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Investors find hope in President Enkhbayar’s call for Mongolia to not nationalize mines |
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Monday, 13 October 2008 |
Private investors were cautiously
optimistic last week following recent statements by Mongolian President
Enkhbayar urging the government not to nationalize the nation’s mines.
Speaking in Parliament last
week, President Enkhbayar said “I would like to suggest that Parliament
and the Government work on a policy to implement major mining projects,
abiding by the principle of win-win for both parties, and incorporating
the interest of investors and the interest of the nation.”
A proposal had been floated
by leading politicians to allow Mongolia to hold a 51 percent ownership
in the nation’s most valuable mines. To do this, Mongolia would have
had to void existing contracts with mine owners.
Further, nationalizing the
mines would put into jeopardy future investments in Mongolia by private
companies.
Adding pressure on the government
to abandon plans to nationalize mines, have been calls from business
organizations to the Bush administration to withhold US $385 million
from the nation’s Millennium Challenge Corporation’s assistance
program to Mongolia.
President Enkhbayar added,
during his speech in Parliament, that Mongolia does not have the ability
to develop its natural resources on its own. “It is the reality
that Mongolians cannot invest in its deposits independently, introduce
advanced technology and provide qualified experts. Therefore, there
is no other way than attracting major investors, their financial resources,
technology and experts. Investors would want to calculate their investment
returns and control expenditures of their investment. They would aspire
to recover their investment and make a profit. This is natural.” Enkhbayar
said, “Therefore, there is no other way than for all parties concerned
to accept the market principles of allowing the investors to own more
than 51 percent of the deposit.”
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