BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 316 – March 14, 2014

NEWS HIGHLIGHTS:

Business

Rio apparently mulls Turquoise Hill buyout;

MMC sees weakness ahead for coking coal prices;

MMC reports profit growth amid financial losses for 2013;

Denison could explore agreement with government for uranium assets;

Wolf Petroleum poised to reveal initial oil estimate on SB Block;

Kincora Copper to raise up to USD 4.5 million for exploration;

Mongolia’s Commodities Exchange to partner with Toronto Stock Exchange;

Slodych plans for new exports to China, Mongolia;

Mövenpick Hotels & Resorts expands to Mongolia;

Fire causes oil tanker to explode at PetroChina;

Hunnu Air appoints APG as GSA in 17 countries;

Transport Ministry inspects new buses for public transportation use;

Mongolia named official partner country of 2015 ITB Berlin;

The Miner & Supplier 2014 commences on March 13, 2014;

Ulaanbaatar to host Asian Fashion Week;

Mining Minister emphasizes cooperation at PDAC convention;

State-backed Indian firms hope to buy foreign coal mines soon.

Economy

Inflation at 12.2% year-over-year for February;

Foreign trade balance deficit narrows;

Government spending on the rise;

Mongol Bank: FX auctions, 1-week bills, securities;

Moody's: Outlook for Mongolia's banking system remains negative;

Mongolia readies for USD 30 billion brown coal gasification plant;

IMF warns against 'unsustainably loose' macroeconomic policies;

Ulaanbaatar Railway expects 18% increase in cargo for 2014;

Mining Ministry to develop new coal rubric;

Taiwan greenlights sea buckthorn for production;

Mongolia to back loans for upgraded tech in public transport;

Chinggis Khan's secret weapon was rain;

Copper slumps on worries over China's economy;

Global miners dismiss iron ore price slump;

Australia’s mineral tax falls far short of estimated revenue.

Politics

Irregular session of Parliament scheduled for 24 March;

Prime Minister delivers speech at FAO conference;

Mongolia to introduce new immigration management system;

President receives ambassadors' credentials;

40th anniversary of Mongolian-Thailand diplomatic relations;

World Bank country director to exit Mongolia;

BCM chairman named as Young Global Leader;

U.S. Ambassador and Mongolian officials meet with translators;

Journalists receive investigative journalism training;

Courts rule against MPP claim of ownership over Lenin Museum;

Government cracks down on corporate tax evasion;

Mayor introduces three-strike policy for city officials;

Perth man, Paul Weeks, among the missing on Malaysian Airlines plane;

Mongolian athlete takes 14th place in Paralympics.

ECONOMIC INDICATORS

MSE Top 20 Index by market Capitalization;

Foreign-listed Companies with Mongolian Assets;

Inflation;

Central bank policy rate;

Currency rates.

*Click on titles above to link to articles.

SPONSORS

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BUSINESS

RIO APPARENTLY MULLS TURQUOISE HILL BUYOUT

Canada has not been a happy hunting ground for mining giant Rio Tinto PLC. Investors must still

remember its disastrous GBP 23 billion (USD 38 billion) acquisition of aluminum giant Alcan in 2007,

a bruising top-of-the-market deal when Rio Tinto itself was under pressure from industry rivals to

either get bigger or be bought. It effectively led to the sacking of boss Tom Albanese, who made

way for Sam Walsh. He has bided his time before considering venturing back into the country, but

apparently is now lining up a bid for the outstanding 49.2 per cent stake in Vancouver-based

mineral exploration and development company Turquoise Hill Resources Ltd., formally known as

Ivanhoe Mines, it does not already own.

Up more than 10 percent in the previous two sessions amid growing speculation a deal could be on

the cards, Turquoise‘ shares advanced 0.13 per cent more to USD 4.09 on talk Rio is ready to

pounce with a cash offer of around USD 8 a share. Rio owns 50.8 percent of Turquoise, which holds

66 percent of the huge Oyu Tolgoi copper and gold mine. Progress on the USD 5 billion second stage

of Oyu Tolgoi has been frozen because of Rio‘s inability to strike an agreement with the Mongolian

government. But sources now suggest a deal could be announced within the next few weeks and

could coincide with Rio swallowing the rest of Turquoise.

Billionaire entrepreneur Robert Friedland, a major player in the junior mining industry, holds 3

percent of Turquoise and has thus far been against selling out to Rio.

Source: Daily Mail

MMC SEES WEAKNESS AHEAD FOR COKING COAL PRICES

Oversupply will keep prices low, says Mongolian Mining Corp. (MMC), as the firm posts a USD 58.1

million annual loss.

MMC, the nation's largest miner of coking coal sold primarily to China, expects the steel smelting

ingredient's price to remain weak this year due to oversupply, although it has gained market share

from rivals by expanding processing and logistics operations.

"I don't expect prices to fall below current levels, but I don't see meaningful price gain either, until

demand and supply equilibrium is restored," Chief Executive Battsengel Gotov told a press

conference. He said prices of seaborne coking coal—mainly from Australia and Brazil—have been

trading around the USD 85 per ton mark since the start of the year. MMC's average selling price of

its mainstay product, hard coking coal, fell 15 percent last year to USD 92.10 a ton from USD 108.40

in 2012, owing to an estimated excess supply of over 30 million tons. The excess is expected to fall

to between 10 million and 15 million tons this year, helped partly by higher steel output in Europe

and the United States, Gotov said.

The mainland's steel production growth is expected to slow to 4 percent from 7.5 percent last year

as Beijing seeks to shift the economic growth driver from fixed-asset investment to consumption

and services, according to the China Iron and Steel Association. Mongolian Mining yesterday posted

a net loss of USD 58.1 million for last year, from USD 2.5 million in 2012 as finance costs almost

doubled to USD 95.1 million. Revenue fell 7.8 percent to USD 437.3 million as the 15 percent fall in

the average selling price offset a 26 percent jump in hard coking coal sales volume to 4.3 million

tons. The firm aims to sell 6 million tons this year.

Land-locked Mongolia's competitiveness is expected to be constrained until a government-built

railway is completed next year or later, while Australian miners ramp up output to lower per-ton

fixed costs.

Source: South China Morning Press

MMC REPORTS PROFIT GROWTH AMID FINANCIAL LOSSES FOR 2013

Mongolian Mining Corp. (MMC) reported a 40.3 percent profit growth for 2013 compared with the

year before, despite tough market conditions that saw shareholder losses 23 times greater in 2013

from the year before.

MMC‘s production increased to record levels of output in its mining, processing, transportation and

sales activities for the year ended 31 December 2013. Key highlights being that its total processed

run-of-mine coal volume reached 10.7 million tons representing an increase of 44.5 percent year-

on-year, and export of 4.3 million tons of washed hard coking coal products in 2013, up by 26.5

percent year-on-year.

MMC's revenue derived from total export sales of 5.7 million tons of coal products amounted to USD

437.3 million for the year ended 31 December 2013 compared with USD 474.5 the year before, due

to a 15 percent decrease in the average selling price of hard coking coal. Despite demanding market

conditions, the MMC demonstrated improved financial performance in 2013. Although prices for

hard coking coal sold decreased, MMC generated gross profit of USD 75.9 million, representing 40.3

percent growth year-on-year, as a result of actions taken to control costs and boost productivities.

The loss attributable to MMC's equity shareholders for the year ended 31 December 2013 was USD

58.1 million compared to a loss of USD 2.5 million for the year ended 31 December 2012. The basic

loss per share attributable to the equity shareholders of the company amounted to USD 1.57 cents

for the year ended 31 December 2013, as compared to basic loss per share of USD 0.07 cents for the

year ended 31 December 2012.

The major contributing factor toward MMC's net loss position, aside from decrease in prices was an

increase in its finance costs. Finance costs were a result of reductions in interest expenses,

negative change in the net fair value related to senior notes, and foreign exchange losses due to

depreciation of the Mongolian tugrug against the U.S. dollar, bringing total net finance cost to USD

85.5 million.

MMC's board of directors did not recommend dividend payments for the year.

Source: Mongolia Mining Corp.

DENISON COULD EXPLORE AGREEMENT WITH GOVERNMENT FOR URANIUM ASSETS

Denison Mines Corp. on 6 March said in its 2013 year-end results that it might be interested in

pursuing a strategic agreement with the Mongolian government for its uranium assets in the

country.

Denison's reported USD 550,000 for exploration at the Gurvan Saikhan joint venture with the

Mongolian government in 2013 compared with USD 3.156 million for 2012. Denison curtailed

exploration activities in 2013 so it could focus on completing the field programs and studies

necessary to convert its exploration licenses to mining licenses. In addition, the company has

started exploring strategic alternatives regarding its ownership interest in Gurvan Saikhan.

Denison has 85 percent interest in Gurvan Saikhan, with state-owned Mon-Atom LLC holding the

remaining 15 percent interest.

Source: Denison Mines Corp.

WOLF PETROLEUM POISED TO REVEAL INITIAL OIL ESTIMATE ON SB BLOCK

Wolf Petroleum Ltd. is preparing to divulge an initial oil estimate on its SB Block.

The block is in a proven and producing region, and covers 23,000 square kilometers, and is one of

the first identified petroleum blocks in Mongolia. Around 60 percent, or 12,000 square kilometers of

the block, is interpreted as Cretaceous in age with a high potential for oil source reservoir rocks at

depth. Wolf is looking for farm-in opportunities. In total Wolf has interests in over 74,000 square

kilometers in Mongolia, which equates to over 18 million acres.

Source: Proactive Investors

KINCORA COPPER TO RAISE UP TO USD 4.5 MILLION FOR EXPLORATION

Kincora Copper Ltd. is raising CAD 5 million (USD 4.5 million) to fund exploration work at its flagship

Bronze Fox copper project.

Kincora is issuing 100 million units, comprising one new share and one share warrant, priced at CAD

0.05 per unit, via a non-brokered private placing. Warrants will be exercisable for two years at CAD

0.105.

Last month, Kincora revealed highly encouraging results at Bronze Fox, which is situated

approximately 250 kilometers from the Chinese border and about 1 40 kilometers northeast of Rio

Tinto PLC's Oyu Tolgoi.

Investors participating in the placement will have a four month ―hold period.‖

Source: Proactive Investors

MONGOLIA‟S COMMODITIES EXCHANGE TO PARTNER WITH TORONTO STOCK EXCHANGE

Minister of Mining Davaajav Gankhuyag negotiated with a Toronto Stock Exchange (TSX) official last

week for a partnership for Mongolia's proposed minerals exchange for the local bourse.

Gankhuyag met with the TSX senior vice president, Ungad Chadda, while in Toronto to lead a

delegation at the 2014 Prospectors & Developers Association of Canada (PDAC) International

Convention last week. Chadda agreed to establish a memorandum of understanding to support the

planned mineral exchange in Mongolia's stock market. The agreement would see the TSX offer

Mongolia technical assistance and train the Mongolian staff.

―Mongolia created a long term understandable and sustainable environment in its mining sector; we

offer to our investors great opportunity to take part in enduring state, flourishing economy with

stable legal frameworks,‖ said Davaajav to an audience during PDAC.

Source: Info Mongolia

SLODYCH PLANS FOR NEW EXPORTS TO CHINA, MONGOLIA

Slodych Confectionery Factory JSC plans to launch the exports of its food products to Mongolia and

China.

Expanded exports are among the company‘s top priorities to fund the modernization of its facilities.

Slodych has boosted exports to its traditional markets and introduced its products to the five new

markets of Latvia, Azerbaijan, Tajikistan, Lebanon and Vietnam. This year the factory started

exporting to Serbia, with future plans to begin shipping to China and Mongolia.

In all, Slodych sells to 12 markets, with the largest being Russia, Kazakhstan, Germany, the USA,

and Ukraine.

Source: Belarusian Telegraph Agency

MÖVENPICK HOTELS & RESORTS EXPANDS TO MONGOLIA

Mövenpick Hotels & Resorts has announced new hotels in Mongolia, Turkey and Morocco.

Mövenpick announced it is to manage a new hotel in the capital of Mongolia from 2018. The

Ulaanbaatar hotel will have 250 rooms and 124 residences based in the upmarket area of

Bayanzurkh District, just 3.5 kilometers from the historic center of Sukhbaatar Square.

"Considered organic growth has become a hallmark of Mövenpick Hotels & Resorts and these

stunning new projects illustrate this philosophy perfectly," said the company's president and chief

executive officer, Jean Gabriel Pérès.

Source: Mövenpick Hotels & Resorts

FIRE CAUSES OIL TANKER TO EXPLODE AT PETROCHINA

A fire that broke out at the at Matad Soum, Dornod Aimag facilities of PetroChina Daqing Tamsag

has suspended operations there, reported The National Emergency Management Agency (NEMA) and

the Petroleum Authority Tuesday.

Two Chinese workers were killed and a 40-year old driver on Petro China's staff was put in a

hospital in China because of the fire, which took place 20:48 on Monday while oil was being pumped

for shipping. At the scene of the fire were 10 vehicles arrived for the sixth shift for oil export from

the Toson Uul XIX oil field. One of the 10 vehicles caught fire and exploded, destroying 8 other

vehicles.

The fire was extinguished at around 02:30 the next day, but the situation at the site was still

reportedly needing emergency management. Further damage was reportedly averted after the shift

operator shut off the shipping pump to prevent oil from leaking. Officials said that the fire was

contained before it could spread any further through to nearby buildings.

Source: News.mn

HUNNU AIR APPOINTS APG AS GSA IN 17 COUNTRIES

Mongolia‘s Hunnu Air has appointed APG Network as its general service administrator (GSA) in 17

countries in Europe, North America and the Far East (Belgium & Luxembourg, Canada, Czech Rep &

Slovakia, Denmark, France, Germany, Italy, Netherlands, Norway, Philippines, Russia, Spain,

Sweden, Switzerland, Turkey, UK and USA).

APG will be providing full sales and marketing services as well as call center and ticketing facilities.

Hunnu Air has also signed up for APG‘s IBCS program which offers airlines pay-as-you-go access to

BSPs. The program is now used by over 160 airlines.

Hunnu Air‘s international network will be augmented by a new twice-weekly service to Paris CDG

which is due to commence in June 2014. A further new route to Singapore, scheduled for 2015, will

coincide with delivery of Hunnu Air‘s first Airbus A330-200.

Source: AsiaTravelTips.com

TRANSPORT MINISTRY INSPECTS NEW BUSES FOR PUBLIC TRANSPORTATION USE

Atibus LLC introduced its new line of passenger vehicles to the Road and Transportation Ministry.

Atibus presented 10 new vehicles able to service trips from Ulaanbaatar to distant provinces and

one vehicle for travel between cities in Mongolia and China. The inter-city vehicle sits 53

passengers and comes equipped with a television, toilets, heating and air condition, in addition to

GPS.

Mongolia has exempted large buses from value-added and custom taxes to encourage the import of

safer vehicles for public transportation.

Separately, bus drivers who drive routes between Erdenet and Ulaanbaatar have declared a strike

against their employers.

Source: Undesnii Shuudan

MONGOLIA NAMED OFFICIAL PARTNER COUNTRY OF 2015 ITB BERLIN

Mongolia on 5 March agreed to be the official partner country of ITB Berlin next year.

―In its role as the Partner Country of ITB Berlin 2015 Mongolia will be sending out a clear signal as

an emergent tourism destination,‖ said Christian Göke, chief executive officer of Messe Berlin. ―We

are confident that Mongolia with its wealth of cultural and natural attractions and its eventful

history will successfully present itself to the international market and that it will attract keen

interest from both trade visitors and the general public.‖

Altangerel Purev, state secretary at the Ministry of Culture, Sports and Tourism of Mongolia, and

Göke both signed the agreement for the partnership.

Source: 4 Hoteliers

THE MINER & SUPPLIER 2014 COMMENCES ON MARCH 13, 2014

The fourth annual Miner & Supplier Conference and Exhibition is held at the Chinggis Khaan Hotel in

Ulaanbaatar on 13 and 14 March.

This year‘s event has the slogan "Let's Move to the New Stage of Development," and focuses on

expanding the use of environmentally friendly technology and increasing business coordination

between mine suppliers and mine managers. Organizing this year's event are the Ministry of

Economic Development and the Mongolian Mining Exchange.

Source: Info Mongolia

ULAANBAATAR TO HOST ASIAN FASHION WEEK

Ulaanbaatar will host the 2014 Asian Fashion Week from 15 to 18 August.

The event will gather fashion designers and models from 30 Asian countries, including Bhutan,

Brunei, Cambodia and China. Countries such as Georgia, Australia and Switzerland will be

represented at the events by some of their best designers.

The first stage for the selection of Mongolian models is currently underway at the Citi Institute.

Source: Montsame

MINING MINISTER EMPHASIZES COOPERATION AT PDAC CONVENTION

Mining Minister Davaajav Gankhuyag warmly welcomed foreign investment at Mongolia@PDAC

conference in Toronto on 4 March, promising that Mongolia would ―never repeat‖ its mistakes.

The minister noted that ―discrepancies‖ in laws would be addressed by Parliament and that

Mongolia‘s goal was to offer investors ―firm sustainability of politics, economics and legal

environment.‖ The Minister candidly admitted Mongolia had made mistakes that impacted foreign

investment in the past but that it would "never repeat" them.

Gankhuayg also said that the moratorium on new mining exploration licenses, first imposed in June

2010, might end as a result of the Minerals Law amendments and other legislation to be taken up

during the spring session of Parliament. He also mentioned the so-called ―Long Name Law‖ that

bans mining at areas near rivers and forests, saying resolution may be forthcoming, but did not

directly address the issue of the 106 exploration licenses annulled last year as part of an

investigation into corruption at the Mineral Resources Authority of Mongolia (MRAM).

When asked about Oyu Tolgoi LLC, the Minister several times said that all matters regarding the

copper-gold mine would be resolved by its board of directors, which includes three Mongolian

directors, without involvement by the Cabinet or Parliament.

Source: NAMBC

STATE-BACKED INDIAN FIRMS HOPE TO BUY FOREIGN COAL MINES SOON

A consortium led by Steel Authority of India Ltd. (SAIL), which in 2012 signed a memorandum of

understanding in Ulaanbaatar to study possibilities for downstream iron ore production, hopes to

buy coal mines overseas in the next few months when it has completed due diligence on facilities in

Indonesia, Mozambique and the United States.

Most steel producers in India, the world's number-three coal importer, depend on overseas coal

shipments and have been trying to buy mines in Africa and Europe. SAIL is India's second largest

steel producer, and third-largest steel maker JSW Steel Ltd has already bought U.S. mines that

produce the coal used in steelmaking. Some other private companies have also acquired mines in

Australia. India's demand for steel making coal is expected to triple by 2020-21, with about 90

percent of that coming from abroad.

"We're doing due diligence in three to four geographies such as Indonesia, Mozambique and the

United States," said Ajay Mathur, chief executive of International Coal Ventures Ltd., the

consortium led by SAIL.

Mozambique is logistically quite well suited for India, Mathur told reporters on the sidelines of a

conference in the state of Goa. "Whatever has come out of Vale and Rio's (operations) from

Mozambique looks to be of good quality," he said, referring to the commodity giants' mines in the

African nation. Mathur declined to say by when or where a deal would be sealed. When asked

whether the group was close to buying coal assets in Poland as earlier reported by media, C. S.

Verma, chairperson of SAIL and ICVL, said "yes,‖ and that a deal should appear ―in the next few

months.‖

Separately, Verma said SAIL would raise coal imports by 6 million tons to 18 million tons in the next

two and a half years as it boosts its steel making capacity to 24-million tons from 17.5-million tons.

Ahmed Firoz, an economist with India's Ministry of Steel, said public-private partnerships were very

important in ensuring sufficient coal was available in India, whose imports according to research

firm OreTeam rose 21 percent to 152-million tons last year.

Source: Mining Weekly

ECONOMY

INFLATION AT 12.2 % NATIONWIDE YEAR-OVER-YEAR FOR FEBRUARY

The National Statistical Office reported inflation year-over-year at the end of February of 12.2%

nationwide and 12.0% in Ulaanbaatar.

Inflation rose 0.9 percent inflation in February from January and was driven by price growth in food

products and beverages. Inflation in Ulaanbaatar fell from 1.2 percent to 1 percent the year before,

partly due to growth in meat prices of 45 percent this year compared with 73.2 percent the year

before, said E. Erdenesan, deputy head of the macroeconomic statistics department.

The average monthly family income increased 14 percent to MNT 893,500 in February year-on-year.

Source: Zuunii Medee

FOREIGN TRADE BALANCE DEFICIT NARROWS

Mongolia traded with 92 countries for total external trade turnover of USD 1,208.5 million in the

first two months of 2014, reported the Bank of Mongolia.

Exports made up USD 594.6 million while imports were USD 613.9 million, with a foreign trade

balance deficit of USD 305.1 million. The balance of payments was in deficit of USD 19.3 million in

the year up to March.

Compared to same period of the previous year, the deficit fell 93.7 percent by USD 285.8 million.

Total external trade turnover fell 8.3 percent by USD 108.8 million, and imports were down 24.3

percent by USD 197.3 million, while exports grew by USD 88.5 million or 17.5 percent, compared to

the same period of the previous year.

Source: Montsame

GOVERNMENT SPENDING ON THE RISE

Government revenue totaled 709.4 billion for the first two months of 2014.

Total expenditure and net lending was MNT 799.7 billion, representing a deficit of MNT 90.4 billion.

Tax revenue grew 1.6 percent by MNT 10.1 billion from the same period in 2013, which has been

attributed to a 32.4 percent increase by MNT 16.1 billion in additional tax revenue from social

security and tax on foreign trade. Income tax collected fell 11.8 percent by 21.8 billion.

Total expenditure and net lending by the government grew 30 percent by MNT 184.4 billion to MNT

799.7 billion in the year to March, compared with the same period from the year before. Capital

expenditure grew 4.7 times by MNT 83.1 billion from the year before, subsidies and account

transfers grew 22.6 percent by MNT 63.9 billion, spending on goods and services grew 8 percent by

24.7 billion, and interest payments grew 3.2 times by MNT 21.7 billion. Lending minus repayments,

however, fell by MNT 9 billion.

Source: Montsame

MONGOL BANK: FX AUCTIONS, 1-WEEK BILLS, SECURITIES

The Bank of Mongolia on 11 March sold USD 5.6 million at auction for a closing rate of MNT 1,778

and CNY 4 million for rate of MNT 289.55. Total bid offers to the central bank were USD 29 million

and CNY 26.5 million. On the same day, the Bank of Mongolia received an equivalent of USD 36.5

million from currency swap transactions with local banks.

On 13 March the central bank rejected bid offers of USD 20 million and CNY 26 million from local

commercial banks, as well as requests for USD 4.9 million and CNY 3.6 million. On the same day,

the central bank received an equivalent of USD 70.3 million from currency swap transactions.

Also on 13 March, the central bank auctioned one-week bills worth MNT 297.4 billion at a weighted

interest rate of 10.5 percent a year.

Source: Bank of Mongolia

MOODY'S: OUTLOOK FOR MONGOLIA'S BANKING SYSTEM REMAINS NEGATIVE

Moody's Investors Service said that the outlook on the Mongolia banking system remains negative,

reflecting the expectation of continued weakness in Mongolia's key commodity exports, namely coal

and copper, which account for 88 percent of its exports and 20 percent of its gross domestic

product (GDP).

"While oversupply and weak global prices in the steel and coal sectors constitute a primary and

external pressure point, our outlook also takes into account the Mongolian government's aggressive

macroeconomic measures to support the economy against the resultant growth headwinds," says

Hyun Hee Park, a Moody's analyst.

Current cyclical headwinds have exacerbated the system's vulnerability. The liquidity and capital

conditions of Mongolian banks have continued to tighten—despite liquidity injections by the Bank of

Mongolia in 2013—as loan growth has exceeded both growth in deposits and expansion in internal

capital sources. The foreign currency loan-to-deposit ratio jumped to a record high of 112 percent

in late 2013. In a system where foreign currency deposits account for 23 percent of total deposits,

this development highlights the risks faced by the system, especially in the context of a sharp

depreciation in the tugrug.

Yet, the banks are also vulnerable to potential changes in economic policy, given the instrumental

role that the Bank of Mongolia has played in the past year to support both the banks and economy.

If the central bank withdraws from its current policy lending role, it will leave a re-financing gap

equivalent to as much as 22 percent of banking system liabilities as of end-2013. The Source

expects the government to support deposits at those banks considered to be of high systemic

importance to the economy. However, potential government support to bank non-deposit creditors

is less predictable given the experience of bank resolutions in Mongolia.

The negative outlook on the banking system is in contrast to Mongolia's stable sovereign outlook.

The sovereign outlook places more emphasis on the country's strong growth potential and its

abundant mineral resources, despite Moody's negative outlook for the banking system.

Source: Moody's Investors Services

MONGOLIA READIES FOR USD 30 BILLION BROWN COAL GASIFICATION PLANT

The Cabinet of Ministers has established a working group at the Mining Ministry for the

establishment of a coal to liquid (CTL) fuel plant expected for commissioning in 2018.

The construction of four production plants with the capacity to produce 16 billion cubic meters of

gasoline [Source does not specify over what period] will require USD 30 billion. The government

ordered that a feasibility study be ready by September, which would be followed by negotiations

between China and Mongolia. Construction is planned to begin in 2015 and complete in 2018.

Project preparation and building will require a temporary workforce of 40,000, and the plant is

expected to provide 10,000 permanent positions. Training must begin soon, ordered the Cabinet.

Prime Minister Norov Altankhuyag signed a Memorandum of Understanding between Mongolia's

Mining Ministry and Sinopec Corp. while visiting China in October 2013 for the gasification of brown

coal (lignite) produced from mines in Mongolia. Mongolia's plans are to have the liquefied fuel

transported to China via pipelines from Ulaanbaatar.

The government intends to increase domestic production with the plant and also cut down on air

pollution. The process of coal gasification was first introduced in the United States. China currently

has one plant operational and 12 complexes under construction.

Source: Zuunii Medee

IMF WARNS AGAINST 'UNSUSTAINABLY LOOSE' MACROECONOMIC POLICIES

Mongolia has made impressive progress in developing its economy over the past decade but has

serious issues to address to maintain the trajectory, said the International Monetary Fund (IMF) in

its latest country report.

―Medium-term prospects remain promising given Mongolia‘s large natural resource endowment,‖

said the Source, ―but macroeconomic policies have become unsustainably loose. The resulting

balance of payments (BOP) pressures have been compounded by negative shocks to FDI [foreign

direct investment] and coal exports. While the Source reported expected growth of 12 percent in

2013 and 9.5 percent in 2014, it noted uncertain external environment. While international reserves

remain adequate, the government has done so through external borrowing. Declining net

international reserves this year is not sustainable.

―Securing sustainable growth while addressing macroeconomic risks requires a package of fiscal

adjustment, unwinding of the monetary stimulus provided this year, and continued exchange rate

flexibility,‖ reads the Source. ―Banking sector vulnerabilities and weaknesses in the business

climate also need to be addressed.

The Source lauded the steps taken to tighten fiscal policy at the end of last year, but warned that

continued off-budget spending by the Development Bank of Mongolia put the overall fiscal deficit in

2013 likely at 10 percent of GDP. ―Implementation of the Fiscal Stability Law (FSL) is an urgent

priority,‖ reads the Source.

One point of weakness was a housing ownership and construction incentive program that the Source

says should be phased out. The government's Price Stabilization Program, which introduced the

government-backed mortgage program and injected cash into the construction industry, ―distorts

markets,‖ it warned, ―and is bound to ratchet up inflation.‖ The source also recommended that the

central bank not intervene on the depreciating tugrug, and continue its efforts to try and ease

access for foreign investment in the country.

Read the full report here.

Source: International Monetary Fund

ULAANBAATAR RAILWAY EXPECTS 18% INCREASE IN CARGO FOR 2014

Ulaanbaatar Railway JSC reported an expectation of up to 23 million tons of cargo this year at a

annual meeting of rail officials from around the region held in Ulaanbaatar this year.

Representatives from Mongolia, China, Russia, North Korea and Vietnam met last week, where they

decided on the likely volume of rail freight for each country. Ulaanbaatar Railway shareholders said

they would likely see 13 million tons of export-import cargo, 2.2 million tons of transit cargo, and

six to 7.8 tons of in-country cargo shipped. Realized exports shipped would grow 2.7 million tons

and transit cargo by 760,000 ton from 2013.

Ulaanbaatar Railway has launched a USD 256 million project aimed to increase rail capacity by 60

percent that is expected to complete in 2015. The added capacity would allow for the transport of

an additional 30 million ton of cargo, which would allow Mongolia to reduce transportation fees,

better manage shipment arrivals, and provide a one-stop service office, said Y. Manlaibayar, head

of the Railway and Sea Transportation Department at the Ministry of Roads and Transportation.

Source: Unuudur

MINING MINISTRY TO DEVELOP NEW COAL RUBRIC

A working group within the Ministry of Mining is working to develop new standards for coal

classification.

―Mongolia needs its own national classification for setting coal prices,‖ said adviser to the Mining

Minister D. Bat-Erdene. ―Tax and customs organizations had problems because they did not have

national classifications. Payments for current mineral reserves are calculated based on a price that

includes Chinese VAT and transportation cost, which is causing a burden to coal exporters.‖

The new system would better align with international standards and replace the existing

classification rubric that was first introduced in the Soviet era, said Bat-Erdene. The working group

has so far divided coal into the classifications of raw coal, which includes anthracite, stone coal and

brown coal (lignite), and downstream coal, which would include coking coal, semi coking coal,

weak coking coal and thermal coal, he said.

Source: Unuudur

TAIWAN GREENLIGHTS SEA BUCKTHORN FOR PRODUCTION

Taiwan has approved oil extracted from sea buckthorn grown in Uvs Aimag for international sale.

Last year Uvs' governor signed a cooperation agreement for production using locally grown sea

buckthorn and timber.

Source: Zuunii Medee

MONGOLIA TO BACK LOANS FOR UPGRADED TECH IN PUBLIC TRANSPORT

The government has promised to guarantee MNT 13.3 billion in loans from Trade and Development

Bank of Mongolia LLC for the introduction of technology such GPS and online payment to public

transportation services.

The project will be led by the information technology, postal service and communication

departments of the state government, in partnership with Slide Co. and 24 public transportation

companies with a sum total 1,000 large and 700 small buses. The government provides MNT 50

billion annually to those 24 companies to subsidize free transportation for senior citizens, students,

military and the disabled.

The new system would allow individuals to register passengers and obtain reduced fees. The

government plans to make bus schedules available on mobile phones and at bus stops, as well as

provide the option for online payment.

Source: Undesnii Shuudan

CHINGGIS KHAN'S SECRET WEAPON WAS RAIN

Some 800 years ago, ancestors of modern Mongolians conquered the world on horseback. A period

of unusually mild weather may have helped propel them by making them rich in livestock.

New research by a team of tree-ring scientists from Columbia University's Lamont-Doherty Earth

Observatory may have uncovered the reason why an obscure band of nomadic Mongol horsemen

were able to sweep through much of Asia in a few meteoric decades 800 years ago: They enjoyed

an unprecedented, and yet-to-be-repeated, 15-year run of bountiful rains and mild weather on the

normally cold and arid steppes. By sampling tree rings in the gnarled and twisted Siberian pines in

the Khangai Mountains in central Mongolia, the team pieced together a chronology of local climatic

conditions stretching between 900 A.D. to the present. The study, published in this week's

Proceedings of the National Academy of Sciences, offers a new interpretation of why the Mongols

suddenly went on the move.

"What makes our new record distinctive is that we can see 15 straight years of above-average

moisture," says the study's lead author, Neil Pedersen, a tree-ring scientist with the Lamond-

Doherty Earth Observatory. "It falls during an important period in Mongol history and is singular in

terms of persistently wet conditions."

The climate chronology compiled by the Lamont-Doherty team reveals that the dawn of the 21st

century has seen some of the hottest weather and most severe droughts in centuries—hotter and

drier than even the severe drought years of the 1180s and 1190s. It also suggests that climate may

play a role in a modern Mongol invasion—from the arid steppes to the crowded cities. The recent

drought years have followed a string of fairly wet years toward the end of the 20th century. That's a

double whammy, says Pedersen, since the relative abundance of rainfall in the 1990s could have

made herdsmen less prepared for the harsh conditions of a severe drought. The hard years, coupled

with sweeping changes in Mongolia's post-communist society, have sparked a mass exodus from the

steppes into the country's capital, Ulaanbataar, where roughly half of Mongolia's 3-million-strong

population now lives.

Source: National Geographic

COPPER SLUMPS ON WORRIES OVER CHINA'S ECONOMY

The price of copper Monday slumped to its lowest level in more than eight months as concerns

mounted about demand from top consumer China.

Three-month copper on the London Metal Exchange fell to its lowest price since June 2013, trading

at USD 6,608 per metric ton. It is down 10 percent in 2014. The red metal, which had been shaken

Friday by the first default in China's corporate-bond market, fell further after an industry report

showed Chinese manufacturing-sector activity fell to a seven-month low.

Any uncertainty about Chinese economic growth could potentially weigh on demand for copper.

There are also concerns that many Chinese companies are turning to a risky type of funding which

involves importing copper and using it as collateral for bank loans. If the price of copper falls,

borrowers will be forced to dump the metal to help cover losses. China accounts for 40 percent of

the world's global consumption of copper and is the main buyer of Mongolian copper ore from Oyu

Tolgoi.

The high levels of copper imports in the first two months of the year have raised worries about a

supply overhang. Data over the weekend showed China's copper and copper-product imports rose

27.5 percent in February from a year earlier, to 380,000 tons, but were down 29 percent from

January. Copper financing activity has put a "cloud" over the total supply overhang at the moment,

Australia & New Zealand Banking Group said in a report. However, imports could still hover above

the levels seen in the first six months of 2013 in the next month or two, as Chinese buyers likely

booked more term imports this year and financing demand is still alive, just weaker, according to

Sijin Cheng, an analyst with Barclays. She expects copper prices to be under pressure in the short

term.

Daniel Belchers, commodities fund manager at Threadneedle Investments, said he has been

"increasingly worried" about the price of copper. He said his firm has been reducing its copper

holdings since the start of the year, and that if copper's current move continues, they could reduce

holdings further.

Source: Wall Street Journal

GLOBAL MINERS DISMISS IRON ORE PRICE SLUMP

BHP Billiton Ltd. and Rio Tinto PLC have dismissed concerns over slowing demand for steel from

China and a slump in iron ore prices as temporary, saying they anticipate continued strong steel

demand growth over the next 10 years.

―Our view that Chinese crude steel production is expected to peak at 1.1 billion tons, around 2025,

is unchanged,‖ Jimmy Wilson, BHP‘s iron ore president, said on Tuesday. ―We remain confident that

global demand for iron ore will continue to grow, though at a more moderate rate, driven by

urbanization and industrialization.‖

Rio described the sharp price fall this week as ―short-term volatility‖.

The upbeat message from BHP, the world‘s largest mining company by market capitalization, and

rival Rio came as iron ore prices hit an 18-month low on Monday, wiping billions of dollars off the

market value of the world‘s biggest mining companies. Benchmark iron ore delivered into China

sank 8.3 percent to USD 104.70 a ton on Monday—the second-biggest one-day percentage fall on

record—according to the Steel Index price reporting agency. On Tuesday, iron ore futures were up

0.8 percent.

Wilson told a conference in Perth that prices were likely to fall as growth in the supply of iron ore

exceeded demand over the next five years, but that they would then come back up and stabilize.

Rio Tinto also downplayed the slump in iron ore prices, saying it was the lowest unit cost producer

in the Pilbara region of Western Australia in 2013 with a cost of USD 20.80 per ton.

Nevertheless, Citi Research sounded a bearish note on iron ore: ―The dramatic fall in prices came

despite CISA reporting steel production for the last 10 days of February at by far the highest level so

far this year,‖ said Citi analysts in a note. ―This brings into serious question the ability of higher

steel production to stabilize prices in the face of rising Australian exports during a mild cyclone

season.‖

Source: Financial Times

AUSTRALIA‟S MINERAL TAX FALLS FAR SHORT OF ESTIMATED REVENUE

Momentum continues to gather for the repeal of Australia‘s Mineral Resource Rent Tax as revenue

falls far short of estimates. Australia is a direct competitor with Mongolia for coal exports to China.

An analysis by the Weekend Australian newspaper has determined that Australia‘s Mineral Resource

Rent Tax (MRRT) has raised only AUD 232 million (USD 207.78 million) this financial year, down

substantially from the AUD 4 billion originally forecast. Although Rio Tinto PLC, BHP Billiton Ltd.

and Fortescue Metals Group posted combined profits of more than USD 14 billion, The Weekend

Australian noted that ―BHP was the only big iron ore miner to pay the minerals resources rent tax in

the six months to December 31.‖

The analysis by the newspapers showed earnings from Rio Tinto‘s iron ore operations increased 80

percent to USD 6.38 billion in the first half of the 2013-2014 fiscal year, yet Rio did not pay any

MRRT. The Weekend Australian also estimated that Fortescue almost tripled its iron ore profits to

USD 1.7 billion, ―but still did not pay any MRRT.‖

Source: Mine Web

POLITICS

IRREGULAR SESSION OF PARLIAMENT SCHEDULED FOR 24 MARCH

Parliament has approved an initiative to convene for an irregular session on 24 March.

Parliament is expected to discuss the 2014 budget, the agenda for the spring session of Parliament,

and results from the audits of frozen construction projects included in the 2014 budget. The audits

are reportedly a top priority for law makers. Funding was frozen to these projects so Parliament

could reassess spending in the 2014 budget. The agenda is also important because parliamentarians

did not make time to discuss the agenda within their parties before the close of the fall session.

The regular spring session could start as early as 5 April, reported the Source.

Source: Montsame

PRIME MINISTER DELIVERS SPEECH AT FAO CONFERENCE

Prime Minister Norov Altankhuyag spoke of the contributions Mongolia could make toward the global

food supply in a speech 10 March on the third day of the 32nd session of the FAO Regional

Conference for Asia and the Pacific in Ulaanbaatar.

―[Countries] see us as a country based on mining, with high economic growth, but Mongolia has the

great opportunity to reach high development with its agriculture, including through animal

husbandry," he said to an audience of representatives of agriculture, forestry and fisheries from 40

countries in the Pacific region.

Altankhuyag said Mongolia could help provide food around the world ―through its 43 million heads of

livestock.‖ He added, "A combination of our thousand-year-old traditional methods of raising

livestock and modern technologies can make Mongolia a model exporter for the world reserve of

organic foods.‖

Source: Montsame

MONGOLIA TO INTRODUCE NEW IMMIGRATION MANAGEMENT SYSTEM

The Immigration Agency of Mongolia has partnered with the Korean International Cooperation

Agency (KOICA) for reforms in immigration management on Wednesday.

The project aims to introduce an online system to regulate citizenship and migration matters in

2016. Funded by KOICA, the project would enable the accurate monitoring of migration, provide

better protection of the rights of Mongolians living abroad and provide them with legal assistance.

The project will also include the creation of a database for supervision over foreign nationals,

international organizations, and foreign invested companies in Mongolia.

The database will be used for registration at Mongolia's border points.

Source: Montsame

PRESIDENT RECEIVES AMBASSADORS' CREDENTIALS

The non-residential ambassadors of Sudan and Finland to Mongolia presented their diplomatic

credentials to President Tsakhia Elbegdorj 13 March.

Sudanese Ambassador Omer Eiza Ahmed told the president that by the end of last year the fourth

contingency of Mongolian troops were serving in the peacekeeping mission in Darfur.

Finnish Ambassador Jari Gustafsson said he would do his best to widen the friendly relations

between Mongolia and Finland within his office term. The president noted that last year marked the

50th anniversary of diplomatic relations and that their countries were cooperating in reforming

Mongolia's courts system.

Mongolia established diplomatic relations with Sudan on 7 July 1970 and with Finland on 15 July

1963.

Source: Montsame

40TH ANNIVERSARY OF MONGOLIAN-THAILAND DIPLOMATIC RELATIONS

Officials from Mongolia and Thailand's Foreign Affairs ministries observed the 40th anniversary of

diplomatic relations between their two nations 10 March.

―Mongolian-Thailand diplomatic relations and cooperation have widened in various fields in the past

40 years and mutual high level visits were successfully conducted. Moreover, opportunities to boost

cooperation on mining, tourism and culture have been found,‖ said Foreign Minister Luvsanvadan

Bold.

Also in attendance were senior state officials, representatives of the diplomatic corps in

Ulaanbaatar, U.N. representative officials, senior officials of the Mongolian-Thai Friendship

Association and the honorary consul from the Kingdom of Thailand in Mongolia. Thai Ambassador

Wiboon Khusakul recalled that Princess Maha Chakri Sirindhorn twice visited Mongolia, contributing

to the prominent efforts to grow bilateral relations and cooperation between Mongolia and

Thailand.

Source: News.mn

WORLD BANK COUNTRY DIRECTOR TO EXIT MONGOLIA

Coralie Gevers next month is due to step down as country director of the World Bank to Mongolia.

Gevers, who has had a 20-year career with the World Bank, finishes her term April to move on to

her next assignment in Madagascar after three years in her position. During her role with the bank,

she oversaw the disbursement of USD 115 million in loans and financial assistance, and the

implementation of projects for renewable energy and education in rural Mongolia, as well as

sustainable mineral resource consumption.

Gevers in 2011 replaced Arshad Sayed, who currently serves as president of Peabody Energy's Corp.'s

Mongolia operations.

Source: Unuudur

BCM CHAIRMAN NAMED AS YOUNG GLOBAL LEADER

The Forum of Young Global Leaders named two Mongolians on this year's roster: Business Council of

Mongolia (BCM) Chairman and Nova Terra LLC Managing Partner Bayanjargal Byambasaikhan, and

Shunkhlai Group President and Director of Strategic Planning Ganzorig Vanchig.

Young Global Leaders come from 66 countries across seven regions, and equally represent the

public and private sector. The Forum of Young Global Leaders is a multi-stakeholder community of

more than 900 young leaders.

―Bold, brave, action-oriented and entrepreneurial, these individuals commit both their time and

talent to make the world a better place,‖ said the Source. ―They have committed their energy and

knowledge to the most critical issues facing humankind. The community is made up of leaders from

all walks of life, from every region of the world and every stakeholder group in society.‖

Source: Forum of Young Global Leaders

U.S. AMBASSADOR AND MONGOLIAN OFFICIALS MEET WITH TRANSLATORS

U.S. Ambassador to Mongolia Piper Campbell 6 March visited a training course funded by the

embassy for English legal translation.

The course is meant to prepare Mongolian translators so they can properly translate bills. Legal

translation is necessary for the Transparency Agreement which Mongolia and the United States

signed September 2013. Although the agreement has not yet been ratified, the U.S. Embassy has

launched the technical assistance promised under the agreement in the expectation that it will be.

The agreement requires that Mongolia publish in English bills that will impact business in Mongolia.

The U.S. Embassy has partnered with the American University of Mongolia's English Language

Institute to provide legal translations for select members of staff from the Ministry of Justice and

National Legal Institute.

Source: Montsame

JOURNALISTS RECEIVE INVESTIGATIVE JOURNALISM TRAINING

The Society of Investigative Journalists conducted a two-day training on methodology in

investigative journalism 13 and 14 March at the Corporate Hotel.

The Mongolian chapter of Transparency International, the British Embassy to Mongolia and the

Thomson Foundation organized the two-day training to help raise the standards of investigative

reporting in Mongolia. The event included speeches from development officer at the Thomson

Foundation, Bettina Peters and President and Chief Executive Officer of Globe International, Kh.

Naranjargal. Topics were to include improving technical skills for information gathering, developing

teamwork, dialogue training.

Source: News.mn

COURTS RULE AGAINST MPP CLAIM OF OWNERSHIP OVER LENIN MUSEUM

A third Mongolian court has ruled against the Mongolian People's Party's (MPP) claim of ownership

over the Lenin Museum a year since the Ministry of Culture, Sports and Tourism announced it would

use the building for a proposed dinosaur museum.

Culture Minister Ts. Oyungerel and State Property Committee Chairman D. Tsogtbaatar announced

the decision 12 March, adding that an open tender bid for the redevelopment and repair work for

the conversion to a dinosaur museum would be held. The museum will be converted into a dinosaur

museum that will house the Tyrannosaurus bataar that was returned to Mongolia last year after

almost being illegally auctioned in the United States.

The MPP 11 times delayed the courts from announcing a decision on the case. In the end, however,

the courts ruled that the building did not belong to the party because it was built using funds from

the state budget in 1974. The MPP, which once ruled Mongolia as a single-party state under the title

the Mongolian People's Revolutionary Party, had been using the building as its own commercial

property.

Source: News.mn

GOVERNMENT CRACKS DOWN ON CORPORATE TAX EVASION

The economic crimes investigation division of the Agency for Combating Organized Crime has

investigated 3,313 administrators and accountants (with double counting) from various companies

for illegal reporting on taxes.

Authorities said the companies they have investigated owed a sum total MNT 608 billion in back

taxes. Some companies were also guilty of placing the names of dead individuals, foreign citizens,

and students studying abroad on the titles of company registration, in addition to forged invoices

for value-added tax (VAT).

The government is allowing that criminal investigations be canceled if the sum owed was below

MNT 177.55 million and was paid. Authorities reported that the 251 entities that paid a total MNT

15.5 billion in back taxes by 14 February saw their criminal cases canceled.

Source: Undesnii Shuudan

MAYOR INTRODUCES THREE-STRIKE POLICY FOR CITY OFFICIALS

Ulaanbaatar Mayor Erdene Bat-Uul introduced a new three-strike plan to encouraged better

performance from city officials.

In light of cases brought to his attention where there were long delays before action was taken by

the city, the mayor said any government authorities performing poorly in their positions would

receive yellow slips to serve as warnings for their misconduct. Any official to receive three

warnings, he said, would be dismissed from their position.

Source: Undesnii Shuudan

PERTH MAN, PAUL WEEKS, AMONG THE MISSING ON MALAYSIAN AIRLINES PLANE

Two of the passengers on the Malaysian Airlines plane that reportedly crashed into the sea off the

Vietnamese island of Phu Quoc early Saturday were traveling to Mongolia. Nothing is as yet known

about the fate of the 239 persons on board.

Paul Weeks, a 38-year-old New Zealander who relocated to Perth, Australia, was on board Malaysian

Airlines Flight 370 en route to Mongolia for a new job in the mining industry.

''He had just taken on a new role; that's why he was heading to Mongolia,'' Weeks' sister, Sara

Weeks, said. ''He was going to be based there for a month on [at a time]. It was a really good job

and he was going to be paid very well.‖

Weeks' sister said she spoke to her brother's wife in Perth about 02:00 on Sunday and ''she is very,

very upset—naturally. She is of the understanding that it's looking like the plane has crashed. 'She is

bracing herself for the worst.''

Chandrika Sharma was also traveling to Mongolia via the Malaysian Airlines flight MH370 from

Malaysia to Beijing. Sharma was the executive secretary of the International Collective in Support

of Fish Workers, based in Chennai. An expert in fisheries sector and issues related to fishermen,

Sharma, a resident of Velachery, was heading to Ulaanbaatar, Mongolia, to attend a regional

conference for Asia and the Pacific hosted by Food and Agriculture Organization of the United

Nations. Her husband is a consultant based in Chennai and their only daughter is pursuing studies

English literature in Ambedkar University, Delhi.

M.J. Vijayan of National Fish Workers Forum, who has worked closely with Ms. Chandrika, expressed

shock over the reports of her flight crashing. ―She was a very modest, silent person, less visible…

but when she is in a conference you realize that she makes a substantive contribution to the cause.

She would make very specific interventions,‖ he said. ―For the past one year, she has been flying

frequently due to all the negotiations going on with the FAO and ILO… in fact we used to joke about

her globetrotting,‖ he added.

Source: The Hindu, Sydney Morning Herald

MONGOLIAN ATHLETE TAKES 14TH PLACE IN PARALYMPICS

Mongolian cross country skier B. Ganbold took 14th place at the 2014 Sochi 2014 Winter Paralympics

in Russia.

Ganbold finished at 1:04:01 in the men`s 20-kilometer cross country skiing event. Russian

competitor Rushan Minnegulov won the gold medal, while Finland‘s Ilkka Tuomisto won silver, and

Russia‘s Vladislav Lekomtsev won bronze. Eighteen athletes out of 20 from 12 countries made it to

the finish line. The two remaining Chinese athletes could not finish the event.

Mongolian athlete B. Ganbold was scheduled to next run in the men‘s 1,000-meter sprint on 12

March and the men`s 10-kilometer classic on 16 March.

Source: News.mn

ANNOUNCEMENTS

MONGOLIA ECONOMIC FORUM 2014, ULAANBAATAR, 24-25 MARCH

The fifth annual meeting of Mongolia Economic Forum will be held on 24 and 25 March at the State

Palace in Ulaanbaatar.

During this two day event participants will discuss topics related to future of Mongolia and many

more social and economical hot topics. The World Economic Forum project team will also present

‗The Scenarios for Mongolia‘ during the meeting.

BCM members will receive an exclusive 10 percent discount.

For enquiries regarding participation and press, please call 976-11-321051 or email

info@meforum.mn or visit www.meforum.mn. Please register at http://meforum.mn/registration/.

Registration will be closed 5 pm, 21 March.

___________________________________________

BCM MEMBERS RECEIVE 15% DISCOUNT FOR OIL AND OIL SHALE MONGOLIA, UB, 9-10 APRIL

The Oil and Oil Shale Mongolia 2014 international investment conference, hosted by the Petroleum

Authority of Mongolia, will be held in Ulaanbaatar from 9 to 10 April 2014.

The event will be attended by international investors, oil, gas, and oil shale companies, service

providers, consultancies, equipment suppliers, and traders.

Delegates will have a unique opportunity to network with industry's key contacts at the country's

first international investment conference on oil, gas, and oil shale. They will have the opportunity

to obtain vital information on legislation and policies on oil, gas, and oil shale exploration and

production regulations from the officials of the Ministry of Mining and Petroleum Authority of

Mongolia. Moreover, projects on oil refinery, exploration, production, plus oil shale projects will be

presented.

BCM members will receive an exclusive 15 percent discount. For more information call +976 9909-

1765 or 9910-5877, email info@oilmongolia.com or logon to OilMongolia.com.

___________________________________________

MONGOLIA INVESTMENT SUMMIT, LONDON, 29 APRIL-2 MAY

The second annual Mongolia Investment Summit in London will be 29 April to 2 May.

An additional post-summit workshop will be held, giving participants four whole days of

presentations, discussions, panels and networking opportunities. Keynote speakers include Ochirbat

Chuluunbat, vice minister for economic development, Dorjpurev Dulamsuren, vice minister for

energy, and Clemente Cappello, chief investment officer at Sturgeon Capital

All BCM members can take advantage of a special 25 percent discount by using the offer code

UL912BCM when registering. Register online at mongoliainvestmentsummit.com/London, call +44

(0) 207 216 6056, or email cs@resourcefulevents.com

___________________________________________

3RD ANNUAL MONGOLIA TRADE & COMMODITY FINANCE CONFERENCE, BLUE SKY HOTEL, 13 MAY

Exporta announces that the Mongolia Trade & Commodity Finance Conference will return to

Ulaanbaatar on May 13, 2014 for the third edition of this annual series

The Mongolia Trade & Commodity Finance Conference is the only event of its kind. Building on the

success of the 2013 conference, which welcomed 175 delegates from 13 different countries, the

2014 event will once again provide an unrivaled platform for discussion and debate with the

region‘s leading local businesses and trade finance practitioners.

With its focus on Mongolia‘s mining, minerals and vast commodity-led growth, this will be the key

trade gathering for the country‘s senior business leaders, providing timely insight on the challenges

facing the local banking and private sectors, as well as offering perspectives from the industry‘s key

supporting actors.

BCM members will receive a 10% discount at registration. Please contact saruul@bcmongolia.org to

get a special discount code. Click here to register, or visit exportagroup.com for more information.

___________________________________________

PPP HANDBOOK FOR PUBLIC AND PRIVATE STAKEHOLDERS LAUNCHED

Mongolia‘s Ministry of Economic Development launched the PPP manual on 19 February 2014.

Prepared with ADB support, the manual guides public and private stakeholders in the preparation of

PPPs. ADB Principal PPP Specialist, Craig Sugden, stressed that Mongolian PPP environment has

three strengths now: the Concession Law, the PPP implementing unit, and the handbook. In

addition, the first in a series of Public Private Partnership Stakeholders Consultative Meetings to be

organized quarterly by MOED was held on 21 Feb in Best Western Tuushin Hotel. Contact Innovation

and PPP Department, MOED, Tel: 264726 for the manual.

ADB has supported Mongolia‘s PPP work since 2009 and was appointed as the mandated advisor to

the PPP for Combined Heat and Power Plant 5.

___________________________________________

“MM TODAY” ON MNB-TV, FRIDAY, 19:00 TO 19:10

BCM is pleased to announce that Mongolian National Broadcasting continues its cooperation with

BCM on ―MM Today‖. This English news program is aired every Friday for 10 minutes and is

scheduled from 19:00 to 19:10 tonight. Tune in to watch this program that reports stories from

today‘s BCM NewsWire.

BCM WORKING GROUPS

BCM LAUNCHES LOGISTICS WORKING GROUP.

The following statement was made at Coal Mongolia by O. Chuluunbat, Vice Minister of Economic

Development -- "Transport is the most pressing issue in Mongolia!" There appears to be an urgent

need for greater focus on logistics. This need is at all levels from the university up through

vocational job training to business and government policies and strategies.

Given the makeup of BCM's membership, we welcome individual volunteers from our logistics,

mining, transport, university and other interested members to join our new Logistics Working

Group. This BCM Working Group (WG) can lead private sector input and recommendations in this

critical area for Mongolia and make a real and meaningful impact..

Members should please contact Erdenetsetseg at erka@bcmongolia.org; to join this WG or for more

information.

___________________________________________

BCM TAX WORKING GROUP REQUEST TO GOVERNMENT

BCM`s Tax Working Group on March 11 requested an "open discussion" of proposed tax law changes

in an official letter to MP Ch. Saikanbileg, chief of the Mongolian cabinet secretariat.

Please see following link to Dr. Khashchuluun, Execcutive Director of the National Council of

Private Sector Support (NCPSS), and the NCPSS’s “Taxation Impact Research” presentation to the

BCM Tax Working Group on February 19, 2014 in Mongolian -

http://bcmongolia.org/images/files/mn/Iltgeluud/Khashchuluun.pdf.

English translation - "Change of the package of Taxation Laws private sector" posted to BCM English

website.

If you have any comments on the proposed tax laws, please send to erka@bcmongolia.org

BCM WEBSITES

MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS

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

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

government website Open-Government.mn are regularly updated.

•―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

The presentation below was made at Mongolian National University as part of the ―BCM in the

University Classroom series‖ on February 27, 2014:

• Ser-Od Inchinkhorloo, Vice Director, BCM, ―Investment environment: Past, Present, Future‖

The presentation below is from the February 24 BCM monthly meeting by Nick Cousyn, COO, BD Sec:

• О. Зоригт, Гүйцэтгэх захирал, Майн Инфо "Майн Инфо ХХК-ний товч танилцуулга", МБЗ-ийн 2

сарын 24-ний сарын хурал

Dr. Khashchuluun, Executive Director, National Council of Private Sector Support, ―Taxation Impact

Research‖ to BCM Tax Working Group, February 19, 2014

• ТАТВАРЫН БАГЦ ХУУЛИЙН ӨӨРЧЛӨЛТ: ХУВИЙН ХЭВШИЛД, Ч. Хашчулуун, Хувийн хэвшлийг

дэмжих үндэсний зөвлөлийн гүйцэтгэх захирал 2014.02.19

20 Presentations from Coal Mongolia, 20-21 February, 2014:

• Уул уурхайн сайд Д. Ганхуяг, Төрөөс Эрдэс Баялгийн Салбарт Баримтлах Бодлого, Нүүрсний

Салбарыг Хөгжүүлэх Стратегийн Чиг Хандлага, Коал Монголиа 2014, 2 сарын 20-21.

• Сангийн сайд Ч.Улаан, МОНГОЛ УЛСЫН САНГИЙН ЯАМ, Улсын төсөвт нүүрсний салбарын

үзүүлэх нөлөө, татварын орчин шинэчлэл, Коал Монголиа 2014, 2 сарын 20-21.

• Монгол орны нүүрсний салбар дахь байгаль орчны асуудал, Байгаль орчин, ногоон хөгжлийн

яам, ХБОБНГ-ын дарга Д.Энхбат Коал Монголиа 2014, 2 сарын 20-21.

• НҮҮРСНИЙ АЖ ҮЙЛДВЭРЛЭЛИЙГ ХӨГЖҮҮЛЭХ ТЭЭВЭР ЛОЖИСТИКИЙН АСУУДЛУУД:

Л.ПҮРЭВБААТАР ТӨМӨР ЗАМЫН ИНЖЕНЕРҮҮДИЙН ХОЛБООНЫ ЕРӨНХИЙЛӨГЧ, ―УУЛ УУРХАЙН

БҮТЭЭГДЭХҮҮНИЙ ТЭЭВЭРЛЭЛТ‖ Коал Монголиа 2014, 2 сарын 20-21.

• МОНГОЛ УЛСЫН НҮҮРСНИЙ САЛБАР ДАХЬ ХӨРӨНГӨ ОРУУЛАЛТ, ХУДАЛДААНЫ ТААТАЙ ОРЧИН

БҮРДҮҮЛЭХ НЬ,ЭДИЙН ЗАСГИЙН ХӨГЖЛИЙН ДЭД САЙД О.ЧУЛУУНБАТ Коал Монголиа 2014, 2

сарын 20-21.

• Уул уурхайн дэд сайд О. Эрдэнэбулган, Олон улсын нүүрсний зах зээл дэх Монгол улсын

өрсөлдөх чадварыг нэмэгдүүлэхэд төрийн оролцоо Коал Монголиа 2014, 2 сарын 20-21.

• Ж. Батцэнгэл, Монголын Уул Уурхайн Корпорацийн дарга, МОНГОЛЫН НҮҮРСНИЙ САЛБАРЫН

ӨНӨӨГИЙН НӨХЦӨЛ БАЙДАЛ, Тулгарч буй бэрхшээл ба шийдэх боломж Коал Монголиа 2014, 2

сарын 20-21.

• Аршад Саеид, Пийбоди Энержи компанийн Монгол ба Энэтхэг улсыг хариуцсан Ерөнхийлөгч,

Дэлхийн нүүрсний зах зээл, Монгол улсад үзүүлэх нөлөөлөл, Коал Монголиа 2014, 2 сарын 20-

21.

• МОЗА гүйцэтгэх захирал Ч. Хашчулуун, Занарын дэлхии ̆н хувьсгал ба Монголын эдии ̆н засагт

үр нөлөө, Коал Монголиа 2014, 2 сарын 20-21.

• Багануур Энержи Корпорэйшн ХХК, Нүүрс хийжүүлэх, шингэрүүлэх цогцолбор парк төслийн

товч танилцуулга, Коал Монголиа 2014, 2 сарын 20-21.

• АДУУНЧУЛУУНЫ ЦАХИЛГААН СТАНЦ, БЕНЗИНИЙ ҮЙЛДВЭРИЙН ТӨСӨЛ, Ж.Золжаргал –

Төслийн удирдагч, Коал Монголиа 2014, 2 сарын 20-21.

• Ц.Ганцог, Жени Ойл Шэйл Монголиа ХХК Гүйцэтгэх захирал, ШАТДАГ ЗАНАРЫГ АШИГЛАХ

БОЛОМЖ, Коал Монголиа 2014, 2 сарын 20-21.

• Фэн Вэй эрчим хүчний зөвлөгөө өгөх компани, 2014 оны хятадын нүүрсний зах зээлийн

шинжилгээ болон үнийн таамаглал, Коал Монголиа 2014, 2 сарын 20-21.

• Я. Батсуурь, Эрдэнэс Таван Толгой ХК, Танилцуулга, Коал Монголиа 2014, 2 сарын 20-21.

• Хишиг Арвин Индустриал ХХК, ҮНДЭСНИЙ КОМПАНИУДЫН ТӨЛӨВШИЛ, ӨРСӨЛДӨХ ЧАДВАР,

Коал Монголиа 2014, 2 сарын 20-21.

• Виртген Групп, МОНГОЛЫН НҮҮРСНИЙ ЗАХ ЗЭЭЛ ДЭХ WIRTGEN БРЭНДИЙН SURFACE MINER

БУЮУ АНГИЛАН ОЛБОРЛОГЧИЙН ТЕХНОЛОГИ БОЛОН АШИГЛАХ БОЛОМЖУУД, Коал Монголиа

2014, 2 сарын 20-21.

• ―Тавантолгой‖ ХК-ийн Гүйцэтгэх захирал Р.Сэддорж, Дэвшилтэт технологи ба инновацийг

нутагшуулах нь, Коал Монголиа 2014, 2 сарын 20-21.

• ―УУЛ УУРХАЙН ДЭД БҮТЦИЙН ХӨРӨНГӨ ОРУУЛАЛТЫГ ДЭМЖИХ ТӨСӨЛ‖ Төслийн Зохицуулагч

Б.Энхбаатар,Коал Монголиа 2014, 2 сарын 20-21.

• ДЭД САЙД Д.ДОРЖПҮРЭВ, Эрчим Хүчний Яам, 2014 ОНД ЭРЧИМ ХҮЧНИЙ САЛБАРЫН

ХИЙГДЭХЭЭР ТӨЛӨВЛӨСӨН АЖЛУУД БОЛОН ТӨРӨӨС БАРИМТАЛЖ БУЙ БОДЛОГО, Коал

Монголиа 2014, 2 сарын 20-21.

• Ай Эм Си Монтан Компани, Нүүрс баяжуулах талаар, Коал Монголиа 2014, 2 сарын 20-21.

The below presentation is from the January 27 BCM monthly meeting:

• ОЙ ХАМГААЛАЛД СУУРИЛСАН БИЗНЕС, Цэсэдийн БАНЗРАГЧ /Ph.D/, БОНЯ- ны ОЙ

ХАМГААЛАЛ, ОЙЖУУЛАЛТЫГ ЗОХИЦУУЛАХ ХЭЛТЭСИЙН ДАРГА, МБЗ-ийн 1 сарын 27-ны

гишүүдийн сарын хурал дээр

___________________________________________

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

BUSINESS NEWS‟, „PHOTO GALLERY‟

•―Impact of Corruption in Mongolia‖ by L.Sumati, Director of Sant Maral Foundation at the ―ANTI-

CORRUPTION LEGISLATION/POLICY, INTERNATIONAL BEST PRACTICE ON TRANSPARENCY‖ Training

seminar, Mar 06, 2014;

•―Anglo American Business Integrity policy and its application within the Business Globally‖ , Dr.

Graeme Hancock, President and Chief Representative Mongolia of Anglo American at the ―ANTI-

CORRUPTION LEGISLATION/POLICY, INTERNATIONAL BEST PRACTICE ON TRANSPARENCY‖ Training

seminar, Mar 06, 2014;

•Change of the package of taxation laws: private sector, Dr. Ch. Khashchuluun, Executive Director,

National Council for Private Sector Support, at the BCM`s Tax working group's meeting Feb 19,

2014;

•Economic and Capital Markets Update, Nick Cousyn, Chief Operating Officer, BDSec at the BCM

Monthly Meeting, Feb 24, 2014

15 Presentations at Coal Mongolia, February 20-21:

•Impact of Coal Sector on Government's Budget and the Taxation Regime , Ch. Ulaan, Minister of

Finance, MINISTRY OF FINANCE OF MONGOLIA

•Environmental issues in Mongolian coal mining sector, D.Enkhbat Ministry of Environment and

Green Development, Head of Environment and Natural Resources Department

•COAL INDUSTRIAL DEVELOPMENT, TRANSPORT AND LOGISTICS ISSUES: PRESENTATION TOPIC:

TRANSPORTATION OF THE MINING PRODUCT" Purevbaatar Luvsandagva, Head, Association of Railway

Engineering of Mongolia

•INVESTMENT INTO MONGOLIAN COAL MINING SECTOR AND CREATING AN ATTRACTIVE ENVIRONMENT

FOR INTERNATIONAL TRADE, VICE MINISTER OF ECONOMIC DEVELOPMENT, O. Chuluunbat, Vice

Minister, Ministry of Economic Development

•Government Involvement and Support to Enhance the Mongolian Competitiveness in Coal Sector,

O. Erdenebulgan, Vice Minister of Mining

•MONGOLIAN COAL INDUSTRY, Overcoming challenges in volatile market conditions, G.Battsengel,

Director, Mongolian Mining Corporation

•Global Coal Markets and Implications for Mongolia , Arshad Sayed, President of Mongolia & India,

Peabody Energy

• Introduction of CTL Plant Project, T. Munkhtur, Baganuur Energy Corporation

• ADUUNCHULUUN POWER AND CTL PROJECT, J.Zoljargal, Project Manager, MAK

• OIL SHALE OPPORTUNITIES IN MONGOLIA, Ts.Gantsog, Executive Director, Genie Oil Shale

Mongolia

• China Coal Market Lookout 2014, Fenwei Energy Consulting

• Erdenes Tavan Tolgoi JSC, Y. Batsuuri, CEO

• WIRTGEN SURFACE MINING TECHNOLOGY AND CHALLENGES IN COAL IN MONGOLIA by Wirtgen

Group

• "MINING INFRASTRUCTURE INVESTMENT SUPPORT PROJECT", Project Coordinator, B. Enkhbaatar at

the Coal Mongolia 2014, Feb 20-21.

• Coal Processing by IMC Montan.

The following presentations are from the January 27 BCM monthly meeting:

- "The year 2014 starts with new IPO on the Mongolian Stock Exchange", Richard Kobayashi, CEO,

Standard Investment LLC

- "IMA Consultancy Services for Investors and Account Manager's Role" D. Irmuun, Director of Division

for Promotion and Consultancy Services, Invest Mongolia Agency

The following have been added to Interview Section:

• Jim Dwyer, Executive Director, BCM: ―Minerals Policy‖;

• D. Bayasgalan, Director of Golomt Bank: ―Golomt has no problem‖;

• From the Oxford Business Group, Mongolia Reports 2013 book;

• B. Byambasaikhan, Chairman, Business Council of Mongolia: ―Talk is cheap‖;

• President Ts. Elbegdorj: ―Diversifying for growth‖;

• Jim Dwyer, Executive Director, BCM: ―Non-mining sectors budding‖;

• Peter Morrow, Chairman, American University of Mongolia: ―Filling in the blanks‖;

• N. Zoljargal, Governor, Bank of Mongolia: ―Sustainable vision‖;

• Gansukh, Minister of Roads and Transportation: ―Accessing new markets‖;

• J. Od, President, MCS Group: ―Building interest‖;

• Cameron McRae, President and CEO, Oyu Tolgoi: ―Sitting on a copper mine‖.

BCM's English website includes the ―Mongolia Business News‖ section.

Mongolia Reports section:

• 2014 Article IV staff report for Mongolia by International Monetary Fund;

• BCM comments on draft Amendments to the Minerals Law made to Mr. D.Gankhuyag, the Minister

of Mining, February, 2014;

• BCM Open Letter to Parliament and Government is available for download.

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

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

The ―Photo Gallery‖ contains photos from the 6th Anniversary BCM Renewal dinner on November

11, 2013.

BCM Football Cup 2013 pictures are posted to the website - http://bcmongolia.org/en/photos/350-

en/album?albumid=200

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

BCM LAUNCHES NEW LINKED-IN COMPANY PAGE

The Business Council of Mongolia has launched a new company page on the social networking

website LinkedIn to network its members and followers including small-medium enterprises (SMEs).

The new page will allow BCM to alert followers to the latest news and information critical to their

businesses. Members‘ businesses will be promoted. Additionally, BCM plans to deliver monthly

infographics on the latest data as well as videos and other media content as they come. The bulk of

the content on the new page will be in Mongolian language to better cater to BCM's Mongolian-

speaking audience and members. The following link can direct you to the new BCM's Linked-in page.

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

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.

SOCIAL STATS:

BCM now has 4,758 fans on our Facebook fans page, 1,611 connections on LinkedIn network, and

959 followers on Twitter.

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

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

BCM IN THE UNIVERSITY CLASSROOM NEWS

Business Council of Mongolia (BCM) has been progressing with its BCM in the University Classroom

series since March 2012. Led by BCM‘s Education Working Group, the program provides lectures at

universities to help inspire students and give them direction for their future careers. The series has

grown to include an average of 10 lectures per academic year. Now 1,213 students and teachers

have participated with BCM in the University Classroom Project.

Next BCM in the University Classroom series will be held on 18 March at the Institute of Finance &

Economics. Ms. Zaya B., consultant at World Bank, has been invited to speak. Presentation title:

―Insurance Market in Mongolia‖.

ECONOMIC INDICATORS

INFLATION

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

Year 2007 *15.1% [source: NSOM]

Year 2008 *22.1% [source: NSOM]

Year 2009 *4.2% [source: NSOM]

Year 2010 *13.0% [source: NSOM]

Year 2011 *10.2% [source: NSOM]

Year 2012 *14.0% [source: NSOM]

Year 2013 *12.5% [source: NSOM]

February 28, 2014 *12.2% [source: NSOM]

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

Note: 12.0% y-o-y, Ulaanbaatar city, February 28, 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]

CURRENCY RATES – 14 MARCH 2014

Currency Name Currency Rate

US dollar USD 1,767.94

Euro EUR 2,467.07

Japanese yen JPY 17.23

British pound GBP 2,945.74

Hong Kong dollar HKD 227.71

Chinese Yuan CNY 288.05

Russian Ruble RUB 48.46

South Korean won KRW 1.65

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.