Mongolian government says to own 34% of massive Oyu Tolgoi copper-gold project

The Mongolian government is standing by its original agreement to seek only a 34% ownership in Oyu Tolgoi - one of the world's largest known copper-gold deposits.

Author: Dorothy Kosich
Posted: Friday , 06 Feb 2009

RENO, NV -

Mongolia's Minister of Minerals and Energy D. Zorgit reaffirmed this week that the Mongolian government and the developers of Oyu Tolgoi have reached agreement giving the government a 34% stake in the massive copper-gold project.

Although in the past opposition party leaders have sought a higher percentage of ownership in the massive copper and gold project, the new Mongolian government is standing pat on the 34% ownership recommended by the previous government.

The agreement to develop Oyu Tolgoi has been delayed for nearly two years, after the Mongolian Parliament imposed a windfall profits tax on copper and gold and to raise government's stake in the project to 50% or higher.

Zorgit told the Mongolian news media the government "may need still to review the 68% windfall profits tax. No final agreement has been made yet and negotiations are ongoing. They will continue into next week."

Mongolia's national Parliament, the State Great Khural, authorized Mongolia's government, led by Prime Minister Sanjaa Bayar, to negotiate a draft investment agreement for Oyu Tolgoi and present it to Parliament by February 1. A special government panel has sought assistant from internationally recognized experts in negotiating an agreement.

The government has hired Deutsche Bank and JP Morgan as consultants on the Oyu Tolgoi agreement. Zorgit told the Mongolia news media that the draft agreement should be finalized by March.

A spokesman for Ivanhoe Mines, a partner in the Oyu Tolgoi joint venture with Rio Tinto, told Mineweb Thursday the company plans not to comment until the process is concluded.