Source: Financial Times                           Date: 05 October, 2011

Rio Tinto and Ivanhoe Mines have had to suffer increasing political pressure regarding their Oyu Tolgoi project. A controversy seems to be an effect of the turbulence within Mongolia’s mining sector as the 2012 elections approach.The government announced its interest in raising its stake in Oyu Tolgoi to 50 percent ahead of schedule. The news brought discontent to Mongolia's mining sector just when the global economic crisis was beginning to affect mining firms. Rio has warned that the demand for commodities may fall and a drop in production in its biggest copper mine in Chile.Although Mongolia has managed to come out unscathed by economic perils thus far, investors are fearful about how a change in the political environment may impact resource projects.“An unstable environment, where changes to agreements are forced, leads to investors being very apprehensive and uncertain,” said Cameron McRae, Rio's country director and the head of operations at Oyu Tolgoi. “Therefore the stability of this investment agreement sends a very important signal from Mongolia to the world.”Discussions over the Oyu Tolgoi copper and gold project only touched on the stake, said D. Zorigt, mining minister.A change in politics could mostly seriously impact the Tavan Tolgoi coal project as well. The government is selling the rights to half of the deposit to foreign investors, while the other half will be under the control of the state-owned firm Erdenes Tavan Tolgoi. It is possible that firm will list on markets in London, Hong Kong, and Ulaanbaatar by March next year.Both Oyu Tolgoi and Tavan Tolgoi are enormous deposits of copper and coal respectively. The development of these mines has already brought enormous economic growth to Mongolia.