An Analysis of Concerns about the Draft Agreement to Undertake the Oyu Tolgoi Mining Project
April 2009 — A study by Dr. Robert Shapiro and Sonecon, LLC, Commissioned by World Growth Mongolia.
On February 18, 2009, the Mongolian Government Cabinet and two international mining companies, Ivanhoe Mines, Ltd. and Rio Tinto International Holdings, Limited, finalized a new draft agreement to develop the Oyu Tolgoi mine. The report, An Analysis of Concerns about the Draft Agreement to Undertake the Oyu Tolgoi Mining Project examines the agreement and the concerns of Mongolian analysts, policymakers and civic society NGOs, and concludes that the concerns are largely misplaced or substantially outweighed by the very substantial benefits which this agreement offers Mongolia’s economy and people.
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The Oyu Tolgoi Investment Agreement: Why It Works for Mongolia
April 2009 — A study by World Growth.
For the past five years the Mongolian Government has been negotiating an Investment Agreement with Ivanhoe Mines and its partner Rio Tinto to develop the mineral deposit at Oyu Tolgoi in the Southern Gobi. The deposit is huge and will require an investment of more than US$7 billion to bring it to fruition. As the Mongolian economy is also slowing rapidly, the economic benefits of the proposed Agreement now assume an even greater significance for the country. Even before the downturn, Mongolia was facing serious challenges in terms of inflation and its deteriorating fiscal position. The report argues that the proposed Agreement would help to ensure that Oyu Tolgoi proceeds, thereby making a major contribution to stabilizing the country’s public finances.
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Economic Modernization in Mongolia: The Impact of Tax and Regulatory Policies on the Mining Sector
January 2009 – A study by Dr. Robert Shapiro and Sonecon, LLC, Commissioned by World Growth Mongolia
This detailed report, “Economic Modernization in Mongolia: The Impact of Tax and Regulatory Policies on the Mining Sector,” examines the potential impact of recent government policies on the prospects for six, new major mining projects. The study is authored by Dr. Robert Shapiro, Chairman of Sonecon, LLC, an international economic advisory firm, and commissioned by World Growth Mongolia. Dr. Shapiro finds that if these projects go forward, they should produce enormous, long-term economic benefits for the Mongolian economy. However, all of these future gains are at risk, because recent amendments to the 1997 Minerals Law and other legal changes have created major concerns for large foreign investors in Mongolian mining. This study specifically discusses the impact of the mineral royalty rate, the windfall profits tax, and public ownership or equity on these mining projects.
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Taxation and Mining in Mongolia
December 2008 - A study by World Growth.
Taxation and Mining in Mongolia reviews international best practices, examining the case of Chile in particular. After making major taxation reforms nearly 15 years ago, Chile quickly captured over 50 percent of the world’s investment in copper and gold. Chile’s tax model is based on the principle that lowering the tax rate will expand the tax base and provide greater revenue to the Government. This is the same principle upon which Mongolia’s general taxation system, regarded as best practice, rests. Taxation and Mining in Mongolia also carefully examines Mongolia’s current taxation policies and determines conclusively that the Windfall Profits Tax on gold and copper has severely damaged Mongolia’s economy and recommends that this tax be immediately repealed and replaced with a sensible alternative.
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A Path Forward for Mining in Mongolia
November 2008 - A study by World Growth.
This report addresses the key policy issues that confront the Mongolian Government and the State Great Hural in deciding the nature of the taxation and regulatory regimes which are to apply to commercial mining in Mongolia. During this process, it will be important for the Government and the State Great Hural to consider the roles that the public and private sectors are best suited to play in the exploitation of Mongolia’s mineral wealth. Only the public sector can establish the legislative framework that supports and enforces a system of transparent, secure and transferable property rights in mineral exploration, mining and processing. With that in place, the private sector is ideally placed to organise the extraction of economically useful minerals and metals.
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Averting the Resource Curse
April 2008 — A study by World Growth.
Mongolia is in the process of transforming itself into a nation that is based on secure property rights, economic freedom and democratic government – and even though it has lost its way in that regard over the past several years it is believed that it can and will get itself back on course. A major test of the progress it has made, as well as its resolve to continue with that process, will be how it handles the challenge represented by Oyu Tolgoi, a massive, world class mineral deposit located in the remote South Gobi region of Mongolia, near the China border. The study canvasses the requirements of a mining policy framework for Mongolia that would deliver international best practices in terms of investment attraction.
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