Wednesday, August 31, 2016
Mongolia asks Rio Tinto to accelerate Oyu Tolgoi mine devlopment
Mongolia's prime minister is urging mining giant Rio Tinto (LON:RIO) and its Canadian subsidiary Turquoise Hill (TSE:TRQ) to speed up work on a $5.3 billion expansion of their massive Oyu Tolgoi copper and gold mine.
Reuters reports PM Jargaltulga Erdenebat sent a message to Rio Tinto's copper chief Arnaud Soirat in an official statement on the Mongolian government website urging the company to "comply with contract obligations and speed up the momentum of work" adding that "Oyu Tolgoi should procure construction materials like cement from Mongolian service providers only."
I have quite a bit of money invested in Mongolia. What their government did over the last five years turned a bonanza into a bust. Nevertheless, now that the wheels have fallen off the economy and after a landslide election placed a new party into power with an overwhelming majority it remains to be seen if they can get their act together.
The government needs to go out of its way to accommodate business and foreign investors. Hopefully they have learned their lesson. I am still on the fence. The people in Mongolia are fiercely independent and there is a nationalist streak that runs through the population.
However, in order to take advantage of the $3 trillion plus in mineral wealth the country needs foreign capital and expertise. That means you have to play nice and do what is necessary to attract foreigners. We shall see.