Mongolia reverses its stance on the banking regulation

In response to Rio Tinto and IMF, the government of Mongolia retracts its banking regulation.

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Banking Regulation

Mongolia puts in place a new Banking regulation: obligation to use local bank services. The law requires all foreign multinationals to use local commercial banks to transfer funds in and out of the country. The law, announced in April, was meant to increase the country’s foreign currency reserves, while also strengthening the Mongolian banking sector.

Mongolia adopts the Minerals Policy

Otherwise known as “The Policy,” this new policy on the minerals sector serves as a framework for further amendments to the existing mining law and other laws relating to natural resources. The aims of the policy include strengthening private sector development and establishing a stable investment environment. It retains the strategic deposits clause.[1]

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Agreement signed to provide Oyu Tolgoi with power from Tavan Tolgoi

An agreement is signed between the IFC, the ERBD-financed Oyu Tolgoi LLC, and the Mongolian government for the purchase of power domestically, as well as the memorandum for the power purchase between Mongolia and the Tavan Tolgoi coal-based power project. The transmission line from the Tavan Tolgoi plant will provide electricity solely for the Oyu Tolgoi mine. [1]

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The Investment Law of Mongolia passes

This new Investment Law reverses the 2012 Investment Law (SEFIL), provides foreign investors with the same protections as domestic investors, and eases regulatory approval requirements for foreign private investment. [1]

Article 1: “to encourage foreign investment, to protect the rights and property of foreign investors in Mongolia, and to regulate matters relating to the operations of business entities foreign investment.” (Jargalsaikhan 2016: 7; Lander 2013)
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Mongolia tries to amend the 2009 Oyu Tolgoi Investment Agreement

Mongolia aims to raise the government stake in the Oyu Tolgoi mine from 34% to at least 40%, change the set royalty rate of 5% to a sliding rate up to 20% in line with copper prices, and eliminate the income tax allowance. [1]

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New Foreign Investment Law passed

The ‘Strategic Entities Foreign Investment Law’ (SEFIL) / ‘Business Entities Operating in Sectors of Strategic Importance’ is passed. This law limits foreign investment and ownership in sectors like mining to 49%, and is perceived by the mining sector as resource nationalism[1].

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Mongolia cancels its tax treaty with the Netherlands

Turquoise Hill Netherlands is a little-known Amsterdam-based company with three employees, no office, and not even its own mailbox. To the government of Mongolia, though, the company represents billions in taxes that it will never see[1]. See full analysis by SOMO[2].

[1] retrieved 7 September 2018


Windfall Profits Tax on copper and gold is repealed

Ivanhoe and Rio Tinto successfully negotiate that the Mongolian Parliament repeals the Windfall Profits Tax of 68%, so the Oyu Tolgoi project can proceed. Along with it, the corporate income tax was eased as well, for losses to be carried forward for 8 years (up from two).[1]

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National Development Strategy

Millennium development goals-based comprehensive national development strategy of Mongolia[1]. Aspiration to be a middle-income country by 2021, with an industrialised knowledge based economy and high human development standards.

[1], retrieved 7 September 2018, see also Lander 2013.