Irregular Cabinet Meeting was held yesterday and discussed the draft agreement on Oyu Tolgoi. Minister D.Zorigt said that the first draft has clause of receiving pre-payment from the investors. But it is still not clear yet about when the State Great Khural would discuss it. Also Tavan Tolgoi draft agreement is about to be concluded. Over10 companies are presented their interest in Tavan Tolgoi and one company was selected as its technical consultant.
Minister D.Zorigt shared some point of views with media:
Q: The State Great Khural has given instruction and guidelines. Does deal making process reflected this guideline? Is the draft agreement ready now?
D.Zorigt: Yes, the State Great Khural provided certain guidelines. The draft agreement will be discussed by the National Security Council. If necessary, it will be discussed again through the Cabinet Meeting. The draft agreement is ready now.
Q: You have mentioned about the disagreement with investors on ownership issues. What will be the ownership now?
D.Zorigt: Yes, but after negotiation, both sides are agreed on 34%. But we should not understand that it will remain same. We will further acquire 16%. In other words we will acquire up to 50%. But it will after the certain time period.
Q: When?
D.Zorigt: It might take some time.
Q: When we will get pre-payment?
D.Zorigt: After signature, we will receive it according to the schedule.
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It would be well to be careful to distinguish between the ownership of the minerals at Oyu Tolgoi and the operation of the mine. The minerals belong to the people of Mongolia. The operators of the mine could be the people of Mongolia or an organization that specializes in operating large mines. If the people of Mongolia decide to have a mining company operate the mine under appropriate conditions, that does not change who owns the minerals or who owns the mining company unless the agreement provides for that. The wisdom of having the same ownership of the minerals and the operation is debatable. The interests of the owners of the minerals are not the same as the owners of the operation. What is best for the people of Mongolia as owners of the minerals would be in conflict with their operation of the mine and would lead to political disputes in the future as has happened elsewhere when these two interests are combined. Keeping the two separate would allow the Mongolian people to control the mining of their minerals without
compromise. If an operator violated agreements and understandings, it could be fired. It’s a little harder to fire yourself or your fellow countrymen.
Absolutely, this agreement gives me same historical experience when Mongolia had three side meeting with China and Russia. All agreed on autonomous, but China thought it is as part of China, Mongolia thought it is independence and Russia thought that it is Chinese autonomous with Russian sovereignity.
Pity