It has been while since the very first draft of guideline was developed by the working group. There were few Q&A during the Standing Committee Meeting from MPs which were answered by the working group members, MP Kh.Badamsuren, D.Odkhuu, E.Bat-Uul. Mr. D.Zorigt, the Minister for Mineral Resources and Energy represented the Government of Mongolia.
MP D.Gankhuyag: The Agreement will be made based on the current legislation. But in the law, the State entitled to own up to 50% of Tavan Tolgoi. But isn’t it contradictory that it was stated in the draft “the Government of Mongolia shall seek to own up to 51%…”MP Kh.Badamsuren: The law stated that the State’s ownership will vary from up to 34% to up to 50% depends on the exploration budget providers. We stated in the draft that not the State but the Mongolian side, therefore it doesn’t contradict with the law. It will be limited by the provision of …up to 50%…
MP D.Zorigt: How to select investors in Tavan Tolgoi project? Will it be only one or many investors?
MP Kh.Badamsuren: The Government will announce tender bid after this draft was adopted by the State Great Khural. It is not clear that how many investors will be interested in it.
MP L.Gantumur: What is the position of the Government on the draft resolution? When the political decision will be made on exploitation of Tavan Tolgoi? What is the reason of granting the power to the Government and to be controlled by the working group?
Mr. D.Zorigt, Minister for Mineral Resource and Energy: The Government principally supports the draft resolution. It is correct to adopt guideline for the Government by the State Great Khural. The State Great Khrual rejected the draft agreement. Exploitation of Tavan Tolgoi deposit is being prepared.
MP L.Gantumur: When the draft agreement will be ready from the Government?
Mr. D.Zorigt, Minister for Mineral Resource and Energy: It stated that within December 1 2008. But, this time is already passed. Therefore, it is hard to say that before the New Year.
MP J.Batsuuri: Can the agreement be made after the Mineral Law is amended? Is it really necessary to sign an agreement when the commodity price is falling?
MP D.Odkhuu: We lost much time because of leaning back. Now the situation is changed. We don’t need to lose time again for waiting the draft amendment is adopted.
MP N.Enkhbold: It said that certain part of the investment is to be paid in advance and you said that some investors were approached. Do they agree this condition?
Mr. D.Zorigt, Minister for Mineral Resource and Energy: It will take 2-3 years to start production after signing an agreement. No investors officially started or expressed their position regarding pre-payment. During the previous negotiation, there was an informal talk about pre-payment of tax.
MP Z.Altai: People are eagerly waiting to amend the Mineral Law of Mongolia. Political parties used so much populism in this issue so much before the election. But now you are talking about postponing. Investors understood so much about us that Mongolians are not reliable. Will they believe in us to sign an agreement based on the resolution? Let’s adopt the law. We can announce open discussion and get people’s comments. Why we need this “lousy” resolution?
MP E.Bat-Uul: This is the fastest way of solving this issue. It is hard for investors to pay advance payment. The situation would be much different if we signed the agreement few years ago. But we lost so much time when we are tearing apart into many interests and debates and if the commodity price rebound, the situation will be repeated.
MP R.Rash: Will the windfall tax of 68% be obstacle for signing the agreement?
MP Kh.Badasuren: Yes.
MPs discussed mainly about the control and monitoring of working group and advance payments. Also they provided their comments to the Head of the Standing Committee in a written way. After Q&A, MPs voted.
MP D.Zorigt made comment of announcing open tender bid in selecting investors. But he gave up his comment, when MP N.Narankhuu warned about if word “open” is used then this would breach the currently effective legislation.
The Standing Committee on economy supported the draft resolution. The Government of Mongolia received the duty of bringing the investment agreement by February 1 2009 and updating the Standing Committee regularly on the development of negotiation and agreement. Also MPs emphasized the importance of inserting clauses receiving advance payment, producing end products, creating workplaces, protecting environment and building cities in the agreement.