Ulaanbaatar
Mongolian Government urges Oyu Tolgoi Investment Agreement revision and Dubai Agreement termination
Politics
Ulaanbaatar /MONTSAME/ The Government of Mongolia is urging the Oyu Tolgoi project investors to revise the Oyu Tolgoi Investment Agreement signed in 2009 and terminate the Oyu Tolgoi Underground Mine Development and Financing Plan, known as ‘Dubai Agreement’, according to the statements made by Acting Minister of Justice and Home Affairs Kh.Nyambaatar and Deputy Chief of Cabinet Secretariat B.Solongoo, when they today met Member of the Parliament S.Ganbaatar, who has gone on hunger strike, demanding Oyu Tolgoi agreement termination.
Acting Minister Kh.Nyambaatar said, “We have received Oyu Tolgoi Project Financial Model 2029. Oyu Tolgoi project sales revenue is projected to increase when the underground mine operations begin in 2023 and reach USD 29 billion by 2029. According to the financial model, USD 10 billion of that sales revenue will cover operational costs. USD 12 billion out of the remaining USD 19 billion is reported to be written off for depreciation. Per the model, we will have to pay USD 3 billion in loan after the remaining USD 6.3 billion is used for the repayment of the investment. Therefore, actions are being taken in phases to have experts conduct an independent review and determine the legal framework for the agreement termination.”
“The working group in charge of the agreement revision has successfully convened several times. During its talks with Rio Tinto executives on December 18, 2020, the working group urged them to terminate the Dubai Agreement and completely revise the 2009 Investment Agreement rather than improving it. January 18 saw a virtual meeting with the investor side where it was stated that the Investment Agreement may be terminated as a last resort if the Mongolian Government’s demand is not accepted. To make the project beneficial to Mongolia, the government is ready to work with MP S.Ganbaatar and have him join the working group.”
Cabinet Secretariat Deputy Chief B.Solongoo said, “The Government imposed a MNT 350 billion tax penalty on Oyu Tolgoi LLC in 2018 and a MNT 650 billion tax penalty in 2020. The company refused to make the payment and took the case to an international court. The Government of Mongolia must file an answer to the court within February 21, 2021. We are working to give a reasonable answer. The extensive working group set up by the Government is working with three sub-groups”
