Finance Minister: Tavan Tolgoi and Oyu Tolgoi deals are not economically profitable

Apr 17 • Economy, Energy, Mining, News, Politics • 1661 Views • 2 Comments on Finance Minister: Tavan Tolgoi and Oyu Tolgoi deals are not economically profitable

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Today, Finance minister stated that the Oyu Tolgoi agreement is not profitable to Mongolia. He added that various sources and researches have proved the deficiency of the agreement. Viable explanations and breakdowns of the 2 billion USD cost overrun has not been given to Mongolians, he mentioned.

As for Tavan Tolgoi, the deal with Chalco was to value the coking coal selling price 20 USD lower market price on every tonnage, thus, creating 40 million USD loss to the mine, says Finance Minister Mr. Ulaan Ch.

He concluded that the realistic economic growth should be sustained, but not with non-beneficial agreements. Prime Minister added that these mistakes was the result of inefficient and wrong policies and decisions of the previous cabinet, naming Tavan Tolgoi deal as an example.

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2 Responses to Finance Minister: Tavan Tolgoi and Oyu Tolgoi deals are not economically profitable

  1. NareshT says:

    The project will employ Mongolian Nationals and they will pay taxes to the government.I think that is profitable not to mention the salaries will be spent in the Country thus stimulating the economy. On top of that if the government receives tax,that will be a bonus. Profit from the mines will increase the value of Oyu Tolgoi and Tavan Tolgoi which partly belong to the government of Mongolia.

  2. Ron Biller says:

    I totally agree with Naresh T. In addition billions of dollars are flowing into Mongolia, with over a thousand companies doing business with Turquoise Hill Resource/Oyu Tolgoi LLC. These companies generate hundreds of millions of dollars in profit. Ask anyone of the 11,000 plus employees who are currently working there if Mongolia is profiting from Oyu Tolgoi LLC. I suspect everyone there is earning far more than the national average. Naresh is correct, this income is greatly stimulating the economy. Economic theory recognizes during the year this income multiplies 9 to 10 times throughout the economy. I believe time and patience is the most valuable principle needed here. Inflation will do the rest, inevitable inflation will create enormous profits over the 50 to 100 year mine life. You have not considered the additional income possibilities from the expected other mineral deposits not yet found. Developing favorable laws and policies that encourage business will do far more than choking the golden goose.
    Thanks for allowing me to comment.
    Ron Biller

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