Resolution of the State Great Khural (draft)
Draft
Resolution of the State Great Khural
Date No Ulaanbaatar City
On Investment Agreement of Oyu Tolgoi Project
Based on the provisions 8.1.7 of the Article 8, Article 29 of the Mineral Law of Mongolia and the provision 24.6 of the Article 24 of the Law on the State Great Khural Session Procedure, hereby, the State Great Khural resolves as follows:
1. The minimum ownership of the State in Oyu Tolgoi project is set at 34% with further acquisition of up to 50% after the refund of its investment
2. The signing power of Oyu Tolgoi Investment Agreement is granted to the Government of Mongolia (Prime Minister S.Bayar) in accordance with the effective laws and regulations of Mongolia, main guidance and principles approved by the Resolution 40 of the State Great Khural in 2008 and the findings and comments of the Standing Committee on Economy of May 12 2009.
3. The Government of Mongolia (Prime Minister S.Bayar) is entitled and obliged to resolve the issue of further acquisition of State ownership with the investor according to the point One of this resolution.
4. The Standing Committee on Economy (MP Ts.Bayarsaikhan) will pay attention on the implementation of the resolution.
Popularity: 12% [?]
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About the Author: Amarsanaa
26 Responses to Resolution of the State Great Khural (draft)
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Dear Amarsanaa,
Thanks for this report, as always.
I am kind of confused. what’s the purpose of the resolution?
Will they vote on this?
Also I noticed that the windfall tax issue is not mentioned in here.
This is now being discussed and voted by the State Great Khural. Right now. But actually, it has no effect, cos it still pushing old position to IVN.
I’m confused too. What is the next step?
Amarsanaa,
Does this mean that the government can approve the agreement without coming back to the SGK?
Does this mean that, If both sides agree on the terms of the IA, that the government, Prime Minister, has the authority to sign the IA, if it follows the current Laws? As long as it does not conflict with Constitution?
Do other Laws need to be changed, before the IA can be signed.
Have these terms been agreed to by IVN?
Who has the authority to sign for the Minister Of Finance in his absence? Have all of the Laws that were required to be changed, been changed. If not, can the signing of the agreement be finished, this week?
How many MPs were present? Is a majority vote needed? Were there enough MPs present to have a majority vote of the SGK.
Thanks for keeping everyone informed.
I know you have more to do than hold our hand.
Did you say that they are still meeting? Let us know what else goes on today, it appears that they understand the importance of the OT IA.
“B”
I hope that the Minister of Finance is alright. And he is able to come home soon.
Amarsanaa,
Are these procedings, in particular the SGK discussions and votes.
Will they publish the entire agreement once it is signed?
Do you think it will be done this week?
Does it look to you like the agreement is close to final agreement on all of the terms? That meaning no more changes by either side of the negotiations?
“B”
Are the proceedings of the SGK being televised?
Are the Standing Committee procedings open to the public, or done behind closed doors?
Are there representatives from IVN in attendance at either of these meetings, SGK or the Standing Committee meetings?
Thanks again, “B”
So sad.
Less sad for me as an investor, because I was able to sell my shares, than for the people of Mongolia. Just as my own capital moved from a company that was willing to invest in the future of Mongolia, so will the capital of many companies now leave Mongolia. The life of the average Mongolian will be worse off for it.
Another opportunity has been lost. Once again the perfect is the enemy of the good. I don’t think this deal can ever be achieved given the current Mongolian political system. Too many personal agendas amongst the MPs and not enough party discipline.
The politicians will continue to promise that which cannot be delivered and Mongolia will continue to languish.
It is true that the Mongolians are worse for not making this IA but the right IA needs to go through. In my opinion most Mongolian do not understand the meaning of investment, it would be much better to look at it as an investment rather than using owning… i agree with the previous comment.
Amarsanaa,
Now the the government has been given the authority to close the IA. Don’t you think it should be finalized soon since the government has been pushing for this agreement to get done? Thanks.
I believe it’s a good step in order for a finalized agreement. Now, the government should be able to negotiate further and sign the deal withing in a month. Both sites are desperate now. The resolution has sealed the deal basically. I am not sure why there is a bit sell off.
The investors have sold the stocks as if the Parliament blocked the deal or something. A bit overreacting to me.
Amarsanaa,
Will the Special Session carry over until next week?
Eric
Eric, now there is no need for the special session. The Government has the authority to conclude the deal. The Parliament has given the authority to do that. I hope both sides will be eager to complete the deal very soon.
OK. There seems to be a lot of unhappiness with the current IA. What is the chance for protests and public backlash?
That kind of instability would reek havoc on the IA and IVN’s stock price. Also, how long from now is the deal to be concluded? If it’s a month or two away, IVN’s stock price will drop further.
A lot of uncertainty is never good for a stocks PPS.
I agree with your statement. I think the government will call a press conference tomorrow about the progress the sides have made. I expect the stock price will drop further. However, the good thing is that the Government is willing to complete the deal. I don’t think there is a chance for protests or anything. The pressure is on the government side now. I have a feeling that the deal can be signed very soon…surprisingly soon perhaps.
I am a Canadian that used to have shares of IVN. I Have been following some of the publications about the OYU TOLGOI IA. I do not think this deal can ever be achieved, given the current Mongolian Political System.The USA AND Canadian Goverments as well other countries, in these bad economic times they gave billions of Dollars to varius industries to help them in order to retain people to work.People need jobs to feed their families.Here we have a situation that if it was not for IVN’S Hundreds of Millions of Dollars in Exploration investment and experties the Mongolian people would not know this thing existed 2000 feet or meters under ground what ever it is.Other countries would even give financial assistance to the company to develop this. By developing this deposit would mean thousands of jobs for ordinary Mongolian families. Many things would get developed around the whole region and country that they will give a big-big boost to the economy of the country.It is frustrating to me following the whole process. How can IVN Management put up will all this?.BHP BILLITON did the right thing to close their exploration office.I think IVN should give the politicians of Mongolian people 3 days to sign or not to sign the IA.They continue to waste a lot of good money and time in Mongolia. IVN should lay off the rest of 250? people they employ and retain only 2 people as they put the project on care and wait until maybe the Politicians wake up or the people of Mongolia make them wake up.IVN has too many good things in Australia and other countries. The high grade Merling Molybdenum and Rhenium project, Mount elliot, Mount Dore and many others should be were IVN should spend the money in order to give the shareholders of the company value and return.Here we have IVN spend 1 billion of dollars and planing to spend another 3 or 4 in Mongolia,they put the money, they have the risk and these politicians want everything for them selves (they say for the people of Mongolia). What is it left for IVN and the investors and share holders of IVN.
I would even suggest for the Mongolian politicians to refund the 1 billion IVN spent so far on this project to IVN and they can keep the whole thing. If they have the ability to finish the project then the mongolian people would get 100 % of the benefit. If not they will get 0% which i thing will be the case.The Mongolian people that need jobs to support their families, they should hang the politicians that play with political technicalities and can not finish an IA for the last 5 years.SHAME ON THEM.The Mongolian people that need good jobs should tell their politicians to negociate with IVN how many jobs this project directly and indirectly will create and forget about how much profit IVN will make. This is how it works. They put the investment, they have the experties, they take the risk and hope to make profit.Even if the Mongolian goverment taxes IVN 20% On nets profits it will still amound to millions of dollars of revenue for the country. Why they talk about owenership of 34 %. If the deal does not happen the Mongolian Goverment will get 0% revenue and the Mongolian people 0% jobs.In terms of IVN it is a good solid company with good backing of Rio Tinto, With many other projects in other countries friendly to investors and they will do O.K. In terms of the OYU TOLGOI deposit well it was under groung for 2 million years ? it can stay for another 100,000 years.
Eric says “there seem to be a lot of unhappiness with current IA and protests may take place.” I do not get it.Are the people unhappy that the deal does not finish or they are unhappy with the terms that they do not know yet. We have not seen any proposal that have the actual terms yet. At least i have not. People that need jobs should protest for the politicians to finish it fast. Also the 250 people that were let go back in October when IVN Anounced cuts should protest. My personal priority would be if i have a job and how much money i would bring every week to support my kids and wife.Some of the things that i see get posted here i do not know if the are actual. E.G. the Goverment wants 34%, 50 %, 55% ownership they want 68 % tax, they want $245 million dollars, they want IVN to build roads, maintain them, build Hydro plants, water supply and i do not know what else. I do not know the details but if some of these things are actual i thing IVN should leave from there even it is mid night
the lateset thing that i know clearly is SGK will have extended sessions in coming weeks. Prime Minister who hold his visit to Japan left the case to visit Japan, because he predicted that it would again take more time and concern.
So Now it will take quite lengthy time.
Has the power to negotiate been given to the government?
And if so, can they remove the 68% windfall tax?
To Eric,
According to the SGK resolution, the Government now has full power to negociate with Ivanhoe within legal frame of Mongolia.
It is a common sense that only parlamentary has rigth to change any law of course including your most interested mongolian windfall tax law. Therefore, a success of IA only depends on Ivanhoe side. It is very simple now; If they won’t accept the Mongolian laws as is it, ther would not be a deal.
Goodbye Rio, Hello Chinalco.
It seems there’s a big powerplay at work here, one that is reaching all the way into the State Great Khural. It’s just my theory, but here it is:
The MPs are subject to influence and pressure from China and Russia. The end result may be a splitting of OT and TT between Russia and China. OT to China, TT to Russia. MPs are acting in the best interests of their respective Chinese and Russian supporters.
The strategy right now is to force the Mongolian Government into a no-win position on OT. There is no way that IVN and RIO will agree to a deal with the old tax structure in place. This will lead to RIO pulling out of it’s agreement with IVN. This was stated as a “concern” of some of the MPs, while it is in fact the goal of the process. They can’t do anything about IVN owning the rights to OT, but they can get rid of RIO and replace them with Chinalco.
China is currently sending a sharp message to RIO with the arrest of senior personnel on charges of “stealing state secrets”. Chinalco is upset with RIO over their failed deal. RIO will be made to suffer. It is a matter of pride and saving face.
Once Chinalco is partnered with IVN, the MPs will suddenly see the great need for an IA and will reconsider their position on the tax holiday and elimination of the windfall tax. An IA will be concluded with IVN and Chinalco. The next step will then be making a deal on TT with Russian interests.
In the end, Mongolia will end up with a worse deal than any that have been negotiated so far. The standards and practices of the OT mines under IVN and Chinalco will be lower than they would have been under a IVN and RIO agreement.
And so much time will have been lost.
Amarsanaa, I would be interested in your thought on this theory, as well as the opinions of any other posters.
Thanks for reading.
make the future says,
I agree 100%. I see the same thing and have posted on Yahoo boards saying so. It makes perfect sense.
Great buy in opportunity when IVN drops below $7. US
Few people who are blamed Chinese or infidel have been trying to remind this mass that our policy which we set in early 90s to have third neighbor but not single country such as world community or international organizations or other communities. Unfortunately, i am still minority within my community. 76 MPs are too many to resolve the issue, first of all it is so hard to educate and understand the situation. In business we should talk about both sides not only us! then you will enjoy good cooperation.
Russia and China will accept all our SGK conditions and sign with claps and applause with big ceremony and friendship and then after 10 years later or 5 years later, Mongolia gradually vanish from world community map. There will be little conflicts one after another until it soars to huge riot then Russian or Chinese intervention to protect its property investment or citizens. Then drama is over, world community will watch next episode on another dumb country with rich in natural resources.
That’s an interesting analysis.
I was not taking into account the resistance of the general Mongolian population to domination by the two neighbours. The scenario you describe does make sense though. Civil unrest could start a whole chain reaction.
So the question is: if the People of Mongolia generally accept the idea of a “third neighbour” policy, why do the MPs of both parties not feel duty-bound to implement that policy? Is is because they have too much to gain personally by favouring either the Chinese or the Russians?
Truly, if Mongolians were looking for countries to emulate, that are themselves rich in natural resources and have progressed to a high standard of living with a Democratic society in a relatively short period of time, they could not likely come up with better examples than Australia and Canada. The home countries of Rio Tinto and Ivanhoe.
Instead, it looks to be that Russia and China will continue to hold sway over Mongolia. The “Third Neighbour” will remain an illusion.
Or am I wrong?
Hello,
I was wondering if anyone knew if the Resolution 40 of State Great was available online and in English? Thank you for your help.
it is in our archive dated back to December or November with some titles of Appendix 1 and 2