INCREASED INVESTMENTS OF OT PROJECT ARE CRITICIZED

Ulaanbaatar /MONTSAME/ Mongolia's Government criticizes exceeded investments of the "Ouy tolgoi" project. The Mongolian society is awaiting the "Oyu tolgoi" LLC shareholders' meeting, which has been postponed so far. Some world media demonstrate a complete lack of understanding of the matter, saying that the Mongolian government is trying to increase its shares only. Such an idea is common even among some Mongolian MPs, but the government is paying its main attention to the dramatically increased initial investments. Mongolia's government understands that the feasibility study of the project is the soul of the agreement. The government tries to protect economic viability of the project and its return to people, who are the real owner of the asset, and realizes that every cent of the cost escalation dramatically impacts on our dividends, tax, as well as royalty. The Anglo-Australian mining giant Rio Tinto, the major stakeholder of Turquoise Hill Resources, intends to raise 6.6 billion USD this year for Oyu tolgoi. From the raised capital, 4.4 billion USD will go back to Turquoise Hill Resources on the grounds that this was the amount invested by the company in the past, while 2 billion USD will be used for the project operations. Furthermore, the company has informed recently that they need additional capital of 5.1 billion USD. As the President of Mongolia Ts.Elbegdorj noted, Rio Tinto should not be making such decisions and that the investment agreement does not allow this. Furthermore, even if such actions were allowed, Mongolia would have to pay its share of the raised capital of 6.6 billion USD, even if Rio takes back 4 billion USD for itself. "The initial estimate for the underground mine's financing was 14.6 billion USD, but the company is planning to spend 24.4 billion USD. The expenses are 9.8 billion more than the estimates, this must be addressed," said the President. "The investment agreement is that the initial investment will be used to produce ore concentrates and the commercial profit will be used for operation expenses. There was nothing about raising around 7 billion USD more, from some other source, and the company taking back its expenses from the investment and leaving. The time has come for the Mongolian government to take Oyu tolgoi matters into its own hands," said the President. He also says Mongolia must take its rightful place in Oyu tolgoi and that it is not satisfactory that Mongolia has a 34 percent stake in the project but is excluded from the project and does not know what is taking place. The government wants to make in the company's financial report a write-down of all extra spending, not stipulated in the feasibility study, and to keep at 53 percent at nominal value the profit Mongolia is to gain from the project for the whole period of fully exploiting the deposit according to the feasibility study. The Speaker of the Great State Khural (parliament) Mr Z.Enkhbold is confident that the government can decide the Investment agreement on its own."On only this right but also utmost power and performance have been given to the government by the previous parliament, so the government and the Rio Tinto can freely talk and sort out the problems," he said. D.Enkhbileg