Altan San Securities - Mongolia Investment - Erdenes MGL no longer receives money from Government, says B.Enebish

Erdenes MGL no longer receives money from Government, says B.Enebish

B.Enebish, who succeeded the present Mineral and Energy Minister D.Zorigt as Executive Director of the state owned company Erdenes MGL, answers some questions from our reporter.

What is the role of your company in strategic deposit mining?
Erdenes MGL was founded in 2007 to represent the state in any strategic mining deposit exploration. For the last two years we have worked closely with the working groups on the Oyutolgoi and Tavantolgoi investment agreements.
When an agreement is signed will an Erdenes MGL representative sit on the boards that will run Oyutolgoi and Tavantolgoi?
The Mongolian Government will hold the shares and we shall be responsible for fulfilling both its responsibilities as the shareholder and in claiming its rights.
Does Erdenes MGL own the license of all strategic deposits?
No. We own the license only of Tavantolgoi and Shivee Ovoo coal mining. In 2006 Parliament adopted a list of strategic mining deposits. There are 15 such deposits and we shall represent the Government when work begins on any of them. It does not mean Erdenes MGL will own the license. But a license can be transferred to us. This is what happened when the MonAtom company was set up to take charge of the uranium deposits in Mongolia. Licenses were transferred to MonAtom.
Is Erdenes MGL financed by the Government as the other state owned companies are?
This was the case until the end of 2008. Since January 2009 we have been financing ourselves.
How?
I can only say that we haven’t received any money this year from the Government. The delay in signing the investment agreement has created this uncertain situation. We have to be responsible for our own financial requirements.
When work begins in Oyutolgoi will Erdenes MGL be run with money from dividends or will the expenses of your company be included as part of the administrative costs of the project?
From dividends. But that is a long way away.

Then how will you manage?
We work like other mining companies. Our staff work as consultants, and prepare economic and technical estimates. We also own some mines.
What exactly was signed during Mr. Putin’s visit?
The decision to establish a joint company between Russian Railways, Mongolian Railways and Erdenes MGL was taken in March this year. During the visit a formal agreement was signed to establish the company that will be called Development of Infrastructure.
What will the company do?
That will be decided by the Government. The Russian side will also have a say. As I understand, its main job will be to develop infrastructure. Now the company is in the process of registration. Developing infrastructure is closely connected to mining strategic deposits. Extraction will be hampered if there is no efficient and adequate transportation.
There are reports in the Russian media that Russia is ready to invest USD7 billion in the joint company?
I have no information on this.
The financial daily Kommersant wrote the Russians will explore Oyutolgoi and Tavantolgoi.
The license of Oyutolgoi is held by Ivanhoe Mines Mongolia Inc.
What about Tavantolgoi?
The Mongolian Government floated a tender on Tavantolgoi and we received 11 bids, all of them from leading mining companies, including a Russian consortium. Some time ago I heard Severstali will leave this consortium. I don’t know if Russian Railways will replace Severstali. I think work on Tavantolgoi will start next autumn.

Source: www.NEWS.mn

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