Altan San Securities - Mongolia Investment - Gold Mine Negotiations May Set Pace For Mining Labor Contracts

Gold Mine Negotiations May Set Pace For Mining Labor Contracts

         Work has ground to a halt at the Boroo gold mine in Mongolia as Centerra Gold and Mongolian labor unions battle over a labor issues which may prove a test case for labor negotiations for the Mongolian mining industry, the Mineweb said.
          Being among the first foreign companies to mine in Mongolia has been both exhilarating and frustrating for Centerra Gold, which now finds its Boroo gold mine in a temporary shutdown as the mining companies and Mongolia's national trade union debate a labor contract, which could set a precedent for other foreign miners, according to the Mineweb.
                       In an interview with Mineweb Wednesday, Centerra Vice President , Investor Relations John Pearson said Boroo's labor problems began after Ivanhoe laid off workers and Boroo let go of the contract workers who had finished building the mine's heap leach pad in June 2008.
Discussions began between the local Boroo Trade Union and Boroo management in the fall of last year. However, things heated up politically after a national trade union organization joined the talks with the aim of increasing the pay of all Mongolian miners.
       Eventually, Pearson said, redundancy pay and mine closure bonuses were also raised by the national union, issues which parent Centerra Gold says are unreasonable. Although Centerra's collective bargaining agreement expires on January 31, 2010, unionized employees initiated a work stoppage on May 26, 2009, an action Centerra asserts is illegal.
Mining and milling have been temporarily suspended as the labor negotiations plod along. In Mongolia, contract negotiations take longer because--since the Mongolians stand by their commitments once they are made-they are scrupulously careful as to the wording of such agreements.
Pearson said Boroo started production in 2004 and is estimated to have 800,000 ounces of gold reserves remaining. While Boroo is located in a remote area of Mongolia, the minesite enjoys good access to a highway and a railway.
        The Gatsuurt exploration property, located 35 kilometres from the Boroo mine, contains a number of satellite deposits with ore that can be processed in the Boroo operation, which plans to add a bio-oxidation circuit. Because of the satellite deposits, Pearson estimates that Boroo and Gantsuurt offer another decade of mine life, yielding 200,000 ounces of gold.
        At 1,564,116 square kilometres, Mongolia is the 19th largest and most sparsely populated independent country in the world. Roughly 30% of the country's 2.9 people are nomadic or semi-nomadic. About 20 % of the population lives on less than US$ 1.25 a day. Since international mining investment is considered one of the key stepping stones to economic growth for the country, the Boroo negotiations may attract more attention from the Mongolian government and international agencies than a typical gold mine of its size in, say, Nevada.

Source: Montsame

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