Job Rotation in the Mongolian Cabinet, at Turquoise Hill and at Oyu Tolgoi

By Julian Dierkes and Bulgan B

Any observer would agree that the development of Oyu Tolgoi has been a winding and meandering path. In the foreign press and from an international investor perspective, mentions of the frequent turnover of Mongolian prime ministers are almost as frequent as the totemic invocation of the vacuous “resource nationalism” label. While those observations are correct in pointing to frequent turnover in Mongolian prime ministers, they rarely note the matter that CEOs of Oyu Tolgoi – ultimately appointed by Rio Tinto – have been almost as numerous as Mongolian prime ministers. In fact, since 2007, there have been an equal number of PMs as Oyu Tolgoi CEOs!

Prime Ministers

Nov 2007 – Oct 2009: S Bayar
Oct 2009 – Aug 2012: Su Batbold
Aug 2012 – Nov 2014: N Altankhuyag
Nov 2014 – July 2016: Ch Saikhanbileg
July 2016 – Oct 2017: J Erdenebat
Oct 2017 – present: U Khurelsukh

Note that we’ve excluded the very brief “acting PM” interlude of D Terbishdagva in 2014.

Oyu Tolgoi CEOs

Keith Marshall: Feb 2008 – Dec 2010
Cameron McCrae: Dec 2010 – Oct 2013
Craig Kinnell: Oct 2013 – Oct 14
Andrew Woodley: Nov 2014 – Sept 2016
Stephen Jones (Acting CEO): Sept 2016 – May 2017
Armando Torres: May 2017 – present

Turquoise Hill CEOs

Robert Friedland: founder – Apr 2012
Kay Priestley: May 2012 – Nov 2014 [July 2012 name change from Ivanhoe Mines to Turquoise Hill Resources]
Jeff Tygesen: Dec 2014 – June 2018
Luke Colton (acting): July 2018 – present

Significance

While the turnover in government executive is rooted in a) electoral politics, and b) factional politics, why have there been so many Oyu Tolgoi executives?

Much has been written about turnover in the Mongolian government, but less attention has focused on turnover that is initiated by an investment partner like Rio Tinto. In their recent open letters, SailingStone Capital has criticized the lack of independence of Turquoise Hill management vis-a-vis Rio Tinto, but a similar argument could surely be made regarding Oyu Tolgoi management.

All OT CEOs have been placed in their positions from previous roles within the Rio Tinto organization. Their appointments have often come with claims that they bring specific skills to the job that are well-suited to the context that OT is operating in, like a focus on construction and development or a specific kind of operation.

That may well be the case, but it means that there is very little continuity among the OT leadership. Rio Tinto has repeatedly claimed that their financial investment is matched by a commitment to Mongolia as a location for its investment, but executive turnover is one aspect among several that casts some doubt on that commitment.

It is fair to criticize the Mongolian government for several kinds of lack of continuity (changes in taxation, governance requirements, etc.), some of those discontinuities are a natural and, ultimately, desirable aspect of democracy, i.e. this lack of continuity represents expressions of Mongolians’ political will.

But in businesses like Rio Tinto, Turquoise Hill, and Oyu Tolgoi, turnover is not induced by democratic processes, or external actors (at least not typically). So, it is difficult to fend off the impression that Oyu Tolgoi is often treated by Rio Tinto as a business unit that does not exist in a particular social and political context.

Presumably, Rio Tinto is planning to operate Oyu Tolgoi for many decades. Mongolians certainly are counting on a mine life of many decades for Oyu Tolgoi. Given that longterm relationship and the acute need for social license to operate for mining operations around the world, more continuity in the management personnel sent by Rio Tinto could not only signal commitment but allow the company to engage with Mongolia as a social and political context more seriously than they have in the past. Yes, the company is hiring Mongolians, of course, as specified by the Investment Agreement, but also to reduce costs. Yes, important agreements have been reached with the population of South Gobi. But the turnover in executives has added to the impression that Rio Tinto has resisted treating Oyu Tolgoi as anything other than a specific column in a global spreadsheet, without personality and without locally specific expectations.

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