Ulaanbaatar, Mongolia - Oyu Tolgoi said today that the Investment Agreement (IA) is beneficial to Mongolia and the shareholders would not contemplate changing the terms of the Agreement that governs the shareholding and profit share of the Oyu Tolgoi mine.
Oyu Tolgoi chief executive officer Cameron McRae said “The IA is a great deal for Mongolia – the government gets more than 50 per cent of pre-tax profits when you include equity, dividends, taxes, royalties and VAT. That’s more than five tugrugs out of every 10 going direct to Mongolia, before you even think about what the mine will do for jobs, local suppliers and technology improvements.
“The Investment Agreement gives Mongolia the benefits of ownership, while not requiring the government from having to put up any money up front. It is a robust agreement enshrined in Mongolian law and was signed by all parties in good faith on the understanding it would not be changed.
“We will have invested more than US$6 billion before the mine becomes operational, we will have paid $700m in taxes by the time the first product is sold, and of course the Government of Mongolia does not have to pay any money up front for its share. This is a partnership that is the equal of any in the world.”
In response to media reports that the IA may be reconsidered, Mr McRae confirmed that there had not been any talks with the Government about renegotiating the IA.
“Both sides agree that the IA is a cornerstone agreement that is clearly attracting foreign direct investment to Mongolia, and the stability this framework represents is key to investor confidence.
“Oyu Tolgoi continues to honour its commitments to the IA. We are employing and training 10,000 Mongolians and running the biggest vocational training programme ever seen in Mongolia. In addition to the mine, Oyu Tolgoi is building key infrastructure, including an airport, three vocational schools, a 100km paved road, and two sports complexes. Under our 'Mongolia First' programme, we have more than 1,000 Mongolian suppliers listed on our books, with more than US$1 billion already committed to local suppliers.
“We understand that Oyu Tolgoi is vital for Mongolia’s future and we are committed to ensuring Mongolia’s future growth and prosperity.”
About Oyu Tolgoi LLC (www.ot.mn)
Oyu Tolgoi LLC, Mongolia's largest copper and gold mining company, is a strategic partnership between the Government of Mongolia, Turquoise Hill Resources and Rio Tinto. Located in the South Gobi, Oyu Tolgoi commenced shipment of product to customers in July 2013. Oyu Tolgoi is managed by Rio Tinto, which is investing global expertise and cutting-edge technology to help develop Mongolia’s mining industry and ensure Oyu Tolgoi is one of the world’s most advanced mines. For Oyu Tolgoi, nothing matters more than safety. The business operates under the principle that if a job cannot be done safely, it will not be done at all.