Mongolia election boost for mining

Mongolia's ruling party yesterday claimed victory in parliamentary elections expected to open the way for long-awaited agreement on how to handle billions of dollars of foreign investment in the country's mining sector.

The Mongolian People's Revolutionary party said it had won 38 seats from rural constituencies, enough to secure a clear majority in the 76-member unicameral parliament, the State Great Hural.

With the MPRP expected to claim more seats from constituencies in the capital Ulan Bator, where votes were still being counted, the result appeared set to markedly strengthen the ruling party's position.

Mongolia's last parliamentary election in 2004 gave only the narrowest of parliamentary majorities to the MPRP, a former communist party that has governed the country for all but four of the last 87 years.

The previous broadly split parliament had failed to agree revisions to the mining law seen as essential to promoting foreign investment or to approve the long-stalled multi-billion dollar Oyu Tolgoi copper project backed by Ivanhoe Mines of Canada and Rio Tinto.

Mongolia's large estimated reserves of resources such as copper, gold, coal and uranium have drawn increasing international interest amid rising commodity prices and the rapid economic growth of China, the grassland nation's southern neighbour.

However, international mining executives have expressed deep frustration at slow progress in setting the terms of foreign involvement in projects such as Oyu Tolgoi and the Tavan Tolgoi coalfield.

Sumati, head of the Sant Maral independent political polling group, said the election result was likely to lead to early approval of the mining law and Oyu Tolgoi project.

Sanj Bayar, prime minister during the previous parliamentary session, had been unable to win backing for the deals from an opposition keen not to strengthen his position ahead of the elections, said Mr Sumati, who like many Mongolians prefers to go by a single name.

"Now he shouldn't have any more trouble," Mr Sumati said.

How to regulate foreign involvement in the mining sector has been a highly sensitive topic in Mongolia. Growing resource extraction helped to fuel economic growth of nearly 10 per cent last year, but much of the population remains mired in poverty.