The working group of the State Great Khural on drafting amendment in the Mineral Law of Mongolia has 13 members. The working group consists of 7 members from MPRP, 5 from Democratic Party and 1 from Civil Will Party (MP S.Oyun). MP Kh.Badamsuren, the head of the working group, has his word on the current issue.
Q: You are about to propose your proposal and conclusion to the Standing Committee on Economy. Can it be understood that this work is about to finish?
MP Kh.Badamsuren: I think members of the working group approached this issue with fundamental principles and from many aspects. The alternative to unlock the procedure of strategic deposits and investment agreement was proposed to the parliamentary party groups. The proposal of the working group was principally supported. The copper price has fallen by 2 times since the talks of draft Mineral Law started. Therefore, we don’t have right to lose time. We’d better not to lose time by saying need to discuss seriously. We all want that the amendment in the mineral law is precise, long lasting and capable to solve the mineral issues and license disputes. Tavan Tolgoi, Oyu Tolgoi deposits must be exploited immediately. The opportunity to realize the election promises is directly depends on this draft law. Therefore, the issue must be accelerated. If the Government is granted with the right to start negotiation with interested parties, after providing it with guidelines and resolution draft, then this work will make enormous progress. It is time for major political parties to join and unite their positions for the national big interest. Investors are in pending situation.
Q: What is the appropriate involvement of the State at this time?
MP Kh.Badamsuren: Mongolian mineral deposits attract investors’ attention with their size and quality and it will surely attract in the future. Therefore, the state must make precise and clear decision. The working group proposes an alternative that ownership of the Mongolian side is more than 51% in Tavan Tolgoi deposit and not less than 34% in Oyu Tolgoi deposit. According to the current Mineral law, it has clause that the Mongolian ownership is not less than 34%.
Q: The Mongolian politicians lost the golden opportunity when the copper price was high. Today the situation is in misery. Is it appropriate to change its legislation according to the price surge?
MP Kh.Badamsuren: How can it be appropriate. Of course it is unwise to amend the law according to the rice surge. Law is law. There must be law that is appropriate with the policy. It is natural that in the market economy, price surges.
Q: President said that we have experience to jointly exploit deposit. Our ownership at Erdenet was 49% at the beginning and it was increased up to 51%. Can this experience be implemented in these deposits?
MP Kh.Badamsuren: The very punctual and clear clause was in the first negotiation of Erdenet JVC and MongolRostsvetmet cooperative. After factories and mines operate in their full capacity and refunding its initial investment, the Mongolian State ownership was increased up to 51%. It was the correct step at that time. Experience of establishing the factory, training human resource and setting the ownership must be considered. But it must be made that to meet with the demand of modern time and legal environment. Mongolia should develop on its mineral resource advantage and environmentally sound and friendly technology.
Q: What are the expectations from the investors?
MP Kh.Badamsuren: Mongolia has world class deposits with high quality. We have two big markets. I think, interested parties on Tavan Tolgoi cocking coal deposit will not turn back. We should make the investment and exploitation condition of Tavan Tolgoi and Oyu Tolgoi clear for the investors. We cannot exploit it alone. It is not the issue of building one mine over there. Infrastructure and energy sector will develop accordingly. City and urban development issue will be considered in complex way. It is the pre-condition of building cities like Erdenet, Baganuur, Bor-Undur. It will also help us to solve the social issues such as migration to the cities, unemployment and poverty. Mongolia can develop further if 15 strategically important deposits are in operation.
Q: You are expert in mining industry Do you have regret on if we build a copper smelting factory with the fund from windfall tax of 68% when the copper price was high.
MP Kh.Badamsuren: Of course. Erdenet is joint venture. I thought that why the board of directors didn’t solve this issue. Even the copper price falls, we do not give up our intention of building factory that will produce final product. It was discussed before. Erdenet has experienced and skilled experts and professionals in this part.
There is a small and compact copper cathode producing factory. Its capacity is small but it operates well enough using the dump waste of Erdenet copper mine. Our leading expert in mining industry leads Erdmin. The factory that produces final product is stated in the Action Plan of the Coalition Government.
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