Working groups of Standing Committee on Economy and SGK combined their comments and conclusions on OT agreement and presented to the Government. In relationship with the event, working group chairmans MP Ts.Bayarsaikhan and MP G.Zandanshatar, MP D.Damba-Ochir, D.Baldan-Ochir made press conference.
MP Ts.Bayarsaikhan, Chairman of the Standing Committee on Economy, opened the press conference “… people of Mongolia received many comments towards the strategically important deposits. Draft investment agreement on OT project between the Government of Mongolia and IMMI was presented to the State Great Khural in March. Many important issues such as benefits from the mining projects to the people of Mongolia took effect in the draft agreement. But it was discussed by the party groups and decided that it cannot be adopted as it was presented by the Government. Some issues of this important and big agreement were discussed separately over ten times in the past. The Standing Committee concluded that the working group comments were correct and sent back to the Government…”
Not only MPs worked on the draft. Research and Monitoring Center of the State Great Khural made study on three directions including news, editorials, articles, research materials around the world regarding the mining industry. Working group thinks that the term of the agreement (30 years at the signature and will be extended twice with 20 years) is quite long. It suggests shortening it down to 15 years of initial term. Also the Mongolian side refuses to receive loan with higher interest rate for buying its 34% equity at OT. There are many issues were considered also including tax waive issues, Mineral Law Amendments and etc.
After the press release, MPs answered the questions of the media representatives.
Q: What is the current reserve of Oyu Tolgoi deposit?
MP Ts.Bayarsaikhan: 32 million tons of copper and 1200 tons of gold. Reserve size is stable.
MP G.Zandanshatar: When realizing OT deposit, its benefit will come regardless of the production. At first instance 3500 people will be employed. Over 500 million US$ revenue will come as tax income. Construction material factories will be in production. Mongolia will solve its certain difficulties of its economy. The resource of providing Grant of the Motherland will be established. Prior to all, socially vulnerable parts, including elders, disabled people, of the society will be benefited. Oyu Tolgoi agreement will be the example of its following agreements.
MP D.Damba-Ochir: Investors are closely observing this agreement. First part will be ready in 2011 and it must operate in its full strength in 2013. The work must start instantly when the stability agreement is signed. But OT is three times bigger than Erdenet, therefore, we should not be in rush.
MP D.Baldan-Ochir: Erdenet has at least 50 years of reserve. If Erdenet is in production for 80-90 years, then Oyu Tolgoi will be in production 100-200 years.
MP Ts.Bayarsaikhan: This is the first time that SGK discussed the investment agreement. It will be reach in the medium that is beneficial to Mongolia and interesting for the investors. OT is the world class reserve. I hope that investors will agree with the Government on our comments and conclusions. Mongolia should be one part, here, political view is not important. Our mission is to build feasible and economically fruitful agreement.
MP G.Zandanshatar: We get 70-80% tax from Erdenet including windfall tax. We can receive revenue of 24 billion US$ in next 30 years. Dividend can be received starting from 2024. Over 20 types of taxes, fees and payments will be received from Oyu Tolgoi. Mongolian side will get 55-60% profit from it. Mongolia will receive the final responsibility of the agreement, if any conflict occurs, and then it will be resolved by international arbitrage. If the agreement will be made correctly, Mongolia will be a rich country with its treasury and currency reserve in next 10-20 years.