ULAN BATOR, April 6 (Reuters) - Mongolia will soon finalise negotiations that will free up $8 billion for expansions at the country’s largest coal and copper mines, its prime minister said in a national address on Sunday.
Talks between the government and investors are progressing towards the close of deals on Mongolia’s multi-billion dollar Oyu Tolgoi copper mine and Tavan Tolgoi coking coal mine, Prime Minister Chimed Saikhanbileg’s said late on Sunday.
Mongolia is desperate for a revival in foreign investment after it fell 74 percent last year amid disputes with foreign investors such as global miner Rio Tinto .
“Now the parties are finalising their respective internal processes and we will soon officially announce results,” Saikhanbileg said about the expansion project for the Oyu Tolgoi copper mine, according to an unofficial translation of his televised speech.
A spokesman for Rio Tinto, holder of a 66 percent stake in the copper mine, could not be reached for comment.
Disputes over the rising costs at Oyu Tolgoi and taxes have delayed construction of the second underground phase at the $6.5 billion mine since August 2013.
Rio Tinto must resolve the disputes before banks can release more than $4 billion in financing to fund the expansion.
The government is also in the final stages of forging a deal to hand over management of state-owned Erdenes Tavan Tolgoi coal mine to China’s Shenhua Energy, Japan’s Sumitomo Corp and Mongolian Mining Corp subsidiary Energy Resources.
Mongolia has asked the partners to spend $4 billion to expand the Tavan Tolgoi mine’s capacity.
Both mines are located less than 250 kilometres from the Chinese border.
Mongolia’s mineral riches and strategic location drove peak economic growth of 17.5 percent in 2011, but disputes with investors have recently soured investment appetite.
The Asian Development Bank has estimated the average economic growth rate for 2015 and 2016 could slow to as little as 4 percent, without a strong recovery in foreign investment.
Saikhanbileg, who entered office last November to kick-start the economy again, blamed the disputes with mining investors on the political posturing by the country’s 76 lawmakers.
Mongolia is also planning to announce a final deal this month for the long awaited Combined Heat and Power Plant 5 project led by GDF Suez, Japan’s Sojitz Corp. Korea’s POSCO and Mongolia’s Newcom Group, he said.
The consortium in 2014 signed an initial 25-year power purchase agreement for the 415 megawatt coal-fired facility. (Reporting by Terrence Edwards; Editing by Tom Hogue)