BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 261-262 – February 22, 2013

A “DOUBLE ISSUE” INCLUDING SEVERAL STORIES DURING TSAGAAN SAR HOLIDAY

NEWS HIGHLIGHTS:

Business

Rio says OT's start depends on end to dispute;

Rio Tinto said to set terms for dispute-hit OT;

Erdenes TT selects domestic firm for West Tsankhi development;

Coal Mongolia 2013 recap: Day One;

Anglo American enters the Mongolia market;

Authorities put restrictions on SouthGobi's bank accounts, assets;

Mongolia Energy Corp served writ by Leighton;

Kincora reports on 2012 exploration;

Haranga confirms new iron ore discovery at Selenge;

Newera plans more coal drilling;

Wolf Petroleum kicks off oil and gas hunt;

Modun Resources expects mining license for Nuurst in Q2;

Prophecy announces subscription to private placement by Asian partner;

Eurofeu undergoes MSE's first reverse takeover;

Entrée Gold and Sandstorm Gold enter wide-ranging finance package;

Mongolia Growth Group gives details on renovation projects;

Guildford makes management appointments;

Roads Expo to be held in UB;

Mongolian designer premiers at New York Couture Fashion Week;

Textile firms opens wool factory;

Rio chief pledges changes after losses;

ING sells Korean stake;

Areva says uranium output last year hit record.

Economy

Mongol Bank adds to money supply with one week treasury bills;

Mongolian salaries to grow 18.5 percent in 2013, says Mongol Bank;

FRC raises trading fees;

FMG Mongolia Fund experiences drop amid OT concerns;

Government puts the squeeze on foreign workforce;

UB to receive 300-megawatt thermal power plant;

Commodity and China recoveries make Mongolia attractive for H2 2013;

Tackling retail rights;

Rio's Mongolia copper dream awakens 20-year-old nightmare;

Before the gold rush;

The dark side of the mineral boom;

Preservation challenges confront trove of Buddhist texts;

China coking coal price drops on daily steel index;

Copper slides to 3-week low as Chinese post-holiday demand disappoints;

Number, value of mining M&A transactions to improve this year.

Politics

OT talks to recommence on 27 February;

Council to present four project proposals for financing by Chinggis bonds;

MNMA releases list of proposed changes to draft Minerals Law to IAAC;

Mongolia cancels double-taxation agreements;

Mongolia to introduce national bank savings accounts insurer;

IAAC collects conflict of interest reports;

Auditing agency investigates mineral resources sector;

Senior MPRP members call for unification with MPP;

Parliament decides the fate of Chinggis Khan airport;

Mongolia falls on government transparency index;

Mongolia's scorecard;

Mongolia feels weight of corruption;

Elbegdorj makes historic visit to South Sudan;

Sudan bombs South Sudan ahead of Elbegdorj's visit;

Defense delegation visits Moscow;

Mongolia proposes camel exchange with Japan;

Officials arrest Korean travelers at border;

Aid group sends aid to Dukha Turks;

Police website hacked;

Tyrannosaurus to come home to Mongolia;

Putin threatens Russia's culture of corruption;

U.S., China ties tested in cyberspace.

*Click on titles above to link to articles.

SPONSORS:

Khan Bank

Oxford Business Group

Major Drilling

Techenomics Mongolia

Breakthrough PR

International SOS

Mongolian National Broadcasting

BCM MONTHLY MEETING NOTICE

BCM‘s monthly meeting for members will be on Monday, February 25, 2013 at 5PM at the KEMPINSKI

HOTEL KHAN PALACE, 2nd floor, Altai Ballroom.

The bilingual meeting will feature the following presentations:

- Call to Order/Business Council of Mongolia: B. Byambasaikhan, Chairman, BCM

- BCM Report: Jim Dwyer, Executive Director, BCM

- Ch. Khashchuluun, CEO, UBRM Consulting - "About Current Issues of FDI in Mongolia"

- Jargalsaikhan Dambadarjaa MBA, Columnist and host of NTV program "defacto" - "Five Hills and

Five challenges"

A networking reception will be held for all attendees immediately following the business portion of

the meeting in the ―Tenger‖ restaurant, 1st floor, Kempinski Hotel Khan Palace.

BUSINESS

RIO SAYS OT'S START DEPENDS ON END TO DISPUTE

Rio Tinto PLC, the world's second-largest mining company, said its USD 6.6 billion Oyu Tolgoi copper

mine in Mongolia will not start until disagreements with the government are resolved.

―A number of substantive issues have recently been raised by the government of Mongolia, including

the implementation of the investment and shareholder agreements and project finance,‖ Rio Tinto

said in a statement. ―Subject to the resolution of these issues, first commercial production from

Oyu Tolgoi is scheduled to commence by the end of June 2013.‖

Rio Tinto, which named Jean-Sebastien Jacques as the new head of its copper unit, twice rejected

Mongolia's demands in the past 18 months for a greater share of profits from the mine. President Ts.

Elbegdorj said this month Mongolia should have more control of the copper-gold operation that will

be the biggest contributor to its economy once it's in full production.

―I'm concerned by recent political signals within Mongolia calling into question some aspects of the

investment agreement,‖ Rio Chief Executive Officer Sam Walsh said during a webcast presentation.

―This undermines the partnership we've built and the stability on which a project of this size and

scale depends.‖

The government is seeking to boost Mongolian participation in management and increase the

number of local companies that can benefit from the project, including the use of Mongolian banks.

Rio Tinto reported a lower-than-expected second half loss as earnings at its iron ore unit beat

analysts‘ estimates and it raised its dividend. The loss was USD 8.9 billion in the six months ended

31 December from a USD 1.76 billion loss a year ago, Rio Tinto said in an email. The loss, the

biggest in at least 15 years, was driven by USD 14 billion in writedowns on the value of its aluminum

and coal business and offset by an almost USD 1 billion benefit from its mineral sands operations.

Source: Bloomberg

RIO TINTO SAID TO SET TERMS FOR DISPUTE-HIT OT

Rio Tinto PLC proposed initial terms on a USD 4 billion project financing for the Oyu Tolgoi copper-

gold mine in Mongolia as it tussles with the government over profits, three people with knowledge

of the deal said.

The world's second-largest mining company sent a request for proposals to lenders after holding

bank meetings, said the people, who asked not to be named because the transaction is private.

They have been asked to respond by mid-March, the people said.

Rio Tinto is seeking about USD 2 billion of 12-year loans from banks and a further USD 2 billion from

export credit agencies and international development funds for the project, the people said. The

company is said to be considering a temporary halt to work as the government demands a greater

share of profit from the mine. About half of the bank debt will pay an interest rate of 2 to 3

percentage points more than benchmarks and be insured against political risks by the World Bank's

Multilateral Investment Guarantee Agency, according to the people with knowledge of financing.

The cost of building the first phase of mine rose to USD 6.6 billion from an initial 2010 costing of

USD 5.7 billion, along with USD 500 million of interest payments on existing loans, according to a 5

February statement from Oyu Tolgoi's website. The project financing will enable the next stage of

development of the mine and help reduce costs for shareholders, Oyu Tolgoi said.

Source: Bloomberg

ERDENES TT SELECTS DOMESTIC FIRM FOR WEST TSANKHI DEVELOPMENT

Erdenes Tavan Tolgoi LLC selected Mongolian firm Khishig Arvin to begin development of the West

Tsankhi at the Tavan Tolgoi coking coal project.

The company will begin soil removal beginning at the end of next month. Erdenes-TT's Chief

Executive Officer, Ya. Batsuuri, said West Tsankhi would produce an additional seven million tons of

coal this year, which would help improve the company's financial status.

Source: Zuuni Medee

COAL MONGOLIA 2013 RECAP: DAY ONE

After months of political uncertainty and sweeping changes to legislature, speakers at the Coal

Mongolia 2013 forum made multiple calls for solidarity and cooperation between the public and

private sectors.

That was the message multiple ambassadors made during the hour for remarks from country

representatives. U.S. Ambassador Piper Campbell made a plea for greater trust between the

government and private companies, as the disputes only benefited a few enterprising individuals

while development stagnates throughout the country.

―The problem right now is people don't seem to trust the system or even trust the information—

trust that they understand what the plans are and the impact of what those plans are,‖ said

Campbell.

Japanese Ambassador Takenor Shimizu painted a similar picture with his words, noting that

legislation that did not foster a fair business climate would not aid Mongolia's intention to built a

more diversified economy. The current path Mongolia, he said, would not attract new buyers for

Mongolia's minerals, but instead would only put Mongolia at the mercy of its only trading partner:

China.

―Mongolia is fortunate to border the country that leads the world in consumption. But Mongolia is

dependent on a single country,‖ said Shimizu. He added, ―I'd like to note participation of Japan and

Korea would contribute to the national security here.‖

Speakers from bankers to the mining sector Randolph Koppa, President of Trade and Development

Bank LLC, and Norihiko Kato, Chief Executive Officer of Khan Bank LLC, sung their praises of the

economic growth potential in Mongolia and how Mongolians could lead their country to a more

prosperous future. But they cautioned that Mongolia was not invincible or an exception to global

financial downturn. And reports of political instability would only exacerbate those issues.

But still the political implications lingered in the minds of audience members, evidenced by a

question to Layton Croft, Vice President of International Government Relations Asia of Peabody

Energy Corp., that asked if Mongolia truly needed assistance from foreign mining companies.

―Mongolia's sovereignty is paramount. Mongolia is a free country and Mongolians are a people who

strive for what's best for them,‖ answered Croft. ―To the person who asked this question, I don't

know if it‘s the right question. It's a political question. I don't think Mongolia's mining sector is a

political issue; it's an economic issue.‖

He reminded audience members that Mongolia still needs assistance building up its infrastructure,

training its workforce, and delivering the best technology to its operations. And foreign partnerships

were the fastest and most efficient way of achieving those goals, he said.

―It's not about foreign or not foreign,‖ said Layton, ―it's about what do we need?‖

Source: BCM

ANGLO AMERICAN ENTERS THE MONGOLIA MARKET

Anglo American announced the appointment of Graeme Hancock as President and Chief

Representative for Anglo American in Mongolia.

Hancock has been involved in the mining industry in Mongolia for the past six years, initially at the

World Bank and most recently as chief operating officer of Erdenes Tavan Tolgoi, with responsibility

for development of the Tavan Tolgoi coal project. Hancock has extensive experience in the

resource sector and has worked in government development agencies and the private sector in New

Zealand, Papua New Guinea and throughout Asia in a range of technical and commercial senior

management roles.

Anglo American recently opened an office in Ulaanbaatar as part of its long-term growth strategy to

focus on selective development in countries that are highly prospective for the group's preferred

commodities. Hancock will lead the development of Anglo American's business in Mongolia.

―Mongolia is becoming an increasingly important mining economy with significant mineral

endowments in close proximity to key markets in north Asia. I am pleased to have the opportunity

to lead the important process of establishing Anglo American's presence in Mongolia.‖

Source: Anglo American PLC

AUTHORITIES PUT RESTRICTIONS ON SOUTHGOBI'S BANK ACCOUNTS, ASSETS

Canadian coal miner SouthGobi Resources Ltd. said Mongolia's Independent Authority Against

Corruption (IAAC) has imposed restrictions on the company's Mongolian unit, including its local bank

accounts, as it investigates asset sales.

The orders restrict the use of in-country funds but are not expected to have any material impact on

the company's activities, said SouthGobi, which is controlled by Rio Tinto PLC. The IAAC launched

an investigation last year into the divestment of some SouthGobi licenses to third parties and the

involvement of government officials, SouthGobi said last year.

None of the company's employees have been charged with any wrongdoings, SouthGobi said on

Thursday, adding that it was reviewing the legal process under which the restrictions have been

imposed. In September, Aluminum Corp. of China Ltd. (Chalco) dropped its USD 926 million bid for a

majority stake in SouthGobi due to political opposition from Mongolia. SouthGobi fired its Chief

Executive Officer Alexander Molyneux soon after.

Source: Reuters

MONGOLIA ENERGY CORP SERVED WRIT BY LEIGHTON

Mongolia Energy Corp. (MEC) said a writ of summons was issued in the Court of First Instance of the

High Court of Hong Kong by Leighton LLC against MEC.

Leighton claims for around HKD 67.98 million (USD 8.77 million) against MEC, or alternatively

damages for breach of contract MEC as surety under a written contract of guarantee made on 2

June 2010, together with interest and costs.

MEC said it has instructed its legal adviser to defend the claims and to raise counterclaims against

Leighton. Given that the litigation process is at an early stage, MEC considers that it is not practical

to assess its potential impact on the group at this moment.

The writ was related to MoEnCo LLC's contractual dispute with Leighton LLC. MoEnCo is an indirect

wholly owned operating subsidiary of MEC in Mongolia and Leighton is the ex-contractor of coal

extraction at the Khushuut Coal Mine.

Source: ETNet

KINCORA REPORTS ON 2012 EXPLORATION

Kincora Copper Ltd. released data from its 2012 exploration activities

Exploration activities in late 2012 focused on determining the potential for higher grade copper-

gold porphyry mineralization at depth and near surface oxides at the West Kasulu prospect and

drilling two previously untested geophysics anomalies at Bronze Fox. Following further zones of

broad mineralization being encountered and drilling at one of the aforementioned geophysics

targets extending the West Kasulu prospect's potential strike significantly, the company is

investigating the potential use of follow up geophysics and deeper IP analysis at its advanced

exploration target zones to assist in identifying additional targets.

―Our review of the 2012 exploration season reiterates our belief that Kincora's wholly owned and

flagship Bronze Fox project is prospective for both bulk lower-grade and deeper high-grade copper

mineralization.‖

John Rickus, President and CEO of Kincora, added that two to three drilling rigs ran until the week

before Christmas and all core work programs were completed.

Source: Kincora Copper Ltd.

HARANGA CONFIRMS NEW IRON ORE DISCOVERY AT SELENGE

Haranga Resources Ltd. has received final assays from drilling at its Selenge iron ore project in

Mongolia which confirm the new Undur Ukhaa discovery and extends mineralization at the Dund

Bulag prospect.

Assays have now been received for the new Undur Ukhaa discovery and show intercepts of 44

meters at 20 percent iron from 24 meters; 16 meters at 21 percent from 89 meters and 26 meters

at 21 percent iron from 107 meters. Highlight intersections from drilling at the Dund Bulag prospect

include 130 meters at 22 percent iron from 67 meters; 50 meters at 22 percent iron from nine

meters and 26 meters at 27 percent iron from 116 meters including two meters at 47 percent iron.

The magnetite mineralization at Dund Bulag achieved a high quality concentrate averaging over 65

percent iron with low impurities during metallurgical testing in 2012. The receipt of the final assays

completes the program of 35,000 meters of diamond drilling at the three projects, undertaken in

2012. The cumulative exploration target at Selenge is 250 to 400 million tons, and an expanded

JORC resource is expected in the June quarter of this year.

Source: Steel Guru

NEWERA PLANS MORE COAL DRILLING

Newera Resources is planning a third drilling program at its Shanagan East coal project.

If successful, follow up drilling will be considered to further define the east-west strike of these

seams. Initial drilling is also planned to define an exploration target and a potential JORC resource.

Newera has had ongoing success at its Shanagan East project with significant widths of bright black

coal recently intersected in three of the four phase-two drill holes.

Source: Proactive Investors

WOLF PETROLEUM KICKS OFF OIL AND GAS HUNT

Wolf Petroleum Ltd. has started comprehensive geophysical programs at its Sukhbaatar block in

Mongolia to confirm the structure and depth of hydrocarbon basins.

The ground-based program consists of more than 6,300 survey points and 11,000 line kilometers of

survey work. Processing and interpretation of the geophysical data will be done simultaneously in

Mongolia and the United States to accelerate processing and interpretation time. Data from the

geophysical survey will assist in the interpretation of high resolution remote sensing surveys that

Wolf is conducting. Data from the 2D seismic and geochemical programs will confirm the presence

of a petroleum system under the block and focus the 2013 drilling program toward areas of live

hydrocarbon seepage.

Source: Proactive Investors

MODUN RESOURCES EXPECTS MINING LICENSE FOR NUURST IN Q2

Modun Resources Ltd. said a mining license for its Nuurst project should be granted by April after

the Mineral Resources Authority (MRA) approved conversion of the project's exploration license to a

mining permit. The application is now with the newly formed Mineral Resource Council, which is

responsible for reviewing the details of mining license applications and making recommendations to

MRA.

The 489 million-ton Nuurst resource is in central Mongolia, six kilometers from existing rail

infrastructure connecting to the Chinese border. In November 2012, Modun secured an exclusive

deal with Tennant Metals which will see the commodity trader purchase 100 percent of the coal

producer at Nuurst. The Bluefield Group is continuing its preparation of a JORC-compliant coal

estimate at the site which is due for announcement soon.

―The [USD 1.5 billion] bond issue was heavily oversubscribed by foreign investors in a positive sign

for foreigner investment into Mongolia,‖ said Managing Director Rick Dalton. ―We welcome the

funds being used for mining investment and electricity production which demonstrate the Mongolian

government's commitment to supporting the growth and development of the mining industry.‖

Source: Business Mongolia

PROPHECY ANNOUNCES SUBSCRIPTION TO PRIVATE PLACEMENT BY ASIAN PARTNER

Prophecy Coal Corp. announced it would undertake a non-brokered private placement to raise gross

proceeds of up to CAD 8.4 million.

The placement involves the issuance of up to 60 million units at a price of USD 0.14 per unit. Each

unit consists of one common share of the company and 0.75 of a share purchase warrant. Each

whole warrant allows the holder to acquire an additional share at a price of USD 0.18 for a period of

two years following closing. NewMargin Prophecy Coal Ltd., at arms lengths to the company, has

subscribed 40 million units of this financing.

The proceeds of the placement will be used to prepare for Chandgana power plant construction and

for general working purposes. The placement is subject to the approval of the Toronto Stock

Exchange (TSX).

Source: MarketWire

EUROFEU UNDERGOES MSE'S FIRST REVERSE TAKEOVER

ResCap Securities announced completion of the first-ever reverse takeover on the Mongolia Sock

Exchange by Eurofeu Asia JSC and its international partners and shareholders.

Rescap acted as the exclusive advisor and broker to Eurofeu Asia, Eurofeu France and DEF

International. Eurofeu Asia provides full service fire safety, supplying fire safety products including

E.U. certified fire extinguishers. It also provides a variety of fire safety and assessment services.

Source: ResCap Securities

ENTRÉE GOLD AND SANDSTORM GOLD ENTER WIDE-RANGING FINANCE PACKAGE

Entrée Gold Inc., Sandstorm Gold and Sandstorm Metals and Energy announced they have agreed to

a multi-faceted financing deal worth USD 55 million.

Terms of the agreement include a streaming royalty from future production at Entrée's Heruga and

Hugo North deposits in Mongolia, a private placement by Sandstorm Gold into Entrée Gold, and a

net smelter return for Sandstorm Gold on Entrée's assets in Nevada.

―This financing package lays a solid foundation upon which Entree can further advance its core

properties. The nature of this transaction minimizes shareholder dilution while allowing the

company to monetize a portion of its assets,‖ said Entrée's chief executive officer.

Source: Junior Mining Network

MONGOLIA GROWTH GROUP GIVES DETAILS ON RENOVATION PROJECTS

Mongolia Growth Group Ltd. reported three property acquisitions and the successful completion of

two of three renovation projects in a letter to investors.

Renovations began in early summer 2012, and after a few months planning, the exterior work was

undertaken before winter's cold. The majority of interior work had been completed in November,

December and January.

The recently named Anand Building has been 35 percent leased following a remodeling. MGG hopes

to have the building completely leased by early spring. The renamed Denver Center has had two

interior floors remodeled, stairs painted, Internet access wired, and a garage retrofitted. The

Denver Center is 57 percent leased and is expected to reach 100 percent by early spring.

Source: Mongolia Growth Group Ltd.

GUILDFORD MAKES MANAGEMENT APPOINTMENTS

Guildford Coal Ltd. announced key new management positions at subsidiary companies Terra Energy

Ltd. and Guildford Coal (Mongolia) Pty Ltd. for its Mongolian coal operations.

Peter Westerhuis will take on the role of chief executive officer. Prior to joining Guildford, he was

an executive director with Idemitsu Resources Australia and the chief executive of Ensham Joint

Venture, which holds leases in central Queensland, Australia. He led the development and

expansion of Ensham from a small open-cut mine to a world-class 9 million ton per year open-cut

and underground mining complex employing up to 1,000 people and producing 10 different energy

products for export to customers worldwide.

Julien Lawrence will serve as chief operating officer for technical. Prior to Terra, he was the

regional mine services manager for Leighton Asia Ltd., covering Mongolia. He helped develop a

mining business for Leighton Asia by supporting pre-contracts studies, contract development and

negotiations, business development, and initial project star-up support through Asia. Lawrence

project managed the development of the Khushuut coal project in western Mongolia from technical

studies through to first production.

Mark Sinton will be general manager of mining. He has held a number of management positions at

various operations across the world. He managed the expansion of numerous large-scale operations

from Greenfields through to production across numerous geographies. Previous roles include general

manager at Perseus Mining Ltd., based in West Africa.

Source: Guildford Coal Ltd.

ROADS EXPO TO BE HELD IN UB

The Ministry of Roads and Transportation (MRT) will host the first International Roads Expo Mongolia

in Ulaanbaatar from 6 to 7 March.

With mining well underway, infrastructural development has become the second engine of growth

in the Mongolian economy. Many new projects in roads and railways are planned for the near

future, including the government's 2012-2016 Road Development Plan to connect every major city in

Mongolia to Ulaanbaatar.

The government has planned for 4,100 kilometers of road to connect every province and city to

Ulaanbaatar and 990 kilometers of highway linking Altanbulag Soum with Zamyn-Uud. For 2012,

plans are to construct 1,300 kilometers of paved road from Ulaanbaatar to the aimags of

Bayankhongor, Khuvsgul, Umnugobi, Dundgobi, Dornogobi, and Dornod Aimags. The project is

budgeted for USD 300 million.

Mongolia is currently struggling with an underdeveloped road network. As of 2012, Mongolia had just

7,000 kilometers of engineered roads, of which 3,500 kilometers are paved and the rest are gravel.

There are only two paved roads links to Russia and none to China. This has resulted in most goods

being transported by rail.

The government plans to support road development with low-interest loans for development. It

hopes the expo will help companies better equip themselves for construction and provide

opportunities for experience sharing.

Source: Info Mongolia

MONGOLIAN DESIGNER PREMIERS AT NEW YORK COUTURE FASHION WEEK

Rising design star Katya Zol from Mongolia premiered her latest collection at Couture Fashion Week

in New York City.

The Katya Zol brand represents the young generation of Mongolian modern and elite designers. Zol's

designs are primarily made for the young professional trend setting forward thinkers. Zol was the

first Mongolian designer to present her collection in a major fashion event in Malaysia, one of Asia's

―tiger‖ countries. She launched her online boutique in 2010 worldwide, which has seen great

success and a fan base eager for her latest ideas. Her designs were recently featured in

Cosmopolitan magazine.

Couture Fashion Week is a multi-day event showcasing couture and luxury fashion. It also includes

exhibits of luxury brands and fine art as well as world-class entertainment and receptions. The

event is held twice a year in New York.

Source: Couture Fashion Week

TEXTILE FIRMS OPENS WOOL FACTORY

The firm Mongol Noos has opened a wool-spinning factory in Zuunmod Soum, Tuv Aimag.

The new factory will produce two tons of woolen yarn a day using the processed wool from 18 firms.

Additionally the factory will produce insulation materials using the waste materials from yarn

production.

Although it has enough raw materials to meet textile demand, Mongolia has had to import all its

fabrics for the garment sector. A woolen fabrics factory would be reportedly worth MNT 50 billion a

year.

Mongol Noos opened its first small factory to process wool in Bayantsogt Soum, Tuv Aimag in 1996.

Source: Zuunii Medee

RIO CHIEF PLEDGES CHANGES AFTER LOSSES

Rio Tinto PLC's new chief executive pledged to pursue greater value for shareholders and slash costs

after the Anglo-Australian miner logged its first full-year loss, hit by a sharp drop in commodity

prices and more than USD 14 billion in impairment charges that last month dethroned its former

boss.

Sam Walsh, Rio Tinto's new chief executive, said Thursday he would only spend on business that

offered a solid return to shareholders. The company also plans to be more aggressive with the sale

of non-core operations, he said during a conference call from London.

―The strategy is unchanged,‖ said Walsh, the former head of Rio's iron-ore division, who took over

as chief executive from Tom Albanese last month. ―But under my leadership, there will be a change

in how we achieve this strategy.‖

Excluding the writedowns and other one-time items, Rio's earnings fell 40 percent to USD 9.3 billion

for 2012 from USD 15.55 billion a year earlier, slightly ahead of analysts' forecasts. The company

said lower average commodity prices reduced its earnings by 5.3 billion. Revenue fell 16 percent to

USD 50.97 billion. Rio Tinto had not posted an annual loss since before it became a dual-listed

company with the merger of its U.K. and Australian assets in 1995.

Weaker commodity prices have forced major mining companies to slash costs and shelve projects,

while facing renewed calls from investors to increase returns after years stemmed in large part

from expanding mines and acquisitions. Rio Tinto's asset writedowns for the year stemmed in large

part from costly and poorly timed acquisitions, including the USD 38 billion purchase of Canadian

aluminum company Alcan at the height of the market in 2007.

The company said it aims to reduce costs by USD 2 billion this year and an additional USD 3 billion

by the end of 2014, while trimming capital expenditure on approved expansion projects and

exploration.

Rio Tinto doesn't expect a change in the demand outlook for its core commodities, which Walsh said

will continue to be driven by growth in China and the industrialization and urbanization elsewhere

in Asia. The recovery in China's economy is expected to push gross-domestic-product growth above

8 percent this year, although Walsh added that commodity-price volatility will likely continue while

structural issues in the European and U.S. economies remain unresolved.

Source: Wall Street Journal

ING SELLS KOREAN STAKE

ING Group is selling its holding in South Korea banking giant KB Financial Group as it continues to

seek to sell the two companies' life-insurance joint venture. ING is the investment banking company

which took part in the first of Mongolia's sovereign debt offerings through the Development Bank of

Mongolia as well as Trade and Development Bank of Mongolia LLC's corporate debt offerings.

ING's decision to sell its 5 percent stake in the Seoul lender comes as the Dutch lender seeks to slim

down and become a bank focused on Europe, rather than a sprawling global giant. The shares, held

by ING Bank NV, the leader's banking arm, were being offered to institutional investors between

KRW 37,480 and KRW 37,750 apiece (USD 34.68 and USD 34.93), to a discount of 0.7 percent to 1.4

percent to Thursday's closing price of KRW 38,000. The final piece was expected to be announced

before Korean markets open on Friday.

ING said late Thursday that the deal had raised approximately EUR 500 million (USD 673 million).

The sale would generate a profit of about EUR 100 million after taxes, it added.

Separately, ING continues to negotiate to sell its minority share of KB Life Insurance, its life-

insurance joint venture with KB Financial, to KB Financial, which would then have complete

ownership. KB's life insurance services are sold primarily through the KB branch network, and KB

Financial has indicated it wants to bulk up its presence in insurance.

ING has also sought to sell ING Life Insurance Korea, the country's fifth-largest life insurer by assets,

to KB Financial, but the Seoul lender decided two months ago against buying the company for USD

2.1 billion after months of exclusive talks. The collapse of that deal was a setback for ING, which is

required to sell more than half of its Asian insurance operations and at least a quarter of its U.S.

insurance business by the end of this year under the terms of a 2008 Dutch government bailout. ING

has resumed efforts to sell ING Life Insurance, and Korean companies and unlisted Kyobo Life

Insurance—the nation's second-and third-largest life insurer—have shown interest.

Source: Wall Street Journal

AREVA SAYS URANIUM OUTPUT LAST YEAR HIT RECORD

French nuclear power group Areva SA, who is exploring for uranium in Mongolia, said its uranium

production hit a record level of 9,760 tons last year, retaining its position as the world's second-

largest producer behind Kazakh state nuclear firm Kazatomprom.

Areva produced 3,661 tons via its 51 percent-owned Katco joint venture with Kazatomprom and

3,065 tons at its Somair mine in Niger. Its share in the Cominak mine in Niger yielded 512 tons for

Areva, the company said. Areva's stake in the Canadian McArthur-Key Lake facility yielded 2,270

tons and the Trekkopje, Namibia, pilot site 251 tons. According to World Nuclear Association Data,

global uranium production totaled 54,510 tons in 2011, of which 8,884 tons came from

Kazatomprom, 8,790 tons from Areva and 8,630 tons from Canada's Cameco, the operating partner

at Key Lake.

Source: Mining Weekly

ECONOMY

MONGOL BANK ADDS TO MONEY SUPPLY WITH ONE-WEEK TREASURY BILLS

The Bank of Mongolia issued MNT 576.75 billion in one-week treasury bills at 12.5 percent on 13

February.

The Central Bank lowered its policy rate by 75 basis points to 12.5 percent on 31 January. The bank

originally started to sell treasury bills weekly in July of 2007 at a fixed rate and amount. However,

in May 2010 the trading of treasury bills became competitive based on rates bid by local commercial

banks.

The government also announced that week the issuance of a MNT 25 billion 12-week bond. The

issue was oversubscribed with local banks bidding MNT 38 billion. As planned, the 12-week bond

issue closed at MNT 25 billion at a weighted average rate of 11.04 percent. The lowest and the

highest rates of the subscription were 10.87 percent and 11.20 percent, respectively.

Source: Mongolia Investment Banking Group

MONGOLIAN SALARIES TO GROW 18.5 PERCENT IN 2013, SAYS MONGOL BANK

The Bank of Mongolia has projected an 18.5 percent salary increase in 2013 from last year.

The Central Bank has estimated the average salary in Mongolia would reach MNT 670,000, based on

a survey of 12 researchers and analysts from universities and banks. The highest projection for

Mongolian salaries was MNT 736,000 while the lowest was MNT 590,900. A survey of 400 businesses

found that 33 percent of those surveyed planned to raise employee salaries.

Source: Zuunii Medee

FRC RAISES TRADING FEES

The Financial Regulatory Commission (FRC) has raised the fee to participate on the securities

market for financial entities. The raised fee will take effect 24 February.

Source: Financial Regulatory Commission

FMG MONGOLIA FUND EXPERIENCES DROP AMID OT CONCERNS

The FMG Mongolia Fund experienced a 1.4 percent loss for the month of January.

The fund said the Mongolian equity market has been adversely affected by the dispute between Rio

Tinto PLC and the Oyu Tolgoi investors over their shared ownership. It also reported stability in the

tugrik against the U.S. dollar over the last three months, with gross domestic product (GDP) per

capita forecast to grow to USD 4,300 in 2013 versus USD 3,575 last year. GDP is forecast to grow 10

percent this year, down from 12.3 percent in 2012. However, should Oyu Tolgoi go online as

scheduled in June GDP could reach as high as 17 percent.

The fall follows a 7.4 percent gain in December. Given the low trading volume on the MSE since the

summer, the fund allocated cash to two large mining companies with significant resources in

Mongolia that trade offshore. Both investments were up significantly in December.

Source: FMG Fund

GOVERNMENT PUTS THE SQUEEZE ON FOREIGN WORKFORCE

Hogan Lovells alerted clients of the government's passage of a new foreign labor force quota.

Resolution No. 192 sets out the total number of foreign employees an economic entity operating in

specific sectors may employ, depending on the size of its workforce and its paid-in capital.

The source reported three notable changes. The first is the removal of the agriculture, forestry,

fishing and hunting sectors entirely. The new legislation also changed the ratios allowed for some

sectors such as the reduced ration from 25 percent to 20 percent of foreigners for support activities

for mining, a marginal increase for provision of accommodation services, a 1 percent fluctuation for

human health activities and other personal activities, a standard 10 percent ratio for food and

beverage service activities, and the increase to 20 percent from 5 to 10 percent for retail trade and

repair of motor vehicles and motorcycles. Finally, a new a category was added for ―representative

offices of foreign legal entities and authorized foreign nongovernmental organizations operating in

the humanitarian sector.‖

Any company acting in any sector not specified is permitted up to 5 percent foreign employees, and

any entity with a staff less than 20 is permitted just one.

Source: Hogan Lovells

UB TO RECEIVE 300-MEGAWATT THERMAL POWER PLANT

The Cabinet of Ministers approved the motion for a new 300-megawatt power plant in Ulaanbaatar.

Given that the current heat production capacity of the city is forecast to fall below demand during

peak winter months in 2013 and 2014, a new thermal power station is planned for the Eighth Khoroo

in Bayanzurkh District in eastern Ulaanbaatar. Plans are to renovate the aging US-15 plant.

Energy Minister M. Sonimpil is tasked with commissioning the first furnace of the plant along the

required heat distribution line by December this year.

Source: Business Mongolia

COMMODITY AND CHINA RECOVERIES MAKE MONGOLIA ATTRACTIVE FOR H2 2013

This month saw renewed focus on commodity pricing including updated views from several key

institutions such as the Reserve Bank of Australia, Allianz Global Investors, Avia Investors, as well as

indicative moves being made by Soros and Bacon against gold backed exchanged-traded products.

While a number of precious and base metals experienced poor performance, observers saw

significant differences between Mongolian stock performances and their relative markets.

With gold retreating to a six-month low, closing out at USD 1,609.50 and having dipped below USD

1,600 for the first time since 15 August of last year, gold-focused mutual funds, exchange-traded

funds, and a wide range of gold-mining companies closed the week at measurable losses. However,

Mongolia exposed gold stories such as Erdene Resource Development Corp., Centerra Gold Inc., and

Entrée Gold Inc. remained relatively unchanged as did other Mongolia focused stories exposed to

different commodities. The underlying reason for this separation is the construction of negative

market sentiment that began in the first half of 2012.

Moving into the second half of 2013, the source believes that a very different sentiment will enter

Mongolia. This is hinged on key milestones, including changes to the Strategic Entities Foreign

Investment Law, approval of an industry-accepted Minerals Law, commercial production being

reached at Oyu Tolgoi, and a strong outlook for Chinese growth and commodities demand.

―While these milestones may seem daunting, we believe they are possible,‖ said the source.

It added that China was likely to see recovered growth through 2013, which would drive immediate

demand for a number of industrial and energy commodities forming the foundation for wider growth

across the economy.

Source: Mongolia Investment Banking Group

TACKLING RETAIL RIGHTS

Efforts by Mongolia's government to improve conditions for increasingly wealthy local consumers

bode well for the fledgling retail industry. There are concerns, however, that watchdogs and

legislation will not be able to keep pace with the rapid growth of the industry.

A national consumer conference titled ‗The People are King‘ was held in November in Ulaanbaatar

with the aim of educating both consumers and producers on the importance of product quality.

Consumer representatives said that manufacturers should guarantee quality at the beginning of a

product's lifespan, and that distributors should not ignore reasonable demands by consumer

awareness regarding rights protection.

In July 2012, a mission from the U.N. Conference on Trade and Development (UNCTAD) presented

findings of a peer review it had conducted on the Authority for Fair Competition and Consumer

Protection. (AFCCP). UNCTAD found the agency had limited experience of joint work with the police

in consumer protection cases, with ―no transfer of investigatory skills from professional

investigatory agencies to the AFCCP.‖ It also noted the lack of a public relations policy, stating the

agency must develop a consistent policy for human relations, staff, development, knowledge

management, and experience sharing.

Meanwhile, the European Bank for Reconstruction and Development (EBRD) has taken a lead role in

developing the retail sector through the provision of a USD 4 million senior loan and USD 2 million

mezzanine loan in October 2012 to support BSB Service.

As a sign that it is preparing to be more assertive in projecting consumers, in November the AFCCP

imposed a MNT 4.97 billion (USD 3.58 million) fine on NIC, the largest retailer of petroleum

products in Mongolia for the ―creation of a false shortage of gasoline in the market,‖ reported

Business Mongolia. Further consumer protection steps have been taken by the Central Bank,

including a MNT 61 billion soft loan for flour mills that will allow them to supply first-grade flour at

a maximum wholesale price of MNT 550 per kilogram and a maximum retail price of MNT 650 per

kilogram.

Source: Oxford Business Group

RIO'S MONGOLIA COPPER DREAM AWAKENS 20-YEAR-OLD NIGHTMARE

Mongolia's copper and gold mine looks like a dream location sitting next to China, the biggest

market. Yet, Mongolia's bid for more control of the project draws comparison with a Rio Tinto PLC

mine that went badly wrong.

Rio Tinto has refused government overtures to rewrite the agreement on the mine known as Oyu

Tolgoi, raising tensions and comparison with another Rio Tinto copper mine more than two decades

ago. That project known as Panguana on the island of Bougainville in Papua New Guinea was shut

down by local protests and is still the subject of a U.S. court case.

―In Bougainville the community felt, rightly or wrongly, they were not compensated adequately for

the various impacts of mining they had to absorb,‖ said Jeffrey Neilsen, a senior lecturer in

economic geography at the University of Sydney. Governments in emerging economies ―have to be

seen to be taking a strong stance and making sure that the benefits of their resource wealth are

being shared.‖ Mining companies also need to consider wealth distribution in countries where they

invest as a matter of course, said Michael Bush, who now heads credit research at National Australia

Bank Ltd. and formerly worked as a geologist at Triad Minerals Inc.

A disconnect with local people led to the troubles at Rio's Panguna mine, with the company not

doing enough to mitigate the effect of its project on local inflation or the environment, Nielsen

said.

―All of a sudden the local community cut down these massive trees and put them across the access

road to the pit,‖ Nielsen said. ―About 5,000 illegal miners took over the asset and started mining

the pit. They were mining themselves, digging shafts. Then the company had to slowly renegotiate

access to the pit.‖

The Mongolian dispute will probably end better than the story of the Bougainville mine. But that

story is unfinished: Two weeks ago on 7 February, about 23 years since Rio closed Panguna, the

company announced it may be restarted. The mine still holds more copper and gold than was dug

out.

Source: Bloomberg

BEFORE THE GOLD RUSH

Mongolia finds itself at odds with the sources of its new-found wealth, the foreign miners and

financiers, dazzled by the unfathomable bounty under its vast terrain. Some foreigners fear that

populist politicians may kill the goose before it has laid any golden eggs. Almost certainly not; but

―resource nationalism‖ will surely make life uncomfortable for geese.

Because of falling commodity prices and a slowdown in China, which takes over 85 percent of its

exports, Mongolia's roaring economy slowed drastically last year—to a mere 12 percent or so gross

domestic product (GDP) growth, from over 17 percent in 2011. But the benefits produced by these

giddy number remain elusive for many Mongolians. According to the International Monetary Fund

(IMF), the number of Mongolians living in poverty fell by about 10 percentage points in 2011, thanks

to government handouts. But that still left some 30 percent below the poverty lines.

A presidential election is due in June. The incumbent, Ts. Elbegdorj of the Democratic Party (DP),

is the favorite and is closely identified with the opening to foreign investments. But new draft

mining legislation from his office has provoked howls of protest from the industry, which claims its

restrictions would deter all new investment in mining. And this month the president weighed into

the foreigners behind the biggest project to date in Mongolia, the Oyu Tolgoi copper and gold mine.

The mine has just produced its first copper concentrate and is expected to begin commercial

production by the end of June. It seems well on track to meet the ambitious hopes vested in it. Yet

the president accused the company of having spent more than had been scheduled when the

investment agreement was signed in 2009 (nearly USD 7 billion so far); of being slow in explaining

why; of paying its management too much; and of employing more foreigners than it was supposed

to. In rebutting these slights, Oyu Tolgoi pointed out that Rio Tinto is shouldering most of the

project's risks, lending the government money for its share of the investment, and the loan will

never be rapid if the mine does not make enough money.

A row with Oyu Tolgoi is not all bad for government. And at least it is not threatening as it did last

year, to renegotiate the investment agreement or expropriate part of Turquoise Hill's stake. The

smug consensus among foreign businessmen is that the government needs Rio Tinto more than Rio

Tinto needs it. That may be true; but it is all the more reason to expect the government to be

suspicious of its foreign partner.

Source: Economist

THE DARK SIDE OF THE MINERAL BOOM

The impending launch this year of the Oyu Tolgoi copper-gold project has ignited a debate in

Mongolia about how to avoid a massive rise in income disparity. The herders who live near Oyu

Tolgoi, however, say they are worse off than anyone else.

Rio Tinto PLC is courting Gobi nomads and offering impressive compensation packages—particularly

when compared to national salary averages—to win over locals. New schools, full-ride scholarships,

guaranteed lifetime employment, part-time positions that don't interfere with herding schedules,

lump sums of cash, and new sheds and animal pens for each family are just some of the incentives

to entice natives to move off ancestral grazing land and make room for the mega mine.

Most herders earn roughly MNT 450,000 a month from part-time work at the mine in addition to

their herding income compared with a national salary average of USD 400. Left with the only other

option of becoming displaced and left with nothing at all, Gobi herders take the incentives with a

heavy dose of pragmatism.

Removed from their traditional pastures, ruralists continue to worry about the mine's effect on the

land. Most fear for the local water supply, which in a desert area is scarce enough without an

enormous mine operating at an estimated 204 gallons of water per second. Others wonder if the

land can survive the effects of increased desertification. Trucks carry construction materials, ore,

and workers to and from the mine nearly 24 hours a day over unpaved land, kicking up a perpetual

veil of dust over the region. Families have stopped eating animal innards—a staple of the Mongolian

diet—due to a buildup of dust found inside the animals respiratory and digestive systems. Some

herders wonder if their own bodies are being harmed in the same way.

Source: The Atlantic

PRESERVATION CHALLENGES CONFRONT TROVE OF BUDDHIST TEXTS

The National Library is estimated to contain over a million scholarly and religious Tibetan Buddhist

canon—sacred contemporary records of the Buddha's oral teachings, called the Kangyur, and

commentaries and treatises on the teaching of the Buddha, the Tegyur.

Many original Tibetan texts were lost or destroyed amid the Chinese invasion of Tibet in 1950.

Thanks to centuries of contact with Tibet, however, Mongolia is believed to have some of the few

remaining originals. In addition to ancient Tibetan and Mongolian documents, rare Sanskrit

manuscripts, including 800 verses by Nagarjuna, a second-century Indian Buddhist philosopher,

inscribed on birch bark have been identified in the collection.

―This collection is not just a national treasure, but a world treasure. It is not just about Tibetan or

Mongolian history, but a slice of human history,‖ said the library's director, Ch. Khaidav.

Many texts are in poor condition and housed in less-than-adequate conditions, admitted Khaidav,

the library director. She said the Mongolian government funded the study and restoration of many

of the ancient Mongolian texts. But until recently there was little done with the Tibetan texts.

Foreign assistance arrived in 1999, when the Asian Classic Input Project (ACIP), a New York-based

nonprofit dedicated to preserving and digitalizing ancient Tibetan and Sanskrit texts, began

cataloguing the library's contents. But project stalled in 2008. Gonchog believes that perceptions of

the collection's monetary value and suspicions among local officials about the reasons for foreign

interest have hindered preservation efforts.

ACIP's work resumed this month with a temporary grant from Singapore-based Global Institute

For Tomorrow (GIFT), a think tank, which estimated the whole project will cost USD 1.1 million.

Every single page is carefully studied for type of material used, possible origin, as well as the script

and printing style and monastery seal stamp that help determine where and, sometimes, when the

text was produced. Within days of recommencing the project a small fire stalled work again. ACIP

recently updated the hardware and says that with enough funding it could catalogue the entire

collection within three years.

Source: Eurasianet

CHINA COKING COAL PRICE DROPS ON DAILY STEEL INDEX

The cash price of steel billet experienced the biggest price decline of the day on MetalMiner's daily

steel price index, dropping 3.6 percent on the London Metal Exchange (LME) at USD 290 a metric

ton. Coking coal comprised nearly half of all Mongolian exports during much of 2012.

Chinese steel prices were mixed for the day. The price of iron ore 58 percent fines from India failed

to hit a high price of USD 135 per dry metric ton. However, after three straight days of no change,

the price of Chinese coking coal decreased by 3.4 percent. On the tail end of a three-day flat

streak, the price of Chinese slab rose by 2.3 percent. The three-month price of the U.S. HRC futures

contract spot price flattened at USD 611 per short ton after two days of downward moment.

Source: MetalMiner

COPPER SLIDES TO 3-WEEK LOW AS CHINESE POST-HOLIDAY DEMAND DISAPPOINTS

Copper prices have built a base above USD 8,000 this year, but have failed to find traction above

USD 8,346 a ton, a four-month peak hit early this month.

Volumes were expected to pick up as U.S. traders returned on Tuesday from the President's Day

holiday. Chinese traders reported low overall post-holiday interest in the metal, weighing on prices,

though some purchases had been completed that narrowed Shanghai's price discount to London cash

copper to USD 80 from about USD 200 pre-holiday. China consumes about 40 percent of the world's

copper and nearly all of Mongolia's.

―We need to see more substance in terms of underlying demand if the run up in prices is to be

sustained. All eyes were on the return of the Chinese. It's still early to say, but yes, it's been a no-

show so far,‖ said Macquarie analyst Duncan Hobbs.

―Also there are reports circulating that the Chinese government may start to tighten [monetary

policy].‖

There was also concern that Beijing and Hong Kong would launch more curbs to cool rising property

prices, which weighed on shares there. There were still hopes among traders that post-holiday

buying might yet resume.

―A lot of Chinese guys are still out. We might get a bit more action when Chinese New Year

officially finishes with the Lantern Festival on the 24th,‖ a Singapore-based trader said.

Limiting falls, however, was data showing better-than-expected ZEW economic sentiment in

Germany, Europe's biggest economy, which helped push European shares higher.

Source: Reuters

NUMBER, VALUE OF MINING M&A TRANSACTIONS TO IMPROVE THIS YEAR.

The number of mining and metals transactions, and the value of the transactions were expected to

improve in 2013, advisory firm Ernst & Young predicted on Monday.

In its ―Mergers, acquisitions and capital raising in the mining and metals sector‖ report, Ernst &

Young said the recovery would be driven by state-backed and financial investors' appetite for

mergers and acquisitions, combined with divestments. The report showed that there were 941

completed deals with a total value of USD 104 billion in 2012, down 7 percent and 36 percent

respectively on 2011. This was the lowest number of deals since 2008 and the smallest by value

since 2009, at the height of the financial crisis.

However, Ernst & Young Global Mining & Metals transaction leader Lee Downham said on Monday

deal activity would pick up in 2013.

―We will see the continued rise of strategic and financial buyers in the sector throughout this year,

motivated by the need to secure long-term sources of mineral supply and the prospect of quick

returns respectively.‖

Downham noted that traditional deals and financing had become increasingly marginalized post-

financial crisis, as access to capital through debt and equity markets became increasingly

constrained. He said financial investors, which included private capital, investment funds, sovereign

wealth and real estate holding companies were typically taking toehold investments of between 10

percent and 15 percent while the increasingly commercial focused, state-backed strategic investors

were commonly adopting a larger investment strategy.

The auditor also reported on Monday that there was an overall decline in the amount of capital

raised by the sector, the first year since 2009, despite an all-time record USD 113 billion raised

from corporate bonds, 35 percent more than in 2011. Loans proceeds for the year fell to USD 106

billion as banks continued to reduce their exposure to riskier assets to manage their reserve capital

requirements. Meanwhile, the total value of initial public offerings in 2012 was the lowest since at

least 2007, with a year-on-year 40 percent fall in volume and 81 percent drop in proceeds, even

excluding the Glencore International PLC float in 2011.

Source: Mining Weekly

POLITICS

OT TALKS TO RECOMMENCE ON 27 FEBRUARY

The Oyu Tolgoi LLC board is set to continue its meeting with shareholders held before Tsagaan Sar

that was postponed until after the holiday on 27 February.

Ministers of mining, economics, environment and finance met two weeks ago to resolve disputes

with Oyu Tolgoi LLC's shareholders where they submitted nineteen points of grievance. Mining

Minister D. Gankhuyag commented that some of the explanations given for the larger-than-

projected costs calculated by the government had ―no basis in reality,‖ while Economic

Development Minister Batbayar refused to apologize to investors for remarks made in public and to

the media.

―They seemed offended [by our 1 February discussion with the president]... They have said

something like, 'The Mongolian government should apologize,'‖ said Batbayar. ―We have said in

response that (a) as a democracy Mongolia has the right to take up this issue in its Parliament, (b)

public opinion will not be decided by your wishes... [and] (c) you must understand and respect the

reluctance of Mongolians to give up their land.‖

The minister added the government was, however, seeking cooperation to settle the disputes.

Finance Minister Ch. Ulaan also accused Oyu Tolgoi LLC of failing to pay taxes in 2012.

Source: Mongolian International Capital Corp.

COUNCIL TO PRESENT FOUR PROJECT PROPOSALS FOR FINANCING BY CHINGGIS BONDS

The government body responsible for selecting projects funded by the government's USD 1.5 billion

Chinggis bonds received four project proposals.

The Policy Council, headed by Prime Minister N. Altankhuyag, first received the proposal for a roads

project for the construction of 1,347 kilometers of paved road between Dornod, Dundgobi,

Bayankhogor, and Khuvsgul Aimags. Two other roads projects were proposed that included the

construction of highways for Ulaanbaatar and two horizontal along the Tuul and Selbe Rivers. The

last proposal suggested the construction of a 300-megawatt power plant at the Tavan Tolgoi mine.

The council will present the proposals to the Cabinet of Ministers of 23 February.

Source: News.mn

MNMA RELEASES LIST OF PROPOSED CHANGES TO DRAFT MINERALS LAW TO IAAC

The Mongolian National Mining Association (MNMA) finished its proposed changes to the draft

Minerals Law.

A working group made up of representatives of the MNMA appealed to the Independent Authority

Against Corruption (IAAC) to consider several clauses of the draft Minerals Law that might

exacerbate corruption and add bureaucracy. The IAAC agreed to accept the proposal and send out

an advisory to the government's administrative office.

Problems with the bill include the addition of two categories of special licenses to four categories,

ambiguity over the period of time for licensing, the set of exploration and mining periods by the

government, the subject-oriented nature of the terms for termination, the conditions for the

passage of a feasibility study, and changes to the tax policy where taxes are taken from every phase

of operations, rather than just income as was previously done. The proposal also took issue with the

13th and 14th clauses for the government's ability to take back mineral deposit land as well as a

clause that requires a Mongolian entity to own at least 50 to 75 percent of exploration, processing

and mining licenses.

Source: BDSec JSC, Udriin Sonin

MONGOLIA CANCELS DOUBLE-TAXATION AGREEMENTS

On 2 November 2012, Parliament passed the law on annulment of agreements between the

Mongolian government and the governments of four countries on avoidance of double taxation and

prevention of fiscal evasion with respect to taxes on income.

Mongolia's canceled agreements are with Kuwait, Luxembourg, the Netherlands, and United Arab

Emirates, with expiration to begin in 2014 for the former two and 2015 for the latter.

―In our view, the annulment of these agreements will have an adverse impact on the existing and

future investment from the above-mentioned four countries and reduces the business framework

with these countries,‖ said V. Bolormaa, senior lawyer at GRATA Law Firm.

Source: GRATA Law Firm

MONGOLIA TO INTRODUCE NATIONAL BANK SAVINGS ACCOUNTS INSURER

A new savings insurance body is set to be established with the passage for the Savings Insurance

Law by Parliament.

The law insures bank savings accounts up to MNT 20 million from loss. Data shows 99 percent of

savings account holders have savings below that threshold.

The Ministry of Finance and Mongol Bank will need to provide MNT 50 billion to establish the

insurer. Another MNT 100 billion is also expected to come from commercial banks in the form of

insurance fees.

Source: Business Mongolia

IAAC COLLECTS CONFLICT OF INTEREST REPORTS

The Independent Authority Against Corruption (IAAC) collected reports to determine if conflicts of

interest exist from 99.2 percent of high-ranking officials.

The agency finished collecting data after it begun on 15 January this year, said B. Ulzii, head of

monitoring and analysis. The IAAC collected 47,000 reports from officials online, she added.

The aim of the survey, according to the IAAC, is to create more transparency within government

and detect any wrongdoing with public offices or by officials. If investigators uncover undeclared

funds, they will appeal to the heads of the organization to propose a change.

In 2012 the IAAC reviewed 238 declaration reports, of which 104 of those who reported had their

positions changed, 41 received warnings and 45 had their wages cut. Another four officials were

demoted and 12 were dismissed.

Source: News.mn

AUDITING AGENCY INVESTIGATES MINERAL RESOURCES SECTOR

The National Audit Authority completed its analysis of Mongolia's mineral resources sector.

The audit included examination of the Ministry of Mining, the Mineral Resources Authority, Customs

General Administration and General Department of Taxation. Auditors found ambiguous text in the

Minerals Law and regulations with the petroleum and mining sectors not being enforced. They also

concluded that the dust kicked up by trucks transporting minerals was exacerbating desertification.

The auditing body delivered specific requests to authorities on how to improve the situation.

Source: Udriin Sonin

SENIOR MPRP MEMBERS CALL FOR UNIFICATION WITH MPP

Senior members of the Mongolian People's Party (MPP) and Mongolian People's Revolutionary Party

(MPRP) began talks on uniting their parties once again under a single name.

Members of the two parties sent statements proposing such a move. The first message sent came

from senior members of the MPRP on Tuesday. MPP Chairman U. Enkhtuvshin, who personally

received the message along with Secretary General J. Sukhbaatar, said he supported such a motion.

The MPP's Committee for Reform sent a response while MP D. Zagdjav handed a copy of the letter

to MPRP Deputy Chairperson D. Terbishdagva. Terbishdagva has not yet made any statements

concerning the proposal.

Source: Udriin Sonin

PARLIAMENT DECIDES THE FATE OF CHINGGIS KHAN AIRPORT

Parliament determined the future use of Chinggis Khan International Airport as a transit airport.

The motion is part of larger policy regulation regarding aviation in Mongolia, which received 70

percent approval from Parliament. Taking over the international travel duties of the Chinggis

airport will be the new airport planned for Zuunmod, while the older one is used for travel between

China and Russia.

Parliament also opted not to privatize its aviation companies. The policy also calls for the

attainment of three new airplanes. Policy makers reasoned this would keep the company more

profitable for the near term until the assets were ready for private sale.

Source: Udriin Sonin

MONGOLIA FALLS ON GOVERNMENT TRANSPARENCY INDEX

Open Society Forum deemed Mongolia's transparency in its budget unsatisfactory, falling 16 places

to 38 out of 100 countries. Mongolia earned a total score of 51 points, falling nine points from the

last report when ranked 22nd.

The report is released once every two years to evaluate 8 major criteria on budget transparency in

government. This includes analysis on budget issues, citizens' budgets, and half-year interim

reports.

Source: Zuunii Medee

MONGOLIA'S SCORECARD

Global indices seem to have been gaining in popularity, or at least appearing more often in the

press in Mongolia. This seems to be a result of the country's desire to communicate some

characteristics of countries, cities, companies, universities, and brands on a common scale.

Below are the relevant indices, Mongolia's score, Mongolia's ranking and comments (if any) about

the methodology or other noteworthy information.

Transparency International: Corruption Perception Index.

2012 Rank 94 (of 174); 2011 Rank 120

2012 Score 36 (out of 100)

Note: It is still unclear on the methodology or explanation for the year-on-year jump for Mongolia.

World Bank: Ease of Doing Business

2013 Rank 76 (of 185) | 2012 Rank 88

Notes: Mongolia handicapped by land-locked geography

World Justice Project: Rule of Law Index

2012 Rank 38 to 93rd (of 97) on different sub-indicators

Bertelsmann Stiftung: Transformation Index

2012 Rank 39 (Democracy), 71 (Market Economy), 51 (Status) (of 128)

Forbes: Best Countries for Doing Business

2012 Rank 64 (of 141)

Heritage Foundation: Index of Economic Freedom

2013 Rank 75 (of 177) | 2012 Rank 81

2013 Score 61.7 | 2012 61.5

Freedom House: Freedom in the World

2013 Score ―Free‖ Civil Liberties 2, Political Rights 1 | 2012 Score ―Free‖ (2.0), Civil Liberties 2,

Political Rights 2

UNDP: Human Development Report

2011 Rank 110 (of 187)

2011 HDI 0.653

World Economic Forum: Global Competitiveness Index

2012-13 Rank 93 (of 144) | 2011-12 Rank 96

2012-13 Score 3.87 (1-7)

Fraser Institute: Economic Freedom in the World

2010 Rank 69 (of 144)

2010 Score 7.01 (of 10)

Reporters without Borders: Press Freedom Index

2013 Rank 98 (of 179) | 2011-12 Rank 100 (0f 179)

2013 Score 29.93 | 2011-12 Score 35.75

Maplecroft: Global Political Risk Atlas

2013 Rank 101 (of 197)

2013 Score medium

Source: Mongolia Today

MONGOLIA FEELS WEIGHT OF CORRUPTION

Mongolia's economy is booming, with growth trajectories showing it will be one of the world's

fastest growing economies again this year. It is consistently advancing in global rankings on

governance and investment climate. Thanks in part to the passage last year of the new Law on

Conflicts of Interest, Mongolia moved 26 spots from 120 to 94 in Transparency International's 2012

Corruption Perception Index, and up from 88 to 76 in the World Bank's Ease of Doing Business Index.

According to the report, over 17 percent of large businesses (with transactions of more than MNT

200 million) spent over 50 percent of their time overcoming non-productive obstacles, such as

obtaining or renewing licenses, facing temporary prohibitions and navigating an unstable regulatory

environment. The 11 percent of business able to overcome these obstacles have been able to

accomplish this by using 25 percent of their company resources.

Despite the government anti-corruption efforts such as the enactment of the Freedom of

Information Law (2011) and Conflict of Interest Law (2012), and presence of the Independent

Authority Against Corruption, an overwhelming number of respondents from the business community

(73 percent) reported they have little or almost no knowledge of government anti-corruption

efforts. Only 2 percent reported that these anti-corruption efforts are very effective. Eighteen

percent said they were somewhat effective.

Parliament has a key role in this fight. Last month, 12 parliamentarians from across all political

parties held a press conference to announce the reconvening of the Mongolian chapter of the Global

Organization of Parliamentarians against Corruption, a voluntary organization of parliamentarians

from around the world seeking to promote transparent and accountable governance. Last week,

four parliamentarians attended the GOPAC Conference in Manila where they were introduced to the

importance of strong leadership, creating a robust legal environment, and the critical role civil

society can play in the fight against corruption.

Source: Asia Foundation

ELBEGDORJ MAKES HISTORIC VISIT TO SOUTH SUDAN

President Ts. Elbegdorj was the first Asian leader to visit the infant nation of South Sudan since

gaining its independence in 2011.

Elbegdorj received a warm welcome from South Sudanese President Salva Kiir and the U.N. Special

Envoy to South Sudan Hilde F. Johnson upon his arrival at the Juba International Airport.

Government spokesperson Barnaba Marial said the president's visit was of great significance to

South Sudan.

―As you know the U.N. Mission in South Sudan (UNMISS) troops who are here in South Sudan, a large

number of them come from Mongolia. He will visit his troops in Bentiu, Unity State and Ruymbek in

Lake State,‖ said Marial in a statement to the press. ―He added, what is important is that the

president and the people of the Republic of South Sudan are happy to receive the president of

Mongolia. We warmly welcome him.‖

Hilde said that Mongolia has two contingents of U.N. peacekeepers who are deployed in South Sudan

carrying out a mission of ensuring peace in the country.

Source: Gurtong

SUDAN BOMBS SOUTH SUDAN AHEAD OF ELBEGDORJ'S VISIT

President Ts. Elbegdorj arrived in Juba on Friday despite plans to threaten his visit to the areas in

which Mongolian peacekeeping troops operate in South Sudan.

On Thursday at around 4 p.m., Sudan's armed forces bombed the Jau area, the northern part of the

state of Unity and where the majority of the Mongolian peacekeeping troops serving under the U.N.

Mission in South Sudan (UNMISS) are based. Briefing the press at the airport on last Friday,

government spokesperson Barnaba Marial Benjamin said the president was in the country to inspect

his troops serving under UMISS areas within the state of Rumbek Lakes and Bentiu of Unity.

Benjamin condemned the activities carried by the Khartoum government on their territories. He

also disclosed that Elbegdorj would be accompanied by South Sudan's deputy defense minister and a

team from the RSS presidency.

Source: Chimp Reports

DEFENSE DELEGATION VISITS MOSCOW

A military delegation from Mongolia led by Defense Minister D. Bat-Erdene arrived in Moscow for an

official visit last Sunday, the Russian Defense Ministry reported.

The delegation was scheduled for two talks with Russian Defense Minister, Army General Sergei

Shoigu. The two defense chiefs planned to discuss the state and prospects of military and

technology cooperation and consider a number of important issues of regional and international

security. The visit was scheduled to last until 21 February.

―The agenda also envisions a visit to the fifth separate motorized rifle brigade of the western

military district in the Moscow region.

Source: RIA Novosti

MONGOLIA PROPOSES CAMEL EXCHANGE WITH JAPAN

The Consul General of Mongolia to Osaka proposed bringing Mongolia camels to Japan's Tottori sand

dunes.

―Mongolian Bactrian camels are distinct from any other species. We wish to deliver dozens of

Mongolian camels that would also promote Mongolia,‖ said Consul General D. Batjargal.

Batjargal met with Takeuch Isao, governor of the Tottori prefecture, on 4 February where she

proposed the exchange. She suggested the camels could help promote tourism to the Tottori sand

dunes, one of the three largest sand dunes in Japan. If they city administration approved the

proposal, the camels could become a symbol for the dunes.

―In recent years we face difficulties to find camels and we are glad to hear the proposal from you,‖

said Isao.

Tottori-Sakyu, located in eastern Tottori, is the largest sand hills in Japan.

Volcanic ash from Mount Daisen settled on the sand of the Sendai-Gawa River, and the ocean winds

that blew from the rough Sea of Japan formed the dunes over a period of almost 100,000 years.

Source: Info Mongolia

OFFICIALS ARREST KOREAN TRAVELERS AT BORDER

Border officials arrested Koreans who allegedly were conducting illegal surveillance near the

Mongolian border.

The arrested individuals lacked permission to enter the area, as is required by Mongolian law for

both foreign and Mongolian citizens. However, authorities found the arrested individuals had

carried out no illegal activity and released them with a fine.

Source: News.mn

AID GROUP SENDS AID TO DUKHA TURKS

Turkish International Cooperation Agency (TIKA) sent aid packages to Dukhas, a small Turkic

community living in Mongolia.

According to a statement released from TIKA, the office of the Ulaanbaatar program coordinator,

organized relief aid reached Tsagaan Nuur after seven hours of journey. Heading to the city center

to get the relief aid, after taking their packages of winter materials, Dukhas returned to their

homes after loading their packages onto deer.

Source: World Bulletin

POLICE WEBSITE HACKED

The General Police Department confirmed reports that its website was hacked on 15 February.

Police spokesperson T. Jargalsaikhan said security had been temporally halted while a new system

was being implemented for the website. He said that the hacker would have had access to notices,

warnings, advisories and announcements but not any classified documents.

―The website did not contain any private or company information, so there is no risk of private data

leaks,‖ Jargalsaikhan said.

He added that a notice of the hacking was submitted to the engineers and they are currently on the

case. If caught, the hackers would be fined 100 to 250 times minimum wage or sentenced between

three to six months in jail. If the crime was found to be more serious, the hackers could even face

between two and five years of jail time.

Source: News.mn

TYRANNOSAURUS TO COME HOME TO MONGOLIA

A nearly complete 70-million-year old Tyrannosaurus baatar skeleton will be returned to Mongolia

following the high-profile prosecution of a Florida paleontologist by federal authorities in New York,

U.S. authorities said 13 February.

A New York federal judge ordered the skeleton and other fossils forfeited to the U.S. government

this week after the paleontologist pleaded guilty in December to fraud and conspiracy. Ellen Davis,

a spokeswoman for Manhattan U.S. Attorney Preet Bharara, said his office would return the eight-

foot-tall, 24-foot-long, mostly reconstructed Tyrannosaurus.

U.S. Authorities filed charges against Prokopi and seized the skeleton, which is fossilized bones

welded to a metal frame. In announcing this seizure, Bharara called Prokopi a ―one-man black

market in prehistoric fossils.‖ Authorities accused Prokopi of having lied on U.S. Customs forms

when he declared the fossilized bones were worth USD 19,000.

In December, Prokopi pleaded guilty to conspiracy, entry of goods by means of false statements,

and the interstate and foreign transportation of goods taken by fraud. He faces at least 10 years in

prison if convicted on the fraud charges when he is sentenced in April.

Source: Reuters

PUTIN THREATENS RUSSIA'S CULTURE OF CORRUPTION

Russian President Vladimir Putin submitted a bill to the State Duma on 12 February banning Russian

officials from having foreign bank accounts. This action gives power to the belief that Putin is

serious about his first real anti-corruption campaign with his own government, similar to Elbegdorj's

attack on corruption in Mongolia.

Transparency International ranked Russia the most corrupt major economic and industrial power on

its Corruption Perceptions Index, landing it among the likes of Honduras, Iran and Guyana. In

Russia, corrupt practices are not new, but rather have become part of the country's tradition and

culture.

Putin's proposal would prevent government officials and their spouses or children from having

foreign bank accounts, which are commonly used to hide embezzled funds. A recent flurry of

government and independent reports estimate 5 to 30 percent of funds are lost to corrupt practices

in the Russian government, a staggering cost for an administration with annual revenue of

approximately USD 750 billion.

Never before has a senior ranking official been under investigation for corrupting practices. Former

defense minister Anatoli Serdyukov was forced to resign in November over a multi-million-dollar

scandal, and he and his family are now under a series of investigations. Also the son-in-law of a

former premier and former chairman of the Federal Financing Monitoring Service, Serdyukov's

example has shown that no one is protected from this new government crackdown. The

administration has hinted that this is the first move in a larger trend being pushed by Putin.

There are many factors driving Putin into action, including the consequences if another dire

financial situation were to arise and Putin's preparation for another government reshuffle,

something he does every few years. Putin must feel that he is in a strong enough position to

actually go after his own loyalists. But ignoring government corruption has long been a way for

Putin to maintain such loyalty.

Source: Business News Europe

U.S., CHINA TIES TESTED IN CYBERSPACE

While Mongolia's General Police Department handles damage control following a hacker's attack on

their website, ties between China and the United States are being strained by cyber battles.

U.S. military and homeland security officials quietly have long-blamed the Chinese military for the

most egregious assaults on U.S. computer networks. Continued hacking and data theft, however,

are being met by an increasing willingness by Washington to publicly point the finger at Beijing.

―There is no doubt that cyber tensions are growing, and they are keeping pace with growing

tensions in the near seas of China,‖ said Patrick Cronin, a senior adviser at the Center for a New

American Security, a think tank generally supportive of the Obama administration. ―In many ways

there is a connection between China asserting itself in the maritime domain... and now in the cyber

realm as well.‖

The Obama administration reacted swiftly to a report Tuesday by Mandiant, an Internet security

firm, citing evidence that a unit of China's People's Liberation Army (CPLA) was responsible for

computing espionage around the world, including cyber attacks on American corporations and

government agencies.

China disputed Mandiant's allegations and countered with its own statement that the United States

is the top source of attacks against Chinese targets.

With a growing body of evidence of Chinese involvement in cybertheft exerting pressure on U.S.

relations with China, officials cited one reasons for hope: that mounting evidence might force

Beijing to engage in a more open and forthright dialogue about its activities; a position echoed by

outside defense experts.

Some experts say China's leadership change last year, when Xi Jinping succeeded Hu Jintao as

president, may present an opportunity for a more frank exchange of views. But Harold Brown, a

former U.S. secretary of defense, said the Chinese military sees advantages in secrecy, a view that

has consistently derailed attempts to improve defense ties.

Source: Wall Street Journal

ANNOUNCEMENTS

ECONOMIC IMPACT ASSESSMENT - DRAFT MINERALS LAW, MARCH 18, UB

Dr. Brian Fisher, Managing Director, BAEconomics Pty. Ltd. will present his ―Economic Impact

Assessment – Draft Minerals Law‖ from 9:30 a.m. to 12 p.m. at the Kempinski Hotel Khan Palace,

2nd floor, Altai Ballroom.

Dr. Fisher is one of Australia's most respected advisors on climate change, emissions trading, and

the economic impact of current future climate and energy policy. He previously held the position of

Executive Director of the Australian Bureau and Resource Economics (ABARE).

BCM is the organizer of the event. The meeting is free. Please RSVP with an email to

saruul@BCMongolia.org for information and to register. Seats will be given to the first 100

respondents.

___________________________________________

FDI – CHALLENGES, RISKS AND SOLUTIONS CONFERENCE, APRIL 19, UB

A conference entitled ―FDI-Challenges, Risks and Solutions‖ will be held on 19 April at the

Kempinski Hotel Khan Palace, 2nd Floor, Altai Ballroom.

Speakers will include:

S. Bold, Chief Economist, Central Bank

Dr. B. Amarsana, Academic Secretary, National Legal Institute

I. Ser-Od, Vice Director, Business Council of Mongolia

D. Gan-ochir, Advisor to President, Central Bank‘s Stability Council

BCM is co-organizing with UB Risk Management Consulting. The event is free. For information or to

register email saruul@BCMongolia.org.

___________________________________________

MINER & SUPPLIER CONFERENCE, 14-15 MARCH, ULAANBAATAR

The third annual Miner & Supplier Conference will be held at Chinggis Khan hotel on 14-15 March.

BCM members will receive a 10 percent discount for registration.

This year the forum will be organized under the slogan ―Maximizing Mining Capabilities with

Effective Procurement Strategies.‖ It several goals include improving contributions to society and

the national economy, promoting environmentally friendly products and technology and increasing

business coherence between suppliers and mining businessmen.

Contact Saruul at saruul@bcmongolia.org or at 317027 for a special discount code. For more

information visit minerandsupplier.com.

___________________________________________

MINES AND MONEY HONG KONG, 19-22 MARCH

Mines and Money Hong Kong is where mining companies from around the world come to raise capital

in Asia and meet with investors from Hong Kong and mainland China.

Cementing its position as a major fixture on the global mining investment circuit, Mines and Money

Hong Kong 2013 will bring together over 3,500 institutional investors, mining entrepreneurs, brokers

and investment analysts for five days of high-value networking, investment analysis and deal-

making, from 18-22 March.

Click here to read delegate feedback on the 2012 event and learn why the industry views Mines and

Money Hong Kong as a ―must-attend‖ event.

The exhibition floorplan for Mines and Money Hong Kong 2013 is already filling up fast – click here to

see the list of mining companies already signed up to showcase their projects and investment

opportunities at the event.

Bringing together more investors and investment opportunities than ever before, Mines and Money

Hong Kong 2013 is an event you will benefit from attending.

What‟s new in 2013?

Enhanced pre-event networking to facilitate meeting arrangement

More in-show meeting rooms to facilitate one-2-one meetings onsite – (sold out in 2012)

Extended exhibition to provide space for 320+ mining companies to showcase their projects and

growth prospects – (sold out in 2012)

Larger venue for the black tie Mines and Money Hong Kong 2013 Asia Mining Awards Gala Dinner –

(sold out in 2012)

Dedicated investor invitation team to ensure maximum investor attendance

Mines and Money Hong Kong will also provide…

A high-level conference covering the most relevant topics for your business

Leading international speakers from across the mining and investment sectors

Project spotlight presentations showcasing a wide array of mining investment opportunities

Superb networking opportunities with decision-makers at the highest level

A bustling exhibition offering business opportunities at every turn

The largest gathering of investors focused on the mining sector in the Asia-Pacific region

As usual, BCM is supporting this event and members will get 15% discount for registration.

___________________________________________

MONGOLIA INVESTMENT SUMMIT 2013, 16-18 APRIL, LONDON

Business Council of Mongolia members are invited to attend the Mongolia Investment Summit

London 2013 and receive a 15 percent discount on their registration fee.

With significant amounts of investment in Mongolia traditionally coming from Asia there are new

opportunities to be explored in the Western Hemisphere. Investor interest is high from the west and

fund managers, private investors and financiers want to gain exposure to Mongolian growth.

Mongolia Investment Summit London in April will provide an important opportunity to meet these

investors, raise the profile of Mongolia and promote your business.

The event provides an excellent opportunity to meet with major investors, mining groups,

government officials and real estate specialists to identify new business partners. At the event, the

views on the country will be discussed by investors from companies such as Barclays Natural

Resource Investments, HSBC Global Asset Management, Collabrium Capital and more. The event

provides an opportunity not to be missed.

Enter the discount code “Business-Council-Mongolia-Special” when you register to receive the

early bird discount plus an additional 15percent off.

___________________________________________

3RD RISK MANAGEMENT FORUM, 1 MAY, ULAANBAATAR

The 3rd Risk Management Forum of Mongolia will be held on 1 May 2013 in Ulaanbaatar at the Blue

Sky Tower.

This is the largest risk management event in Mongolia, co-organized by the Business Council of

Mongolia (BCM) and Mandal General Insurance. The Risk Management Forum will provide the most

comprehensive overview of risks that Mongolia faces today and the status of risk management all

under one roof. Risk management techniques and tools will be shared and best practices promoted

across industries.

Last year, the event had attracted over 250 representatives of Mongolia's top corporations and

government agencies and resulted in the launch of a new Risk Institute of Mongolia under the initial

umbrella of the BCM. This year, the expert speakers will be address topics concerning Macro Risks,

Business Risks, and Community Risks.

For more information, visit RiskForum.mn.

___________________________________________

“MM TODAY” on MNB-TV, Friday‟s at 19:05

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 15 minutes and is

scheduled from 19:05 to 19:20 tonight. Tune in to watch this program that reports stories from

today‘s BCM NewsWire.

___________________________________________

BCM‟S MINING SUPPLY CHAIN DATABASE

The new version of BCM‘s Mining Supply Chain Database is in use. Following the initiative of Oyu

Tolgoi LLC, the BCM has maintained the Mining Supply Chain Database since March 2009. It is an

honor to introduce you to the new version of the database which is totally upgraded as to its

content and use of information technology opportunities.

As of December 31, suppliers registered on the database totaled 1,405. During 2012, 251 new

supplier entities joined the Database and 236 prior supplier registrants updated their company

profiles. In addition, 22 buyers were also registered and 82 tender announcements were posted.

We are inviting all Mongolian mining suppliers and buyer companies to join the Mining Supply Chain

Database. Please visit here for registration—FREE!

If you have any questions regarding the database, please contact Undral at undral@bcmongolia.org

or 317027.

BCM WEBSITES

MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS

The ‗Presentations‘ section on BCM‘s Mongolian website can be reached via bcm.mn/itgeluud.

As a key component of BCM‘s Mongolian website, articles from the ‗News‘ section and the

government website Open-Government.mn are regularly updated.

___________________________________________

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

„PHOTO GALLERY‟

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

Note the presentation by Bold Baatar, CEO of Altan Dornod Mongol, ―Mongolian Mining Investment

Environment‖ at the Mining Industry Open Discussion on February 1, 2013, at Kempinski Khan Palace

Hotel.

The following 3 presentations were added from the BCM 28 January monthly meeting:

• Dr. Katsuhide Nagayama, JICA Team Leader, JICA Project Team – ―The UB-Metro toward a world

competitive city - Ulaanbaatar‖

• Chris Adsett, Chief Executive Officer, Techenomics Mongolia – ―Importance of Oil Analysis to

Industry‖

• Mandar Jayawant, Managing Director, Mongolian Opportunities Fund – ―The Value of Private Equity

for Mongolian Companies‖

• Please also note 25 presentations from the Mongolian Investment Summit 2012 on 30-31 October

in Hong Kong; recent postings from BCM‘s 11 December, 5 November and 24 September monthly

meetings; and 9 presentations from Discover Mongolia 2012.

The ―Mongolia Reports‖ section includes the ―Official statement of Oyu Tolgoi LLC in relation to

information, data and facts related to Oyu Tolgoi discussed during open session of the State Great

Khural, dated 1 February, 2013‖; ―2013 Mongolia Investment Climate Statement‖ by the Economic

and Commercial Section of the U.S. Embassy; ―Mongolia Foreign Labor Force Ratio for 2013‖ by

Hogan Lovells International LLP; ―How Mongolia will perform in 2013?‖ by Mandal Asset

Management; ―Mongolia Business Owner and CFO Survey result‖ by BDSec JSC; ―The fiscal regime

for mining - a way forward‖ by IMF Fiscal Affairs Department; ―Mongolia-a supplement to Mining

Journal‖ from Mining Journal October, 2012; ―Macro Overview‖ September, 2012 by EPCRC; ―Taxes

for Expatriates in Mongolia‖ by PricewaterhouseCoopers.

BCM's English website includes the ―Mongolia Business News‖ section where the Open Letter to

Parliament and Government is available for download.

BCM continuously posts news stories and analysis of relevance to Mongolia at ‗Mongolian Business

News‖ before they are all put together each week for Friday's weekly NewsWire.

The ―Photo Gallery‖ contains photos from the 5th Anniversary BCM Gala dinner on November 5.

The BCM NewsWire will continue to be issued each Friday, incorporating items already on the home

page for a consolidated account of the week‘s events.

___________________________________________

SOCIAL NETWORK WITH BCM

The Business Council of Mongolia (BCM) has expanded its reach to your favorite social networks.

Keep up to date on the latest business deals in Mongolia and how the climate for investment is

improving each day with BCM.

Connect with BCM on Linked-in to join the diverse group of professional contacts creating a better

business environment in Mongolia today.

Add BCM on Facebook at http://www.facebook.com/pages/THE-BUSINESS-COUNCIL-OF-

MONGOLIA/129826330435540 to read the latest announcements and comment on events carried in

the NewsWire with the community.

Hear breaking news and announcements as they happen when you follow BCM on Twitter at

http://twitter.com/#!/bcMongolia.

We have now 946 fans on our Facebook fans page, 1,114 connections on LinkedIn network, and 608

followers on Twitter.

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

organization, visit the official BCM website at www.bcmongolia.org and www.bcm.mn.

BCM WORKING GROUP NEWS

Business Council of Mongolia (BCM) has been moving forward with its ‗BCM in the University‘s

Classrooms 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.

Most recently Amanda Fine, Director, Wildlife Conservation Society (WCS) and Odonchimeg

Nyamtseren MSc., WCS Wildlife Trade and Protected Areas Specialist, gave a presentation titled

―Management and Sustainable Development of Nature Resource-Extractive Industries as a Partner of

Protected Areas‖ to an audience of more than 90 students and teachers and Sodnomdagva Ch,

Associate Professor at Geoecology and Environmental Science Department, National University of

Mongolia, at 20thof February 2013.

Their presentation was very fruitful for the students. Students were much interested about Business

and Biodiversity offset programmer. Lastly Odonchimeg finished by noting WCS‘s door is always

open to your school. If you have any interest relative to environment and wildlife issues, please

come to visit our office.

Next: BCM in the Classroom series will be held on 22nd of February at Institute of Finance &

Economics. Randolph Koppa, President, Trade and Development Bank has been invited to speak.

Presentation title: ―Banking Overview, Chinges Bond‖

ECONOMIC INDICATORS

INFLATION

Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]

Year 2007 *15.1% [source: NSOM]

Year 2008 *22.1% [source: NSOM]

Year 2009 *4.2% [source: NSOM]

Year 2010 *13.0% [source: NSOM]

Year 2011 *10.2% [source: NSOM]

Year 2012 *14.0% [source: NSOM]

January 31, 2013 *13.0% [source: NSOM]

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

Note: 12.7% y-o-y, Ulaanbaatar city, January 31, 2013

CENTRAL BANK POLICY LOAN RATE

December 31, 2008 9.75% [source: IMF]

March 11, 2009 14.00% [source: IMF]

May 12, 2009 12.75% [source: IMF]

June 12, 2009 11.50% [source: IMF]

September 30, 2009 10.00% [source: IMF]

May 12, 2010 11.00% [source: IMF]

April 28, 2011 11.50% [source: IMF]

August 25, 2011 11.75% [source: IMF]

October 25, 2011 12.25% [source: IMF]

March 19, 2012 12.75% [source: Mongol Bank]

April 18, 2012 13.25% [source: Mongol Bank]

January 25, 2013 12.50% [source: Mongol Bank]

CURRENCY RATES – February 21, 2013

Currency Name Currency Rate

US dollar USD 1,392.38

Euro EUR 1,846.50

Japanese yen JPY 14.92

British pound GBP 2,115.72

Hong Kong dollar HKD 179.63

Chinese Yuan CNY 223.16

Russian Ruble RUB 46.04

South Korean won KRW 1.29

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.