BEIJING – Anglo-Australian mining company Rio Tinto warned Mongolia on Tuesday that if it wanted to attract future foreign capital to the country, it would have to honor and comply with existing contracts to explore the Oyu Tolgoi mine, one of the country’s largest mines, in the Gobi desert.
Arnaud Soirat, head of Rio’s copper business, said that the world was watching the development of Oyu Tolgoi and hence Mongolia must demonstrate its “stability to foreign investors to attract more investment.”
“It is a test case for future investment in Mongolia which brings with it jobs, new business opportunities and community development,” Soirat said at the Mongolia Economic Forum in Ulan Bator.
Soirat added Mongolia could become a “successful resource nation” but only if it honored its financial agreements.
Soirat’s comments follow five months of conflict between the two sides over a $155 million tax bill handed to Rio by the Mongolian government and a corruption investigation, which has led to the arrest of two former prime ministers of Mongolia so far.
It is estimated that the development of the Oyu Tolgoi mines, with its rich reserves of gold and copper, could generate a third of the revenue of the Mongolian government.
The mining giant has invested $7.5 billion in Mongolia since 2010 and has paid another $1.5 billion to the government in the form of taxes, mining usufruct rights and other fees.
The Mongolian government controls 34 percent of the mine while Rio Tinto has control over the rest 66 percent through the firm Turquoise Hill, majority-owned by Rio Tinto.