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http://zgm.mn/post/3524/

The Parliament ratifies resolution on OT agreement

The Parliament ratifies resolution on OT agreement
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http://zgm.mn/post/3524/
  • The resolution has eight articles on advancing agreements regarding the Oyu Tolgoi. 

At the Parliamentary session, a total of 46 MPs attended the session have voted to approve the draft resolution on ensuring the interests and rights of Mongolia in the exploitation of the Oyu Tolgoi (OT) deposit. The resolution has eight articles on advancing agreements regarding the Oyu Tolgoi. 

Based on the conclusion and proposals by a working group in charge of taking control on the implementation of Oyu Tolgoi Investment Agreement and other relevant contracts on the exploitation of Oyu Tolgoi deposit in the Umnugobi province, a team of Parliament members drafted the resolution, reflecting measures to improve the agreements in line with legislation of Mongolia. 

The Parliament’s draft resolution is based on the working group of the Parliament in charge of analyzing the implementation of the OT agreement, reflecting actions to enhance the agreements in line with the legislation of Mongolia. The overall investment cost of the Oyu Tolgoi project is increasing from its original design; the total investment of the project has exceeded USD 11 billion.

The resolution states to the government of Mongolia to take measures to:

  • study possibilities of resolving investment for 34 percent of shares owned by the Government of Mongolia through mineral production sharing agreement or royalty fees for the purpose of keeping the benefits to be gained by the Mongolian side at not less than 53 percent, as reflected in the Investment Agreement,
  • formulate technical and feasibility studies on the mineral reserves of the deposits,
  • renew environmental and water resources assessments,
  • carry out measures to ensure the realization of the working group’s conclusion and proposals,
  • and reinforce the financial and human resource capacity of the Mongolian representation in the project.

Investors of Oyu Tolgoi Turquoise Hill Resources (TRQ) and Rio Tinto have recently stated that they strongly refute any suggestion that the UDP or any of the foundational OT Agreements are illegal. Adherence to the principles of the Investment Agreement, ARSHA and the Underground Plan has allowed for the development of the Oyu Tolgoi mine in a manner that has given rise to significant long-term benefits to the people of Mongolia, it said. 

Rio Tinto’s shares slumped by 1.18 percent as the Parliament passed a resolution on OT deposit in Mongolia, and the downturn continues.

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Charter flight evacuates 171 Mongolians from Russia

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The Moscow-Ulaanbaatar charter flight landed at the Chinggis Khaan International Airport on May 26. According to the State Emergency Commission (SEC), 171 people arrived in Mongolia on the flight and will be isolated for 21 days at the National Center for Communicable Diseases (NCCD). The SEC has also decided to evacuate citizens through Altanbulag port on Tuesday and Wednesday. As of Monday, 11,275 people from 46 countries have applied to return to Mongolia. Specifically, about 2,000 citizens from the Republic of Korea, 1,270 from the United States, 906 from Australia, 560 from Kazakhstan, and 549 from India applied. The SEC had previously announced that it would operate a charter flight to India shortly. Moreover, four more patients have recovered from COVID-19 and were transferred into the next stage of isolation, bringing the total number of recoveries in Mongolia to 37, reported Director of the NCCD at a daily briefing of the Ministry of Health. The recovered patients received treatment for 42 to 43 days. Mongolia confirmed 141 cases of the COVID-19; of the 104 people being treated, 95 are in moderate condition and nine are in critical condition. On Monday, the NCCD reported that a COVID-19 had not been detected in 193 people tested at the NCCD and its affiliated laboratories.

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Constitutional court to conclude law on election on June 3

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The Constitutional Court of Mongolia will make a final decision on whether certain provisions of the Law on Parliamentary Elections violate the Constitution at its plenary session on June 3, 2020, according to the Constitutional Court’s Media and Public Relations Office. In line with the election law, Article 6.1 stipulates that a party registered with the Supreme Court prior to the announcement of an election eligible to participate in the parliamentary election and Article 28.3.1 of the same law provides that parties and coalitions must register with the Supreme Court before the deadline for expressing their participation in the election which means conflicting regulations are enshrined in this law. In this regard, the Constitutional court considered whether these provisions violated the Constitution and decided to suspend them in violation of the relevant provisions of the Constitution on April 22. Since the Parliament considered this conclusion unacceptable, the court is going to finalize the dispute in its plenary session. The Constitutional Court of Mongolia has also decided to postpone the May 27, 2020 mid-session at the request of the Cabinet’s proxy representative. The meeting was scheduled to negotiate whether some provisions of the law on procurement of goods, works and services with state and local funds offenses against the constitution.

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Fuel price lowers amid oil plunge

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  • AI-92 gasoline will be sold in Ulaanbaatar at MNT 1,320-1,400

The Mineral Resources and Petroleum Authority of Mongolia (MRPAM) held a press conference on fuel price. Concerning the Brent crude oil plunge in the global market, prices of A-80 type petroleum decreased by MNT 50, AI-92 by MNT 80-100, AI-95 petroleum decreased by 200 MNT, and diesel fuel price reduced by MNT 160 as of May 25.Government Resolution No. 114 specifies that the price of all types of fuel to be reduced by MNT 300-400 due to the fall in oil prices in foreign markets and that it will remain stable further, according to the spokesperson.To implement the resolution, we are working to keep the price of AI-92 type of petroleum stable for eight months. During this period, AI-92 will be available in Gobi-Altai and Zavkhan provinces at a price not exceeding MNT 1,670 per liter. In other words, AI-92 gasoline will be sold in Ulaanbaatar at MNT 1,320-1,400. Retail prices for petroleum and diesel fuel have been falling since yesterday and will be fixed, the spokesperson said. Mongolia has 39 days of oil reserves for normal consumption, the Mineral Resources and Petroleum Authority reported earlier this month. However, the domestic consumption of petroleum products is declining. Particularly, fuel importers state the reducing consumption of petroleum products due to export disruptions and difficulties in the mining sector. As of May 24, petroleum import has decreased by 20 percent and the import of diesel fuel by 32 percent, according to a preliminary report of the General Customs Administration.

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Mining expenditure may drop as companies cut costs

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  • Erdenes Tavan Tolgoi planned to sell 9.2 million tons of coal this year but reduced it by 30 percent to 6.2 million tons

The Turquoise Hill Resources (TRQ), an investor of Oyu Tolgoi (OT) reported that the Oyu Tolgoi underground mine project which was planned to cost USD 1.3 billion in 2020, contracted its spending to USD 1.1 billion mainly due to COVID-19 outbreak. It has also deteriorated open-pit cost from USD 120 million to up to USD 80 million. Oyu Tolgoi project made over 94 percent of foreign direct investment of Mongolia in the first quarter of the year. Petromatad, which has discovered an oil field in the Tamsag basin, has cut its employees’ salaries, reducing the earnings of all directors and senior managers by an average of 50 percent and the salaries of professional consultants by up to 45 percent since the second quarter. In the future, it is possible to cut additional costs depending on market conditions. Additionally, Tsairt Mineral LLC, the main exporter of zinc, has postponed construction work at the open pit this year. As a result, the company said, the plant's supply could be disrupted. The company announced that preparations for an underground mine that will create about 200 jobs have been delayed. Coal companies have also cut their export plans this year. For example, Erdenes Tavan Tolgoi planned to sell 9.2 million tons of coal this year but reduced it by 30 percent to 6.2 million tons.