Rio Tinto urges Mongolia not to tamper with mine deal
Staff Writer |
Rio Tinto urged the Mongolian government not to tamper with the contract on the Oyu Tolgoi mine in the Gobi desert if it wants to attract more foreign investors.
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Speaking at the Mongolia Economic Forum held in Ulan Bator, Arnaud Soirat, the head of Rio's copper business, said Mongolia had all ingredients to become a "successful resource nation" but only if it honored agreements around issues such as tax and royalty payments.
"The world is watching how Oyu Tolgoi develops. Therefore, Mongolia has to demonstrate its stability to foreign investors to attract more investment. It is a test case for future investment in Mongolia which brings with it jobs, new business opportunities and community development," Soirat said.
"A strong partnership between the government and the private sector is important for sustainable economic and social development of the country. If we can work together, Mongolia will be able to attract more investment," he added.
Oyu Tolgoi is the largest public-private employer in Mongolia. Currently, the company employs 14,000 people, of which 94 percent are Mongolians.
Rio Tinto has invested more than $7.5 billion in the country since 2010 and paid the Mongolian government some $1.5 billion in taxes, royalties and other fees.
The company, the largest foreign investor of the resource-rich country, is now planning to spend a further $5.5 billion on developing an underground mine.
However, the expansion has been delayed by political disputes and became the subject in a corruption investigation that has led to the arrest of two former prime ministers and an ex-finance minister who signed the 2009 investment deal.
Oyu Tolgoi copper-gold mine, located in the South Gobi Desert of Mongolia, is expected to produce an average of 430,000 tons of copper and 425,000 ounces (about 12,050 kg) of gold annually for 20 years, and is estimated to generate up to a third of government revenue by 2019.
The Mongolian government has a 34 percent stake in Oyu Tolgoi while Rio Tinto-controlled Turquoise Hill Resources owns the remaining 66 percent. ■