BCM Mongolia: Government’s Demands Include 34% Share in Ivanhoe Mines Mongolia Inc.

Tue, 2009-08-04 12:18

The working group set up by the Government and Ivanhoe Mines have been meeting every day since Monday to reach an agreement on investing in the Oyu Tolgoi project. Both sides have been tightlipped about how things are going and no immediate breakthrough is expected.
The Mongolian side includes three members of the Cabinet -- Finance Minister S.Bayartsogt, Mineral and Energy Minister D.Zorigt, and Environment and Tourism Minister L.Gansukh. About a dozen officials from the three ministries are helping them in the talks.
The investors’ side is led by Commerce Director Mr. Sam Riggall of Rio Tinto and Deputy Chairman Mr. Peter Meredith of Ivanhoe. Both are familiar with past negotiations on the agreement.
The Mongolian side has submitted its fresh list of 35 demands. The most contentious issue is the 68 percent windfall profits tax. The Mongolian Parliament has said this can in no circumstances be waived, while the investors have from the beginning refused to accept this, arguing that if this is levied the total tax burden would go up to an unacceptable 90 percent of the profits.
Another thorny issue is that of how much share the Government will have. Parliament has instructed the Government to try hard to raise this to 50 percent from the 34 percent that both sides previously agreed upon. This would have been difficult to achieve as the mining law in force does not support the Government claim to own more than 34 percent. To bypass this dichotomy the Mongolian side is now asking for 34 percent share in Ivanhoe Mines Mongolia Inc., and not in the project.
Read more…

Source: en.News.mn

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Mining

Archived Comments

Lynda Smith

2009-08-04 16:52:41

How in the world does Mongolia expect to attract further foreign investment in their country if they greedily cut into the profits of the company, making that company unprofitable? This is the worst kind of corruption, and who pays? The citizens of Mongolia who will continue to be in poverty & hunger. Concerned.

passer by

2009-08-04 18:36:37

More$? Really?! Now thats Ca-Ray-Z...

Jean Baptist

2009-08-04 21:28:01

Greedy? it is their own wealth they can do as they please. and you are so concerned about Mongolians "hunger & poverty" poverty maybe hunger never. Last time I checked Mongolia isn't Burma.

jimbo

2009-08-05 03:22:12

China is controling the Mongolian players to do with Ivanhoe mines in Mongolia....yes?

jimbo

2009-08-05 03:23:09

China seems in control...yes?

@ jimbo

2009-08-05 03:50:39

@ jimbo "China is controling the Mongolian players to do with Ivanhoe mines in Mongolia....yes?" What makes you ask that question? What many people seem to mix up in this discussion is that China actually plays no role whatsoever (other than being the customer for the ore concentrate) in this deal. People like to argue that China already is going to have a stake in OT as they have tried to buy Rio Tinto shares. This however was stopped by the Australian regulatory boards, as Australia did not want Chinese influence in Rio Tinto. Good call. The Chinese on the other hand took a couple of Rio Tinto execs into custody in China saying that they had committed espionage. That in return shows the regime that China actually is."Don't f*&$ with the Chinese!" OT's stakeholders are Ivanhoe Mines and Rio Tinto. Not the Chinese. China would like to borrow Mongolia a lot of money and in return they will want things. Then we can discuss about China being in control of the game.

@ Mongolia Web News & BCM

2009-08-05 03:54:13

This post brings news that is a week old! and it is copied from all sortsof other sources (which is not a bad thing of course, but still leaves it OLD NEWS). Would be nice if this news service could actually bring some up-to-date news again....

bigdeal

2009-08-05 08:09:15

What the Mongolian government doing to OT deal is laughable. How can they expect 68% tax on top of 34% ownership? This is so ridiculous that no sane persone can agree on this. If the Mongolian government want to make this deal they need to look at other deals around the world with similar projects and come to some sense that what they are proposing is too unrealistic. Granted that people are in poverty and they desparately need money, but this is not going to get them far. I would say Mongolian government should take 15% of stake and waive taxes. This way they can bring in the investors in other projects as well as bring in much needed jobs to Mongolians. Look at Khazakstan... look at Uzbekistan... If OT deal does not go through by October Rio Tinto will pull out. Then Ivanhoe will not be in a position to finance this project. guess who is going to come in... Chinese who will control most of economy of Mongolia and will turn the country into a 2nd Tibet. Mongolians are digging grave for themselves. If they are not financially secure and independent then the only future road for them is being a puppet(if not a slave) to Russia and China. Of course they can say 'WE ARE THE MIGHTY SONS OF GHINIS KHAN' bullshit and pride themselves on the past history. let them be the sons of Ghingis Khan and be a pitiful people who can't even make their own future. Mongolians !! Wake UP!!!

investor

2009-08-05 09:17:58

GREEDY!! GREEDY!! Maybe the Mongolian Goverment must visit their citizens which live in POVERTY & HUNGER , some of them only hope and pray for the work this project is going to create , for food on table and a warm house in this coming winter.PLEASE GOVERMENT AND PARLIAMENT - STOP THIS GREED AND LOOK AFTER YOUR PEOPLE!!!!!

stop dreaming

2009-08-05 12:42:01

everyone can stop dreaming. there is no way this is going to happen. parliament has already said the IA must be according to the law. now gov has asked yet again for a special session of parliament. to do what? there is no winner going to come out of this. either ivn/rio actually agree to the terms, which they will not, then they are going to run a non-profitable mine. or the gov cant reach the IA, then they will resign. then the game will start over and the next cabinet will fail. and the reason for all of it is very simple! the MPs do not care about the good of the people or the country. they care ONLY about themsleves.

Barry

2009-08-05 19:02:23

bigdeal, I think you have a handle on this thing. Do like others have done, MAKE the deal simple. 10% to 15% of gross revenues. Waiving the taxes on imports would be good, but waiveing excise taxes a must. Why would the Mongolians tax equipment coming into the country??? They cannot make it in Mongolia, where do they think it will come from? Driving costs of the operation up is not a way to make more profit. IVN / RTP should shut down the OT mine to maintenance level until this deal is worked out. Send workers home. Cut operation expenses to the bone. NO BODY can make a decent deal with the Mongolians. How many other mines are shutting down or cutting back production? I'll bet the new mines are not spending much money in theis investment environment. "B"

2009-08-06 02:17:24

This project has been sitting on the shelf for too long - so long in fact that by the time it is a functional mine, an entire generation of Mongolians will have missed out on opportunity. The most vauable asset in Mongolia, is it's people. Use the project to develop and enhance the welfare and knowledge of the people. The Mongolian government would do well to follow the lead of African nations such as Ghana, Tanzania and Botswana and their business models. Investment has been swift and expansive n these countries, whilst the resources of the country's future (the people) are becoming qualified and knowledgable. The government would do well to undertake the external advice of a neutral entity to solve this issue. Ivanhoe is the tip of a much larger potential here. Look at the long term objective of the nation and allow Mongolia to become a resource force to be reckoned with. However to do that requires concessions in order to achieve long term prosperity. Available for comment and advice

msjimmied

2009-08-06 02:27:46

http://seekingalpha.com/article/106315-ivanhoe-mines-is-a-bargain-but Still holds true after all this time. Get out of Mongolia, otherwise spend billions more and be held hostage by a government that will suspend your license on a whim. What does the actions of the government tell you? It is not mature enough of a government to trust. Get out while you can. Better to lose a little now, than a lot later.

current reports

2009-08-07 04:54:55

en.news.mn reporting that government will meet today to discuss "status: of OT agreement. UB Post is reporting that government "may deicide today whether to continue negotiations with developers...., or withdraw from the bargaining table". looks like the drama is coming to an end. just no a good or happy end.

buba

2009-08-07 06:15:44

This drama will end end 10 years with Mongolians still in poverty. Mongolian will still be # 1 in the world in terms of receiving most handouts and money/aide from foreign country. Essentially what Mongolians want in OT deal is another big HANDOUT so they can drink and gorge themselves to death.

batbaatar

2009-08-07 13:11:06

It is impudent and shameless intervention in internal affairs of Mongolia. We should expel these bastards. They are gangsters. Ivanhoe Mines and Rio Tinto should leave our country. We mongolians have to revoke Oyu Tolgoi license immediately!!!

passer by

2009-08-07 16:22:08

Yea, Thats Right. Kick em all out now. Thats a solution. Right on man. Power to the people (few million or so of them). Just give 500,000 some shovels and pick axes cause you dont need those buzzards help or knowledge. Cheap azz Canadian technology. Go get the MPs, their wives, kids, brothers, sisters, brothers and sisters kids and political sidekicks to form an SUV blockade as a sign of solidarity and stance for justice. Then tie up all those foreign gangstars, put them in a room where the MPs will personally hold re-education classes on how to be fair, right, honest, correct and lawful. Right on man, tell em how it must be! Fight tha power, Chuck D-Bat

Fair game.

2009-08-07 21:48:04

Forget it, pull out...Let them stay impoverished and uneducated, let them wonder why they are not prosperous... Maybe one day their children will learn from their mistakes. To the minority of wealthy, powerful and vocally dominant mongolians; well played, keep up the hegemony (and keep sending your kids to western schools).

StarKiller

2009-08-10 11:36:17

Good for them for wanting atleast Q Mongolian ownership of any business. The Chinese have done something similar with amazing results. All this talk about "private investment" is just a way of letting foreign interests control your nations resources. It is a SCAM by international thieves on ignorant (or Corrupt) Governments who allow treasonous acts for personal gain ($$) either within itself or it's citizenry. This is how all those South American and African countries lost any chance of controlling and profiting off their natural resources. Here is how Natural Resources work since the dawn of time: The Government Mines the nation for resources themselves, uses what it needs for the Nation, then they export/sell or trade any surplus for other materials. No citizen or Governing body can employ a foreign investor to mine NATIONAL resources, that is treason. A quote about the subject from Napoleon: "Agriculture is the soul and chief foundation of empires, industry (including mining) produces riches and the happiness of the people, Exportations represent the superabundance (SURPLUS) and the good use of both."

StarKiller

2009-08-10 12:04:03

(Correction of my last post line 1) Good for them for wanting at least 50 percent Mongolian ownership of any business. The Chinese have done something similar with amazing results. Hopefully it will put things towards the correct path.

Barry

2009-08-10 19:59:38

The Chinese at least make a monetaary contribution to the projects that they 'invest' in. The Mongolians expect 34% ownership with 'NO' monetary contribution. Plus they want nearly 95% of the profits. Why would any mining company invest where they were limited to 5% profit? IVN / RTP have already spent billions of $ to develope this mine, what has it cost the Mongolians? Yet they want all or most all of the profits. "B"

StarKiller

2009-08-11 04:08:17

If that is the case then maybe they have finally woken up to the thieves amongst them and issued an ultimatum.

entrepreneur

2009-08-11 04:55:04

@ StarKiller, good point and would be a wonderful idea if only mongolia had the skills, resources and knowledge to mine its deposits by itself but it doesn't, so there is no other choice but to work with foreign companies who do have the skills and resources to mine the country's mines.

StarKiller

2009-08-13 05:11:23

@ entrepreneur Why do you say Mongolians can not do it themselves? It was estimated the mining process would cost around 11 Million Dollars, and just recently the Mongolian Gov. received over 250 Million in Aid. Money is not an issue, man power is not an issue. The only issue is treasonous criminals selling out to foreigners.

@ "StarKiller"

2009-08-13 06:13:43

The initial investment cost that Ivanhoe/RT will put in as reported by the Mongolian news: http://en.news.mn/news/3254 is said to be 4 Billion USD. It seems a wee bit higher than the 11 Million for the "mining process" that you are reporting. As far as man power, can Mongolia provide internationally experienced engineers that can use the block caving process?

passer by

2009-08-13 16:15:17

The sounds of crickets fills the air as the facts are laid out and referenced/cited... A silence that can only be broken by the sound of hacking and caughing as one fails at swallowing down that lump of humility ever ensnared in the throat... Confronted with the age old princple, on a more global scale, of "we not me"... Grasshopper!!!,,, "Drop down and give me 20"

Apple

2009-08-14 02:14:00

Corruption

Starkiller

2009-08-14 02:22:31

Response to previous post: HOLY ****! 4BILLION!? This is the biggest LIE I have seen in awhile. What the Gov. is doing then is going to pocket almost all of the 4BN THEMSELVES while having tax payers even foot the bill for the mining!! Mining only being average 11Million USD (See costs & link below) What an insult to the average persons intelligence, you could literally build an entirely new Mongolia with that amount of money. I didn't realize just how corrupt Mongolia's Government was, but this says it all. Unbelievable. What's interesting is that it would take a decades just to break even with uranium at 100 per lbs. You would need 46,000,000 lbs of uranium to pay that. Mongolias output would be at a maximum probably 1.5 mill a year and the fact the National Security Council was involved should shed some light on the motivations behind this LIE. The Foreign Miners, maybe because they know uranium will be worth 500 USD/lbs in a few years, decided to take it on?? Mining costs in America and Canada are around 15 Mill USD. Even entrepenuer private miners are doing uranium, it is like mining Gold. It only took one Google search for "Cost of Mining", do it yourself.

ubboy

2009-08-14 02:57:11

Starkiller - OT is a copper mine, not a uranium mine. That is just the start of pointing out the wrongful, hate-filled "facts" you rant about. The cost to build the mine is at least $4bn. Do a proper search on the internet and supply a factual link! You are right, that is a lot of money. More than Mongolia gets is aid in 10 years. And yes, Mongolia does have to rely on aid to live while it does not build this mine (I did not hear any thanks for the aid - only hate). Mongolia does not have the skills or the people to build the mine today. Very few countries in the world could do it alone. Mongolia is not represented by you, Starkiller. It has far better people. Starkiller for Mine Manager: Someone who does not even know metal what the mine is mining, and relies on childish Google searches for "cost of mining". Yet can write hatred and xenophobia.

mongolguru

2009-08-14 07:19:12

Aug 11, 2009 Opinion as posted on Google Finance: National Security Council comprising of President, Speaker and PM has approved the Government's draft OT agreement. This proposal migh have been changed a little bit, but the most important thing is that Government will not demand 68% windfall tax as previously ordered by the Parlaiment. Essentially it is the same draft that has been pushed through the parlaiment recently. Other developments: Top Mongolian publicist gave interview that has been published in major media outlets and he persuaded politicians to approve the OT agreement this time and he warned that if they do not approve it we will lose everything and Mongolian independence is at stake. Will it likely that this time the OT agreement will be approved in acceptable manner to Ivanhoe Mines and Rio Tinto? I think this time it will 90%, because this time PM will not be abroad (as in previous case where he was absent paying Official visit to Japan and escorted by pro-Bayar MP's which were roughly 10 MP's, Parlaiment has 75 MP's which will give him major boost in pushing the deal through). Last time 66% opposed the deal out of 45 MP's. Again this time he has 10 MP's by his side and those opposing the deal in the original form were widely branded as pro-Beijing and corrupted. This "pro-Beijing and corrupted" allegation is very serious, they must be now reconsidering their decision and image. Aug 14, 2009 Update: Mongolian Government has achieved some minor "victories" in negotiations with Rio Tinto and Ivanhoe Mines. Investors agreed to not pursue any discounts or tax breaks and will pay all the taxes and royalties and fees. This applies to all its contractors and partners. But the key wrangling point of 68% windfall tax will be resolved by Mongolia abolishing this windfall tax altogether by 2011 for all the companies. Upfront payment to Mongolia was doubled 2 times and became $250 million as well as interest rate to Mongolia's share loan was significantly reduced.

Fedupsky

2009-08-21 09:05:12

$11m would not even cover operating costs for one month, StarWanker (gar-hangla)

Hulu

2010-04-07 01:18:04

With uneducated mass in the country, what could possibly be done. Better U sit on your gold and be a good herder still. Even we sell our resources to outside we will remain as herders.Receiving cash is not a solution to it. Cash will be blown once. Foreign F...ng A's will take our resources and will leave in no time. But it is not matter of foreign or domestic, it is a matter of the world as one. With all these mining impacts and so called " development" there will be catastrophy no matter which color u are in, what kind of education u have had.We all FALLEN MAN

ed - new york

2010-04-08 18:45:29

mongolia resources will inject foreign wealth directly in the country. The problem is that the country is undecided how to handle the money because some believe in Communists values, and some Democratic/capitalist values. It's nutty. Corruption can be done both ways, but the capitalist approach can benefit private sector investment, as the communist approach will only benefit a small few of diplomats, and self-preserving politicians.

BCM Mongolia: Government’s Demands Include 34% Share in Ivanhoe Mines Mongolia Inc.

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