Source:The Australian                          Date: 14 September, 2011

Rio Tinto's CEO issued a warning to Parliament members to end their interferences putting the reputation of Mongolia as a favorable place for business in jeopardy. Recently 20 members of Parliament appealed to yet another revision of the Oyu Tolgoi contract.

During the Discover Mongolia forum in Ulaanbaatar, Cameron McRae, Rio Tinto's country director and chief executive of the Oyu Tolgoi copper-gold deposit, said that his firm's 2009 agreement with the government signaled that Mongolia was a place businesses were welcome to operate, but a break of its commitment could lead investors and firms to question that notion.

"If even a few voices call for Mongolia's commitments to be broken and agreements to be changed, there is a risk that this will undermine investor confidences," McRae said. "These few will have to answer to the many Mongolians whose jobs will be on the line and the local businesses whose prospects will be jeopardized. We are confident that Mongolia will not let this happen; that stability and the rule of law will prevail; that Mongolia's long-awaited economic promise will become a reality."

The Oyu Tolgoi site already has and will contribute to rapid economic growth in Mongolia. Recently, the firm projected the gold and copper project will contribute to 30 percent of the country's gross domestic product (GDP). The government will receive USD 220 million in taxes from Oyu Tolgoi in 2011 alone and a total of USD 700 million before the project even begins production. It employs 14,000 workers, 60 percent of who are Mongolian nationals. The mine will produce 467,000 tons of copper, 330,000 ounces of gold and 2.9 million ounces of silver a year. It is one of the worlds largest gold mines.

Read more.

Regulation and taxation in Mongolia have been thorny issues between Mongolia and its expanding mining sector. Already at least four major revisions to tax law have been implemented in the past 12 years. The most recent investment agreement replaced an earlier one that would have directed 68 percent of profits on copper and gold to the government during periods of heavy inflation. This law resulted in significant drop in foreign investment.