ULAANBAATAR/LONDON (Reuters) - Mongolia’s Supreme Court has ruled against the government’s attempt to nationalize a 49 percent stake in one of Asia’s biggest copper mines, industry sources said on Friday.
They said the owner of the holding - Mongolian Copper Corporation (MCC) - would now seek compensation through international arbitration over the Mongolian government’s alleged breach of international rules on investors’ rights.
“I want to stress that all legal obstacles have been removed involving our shareholding,” MCC’s CEO, Tsooj Purevtuvshin, told Reuters on Friday.
The Supreme Court delivered its ruling on Thursday, effectively restoring to MCC the stake it bought in the Erdenet copper mine from the Russian government in 2016 for $400 million. The court did not respond to requests for comment.
In a statement issued in London, MCC said it had assembled an international legal team, led by law firm Omnia Strategy, to seek compensation after two days of talks on Dec 4-5 in Ulaanbaatar with government officials failed to reach a deal.
No-one from the Mongolian government, which holds the other 51 percent in Erdenet, was immediately available for comment.
MCC has been locked in a legal battle since February, when the Mongolian parliament voted to nationalize its 49 percent shareholding on the grounds the sale was not approved by the lawmakers.
The Supreme Court recognized MCC as the owner of the 49 percent stake in Erdenet, which produces 530,000 tonnes of copper concentrate annually, upholding a lower court ruling.
It also voided an earlier decision to dismiss the MCC board and Purevtuvshin said the MCC board members would reclaim their positions. Purevtuvshin is not a board member.
The shareholding would be transferred from the State Property Committee back to MCC once the Supreme Court releases a written statement, after about two weeks, he added.
Industry sources, who asked not to be named, said the case was positive in that it proved the separation between the judiciary and the government, but they were wary of drawing broader implications.
Purevtuvshin declined to comment on whether the court decision could move forward a possible partnership mooted between Erdenet and Chile’s Codelco.
Erdenet has been producing since 1978 and is one of the largest tax contributors in a country highly dependent on its natural resources for income, especially as it seeks to meet the conditions of an IMF bailout.
Mongolia’s huge copper potential has attracted interest from international miners, led by Rio Tinto, which operates the country’s giant Oyu Tolgoi copper project.
Codelco has also said it is preparing to invest in Mongolia as copper deposits in Chile, the world’s biggest copper producing nation, dwindle in quality following years of exploitation.
Editing by Adrian Croft