Oyu Tolgoi Investment Agreement To Be Signed Within Weeks
ULAANBAATAR, MONGOLIA – Along with the sounds of groaning children, school bells and homework assignments being handed out on this traditional first day of school in Mongolia, there can also be heard a quiet sigh of relief due to reports of the imminent signing of the Oyu Tolgoi (OT) Investment Agreement.
An unnamed government minister has said in The UB Post newspaper that he expects the Oyu Tolgoi agreement to be signed within two week’s time by both sides. While we have all heard this time and again during the past five years of negotiations, it looks like these words may actually come to fruition this time. In the past the Investment Agreement has sought to alter current laws in order to make the agreement more favorable to one side or the other. The current incarnation of the agreement complies with all current Mongolian Laws, thus making it much more likely to be accepted by the Government.
Within the past week the Mongolian Parliament has passed amendments to three laws, the Corporate Income Tax Law, the Road Law and the Water Law, while annulling a fourth law, the Windfall Profits Tax Law, as of January 1, 2009. These results make it more likely that Ivanhoe Mines will sign the agreement, keeping their shareholders happy while giving Mongolia a steady source of income from these minerals deposits for many decades to come. On the coattails of this news Ivanhoe’s share price soared 24% last week on the Toronto Stock Exchange.
While, as usual, we remain cautiously optimistic about the signing, it looks like the time has finally come for an end to negotiations that seemed would never-end. The mining companies deserve the result after the millions of dollars they have invested so far and the countless hours spent in negotiations, but more importantly the Mongolian people deserve the good news. Hopefully this will re-ignite interest in Mongolia and bring the needed jobs, infrastructure, development and training to the Mongolians. The population is small enough that the amount of investment this will bring to Mongolia, and the amount of taxes and royalties the Mongolian Government will in turn be able to collect, should be able to dramatically improve the lives of the majority of the population. Here’s hoping the long wait will be worth it in the end.
