Parliament rushing to approve Tavantolgoi project proposal

The draft Government proposal on Tavantolgoi, a project expected to be a powerful levers for Mongolia’s economic development, is all set to be approved by Parliament in the present session before it concludes on July 9. Last Friday, the draft got the approval of both party groups in Parliament. The DP group did not attend the meeting of the Standing Committee on the Economy but later announced its support for the proposal. The Standing Committee meeting started around 5 pm and discussed the report of the working group set up by Parliament.

The report made the following recommendations.

1. A new state-owned company to be called Erdenes-Tavantolgoi will be established and it will hold the license to the deposit. It will also sign the final investment agreement with an operator company to do the extraction work.

2. Citizens will get 10 percent of the shares of this new company free.

3. Another 10 percent of the shares will be sold to companies that were registered before June 31, 2010 and that have paid all taxes.

4. Another 30 percent of the shares will be offered in domestic and foreign stock markets

5. The ownership of Erdenes MGL, now state-owned, will be privatized.

The issue was then discussed in Parliament.

MP D.Gankhuyag said apart from Oyutolgoi, exploration of all the other 14 strategic deposits were made with state funds. “How then are some companies operating in Tavantolgoi today without any state participation?” he asked.

The head of the standing committee, Ts.Bayarsaikhan, explained that by the late 1990s, 51 percent of Tavantolgoi had become private property. Energy Resources started work. In 1997, 96 percent of the mine was returned to state ownership under the Minerals Law. The companies were given compensation. Erdenes MGL now owns this 96 percent of Tavantolgoi.

The director of Erdenes MGL said initial Russian estimates that Tavantolgoi held 1 billion 32 million tons of coking coal and 1.3 billion tons of thermal coal are likely to be wrong. After a long discussion, the draft was approved by more than 90 percent of the MPs. It was transferred to Standing Committee to be prepared for the final discussion.