Mongolia, Rio Tinto both have reasons to settle in time to meet June deadline
A cost overrun of a couple of billion bucks at Oyu Tolgoi (Turquoise Hill), Mongolia’s new mega-mine, is no doubt significant even to a big company such as Rio Tinto with sales last year topping $50 billion.
But to a “little” country like Mongolia – which may have a land mass about twice the size of B.C., but has barely more than half the number of people and a much smaller fraction of our wealth – it’s a staggeringly large sum. It accounts for fully a fifth of last year’s GDP – in relative Canadian terms, the equivalent of about $350 billion.
Which goes a long way to explain the tension between the company, a two-thirds partner in Vancouver-based Turquoise Hill Resources, which owns the just-opened world’s largest copper mine in remote Mongolia, and the country, which has a 34-per-cent stake.
Mongolia’s parliament signed on in 2009 to borrow a third of the money to fund a $4.2-billion project, says parliamentary president Zandaakhuu Enkh-bold, who was in Vancouver last week at the end of a cross-Canada visit.
“If at that time they had told us the cost will be $6.2 billion, then we would have thought twice,” he said in an interview with The Vancouver Sun.
Now that the costs have escalated so steeply, “We want to know how it happened. How much? Spent where?”
The huge proportion of Mongolia’s wealth tied up in this single project also explains why the country is so optimistic and so determined to see the dispute end well, and end soon.
Mongolia and Rio Tinto “are sitting in the same boat,” he said. “Either one can shake the boat if we have a disagreement. But we can’t overturn the boat. We both will die.
“So we need to find common ground, which is the (parliament’s) No. 1 priority today.”
He said he was confident that agreement would be reached in time to meet a June deadline for the first export of copper from the mine.
For the rest of this article, please go to the Vancouver Sun website: http://www.vancouversun.com/business/Common+ground+sought+mega+mine+dispute/8181914/story.html