National Security Council advises rescinding entire ‘Dubai’ agreement

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The Secretariat of the National Security Council this week recommended the government to replace the 2015 Oyu Tolgoi Underground Mine Development and Financing Plan, known as “Dubai Agreement”, with a completely new deal.

The secretariat has completed a comprehensive analysis on the 2009 Oyu Tolgoi investment agreement and 2011 amended and restated shareholders’ agreement.

“Permission to sign the Oyu Tolgoi investment agreement was not approved by Parliament or presented to Parlia- ment prior to signing. The key route to making the Oyu Tolgoi project profitable for Mongolia is to make amendments to the main agreement with the foreign partner on the development of the Oyu Tolgoi mine and make necessary changes to the investment agreement accordingly,” the secretariat said in a statement.

The council views that there should be no problem for shareholders of the massive Oyu Tolgoi project – namely Mongolia through Erdenes Oyu Tolgoi and Rio Tinto through Turquoise Hill Resources – to negotiate changes into the agreement.

The following recommendations were made:

1. Amend the provisions of the shareholder agreement (mentioned in the analysis report and recommendations) to ensure it is beneficial to Mongolia.

2. Amend the investment agreement based on amendments to the shareholder agreement.

3. Cancel the entire Oyu Tolgoi underground mine development and financing plan (Dubai agreement), and include the relevant regulations in the investment agreement in a mutually agreed form.

4. Renew and approve Oyu Tolgoi LLC’s charter in accordance with the amendments to the above-mentioned agreements.

Dulguun Bayarsaikhan