The Mongolian government has reached a deal with Rio Tinto and Ivanhoe Mines to not alter the original terms of the agreement for developing the massive Oyu Tolgoi gold and copper project.
The Mongolian government was planning to increase its stake in the $10-billion Oyu Tolgoi project to 50 per cent from 34 per cent, although such an increase would have been permissible only after 30 years, according to the original agreement that it signed with Rio Tinto and Ivanhoe two years ago.
Vancouver, Canada-based Ivanhoe owns 66 per cent of Oyu Tolgoi, which is half way through completion and would be one of the world's five-biggest copper mines, according to Rio Tinto, which does not have a direct interest in the mine, but owns 49 per cent of Ivanhoe and has agreed to pay most of the development cost of Oyu Tolgoi.
Ivanhoe has spent over six years negotiating with Mongolia prior to reaching an agreement in October 2009 to develop the site, which is expected to open in 2013.
The Mongolian government's move had upset investors in Ivanhoe and Rio Tinto, both of which told the government that the new proposal might alarm foreign investors and they would not renegotiate the Oyu Tolgoi contract.
Mongolia's renegotiation bid comes under pressure from the country's lawmakers and highlights the risks for overseas investors as countries across Asia, Africa and Latin America seek greater control of raw materials.