BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 338 – August 15, 2014

NEWS HIGHLIGHTS:

Business

Rio secures power deal for Mongolian copper mine;

Turquoise Hill aims to end Mongolia tax dispute before deadline;

SouthGobi narrows Q2 loss on higher sales despite low prices;

Xanadu intersects 665.7m of copper-gold mineralization;

MEC announces further extensions of debt repayment moratorium;

Japan to help launch shrimp farm;

VIP Taxi launches in August;

Redundancies expected at MSE as it cuts down on costs;

MGG reports 32.3 percent growth in same-store rentals for June;

Mongolian Economy partners with Global Water Partnership;

Medical equipment exhibition in UB;

Mongolia-Japan Business Forum concludes;

Mongolia-Korea Economic Forum convenes;

Luxury brand Tengri inspires environmental change in Mongolia;

OT building sports center in Manlai Soum;

Rio Tinto opens Galba public park in Khanbogd;

Rio Tinto's cuts are the deepest;

Centerra's Kumtor mine produces 5.6 tons of gold H1 2014.

Economy

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

USAID’s BPI supports Mongolian tax administration’s new tax e-pay system;

Mongolia expects a good harvest of crops in 2014;

Nationwide roads project to complete this year;

Births, infant mortality on the rise;

Real household income declines while expenses increase;

New apartments to replace 21 derelict buildings;

UB receives online applications from 84,000 for land requests;

Swine flu outbreak in Bulgan;

Golden Eagle Festival held in Nalaikh;

Operation Pacific Angel brings over 70 medical specialists to Mongolia;

Copper slumps on Chinese demand concern.

Politics

MPs called out on poor attendance records;

Cabinet forms copper development team;

Cabinet approves program to support the arts;

Minister of Road visits Russia;

Russian army arrives in Mongolia for joint military exercise;

Peacekeepers pay tribute to military banner;

Mongolia to celebrate Chinese culture in August;

Mongolia awards Kyakhta border service of Russia in Buryatia;

UB to charge fees for driving in UB city center;

Groups speak out for residents against a Chinese gold miner;

Case against the Prime Minister`s daughter is dismissed;

Mongolia deports 427 foreign illegals;

Cybercrime raises concerns for local businesses;

Light ahead for Mongolia’s LGBT youth;

Mongolian-Japanese EPA: Counterbalancing China and Russia – EDITORIAL;

Is Xi serious about cracking down on corruption? - 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

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Invest Mongolia Agency

BUSINESS

RIO SECURES POWER DEAL FOR MONGOLIAN COPPER MINE

Rio Tinto PLC on Thursday secured an agreement with the Mongolian government for the

construction of a power generation plant to feed the USD 6.5 billion Oyu Tolgoi copper project,

ahead of a September 30 deadline for a decision on project financing.

The Oyu Tolgoi LLC mining unit will be the primary consumer of energy generated from the power

station, which is expected to be built near Mongolia's state-owned Tavan Tolgoi coal mine. Mongolia

will hold an international tender to select a private company to fund construction and then own and

operate the power plant, said Oyu Tolgoi in a 14 August statement. Mongolia's prime minister,

Norov Altankhuyag, signed the Power Sector Cooperation Agreement (PSCA) alongside the country's

minister of energy, and Oyu Tolgoi's Rio Tinto president and chief executive officer, Craig Kinnell.

Currently the project is sourcing power from China's state-owned Inner Mongolia Power Corp.

region. The investment agreement Rio has with the government for the project stipulates that it

must secure a local power source by 2017.

"The PSCA is a positive development for Oyu Tolgoi," said Rio Tinto Copper chief executive Jean-

Sebastien Jacques, in the statement. "It demonstrates how the Government and we can work

together to achieve shared objectives - in this case, developing a long-term, economically

competitive, and reliable power supply in the South Gobi."

Source: Reuters

TURQUOISE HILL AIMS TO END MONGOLIA TAX DISPUTE BEFORE DEADLINE

Turquoise Hill Resources is working to resolve a tax dispute with the Mongolian government before

an extension runs out on funding commitments for the underground expansion of its Oyu Tolgoi gold

and copper mine, the company's chief executive officer said on Tuesday.

"We are all aware of the September 30 date and we are all working toward that deadline," Chief

Executive Officer Kay Priestly said on a conference call with investors, referring to the expiration of

a six-month extension on bank commitments to fund the project. "Clearly the underground is a

significant part of the value of this mine, and right now we're focused on progressing the

underground."

The underground development of Oyu Tolgoi, which is one of the world's largest undeveloped

copper deposits, was put on hold last year when the Mongolian government became concerned that

cost overruns would delay the flow of the government's share of profits from the mine. In May, a

group of banks agreed to extend their commitment to fund the project, but efforts to restart

development work hit a snag in June, when the Canadian company filed a notice of dispute with the

government of Mongolia, after tax authorities claimed unpaid taxes and penalties related to the

project.

Priestly said development work on the Oyu Tolgoi expansion project would resume once the

outstanding shareholder issues, including tax claims, are resolved and all parties have agreed on a

comprehensive funding plan. The underground expansion must also be approved by Turquoise Hill

and the Mongolian government. The Vancouver-based company said a feasibility study, originally

expected in June, is nearly complete.

Source: Reuters

SOUTHGOBI NARROWS Q2 LOSS ON HIGHER SALES DESPITE LOW PRICES

Toronto-and Hong Kong-listed SouthGobi Resources Ltd. on Monday reported a narrower net loss in

the second quarter ended June 30, propped up by higher coal sales, which was offset by

significantly lower coal prices.

The Hong Kong-based miner reported a net loss of USD 23.17 million, or USD 0.12 a share, compared

with a loss of USD 33.14 million in the same quarter a year earlier. Two Bay Street analysts

expected a loss of USD 0.073 a share on revenue of USD 17.6 million. SouthGobi reported revenue of

USD 6.7 million, marginally higher compared with USD 6.13 million in the same quarter last year,

despite total coal sales nearly doubling to 630,000 tons. This was offset by the average realized coal

price falling 52 percent to USD 12.52 a ton in the period, compared with USD 26.26 a ton a year

earlier.

During the second quarter, the company shipped 910,000 tons of coal from its Mongolia-based

flagship Ovoot Tolgoi coal mine that sells coal to Chinese customers, but only recognized revenue

for 630,000 tons, with the remaining 280,000 tons expected to meet revenue recognition

requirements in the second half of the year.

―The company continues to operate under difficult market conditions. Coal prices in China declined

further in the second quarter compared to the first quarter of 2014 in response to excess seaborne

and Chinese domestic supply,‖ SouthGobi said in a statement.

Output in the quarter decreased to 550,000 tons of raw coal, compared with 640,000 in the first

quarter of this year. This decrease was owing to the company‘s decision in June to reduce its

production and place about half of its workforce on furlough, which was expected to remain until

the end of August, depending on market conditions. During the quarter, the company obtained a

CAD 10 million revolving credit facility from Turquoise Hill to meet its short-term working capital

requirements with a maturity date of 30 August. At 30 June, the company had drawn down CAD 3.8

million under this facility.

SouthGobi also during the quarter completed the sale of its Tsagaan Tolgoi mining license for net

proceeds of CAD 1.3 million.

Source: Mining Weekly

XANADU INTERSECTS 665.7M OF COPPER-GOLD MINERALIZATION

Xanadu Mines Ltd. has confirmed the presence of a significant mineralized tourmaline breccia

system east of the high-grade Altan Tolgoi prospect at the Kharmagtai project.

Drill hole KHDDH344 assays are: 665.7 meters at 0.37 percent copper and 0.28 grams per ton of gold

from surface including 312 meters at 0.49 percent copper and 0.40 grams per ton of gold from 274

meters. Xanadu said that the geophysical signature of the tourmaline breccia can be traced for at

least 3.5 kilometers under shallow cover.

Drilling continues along the new discovery zone with step out drill hole KHDDH346 intersecting

significant visible copper sulphide mineralization between 140 meters and the 670 meters, the

current depth. Xanadu has now extended the strike length of the Altan Tolgoi system to over 600

meters and mineralization remains open to the west, east and at depth.

Source: Proactive Investors

MEC ANNOUNCES FURTHER EXTENSIONS OF DEBT REPAYMENT MORATORIUM

Mongolia Energy Corporation (MEC) Ltd. on 12 August announced that it had negotiated an extension

until 12 September for repayment to corporate bond holders. MEC will extend the deadline for its

SF convertible note, a 3.5 percent GI convertible note, and a 3 percent CTF convertible note while

it restructures its debt with all convertible noteholders.

Source: Mongolia Energy Corp.

JAPAN TO HELP LAUNCH SHRIMP FARM

Mongolia-Japan joint venture ISAK and Japanese firm IMT plan to launch an aquaculture business for

shrimp farming.

The company plans to launch sales in February 2015 to produce an initial eight tons a year, said

ISAK Chief Executive Officer G. Aranzal. Mongolia consumes about 10 tons of shrimp a year, he

added, and 99 percent comes from China. ―Chinese shrimp have a bad taste and its place of origin

is unknown,‖ said Aranzal.

If sales are strong, the company is prepared to expand production to 40 tons a year.

Source: Unuudur

VIP TAXI LAUNCHES IN AUGUST

VIP Taxi launched its luxury taxi service in Ulaanbaatar on 1 August.

The company provides various services geared toward luxury for weddings and special diplomatic

visits and safe travel with its fleet of black Sonata 7 cars. The ―VIP Taxi‖ is its luxury service, the

―Pink taxi‖ cars are driven by women for female passengers, and the ―Kids taxi‖ service due to

launch in September will allow parents to hire specific drivers while monitoring their route via

mobile phone. The company is geared toward providing luxury transport services.

Source: Unuudur

REDUNDANCIES EXPECTED AT MSE AS IT CUTS DOWN ON COSTS

The Mongolian Stock Exchange (MSE) on 7 August announced it had begun making cost cuts on 5

August.

The local exchange will take several measures, including cuts in expenditures, a 30 percent cut in

wages, redundancies, and the streamlining of its organizational structure. The MSE said it expects

to begin announcing redundancies soon and that it would not make any major procurements for the

remainder of the year.

Source: MSE, Cover Mongolia

MGG REPORTS 32.3 PERCENT GROWTH IN SAME-STORE RENTALS FOR JUNE

Real-estate developer Mongolia Growth Group Ltd. (MGG) reported that its core commercial

property portfolio saw a 32.3 percent increase in same-store rentals for June compared with the

same month in 2013.

―During the month of June, we continued to implement our strategy of shifting MGG‘s asset mix

away from smaller properties that cost more to maintain and manage, towards larger institutional-

quality assets that are easier to scale, as we continue to build MGG into Mongolia‘s leading

commercial real estate concern,‖ said Chairman Harris Kupperman. He added that MGG had

disposed of six properties for CAD 1.06 million (USD 0.97 million) in June, making a total of USD

1.45 million for the 12 properties sold this year. Proceeds from the sales will be used for the

renovation of a planned retail center.

Source: Mongolia Growth Group Ltd.

MONGOLIAN ECONOMY PARTNERS WITH GLOBAL WATER PARTNERSHIP

The magazine Mongolian Economy has announced its official partnership with the Global Water

Partnership (GWP), a network of organizations collaborating together to ensure the sustainability of

global water resources. GWP promotes responsible water management with strong governance and

seeks out solutions to the greatest threats to water reserves. The groups advocates for water issues

to be taken to the highest levels of priorities for government and more dialogues on related

matters.

Source: Mongolian Economy

MEDICAL EQUIPMENT EXHIBITION IN UB

An international exhibition of medical equipment and facilities will be held from 27 to 29 August at

the Misheel Expo Center in Ulaanbaatar.

Some of the world's biggest medical equipment providers will arrive for the exhibition including GE

Healthcare, Medtronic, Covidien, Pentax, Nihon Kohden, Belimed AG, ERBE, Kangda, KHB,

Microport, KDL, Boxun, Siling, Sanyou, General Care and Medi Land. Guests for the exhibition's

opening will include staff from the Health Ministry, resident Chinese diplomats, and health

authorities from international organizations.

The organizers of the event are the Ministry of Health, the Misheel Expo Group, Monolab LLC,

China‘s SCIS LLC, and the Society of Medical Engineers.

Source: Montsame

MONGOLIA-JAPAN BUSINESS FORUM CONCLUDES

The Ministry of Industry and Agriculture has continued its partnership with the Shizuoka Prefecture

of Japan to cooperate in agriculture with the Mongolia-Japan Business Forum held last week in

Ulaanbaatar.

Mongolia and the Japanese locality launched their partnership last May with the signing of a

memorandum of understanding. Japanese government officials and businesspeople from the

Shizuoka Prefecture arrived in Mongolia seeking closer collaboration opportunities for business with

Mongolia. Mongolian manufacturers expressed interest in exporting Mongolian products to Japan,

such as Mongolia's khalkh green tea. Meanwhile, the visiting government officials offered

opportunities for Mongolian engineers to participate in long-term training at the Central Region

Power Plants in Shizuoka.

Source: News.mn

MONGOLIA-KOREA ECONOMIC FORUM CONVENES

The Mongolia-Korea Economic Forum was held 12 August with the objective of providing the

opportunity for the expansion of bilateral political and business relations.

Forum representatives toured Mongolia's largest projects, including the Tavan Tolgoi and Oyu Tolgoi

mine sites, as well as Korean operations in Mongolia. The forum also provided a framework for

Mongolia to express interest in establishing a free trade agreement with Korea, bring high-tech

Korea resources to Mongolia, and train qualified personnel in Korea.

In attendance were Mongolia-Korea NGO Chair G. Batkhuu, Korea-Mongolia Cooperation Forum Head

Jung Jang Son, Erdenes Tavan Tolgoi LLC Chief Executive Officer Ya. Batsuuri, Korean Air Lines

President Chi Chang Hun, and Mongolian Ambassador to Korea B. Ganbold.

Source: News.mn

LUXURY BRAND TENGRI INSPIRES ENVIRONMENTAL CHANGE IN MONGOLIA

This weekend luxury fashion brand Tengri will stage the Tsetserleg Festival in one of the world‘s

most enchanting and unfrequented regions in Mongolia. The Tengri festival, in partnership with

RockCorp, will gather 100 volunteers to help clean up the nearby Tamir River and do community

work to help improve the beautiful, natural surroundings that have suffered due to pollution and

the harmful mining industry.

Award-winning Hip-Hop artist Quiza is the headline act at the event. Heavily involved in cultural

developments in Mongolia through his work as Head of the Cultural Department of Ulaanbaatar,

Quiza said: ―To inspire young Mongolians to promote cultural and natural heritages to the world and

support development of our beautiful country is extremely important to me. Tengri is also

passionate about this message, so I am delighted to be able to show my support and perform at the

festival.‖

The London-based ―fairshare‖ pioneer behind Mongolian-inspired clothing brand Tengri, the

Tsetserleg Festival has been developed to support the nomadic herder families living in the region

by creating an innovative event. One highlight will be a fashion show, which will take place in

Zayain-Khuree on the steps of a Buddhist temple serving as a runway like no other. The local models

will take to the steps to showcase the first ever collection by Tengri—a stylish knitwear brand for

men and women, specializing in garments made of 100 percent Mongolian yak wool—which officially

launches in September 2014.

―By putting volunteering and music at the heart of the platform from the start,‖ said Stephen

Greene, the co-founder and chief executive officer of RockCorp, a partner for the event. ―[Tengri]

is not only creating a successful design business in partnership with the yak herders, but is also

celebrating their work and culture... By using the festival to engage youth in the project, we can

help preserve the beautiful environment.‖

Source: Travel News Asia

OT BUILDING SPORTS CENTER IN MANLAI SOUM

Oyu Tolgoi LLC and local government representatives on 31 July broke ground and laid a foundation

stone for a new sports center in Manlai Soum, Umnugobi Aimag, the company's website reported

Friday.

―This sports center will play an important role in providing our community with opportunities to

enjoy healthy lifestyles and enable children and young people to spend their leisure time in sports

activities." Chairman of Manlai's Citizens Representatives Khural, O. Bat-Erdene, said at the

ceremony.

The sports centre will have 250 seats and be fully equipped with modern sports equipment and

facilities to promote the health, safety, and comfort of athletes and the public.

Source: Montsame

RIO TINTO OPENS GALBA PUBLIC PARK IN KHANBOGD

Oyu Tolgoi LLC saw the opening of the Galba Public Park it helped finance last weekend while

residents celebrated its 90th anniversary.

―As Khanbogd residents celebrate 90th anniversary of our county, one of 90 developments to mark

this event is opening of this Galba Public Park, which will provide opportunities for children and

adults to spend time in a pleasant and comfortable environment,‖ said Khanbogd Governor T.

Buyan-Ulzii.

A member of Oyu Tolgoi's board, executives of the state-owned shareholder of the Oyu Tolgoi mines

Erdenes Oyu Tolgoi LLC, and representatives of the project leader Rio Tinto PLC were in attendance

for the festivities. The five-hectare park was built by a Mongolian company that installed fountains,

lawns, parking for 300 cars, restrooms and lighting. It gets its name from an older name for the

county in Khanbogd's history.

Source: Oyu Tolgoi LLC

RIO TINTO’S CUTS ARE THE DEEPEST

Shares in Anglo-Australian giant Rio Tinto PLC were trading up in London after the firm said its first-

half profit more than doubled, boosted by deep cost cuts and a jump in iron ore production.

Net profit at the company totaled USD 4.4 billion in the six months through June, compared with

USD 1.72 billion in 2013. During the first half Rio upped underlying earnings 21 percent to USD 5.1

billion versus USD 4.7 billion consensus forecast, helping it to cut net debt by USD 1.9 billion in the

first half to USD 16.1 billion. Rio Tinto said it hit cost-cutting targets of USD 3 billion are six months

ahead of the target date, trimming USD 3.2 billion of operating cash costs since 2012. Further cost

reductions are expected to realize a further USD 1 billion of savings by the end of next year. Chief

Executive Sam Walsh took the top position early in 2013 after leading the company's iron ore

division and has been the most aggressive among the top diversified miners to cut costs, dispose of

assets and overhaul capital expenditure programs.

Source: Mining.com

CENTERRA'S KUMTOR MINE PRODUCES 5.6 TONS OF GOLD FOR SIX MONTHS OF 2014

Centerra Gold Inc. announced production of 180,793 ounces (5,623 kilograms) of gold in the first six

months of 2014 from the Kumtor mine in Kyrgyzstan.

Gold production for only the second quarter was 77,860 ounces (2,422 kilograms) compared with

72,365 ounces (2,251 kilograms) in the same quarter in 2013. Gold sales in the second quarter of

2014 were 77,743 ounces, or approximately 2.4 tons. Total revenue from gold sales in the second

quarter of 2013 was USD 99.8 million.

Centerra said it had contributed more than 3 billion soms (USD 57 million) in taxes and mandatory

payments.

Source: Centerra Gold Inc.

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ECONOMY

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

The Bank of Mongolia on 14 August auctioned USD 38.5 million and CNY 68 million to commercial

banks for closing rates of MNT 1,896.00 and MNT 308.30, respectively. The central bank also

reported that it had received an equivalent of USD 39.5 million from swap agreements and

accepted a swap agreement ask offer of USD 45 million with commercial banks.

The central bank reported on 13 August the issue of one-week bills worth MNT 112.4 billion at a

weighted interest of 12 percent a year.

The central bank reported on 13 August MNT 10 billion in bids for the auction for 52-week treasury

notes with a face value of MNT 10 billion. The bills were sold at a discounted price with an average

yield of 15.5 percent. The central bank also reported on 13 August that it cancelled the auction of

three-year treasury notes with a face value of MNT 10 billion due to the ―absence of both

competitive and non-competitive bids.‖

Source: Bank of Mongolia

USAID’S BPI SUPPORTS MONGOLIAN TAX ADMINISTRATION’S NEW TAX E-PAY SYSTEM

The General Department of Taxation (GDT) launched its new E-Payment System on 1 August, with

support from the USAID-funded Business Plus Initiative Project (BPI).

GDT upgraded and launched its new e-tax filing system in early 2014, which now reaches more than

70 percent of taxpayers. In order to facilitate payment of taxes, USAID supported the GDT in

developing an e-payment system with two user-friendly options. The first option allows taxpayers to

visit the GDT e-filing website and make payments using a debit or credit card. With the second

option taxpayers can pay taxes directly from their personal banking system. Golomt Bank LLC, Khan

Bank LLC, and State Bank LLC partnered with the GDT to pilot the latter option. Their cooperation

provides e-payment access through banks to more than 80 percent of the taxpayer base. GDT plans

to expand its service via all commercial banks in Mongolia.

Before the e-payment system, taxpayers needed to make tax payments at their bank and then visit

the GDT office, where a tax inspector would enter payment information to the system based on the

bank payment slip. The new e-payment makes paying taxes easier, cheaper, safer and faster by

connecting GDT and banks electronically with just a few clicks, eliminating physical visits to banks

and the tax office.

―Improved information technology support is an important enabler for the implementation of tax

administration reforms and for the enhanced performance of the GDT,‖ said T. Batmagnai, GDT's

commissioner. ―We also recognize that partnerships with leading commercial banks are key to

accelerating the migration of our taxpayers to a ‗cashless society‘ throughout Mongolia.‖

E-payment is part of USAID‘s broader collaboration through technical assistance, capacity-building

for more than 500 tax officers and 3,000 taxpayers and tax preparers. Since 1991, USAID has

provided over USD 230 million worth of technical and humanitarian assistance in support of

Mongolia‘s democratic, economic and social transition.

Source: Montsame

MONGOLIA EXPECTS A GOOD HARVEST OF CROPS IN 2014

With yet another bump in the harvest of crops, Mongolia‘s agricultural production is expected to

exceed domestic demand.

Preparation for autumn harvest is now underway, agriculture authorities said. Moreover, the

Agriculture Production Support Fund is making efforts to support agrarian companies with soft loans

and agricultural equipment sold at discounted prices.

The Ministry of Industry and Agriculture reported that in 2014 cereal grains were planted on 293,000

hectares of land, potatoes on 13,000 hectares, various vegetables on 7,900 hectares, fodder on

12,000 hectares, oil plants on 78,100 hectares, fruits on 495,000 hectares, and medicinal herbs on

950,000. In 2013 Mongolia harvested 387,000 tons of cereal grains, 191,600 tons of potatoes,

101,800 tons of vegetables, 1,169,300 tons of gross hay and 36,600 tons of handmade fodder.

In 2008, Mongolia launched its third land reclamation campaign. The country‘s grain production has

increased greatly since then. Over the past five years, governments have had considerable success

in achieving this objective. Favorable conditions in 2010 and 2012 allowed Mongolia to meet 100

percent of domestic potatoes and wheat demand, and between 50 to 70 percent of domestic

vegetables and flour demand.

Source: Montsame

NATIONWIDE ROADS PROJECT TO COMPLETE THIS YEAR

Mongolia is expected to see the completion of its roads projects to connect each of Mongolia's 21

provinces with the capital.

Last year Mongolia began to connect Ulaanbaatar via paved roads with Dornod, Dornogobi,

Khuvsgul, Bayankhongor, Dundgobi and Umnugobi Aimags. Roads to Dornogobi, Bayankhongor, and

Dundgobi finished last year while the roads to the remaining provinces are to finish this year.

Construction for roads to Gobi-Altai, Sukhbaatar and Zavkhan Aimags are to take place this year—a

year later than scheduled—branching off from roads to Dornod, Khuvsgul and Umnugovi.

Source: Udriin Sonin

BIRTHS, INFANT MORTALITY ON THE RISE

The birthrate and infant mortality rate are both on the rise this year, according to statistics from

the National Statistical Office.

The birthrate grew 3.1 percent with 47,279 mothers giving birth in the first seven months of 2014.

July saw mothers give birth to 7,170 babies, or 63 more from the same period last year. Meanwhile,

the number of infant mortalities tallied 728 since January this year, or 66 more than the same

period in 2013. The numbers of deaths to children under five years old also grew this year by 72

deaths for a total of 884 children. The number of infant mortalities for only July grew by 11 this

year from last for a total of 96 cases, while the number deaths to children under five years old grew

by 24 cases to 124 deaths.

Source: Unuudur

REAL HOUSEHOLD INCOME DECLINES WHILE EXPENSES INCREASE

Households in 2014 have seen aggregate incomes slightly decline while the burden from expenses

continues to pile higher.

The nominal household income average for the second quarter of this year grew 8.9 percent to MNT

1,014 million. The average for individual salaries grew by MNT 70,600 while income from the sale of

agricultural products grew by MNT 19,200. But it was the real household income average (calculated

after inflation) that took a hit. Figures for the second quarter declined 4.3 percent to MNT 806,400

from the same period last year while expenses compared with the same periods grew 16 percent to

MNT 920.3.

Price growth for products and services such as food were responsible for an additional MNT 136,900

to the household expenses average. The real household expenses average for the second quarter

was MNT 803,000, or 4 percent more from the year before.

Source: Unuudur

NEW APARTMENTS TO REPLACE 21 DERELICT BUILDINGS

Ulaanbaatar will demolish 21 degraded buildings to make way for the construction of new ones able

to withstand earthquakes.

Ulaanbaatar City Mayor Erdene Bat-Uul has delivered a city ordinance for the demolition of

buildings in Bayangol and Khan-Uul Districts after inspections concluded that they were not capable

of withstanding earthquakes. The 21 apartments are now closed off to prevent accidents.

Demolition and construction of the new apartments will begin shortly after contractors are selected

through a tender bidding process.

The government will lead negotiations with the residents of the apartments and the executor

companies to form a trilateral contract.

Source: UB Post

UB RECEIVES ONLINE APPLICATIONS FROM 84,000 FOR LAND REQUESTS

Ulaanbaatar as of 11 August had received applications from 84,000 citizens for land ownership

requests since opening up online registration on 1 August.

The Ulaanbaatar City Council has allowed for the distribution of 1,524 hectares of land at five

locations in Songinokhairkhan, Bayanzurkh, Khan-Uul, Baganuur and Bagakhangai Districts. The large

traffic to the website resulted in multiple crashes and slow load times for many visitors, reported

officials. Ulaanbaatar City Property Relations Agency‘s official Ts. Shijir said that land grants would

be given to those who do have not already acquired land from the government.

Submissions closed today, 15 August, at 12:00.

Source: UB Post

SWINE FLU OUTBREAK IN BULGAN

Health authorities put down 328 pigs with swine flu in Tariakhtai Soum, Bulgan Aimag. The county

was put under quarantine on 31 July. The Specialized Emergency Department and Veterinary

Service has sent 24 officials to the town to control the spread of infection and prevent a further

outbreak.

Source: Unuudur

GOLDEN EAGLE FESTIVAL HELD IN NALAIKH

The annual Golden Eagle Festival was held near Nalaikh district on 9 and 10 August, where

spectators witnessed eagle hunting with eagles specially trained by Kazakh hunters from Bayan Ulgii

Aimag,

The Golden Eagle Festival promotes diversity by sharing different the forms of cultural expressions

and traditions from Mongolia's Kazakh minority group. The Golden Eagle Festival features

ceremonies, dance performances, a parade and a Kazakh play that is made in honor of the hunters

and their eagles.

The small Kazakh community residing in the central region of Mongolia hosted the first Golden Eagle

Festival in Darkhan-Uul in 2006. The Annual Golden Eagle Festival is organized by community

council of Bayan-Ulgii, sponsors, the Ministry of Culture, Sport and Tourism, and the Nalaikh District

Governor's Office.

Source: News.mn

OPERATION PACIFIC ANGEL BRINGS OVER 70 MEDICAL SPECIALISTS TO MONGOLIA

The "Operation Pacific Angel" humanitarian assistance exercises will bring some 70 military

personnel from the U.S. Air Force Pacific Command to Ulaanbaatar, Orkhon Aimag and Bulgan

Aimag from 4 to 18 August.

This year is the first time that such exercises will be held, and will include medical, dental,

optometry, and engineering programs among other subject matter related to health care. Local

medical specialists and staff from Mongolia's Defense Ministry, the medical center from the Law

Enforcement University, and National Trauma Orthopedic Research Center will participate in

humanitarian assistance exercises for providing medical care.

Source: News.mn

COPPER SLUMPS ON CHINESE DEMAND CONCERN

Copper, Mongolia's number-one export commodity, has sunk to its lowest level since June after

weak economic data fueled concerns about the prospects for demand in China, the main consumer

of Mongolia's exports.

Copper, used in electronics and construction, traded as low as USD 6,873 a ton for delivery in three

months on the London Metal Exchange on Wednesday after figures showed the amount of money

flowing into China‘s economy slowed sharply in July.

―When people look at bad data from China and decided to do something about it in metals, then

they are going to look at copper first,‖ said Vivienne Lloyd, base metals analyst at Macquarie. The

bank estimates China accounts for around 45 per cent of refined copper consumption worldwide.

A combination of short covering by investors, who had taken bearish bets following allegations of

fraud against a Chinese metals company in Qingdao, and renewed investor interest in base metals,

helped drive copper to a five-month high of USD 7,172 in July. But sentiment has shifted in recent

weeks as data showed another decline in Chinese cathode imports, which fell 8 percent, or 10,000

tons, month-on-month in July, as well as an increase in refined copper production in China.

Problems and maintenance shut downs at smelters in China limited refined production in the first

half of the year, but that has started to change. Lloyd said copper market fundamentals were likely

to weaken in the remainder of the year. ―We have got a situation of weaker construction in China,

some softening in the European market and increased mine production,‖ she said.

Macquarie expects the refined market to swing from a 166,000 ton deficit in the first half of the

year to a 229,000 ton surplus in the second half because of headwinds facing the property market in

China and outflows of refined copper from bonded warehouses in the aftermath of the Qingdao port

scandal. As wiring is one the last stages of the construction process, Lloyd said weak Chinese

housing starts in the first half of the year would start to affect cable orders through the third and

fourth quarter.

Source: Financial Times

POLITICS

MPS CALLED OUT ON POOR ATTENDANCE RECORDS

Members of parliament were called out for excessive absences at the release of a report from the

Parliament Secretariat.

For 29 spring sessions spanning 139 hours, J. Erdenebat and Kh. Temuujin were the most active

members with the best attendance, followed by A. Bekei, Chultem Ulaan and Zandaaukhuu

Enkhbold. Meanwhile, L. Enkh-Amgalan and Ch. Khurelbaatar were noted as to have spoken the

most during sessions. According to the report, the most active members of Parliament with the best

attendance were members of the opposition Mongolian People's Party.

Meanwhile, Parliament members with ministerial posts were noted as those with the worst

attendance. O. Sodbileg was named as the parliament member with the lowest attendance record.

R. Amarjargal, Kh. Battulga, and B. Narankhuu failed to attend half of the sessions, according to

the report, with mention also made of the poor attendance by Kh. Bolorchuluun, Ts. Dashdorj, and

Ts. Oyunbaatar.

Foreign Minister Luvsanvandan Bold defended his absences, explaining that his role as Mongolia's top

diplomat required that he travel as Mongolia's top diplomat. Meanwhile, M. Zorigt beat out Bold as

the parliamentarian with the most absences due to travel. Prime Minister Norov Altankhuyag was

also criticized for his attendance record. [the Sources notes only ―excuses‖ were given in his

defense, without elaborating what they were or how often he failed to attend sessions of

Parliament]

Source: Unuudur

CABINET FORMS COPPER DEVELOPMENT TEAM

The Cabinet Secretariat on 31 July ordered the formation of a team responsible for leading the

development of the country's copper processing capabilities. The project team will direct initiatives

with the goal of constructing a copper smelter and copper concentrator.

Source: News.mn

CABINET APPROVES PROGRAM TO SUPPORT THE ARTS

The Cabinet on 31 July approved the Culture, Sports and Tourism Minister Ts. Oyungerel's initiative

for an annual program to support the arts in Mongolia. The program will be used to facilitate the

production of films, novels, music, and art and allow for digital distribution worldwide.

Source: Montsame

MINISTER OF ROAD VISITS RUSSIA

Mongolia‘s Minister of Road and Transportation A. Gansukh discussed bilateral cooperation

opportunities with Russia's transportation minister while on a working visit in Russia from 6 to 9

August. Gansukh and Russian Minister M. Sokolov discussed possibilities for railway transit, technical

renovation for the Russian-Mongolian joint venture Ulaanbaatar Railways LLC, and a possible

partnership between MIAT Mongolian Airlines LLC and Aeroflot.

Source: Montsame

RUSSIAN ARMY ARRIVES IN MONGOLIA FOR JOINT MILITARY EXERCISE

Two military units from the Eastern Military District arrived in Mongolia on 12 August to participate

in the bilateral military exercise Selenga 2014 due to begin 15 August, Alexander Gordeyev, the

district's representative said.

Gordeyev said that ―once the weaponry and military equipment are unloaded at the Bayan-Tumen

station, the troops will go on a 15 kilometer [9 mile] march‖ to the military range in Choibalsan.

The exercise will see the participation of Eastern Military District troops and 100 hardware units.

According to Gordeyev, the exercise for the first time will see the use of the Mi-24 helicopters from

the air base located in the Zabaikalye Territory. The Akatsiya artillery system, Grad multiple launch

rocket system and Shilka anti-aircraft system will also be deployed for the first time.

Selenga 2013 also took place in Mongolia and saw 300 soldiers from the Eastern Military District, 250

members of the Mongolian Armed Forces and about 100 military hardware units from both countries

in attendance.

Source: RIA Novosti

PEACEKEEPERS PAY TRIBUTE TO MILITARY BANNER

Mongolian troops of the fourth contingent of the Mongolian Armed Forces—to serve with the U.N.

Missions in Sudan (UNMIS) operation in South Sudan—paid tribute to the military banner on

Thursday. Lieutenant-Colonel M. Batchuluun will lead 850 troops for the objective of supporting

South Sudan while ensuring peace and security.

Mongolia has been participating in the UNMIS since 2012.

Source: Montsame

MONGOLIA TO CELEBRATE CHINESE CULTURE IN AUGUST

Mongolia will observe the 65th anniversary of Sino-Mongolian relations along with celebrations for

Chinese culture in line with a visit by Chinese President Xi Jinping on 18 August. Mongolia will

celebrate Chinese culture from 20 to 30 August. The celebration will include artist exhibitions and a

ceremonial performance by performers of the Jilin province of China on 27 August.

Source: News.mn

MONGOLIA AWARDS KYAKHTA BORDER SERVICE OF RUSSIA IN BURYATIA

President Tsakhia Elbegdorj on 8 August bestowed the Mongolian Order of Military Glory upon the

Kyakhta border service.

Kyakhta, the administrative center of the Kyakhtinsky District in Russia's Buryatia Republic, was

recognized for its part in protecting Mongolia's independence on the eve of the 75th anniversary of

Russia and Mongolia's victory in the World War II Khalkh Gol River Battle. The city is located near

the Mongolia-Russia border and stands directly opposite the Mongolian border town Altanbulag.

―Today I had a great honor to reward the Kyakhta Border service of the Border Patrol Directorate of

the Russian Federal Security Service in Buryatia with the Mongolian Order of the Military Glory, at

the decree of the Mongolian President and Commander-in-chief Elbegdorj Tsakhia,‖ said P.

Tsagaan, the president's chief advisor. He added that the award ―is the recognition of the huge

merit of the Russian Border Troops and Armed Forces in a protection of the independence and

sovereignty of Mongolia, in the maintenance of peace on the borders of both countries, and in the

cooperation between our two peoples‖.

Source: Montsame

UB TO CHARGE FEES FOR DRIVING IN UB CITY CENTER

Ulaanbaatar residents are opposing a new city ordinance that would charge motorists up to MNT

50,000 a month to drive through the city center.

A working group appointed by the Ulaanbaatar government tasked with seeking out ways of

reducing traffic congestion has introduced a bill that would charge motorists MNT 40,000 to MNT

50,000 in monthly fees for traveling through the city center. The fee would apply to drivers

travelling within the area between Baruun Durev to the main intersection on Peace Avenue at the

13th District, across to the Geser church and Sansar tunnel and from Beijing Street to Peace

Avenue. The fee will only be necessary for drivers traveling within that area between 07:00 and

22:00.

Source: Undesnii Shuudan

GROUPS SPEAK OUT FOR RESIDENTS AGAINST A CHINESE GOLD MINER

The environmental group World Mongolia Green Development and the nationalist group Bosoo Khukh

Mongol have spoken out against a gold mining operation they said is upsetting local residents and

has caused the death of some livestock.

The groups claimed that local residents reached out for the help after about 20 livestock have died

since the gold miner Tserenbadam began its gold exploration campaign near the Martsad River. The

Mineral Resources Authority approved a 30-year mining license to expire in 2043 to the Chinese-

invested company, said the groups, with endorsement from agencies such as the General Agency for

Specialized Inspection and Ministry of the Environment and Green Development, said P.

Shinjeeravdan, chairman of Bosoo Khukh Mongol. He said local government had supported the

Chinese company's right to operate despite a petition with signatures of local residents opposing the

establishment of such a gold mine.

Source: Zuunii Medee

CASE AGAINST THE PRIME MINISTER’S DAUGHTER IS DISMISSED

The State Prosecutor has dropped the case against Prime Minister Norov Altankhuyag's daughter for

alleged corruption related to the city's Clear Air Program.

Altankhuyag`s daughter, A. Saranzaya, was under investigation by the Independent Agency Against

Corruption (IAAC) due to the suspicion that she transferred large sums of money from the Clean Air

Fund account to another account using forged documents while working at the Settlement Division

of the Ministry of Finance. However, District Prosecutor No. 1 dropped the case just a few days

after receiving it by transfer from IAAC on the grounds that, ―the corpus delicti had not been

proven.‖

A close advisor to the prime minister, G. Khurelsukh, is currently incarcerated for alleged crimes

related to the same program.

Source: Udriin Sonin

MONGOLIA DEPORTS 427 FOREIGN ILLEGALS

Mongolia had deported 427 foreigners as of 1 August, while another 4,700 foreigners were given

notice to leave the country within ten days, reported the Mongolian Immigration Authority.

―We control every single foreigner who receives a visa from our organization, until they leave,‖ said

the head of the Deportation Department Kh. Bekhbat. ―There is a misunderstanding that the

Authority of Civic Movement is the only place that gives visas to foreigners and solves their

problems. Foreigners who get working visas from our organization should pay the appropriate taxes

to Mongolia.‖

However, he added, the Mongolian Immigration Authority does not have authority over visas issued

by Mongolian Embassies in foreign countries.

Source: UB Post

CYBERCRIME RAISES CONCERNS FOR LOCAL BUSINESSES

The General Intelligence Agency's Cyber Security Agency (CSA) has advised the public to strengthen

their online security following a rising number of complaints regarding hackers and fraud.

Several organizations and individuals conducting with international offices and partners have had

their emails hacked or become victims of fraud by online predators. The agency said that many

have fallen victim to these scams because they were not familiar with the most common scamming

techniques.

CSA advised businesses, especially those with international relations, to closely check the email

addresses when they correspond, check the web address and confirm where they enter private

data, and confirm the name of business partners, bank accounts and bank names via phone calls

with international partners. The agency also advised that companies reset their passwords to

stronger, more difficult to replicate ones. They recommended using digits, capitalized letters, and

regularly changing passwords as best ways to protect data.

Source: UB Post

LIGHT AHEAD FOR MONGOLIA’S LGBT YOUTH

Where do you see Mongolia‘s lesbian, gay, bi-sexual, and trans-gendered (LGBT) community five

years from now? This was the first question that came to mind at the first Mongolian LGBT Forum

last weekend. Over the weekend, approximately 70 community members gathered to discuss LGBT

rights and exchange ideas in a judgment-free environment.

―I have rarely heard of trans-gendered individuals in the workplace, even when they have a really

good education,‖ G. Nyampurev, program officer at the Together Centre said. ―Usually they work

for NGOs and many have to turn to sex work.‖

While Mongolia's marriage law opposes homosexual unions, some youth believe there can be change

for Mongolia. For the past several years, trade unions have been battling for greater equality and a

safer work environment for women— a fight that could greatly benefit LGBT workers in Mongolia.

Alongside these efforts, reforms and amendments are being pushed by both women and LGBT NGOs

for changes to the Constitution and Labor Law to include ―sexual orientation‖ and ―gender identity‖

to the list of criteria upon which employers cannot discriminate. A number of community-based

initiatives have also been engaged to improve the quality of life for LGBT individuals.

Mugi, a trans-gendered woman from Ulaanbaatar, started a business venture to employ trans-

gendered individuals, but economic and social support from outside the community has been very

difficult to acquire and she is still searching for investors.

Source: UB Post

MONGOLIAN-JAPANESE EPA: COUNTERBALANCING CHINA AND RUSSIA - EDITORIAL

On the 40th anniversary of establishing bilateral diplomatic relations, President Tsakhia Elbegdorj

and Japan‘s Prime Minister Shinzo Abe met in Tokyo on 22 July to sign a joint statement on

affirming the final roadmap toward instituting an Economic Partnership Agreement (EPA). Aimed at

promoting mutual trade and investment, the agreement could be ratified by the parliaments of

both nations in the first quarter of 2015—the first such agreement for Mongolia and the 15th for

Japan.

The EPA exempts all Mongolian exports to Japan, including meat and raw minerals, and 96 percent

of Japanese exports to Mongolia from tariffs in the coming decade. Japan pledged to support

policies to grow Mongolia‘s exports. The joint statement is based on three principles: (1) The EPA is

key to elevating bilateral economic relations to higher levels and promoting mutually

complementary cooperation; (2) The two sides agreed on recommendations of how to proceed with

Abe‘s previously announced ERCH Plus initiative, proposed during his March 2013 Mongolian visit; (3)

The most intriguing element was that Japan proposed appointing an economic adviser for the

Mongolians to work on mid- and long-term economic policy development.

Although this trip focused on Mongolian-Japanese economic relations, other issues were discussed

by Prime Minister Abe and the Mongolian president. One topic discussed was Mongolian assistance in

the ongoing negotiations between North Korea and Japan for the daughter of Japanese abductee

Megumi Yokota to visit Japan in November. Tokyo believes that Ulaanbaatar could serve as a bridge

to resolving the ongoing case of Japanese citizens abducted by North Korea and be a constructive

influence in the region.

Regardless of the wider agenda, Elbegdorj‘s trip revealed that Japan sees economic cooperation as

the key to its future relationship with Mongolia. Even Japanese-Mongolian military cooperation has

an economic component. Japanese Army officials, led by General Kiyofumi Iwata, Chief of Staff of

the Japan Ground Self Defense Forces, conducted a working visit to Mongolia from 25 to 28 June.

Japanese military engineers discussed road construction plans with elements of the Mongolian

Armed Forces and professors at the Mongolian University of Defense. General Iwata attended the

ground-breaking ceremony for a 15-kilometer paved road to Mongolia‘s Five Hills Military Training

Center, which will be built by Mongolian and Japanese military engineers before the end of 2016.

The agreement is expected to increase investment in Mongolia and lessen Mongolia‘s dependence

on China. For Japan, the agreement can greatly benefit the export of automobiles and import of

Mongolian minerals.

Alicia Campi has a Ph.D. in Mongolian Studies, was involved in the preliminary negotiations to

establish bilateral relations in the 1980s, and served as a diplomat in Ulaanbaatar. She has a

Mongolian consultancy company (U.S.-Mongolia Advisory Group), and writes and speaks extensively

on Mongolian issues.

Source: Jamestown Foundation

IS XI SERIOUS ABOUT CRACKING DOWN ON CORRUPTION? - EDITORIAL

There are many signs that Chinese President Xi Jinping‘s unprecedented anti-corruption drive is

serious. In recent weeks, an investigation was launched into former security chief and Politburo

Standing Committee member Zhou Yongkang, while former top General Xu Caihou was expelled

from the Communist Party. Nearly 200,000 party members of all levels have reportedly been

disciplined for corruption over the last two years. But if this top down approach is not matched by a

bottom-up empowerment of the people being most harmed by China‘s corruption pandemic, it will

have little chance of success.

Xi has promised that the anti-corruption campaign will snare ―tigers‖ as well as ―flies,‖ senior

leaders as well as smaller fry, and he has been true to his word. But because corruption is so

pervasive, it‘s difficult not to see political and public relations motives. When Chinese media

reports critically on the vast wealth accrued by the families of former Chongqing leader Bo Xilai,

Zhou Yongkang, and others, it‘s easy to remember the Bloomberg and New York Times reports on

the millions of dollars held by Xi‘s and former Premier Wen Jiabao‘s families. And no one believes

that China‘s government leaders, among the wealthiest in the world, are getting rich from their

salaries alone.

This corruption passes from the top down. Officials in senior positions receive bribes from

businessmen they then use to secure their own promotions and strengthen their essential patronage

networks according to qian gui ze, the ―hidden rules‖ of the road. It doesn‘t end there. Parents in

schools across China are expected to pay teachers to ensure fair treatment for their children,

journalists require envelopes of cash for attending press conferences, doctors in public hospitals

demand payment for providing care. Nearly everyone with something to offer can expect additional

payments under the table.

While it might be conceptually possible for China to address its corruption problem with a

Singapore-like good governance approach if its leaders were willing to take vows of chastity and

poverty, the far likelier bet is that it can‘t because the party itself is the problem. Problems will

remain as long as the party stays above the law with zero transparency or public accountability,

leaders like Zhou are expelled while others have amassed far greater spoils are exempt, and

Chinese citizens are sent to jail for protesting official corruption or advocating that China live up to

its own constitution. If, on the other hand, Xi is serious about addressing corruption, he will need to

push the kinds of political reforms required to facilitate bottom-up pressure for accountability and

good governance—rule of law, sunshine and disclosure legislation, a free press, conflict of interest

rules, supporting non-governmental watchdog groups, empowering the public, etcetera. Ultimately,

but not necessarily immediately, the Chinese Communist Party will need a mandate by the people

conferred through meaningful elections.

Since taking over two years ago, Xi has moved steadily to consolidate power and isolate his rivals.

Up to this point, the anti-corruption campaign can only be seen as part of this process. And if Xi

does not push for political reforms, the campaign will simply look like a risky political and public

relations maneuver to get rid of rivals, an approach that won‘t get China out of its morass.

I hope it‘s the former, but the jury is still out.

Jamie Metzl is a Senior Fellow at the Asia Society.

Source: CNN

ANNOUNCEMENTS

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.

___________________________________________

INVEST MONGOLIA, 2-3 SEPTEMBER, ULAANBAATAR

Frontier Securities' eighth annual Invest Mongolia conference is scheduled for 2 and 3 September in

Ulaanbaatar

This year, the conference will be held over two days for presentations and discussions on ―smart‖

governance, a roadmap for Mongolia to come out of its economic crisis, and industries such as

mining, infrastructure, tourism, real estate and oil.

BCM members will receive a 15 percent discount at registration. Register online at frontier-

conference.com. For more information call 976-7011-9999 or email: conference@frontier.mn

___________________________________________

2014 DISCOVER MONGOLIA, 4-5 SEPTEMBER, ULAANBAATAR

The 12th Discover Mongolia International Mining Investors Forum (IMIF) will be held in Ulaanbaatar,

Mongolia on 4 and 5 September at the Children's Palace of Mongolia— the location of the conference

for the past 11 years.

The forum will have two days of intensive minerals and mining discourse and exhibition for

companies. Although the Mongolian economy is undergoing serious challenges and difficulties, some

decisions and resolutions adopted at the law-making and executive branches of the government

help us restore confidence and trust. Parliament‘s decision to harness the country‘s economic and

business environment makes long-term steps to nurture investor confidence and trust in Mongolia.

The 12th annual Discover Mongolia-2014 IMIF is pleased to announce its Platinum Sponsors are

Xanadu Mines and Mongol Metals and its Gold Sponsor is Anglo American.

Business Council of Mongolia is again supporting Discover Mongolia 2014 International Mining. BCM

members will receive an early bird rate to attend the forum. For Exhibition, Sponsorship and

Delegates information visit discovermongolaiforum.com. For more information call 976-7014-9762,

fax 976-7014-9762, or email info@discovermongoliaforum.com.

___________________________________________

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.

BCM WORKING GROUP NEWS

The BCM Environmental Working Group met on 26 June with 15 members attending.

Bayarmaa A, Vice Director, BCM, moderated the session.

New members: Shinetsetseg-Breakthrough PR, Ariunaa Norovsambuu–The Asia Foundation.

New Participants: Tirza Theunissen-The Asia Foundation, Binderya Oyunbaatar, Dolzmaa

Davaasuren-The Nature Conservancy,

Guests: Batima Puntsagmaa-Mongolian Water Forum, Kevin Trzcinski-Mongolian National University,

Tsenguun Tumurkhuyag, Munkhjargal Bayarlkhagva-Sustainability East Asia, Altai Onkhor–Water

Resources Group.

Speakers and topics were:

Introduction of Urban Services Program by Tirza Theunissen, TAF Deputy Country Representative,

Asia Foundation;

Impact of Climate Change on Water Resources by P. Batima, Director, Mongolia Water Forum;

Application and Use of Solar Thermal and Energy Efficient Technologies in Mongolia by Kevin

Trzcinski, Vice President of International Relations, Mongolian National University.

If you have any questions, please contact Erdenetsetseg at erka@bcmongolia.org.

___________________________________________

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

Mattias Ahlin-Scania, Chairman, moderated the session.

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

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

Manager, Mitsui Co.

Tengis Garamgaibaatar, Chief Executive Officer, Monroad, was elected as WG chairman.

Congratulations to him for his new role as BCM`s Logistics Working Group Chairman! We thank

Mattias Ahlin for his groundbreaking efforts in launching the Working Group. Mattias is returning to

Scania‘s headquarters in Sweden.

Speakers and topics were:

1. Follow up from last meeting‘s discussion

a. Main challenges for the Mongolian Logistic sector

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

(Mission Statement)

a. Transport modes; road, rail, air

b. Customs efficiency

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

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

e. Transport efficiency

3. Discussion about meeting intensity and organization

4. Other business

Next meeting was scheduled on 7 August. If you have any interest joining the new and growing

Logistics Working Group, please contact Erdenetsetseg at erka@bcmongolia.org

___________________________________________

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

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

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

Speakers and topics were:

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

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

Capital LLC.

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

erka@bcmongolia.org

___________________________________________

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

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

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

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

New members: Amarbayasgalan and Tuvshinbayar from Terra Energy.

Meeting agenda:

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

• Initial new tax policy thoughts from WG members.

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

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

Revitalization Council.

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

___________________________________________

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

Corporate Hotel meeting room.

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

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

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

Export Society.

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

The following 11 presentations were made:

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

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

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

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

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

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

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

Group and Deloitte Onch Audit;

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

Group and BDSec;

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

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

Embassy of the United States of America

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

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

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

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

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

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

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

Amendments."

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

Group which was accomplished by the BCM Legislative Working Group.

Note: Amendments to the Minerals Law were passed by Parliament on 1 July 2014.

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 by BCM, August 2014;

• 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 5,930 fans on our Facebook fans page, 642 connections on LinkedIn

network, and 1,136 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 – 14 AUGUST 2014

Currency Name Currency Rate

US Dollar USD 1,897.73

Euro EUR 2,535.46

Japanese yen JPY 18.52

British pound GBP 3,162.66

Hong Kong dollar HKD 244.84

Chinese Yuan CNY 308.49

Russian Ruble RUB 52.61

South Korean won KRW 1.86

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.