BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 234 – August 10, 2012

NEWS HIGHLIGHTS:

Business:

Korea Resources stakes claim for at least 10 percent of TT west project;

Ivanhoe name change to Turquoise Hill Resources takes effect;

Kincora Copper releases partial assay results of Bronze Fox project;

Newera to break ground at Shanagan Uul East;

Developers break ground at Village@Nukht;

MMC sees 71.1 percent increase in revenue for first half 2012;

Prophecy Coal debuts Prophecy Power division to focus on energy sector;

23 brokers meet new MSE requirements;

MSE looks to give input to government regulations;

Petro Matad appoints new exploration manager, reassesses exploration assets;

Nomin celebrates 20-year milestone;

Organizers prepare for biggest event ever at Discover Mongolia;

Mining and construction conferences set for September;

Mongolia cashmere brand collaborates for London Design Festival.

Standard Chartered accused of hiding transactions with Iranian banks;

Xstrata sets out to show that it can stand alone;

Thai group in rival bid to Heineken for APB stake;

China launches rare-earths platform.

Economy:

Rail authorities look to new border points to access China and Russia;

Japan to aid in development of Mongolia's railway system;

City government to crack down on companies transporting gravel;

Chinese inspectors to evaluate potential for meat trade;

Traffic accidents on the rise;

Foreign aid goes to construction of new schools;

Key political risks to watch;

Coal price to drop as steel output slows;

Molybdenum demand from China to exceed global rates to 2016;

ASX-listed mining juniors struggle to convince investors;

Australian explorers head overseas;

Reform by stealth is a reason for optimism about China;

Chinggis Khaan grave hunter dies at 80.

Politics:

Justice Coalition says it will proceed with its participation in grand coalition;

No final decision on grand coalition until after case is resolved, says MP;

Enkhbayar's supporters lash out;

Bat-Uul appointed as new mayor of Ulaanbaatar;

Standing committee structure put in place;

Government falling short on funding roads project, says Development Bank;

Railroad workers protest forced retirement of union head;

Mongolia, India begin joint military exercises;

West eyes strengthened ties to Mongolia;

Experts in democracy to visit Mongolia;

U.S. fossil dealer fights for return of Tyrannosaurus baatar skeleton;

Enkhbayar case shines a light on misinformation;

Inner Mongolia party chief tapped for promotion.

*Click on titles above to link to articles.

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BUSINESS

KOREA RESOURCES STAKES CLAIM FOR AT LEAST 10 PERCENT OF TT WEST PROJECT

State-owned Korea Resources Corp. intends to take in at least 10 percent of the Tavan Tolgoi

western block coal project, said its president and chief executive.

―South Korea wishes to participate in the management of the Tavan Tolgoi project and wants 10

percent in return,‖ said Kim Shin-John. ―Thirty-six percent for a consortium between Russian,

Japan and South Korea from the Mongolian government is too little.‖

Shin-Jon added that Korea Resources was not the only company hoping to invest in the project and

that other would-be suitors include Korea Electric Power Corp. Posco, Daewoo International Corp.,

and LG International Corp.

The tender to the Tavan Tolgoi Western Tsankhi project has been up in the air for about a year now

since the government announced its decision of dividing the project between United States'

Peabody Energy Co. (24 percent), China's Shenhua Energy Co. (40 percent), and the before

unmentioned bidder Mongolian Railways-Russian Railways consortium (36 percent). The decision was

immediately revoked following complaints from Japan and Korea and has since been left undecided.

Shenhua Energy has previously stated that it wants the largest share possible while other observers

have pointed out that it is unlikely that Peabody Energy will participate unless it can lead

operations. President of Japan's Mitsui & Co. Fuminobu Kavashiman said in March that his company

would also like to act as a strategic investor.

Representatives of Erdenes MGL JSC have previously said that a decision would not likely appear

until after elections. With elections now behind Mongolia, however, foreign investors are likely to

speak out more loudly and often.

Source: UB Post

IVANHOE NAME CHANGE TO TURQUOISE HILL RESOURCES TAKES EFFECT

Ivanhoe Mines Ltd. has announced its name change to Turquoise Hill Resources Ltd. has gone into

effect. The company said its new trading symbol will be ―TRQ‖ and would become effective at the

opening of trading on the Toronto Stock Exchange, the New York Stock Exchange and the NASDAQ

stock market on 8 August.

―Changing our name to Turquoise Hill Resources marks another milestone in our corporate history,‖

said Turquoise Hill Chief Executive Officer Kay Priestly. ―Our new name more closely aligns the

company with our world-class Oyu Tolgoi project and will have added significance as we rapidly

approach the start of production.‖

A corporate name change was an element of a deal with the company's majority shareholder, Rio

Tinto PLC, to ensure funding of the USD 6 billion Oyu Tolgoi copper and gold mine in Mongolia.

In April, Rio provided an additional credit facility of up to USD 1.5 billion to ensure construction

wouldn't be delayed. Rio said it would also support the completion of a loan of USD 3 billion to USD

4 billion to be provided by third-party lenders. The deal resolved issues over financing Oyu Tolgoi,

which will, once in production, be set to beat Chile's Escondida as the world's largest copper mine.

Initial commercial production at Oyu Tolgoi is expected in second quarter of 2013.

The company noted that the change to Turquoise Hill Resources will not affect existing Ivanhoe

Mines stock certificates. The new name was approved by shareholders at the company's annual

meeting on 28 June, 2012.

Source: Proactive Investors

KINCORA COPPER RELEASES PARTIAL ASSAY RESULTS OF BRONZE FOX PROJECT

Kincora Copper Ltd. reported an average of 0.5 percent copper, 0.1 grams per tons of gold and 0.33

percent molybdenum mineralization across 180 meters in its partial assay results from its Bronze

Fox copper project.

The assay results come from Hole BF62 located in the West Kasulu zone at Bronze Fox. Results from

this hole include an average of 0.89 percent copper, 0.14 grams per ton of gold, and 694 parts per

million of molybdenum over 37 meters.

The company said these results confirm the potential for a deep high-grade porphyry-style copper

deposit and provides encouragement that exploration could be touching upon the edge of a large

high-grade copper and gold reserve.

―These exciting results confirm that higher-grade zones exist within this exceptionally large

system,‖ said John Rickus, President and Chief Executive Officer of Kincora Copper. ―For the

remainder of the year, our team will continue to explore a number of high priority targets to

establish the extent of the copper and gold mineralization on the Bronze Fox properties.‖

Further core cutting and sampling at Hole BF62 is ongoing. Between April and July, exploration

completed 7,168 meters of diamond core drilling. Partial cores containing 2,219 samples were sent

for lab testing with 2,184 results received.

The partial assay from Tourmaline Hills includes 1 meter of 2.75 grams per ton of gold at Hole F61

as well as five meters averaging 2.65 grams per tons of gold there.

Source: Kincora Copper Ltd.

NEWERA TO BREAK GROUND AT SHANAGAN UUL EAST

Newera Resources Ltd. plans to explore its Shanagan Uul East project, located in central Mongolia,

after receiving promising data from mapping studies.

The Shanagan projects comprises of one exploration license covering an area of approximately

2,223 hectares located approximately 50 kilometers from an existing heavy-duty rail line that

services the nearby Baganuur light coal deposit and connects to the trans-Siberian railway.

Newera subsequently contracted Mongolia-based geological consulting group Nordic Geological

Solutions (NGS) LLC for field mapping, completed with reportedly positive results. In its review,

NGS reported late Permian coal-bearing strata within an 8 square kilometer area and up to nine

coal seams.

Newera Resources intends to employ an initial drilling program of five holes of a combined length of

1,000 meters, as well as trenching, to produce a maiden JORC resource within the next quarter.

Source: Newera Resources Ltd.

DEVELOPERS BREAK GROUND AT VILLAGE@NUKHT

Asia Pacific Investment Partners and its subsidiary Mongolia Properties held a groundbreaking

ceremony for its Village @ Nukht development project.

Located 50 meters south of the Nukht gated community, construction is underway for the new

buildings. While construction has been ongoing since March, the ceremony marked the next phase in

construction in the arena, which is expected to open in early 2013.

The 10,000 square meter retail, dining, entertainment, and office center will feature such facilities

as a three-story German-themed Brauhaus, high-end Italian restaurant, courtyard and spa-massage

treatment center, as well as office lofts on the third floor. In addition, the company said the new

development will offer scenic views of the surrounding Bogd Khan mountain and family-oriented

amenities such as an outdoor activities center for children.

Source: Asia Pacific Investment Partners

MMC SEES 71.1 PERCENT INCREASE IN REVENUE FOR FIRST HALF 2012

Mongolia Mining Corp. reported a 71.1 percent revenue increase in the first six months ended 30

June compared with the same period a year before in interim results.

The increase amounted to some USD 233 million for the first six months of 2012. During this period,

MMC grew its earnings before interest, tax, depreciation and amortization by 139.6 percent to

approximately USD 67.2 million compared with the same period in 2011. Additionally, the

company's earnings per share increased by 56 percent to USD 0.84 a share from USD 0.54 for the

comparable 2011 period.

Source: Mongolian Mining Corp.

PROPHECY COAL DEBUTS PROPHECY POWER DIVISION TO FOCUS ON ENERGY SECTOR

Prophecy Coal Corp. has unveiled it power division named Prophecy Power, a unit to focus on the

power sector in Mongolia.

Prophecy Coal's Chandgana will similarly develop the Chandgana coal project to secure fuel supply

to Prophecy Power, it said. The proposed 600-megawatt power plant will be built next to Prophecy

Coal's Chandgana coal deposit located in Central Mongolia. The project will be implemented in two

phases, with the first to see two 150-megawatt power generators and transmission lines built next

year and completed by 2016 and the second to see two other 150-megawatt generators built

between 2014 and 2017.

Since obtaining the license for construction, the company has been in on-going talks with the

Mongolian government to finalize the power purchase agreement to secure the country's long-term

energy supply. Meanwhile, Prophecy Power has been in talks with several private Mongolian

companies regarding bi-lateral power purchase agreements. The proposed mining projects—which

include copper, molybdenum, and iron ore, will collectively need 200 megawatts of power by 2016,

and exclude the Oyu Tolgoi project.

Source: Proactive Investors

23 BROKERS MEET NEW MSE REQUIREMENTS

With the number of members meeting requirements set by the Mongolian Stock Exchange's trading

system increasing day by day, the number of compliant brokers has reached 23.

The increase has brought the number of members contributing to the Settlement Guarantee Fund to

42, and the number of members that concluded a revised agreement with the MSE to 52. The

number of member organizations that have placed collateral now stands at 24.

Source: Mongolian Stock Exchange

MSE LOOKS TO GIVE INPUT TO GOVERNMENT REGULATIONS

Representatives of the Mongolian Stock Exchange attended a meeting of the Capital Markets

Working Group regarding the compliance of brokerage firms with the exchange's new regulations

Members of the working group discussed the objectives, structure, mechanics, roles and

responsibilities of the working group as well as recent market developments and other business

related to the new Millennium Exchange trading system. There it was decided that a new sub

working group would be formed to address current market issues in a timely manner.

In addition to the MSE were representatives of the Financial Regulatory Commission (FRC),

Mongolian Securities Clearing House (MSCH) and Central Depository, brokerage firms who meet

compliance for trade, and the Mongolian Association of Securities Dealers.

Source: Mongolian Stock Exchange

PETRO MATAD APPOINTS NEW EXPLORATION MANAGER, REASSESSES EXPLORATION ASSETS

Oil firm Petro Matad Ltd. has set out to bolster its planned work program by hiring an experienced

exploration manager.

Ridvan Karpuz was appointed for his 23 years of work experience and ―a proven track record of

significant oil discoveries.‖ His experience has been in remote and logistically demanding locations

and in globally significant hydrocarbon provinces such as the Middle East, North Sea, Barren Sea,

Norwegian Sea, North Atlantic, and North Africa. More recently he has been at Australian-listed

OMV AG where he spent the last four years working in Iran, Yemen, and more recently Tunisia.

―His proven leadership record in commercial oil exploration and commitment to residency in

Mongolia will enhance our exploration program,‖ said Chief Executive Douglas McGay.‖

At the end of June, the company said it would review its exploration assets in Mongolia and assess a

technical path forward possibly through partnerships. The company, which recently installed a new

management team, added its plans to revisit the data from last year's troubled drilling campaign at

Davsan Tolgoi to lower the risks for a drilling campaign planned for 2013. Drilling and working rigs

have been stood down and drilling has been suspended for the remainder of 2012 while this study

continues.

Source: Proactive Investors

NOMIN CELEBRATES 20-YEAR MILESTONE

Nomin Holding celebrates its 20th anniversary this year, holding a formal celebration during

Naadam where representatives from more than 400 companies from around the world gathered to

give their congratulations.

―Twenty years might be a short time in terms of social development. However, for us, Nomin and

Mongolia, it has been the years of progress and development,‖ said General Director Sh.

Bayarsaikhan.

Nomin Holding celebrated the event with a tour of its many facilities to show the company's growth

over the last 10 years, topped off with a birthday cake and a visit to the enormous Chinggis Khan

statue outside the city.

Source: Mongolian Economy

ORGANIZERS PREPARE FOR BIGGEST EVENT EVER AT DISCOVER MONGOLIA

The organizers of this year's Discover Mongolia international mining investors' forum are planning for

the biggest showing yet. This year marks the event's 10-year anniversary.

Last year's event attracted 1,500 delegates from around the world, but organizers believe they can

beat that record this year. The forum will have a strong focus on helping the attendees continue

identifying potential opportunities to benefit from Mongolia's resource-driven economic growth by

expanding its scope to better support the understanding of regional supply and demand functions as

they relate to the Mongolian growth story.

―We are very pleased to announce that this year's forum will include a regional view that will

provide a much more robust understanding of Northeast Asia's supply and demand of raw

materials,‖ said member of the organizing committee D. Jargalsaikhan.

Acknowledging that market conditions have taken effect over potential investment into Mongolia,

the event is committed to addressing certain key topics on their minds with sessions scheduled to

discuss political stability and the recent parliamentary election, slowing Chinese economic growth,

infrastructure issues facing Mongolia's development, and the legal environment for foreign

investment into Mongolia.

To address these topics, speakers include Peter Nicholls, Vice President of Oyu Tolgoi LLC,

Zolijargal, Deputy Governor of the Bank of Mongolia, James Passin, Fund Manager of Firebird

Management LLC.

Source: Market Wire

MINING AND CONSTRUCTION CONFERENCES SET FOR SEPTEMBER 5-7

Representatives of 170 companies from 22 countries will gather in Mongolia for the Mining Mongolia

2012 and Building & Construction Mongolia forums from 5 to 7 September at Buyant-Ukhaa Sports

Palace.

Source: MiningandConstructionMongolia.com

MONGOLIA CASHMERE BRAND COLLABORATES FOR LONDON DESIGN FESTIVAL

London-based furniture designer Peter Marigold has collaborated with the cashmere brand Oyuna to

create a symbolic installation at the 2012 London Design Festival.

The installation is an abstract reinterpretation of the traditional Mongolian ger that redefines

common perceptions of indoor-outdoor space. Made by blackened raw steel, and dark cast wooden

surfaces, the skeletal organically finished structure provides the backdrop to Oyuna's cashmere

shawls, throws, and clothing.

Oyuna was founded by Ts. Oyuna and David Bernasconi in London in 2002. Oyuna's designs are

inspired by the colors of Mongolia's wild plants and by the creativity of inner city London life.

Source: World Interior Design Network

STANDARD CHARTERED ACCUSED OF HIDING TRANSACTIONS WITH IRANIAN BANKS

The New York State Department of Financial Services in the United States accused Standard

Chartered of masking more than 60,000 transactions for Iranian banks and corporations. Standard

Chartered is known for its operations with developing nations and emerging economies, opening a

representative office in Mongolia in 2011.

Senior management at the 150-year-old bank used the New York branch ―as a front for prohibited

dealings with Iran—dealings that indisputably helped sustain a global threat to peace and stability,‖

according to a regulatory order sent to the bank. The order requires the bank to explain the

apparent violations of law in a hearing later this month and justify why its license to operate in New

York should not be revoked. The bank has stated that is ―strongly rejects the position and portrayal

of facts‖.

The accusations against Standard Chartered come as U.S. officials work to crack down on the flow

of money to foreign countries, companies and individuals connected to terrorism, weapons of mass

destruction, and drug trafficking. Banking regulators said it had discovered evidence that Standard

Chartered operated ―similar schemes‖ to do business with other countries under United States

sanctions, including Myanmar, Libya, and Sudan.

Standard Chartered is the latest in a series of global banks to be accused of facilitating illegal flows

of money from outside the United Sates. HSBC has been accused of being used by Mexican drug

cartels to funnel cash back to the United States; by Saudi Arabian banks with terrorist ties that

needed access to dollars; and by Iranians who wanted to circumvent U.S. sanctions.

The bank came under scrutiny from the Federal Reserve Bank of New York in 2003 after regulators

discovered deficiencies in monitoring its transactions. As a result, the bank entered a formal

agreement with regulators that it strengthen its oversight with independent constancies. Even the

independent monitoring by Deloitte Touche was allegedly compromised. Deloitte, however, denies

it aided the bank.

Source: New York Times

XSTRATA SETS OUT TO SHOW THAT IT CAN STAND ALONE

Xstrata PLC on Tuesday sought to underline its stand-alone growth prospects and pledged to prune

capital spending against the backdrop of shareholder opposition to the terms of the miner's USD 60

billion planned merger with commodities trader Glencore International PLC.

―The inherent capacity of Xstrata to generate value as a stand-alone company remains very, very

powerful indeed,‖ he said, while saying that he saw a merged entity as a ―more powerful business

model.‖

The long-mooted combination of Xstrata's mining output with Glencore's marketing machine was

thrown into disarray in June when Qatar's sovereign wealth fund went public in calling for 3.25

Glencore shares for each of the miner's, rather than 2.8 on offer. Xstrata and Glencore last month

delayed their shareholder votes on the deal until September, after Qatar's intervention, with little

progress since, according to people familiar with the matter. With more than 11 percent of the

miner, the fund probably holds sufficient votes to block the deal.

―This set of results was all about Xstrata,‖ said Myles Allsop, analyst at UBS. ―It felt like they were

trying to address some of the concerns raised in the market about the outlook for thermal coal,

their growth projects, capital expenditure and their stand-alone organic growth profile, and

emphasis that they are a credible investment if the Glencore merger does not happen.‖

Xstrata said that it would defer USD 1 billion of about USD 8.2 billion in capital expenditure this

year, amid calls from investors for greater discipline given the ailing outlook for the global economy

and commodity prices.

Source: Financial Times

THAI GROUP IN RIVAL BID TO HEINEKEN FOR APB STAKE

The battle for control of Asia Pacific Breweries (APB), a major beer distributor in Mongolia,

intensified on Tuesday after an affiliate of Thai brewer ThaiBev made an unexpected SGD 1 billion

(USD 805 million) offer. APB has recently expanded its aims in Mongolia to enter into vodka

distribution in addition to its partnership with MCS Group for bottling and distributing beers such as

Tiger.

The matter was for a 7.3 percent stake in the maker of Tiger beer owned by Fraser and Neave

(F&N), and has challenged efforts by Dutch brewery Heineken to take control of the drinks business.

The development complicates an already tangled set of deals from which Heineken hopes to emerge

with control of APB.

Heineken last week offered SGD 50 a share, or SGD 4.2 billion, for a 32.4 percent stake held by

F&N, a Singapore conglomerate, in a joint venture through which the two companies control APB. It

is also offering the same price for a 7.3 percent direct stake that F&N has in APB.

However, F&N said on Tuesday that the affiliate of ThaiBev had made an unsolicited offer for the

direct 7.3 percent holding that F&N has in APB, for SGD 55 a share. That values APB at about 10

percent more than the offer tabled by Heineken.

ThaiBev has recently been increasing its stake in F&N in an apparent attempt to influence the

outcome of any shareholder vote on Heineken's offer, which is expected to take place at an

extraordinary shareholder meeting within weeks.

ThaiBev had already agreed to buy a 22 percent stake in F&N from Oversea-Chinese Banking Corp.

(OCBC), Singapore's second-largest bank by assets, and other affiliates. As part of that deal

announced last month, it also agreed to buy for SGD 45 a share an 8.4 percent direct stake in APB

held by OCBC. Since then, ThaiBev has purchased 2.1 percent of F&N through the open market,

bringing its total ―deemed stake‖ in the food, drinks and property conglomerate to 24.1 percent.

That makes the Thai group the largest shareholder in F&N.

Source: Financial Times

CHINA LAUNCHES RARE-EARTHS PLATFORM

China has launched its trading platform for rare-earth metals as it moves to boost its pricing power

over the strategic resources for which it dominates global productions.

China's leading producer of rare-earths, Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech

Co., started the platform in cooperation with nine other companies and institutions. The facility is

located in the city of Baotou in China's resource-rich northern region of Inner Mongolia, described as

containing over half of global light rare-earths output.

China dominates production of the metals—key elements in consumer electronics and other high-

tech goods—producing in excess of 90 percent of rare-earths, though it only has 23 percent of global

reserves. Their strategic importance gained prominence in late 2010 when Japanese industry

sources said China temporarily cut off exports amid a territorial dispute between the countries.

China denied halting exports

The United States claims that China sets export quotas, duties, and other restrictions that make the

products increasingly more expensive. A source close to the World Trade Organization (WTO) said

last month that the body would investigate Chinese export restrictions on rare-earths, after a

request by the European Union, the United States, and Japan.

Zhan Rihui, vice general of Baotou Steel, said that pricing on the platform will be ―transparent and

consistent.‖

Source: AFP

ECONOMICS

RAIL AUTHORITIES LOOK TO NEW BORDER POINTS TO ACCESS CHINA AND RUSSIA

The Mongolian government is investigating opportunities for installing additional border points to

Russian and China, given increasing mining production export through the Tianjin border.

―We are investigating the transport of mining commodities by way of Vladivostok of Russia and

three other borders points to China,‖ said L. Purevbaatar, head of Mongolian Railway JSC. He added

that attempts have been made to transport coal through the Nahutka border point of Russia as well.

Purevbaatar said the Mongolia would have to make negotiations with both the Chinese and Russian

governments as well as their respective railway companies before development could begin. He

added that a discounted price on aluminum might be included in such agreements.

Source: Unuudur

JAPAN TO AID IN DEVELOPMENT OF MONGOLIA'S RAILWAY SYSTEM

The chairman of Japan's Freight Railway Co. discussed opportunities to collaborate on the

development of Mongolia's railways.

Naohiko Ito, who is in Mongolia on an official visit, visited the Ulaanbaatar Railroad Authority's

management department, where to his surprise he found starkly different railroad operations from

what is used in Japan.

―The process of loading and hauling is done by an intermediary company. Also, reports regarding

the receiving, loading and documentation of loads are handled by separate companies,‖ said Ito.

Ito met with the deputy head of the Mongolian Railroad Authority to discuss possibilities for

cooperation for the development of Mongolia's railway system, to educate people on information

technology and Japan's modern railroad system. Ito pointed out that the vast amount of green land

gave greater potential for the development of a railway system than Japan.

Source: UB Post

CITY GOVERNMENT TO CRACK DOWN ON COMPANIES TRANSPORTING GRAVEL

The growing number of construction projects in the capital has called for more resources such as

gravel, but the practices of unscrupulous companies is taking a toll on the land they travel through

to get those materials to those projects.

The number of firms permitted to collect gravel for construction purposes has grown in Mongolia,

including 70 that carry gravel from the Tuul River. The trucks carrying gravel are massive and drive

freely to their destinations, leaving clouds of dust and ruined terrain in their wake. Around 200

people from 32 households living in the Khan-Uul District have complained to authorities about

these circumstances. Each of these households breeds between 10 and 200 heads of cattle.

―Any damage that was made will be compensated by those entities, ―said Z. Batbayar, the deputy

chairman of the Water Authority. ―There is specific demand for gravel for the buildings under

construction in Ulaanbaatar, but gravel exploration raises the issues of environmental damage.

In 2012, only 5 of the 70 businesses that transport gravel from the Tuul River to construction

projects in Ulaanbaatar have submitted plans for rehabilitation measures to the Specialized

Inspection Agency (SIA), with the rest in violation of environment laws.

Source: UB Post

CHINESE INSPECTORS TO EVALUATE POTENTIAL FOR MEAT TRADE

A Chinese delegation will come to Mongolia for inspection to see if China can permit meat imports.

Chinese authorities have expressed interest in importing meats from Mongolia's Western provinces.

Delegates from China's General Administration of Quality Supervision, Inspection and Quarantine are

set to visit the main laboratory of Mongolia's State Professional Inspection Agency and meat

processing factories in Mongolia. The delegates will visit processing factories in Arkhangai and Uvs

Aimags.

Source: Zuunii Medee

TRAFFIC ACCIDENTS ON THE RISE

The number of deaths from traffic accidents saw a 21.6 percent increase and accidents increased

by 16.4 percent from a year ago.

Most of the deadly accidents occurred outside the city. A third of those affected were pedestrians,

another third were drivers, and the rest were passengers.

Many of the injuries and deaths could have been avoided had those involved been wearing a

seatbelt, while inattention to road sides was another reported cause. Observers have also noticed

an increase in the number of collisions with road borders, fences, houses and gers. Most accidents

occurred on Fridays and Saturdays.

Traffic authorities reported that drivers were responsible for the accident 98.7 percent of the time,

while pedestrians were the cause of 1.3 percent.

Source: Udriin Sonin

FOREIGN AID GOES TO CONSTRUCTION OF NEW SCHOOLS

Funding from the World Bank will go to the construction of 40 new kindergartens using Canadian

standards and technology this year.

Nineteen of the kindergartens will be built in Ulaanbaatar and one school per provincial center.

Construction has already begun in Orkhon, Tuv, and Uvurkhangai Aimags.

JICA has provided funding for the construction of 6 schools in Ulaanbaatar this year. Additionally,

an extension to School No. 53 is complete as well as an extension to the Amgalan school complex

for 640 children in Khujirbulan which is due for completion in September.

Source: Unuudur

KEY POLITICAL RISKS TO WATCH

June's parliamentary election proved inconclusive, and the coalition government that is still taking

shape is certain to involve parties hostile to foreign mining firms, a move that will worry investors.

The following is a summary of key political risks to watch:

Investment politics

The grand coalition under negotiation, to be led as prime minister by Democratic Party (DP) chief

N. Altankhuyag, will include minority parties that want to limit foreign investment in the booming

mining sector. There is talk of reviewing the contract for Rio Tinto PLC's giant Oyu Tolgoi copper-

gold mine and also ensuring that the 7.5 billion-ton Tavan Tolgoi coal mine remain in Mongolian

hands.

Few major Mongolian projects are progressing smoothly. Aluminum Corp. of China Ltd.'s attempted

takeover of SouthGobi Resources Ltd. was delayed after Parliament passed legislation to cap foreign

investment purchases to below 50 percent unless government approval was attained. The

legislation's passage was seen as a direct response to the proposed deal.

The ―resource‖ curse‖

With 16.7 percent growth in the first quarter this year, the highest in Asia, the country is already

showing classic symptoms of ―Dutch disease‖, including soaring inflation and high interest rates. In

July ratings agency Fitch said ―rising systematic risks‖ could lead Mongolia to a repeat of the boom-

bust cycle it experienced in 2007 through 2009, should commodity prices fall.

The government is trying to protect against fluctuating commodity prices, and wants to use the

proceeds from mining to pay for infrastructure, health and education, and develop other sectors.

Getting on with the neighbors

Many of Mongolia's 2.7 million citizens are concerned about growing Chinese and Russian influence,

fears not allayed by the grant of majority interest in Tavan Tolgoi's western block to Chinese and

Russian interests last year—a decision that was later reversed. China already dominates Mongolia's

economy, buying 90 percent of the country's exports in the first half of 2011.

Mongolia's reliance on Russia and China for fuel, power and transportation also poses risks to the

mining sector. It also depends on Russia's railway network to fulfill plans to deliver coal to Japan

and South Korea.

Source: Reuters

COAL PRICE TO DROP AS STEEL OUTPUT SLOWS

Coal used to make steel is set to drop to the lowest price in two years, eroding earnings at BHP

Billiton Ltd. and Rio Tinto Group, as European demand wanes and China shifts supply contracts to

Mongolia and Australia.

The contract price may drop 11 percent to USD 200 a metric ton in the three months to 31

December from USD 225 a ton this quarter, according to analysts and industry officials surveyed.

The spot prices in China fell 24 percent to USD 179.50 as of 2 August, the lowest this year.

―Steel demand in Europe is very weak and consumption has slowed dramatically in recent months,‖

said Tim Cahill, an analyst at J&E Davy Holdings Ltd. ―It'll get worse in the second half as

government spending slows and banks stop lending to home buyers.‖

Possible higher supplies will also put pressure on prices after the BHP Billiton Mitsubishi Alliance,

the world's biggest exporter of steelmaking coal, resumed operations last month at its Queensland

mines, pruning the risk of shortages. The venture supplies about 18 percent of global coking coal.

Mongolia is likely to provide the strongest new competition being next to China and because of the

size and quality of its reserves, Australia's Bureau of Resource and Energy Economics said in a 2 July

report.

―China benefits from its proximity and availability of cheaper coal from Mongolia,‖ said Helen Lau,

a Hong Kong-based analyst with UOB-Kay Hian Ltd. ―Mongolia will continue to replace Australian

coking coal in China.‖

Should benchmark prices fall below USD 200 a ton because of receding demand in China, the world's

biggest steel producer and consumer, coking coal suppliers will start cutting output to support

prices, said Kuni Chen, an analyst with CRT Capital Group LLC. Global steel demand growth is

forecast to slow to 3.6 percent this year from 5.6 percent in 2011. China may consume 648 million

tons of steel this year compared with 657 million tons forecast in March because of the slowing

economy, Australia's Bureau of Resources and Energy Economic said in a 27 June report.

Source: Bloomberg Businessweek

MOLYBDENUM DEMAND FROM CHINA TO EXCEED GLOBAL RATES TO 2016

Global demand for molybdenum, a growing export for Mongolia, bounced back from the impact of

the global economic downturn, growing by just over 11 percent in 2010 and a further 9 percent in

2011 according to a new report from Roskill. In Mongolia molybdenum is a primary by-product found

in copper and gold mines.

China now accounts for around 31 percent of global molybdenum demand and its growth rates

continue to outpace those in other countries. While global demand for molybdenum is forecast to

grow at an average of 4.6 percent per year to 2016, Chinese demand is forecast to increase by 7.5

percent a year. The principal engines of growth will be increased use of stainless steel containing

molybdenum in process, power and desalination plants, in oil and gas production, and distribution

and in motor vehicle components.

Primary molybdenum mines were the first to respond to the recovery in demand in 2010, but in

2011 growth in output by by-product molybdenum from copper mines outpaced growth from

primary mines. In 2012 mine capacity is sufficient to meet demand, and supply is likely to show a

surplus over the next three years.

The longer term price prospects for molybdenum appears stable, given apparent adequate existing

mine capacity and 140 kilotons per year of relatively low-cost by-product molybdenum in new

copper molybdenum mining projects under review in addition to 100 kilotons per year in

molybdenum-driven projects.

Source: Market Watch

ASX-LISTED MINING JUNIORS STRUGGLE TO CONVINCE INVESTORS

You know things are tough when you cannot float a company with coal targets in Mongolia. And

when anything with gold under its belt cannot seem to attract enough money to get listed.

Kumai Energy Ltd. has seen fit to withdraw its prospectus for an initial public offering through the

Australian Securities Exchange (ASX), despite seeming to have a story that is suited to the markets'

interests: coal in Mongolia, with four prospective licenses. Further still, all the upcoming floats to

list on the ASX makes for grim reading. There are 12 resource floats listed—one has withdrawn, six

have their listing dates ―to be announced‖ and the market is awaiting to see whether the others get

off over the next five week.

The languishing ―TBA‖ floats are—believe it or not—all gold stories. It's the market of course: the

bottom has well and truly dropped out of the junior sector. Those investors left in the market are

interested in drilling results—not promises of future potential. The companies all have a plausible

story to sell, but no one seems to be listening.

Source: The Australian

AUSTRALIAN EXPLORERS HEAD OVERSEAS

Australian-listed mineral explorers are increasingly moving their exploration offshore as

uncertainties and difficulties in the local market make foreign destinations more attractive—a fact

the Mongolian government should pay mind to as it considers introducing tax hikes to the industry

driving Mongolia's growth—said mining consultant Surbiton Associates.

―We've tracked the local gold and wider mining industry over a long period and the trend to

offshore exploration is very clear,‖ Surbiton director Sandra Close said. ―It's now reached the point

where over half of all the exploration expenditure by Australian-listed companies is being spent

overseas—it's not just for gold but for all minerals.‖

Close expressed concerns that if the trend continued, new discoveries would be developed offshore

in direct competition with Australian producers and the local industry would decline. She also noted

that the resources industry and its exports were a vital part of the Australian economy.

Other taxation concerns included the introduction of a carbon tax, which the federal government

had initially promised not to introduce, as well as recent uncertainty regarding the diesel fuel

rebate.

Source: Mining Weekly

REFORM BY STEALTH IS A REASON FOR OPTIMISM ABOUT CHINA

China pessimists are claiming vindication as growth slows in the world's second-largest economy and

main consumer of Mongolian mineral exports. Optimists point out that Beijing has fiscal room to

respond but there are risks to any short-term policy measures. An aging population and a rocky

leadership transition strengthen the bears' case.

However, there are grounds for hope. Recent political turmoil put reactionary forces in the

Communist Party of China on the defensive. Meanwhile, reform-minded officials pushed through

some modest but significant financial market reforms.

The need for interest rate liberalization is widely recognized inside and outside China. Freeing up

deposit rates and abandoning the fixed spread between deposit and loan rates would result in

better returns for depositors and encourage banks to sharpen their lending practices. In the face of

opposition from the big banks, the government took a small step when it cut rates recently—freeing

up banks to offer deposit rates marginally higher than the base rate, arguing that this would make

the rate more palatable to depositors.

A one-shot approach to breaking up big banks or freeing interest rates risks a backlash and

concerted opposition that could block changes altogether. Reform-minded officials are taking a

more subtle approach—using a megaphone to draw attention to the problems and introducing small

but tangible changes. Given the severe political constraints China's leaders face, however, modest

reforms by stealth are better than no reforms at all.

The author, Eswar Prasad, is a professor of economics at Cornell University, a senior fellow at the

Brookings Institution and a former head of International Monetary Fund's (IMF's) China division.

Source: Financial Times

CHINGGIS KHAAN GRAVE HUNTER DIES AT 80

Maury Kravitz was a lawyer, a gold trader and a student of history, but he was best known for his

fascination with Chinggis Khan, a fascination that led him to four expeditions in search of his grave

site in Mongolia.

―I got a call in early 1995... about some cockamamie scheme to look for a burial site in Mongolia for

Genghis Khan,‖ John Woods, a professor of history at the University of Chicago, who would

eventually be persuaded to join Kravitz on his search. ―Although the scheme seemed strange, he

was so magnetic that I couldn't turn away.‖

Kravitz, 80, died of complications from chronic obstructive pulmonary disease Tuesday, 31 July. As

an amateur student of history as young man, Kravitz's main focus was Chinggis Khan. Kravitz

assembled a library of more than 400 volumes concerning the nomadic tribesman who ruled the

nomadic tribes of northeast Asia in the 13th century. He said in a 1994 Chicago Tribune story that

his admiration for Chinggis grew out of his ability to overcome obstacles to become the most

important ruler of his era.

Kravitz managed to win approval for his expedition from the Mongolian government. L. Orgil, now

an ambassador for Mongolia to Switzerland, said Kravitz's expeditions raised awareness both within

and outside the country of Mongolia's impact on world history.

―Maury was a big friend of Mongolia and its people,‖ said Orgil.

Source: Chicago Tribune

POLITICS

JUSTICE COALITION SAYS IT WILL PROCEED WITH ITS PARTICIPATION IN GRAND COALITION

The Justice Coalition, comprised of both the Mongolian People's Revolutionary Party (MPRP) and

Mongolian National Democratic Party (MNDP), held a meeting to announce that it would proceed

with its participation with the Democratic Party (DP) and Civil Will Green Party (CW-GP) for a grand

coalition government.

In a press conference following the coalition meeting, N. Battsereg, the leader of the parliamentary

representatives from the Justice Coalition, officially denied rumors that the Justice Coalition would

abandon the grand coalition in light of the four year-sentence given to N. Enkhbayar, the party's

formal leader.

―As of now, none of the members of the Justice Coalition are opposing the negotiation on forming a

coalition government,‖ said N. Battsereg.

He said that the party has made inroads toward developing roles for party members within the

coalition. As for now, the coalition has lodged its complaint with the Sukhbaatar district court and

has expressed its desire to hear the DP's stance on the matter.

Source: Info Mongolia

NO FINAL DECISION ON GRAND COALITION UNTIL AFTER CASE IS RESOLVED, SAYS MP

N. Enkhbayar will have two opportunities to appeal his four-year sentence to prison for graft, said

MP G. Uyanga from the Mongolian People's Revolutionary Party (MPRP). In the meantime, observers

are waiting to see if the Justice Coalition can remain intact and continue its participation in the

grand coalition headed by the party that led the anti-corruption offensive that resulted in

Enkhbayar's arrest.

While some party members have called for protest until Enkhbayar is freed from prison, the official

stance of the Justice Coalition, comprised of both Enkhbayar's Mongolian People's Revolutionary

Party (MPRP) and the Mongolian National Democratic Party (MNDP), is to stay in the grand coalition.

Uyanga admitted that there are many rumors in the air regarding the Justice Coalition's next move,

but she contends that the party has set a nine-year plan for the pact, rather than a loose

agreement that would extend only past the election.

Uyanga said the parties will make their final decision to the future of the Justice Coalition and its

participation in the grand coalition only after Enkhbayar‘s case concludes.

Source: Udriin Sonin

ENKHBAYAR'S SUPPORTERS LASH OUT

Enkhbayar, his supporters, and members of the Mongolian People Revolutionary Party (MPRP) have

protested his sentence of four years in prison, announcing their intention to appeal the decision.

After the trial, attorney S. Narangerel said the judges refused to take as witnesses D. Choijames

Khamba, a Buddhist Bishop, and Kh. Narankhuu, the former executive director of Erdenet, at the

trial. Amongst the charges, Enkhbayar was found guilty of redirecting equipment intended for the

Gandan monastery, for which he has been ordered to pay USD 40,000 in damages, while charges of

dealings with Erdenet Mining Corp. were thrown out.

E. Batsugar, Enkhbayar's son, came to a gathering of Enkhbayar supporters, targeting Ye. Sagsai,

deputy director of the Ulaanbaatar Prosecutor's Office, and Ts. Soyombo-Erdene, the presiding

judge over the Sukhbaatar district court in his claims of injustice. Enkhbayar's wife, O. Tsolmon,

blamed incumbent President Ts. Elbegdorj for the four-year jail sentence of her husband, saying

there were no facts or evidence for the trial.

―Elbegdorj is the person behind the sentencing of my husband. The judges of the Sukhbaatar

district court, which have no conscience nor compassion, will bear their bad karma one day,‖ she

said.

Source: Global Times, UB Post

BAT-UUL APPOINTED AS NEW MAYOR OF ULAANBAATAR

Outgoing Prime Minister S. Batbold ratified the appointment of E. Bat-Uul as governor of

Ulaanbaatar, handing him his credentials on 7 August.

With the appointment Bat-Uul becomes Ulaanbaatar 31st mayor. Batbold advised the new mayor to

maintain the city's civil services and imparted upon him his wish that he successfully enact policies

that reflect his administration's plans.

―First, I am going to reconcile the roadwork and afterward will give attention to making

arrangements for winter,‖ said Bat-Uul.

Bat-Uul received the official stamp from outgoing Mayor G. Munkhbayar, wishing Bat-Uul success

and presenting him with the latest formal report on the capital city budget.

The new mayor expressed his intentions to begin immediately in development of needed

infrastructure in the city's ger districts, as cited in the Democratic Party's (DP's) action plan.

Source: Unuudur

STANDING COMMITTEE STRUCTURE PUT IN PLACE

Parliament approved amendments to the Law on Parliament that will provide guidance for the

structure of the new government.

The amendments provides for eight standing committees, including a new standing committee on

petitions. The legislation also allows MPs to belong to three standing committees compared with

two in the past. Standing committees will be composed of between 10 and 19 members.

Additionally, the session of Parliament when these amendments were passed saw the election of A.

Bakei as the chair of standing committee on state structure.

Source: Zuunii Medee

GOVERNMENT FALLING SHORT ON FUNDING ROADS PROJECT, SAYS DEVELOPMENT BANK

A representative of the Development Bank of Mongolia has complained of the government's slow

pace in funding road projects.

―The funding received for the projects‘ proposals are not enough,‖ said Ts. Lut-Ochir. ―To tell the

truth, there are a few ready-to-go projects that fulfill all the requirements including a baseline for

research. Road projects are ready to proceed.‖

He said the Development Bank would provide funding to 17 road projects in Ulaanbaatar and 13

road projects in the provinces. Although the 17 projects in Ulaanbaatar have already begun, the

Bank lacks the funding for their completion.

The Ministry of Finance said that the officials responsible for signing the agreement are on annual

leave, said Lut-Ochir. He added that changes to the agreement have been made so that it is in line

with past negotiations, so there should be no delay to its approval. He warned that companies are

already burning through the money paid to them by the Development Bank and time is running out

before operations will have to come to a halt.

Source: Unuudur

RAILROAD WORKERS PROTEST FORCED RETIREMENT OF UNION HEAD

The railroad workers' union has protested pressures from both Russian and Mongolian stakeholders

for union head T. Ochirkhuu to retire.

Minister of Road, Transportation and Construction Ts. Dashdorj has decided that Ochirkhuu must

retire now that he has reached the age of retirement. Union members, however, contend that the

union head has not in fact reached the age of retirement and thus may continue his duties at his

post.

Russian stakeholders have also delivered an official request that the union head be replaced. It asks

that a new union representative be chosen at the September stockholders meeting and that the

chosen replacement be Russian.

Source: Zuunii Medee

MONGOLIA, INDIA BEGIN JOINT MILITARY EXERCISES

Aiming at sharpening their counter-insurgency skills and enhancing training infrastructure for U.N.

peacekeeping missions, the Mongolian armed forces began participating in joint exercises with its

Indian counterpart at Begaum in Karnataka, India on 6 August.

The Mongolian army will be represented by 38 personnel. For over 10 days they will participate in

several counter-insurgency and counter-terrorism operations in Begaum.

Codenamed ―Nomadic Elephant,‖ the exercise will focus specially on the needs of peacekeeping

missions under the U.N. flag and will help in increasing the coordination and understanding between

troops of the two nations, they said.

Additionally, the eighth round of joint exercise will also aim at conducting special sessions to

modernize Mongolian defense. Defense cooperation and relations between the two nations have

seen a steady growth over the last decade, with the first joint exercise in 2004. Joint drills have

been held every year, officials said.

Source: Business Standard

WEST EYES STRENGTHENED TIES TO MONGOLIA

Mongolia presents the United States with a unique geopolitical opportunity to manage the

renaissance of Chinese primacy in Central Asia. Mongolia's history and geography bind it to China

and Russia, and this makes it an essential strategic partner for those wanting to hedge against the

influence of either or both.

Mongolia's eastern border with China is less than 1,000 kilometers from North Korea, which makes it

an intriguing partner on security and defense issues with the United States, Japan, and South Korea.

According to Jane's Information Group, Mongolia has no aspirations—or capacity—to develop a

strategic weapons system, but this cannot be entirely dismissed if developments surrounding North

Korea's latent nuclear weapon program take a turn.

Ulaanbaatar has long been part of Washington's strategic calculus in Central Asia and its importance

has been magnified by the war in Afghanistan. More than 100 members of the Mongolian Armed

Forces are serving there as part of the International Security Assistance Force. Mongolian troops

have helped train the Afghan National Army in mobile field artillery techniques and continue to

provide security at Kabul International Airport.

Mongolia has also committed troops to the NATO mission in Kosovo from 2005 to 2007 and

contributed peacekeepers to South Sudan last year. It cooperation with NATO was formalized this

year when it signed an Individual Partnership and Cooperation Program, which is expected to focus

on building up Mongolia's military capacity, as well as improving interoperability with NATO troops.

Additionally, after its first Khaan Quest exercise in 2004, senior party officials in China began

pushing for increased engagement with their northern neighbor on security and defense issues. In

June, the leaders of Mongolia and China met in Beijing on the sidelines of the 12th Heads of State

summit for the Shanghai Cooperation Organization (SCO), where Mongolia has observer status.

The United States views Mongolia through an integrated lens balancing its economic interests with

strategic concerns. As the world's fastest growing economy, Mongolia is an appealing target for

foreign investors in sectors such as mining, nuclear power and technology. For Washington, though,

security still trumps in Mongolia.

Source: Defense News

EXPERTS IN DEMOCRACY TO VISIT MONGOLIA

At the invitation of President Ts. Elbegdorj, leading theorists on democracy will soon arrive to

deliver a lecture at the Great Hall of the Government Palace to discuss models for development

following the global financial crisis.

The political scientists are the senior fellows and professors of the Freeman Spogli Institute for

International Studies at Stanford University, California. The roster consists of the famous political

scientist Francis Fukuyama, leading contemporary scholar in the field of democracy studies Larry

Diamond and one of the most influential political analysts Stephen Krasner.

Source: Mongolia Web

U.S. FOSSIL DEALER FIGHTS FOR RETURN OF TYRANNOSAURUS BAATAR SKELETON

The U.S. fossil dealer who attempted to sell the Tarbosaurus baatar skeleton at an auction before

President Ts. Elbegdorj intervened has made it clear he wants it back.

In a court filing on 27 July, fossil dealer Eric Prokopi put the U.S. government on notice that he

plans to fight their attempt to take ownership of it. According to his filed claim, Prokopi

―purchased components of the [tyrannosaur] on the international market and then spent a year of

his life and considerable expenses identifying, restoring, and mounting and preparing it.‖ The

document refers to the fossil as a ―display piece,‖ reflecting the work he put into preparing and

mounting the skeleton.

―We are just trying to create a factual distinction between a fossil which is imported and a finished

piece which is what was being sold at the auction,‖ McCullough said.

The sale, which came to USD 1.1 million at auction, did not go through because of the Mongolian

claim. Paleontologists have supported this claim, saying that clearly identifiable remains for

Tarbosaurus baatar are only known to have come from within Mongolia. Prokopi has said the bones

could have come from elsewhere.

The international legal landscape for fossils is complicated. Mongolia makes fossils found within its

boundaries state property, but U.S. law allows for the collection and sale of fossils dug up on

private land with permission by the land owner. But this case involves probable Mongolian fossils

offered for sale in the United States.

―Until the case is tried in court, I don't know if there are any laws that have been broken here in

the U.S.‖ said George Winters, executive director of the Association of Applied Paleontological

Sciences (AAPS).

Winters said it is not difficult to find fossils from the same species of dinosaur or others quite likely

taken from Mongolia and listed in auction catalogs or on eBay. In China, tourists may legally

purchase fossils, but when they attempt to take their purchases home, they maybe be detained or

even jailed, since Chinese law does not permit the export of fossils.

Source: Discovery

ENKHBAYAR CASE SHINES A LIGHT ON MISINFORMATION

At the three-day trial of Mongolia's third President, N. Enkhbayar, lawyer Narangerel argued

nepotism was common in Mongolia, asking what's wrong with asking for favors from friends whom

you have helped along the way.

The widely televised trial provided the opportunity for the public to see and hear the arguments of

both the prosecution and defense. Understanding the trail would be easiest to those who are

already familiar with civil law procedures and the papers inside the thick folders that contain the

details to the case. However, the Mongolian public was interested in connecting the dots to

Enkhbayar's case to understand how political corruption occurs in Mongolia.

Many of the foreign journalists observing the trial seemed to capture only occasional statements of

lawyers and individuals when there was some kind of debate. During such debates, the most

common words Enkhbayar used were ―I didn't do it‖ or ―ask them, not me‖—meaning that those

who benefited from the questionable privatization of state-owned old buildings in lucrative

locations, or preferential contracts with mining corporations were not Enkhbayar himself, but his

son and his sister. However, all of these dealings joined the roster of Enkhbayar's own companies.

Many say Enkhbayar's sentence was ―too soft‖, while Enkhbayar's lawyer seems to agree that his

client is guilty—except that it is an excusable offense in Mongolia's legal system. International

opinion apparently differs with poorly informed coverage of the events. Perhaps it is because these

sources rely on coverage from Beijing where in the past it has reported inaccuracies due to China's

so-called Great Firewall, which prohibits access to certain websites.

Source: News.mn

INNER MONGOLIA PARTY CHIEF TAPPED FOR PROMOTION

Chinese President Hu Jintao is maneuvering to promote one of his closest allies and a leading figure

of the Inner Mongolian autonomous region to the Communist Party's inner sanctum, two

independent sources said, in a bid to retain clout and preserve his legacy after retiring as party

chief.

Hu Chunhua, party boss of the northern region of Inner Mongolia, is a rising political star of the

party's next generation of senior leaders. He is seen as a reformer and a close ally of Hu Jintao,

although the two are not related. Under the constitution, the president, 69, has to stand down

early next year in a once-in-a-decade leadership transition.

The president wants ―Little Hu,‖ as the younger man is popularly known in China, to be either

catapulted straight into the party's supreme-decision making body—the Politburo Standing

Committee—or at least promoted to the prestigious post of party chief in Shanghai.

Jintao is widely expected to hand the top job in the party to Vice President Xi Jinping and look to

promote other allies to important roles. He has been pushing to shrink the standing committee to

seven from the current nine members to retain influence. Sources have said membership could be

increased to 11. A new leadership line-up is expected to be announced at a party congress to be

held in October at the earliest. That new lineup will formally take over the reins of power in March.

If elevated, Hu Chunhua, 49, would be the youngest member of the standing committee and as an

ally of an outgoing president would be seen as someone destined for bigger things, possibly the

party leadership. He gained some international exposure earlier this year, when he accompanies Xi

on a trip to the United States, along with a smattering of other provincial leaders.

Hu Chunhua won plaudits from the government, diplomats and analysts said, after successfully

dealing with rare protests by ethnic Mongols last year in Inner Mongolia, who took to the streets

angered by the destruction of traditional grazing land by coal miners and a lack of respect for their

culture.

Source: Reuters

ANNOUNCEMENTS

DISCOVER MONGOLIA-2012, AUGUST 30-31

The Discover Mongolia conference will be held on August 30-31 in Ulaanbaatar. The conference

venue will again be the Children's Palace. BCM is a supporting organization of Discover Mongolia

2012, and its members will have the opportunity for an early-bird rate for attendance.

Oyu Tolgoi LLC, Mongolia's largest copper and gold mining firm, will be the event's premier sponsor,

in addition to the forum's ―gold sponsors‖: Monnis International Inc., Xanadu Mines Ltd., Aspire

Mining Ltd., Micromine Mongolia LLC, and Mongolian Mining Corp. The conference agenda will

concentrate on recent developments that have taken place in Mongolia's mining and foreign

investment landscape.

For more information, call +976 7014 9762 or email info@discovermongoliaforum.com.

___________________________________________

MONGOLIA INVESTMENT SUMMIT 2012, HONG KONG, OCTOBER 30-31

The Mongolia Investment Summit 2012 will be held from 29 to 30 October at the Four Seasons Hotel

in Hong Kong to once again bring the best of Mongolia's investment opportunities to Asia's leading

investment hub.

Now in its third year, the summit has strongly cemented its position as the largest Mongolian

investment event outside of Ulaanbaatar, providing foreign investors with the most comprehensive

overview of Mongolia's key economic growth sectors all under one roof.

Speakers to the event include Altai Khangai, Chief Executive Officer of the Mongolian Stock

Exchange (MSE), Cameron McRae, President and Chief Executive Officer of Oyu Tolgoi LLC, and

James Passin, Co-founder and Manager of Firebird Mongolia Fund.

For more information, find a brochure to the event by logging on to the website:

mongoliainvestmentsummit.com.

___________________________________________

REGISTER NOW FOR MONGOLIAN MINING DIRECTORY-2013

Mongolian Mining Directory-2013 which provides information database for Mining companies,

investors, suppliers, service companies, government and non government organizations will be

published for the fourth year to commemorate the 90th anniversary of the Mongolian mining

industry. The MMD is distributed free of charge to international and domestic mining companies,

international conferences and exhibition, embassy offices in Mongolia and foreign countries to

investors.

BCM is a Supporting Organization of the MMD and welcomes Mongolian mining industry participants

who are interested in advertising their products and services in Mongolian Mining Directory-2013.

For more information please visit: www.mining.mn, www.mongolianminingdirectory.mn or call

+976-7011 5590.

___________________________________________

REGISTER FOR BCM’S MINING SUPPLY CHAIN DATABASE AT NO COST

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

Oyu Tolgoi LLC, the BCM has maintained the Mining supply chain database since March 2009. It is

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

content and use of information technology opportunities.

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

Database. Please visit here for registration.

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

or 317027.

___________________________________________

POSTINGS ON MONGOLIAN WEBSITE ‘PRESENTATIONS’ AND ‘NEWS’ SECTIONS

The new ‗Presentations‘ section on BCM‘s Mongolian website can be reached via link to

bcm.mn/itgeluud. Several presentations already posted include World Bank‘s Mongolia Quarterly

Economic Update–June 2012; 11 speeches from the 2nd Coaltrans on May 23-24 in UB.

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

―Open-Government.mn‖ site are regularly posted.

___________________________________________

POSTINGS ON ENGLISH WEBSITE 'PRESENTATIONS', 'MONGOLIA REPORTS' AND ‘MONGOLIAN

BUSINESS NEWS’

On BCM‘s English website, ‗Resource, Presentations‘ section, for your review are 4 presentations

from BCM‘s June 25 monthly meeting; 12 presentations from the 2nd Coaltrans on May 23-24 in UB;

3 speeches from ―Corporate Governance Training for Directors‖ on April 27-28; 12 presentations on

Mongolian entities at Mines and Money Hong Kong 2012 on March 21-23; 11 presentations from Coal

Mongolia 2012 on February 9-10; and speeches from all BCM‘s monthly meetings in 2011-12.

Also on BCM‘s English website, ‗Resource, Mongolia Reports‘ section, please note the Polit

Barometer, June 2012, and the Polit Barometer, April 2012 by Sant Maral Foundation (Mongolian

and English versions); Risk Report for Mongolia 2012 by Mongolia Economic Forum; ―Preliminary

estimates of staggering costs of inefficient trade regulation in Mongolia‖ by Olin McGill, consultant

to USAID BPI; ADB‘s Asian Development Outlook, April 2012; detailed results of BCM‘s NewsWire

survey of March 2012; World Bank‘s Mongolia Quarterly Economic Update, February 2012; Executive

Summary of the Mongolian Real Estate Report 2012 by M.A.D. Investment Solutions; 2011 Mongolia

Investment Climate Statement by Economic and Commercial Section of U.S. Embassy, Ulaanbaatar,

Mongolia; and Transition Report 2011 (Mongolia data) by EBRD and the Economic Research Institute.

We are now posting some news stories and analyses relevant to Mongolia to BCM website's

‗Mongolian Business News‘ as they come, instead of waiting until each Friday to put them all

together in the weekly NewsWire. The NewsWire will, however, continue to be issued on Friday,

and will incorporate items that are already on the home page, so that it presents a consolidated

account of the week‘s events.

___________________________________________

SOCIAL NETWORK WITH BCM

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

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

improving each day with BCM.

Connect with BCM on Linked-in to join the diverse group of professional contacts creating a better

business environment in Mongolia today.

Add BCM on Facebook at http://www.facebook.com/pages/THE-BUSINESS-COUNCIL-OF-

MONGOLIA/129826330435540 to read the latest announcements and comment on events carried in

the NewsWire with the community.

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

http://twitter.com/#!/bcMongolia.

Of course for news information, interviews, and announcements regarding our organization, visit

the official BCM website at www.bcmongolia.org and www.bcm.mn.

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]

June 30, 2012 *14.7% [source: NSOM]

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

Note: 15.1% y-o-y, Ulaanbaatar city, June 30, 2012

CENTRAL BANK POLICY 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]

CURRENCY RATES – August 9, 2012

Currency Name Currency Rate

U.S. dollar USD 1,358.01

Euro EUR 1,680.06

Japanese yen JPY 17.33

British pound GBP 2,116.12

Hong Kong dollar HKD 175.12

Chinese yuan CNY 213.30

South Korean won KRW 1.20

Russian ruble RUB 42.84

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.