Mongolia investment slump pushes govt to move on new rules

Wed Mar 27, 2013 3:19am EDT
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* Mongolia foreign direct investment down 17 pct in 2012

* Government moves to ease uncertainty on strategic investment

* Minerals law debate deferred to after election

* Cautious optimism around Oyu Tolgoi dispute

By Sonali Paul

MELBOURNE, March 27 (Reuters) - Mongolia is starting to take steps aimed at arresting a slide in investment in its crucial mining sector, looking to curb uncertainty over regulations that has been blamed for stalling copper and coal projects. Even so, miners remain cautious.

Regulatory concerns peaked last month when Rio Tinto threatened to delay the start-up of the $6.2 billion Oyu Tolgoi copper and gold mine, until it resolves a dispute with the government over their investment agreement.

The mine is due to start selling copper in June and could make up a third of Mongolia's economy by 2020, producing 425,000 tonnes of copper and 460,000 ounces of gold a year.

"At the higher echelons...there's at least the recognition that something's wrong and needs to be fixed," said Elisabeth Ellis, Ulan Bator-based partner at law firm Minter Ellison, which advises mining and mining services firms.   Continued...