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Research and Markets: In May 2009, the Mongolian Government Was Forced To Defend Itself After It Was Sued By Russian Mining Company Altan Dornod Mongo
Tuesday November 3, 09:00 PM
Research and Markets (http://www.researchandmarkets.com/research/19d5f3/mongolia_mining_re)
has announced the addition of the "Mongolia
Mining Report Q4 2009" report to their offering.
The Mongolia Mining Report provides industry professionals and
strategists, corporate analysts, mining associations, government
departments and regulatory bodies with independent forecasts and
competitive intelligence on Mongolia's mining industry.
Mongolia's mining industry has great potential. Its mineral resources
are largely unexplored and unexploited. That said, the exploration that
has been carried out to date has found sizable reserves of coal, copper,
fluorspar and gold. Full scale extraction of these resources has
occurred at a number of mines. In total, about 80 types of minerals have
been discovered in Mongolia. However, the biggest drawback to foreign
investment remains regulatory issues. In May 2009, the Mongolian
government was forced to defend itself in the Frankfurt Court of
International Arbitration, after it was sued for US$1bn by Russian
mining company Altan Dornod Mongol. As reported by Mongol News, the
company accuses the Mongolian authorities of taking excessive taxation
from Russian investments, claiming that the 68% windfall tax is against
international law as Mongolia and Russia have signed a bilateral
agreement to avoid double taxation for companies operating between the
territories. The Mongolian Taxation Authority claims that Altan Dornod
Mongol owes MNT56bn (US$39.6mn) and has subsequently shut down the
company's bank accounts and is threatening to confiscate its mining
licenses.
Meanwhile, the author remains concerned about ongoing delays to the
finalisation of what will be a landmark agreement over drilling rights
at the Oyu Tolgoi gold and copper mine, although we expect the deal to
be finalised in H109, negotiations are dragging on. When finally signed,
the deal should spark a resultant surge in FDI inflows through the
remainder of 2009 and 2010. Indeed, the importance which Oyu Tolgoi, and
the underlying legal contract between the government and
Anglo-Australian Rio Tinto and Canada's Ivanhoe will play for Mongolia's
growth dynamics cannot be downplayed. As the biggest foreign investment
project in Mongolia's history, we expect the benchmark mining agreement
to not only increase investment inflows in the short term, but also
serve as the framework upon which future projects will be based.
Yet, in late April the Democratic Party, which is a partner in
Mongolia's coalition government, announced its reservations about the
draft investment agreement governing the project. Though most
legislators in Ulan Bator remain keen on finalising the landmark mining
deal, ongoing disagreements within parliament continue to obstruct
conclusion of the agreement. Key participants in the mining sector
include: Centerra Gold, Erdene Gold, Ivanhoe Mines, QGX, Solomon
Resources, and South Gobi Energy Resources (a subsidiary of Ivanhoe
Mines). Key export markets include China, Canada, Japan, South Korea and
the US.
Key Topics Covered:
Executive Summary
SWOT Analysis
Industry Trends And Developments
Mining Business Environment
Competitive Landscape
Company Monitor
Appendices
Companies Mentioned:
Centerra Gold Inc
Erdene Gold Inc
Ivanhoe Mines
Solomon Resources Limited
SouthGobi Energy Resources Ltd
For more information visit http://www.researchandmarkets.com/research/19d5f3/mongolia_mining_re
Contact:Research and MarketsLaura Wood, Senior Manager,press@researchandmarkets.comU.S. Fax: 646-607-1907Fax (outside U.S.): +353-1-481-1716
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