from V.RH BB, PMs Speech in Great KhuralThanks danvinovich
The Prime Ministers key note speech at the Parliament's General Session
I'm very grateful for approving the Government's Cabinet during this General Session therefore giving us the chance to work with complete Government. Until the next election the Government needs to work racing against time. We understand that we won't be able to much and don't have the capability to do so as well. Therefore the benefit and the future of Mongolia's interest we demand to do the following five actions immediately.
We are not proposing new unheard actions. We are requesting to work jointly on the previous tasks' which have been started but has been discontinued, plans which we didn't dare to start and on projects that cannot wait any longer which are going to determine the future developments and direction of Mongolia. I understand that these acts, thoughts and proposals are going to define our future from which applicable proceedings will be put in place. I would like to note the word "innovation" which is widely used in the world. After discussing and articulating with our professors and researchers we interpreted it as "to renovate the existing thing" and translated the word into Mongolian as "Advancement".
Advanced Usage of Natural Resources
The perception that citizens of a country with natural resources are rich and citizens of a country without natural resources are poor has been disregarded. Today there is no difference between a large country with many inhabitants and a small country with few residents. This evolution has been selected through its natural selection process from the world's development and at the same time countless natural wealth has been uncovered under the Mongolian soil and the value of this unimaginable wealth has been escalated.
Mongolian people have many years of statehood traditions. We have the practice of increasing our livestock but no experience in capital build up. We know the ways to double our stock but no ability to excess our money. Although our State and country have 2000 years of history the chronicles of our national capitalists are only near 20 years. Even though without any experience, a fate of darkness and uncertainty cannot be smeared on Mongolians. Incidents and sufferance of other countries with natural wealth are giving us lessons and telling us what to do.
During 1990s we've given ourselves the nickname "Beggars sitting on gold". We did not understand that unless we change the vision of the person it does not matter whether we're sitting on gold or rock. Back then we knew that we were penniless but we did not know that that tiny piece of land called Oyu Tolgoi would contain 71 billion ounces of copper and 31 million ounces of gold. The land that we were sitting on, walking on and even the rocks that we put our hats on was a treasure.
Last year during the visit of the Russian Premier M.Fradkov one the accompanying businessmen called us "Dogs guarding their bones" meaning if we can't use our wealth
ourselves what's the point of being rigid and problematic rebuking the people that have the experience and knowledge to do so.
We know that the foreign company made the exploration and evaluation of Oyu Tolgoi using their own funds. Exploration is a risky business and because of that we've made an agreement with the company using the "Don't cry if you've fallen yourself" attitude. Mongolia spent tens of millions of dollars for this project and after the failure because we didn't have had any major dependable national companies we've had no choice but to give the task to foreign company. First it was BHP Billiton which also spent lots of USD but found nothing as well and without crying left the country. When Ivanhoe Mines came it was their luck. According to our law we gave the guarantee for their investment and had to arrange a sustainable investment agreement. By 2003 and up until today the rumor of that agreement has started to disappear. The foreigners are watching us on how we are delaying and obstructing the IA and how we're backing from the promises and guarantees we've made. Our simple truth is that we don't have the ability to exploit Oyu Tolgoi all by ourselves therefore we need the help of experienced major foreign companies.
The other deposit that is in the center of public and Governments attention is the Tavan Tolgoi deposit with reserves 6.5 billion tonnes of coal. To mention on the side the price of coal on the world market is increasing hourly and with 1.8 billion tonnes of coking coal the value of this deposit can be estimated. The history of this deposit is different from that of Oyu Tolgoi. The exploration has started in 1960 and for 40 years the Mongolian Government invested in the project one way or another. From the state budget or to say more modern term, from tax payer's money the exploration and reserve evaluation was done. To put it in other words the Mongolian State took the risks and made the exploration. Even during the socialist era we've tried to co-operate with other countries but because of transportation difficulties and low coal price nobody paid attention.
After we've embraced the market economy BHP Billiton obtained the license but come to a decision that no profit can be made and returned it. Now the license is safely in the hands of a Consortium made up from several national companies. These companies not only safely kept the license but also made significant amount of investment into the project and developed the needed economic evaluation as well. The Mongolian people and the Mongolian Government thanks these national companies and "Energy Resources" Consortium for safely keeping the license in the hands of the Mongolians and for not selling and loosing this valuable wealth to foreigners.
The reserve in Tavan Tolgoi is one of the biggest uncovered coal reserves in the world and the Mongolian Government needs to export this wealth in following the world examples therefore the Mongolian people can receive the maximum possible benefits. I want to point out the phrase "At this present time". Exactly at this present time when the prices of minerals are soaring our country is becoming a nation with one of the biggest reserves. We are of course worried about petroleum price increase. Nothing good is coming out from it but our gold, copper and coal values are surpassing the petrol. We cannot afford to loose anymore valuable time rendering others in front of us when we have all this wealth on our doorsteps. History will show us that such luck and moments do not occur every now and then.
The first challenger for Mongolia has already showed up. Even though Tavan Tolgoi has the labeled of "The Most", it is no longer the only one. Recently a coal deposit has been discovered in Mozambique which with first estimation has reserves no less than Tavan Tolgoi. Maybe with the next evaluation it might be more than ours. Or maybe somebody would discover somewhere a deposit twice the size as ours. It is only a question of time. The social perception of seeing the foreigners as suspicious is changing. The Government always understands, considers and respects the fact that on every social level there are many different views, opinions and interests.
In comparison with the previous period, the Mongolian Government has learned to identify and negotiate with foreigners. The Democratic Mongolian Government has gained 20 years of experience in dealing with the free world. Although with periodic interruption, the Mongolian State has been established 2000 years ago. At times we lack the opportunity and potential. We also understood, it does not mean that when we ask somebody the things we don't know or understand is considered a weakness but if we are attempting to keep embracing the unknown objects that would be considered as foolish. We are living in an era where a person who doesn't know how to do things gets the person who knows how to do the things for him is considered to be a intelligent.
Not every herder can become a horse trader and the same thing applies to the mining business where not every country with natural resources can do business. There are many established professional organizations where they specialize in making beneficial deals for countries and therefore receiving its dues. Untainted name becomes its selling point, dependable service becomes its brand and such are the organizations that are selling the Arabian oils and American petrol.
We have people saying that we can survive without using our mineral wealth and will leave these resources to later generations. These kind of people are in many countries. Human periods always sustained from their current surroundings, fate and environment. The next generation's era is the next generation's property. We can't bring backward the future and we can't forward our today's world.
The human nature is always to leave the later generation its developments and progress. More wealth is left for them. To tell the truth, these coppers and golds that are beneath our soil are just mineral reserves, not a social wealth. Only when human hands, minds and management have been applied then it becomes a social wealth. The later generations always regret about not leaving them strong and developed country and not about petty affairs such as who's consuming and misusing.
It is in our era the Mongolian natural resources have become the center of world's attention with the increased values on the world's market. It is our responsibility before our descendants to justly use this historic opportunity. If we keep bickering and quarreling with each other and lose this opportunity our later generation will seek condemnation from us. Thus we bear the responsibility to leave our descendants strong, well developed and prepared intellectual potentials.
There is a need to establish the Oyu Tolgoi IA for the greater benefit for Mongolia with well known world wide recognized organization in accordance by the world standards and examples. It would be much secure to hire well recognized international financial organization to arrange a deal for the Mongolian Government. The Government will relay its conditions and demands to that organization. Such is the way how deals are done today and we must follow it accordingly.
Regarding the Tavan Tolgoi, after the Government gains full control over the deposit only then it can be decided when, how and by whom the deposit should be used. The Government spent significant amount of time and its capital to explore, discover and analyze this deposit therefore it has full right to gain full control. The Government views that because Tavan Tolgoi has become issue of national security and public interests the deposit needs to be under full Government's control and therefore the Government will decide who and which company should invest and participate and signed the agreements.
The Government is not a feudal entity that confiscates private properties. The Mongolian State understands that it will not again exercise its previous unpleasant experience of confiscating its citizen's properties. The Constitution clearly states that nobody can seize any property, especially private property. Therefore a discussion is on the way with the companies who own the Tavan Tolgoi licenses and compensation will be paid accordingly and nobody will be disappointed.
For the of a our nation and publics interest the Government is making such decisions and we hope that the Mongolian people and the foreign investors would rightfully understand and support us. Everyone can see that Oyu Tolgoi and Tavan Tolgoi projects are stuck. It is the Government responsibility to sort the situation and receive the benefits from these developments