He had been on hunger strike just over 10 days to protest his innocence. N.Enkhbayar’s health condition is worsening says his family members and he is now being treated in hospital.

Mr Enkhbayar had been planning to stand in parliamentary elections next month as the head of a new political party.

N.Enkhbayar served as PM and then President but left office following an presidential election defeat in 2009.

The country is battling a massive shortage of coal. Interestingly, for the first time last year, China imported more coal from Mongolia than from Australia. By securing its own feed, and especially with Australian coal prices hitting the roof, analysts say India will soon be able to tap into what is considered a rich resource.

Coking coal prices from Australia shot up last year, to more than $300 a tonne, after floods took out 16 million tonnes of annual production from Queensland mines, in late 2010 and 2011. An analyst with Mumbai-based brokerage firm Pinc Research said the drastic rise in prices hit the bottom lines of Indian steel makers, who rely mainly on imports to meet their requirements.

“Coking coal prices, which shot up to around $320-$350 a tonne, did not come down despite normalcy being restored in the Australian mines. Australian coking coal prices shot up from $125 in 2010 to $350 in 2011. Currently it is moving between $200 and $230 per tonne. The profit margins of most energy-intensive industries in India such as cement, aluminium and sponge iron have come under pressure in the March quarter due to this,” said an analyst.

Moreover, Australia’s Mineral Resource Tax that will levy a 30% tax on the profits of iron ore and coal mining companies, got approved by the Australian Senate on March 19, 2012. The tax is due to start on July 1, 2012 and is expected to generate AUD$ 11.0 billion in its first three years. Australian miners will likely pass on the cost hike to their customers – steel producers in India – impacting profitability. Pinc Research estimates the tax will push up coking coal prices by 4%.

India currently imports a major chunk of coking coal from Australia and with India’s steel capacity going up over the next 18 months, the coking coal demand is expected to move up equally.
The new agreement in Mongolia is set to help ease the burden. An Indian delegation comprising the chairman of the Steel Authority of India, C S Verma and U P Singh, joint secretary in the Ministry of Steel are in Beijing and are to visit Ulaanbaatar to formalise the accord.

Speaking to newswires, Verma said the memorandum of understanding with the Mongolian government would be for the allocation of coking coal mines. He told newspersons that the Indian government has been in talks with their counterparts in Mongolia for about a year on the issue.

Despite abundant coking coal mines, Mongolia does not have any steel plant of its own. Verma said Mongolia has very good quality coking coal mines and that India does not have such quality coal mines. The reciprocal arrangement would be to set up a steel plant there and the Mongolian government would, in turn, allocate coking coal mines.

Upon his appointment, Dr. Klingner said, “It is an honour to be appointed Chairman of the Ivanhoe Mines Board of Directors. The company is advancing towards a significant milestone as phase one construction at Oyu Tolgoi nears completion and production is set to begin. The people of Mongolia will benefit from Oyu Tolgoi, which will be one of the country’s largest mining operations. I look forward to working with my fellow directors and the new senior management team as we further develop this impressive operation.”

Kay Priestly, Ivanhoe Mines Chief Executive Officer, said, “The appointment of David Klingner as Chairman and reappointing of Livia Mahler as a director is another important step in the corporate governance transition agreed by Ivanhoe and Rio Tinto. The agreement with Rio Tinto announced on April 18, 2012 also establishes a comprehensive financing plan providing financial stability supporting the development of Oyu Tolgoi for the benefit of all shareholders.

“At the end of April, Oyu Tolgoi’s overall phase one construction was 82% complete and mining and stockpiling of first ore from the open pit had begun, which is indicative of the good progress we are making. Moving forward, our strategy will focus on the continued timely development of Oyu Tolgoi where we expect first production in the second half of 2012 and the beginning of commercial production in the first half of 2013.”

The Indian delegation comprising of Chairman of Steel Authority of India (SAIL) C S Verma and U P Singh, Joint Secretary in the Ministry of Steel will go to Ulaanbaatar tomorrow to sign a pact in this regard.

“We are signing an MoU with the Mongolian government for allocation of some coking coal mine. We have been talking about this for about a year,” Verma who held talks with top Chinese steel officials and producers in the past two days told PTI.

The plan is to acquire the mine, utilise the coal for the steel plant India proposes to set up in Mongolia and export the rest to India through Chinese ports as Mongolia is a land locked country.

Asked whether India is expecting substantial volumes from Mongolian mines, Verma said, “I think it should happen. We will be too keen to get good volumes, good mine with lot of reserves, so that we feed the steel plant which we will be setting up there and the surplus will be brought to India,” Verma said.

“Mongolia has very good quality of coking coal mines. We do not have such quality coal mines ourselves. Let Mongolian government allocate some good coking coal mine and we will have reciprocal arrangement to set up a steel plant there,” he said.

Despite being a growing economy with abundant coking coal mines, Mongolia does not have any steel plant of its own.

The mine India plans to acquire will first meet the requirement of setting up a steel plant there. Then the surplus coking coal will be taken to from there, Verma said.

http://economictimes.indiatimes.com

In an update on its open pit coal operation, Prophecy said that since 2010, it has invested over $30 million at Ulaan Ovoo, including road and bridge building, mining fleet, mining camp, pre-stripping, and other infrastructure and community improvements.

Prophecy said that since September 2011, it has sold and delivered some 188,915 tonnes of thermal coal, including 8,055 tonnes to Russia, 23,543 tonnes to private Mongolian companies, and 157,317 tonnes to Mongolian government-owned power plants.

The company said it has contracts to deliver an additional 228,388 tonnes in 2012, the majority of which is to be delivered to the Darhan and Erdenet power plants in Mongolia.

Prophecy reported that there are currently around 130,000 tonnes of coal stockpiled at Ulaan Ovoo.

The company’s total sales target for 2012 is 300,000 tonnes of coal, and for the rest of the year, it expects a stabilized production cost and minimal capital expenditures at Ulaan Ovoo.

“Ulaan Ovoo produces highly desirable thermal coal of NAR 5,100 kcal/kg quality to fulfill the regional demand of the thermal coal market,” said chairman and CEO John Lee.

“The coal inventory levels at Mongolian power plants this past winter were down to only a few days, which created a national emergency.”

In the past months, Prophecy said it has experienced a steady increase in both the demand and realized sale price for its coal.

In 2012, it said it received commitment and interest for a substantial quantity of Ulaan Ovoo coal from Russian buyers. But the company noted it is postponing sales to Russia pending the opening of the Zeltura border crossing and a revised export royalty scheme from the General Department of Taxation of Mongolia.

Prophecy is currently paying export royalties based on a government-set benchmark coal price, which is nearly three times higher than the actual sale price. The company said it is optimistic that progress will be made on both royalty and border opening fronts to improve the margin on sales.

“We are committed to delivering our quota to Mongolian power plants in 2012, while continuing to work with the Mongolian government on the 600 MW Chandgana Power Purchase Agreement to address the long-term energy needs of this rapidly developing country and at the same time, provide a stable return to our shareholders,” concluded Lee.
In November 2011, the Vancouver-based company received a license from the Mongolian government to build a 600 megawatt power plant at its Chandgana Tal thermal coal deposit.

The company has over 1.4 billion tonnes of near surface thermal coal resources on two coal properties in Mongolia. Prophecy’s Chandgana 600 MW power plant has been permitted and its Ulaan Ovoo coal mine is currently in production.
In March, the company announced that it closed a $10.06 million non-brokered private placement financing, selling 22.36 million shares priced at 45 cents each, up from the initial 20 million shares Prophecy originally planned to sell.

Prophecy said at the time that it would use funds for technical work to bring its Chandgana thermal coal power plant project toward development. The proceeds would also be used for general working capital.

Source: http://www.proactiveinvestors.co.uk

SouthGobi Resources Ltd. 1878.HK +5.54% said that the Anti-Corruption Agency of Mongolia “formally requested information” from the offices of subsidiary SouthGobi Sands LLC.

Vancouver-based Ivanhoe owns 57.6% of SouthGobi Resources. Ivanhoe’s shares were down 7% at 9.66 Canadian dollars (US$9.73) in early trading. SouthGobi’s shares fell by 13% in Hong Kong.

SouthGobi said the decline was spurred by an attempt by the Mongolian government to limit foreign ownership of Mongolian strategic assets to 49% and the visit of anticorruption officers to its offices.

“SouthGobi has previously been advised this is in connection with an investigation into a third-party and has no reason to believe SouthGobi Sands LLC is itself the subject of any investigation,” the company said.

Last month the Mongolian government suspended SouthGobi’s mining licenses on what it called national-security concerns, following a bid by China’s state-owned Aluminum Corp. of China Ltd. ACH -4.66% The Chinese company had agreed to buy a controlling stake in SouthGobi in a deal valued at as much as 7.2 billion Hong Kong dollars (US$927 million)

Ivanhoe’s largest project is in Mongolia, where it owns 66% of the massive Oyu Tolgoi copper and gold mine.

Source: Wall Street Journal

Hailed as one of the last frontiers for resources exploration, the central Asian country is thought to have $1.3 trillion in untapped mineral deposits, including coal, copper, iron ore, zinc and gold, beneath its vast deserts and steppes.

Over the past four years, the country’s mining companies have ramped up their output, and foreign resources giants are increasingly investing in the region. This year alone, Mongolia will see gross domestic product growth of 17.2%, according to the International Monetary Fund.

But if Mongolia is to enjoy the spoils of its natural wealth, the country’s capital markets have to be reformed – starting with its fledgling national bourse.

Founded in 1991, the Mongolian Stock Exchange has 336 listings. Many names are inactive and overall trading on the exchange is thin at just two hours a day. With a capitalisation of $2bn (compared with the LSE’s $3.7 trillion) the market is too illiquid to provide a platform for chunky home-grown listings. As a result, several of the country’s commodity giants have had no choice but to seek public offerings abroad, with the Australian Securities Exchange and Canada’s TMX Group the primary beneficiaries.

Altai Khangai, the Mongolian exchange’s 30-year-old chief executive, said: “Because of the lack of sophisticated infrastructure, mining companies haven’t been able to gain exposure locally.”

Modernisation

The Mongolian government intends to change this. Last year the Ulan Bator-based exchange signed an agreement with the LSE to overhaul the Mongolian market. The London exchange beat off rivals Nasdaq OMX, Deutsche Borse and the Korean Stock Exchange to secure a three-year deal under which the LSE will help transform Mongolia’s securities law and regulation, modernise its trading infrastructure, and develop its long-term business strategy.

As part of the deal, the MSE will implement the LSE’s technology platform MillenniumIT at the trading, clearing and settlement levels.

Khangai, who was appointed to the role permanently in January, said: “We are in the final stage of testing and expect the Millennium-IT implementation to go live shortly.”

Mongolia’s parliament is reviewing a draft securities law which, among other things, incorporates elements of the UK’s Financial Services Act listing rules and increases transparency and disclosure requirements. “We are bringing in technical but also conceptual changes,” said Khangai.

The exchanges estimate that the MSE will notch up $45bn in listings during the next 10 years through the privatisation of state-owned companies and other assets – and the LSE hopes it will get a slice of the action.
The spotlight is currently on state-owned miner Erdenes-Tavan Tolgoi, owner of the world’s largest coking coal deposit. The Mongolian company is scheduled to launch a three-pronged $3bn listing – in London, Hong Kong and Ulan Bator – following the passing of the new securities law this year.

Dual listings

Khangai, a former commodities trader and adviser to the Mongolian prime minister, also hopes the government-led reforms will result in several of the nearly 50 foreign-listed international mining companies with assets and operations in Mongolia to seek a dual listing at home. He said: “A dual listing would give these companies exposure to local investors and the local currency. We have had several expressions of interest and a significant potential pipeline. It is also regarded, politically, as the loyal thing to do.”

The development of the local market is even more important for non-mining firms, he said, since domestic Mongolian companies that are not part of the commodities boom find it difficult to gain international exposure.

Tony Weeresinghe, LSE Group director of global development and chief executive of Millennium IT, said: “For Mongolian companies, the chance to develop lasting relationships with some of the world’s largest institutional investors will kick-start their development and help fast-track the country’s already rapid progress.”

Currently the exchange trades stocks and government bonds but it is exploring the introduction of vanilla exchange-traded funds, which are growing popular among emerging market bourses.

http://www.efinancialnews.com

Total market capitalisation was increased by 37.5 billion MNT or 1.9 percent and was set at 1 trillion and 934.6 billion MNT. Shares which the prices were most increased JSCs were Darkhan Transport, Aduunchuluun and Chatsargana but Khereglee impex, Gutal and Mongol Nekhmel JSCs were most decreased.

Total shares of 44 JSCs were traded, share prices of 19 JSCs were increased, 15 were decreased but share prices of 10 JSCs were stable. The most actively traded stocks by volume were Remicon, HB oil, BDSec but BDSec, APU and Remicon JSCs were most actively traded in terms of trading value.

Draft

LAW OF MONGOLIA

… 2012 Ulaanbaatar

ON REGULATION OF FOREIGN INVESTMENT IN BUSINESS ENTITIES OF
STRATEGIC IMPORTANCE

CHAPTER ONE
GENERAL PROVISIONS

Article 1. Purpose of the Law

1.1.The purpose of this law is to regulate relations concerning investment to
business entities operating in sectors of strategic importance by foreign investors, other
related parties of common interest with them, and third parties, and to regulate relations
related to granting of licenses to them.

Article 2. Legislation on foreign investment to business entities of strategic
importance

2.1.Legislation on foreign investment to business entities of strategic importance
shall consist of the Constitution1, Law on Foreign Investment 2, Law on National

Security 3, this Law, and other legislative acts adopted pursuant to these laws.

2.2 . If an international treaty to which Mongolia is a party is inconsistent with this

L aw, then the provisions of the internation al treaty shall prevail

Article 3. Scope of the Law

3.1.Entities controlled by foreign Governments, international organizations,
entities controlled by international organizations shall obtain permission from the
Government of Mongolia upon making investments to Mongolia.

3.2.Foreign investor, related entity with common interest and third parties shall
obtain permission from the Government of Mongolia when concluding transactions
referred to in Article 7 of this Law to own shares of companies operating in one of the
sectors or activities of strategic importance or to own shares of companies with market
value over 100.0 billion togrogs.

3.3.This Law shall not concern foreign investments made within the framework of
international treaties and conventions to which Mongolia is a party, and as part of
military technical cooperation.

1The Constitution of Mongolia – published in “ State Bulletin” No.1, 1992.
2Law on Foreign Investment – published in “ State Bulletin” No. 4,5 , 1993.
3Law on National Security – published in “ State Bulletin” No..3, 2002.
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3.4.Foreign investor, other related party with common interest and third party are
prohibited to conclude transactions breaching Article 4.1.1. of this Law.

3.5. If transaction made outside the territory of Mongolia contain features
indicated in Article 3.1- 3.2 of this Law, this Law shall apply.

3.6. This Law shall apply to foreign investor, related entity with common interest,
and third party that seek acquiring shares of companies referred to in Article 4.1.1
directly and indirectly.

3.7. The share of Mongolian party of entities of strategic importance shall be no
less than 51percent.

Article 4. Definition of terms

4.1. Terms used in this Law shall be understood in the following meaning:

4.1.1.“ entity of strategic importance” / hereinafter “ strategic entity”/ means
business entity operating in sector or activity referred to in Article 5 of this Law or
company with market value over 100.0 billion togrogs;

4.1.2.“ acquire indirectly” means to acquire rights to dispose shares
through foreign investor, related entity with common interest and third party;

4.1.3.“ invalidate management decision” means possibility for foreign
investor, related entity with common interest and through third party to invalidate the
management decision ought to be approved by the majority in accordance with laws,
bylaw of the entity or contract;

4.1.4.“ foreign investor” means entity referred to in Article 3.2 of the Law on
Foreign Investment, excluding entities referred to in Article 3.1 of this Law;

4.1.5.“ related entity with common interest” means entity referred to in
Article 99.1. of the Company Law;

4.1.6.“ third party” means legal person or individual who has continued ties
with foreign investor and related entity with common interest and not registered in
Mongolia.

4.1.7.“ market value” means the closing value of the given day of company
referred to in Article 4.1.1. of this Law, registered at specific stock exchange for specific
period of time;

4.1.8.“ Mongolian party” means citizen of Mongolia, national business
entity, Government of Mongolia, entities controlled by it.
4.1.9.“ national business entity” means entities founded by citizen or legal
person of Mongolia and owned 100 percent by citizen and legal peг son of Mongolia.

CHAPTER TWO
SECTOR, ACTIVITY, BUSINESS ENTITY OF STRATEGIC IMPORTANCE,
MAKING TRANSACTIONS

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Article 5.Sector, activity, business entity of strategic importance

5.1.Sectors of strategic importance refers to minerals, food, agriculture, power
supply, road, transportation, information and communication sectors, which are
strategically important for meeting basic needs of the population, maintaining economic
independence and normal functioning, generating national revenue, and ensuring
national security.

5.2.The following activities refer to activities of strategic importance:

5.2.1.production and distribution of industrial explosive materials;
5.2.2.activities related to maintaining flight security;
5.2.3.TB and radio activity broadcasting for more than half of the
population;
5.2.4.communications services throughout the territory of Mongolia;
5.2.5.activities for guaranteeing safety, quality and supply of food;
5.2.6.oil related activities;
5.2.7.power supply activities;
5.2.8.road and transportation activities;
5.2.9.activities of using water sources of urban settlements;
5.2.10.activities which may cause substantial negative impact both directly
and indirectly on eco system, natural resources other than minerals, and biodiversity of
Mongolia and the given local area;
5.2.11.immovable property market;
5.2.12.extraction of radio active natural resources;
5.2.13.preparation and processing of livestock skins, hides, wool, and
cashmere;
5.2.14.use, production, distribution of chemical toxic substances;
5.2.15.use of recombinant technology and substances that cause
infectious diseases in biotechnology production;

5.2.16.activity which may directly or indirectly affect the market and price
of key export items of mining, including gold, copper, coal, iron ore, and rare earth
elements

5.3.Business entities with market value over 100.0 billion togrogs shall be entity
of strategic importance.

Article 6.Transactions which require permission

6.1.Transactions which require permission in accordance with this Law
/hereinafter referred to “ transaction”/ include those which will:
6.1.1.provide right to acquire one third or more shares of the strategic
company directly or indirectly;
6.1.2.provide right to carry out the executive management of strategic
entity unilaterally or to appoint the majority of the management team, or to appoint the
majority of the board of directors without any preconditions;
6.1.3.provide right to veto management decision of strategic business
entity;
6.1.4.provide right to exercise management role, determine decision of
strategic entity, and exercise business operational activities ;
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6.1.5.may create buyer or supplier monopoly at international and
Mongolian commodities markets;
6.1.6.may affect directly and indirectly the market and price of key export
items of mining of Mongolia, including gold, copper, coal, iron ore, and rare earth
elements.

6.2.Entity referred to in Article 3.1, 3.2 of this Law shall submit request for
permission to relevant authority within 30 days of the transaction referred to in Article
6.1 of this Law.

CHAPTER THREE
REVIEW OF REQUESTS AND DECISION MAKING BY STATE ORGANIZATION

Article 7.Request for permission

7.1. Entity referred to in Article 3.1, 3.2 of this Law planning to make the
transaction referred to in Article 6 of this Law /hereinafter referred to “ applicant”/ shall
submit its request to state organization in charge of foreign investment in accordance
with the Article 7.2 of this Law.

7.2.Request shall have the following documents attached to it:
7.2.1.application for permission;
7.2.2.document showing state registration in accordance with laws of
respective country;
7.2.3.applicant’s personal ID ;
7.2.4.document showing that entity is foreign entity without the status of
legal person???? тухайн хууль дагуу мэдүүлэгч -
хуулийн э тгээдийн эрхгүй гадаадын байгууллагын байгуулагдсаныг нотлох баримт
бичиг;
7.2.5.document showing establishment of the applicant-legal person;
7.2.6.draft contract describing the content of the transaction;
7.2.7.document containing information applicant’s in
years preceding the request ;
7.2.8.document showing information on the related entity with common
interest with the applicant, its composition and cooperation between participating parties
; 7.2.9.document containing information on entities that belong to the applicant or
entities that control the applicant;
7.2.10.documents on shares;
7.2.11.draft business plan.
7.3.Applicant shall submit certified copies of the documents listed in Article 7.2 of
this Law to the state organization in charge of foreign investment.

Article 8.Decision making on request

8.1.State organization in charge of foreign investment shall receive requests that
meet the following criteria:
8.1.1.any activity or nature of investment do not contradict the national
security concept of Mongolia;
8.1.2.applicant meets conditions to abide by legislations of Mongolia and
established business codes;
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5

8.1.3.the investment does not contain elements of restraining competition
in specific sector and creating monopoly ;
8.1.4.the investment does not provide substantial effect on national budget
revenue and other policy activities of Mongolia;
8.1.5.the investment does not provide substantial effect on activities of
national investors and business entrepreneurs of Mongolia .

8.2.State organization in charge of foreign investment shall carry out the following
actions within 14 days of receipt of request:
8.2.1.check completeness of request and demand missing documents if
incomplete, and if complete, register request;
8.2.2.return request to the applicant without further action if the applicant
did not meet the requirement indicated in Article 8.2.1 of this Law within 30 days.
8.3.State organization in charge of foreign investment shall submit its proposal to
the Government on feasibility of accepting the request within 3 months.
8.4.The Government shall make a decision to grant or not the requested
permission within 45 days of receiving the proposal with relevant supporting documents
from the state organization in charge of foreign investment referred to in Article 8.3 of
this Law.
8.5.State organization in charge of foreign investment shall notify the applicant
within 15 days of receiving the decision referred to in Article 8.4 of this Law.
8.6.Detailed procedure for reviewing request and making decision on it shall be
approved by the Government in accordance with this Law.
Article 9.Informing about transactions that took place
9.1.Foreign investor, related entity with common interest and third party shall
notify the state organization in charge of foreign investment within 30 days of its direct
and indirect acquisition ranging from five percent to the percentage referred to in Article
6.1.1 of this Law of a strategic company in accordance with the procedure adopted by
the Government of Mongolia.
9.2.Within 180 days of entering info force of this Law, entity referred to Article
3.1, 3.2 of this Law shall provide information to the state organization in charge of
foreign investment on its ownership from five percent and more of shares of strategic
company that was held prior to this Law became effective.

CHAPTER FOUR
MISCELLANUOUS
Article 10.Legal effect
10.1.Transactions that breach requirements set forth by this Law and Article 6
shall be invalid.
10.2.Relevant authority shall discontinue activities of the strategic entity that
breached this Law or invalidate its license.

Article 11.Entering info force

11.1.This Law shall enter into force on the day of approval.