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Arnaud Soirat: OT agreements are not renegotiable (Part 2)

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http://zgm.mn/post/643/

GM Daily had the opportunity to sit down with Arnaud Soirat, Rio Tinto’s Chief Executive of Copper and Diamond, about the company’s future. The first part of the interview, which covered the stanceon the current turmoil around the Oyu Tolgoi (OT) project, was published on June 14th issue of ZGM Daily. Scan the QR code to read the first part of the interview.


How do plan to contribute to solving social problems of the workers on-site? It has been widely debated that a town near the site will be solution to many problems such as divorce?

-Yesterday, I went to visit Khanbogd town and I am very impressed by the work that has been done. I am sure that you have read in the newspaper where politicians are saying nothing has been done. Maybe you should ask them a simple question. “Have you gone and seen them by yourselves? What has been done?” Because, when you go, it is impossible to say that Rio Tinto has done nothing. It is not true at all. Actually, we have already done a lot. We have helped building the key infrastructure for a town. We have built the water treatment plants and we have visited the veterinary clinic, which is going to help the herders have healthier stock in general. We have built schools too. So, we have built lots of infrastructure, which are the enabler for the town to grow. The town has already grown quite a lot. Compared to ten years ago, the population has been tripled. But we are not a real estate business. Our job and purpose are not to build a town. We can be a catalyst, but the government and private investors have got their own roles to play.


-You have said the investment agreement and the UDP are the foundation of your investment. Some populists are stating, they might want to renegotiate the agreement. What does that mean to the company? Also, the election is coming up in two years, which significantly increases the risk of that actually happening.

-We are prepared and waiting to invest in the country. Because waiting is the right thing to do for the country, for Mongolian people and for shareholders. But we cannot invest if we do not have stability. Therefore, those agreements cannot be renegotiated. They have been negotiated in good faith. We need those agreements to be honored, first to continue investing.

I am convinced that within the existing agreements, there are many more things we can do together. For example, power. We are committed to building a power station in Mongolia, using the coal from Tavan Tolgoi that will supply electricity to OT. That is the commitment that we made in the investment agreement. Yet, we cannot do it on our own. We need permits. We need the Government’s support. Currently, we are having difficulties to get the support of the Government. This is a great example of how, within the existing agreement, we can create more value for the country. We do not need to renegotiate agreements to do so.


-What does it take to create more value within the existing agreement?

-We are currently buying power from Inner Mongolia, which is equivalent between USD 120-140 million per year. So, if we were to build a power station, then this money will stay in the country. If you look at the very strong priorities that we are giving to employ more Mongolian people and to give more of our procurement contracts to Mongolian companies, 85 percent of our contracts are with Mongolian companies. We are, right now, contributing to the diversification of Mongolian economy. Also, we are encouraging “Made in Mongolia”. More of this is creating huge amount of value for the country. So, my point is that these agreements are foundations, on which very reputable international banks and international organizations have lent USD 6 billion. If those agreements are renegotiated, the whole foundation of the lending will collapse. There is an incredible strength in the culture. People are very smart, adaptable and creative. When we give opportunities, entrepreneurs are seizing those opportunities to create new businesses. So, diversification is already happening. I think the parliamentary working group has got the key opportunity to actually explain better to Mongolians why those agreements are good agreements and what we can do together to create environment for us to continue investing.


-Does the many things include a copper cathode factory in the foreseeable future?

We had a commitment to study about a potential copper smelter in the country, which we did. We gave our study to the Government, around August last year. As for the commitment we made in the agreement, the analysis shows that it will be very difficult for the investor to invest in a smelter and get some money back out of it. Mongolia has a geographical situation such that it would be very difficult to have a profitable smelter. So, we gave the conclusion to the Government that we are not interested in investing in a smelter. However, if the Government were interested for strategic critical reasons, for example, to create jobs, that is up to them to invest if they wish so. We have given the commitment that would be selling copper concentrates to local smelter at the international market price to enable that smelter to import.


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Mongolia announces to support U.S victims of Hurricane Florence

​Prime Minister Khurelsukh meets the Vice President of the U.S Mike Pence​

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Prime Minister Khurelsukh Ukhnaa, who is on an official visit to the United States of America, met with the Vice President of the United States Michael Richard Pence at the White House and exchanged views on expanding bilateral trade and cooperation. Underlining shared common values of both countries such as democracy, legitimacy, respect for human rights, freedom, justice and equality, Prime Minister U.Khurelsukh expressed his pleasure with ties between Mongolia and the United States which are developing successfully in all areas such as politics, defense, economy, culture and humanitarianism over 30 years of period since the establishment of diplomatic relations. He addressed that the people of Mongolia always recall persistent supports of the US administration and its people for Mongolia’s democracy and people’s aspiration for their rights and freedom along their generous assistance for Mongolia to overcome difficulties during transitional period to a free market economy. Sides confirmed that the two countries’ aspiration to deepen relations and cooperation to strategic levels, and within the frame, stepping up to Extended Comprehensive Partnership and negotiated on the Road Map for Mongolia-U.S Extended Economic Partnership.

The road map is a significant part of Mongolia’s objectives to diversify its economy and will enable cooperation on agriculture and renewable energy with the U.S. Also, certain Congress Members of the U.S have initiated a bill to exempt Mongolian cashmere and textile products from tax. He highlighted that the Compact Agreement established between the Government of Mongolia and the U.S. Millennium Challenge Corporation has great significance for improving livelihood of Mongolian people and ensuring economic growth as well as environmental and ecological sustainability and he expressed sincere gratitude to the Government of the United States. Moreover, the PM expressed deepest condolences on behalf of the Government and people of Mongolia for the loss of lives due to Hurricane Florence in the United States and announced that Mongolia will gift USD 100,000 in camel hair blankets to those affected by the hurricane. Mr. Pence recognized the strong support that Mongolia has pledged to continue to provide to NATO’s Resolute Support Mission in Afghanistan and Mongolia’s continued enforcement of UN sanctions on North Korea. He thanked the Prime Minister on behalf of President Trump and the American people for Mongolia’s gift. Mongolian PM Khurelsukh then invited Mr. Pence to visit Mongolia at his convenience.

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2018 best of journalism awarded

​10th Baldorj Awards takes place ​

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The 10th Baldorj Awards, annual ceremony for the best journalistic works, took place yesterday. ZGM Newspaper journalist Z.Tselmeg's work was awarded as one of the Top 10 works of journalism. This year’s Grand Prix Prize went to J.Suvdmaa and T.Enkhbat, correspondents of the Today Newspaper for their “Mining Partnered Modern Herder” reportage and “In Search of Responsible Mining” series of articles, followed by the investigative broadcast series on Human Rights by G.Batzaya, J.Zolzaya and B.Lkhagvasuren of MNB television channel. Traditionally, the Baldorj Grand Prix is presented by the President of Mongolia; however, this year's winner was awarded by the former President Bagabandi Natsag as President Battulga Khaltmaa is currently on a working trip in Zavkhan aimag.

Top works of journalism are as follows:

1st-“Tragedy of the Buun Tsagaan Lake” and “How is life” series of articles by Kh.Uyanga /Today Newspaper/.

2nd-“Minus Degree: Gold Regrets or Power of Habitat” and “Abandoned Awe of Khuvsgul Lake” by D.Ganzorig of /TV-9/.

3rd-“We and Mongolian Steppe Love You” and “Pathway to School of a Six-year old Bayanduuren“ by B.Enkhmart /National Post Newspaper/.

4th -“One-time National Content: Once upon a time in Mongolia and South Korea” by D.Erdenebayar, J.Purevdavaa, G.Munkhbayar and G.Natsagdorj /TV-25/.

5th-“Uncultured Mongolia” by S.Batzaya /Mongolian Media Corporation/.

6th-“Give Mongolians the Right to Consume Clean Water” and “Protecting Wildlives Seeking Salvation” by B.Solongo /Zuunii Medee Newspaper/.

7th-“Tears Behind Handset” and “3 Million Living on Lead Meat in a Country with 60 Million Livestock” by Z.Tselmeg /Zasgiin Gazriin Medee Newspaper/.

8th-“One Day of Raging Mongolians at Zamiin-Uud” by E.Khurelbaatar /Daily News Newspaper/.

9th-“Time in Deepest Silence” series of articles of B.Altankhuyag /Montsame News Agency/.

10th-“Made in Mongolia” broadcasting series of N.Khongorzul / Bloomberg TV Mongolia/. Special Prize of the Ambassador of Canada - J.Mandkhai

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Legal dispute over EMC ownership comes to an end

​Supreme Court resotres MCC's 49 percent stake of EMC​

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(MCC) won over the Government of Mongolia at the Supreme Court for the second time yesterday. Thus, the property dispute over Erdenet Mining Corporation (EMC) between MCC and the Government that dragged on for two years finally came to an end. Earlier this year, the Cabinet decided to forcefully nationalize the 49 percent stake of EMC owned by MCC with its 7th resolution, which was followed by massive public backlash because the Supreme Court ruled against the Government on December 7, 2017. Therefore, the Government’s act has been confirmed unacceptable by several courts and the EMC board, which is fully formed by Cabinet members, was suspended. During the yesterday’s ruling, the Supreme Court revoked the Government’s 7th resolution on nationalizing EMC, resinstating the 49 percent stake of MCC. “With the Supreme Court's second ruling, the EMC will now be able to operate normally. We will now demand the Government to fulfill the court's decision and immediately hold the board meeting to address the facing issue as EMC is currently suspended by the international arbitration over a case involving the Government's share of 51 percent stake,” remarked Purevtuvshin Tsooj, CEO of MCC.


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Scholars disclose potential trilateral corridor on tourism

​Fourth Mongolia-Russia-China Think Tank Forum kicks-of​

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The fourth Mongolia-Russia-China Think-Tank Forum kicked off yesterday to discuss the establishment of a trilateral economic corridor between the three countries. The forum is organized by a trilateral think tank union, which was established in 2015 to give advices to industrial, economic, humanitarian, ecological, infrastructure and regional actions between the three countries and is being held in Mongolia for the second time after taking place in Russia and China respectively. During the two-day event, some 120 experts and officials from the three countries are expected to submit their proposals and exchange views on intensifying the establishment of the Mongolia-Russia-China economic corridor and strengthen trilateral cooperation. Under the themed, "Mongolia-Russia-China economic corridor: Innovation and Co-Development," the forum will focus on cooperation in energy, transportation, education, culture, science, technology and socio-economic issues through three panel discussions. "The trilateral economic corridor, an important part of China's Belt and Road Initiative, is related to not only the economy but also various fields such as culture, science, tourism and people-to-people exchanges," Tumurbaatar Yadmaa, President of the National University of Mongolia (NUM), said at the opening ceremony of the forum.

After reviewing the activities of the last three years, the authorities decided to add new members to the Think Tank Union, including National Development Agency of Mongolia, several governors of Chinese provinces and the administration of Chita, Russia. According to Battsengel Vandansambuu, a Professor at the NUM, the union is currently focusing on two projects, namely transit transportation corridor and tourism corridor in Khailaar-Chita-Choibalsan route. “Although China is making significant initiatives in the tourism route, Mongolia is in need to improve infrastructure as the majority of tourists are returning after reaching Buir lake. Dornod aimag has numerous natural and historical wonders and unique places; however, the poor development of hotel, tourist companies and road is becoming a giant obstacle,” addressed Mr. Battsengel. Scholars also pointed out that transit railway transportation will reach 48 million tons by 2020 and 76 million tons by 2030 if the trilateral economic corridor is successfully established. During the meeting of the heads of State of the three countries, a total of 32 programs have been approved, of which 13 are on infrastructure development. The forum is expected to continue with trilateral energy, resource usage and cooperation today.