Mon, Nov 05, 2012 - Page 15 News List

Giant copper mine offers Mongolia a cash bonanza

AFP, ULAN BATOR

However, the mine — open pit initially and underground starting in 2016 — faces objections from some local residents concerned about the environmental impact.

Herders have complained about dust kicked up by trucks, which they say harms livestock. Last month, the campaign group OT Watch filed a claim against the mine on behalf of herders seeking compensation.

The mine has also run into political headwinds as vocal backbench legislators demand the government amend its 2009 investment agreement to increase its stake in the project to 50 percent.

Mongolian Prime Minister Altankhuyag Norov has not endorsed the calls, but says Mongolia “will revisit and reconsider some aspects of the agreement” because of higher development costs — to the angst of the private developers.

“When a few parliamentarians push government to renege on past deals its not just investors who are hurt, its Mongolians, Mongolian businesses, the entire supply chain,” Rio Tinto spokesman Houston Spencer told a recent conference.

Another pending issue is finalizing a power purchase agreement with China which remains incomplete amid ongoing negotiations between Rio Tinto and Beijing, the company said.

Until it is inked, Oyu Tolgoi cannot switch on key equipment that reduces raw ore to concentrate, a process which makes it economical to export.

The delay could hurt Mongolia’s economy, which has found itself on softer ground in recent months due to falling coal revenue in July and August.

Third-quarter GDP growth was 5.6 percent, compared with 16.5 percent in the first quarter, according to the National Statistics Office.

“Any delay in commercial production at the mine could also impact the near term growth outlook,” a World Bank report said last month.

This story has been viewed 2675 times.
TOP top