Эрдсийг эрдэнэст
Ирээдүйг өндөр хөгжилд
Ирээдүйг өндөр хөгжилд
Mining The Resources
Minding the future
Minding the future
The Mongolian Mining Journal - March 2026
By A. Khaliun
Amid the tense negotiations between the Government and the Rio Tinto Group over the Oyu Tolgoi Investment Agreement, Prime Minister G. Zandanshatar - who had been issuing firm demands to the investors - resigned at his own request.
Although it was impossible to anticipate, the Prime Minister's sudden decision to submit his resignation after nine months clearly had political implications, as G. Zandanshatar himself hinted during a parliamentary session while responding to MPs' questions. Since the signing of the Oyu Tolgoi Investment Agreement in 2009, G. Zandanshatar has been the most clear and pragmatic among all Prime Ministers, consistently putting forward proposals that firmly pressured investors.
His government expressed a clear and firm stance on policies aimed at increasing the benefits that the Mongolian people receive from the Oyu Tolgoi deposit, which has been discussed for many years. These include:
Negotiations are still ongoing.
"Although I have resigned, the continuity of government work and the principles upheld by the Cabinet should not change," he emphasized.
His statement can be read as a message for the next Prime Minister to carry forward. The newly appointed Prime Minister, N. Uchral, invited G. Zandanshatar to continue working in his government, signaling that there will be no major changes to the previous administration's policies during Uchral's tenure.
G. Zandanshatar had recovered from his first setback - when he was unable to resolve internal party conflicts thanks to the Constitutional Court. He has now experienced a second setback, though this time it was a "soft landing" compared with the first. During ongoing negotiations with Rio Tinto, he leveraged Mongolia's most important national interests as a key political tool and tied the cause of his second setback directly to the investor side.
During the session of the Standing Committee on State Structure on relieving Prime Minister G. Zandanshatar, the issue of minerals and mining was raised. At that time, a question was asked regarding the resignation of the Cabinet and the future of the initiative aimed at ensuring that the Mongolian people fully benefit from their natural resources.
Member of Parliament B. Kherlen responded as follows: "Five specific demands were made to the Rio Tinto Group, and while the negotiations had been progressing successfully with positive outcomes, political deadlock had emerged. This leaves us with no choice but to conclude that, on one hand, the situation was influenced by the political environment, and on the other hand, it is somehow related to the slowdown in the progress of the negotiations. We are compelled to view this as connected to the current political instability.
The negotiation team has met at the table four times. The investor side offered to reduce the interest rate on the loan to some extent, but we did not agree. Mongolia will maintain a firm position. Therefore, according to the agreement, the reduction of the loan interest, which occurs once every seven years, was pre-negotiated to produce tangible results. I am also concerned that discussions on receiving advance dividends, which had been proceeding effectively, are now being slightly delayed."
Even though G. Zandanshatar has left and N. Uchral has taken office, there will be no significant change in the terms of the ongoing Oyu Tolgoi negotiations or the government's position.
This is because both politicians are from one faction of the divided Mongolian People's Party (MPP). N. Uchral's invitation to G. Zandanshatar to continue working in his cabinet demonstrates the unity between the two politicians.
Although the government resigned amid the ongoing Oyu Tolgoi negotiations, and some may see this as a reason to "distrust" Rio Tinto, the talks will continue regardless of who serves as Prime Minister. Any decisions reached will need to be communicated to the public.
The working group, led by Minister of Industry and Mineral Resources G. Damdinnyam and tasked with reducing the management fee percentage for the Oyu Tolgoi project, last met with Rio Tinto representatives on March 12. The investors did not accept the government's proposal, and the parties failed to reach an agreement. After reviewing the proposal, it was decided to continue discussions in the near future, and the full-day meeting concluded. The working group had planned to resume negotiations by the end of March, but the government resigned before this could take place.
When asked about the timing of the next round of negotiations, the Ministry of Industry and Mineral Resources stated that no date has yet been set.
While Rio Tinto will be observing how the government's composition changes and what approach it ultimately takes, it is almost certain that they expect no major deviation from the message left by Zandanshatar.
The Prime Minister, who had imposed the toughest demands on investors, has now stepped down. In leaving office, he conveyed a message to his successor and walked away having secured political capital both among his close circle and the less-informed "silent majority," while watching and planning his next political move.