Altan San Securities - Mongolia Investment - Elbegdorj wants profit sharing, not equity ownership

Elbegdorj wants profit sharing, not equity ownership

President Ts. Elbegdorj told Bloomberg News in an interview on the eve of assuming office that he did not favor the government buying an equity stake in the Oyu Tolgoi project, suggesting instead that the government take 50 percent of the profit. He said he would like to say to the foreign investors, “Do not close the door, there are still opportunities.” Mr. Elbegdorj called reaching an agreement his “first priority” on the economic front, though he gave no more specific time frame for a deal than the next three years. “This agreement is the first agreement,” he said. “If we make a good agreement, this will be an example for exploiting other big deposits and there is no space to make mistakes.”

Mr. Elbegdorj also proposed that the government consider changing the windfall profit tax that imposes a rate of 68 percent on revenue when copper prices exceed a certain amount per ton. Instead, he suggested a graduated system, for example a rate of 40 percent when copper prices reach USD8,000 per ton and 60 percent when they reach USD10,000 per ton. “I think one big high rate is not very wise,” he said. Rio Tinto shares fell as a cloud of uncertainty emerged over its gold and copper projects in Mongolia.

Source: www.news.mn

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