The operator of a Mongolian coal mine that is at the center of a controversy
over a Chinese acquisition bid said Tuesday it will stop production this month.

Operations at the Ovoot Tolgoi Mine “will be entirely curtailed” as of the
end of this quarter, SouthGobi Resources Ltd. said in a statement through the
Hong Kong stock exchange. It cited weak market conditions and regulatory
issues.

The company said earlier that Mongolian authorities asked it to suspend
production while they review a plan by state-owned Aluminum Corp. of China to
acquire a majority stake in the miner from a Canadian company.

Mongolia has profited from selling coal, copper and other minerals to
China’s booming economy but some in the sparsely populated North Asian nation
are uneasy about possible economic domination by their giant neighbor.

Chalco’s plan to buy a 57.6 percent stake in SouthGobi from Canada’s Ivanhoe
Mines Ltd. triggered anxiety in Mongolia about Chinese ownership of a major
resource producer.

Last month, Mongolia’s parliament passed a foreign investment law that
appeared aimed at stopping Chalco. It requires government approval for
investments in mining or other strategic industries if the investors are
foreign state-owned companies or if foreign investment would exceed 49 percent
of the venture.

Phone calls Tuesday to Chalco’s Beijing headquarters were not answered.

Chinese mining and energy companies have been investing abroad in hopes of
capturing more of the profits from global demand for resources.

Mongolian leaders want to develop their economy by creating industries to
process minerals and other resources before they are exported. They worry
Chinese owners might undercut that by shipping raw ores and other materials
across the border for processing.

SouthGobi said it has failed to receive regulatory approvals and permits due
to the uncertain situation. It said that included approval of an environmental
report that is required to move ahead with plans to operate a coal handling
facility.

The company said it already has cut back operations at Ovoot Tolgoi to avoid
having too much unsold inventory on hand.