--Renegotiation of Oyu Tolgoi unlikely -Mongolia's ambassador to
China
--Rio Tinto's Oyu Tolgoi signed deal Friday for China
electricity supply
--Australian lawyer needed in Mongolia for graft
investigation
--Australian lawyer free to roam Mongolia; not accused
--Mongolia coal exports to China sharply lower in 2012
By Chuin-Wei Yap
TIANJIN--A campaign in Mongolia to assert more national control
over mining, including calls for renegotiation of a mine ownership
deal with global mining giant Rio Tinto PLC (RIO), is unlikely
succeed, Mongolia's ambassador to Beijing, Tsedenjav Sukhbaatar,
said Monday.
Also, the Oyu Tolgoi gold and copper mine project, one of the
world's largest such developments, which is majority-owned by Rio
Tinto, has taken another step toward production, with an agreement
on Friday for China to supply electricity to the venture, the
ambassador said, without providing details.
Mongolia, which has huge but lightly exploited mineral reserves,
has been a prime beneficiary of a mining boom in recent years, but
resource nationalism has delayed some major foreign-backed projects
and thrown others into uncertainty. Oyu Tolgoi, one of Mongolia's
flagship projects, has reserves estimated at 41 billion pounds of
copper and 21 million ounces of gold.
During the run-up to national elections this June, some
candidates called for a renegotiation of the Oyu Tolgoi terms,
suggesting Rio Tinto's stake be cut to 49% from 66%. Rio Tinto
manages the development of the mine and owns a 51% stake in
Canada-based Turquoise Hill Resources Ltd. (TRQ), which in turn
holds a 66% stake in the project. The Mongolian government owns a
34% interest.
"I don't think it will go that way. We will stick as far as
possible to the current agreement," the ambassador told Dow Jones
Newswires. "This [renegotiation attempt] was raised by some
politicians, not by the government...it is a political campaign
tool. The majority of the government understands how to handle
foreign investments."
Mongolia's soul-searching on its resources sector has coincided
with a crackdown on corruption, which has snared Australian lawyer
Sarah Armstrong, chief legal counsel for Mongolia coal miner
SouthGobi Resources Ltd. (1878.HK) in a government graft probe.
SouthGobi is controlled by Rio Tinto.
Mr. Sukhbaatar said Monday that Armstrong had been prevented
from leaving the country, as her assistance was needed in the
government's probe of a former Mongolia mines ministry official
suspected of illegally handling mining licenses.
Ms. Armstrong isn't accused, and can move freely within
Mongolia, said Mr. Sukhbaatar, who didn't specify how long the
probe or the departure restriction might last.
Mongolia is also facing problems stemming from an economic
slowdown in China. Coal exports, Mongolia's largest export
category, are likely to reach just 11 million-12 million metric
tons this year, down from 22 million last year, he said.
The envoy said the government wanted to move ahead fast on the
stalled project to develop its enormous Tavan Tolgoi coking coal
reserves. Efforts to raise money for this in an initial public
offering for shares in a state mining company and by inviting
international miners to carry out the extraction work have faced
repeated delays.
"It's high on the agenda of the government. It's time to start
the exploitation of Tavan Tolgoi," the ambassador said.
Write to Chuin-Wei Yap at chuin-wei.yap@dowjones.com
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