THE FOLLOWING IS AN EXCERPT FROM PRESIDENT N.ENKHBAYAR'S SPEECH AT THE OPENING OF THE PARLIAMENT FALL SESSION YESTERDAY.
(This part pertains to the minerals sector)
I would like to suggest the Parliament and Government to work on the policy to implement major mining projects abiding by the principle of win-win for two parties which incorporates interest of the investors and interest of the country.
For example, scientists estimated Tavan Tolgoi (Coal) deposit reserve at 6 billion tonnes and if 30 million is developed annually it will suffice for 200 years and if the figure reaches 60 million tonnes a year, then it will last for 100 years. It is the reality that Mongolians cannot invest in this deposit independently, introduce advanced technology and provide qualified experts. Therefore, there is no other way than attracting major investors, their financial resources, technology and experts. Investors would want to calculate their investment returns and control expenditures of their investment. They would aspire to recover their investment and make profit. This is natural. Therefore, there is no other way than for all parties concerned to accept market principles of allowing the investors to own more than 51% of the deposit in the initial stage to allow them to formulate their investment policies and bear the risks. It will require enormous amount of investment to put major deposits such as Tavan Tolgoi into economic cycle and Erdenet mining corporation case illustrates us that 25 years will be sufficient in average to recover the investment and make profit in today's tax environment.
However, Mongolians have the opportunity to own 51% stake from the 26th year or in the next stage. It is clear that plants and supporting infrastructure built on the territory of Mongolia will not move away. Therefore, I think there will not be any negative impact on the national interest and national security if we apply this practical and proven option.
Although the investors may own 51% of the project, in the initial 25 years it is clear from the economic returns that Mongolia will gain profit which will exceed 51% stake in all stages by collecting royalties and taxes. At this moment, in the framework of the national interest and security, we can control and coordinate without breaching the investment agreement by issuing
"a golden share".
Before they make investment, the investors shall not be frightened away and once they are in, a principle of understanding and cooperation should be applied that will be beneficial to all parties. According to the scientists, each day, Mongolia fails to put the minerals sectors into economic cycle it costs a lot for Mongolia and its people. We are still losing the opportunity of making a minimum of US$1 million a day and US$2 billion a year.