www.unuudur.com » Mongolia election tight amid wait over mining deals

Mongolia election tight amid wait over mining deals

[Нийтэлсэн: 18:20 26.05.2009 ]

www.mining-journal.com

Mongolians head to the polls on Sunday to elect a new president in a tight race that will help determine when and how the country will reach consensus on working with foreign investors to tap its vast mineral wealth.

Most immediately at stake is whether parliament can quickly ratify a long-awaited draft investment agreement on the US$3 billion Oyu Tolgoi copper and gold project, set to be developed by Ivanhoe Mines and Rio Tinto.

While the office of president is largely ceremonial, the contest over that symbol of national unity has already distracted parliament from working on approving the landmark agreement. Any disputes over the election’s outcome could further push back progress.

Further, a victory by opposition Democratic Party (DP) candidate Tsakhiagiin Elbegdorj over incumbent Nambariin Enkhbayar of the ruling Mongolian People’s Revolutionary Party (MPRP) could set back foreign investors’ long-term interests.

“If Elbegdorj wins, that would be a pretty strong signal of probably more complications in policy making over mining, given his track record on anti-foreign and populist inclinations,” said Damien Ma with political risk consultancy Eurasia Group.

Mongolia, whose annual per-capita income is about US$1,200, wants to use its deposits of copper, gold, uranium, lead, zinc, and coal to pull its nearly 3 million people out of poverty.

The government’s desire to formulate the Oyu Tolgoi deal as a template for future mining projects has meant negotiations have dragged on for years, as Mongolia seeks to ensure it obtains more favourable terms than with past projects.

But sealing the deal quickly is now widely seen as increasingly important if Mongolia hopes to realise its ambitions of becoming a mining powerhouse and take advantage of the next upturn in commodity prices.

In the meantime nearly US$1 billion in foreign loans and grants are helping Mongolia, a vast, windswept country wedged between Russia and China, through a collapse in mineral prices, particularly for its biggest export, copper, that has seriously dented income.

Any repeat of the type of unrest and ensuing legal struggles that followed last year’s parliamentary elections, in which at least five died, could postpone the Oyu Tolgoi project and other investments further, just when the country most needs to secure future sources of revenue, said Mr Ma.

If any post-election disruptions to progress on mining were serious, there could even be a “low, but slight uptick” in the risk that Ivanhoe or Rio Tinto could become so disenchanted that they would think twice about Oyu Tolgoi, he said.

Frustration over rampant poverty and perceptions of official corruption appear to be working in favour of challenger Mr Elbegdorj, said Luvsandendev Sumati, director of the Sant Maral Foundation, a group that does polling and surveys.

A poll by the foundation in late April showed that 37% of voters favoured Mr Elbegdorj, while just over 36% would vote for Mr Enkhbayar.

Polling is not permitted during the seven days prior to the election, and exit polls are also banned, but Mr Sumati said there were signs Mr Elbegdorj had been gaining among constituencies that have traditionally favoured the ruling MPRP, including the nomadic herders who make up much of the population.

“A lot of votes that we see in favour of Mr Elbegdorj are protest votes against President Enkhbayar,” Mr Sumati said.

Nowhere is that sense of frustration more visible than in the poor outlying districts of the capital Ulan Bator, where many live without running water or sewage treatment.

At a rally for Mr Elbegdorj in the final hours of campaigning, residents greeted his slogan of “Change” with loud cheers. “The poverty of the Mongolian people needs to be done away with, and the wealth and resources need to be distributed and shared,” said Sanjmyataviin Ravjaa, 70, a retired herder wearing a traditional long silk cloak, known as a deel.

Mr Sumati with the Sant Maral Foundation said he was hopeful the polls would avoid a repeat of last year’s violence, and did not expect dealings with foreign investors to see any drastic shift. “The composition of the Mongolian side (in negotiations) will be changed depending on the outcome of the elections, but the attitude will definitely not.” negotiations) will be changed depending on the outcome of the elections, but the attitude will definitely not.”



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