The
MPRP group in Parliament on Monday gave unanimous approval to the draft Tavantolgoi
investment agreement. Later, the head of the group, D.Lundeejantsan, and the Minister
for Minerals and Energy, D.Zorigt, briefed media on the basic provisions of the
draft agreement.

The
deposits will be fully owned by the state and “every Mongolian citizen will
become a shareholder in the deposits once the coal enters market circulation”. The
deposits will be split into two parts to be mined. It is estimated that 30
percent of the total six billion tons of coal can be coked. Global demand for coking
coal is strong and the price is over USD250 per ton, while thermal coal costs
USD132.  

Lundeejantsan
explained that a state owned company will be established and no less than 10
percent share of at least 3.5 billion tons of deposit will be distributed
equally to 2.7 million citizens. This is different from previous privatization when
people received pink and blue sheets as their shares of state owned factories. All
the privatization in the past 20 years has paid dividend of only MNT 3000-4000,
but this will be much more profitable.

In
addition to these free shares, all registered companies and citizens of
Mongolia will be able to buy shares of the deposit when they are sold in the
Mongolian Stock Exchange. The Mineral Law stipulates that no less than 10
percent of the total shares will have to be so offered. The MPRP MPs urged that
everybody should have equal opportunity to buy shares at the stock exchange.

Foreign
investors and domestic companies or consortiums will have a chance to operate
the mines. Issues related to transit transportation will be settled. Present
estimates are that if 15 million tons of coal is coked annually, the state will
earn USD 5 billion 500 million in the coming 30 years and if the quantity coked
goes up to 30 million tons annually, the corresponding  revenue will be USD16 billion.

Zorigt
clarified that once Parliament approves the draft agreement, the new company
will be set up, specifically for Tavantolgoi, and its shares will be distributed
to citizens. The state will continue to own both the license and the deposits
in both parts of while chosen companies will do the excavation and marketing on
a contract.