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Mongolian Parliament Could Consider Huge Oyu Tolgoi Copper-Gold Project This Week

Written by Dorothy Kosich
Tuesday, July 07, 2009.
Despite delays and the election of a new Mongolian President, rumors say the Mongolian Parliament may consider the Oyu Tolgoi agreement as soon as this week. Talk has been circulating in the Mongolian news media that the agreement governing the massive Oyu Tolgoi copper-gold project may be reviewed in the Mongolian parliament (the State Great Khural) as early as this week. An unidentified official “who is close to the agreement” recently was quoted in the Mongolia news media stating the “Oyu Tolgoi agreement will be discussed, adopted by the State Great Khural and the government will be granted with power to sign on it very soon.” The official said the Oyu Tolgoi agreement will be adopted before the Naadam Festival (a major Mongolian holiday which begins on July 11) and that the government may sign the document before the end of July. Blogger and Mongolian businessman Chris de Gruben, who calls himself “the Accidental Entrepreneur,” said Mongolian media reports said Parliament could review the agreement as soon as Wednesday. However, de Gruben cautioned, “Even if, by some miracle, the agreement was to be signed this summer, it will probably be too late for Ivanhoe and Rio Tinto to start real, large scale investments and construction at the OT site and building its infrastructure in UB before the onset of winter.” “This means they will have to wait until next spring to start the heavy investment, thus yet another winter of discontent,” he added. Business Mongolia asserts the biggest leverage for the urgency to act on the Oyu Tolgoi agreement is the global financial recession. “Mongolia would have (a) budget deficit of 93 million MNT (80 million US$) by the end of this year.” “In the meantime, Mongolia is at the mercy of the goodwill of foreign nations for ever increasing grants and loans. Every week brings new multimillion dollar loans to Mongolia while it does not seem the country has a clear strategy of how it will pay it back,” de Gruben observed. “It is spending money today that it hopes it will make tomorrow, a flawed strategy which sadly puts Mongolia in a weak negotiating position.” Meanwhile, the Oyu Tolgoi impasse has also taken its toll on the Tavan Tolgoi agreement. The government has repeatedly said it would deal with the 6.5 million ton coal project only after the Oyu Tolgoi agreement is resolved. However, members of the MPRP (the Mongolian People’s Revolutionary Party) want to settle the Tavan Tolgoi agreement now. It has been estimated that Mongolia will earn US$1 billion a year when all five Tavan Tolgoi coal deposits are being mined. The head of Parliament’s Mongolian Democratic Party caucus has asked that Oyu Tolgoi and Tavan Tolgoi be discussed together in Parliament. Mineweb