Looks Like Agreement on OT Has Been ReachedNational Security Council reviewing draft of Oyutolgoi agreement
Tue, 17 Feb 2009 17:55:26
The working group set up by the Government to negotiate an agreement with Ivanhoe Mines and Rio Tinto, the two joint investors in Oyutolgoi, has finished its work. The draft will be presented to Parliament soon, after the National Security Council finishes reviewing it on Tuesday. Once Parliament approves it as it stands, there will be no further obstacles to work beginning on the mines. If, however, Parliament rejects the draft, either in its entirety or in part or parts, the talks will have to be held again.
The agreement has 160 clauses placed under 16 main articles. The more salient points are given below.
- Ivanhoe Mines Mongolia will operate in Oyutolgoi and the Mongolian Government would own 34 percent of the deposits. This percentage will increase to 50 within one year of extending the contract. This is likely to be after 30 years, though the Government will neither confirm nor deny that the present agreement is going to be for that period.
-The Mongolian side will take USD125 million in advance.
- Ivanhoe Mines will pay taxes and other dues in accordance with the laws of Mongolia. - The mined gold will be sold to Mongolbank at the market rate prevalent on the day of sale.
- Once the initial amount of investment plus an additional 29.9 percent of it has been recouped, income from the project will be subject to 30 percent tax.
- A copper smelting factory will have to be set up in Mongolia. - All the technology used for the mining should be non-hazardous to the environment and must meet Mongolian and international standards. The excavation has to be efficient, with as little waste as possible. - An Umnugobi Regional Development Council will be established. The investor will be a member and support its activity. - Energy for the mines and everything to do with them will come from China for the first 4 years, after which period domestically produced power will be used. For this a power station will have to be built in a place advantageous for Mongolia. The investor will build a road connecting the Oyutolgoi mines and the Gashuun Sukhait border port and also construct an aircraft landing strip at the mines site. - At least 90 percent of the employees would be Mongolian.