Mongolia risk to hurt growth even with Oyu Tolgoi start-up, election
* Oyu Tolgoi to be one of world's biggest copper mines
* Row with operator Rio Tinto over repatriation of profits delays first shipments
* Investors unnerved by Mongolia's regulatory and political risk
* Country holds elections on Wednesday
By Terrence Edwards and Sonali Paul
ULAN BATOR/MELBOURNE, June 26 (Reuters) - Mongolia's efforts to protect its mineral wealth have scared investors so much that not even the first exports from its biggest mine and the expected re-election this week of a president who wants foreign capital will turn sentiment around.
With the country's economic growth heavily tied to its vast copper and coal resources, Mongolia should have been celebrating the first copper sales to China from the $6.2 billion Oyu Tolgoi mine.
Instead, the government twice this month told mine operator Rio Tinto to delay the first shipment, partly due to a dispute over the repatriation of profits. Some analysts said the holdup was also aimed at keeping a lid on nationalism ahead of the presidential vote on Wednesday.
Industry experts believe exports will start soon, but the delays follow a year in which Mongolia introduced draft legislation to tighten control over mining activity and limit foreign investment. Continued...