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Mongolia: Strong Pressure Postpones Mining Investment Agreement

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Pressure on the government of Mongolia has stalled talks over a mining investment agreement.  The government must now incorporate suggestions from civil society, ensuring the project is properly assessed and in line with the Constitution. 
The investment agreement on the biggest mining deposit is under consideration after the strong lobby of the Civil Society Groups in Mongolia. As a result of regular demonstrations on behalf of civil society groups in Mongolia, parliament has postponed discussions on an investment agreement between the government and foreign investment company Ivanhoe Mines Mongolia Inc Co.LTD until October, even though the draft agreement was presented to parliament and included in the agenda.  On 24 July, Parliamentary speaker D. Lundeejantsan said the draft agreements would be postponed, stressing the need to review the provisions regarding its impact.

Oyu Tolgoi has the biggest mining deposit from where enormous natural resources have been extracted for 35 years, promoting the economic growth and social development of the country under Ivanhoe Mines Co., LTD, a Canadian mining company, and Rio Tinto International Holdings Limited Corporation of UK and Northern Ireland.

The investment agreement involved more than just economic considerations and should be used as a standard for the following investments agreements after a 2006 law on mineral extraction. According to the law, every issue related to stockholding and quotas, tax rate schedule and safety of the environment should be set forth in the investment agreement.

The final draft of the agreement sent by the government to parliament on 10 July, 2007 was incompatible with many laws, including the Constitution of Mongolia. Mongolian civil society groups requested parliament to reject the agreement as it has violated many legal provisions. For instance, Article 13.3 of the draft Agreement which says “in case of any confliction between the Mongolian laws and the Investment Agreement, the Agreement is invalid” infringes on the Constitution. 

The NGOs accused the government that the negotiated price was too low in a project without any clear economic and technical assessment or participation from civil society and public opinion. The protestors have declared mass demonstrations and hunger strikes until the Parliament has resolved the matter. The denial of the right to participation is contrary to Rio Declaration on Environment and Development and Extractive Industry Transparency Initiative, to which Mongolian Government has committed voluntarily to implement.  

The Centre for Human Rights and Development along with other civil society organisation welcomed the decision of the Parliament to set back the draft of the investment agreement. Further, they are closely monitoring the situation and demanding that a public hearing is held and their comments are incorporated in the final agreement.