Mongolia seeks to increase stake in Oyu Tolgoi project from Rio Tinto
26 September 2011
Mongolia is seeking to up its stake in one of the world's largest undeveloped copper mines two years following its agreement with Rio Tinto Group and Ivanhoe Mines Ltd to cap government control until 2039.
The government plans to increase the stake to 50 per cent from 34 per cent, in the Oyu Tolgoi project according to Dashdorj Zorigt, Mongolia's minerals minister, who spoke to reporters at Oyu Tolgoi yesterday. Such an increase is allowed only after 30 years, according to a summary of the $10 billion project agreement from London-based Rio, which said the new proposal might alarm foreign investors.
Mongolia's renegotiation bid comes on pressure from lawmakers and serves to underline risks for overseas investors as countries across Asia, Africa and Latin America seek greater control of raw materials.
According to Ernst & Young LLP, the emerging trend of resource nationalism was the biggest risk for global mining companies.
Analysts say, the development would be another deterrent to investing in Mongolia.
Rio was down 0.6 per cent to A$62.28 on the Australian stock exchange.