Mongolia mine development

Mongolia mine

Mongolia to reopen talks on mine development

ULAN BATOR, Mongolia — Mongolia decided Thursday to reopen talks with international mining companies on two key mineral deposits, a national issue so sensitive that it helped lead to deadly rioting, a protested election and the country's first-ever state of emergency earlier this year.

The poor, landlocked country is trying to retain more of its natural wealth from its huge mineral deposits, including copper, gold and coal, but it has been hit hard by falling metals prices.

The Mongolian parliament on Thursday passed a resolution to authorize the government to start negotiations with foreign mining companies to develop the Oyu Tolgoi gold and copper mine and the Tavan Tolgoi coal deposits - even though the country hasn't yet decided on how much ownership to take in its own mines.

Mongolia, sandwiched between China and Russia, gets more than half of its revenue from tax on copper, but copper prices have fallen sharply this year.

The country's debate over how much control it should retain over its natural resources disrupted a June 29 parliamentary election that focused on how to share mineral wealth. Protesters attacked ruling party and election offices, alleging election fraud. Violence left five dead, 300 injured, and hundreds detained.

The two main political parties had focused their campaigns on how to tap the recently discovered huge mineral deposits but disagreed over whether the government or private sector should hold a majority stake.

Mongolia's parliament has been unable to pass an amendment to the country's Minerals Law, which keeps the government from concluding investment agreements with international mining giants to develop mineral deposits in the Gobi Desert.

But Thursday's resolution means talks with the companies will continue, even though President Nambaryn Enkhbayar has said a decision on state ownership of the country's mineral deposits might take until the middle of next year.

The current Minerals Law gives the country a 34 per cent stake in any privately funded mineral deposits and up to a 50 per cent stake in government-funded deposits.

But the government would like to increase Mongolia's stake to at least 51 per cent in all strategically important mining deposits.

The government says per capita income in Mongolia is $1,500 a year.

Source: The Canadian Press