Source: News.mn, San Francisco Chronicle                           Date: 05 October, 2011

Rio Tinto and Ivanhoe Mines rejected the Mongolian government's request for renegotiations of its Oyu Tolgoi investment agreement. Ivanhoe owns a 66 percent stake in the Oyu Tolgoi copper and gold project while Rio holds indirect ownership with its 49 percent stake in Ivanhoe.The news comes in light of reports that renegotiating the contract might undermine investor confidence in Mongolia. The government has said it would like to increase its stake from 34 percent to 50 percent, however the investment agreement it signed in 2009 stipulates that it must wait 30 years before it can do so. Ivanhoe stocks fell 6.6 percent to CAD 13.49 in Toronto following the government's plea.Mining companies are forced to defend against trends of resource nationalism surfacing world-wide. Ernest & Young identified this challenge as the greatest to mining firms operating abroad."It's the continuing theme of governments changing the goalposts after the investment has been made," said financial expert Prasad Patkar. "As an investor in these countries and these projects you have to expect and demand a higher return compensating for the higher risk that is now inherent in these things."The loss in investor confidence does not seem limited to Ivanhoe. The coking coal producer Mongolian Mining Corporation (MMC) fell 14 percent on the Hong Kong Exchange (HKE) before ending at HKD 5.16, its lowest price since its listing at HKD 7.00 last year.Both Rio and Ivanhoe have sent written responses to the National Security Council (NSC) warning the government against breaking investors' confidence in the investment opportunities in Mongolia. In a statement released by Ivanhoe, the company said they would like the government to honor its original 2009 agreement.The Oyu Tolgoi is the world's greatest untapped copper deposit and will rank among the top five largest producers once production begins. Rio has said Oyu Tolgoi will account for 30 percent of Mongolia's GDP.