After last month's failed attempt by China's Chalco to buy SouthGobi Resources, Mongolia's parliament has been weighing its options for future investments. Yesterday parliament approved a draft law that would require government review for any foreign investments over 100 bn turgriks (76 million USD) and limit share value to 49%.
The draft law is a set to be voted on next month and will not apply retroactively to past deals. These measures effectively protect the Oyu Tolgoi project owned by Australia's Rio Tinto, and honor another Chalco deal with Winsway Coking Coal Holding Ltd that was reached a week before its troubles with SouthGobi.
The government approval comes at tumultuous time as parliamentary elections are still slated for June and Former President Enkhbayar just received bail from his April arrest on corruption charges. The arrest of the former president was released from police custody after going on a hunger strike protesting what he calls a politically motivated arrest.
The repercussions from the draft law have yet to be seen but at the same time seem stabilizing. Operations at SouthGobi Resources have resumed and investors now have clear guidelines off which to operate. The law defines investments deals made in minerals, banking & finance, or media & telecommunications, as applicable and possible given that parliament approves of deal provisions. The law comes at a time as a compromise on the large, Tavan Tolgoi coal project deal has been stalled since March.
Special to the linked article is a reported word document of the draft provisions for the law.