signed an export contract that agrees to have Isokman Trading

provide the cattle to Govi Khurakh.

Source: News.mn

ERDENET MINING'S ACCOUNTS RECEIVABLE TOTALS MNT 36BN

Erdenet Mining Corp. LLC has received 24.8 billion in cash and assets out of a total MNT 60.8 billion

owed by Mongolian companies for goods and services.

Erdenet Mining made pre-payments to 160 companies for goods and services. Erdenet has reported

that it has collected MNT 24.8 million from 60 companies, including MNT 10.1 million from Dund

Nuur and MNT 9 million from Ugalz Enkh. Some companies provided assets as compensation,

including two apartments by En Co Corp. for debt of MNT 244 million and one Lexus 470 from

Mongol Sigar for debt of MNT 81 million.

Source: Unuudur

MONGOLIA GROWTH GROUP‟S APRIL REVENUE JUMPS 22.7 PERCENT

Real estate investment company Mongolian Mongolia Growth Group (MGG) reported a 22.7 percent

jump in revenue in its April 2014 shareholder letter.

MGG‘s core commercial property portfolio saw its same-store rentals increase 36.8 percent from

April last year on properties owned 12 months or longer. Total billed revenue for April 2014 was

MNT 260.7 million, compared with MNT 212.5 million in April 2013 for a 22.7 percent increase. The

occupancy rate for the core portfolio in April of 2014 was 95.9 percent, including an occupancy rate

of 98.1 percent for core retail properties and an occupancy rate of 90.5 percent for core office

properties.

MMG said it is implementing a strategy of shifting MGG‘s asset mix away from smaller properties

that cost more to maintain and manage, and towards larger institutional-quality assets that are

easier to scale. MMG disposed of one property in April, and over the first four months of 2014

disposed of a total of seven properties. MGG said it received commitments to sell an additional two

properties.

In April, MGG borrowed money from a ―highly respected‖ bank in Mongolia, in order to complete

the acquisition of a distressed asset at a substantial discount to current market prices. ―While

property companies are usually significantly leveraged for better economics, we want MGG to retain

a conservative balance sheet with ample liquidity to take advantage of future acquisition

opportunities, like the purchase that was just completed,‖ said MGG in the statement. ―The

company intends to reduce the borrowings through continued sales of non-core assets, while in due

course exploring ways to refinance this new loan with cheaper overseas borrowings.‖

Source: UB Post

MINTER REPRESENTED XANADU MINES ON RECENT MONGOLIAN ACQUISITION

Minter Ellison LLP was counsel on a recent deal for Xanadu Mines Ltd. and its joint venture company

Mongol Metals LLC to acquire 90 percent interest in the Oyut Ulaan mine from a wholly-owned

subsidiary of Turquoise Hill Resources Ltd. for USD 14 million. This was the first significant

acquisition transaction in Mongolia for some time.

This acquisition was funded by Xanadu with a USD 4 million, three-year loan agreement with the

Noble Group and USD 4 million equity in Mongol Metals from its joint venture partner as initial

consideration. Minters‘ team was led by Elisabeth Ellis, the managing partner of the firm‘s

Ulaanbaatar office, with assistance from her Mongolian-based colleagues Sebastian Rosholt and

Dunnaran Baasankhuu.

Source: Lawyers Weekly

MONGOLIA HOSTS INDIA, INNER MONGOLIA, S. KOREA BUSINESS FORUMS

Summer marks the start of the season for international visits and conferences in Mongolia, with one

held this week and two more to be held in July.

A Mongolia-India business forum was held Thursday in Mongolia. Attendees discussed the

development of cooperation and trade, with the overarching goal of the forum to expand

commercial relations.

The Mongolia-Inner Mongolia Investment Forum 2014 will be held 2 to 4 July. Over 200 investors and

businessmen are expected to attend the conference to learn about China-Mongolia relations in the

fields of energy, food, agriculture, communication, commerce, banking, financing, and the

environment.

The KOTRA Ulaanbaatar Business Center will host the Business-to-Business Meeting for Mongolian

and South Korean entrepreneurs at the Chinggis Khaan Hotel in Ulaanbaatar on 3 July. Eight Korean

companies have registered to attend the meeting, where they will introduce and promote products

and services they are targeting for the Mongolian market. Companies expected to attend include

Postech Co., Ltd., a welding machinery and refrigeration provider, and heavy equipment provider

Jonhun Trade.

Source: News.mn, News.mn, Info Mongolia

KYRGYZSTAN OKS CENTERRA GOLD'S 2014 MINE PLAN TO AVOID SHUTDOWN

The government of Kyrgyzstan said on Wednesday it had approved Centerra Gold Inc.'s mine plan

for 2014, rushing to meet a deadline set by the Canadian investor, which had threatened to shut

operations at the country's largest gold deposit.

"We have signed a relevant order. The company receives the right to continue its work," Valery Dil,

Kyrgyzstan's deputy prime minister in charge of economy and investment, said. "We chose the most

rational option... to avoid the mothballing of the company's facilities and to avert unpredictable

consequences for the economy and ecology."

But in a statement released shortly after midday on Wednesday, Toronto-based Centerra Gold said

it did not yet have official approval for the mine plan in hand. "The company reiterates... that

absent the receipt of such approvals by the close of business on (Friday) June 13, 2014, it intends to

begin an orderly shutdown of operations at the Kumtor project," Centerra said.

Centerra has until 1 August to coordinate its planned work at the Davydov Glacier at the site of its

operations in the Tien Shan mountains, and register all the explored mineral reserves of its license

area, the Kyrgyz geology and mineral resources agency said. The Kumtor mine, which lies near the

Chinese border at an altitude of 4,000 meters (13,123 feet), has been a source of political tension

in the impoverished Central Asian country, which has been trying to increase revenues from the

project. Kyrgyzstan's state environment agency said last week that after looking into Centerra's

2014 work plan for the mine, there were serious concerns that the plans could damage the glacier.

The Kumtor mine is a key source of foreign exchange for the country of 5.5 million people. It is also

the main taxpayer and biggest employer in Kyrgyzstan. A shutdown would further aggravate the

bitter dispute between Centerra and the government, which wants more revenue from the mine.

Under a draft agreement in December, Kyrgyzstan would swap its 32.7 percent stake in Centerra for

half of the Kumtor mine, the company's main asset. But the deal has not been finalized.

Source: Reuters

SPONSORS

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Mongolian Economy Magazine

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ECONOMY

MONGOL BANK: FX AUCTION, SWAP AGREEMENTS, 1-WEEK BILLS, TREASURY BILLS;

The Bank of Mongolia on 12 June reported that it sold CNY 26 million to commercial banks for

closing rates of MNT 292.95. The central bank also reported that it had received an equivalent of

USD 42.2 million from swap agreements with commercial banks.

The central bank reported on 12 June the issue of one-week bills worth MNT 97.7 billion at a

weighted interest of 10.5 percent a year.

The central bank reported on 11 June MNT 62.5 billion in bids for the issue of 12-year treasury bills

with a face value of MNT 40 billion. Each unit was sold at a discounted price with a weighted

average yield of 9.41 percent.

Source: Bank of Mongolia

FDI FALLS 64% Y-O-Y

The Bank of Mongolia reported a 64 percent decline in foreign direct investment (FDI) in its balance

of payments reports for the year to May.

The central bank reported a 56 percent increase for a current account deficit of USD 434.3 million

from the previous year. The deficit of international trade accounts for goods fell 114 percent,

resulting in a surplus of USD 41.3 million; the trade of services deficit decreased 12 percent to USD

447 million; the deficit of income account dropped 49 percent to USD 108.3 million; and the current

transfers increased by 123 percent to USD 79.7 million.

The balance of capital and financial accounts surplus was USD 121.4 million, which was an 84

percent fall from last year. This was due to 64 percent decline of foreign direct investment from

the same period last year, totaling USD 604.9 million.

The Samurai bond issued by the Development Bank of Mongolia has triggered portfolio investment

surplus growth of USD 342 million. The USD 368.2 million in other investment deficits was due to

trade credit assets (USD 145.6 million) and net currency and deposit (USD 217.6 million).

Source: Bank of Mongolia

FRC PARTNERS FOR LICENSING AND SECURITIES TRADE REGULATION

The Financial Regulatory Committee (FRC) has signed a memorandum of understanding with the

Mongolian Association of Securities Trade Holders (MASTH) on 10 June, vowing to cooperate to

ensure sustainable development of the securities market.

Both groups will be responsible for granting rights to provide professional financial services as well

as the development and implementation of policies for the securities market. They will also

cooperate to host trainings for both beginner and professional investors.

Source: Montsame

MONGOLIA‟S REJUVENATION BEGINS AT THE DRILL RIGS

Despite the economic downturn Mongolia has begun boosting its mining activities. Along with the

government‘s 100-day plan to increase foreign investment, the Ministry of Mining announced a list

of objectives for 2014. This includes the planned development of the underground mine at Oyu

Tolgoi LLC and a strategy to increase profitability at Erdenes Tavan Tolgoi LLC.

Junior miners such as Erdene Resources Development Corp., Xanadu Mines Ltd., and Kincora Copper

Ltd. have started exploration work across the country. Meanwhile, Centerra Gold Inc. has submitted

a request to classify its Gatsuurt gold project as strategically imperative to the Mongolian economy

and allowing Centerra to begin mining.

―The initiation of these potentially impressive drilling projects and the progress of current mining

activities, displays the magnitude to which Mongolia depends on the mining industry,‖ reads the

source. ―However, exploration is not enough on its own to keep the economy growing. In order to

realize its full potential the Government of Mongolia must adapt the foreign investment laws to

become more receptive to investors. Current opinion in government is inclined more heavily toward

the acceptance of foreign investment, as it should.‖

Source: Mongolia Investment Banking Group LLC

BREAD PRICES JUMP 9%

The price of bread jumped 9 percent for some brands, with most markups ranging between MNT 50

and MNT 100.

Bread prices grew because of markups from the distributors, said grocers. Although prices varied at

different stores, brands such as Misheel grew from MNT 1,100 to MNT 1,200. Distributors said cost of

production was the chief reason for the markups. ―The cost of flour has increased, that‘s why we

raised the price of bread,‖ said a spokesperson for Talkh Chikher.

Source: UB Post

PRICES JUMP, PURCHASING POWER STANDS STILL

Pensioners rejoiced when the Mongolian government raised pensions. Yet, the pension increase that

came as a delight to the elderly was followed by a similar hike in prices of consumer goods.

Pensions grew by 15 to percent, depending on prior income, with the minimum increase of 15

percent adding around MNT 20,000 to the average pensioner's income. Unfortunately, that gain has

largely been counterbalanced by the depreciation of the tugrug against foreign currencies and

inflation. Today MNT 20,000 will buy two kilograms of beef compared with three years ago when

MNT 20,000 was enough for ten days of food. And that is despite the fact that Mongolia has over 45

million heads of livestock.

Inflation as of May 31 grew by 13.1 percent year-over-year in Mongolia. Inflation grew by almost 50

percent during the four years between 2010 and 2014 compared with 2006 and 2010. That has

resulted in hikes for consumer goods. The retail price for a liter of APU LLC's ―Pure Milk‖ has grown

60 percent from MNT 1,700 in 2011 to MNT 2,700 today.

Source: UB Post

MONGOLIA EARNS MNT 279MN FROM SHIPS' USE OF MONGOLIAN FLAG

Mongolia has earned MNT 279 million from the use of the Mongolian flag on sea vessels.

―There are 420 vessels with Mongolian flags floating, and last year we earned MNT 279 million in

revenue from the flag's use,‖ said an official of the Standing Committee on Security and Foreign

policy. ―Also, negotiations for establishing a joint venture company for sea transport are being

made.‖

Source: Unuudur

MONGOLIA TO SPEND MNT 2.2BN ON NAADAM CELEBRATIONS

Total spending of MNT 2.2 billion has been budgeted [Source does not say what body approved -ed]

for the 2014 Naadam Festival.

Some MNT 369.9 million of funding will come from earnings generated from the Naadam Festival,

MNT 500 million from the Ulaanbaatar budget, MNT 57 million from profits from last year‘s Naadam

Festival, and MNT 1.2 million from the Government‘s Resource Fund. Planners have allocated 13.1

percent of the budget to awards, 42.8 percent for the organizing of ceremonies, 22.4 percent on

services, and 6.4 percent on emergency services. The remainder in funding has been budgeted for

management costs.

Source: UB Post

WORLD BANK APPROVES $93.7MN PACKAGE FOR DEVELOPMENT PROJECTS

The World Bank on 6 June announced board approval for USD 93.7 million in credits from the

International Development Agency (IDA) to the Mongolian government to support four projects for

such aims as improving education and government efficiency.

The Education Quality Reform Project will receive USD 30 million to improve the quality of

education for primary school children in Mongolia. The project aims to extend access to high quality

learning materials, establish a national assessment system, improve teacher professional

development, and implement a school grants program.

The Third Sustainable Livelihoods Project received USD 24.8 million to benefit rural citizens

throughout Mongolia with improved local governance through the implementation of local

development funds and to support the further development of the government's Soum Program for

local economic development. The project will support capacity building for local government and

communities and provide performance-based financing for good governance. The project will be co-

financed with a USD 11.4 million grant from the Swiss Agency for Development and Cooperation.

The E-Health Project will receive USD 19.4 million to take advantage of Mongolia's vast broadband

infrastructure to ensure faster access to more integrated health information systems across the

country to process referrals faster, avoid duplication of tests and procedures, and provide follow-up

care, as the information can be shared among hospitals and healthcare providers, even in remote

areas.

The SMART Government Project will receive USD 19.4 million for the utilization of information and

communication technologies (ICT) to improve accessibility, transparency and efficiency of public

services in Mongolia. The project would help the government leverage the ICT sector as a key driver

of growth, competitiveness, and improved governance. The project seeks to advance Mongolia's

commitment to an accountable, transparent and responsive government, leveraging open data and

ICT innovations.

Source: Insurance News Net

JAPAN GRANT TO FUND TRAINING OF CIVIL SERVANTS

The Japanese government has promised to provide JPY 242 million (USD 2.4 million) grant to fund a

scholarship program for an initiative to improve Mongolia's human resources in government.

Foreign Affairs Minister Luvsanvandan Bold signed an intergovernmental accord for the project on 4

June, along with Japanese Ambassador Takenori Shimizu. The agreements sets out to train up to 20

Mongolian post-graduate students in law, economics, government management, business

administration, international relations, and information technologies.

The government of Japan has run programs aimed at improving human resources around the world

since 1999. Japan has launched 12 projects in Mongolia since 2001, with 227 Mongolian receiving

Master's degrees from Japan.

Source: Montsame

CITY RAILBUS LAUNCHED

Ulaanbaatar launched its city railbus transportation services on 6 June, offering 22-minute, cross-

city travel from east to west.

The 136-seat railbus travels from Tolgoit to Amgalan at a speed of 100 kilometers per hour. The

train can carry up to 300 passengers at a time, traveling 47 minutes round trip from Tolgoit to

Amgalan and back again. The railbus is scheduled to travel five times a day, stopping at Tavanshar,

Bars-2, the Ulaanbaatar train station, Dundgol, Narantuul and Ulaankhuaran en route from Tolgoit

to Amgalan.

Source: News.mn

2013 GLOBAL MINE PROFITS LOWEST IN A DECADE, SAYS PWC

Overall global mining market values plummeted by 23 percent last year to USD 958 million as gold

miners were particularly hit hard, says a new PricewaterhouseCoopers (PwC) report.

―2013 was a year that forced the global mining industry to realign expectations in one of the most

difficult operating environments for years,‖ said PwC in its latest Mine report published Thursday.

Led by gold‘s greatest decline in three decades, commodity prices decreased significantly and

mining stocks fell 23 percent in 2013. Coupled with record impairments of USD 57 billion last year,

global mining‘s net profits plunged 72 percent to a decade low of USD 20 billion in 2013. The

changing global mining landscape also includes a sharp difference in the collective profits between

emerging market mining companies and their developed market counterparts, PwC noted. Last

year‘s net profits from emerging market mining companies totaled USD 24 billion, compared to an

aggregate net loss of USD 4 billion for developed market companies, which were substantially

impacted by impairments. Emerging markets also account for 60 to 80 percent of the new reserves

added globally during the past decade to 2013, the report observed.

―These markets bring enormous opportunity for the industry, but such opportunity is tempered by

complexity and risks due to the relative differences in political, legal and business practices.‖

Only 4 of the top 40 mining companies showed an increase in market capitalization last year,

according to the report. Exploration spending was down more than 30 percent in 2013 and capital

expenditures are expected to decline by more than 10 percent this year. Net debt increased 42

percent during 2013 as miners extended their repayment periods, according to the report.

Traditional quick-fixes such as idling a mine equipment fleet, reducing employees, slashing costs,

and deferring capital expenditure were also utilized last year, said the report. Among the more

fundamentals shifts in strategy emerging in the mining industry is a push to simplify structures and

focus on extracting value from higher quality assets; a move to sharing mining infrastructure to

reduce operating costs, realize efficiencies and spread capital and risk; and a commitment to

addressing lower productivity levels, said PwC.

Source: Financial Times

COPPER RETREATS ON CHINA FINANCING FEARS

The red metal, which is used in construction and electrical appliances and was the largest exported

commodity in April for Mongolia, is also a popular source of collateral for loans and financing deals

in China.

According to media reports, a Chinese investigation has halted shipments of copper and aluminum

from Qingdao, a key port in the north of the country, after a trading company in the city was

alleged to have used the same stocks of copper as collateral for multiple deals. Investment bank

Macquarie reckons the company in question could hold 20,000 tons of copper, but has collateralized

around 40,000 to 50,000 tons.

―There are people out there in the market that hold fake or photocopied receipts and the

authorities are trying to decide who owns the copper,‖ said Vivienne Lloyd, analyst at Macquarie.

Lloyd added that the investigation could have bearish implications for the price. ―If the Chinese

banks are nervous about issuing letters of credit, there are going to be far less of them bankrolling

anybody‘s venture to finance using copper,‖ she said.

Copper fell sharply in March after fears that financing deals would unwind, but has since regained

some of its losses. Capital Economics, the research consultancy, suggested commodity demand as

part of financing deals in China is ―set to fade‖ as authorities continue to crack down on the

shadow finance sector. ―A disorderly unwinding of the deals could lead to sharply lower prices as

stocks are offloaded on to the market,‖ the research consultancy said in a note published on

Wednesday.

Source: Financial Times

COAL CARGO PRICE SLIPS TO 4-YEAR LOW

Thermal coal was in focus after a European cargo fetched the lowest price in four years.

According to Argus, the price reporting agency, a 50,000 ton June shipment was booked at USD

70.15 a ton for delivery into Rotterdam on Thursday, down USD 3.35 on a similar trade earlier in the

week. This was the lowest level for a cargo in the European spot market since March 2010 when a

50,000 ton cargo changed hands at USD 69 a ton. Analysts said the trade highlighted the pressures

facing the thermal coal market in Europe—strong supplies and abundant stockpiles.

―It‘s a pretty grim market at the moment,‖ said Stefan Ljubisavljevic, analyst at Macquarie. ―There

is very little to get excited about.

Although overshadowed by commodities such as iron ore, aluminum and copper, the price of

thermal coal, used by power stations, is crucial for the profitability of the mining industry,

particularly in Australia and South Africa. Lower prices weigh on the profits of the largest global

thermal coal miners, including Glencore Ltd., Rio Tinto PLC and Anglo American PLC.

A supply glut has seen benchmark thermal coal prices in Australia, Europe and South Africa fall

between 10 and 15 percent this year. Australia and Russia, the second and third biggest producers,

respectively, have continued to pump out record volumes of coal, while demand from India, last

year‘s bright spot, is down 8 percent year-on-year through the first four months of 2014, according

to Macquarie.

In addition, stockpiles in China, a large consumer of thermal coal, have started to climb again.

While some of the rise is due to seasonal trends, the current increase is slightly faster than normal,

said analysts. ―Rising stockpiles, over and above seasonal trends, may indicate weaker demand for

electricity and, as a result, also could imply slower growth from the manufacturing sector and, by

extension, slower demand for commodities,‖ said Standard Bank in a report.

Source: Financial Times

DON‟T BET AGAINST CHINA, SAYS FORTESCUE CHAIRMAN ON IRON ORE

As the value of iron ore—a chief ingredient for steelmaking and a chief export for Mongolia—fell

further to prices not seen since 2012, a group of mining bosses, including Andrew Forrest, chairman

of iron-ore miner Fortescue, told a conference the price slump will be short-lived and continued to

talk up the strength of China‘s commodity appetite.

Iron ore dropped 4.1 percent on Friday to USD 91.80 a ton, its lowest price since September 2012.

This represents close to a 30 percent fall since the beginning of 2014 and has chipped away at the

value of Australia‘s biggest miners as investors seek a way out of the price rout. Fortescue Metals

Group lost 13 percent in May and is down 23 percent year-to-date. While Australian‘s major miners

like Rio Tinto PLC and BHP Billiton Ltd. are so far shielded from any real price crunch, with cash

costs of between USD 40 to USD 45 per ton produced, further dips have the potential to derail

juniors who have higher outlays.

Some analysts are pointing to lows of USD 87 a ton by the second half of the year, driven by an

oversupply and a lessening in steel demand in China. The country is turning off its old and emission-

heavy blast furnaces, displacing millions of tons of iron ore. Meanwhile, there is more of the steel

making ingredient in the market than it can handle and Citigroup predicts that the global seaborne

iron ore surplus will rise to 67 million tons in 2014 compared to just two million tons last year.

Fortescue Metals Group chief Andrew Forrest played down concerns of further price drops, stating

China would continue to grow. Speaking at the Australia in China's Century conference, Forrest said

China was trying to urbanize ―an Australia every year‖. His quote: ―a bet against China is the only

guarantee of loss I‘ve seen for a long time.‖ As for the price, Forrest said he was comfortable with

the value of iron ore hovering around the USD 110 a ton range.

Source: Australian Miner

WORLD BANK SAYS CHINA‟S GROWTH IS ON TRACK

China is likely to meet its economic growth target of 7.5 percent this year, the World Bank said on

Friday, but must persevere with fiscal and financial overhauls to deal with the cause of its debt

problems.

The government unveiled a series of targeted measures after the economy got off to a weak start

this year, with official manufacturing and service sector surveys for May already showing an

improvement. The World Bank expects China‘s economy to grow 7.6 percent this year on policy

support and a recovery of global demand, while it noted growth could slow to 7.5 percent in 2015.

The World Bank said China‘s growth momentum could accelerate in the second quarter of 2014, a

more upbeat view than that held by many private economists. The International Monetary Fund said

on Thursday that it expected China to grow about 7.5 percent this year and then slow to about 7

percent next year.

The country‘s leaders have ruled out any large stimulus campaign, with the country still dealing

with effects from the stimulus worth CNY 4 trillion (USD 585 billion) put into effect during the

global financial crisis in 2008 and 2009, which piled up local debt. The new leadership has shown

greater tolerance for slower growth as it has tried to steer the economy toward domestic

consumption and away from the traditional engines of exports and investment. Still, the World Bank

saw risks to its 2014 China growth projection, as an abrupt reduction of local government debt and

a sharp slowdown in the real estate sector could weigh on economic activity. The World Bank urged

China to speed up fiscal and financial overhauls to deal with its debt problems.

―Delays in implementing coherent reforms could perpetuate resource misallocation, undermine the

health of the banking system, threaten the debt sustainability of local governments and increase

the fiscal costs of reforms,‖ it said.

Source: Reuters

POLITICS

MAK OWES GOVERNMENT NO EQUITY IN TSAGAAN SUVARGA, SAYS WORKING GROUP

A Working Group appointed by the Economic Standing Committee has found that the state does not

have a right to a stake in Mongolyn Alt Corp.‘s (MAK) Tsagaan Suvarga copper mine.

The state is entitled to shares in any mine deposit in which it can invest at least USD 350 million.

The committee, however, ruled that the government currently lacks the capacity to make such an

investment and that the deposit is too small to be considered a ―strategic deposit‖ in which

Mongolia holds such rights. The Erdenet copper mine, for example, is 7 times larger than Tsagaan

Suvarga, while the Oyu Tolgoi mines is 27 times larger, said the committee.

Source: Undesnii Shuudan

GOVERNMENT ANNOUNCES BIDDING FOR STATE-OWNED ASSETS

The government has released a list of state-owned assets it plans to auction for privatization on 10

July. Those assets are:

The Deglii Tsagaan airport in Uvs Aimag;

The Gurvan Saikhan international airport in Umnugovi Aimag;

The Bulgang Aimag airport;

The Dalanzadgad thermal power plant in Umnugovi Aimag;

The Food and Agriculture Small and Medium Enterprise Office in Bulgan Aimag;

The Altai-Uliastai power system;

Branches of Torrin Bank (State Bank).

Source: Zuunii Medee

PARLIAMENT EXTENDS TAX EXEMPTIONS FOR SMALL BUSINESSES

Parliament has voted in favor of extending tax exemptions provided to small businesses for the

import of equipment and tools until 31 December 2016.

Ninety-two percent of the 66,000 businesses that operate in Mongolia are considered small-and

medium enterprises—any company that hires less than 20 employees—and about 80 percent urgently

need an upgrade of their facilities, said Secretary of the prime minister's Policy Council,

Bayanjargal Byambasaikhan.

Source: Montsame

MINISTER OF JUSTICE SUBMITS BILLS FOR MOVABLE PROPERTY AND TAX AMNESTY

Justice Minister Kh. Temuujin on 9 June submitted to Parliament Speaker Zandaakhu Enkhbold

legislation for transparent registration of movable properties, non-material capital and tax

amnesty.

The bill would allow individuals to declare items such as equity, copyright, and patents, said

Temuujin, which would ―eliminate many obstacles in sharing information about the registration."

He said the reworded legislation makes a clear legal basis for introducing an online system for

registration that would also be freely accessible by those searching for such information.

The second bill Temuujin submitted would provide amnesty to anyone guilty of hiding assets for tax

avoidance purposes. He said the law would allow individuals to come forward to pay back taxes

owed without facing any criminal prosecution.

Source: Montsame

PRIME MINISTER EXPLAINS PM OFFICE‟S BUDGET SPENDING

The prime minister summarized how his office is spending the MNT 50 billion allotted in the 2014

budget.

The bulk of the funds, MNT 47.9 billion, were spent on 7 different initiatives, said Prime Minister

Norov Altankhuyag. Some MNT 1.7 billion was used to introduce mobile hand devices carried by

traffic police used to fine traffic offenders. Almost MNT 2 billion was spent to improve postal

services, introduce GPS monitoring for postal delivery, and install smart post boxes. Another MNT

9.7 billion was spent for the construction of indoor-markets in Khovd, Uvs and Bayan-Olgii Aimags,

while MNT 5.3 billion funded construction of a sports complex and bicycle roads in the national

garden park, said Altankhuayg.

The prime minister's office spent some MNT 5.3 billion to purchase equipment to renovate the

Center for Children and Youths as well as medical apparatuses for the National Center for Mother

and Infants. Altankhuyag said he also oversaw the spending of some MNT 23.6 billion to establish

diagnostic centers in 11 provinces.

Source: Montsame

UAE FOREIGN MINISTER VISITS MONGOLIA

United Arab Emirates (UAE) Foreign Minister Sheik Abdullah bin Zayed bin Sultan Al Nahyan, paid a

two-day official visit to Mongolia on 3 and 4 June.

Foreign Affairs Minister Luvsanvandan Bold held official talks with Nahyan, which Bold said

concerned bilateral and international relations. Bold said Mongolia would like to expand bilateral

cooperation in certain fields. The Emirates official said his country would like to pursue the

proposed Mongolian-Arab Emirates Intergovernmental Joint Commission as well as increase bilateral

economic cooperation, particularly in mining, oil extraction, and infrastructure construction.

Nahyan also met with President Tsakhia Elbegdorj and Prime Minister Norov Altankhuyag for what

was the first official visit by a foreign minister of the United Arab Emirates since the two countries

established diplomatic relations in 1996.

Source: News.mn

RUSSIA, MONGOLIA AGREE TO STEP UP COOPERATION, SAYS RUSSIAN OFFICIAL

Russia and Mongolia have determined further ways for developing trusted-based cooperation.

―We tried to formalize the agreements, reached on the sidelines of the Shanghai summit. I‘m

satisfied that we could resume the dialogue between the security councils of our countries,‖ the

secretary of Russia‘s Security Council, Nikolai Patrushev has said.

He commented on the results of his 3-4 June trip to Mongolia that had preceded the visit to China.

―Mongolia is our neighbor and the major strategic partner. This is conditioned by the common

economic interests, close relations between people and common positions on key global issues,‖

Patrushev said on Friday.

Source: Itar-Tass News Agency

PRESIDENT EYES JAPAN VISIT IN JULY, ABE TO DISCUSS ABDUCTIONS

Japan and Mongolia are in talks on setting up a meeting between their leaders in late July in Tokyo,

Japanese government officials said Monday.

If realized, it will be Mongolian President Tsakhia Elbegdorj's second visit to Japan this year

following one in April, as Tokyo aims to strengthen relations with Ulaanbaatar in a bid to resolve

the issue of North Korea's abductions of Japanese nationals. Mongolia, unlike Japan, has diplomatic

ties with North Korea.

Abe plans to explain to Elbegdorj about the agreement reached between Tokyo and Pyongyang

during recent intergovernmental talks in Stockholm to re-investigate the fate of Japanese nationals

abducted by North Korean agents in the 1970s and 1980s, the officials said. Mongolia acted as a go-

between for Japan and North Korea to materialize the first-ever meeting in Ulaanbaatar in March

between the parents of Megumi Yokota, a symbolic figure among abduction victims, and her

daughter, who lives in North Korea. Yokota went missing on her way home from school in 1977 when

she was 13. In 2002, Pyongyang admitted to having abducted Japanese to North Korea, including

Yokota, who it says committed suicide in 1994 after giving birth to a daughter.

Japan is looking for further cooperation from Mongolia regarding the abduction issue as it believes

in the need of international calls for positive action by North Korea in its reinvestigation.

During Elbegdorj's upcoming visit, Japan and Mongolia are also expected to agree to accelerate

talks toward an early conclusion of their free trade agreement, according to the officials. The

Mongolian president is considering visiting Japan to attend a business seminar to be held jointly by

the country's government and the Japan Business Federation, Japan's most powerful business lobby

known as Keidanren, on 22 July in Tokyo, the officials said.

Source: Global Post

ULAANBAATAR TO HOST DIALOGUE ON NORTHEAST ASIAN SECURITY

Mongolia plans to host the Dialogue on Northeast Asian Security this year in Ulaanbaatar.

President Tsakhia Elbegdorj first announced plans for the Ulaanbaatar Dialogue on Northeast Asian

Security at the 7th Ministerial Conference of the Community of Democracies in April 2013. Mongolia

aims to contribute to the resolution of challenging issues in the region as it has maintained friendly

relations with every country in the region. The key purpose of the meeting will be to provide a

platform for every country in the region to foster resolutions to disputes.

The president's declaration has also led to plans to host a forum for the gathering of mayors to

major cities in Northeast Asia as well as the first-ever international scientific conference. This year

the president's initiative led to Mongolia's first hosting of the Forum of Northeast Asian women

parliamentarians last year.

Source: News.mn

FORMER PREMIER UNDER POSSIBLE INVESTIGATION FOR URANIUM LICENSES

Former Prime Minister Sanjaa Bayar and the former director of state-owned uranium company Mon-

Atom are likely to be investigated for the issuance of uranium licenses in 12 of Sukhbaatar Aimag's

13 counties.

The investigation will make specific note of licenses issued for Dariganga Park and Altan Ovoo

during Bayar's term of office from November 2007 to June 2008 as well as the head of Mon-Atom at

the time of the issuance, R. Badamdamdin. Former Premier Sukhbaatar Batbold, whose term was

from 2009 to 2012, may also be under investigation, according to unnamed sources, because of the

24 Dariganga projects for oil exploration launched during his term in office.

Source: Zuunii Medee

DIRECTOR OF NATIONAL UNIVERSITY FOUND GUILTY OF EMBEZZLING MNT 347MN

National University of Mongolia Director A. Galtbayar has been ordered to pay MNT 347 million after

being found guilty of charging students that amount in excess student fees, said the Agency for Fair

Competition and Consumer Rights.

AFFCR said Galtbayar was proven to have charged MNT 111 million to 75 students so that they could

change their majors and MNT 236 million to 166 students through a September order for fees. The

agency received a complaint in November 2013 about Galtbayar, it said.

Galtbayar, who plead not guilty to the charges, was denied his request for an appeal.

Source: UB Post

KHUVSGUL CITIZENS COUNCIL EXTENDS LICENSE BANS

The Citizens` Council of Khuvsgul Aimag has extended a ban on mining and exploration for another

25 years in 14 counties.

The council canceled 48 out of 53 issued licenses in 2009 after it passed a resolution that banned

the exploration and mining of minerals, with exception for some ―common‖ minerals such as sand

and gravel. The council extended that measure for another 25 years with another decision last May.

The territory covers 14 counties with important fresh water reserves and where tourism was vital to

the local economies.

Source: Unuudur

THE BLACK MARKET FOR DINOSAURS

On the morning of 17 October 2012, a cadre of federal agents and sheriff‘s deputies in Gainesville,

Florida, went to the home of a suspected fossil smuggler named Eric Prokopi and arrested him. The

case against Prokopi was unusual and aggressive: it included several counts of felonious smuggling,

and characterizations of the defendant as a ―one-man black market.‖ Two months after his arrest,

Prokopi pleaded guilty to smuggling the bones of a Tarbosaurus bataar, a Tyrannosaurus rex cousin

that lived 70 million years ago in the Gobi Desert of Mongolia, which prohibits the

commercialization of natural history.

Facing a possible 17 years in prison, Prokopi started talking. In the seventeen months since he

pleaded guilty, he has helped to widen the U.S. investigation into fossil smuggling, providing details

about specific specimens, dates, and locations. ―There is probably not an active fossil investigation

at this point that doesn‘t owe, on some level, to information that Mr. Prokopi has furnished law

enforcement,‖ Martin Bell, an assistant U.S. Attorney, told the U.S. District Judge Alvin Hellerstein

last week, when Prokopi returned to the federal courthouse in lower Manhattan for sentencing.

Prokopi grew up hunting shark teeth and other fossils on the shores and in the rivers of central

Florida. He got interested in Mongolian dinosaurs through the huge fossil-and-mineral show that

takes over Tucson each February, attracting many thousands of dealers, buyers, and browsers from

around the world. Illicit materials often turn up at the Tucson show and at a smaller one in Denver;

the events are rarely policed. A novice could get the impression that selling fossils from Argentina

or China or Mongolia is legal, when it isn‘t.

Working with a Mongolian guide whom Prokopi trusted (and who has since died), Prokopi moved

fossils that had been extracted from the Nemegt Formation, a fruitful expanse of Late Cretaceous

sandstone and mudstone. He believed that he had permission to do so; once the bones reached a

business associate in Great Britain, Prokopi realized that he was dealing with contraband—yet,

according to last week‘s hearing, imported it to the U.S. anyway, largely describing it on customs

forms as ―reptiles.‖

Prokopi could have been sentenced to several years in prison for the attempted sale of the T.

bataar at auction, which Mongolia's president thwarted. Prokopi received a three-month sentence,

followed by three months in community detention. Prokopi has the summer to spend with his

children. He will report to prison at 2 PM on September 9th.

Through Houston lawyer Robert Painter, Mongolian President Tsakhia Elbegdorj said Prokopi's

sentencing ―sends a strong message to smugglers that they will be prosecuted, and that there is a

serious price that will be paid for their crimes.‖

Source: The New Yorker

ANNOUNCEMENTS

STILL TIME TO REGISTER FOR MONGOLIA BUSINESS SUMMIT IN UB, JUNE 19-20

Registration is still open for the Mongolia Business Summit held 19 to 29 June in Ulaanbaatar. Prime

Minister Norov Altankhuyag is presiding over the two-day conference, where up-to-date and sector-

specific information on current and planned Public-Private-Partnership projects in mining,

infrastructure, processing industries, agriculture, wool and cashmere, and the food and building

materials sectors will be discussed. Speakers include cabinet ministers, members of Parliament as

well as Mongolian and foreign business leaders. Optional add-on tours are also offered.

View the agenda for the forum here; or for online registration click here.

___________________________________________

VILLAGE @ NUKHT TO HOST THEMED PARTY, 14 JUNE

Asia Pacific Investment Partner's Village @ Nukht will host a themed part at 17:00 on Saturday, 14

June.

Registration will be first come, first served. To RSVP or for more information email

Gema@apipcorp.com or calling 99079785.

___________________________________________

“MM TODAY” ON MNB-TV, FRIDAY, 19:00 TO 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 WORKING GROUP NEWS

The BCM Logistics Working Group met on Tuesday, 10 June, with 7 members attending.

Mattias Ahlin, Scania, Logistics Working Group Chairman, moderated the session.

New members: D Enkhbat, CEO, Mongolian Express; Rentsendorj Yondon, Mongolian Opportunities

Fund; Buyanderler Tsogt-Ochir, Logistics Supervisor, Cummins Mongolia; Nobuo Okada, General

Manager, Mitsui Co.

BCM`s Logistics Working Group Chair, Mattias Ahlin is leaving the country. Tengis Garamgaibaatar,

CEO, Monroad, was elected as WG chairman. Congratulations to Tengis!

Speakers and topics were:

1. Follow up from last meeting‘s discussion

a. Main challenges for the Mongolian Logistics sector

2. Discussion about BCM Logistics Working group role and focus areas

(Mission Statement)

a. Transport modes; road, rail, air

b. Customs efficiency

c. Legal framework; Loads and dimension, safety, standards

d. Stakeholders: ministries, customs, transport organizations, vehicle manufacturer association

e. Transport efficiency

3. Discussion about meeting intensity and organization

4. Other business

Next meeting was scheduled on 7 August 2014. Meeting agenda will be announced. If you have any

interest in joining BCM‘s new Logistics Working Group, please contact Erdenetsetseg at

erka@bcmongolia.org

___________________________________________

The BCM Capital Markets Working Group met on Thursday, 29 May, with 11 members attending.

Howard Lambert /ING Bank/ and Nick Cousyn /BDSec/, Co-chairmen, moderated the session.

Guest: Michael O`Malley-Executive Director at ISG MineElect.

Speakers and topics were:

Facilitating foreign direct investment (FDI) and Capital Markets update - by Byambaa Losolsuren,

Leader of FDI Capital Markets group of 100 Day Revitalization Council, and Partner of Mandal

Capital LLC.

If you have any recommendations on Capital Markets for the Revitalization Council, please contact

erka@bcmongolia.org

___________________________________________

The BCM Tax Working Group met Thursday, 22 May, with 12 members attending.

Onch D. - Co-chair, BCM‘s Tax WG and Deloitte Onch a moderated the session.

Attending were representatives from the following BCM member entities - Deloitte Onch, PwC,

Ernst & Young, KPMG Tax, OT, Terra Energy, Petro Matad, MahoneyLiotta, TMZ and BCM.

New members: Amarbayasgalan and Tuvshinbayar from Terra Energy.

Meeting agenda:

• Overview - B. Byambasaikhan, Secretariat, 100 Day Revitalization Program; Chairman, BCM

• Initial new tax policy thoughts from WG members.

On May 29 BCM‘s Tax Working Group sent a detailed study of the current value added tax (VAT)

deficiencies and recommendations for efficiencies to result in greater tax revenue to the 100 Days

Revitalization Council.

Please contact T.Erdenetsetseg, BCM Working Group Coordinator, erka@bcmongolia.org.

___________________________________________

The BCM ‗expanded‘ Legislative Working Group (LWG) met on 20 May, with 42 members attending

at Corporate Hotel meeting room.

This was the third expanded WG meeting on the draft Amendments to the Minerals Law. The 2 ½

hour session included BCM members from mining companies, embassies and the MNMA. Special

guests were 5 members of Parliament and others from the Mining Ministry, Geological Society and

Export Society.

LWG Co-chair, James Liotta, Mahoney Liotta, moderated the session.

The following 11 presentations were made:

- A healthy Private Sector Driven Industry (1997 and 2006 Minerals Law / Amendments / what to

look for. By Doug McGay – longtime resident in the Minerals and petroleum industry;

- Investor views and concerns about making investments in Mongolia and its mining sector. By

Randolph Koppa – Vice Chairman, BCM and President, TDB;

- A view from the Mining Majors by Sunjidmaa Jamba from Peabody Energy;

- A supply side view by Stephen Potter, Wagner Asia;

- Tax Issues impacting the Minerals Industry by D. Onchinsuren – Co-chair BCM Tax Working Group

and Deloitte Onch Audit;

- Use of MSE for State Privatizations by Nick Cousyn – Co-chair, BCM Capital Markets Working Group

and BDSec;

- Views from within the Industry by N. Algaa – Executive Director, MNMA;

- Transparency and Public Comment by David Wyche – Economic/Commercial Section Chief,

Embassy of the United States of America

- International Agreements that attract bi-lateral investment, and views on the State ownership of

assets by Maxim Berdichevsky – Counselor & Senior Trade Commissioner, Embassy of Canada

- Some specific thoughts on the Amendments by James Liotta – Co-chair, BCM LWG and

MahoneyLiotta Law Firm; Bayar Budragchaa - Co-chair, BCM LWG and ELC Law Firm.

As MP Garamgaibaatar, Chair of the Standing Committee on Economic Affairs and Head of the

Parliamentary Working Group on the Draft Amendments to the Minerals Law, commented at the

meeting's conclusion - "We should not really change general structure and core contents of the draft

Amendments."

Also MP Garamgaibaatar welcomed BCM sending any additional comments directly to his Working

Group.

„BCM IN THE UNIVERSITY CLASSROOM‟ NEWS

Business Council of Mongolia (BCM) has progressed with its ‗BCM in the University Classroom‘ series

since March 2012. Led by BCM‘s Education Working Group, the program provides lectures at

universities to help inspire students and give them direction for their future careers. The series has

grown to include an average of 10 lectures per academic year. Now 1,544 students and teachers

have participated to BCM in the University Classroom Project.

Thanks to all who have participated in BCM in the University classroom project. We are now

collecting specific lecture topics for the next year academic year to June 2015.

The University of the Humanities joined our BCM in the University Classroom project in May. So

BCM‘s project has expanded to 4 of Mongolia‘s largest universities -- National University of

Mongolia, Institute of Finance and Economics, Mongolian National University and University of the

Humanities -- with over 40,000 students collectively.

If you like to share your experience on some specific topic during the next school term, you can

discuss with us. Please contact: erka@bcmongolia.org

BCM WEBSITES

PRESENTATIONS (in Mongolian):

The following statistics and reports posted on Presentations section in Mongolian:

http://bcmongolia.org/mn/илтгэлүүд

• Монгол улсын нийгэм эдийн засгийн байдал, 2014 оны 4 сарын байдлаар, Үндэсний

статистикийн хороо

• Мандал Женерал Даатгал тайлан, 2014 оны 5 сар

• Сант марал сангаас гаргасан УЛС ТӨРИЙН БАРОМЕТР №13(47), 2014 ОН 3 САР

• Монгол улсын нийгэм эдийн засгийн байдал, 2014 оны 3 сарын байдлаар, Үндэсний

статистикийн хороо

• ―Anti-Corruption legislation and State Policy‖ (Mongolian) by D. Munkhjargal, Prevention and

Public Awareness Department, Senior Commissioner, Independent Authority Against Corruption

(IAAC) Mongolia at the ―ANTI-CORRUPTION LEGISLATION/POLICY, INTERNATIONAL BEST PRACTICE

ON TRANSPARENCY‖ Training seminar, Mar 06, 2014

The presentation below was made at Mongolian National University as part of the ―BCM in the

University Classroom series‖ on February 27, 2014:

• Ser-Od Inchinkhorloo, Vice Director, BCM, ―Investment environment: Past, Present, Future‖

(Mongolian)

The presentation below is from the February 24 BCM monthly meeting:

• О. Зоригт, Гүйцэтгэх захирал, Майн Инфо "Майн Инфо ХХК-ний товч танилцуулга", МБЗ-ийн 2

сарын 24-ний сарын хурал

Dr. Khashchuluun, Executive Director, National Council of Private Sector Support, ―Taxation Impact

Research‖ to BCM Tax Working Group, February 19, 2014

• ТАТВАРЫН БАГЦ ХУУЛИЙН ӨӨРЧЛӨЛТ: ХУВИЙН ХЭВШИЛД, Ч. Хашчулуун, Хувийн хэвшлийг

дэмжих үндэсний зөвлөлийн гүйцэтгэх захирал 2014.02.19

20 Presentations from Coal Mongolia, 20-21 February, 2014:

• Уул уурхайн сайд Д. Ганхуяг, Төрөөс Эрдэс Баялгийн Салбарт Баримтлах Бодлого, Нүүрсний

Салбарыг Хөгжүүлэх Стратегийн Чиг Хандлага, Коал Монголиа 2014, 2 сарын 20-21.

• Сангийн сайд Ч.Улаан, МОНГОЛ УЛСЫН САНГИЙН ЯАМ, Улсын төсөвт нүүрсний салбарын

үзүүлэх нөлөө, татварын орчин шинэчлэл, Коал Монголиа 2014, 2 сарын 20-21.

• Монгол орны нүүрсний салбар дахь байгаль орчны асуудал, Байгаль орчин, ногоон хөгжлийн

яам, ХБОБНГ-ын дарга Д.Энхбат Коал Монголиа 2014, 2 сарын 20-21.

• НҮҮРСНИЙ АЖ ҮЙЛДВЭРЛЭЛИЙГ ХӨГЖҮҮЛЭХ ТЭЭВЭР ЛОЖИСТИКИЙН АСУУДЛУУД:

Л.ПҮРЭВБААТАР ТӨМӨР ЗАМЫН ИНЖЕНЕРҮҮДИЙН ХОЛБООНЫ ЕРӨНХИЙЛӨГЧ, ―УУЛ УУРХАЙН

БҮТЭЭГДЭХҮҮНИЙ ТЭЭВЭРЛЭЛТ‖ Коал Монголиа 2014, 2 сарын 20-21.

• МОНГОЛ УЛСЫН НҮҮРСНИЙ САЛБАР ДАХЬ ХӨРӨНГӨ ОРУУЛАЛТ, ХУДАЛДААНЫ ТААТАЙ ОРЧИН

БҮРДҮҮЛЭХ НЬ,ЭДИЙН ЗАСГИЙН ХӨГЖЛИЙН ДЭД САЙД О.ЧУЛУУНБАТ Коал Монголиа 2014, 2

сарын 20-21.

• Уул уурхайн дэд сайд О. Эрдэнэбулган, Олон улсын нүүрсний зах зээл дэх Монгол улсын

өрсөлдөх чадварыг нэмэгдүүлэхэд төрийн оролцоо Коал Монголиа 2014, 2 сарын 20-21.

• Ж. Батцэнгэл, Монголын Уул Уурхайн Корпорацийн дарга, МОНГОЛЫН НҮҮРСНИЙ САЛБАРЫН

ӨНӨӨГИЙН НӨХЦӨЛ БАЙДАЛ, Тулгарч буй бэрхшээл ба шийдэх боломж Коал Монголиа 2014, 2

сарын 20-21.

• Аршад Саеид, Пийбоди Энержи компанийн Монгол ба Энэтхэг улсыг хариуцсан Ерөнхийлөгч,

Дэлхийн нүүрсний зах зээл, Монгол улсад үзүүлэх нөлөөлөл, Коал Монголиа 2014, 2 сарын 20-

21.

• МОЗА гүйцэтгэх захирал Ч. Хашчулуун, Занарын дэлхии ̆н хувьсгал ба Монголын эдии ̆н засагт

үр нөлөө, Коал Монголиа 2014, 2 сарын 20-21.

• Багануур Энержи Корпорэйшн ХХК, Нүүрс хийжүүлэх, шингэрүүлэх цогцолбор парк төслийн

товч танилцуулга, Коал Монголиа 2014, 2 сарын 20-21.

• АДУУНЧУЛУУНЫ ЦАХИЛГААН СТАНЦ, БЕНЗИНИЙ ҮЙЛДВЭРИЙН ТӨСӨЛ, Ж.Золжаргал –

Төслийн удирдагч, Коал Монголиа 2014, 2 сарын 20-21.

• Ц.Ганцог, Жени Ойл Шэйл Монголиа ХХК Гүйцэтгэх захирал, ШАТДАГ ЗАНАРЫГ АШИГЛАХ

БОЛОМЖ, Коал Монголиа 2014, 2 сарын 20-21.

• Фэн Вэй эрчим хүчний зөвлөгөө өгөх компани, 2014 оны хятадын нүүрсний зах зээлийн

шинжилгээ болон үнийн таамаглал, Коал Монголиа 2014, 2 сарын 20-21.

• Я. Батсуурь, Эрдэнэс Таван Толгой ХК, Танилцуулга, Коал Монголиа 2014, 2 сарын 20-21.

• Хишиг Арвин Индустриал ХХК, ҮНДЭСНИЙ КОМПАНИУДЫН ТӨЛӨВШИЛ, ӨРСӨЛДӨХ ЧАДВАР,

Коал Монголиа 2014, 2 сарын 20-21.

• Виртген Групп, МОНГОЛЫН НҮҮРСНИЙ ЗАХ ЗЭЭЛ ДЭХ WIRTGEN БРЭНДИЙН SURFACE MINER

БУЮУ АНГИЛАН ОЛБОРЛОГЧИЙН ТЕХНОЛОГИ БОЛОН АШИГЛАХ БОЛОМЖУУД, Коал Монголиа

2014, 2 сарын 20-21.

• ―Тавантолгой‖ ХК-ийн Гүйцэтгэх захирал Р.Сэддорж, Дэвшилтэт технологи ба инновацийг

нутагшуулах нь, Коал Монголиа 2014, 2 сарын 20-21.

• ―УУЛ УУРХАЙН ДЭД БҮТЦИЙН ХӨРӨНГӨ ОРУУЛАЛТЫГ ДЭМЖИХ ТӨСӨЛ‖ Төслийн Зохицуулагч

Б.Энхбаатар,Коал Монголиа 2014, 2 сарын 20-21.

• ДЭД САЙД Д.ДОРЖПҮРЭВ, Эрчим Хүчний Яам, 2014 ОНД ЭРЧИМ ХҮЧНИЙ САЛБАРЫН

ХИЙГДЭХЭЭР ТӨЛӨВЛӨСӨН АЖЛУУД БОЛОН ТӨРӨӨС БАРИМТАЛЖ БУЙ БОДЛОГО, Коал

Монголиа 2014, 2 сарын 20-21.

• Ай Эм Си Монтан Компани, Нүүрс баяжуулах талаар, Коал Монголиа 2014, 2 сарын 20-21.

The below presentation is from the January 27 BCM monthly meeting:

• ОЙ ХАМГААЛАЛД СУУРИЛСАН БИЗНЕС, Цэсэдийн БАНЗРАГЧ /Ph.D/, БОНЯ- ны ОЙ

ХАМГААЛАЛ, ОЙЖУУЛАЛТЫГ ЗОХИЦУУЛАХ ХЭЛТЭСИЙН ДАРГА, МБЗ-ийн 1 сарын 27-ны

гишүүдийн сарын хурал дээр

___________________________________________

ENGLISH WEBSITE: 'PRESENTATIONS', 'MONGOLIA REPORTS', „INTERVIEWS„, MONGOLIAN

BUSINESS NEWS‟, „PHOTO GALLERY‟

3 presentations from BCM monthly meeting on May 26, 2014:

• B. Lakshmi, Director, Mongolia Economic Forum – ―Why Mongolia Business Summit?‖ at the BCM

Monthly meeting May 26, 2014

• Nick Cousyn, Co-chair, BCM Capital Markets Working Group – ―Use of MSE for State Privatizations‖

at the BCM Monthly meeting May 26, 2014

• Peter Benson, VicRoads Team Leader, ADB Capacity Building Project – ―Mongolia Roads –

Achievements and Challenges‖at the BCM Monthly meeting May 26, 2014

• China Metals & Mining Thermal Coal, Coking Coal, Copper, Gold, Steel by Macquarie Capital

Securities Limited

4 presentations from 3rd Mongolia Trade and Commodity Finance Conference, May 13, Blue Sky-UB:

• Mongolia – New Investment Laws, Stephen Tricks, Consultant, Clyde & Co;

• Mongolia Investment Law: select issues, B. Enkhbat, Partner, MDS & KhanLex Law Firm;

• Mongolia‘s promise of mineral wealth, Arnout van Heukelem, Head of Metals & Mining Asia ING;

• Utilising international partnerships to extend access to trade finance, Marco Nindl, Trade Finance

Banker, EBRD.

16 Presentations at 2014 Mongolia Investment Summit London, April 30-May 1:

• Assessing developments in current economic policy and how the government will manage and

improve existing regulations, Ochirbat Chuluunbat, Vice Minister for Economic Development,

Ministry of Economic Development, Mongolia

• How should investors interpret the shift in government policy and the introduction of the new

investment law?, Andrew Danenza, Founder and Managing Partner, Melbury Capital, UK

• Examining legal developments and what this means for the stimulation of FDI, Chris Melville,

Partner, Hogan Lovells, Mongolia

• Examining Mongolian mining policy and how it could benefit the production and export of mineral

resources, Rentsendoo Jigjid, State Secretary, Ministry of Mining, Mongolia

• Analyzing the Mongolian coal market: how could mining companies best respond to the operating

environment and fluctuations in demand?, Battsengel Gotov, Executive Director and CEO, Mongolian

Mining Corporation, Mongolia

• Examining how Mongolian banks and financial institutions are dealing with the challenges and

opportunities of a fast growing economy, Norihiko Kato, CEO, Khan Bank, Mongolia

• Spotlight presentations: a chance to showcase your services and projects to a wide investor

audience, Leading bank of Mongolia: Golomt Bank - Munkhbat Davaatseren CEO, Golomt Securities

LLC, Mongolia

• To what extent has Mongolia retained its previously high levels of investment appeal? Alisher Ali

Chairman, Eurasia Capital, Mongolia

• How can Mongolia attract private investment in power development? Philip Lam, Senior Banker,

Power and Energy Utilities, EBRD, UK

• Examining the potential for successful renewable energy projects in Mongolia and the benefits

cleaner energy will bring for foreign investors, Bolor J. Artan, Deputy CEO, Newcom Group,

Mongolia

• Spotlight presentations: a chance to showcase your services and projects to a wide investor

audience, Michael Jonas Director, Genie Mongolia and Executive Vice President, Genie Oil and Gas,

Mongolia

• Assessing the Mongolian Stocks Exchange‘s cooperation with the London Stock Exchange and how

this can benefit investors, Jon Edwards Deputy Head of Primary Markets- Emerging Markets, London

Stock Exchange, UK

• Spotlight presentations: a chance to showcase your services and projects to a wide investor

audience, Boldbaatar Lamjav, Board Member, Nuudelchin, Mongolia

• Mining infrastructure case study: examining the development of infrastructure to support Erdenes

Tavan Tolgoi and how a continuation will bring, Badarch Enkhbat, CFO, Erdenes Tavan Tolgoi,

Mongolia

• Developing strategic mineral assets and infrastructure in Mongolia: Examining the timescales and

how obstacles can be overcome, Sainbuyan Odon CEO, Erdenes MGL LLC, Mongolia

• How could you ensure an effective IPO and the raising of the necessary capital for your business?,

Ayuna Nechaeva, Business Development Manager – Russia, CIS and Mongolia, London Stock

Exchange, UK.

_________________________________________________________________________-

•―BCM‘s Green Office Initiative: Starting from waste management and recycling‖, A. Bayarmaa,

Head of BCM Environmental Working Group/Senior Carbon Finance Specialist, Clean Energy LLC, at

the BCM monthly meeting April 28, 2014

•―Socio-Political Situation in Spring 2014‖, L. Sumati, Director, Sant Maral Foundation, at the BCM

monthly meeting April 28, 2014

• ―Public-Private Partnership in Mongolia: Now and Future Prospects‖, E. Enerelt, Investment

Officer, ADB and Ts. Batbayar, Director of Concession Division, Ministry of Economic Development

at BCM monthly meeting, March 24, 2014;

• ―Areva in Mongolia: 15 years of presence – New perspectives in uranium mining‖, Thierry Plaisant,

General Director, Areva Mongol at BCM monthly meeting, March 24, 2014;

• ―Impact of Corruption in Mongolia‖ by L. Sumati, Director of Sant Maral Foundation at the ―ANTI-

CORRUPTION LEGISLATION/POLICY, INTERNATIONAL BEST PRACTICE ON TRANSPARENCY‖ Training

seminar, Mar 06, 2014;

• ―Anglo American Business Integrity policy and its application within the Business Globally‖ , Dr.

Graeme Hancock, President and Chief Representative Mongolia of Anglo American at the ―ANTI-

CORRUPTION LEGISLATION/POLICY, INTERNATIONAL BEST PRACTICE ON TRANSPARENCY‖ Training

seminar, Mar 06, 2014;

Mongolia reports: http://bcmongolia.org/en/mongolia-reports

• ASIA Reaching for the Top by International Monetary Fund, June 2014

• ASIA Achieving Its Potential by International Monetary Fund, June 2014

• Social and economic situation of Mongolia, as of April 2014, by National Statistical Office

• Mongolia: Economy outlook 2014, by Asian Development Bank;

• Selected Macroeconomic Indicators as of Jan 2014, by International Monetary Fund;

• Monthly statistical bulletin, March, 2014 , by Mongol Bank;

• Social and economic situation of Mongolia as of March 2014 by National Statistical Office of

Mongolia (available in Mongolian language - Монгол улсын нийгэм эдийн засгийн байдал 2014

оны 3 сарын байдлаар, Үндэсний статистикийн хороо)

• Polit Barometer, March 2014, by Sant Maral Foundation.

Interview Section: http://bcmongolia.org/en/interviews

• Talking to United World, the Executive Director of the Mongolian Drilling Association (MDA)

Professor J. Tseveenjav. Source: http://www.worldfolio.co.uk/

• Jim Dwyer, Executive Director, BCM – ―Business need more business‖;

• Damshnamjil Tsogtbaatar, Chairman of the SPC: ―Privatizing Mongolia‖;

• Jan Hansen, Economist, ADB: ―The depreciation should help to increase the competitiveness and

to develop the non-mining industrial sector‖;

• Jim Dwyer, Executive Director, BCM: ―Minerals Policy‖;

• D. Bayasgalan, Director of Golomt Bank: ―Golomt has no problem‖;

• From the Oxford Business Group, Mongolia Reports 2013 book;

• B. Byambasaikhan, Chairman, BCM: ―Talk is cheap‖;

• President Ts. Elbegdorj: ―Diversifying for growth‖;

BCM's English website includes the ―Mongolia Business News‖ section.

• 2014 Article IV staff report for Mongolia by International Monetary Fund;

• BCM comments on draft Amendments to the Minerals Law made to Mr. D.Gankhuyag, the Minister

of Mining, February, 2014;

• BCM 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 6th Anniversary BCM Renewal dinner on November

11, 2013.

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.

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 https://www.facebook.com/TheBusinessCouncilOfMongolia 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

https://twitter.com/bcmongolia.

The bulk of the content on BCM‘s new LinkedIn page is Mongolian language to better cater to BCM's

Mongolian-speaking audience and members. Please click on the below link to follow us on our new

LinkedIn page.

http://www.linkedin.com/company/business-council-of-mongolia?trk=company_logo

Social stats: BCM now has 5,799 fans on our Facebook fans page, 604 connections on LinkedIn

network, and 1,102 followers on Twitter.

Of course for news information, interviews, event photos, VIDEOS and announcements regarding our

organization, visit the official BCM website at http://bcmongolia.org/en/

ECONOMIC INDICATROS

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]

Year 2012 *14.0% [source: NSOM]

Year 2013 *12.5% [source: NSOM]

May 31, 2014 *13.1% [source: NSOM]

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

Note: 13.9% y-o-y, Ulaanbaatar city, May 31, 2014

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 – 12 JUNE 2014

Currency Name Currency Rate

US Dollar USD 1,824.70

Euro EUR 2,469.28

Japanese yen JPY 17.88

British pound GBP 3,070.70

Hong Kong dollar HKD 235.39

Chinese Yuan CNY 53.11

Russian Ruble RUB 293.52

South Korean won KRW 1.79

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.