CAB­I­NET TO HAND OUT SHARES OF ERDENET TO PUBLIC

The UB Post - - FRONT PAGE - By B.CHINTUSHIG

In a move over­turn­ing the re­cent de­ci­sion by the Supreme Court of Mon­go­lia, Cab­i­net de­cided to pur­chase the Erdenet Min­ing Cor­po­ra­tion (EMC)’s 49 per­cent from Mon­go­lian Cop­per Cor­po­ra­tion (MCC).

Dur­ing a reg­u­lar ses­sion of Cab­i­net on Jan­uary 11, a de­cree was signed to trans­form the EMC into a joint stock com­pany and dis­trib­ute shares amongst all cit­i­zens. The move is rem­i­nis­cent of the dis­tri­bu­tion of shares in the state-owned Er­denes Ta­van Tol­goi to 2.45 mil­lion cit­i­zens in 2012.

Ac­cord­ing to Cab­i­net, there are 10 mea­sures that need to be taken such as an in­ter­na­tional au­dit be­fore the process of turn­ing EMC into a joint stock com­pany and dis­tribut­ing shares. How­ever, as Cab­i­net of­fi­cials have noted, Par­lia­ment has the fi­nal say on the mat­ter. Based on Par­lia­ment’s pre­vi­ous res­o­lu­tion on Fe­bru­ary 10, 2017 to wholly take back EMC, it is highly prob­a­ble that it will back Cab­i­net’s pro­posal to pur­chase the 49 per­cent stake.

Cab­i­net has said that it will draft an of­fi­cial pro­posal to Par­lia­ment, de­tail­ing ex­actly how many shares of EMC will be dis­trib­uted to cit­i­zens and the terms and con­di­tions of the own­er­ship.

Among the 10 mea­sures that have to be taken, a val­u­a­tion of as­sets will be con­ducted. EMC is con­sid­ered to be one of the big­gest ore min­ing and ore pro­cess­ing fac­to­ries in Asia. At present, it is a fairly large com­plex pro­cess­ing 26 mil­lion tons of ore per year and pro­duc­ing around 530,000 tons of cop­per con­cen­trate and around 4,500 tons of molyb­de­num con­cen­trates an­nu­ally. In 2017, EMC saw 273 bil­lion MNT in profit after a down year in 2016.

Cab­i­net has said that the “il­le­gal” loans pro­vided to the Trade and De­vel­op­ment Bank of Mon­go­lia from the cen­tral bank and the De­vel­op­ment Bank of Mon­go­lia to buy EMC, the con­ces­sion agree­ment, and the div­i­dends that MCC re­ceived dur­ing its 49 per­cent own­er­ship of EMC will be de­ducted from the amount that will be paid for the pur­chase of the 49 per­cent stake. Fi­nance Min­is­ter Ch.Khurel­baatar has said that this amounts to one tril­lion MNT for the sale.

Ini­tially, fol­low­ing a probe that con­cluded that the 400 mil­lion USD trans­ac­tion by MCC to buy Rus­sia’s 49 per­cent stake in EMC was il­le­gal, Par­lia­ment made its ini­tial de­ci­sion to trans­fer the mi­nor­ity share back to the state. The res­o­lu­tion in­val­i­dated an ear­lier gov­ern­ment de­ci­sion that au­tho­rized the sale of 49 per­cent of both EMC and Mon­gol­rostsvet­met LLC to MCC.

The for­tunes of MCC turned around on De­cem­ber 7, 2017 with a ruling by the Supreme Court of Mon­go­lia in fa­vor of the com­pany. MCC had their mi­nor­ity own­er­ship of­fi­cially re­in­stated by the Gov­ern­ment Agency of In­tel­lec­tual Prop­erty and State Reg­is­tra­tion and is­sued a re­newed cer­tifi­cate of le­gal en­tity on De­cem­ber 28.

MMC said that the of­fi­cial re­in­state­ment is an im­por­tant de­vel­op­ment and com­mended the cur­rent Cab­i­net for its de­ci­sion.

“The cur­rent gov­ern­ment’s ac­tion shows crit­i­cal as­pect of the rule of law’s sys­tem by re­scind­ing the pre­vi­ous gov­ern­ment de­ci­sion, which was de­ter­mined to be il­le­gal by the Supreme Court,” MMC stated.

Re­spond­ing to Cab­i­net’s most re­cent de­ci­sion to pur­chase EMC’s 49 per­cent, MCC stated that its ne­go­ti­a­tions with the gov­ern­ment was still pend­ing and that Cab­i­net was “mis­rep­re­sent­ing” when it claimed that it had reached an agree­ment with the com­pany.

“The Con­sti­tu­tion of Mon­go­lia does not au­tho­rize the gov­ern­ment to amend or over­rule any judg­ment of the Supreme Court to achieve its po­lit­i­cal prom­ises,” MCC said in a state­ment pub­lished on its web­site.

“The above ac­tions of the gov­ern­ment are in vi­o­la­tion of the Con­sti­tu­tion of Mon­go­lia, the Civil Code and other re­lated laws. The gov­ern­ment is re­peat­ing the pre­vi­ous gov­ern­ment’s mis­take. It is un­for­tu­nate that the gov­ern­ment of Mon­go­lia is de­lib­er­ately con­fus­ing the public and giv­ing false in­for­ma­tion to mis­lead the truth to jus­tify its il­le­gal ac­tions,” the state­ment con­tin­ued.

MCC has said that it will fight the de­ci­sion and take the case to an in­ter­na­tional ar­bi­tra­tion court. Chair­man of MCC M.Munkhbaatar was re­port­edly in Lon­don ear­lier this week to meet with law firm Om­nia Strat­egy.

In light of Cab­i­net’s move to buy back EMC and dis­trib­ute shares among cit­i­zens, many have raised con­cerns over the gov­ern­ment’s in­suf­fi­cien­cies in han­dling of such mea­sures, ev­i­denced by the Er­denes Ta­van Tol­goi share hand­out con­tro­versy. Only time will tell if the gov­ern­ment was able to learn from its mis­takes in the man­age­ment of dis­tribut­ing shares to cit­i­zens.

Head of the Gov­ern­ment Agency for Pol­icy Co­or­di­na­tion for State Prop­erty, Ts.Nyam-Osor took ques­tions from the me­dia after the de­ci­sion to dis­cuss the rea­son­ing be­hind the de­ci­sion and the process of pur­chas­ing EMC’s mi­nor­ity stake.

Cab­i­net has made the de­ci­sion to al­low cit­i­zens to own shares in EMC. What is the sig­nif­i­cance of this?

In the Law on Min­eral Re­sources, there is an ar­ti­cle that al­lows the gov­ern­ment to dis­trib­ute up to 10 per­cent of shares in strate­gic mines to cit­i­zens free of charge. Based on this ar­ti­cle, the de­ci­sion was made to give our cit­i­zens the own­er­ship in the Erdenet mine. The shares will be pro­vided free of charge. Ex­actly how many shares will be dis­trib­uted will be clear after an au­dit is con­ducted by an in­ter­na­tional firm. The Mon­go­lian peo­ple will come to re­al­ize the value of shares and stock once they own a stake in a com­pany that is prof­itable. This move will also help the Mon­go­lian Stock Ex­change. The gover­nance of EMC will also im­prove. If the public keeps EMC in check, cor­rup­tion is­sues at EMC will be elim­i­nated.

Would it then be cor­rect to as­sume that a sim­i­lar mea­sure will be taken on all strate­gic mines to im­pose public ac­count­abil­ity on op­er­a­tions?

That is cor­rect. The process to pro­vide shares of state-owned com­pa­nies that have sta­ble op­er­a­tions to our cit­i­zens be­gins with EMC.

The 49 per­cent stake in EMC is very dis­puted. Wouldn’t pro­vid­ing shares to cit­i­zens only ag­gra­vate the is­sue?

That will not be an is­sue as there is no dis­pute about the 51 per­cent stake owned by the gov­ern­ment.

Erdenet cop­per mine

Photo by E.KHARTSAGA

Con­cen­tra­tors of Erdenet Min­ing Cor­po­ra­tion

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