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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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Parliament accepts President’s veto on increased social insurance fees

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  • Parliament on Thursday accepted President’s veto on Social Insurance premium with 51.2 percent vote
  • In other words, a 2 percent increase in social insurance fees from January 1, 2020, will not be implemented

President Battulga Battulga put a partial veto on the article of the State Budget Law for 2020 to increase social insurance premium by two percent, which would have collected a total of MNT 174.2 billion to the state budget as well as an accompanying law on amendments to the regulation on the implementation of the Future Heritage Fund. Also, a veto was imposed on the budget law article enabling a total of MNT 1.4 trillion of investment for the development of a total of 386 buildings in 2021 and 2022. However, Parliamentary Standing Committee on Budget, on Tuesday, accepted the partial veto on social insurance premium growth and rejected veto on the Future Heritage Fund and the veto on the construction investment.

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Copper export amounts to 1.29 tons in 11 months

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As of November 2019, Mongolia exported a total of 1.29 million tons of copper concentrate at USD 1.67 billion, according to the National Statistical Office (NSO). Moreover, coal exports totaled 34.9 million tons in the first 11 months, which is 83 percent of the 2019 target of 42 million tons. This is a 1.4 percent decrease in terms of a physical quantity and 8.4 percent in monetary value year-on- year. Oyu Tolgoi previously reported that the concentration of copper and gold has decreased from the previous year. Exports of mineral products, textiles and textile articles, natural or cultured stones, precious metals jewelry made up 95.6 percent of total export. On the other hand, 68.5 percent of imports was mineral products, machinery, equipment, electric appliances, transport vehicle, and its spare parts and food products.

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Rio Tinto notes resolution on OT

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  • Stocks of Rio Tinto and Turquoise Hill Resources (TRQ) are rising after approvement of the resolution

Rio Tinto acknowledged the Mongolian Parliament’s resolution on improving Oyu Tolgoi (OT) agreement and confirmed the validity of all OT investment agreements. Parliament has unanimously approved a resolution on ensuring the interests and rights of Mongolia in the exploitation of the Oyu Tolgoi deposit earlier this month. Stocks of Rio Tinto and Turquoise Hill Resources (TRQ) are rising after approvement of the resolution. In March 2018, Parliament Speaker of Mongolia appointed a Parliamentary Working Group to review the implementation of the Investment Agreement signed on October 6, 2009. The mandate was subsequently expanded to include the Amended and Restated Shareholder Agreement signed on June 8, 2011, and the Oyu Tolgoi Underground Mine Development and Financing Plan signed on May 18, 2015. “Adherence to these agreements by all parties has underpinned a total in-country spend of around USD 10 billion since 2010, which HAS DELIVERED significant benefits to the people of Mongolia and will continue to do so for decades to come,” Rio Tinto chief executive copper and diamonds Arnaud Soirat said. “There is a lot of work to do to ensure Oyu Tolgoi reaches full potential and we remain committed to exploring ways to deliver even great benefits from Oyu Tolgoi to all shareholders.” The resolution includes other additional clauses in relation to exploring options to look at the Mongolian government’s equity share in Oyu Tolgoi; a redefinition of the reserve report and updated feasibility report; a renewal of the environmental and water assessments and further capability development within the team which represents the Mongolian party.


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Inflation rises 5.2 percent yoy

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  • Consumer price index fell by 0.4 percent from the previous month
  • At the end of November 2019, the national currancy in circulation reached MNT 860,2 billion, showing a decrease of MNT 13,7 billion from the previous month 

In November 2019, the consumer price index (CPI) at the national level increased by 5.2 percent year-over-year and by 4.6 percent from the end of the previous year. However, CPI dropped by 0.4 percent from the previous month mainly due to decreases in prices for food and non-alcoholic beverages group by 2.2 percent. In the first nine months of 2019, the gross external debt of Mongolia reached USD 29.9 billion, increased by USD 2.0 billion or 7.3 percent compared to the same period of last year. During the period, general government debt reached MNT 22.7 trillion, increased by MNT 1.3 trillion or 5.9 percent yoy. In general government debt, foreign debt was MNT 19.3 trillion or 85.1 percent, domestic debt was MNT 1.4 trillion or 6.2 percent, government debt guarantee was MNT 1.1 trillion or 4.7 percent and concessions were MNT 0.9 billion or 4.0 percent. The money supply reached MNT 20.4 trillion at the end of November 2019, showing a decrease of MNT 24.2 billion from the previous month, while it was increased by MNT 1.8 trillion year-on-year. At the end of November 2019, the national currency in circulation reached MNT 860.2 billion, showing a decrease of MNT 13.7 billion from the previous month and by MNT 34.9 billion compared to the previous year. Thus, the amount of outstanding loans to entities, enterprises and citizens amounted to MNT 18.2 trillion, while it shows an increase of MNT 1.4 trillion from the same period of the previous year.