26.03.2012, Development Bank of Mongolia: It's role in infrastructure development of Mongolia, L.Bolormaa

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CONFIDENTIAL

Development Bank of Mongolia Its role in infrastructure development of Mongolia

March 25, 2012

March 26, 2012

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CONFIDENTIAL

Agenda

I. Overview of Development Bank of Mongolia (DBM)

II. Infrastructure projects

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I. Overview of Development Bank of Mongolia

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Direct

supervision

DBM is Mongolia’s Only Policy Bank

Parent

Establishment

Mission

100% owned by the Government of Mongolia

DBM was established on 25 March, 2011 by

the Government of Mongolia and under the

Development Bank Law passed by

Parliament on 10 February, 2011

To foster the economic and infrastructure

development of Mongolia by providing long-

term financing for policy-oriented projects

consistent with the Government’s

macroeconomic development strategy

Road constructionConstruction &

Infrastructure

Railway constructionSainshand

Industrial Complex

DBM will play a pivotal role in the development and continuous progress of Mongolia’s economy

1 2

3 4

DBM will finance projects in the following sectors…

Organizational Chart

Government

of MongoliaCabinet

Ministry

of Finance

DBM

100%

Direct

supervision

■ The Cabinet is the highest institution of Government administration in Mongolia and directly supervises DBM

■ The Ministry of Finance directly supervises DBM

Shareholders’

meeting

Board of

Directors

CEO

First Deputy

CEO

Nomination

Committee

Audit Committee

Remuneration

Committee

Credit

Department

Risk Management

Department

Monitoring and

Administration

Department

Asset and

Liability

Management

Department

Asset and Liability

Management

Committee

Credit Committee

Internal Audit

Unit

Executive

Committee

DBM Corporate Structure

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CONFIDENTIAL

Euro Mid-Term Note Programme (EMTN)

Bond Issuer Development Bank of Mongolia (“DBM” or the “Bank”)

Commencement Date November 30, 2011

Credit Rate Moody’s: B1 (Stable) / S&P: BB- (Positive) / Fitch: B+ (Stable)

Gaurantor*Unconditionally and irrevocably guaranteed by the Government

of Mongolia (“GoM”)

Total Amount 600.0 /six hundred / million USD

Period 5 years

Listed Stock Exchange Singapore Stock Exchange

Interest Payment 6 months after first proceed and semi-annually

Bond PurposeTo finance new railway projects, design and construction of

roads and infrastructure projects related to housing.

Placement Type Private and Public placement

Placed Bond Amount2011-12-09, 1 year, 20 million USD, 6.0% (private)

2012-03-21, 5 years, 580 million USD, 5.75% (public)

DBM 600 M$EMTN

Underwriters

November 30, 2011

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First Debut Bond for the DBM

Distribution by Geography% of allocation

Asia (32%)

Europe (36%)

US Offshore (32%)

FM/AM (85%)

Private Banks (12%)

Other (3%)

Distribution by Investor Type% of allocation

• First sovereign-linked public bond offering

from Mongolia

• A benchmark size issue; opened the

international bond markets to Mongolian

borrowers

• US$ 6.6bn order-book with 13x

oversubscription, more than 300 accounts

participated

• Upsized to USD 580mn, priced at 5.75%

• Tightest ever pricing for a debut EM

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3

II. Infrastructure projects

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Infrastructure Projects to be financed

29%

1%

3%

15%4%

40%

3%5%

Total cost 2012 % in portfolio

Road Construction 845.74 375.84 29.0%

Road Designing 11.06 6.30 0.5%

100,000 Housing Construction 132.70 37.65 2.9%

6% Mortgage Loan Fund 200.00 200.00 15.4%

Engineering Utility 108.60 57.36 4.4%

Railway 521.00 521.00 40.1%

Sainshand Industrial Park 40.00 40.00 3.1%

Public-Private Partnership 60.00 60.00 4.6%

Development Bank of Mongolia is mandated to provide fund for projects designated in the

Parliament Resolution No.15 of 2011.

In 2012 DBM plans to finance MNT 1.3bn for rail-road, roads, infrastructure for residential

districts, housing loan fund, and Sainshand Industrial Park projects.

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Road Projects

DBM will finance construction of 1,500 km paved

roads.

The roads will pass through 12 provinces.

Construction work will take approximately 2 years to

complete.

In order to improve road quality, independent

monitoring consultant will be hired for each roads.

existing roadsunder constructionto be built by DBM fund

48 km of roads’ construction and reconstruction work

will be financed by DBM.

A new leveled intersection at eastern crossroad, 2

bridge extension will be built.

Most of the projects will take 1 year to complete.

Construction monitoring consultant will be hired for

Ulaanbaatar roads for first time.

to be built by DBM fundPlanned road

Rural road construction Ulaanbaatar road construction

DBM will finance 1,600 km of road construction and 4300 km of road designing project included in

“New Development” program stipulated by the Parliament Resolution No.36 of 2011:

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12th district

16th district

15th district

Buyant Ukhaa, Yarmag

19th district

7th district

Housing & Utility Projects

A new residential district with 28 blocks for 1,764

households. The government provides the land to

Mongolian Housing Finance Corporation to build the

district in 1.5 years.

Total cost of the project is 76.6 billion MNT including

8.3 billion MNT for utility and public structures.

Buyant-Ukhaa district

Chinggis Khan Intl. Airport.

161 billion MNT for 20 heat supply,

67 billion MNT for 10 electricity and heap

transmission

150 billion MNT for 25 clean water and sewage

system.

And it includes “New county center” project for 5

county with total of 50 billion MNT budget.

Buyant-Ukhaa district Engineering Utility

Bayangol valley

new district

The Government Resolution No.149 of 2011 has designated 3 housing construction and utility projects

to be financed by DBM.

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Railway Projects

1st PHASE – 1100 km

Dalanzadgad – Tavan tolgoi – Zuunbayan (Sainshand)

Sainshand – Baruun Urt

Baruun Urt – Khuut

Khuut – Choibalsan

2nd PHASE – 900 km

Nariin Sukhait – Shivee Khuren

Ukhaa Khudag – Gashuun Sukhait

Khuut – Tamsagbulag - Numrug

Khuut - Bichigt

3rd PHASE – 3600 km

Western Railroad Network

The State Policy on Railway

Transportation was approved

by the Parliament Resolution

No.32 dated 2010 to develop a

freight system between

strategic mines and industrial

clusters, to establish a national

transportation network, and to

support nationwide economical

and industrial growth.

The new railway will be

constructed towards east, in

order to reach the North-

Eastern industrial region of

China, and beyond to Korean

and Japanese markets.

Connecting strategic mines in

the South-Eastern region to the

market will amplify their

economic outputs

Dalanzadgad

Baruun-Urt

Choibalsan

Bichigt

Zamiin Ude

Sainshand

Ereentsaw

Khuut

Tavantolgoi

Numrug

Gashuun Sukhait

Nariinsukhait

Shivee Khuren

Existing Rail

1st phase

2nd phase

Oyu tolgoi

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Sainshand Project

Parliament of Mongolia has

approved by its Resolution #45 to

build “Sainshand Industrial Park”.

Establishing a processing factory-

complex in Sainshand and

introducing leading technique and

high technology will increase the

competitiveness of Mongolian

economy as well as bring

significant impact on socio-

economic development of the

country..

In 2013-2021, the average growth

of GDP is estimated to reach

15.8% annually, with refineries

14% of the total GDP.

Bechtel USA, an engineering

corporation is engaged in Master

Plan development for the project.

Feasibility studies for the each

processing factories are planned

to be commenced from April, 2012.

Projects

Project cost

(USD

million)

Capacity

(million tons per

annum)

Implementation

schedule Target

Coking Coal 400 2.0 MTPA of

metallurgic coke 36 month

Coke for export

Coal gasification 1000

DRI reducing gas

and hydrogen for

refinery 48-54 month

For export and

domestic markets

Copper smelting

plant2000

300 kTPA42 month

For export and

domestic markets

Oil refinery plant 900

1.0 MTPA of crude

oil (20,000 barrels

per day) 48-54 month

For domestic

market

Iron Ore Pellets

Plant500

4.5 MTPA 36-40 month

Pellets for DRI

feed and export

Direct Reduction

Iron (DRI) / Hot

Briquette Iron

500

2.5 MTPA

42 month

For export and

domestic markets

Cement Plant 500

1.0 MTPA

30-36 month

For domestic

markets, also can

be exported to

China

Power plant 750 1050 MW

electrical power 45 month For Industrial

Park’s usage

Industrial Park

Infrastructure3650

Water, heating,

sewerage

For Industrial parks

usage

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What is next…

Road projects :

MRTCUD is responsible for selecting eligible contractors.

Insufficient capacity of domestic construction companies for construction of 1600 km road.

Frequent change of government decisions.

Housing & Utility

MRTCUD, MMRE will select the contractors for utility projects

Some projects do not have technical design

Railway

Implementation of the State Policy on Railway Transportation is in the discussion of the

Cabinet.

Sainshand

Bechtel Group, the consultant for development of master plan have not submitted yet the

final report.

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Development Bank of Mongolia

Thank you.