Source: Bloomberg, AFP                       Date: 29 September, 2011

If Mongolia attempts to alter its investor agreement for the Oyu Tolgoi project, it risks tarnishing its reputation with investors, warned Rio Tinto Country Director to Mongolia Cameron McRae. The government wishes to renegotiate its 2009 deal with Ivanhoe Mines for a 50 percent stake in the project.Prime Minister S. Batbold and Cabinet Secretary Ch. Khurelbaatar sent a letter to Ivanhoe and Rio to invite them for a discussion on the Oyu Tolgoi investor agreement. Ivanhoe currently holds at 66 percent stake in the project, while Rio holds indirect ownership with a 48.5 percent stake in Ivanhoe. A faction of 20 MPs have rallied against the deal, believing they have given too much away of Mongolia's wealth to foreign companies.Rio Tinto plans to invest USD 6 billion into the Oyu Tolgoi copper and gold project, hailed as the world's greatest untapped copper deposit. Construction is half complete on the mine and production is expected to begin next year.The agreement made gave Rio Tinto the confidence to invest “such a mammoth sum” into Oyu Tolgoi, said McRae.“What we are demonstrating is the investment agreement is a contract. We're going to honor it and we expect the government to honor it.”Shareholders plan to raise a sum up to USD 4 billion to finance the project's development. This would be the largest project financing ever in mining history, said McRae. Rio has invested more than USD 3 billion into the project in the past five years. Ivanhoe spent more than six years negotiating an investment pact with the government for the 2009 agreement. Rio believes the entire project will cost up to USD 10 billion.