Mongolia: mineral struggle behind unrest?
Mongolia imposed a four-day state of emergency in the capital, Ulan Bator, after the opposition Democratic Party claimed fraud in last weekend's elections and violent protests broke out. Military vehicles patrolled the streets, five people were killed, and the headquarters of the "victorious" Mongolian People's Revolutionary Party (MPRP) was ransacked and torched. Clashes also took place in the country's second city, Darkhan. (DPA, July 1) The Wall Street Journal fears the unrest "could slow the country's economic transformation and delay investment plans of Western mining companies that have been waiting to push through deals."
The companies include Ivanhoe Mines Ltd. of Vancouver and global mining giant Rio Tinto, which together are seeking to develop one of the world's largest copper and gold projects deep in Mongolia's Gobi desert. But the $7 billion effort, dubbed Oyu Tolgoi, has been held up for years as the companies have sought to negotiate a final agreement with the government to set terms for taxation, royalties and other issues. (WSJ, July 5)
The delay has been due to similar eruption of angry protest. In May 2006, protesters burned an effigy of Ivanhoe owner Robert Friedland. Mongolia's parliament (the State Great Khural), reacting quickly, enacted a new mining tax law, calling for the government to impose taxes of 68% on gold profits when the price exceeds exceeds $500 per ounce and copper over $2,600 per ton. Friedland responded by demanding five percent ownership of the Tavan-Tolgoi coal mine, but an agreement was never reached. (AlJazeera, July 3)