Wednesday, January 14, 2015

The lead goose and Oyu Tolgoi

Rio Tinto, Ivanhoe Mines, Turquoise Hill, Oyu Tolgoi, Mongolia... 
Names familiar to many people around the world. Here is the translation of an article by Uyanga G., a member of Mongolian Parliament, who has a different perception and standpoint than maybe many others, regarding the Oyu Tolgoi project. We are talking about the third-biggest copper mine in the world. It might be interesting to hear something different from inside the country, different than the ones circulated through the world media. As a Mongol myself, I felt obligated to bring this voice to the world community by translating this article, using my humble English.  The floor is yours...

Begin of the translation

By Uyanga Gantumur

Uyanga G.
A  message has been going around quietly but surely that the two sides are  coming to an agreement about the  funding  for the second stage of the Oyu Tolgoi project. We believed the Government   back then that once we sign the Oyu Tolgoi agreement,  money would pour  in, making Mongolia   a heaven, and the next investors will come flying to us  like a flock  of geese. Well, most of us believed that,  but as for me, I didn't, and that is why I have been fighting  for more than 10 years making use of all means like from march  protesting to hunger strike, excluding use of guns, to oppose  this  unfair investment agreement of Oyu Tolgoi.   Today Mongolians pay 150 million USD each year as interest payment on the amount of money we  borrowed for the 34% of ownership while  we  have not received  a mungh  as  profit. To make the matters worse, we also have to pay an interest-on-interest according to  the  term of  that agreement. Soon we will start paying the money we borrowed. Then we might not be able to finance  even a single kindergarten. Talks are on the way to get 4.9 billion USD more for this project, in addition to 4 billion  initially  agreed. We have to take it  seriously since we  have to pay our 34% share of that amount too, which is 1.6 billion USD , the same way we do now with the initial investment.

ONE.   Simple arithmetic of Oyu Tolgoi

I cannot do calculations using 20 thousand variables. But let's do some math using a simple arithmetic. How much worth is Oyu Tolgoi deposit? It is officially confirmed by domestic and foreign specialists, and by authorized professional  institutes that this mine's deposit contains 45 million ton copper and 1800 ton gold. Let's say, we extract 75% of all that. Now, let's estimate the price of this real wealth.  As of  August 2014, the average price for copper was 7005.15 USD per ton at the London Metal Exchange.  With today's rate of Tugrik against USD (1840:1) and considering in average a 29% enriched copper concentration, the total value of copper deposit would be 434.957.715 million Tugrik. Plus, with one ounce being 31.1 gram  and the average price of gold in August  being 1294 USD per ounce, the value of 1800 ton of gold would be 103.353.569 million Tugrik.  The total revenue from copper and gold amounts to 538.311.284 million Tugrik.  This is the result of calculating the price  of  only two known metals-copper and gold- using the average value at the world market, without considering silver and other minerals which are found in the  copper concentration.
Mongolian annual budget revenue is 7 trillion Tugrik. We produce and consume only 10 trillion Tugrik worth of goods in a year. 538 trillion equals our  budget revenue of  76 years.  That is the money we can get just by selling our copper and gold while doing nothing. 76 people have agreed to a deal which would lead to a loss of the fortune all 3 million of us  could use for 76 years. I am  writing this because the present 76 must  not  allow this to continue.

The numbers mentioned above are relative. Even though it's obvious that we cannot dig out all of it at once and sell it, this is our  stand and basic assessment.  This number will go up if copper price rises, and additional resources are discovered  through  more exploration. In most cases, in addition to the first confirmed deposit, there are  more sources discovered during its development, as shown for example in Erdenet case.  There are many ways to keep the production profitable without going down from the once achieved stage during the market price fluctuation. And Mongolia has own  human resources  and professionals who can do it.

Shouldn't we start talking from this standpoint, based on that simple arithmetic calculations? It does not need to be proved that  within next decades the rising demand  of copper and gold will not go down, and the value thereof as well.  That is the main thing we have. Yes, we don't have the best management and the money to mine and process our wealth, but hey, Turquoise Hill, Ivanhoe Mines, and Rio Tinto do not have the necessary  funds  too, to finance this project. They raised funds with higher interests from the world finance market using our mine as deposit, and also charging us for  the payment of  the mediator who helped with the fundraising. To be exact, our partner who owns 66% , charges us, 34% owner, for the mediator costs, and that  means that Ivanhoe Mines and Rio Tinto are not investors but mediators.  What a finance partner we have found!  Knowing all this, our government is doing  nothing. What a useless government we have! What a nation we are, tolerating such a  government and choosing such people to  power!

If we  have had trusted our national companies and helped them to raise funds from the world banks and finance market,  things would have had  much better look  today. Mongolia is not a country without any experiences. We have been earning profits from one of the world's 10 biggest copper mine which we have developed jointly with a powerful country. People involved in exploring the Erdenet deposit, in its mining, and  in dealing with our partner, having participated in all that on  every level, are working now in private sector, as well as in state-owned entities, and some of them are also on the dole. They should have been mobilized, and if there is a lack of knowledge or experience, we could have hired necessary professionals from the international labor market. Mongolians have brains and possibilities to do the same as Ivanhoe Mines and Rio Tinto have invited best manager and professionals from the international labor market  to work for them on a very attractive conditions, and also to buy the required  equipment and techniques.

TWO.    Let's sum up what happened at Oyu Tolgoi

In 2007 the investors have made a deal with Mongolian government about the development of Oyu Tolgoi deposit after having talks in three stages, and agreed to both  drafts  of  Investment agreement and Shareholders' agreement. These agreement drafts and  a resolution draft of the Parliament were submitted by then-Prime minister M.Enkhbold , together with the Chairman of the Cabinet Office, by handing them over to D.Lundaajantsan-then Speaker of the Parliament.  In that first draft were included  a concentrator  plant  with a capacity to  process 54 million ton ore, underground and open pit, a power station, waste management facilities, infrastructure with accompanying  entities and it was calculated that for all this needed  2.724 million USD. At that time, the price for one ton of copper was 7126 USD on global market. The Investment agreement was signed two years later, in 2009, when copper price was  down to 5149 USD , but the amount of investment money was changed to 5.1 million  from 2.7 million USD,     almost doubled than as it was initially agreed to in 2007. Today, the other party  would still not give any explanation as to  why they doubled  the investment money when the prices for energy and metals on global market were going down. Even I, as MP, couldn't get any response, let alone any ordinary citizen, in regards to this issue until today after I addressed all responsible subjects with this request.  This would be the first big question we should demand  an  answer for.

Next question: Let's discuss about the 5.1 million USD investment as it is written in already signed Agreement, leaving aside the 2.7 million USD with  a question mark. Now, let's have a look at the investments introduced in the Technical and Economic Feasibility Study (TEFS) which was discussed at the Minerals Council of Mongolia:
1.   Open pit mine                                                 278 Mill. USD
2.   Underground mine                                        1512 Mill.USD
3.   Infrastructure                                                  646 Mill.USD
4.   Concentrator plant                                          832 Mill.USD
5.   Power plant                                                    460 Mill.USD
6.   Indirect costs                                                  228 Mill.USD
7.   Owners' expenses                                           176 Mill.USD
8.   Waste management                                        261 Mill.USD
9.   Currency fluctuation and unexpected costs   438 Mill.USD
10. Possible  increase of costs                              293 Mill.USD
11. Environmental and closing costs                        2 Mill.USD

The costs including owners' expenses, currency fluctuation and unexpected costs, and possible increase of costs make 17.5% (907 Mill.USD) of all costs. The costs for power plant could  be saved since there is a power plant project has started at Tavan Tolgoi mine and Oyu Tolgoi is considered as the main buyer. There are talks going on with Oyu Tolgoi as consumer and not as investor.
One can see that in that investment is included everything from  taking in account  the currency fluctuation  considering the possible risks, to  developing  of open pit and underground mining, building infrastructure, concentrator plant, power plant, and  the closing costs.  Certainly  all these calculations are not made  by just one person by heart.

Our partner and investor, superior than us in dealing with this matter, has paid the professional companies like Canadian AMMEK and Australian MINPROK to prepare a initial  economic evaluation  of Southern Oyu open pit and an extended version of evaluation including both northern and southern zones of Hugo Dummett deposit in 2006,  in order to  list the mineral reserves     in the unified registrar of mineral resources. Also the final version of Technical and Economical Feasibility Study (TEFS) for both open pit and underground mining of Oyu Tolgoi deposit was prepared by the above mentioned companies in 2007-2008, based on confirmed estimation of copper-gold deposits. This final version of TEFS, prepared for three years by those experienced companies, chosen by the investor itself, was introduced to the Mineral Council of Mongolia in January 2010 and a ruling was issued. But why is it now an additional 4.9 billion USD required to start the underground mining? What expenses have gone up so high?  We have the right to ask and get a clear answer for that question  because we pay 34% of it, and we must ask firmly because today's as well as our future generation will be paying this debt.  I demand an answer to this my second question.

THREE. In order to reach a mutual understanding, we must eliminate the differences of numbers. Without this, even a joint business in a  small trade would fail. Even though it says in the Investment Agreement that  approximately 1 billion USD was spent  for the Oyu Tolgoi exploration, Ivenhoe Mines Mongolia Inc. has reported in its exploration statement that 171.7 billion MNT in total was spent for the exploration, including 74.8679 billion MNT for drilling, 8.9295 billion MNT for lab and tests, 3 billion MNT for core processing. The sum of these three expenses  makes only 86.8 billion MNT, and the rest of 84.9 billion MNT from the total  was left unexplained. All that needs to be reported,  properly documented.

The results of the working group established by the joint order of Deputy Minister, Finance Minister  and Mining Minister, and worked more than a year to investigate the excessive 2 billion USD investment of Oyu Tolgoi project, are still not  available to the  public. Even the members of the Parliament have not received it yet. That must be disclosed. In regards to the tax-related debt of 130 million USD, it might be a small amount compared to the numbers mentioned above,  but Rio Tinto should be sincere and pay this money.  Isn't that shameful for such a big company to dispute a tax debt of 130 million USD and intends to take it to international arbitration when Mongolians are  granting  a favorable condition to develop a treasure which can feed us for 100 years and plus   borrowing money with interests?

In  the Investment Agreement, signed and approved, the initial investment was set as 4 billion USD, but in TEFS received by the Mineral Council of Mongolia that number was given as 5.1 billion USD. Which one is the number we should stick to? One should deal with the next question after we receive  clear answers  to those  plain  questions. So, is it that the project  was delayed  by the Mongolian Government or is the other side at fault? It is all right if the Prime Minister meant it precisely by word when he said that "We are ready to resolve the investment issue."  But if he meant that we agree on additional investment if necessary, then he should face a huge political responsibility.

Can't they understand Mongolia?

480 billion MNT had to be deducted from the budget income of last year due to the investment delay of Oyu Tolgoi project.  We tightened our belt accordingly, and were not able to increase the food amount for our children at the kindergarten and daycare , let alone to raise the salary for their teachers.  New kindergartens couldn't be built and children were  to stay home forcing their mom and dad stay without jobs.
The parliamentary caucus of the  "Justice" coalition had asked Da.Ganbold , a  Mongolian representative in Oyu Tolgoi's board,   particularly about this issue in the presence of Mongolian Prime Minister, Mining Minister, Minister of Economic Development and other officials.
When I heard  a Mongolian saying that   the cost over-runs  also include   the costs for Oyu Tolgoi"s foreign directors and officials who travel around the world with their wives and children, flying business class and staying in luxury hotels with a rate of 5000 USD per day,  and when he tried  to justify it by saying that we should understand the culture of high-level-people who represent big investors  and deal with big monies, although it is not acceptable to us, I became very agitated.
Mongolians pay the 34 percent of all this  by a loan with a high interest. All right, we understand them and we pay the 34 percent of it. Why they could not understand us?

Why they cannot understand that in fact Mongolian children have no kindergarten to go, and that classrooms for 25 students are overcrowded with 45 students, and that a teacher with a meager salary of 400 thousand MNT works with 40-50 students all day, and that we all get poisoned by toxic air, and that people are suffering and dying due to the insufficient number of hospitals and services, and that the newborns sleep with their mother on the floor at the maternity clinics?  Is there no one who would  explain all this and make them understand? Why not put someone else in this company to represent Mongolians  and to explain and defend our interests? To defend Mongolia's interest in Oyu Tolgoi, we need someone who knows Mongolia, understands Mongolians, and who can sense own  national interests of this country and people, but not somebody who just speaks English and has a foreign education.

Who is the lead goose, or the investor?

There is  no one today or  will be in the future who would say, let's put the Oyu Tolgoi in reservation and send the investors home.
Instead of calling those who speak out about defending own interests as populists or nationalists, and blaming them for  chasing away investors and ruining the economy, and playing the smart ones, one should demonstrate own  facts and numbers beneficial to Mongolia, against the ones mentioned above. An investor is not a butterfly you would not want to scare away from a flower. Using this opportunity, I want to say some words about the investor.

Mongolian law on investment states that an investment means the tangible and intangible assets attributed to the joint capital and reflected in financial statements of the business entities which are for profit oriented activities in the territory of Mongolia, and an investor means a foreign and domestic investor who  make an investment in Mongolia, and that a foreign investor means a foreign legal entity or individual (a foreign citizen or stateless person who is non-resident in Mongolia as well as a Mongolian citizen residing permanently in a foreign country) that makes investment in Mongolia.

Let's see what happens in real life, comparing it to the words and sentences written in this law. Last spring Mongolians collapsed when the greenback strengthened  sharply. The government has trembled, too. Why? Because the investment was reduced and the investors were chased away by those evil nationalists, said every smart mouth.   The consequences of stalling of Oyu Tolgoi investment were cruel and Mongolians whose lives depend on dollar were almost ruined due to  skyrocketed rate of Mr.Dollar who was scared off  by those populists.

But imagine that the money called as Oyu Tolgoi investment on which depends our lives as some want to claim, does not go through Mongolian banks and financial organisations; instead it goes out directly being not a subject matter of our concern. In another words, it has not a smallest  effect at all on stabilizing Tugrik and keeping the dollar rate steady. They even don't storage the concentration ore on Mongolia's territory but keep it at storehouses outside  the border. Buying toilet papers from Mongolian stores, feeding Mongolians with rice meals bought from S.Bayartsogt's  eatery, paying salaries to some Mongolians, and paying taxes, obligatory anywhere in the world,  shouldn't  be called as investment. Contempt  might be  a  word too soft for that.

If describing the mandatory tax payments  as our profit is not an offense, what is it?  A trader does not count all his income as profit after selling all his goods. Anyone in Mongolia knows that the profit is what is left after paying  taxes, rent fees, salesman salary, and subtracting the price for goods, costs for food and travel, etc.

An another example: Mongolia's Petroleum Law was passed this spring after much struggle. One of the great improvement of that law , introduced  by the working group led by MP Kh.Bolorchuluun, is the part stating that the money flow of the foreign companies operating in this field should go through Mongolia's banks and financial entities.  With effort from MANAN this law was defeated by 50:50 and another working group was formed with  MP Ts.Nyamdorj in charge. But he reintroduced the  law without that  most important part and with approval of the majority the law was passed. MANAN still exists. We were reckless by believing that MANAN would disappear  if MAN and AN  would go separate, and reappear if they join together to govern. This MANAN was a very thick one and wouldn't disappear so easily. Every morning when we get up we should  remind ourselves  that  MANAN  which was  built up in the past 24 years by  mutual benefits and shared pockets, and trapped  and hooked up themselves with  their failures and sins, is still there  , thicker  than we thought.

It's the  MANAN what makes  MAN  do the opposite while saying , "Dollar gets out of control. The Government should resign!" That is exactly what is called populism. And such people and party should be called populists.

We now know that the definition of investor as written in the law does not match with the real life and that we should   clearly define and understand  who is   the investor- the butterfly we scared away thus allegedly triggered  the dollar go crazy. Let's stop being fond of every golden-haired  with  money in the pocket and calling them as investor-butterfly. If the investment is  the most important factor affecting  Tugrik's rate, the investment should be redefined by reflecting that  influence. As a lawmaker, I will be introducing an amendment to the investment law to make such changes. So, let's ask ourselves again:  Is  the operator company of Oyu Tolgoi project an Investor?

One. Mongolians borrowed 1.7 billion dollars with 6.5% interest in order to jointly develop the Oyu Tolgoi mine (Interest-on-interest is paid too)
Two. The loan interest fee of this company has reached 500 million dollars since 2009 and we started paying 34% of that fee.
Three. The enormous amount of money of Oyu Tolgoi and the payment from selling of concentration ore do not go through Mongolia's banks and therefore it has no influence in stabilizing the currency rate.
Four. We have practically  become dependent on  this company, hailed as  the biggest investor, because any interruption of  production would trouble Mongolia's budget.

That is how the lead goose looks like. The second one would demand more since  the first one set such an example. Are we going to survive if such geese come in flock?  May such goose not come to us in flocks.

My suggestions

ONE. We should get  clear answers to the questions mentioned above. I am going to demand it in the name of the Mongolian people along with my friends. After that, the next issues  will be able to get fixed. In order to run this project risk free, beneficial to all and properly, a right order needs to be set, and the very first thing is to have  clear, honest and complete answers to those questions.

TWO. Oyu Tolgoi project is the first aim of the  flock of geese. The next geese should have a proper information about  the development of this project and any issues or disputes  related to it. We don't have such amount of money to counter the propaganda against Mongolia"s government and Mongolians, lavishly paid  by Rio Tinto.   Therefore let's open a website which contains all the information  about the development of this project,  and let's  introduce it to the world.  This will bring all the information to both natives  and foreign people  openly in proper manner. One cries out always that the investors were scared off  because of the false information. But anyone knows that an investor would not run away from a treasure which is ready to be possessed. There is not too much money needed to prove to the world that Mongolia's government and Mongolians are not evil people scaring off the  investors, and that all they demand is only a fairness. When Mongolia's government introduces officially that website, it is enough to distribute the news to all world media organs using the only state-owned media agency Montsame  which cooperates  with major news agencies of the world.

THREE. Before all this,  it is important that we Mongolians should unify   our standpoint regarding Oyu Tolgoi, and if we could come together it can be improved. But I personally feel that it might  be very difficult. Those  who signed the agreement with an investment  increased by billions of dollars  by yielding the other side are not many, but they just represent the front. This was carried out by a whole gang. If this agreement gets nullified, everybody involved will be exposed. Maybe they are being held captive by that circumstance. Calling us populists, or as people scaring off the  investors, or as ignorant street people who cannot do calculations with 20 thousand variables  is just the cover-up,  not the answer. To tighten its grip and increase the profits, they keep pushing Mongolians along with their government to raise the investment fund. If we can make those who signed the agreement responsible, politically, then we could free ourselves from that grip. As the saying goes, committing  murder as a result of  being embarrassed, we can't let us falling  into  more debt just to cover the bribes of some people, can we?  Should we , being modest, allow us  more debt we could not possibly pay off in our lifetime, or stop it while our loss being minimal, unless  Rio Tinto becomes more reasonable and fair, since Mongolians won't die of  hunger  after all without selling Oyu Tolgoi, right?

Better scare it off than being exploited

The  message  we deliver to the world must be clear and fair. This is not difficult, nor it requires lot of money. Would it be reasonable for others to run away following  Rio Tinto, in case Rio Tinto leaves, instead of competing  to  take its place?  Rio Tinto is scaring off  other investors in order to dominate  in Mongolia. It is their wish to scare off others by making Mongolia look bad. The development of the project has been delayed   because Rio Tinto does  not play  fair. There is a big opportunity to make money in Mongolia's Oyu Tolgoi if one plays only a fair game.

In the end the guilty parties are  the government which brought  us in such a situation and those who signed the agreement.  We should look at ourselves first and those whom we elected before start swearing at Rio Tinto. The investors are not the kind-hearted Jesus, Buddha or mother Theresa who want us to become developed and be  rich,  nor the  beautiful butterflies one wouldn't dare to scare off from flowers.  They are just people who want to invest their money in rewarding projects for profits.  They are smart. They know how to approach and talk to people who know  their rights,  how to defend their interests and have strong self-esteem. They know also how to talk  to  people who dishonor own country, don't understand  own interest and how to defend it, and those who can be trapped by money, as well as how to  tighten their grip and, what to take and how.

People who mistakenly regard their spoken English as education, view  the money as their measurement of everything and set it as their target, whose brains , far distant from the  root and not immune anymore, are washed by  neo-liberal propaganda,  cannot be the power to stand against it. Instead  they form the fifth colony, serving the other side by claiming they were loyal to their beliefs.

Lastly, I want to say few words to our dear INVESTOR.  You have started the work based on the TEFS, prepared by the company of your choice and accepted by the people you bribed. Now, do your job with the money approved because we can't allow us more loss. Complete all the work listed in the project according to the agreement  approved officially on October 6. 2009. If you want to talk about raising the funds for underground mining, a new situation will emerge where the Investment agreement and the Shareholders' agreement need to be discussed anew. Same as in, if somebody wants to sell his house for 100 million and made an agreement with the buyer, but the deal will have to made anew  if the next day  seller wanted 300 million instead, or there is going to be no deal at all.

As the world leading company and as intelligent people, you must give an answer to my questions above. Fairness is a very important, not measurable, nor comparable   thing in a cooperation. Buying a Mongolian does not mean you can do it with all Mongolian. Mongolians are people who can be fair if treated fairly. I have the hope that only after all disputed questions are cleared, our cooperation will succeed and we can work together for our mutual benefit. But if you decide to keep on exploitation, repelling shall be the right  choice for us.

This is my standpoint on Oyu Tolgoi project.

Uyanga Gantumur, Member of Parliament of Mongolia

End of the translation



1. Mungh - smallest monetary unit equals 1/100 of the basic monetary unit (tugrik)
2. 20 thousand variables- referring to what MP Bayartsogt said at the TV debate about Oyu Tolgoi agreement by defending the agreement that it  includes  precise calculations made using  methods with  20 thousand variables.
3. Tugrik - Mongolian currency , abbr. MNT
4. 76 people - the total number of members of the Mongolian Parliament
5. Erdenet - a copper mine jointly developed with Russia (still producing concentration)
6. Tavan Tolgoi - a major coal mine close to Oyu Tolgoi
7. S.Bayartsogt - an MP from Democratic Party
8. MANAN - nickname for the coalition of the two main parties, MAN (abbr. in Mongolian for Mongolian People's Party)  and AN (for Democratic Party), making a term meaning "Fog" in Mongolian) 

I urge our readers to read the following assessment issued by the Oyu Tolgoi Watch almost 4 years ago: http://www.miningwatch.ca/sites/www.miningwatch.ca/files/OT_issues.pdf .    Things looked problematic back then, and as MP Uyanga mentioned in her recent press conference, the issue about the differences of salaries between domestic (Mongolian) and foreign workers still exists today and she gave just one example to prove it:
A Mongol welder gets 71.6 thousand MNT a month while a foreign worker  in the same position get paid 1.8 million MNT monthly for the same job. (With the current exchange rate between MNT and USD-1888:1, that would be  $38 VS $953). That is 25 times (!) more than what Mongolian worker receives. Is that some kind of exploitation? As they are praised as the top leading   company with a worldwide reputation, it is hard to believe that Rio Tinto is taking advantage of native workers by abusing them with  such underpayments!  Are  they trying to make a profit from it? They should be ashamed of that, and I doubt very much that with such an attitude and unfairness  towards Mongolians, they will be not welcomed,  nor respected, maybe even hated by the natives. If both sides hate each other, no business shall be made  between them. Business should be based on trust, fairness and mutual respect.


  1. How exactly do you propose to develop Mongolia without FDI? It's a very simple straight forward question that you nor any other nationalist politician can answer. Let's look at some inconvenient facts for you. The last four years have seen the currency drop by over 50%, FDI drop by over 85%, inflation increase, and a balance of payment issue that is only going to get worse unless FDI increase. it is this simple for Mongolia: Increase FDI and thrive or stand in the way for no good reason other than to pander to voters (as you and others are doing) and destroy the economy. By not allowing Oyo Tolgoi and Tavan Tolgoi to proceed, I can put a probability on the country entering extreme poverty, very high unemployment, exceedingly high inflation, and a destruction in the current account at 95%. Politicians like yourself are directly complicit in the economic hardships the country is currently facing. Rather than help solve the problem, you pander to voters who are uninformed in order to keep your job while at the same time Rome is burning. Look at member of parliament Enkhbayar, himself convicted of CORRUPTION yet he is the second most popular politician in the country. Do your job and educate the people that long term Oyo Tolgoi and Tavan Tolgoi are EXTREMELY beneficial to the long term economic prospects of the country. Without them Mongolia will go the way of other unfortunate nations that should be wealthy and successful. The eyes of the international investing community are upon the nation.

  2. The biggest obstacle to Mongolia gaining wealth from the OT project has been the GOM itself which has caused most of the delays and cost over runs on this project. Before agreeing to the investment agreement, Mongolia spent over 2 years negotiating the agreement, visiting many other countries with mining developments and hired some of the best mining and finance consultants to work on its behalf. While most other countries choose not to have ownership in their mining developments opting for royalties, taxes infrastructure development and jobs instead, Mongolia insisted on owning part of the mining development. Mongolia also did this without putting up any of its own money for its 34% share of O.T. and this is why it has its outstanding loans. Other countries avoid resource development ownership because with ownership comes the risks and responsibilities associated with the resource cycle. They know that ownership is better left to the corporations who can better handle these risks and wide swings ibn cash flows than a government who need a more stable source of income.
    Mongolia was well advised and spent considerable time on this agreement. The foriegn investors invested considerable money based on the good will of this agreement. It is time that Mongolia realize this and honor its agreement. Based on the agreement and confirmed by the world bank, almost 80% of the money generated by this project flows to Mongolia or Mongolians. There are a lot more benefits to Mongolia than the payments it has to make on its loans. Everything from the thousands of jobs that this project provides to the infrastructure that it has payed for and thr fees and taxes that the government of Mongolia has collected.
    If Mongolia wants to join the modern world, it has to learn to play by the rules of the modern world and this means honoring its agreements. Mongolia has lost way more by not honoring this agreement than what it may have gained from any changes to it. Foreign inverters have stayed away as Mongolia has shown that it can not be trusted and they will continue to stay away till Mongolia changes. .
    As long as the people of Mongolia keep electing the likes of Uyanga G.and similar minded politicians, then Mongolia's future in the modern world will not be so good. Mongolia needs to focus on cleaning up the corruption both in and out of government and working to attract foriegn investment . Only then will the people of Mongolia have a bright future!

  3. Having worked on many projects that employed foriegn workers, I can tell you that the international standard is to pay workers based on the pay scales in their country of origin. This only makes sense as their cost of living is based on their home countries as that is where their families are and they will return to. Rio Tinto is following international protocol with respect to how wages are paid. Also 95% of those working at OT are Mongolian with foreigners used for mostly temporary positions that require expertise not available in Mongolia so its not a big problem and really not a problem at all.