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The biggest news in Mongolia this week is the resolution approved by Parliament Friday, November 21. The purpose of the resolution is to better protect the rights and interests of Mongolian people in connection with mining operation at the Oyu Tolgoi mining project. The resolution was approved unanimously via vote of 46 members of parliament then present.

The resolution was drafted in accordance with findings and recommendations of a parliamentary working group tasked with overseeing implementation of the Oyu Tolgoi Investment Agreement and related business contracts. The resolution seeks to improve existing project agreements pursuant to current Mongolian Law.

The resolution specifically calls for the Government of Mongolia to take official measures to review issues related to the government’s ownership of 34 percent of shares in the Oyu Tolgoi company to ensure benefits gained by Mongolia remain at least 53 percent as indicated by the Investment Agreement. The resolution recommends this may be accomplished via an additional mineral production sharing agreement, or by revisions to royally fees.

The resolution also calls for the government to formulate new technical and feasibility studies as to current reserves of mineral deposits at the Oyu Tolgoi project site. The government is asked to perform a review of existing environmental protection and water resource management issues. Finally, the resolution seeks to push the government to build up the financial and human resource capacity of the Mongolian representatives in the Oyu Tolgoi project.

The Parliamentary resolution comes at a critical time for the Oyu Toloi project, as during the same week, the Capital Administrative Court appears to have ruled in favor of a Mongolian NGO against the Government of Mongolia in finding that some of the Oyu Tolgoi projects documentation may have been improperly expected by the Mongolian government.

The Oyu Tolgoi mining project has been plague by legal issues in the past. Initiation of the second phase of the project was delayed several years due to disagreements in implementation between Oyu Tolgoi foreign investors and the Government of Mongolia. These issues were eventually resolved and the second phase was initiated in 2016. If the Government now reverses course and seeks to renegotiate the terms of the Oyu Tolgoi agreements, this will be a negative sign for foreign investment in Mongolia. Such uncertainty as to the investment environment in Mongolia will discourage new foreign investment.

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