Analysis

Mongolia: Massive Mining Project Remains Controversial
A core sample from Mongolia’s Oyu Tolgoi mine containing copper and gold (AP Photo/Ganbat Namjilsangarav)
March 8, 2012
| Economics
| Asia and the Pacific
Summary
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Mongolia, the world’s fastest-growing economy, continues to move forward on massive copper and gold projects. Political maneuvering by the Mongolian government endangered mining activities last year, with major investors Ivanhoe Mines Ltd. (IVN) and Rio Tinto (RIO) threatening to halt activities if Ulan Bator demanded higher royalty fees. Although the government backed down, undercurrents of dissatisfaction with foreign investors in the highly profitable sector remain, and mining activities could become a political issue as the country approaches parliamentary elections in June 2012 and presidential elections next year.

Vancouver-based Ivanhoe Mines Ltd. announced in late February that the llion Oyu Tolgoi copper and gold project is 73 percent complete, and that the mine is on track to begin production in the third quarter of 2012.  Ivanhoe CEO Robert Friedland stated that installation of the two production lines and pre-commissioning work is ahead of schedule.  A 100,000 ton capacity concentrator is more than 80 percent complete, according to Friedland, and the company will complete the first production line in the third quarter.  Friedland added that after the project produces ore, copper, gold and silver concentrate this year, it will move toward commercial production in the first half of 2013.

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