Mongolia Web News - 40% of workers to be let go at Oyu Tolgoi

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40% of workers to be let go at Oyu Tolgoi

Wednesday, 03 December 2008

Rio Tinto announced today that it would cut 250 jobs at its Oyu Tolgoi copper and gold mine.

While blaming the workforce cut on the economy, company officials might also expect the government of Mongolia to feel continued pressure to, at last, sign an agreement to allow mining to proceed.

Oyu Tolgoi, a joint venture between Rio and Canada's Ivanhoe Mines, said the cuts represented around 40 per cent of its workforce.

"In light of the global financial crisis and collapse of international prices for metals such as copper, the Oyu Tolgoi project - which was projected to annually produce 440,000 tons of copper and 320,000 ounces of gold by 2011 - is implementing cost-saving measures which have necessitated some reductions in the workforce," Oyu Tolgoi managing director Keith Marshall said.

Comments (8)

1 Written by ericahls, on 2008-12-03 08:55:17, IP: 69.243.125.113
Rio is doing the right thing. I am an investor with Entree Gold and think that delay in Mongolia has gone on long enough. This move by Rio should bring some reality to the Mongolian government that their is a cost for delaying.

Please keep in mind that I believe in an equitable partnership between Mongolian and the mining companies but this delay is costing the mining companies a lot of money and significant reduction in their share prices. It's time for Mongolia to act.

2 Written by growsmartmongolia, on 2008-12-03 15:16:53, IP: 72.65.111.254
The real losers in all these delays is the Mongolian people. Jobs,tax revenues,a better standard of living and education have all been unnecessarily deferred. The internationally accepted standards for a fair partnership have been provided to the Mongolian government and their representatives and working groups. Trying to reinvent the wheel only hurts the people by delaying things. No one is trying to cheat Mongolia by saying that a wheel is round. A good wheel is round. An equitable partnership is equitable and good models exist and don't have to be reinvented. A lot of time and money has been lost.
As an example, see how much damage the windfall tax has done. The income of the government has decreased, mining has slowed, smuggling has increased and no one benefits. If the threshold for the tax is raised it won't help matters because once there is economic recovery around the world prices will go up and miners will either slow down their operations or start smuggling again.
Ordinary fair tax and royalty rates will produce increased income as prices go up and not discourage operations and investment.
Oyu Tolgoi could have been up and running or close to it by now. Under the best circumstances it will now be another three or four years. If the world situation gets worse there may be no money to do it. What a sad sad pity.

3 Written by INTJay, on 2008-12-04 04:45:58, IP: 12.1.83.2
Why then do you think the process has stalled out so badly?
Is it personal greed of politicians behind closed doors? Is it an honest caution by politicians for the long term care of Mongolians and the preservation of the land?
Is the government just ignorant in their ability to carry over existing regulatory standards?
Can they simply not agree on a direction?

One thing is likely. Regardless of agreements and promises the businesses will look out first and foremost for themselves. Therefore, it is wise of Mongolia and its citizens to step cautiously into any agreements. But yes, eventually some action has to take place!!

4 Written by growsmartmongolia, on 2008-12-04 06:34:33, IP: 72.65.111.254
Being cautious is wise. Allowing caution to become an excuse for needless delay is not wise. Time has been wasted and opportunities delayed. Let's hope they have not been lost.

5 Written by Hosoo, on 2008-12-04 12:34:04, IP: 65.91.106.20
If Mongolian government don't make up their mind and work with Rio, then they're gonna walk out on Mongolia. Then Russia will take over and take advantage of Mongolia for sure.

I want my country to do well. But it's really frustrating to know that most of the decisions made over there don't really do anything good for the country. Too many corrupt politicians. I wonder if any of them really care about the people.

Gap between rich and poor is getting bigger every year. Even if this deal goes well and production starts in years, will the government know how to use the fund wisely to improve our country?

6 Written by INTJay, on 2008-12-04 17:00:11, IP: 69.59.80.124
I might agree...

I've not been back to MGL for some few years but my wife has. Her comments are similar to yours Hosoo.

At the same time, the "people" seem to be so desperate for anything that there is little caution to abuse of credit, abuse of power and/or what will become of things in the mid to distant future.
This is where the "dark side" of capitalism seems to appear. This is why America's economy has crashed so hard. "I want it, I need and must have it today" just does not work long term.

In my own personal view...the desperate mindset of the population for more fuels corruption and better allows those type of politicians and businessmen to better misguide and abuse the people.

This is why I am curious as to what is really going on on the governmental level with regards to these policies and reasons for delay.

Is it out of genuine concern for all and the country or are do the delays have deeper dealings that are not being seen yet actually are generating profits for some select few?

7 Written by Hosoo, on 2008-12-05 09:34:17, IP: 65.91.106.20
Jay,

To answer your last question, I feel (i guess) that the president has made promises or other obligations to the Russians. He can't really come out and say it but there's something going on... I don't think they're dragging this thing out of geniune concern for all and the country. I'm sorry to say this but I just don't trust our president.

8 Written by INTJay, on 2008-12-05 23:40:33, IP: 12.1.83.2
Russians hu? Could be!
Allz I know is there are lots of resources accross MGL and only a few million people to deal with (by the last figures I heard). I know thats oversiplified but really, how hard could it be if a group really wanted to "git er dun"...