ULAN BATOR (Reuters) - Mongolians voted in a “text message referendum” to back a multi-billion dollar expansion of the Oyu Tolgoi copper mine instead of tightening the cash-strapped country’s budget to boost its ailing economy.
Mongolia’s new prime minister, Chimed Saikhanbileg, called for the unprecedented vote via mobile phone text message on whether to step up austerity measures or do whatever it takes to get the country’s mining sector growing again.
Out of 302,008 votes, 56.1 percent supported further development of Oyu Tolgoi, while 43.9 percent were in favor of “strengthening economic discipline”, the prime minister’s spokesman said in a statement. .
The mine, which is being developed by Rio Tinto and owned by its Turquoise Hill Resources unit and the government, has suffered repeated delays.
Only 10 percent of the country’s 3.3 million mobile phone subscribers responded in the poll held from Saturday to Tuesday.
Mongolia’s mineral-dependent economy has been hit by sliding global commodity prices, a slowdown in neighboring China and a series of disputes over the future of key mining projects like the $6.5 billion Oyu Tolgoi copper mine.
Foreign investment fell 74 percent in 2014, according to the latest data from the country’s central bank.
The Oyu Tolgoi project was specifically mentioned in the text message delivered to all mobile phone subscribers asking them to vote. It is one of the world’s largest copper deposits and the biggest mine in the country.
“The results of the poll provide a strong case for investment and moving projects forward. We hope these results will create the momentum that this economy needs,” said Jackson Cox, chairman of the American Chamber of Commerce in Ulan Bator.
Rio Tinto put plans for the underground second phase of the project on hold in August 2013 because of disagreements with the government over costs.
More recently, the government said the mine owed an extra $30 million in tax, which Rio disputes.
“The referendum shows that (the prime minister) is willing to advance the Oyu Tolgoi project further,” said Mongolian Investment Banking Group Chief Executive Bilguun Ankhbayar.
Mongolia’s parliament raised its debt ceiling to 58.3 percent from 40 percent last month after the decline in foreign investment and a number of sovereign bond sales.
The country introduced budget cuts for 2015, mostly affecting infrastructure investment rather than social welfare programs, and raised taxes on imports such as fuel.
Editing by David Stanway, Sonali Paul and Ed Davies