MP Batj. Batbayar, a member of the working group on drafting amendment in the Mineral Law of Mongolia, shares his opinion and position.
Q: It was said that the draft amendment of Mineral Law would be adopted within this year. What is the position of the members of the working group?
MP Batj.Batbayar: I express my opinion directly. We are feeling the negative outcomes of the law that is much related with the investment and economy. If amend a lot, then the law will deteriorate. The Mineral law was changed many times in last two years. Today adopt and tomorrow amend, this is the cycle of our decision making. But investors will invest in places where the law is stable at least 10-15 years. Therefore, we shouldn’t need to touch this law that much. Investors that are interested in Mongolia is getting fewer. Every business is for profit. Urgent resolution from the State Great Khural is required for Tavan Tolgoi and Oyu Tolgoi. World financial crisis is paralyzing mining industry. Just two years ago Oyu Tolgoi project realization expense was 2.5 billion US$, but it was doubled now. Nobody knows when this crisis will be over, 6 months or 60 years. Mongolia has only copper reserve in the world. Other commodity reserve is everywhere in the world. Only main concern must be the production expenditure. Copper price is around 3600 US$ but Erdent JVC spends 4000 US$ for 1 tons of copper. If the situation remains like this, there will not be a single investor.
Q: The reason failure to “sell” our treasury in a right time was politics?
A: It is pure politics. Everybody tosses “stone” to ones who realize the mining projects.
Q: Rio Tinto announced that not to invest in new projects. How can we secure the foreign investment in Mongolia when copper price is decreased and there are many countries rich in minerals?
A: Investors shall be granted with favorable environment.
Q: 49:51 split of ownership will obviously be changed. Will it be decreased down to 34%?
A: I don’t think that even 34% will not be accepted. We were so stubborn to demand 51% for the state. When the copper price was high. Now it is better to listen to the investors.
Q: They will try to give smaller share to the state. Can Mongolia be benefited from this proposal?
A: We will gain money and benefit through tax. There will be many taxes. It is only one third of what we can earn from the mining projects. We can solve many thousand people’s employment through investment. It is better to exploit treasure and realize it into the economic circulation instead of lying on it idly. We need to build many factories. We can raise money from here. Lets form environment for our youth to work and live in home. We don’t want “to spend much in where we counted as the best”.
Q: Prime Minister said that the State Great Khural will issue specific resolution on each mining projects. This idea was included in the Action Plan of the Government. Do you support it?
A: I support this idea to issue separate resolution on Tavan Tolgoi and Oyu Tolgoi. We must realize our strategic deposits. We need to utilize our opportunity and get through this crisis with less loss.
Q: Do members of working group support it? There is hearsay that member of the working group have different positions.
A: Majority support it. We are talking about when to issue the resolution. We will listen to the investors first and present our proposal. We limited the state ownership up to 50%. We will negotiate it until that level. Not many countries and companies in the world to invest in such a huge project solely, especially, in this situation of crisis and commodity price fall. Our exaggerated self-estimation brought us into this situation. In every business, there must be golden principle, “win win”, is pursued. We shall consider it. If we evaluate the things without limits and put veto on it, we will not achieve anything.
Q: Situation of Oyu Tolgoi is difficult, but I think that Tavan Tolgoi coal deposit has investors.
A: Coal price is falling also, nobody knows that will happen in the future. The biggest consumer China limited its energy consumption almost by 30%. Therefore, coal demand will fall. Also in Tuva, Russian Federation, a huge coal deposit was explored, therefore Russians retreated from their interest. It is not the time to relax when the supply is sufficient and commodity price is falling.
Q: Republic of Korea and USA are interested in investing in Tavan Tolgoi. Does anyone from working group met with them?
A: It is old proposal. Nobody from the working group met with any companies. We shall not forget that they only expressed their interest to us only. They will invest in the best places and economy. But we are so boastful. Human is err but he shall not repeat his mistake.