TT issue continues to be mired in confusion

Just days before President Ts.Elbegdorj officially confirmed that the National Security Council (NSC) had rejected the draft proposal to award Tavan Tolgoi development rights to consortiums from China, Russia, and the United States, and has asked the Government to further review its original formulation, D.Sugar, Chairman of the State Property Committee (SPC), had said that the draft had not been discussed by the NSC and was being reframed by the Government working group on its own. With the President and the SPC chief in effect contradicting each other, people are left wondering, and not for the first time, just how our policymakers intend to sort out the issue.     

The draft was presented to the NSC by the Government last July and soon thereafter members of the working group set up by the NSC to prepare a report on it, told media persons that the draft in its present form was not acceptable and could be reviewed by the NSC only after receiving more information from the Government. The draft was accordingly returned to the Government working group on 22 July. It has never been made public whether or when the Government working group did provide the NSC with the information and clarification it sought.

The NSC deemed the tentative decision of the Government to be in violation of the letter and spirit of Parliament’s Resolution #40 of 2008 and Resolution #39 of 2010. These were clear that the Tavan Tolgoi deposit was not to be divided into parts, but was to be deployed as a whole. They also said 10% of the resources should be owned by Mongolian nationals as shareholders, while another 10% was to be sold to the national companies at a pre-determined price, and 30% was to be offered on international stock exchanges to raise capital for the project. The remaining 50% was to remain with the state. The resolutions were based on the Minerals Law provision that no less than 50% of any mineral deposit discovered with state funding should be owned by the state.

Despite such unequivocal and binding directives the Government draft called for deployment of the west Tsanh of Tavan Tolgoi, with a Chinese company 40% responsible for the project, a joint Russia-Mongolia consortium for 36%, and a US company for the remaining 24%. The three would jointly work as an international mining and marketing consortium. The licence over the deposit will be the property of the state which will continue to own 100% of the asset. Investment, infrastructure, railway, operation and marketing rights and responsibilities were to be shared by the three selected participants in the project. The Government working group explained that the Chinese firm had been awarded 40%, the most, of the share as it met all requirements mentioned in the tender, such as railway construction, operation, marketing and advance payment.

Open discussions -- particularly one in the Citizens’ Hall of the President that featured representatives of the civil society, scholars and concerned citizens -- debated the merit of the respective percentage awarded to the participants. The August and September issues of the Mining Journal examined in detail the lack of clarity and realism in several provisions of the draft, wondered why 40% had been given to the Chinese firm chosen, and referred to the widespread and general uncertainty surrounding the merit of the participation percentage itself. We also showed how it went against the established national security concept.

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