Mining companies continue to watch new government’s steps to increase Mongolian mining profits

The fifty companies currently holding rights to extract uranium in Mongolia are collectively holding their breaths as the Mongolian government considers seeking a larger share of mining profits.

An announcement at the end of November that the new government of Prime Minister Sanj Bayar may seek to declare Khan Resources Inc.’s (TSX:KRI) Dornod uranium deposit a “strategic deposit,’ which would allow the government to receive 50 percent of the mine’s profits.

Prime Minister Sanj Bayar has also proposed new laws to allow the government to take control of the Tavan Tolgoi coal deposit, N. Algaa, the executive director of the Mongolian National Mining Association, has told Bloomberg News.

Tavan Tolgoi is the second largest mining investment in Mongolia, following the Oyu Tolgoi copper mine. Initial estimates have indicated Tavan Tolgoi will produce 30 million tons of coal annually for the next 30 years.

Fear among other companies, which have spent up to $350 million to explore and develop Mongolian uranium sites, has caused them to not issue public statements about possible moves by the government to reduce company profits.

"We are going ahead, yet cautiously, with our work program for 2008," Rodney Ogilvie, head of Mongolia operations for uranium miner Cameco (CCO.TO) told the Reuters News Agency.

Adding to mining company fears is the upcoming Mongolian Parliamentary elections which may find political parties using the mining profits issue as a potent electoral issue.

Friday, 14 December 2007
http://www.mongolia-web.com/