MPs Petition to Renegotiate OT Agreement

By Julian Dierkes

Over the last several days (late Sept. 2011) there have been quite a number of articles in the press outside of Mongolia about a petition that was submitted to the Prime Minister of Mongolia by 20 MPs demanding a renegotiation of the Oyu Tolgoi investment agreement and more specifically demanding that the government pursue a 50% ownership stake. Part of the quick press coverage may have been brought about by the swift reaction from Rio Tinto and Ivanhoe.

Below we provide a rough translation of the original petition (by Byambajav D, edited by J Dierkes) as found on the personal blog of MP N Batbayar “A Petition Relating to the Oyu Tolgoi Deposit Issue Forwarded to the Prime Minister” [Accessed on September 28, 2011] Any annotations that we’ve added appear in [square brackets].

To the Prime Minister of Mongolia S. Batbold

On the Enforcement of the Ikh Khural’s Decision

Based on article 41.1 of the Constitution of Mongolia, the undersigned members of parliament are sending you this petition.

According to the article 29.4 of the Mineral Law, the Ikh Khural provided the Government of Mongolia the authority to negotiate the Oyu Tolgoi Investment Agreement and to conclude the agreement under the following terms and conditions:

1. The minimum share of the state ownership of the Oyu Tolgoi deposit should be 34 percent;
2. To permit the Government of Mongolia (S. Bayar [prime minister at the time of the conclusion of the agreement]) to conclude the the Oyu Tolgoi Investment Agreement in accordance with Mongolian legislation and […] guidance and recommendations approved by the Ikh Khural [see original Ikh Khural resolution made available by Business Mongolia;
3. To obligate the Government of Mongolia (S. Bayar) to renegotiate the agreement and increase the state share of the Oyu Tolgoi ownership to no less than 50 percent after the first investment is paid-off.

However, the agreement that the government concluded did not fulfill the terms and conditions of the 57^th decree [the terms listed above] of the Ikh Khural. Even though some members of parliament have repeatedly demanded that the government make amendments to the agreement in accordance with national interests, the decree has not been enforced until present and whether it will be enforced is not clear.

Thus, we demand that the 57^th decree of the State Great Khural on the Oyu Tolgoi Investment Agreement should be enforced and results should be reported to the parliament by October 1, 2011.

If our demand is not fulfilled by this date, we will take all possible measures within our legal authority to conform the agreement to Mongolia’s national interest.

Sincerely,

The members of the State Great Khural who supported this demand:

Mongolian People’s Party

Ts. Davaasuren, B. Bat-Erdene, Ts. Batbayar, D. Baldan-Ochir, S. Byambatsogt, Sh. Saikhansambuu, D. Ochirbat, D. Terbishdagva

Democratic Party

N. Batbayar, D. Gankhuyag, S. Erdene, R. Amarjargal [prime minister 1999-2000], G. Bayarsaikhan, Z. Enkhbold, L. Gantumur, Kh. Temuujin, Ts. Sedvaanchig

Civic Will – Green Party

D. Enkhbat

Independent Members

Z. Altai, Ts. Shinebayar

[Party affiliations added in translation for clarity]

Some points to note about the petition:

• none of the undersigned are members of cabinet. This makes a sense as the petition is directed at cabinet. It thus does not appear to be the case that Min of Mineral Resources, Zorigt, signed the petition.
• a subgroup of the undersigned presented the petition at a press conference and seemed to be the initiators of the petition
• some of the MPs who joined the petition were a surprise in that they had not previously been very vocal in opposing OT or the OT investment agreement: Enkhbat (Civic Will Party), Temuujin and Gantumur (both emerging leaders in the DP)
• some of the “usual suspects” who have been vocal in their opposition in the past: Batbayar, Enkhbold, Bat-Erdene

A Mongolian securities firm (Frontier Securities) has provided a summary of the open letter to Rio Tinto written by the signatories of the parliamentary petition on their “Daily Strategy Notes” (thanks to Trish Saywell of the Northern Miner for pointing me in this direction).

In the brief analysis of the letter, the “chief investment strategist” for Frontier adds some other aspects to the categorization of signatories that we’ve provided above. I would largely agree with his conclusion that is important to view the petition and subsequent ‘campaign’ in the context of the upcoming parliamentary election and “primarily aimed to destabilizing political status quo and break up the Coalition Government as well as based on desire to project patriotic image to electorate”.

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