Ivanhoe says Mongolia mine pact ‘binding’
Ivanhoe Mines Ltd. is lashing out at the Mongolian government after a senior minister said the government wants to increase its stake in the massive Oyu Tolgoi copper-gold project.
Shares of Vancouver-based Ivanhoe dropped 10% on Monday morning after the company said it expects Mongolia to honour the current agreement, which was signed less than two years ago.
“The investment agreement for the Oyu Tolgoi project remains a fair and legally binding contract that deserves and requires the unqualified support of all parties,” Ivanhoe said in a statement.
According to the terms of the agreement, Ivanhoe owns 66% of Oyu Tolgoi and Mongolia owns 34%. The government can increase its stake to 50%, but not until the year 2039.
The government wants to accelerate that timeline. According to reports, Mongolian resources minister D. Zorigt plans to send Ivanhoe and joint venture partner Rio Tinto Ltd. a letter outlining proposed changes to the project (Rio is building the mine and owns 48% of Ivanhoe). One reported suggests the government wants to move up to 50% after Rio and Ivanhoe recoup their costs.
Earlier this month, 20 members of the Mongolian parliament petitioned the government to make changes to the investment agreement. That comes ahead of an election set for next June.
The signing of the investment agreement in October 2009 allowed construction of the multi-billion-dollar project to begin, following years of on-and-off negotiations. It is now 50% complete. On Sunday, Rio Tinto chairman Jan du Plessis visited the site for a “Halfway There” ceremony.
In addition to this new dispute with the government, Ivanhoe chief executive Robert Friedland is also sparring with Rio Tinto. Last week, Rio executive Andrew Harding suggested that Oyu Tolgoi could be delayed if the preferred option for power supply does not proceed. First production is currently expected in 2012.
Ivanhoe retorted on Monday by saying that it is confident that the plan to supply power from China is proceeding as expected.
© Copyright (c) National Post
Shares of Vancouver-based Ivanhoe dropped 10% on Monday morning after the company said it expects Mongolia to honour the current agreement, which was signed less than two years ago.
“The investment agreement for the Oyu Tolgoi project remains a fair and legally binding contract that deserves and requires the unqualified support of all parties,” Ivanhoe said in a statement.
According to the terms of the agreement, Ivanhoe owns 66% of Oyu Tolgoi and Mongolia owns 34%. The government can increase its stake to 50%, but not until the year 2039.
The government wants to accelerate that timeline. According to reports, Mongolian resources minister D. Zorigt plans to send Ivanhoe and joint venture partner Rio Tinto Ltd. a letter outlining proposed changes to the project (Rio is building the mine and owns 48% of Ivanhoe). One reported suggests the government wants to move up to 50% after Rio and Ivanhoe recoup their costs.
Earlier this month, 20 members of the Mongolian parliament petitioned the government to make changes to the investment agreement. That comes ahead of an election set for next June.
The signing of the investment agreement in October 2009 allowed construction of the multi-billion-dollar project to begin, following years of on-and-off negotiations. It is now 50% complete. On Sunday, Rio Tinto chairman Jan du Plessis visited the site for a “Halfway There” ceremony.
In addition to this new dispute with the government, Ivanhoe chief executive Robert Friedland is also sparring with Rio Tinto. Last week, Rio executive Andrew Harding suggested that Oyu Tolgoi could be delayed if the preferred option for power supply does not proceed. First production is currently expected in 2012.
Ivanhoe retorted on Monday by saying that it is confident that the plan to supply power from China is proceeding as expected.
© Copyright (c) National Post
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