Investment Agreement

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Investment Agreement


You can download the Investment Agreement summary here.


Mining the copper and gold of South Gobi requires billions of dollars from investors and the creation of a new company, Oyu Tolgoi LLC. Since the minerals are 100 per cent owned by the Mongolian people, Oyu Tolgoi must first pay taxes, royalties and fees for the copper, gold and molybdenum produced by the mine. Shareholders in the company, including the Mongolian government, then receive dividends based on the profits derived from sales.

The Mongolian Minerals Law provides for Investment Agreements on projects that will span many years. The Oyu Tolgoi Investment Agreement describes the rights and responsibilities of all parties for the entire life of the project. For the Mongolian Government, the Agreement guarantees taxes, royalties, fees, shareholding, environmental standards as well as requirements for employment and social investments. For investors, the Agreement creates a stable and predictable legal structure to plan the business and invest the trillions of MNT (billions of dollars) required to develop the mine and then fund the large expansion programme up to 2020.

After six years of negotiations and a public review by the Parliament, the Oyu Tolgoi Investment Agreement was signed on 6 October, 2009. It is the basis on which another 7.8 trillion MNT (US$6.2 billion) will be invested in the mine. Under the Agreement:

  • The Mongolian government will receive a majority of the profits with no financial risk;
  • The International Monetary Fund estimates that Mongolia will receive up to 71 per cent of Oyu Tolgoi project cash flow over the lifetime of the project through taxes, royalties, fees and dividends;
  • In addition, Mongolia received 34 per cent of the shares in the company without expending public funds or exposing the budget to new debt;
  • The Government of Mongolia’s share of capital expenditure will be repaid from dividends from the mine itself rather than money from the national treasury, thereby protecting the Government’s budget from falling copper and gold prices;
  • The Government of Mongolia has the right to increase its shareholding to 50 per cent in the future.

Other requirements of the Investment Agreement include:

  • Stringent standards for environmental, cultural, community, health and worker safety must be observed;
  • Oyu Tolgoi will create training programmes for Mongolians and 90 per cent of the mine’s employees during operation will be Mongolian; and
  • Oyu Tolgoi will make social and infrastructure investments that improve living standards throughout Mongolia.