Mongolia says Mongolian laws have been breached

The Government of Mongolia and Rio Tinto have been in long discussion over a series of issues regarding the OT project. It was not an authentic intention of the Government of Mongolia to disrupt the concentrate export but instead there is a mutual aim to start the export as soon as all procedures are in line with Mongolian legislative framework.

The Prime Minister, Minister for Finance and Minister for Economic Development have voiced GoM’s concern on the concentrate revenue to be positioned out of Mongolia for a while. On the contrary, Rio has coveted to deposit the revenue to its offshore accounts. The Concentrate sales agreements, which have been concealed from the Government, also significantly impacts to the current conflicting situation. The point to repatriate foreign currency earned from OT concentrate exports into Mongolia instead of offshore islands is essentially important for Mongolia both from balance of payment and tax purposes.

Moreover, OT’s concentrate export sales agreements, which is valued approximately $8 bln, are to be considered as major transactions under Clause 88.1 of the Company Law of Mongolia and by international corporate governance standards. According to law provisions these agreements have to be discussed, unanimously approved at the Board of Director’s and, if needed, Shareholders Meeting of OT of which none of them complied with. Because of this the Government of Mongolia had to postpone the concentrate export second time, which is pity for everyone.

The source says that there hasn’t been any progress in resolving the issues including the Mongolian law breaches and Agreement compliance raised between the Government and Rio Tinto at the shareholders’ level in February 2013.

A representative from the Erdenes Oyutolgoi LLC, a 34% shareholder from the Government of Mongolia, said that postponement of Oyu Tolgoi copper concentrate has nothing to do with the upcoming Presidential election and he also said that the first postponement of June 14 export ceremony was postponed at the request of the Rio Tinto.

S.Bold-Erdene