BCM Mongolia Highlight: Final Oyu Tolgoi Demands Almost Ready

Fri, 2009-07-03 07:13

Oyu TolgoiA NewsWire Highlight by Business Council of Mongolia:

There is widespread expectation that the impasse over the Oyu Tolgoi investment agreement will be resolved before Naadam. Minister of Minerals and Energy D.Zorigt told the MPRP group in Parliament on Monday that considerable progress has been made in finalizing the position of the Mongolian Government on the issue, on the basis of all the suggestions and recommendations from various quarters, including the Standing Committee on the Economy and the working group set up by Parliament. Informal discussions have continued to be held with the investors and the final Mongolian version, once approved by Parliament, is expected to be then negotiated with bright chances of an early settlement.

The final version of the Mongolian position, to be submitted to Parliament, calls for 34% Mongolian ownership, no tax waiver, and an advance payment of USD225 million with lower interest rates. The demand for a 55% share of the profits has not yet been decided. The Government wants Rio Tinto International Holding and Ivanhoe Mines Canada to be co-signatories along with Ivanhoe Mines Mongolia Inc. Two years will be given to the investors to raise funds and five years to complete all construction and start operating to full capacity.

Since Mongolia does not have the resources to provide all the electricity needed for the project, alternatives have been proposed. Mongolia will build the roads, but their maintenance will be the responsibility of the project. The water supply to the project will be extended to cover the needs of herders and the local population. An annual audit will be made and the report will be submitted to the state auditing authority. 

Oyu Tolgoi is currently operated by Ivanhoe Mines (TSX:IVN) and its strategic partner, Rio Tinto (NYSE:RTP).

Source: Business-Mongolia.com
Business Council of Mongolia The Business Council of Mongolia aims to advocate increased trade and investment in Mongolia and serve as a forum for dialogue on the important business climate issues. Join us at the Business Council Mongolia Official Website
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Archived Comments
pol
2009-07-04 08:29:32
Oyu Tolgoi mine will be makes 4 times of more production than Erdenet. But the Canadian gangsters will be pay tax in the Mongolian treasury less than Erdenet pays. Mongols long will not tolerate this impudent robbery.
The Canadian Point of View.
2009-07-04 10:34:04
At this point in time it is immaterial and maybe even counter productive to make conjectures about [who] will be paying [how much] taxes at OT when all is said and done, there is just too much to get done for us dwell on this nonsense. No one will truly know what is fair until the damn thing is built and in production, so don't sweat it. Mongolia will be receiving exponentially greater earnings at OT regardless (nothing else in Mongolia comes close). There are many factors (ie time and costs for development and construction) that make attractive tax incentives reasonable and fair; Like possibly to alleviate financial pressure (especially on the speculative side of things given that we are still early in developement, and sour sentiment can lead to bad business) that could adversely affect the people charged with developing one of the most advanced and profitable large-scale-production mines in the world. With billions of foreign dollars to be invested in construction and infrastructure (much of which will be paying Mongolians wages fair to any westerner-guaranteed much more than erdenet)the idea of heavy taxation seems unreasonable and again, perhaps even detrimental to an all-around highly lucrative endeavor. To sum up this reasoning i simply ask, if the Mongolians are getting thousands of taxable jobs, and hundreds of millions of dollars of taxable infrastructure, and not to mention the hundreds of billions of dollars worth of gold in the foreseeable future, why oh why should the average Mongolian sweat about anything? put a smile on! you are getting something that will set a new standard of business for Mongolia and contribute to a new quality of life for many and eventually, ALL Mongolians. This is not some self-righteous rant, We do not seek your appreciation! only respect in business, no one ever said we cannot have honor and dignity in making money. Our cohesion is what is going to make this dream a reality in near terms, think about it.

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