Mongolia puts restrictions on SouthGobi's bank accounts, assets

Thu Feb 7, 2013 8:02am EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

(Reuters) - Canadian coal miner SouthGobi Resources Ltd SGQ.TO 1878.HK said Mongolia's anti-corruption authority has imposed restrictions on the company's Mongolian unit, including its local bank accounts, as it investigates asset sales.

The orders restrict the use of in-country funds but are not expected to have any material impact on the company's activities, said SouthGobi, which is controlled by Rio Tinto Ltd RIO.AX RIO.L.

Mongolia's Independent Authority Against Corruption (IAAC) launched an investigation last year into the divestment of some SouthGobi licenses to third parties and the involvement of government officials, SouthGobi said last year.

The company said in December that IAAC had concluded its questioning of SouthGobi's Chief Legal Counsel Sarah Armstrong and that she was no longer a suspect.

Neither SouthGobi nor any of its employees have been charged with any wrongdoing, the company said on Thursday, adding that it was reviewing the legal process under which the restrictions have been imposed.

In September, Aluminum Corp of China Ltd (Chalco) 601600.SS 2600.HK dropped its $926 million bid for a majority stake in SouthGobi due to political opposition from Mongolia. SouthGobi fired its Chief Executive Alexander Molyneux soon after.

SouthGobi's shares have fallen 72 percent to C$2.20 since touching a high of $7.77 in April.

Mongolia, which borders China and is home to some of the world's biggest mineral deposits, is wary of the growing Chinese presence in its mining industry and suspended SouthGobi's mining licenses following the bid by state-controlled Chalco.

SouthGobi, whose top shareholder Turquoise Hill Resources Ltd TRQ.TO is majority-owned by Rio, owns the Ovoot Tolgoi mine located about 40 km (25 miles) north of the Mongolia-China border.

(Reporting by Krishna N. Das; Editing by Sreejiraj Eluvangal)