STABILITY AGREEMENT - NOT AGREEDGord, that link didn't work for me, just took me to the home page of the UB Post. But I did find this one, a little dissension over there that I didn't know about before....
"Movement slams Ivanhoe over Mongolia’s Oyu Tolgoi mine future
TheUBPost, 06 Apr 2005
"Oyu Tolgoi, the site in Omnogobi aimag where Ivanhoe Mines has located significant deposits of gold and copper, has been made a point of contention by a group that claims to be in the interest of the Mongolian people. A campaign named “Movement for Giving Half of Oyu Tolgoi to Mongolians” has described the current draft of a stability contract between Ivanhoe Mines and the Mongolian government as “robbery.” Coordinator of the movement N.Dashzeveg stated on March 29 that the stability contract stipulates Ivanhoe would keep 95 percent of the profits and 5 percent would go to the government. Dashzeveg said that if the contract were to be approved in its current form, the movement would do anything in its power to cancel the contract and would even resort to attempts to remove the current government and disband the parliament.
"Economists from the movement claim to have studied the draft stability contract and base their standpoint on it. They also say they have taken into account statements made by Ivanhoe Mines Chairman Robert Friedland given at the BMO Nesbitt Burns Global Resources Conference last month and statements made by Ivanhoe officials during a television forum on the topic “What will Ivanhoe Mines give us?” aired on national television on March 23. The economists concluded that Mongolia will receive a small percentage of the profits that will be made by Ivanhoe Mines and that the country will loose a historic chance to escape from poverty. Dashzeveg claimed that if changes are not made soon, the contract would be approved, facilitated by bribe-taking state officials, and as a result “the property of the [Mongolian] people would be gifted to foreigners”.
"The movement proposed that Mongolia should make a contract with Ivanhoe for the products of the mine to be shared equally, saying that if Mongolia lacks the capital to invest, the government could take loans from other countries and pay them back in products from the mine, in a similar way to the financing of the Erdenet copper mine.
"Several other proposals were put to the president, prime minister, and parliament speaker by the movement on the use of Oyu Tolgoi. One of the proposals is to change the law on natural resources in order to regulate allocation of mining licenses. The movement sees the current system as unjust, saying that licenses can be bought and sold without any taxes being payable to the state. The proposal also suggests that licenses for exploration and mining should be granted separately, with the holding of an exploration license being no guarantee of being able to obtain a mining license for the same area.
"The suggestion is for mining licenses to instead be allocated by auction or tender.
Dashzeveg said that as a result of already having invested US$70 million in exploration, Ivanhoe has obtained a mining license for an area that contains an equivalent of gold and copper concentrate worth US$100 billion. If a tender to use a deposit of this value were to be announced, Dashzeveg predicted that Japanese, Korean, and Chinese companies much bigger than Ivanhoe Mines would be involved and would make a large payment to the government. Dashzeveg argued that because Ivanhoe Mines is a small company it may not develop related industries such as manufacturing of finished products, therefore losing out on potential revenue. He speculated that Ivanhoe Mines would sell concentrate gold and copper for US$100 billion, which China could use to make products to be sold for US$300 billion, at a net gain of US$200 billion. Mongolia might earn just US$3 billion from this, according to the draft contract, Dashzeveg said.
"The movement claims there are also issues of a lack of transparency in handling the stability contract as only two or three cabinet members are said to be involved in the decision-making process. The movement argues that this should be more open and that the draft should be discussed by the whole parliament. Dashzeveg pointed out the scale of money at stake, saying that the figure of US$300 billion he quoted is equal to 600 years’ income for Mongolia (based on a current annual budget of between US$500 million and US$600 million). He said that parliament sometimes holds a poll to allocate just Tg3 million for the reconstruction of soum schools, but in contrast MPs have not been informed about the big issues currently at stake in the contract.
"Head of the Parliament Standing Committee on Economy Ts.Damiran commented that the minister of finance has the right to sign stability contracts with foreign investors on behalf of the government He claimed that the law on natural resource of Mongolia is satisfactory in its present form and creates a comfortable environment for foreign investors, although he said it may be too “loose”, saying that tax exemptions are too generous and were made just to attract foreign investors Damiran said that law should be changed, but the version suggested by Dashzeveg of sharing the products equally would not be possible. He claimed that the government should have a different tax policy for bigger deposits such as Oyu Tolgoi. Damiran said that under the current law mining companies must pay a fee equivalent to 2.5 percent of total sales, a figure that he suggests should be increased to at least 15 percent.
"He commented that the issue of the Oyu Tolgoi stability contract had been discussed by National Security Council, which has decided to take advice from foreign experts on the contract.
The Movement for Giving Half of Oyu Tolgoi to Mongolians is not taking on just Ivanhoe with its approach, as it is pointing out areas of regulation that it says should be changed to prevent other companies from taking advantage of the current system. As an example, economists from the movement said that there are reserves of 36 tons of gold in the area being mined by Boroo Gold. The movement claims the company is 100 percent exempt from tax on its profits for the first five years of operation and has a fifty percent discount for the following five years. Boroo Gold extracted eight tons of gold in its first year, meaning that the company will mine all of the gold in the first five years without having to pay tax on its profits, the movement claimed. The statement made in conclusion was that if one ton of gold is worth US$10 million, Mongolia will essentially gift US$400 million to foreigners.
https://ubpost.mongolnews.mn/index.php?subaction=showfull&id=1112792873&archive=&start_from=&ucat=4&