The dispute with Khan Resources wraps up just as Rio Tinto and its partners are set to resume work on a $5.3 billion expansion of the Oyu Tolgoi copper mine following a three-year delay due to disputes with the Mongolian overnment.
Mongolia is ready to deliver a $70 million payment to Toronto-listed uranium miner Khan Resources, a government source said, wrapping up a seven-year dispute that tarnished the country’s reputation as a hot mining destination.
The resource-rich country that relies on China to buy nearly all of its resources is settling disputes with miners one by one to help revive foreign investment after four years of economic decline.
Mongolian Prime Minister Chimed Saikhanbileg has repeated the slogan “Mongolia is open for business” on visits around the world in the hopes rebooting the economy, which the Asian Development Bank projects will grow just 0.1 percent this year.
“We want to show that we’re trying to improve our relationships and reputation,” said a Mongolian government source. He said $70 million had been deposited into an escrow account for payment to Khan Resources on Monday.
The source asked not to be named as the transaction had not yet been completed.
Mongolia’s Ministry of Finance was not immediately available for comment.
Last year, a Paris tribunal ordered Mongolia to pay about $100 million to Khan Resources as compensation for canceling its uranium-mining licences for the the Dornod uranium project in 2009 and handing it over to Russia’s ARMZ.
At a meeting during a major mining conference in Toronto in March, Mongolia and Khan came together and settled on a payment of $70 million.
The dispute with Khan Resources wraps up just as Rio Tinto and its partners are set to resume work on a $5.3 billion expansion of the Oyu Tolgoi copper mine following a three-year delay due to disputes with the Mongolian overnment.
Investors are also keeping close watch on the Gatsuurt gold mine in Mongolia, where Centerra Gold Inc has waited seven years for mining rights.
Source: Reuters