At the meeting on Wednesday, the government was introduced with present situation of the Erdenet Mining Corporation, the giant copper mining industry of Mongolia.

Over the past 30 years since its establishment, Erdenet contributed MNT 1 trillion and 990 billion to the general government and the local budgets. As of 2008, the corporation occupied 40 percent of the total tax revenue of the country. Due to a drop of copper and molybdenum prices in international market, the volume of trading and profit have dramatically declined. In the last year, the profit stood at MNT 20.7 billion. If copper price reaches about USD 3,150 in international market this year, the Erdenet will get an opportunity to operate without loss.
Compared with 2000, extraction value for a one ton of pure copper has doubled, and tax load has increased four times. For over two years since enactment of the Law of Windfall Tax, the Erdenet contributed about MNT 870 billion to Mongolia's Development Fund. Due to a change made in ways of pursuing this Law, the Erdenet pays not 68 percent of windfall tax, but 75.4 percent of tax in total. This affects negatively the financial condition of the Erdenet. It also makes the Erdenet fail to make extension and renovation and to set up a plant to manufacture final products.
At the meeting, the government assigned State Property Committee Chairman D.S ugar and General Director of Erdenet Mining Corporation to ensure normal operation with contributing the income into the state budget according to a schedule agreed upon between the Finance Ministry and the Administration of the Erdenet on February 20, 2009.

 

Source: Montsame

Mar 5, 2009