BUSINESS COUNCIL of MONGOLIA NewsWire

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Issue 116, April 30, 2010

NEWS HIGHLIGHTS:

Business:

MCS and Erdenet lead 100 top national enterprises in 2009;

Mongolian members to join OT board not yet named;

Khan Bank named best bank once again;

Centerra’s revenue soars in Q1;

Ernst & Young denies all charges made in newspaper article;

Khan Resources shareholder requisitions special meeting;

Local experts’ views will help decide choice of TT investor, says Minister;

Mongolian companies unite to work at Tavan Tolgoi;

SouthGobi sands expects paved road to be ready by August;

AIESEC Mongolia growing fast;

Ivanhoe Mines amends shareholders’ rights plan;

Busy time in Washington, D.C. for business mission;

“Discover Mongolia” in early September;

POSCO plans coke production, coal gasification in Mongolia;

Mongolia approves Meritus’s acquisition of gold property from Troy Resources;

Several injured in clashes as “Ninjas” raid Chinese mine.

Economy:

President freezes new mining permits until new law is passed;

Graduated royalty rates to replace windfall profits tax;

Salaries, pensions for teachers and doctors to go up 30 percent from October 1;

Wages must be related to productivity;

MNMA chief wants professional involvement in framing mining laws;

Ministry official favors comprehensive law, even at the cost of some delay;

Animals for some herders, training for others;

The main gain from OT and TT will be jobs, feels Mrs. Oyun;

ADB funds for urban services project in mining areas;

Three southern provinces seek investment;

Mayor warns road builders of blacklisting;

More border posts to be open 24 hours a day;

China plans to build power transmission line from Mongolia;

Russian bond success fuels spending fears;

Chile to raise mining royalty to help fund reconstruction;

World Bank gets more capital, China more voting power;

More World Bank lending will not cure all ills;

Dramatic increase in China’s coal import;

Australia’s minerals sector unsustainable in long term, says report.

Politics:

Elbegdorj in China;

Protesters reach agreement with MPs’ group, call off hunger strike;

Deputy Speaker feels political system is stalling economic growth;

Diplomat stabbed in broad daylight;

Minister unveils grand projects;

Energy regulatory body to be reconstituted;

South Korea to help build waste recycling plant;

Tax official’s complaints of corruption found baseless;

Draft wants doctors, not police, to take care of the drunk;

French ambassador happy with state of bilateral relations;

City engineer jailed for taking bribe;

Shanghai Expo begins on Saturday.

*Click on titles above to link to articles.

BCM MONTHLY MEETING RECAP

The monthly meeting on April 26, attended by 89 members, began with Chairman Laurenz Melchers mentioning several things that have happened since the last meeting such as the visit by former Ambassador Michael Ussery, who has extensive experience in higher education, exploring whether Mongolia is ready for an American University of Mongolia. Executive Director Jim Dwyer said membership now stood at 138, the most recent 5 of whom are Marubeni, Talk Talk English, Mitsubishi, Hunnu Coal, and State Bank of Mongolia. He also reported on the work of the seven working groups, one of which has been renamed the Education Group, involving over 90 volunteers.

The presentation by the visiting Business and Biodiversity Offsets Program (BBOP) team was in two parts. Ms. Kerry ten Kate said their work depends on collaboration between the public and private sectors. Even well-intentioned and extensive restoration after industrial activity, especially mining, leaves ―a significant residual impact‖ on biodiversity. The BBOP believes adherence to a ―mitigation hierarchy‖ can help turn this usually negative net impact into a positive one.

Mr. Ray Victurine said proper restoration, as practiced by Rio Tinto, among others, has shown that developing biodiversity offsets goes beyond legal imperatives. Adoption of best practice principles helps companies reduce operational and project development risks, at the same time forging good relationships with regulators and stakeholders, which can contribute to securing permits and broader social license to operate. The team hopes to persuade the Government of Mongolia to become a partner, and companies to set up pilot projects, as has been successfully done in several other countries.

Mr. D. Damba, President of the Mongolian National Mining Association (MNMA), then provided an update on the mining sector. MNMA is not against regulations and laws as such, but want these to be reasonable and prudent, shorn of negative impacts and helping in ―profitable and efficient mining‖. MNMA has taken up with the Prime Minister and other authorities various issues that it considers ―impractical‖, and has protested against Government action in certain cases, as in that of Khan Resources. The Prime Minister has accepted in principle the MNMA stand that the General Tax Authority should not be involved in either developing the methodology of calculating taxes or in the actual determination of tax liabilities. Instead, its role should be restricted to collecting taxes. Mr. Ben Turnbull, CEO, State Bank of Mongolia, said this new bank, wholly owned by the Government, is ranked 6th in terms of size among the 15 commercial banks in the country. The EBRD and the World Bank have arranged to put in place an ex-pat management team. He made it clear that the new bank is ―a bridge bank‖, and will be under State ownership only temporarily before being privatized in around three years‘ time. In that period it will provide safe and stable banking services to help tide over stressful times for the banking sector.

Mr. Martin Quick, CEO of beleaguered Khan Resources, made a statement when members in the audience were asked to briefly comment on their businesses. He referred to the ―abrupt, unilateral, and highly illegal‖ invalidation of the company‘s two licenses on the Dornod uranium fields, and said the company‘s Board of Directors was determined to get justice for its shareholders, in Mongolian or international courts, against the expropriation. He sought the full support of the private sector, while acknowledging that companies have their own interests to

pursue.

BUSINESS MCS AND ERDENET LEAD 100 TOP NATIONAL ENTERPRISES IN 2009 Erdenet Mining Corporation and MCS Group are on top of this year‘s list of the best 100 enterprises in Mongolia. The present list for 2009 is the 9th annual one the Government and the Mongolian Chamber of Commerce and Industry have prepared, grading enterprises on the basis of their contribution to national economic and social development. Among the criteria used in the evaluation are the amount of taxes paid and of investment made, and the nature of the programs showing a sense of social responsibility, the amount spent on them, and the results achieved. MCS Group has headed the list for the fourth consecutive year. It paid MNT13.5 billion in taxes and fees in 2004, MNT23.1 billion in 2005, MNT32.5 billion in 2006, MNT47.8 billion in 2007, MNT67.2 billion in 2008, and MNT66.6 billion in 2009, making up a total of MNT250.7 billion in the last 6 years. The group created 2,690 new jobs in the last three years -- 616 of them in 2007, 442 in 2008, and 1,632 in 2009.

Source: Undesnii Shuudan

MONGOLIAN MEMBERS TO JOIN OT BOARD NOT YET NAMED The three Mongolian members to sit on the Executive Board of Oyu Tolgoi LLC are yet to be named. The State Property Committee‘s recent meeting on the issue was postponed without giving any clear reason. The board will have nine members, three each from Mongolia, Rio Tinto and Ivanhoe Mines. There is considerable speculation over the choice. Deputy Finance Minister T.Ochirkhuu has said the selection has already been made and the announcement is just a formality. Among those reported to be lobbying to be chosen are former Ambassador to Canada and China Ch.Batsukh, and former President N.Bagabandi. It may also be that the MPRP and the DP will nominate one member each, while the third could be a Government official, or from Erdenes MGL or a civil society organization. Source: Zuunii Medee, Ardin Erkh

KHAN BANK NAMED BEST BANK ONCE AGAIN Khan Bank has been named the best commercial bank in the country in 2009. This is the sixth time the bank has featured among the best 5 banks annually chosen jointly by the Government and the National Chamber of Commerce and Industry, after assessing their contribution to the national economy. Also considered were the banks‘ financial performance and the products and services they offered. Khan Bank‘s liquidity ratio increased from 21.8% in 2008 to 42.5% in 2009 while equity adequacy rose from 12.7% in 2008 to 19.3% in 2009, much higher than the 12% considered prudent by the Central Bank. Khan Bank‘s total deposits increased by 28% over 2008 and it became the first Mongolian bank to have MNT1 trillion in total assets. Khan Bank was also honored for ―Excellence in Corporate Social Responsibility‖, an award it has won earlier, too. It spent over MNT768 million on programs of education, arts and culture, and rural and economic development in 2009.

Source: Montsame

CENTERRA‟S REVENUE SOARS IN Q1 Centerra Gold reported a quarterly profit on Wednesday versus a year-earlier loss, helped by higher production and gold prices, and affirmed its production outlook for the year. The Canadian gold miner said it had net earnings of USD122.1 million in the first quarter, compared with a net loss of USD20.3 million a year earlier. Revenue soared to USD255.5 million from USD98.4 million a year earlier, reflecting a 114 percent increase in ounces sold and a 22 percent increase in price. Gold production at Kumtor in Kyrgyzstan was significantly higher in the quarter, which more than offset lower production at Centerra's smaller Boroo mine in Mongolia. The company said it still expects to produce between 640,000 and 700,000 ounces of gold this year at cash costs of USD460 to USD505 per ounce. Source: Reuters.com

ERNST & YOUNG DENIES ALL CHARGES MADE IN NEWSPAPER ARTICLE Ernst & Young Mongolia Audit LLC has said certain statements made about it in the daily newspaper Onoodor are incorrect and neither the journalist nor the editorial staff had verified them before

they were published. An unsigned article in the newspaper on April 13 had charged the firm with concealing over USD500 million of revenue, with working in Mongolia without a proper license, and with not paying USD50 million in taxes. Asserting that ―not one of these statements is correct‖, the company says it has ―always conducted its audit activities in Mongolia pursuant to a permit issued by the Ministry of Finance‖. The publication of the article was ―irresponsible‖ and the company was forced to issue its statement following ―the failure of the publisher and management to retract their errors‖. The company was ―proud that our firm is expanding our activities to match the positive development of the Mongolian economy and will continue to build on the excellent relationship that it has established with its clients, the business community, relevant regulatory bodies and authorities here over the years‖. Source: Ernst & Young Mongolia Audit LLC

KHAN RESOURCES SHAREHOLDER REQUISITIONS SPECIAL MEETING Laramide Resources, which owns about 13.2% of Khan Resources, has requisitioned a special meeting of the uranium junior's board to introduce new directors to the firm's existing board ―to facilitate the best shareholder outcome if the existing takeover offer fails to materialize‖. Laramide said it has requested this meeting in consultation with other large institutional shareholders, to respond to recent developments in Mongolia including the extension of the CNNC Overseas Uranium Holding Ltd takeover offer. Khan agreed earlier this year to be acquired by CNNC, as part of its defense against a hostile takeover offer from Russia's Atmoredmetzoloto. Earlier this month, Khan said that it received notification from the Mongolian Nuclear Energy Agency that mining and exploration licenses for the company's flagship uranium project in the country had been invalidated. Khan is challenging the decision in court, and has said that it does not expect the developments to affect the takeover by CNNC, but shareholders are obviously concerned. Laramide said that it had not entered into a lock-up agreement with CNNC, but agreed with Khan's board recommendation to accept the CNNC offer, which has been extended to expire on May 25.

Source: www.miningweekly.com

LOCAL EXPERTS‟ VIEWS WILL HELP DECIDE CHOICE OF TT INVESTOR, SAYS MINISTER Minerals and Energy Minister D. Zorigt has said the Government will present its concept document on Tavan Tolgoi to Parliament for discussion as soon as it is approved by the National Security Council. Asked about the criteria for choosing the investor(s), he said there would be several. Since the Government will retain 100% ownership of the deposit, the investor(s) will be offered an operating and marketing contract but will be expected to meet all investment expenses. He also indicated that the opinion of national scientists will also be taken into account before a final choice is made.

Source: Udriin Sonin

MONGOLIAN COMPANIES UNITE TO WORK AT TAVAN TOLGOI Some 700 Mongolian companies have come together to stake their claim to work in Tavan Tolgoi in the face of the Government‘s perceived lack of support to domestic enterprises. Every member of ―Mongol 999+‖ must pay MNT 1 million. The leadership is tentative about their course of action, but has indicated that the total money collected will be used as capital for a company where all members will have shares. However, they do not use the word ―consortium‖ for their union.

Source: Ardin Erkh

SOUTHGOBI SANDS EXPECTS PAVED ROAD TO BE READY BY AUGUST SouthGobi sands expects the 18-meter wide paved road it is building to facilitate transportation of coal from Ovoot Tolgoi and Tsagaan Tolgoi mines will be ready for use by August. Risks of accidents will then be less. The company is at present focusing on extraction though it has 18 exploration licenses in Umnugobi province. Asked by media when the company will begin work on a coal refinery, its Public Relations Manager, Mr.D.Bat-Erdene, said things move at a somewhat leisurely pace in Mongolia where permission has to be taken from many ministries, agencies and government organizations. The company is buying electricity from China at twice the domestic cost because there is no choice. It has proposed setting up a power plant, but the Ministry is yet to respond. Source: Ardin Erkh

AIESEC MONGOLIA GROWING FAST Less than one year since formally joining the international student organization, AIESEC Mongolia has been named the fastest growing branch in the entire 107-member network in the first quarter of 2010 when it realized 15 international internships. AIESEC Mongolia has already moved to 66th out of 107 countries. Currently there are also 35 Mongolian members involved in different projects and events Focused on providing a platform for youth leadership development, AIESEC offers students the opportunity to be global citizens and to get experience and skills that matter today. Each year, it provides over 7,500 students the challenging opportunity to live and work in a foreign country in areas of management, technology, education, and development. The key achievements of AIESEC Mongolia in the first quarter were:

15 realized international internships,

23 new Mongolian members,

3 international members selected for the period July 2010 to June 2011,

4 Mongolian members attended a national conference in China, and

Global Village 2010 organized together with the students‗ union at the Mongolian University of Science and Technology.

Source: AIESEC Mongolia

IVANHOE MINES AMENDS SHAREHOLDERS‟ RIGHTS PLAN Ivanhoe Mines Ltd. has amended the shareholders‘ rights plan previously adopted on April 5. The amendments can be summarized as follows:

the definition of ―Acquiring Person‖ has been revised to enable a person who becomes the beneficial owner of 20% or more of the common shares through a combination of listed provisions to acquire an additional 1% of Ivanhoe‘s shares without triggering the plan;

the definition of ―Beneficial Ownership‖ has been revised to delete the reference to ownership by way of ―Derivative Contracts‖;

the definition of ―Exempt Acquisition‖ has been revised to cap the exemption for issuances under incentive plans and to modify the provision related to permitted treasury issuances; and

the shareholder approval provision has been revised to clarify that separate shareholder approvals of the plan will exclude both ―Acquiring Persons‖ and ―Grandfathered Persons‖.

The amended plan currently is in effect, subject to confirmation through a vote of shareholders at Ivanhoe Mines‘ annual general and special meeting to be held on May 7.

Source: www.ivanhoemines.com

BUSY TIME IN WASHINGTON, D.C. FOR BUSINESS MISSION The Mongolian business mission to the International Franchising Exhibition in Washington, D.C. from April 9-11 had a busy schedule. The group had several special meetings and a luncheon where the guests included NAMBC President Steve Saunders; Mr. Eugene Theroux, Senior Partner at Baker & McKenzie; Mr. Zheng Gong Cross, Chief of Mongolian Affairs at the U.S. Department of Commerce; Mr. Daniel Keenaghan, International Trade Specialist at the U.S. Department of Commerce and one of the Government's leading experts on international franchising; Ms. Lauren Schumer, Advisor on Public Policy in Rio Tinto's Washington, DC office; Mr. Mark Wells, General of the Exhibition, and Mr. Kh.Bekhbat, Mongolian Ambassador to the USA. The group included representatives of the mining, heavy machinery, freight forwarding, geodesy, pharmacy, warehousing, construction and restaurant businesses. The visit was hosted by BCM and the Commercial Section of the U.S. Embassy Mongolia. Source: BCM NewsWire

“DISCOVER MONGOLIA” IN EARLY SEPTEMBER This year‘s ―Discover Mongolia‖, the important and popular annual international investors‘ forum, will be held on September 8 to 10, according to the Mongolian National Mining Association. The association has also announced that it, along with the World Bank, Oyu Tolgoi LLC, and GTZ, will help the Mongolian National University organize a meeting on May 15 to discuss how good governance can keep the resource curse at bay.

Source: The Mongolian National Mining Association

POSCO PLANS COKE PRODUCTION, COAL GASIFICATION IN MONGOLIA POSCO, South Korea's leading steelmaker, will develop coke production and gasify coal in Mongolia. It has said it has signed a preliminary agreement with the Mongolian Government for coke production and coal gasification and help develop its steel industry. The company said CEO Chung Joon-yang visited Mongolia earlier this week to discuss the project. Source: TradingMarkets.com

MONGOLIA APPROVES MERITUS‟S ACQUISITION OF GOLD PROPERTY FROM TROY RESOURCES Meritus Minerals has announced that the Mongolian Government has approved its acquisition of Troy Resources Ltd's subsidiary in Mongolia. As required by law, the Mongolian Government has approved the purchase of Troy's shares in Troy Mongolian Alt Resources LLC (TMAR) by Meritus and also the name change of TMAR to Meritus MGL LLC. It has also ratified the appointment of new directors representing Meritus. All approvals to the transaction required by Mongolian law having been received, Meritus can now commence exploration on the Gutain Davaa high grade gold project in northern Mongolia through Meritus MGL LLC. The subsidiary holds an 80% interest in the Gutain Davaa project and has agreed to purchase the remaining 20% of the shares held by a Mongolian company. Registration of this share transaction is under way.

Source: Meritus Minerals Ltd.

SEVERAL INJURED IN CLASHES AS “NINJAS” RAID CHINESE MINE More than 10 people were injured, some severely, when a group of artisanal miners or ―ninjas‖ attacked a fluoride mine run by Ejunmen, a Chinese company, in Khar-Airag district of Dornogovi province, a little before midnight on April 23. The company‘s own security people were outnumbered by the 30 or so attackers, and they called the police for help. By the time policemen arrived to bring the situation under control, the violence had spread. The police arrested several people for instigating the ―ninjas‖. After a short-lived lull the excitement returned when one man was killed when he flung himself before a car to stop its Chinese occupant from leaving the scene. The company has over 30 employees and has been in business for three years.

Source: Undesnii Shuudan

ECONOMY PRESIDENT FREEZES NEW MINING PERMITS UNTIL NEW IS PASSED President Ts. Elbegdorj has ordered a halt to the issuance and transfer of mineral exploration licenses, as also revalidation of revoked licenses, until the Government can enact a stricter law on mining investment. The directive, posted on his website, may rekindle some of the uncertainty that for years surrounded mining investment in the country. The order came into force at 5 pm on April 20. The President had called the heads of Standing Committees and the Director of the Mineral Department to a meeting earlier on the day to explain his decision, calling it ―an extreme step taken after careful consideration‖. He said he had found during his visits to the provinces that there was widespread anger over how petty violations had taken on criminal proportions. Mineral resources are connected to national security, but holders of almost half of the exploration licenses do not provide the mandatory annual information about their work. Licenses are used less for exploration than as money-making tools. The freeze on new mining permits will remain in place until a new law on mineral licenses is adopted by the Government, according to the directive. It was not immediately clear how long it would take to pass a new law, but the directive calls on the Government to hold public discussions on the matter in June. "I order the Government to regularly report to me on the status of the implementation and the ways it resolves the issues," said Mr. Elbegdorj, adding that a final report has to be submitted to the National Security Council by May. In June, citizens will be given information about this through the Civil Chamber. "It is important to urgently develop the law on mineral licenses and have it publicly discussed." Mr. Elbegdorj said that while he remains focused on the development and protection of natural resources, his directive seeks to ensure that that the people of Mongolia remain the true owners of the countries mineral wealth. Read more… Right now, the Presidential directive apparently will not affect the operations of those companies that have valid exploration permits. But it is unclear whether the Government intends to review the validity of existing permits going forward. The new directive could hinder Khan Resources' efforts

to get its uranium mining and exploration licenses reinstated, as the Presidential order also applies to any licenses that have been revoked. ―Our initial estimate is that this should not have any effect on overseas investors in Mongolia, although we‘re still looking to clarify some details,‖ said Mr. Alisher Djumanov, the Beijing-based chief executive officer of Eurasia Capital Management. ―The whole system for allocating licenses does need streamlining and it may well be that there is corruption in the way some licenses are given out.‖ Mining Minister Dashdorj Zorigt declined to make an immediate comment. ―I think this is just a temporary situation,‖ said Mr. Alexander Molyneux, chief executive officer of SouthGobi Energy. ―The Government is checking mining licenses to make sure they are in order. If your license is in order, like ours is, then there shouldn‘t be a problem.‖ Last year's signing of a long-awaited agreement with Rio Tinto and Ivanhoe Mines allowing them to proceed with the USD5 billion Oyu Tolgoi copper and gold mine had paved the way for foreign investment in the mining sector. Mongolia has thus far issued 4,706 valid mineral licenses of which 3,610 are exploration permits and 1,096 are mining licenses. The directive noted that most of the permits currently held by companies and individuals operating in Mongolia are held in violation of existing laws. Source: Reuters, Bloomberg, Undesnii Shuudan

GRADUATED ROYALTY RATES TO REPLACE WINDFALL PROFITS TAX The Finance Ministry intends to introduce, subject to approval by Parliament, a new form of taxation from January 1, 2011, immediately after bidding farewell to the old year and with it the 68% windfall profits tax. Increased royalty fees are charged in many countries and the system comes in several ways. It may be linked to the profit level of the companies, or can be imposed depending on the volume of output and sales. The risk in linking it to the profits is that companies may utilize their considerable accountancy skills to manipulate the statement of profit and thus pay less. That is why countries less capable of monitoring complicated and convoluted financial records opt for clearer specifics. Mongolia has chosen the more certain method of computing the tax depending on the commodity price in the global market. The higher the price, the more the tax. In this, it is almost the same as the 68% tax. However, according to the preamble to the draft law on gradually increased royalty, it is less stringent. The maximum graduated rise will be 5%, added to the basic 5% rate now in force. This maximum total royalty charge of 10% will be collected from copper when its price is more than USD 8,000 per ton, from gold when its price hits USD1,300 or more per ounce, and from coking coal when its price is USD70 or more per ton. When prices are less than these, the rate will be correspondingly less. This means when copper price is around USD7,000 in the world market, according to the windfall profit tax law, a company is subject to payment of USD2,448 in tax, while it is to pay USD280 according to the additional 4% of the gradually increased royalty applicable. Similarly, if gold price in the world market is around USD1,100 per ounce, the windfall profit tax is USD170, while the gradually increased 3% of royalty will be USD33. The Ministry estimates the gradually increased royalty will earn the state budget MNT95 billion a year. A windfall profits tax on copper was first proposed in 2006. Worried that the Russians would perceive it as aimed at Erdenet, the Government got the ambit of the tax extended to cover gold as well. This time the net is cast wider. Increased royalties are to be paid on gold, copper, zinc, tungsten, molybdenum, coking coal, iron ore and fluorspar.

Source: The Mongolian Mining Journal SALARIES, PENSIONS FOR TEACHERS AND DOCTORS TO GO UP 30 PERCENT FROM OCTOBER 1 Salaries and pensions for teachers, doctors and similar State employees will rise by 30 percent from October 1. The tripartite negotiations between the Confederation of Mongolian Labor Unions, the Ministry for Social Welfare and Labor, and the Union of Employers decided on this after four prolonged sessions of talks. Source: www.News.mn

WAGES MUST BE RELATED TO PRODUCTIVITY Mr. Ch. Khashchuluun, Chairman of the National Development and Innovation Committee, feels that prices having risen 20% since 2008, the wage increase was inevitable but steps have to be taken to see that a 30% rise does not lead to inflation. The ultimate goal is to improve productivity and industrial capacity by using modern technology which requires substantial investments. This, however, applies only to industrial labor. The norms for determining the wage level of public

servants and employees in other social sectors are different and should reflect the average wages in the overall economy and average national productivity. Source: Undesnii Shuudan

MNMA CHIEF WANTS PROFESSIONAL INVOLVEMENT IN FRAMING MINING LAWS Mr. D.Damba, President of the Mongolian National Mining Association, has said unwise laws harm the mineral sector which is the mainstay of the national economy. The mining sector in Mongolia has a history of 85 years, but the country is yet to not have a comprehensive mining law reflecting a long-term policy. ―This will not do,‖ he has said, calling for ―a clear, realistic and sustainable policy and a law that will both reflect and implement that policy in the mineral sector‖. The present situation where, ―in the absence of an overall view‖ many laws are being passed that are ―against the interests of the sector, leaving miners very frustrated‖, is possible ―only because the state neither has nor can give a clear sense of direction‖. He singled out three recent laws that, ―individually and together, are seriously damaging business‖. Mr. Damba feels it is ―imperative that the State formulates its policy on a priority basis, presents it to the public to allow all concerned, especially our member companies, to review its provisions and make practical suggestions, and then incorporate them on merit in the final draft that will become law‖. Stressing the need for the involvement of professionals in the drafting of laws on technical matters, Mr. Damba said, ―With all due respect to them, a group of MPs sitting together and drafting a mining law cannot be the best way to do justice to issues technically complicated and with ramifications hidden from the amateur eye.‖ The result of this practice has been the law banning mining work in certain areas. ―Some in the Government have understood its huge negative impact and are going slow. Can you imagine that we have a law that the Government is embarrassed to enforce?‖ he said. Source: The Mongolian Mining Journal

MINISTRY OFFICIAL FAVORS COMPREHENSIVE LAW, EVEN AT THE COST OF SOME DELAY Mr. B.Batkhuu, Head of the Mining and Heavy Industry Department at the Ministry of Mineral Resources and Energy, has said demands for a new mining law are nothing new. There has for long been general agreement that the present law deals more with licensing and exploration of specific deposits than with the many other aspects of mining operations. That is why it is often called the law of bookkeeping or registration. Procedures and regulations are not clearly defined and provisions in inter-related laws are often not compatible and in many cases contradict one another. This inconsistency poses problems for both the operator and the regulator, affecting the whole sector. The Ministry has carefully studied laws in several other countries and would also like to compare notes with research institutions. Mr. Batkhuu wants to submit a draft to Parliament only after detailed and adequate preparation, instead of doing something in a hurry only to find that the law has lacunae that would need fresh amendments. Implementation can always reveal unforeseen problems and challenges, but mining is a long-term process and people investing in the sector have to make long-term plans at high risk. Uncertainty in the legal environment does not help them. Mr. Batkhuu said they have been impressed by how countries such as Canada and Australia have elaborate and very detailed guidelines on all aspects and stages of the mining process, from feasibility study to closure. They do not go along and devise solutions as problems arise. Even before operations begin, every side knows what to do when the resources are exhausted, how the mine should be handed over and what the closure procedure will be. Restoration not only has an environmental side, its social aspect is no less important. Those who work at the mines should know right from the beginning where they will stand when they find themselves without a job. That is why he would prefer a well thought-out and comprehensive law to govern this most important sector of the Mongolian economy. However, the cardinal principle of State control over the strategic deposits should never be diluted, Mr. Batkhuu was certain. Source: The Mongolian Mining Journal

ANIMALS FOR SOME HERDERS, TRAINING FOR OTHERS Prime Minister S.Batbold has said 41.4 percent of the total spent so far on alleviating herders‘ distress has gone toward increasing food supply, 22.3 percent toward transportation, 18.8 percent toward providing animal feed, and 17.5 percent toward removing animal carcasses. The Government has asked for suggestions from provincial authorities on how best to meet the problem. Altogether 8,711 herder families have lost all their livestock. The Government has presented a draft law to Parliament to allocate the necessary funds to help them after a budget revision. Half or

4,355 of the affected families will be offered animals to start afresh, while the other 4,356 families will be absorbed in other economic sectors. They will receive training to help them take up another profession. All herders will receive medical attention to relieve stress-related symptoms. The authorities are planning to implement the livestock indexed insurance in all provinces by 2012.

Source: Ardin Erkh

THE MAIN GAIN FROM OT AND TT WILL BE JOBS, FEELS Mrs. OYUN Mrs. S. Oyun, MP and mining specialist, has said her main expectation from the Oyu Tolgoi project, and the expansion of the infrastructure and service sectors that will certainly follow, is generation of employment. Only creation of jobs for the ordinary people can reduce poverty. The social stability factor also has to be considered as people‘s endurance levels are being tested. The investment agreement could have been better, but it is acceptable and should not be dismissed out of hand. It was more important to get the project started, she said, than to wait indefinitely to reach an agreement that satisfied the hopes of all Mongolians. Mrs. Oyun would not comment much about the possible selection of the investor(s) at Tavan Tolgoi as she does not know details of what the Government thinks. Domestic companies cannot hope to be the main contract operator because they lack the financial, technical, management, and manpower resources to take up any job of the required magnitude, but they surely can hope to get sub-contracts according to their capacity. Mining in Chile also passed through an initial phase when operations were totally in the hands of foreign investors, but national companies associated with them gradually grew stronger and now some of them are known worldwide. This may very well happen here, she said. Mrs. Oyun emphasized that all expectations and estimations based on mining must be tempered by the fact that minerals prices always fluctuate. This affects not just the extracting companies who employ people but also the State budget. ―It will not be wise for our economic policy planners to have the irrational faith that the golden moment will last forever,‖ she said and hoped the proposed fiscal stability law will be treated with proper respect. ―We cannot afford to repeat the irresponsibility we displayed at the 2008 election. Of course people need more, but it will take several years even after full revenues start coming in from both Oyu Tolgoi and Tavan Tolgoi for the State to have the cash to distribute such huge amounts to each citizen. And all sorts of unwelcome results may follow this inflow of money into the market. It makes much more sense to provide unemployed people with opportunities to make money on a continuing basis than to put some cash into their hands,‖ she said. Mrs. Oyun felt one way to protect the environment would be to close down small mines and have only large-scale operations which can afford to apply international standards in their operations.

Source: Onoodor

ADB FUNDS FOR URBAN SERVICES PROJECT IN MINING AREAS The Asian Development Bank (ADB) Board of Directors has approved a USD15 million grant to help improve urban infrastructure and services in the mining and border towns in Southeast Gobi. The grant will directly benefit about 100,000 people in six towns of Omnogovi and Dornogovi provinces, where around 31% of the people are below the poverty level now. Both provinces are poised for rapid economic growth following expansion of mining and cross-border trade. The population in urban centers is projected to more than double by 2020. "The provision of urban infrastructure and services is currently poor. Many basic services are either inadequate or absent. Insufficient and unreliable urban services add to business and household costs, damage the urban environment, and diminish quality of life," the ADB has said in a statement announcing the grant. Maximizing the benefits for the residents of Southeast Gobi will depend on effective urban planning, management, and service delivery policies and structures being in place. The project has two parts. The first will fund consultations to make way for infrastructure services reforms, institutional development, and capacity building to strengthen urban planning and policy making, regional cooperation, and project management and project performance monitoring. The second will fund needed infrastructure improvements such as developing water sources, transmission, storage, and distribution facilities, increasing connections to piped water supply and reducing system leakages. Funding will also be provided to increase waste water collection, boost waste water treatment capacity, and enhance other sanitation services. The total cost of the project is USD21.9 million, with Mongolia providing USD6.8 million and local governments contributing USD100,000 to complement the ADB grant.

Source: The Asian Development Bank

THREE SOUTHERN PROVINCES SEEK INVESTMENT More than 450 participants attended the ―Southern (Gobi) Region: Investors‘ Forum-2010‖ in Dalanzadgad in Umnugobi province on April 21, organized jointly by The Ministry of Foreign Affairs and Trade and FIFTA. Participants included BCM members Newcom, MSM, MICC, Oyu Tolgoi, Southgobi sands, and Khan Bank; the German, South Korean, Japanese and British Ambassadors; and the heads of the IMF and GTZ country offices. The forum gave them a platform to exchange views on how to attract foreign investment to help in the region‘s development, and to learn more about the opportunities and advantages the region offered. Among the speakers were Mineral Resources and Energy Minister D.Zorigt, three provincial Governors, the FIFTA Vice Chairman, and Mr. D.Batsaikhan, Deputy CEO of Khan Bank. They emphasized the need to change the authorities‘ regulatory-oriented mindset if investors‘ interests were to be promoted and the three regional Governors – of Umnugobi, Dundgobi and Dornogobi – were urged to follow up the ideas expressed and ensure that proposed projects conformed to sustainable development criteria. The provinces are seeking investment in road construction, power, meat, leather and milk processing, public education and agriculture. Those interested in any of these investment areas can contact the BCM office for more information and/or help. The next regional investment forum, for the Northern region, will be held in Erdenet city in June. Source: BCM NewsWire

MAYOR WARNS ROAD BUILDERS OF BLACKLISTING Ulaanbaatar Mayor G. Munkhbayar has told road construction companies that their selection through tenders would be henceforth followed by strict monitoring of the pace and quality of their work. This would apply especially to companies that execute projects with State investments. In recent years, the road construction sector has come in for much criticism. Inspections will be more frequent and also more intensive to ensure that deadlines are not missed, and that the material and technology used are not substandard. Any dereliction will lead to blacklisting, the Mayor warned.

Source: Udriin Sonin

MORE BORDER POSTS TO BE OPEN 24 HOURS A DAY The Government has decided that more border checkpoints, besides Gashuunsukhait and Shiveekhuren, will be kept open for trade movement 24 hours a day. Burgastai will follow the schedule from July 1, and Bulgan from 2011. Source: Montsame

CHINA PLANS TO BUILD POWER TRANSMISSION LINE FROM MONGOLIA An oil net importer, a coal net importer and a gas net importer, China has now become a net importer for all the major fossil fuels. With the economic recovery and insufficient domestic production, China is greatly raising fuel import for 2010. Oil, coal and gas net import is expected to increase by near 10 percent, over 50 percent and more than twofold. Less noticed but more stunning, China is also quietly but dramatically raising its electricity import from northern and western neighbors, particularly Russia, Mongolia and Central Asian countries. Electricity import approached 1 billion kwh in 2009. Although the volume was small compared to the total power consumption, the trend of growth is overwhelming. While Northeast China is greatly increasing power purchases from Russia, Tianjin is planning to build a 600 kv DC transmission line to import a total of 2 trillion kwh electricity from Mongolia for 30 years. China's energy import dependence will be quickly increasing in the coming years, and is expected to go up over 14 percent from 12.7 percent in 2009. Foreign fuel dependence could approach 5 percent for coal and 56 percent for oil, and exceed 13 percent for gas for 2010.

Source: www.glgroup.com

RUSSIAN BOND SUCCESS FUELS SPENDING FEARS Russia‘s return to the international debt markets for the first time in a decade, raising USD5.5 billion at rates far lower than its emerging market peers, underpins the country‘s turnaround from just over a year ago when economic crisis was forcing it to use its hard currency reserves at an alarming pace. Investors have jumped to participate in Russia‘s oil-fueled recovery. Reserves have recovered to USD456.3 billion, as higher oil prices fuel ruble strengthening and boost budget revenues by USD5 billion a month more than projected.

But despite the country‘s low public debt relative to gross domestic product and the modest sum raised by the eurobond, some economists say Russia‘s return to international borrowing markets at cheap rates could make it harder in future for the Government to rein in runaway spending – while the budget is becoming ever more dependent on the oil price, making the economy more vulnerable to the price shocks that helped send GDP growth down to minus 9 per cent last year. Much of the Government‘s increased anti-crisis spending went towards permanent items such as transfers to regions instead of toward anti-crisis projects such as infrastructure and targeted social support that could be unwound once the economy recovered. This increased spending may prove difficult to reverse or offset. Read more… Ever fearful of social backlash due to the economic crisis, Russia has increased pension spending 32 per cent per year in the last few years, while they are due to be increased another 42 per cent this year. In a speech to the Russian parliament this week, Prime Minister Vladimir Putin also promised salary increases. In the meantime, State investment in ―the national economy‖, a murky line item in the budget that designates State support for enterprises, has also climbed in the past few years (though spending this year has declined slightly). Between 2005 and 2009, spending on the national economy increased seven times. The Finance Minister is moving to reduce the deficit. He is locking horns with the politically entrenched state oil barons in an attempt to reduce tax holidays for the development of new fields, which could win an extra USD4 billion in revenues this year. He is also considering an increase in payroll tax.

Source: The Financial Times

CHILE TO RAISE MINING ROYALTY TO HELP FUND RECONSTRUCTION The Government of Chile will increase royalty fees on mining companies and raise corporate taxes for the next two years to help fund rebuilding of hospitals, schools and roads destroyed or damaged after the February 27 earthquake. The Government may also sell USD1 billion in 10-year bonds and borrow an undisclosed amount in the domestic market. The Government estimates it will need USD8.4 billion for reconstruction of facilities.

Source: Bloomberg.com WORLD BANK GETS MORE CAPITAL, CHINA MORE VOTING POWER The World Bank has agreed to give emerging economies greater influence in the institution, a shift that puts China third in voting power behind the United States and Japan. The agreement will increase the votes of developing countries by 3.13 per cent, contributing USD1.6 billion to World Bank resources. In addition, members agreed to a capital increase of USD3.5 billion for the bank — the first in more than 20 years. ―We can feel proud that we have concluded agreements on a transformative financial and governance reform agenda, along with new capital for the World Bank and a new and more representative shareholding formula,‖ U.S. Treasury Secretary Timothy Geithner said in a statement before the announcement. He also said that the US, which holds the largest voting share in the World Bank at 16.4 per cent, would not seek any increase for itself under a revised voting formula that is to better reflect developing countries‘ economic heft. The World Bank had asked for a capital increase of USD3 billion to USD5 billion, allocated proportionally among its members. Mr. Geithner said he would ask Congress to approve the US share of it. The talks were difficult because advanced economies, especially those in Europe, were unwilling to give up some of their voting shares, and the US held on to its veto power. Smaller European countries were concerned that even a small change in their voting power would mean a marked reduction in their influence.

Source: Reuters

MORE WORLD BANK LENDING WILL NOT CURE ALL ILLS There is no lack of rhetorical commitment to multilateral collaboration and proper participation by emerging economies in the world‘s handling of its greatest challenges. More often than not it is honored in the breach. So it is welcome that World Bank members have agreed a capital raise giving emerging countries a little more space at the Bretton Woods table. The new USD86 billion in capital for the World Bank‘s quasi-commercial lending arm – the International Bank for Reconstruction and Development – no doubt makes a big difference to the

bank itself. It is its first capital injection in 20 years and raises its equity by half. Its president, Robert Zoellick, had warned that without more capital, lending would soon hit a ceiling. How it matters to global development is less clear. IBRD clients are middle-income States with access to private capital markets. That access has, however, suffered from those markets‘ collapse, and will continue to suffer as even recovering markets are swamped by rich-country borrowing needs. So the IBRD plays a useful stopgap role. But it was a salutary one. With talks on trade and climate change in disarray, it proved that the rich and the emerging world can find common ground – even when governments are strapped for cash. That is a political achievement, which the International Monetary Fund must now replicate. Emerging states may then feel less bound to accumulate reserves to avoid any risk of asking it for help. The more stable world that would result could save more people from misery than any World Bank lending. Read more… Yet in the longer term IBRD funding is not the highest priority. Though the bank points out that most of the world‘s poor live in IBRD client countries, these States have the means to address domestic poverty. They should eventually be weaned off official support. Money must not be pumped into IBRD at the expense of funds for the poorest countries, such as the Bank‘s International Development Association. The signs are reassuring. Far from being crowded out, other multilateral bodies have also got new cash: the African Development Bank is tripling its capital. What is more, emerging countries themselves are funding a large part of the IBRD capital injection, in return for a move on their long-standing demand for greater vote shares. Rich countries are giving up 3.1 percentage points of voting shares and will now hold 52.8 per cent. Cosmetic, yes; but in global affairs cosmetics have political significance. The bargain was not reached without resistance.

Source: The Financial Times

DRAMATIC INCREASE IN CHINA‟S COAL IMPORT The world is watching another China moment nervously, as China dramatically raises its coal import. During the first quarter of 2010, China imported 48.2 million tons coal, accounting for near 7 percent of its total coal consumption. A projected coal consumption of 3.2 to 3.3 billion tons for 2010 could put total net coal import at 150 to 200 million tons for the whole year. The world was not so agitated at another such China moment in 1993, when the country became a net oil importer. Since then, China has now contributed over one third of the global incremental oil demand, and average crude oil import has reached around 4.5 million barrels per day. Now China has become a net coal importer, and its import volumes continue rising rapidly. Import figures for the first quarter of 2010, show an increase of over 2.4 times when compared with the same period last year. Import volumes of all types of coal except for anthracite that is heavily used as a feedstock for fertilizer and other chemicals soared up dramatically. Coal import sources were extended to almost all major coal producing regions of the world including the U.S., Canada, Columbia and South Africa. Indonesia, Australia and Vietnam remained the leading sources, followed by Russia, Mongolia, South Africa and Canada. Evidently, coastal provinces in China are increasingly relying on import.

Source: The Garson Lehman Group

AUSTRALIA‟S MINERALS SECTOR UNSUSTAINABLE IN LONG TERM, SAYS REPORT Australia‘s reputation as one of the world‘s foremost destinations for mineral exploration is under threat from a critical market failure that discourages greenfield exploration, the Australian Institute of Geoscientists (AIG) has reported. It has said that Australia‘s current precious and base-metals mining production was increasingly reliant on a small number of major deposits which were largely mature and in decline, presenting a clear threat to mine production and, in turn, the export earnings of the Australian economy. An AIG report has found that the heavy reliance of companies exploring in Australia on short-term market capital has impeded their ability to undertake high-risk, but potentially high-reward greenfield exploration capable of yielding the new major discoveries needed to sustain Australia‘s precious and base-metals mining production. Source: www.miningweekly.com

POLITICS ELBEGDORJ IN CHINA President Ts. Elbegdorj is paying a six-day state visit to China at the invitation of President Hu Jintao. After arrival on April 28, Mr Elbegdorj met with Chinese Premier Wen Jiabao to exchange views on bilateral relations and cooperation. Premier Wen proposed greater economic and trade cooperation, especially in major industrial projects. Mr. Elbegdorj thanked China for its support to Mongolia's social and economic progress, and repeated his country‘s commitment to the one-China policy. Earlier on the day, Mr. Elbegdorj attended a meeting of the China-Mongolia Business Forum. China has been Mongolia's largest trade partner for 11 years. Representatives of 40 companies are in the team accompanying him. This is Mr. Elbegdorj‘s first visit to China since he took office in May 2009. Besides Beijing, he will also visit Shanghai and attend the opening ceremony of the Shanghai World Expo on April 30. Source: Montsame, Ardin Erkh

PROTESTERS REACH AGREEMENT WITH MPs‟ GROUP, CALL OFF HUNGER STRIKE The hunger strike by some protesters was called off last week after a series of talks between leaders of the movement and a MPs‘ group set up by Parliament to settle the issue. The parties signed a memorandum incorporating the terms of agreement reached at the talks. The hunger strike was to put pressure on Parliament to hold a referendum to ascertain people‘s opinion on the protesters‘ demands. One of their leaders told media the civil movements will be free to resume the protest if the agreement was not implemented. He said they would also be watching how the election promise of a threefold rise in salaries and pensions is treated. Asked how much money the civil movements had spent on the protest, another leader said he could not give the exact figure. ―There was a donation box in Sukhbaatar Square and we used the money people put in it,‖ he said. Source: English.News.mn

DEPUTY SPEAKER FEELS POLITICAL SYSTEM IS STALLING ECONOMIC GROWTH Deputy Speaker of Parliament N.Enkhbold has said the two draft laws recommending adoption of the proportional system of representation when the next election to Parliament is held in 2012 are likely to be discussed together in the Standing Committees as often happens with drafts with a similar intent. The two differ on specifics, but their main concept is similar, and Mr. Enkhbold felt that ―despite some opposition, the proportional system will be supported this time‖. Saying that ―the consensus after our 20 years‘ experience of elections‖ is that ―the political system is hindering our economic development‖, Mr. Enkhbold asserted that change must begin with the manner in which Parliament is elected. Dismissing concerns that the proposed system will give preference to people close to the Party leaders, he said there are ways to make sure this does not happen. No leader will decide a party‘s list of candidates all by himself. They will be selected by a board or at a general meeting.

Source: Ardin Erkh

DIPLOMAT STABBED IN BROAD DAYLIGHT Mr. R.L. Negi, Charge d‘Affaires at the Indian Embassy, is recovering from injuries sustained when he was attacked by two unknown assailants who shouted as they beat him, ―Go back to your own country.‖ Mr. Negi‘s left eye was ―50 to 60 percent damaged and will take long to heal‖, according to doctors. The 56-year-old diplomat was returning home from his morning walk at around 9:45 on April 18 when two Mongolians pounced on him from behind, raining blows on his head, waist and legs. Mr. Negi screamed for his life, but the attackers merely laughed, hit him in the eye, and left after stabbing him in the stomach. Police have arrested one man for the incident and have described it as an act of ―mindless and spontaneous violence‖ without, however, any racial undertone. Expressing ―great concern‖, they have asked for public assistance to stop any recurrence of such attacks. Mr. Negi is not new in Ulaanbaatar. He was posted here in the 1990s, and returned as Counsellor and Head of Chancery last year. His wife is Mongolian and they have two children. His faith that the city is safe has now been shaken, and he is also convinced that he was attacked because he was a foreigner. Source: English.News.mn

MINISTER UNVEILS GRAND PROJECTS Minister of Roads, Transport, and Urban Construction Kh.Battulga has said that the years since the democratic revolution have seen a lot of gains in social and economic life, but have also been marked by a singular absence of any grand project that can be held up as a national achievement. Things are set to change, giving the lie to feelings that the coalition government‘s only success has been its decision to allocate MNT1.5 million to each citizen. A long-term and visionary development policy has been adopted. Some 100,000 apartments will be constructed, of which 75,000 are to be in Ulaanbaatar. Migrants in the ger areas will be employed in this building program, thus giving them income to repay loans taken to buy their own apartments, which they would also help build. Another showpiece project will be the new railway routes, he said. They will ultimately connect Oyu Tolgoi and Tavan Tolgoi in the southern Gobi region with the Trans-Siberian Railway, affording direct access to export markets through Vladivostock. This will make Mongolia less dependent on China, which would continue to offer access to other sea ports. ―A government cannot take decisions,‖ he said, ―only on the basis of immediate economic benefits, nor can it allow the demands of the market to dictate all our national choices.‖ Noting that ―70% of our foreign trade is with China‖, most of it consisting of consumer goods and food, he asked, ―What would happen if China closed its borders one day? Integrating our railway only with China‘s will make us 100% economically dependent on one country. This is something no nation can afford to risk,‖ Mr. Battulga said. Source: Undesnii Shuudan

ENERGY REGULATORY BODY TO BE RECONSTITUTED The Government has decided to remove Mr. R.Ganjuur from his position of head of the Energy Regulatory Authority (ERA) for unsatisfactory performance. This follows a report from the Minister of Mineral Resources and Energy that Mr. Ganjuur and all other members of the ERA Coordinators' Council were responsible for the ERA‘s poor performance, especially in taking incorrect decisions beginning from 2006 that led to problems in the power and heating sector. The Government will totally reconstitute the Council under a new head.

Source: Montsame

SOUTH KOREA TO HELP BUILD WASTE RECYCLING PLANT A solid waste recycling plant will be ready in a suburb of Ulaanbaatar next year with the Korea International Cooperation Agency bearing the cost of USD3.5 million. The plant will sort, recycle and burn household waste to generate power. The project is part of a partnership program among East Asian countries on tackling problems of global climate change. Source: Xinhua, Montsame TAX OFFICIAL‟S COMPLAINTS OF CORRUPTION FOUND BASELESS Investigations made by the Anti-Corruption Agency have found little substance in several complaints against some important people, including Deputy Prime Minister M. Enkhbold, the Prime Minister‘s Legal Advisor B. Dolgor, and two senior tax officials. It is even rumored that the complaintant, Ms. N. Enkhee, may face legal action for deliberately tarnishing the reputation of people in high positions. Ms. Enkhee, herself a senior tax official, has several times told the media that she has influential politicians behind her. Source: Zuunii Medee

DRAFT WANTS DOCTORS, NOT POLICE, TO TAKE CARE OF THE DRUNK Parliament has agreed to discuss in more detail a draft seeking to take away from the police the responsibility of looking after drunken people and to hand over running of the night shelters to the Ministry for Health. According to the head of the General Police Authority, Mr. D.Sandag-Ochir, about 300 people are daily brought to the shelters. The draft wants hospitals to take care of them. However, doctors will be free to call for police help if they cannot cope with the behavior of those under care. Some MPs wondered if it would be right to place a fresh responsibility on already overburdened medical staff and hospitals. Minister for Health S.Lambaa said this provision was not in the draft when it was discussed by the Government and ―has now appeared out of nowhere‖. He has sent a note to Interior Minister Ts.Nyamdorj that hospitals will not be able to take the responsibility. Source: www.News.mn

FRENCH AMBASSADOR HAPPY WITH STATE OF BILATERAL RELATIONS French Ambassador Jean Paul Dumont, who had served here in 1971-1974 as attache to the very first Ambassador of his country to Mongolia, says bilateral relations have changed radically in both intent and contents from the time diplomatic relations were established in 1966. Following signing of an agreement on collaboration in scientific, technical, and cultural areas, the stage is set for exchange of teachers to teach Mongolian in France and French in Mongolia. Trade relations have also expanded. About 600 Mongolians have enrolled for courses in French in four universities and colleges and in three secondary schools. Appreciating Mongolia‘s designation of France as a "third neighbor", Mr. Dumont said his country will provide assistance to herders most affected by the dzud. French NGOs are active in the medical, veterinary, and sewage cleaning areas. French firms are taking part in projects to reduce air pollution in Ulaanbaatar. Areva has been participating for several years in development of uranium mining. The ambassador was confident that relations will get stronger with the years.

Source: Montsame

CITY ENGINEER JAILED FOR TAKING BRIBE Mr. U.Sukhbaatar has been sentenced to five years‘ imprisonment for accepting bribes when he was an engineer with the Ulaanbaatar Urban Development, Construction, and Planning Office. He was given a three-room apartment by the 100% Chinese invested Shundi Company in return for favors shown to it in work. However, Mr. Van Sen Ton, Executive Director of the bribe-paying company and a Chinese national, escaped punishment on technical grounds. Source: Zuunii Medee

SHANGHAI EXPO BEGINS ON SATURDAY Shanghai will unveil to the world on May 1 its six-month long World Expo, China's largest international event since the 2008 Beijing Olympics. The country is trying to create an Expo on a scale never seen before, spending vast sums of money to make the event a blow out extravaganza for the expected 70 million visitors. A World Expo is a fair where countries and companies display their latest scientific achievements and technological advancements. Expos historically have been remembered for the creation of landmarks like the Eiffel Tower and the introduction of television and the ice cream cone to mass audiences. While recent Expos have failed to fire the world's imagination much, Shanghai is creating great fanfare to put them back on the map. China has officially spent USD4.2 billion, more than double what it spent on the Olympics, but Chinese media report the actual cost could be up to USD58 billion. The Government is using the Expo as a means to highlight its authority and dominance internally, showing its citizens it is powerful enough to host two international events on such a grand scale and in such a short space of time. Nearly 95 percent of visitors to the Expo are expected to be from China itself. Analysts say the Expo serves as a platform for the Government to legitimize its role in power as well as exemplifying the country's fast economic development. Read more… China has tried to raise its Expo's global profile by inviting state leaders to attend the biggest and most expensive Expo in history, and countries and companies are making special efforts to improve commercial and political ties with the world's third-largest economy. Mongolia is among the 191 countries attending, many of which have invested record amounts to build their pavilions. Saudi Arabia, for instance, spent USD146 million to build its spaceship-like pavilion. Multinationals like General Motors and Coca-Cola Co are also making record efforts to cement their presence in China and using the Expo to target the huge domestic market Countries are likely to reap only intangible gains by boosting their tourism appeal to the Chinese public. But they will gain valuable goodwill with Beijing by attending, especially smaller countries that rely on Chinese trade and aid. Very few Expos in history have actually turned a profit, with the World Expo in Hanover in 2000 estimated to have lost USD1.1 billion, while Vancouver's World Expo held in 1986 was in the red by USD33 million. Shanghai officials say they are not aiming to make a profit, but want instead to use the Expo to show China's achievements to the world and let Chinese people experience different cultures. Source: Reuters.com

ANNOUNCEMENTS

CORPORATE GOVERNANCE FORUM ON MAY 27

The third annual Mongolia Corporate Governance Forum, to be held on May 27, will bring together, as in earlier years, Mongolian business leaders and policy makers. The key discussion points will be:

World Bank Report on Standards and Codes on Corporate Governance 2010;

Corporate Governance reform process: Progress and challenges top investment environment;

Corporate Governance in banking sector in light of recent crises;

Investors‘ perspectives on Mongolia: Expectations and requirements;

Future corporate governance policy frameworks and regulation. Corporate Governance Development Center is the organizer of the event, with BCM, IFC, Eurasia Capital, USAID and EPRC-Chemonics acting as partners in arranging it. For information and invitations, please contact Tsend-Ayush at tsendee51@yahoo.com, 9910-5111, or Mr. Unenbat at unenbat.jigjid@yahoo.com, 9911-8745.

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FRONTIER SECURITIES TO HOLD „MONGOLIA: CAPITAL RAISING‟ CONFERENCE Frontier Securities will be holding a conference on capital raising in Mongolia at Chinggis Khaan Hotel on June 15-16. Among those expected to speak are Mr. D. Sugar, Chairman of the State Property Committee; Mr. Lawrence Fok, Executive Vice President, Hong Kong Exchanges and Clearing Limited; and Mr. Naomitsu Abe, Senior Manager responsible for Japan, Korea and Mongolia at the London Stock Exchange. For inquiries and registration forms, contact staff@frontier.mn, 7011-9999. ____________________________________

“BSPOT" on B-TV

BTV (Business TV) now telecasts a 10-minute English-language news program called BSPOT every evening from Monday to Friday at 21:30, taking most of the stories from the BCM NewsWire.

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“MM TODAY” on MNB-TV BCM is pleased to announce that Mongolian National Broadcasting continues its cooperation with BCM on ―MM Today‖. This English news program is aired every Friday for 10 minutes and is scheduled for 21:15 tonight. Tune in to watch this program that reports stories from today‘s BCM NewsWire.

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FOREIGN-LISTED COMPANIES WITH MONGOLIAN ASSETS

Following President Elbegdorj's order to halt the issuance and transfer of mineral exploration licenses until mining license legislation is revised, several exploration companies experienced sizable declines in share price. See table following:

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]

March 31, 2010 *8.5% [source:NSOM]

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

CENTRAL BANK POLICY LOAN RATE

December 31, 2008 9.75% [source: IMF]

March 11, 2009 14.00% [source: IMF]

May 12, 2009 12.75% [source: IMF]

June 12, 2009 11.50% [source: IMF]

September 30, 2009 10.00% [source: IMF]

CURRENCY RATES – April 29, 2010

Currency name Currency Rate

US dollars USD 1,373.24

Euro EUR 1,810.41

Japanese yen JPY 14.73

British pound GBP 2,090.35

Hong Kong dollar HKD 176.83

Chinese yuan CNY 201.19

Russian ruble RUB 46.79

South Korean won KRW 1.23

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.