BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 341 – September 5, 2014

NEWS HIGHLIGHTS:

Business

Tender selection for TT to launch in November;

Rio Tinto appoints new chief of Mongolia Oyu Tolgoi copper mine;

Investors meet in UB for Invest Mongolia and Discover Mongolia;

Rosneft to widen market penetration in Mongolia;

Gazprom, CNPC to decide on gas pipeline to China via Mongolia;

Russia makes currency trade agreement with Development Bank;

Golomt Bank acquires custodian banking license, first in Mongolia;

SouthGobi says cash may not last the year as holder defers debt;

Gina Rinehart shuts down Mongolia exploration project;

MSE extends partnership with London bourse;

General Customs Authority to cooperate with USAID;

Government to open agriculture insurance company;

Dairy factory to open in Selenge;

Mongolian company to launch domestic sales of Laotian rice;

Cashmere producers partner with Thai institute for cashmere/silk brand;

MSE cuts brokers' expenses;

Modun announces board and executive changes and equity raising;

New ADB office to advise on PPP transactions.

Economy

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

Bulgaria to invest in UB to offset Russian sanctions;

Turkey to provide Mongolia with $300 mn of loans;

Water must be included in energy and mining plans, says ADB;

Apartment construction begins in Arkhangai;

Inspection agency cracks down on food additives used by food manufacturers;

Japan donates lab equipment;

New hospital to address Mongolia’s cancer crisis;

Life in Ulaanbataar's tent city is hard—but Mongolians won't give up their gers;

Is the wall of copper supply finally coming?;

Coal miners see signs of recovery as prices stabilize;

Iron ore hits a new two-year low.

Politics

Putin visits Mongolia to boost trade ties;

Mongolia's ‘rebalance’ toward Russia and China;

Russia and Mongolia finalize visa-free travel agreement;

Mongolia expands representation at IMF and World Bank;

Niigata mayor visits Khovsgol;

Acting head of General Police Agency appointed to permanent position;

Nut collectors to receive fines;

Details of former Soviet positions in Mongolia unveiled;

Moving Mongolia forward—and why INS?;

China and Mongolia: Realizing a ‘Comprehensive Strategic Partnership' – EDITORIAL.

Others

Announcements;

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

ECONOMIC INDICATORS

Weekly Market Indicators from MIBG;

Inflation;

Central bank Policy Rate;

Currency Rates.

*Click on titles above to link to articles.

SPONSORS

Khan Bank

International SOS

Wagner Asia Automotive

Invest Mongolia Agency

BUSINESS

TENDER SELECTION FOR TT TO LAUNCH IN NOVEMBER

The Cabinet Secretariat on 28 August announced at a press conference that tender bidding to

operate a coal mining operation at Erdenes Tavan Tolgoi LLC's West Tsankhi deposit will launch on 1

November.

A short list of bidders will be announced by 15 December, said government officials. The Cabinet

has created a task force chaired by Cabinet Minister Ch. Saikhanbileg to run the bidding process.

Mongolia first announced that a consortium would likely be named this year in May to help revive

the flagging economy. A consortium was first announced in July 2011, but was scrapped almost

immediately because it did not include Japanese or Korean partners.

Source: News.mn

RIO TINTO APPOINTS NEW CHIEF OF MONGOLIA OYU TOLGOI COPPER MINE

Global mining giant Rio Tinto PLC has appointed a new chief executive for the USD 6.5 billion Oyu

Tolgoi copper-gold deposit in Mongolia as it bids to restart construction for the long-postponed

second phase of the project.

Rio Tinto executive Andrew Woodley will become president and chief executive officer, replacing

Craig Kinnell, who is leaving for personal reasons, according to a press release issued by Oyu Tolgoi

LLC on Thursday. Kinnell will hand over duties to Woodley in October and will move on to a new

role with Rio Tinto in London the following month, the release said. Woodley will move to

Ulaanbaatar after heading up Rio Tinto's coal business in Mozambique, which the company bought

for USD 4 billion in 2011 and sold for just USD 50 million after failing to secure approval to barge

coal to an export port.

Kinnell was regarded in the industry as a short-term appointment aimed at driving through cost

cuts. He was not in charge during a first round of 1,700 redundancies in September 2013, but

oversaw 300 job cuts in May. Rio's majority owned Turquoise Hill Resources, which owns 66 percent

of Oyu Tolgoi, is currently embroiled in a tax dispute with the Mongolian authorities over a USD 130

million bill delivered in June. Rio is waiting for the project's board to approve a feasibility study

ahead of a September 30 deadline for a USD 4 billion project financing package that will fund

construction. The Mongolian government owns the remaining 34 percent of Oyu Tolgoi and has

representatives on the mining unit's board of directors.

"As long as the tax dispute with the government of Mongolia is ongoing, a resolution of the second

phase of this project will not be forthcoming," said Neil Ashdown, deputy head for Asia for IHS

Country Risk on the sidelines of the Discover Mongolia investment conference in Ulaanbaatar. He

added that delays around the expansion of Oyu Tolgoi were deterring other foreign investors, and

he did not expect to see a big increase in foreign investment into Mongolia at present.

Source: Reuters

INVESTORS MEET IN UB FOR INVEST MONGOLIA AND DISCOVER MONGOLIA

Investors gathered to reflect on the numerous changes to the legislative and tax regimes in

Mongolia during two of Mongolia's biggest conferences.

Frontier Securities held its annual Invest Mongolia conference at the Blue Sky Tower and Hotel on 2

and 3 September, followed shortly by the Discover Mongolia international investors' conference at

the Children's palace on 4 and 5 September. Speakers such as Economic Development Deputy

Minister O. Chuluunbat, at the Frontier Conference, discussed how the investment environment had

improved in 2014 as well as how the country planned to continue promoting greater transparency

and stability for investments. Meanwhile foreign investors spoke out on the importance of keeping a

balance between Mongolia's large neighbors China and Russia with “Third Neighbor” partners.

U.S. Ambassador Piper Campbell, at Invest Mongolia, said: “In my view, the not-yet-fully realized

value of the Third Neighbor policy lies in the area of economic engagement—trade agreements and

actual business deals: whether parliamentary action on the U.S.-Mongolia Transparency Agreement

signed nearly a year ago, decisions on key projects such as Tavan Tolgoi—where we've made no

secret of our hopes that a world-class U.S. company, Peabody Energy, might play a role, an

increased prioritization of the best technology and best commercial terms in tenders related to

rail, or agreement between Mongolia and Rio Tinto to move ahead with phase two of Oyu Tolgoi's

development.” (Read the full speech in English or Mongolian)

A highlight for Discover Mongolia was the Thursday morning signing of a tri-party declaration of

cooperation between the government, mining industry and civil society. The agreement paves the

way for a minerals council that was initiated by the Minerals Policy passed by government earlier

this year that will aim to introduce more transparency in the resource extraction industry and

accountability for companies.

“This council will serve as a bridge between the three parties in every newly proposed legislation,”

said Dugar Jargalsaikhan, chairman of Mongolia Investment Holdings (MIH) LLC and a member of the

organization committee for Discover Mongolia. “By establishing this council I think there will be a

more predictable legal environment.”

Source: BCM

ROSNEFT TO WIDEN MARKET PENETRATION IN MONGOLIA

Top oil exporter to Mongolia Rosneft hopes to widen its market reach in Mongolia, said Russian

President Vladimir Putin in his joint statement with the president on Wednesday.

“This cooperation will focus on creating new joint factories, boosting the bilateral trade and

resuming the traditional cooperation,” Putin said.

Also, Putin said Russia hoped to remove taxes on agriculture products from Mongolia and cooperate

in air transport. He added Russian and Mongolian aviation officials had signed an agreement

already.

Source: Montsame

GAZPROM, CNPC TO DECIDE ON GAS PIPELINE TO CHINA VIA MONGOLIA

Russia’s Gazprom and China National Petroleum Corporation (CNPC) will need to decide whether

their gas pipeline will run through Mongolia or not, Russian Natural Resources and the Environment

Minister Sergei Donskoy on Wednesday.

“This issue will have to be discussed at the level of Gazprom and CNPC. As a buyer, they [CNPC]

should make assessments, raise questions and put forth demands. Mongolia will have to answer

these questions,” Donskoy said.

He said Mongolia’s proposal could be attractive since the pipeline will run mainly across the plains

and therefore will need fewer booster stations. But problems may arise if the pipeline crosses

nature reserves in Mongolia, he added. Donskoy said this issue had been under discussion since the

autumn of 2013.

In May 2014, Gazprom and CNPC, China's largest petroleum company, signed a USD 400 billion

contract for the supply of Russian pipeline gas to China. Under the contract, Russia will supply 38

billion cubic meters of gas a year for 30 years.

In October 2009, Gazprom and CNPC concluded the Framework Agreement on the major terms and

conditions of natural gas supply from Russia to China. The agreement stipulates annual exports of

up to 68 billion cubic meters of gas to the Chinese market. In September 2010 the Extended Major

Terms of natural gas supply from Russia to China were signed. In March 2013, Gazprom and CNPC

signed the Memorandum of Understanding for cooperation between the two companies in pipeline

gas deliveries to China via the eastern route. In September 2013, Gazprom and CNPC inked an

agreement determining major terms and conditions of pipeline gas supply from Russia to China via

the so-called eastern route, which will transport 38 billion cubic meters of Russian gas to China.

The western route will deliver West Siberian gas to China from 2019.

Source: Itar-Tass

RUSSIA MAKES CURRENCY TRADE AGREEMENT WITH DEVELOPMENT BANK

Mongolia and Russia's development banks signed a contract for a currency trade agreement during

the state visit of Russian President Vladimir Putin on 3 September.

The delegation accompanying Putin included Sergei Lykov, managing director and board member of

Russia's development Bank, Vnesheconombank, who met with Economic Development Minister

Nyamjav Batbayar to discuss opportunities for cooperation. The Russian bank agreed to invest USD

74 million into the expanded capacity of Thermal Power Station No. 4.

"One of advantage for the trade of national currencies is the likelihood of increasing exports

between Mongolia and Russia," said B. Munkhbat, director of the Development Bank.

Source: Montsame

GOLOMT BANK ACQUIRES CUSTODIAN BANKING LICENSE, FIRST IN MONGOLIA

The Financial Regulatory Commission on 27 August approved Golomt Bank LLC as Mongolia's first

custodian bank. The license will allow Golomt to safeguard securities to facilitate stock trade on

the Mongolian Stock Exchange.

Source: Montsame

SOUTHGOBI SAYS CASH MAY NOT LAST THE YEAR AS HOLDER DEFERS DEBT

Hong Kong-listed SouthGobi Resources Ltd. said it may not have enough cash to see out the year as

the Mongolian coal miner’s majority shareholder agreed to defer its debt repayments and it seeks

new financing deals to help combat weak commodity prices.

“There can be no assurance that the company will have sufficient funding for the balance of 2014

to be able to continue as a going concern,” the company said in a statement today to the Hong

Kong Stock Exchange. It’s seeking additional sources of financing, including coal prepayment, as a

potential solution to continue operations. Vancouver-based Turquoise Hill Resources Ltd. holds 56

percent of SouthGobi and is itself 51 percent owned by mining giant Rio Tinto Group. Turquoise Hill

provided SouthGobi a USD 10 million revolving credit facility in May, $3.8 million of which has been

drawn down.

Lower coal prices are hurting Mongolia which counts the commodity as its second-biggest export.

The nation’s earnings from coal have steadily dropped from USD 2.27 billion in 2011 to USD 1.2

billion last year. In the first seven months of 2014 Mongolia exported 10.3 million tons of coal worth

USD 500 million, according to the National Statistical Office of Mongolia. And SouthGobi’s financial

woes come amid allegations of tax evasion by the Mongolian government. Following two years of

investigation, a court of justice in Ulaanbaatar last week returned the tax case to the prosecutor

for further investigation, citing insufficient evidence, according to a statement by SouthGobi.

In July, Turquoise Hill announced that it will sell 29.95 percent of SouthGobi to Hong Kong-based

National United Resources Holdings Ltd. Turquoise Hill will maintain a 26 percent stake in

SouthGobi after the deal which is due for completion by the end of November.

Source: Bloomberg

GINA RINEHART SHUTS DOWN MONGOLIA EXPLORATION PROJECT

Australia's richest woman Gina Rinehart has quietly shut down her Mongolian mining exploration

operation.

Company documents filed in Singapore show that the billionaire's Hancock Prospecting group wrote

off its Mongolian investment last year because of "management's intention to wind up the subsidiary

company in the near future."

"Hancock Prospecting did assess mineral tenements in Mongolia in recent years, however chose not

to pursue any and has no current interests in Mongolia," said a Hancock Prospecting spokesperson.

The decision to withdraw comes at a time when investor sentiment towards the land-locked Asian

nation has deteriorated markedly. Shares in most Australian miners exploring in Mongolia have

plummeted over recent years, and Rio Tinto PLC's attempts to build a major new copper and gold

mine there continue to be hampered by government disputes.

Details of Rinehart's Mongolian operation emerged in financial accounts lodged last month by

Hancock Prospecting subsidiary Hancock (Singapore). The accounts, for the 2013 financial year,

appear to show that the Mongolian company, Hancock Prospecting Mongolia, was the Singapore

arm's only substantial asset, worth about SGD 125,000 (USD 107,000). Hancock's country manager

appears to have been William Sanders, a graduate of Mississippi State University, who claims on his

LinkedIn profile to have "supervised all internal and external operations" for Hancock Prospecting

Mongolia. He says he held the job from September 2011, when the exploration office was opened,

to March 2014 and "conducted and oversaw the initial due diligence work on over 100 exploration

and mining tenements covering several million hectares of land".

Hancock Prospecting Mongolia appears to be separate from Rinehart's other investments in the

country. In 2011 she reportedly bought small stakes in two listed Australian companies exploring for

coal in Mongolia, Aspire Mining and Guildford Coal, worth a total of USD 3 million.

Source: Sydney Morning Herald

MSE EXTENDS PARTNERSHIP WITH LONDON BOURSE

The Mongolian Stock Exchange (MSE) on 9 September is scheduled to sign an agreement in London

to extend its cooperation agreement with the London Stock Exchange (LSE) Group.

The LSE has assisted the development of the local bourse with the introduction of a modern trading

platform and advisory assistance in its regulatory regime. Signing the agreement will be Finance

Minister Chultem Ulaan and Acting MSE Director D. Angar.

Source: Montsame

GENERAL CUSTOMS AUTHORITY TO COOPERATE WITH USAID

USAID is poised to advise the General Customs Authority for the modernization for its regulatory

regime for foreign trade.

Customs Authority head O. Ganbat and acting USAID Director Richard Chen signed a memorandum

of understanding initializing the agreement on 28 August. The document sets out the objectives to

ease restrictions over businessmen, assist in the launch of audits following customs procedures,

introduce risk management practices, and update its IT systems. USAID has also promised to

provide training for mid-tier staff at the authority.

Source: Montsame

GOVERNMENT TO OPEN AGRICULTURE INSURANCE COMPANY

The Cabinet Secretariat on 28 August ordered the founding of a new state-owned herders' insurance

company.

The company was initiated by a law passed in spring that provides the foundation for insuring

livestock. Shareholder power has been granted to the Ministry of Finance. Minister of Finance

Chultem Ulaan is to transfer the funds placed in this year’s budget to the company account and

budget for 2015 and 2016.

Source: Montsame

DAIRY FACTORY TO OPEN IN SELENGE

Selenge Aimag has negotiated with a Chinese locality for the establishment of a provincially-owned

dairy factory. Selenge's governor negotiated a cooperation agreement with the Chinese province

Kharbin. The governor also had proposed setting up seabuckthorn processing factory and an

assembly plant for Chinese-made equipment.

Selenge aimag produces over 40,000 of milk a year, but only up to 5,000 tons is sold domestically.

Source: Montsame

MONGOLIAN COMPANY TO LAUNCH DOMESTIC SALES OF LAOTIAN RICE

The Mongolian company GIMEX is planning for a November launch of domestic sales of rice

processed in Laos.

The rice operation was initiated by a memorandum between Mongolia and Laos' governments

leasing 10,000 hectares of land in Laos. GIMEX has installed a rice processing plant able to produce

60 tons of rice a day. The company will meet 30 percent of Mongolian annual demand for rice.

"We are working to deliver chemical-free fertilizers and high-quality rice to the country," said

GIMEX Chief Executive Officer J. Gankhuyag.

Source: Unuudur

CASHMERE PRODUCERS PARTNER WITH THAI INSTITUTE FOR CASHMERE/SILK BRAND

Mongolian cashmere and wool companies have partnered with the Thailand Textile Institute to

launch a new brand that utilizes textiles specially produced in each nation.

Last year the institute expressed interest in developing a new brand that merged Mongolian

cashmere and Thai silk. The brand would target both Asian and European markets for distribution

and sales. Six Mongolians traveled to Thailand at the end of August to attend a training session, said

the Ministry of Industry and Agriculture.

Source: Unuudur

MSE CUTS BROKERS' EXPENSES

The Mongolian Stock Exchange (MSE) has reduced its annual fee for market participation by more

than half in the hopes of easing the burden on stock brokers.

The Mongolian bourse has reduced its annual fees from between MNT 2.5 million and 3.5 million to

a flat fee of MNT 1.5 million. Also, the MSE will provide access to the Bloomberg Terminal platform

for market and trade data for MNT 195,000 a month. The cuts will save companies about MNT 8

million a year in expenses.

Source: Udriin Sonin

MODUN ANNOUNCES BOARD AND EXECUTIVE CHANGES AND EQUITY RAISING

Modun Resources Ltd. on 1 September announced the appointment of new board members and

executives who have committed to share holder prescriptions for capital raising as Rick Dalton

resigns as a non-executive director.

Modun has received commitments to subscribe for USD 1 million in new equity through the

subscription of 500 million ordinary shares at 0.2 cents per share. Proceeds will be used for general

working capital including the strategic review of Modun Nuurst thermal coal project. The

placement shall be made in two tranches with the first 302.5 million shares raising USD 605,000 will

be placed using Modun’s pre-approved placement capacity (approved by shareholders on 20 August

2014) and the final 197.5 million shares raising USD 395,000 will be placed, subject to shareholder

approval.

Modun has appointed a new executive team and board with over 30 years private equity investment

experience to accelerate the transformation of Modun into a high growth and strong cash-flow

generating business. Mike Hill will join Modun’s board immediately as executive chairman. Hill, a

former partner of Ernst & Young M&A in Sydney, has been a senior member of the investment team

at Ironbridge since 2004 and a Partner of the firm since 2009. Andrew Gray will join the board

immediately as a non-executive Director. Gray is currently the managing director of Value Capital

Partners (VCP), an investment firm with investment interests spanning software, technology,

healthcare, HCIT and growth businesses globally. Philip Kapp will join the board immediately as a

non-executive director. Kapp is a senior partner of Corrs Chambers Westgarth Lawyers.

Hugh Warner continues as executive director of Modun and Neil Hackett continues as a non-

executive Director and Company Secretary. Julian Knights, a founder of Ironbridge Capital, will

participate in the placement and has agreed to join a Modun Advisory Committee to assist the team

in generating and reviewing acquisition opportunities. Leigh Curyer will also participate in the

placement and has agreed to join a Modun Advisory Committee.

Source: Modun Resources Ltd.

NEW ADB OFFICE TO ADVISE ON PPP TRANSACTIONS

The Asian Development Bank (ADB) on 1 September announced the opening of a new office that will

focus on advising governments such as Mongolia's on shaping public-private partnerships (PPPs).

ADB will advise to help ensure that governments are able to bring to market bankable transactions.

The new ADB office will provide advice on project marketing, deal structuring, bid packaging, and

strategy so that governments are able to complete their transactions and achieve financial

closures.

"Using PPP business models is one of the best ways for developing Asia to meet its massive

infrastructure investment needs, estimated at USD 8 trillion up to 2020, given the significant

amount of private capital that is waiting to be deployed to well-structured and bankable deals,”

said Ryuichi Kaga, head of ADB's Office of Public Private Partnerships. “Accessing the operational

expertise of private companies is another advantage of PPPs for implementing infrastructure

projects efficiently,” he said.

Strategy 2020, the long-term strategic framework that guides ADB’s activities, identified the

private sector as critical to meeting Asia’s development needs. ADB has committed to having

private sector operations and development account for 50 percent of its activities by the end of

this decade. As well as delivering much-needed investment, the private sector can also help inject

greater efficiency and innovation into infrastructure projects in the region. ADB has advised on PPP

transactions for infrastructure projects such as the USD 1.3 billion combined heat and Power Plant

No. 5 in Mongolia.

Source: Montsame

SPONSORS

Oxford Business Group

Mongolian Economy Magazine

ECONOMY

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

The Bank of Mongolia on 2 September accepted bid offers of USD 3.5 million and CNY 40 million for

an average exchange rate of MNT 1,802.39 and MNT 239.12, respectively. The central bank also

received an equivalent of USD 41 million in swap agreement transactions from commercial banks.

The central bank reported on 3 September the issue of one-week bills worth MNT 94.2 billion at a

weighted interest of 12 percent a year.

The central bank reported on 3 September MNT 50.55 billion in bids for the auction for 12-week

treasury notes with a face value of MNT 40 billion. The bills were sold at a discounted price with an

average yield of 15.123 percent.

Source: Bank of Mongolia

BULGARIA TO INVEST IN UB TO OFFSET RUSSIAN SANCTIONS

Just weeks after Russia vetoed imports of agricultural products from the European Union, thus

Bulgaria as well, local companies have been looking for alternatives. As such, interest is rising in

Mongolia, the Asian country's honorary ambassador in Bulgaria informed.

According to Professor Lhamsuren Dugerzhav, Bulgarian companies are already enjoying the respect

and esteem in Ulaanbaatar and other areas of the country, he noted during the ceremony for the

opening of the Honorary Consulate of Mongolia in the country. The largest interest from Bulgaria

involves investments in mining in the Asian country. Currently, native gold mining companies’

production is from tailings. Much of the leading Mongolian specialists in this industry have

completed their higher education in Bulgaria. Therefore Bulgarian companies have a chance to

break out as subcontractors in the distant country.

There is also a newly set up Society for Bulgarian-Mongolian Friendship, created with the help of

three native companies with serious interest to invest in Mongolia. Bulgarian companies seem to

have a good chance to contribute for the building of water infrastructure and roads in the distant

country bordered by Russia to the north and China to the south, east and west.

Source: Standart News

TURKEY TO PROVIDE MONGOLIA WITH $300 MN OF LOANS

Defense Minister D. Bat-Erdene received a pledge for USD 300 million in aid from Turkey's deputy

prime minister while visiting the country to observe the inauguration of Turkish President Tayyip

Erdogan.

Deputy Prime Minister Blent Arinc, who is also the head of the Mongolia-Turkey Intergovernmental

Committee, promised to make available USD 300 million in low-interest, long-term loans while

meeting with Bat-Erdene. They also discussed ways to expand further bilateral economic and trade

relations and reviewed the progress made in relations since the Intergovernmental Committee

Meeting held in Ankara in March 2013.

Source: News.mn

WATER MUST BE INCLUDED IN ENERGY AND MINING PLANS, SAYS ADB

With water becoming increasingly scarce, Mongolia needs to take steps to include water resource

considerations in its development planning for energy generation and mining, according to a new

study by the Asian Development Bank (ADB) and Mongolia’s Ministry of Environment and Green

Development.

The ADB website goes on that the mining industry and thermal power stations are thirsty for

Mongolia’s increasingly scarce water, said Ayumi Konishi, director-general of ADB’s East Asia

Department. “In Mongolia, as elsewhere, it’s critical to consider water and energy use side by

side.”

The agriculture sector was until recently the dominant consumer of water in Mongolia. However,

this is changing quickly due to the rapid development of the mining industry and growing energy

demand. In 2013, mining accounted for 82 percent of exports and 18.5 percent of gross domestic

product (GDP). Meanwhile, demand for electricity from the mining and other sectors is expected to

rise fivefold from 2012 to 2030. Many new energy production facilities and mining operations are

planned for areas where water is most scarce, it says.

The study, “Demand in the Desert,” was launched on 3 September during “Eye on Asia,” a program

of activities convened by ADB as part of World Water Week in Stockholm, Sweden. The study

assesses the water- energy situation at the national level and in the Tuul River Basin and Galba-

Uush Doloodin Gobi Basin.

The Tuul River Basin provides much of Ulaanbaatar’s water and is also likely to be the site for a

new coal-fired plant to generate an additional 1,650 megawatts of power. The new facilities will

increase competition for water. Meanwhile, the Galba-Uush Doloodin Gobi basin, the site of large

mines including Tavan Tolgoi and Oyu Tolgoi as well as energy facilities, will be a major water user

by 2020. Major new mining operations and a new coal fired power station will dramatically increase

water demand.

Given the importance of water to development in Mongolia, ADB plans to help prepare a country

water security assessment that will examine the household, urban, economic, environmental, and

disaster resilience dimensions of water security.

Source: Asia Development Bank

APARTMENT CONSTRUCTION BEGINS IN ARKHANGAI

Construction of state-funded apartment complexes has begun in a town in Arkhangai Aimag.

The first stage of construction of a 120-residency apartment building at Erdenbulgan Soum,

Arkhangai has begun. Mongolia plans to build 1,000-resident apartment complexes in each of

Mongolia’s 21 provinces using its housing agency, the State Housing Corporation of Mongolia.

Construction has already begun at Darkhan-Uul as well as Selenge, Uvs and Khentii Aimags. Next to

see construction are Orkhon, Khuvsgul, Dornod and Khovd Aimags.

Source: Unuudur

INSPECTION AGENCY CRACKS DOWN ON FOOD ADDITIVES USED BY FOOD MANUFACTURERS

Ulaanbaatar's Specialized Inspection Agency is coming down on food producers they say are using

food additives that are harmful to human health.

The agency is ordering that companies change the ingredients in some foods, including

manufacturers of baked goods, dairy, and meats. It found in a survey of ingredients used by

companies that the additive dyes E123, 127 and 952 dyes were being used, which they said are

banned in the United States and Europe. Negative impacts from the additives include liver

aliments, risks to fetal development, respiratory disease, asthma and some cancers, it said.

Food additives were used in 274 types of raw ingredients, said the agency.

Source: Unuudur

JAPAN DONATES LAB EQUIPMENT

Japan has donated to Mongolia's Ministry of Science and Education MNT 700 million worth of natural

sciences equipment and laboratory facilities.

Japan's donation comes after Mongolia established similar labs at 100 schools last year for its

education initiative. The ministry plans to follow this up with new labs stocked with modern

equipment, and in keeping with that direction Japan has granted grant JPY 200 million (USD 2

million dollars) to Mongolia for the purchase of medical and educational resources.

Source: Montsame

NEW HOSPITAL TO ADDRESS MONGOLIA’S CANCER CRISIS

According to the World Health Organization (WHO), Mongolians are investing more money in their

health and consequently, living longer, healthier lives.

An increase in life expectancy and decrease in infant and maternal mortality in Mongolia are being

overshadowed by a greater risk for lifestyle-and behavior-dependent diseases. Mongolia’s rate of

cancer is particularly worrying. According to WHO, cancer is a leading cause of death worldwide

accounting for 8.2 million deaths (approximately 13 percent of all deaths) in 2012. The most

frequent cancers are lung, liver, stomach, colon, and breast cancer. Mongolia, for example, has the

highest rate of liver cancer in the world—33 times greater than the rate in Russia. Research

suggests that this high rate of cancer is largely a result of life style. World Bank research data from

2009 shows that 38.6 percent of survey respondents reported consuming alcohol in the 30 days

previous to taking the survey, and binge drinking (more than 5 drinks on one occasion for men, or

more than 4 drinks for women) was 39.7 percent in men and 15.1 percent in women.

Arjia Rinpoche, well-known to the public as a high Tibetan lama of Mongolian descent, has

investigated multiple pediatric cancer units in hospitals across the United States. Rinpoche and his

team convened with medical and government officials of Mongolia, and decided upon the current

structure: a six-story building within the grounds of the Mother’s and Children’s Medical Center in

Ulaanbaatar to address the key obstacles in child healthcare in Mongolia.

The hospital, while independently funded, will be a government run-organization. Rinpoche notes

that many of the problems apparent in Mongolian government hospitals, in particular corruption

and the lack of access to necessary and sufficient medication, will likely also be a problem here.

The cost of this hospital is currently at USD 2.8 million, of which almost USD 2.6 million has already

been raised. The funds have come from donations, predominantly from Taiwan, Hong Kong,

Singapore, and the United States, as well as from the European Mongolian Society and the

Mongolian Society of London.

Source: UB Post

LIFE IN ULAANBATAAR'S TENT CITY IS HARD—BUT MONGOLIANS WON'T GIVE UP THEIR GERS

Mongolia is urbanizing at a rapid pace, but for many citizens the ger remains central to their

identity. The gentle hillsides around Ulaanbaatar are peppered with dome-roofed gers covered in

white canvas, like rows of miniature circus big tops.

Planning has not been one of Ulaanbaatar’s strengths. Infrastructure is weak and underdeveloped.

New large construction projects often take place in unsuitable city center locations, including

public parks. But Dorjgotov and his colleagues hope their masterplan will change that. The

proposals for transforming the ger district are bold: invite private developers to sign deals with

residents and replace the gers with high-rise apartments for 70,000 families. The city government

has also introduced micro-finance schemes and begun building schools, communal houses and paved

roads in the district. Across the city, a USD 320 million soft loan from Asian Development Bank

(ADB) will be spent on infrastructure over the next nine years. The idea of an underground city

railway has been discussed.

Public officials may struggle to coax the ger dwellers to swap their felt and canvas for bricks and

mortar. Mongolians’ attachment to their gers is both practical—they are warm in winter and cool

and summer—and emotional. It is not just new migrants and impoverished residents who have

homes in the district. Many successful city workers live there, too. “Some people prefer to live like

this because they want space. They have small gardens, plant vegetables,” says Tungalagtuya

Khuukhenduu, who moved to Ulaanbaatar from the Gobi desert when she was 18, to attend

university, and now works for a local non-government organization.

Source: The Guardian

IS THE WALL OF COPPER SUPPLY FINALLY COMING?

This was supposed to be a year of supply surplus for the copper market—the largest mineral export

to China thanks to the Oyu Tolgoi mine. Yet here we are in September and visible inventory,

particularly that on the London Metal Exchange (LME), is still extremely low, while tightness flares

across the nearby LME spreads.

The International Copper Study Group's (ICSG) most recent monthly update assessed the global

refined copper market as being in a 450,000-ton deficit in the first five months of the year, or a

308,000-ton deficit once movements in Shanghai bonded stocks are factored into the equation.

While mined copper production has been rising, up five percent in January-May according to the

ICSG, it has been rising less than expected.

That in part is down to the normal start-up headaches of bringing new mines on stream, but in

greater part it is down to Indonesia's ban on exports of copper concentrates from the Grasberg and

Batu Hijau mines. That ban is now dissolving. Freeport McMoRan, which operates Grasberg, has

resumed shipments, while Newmont Mining, which operates Batu Hijau, is close to doing so. But

Indonesia has not been the only supply hit and delays and start-up problems are found at new

mines.

The Indonesian effect will now wane. The resumption of Indonesian supply will take place just as

three new mines start adding to global concentrates supply. The Caserones mine in Chile, owned by

Japan's Pan Pacific Copper and Mitsui & Co. Ltd, was due to have started operations in January but

only made it into commercial production at the end of May. It is targeting production of around

75,000 tons this year, half its nominal capacity. Closer to original time-table but over-budget has

been the Sierra Gorda mine, also in Chile. Brazil's Vale SA, meanwhile, completed the second-phase

development of its Salobo mine, adding 100,000 tons of annual capacity, during the second quarter.

Toromocho is also ramping up, albeit more slowly than expected, while Oyu Tolgoi LLC in Mongolia

and Bisha in Eritrea have already made it past the teething-problem stage of commissioning.

Source: Reuters

COAL MINERS SEE SIGNS OF RECOVERY AS PRICES STABILIZE

For two years, the world's coal miners have been plagued by a glut of the fuel that has battered

prices and led to the closure of mines, straining tiny towns from Australia to South Africa reliant on

their operations. Now, some of the largest shippers are signaling the worst may be over as prices

stabilize.

Coal mining executives say a string of pit shutdowns should finally kick-start the market by curbing

supply, while demand from buyers such as China and India appears to be picking up. The optimism

is a reversal from past months when companies warned of a sustained market surplus, although

they are stopping short of tipping a sharp rebound and see any recovery as gradual. Coal is one of

the world's most important energy products and is the biggest source of electricity generation,

supplying about 40 percent of global needs, the International Energy Agency says. For a country like

Mongolia, which counts coal as its second largest export after copper, coal is an important source

of jobs and revenue.

While spot prices are yet to enjoy much of a lift, having largely flattened over the past month,

miners are benefiting from the renewed enthusiasm. Whitehaven shares have rallied 37 percent

since the start of July, while Indonesian producer PT Adaro Energy is up 12 percent. Supply rose

more quickly than demand over the past couple of years, as mines that were planned when the

market was booming moved into production. Glencore PLC says thermal coal shipped by sea rose 22

percent between 2011 and 2013, outpacing demand, which rose 18 percent. As a result, the price

of thermal coal, which is used to generate electricity, has been trading near its lowest level in five

years. Metallurgical coal, a steelmaking ingredient, is near its lowest in seven. But production

cutbacks could spark a recovery in metallurgical coal.

Source: Wall Street Journal

IRON ORE HITS A NEW TWO-YEAR LOW

Concern about slowing demand in China has pushed the price of iron ore, a key steelmaking

ingredient and Mongolia's third-largest mineral export, to its lowest level in two years.

A huge increase in supply from the big three global producers—BHP Billiton Ltd., Rio Tinto PLC and

Vale SA, which all depend heavily on iron ore for their profitability—has weighed on the raw

material this year. The price has fallen by more than 35 percent. But the recent sell-off, which has

seen the price of benchmark Australian ore fall from almost USD 100 in early July to USD 85.70 a

ton on Wednesday, has been driven by fears about China, the world’s biggest consumer of seaborne

iron ore.

“We believe that the current weakness in iron ore is being led by a fall in steel demand and prices

within China. Property, construction and infrastructure sectors remain weak and as such steel

demand and prices are falling,” analysts at Goldman Sachs said a report published earlier this

week. “Unless we get significant stimulus in second half of 2014 we believe that there remains the

potential for steel prices to continue to fall, placing increased demand weakness on iron ore,” it

said.

China’s manufacturing sector, which is a big consumer of steel, slowed significantly in August in a

sign of renewed weakness in the world’s second-largest economy. At the same, BHP, Rio and Vale

are pressing ahead with their iron ore expansion plans. Sam Walsh, the chief executive of Rio,

recently told investors “now is not the time for the best iron producer in the world to take a step

back.” Smaller producers are also targeting increased production. Fortescue Metals Group, another

big Australian producer, is looking to raise output to 155-160m tons, while billionaire Gina Rinehart

is set to bring her 55 million ton a year Roy Hill mine on line next year. And if that were not

enough, Anglo American PLC is set to start production from its 26.5 million tons a year Minas Rio

project by the end of the year.

Source: Financial Times

POLITICS

PUTIN VISITS MONGOLIA TO BOOST TRADE TIES

With the crisis in Ukraine hanging over his head, Russian President Vladimir Putin touched down in

Mongolia on a Wednesday trip that could prove key to Russian-Mongolian trade ties.

It was a flying visit—a mere six hours from start to finish—but with the fluctuating situation in

Ukraine and the resulting sanctions war threatening to erode the domestic popularity Putin won

with his clinical amputation of Crimea, the question for many is why he bothered at all. But it is

thought to be precisely this pressure that has prompted Putin to look to his seemingly insignificant

neighbor.

"Because of the emerging situation [in Ukraine], Russia is paying more attention to its immediate

neighbor," Altai Dulbaa, professor in Russian studies from the International Studies Institute of the

Mongolian Academy of Sciences said. "Sanctions from the west mean it falls under Russian interests

to look to the east. Now Russia is no longer importing meat from Australia, Mongolia wants to fill

that gap—we have 60 million animals in Mongolia," she said.

Putin said that there was the "potential for Russia to import Mongolian meat," providing the country

could meet international export standards. At a press conference with Elbegdorj, Putin also

emphasized the strong "military and cultural ties" between the two nations and agreed to increasing

trade from its current level of USD 1.6 billion per year to USD 10 billion by 2020.

Parliamentarian and former prime minister Amarjargal Rinchinnyam said Mongolia had been

disappointed by the "visibility" of its third neighbors over the past decades. "It would have been

nice to see more of our third neighbors—but we cannot have everything," he said at a conference on

Tuesday.

Mongolia's open desire not only to continue, but increase economic links with Russia is further

evidence of its lack of satisfaction with these "third neighbors." Mongolia’s lack of capability when

it comes to mass production means that any increased trade ties must be matched with investment

in the country’s infrastructure and along with the pledge of increased trade, came the promise of a

new railway.

What was agreed: Trade between Mongolia and Russia to reach USD 10 billion by 2020; Negotiations

to begin on Mongolian exports to Russia without tax or customs for the next 20 years; Mongolians

and Russians can now travel between the nations without visas; Mongolia needs to begin developing

border ports to international standards; An agreement was signed to develop Ulaanbaatar Railways;

Schools and training centers will be developed to expand cultural, sports, arts, media cooperation;

and Russia will provide a military-technical grant to Mongolia.

Source: Al Jazeera

MONGOLIA'S 'REBALANCE' TOWARD RUSSIA AND CHINA

In a bid to boost its ailing economy, Mongolia is refocusing its foreign policy on its traditional

partners Russia and China. But experts warn Ulaanbaatar runs the risk of becoming increasingly

dependent.

Topping Russian President Vladimir Putin's agenda for his visit this week was trade and

infrastructure. Like neighboring China, Russia is seeking to benefit from Mongolia's globally

significant mineral resources, and backed this by extending financial support for the development

of Mongolia's infrastructure. Other issues during the visit revolved around boosting bilateral

investment as well as the oft-mooted proposal to build an oil and gas pipeline from Russia to China

through Mongolia, say experts.

Mongolia's "third neighbor" policy, as the name suggests, has never been about replacing Russia and

China. "Mongolia has consistently attempted to balance the influence of its two neighbors, while

supplementing this with the support of countries like Japan, South Korea, Canada, and the United

States," Neil Ashdown, a Mongolia expert and senior Asia-Pacific analyst at IHS, a global information

and analytics firm, said.

“Where in the past Mongolian policymakers and parliamentarians might have been willing to accept

a lower economic return on a project in return for supporting the diplomatic goal of maintaining a

broad base of relations, they are now likely to be driven more by the bottom line," he said. As such,

"for as long as it's economic situation remains comparatively unfavorable, we are likely to see

Mongolia lean towards China in particular, but also Russia."

As a result, Beijing and Moscow have become more important than ever for Ulaanbaatar and both

seem increasingly willing to further tap into Mongolia's natural resources. One crucial obstacle,

however, remains Mongolia's underdeveloped infrastructure connections with its two neighbors. The

mineral-rich southern belt of the country is largely unserved by rail infrastructure, making

Mongolia's mineral exports less competitive.

The key issue for both sides will be the extent to which their visits are seen as promoting trilateral

co-operation over bilateral competition over Mongolia.

Source: DW

RUSSIA AND MONGOLIA FINALIZE VISA-FREE TRAVEL AGREEMENT

Mongolians received visa-free travel to Russia, effective 1 January 2015, during the visit of Vladimir

Putin on 3 September. The agreement granted Mongolian citizens the right to 30-day travel within

Russia without formal visa registration and the same for Russians traveling in Mongolia.

Source: News.mn

MONGOLIA EXPANDS REPRESENTATION AT IMF AND WORLD BANK

The Cabinet Secretariat on 28 August appointed permanent representatives to the International

Monetary Fund (IMF) and World Bank. Mongolia plans to send a group of specialists to the

international financial organizations for experience sharing and to act as executive directors on

each board.

Source: InfoMongolia.com

NIIGATA MAYOR VISITS KHOVSGOL

The mayor of Japanese prefecture Niigata prefecture on 27 August signed a cooperation agreement

with the local administration of Khuvsgul Aimag during an official visit. The agreement creates the

foundation for experience sharing in the areas of foreign relations, tourism, health and education.

Source: Montsame

ACTING HEAD OF GENERAL POLICE AGENCY APPOINTED TO PERMANENT POSITION

The Cabinet Secretariat on 27 August appointed acting head of the General Police Department S.

Baatarjav into the position permanently.

Baatarjav received his appointment as acting head in August following the dismissal of Brigadier

General B. Bilegt due his role in what the Cabinet said was the defamation of Justice Minister Kh.

Temuujin. Prior to his current position, Baatarjav served as deputy first head of the General Police

Agency. Baatarjav has been working in law enforcement for 29 years, starting his career as a

detective in the Tuv Aimag Police Department before being promoted to criminal agent, and senior

agent at the Selenge Aimag and Darkhan-Uul police departments.

Source: News.mn

NUT COLLECTORS TO RECEIVE FINES

Mongolia is cracking down on those who collect cedar nuts from the pine cones that grow on

Siberian pines when they are out of season.

Regulations state that anyone found guilty of collecting the pine cones during the off-season will be

fined 15 times the minimum wage. State environmental regulations allow cedar nuts to be

collected from 15 October to 15 March because that is when the Siberian pines are in season, every

three or four years.

Harvesting the nuts in September or October may have negative impacts on the trees. The cones

turn green when out of season, which mean they are likely to have greater quantities of pine resin

and can cause infectious disease. Green cones are also more difficult to shake off of branches and

attempting to do so could damage the tree permanently.

In Mongolia, pine forests cover a little more than 683,000 hectares. Pine forests play a significant

role in directing the river flow of streams, protect against soil erosion, reduce greenhouse gases,

maintain glacial formations, and provide a habitat for numerous species of plants and animals.

Source: News.mn

DETAILS OF FORMER SOVIET POSITIONS IN MONGOLIA UNVEILED

Years ahead of the Soviet Union’s last-minute entry into war against Japan towards the end of

World War II, the country massively fortified its position along the border area between Mongolia

and Manchuria. The finding is based on expeditions by a joint team of Japanese and Mongolian

researchers to the former battle site of what is known as the 1939 Nomonhan Incident in Japan.

Russia today calls it the Battle of Khalkhin Gol.

“Our study showed that the Soviet Union was covertly preparing for a massive assault on Japan

even years before it entered war against Japan (in August 1945),” said Hisaya Okazaki, who led the

research team.

The recent expedition in Mongolia was carried out in June to mark the 75th anniversary of the

Nomonhan Incident. Mongolia was under the Soviet sphere of influence at that time. As a puppet

state of Japan, Manchukuo in Manchuria, in northeastern China, was controlled by the Kwantung

Army, a division of the Imperial Japanese Army. A skirmish between Mongolian and Manchurian

troops that broke out on May 11, 1939, escalated into a full-scale battle between Soviet troops and

the Kwantung Army. After the Soviet forces’ massive assault on 20 August, the Japanese army was

wiped out. By the time a cease-fire was reached on 16 September, Japanese casualties totaled

20,000 and 26,000 for the Soviet side.

While the Nomonhan Incident is relatively unknown, it had significant ramifications on Japan’s

future. After the Kwantung Army’s defeat, factions pushing for Japan to advance southward were

able to gain momentum. This culminated in the nation entering the Pacific War against the United

States in 1941. Although the Japanese officers defied Tokyo headquarters’ orders by escalating the

Nomonhan Incident, no one was ever held accountable. Those officers went on to play an important

role in charting out disastrous campaigns, including the Battle of Imphal in India and Guadalcanal

Campaign in Solomon Islands in the South Pacific. With little or no supplies, most of their troops

died of starvation or disease in both battles.

Source: Asahi Shimbun

MOVING MONGOLIA FORWARD—AND WHY INS?

A group of men were enjoying the midday sunshine and each other’s company. They were rivals and

friends—who drank and played together. This day, they were enjoying their vodka and telling

stories while a sheep was tethered to a pole 20 meters away. Several hours passed this way before

the men started waking up. They were hung-over, but still cheerful. Somebody said, “Let’s eat.”

And they all looked to the table, where there was no food. One looked back in the direction of the

sheep, and laughed. Another sleepily said, “The sheep is still a sheep.”

Since October 2013, the economic conditions of the country have further deteriorated. Today there

is significant disillusionment with many media opinions being expressed in a negative manner.

There are many different opinions as to the causes of our collective problems and it is the aim of

the Institute of National Strategy to add to the debate, but hopefully in a way that brings people

together to discuss the issues, and ultimately, to put meaningful solutions into place. The following

situations focus us on just five issues that will be addressed in the early articles of the INS article

series.

Situation 1: A good measure of a country’s wealth is its physical and social infrastructure. The

condition of Mongolia’s roads, railways, airports, power stations, hospitals, clinics, schools,

sporting, cultural and other facilities are a poor reflection of Mongolia’s natural beauty.

Situation 2: The government sets the conditions for Mongolia to generate the funding needed to

tackle these physical and social infrastructure challenges. Importantly, these challenges present

business opportunities and economic benefits. Jobs and taxes will be generated as these projects

turn from pipedreams into construction projects and into operating realities.

Situation 3: Mongolia has experienced high and semi-high rates of economic growth since 2010.

However, we now have significant devaluation of the national currency and steadily growing

inflation rates.

Situation 4: Countries with high GDP and globally successful companies “benchmark” their

performance and strategies against the best in their field. They know that getting into the “top

league” is hard work.

Situation 5: In Mongolia, democracy is strong, evidenced by the number of newspapers, TV channels

and internet platforms available to Mongolians. A recent article, written by a Mongolian, was

posted on the website “Mongolia Focus,” where it raised the issues of foreign investors and their

appetite for Mongolia. But what the article really addressed was how the writer saw business and

government working in practice. This is obviously not a flattering view and we are sure some will

object to the assessment and some will say it is not helpful for this type of discussion to occur.

The Institute of National Strategy was formed because the leadership of Mongolia’s business

associations knows there is a huge gap in public policy debate. They feel this debate should be

vibrant and focused on Mongolia’s strategic development choices and economic management.

Importantly, these debates should be based on unbiased research and through working with leading

edge Mongolians and international thinkers. A key focus of INS is to see the private sector radically

stimulated and for Mongolia to reap the benefits of a market driven economy. Specifically, INS aims

to provide regular commentary via an article series on critical issues facing Mongolia and to provide

input into long term strategic development planning.

Source: UB Post

CHINA AND MONGOLIA: REALIZING A ‘COMPREHENSIVE STRATEGIC PARTNERSHIP' – EDITORIAL

On 22 August, Chinese President Xi Jinping wrapped up his two-day trip to Mongolia, which is

noteworthy not just because he signed as many as 26 agreements but because this was his second

single country visit since he became President and also a first by a head of state after 11 years.

This raises questions about why Mongolia has acquired special attention in Xi’s foreign policy and

whether this indicates a new shift.

China had outwitted Russia in becoming the largest investor in Mongolia in 1998 and the largest

trading partner in 1999. This deepening of ties was in tandem with changes in Mongolia-Russia

relations post the Cold War era. Simply put, China’s dominance on Mongolia’s economy in terms of

trade and investment is not a new phenomenon. Rather, economic over-dependence on China has

alerted Mongolia to reconstitute its foreign policy and adopt a new strategy in 2011 that Jeffrey

Reeves has called the “omni-enmeshment and balance of influence” approach. This new approach

called for engaging not only a number of great powers through multilateral and bilateral

mechanisms but also balancing against one country through triangular politics. Evidently thus,

Mongolia signed the strategic partnership with the United States in 2013. It expanded defense ties

with India in 2011 much to the concern of China. This new policy thrust though does not lessen its

economic dependence on China, however, it does accrue deterrence for Mongolia.

While these vulnerabilities have been around for quite some time, the current fillip to China’s

Mongolia thrust has come from the U.S. rebalancing strategy under Barack Obama that in turn has

reinforced Mongolia’s “third neighbor” strategy. To this, Xi Jinping has retaliated with a new

foreign policy initiative. As articulated by a noted Chinese scholar, Yan Xuetong, this new initiative

instead of ascribing top priority to China’s relations with the United States, emphasizes on giving

first priority to its relations with neighboring countries. Xi Jinping thus, went to Mongolia to sell his

dream of the New Silk Road economic belt. Outlining the need for China and Mongolia to be good

neighbors and support each other, his 22 August speech in Mongolia offered sops including

Mongolia’s bid for membership in the APEC and acceptance for the Ulaanbaatar proposal for a

trilateral summit, involving Mongolia, Russia and China. Also, Xi tried to assuage Mongolians’ fear

about Chinese intentions and reiterated China’s peaceful development and win-win strategy.

Clearly, Xi’s visit was intended to enlist the support of Mongolia in fulfilling the Chinese dream, but

Mongolia like most other China’s neighbors while eager to engage economically, is not sanguine of

Chinese intentions.

Abanti Bhattacharya is an associate professor at the department of East Asian Studies at the

University of Delhi.

Source: Eurasia Review

___________________________________________________________

ANNOUNCEMENTS

RISK MANAGEMENT AND INSURANCE SOLUTIONS CONFERENCE, 15 OCTOBER, BLUE SKY TOWER

The Business Council of Mongolia has partnered with Aon for the Risk Management and Insurance

Solutions Conference for Mongolian industries on 15 October at the Blue Sky Hotel and Tower in

Ulaanbaatar.

A mining session will be held the morning of the conference by a number of business professionals

from the leading reinsurance and insurance markets of Europe who will provide an up-to-date

overview of the mining industry with a major focus on real cases and applicable specifics. A guest

speaker from Oyu Tolgoi LLC, the most significant as well as technically-advanced project in

Mongolia, will provide an insight on the Health and Safety risk approach introduced into their

operations. Political risks and trade credit will be in focus in the afternoon for the second session of

the conference day, as well as analysis of Aon's crisis management practices.

Participation is free of charge and is subject to preliminary reservation. Email

saruul@bcmongolia.org by 30 September for registration or call 11 317027.

____________________________________________________________________

OIL & OIL SHALE MONGOLIA 2014, 10-11 SEPTEMBER, UB

The international investment conference Oil & Oil Shale Mongolia 2014 is back with a new

scheduled date on 10 and 11 September.

The Ministry of Mining and Petroleum Authority and Minex Mongolia LLC have decided to host the

event after the passage of the long-awaited new Petroleum Law. This will be the country's first

international investment conference on oil, gas, and oil shale. The event will be attended by

international investors, oil, gas, and oil shale companies, service providers, consultancies,

equipment suppliers, and traders. Delegates will have the opportunity to network with key industry

contacts and obtain vital information on legislation and policies on oil, gas, and oil shale

exploration and production regulations from government authorities.

BCM members will receive a 15 percent discount to attend the conference. For more information or

to register email Chimednyam at chimednyam@minex.mn or call +976 344488, or +976 9910-5877.

_____________________________________________________________________

MONGOLIA PROJECTS & INVESTMENT SUMMIT, HONG KONG, 17-19 NOVEMBER

The Mongolia Projects & Investment Summit will be held in Hong Kong from 17 to 19 November,

where Prime Minister Norovyn Altankhuyag will present his vision to sustain Mongolia’s growth.

The context of the Summit will be a constructive, productive and sincere appraisal of Mongolia as a

place for FDI, given the current circumstances, and what is being done to strengthen its

attractiveness to the international investment community. The Mongolia Projects & Investment

Summit Hong Kong will bring together leading business, investment and governmental figureheads

in an environment of progressive discussion and action.

The implementation of the new Investment Law, amendments made to the Mining Law, a realized

dedication to PPP and more do show that the government is moving in the right direction. The

question on investors’ minds is what tangible progress has been made since last November which

would warrant a return of FDI?

BCM members will be eligible for a 15 percent early bird special that lasts until 12 September.

Download the brochure for the conference agenda here. For registration logon here, or for more

information email info@beaconevents.com or call: +852 2219 0111.

_____________________________________________________________________

BCM WORKING GROUP NEWS

The BCM Environmental Working Group met on Thursday, 28 August with 33 members attending.

Bayarmaa A, Vice Director, BCM opened the meeting and announced the new chair of BCM's

Environmental WG.

New chair Bulganmurun Ts, Senior Officer at GGGI moderated the session. Congratulations to her on

her new role.

New Participants: Otgonsuren A - Wildlife Conservation Society, Yokoyama Hiroki - JICA,

Sugarkhorloo E - Techenomics, Sarnai G - Areva, Jargalsaikhan D, Ganchimeg R - MIH group, Naoh

Elbat, Ryan Calvert - Xac Bank, Darisuren P - US Embassy, Munkhjargal B - Mongolian Association of

Urban Centers, David Tsiklaur - USAID, Steffi Klawiter - MNU, Zandan B - UK Embassy.

Guests: Bjoern Wahlstedt - GIZ, Bunchingiv B - UNDP, Robert Angle - UC Merced Foundation and

University of California, Sugar E - Professional sport training center, Quentin Moreau - People in

Need, Itgel B - Gateway Development Mongolia, Bat - Erdene A - Green tTends.

Speakers and topics were:

Opening Remarks by:

Ms. Bayarmaa Amarjargal, Vice Director, BCM/Former Chair of the BCM’s Environment Working

Group

Ms. Bulganmurun Tsevegjav, Senior Officer at GGGI's Mongolia Representative Office, as our new

Working

Group Chair;

Presentations:

• "GGGI's work in Mongolia and Mongolia's National Green Development Strategy with Focus on

Greening the Building Sector Opportunities and Challenges" by Ms. Bulganmurun Tsevegjav;

• "Mongolia's Green Building Council and Experience Sharing on Green Building Potentials" by Ms.

Nergui Dorj, Founder and Board Member of MGBC and Director of Mongolian National University;

• "Urban NEXUS activities of Ulaanbaatar city government with focus on buildings " by Mr.

Otgonbaatar Dorjgotov, Head of the Project and Cooperation Department, Ulaanbaatar City.

We are looking forward to follow up on this meeting and coordinate with the Mongolian Green

Building Council, Ulaanbaatar City government, private sector and other sector, associations

focusing on Green building development.

BCM will soon be establishing its Energy and Construction Working Group. If you’re interested in

joining this new working group, please contact Erdenetsetseg at erka@bcmongolia.org

______________________________________________________________________________________

BCM WEBSITES

MONGOLIAN WEBSITE: ‘PRESENTATIONS’

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

http://bcmongolia.org/mn/илтгэлүүд

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

статистикийн хороо

• Мандал Женерал Даатгал тайлан, 2014 оны 5 сар

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

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

статистикийн хороо

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

and Public Awareness Department, Senior Commissioner, Independent Authority Against Corruption

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

ON TRANSPARENCY” Training seminar, Mar 06, 2014

___________________________________________

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

BUSINESS NEWS’, ‘PHOTO GALLERY’

2 presentations from BCM monthly meeting on June 23, 2014:

• T. Gansuld, Executive Director, Outotec Mongolia – “Outotec Mineral Processing Solutions

and Experience in Mongolia”

• Lisa Gardner, Journalist & Media Trainer – “Mongolia’s Media Laws: Defamation, Libel and

Threats to Press Freedom”

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

• B. Lakshmi, Director, Mongolia Economic Forum – “Why Mongolia Business Summit?”

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

Privatizations”

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

Achievements and Challenges”

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

Securities Limited

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

• Mongolia Economic Report – August 2014 by BCM;

• World Investment Report 2014 by United Nations Conference on Trade and Development ;

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

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

оны 3 сарын байдлаар, Үндэсний статистикийн хороо);

• Real Estate Report 2014 by Mongolia Properties;

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

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

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

• Polit Barometer by Sant Maral Foundation, March 2014.

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

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

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

• Jim Dwyer, Executive Director, BCM – “Business need more business”;

• Damshnamjil Tsogtbaatar, Chairman of the SPC: “Privatizing Mongolia”;

• Jan Hansen, Economist, ADB: “The depreciation should help to increase the

competitiveness and to develop the non-mining industrial sector”.

BCM's English website includes the “Mongolia Business News” section. BCM continuously posts news

stories and analysis of relevance to Mongolia at ‘Mongolian Business News” before they are all put

together each week for Friday's weekly NewsWire.

The “Photo Gallery” contains photos from the 6th Anniversary BCM Renewal dinner on November

11, 2013.

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

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

___________________________________________

SOCIAL NETWORK WITH BCM

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

Keep up to date on the latest business deals in Mongolia and how the climate for investment is

improving each day with BCM.

Add BCM on Facebook at https://www.facebook.com/TheBusinessCouncilOfMongolia to read the

latest announcements and comment on events carried in the NewsWire with the community.

Hear breaking news and announcements as they happen when you follow BCM on Twitter at

https://twitter.com/bcmongolia.

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

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

LinkedIn page.

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

Social stats: BCM now has 6,028 fans on our Facebook fans page, 1,718 connections on LinkedIn

network, and 1,208 followers on Twitter.

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

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

________________________________________________

INFLATION

Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]

Year 2007 *15.1% [source: NSOM]

Year 2008 *22.1% [source: NSOM]

Year 2009 *4.2% [source: NSOM]

Year 2010 *13.0% [source: NSOM]

Year 2011 *10.2% [source: NSOM]

Year 2012 *14.0% [source: NSOM]

Year 2013 *12.5% [source: NSOM]

July 31, 2014 *14.9% [source: NSOM]

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

Note: 15.4% y-o-y, Ulaanbaatar city, July 31, 2014

CENTRAL BANK POLICY LOAN RATE

December 31, 2008 9.75% [source: IMF]

March 11, 2009 14.00% [source: IMF]

May 12, 2009 12.75% [source: IMF]

June 12, 2009 11.50% [source: IMF]

September 30, 2009 10.00% [source: IMF]

May 12, 2010 11.00% [source: IMF]

April 28, 2011 11.50% [source: IMF]

August 25, 2011 11.75% [source: IMF]

October 25, 2011 12.25% [source: IMF]

March 19, 2012 12.75% [source: Mongol Bank]

April 18, 2012 13.25% [source: Mongol Bank]

January 25, 2013 12.50% [source: Mongol Bank]

April 8, 2013 11.50% [source: Mongol Bank]

June 25, 2013 10.50% [source: Mongol Bank]

July 30, 2014 12.00% {source: Mongol Bank}

CURRENCY RATES – 4 SEPTEMBER 2014

Currency Name Currency Rate

US Dollar USD 1,832.41

Euro EUR 2,408.34

Japanese yen JPY 17.46

British pound GBP 3,015.51

Hong Kong dollar HKD 236.43

Chinese Yuan CNY 298.64

Russian Ruble RUB 49.52

South Korean won KRW 1.80

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.

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