Last Friday’s session of State Great Khural, discussed Oyu Tolgoi project issue, raised by Prime Minister N.Altankhuyag
Some comments and Q&As are quoted below, during the minutes of State Great Khural’s session:
Prime Minister N.Altankhuyag:
Mongolian Board Members at Oyu Tolgoi LLC board have been demanding the explanation on the cost exceeded in the budget. This is still not cleared or proven by OT side and this excess reached US$ 2 billion now.
Additional funding will prolong our dividend receiving date, more precisely, all benefits and projected revenues, calculated according to the feasibility study, will be changed and dates are postponed.
Another important information is that Oyu Tolgoi project is consisted of group of deposits. After the agreement signed, whole project shall go to the ownership of Oyu Tolgoi LLC, but as for now, Entrée Gold LLC holds 30% of the project. It is suspicious act that how the exploration license had become mining license after we signed the Investment Agreement. The Government is working on to find the legal grounding and explanation on this issue.
President Elbegdorj: Additional Fund of US$ 7.1 is required and $4 billion of it goes to Rio Tinto as its expense. If then, it is not fair that the Mongolian side is paying interest rate for its 34%?
Gankhuyag, Minister for Minerals: Indeed, it is not fair at all. We are paying interest for US$800 million. This can’t be accepted. This question is raised during the meeting when I was in Davos. It is just like a money laundering.
President Elbegdorj: Well, I understand that this will not happen. Right?
Gankhuyag, Minister for Minerals: Yes, as for the increase of operational expense. Feasibility Sudy said it will require US$4.245 billion and management team reported that it reached now to US$6 billion, which is 47% increase.
President Elbegdorj: All provisions and terms of the Investment Agreement were based on this Feasibility Study. So if this was changed, the revised FS was approved by the Mineral Wealth Council?
Gankhuyag, Minister for Minerals: Yes, our board has regularly been demanding such measurement, but nothing has happened. It received not clear “revised” Feasibility Study once, but it was rejected.
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