ID :
98373
Tue, 01/05/2010 - 17:56
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Shortlink :
https://oananews.org//node/98373
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MONGOLIA MINING REPORT Q1 2010--NEW REPORT PUBLISHED
Ulaanbaatar, /MONTSAME/ Mongolia Mining Report Q1 2010 has been recently published at http://www.companiesandmarkets.com.
The report says,"Significant changes made recently to the Mineral Law (1997), in particular the repealing of the 68% windfall tax, have opened up the market for foreign investment in Mongolia. The windfall tax initially allowed the government to take advantage of high copper and gold prices, however this resulted in only a short-term gain as it deterred and delayed valuable investment projects like the Oyu Tolgoi coppergold project. The current government concedes that Mongolia has to appeal to foreign investors as it is unable to invest independently into domestic mining projects and will benefit from the new technology and expertise that outside investors bring.
An agreement finally brought a resolution in October 2009 to the ongoing negotiations between Ivanhoe Mines, Rio Tinto and the Mongolian government with regards to the drilling rights of the Oyu Tolgoi copper-gold mine. With the repealed windfall tax both sides were able to agree on mutually beneficial terms including a 34% equity stake for the government in the project. The move by the government to approve the project is likely to make Mongolia more attractive to investors who will bring with them technology and expertise to accelerate the growth of this sector. In September 2009 Marketwire reported that Canada-based Kahn Resources had been encouraged by the progress made on the Oyu Tolgoi project and was eager to discuss its own investment agreement with the Mongolian government to develop its Dornod Uranium Project – showing that the country already was benefiting from its more open investment environment.
It is expected mining output to increase significantly from 2010 onwards, due to the passing of mining investment legislation regarding the Oyu Tolgoi copper/gold project. This will, in turn, pave the way for an agreement on the Tavan Tolgoi deposit, which also has numerous investors lined up and is considered to have the largest untapped reserves of coking coal in the world. The report anticipates that the mining industry will contract by almost 50% in 2009 but return with strong growth of 26% and 18% in 2011 and 2012 respectively.
However, on October 26 2009, Mongolian Prime Minister Bayar Sanjaa announced that he would be resigning from his post due to health reasons. The development introduces a degree of political instability to the country which seemed to be just finding its feet with regard to its relationship to the mining industry. The government has struggled to find a balance between passing on the profits from its rich resources to impoverished citizens without deterring essential foreign investment into the country. Since the presidential election of Elbegdorj Tsakhia of the opposition Mongolian Democratic Party in May 2009, Mongolia has effectively been operating under a coalition government. Whilst the government appears to be working well and in favour of the mining sector, the resignation of Bayar Sanjaa will cause many to wait cautiously to see how relationships progress and are affected by his resignation."
S.Batbayar
18.15
The report says,"Significant changes made recently to the Mineral Law (1997), in particular the repealing of the 68% windfall tax, have opened up the market for foreign investment in Mongolia. The windfall tax initially allowed the government to take advantage of high copper and gold prices, however this resulted in only a short-term gain as it deterred and delayed valuable investment projects like the Oyu Tolgoi coppergold project. The current government concedes that Mongolia has to appeal to foreign investors as it is unable to invest independently into domestic mining projects and will benefit from the new technology and expertise that outside investors bring.
An agreement finally brought a resolution in October 2009 to the ongoing negotiations between Ivanhoe Mines, Rio Tinto and the Mongolian government with regards to the drilling rights of the Oyu Tolgoi copper-gold mine. With the repealed windfall tax both sides were able to agree on mutually beneficial terms including a 34% equity stake for the government in the project. The move by the government to approve the project is likely to make Mongolia more attractive to investors who will bring with them technology and expertise to accelerate the growth of this sector. In September 2009 Marketwire reported that Canada-based Kahn Resources had been encouraged by the progress made on the Oyu Tolgoi project and was eager to discuss its own investment agreement with the Mongolian government to develop its Dornod Uranium Project – showing that the country already was benefiting from its more open investment environment.
It is expected mining output to increase significantly from 2010 onwards, due to the passing of mining investment legislation regarding the Oyu Tolgoi copper/gold project. This will, in turn, pave the way for an agreement on the Tavan Tolgoi deposit, which also has numerous investors lined up and is considered to have the largest untapped reserves of coking coal in the world. The report anticipates that the mining industry will contract by almost 50% in 2009 but return with strong growth of 26% and 18% in 2011 and 2012 respectively.
However, on October 26 2009, Mongolian Prime Minister Bayar Sanjaa announced that he would be resigning from his post due to health reasons. The development introduces a degree of political instability to the country which seemed to be just finding its feet with regard to its relationship to the mining industry. The government has struggled to find a balance between passing on the profits from its rich resources to impoverished citizens without deterring essential foreign investment into the country. Since the presidential election of Elbegdorj Tsakhia of the opposition Mongolian Democratic Party in May 2009, Mongolia has effectively been operating under a coalition government. Whilst the government appears to be working well and in favour of the mining sector, the resignation of Bayar Sanjaa will cause many to wait cautiously to see how relationships progress and are affected by his resignation."
S.Batbayar
18.15
