Mongolia Releases Mine Probe Details
TIANJIN, China—A Mongolian official released details on the government's restrictions on the movement of an Australian attorney there, saying it needs her help on a probe into allegations against a former top mining figure.
Tsedenjav Sukhbaatar, Mongolia's ambassador to Beijing, also said Monday that the government would resist calls at home to renegotiate a major mining agreement with Anglo-Australian resources giant Rio Tinto .
SouthGobi Resources Ltd., a Mongolian coal company controlled by Rio Tinto, said last month that its chief legal counsel, Australian Sarah Armstrong, was being required to remain in the country to help authorities probe corruption allegations. Mr. Sukhbaatar said Monday that Ms. Armstrong had been prevented from leaving because her assistance is needed in the investigation of D. Batkhuyag, the former chief of Mongolia's mining authority, who is suspected of illegally handling mining licenses.
SouthGobi isn't being investigated and Ms. Armstrong hasn't been accused of wrongdoing, he said, adding she can move freely within the country.
Mr. Sukhbaatar didn't specify how long the probe or the departure restriction might last.
Neither Mr. Batkhuyag nor Ms. Armstrong could be reached for comment. An official with Mongolia's Ministry of Mining said it was unable to provide contact with Mr. Batkhuyag and declined to comment further.
Mongolia, which has huge and still 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.
During the run-up to national elections in June, for example, some candidates called for terms of the deal for Oyu Tolgoi—one of the world's largest gold- and copper-mining projects, with reserves estimated at 41 billion pounds of copper and 21 million ounces of gold—be renegotiated to cut Rio Tinto's stake. Rio Tinto manages development of the mine and owns 51% of Turquoise Hill Resources Ltd., which has 66% of Oyu Tolgoi, while the Mongolian government has 34%.
The candidates called for reducing that 66% to 49%.
"I don't think it will go that way. We will stick as far as possible to the current agreement," Mr. Sukhbaatar told The Wall Street Journal. "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."
The Oyu Tolgoi project took another step toward production when China's Inner Mongolia Power (Group) Co. agreed to supply electricity to the venture. The project is expected to begin producing concentrate in the next several months, with commercial production likely to follow three to five months after that, Turquoise Hill said. Rio Tinto confirmed the power-supply deal.
Mongolia also faces problems stemming from an economic slowdown in China. Exports of coal, Mongolia's largest export category, are likely to reach just 11 million to 12 million metric tons this year, down from 22 million last year, Mr. Sukhbaatar said.
The envoy said the government wanted to move ahead fast on a stalled project to develop its enormous Tavan Tolgoi reserves of coking coal, used in making steel. 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," the ambassador said. "It's time to start the exploitation of Tavan Tolgoi."
Write to Chuin-Wei Yap at Chuin-Wei.Yap@wsj.com
A version of this article appeared November 6, 2012, on page A13 in the U.S. edition of The Wall Street Journal, with the headline: Mongolia Releases Mine Probe Details.
Tsedenjav Sukhbaatar, Mongolia's ambassador to Beijing, also said Monday that the government would resist calls at home to renegotiate a major mining agreement with Anglo-Australian resources giant Rio Tinto .
SouthGobi Resources Ltd., a Mongolian coal company controlled by Rio Tinto, said last month that its chief legal counsel, Australian Sarah Armstrong, was being required to remain in the country to help authorities probe corruption allegations. Mr. Sukhbaatar said Monday that Ms. Armstrong had been prevented from leaving because her assistance is needed in the investigation of D. Batkhuyag, the former chief of Mongolia's mining authority, who is suspected of illegally handling mining licenses.
SouthGobi isn't being investigated and Ms. Armstrong hasn't been accused of wrongdoing, he said, adding she can move freely within the country.
Mr. Sukhbaatar didn't specify how long the probe or the departure restriction might last.
Neither Mr. Batkhuyag nor Ms. Armstrong could be reached for comment. An official with Mongolia's Ministry of Mining said it was unable to provide contact with Mr. Batkhuyag and declined to comment further.
Mongolia, which has huge and still 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.
During the run-up to national elections in June, for example, some candidates called for terms of the deal for Oyu Tolgoi—one of the world's largest gold- and copper-mining projects, with reserves estimated at 41 billion pounds of copper and 21 million ounces of gold—be renegotiated to cut Rio Tinto's stake. Rio Tinto manages development of the mine and owns 51% of Turquoise Hill Resources Ltd., which has 66% of Oyu Tolgoi, while the Mongolian government has 34%.
The candidates called for reducing that 66% to 49%.
"I don't think it will go that way. We will stick as far as possible to the current agreement," Mr. Sukhbaatar told The Wall Street Journal. "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."
The Oyu Tolgoi project took another step toward production when China's Inner Mongolia Power (Group) Co. agreed to supply electricity to the venture. The project is expected to begin producing concentrate in the next several months, with commercial production likely to follow three to five months after that, Turquoise Hill said. Rio Tinto confirmed the power-supply deal.
Mongolia also faces problems stemming from an economic slowdown in China. Exports of coal, Mongolia's largest export category, are likely to reach just 11 million to 12 million metric tons this year, down from 22 million last year, Mr. Sukhbaatar said.
The envoy said the government wanted to move ahead fast on a stalled project to develop its enormous Tavan Tolgoi reserves of coking coal, used in making steel. 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," the ambassador said. "It's time to start the exploitation of Tavan Tolgoi."
Write to Chuin-Wei Yap at Chuin-Wei.Yap@wsj.com
A version of this article appeared November 6, 2012, on page A13 in the U.S. edition of The Wall Street Journal, with the headline: Mongolia Releases Mine Probe Details.
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