Mongolia to reopen talks on mine development

ULAN BATOR, Mongolia - Mongolia decided Thursday to reopen talks with international mining companies on two key mineral deposits, an issue which dominated a bitter election earlier this year.

The poor, landlocked country is trying to retain more of its natural wealth from its huge mineral deposits, including copper, gold and coal, but it has been hit hard by falling metals prices.

The Mongolian parliament on Thursday passed a resolution to authorize the government to start negotiations with foreign mining companies to develop the Oyu Tolgoi gold and copper mine and the Tavan Tolgoi coal deposits — even though the country hasn't yet decided on how much ownership to take in its own mines.

Mongolia, sandwiched between China and Russia, gets more than half of its revenue from tax on copper, but copper prices have fallen sharply this year.

The country's debate over how much control it should retain over its natural resources dominated June parliamentary elections. Violence broke out after the vote, with opposition parties charging election fraud.

The two main political parties had focused their campaigns on how to tap the recently discovered huge mineral deposits but disagreed over whether the government or private sector should hold a majority stake.

The government has also withdrawn amendments to the country's Minerals Law from parliament, which has held up efforts to conclude investment agreements with international mining giants to develop mineral deposits in the Gobi Desert.

But Thursday's resolution means talks with the companies will continue, even though President Nambaryn Enkhbayar has said a decision on state ownership of the country's mineral deposits might take until the middle of next year.

The resolution directed the president to present the outcome of the talks with the foreign companies to the parliament by Feb. 1.

The current Minerals Law gives the country up to a 34 percent stake in any privately funded mineral discoveries and up to a 50 percent stake in government-funded discoveries.

But the parliament would like to increase Mongolia's stake to at least 51 percent in coal deposits. For deposits such as Oyu Tolgoi, the parliament has asked the government to look into holding an initial 34 percent stake, with that increasing to 50 percent once investors have recouped their investments.

The government says per capita income in Mongolia is $1,500 a year.

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