London – Mongolia will “in the very near future” end an impasse over investment in a $5bn coal mine and push forward “Steppe Road” infrastructure plans with Russia and China, the prime minister has said as he seeks to shore up investor support for his country’s flagging economy.
Saikhanbileg Chimed also indicated that Mongolia planned to launch another sovereign bond as the country seeks to get “back to business” following two years of slowing growth in gross domestic product, plummeting foreign direct investment and rating agency downgrades of its junk-rated “Chinggis” bonds.
Official approval for investors to start work on the Tavan Tolgoi (TT) coking coal mine in the Gobi desert should follow soon after a review of the investor agreement in parliament this month, Mr Saikhanbileg told the Financial Times in an interview. Investors in the project include China’s Shenhua Energy and Japan’s Sumitomo Corp.
“TT will be unlocked in the very near future,” he said.
Several members of Mongolia’s parliament have raised objections to financial and legal aspects of the TT investor agreement, raising the possibility that the mine — which has estimated reserves of 6bn tonnes — could suffer a similar fate to that of Oyu Tolgoi, a $5bn copper mine, where an expansion project was unblocked in May only after two years of wrangling.
Lack of progress by Rio Tinto, the owner and operator of Oyu Tolgoi, in reaching an accord with Ulan Bator on the expansion highlighted investor concerns about the level of political backing for investment.
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