REFILE-Mongolia says mining review won't target Oyu Tolgoi

Wed Sep 19, 2012 4:02am EDT

ULAN BATOR, Sept 19 (Reuters) - Mongolia's government said it plans to review all foreign mining investments, but pledged not to single out a deal with Rio Tinto to develop the huge Oyu Tolgoi copper-gold mine, in a move that could calm investor concerns over growing resource nationalism.

Mining minister Ganhuyag Davaajav told media last week the new mining "action plan" over the next four years was likely to call for changes to the 2009 Oyu Tolgoi deal, which granted 66 percent of the deposit to Canada's Ivanhoe Mines, now known as Turquoise Hill Resources and majority-owned by Rio Tinto.

But a proposal calling for the deal to be renegotiated was voted down during a heated parliamentary debate on Tuesday.

"In the government action plan, we did not specifically name Oyu Tolgoi, but we said that all investment agreements in the mining and energy sector need to be reviewed carefully," Mongolian prime minister Altankhuyag Norov was quoted as saying by news portal news.mn.

The report said Altankhuyag intended to subject the Oyu Tolgoi agreement to a full and transparent parliamentary hearing and resolve the debate "once and for all".

London-listed private equity firm Origo Partners, which owns mines in Mongolia, welcomed the move, saying in a note that it showed the Oyu Tolgoi project would not be subject to special treatment and that the government remained "predominantly moderate and understands the importance of foreign investment."

Located 550 km (340 miles) southwest of the capital Ulan Bator, Oyu Tolgoi is said to be one of the three largest copper and gold deposits in the world. Rio Tinto and Turquoise Hill will have plowed $6 billion into the mine by the time the first phase of construction is complete.

The construction phase at Oyu Tolgoi is expected to formally wrap up next month and commercial production of ore will commence in the first half of 2013.

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