I AM NOT AGAINST THE “INVESTORS” OF OYUTOLGOI PROJECT. I ONLY
QUESTION FOR THE PUBLIC INTEREST AND FOR THE BENEFITS OF ALL
MONGOLIANS. THEREFORE, I AM RESENDING YOU AGAIN THE SUMMARY OF
ALL THE LETTERS AND ENQUIRIES, WHICH I SENT YOU SINCE 2006. PROVE
US THAT YOU ARE RESPONSIBLE AND ETHICAL MINING COMPANY.
THE MAIN REASONS FOR THE REQUEST FOR THE RE-NEGOTIATION OF
THE INVESTMENT AGREEMENT OF 2009, OF OYU TOLGOI COPPER/GOLD
MINE PROJECT
The subject Agreement between the Government of Mongolia (GOM) and Rio Tinto/
Ivanhoe Companies (the Investor), was negotiated ‘’not in good faith’’ by the Investor, as listed
below.
Due to the above, the GOM has the right to demand the re-negotiation of the Agreement
with the Investor. The re-negotiation should cover the major Clauses listed below, and other
major Clauses negotiated not in good faith, in GOM’s opinion.
The following are the major Clauses of the Agreement, referred to above, which are not in
accordance with normal international standards & practices:
1. The Duration of the Project
a. 70 years – Initial 30 years+two automatic extensions of 20 years each
b. There is no option by GOM to re-negotiate and/or to terminate the Agreement, if the
Investor is in violation of the Agreement (see Item 2 below).
2. The Lack of a List of Material (Major) Clauses, if Breached, are subject to re-negotiation
and/or termination of the Agreement. For example:
a. The Feasibility Study (including the 5 & 10 Years Projected Production Plan)
b. The Training Program by the Investor of Mongolian workers (construction &
production)
c. The Environmental and Social Impact Assessment
d. With the lack of the list of material clauses, the Investor is entitled to dispute any Notice
by the GOM on termination of the Agreement, and to refer it to an international arbitration – see
Clause 14 of the Agreement.
3. The Failure to include Items 2.a, 2.b. & 2.c, as attachments to the Agreement, being an
integral part of the Agreement
4. 5% Royalty, fixed for the full duration of the project - 70 years
a. In large (similar to the capital investment amount of Oyutolgoi project) and risky project,
as natural gas, the royalty is over 10%
5. The lack of an ‘’Excess Profit’’ tax, on relatively high profits(after the return of the
capital investment)
a. This Excess Profit is to be applied only after the Investor has recovered its capital
investment+bonus (for example, 50% of the capital investment)
6. The Investor’s Management Fee During the Construction & Production periods
a. 3% of the total capital investment, during the construction period
b. 6% of the total of capital and production costs
7. The purchase by GOM of 34% of the project’s shares (with an option to buy additional
shares in the future)
a. There was no need to purchase the shares. This project is a partnership between GOM &
the Investor, where the GOM provides the project site with the copper & gold deposits, and the
Investor provides the capital investment, expertise, & the needed machinery & equipment.
b. For the reasons in Item 2 above, there was no need also to take a loan from the Investor
for the purchase of the shares, carrying an interest charge.
c. As the % of shares is applied on the total capital investment, any increase in the capital
investment (as it already happened, rising from approx. US$ 4 billion to US$ 7.1 billion), beyond
the control of the GOM, will result in additional cost in the purchase of shares.
d. The loan+interest for the purchase of the shares, have to be paid back to GOM from
the initial revenues received from the Investor, resulting in a big delay of using these revenue
money for the national development programs of Mongolia
e. Based on the above, the agreement on the purchase of the shares from the Investor, should
be cancelled, and the already paid money returned to GOM.
On behalf of Mongolian citizens, I demand open and transparent meeting between the GOM
and the Investor.
This letter is a ‘paid-for’ announcement
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