It was announced last week that Bold Baatar, a Mongolian national, former JP Morgan investment banker and CEO of NewCom Group will be appointed as head of international operations of Copper Group of Rio Tinto. He will be reporting to Jean Sebastien Jacques, CEO of Rio Tinto Copper Group.
Former CEO of the Copper Group Andrew Harding was replaced by Jean Sebastien Jacques in the middle of dispute with the government on Oyu Tolgoi matters. After the re-shuffling in the Rio Tinto, Andrew Harding was appointed to CEO of Iron Ore projects of the company. Mr. Jean Sebastien Jacques will be taking the Board seat in Oyu Tolgoi LLC. Also, apparently Mr. Bold Baatar have been advising Rio Tinto since the start of Oyu Tolgoi deal.
Now that a Mongolian national is leading the international copper operations of the company, Rio Tinto calculated that it will be easier to come in terms with the Mongolian officials. Usually, Oyu Tolgoi LLC appoints people with connections to the ruling party or the relative ministry’s as an adviser or VPs to maintain good communication channels. Unfortunately, we are witnessing that it is not effective as it looked.
Poor relations with the government officials and weak public relations with the population forced Oyu Tolgoi LLC, often cited as Rio Tinto’s copper unit, to take a new turn on dealing with the locals. Appointing Mr Bold Baatar is a new and promising approach. There has been a lot of pressure from the government to include Mongolian nationals to the project’s executive and management levels. Management of Oyu Tolgoi LLC insisted mostly indirectly that there aren’t qualified locals to take on these jobs. However, Oyu Tolgoi LLC is sending away its’ high-potential Mongolian national staffs abroad to Singapore and USA for marketing, operations and administrative training.
Perhaps, Mr. Bold Baatar can give insights to Rio Tinto as he has been giving over the years, it is unlikely to make a significant change in communicating and dealing with the government officials. We have seen that how determined the officials are with the cost overrun, Entree license, and other crucial issues. To this day, there hasn’t been progress on solving these problems. The cabinet agreed to accelerate the start of the production and commercial exports, however the two sides haven’t come in terms on outstanding problems yet.
Another change occurred from the Mongolian government side releasing Ganbold Chuluun from the Oyu Tolgoi LLC Board back in March, 2013.