After five deaths in post-election riots and a nearly two-month political boycott, Mongolia finally gets its parliamentary house in order. Next on the horizon—forming a new government.
Author: Dorothy Kosich
Posted: Friday , 29 Aug 2008
The eternal flame of hope burned more brightly for miners and explorers as Mongolia's Parliament resumed its first session since a July 23rd walkout by the main opposition party.
Legislators were sworn in Thursday as the new parliament hopes to quickly elect a new chairman who will form a new Mongolian government. The original swearing-in day was halted after opposition Democrats staged a walkout.
Rioting after Mongolia's disputed June 29 election left five people dead, as thousands of people took to the streets to protest against alleged election fraud. The election gave the ruling Mongolian People's Revolutionary Party (MPRP) a comfortable margin of victory with 47 of the 76 seats in parliament, while the Democratic Party won 26.
Democratic Party Leader Tsakhiagiin Elbegdrj originally vowed to not allow his party to return to parliament until a number of demands had been met. The violence and squabbling had convinced a number of foreign analysts that Mongolian Government mine ownership is not a good idea.
The biggest hostage of the stalemate was the hoped for ratification of the Oyu Tolgoi gold and copper project investment agreement between the Mongolian Government and JV partners Rio Tinto and Ivanhoe Mines. Rio and Ivanhoe have devoted four years to seeking government approval to develop the massive deposit. The Mongolian Government has sought amendments that would give the country a higher stake in the $3 billion project.
Meanwhile, the U.S. State Department has noted "a creeping expropriation" on the part of both Mongolia's central and provincial governments
Other mining and exploration projects are expected to benefit from the announcement that the Mongolian Parliament is finally back in session. In an interview with Bloomberg Thursday, Eurasia Capital Management said it planned to increase the world's first Mongolian-focused fund to $100 million to take advantage of the economic growth generated by the nation's mining sector.
Alisher Djumanov, managing partner of the Singapore-based fund, said he believes that the spillover effect from the mining sector will be significant. "We're investing in companies that are expected to growth significantly on the back of this strong economic growth." Among the hedge fund's investments in companies with projects in Mongolia listed outside the country are Ivanhoe Mines and Centerra Gold.
The World Bank estimated that mining accounted for about 20% of real GDP, 56% of gross industrial output, 69% of exports, and 36% of revenue for Mongolia in 2007.
Successful future mining sector development in Mongolia "will to a large extent depend on the government's ability to establish and maintain an effective regulatory and fiscal framework, prudently and transparently manage its mineral wealth to the benefit of all its population and ensure sound environmental and social performance of the sector," according to the World Bank.