Russia, Mongolia form Dornod uranium joint venture

ULAN BATOR, Aug 25 (Reuters) - Russian and Mongolian state-owned firms have formed a joint venture to exploit the Dornod uranium deposit, in a setback for a Canadian mining firm licensed to develop the area.

The move comes after Mongolia’s legislature in July passed a Nuclear Energy law that gave the state greater ownership over uranium deposits, especially those deemed strategic.

Mongolia’s AtomMon and Russian state firm AtomRedMetGold will establish the joint venture Dornod Uranium, Mongolia Today, a Russian language newspaper in Mongolia, reported on Tuesday.

“Under this agreement both sides will put into circulation in Dornod region a deposit of 27.73 tonnes of uranium and will export the raw material for nuclear fuel,” the paper said, without citing anyone.

Khan Resources KRI.TO, a Canadian mining firm, held exploration and mining licenses in the Dornod area in northeastern Mongolia, the site of a former Russian open pit mine. It said in July that it was seeking clarification on the impact of the Mongolian law.

Speculation in Mongolia that Russian interests would regain a greater influence over Mongolia’s uranium wealth grew after the Mongolian Prime Minister, of the Mongolian People’s Revolutionary Party, crossed the border for a quick visit in January.

Mongolia opened its uranium deposits to international prospectors after the collapse of the Soviet Union ended six decades as a satellite state, and forced Russia to abandon its uranium mining interests.

However, in the past three years the country has become increasingly concerned about re-exerting control over its own resources.

Executives from Khan Resources had also travelled to Mongolia, the paper said on Tuesday. They could not be immediately reached for comment. (Reporting by Denis Dyomkin and Lucy Hornby; Editing by Michael Urquhart)