Electing a president and a prime minister’s visit

30th of 5, 2017


ALL eyes will be on the Presidential election until voting day on 26 June, and maybe for some time even after that. This is the seventh such direct election and the winner will be the fifth president of the country. Unfortunately, the billions of MNT that the contestants will spend on their campaign is unlikely to make voters forget that Kh. Battulga failed to retain his seat in the last Parliamentary elections, that S.Ganbaatar has been disowned by his own party, and that M.Enkhbold’s record as Mayor of Ulaanbaatar was not so clean. 

But a choice has to be made, so let us at MMJ restrict our focus and see how the three candidates’ views on mining – as shown by their actions and words – are likely to impact the sector.  That limited perspective shows that Ganbaatar has always been against the Oyu Tolgoi project, and Battulga has time and again stalled the Tavan Tolgoi railway project, thus hindering the development of the TT project itself. Enkhbold’s views on the mining sector have never been clearly spelt out.

Ganbaatar is the candidate of the Mongolian People’s Revolutionary Party and has been consistently vocal against foreign investment in the mining sector. This “populist” attitude naturally scares investors. Both as a street protestor and as member of Parliament, he has demanded changes in the OT agreement and in the terms of partnership with Rio Tinto. His announcement in February that he would stand for President was accompanied by a three-pronged “Save Mongolia” plan. First, 7.4 billion tonnes of the Tavan Tolgoi reserve was to be sold for $74 billion, at one tonne for $10; second, Oyu Tolgoi would be sold for $45 billion; and, third, gold royalty rates would be immediately increased. The mining sector does not share Ganbaatar’s confidence that this is indeed the way to “save Mongolia”. Just take one of the three ideas, increased gold royalties. We all remember how the windfall profits tax merely led to the gold sector concealing true production figures, and to proliferation of small scale mines whose output could not be monitored. Things are yet to return to normal.  About OT, Ganbaatar initially demanded 51 percent state ownership, but has now moved to an outright sale of the deposit.

Battulga is the nominee of the opposition Democratic Party. He won three elections to Parliament since 2004 from the same constituency before losing there in the last. He was minister for Roads, Transportation, Construction and Urban Development, and also for Industry and Agriculture. He always resisted private investment in the Tavan Tolgoi deposit proper and also in the mine- related railway project, but never spoke against this in Oyu Tolgoi. As Minister for Road and Transport since 2008, he used the issue of the railway gauge as a divisive tactics that made a decision elusive. When Energy Resources started to build the 267-km TT-GS railway in 2009, promising to change the face of minerals exports, it was his opposition to it that finally led to the project being abandoned, much to the detriment of economic development.

The candidate of the ruling Mongolian People’s Party, Enkhbold, has been Mayor of Ulaanbaatar, Prime Minister, and Parliament Speaker and now wants the only high-profile position left, the country’s presidency. It is somewhat of a surprise that he has never been vocal about any decision related to the mineral sector, choosing, except on rare occasions, to hide his individual views under the party position on both Oyu Tolgoi and Tavan Tolgoi.

However, he has been critical of the Dubai agreement which led to the start of work at Oyu Tolgoi. Any major tinkering with the terms of that agreement will badly damage Mongolia’s reputation in the international market and among investors.  We can only hope that if he becomes President, with the right to initiate a law, he will not allow OT to become a political game like Tavan Tolgoi. It would be a surprise if a president were to hold a position contrary to that of his party – which, right now, is also in power. Its mining policy is reflected in the action plan of the government, which was approved during his Speakership, and, indeed, one would expect the President to carry it forward, if not to help improve its implementation by initiating new supportive laws. The general opinion is that he could strengthen stability in the mining sector by doing just that.

With things looking positive for the mining sector with resumption of the Oyu Tolgoi underground construction, it would be irresponsible to risk any rocking of the boat. That way,  M.Enkhbold is “a little bit better” than the other two in the coming race for the presidency.

INTEREST in that race overshadowed Prime Minister J.Erdenebat’s recent visit to China, mainly to get support for the weak economy, but Tavan Tolgoi was also discussed. It seems the visit achieved less than was expected and maybe this should have been anticipated. The Prime Minister’s visit was to be preceded by that of a team led by Deputy Prime Minister U.Khurelsukh to discuss railway, mining and other issues but this was cancelled without any public explanation. The Prime Minister’s visit also did not lead to any formal decision on Tavan Tolgoi.

When Erdenebat suggested activating the Tavan Tolgoi project, President Xi Jinping is reported to have reminded him of his own visit to Mongolia 10 years ago as Vice President of China, when also “your country called for developing Tavan Tolgoi as it is still doing ten years later”. According to what Ts. Munkh-Orgil, Minister of Foreign Affairs, told the media, President Xi told the Prime Minister, “It is for you to decide and say if you want to work with us or not in Tavan Tolgoi. We don’t say you must do it or it must be done this way. The first thing for you to do is to take a clear policy decision and then stick to it. Make your intentions clear and, then, if you want, let’s start the work.”

Xi’s statement indicates that China, which is an investor in the Tavan Tolgoi project, is losing patience with how our politicians frequently and regularly change their mind. That our Prime Minister was unable to reply to President Xi also showed that he had gone to China without any concrete proposal on Tavan Tolgoi to offer.

True, 21 agreements were signed, China would give a 350- million-yuan grant, and promised another grant of 2 billion yuan in the next 2-3 years, and the swap agreement between Mongolbank and the People’s Bank of China was extended, but it is Xi Jinping’s gentle admonition that should be the biggest take from the visit.  

In the 10 years since 2008 Mongolia has seen 5 governments, and many working groups to further progress in developing TavanTolgoi. All the while, prospective investors have been waiting patiently. As time goes by, the opportunities go away, and the project value decreases. Actually, for Mongolians, the dream of TT being an economic catalyst like OT appeared nearest fruition when international bidding was first announced, and global companies vied with one another to show interest.

The waiting game has now continued for too long. Except the recent statement by the finance minister that the TT project will include the deposit, its related railway and power plant, there is rarely a word from anybody in authority on where matters stand. The sector minister promised progress in 2017 but that was in February or March and he has been silent since then. Everybody seems to be waiting for the Presidential election to be over before a new beginning is made on TT.

THE Mongolian section of this issue contains E.Odjargal’s interview with Miranda Patrucic, who is investigating information related to Mongolians in the Panama Papers. This coincides with an MMJ journalist attending a course on investigative journalism in Georgia, with support from the Natural Resource Governance Institute. This opens the doors for us to join the international network of investigative journalists and to exchange information and otherwise cooperate with them. The Panama Papers have revealed how Multiserv Overseas, an offshore company linked to Russian Railways, was chosen to supply railway equipment to Mongolia. A report on this matter is also there in this issue’s Mongolian section.   

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