Rio Tinto official: Renegotiation request is about politics
The controversy over the Mongolian government’s request to renegotiate the Oyutolgoi mining investment agreement continues. The government has announced that it would like to increase its stake in the mine from the previously-agreed 34 percent to 50 percent.
Last Sunday, Cameron McRae, Rio Tinto’s Mongolia country manager and chief executive of Oyutolgoi, said the company had not yet received an official notification from the Mongolian government that the government is seeking to change the two-year-old agreement.
“We respect the Mongolian government and when they give us the notification to come and talk we will have those talks,” he said.
“I think what we are demonstrating is that the investment agreement is a contract, and we’re going to honor our commitments and we expect the government to honor its commitments,” he added.
Another Rio Tinto official discussed the issue with Bloomberg News. “There are discussions going on,” said Andrew Harding, the head of Rio’s copper division. Bloomberg reported that Harding said the proposal to renegotiate the agreement should be assessed in the context of next year’s election in Mongolia.
Mongolia owns 34 percent of the Oyutolgoi project and Ivanhoe Mines Ltd owns 66 percent, in accordance with the 2009 agreement. Mongolia has borrowed money for its share, with the loans to be repaid in part with profits from the mine. The agreement also allows Mongolia to increase its stake to 50 percent – but not until 30 years after the agreement took effect.
But ever since the National Security Council rejected a proposed agreement for developing the Tavantolgoi mine, 20 MPs say it is neessary for the government to increase its stake in Oyutolgoi immediately.
Some question why the government made the Oyutolgoi agreement in the first place, if it does not intend to stand by it, and why MPs approved the agreement, only to demand changes just two years later. Some fear renegotiating the agreement will damage Mongolia’s international reputation, and give investors second thoughts about investing in the country.
Last Sunday, Cameron McRae, Rio Tinto’s Mongolia country manager and chief executive of Oyutolgoi, said the company had not yet received an official notification from the Mongolian government that the government is seeking to change the two-year-old agreement.
“We respect the Mongolian government and when they give us the notification to come and talk we will have those talks,” he said.
“I think what we are demonstrating is that the investment agreement is a contract, and we’re going to honor our commitments and we expect the government to honor its commitments,” he added.
Another Rio Tinto official discussed the issue with Bloomberg News. “There are discussions going on,” said Andrew Harding, the head of Rio’s copper division. Bloomberg reported that Harding said the proposal to renegotiate the agreement should be assessed in the context of next year’s election in Mongolia.
Mongolia owns 34 percent of the Oyutolgoi project and Ivanhoe Mines Ltd owns 66 percent, in accordance with the 2009 agreement. Mongolia has borrowed money for its share, with the loans to be repaid in part with profits from the mine. The agreement also allows Mongolia to increase its stake to 50 percent – but not until 30 years after the agreement took effect.
But ever since the National Security Council rejected a proposed agreement for developing the Tavantolgoi mine, 20 MPs say it is neessary for the government to increase its stake in Oyutolgoi immediately.
Some question why the government made the Oyutolgoi agreement in the first place, if it does not intend to stand by it, and why MPs approved the agreement, only to demand changes just two years later. Some fear renegotiating the agreement will damage Mongolia’s international reputation, and give investors second thoughts about investing in the country.
Comments
Post a Comment