Reuters reported that Mongolia should seek to raise its stake in the giant Oyu Tolgoi copper and gold project, weight to concerns among foreign investors about rising resource nationalism following a June election.

That election resulted in the formation of a coalition government, during whose administration the major risk for mining firms the engines of economic growth in Mongolia will be the influence of lawmakers who want Mongolia to have greater control of its resources.

Mr Davajav Ganhuyag new mining minister of Mongolia said that he hoped his government would implement Resolution 57 passed by parliament which states that Mongolia should acquire 50% of Oyu Tolgoi once the principal investors Rio Tinto and Turquoise Hill Resources have recouped their start up investment.

Oyu Tolgoi, located 80 kilometers north of Mongolia's Chinese border, is expected to become one of the world's three largest copper and gold mines when it reaches full production in 2018. The mine is expected to begin commercial production in the H1 of 2013.

The deposit contains an estimated 41 billion pounds of copper and 21 million ounces of gold. It is anticipated that revenue from the mine could boost Mongolia's GDP by one third. By the end of the Q1 of 2012, total capital invested in Oyu Tolgoi stood at approximately USD 4.6 billion, according to Ivanhoe Mines, which is now known as Turquoise Hill.

According to the 2009 Investment Agreement the government can increase its current stake of 34% to 50% only after an initial period of 30 years Of commercial production.

Mr Ganhuyag said that "The 57th Resolution of Parliament related to the Oyu Tolgoi agreement is a law of Mongolia but its implementation is weak.”

Source - Reuters

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