One of the longest state visits of PM Mikhail Fradkov paid for business purposes came to nothing.
Photo: Dmitry Azarov
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Russia’s Business Out of Golden Triangle
Mongolian visit of PM Mikhail Fradkov proved futile for the business of Russia, which is eyeing big deposits of gold, copper, coal and uranium in that country. Bazovy Element, Renova and Severstal failed to win the supporting guarantees for their projects in Mongolia, as today’s policy of the latter is imposing new restrictions for foreigners.
On the very first day of the visit, Prime Minister Mikhail Fradkov made clear to his Mongolian counterpart Miyeegombyn Enkhbold that Russia’s business is interested in coal, copper, gold and uranium deposits in Mongolia and that he has a long list of companies eager to operate there. But the yesterday’s meeting of prime ministers with spokesmen of business community signaled it would be better to forget about the easy path to that country.
Mongolia needed the visit to elaborate its Golden Triangle program that specifies admitting foreigners to three big deposits – the coal Tavan Tolgoy (5 billion tons to 6 billion tons), gold and copper Oyu Tolgoy (30 million tons of copper and 8,000 tons of gold) and copper Tsagaan Suvraga – but maintaining Mongolian stake at 51 percent.
Russia’s top bidders for the deposits are Severstal and Bazovy Element, said a source familiar with the draft project. Their competitors are BHP Billiton, CVRD, Mitsui and Hitachi.
There are a few more projects that attract the Russians. One of them lures Interros and Renova and relates to uranium deposits, which reserves are estimated at 40,000 tons.
But Mongolia is revising the laws now. Enkhbold said they will impose the 68-percent tax on copper and gold if the price escalates above $2,600 per a copper ton and $500 per a gold ounce on London exchange. Another bad news is passing a new bill on minerals, which will require the mandatory participation of Mongolia in development of big deposits and hike payment for subsoil reserves by 15 percent.
In the end, one of the longest visits of Fradkov paid for business purposes came to nothing. The only achievement was setting up a Business Council that will agree on the projects.
www.kommersant.com
All the Article in Russian as of July 13, 2006
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