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Policy

  • S.Bold-Erdene shows how politicians’ move to raise taxes on coal export can cripple a sector that is growing rapidly.

    Six years ago, when gold and copper prices reached their peak, our politicians had a brainwave and decided to impose the now infamous 68 percent windfall profits tax. The ‘author’ of the law, N.Batbayar, proudly says that in the four years the law was in force, more than MNT900 billion was accumulated in the budget. However, many economists would not agree with him that the law was useful. While Erdenet LLC was the only copper mining company that paid the tax, gold mining companies hid their gold and took it across the border. Some South Korean men attempted to fly out from Ulaanbaatar with gold hidden in their anus. Only one or two State owned companies paid this tax after selling their gold.
  • A recent “Development” TV program, produced by The Mongolian Mining Journal, was devoted to the Oyu Tolgoi Investment Agreement, as it is now and as it could be. Representatives of the Government and NGOs, as well as a cross section of MPs gave their views on whether the agreement needed revision to better serve Mongolia’s interests. The program turned out to be very lively and we give below a selection of questions asked and answers given, on the basis of notes taken by G.Iderkhangai.


    Some MPs feel Parliament resolutions have not been adequately reflected in the agreement and Mongolia’s share of ownership should be raised from 34% to 50%. What is your opinion on this?

    S.Bayartsogt, Finance Minister: Parliament resolutions 40 and 57 were very much on our mind when we signed the agreement. Article 1.6 of the agreement says “Mongolia shall claim additional 16% of equity after 30 years”. This is precisely what is in Resolution 57 as approved by the Standing Committee on Security and Foreign Policy.

  • L.Bolormaa

    Things have begun to stir at Tavan Tolgoi. Ya.Dolgorjav, newly appointed executive director of Erdenes MGL LLC, says in an interview with the Mongolian Mining Journal published in this issue, “Our daughter company is hopeful the opening ceremony of Baruun Tsankhi will be held soon, maybe in the middle of April, without waiting for the choice of investor. We can start removing the surface soil, and once this begins, there will be pressure to take a quick decision.”
  • A recent programme on the Development TV channel, produced by the Mongolian Mining Journal, was devoted to the Erdenes Tavan Tolgoi IPO. The participants were B. Enebish, Executive director of Erdenes Tavan Tolgoi LLC; B. Bold, a member of the board of directors of the Mongolian Stock Exchange; and D.Achit-Erdene, President of the MICC Investment Bank. We give below a selection of the questions and answers on this important topic.

    Thank you all very much for accepting our invitation and coming to the Mongolian Mining Journal’s “Development” studio. Our first question is for Mr. Enebish.

     
  • One of the more important presentations  at last month’s “Discover Mongolia-2011” was made by Ya.Bayarkhuu, head of the research and planning department in the Auto Road Authority of Mongolia. Entitled “The present situation and perspectives of Mongolia’s auto roads”, the presentation for the first time offered information on the planned auto road map at mining locations. Altogether, the plan envisages building 6,300 km of paved  road.
  • By L.Bolormaa

    Nobody knows about the progress on the Tavan Tolgoi investors’ bid, and nobody is brave enough to hazard a guess. This is because the deadlock on economically transporting the coal through Russian or Chinese territory still persists, with no resolution in sight, making it impossible for any of us to say something new now. The Mongolian Government’s working committee did its best, but obviously their best was not good enough to have any impact on either Russia or China on issues of routes to sea ports and transport costs. The President and The Prime Minister visited the neighbours in June, and hopes were raised, but no concrete result has so far emerged.
  • L.Bolormaa

    June saw a flurry of strategic foreign visits. The President went to Russia and headed for the USA a few days later, while the Prime Minister attended an Asian summit before arriving in China to sign agreements. Mongolia calls these three countries its strategic partners. Russia and China are called good neighbours, while the USA is the most significant of our third neighbours. It is important to maintain close relations with these three super powers, and one also has to remember the high probability that bidding companies from Russia, China and the USA will be the final choice for Tavan Tolgoi and will be asked to form one big consortium.   
  • U.Borchuluun, Director of Geology and Research Department, Mineral Resource Authority and member of the Mineral Resource Council, tells G.Iderkhangai there should be no controversy on the Tavan Tolgoi reserves.

    Why is there no clarity on the Tavan Tolgoi reserves?
    There are indeed many who have reservations about the generally accepted notion that Tavan Tolgoi has 6.4 billion tons of reserves. It has been a long controversy and many professionals have been engaged in it. There are a number of survey reports, as also both preliminary and detailed exploration reports of work on many areas in each of the three parts: the Tsankh, Ukhaa Khudag, and Bortolgoi. Their estimates vary. The Russian Giproshaht Institute prepared a feasibility study of the Tavan Tolgoi deposit in 1989-1990 based on previous evaluations and estimates and put the total reserves at 6.4 billion tons. This is what was entered into the state registration.
  • By S.Bold-Erdene

    Long used to having the Erdenet Mining Corporation as the country’s only  large industry, Mongolia will soon see others coming up, several of them larger than Erdenet. For example, Erdenes Tavan Tolgoi has the largest coal deposit in the world, while its parent company Erdenes MGL owns, on behalf of the state, all the large mineral deposits of Mongolia. In addition, there will be the Development Bank and a growing stock exchange. How will all these large companies that never existed before be managed, and managed well?
  • By E.Saikhantuya

    Hall A of Parliament House is where the Standing Committee on the Budget is today discussing matters to do with the Development Bank, after they have passed through the Standing Committee on the Economy and through the MPs’ group of both parties. The proposed bank will play a pivotal role in the country’s economic growth.

    The 11 MPs present have just heard a brief introduction to the draft law, and the question and answer session begins. Kh.Badelkhan and O.Chuluunbat ask the Finance Minister for some clarification. Minister of Road, Transportation, Construction and Urban Development Kh.Battulga is busy talking on his mobile phone, while R.Gonchigdorj is fascinated by his laptop, ignoring some other MPs who are sharing a joke.
Poll
Do you agree with increasing state participation in the Draft New Mining Law?
  • 1. Agree
  • 2. Disagree

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