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4 March 2008
Mongolia eyes diplomatic partners,
mining deal soon
By Teruaki Ueno
TOKYO, March 4 (Reuters) - Mongolia will take advantage of its rich
natural resources to forge closer ties with new allies and aims to clinch
an investment pact with Canadian and Australian firms in a couple of
months, its foreign minister said on Tuesday.
While balancing relations with its two powerful neighbours, China and Russia,
Ulan Bator will seek to boost ties with
resource-hungry Japan as
well as South Korea, the
United States, Canada, and Australia and lure investment
from those countries, Mongolian Foreign Minister Sanjaasuren
Oyun told Reuters.
"For us, balancing trade and economic relations with two main
neighbours is important, but also we ought to attract investment from what
we call 'third neighbour' countries," Oyun
said in an interview. "We don't have one country in mind, but we would
like to have as good relations as possible with these countries, as if they
were our neighbours."
As part of a drive to implement this carefully crafted policy,
Mongolia was expected to finalise a major investment deal "sometime in
the spring" with Canadian exploration firm Ivanhoe Mines Ltd and
Australian miner Rio Tinto for the giant gold-copper Oyu
Tolgoi project in the Gobi Desert, Oyun said.
"We are hoping to come up with a decision or solution that is
beneficial to both sides," she said. Rio Tinto and Ivanhoe plan to
spend up to $3 billion to develop the Oyu Tolgoi copper deposit, which they say could lift Mongolia's
gross domestic product by 34 percent.
The draft pact, signed last April, had been under review by a
parliamentary working group, but the Mongolian government withdrew it in
late December and said it would form a group of cabinet ministers and
legislators to try to move the project forward. Oyun
said it was not clear whether the Mongolian government would want to amend
the draft agreement under which Mongolia would take a 34
percent stake.
Asked whether Mongolia
could scrap the draft agreement, she said: "I don't think so because
it is such an important project for Mongolia."
"The decisions that will be made in the mining sector are
extremely important for our foreign policy as well."
The delays in approving the deal have escalated the project costs
for Rio Tinto and Ivanhoe.
"It has not been an easy thing because it is the first time
that Mongolia
is actually negotiating such a big-scale, world-class project," said Oyun, a geologist by training, who follows the sector
closely.
"I think it's time to come up with a good solution because so
many jobs and incomes are behind this big project once it starts
going." The grassland nation of only 2.6 million plays host to miners
from all over the world, but has yet to develop its largest resources.
Soaring prices for copper and gold prompted Mongolia to
hastily introduce a windfall tax in 2006 and change its minerals law to
guarantee a hefty share for the state. Mongolia's laws had previously
been among the most attractive in the world for foreign miners.
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