PARTY GROUPS, STANDING COMMITTEE UNANIMOUSLY APPROVE DRFAT TT AGREEMENT

Following the unanimous approval given to the draft Tavan Tolgoi investment agreement by both party groups in Parliament on Monday and a similar consensus in the Standing Committee on the Economy on Tuesday to allow the draft to be debated in Parliament, the way seems to be clear for a smooth passage of the bill. If it indeed happens that way, it would be in marked and welcome contrast to the checkered career of the other major investment agreement related to Mongolia’s mining resources, that on the Oyu Tolgoi copper-and-gold deposit. No date, however, has been fixed for the debate in Parliament.
The discussion in the Standing Committee was perfunctory, with all members already aware of the provisions of the draft. Earlier, on Monday the party groups had met separately to discuss the draft and both had taken time to go through the provisions and seek clarification, but in the end both gave unanimous approval to the draft.
Minister for Minerals and Energy D.Zorigt briefed media on Monday on the basic provisions of the draft agreement. The deposits will be fully owned by the state and “every Mongolian citizen will become a shareholder in the deposits once the coal enters market circulation”. The deposits will be split into two parts to be mined.
A state-owned company will be established and no less than 10 percent share of at least 3.5 billion tons of deposit will be distributed equally to 2.7 million citizens. In addition to these free shares, all registered companies and citizens of Mongolia will be able to buy shares of the deposit when they are offered on the Mongolian Stock Exchange. The Mineral Law stipulates that no less than 10 percent of the total shares will have to be so placed. The MPRP MPs urged that everybody should have equal opportunity to buy shares at the stock exchange.
Foreign investors and domestic companies or consortiums will have a chance to operate the mines.  It is estimated that 30 percent of the total six billion tons of coal can be coked.  Present estimates are that if 15 million tons of coal is coked annually, the state will earn more than USD 5 billion in the coming 30 years and if the quantity coked goes up to 30 million tons annually, the corresponding  revenue will be USD16 billion.
Mr. Zorigt clarified that once Parliament approves the draft agreement, the new company will be set up, specifically for Tavan Tolgoi, and its shares distributed. The state will continue to own both the license and the deposits in both parts of while chosen companies will do the excavation and marketing on a contract.
Source: English.News.mn

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