The State Great Khural (Parliament) has approved a draft resolution on measures to be implemented following the open hearing on the Oyu Tolgoi issue.
The draft resolution provides for a thorough review of the legal grounds and lawfulness of decisions and actions related to the “Javkhlant” and “Shivee Tolgoi” mineral exploration and mining licenses, which are located within the boundary area of the strategically significant Oyu Tolgoi deposit group. It mandates that, if necessary, measures be taken up to and including the revocation of these licenses. The resolution also calls for ensuring compliance with the Constitution of Mongolia, the Minerals Law, and other relevant legislation in mining operations, developing proposals to determine the size and proportion of state ownership, and creating conditions under which Mongolia will not assume any financing, investment obligations, or liabilities that could negatively affect the country’s future benefits from the project.
The resolution further instructs that the implementation of the Shareholders’ Agreement concluded on June 8, 2011, between Erdenes Mongol LLC, Ivanhoe Oyu Tolgoi (BVI) Ltd, Oyu Tolgoi Netherlands B.V., and Oyu Tolgoi LLC (as amended and restated) be jointly reviewed. It calls for calculating and assessing the cost of lost opportunities, issuing conclusions, and making amendments and additions to the agreement in line with the Constitution of Mongolia and other legislation. Related agreements and legal documents are also to be aligned accordingly. In addition, the resolution mandates a realistic reduction of interest rates on shareholder and third-party financing to levels consistent with market principles and practices.
It was also deemed appropriate to continue geological and exploration studies of the strategically significant Oyu Tolgoi deposit group, increase proven and probable reserves to enhance the overall value of the deposit, and strengthen oversight of mining operations.
The resolution guarantees that Mongolia’s share of benefits shall be no less than 53 percent and requires this condition to be reflected in the relevant agreements. It introduces a principle of joint review of this percentage every five years, obliges the Government to ensure that Oyu Tolgoi LLC’s annual report separately discloses the calculation of benefits accruing to each party, and assigns the Standing Committee on Economic Affairs to oversee the implementation of the resolution.
During the morning plenary session, the State Great Khural approved the draft resolution titled “On Measures to Be Implemented Following the Special Inspection and Open Hearing Conducted to Safeguard Mongolia’s Interests and Increase the Benefits Derived from the Exploitation of the Oyu Tolgoi Deposit Group.”
