BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org

info@bcmongolia.org

Issue 95, November 20, 2009

NEWS HIGHLIGHTS:

Business:

Mongolian Banks Merging to Combat Fiscal Crisis;

Zoos Bank Makes Official Request to Merge;

Zoos Bank 2009 Financials;

Bidders Hope to Invest in Tavan Tolgoi;

Peabody Energy’s Agreement With China’s Greengen;

Mongolia Energy Signs Coal Mine Production Agreement;

China Coal Producers Advance Amid Deadly Snowstorms;

Partnership with China Railway Mongolia to develop Oyut Oyoo;

130 Uranium Licenses Registered by Deadline;

France and Mongolia Cooperate on Uranium Exploration in Gobi;

Oyo Tolgoi Agreement Now Online;

Ivanhoe Mines Q3 ’09 Financial Results;

Ivanhoe Energy Subsidiary to Merge;

Erdene Provides Project Updates;

Khan Bank Grants Its 5 Millionth Loan;

Newtel Shares its Experience with World Giants;

Newcom Group Appoints B. Bold as CEO.

Economy:

EBRD Launches New Strategy for Mongolia;

Mongolia the New Hotspot For Investments, says FIDP’s Jayawant;

The Russian Oligarchy's Aggressive Assault;

Gold Hits Record Above $1150/Ounce Against Weak Dollar;

Copper Remains Near Highs;

Huge Railway project discussed in Sainshand;

Uranium Prices Too Low, says Uranium One’s CEO;

Warren Buffett: The Financial Panic Is Over.

Politics: Deputy Prime Minister Announces Two Week Extension of Quarantine;

Parliament Appoints PM Batbold’s Cabinet;

Working Group resumes Implementation of OT IA;

Development Fund and Social Insurance Fund Budget Reviews;

Prime Minister Meets Higher Education Delegates;

UN Provides Flu Vaccine and more to Mongolia;

Election Campaign Costs Under Budget;

Hu Outlines Domestic Focus at APEC Summit;

China Holds Firm on Major Decisions In Obama’s Visit.

BUSINESS MONGOLIAN BANKS MERGING TO COMBAT FISCAL CRISIS

Three of Mongolia’s private commercial banks: Savings Bank, Mongol Post Bank and Zoos Bank have joined to create a merger to combat a fiscal crisis. The multi-million tugrik merger is the largest Mongolian bank merger to date. ―Zoos Bank’s operation is continuing as normal. There is no fear for savings holders or clients to withdraw their savings,‖ said Altantsetseg, a public relations officer of Zoos Bank. This was echoed by the State Treasurer, who was reappointed to the position by Parliament last Thursday. ―There is fear for the savings account holders. Parliament has secured all bank savings under its blanket deposit guarantee law,‖ said Finance Minister S. Bayartsogt. Mongol Post Bank top executives said that merger will be made under the direct guidance of the Bank of Mongolia in accordance with Mongolia’s laws and regulations. The merged bank may become the second largest commercial bank with over 2,000 employees and more than 300 branches throughout the country.

Source: UB Post

ZOOS BANK MAKES OFFICIAL REQUEST TO MERGE

Shareholders of Zoos Bank made an official request to merge with the Savings and Mongolshuudan banks. Director of Public Relations Department of Zoos Bank, Altantsetseg said Zoos Bank’s operations are stable and that people should not lose confidence. Authorities think the triple merger would make the financial system even more stable.

Mr. Baljinnyam, shareholder of Mongolshuudan, complained at a press conference that an investor of Mongolshuudan, MP D. Zorigt, and Executive Director N. Oyunjargal are trying to remove smaller shareholders. Finance Minister, S. Bayartsogt was asked whether the triple merger indicates the financial crisis is worsening. ―Crisis is just like a human being. When a person gets sick, the previous illnesses come back as side effects. Just like this, economic crisis shows the mistakes of our policies, whether the budget and financial system is capable of working in hard times. This is like a test. Certain sectors are failing the test. Thus, we need to create a condition to be ready for such cases in the future. Many laws are being made and amended‖.

Source: www.news.mn

ZOOS BANK 2009 FINANCIALS

The following financial statements were filed by Zoos Bank with the Mongol Bank as of September 30, 2009:

Zoos Bank

(Thousand MNT) 31-Mar-09 30-Jun-09 30-Sep-09

Cash 49,701,906 74,586,170 58,752,466

short term investment 7,620,350 9,210,450 7,015,359

Net loan 167,249,392 190,119,031 145,122,451

Non performing loan 6,715,464 8,648,938 52,197,377

loan loss reserve (5,064,851) (5,814,625) (32,365,242)

Other real state owned - 502,422 299,462

Other assets 12,595,684 8,587,911 15,541,159

Fixed assets 18,372,494 18,438,461 17,995,001

intangible assets 47,361 35,794 28,370

long term investment 317,052 317,052 317,052

Total assets 255,904,239 301,797,290 245,071,320

Current accounts 44,712,295 67,284,479 72,274,656

Deposit 132,946,945 127,020,792 116,563,519

Time deposit 102,149,729 96,885,578 100,344,161

Demand deposit 30,797,216 30,135,214 16,219,358

Liabilities to Other Financial Corporations 15,911,685 17,490,855 8,161,542

Other fund 23,985,694 47,400,754 47,830,670

Other liabilities 4,387,577 8,434,410 5,304,332

Total liabilities 221,944,196 267,631,290 250,134,719

Statuary fund 14,666,703 14,666,703 14,666,703

Other equity 11,704,969 11,704,969 11,704,969

Retained earnings 3,988,371 4,194,328 (35,035,072)

Subordinated debt 3,600,000 3,600,000 3,600,000

Capital 33,960,044 34,166,000 (5,063,400)

Total Liabilities & Capital 255,904,239 301,797,290 245,071,319

INCOME STATEMENT (Thousand MNT)

interest income 7,664,218 11,064,098 15,292,564

interest expense 6,121,968 13,630,601 21,110,791

Financial income 1,542,250 (2,566,503) (5,818,227)

Non interest income 897,413 1,421,387 1,784,744

Non interest expense 1,907,749 3,854,240 5,827,503

Net non interest income 531,915 (2,432,853) (9,860,986)

Total provision expense 969,045 3,338,136 35,592,908

(437,130) (8,337,492) (45,453,894)

Other income 946,034 9,593,054 7,497,101

Other expense 24,276 126,616 132,867

Net income before tax 484,628 1,128,946 (38,089,660)

Tax - - -

Net income after tax 484,628 1,128,946 (38,089,660)

Source: Zoos Bank

BIDDERS HOPE TO INVEST IN TAVAN TOLGOI

The Mongolian government has been in talks with 10 short-listed bidders for the Tavan Tolgoi coal mine, according to the Mongolian Minerals Authority. ―The Government of Mongolia needs to make a policy decision related to the railway and infrastructure development of the southern region as a whole, and will reengage in talks with investors shortly,‖ said D. Zorigt, Minister of Minerals and Energy. The Mongolian government is expecting to name the winning bidder by the end of the year. The list of bidders includes: India’s Jindal Steel & Power Ltd, China’s Shenhua Energy, Russia’s EN+ Group and Severstal Resources, Brazil’s Vale do Rio Doce, BHP Billiton and Peabody Energy. Deutsche Bank AG and J.P Morgan Chase are participating in the process of transaction as consulting firms for the Mongolian Government.

Tavan Tolgoi has 6.5 billion tons of coal, of which two billion is high-grade coking coal that can be used in thermal power stations, and steel smelting plants. The World Bank is assisting the Government of Mongolia in developing a strategy for the development of the infrastructure in the

southern region. Southern Mongolia contains several mineral deposits of strategic importance for the country. Developing these deposits will require the construction of towns, power plants, railways, and roads.

Source: UB Post

PEABODY ENERGY’S AGREEMENT WITH CHINA’S GREENGEN

China's GreenGen clean coal project executed their joint venture agreement with Peabody Energy. The agreement was commemorated at a signing ceremony at the historic Great Hall of the People in Beijing and included Peabody Chairman and Chief Executive Officer Gregory H. Boyce; Huaneng Group President Cao Peixi; U.S. Secretary of Energy Steven Chu; and Chinese Vice Premier Li Keqiang. The ceremony demonstrates the growing cooperation on clean energy and climate initiatives between the United States and China as President Barack Obama and President Hu Jintao pledge greater cooperation on clean uses of coal. In a joint statement today, the two world leaders recognized the importance of GreenGen and other projects.

GreenGen is a US$1 billion 650 megawatt project, a commercial scale near-zero emissions power project that is under construction near Tianjin. It is China's first integrated gasification combined cycle (IGCC) power project and will serve as a carbon management research center. GreenGen is being developed in phases and ultimately will capture and store carbon dioxide. Electricity generation will begin as quickly as 2011 with the first 250 megawatt IGCC unit.

"With GreenGen, China shows that the world's leading coal-consuming nation can also be the world's leading clean coal provider," said Peabody Chairman and Chief Executive Officer Gregory H. Boyce. "China's coal use is expected to grow by 2 billion tons over the next two decades, driving economic prosperity and energy security. Peabody is advancing clean coal projects all over the world and is pleased to be a part of China's signature low-carbon coal initiative."

The company has a growing presence in China and is pursuing partnerships with major coal, energy and steel companies in Western China and Inner Mongolia. Peabody recently became a member of the U.S. and China Energy Cooperation Program, a public-private partnership with leading Fortune 500 companies that seek to develop clean energy projects in China working in consultation with the U.S. Department of Commerce and certain key agencies of the government of China.

Peabody also has a joint venture that is exploring coal-related development opportunities in Mongolia's South Gobi region and has a business office in Ulaanbaatar, Mongolia. The company's Asian coal trading hub in Singapore offers strong access to serve China and other fast-growing Asian markets.

Source: Peabody Energy

MONGOLIA ENERGY SIGNS COAL MINE PRODUCTION AGREEMENT

Mongolia Energy Corp., the Hong Kong-traded mineral and energy explorer, signed a $206 million agreement to extract coal from the western part of the country. The six-year agreement with a unit of Leighton Holdings Ltd., Australia’s largest construction company, is initially to mine 3 million metric tons of coal a year from the Khushuut pit. Production will likely start in the second quarter next year, Mongolia Energy’s Chief Executive Officer James Schaeffer said at a briefing in Hong Kong. The agreement allows for production up to 8 million tons a year. ―China has an enormous market for coal and Mongolia is sitting at its doorstep,‖ said Hamish Tyrwhitt, managing director of Leighton Asia Ltd.

Investment could reach $2.85 billion over its estimated lifetime of 19 years, said Mongolia Energy’s general counsel, Mohan Datwani. The coking coal will be sold in Xinjiang and $111 million has been spent building a road between the site and China. Mongolia Energy’s coal reserves at Khushuut are estimated at 460 million tons and could generate $240 million in revenue next year if prices remain stable.

Source: Bloomberg

CHINA COAL PRODUCERS ADVANCE AMID DEADLY SNOWSTORMS

China’s coal producers surged as the country’s worst snowstorms in decades, boosted demand and drove up prices. China Shenhua Energy Co., the nation’s biggest coal producer by market value,

rose 5 percent to 37.27 yuan. Shanxi Xishan Coal and Electricity Power Co. climbed 6.7 percent to 40.44 yuan. Yanzhou Coal Mining Co. advanced 6.5 percent to 21.38 yuan. The Shanghai Composite Index gained 2.2 percent.

―The bad weather is causing supply constraints at a time when demand is increasing,‖ said Wang Shuai, a Shanghai-based analyst at Orient Securities Co., in a phone interview. The price of coal gained 1.6 percent to between 640 yuan ($94) and 660 yuan in the week ending Nov. 16, compared with assessments in the previous week, according to data published by the China Coal Transport and Distribution Association today.

Source: Bloomberg

PARTNERSHIP WITH CHINA RAILWAY MONGOLIA TO DEVELOP OYUT OVOO

Green Global Resources Limited announces a strategic partnership between North Asia Resources Group Limited ("NAR") and China Railway Mongolia, to develop the Oyut Ovoo mine.

The Independent Technical Report ("ITR") completed by SRK Consulting China Limited, estimated a total JORC-equivalent Measured, Indicated and Inferred resources of 148.9 million tons of iron resources and 180,000 tons of copper resources in the First Mine Area alone. The estimated value of only the iron-ore resources is approximately HKD2,272,000,000 (USD293 million).

The Oyut Ovoo mine is 90% held by NAR and 10% by China Railway Mongolia. According to the terms of the Agreement executed on November 13th, 2009, China Railway Mongolia will purchase 1.5 million tons per annum of the mine's output at prevailing market prices, and provide transportation services for the mine's output of 2.5 million tons per annum to Erenhot. The term of both the Transportation and Off-take agreement is for an initial period of ten years. Green Global, together with NAR, is the first and only strategic partner of China Railway Mongolia for such an undertaking. The Company expects to obtain the mining license by end of 2009 and begin production in the second half of 2010.

Source: Asia Corporate News Network

130 URANIUM LICENSES REGISTERED BY DEADLINE

According G. Bayarbayasgalan, Director of the Licensing Department of the Nuclear Energy Agency, the deadline for issuing new uranium licenses was November 15. The Mineral Authority of Mongolia transferred over 100 uranium licenses to the NEA. At present, over 130 licenses to 25 companies were registered. There were no new companies applying for the new licenses.

Source: Unuudur, Minerals News

FRANCE AND MONGOLIA COOPERATE ON URANIUM EXPLORATION IN GOBI

Areva Mongol LLC is exploring for uranium deposits in Mongolia. In Dornogobi, it found several potential uranium deposits. The President of the French company and the Chairman of the Nuclear Energy Agency of Mongolia, signed a Memorandum of Understanding on "Cooperation in the field of radioactive mineral resources and peaceful use of nuclear energy" between the Government of Mongolia and the French company. The Odriun Shyydan interviewed Eric de Seze, General Director & CEO of Areva Mongol LLC, at Discover Mongolia’s 7th Mining Investors Forum:

The Nuclear Energy Law was approved by Parliament recently. How is it regarded by investors?

“Now we have a specific law with respect to radioactive materials and uranium. We heard the government was willing to implement a specific and dedicated law to radioactive materials. In other countries, this does not exist as such, because it is the mineral law that applies, plus specific regulations due to the radioactive properties of uranium. This summer, a policy and law came out on nuclear energy. Now the situation has become much clearer. As a French Government State company, we are dealing with Mongolia and with relationships at government levels.

For Mr. de Seze’s complete interview, please refer to BCM Website, Articles/Reports on Mongolia.

Source: Odriin Shuudan

OYO TOLGOI AGREEMENT NOW ONLINE

Full versions of the Oyo Tolgoi investment agreement can be found on the government website: www.open-government.mn. It is posted in both Mongolian and English.

Source: Montsame

IVANHOE MINES Q3 ’09 FINANCIAL RESULTS

In Q3’09, Ivanhoe Mines recorded a net loss of $69.8 million (or $0.18 per share), compared with a net loss of $88.0 million (or $0.23 per share) in Q3’08, representing a decrease of $18.2 million. Results for Q3’09 were affected by $43.5 million in exploration expenses, $12.5 million in general and administrative expenses, $4.1 million in interest expense, a $23.0 million write-down of property, plant and equipment, and $23.0 million in share of loss of significantly influenced investees. These amounts were offset by $3.6 million in income from discontinued operations and $19.5 million in mainly unrealized foreign exchange gains.

Exploration expense of $43.5 million in Q3’09 decreased $16.2 million from $59.7 million in Q3’08. The exploration expenses included $28.1 million spent in Mongolia ($37.9 million in Q3’08), primarily for Oyu Tolgoi and Ovoot Tolgoi, and $11.5 million incurred by Ivanhoe Australia ($17.0 million in Q3’08). Ivanhoe Mines expects to commence capitalizing Oyu Tolgoi development costs in 2010 once the Investment Agreement conditions have been addressed and the agreement takes full effect. Ivanhoe Mines’ cash position, on a consolidated basis at September 30, 2009, was $341.7 million. As of November 13, 2009, Ivanhoe Mines’ current consolidated cash position is approximately $600 million.

Source: Ivanhoe Mines Ltd. Quarterly Review

IVANHOE ENERGY SUBSIDIARY TO MERGE

Ivanhoe Energy Inc. said Wednesday its Mongolian subsidiary would merge with Alberta-based PanAsian Petroleum Inc. in an all-stock deal. The merger involves the issuance of up to three million Ivanhoe shares worth about $7.9 million, but no payment of cash to PanAsian's principals. Ivanhoe said PanAsian holds oil and gas exploration and production rights to a large and highly prospective block in central Mongolia. The company plans to combine PanAsian's Mongolian interests with Sunwing Energy Ltd., Ivanhoe's subsidiary for oil and gas operations in Asia. PanAsian's corporate structure and its contractual relationship with the petroleum authority of Mongolia will not be altered by the merger. "This is an exceptional opportunity for Ivanhoe and Sunwing," said Robert Abboud, Ivanhoe's co-chairman.

"Our objective is to develop additional sources of petroleum supply to permit Mongolia to become more self-sufficient in oil to help meet the needs of domestic consumers and support the realization of the nation's economic aspirations," he said. Ivanhoe is an international heavy oil development and production company.

Source: Canada Press, Ivanhoe-energy

ERDENE PROVIDES PROJECT UPDATES

Erdene Resource Development Corp. ("Erdene") today provided an update on its principal projects in conjunction with the release of its third quarter 2009 financial results.

Peter Akerley, President and CEO said, "We are currently witnessing a major upswing in interest in the commodities on which we have maintained our focus and now find ourselves in a strong position to move the Zuun Mod molybdenum project toward pre-feasibility. In addition to the global economic improvement, we have witnessed a positive change in the political environment in Mongolia with the signing of the investment agreement on the Oyu Tolgoi project. This has given us the confidence to accelerate our property acquisition program in Mongolia."

During the quarter, the company received an updated National Instrument 43-101 compliant resource estimate for the Zuun Mod molybdenum project. The Company has signed contracts with two Mongolian consulting companies to assist with the application to convert the current Zuun Mod exploration license into a mining license.

Erdene has applied for five exploration licences totaling over 400,000 hectares and has plans to continue to increase our staking and acquisition activity. In Mongolia, Erdene is partnered with Xstrata Coal on a comprehensive coal generative and acquisition program.

Read more...

Sharing a border with Mongolia is China, the world's largest coal consumer. Estimates suggest that

over the next 25 years, China will need to secure approximately six million tons of new coal production per month to meet demand. Coal-fired power plants are projected to satisfy approximately three quarters of China's total power generation requirements to 2030. A similar situation exists for metals with Chinese companies, many State-funded, being very acquisitive for copper and molybdenum projects worldwide.

Source: www.erdene.com

KHAN BANK GRANTS ITS 5 MILLIONTH LOAN

Khan Bank, has granted its 5 millionth loan. Two years ago Khan Bank made its three millionth loan and awarded three customers. This time five lucky customers of Khan Bank have been selected as the borrower of the 5 millionth loan. The borrowers of the 5 millionth loan were received at Khan Bank head office and awarded a certificate of recognition and pecuniary award. Three borrowers from rural areas and two from Ulaanbaatar were carefully selected out of thousands of borrowers by precisely determining the time of the loan disbursement with the use of modern technology.

The 5 millionth borrowers, who were selected from Ulaanbaatar, Arkhangai, Bulgan and Khentii aimag, are customers of Khan Bank that received such loan products as business loan, herder’s loan and salary loan that suit their individual needs. Nowadays customers regard a loan as a necessity rather than debt and access particular loan products that suit their financial needs.

Loan products and services of Khan Bank contributed to the economy in the form of support for SME development and job creation. The five lucky borrowers served as specific examples of how an individual can utilize bank loans soundly and benefit their lives and businesses. Khan Bank has not only selected the 5 millionth borrowers but has also decreased the interest rate of salary and business loans to support entrepreneurs, and employees of public and private institutions amidst the economic downturn. The interest rate for a business loan has decreased to 1.6% and for salary loan to 2%.

Source: www.khanbank.com

NEWTEL SHARES ITS EXPERIENCE WITH WORLD GIANTS

A Global Business Excellence Conference took place recently in Singapore with over 30 companies from 12 countries introducing their successful experiences, including Mongolia’s national company, Newtel, a wholly-owned subsidiary of Newcom Group, which delivers Mobicom services in the country. Over 500 representatives from 20 countries attended the conference and approved Newtel’s speech on "Translating Service Vision into Action, NTC Experience" which emphasized success from implementing/realizing the governance of Business Excellence and its best management methods, said Mr. Ch. Davaadash, the Director of Newtel Co. Ltd. In 2007 Newtel started implementing "A model company" project, the Asian Efficiency Organization and within the project scope, they made a contract with the National Capacity Development center of Singapore to adopt the "Service Excellence" standard of Business Excellence, Singapore. In 2008, and 2009, the company received good marks on evaluation of the project from the Singaporean experts.

Source: Zuunii Medee

NEWCOM GROUP APPOINTS B. BOLD AS CEO

The Newcom Group, one of the largest investment companies in Mongolia, has appointed Mr. B. Bold as its Chief Executive Officer. Mr. Bold is joining the Newcom Group from JPMorgan where he was most recently an Executive Director in Investment Banking with a focus on Russia, CIS and Mongolia. He was responsible for deal origination and execution of various M&A and equity capital market transactions across various industries. Mr. Bold started his career on Wall Street with JPMorgan in 1998 and worked over 9 years in the Financial Sponsor Group in New York originating and executing LBO, M&A and debt/equity capital market transactions for large private equity clients such as Blackstone, Warburg Pincus, KKR, Apollo and others. He has executed and closed over 30 transactions in Europe, US and Asia. The Newcom Group is a private investment company focused on long term value creation through innovation and seeks to make a major contribution to the Mongolian economic and social development. The Newcom Group has made a number of successful investments including Mobicom,

the largest wireless operator in Mongolia; EzNis Airways, the largest domestic airline; Newcom Property, largest private property management and maintenance company and other infrastructure investments including development and construction of alternative wind power generation capacity in Mongolia.

Source: www.newcom.mn

ECONOMY EBRD LAUNCHES NEW STRATEGY FOR MONGOLIA

The EBRD’s Board of Directors has adopted a new strategy for Mongolia, reinforcing the Bank’s commitment to support the Mongolian economy and establish priorities for activities in the country over the next three years. The new strategy acknowledges the progress achieved in Mongolia from a number of structural reforms, such as price and trade liberalization and privatization, and outlines the transition challenges (enterprise restructuring, competition policy, banking, non-bank financial institutions & infrastructure reform) for further development of the Mongolian economy.

To promote the diversification of the Mongolian economy, the EBRD will support the development of private enterprises in Mongolia by extending credit lines and providing equity investments to selected agribusiness, cashmere/textile, tourism and property businesses. A priority for EBRD will be to support the Bank of Mongolia to consolidate and strengthen the country’s financial sector. The EBRD will increase its engagement in the banking sector by providing new credit lines for on-lending to micro, small and medium-sized companies, as well as co-financing facilities and equity investments.

The EBRD will support the development of non-banking financial institutions, such as microfinance institutions, leasing, insurance and pensions. The Bank will promote sustainable development of the natural resources sector, which is of strategic importance for the country, and will support infrastructure, energy efficiency and renewable energy projects in Mongolia. The EBRD will continue to pursue policy dialogue in Mongolia in areas of corporate governance, financial sector, mining industry and relations with the investor community.

Source: www.ebrd.com

MONGOLIA THE NEW HOT SPOT FOR INVESTMENTS, SAYS FIDP’S JAYAWANT

Mongolia is the new hot spot for investments as it has the resources that China needs, said Mandar Jayawant, managing director at Frontier Investment & Development Partners. "Mongolia is an extended China play," he said on CNBC's Asia Squawk Box. "The growth in Asia is going to drive the world economy...China is going to drive Asia, and China needs resources. You just have to look at a map and you're going to see where it'll come from. They're going to come from Mongolia," he noted.

"Mongolia has coal, copper, iron ore -- it has everything that China needs and they're ready to go into production. It has a business-friendly government that's just put its money where its mouth has been in the last decade and we're ready to take off in Mongolia." Jayawant said he sees this as a medium-to-long term play and it's a "very, very attractive investment opportunity".

But investments in frontier markets come with high risks attached, with Mongolia's legal system yet to be tried. "You are sort of going to be breaking the path going forward," Jayawant noted. "But we don't see too many political risks or policy risks or flip flops in that sense."

Source: www.CNBC.com

THE RUSSIAN OLIGARCHY’S AGGRESSIVE ASSAULT

The Oyu Tolgoi deposit has become RioTinto’s. When the project begins, the salary payments will be transferred via national banks. Moreover, there are over 10 companies that import fuel from Russia, plus national businesses dealing with food such as meat and furniture imported from Russia – all will be using bank services. That is why banks are interested in merging and the Russian oligarchy is standing behind that campaign union: Savings, Mongol Shuudan and Zoos banks today, and possibly others in the future. The country looks like it’s going to be dependent again on the ―Russian Brothers‖ via the bank mergers.

Source: Unuudur

GOLD HITS RECORD ABOVE $1150/OUNCE ON WEAK DOLLAR

Spot gold hit a record high of $1150 an ounce on Wednesday, as the US dollar remains weak for now. The U.S. and China sparred over exchange rates at a meeting of Asia Pacific leaders on Sunday, a move that quashed expectations that China may allow the yuan to rise in coordination with President Obama's trip to Beijing. Spot gold hit a high of $1150.20 an ounce and was at $1148.50 an ounce against $1141.50 late in New York on Tuesday. Volatility in gold prices is expected to stay relatively high in coming days as substantial amounts of open positions remain in U.S. December gold futures call options with a strike price of $1,200, whose expiry is due next week. Buying call options has been one strategy for gaining exposure to gold. A rise above $1150 in US gold futures could bolster further options-related buying, analysts said.

Source: Mining Weekly, Reuters

COPPER REMAINS NEAR HIGHS

Copper hovered near 13-1/2 month highs on Tuesday as the dollar rose and inventories marched higher, but new investor cash offered some support. Benchmark copper on the London Metal Exchange closed at $6,826 a ton versus $6,855 on Monday. It earlier touched $6,873.75, a level not seen since late September 2008. "Base metals are defying a number of negative influences today, including LME stocks, weaker-than-expected economic data, and a stronger dollar," said David Thurtell, an analyst at Citigroup. "Monetary conditions remain loose and investors seem to want to put money to work, whether it's in gold or base metals."

Weighing on sentiment, the dollar rebounded from a recent 15-month low after Federal Reserve Chairman Ben Bernanke's comments on the currency spurred traders to trim long-term bets against the greenback. A firmer U.S. currency makes metals priced in dollars more expensive for holders of other currencies. Overall sentiment remained positive, with funds that have helped drive copper up more than 120 percent this year still pinning their hopes on a revival in demand next year.

Current demand for copper remains lackluster. Latest data showed LME copper stocks jumped 3 550 t to total 410 000 t, their highest since late April.

Source: Mining Weekly

HUGE RAILWAY PROJECT DISCUSSED IN SAINSHAND

A proposal to establish the Oyutolgoi-Tavantolgoi-Sainshand-Baruun urt-Choibalsan Railway Project is under discussion at the Government level. The project is vital for supplying end-products from Mongolia by way of Dornogovi aimag which is rich in construction raw materials and coal. For the implementation of the project, USD 10 billion of investment is required. Interested or potential companies from the surrounding regions are studying the possibilities and conducting a feasibility study. The project will create 300,000 jobs for Mongolians, according to their study.

Source: Unuudur

URANIUM PRICES TOO LOW FOR NEW MINES, SAYS URANIUM ONE’S CEO

Uranium prices will need to firm significantly to justify development of the world’s mining projects, according to Jean Nortier, CEO of Vancouver-based Uranium One. He believes the market is underestimating the volume of uranium that will be needed to fuel new reactors being built, especially in Asia, and overestimating the supply that will be available over the coming decade.

"In our view, current prices are too low to provide incentive needed to bring sufficient new supply to meet demands for uranium." Uranium One produces nuclear fuel from mines in Kazakhstan, and has projects in Australia and the US.

Nortier said he has been looking at potential acquisitions, but there are very limited opportunities. In Kazakhstan, which is now the world's top uranium producing country, many of the new projects tend to be deeper deposits, requiring more well maintenance and greater volumes of sulfuric acid, Nortier said. ―The general view of Uranium One is that there is enough uranium in the world, but you need higher prices to incentivize mining companies to mine it.

Nortier said he expects that the growth in global power generating capacity from nuclear will surprise many people over the coming decade. ―The market continues to underestimate the

extraordinary growth already under way in the current nuclear industry, and the impact this will have on the demand for uranium.‖ Part of the reason for this is that additions to nuclear generating capacity are coming from China, Russia, India and Japan, he said. There are currently 34 reactors under construction in these four countries alone, and they account for over 50% of the 482 reactors globally in the construction, planned or proposed categories.

Source: Mining Weekly

WARREN BUFFETT: THE FINANCIAL PANIC IS OVER

Warren Buffett, perhaps the world's most admired investor, said on Thursday the financial panic that gripped the globe last year is a thing of the past, even as the U.S. economy's struggles persist. "The financial panic is behind us," the world's second-richest person said at Columbia University's Business School. "Our economy was sputtering, still is sputtering some." Buffett, 79, nevertheless said there is greater opportunity for investments inside the United States than outside, noting that the U.S. economy is far larger than any other.

He appeared at Columbia with Microsoft Corp founder Bill Gates, the world's richest person and a Buffett friend and bridge partner. Last month, preliminary government data showed the U.S. economy expanded in the third quarter, the first three-month period of growth since the second quarter of 2008. Nonetheless, the U.S. unemployment rate last month reached 10.2 percent, the first double-digit reading in 26 years.

Buffett last week made a big bet on the U.S. economy when his Berkshire Hathaway Inc. agreed to pay about $26.4 billion for the 77 percent of railroad company Burlington Northern Santa Fe Corp that it did not already own. "There will be more people in this country, 10, 20, 30 years from now," Buffett said. "They'll be moving more and more goods back and forth to each other and the most environmentally friendly and cost-efficient way of doing that is railroads." Buffett said rail transport uses one-third less fuel and pollutes the air less than trucks, and that one train can supplant about 280 trucks. Railroads are "the most environmentally friendly and the most cost-efficient way" to ship goods around the country. And he noted that Burlington in 2008 used on average one gallon of diesel fuel to ship a ton of freight 470 miles. "That is far, far more efficient than what takes place over the highways," he said.

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Gates, who is also a Berkshire director, said other sectors might also boost the economy over the long term, including information technology, energy and medicine. Separately, Buffett advised the U.S. government not to coddle companies that need bailouts to survive or preserve capital. "More sticks are called for," he said. Buffett gave Federal Reserve Chairman Ben Bernanke and U.S. Treasury Secretary Timothy Geithner "high marks" for how they managed the financial crisis. The billionaire has praised Bernanke in the past, while mocking Geithner's stress tests for banks.

Source: New York Times, Reuters, Wall Street Journal

POLITICS

DEPUTY PRIME MINISTER ANNOUNCES 2 WEEK EXTENTION OF QUARANTINE

During Wednesday’s government meeting, it was announced that the emergency quarantine period would be extended for another 2 weeks due to the growing rate of the H1N1 virus. Social gatherings are to be banned and public places such as cafés, pubs and restaurants are to be closed by 9 pm. Municipal transportation, public services and district organizations will continue to take hygiene measures. Primary and preschools are still closed, but middle and senior class students will resume school on Monday.

Source: ZuuniI Medee, Unuudur

PARLIAMENT APPOINTS PM BATBOLD’S CABINET

Last week, Parliament discussed the structure of the coalition Government. The new PM S. Batbold proposed 11 Ministries and 15 Ministers. The structure is the same as S. Bayar’s Cabinet. The PM suggested G. Zandanshatar to take the absent seat of the Minister for Foreign Affairs. Parliament

also approved the resignation of the Director of Government Office, Minister of Mongolia B. Dolgor and appointed MP Ch. Khurelbaatar, Director of Standing Committee on Budget, in her place.

After a long Q&A session, S. Bayartsogt was reappointed as the Finance Minister taking 93% of vote from MPs. First Vice PM N. Altankhuyag got 93.3% approval and Vice PM M. Enkhbold got 98.4%. MP G. Zandanshatar was appointed as the Minister for Foreign Affairs by 96.6%. Ts. Nyamdorj got 93% approval to stay as Minister for Internal Affairs and L. Gansukh got 100% approval for Minister for Nature, Environment and Tourism. Minister for Defense, L. Bold and Minister for Education, Culture and Science Yo. Otgonbayar, both got 98% approval from MPs to stay in their positions. The last Minister to be re-appointed was Minister for Construction and City Development, Kh.Battulga who got 96.5% approval.

Source: www.news.mn

WORKING GROUP RESUMES IMPLEMENTATION OF OT IA

Last Wednesday, a cabinet meeting was held and asked MP D. Zorigt, head of the working group of OT IA, to resume the implementation of 13 conditions set forth in the agreement. The conditions to be implemented were: to finalize the feasibility study of OT project according to the Mongolian regulations, organize conversion of exploration licenses to mining licenses, organize with the investors an auditing on loan amount of shareholders and verify the expenditures, tax debts and tax preferential of the investor with the Taxation Authority. Provide assistance to the investors in transferring the ownership and introducing restructure, nominate candidates to the Governing board of the company with prior introduction to the Cabinet, amend the present charter and register it with the state registration office, transform the company’s name to Oyu Tolgoi LLC, complete the transfer of investor’s rights, permission and assets not related to OT to other legal body, and ensure that Rio Tinto’s shareholding in Ivanhoe Mines is at minimum 19%.

Source: Ardiin Erkh, Minerals News

DEVELOPMENT FUND AND SOCIAL INSURANCE FUND BUDGET REVIEWS

Parliament’s Standing Committee on Economy discussed the Mongolia Development Fund’s budget of 2010 and the budget of Social Insurance Fund on last week. MPs N. Batbayar, Z. Altai, J. Batsuuri, D. Damba-Ochir and G. Zandanshatar proposed to calculate the budget by a constant price of copper and centralize the excess income in a central fund beginning 2011. MPs N. Batbayar, Z. Altai, D. Odkhuu and A. Tleikhan proposed to decrease the budget expense of 2010 by 130.1 billion MNT. The proposals were supported by the majority.

MP Z.Altai demanded that MPRP and DP must fulfill their promises to give money to the citizens. He proposed to give MNT 500,000 to each citizen in 2010, but this was not approved.

The Standing Committee also approved to provide an additional 500 million MNT to improve the high speed internet service of 134 soums, provide an additional 1 billion MNT to the Prime Minister’s basket to develop the technological industry, add 5 billion MNT for technical innovation of Shivee-Ovoo Company and environmental restoration, build a 30 kilometer road to connect Sainshand and Khamar Monastery, as well as calculating the copper price by 5500 USD a ton, and raise the income of the Mongolia Development Fund by 30 billion MNT. The Standing Committee agreed to add 5 billion MNT as income from Mongolbank as well as decreasing the expenses of the Ministry of Finance by 20 billion MNT.

Source: www.news.mn

PRIME MINISTER MEETS HIGHER EDUCATION DELEGATES

On Monday, Prime Minister S. Batbold, received teachers and scholars of Mongolia's University of Sciences and Technology and delegates of universities and associations. The Prime Minister said the government had established a goal, "Development for People-People for Development" and shared views with the audience. He pointed out that it’s high time "we put goals to make a proper basis and improve standards with an aim to introduce a world standard education to Mongolia". The Prime Minister said it is of importance to create an effective public system for establishing mid-career training and re-training for teachers, and to have a civil educational system that will help people learn civilization, legal rights, and responsibilities. He warned teachers that attention must be drawn to vocational training centers so that they prepare professional skilled specialists to

exploit mineral deposits. The government is aiming to raise the number of students in vocational training centers, he added. In 2009, the number of students in universities and institutes decreased, whereas those in vocational training went up.

Source: Montsame

UN PROVIDES FLU VACCINE AND MORE TO MONGOLIA

The United Nations Population Fund (UNFPA) has decided to give 100 million MNT assistance and support to Mongolia's government. All the money will be dedicated to the H1N1 flu-related measures, including protecting pregnant women and improving medical services for them. In accordance with the decision, acting permanent representative of the UNFPA to Mongolia S. Navchaa, presented to the Vice-Minister of Health the "Tamiflu" medicine costing 60 million MNT. Some 14 million MNT was handed to the Vice-Minister for operating a medical doctors' group in various aimags. The aim is to increase capacity of maternity hospitals in aimags. Some facilities and apparatuses were allotted to Arkhangai, Bayan-Olgii, Bayankhongor, Bulgan, Gobi-Altai, Khentii, Dundgobi, Omnogobi, Sukhbaatar and Tov aimags as well.

Source: Montsame

ELECTION CAMPAIGN COSTS UNDER BUDGET

Campaign costs for the 2009 Presidential, Local Citizens' Representatives and the 2008 Parliament Elections were budgeted at MNT 11747.4 million of which MNT 9709.2 million were spent, saving over MNT 2 million. However, the number of voting age people were over-counted by 130 thousand, which emphasizes the tactics of the election campaign as well as the underdevelopment of civil registration. Instead of printing 100 thousand voting cards, over 170 thousand cards were printed. The number of election campaign offices were also over-established by 8 for the branch bureau, by 96 for department bureaus, and by 6572 for temporary staff which is MNT 54.4 million of tax payers' money wasted.

Source: Zuunii Medee

HU OUTLINES DOMESTIC FOCUS AT APEC SUMMIT

China is seeking to boost its domestic demand to help bolster a fledgling global recovery from the economic crisis, President Hu Jintao said last week. Beijing's focus in its crisis measures is to "expand domestic demand, especially consumer demand," Mr. Hu said in a speech on the sidelines of the Asia-Pacific Economic Cooperation forum's annual summit. "The world economy has shown positive signs of stabilization and recovery, which will help us increase confidence and deepen cooperation," Mr. Hu said. A key theme of the APEC meetings has been the need to shift world growth away from a reliance on U.S. consumers and Asian savers and to foster more domestic demand in Asia. Mr. Hu said the global upturn isn't fully established and patterns of global growth are unsustainable. He also said China rejects protectionism and called for an early and comprehensive agreement to the global Doha Round of trade negotiations. Developing countries should have a bigger voice in international financial institutions, he said.

Source: Wall Street Journal

CHINA HOLDS FIRM ON MAJOR DECISIONS IN OBAMA’S VISIT

President Obama took a conciliatory tone on his first visit to China. On topics like Iran (Mr. Hu did not publicly discuss the possibility of sanctions), China’s currency (he made no nod toward changing its value) and human rights (a joint statement bluntly acknowledged that the two countries ―have differences‖), China held firm against most American demands.

With China’s micro-management of Mr. Obama’s appearances in the country, the trip did more to showcase China’s ability to push back against outside pressure than it did to advance the main issues on Mr. Obama’s agenda, analysts said. ―China effectively stage-managed President Obama’s public appearances, got him to make statements endorsing Chinese positions of political importance to them, and effectively squelched discussions of contentious issues such as human rights and China’s currency policy,‖ said Eswar S. Prasad, a China specialist at Cornell University. ―In a masterstroke, they shifted the public discussion from the global risks posed by Chinese currency

policy to the dangers of loose monetary policy and protectionist tendencies in the U.S.‖

White House officials maintained they got what they came for — the beginning of a needed give-and-take with a surging economic giant. Mr. Obama had made his points during private meetings and one-on-one sessions. Several China experts noted that Mr. Obama was not leaving Beijing empty-handed. The two countries put out a five-point joint statement pledging to work together on a variety of issues. The statement calls for regular exchanges between Mr. Obama and Mr. Hu, and asks that each side pay more attention to the strategic concerns of the other. The statement also pledges that they will work as partners on economic issues, Iran and climate change.

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At a regional conference in Singapore, Mr. Obama announced a setback on another top foreign policy priority, climate change, acknowledging that comprehensive agreement to fight global warming was no longer within reach this year.

Mr. Obama did not appear to move the Chinese on currency issues, either. China has come under heavy pressure, not only from the United States but also from Europe and several Asian countries, to revise its policy of keeping its currency, at an artificially low value against the dollar to help promote its exports. Some economists say China must take that step to prevent the return of large trade and financial imbalances that may have contributed to the recent financial crisis.

Source: New York Times

NEW MONGOLIAN LAWS

The following new laws and annulments to a current Mongolian law were published in a recent weekly Government bulletin. Unless otherwise decided by Parliament, the laws and annulments take effect (10) days after publication.

Date Laws 11.11.2009 Annulment of some provisions of Law on Minerals Law on Exemption from VAT Law on Exemption from Customs Tax

Please visit BCM’s website, Legislative Committee, for a summary of new Mongolian laws. BCM members who wish complete versions of the laws in Mongolian language are welcome to call or email the BCM office (332345; info@bcmongolia.org).

ANNOUNCEMENT HONG KONG AND MACAO TOUR New Juulchin Tours is organizing a 6 day, 5 night tour to Hong Kong and Macao, with a direct flight from Ulaanbaatar to Hong Kong and back. During the tour you will have an opportunity to cheer our athletes participating in Hong Kong 2009 East Asian games. The tour starts on December 4, 2009. Tour price is $1050 per person including visits to Disneyland, Ocean Park, sightseeing in Hong Kong and Macao, 3 star hotel accommodation, meals, guide and transportation. For information and reservations, please contact Munkhtugs, Manager, New Julchin Tours, 9972-2187; 319401.

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“MM TODAY” ON MNB-TV 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 for 9:15 PM tonight. Tune in to watch this program that reports stories from today’s BCM NewsWire.

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ECONOMIC INDICATORS

MSE WEEKLY REVIEW

For the week ended November 13, 2009, trading activity on the Mongolian Stock Exchange (MSE) totaled 2,570,900 shares with 36 companies traded. Total market value of transactions was MNT 2.3 billion. Total market capitalization of the 358 stock companies listed on the MSE was MNT 621.1 billion, and decreased by MNT 48.2 billion or 7.2 % from the previous week.

The Top-20 Index decreased by 818.27 points or 11.7% compared to the previous week, closing at 6,208.44 points. The MSE Composite Index decreased by 293.40 points or 8.6% compared to the previous week, closing at 3,110.09 points.

Most active stocks traded were: Zoos bank (2,381,000 shares), Khuh gan (75,900 shares), Apu (42,500 shares), NIC (18,900 shares), and Genco tur buro (16,300 shares).

Major share price percentage gainers were: UB buk (14.1 %), Shivee ovoo (6.7%), Gazar suljmel (4.6%), Makhimpex (3.6%), and Khuh gan (2.5%). Major share price percentage losers were: Zoos bank (47.2 %), NIC (30.7%), Suu (15%), Darkhan nekhii (15%), and Baganuur (14.3%).

INFLATION

Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)] Year 2007 *15.1% [source: NSOM] Year 2008 *22.1% [source: NSOM] October 31, 2009 *0.9% [source: NSOM] *Year-over-year (y-o-y)

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]

CURRENCY RATES – November 19, 2009

Currency name Currency Rate

US dollars USD 1435.48

Euro EUR 2137.50

Japanese yen JPY 16.10

British pound GBP 2411.39

Hong Kong dollar HKD 185.22

Chinese yuan CNY 210.26

Russian ruble RUB 49.98

South Korean won KRW 1.24

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.