Ya.Sanjmyatav: Mongolia lost Erdenet arbitration case

Mongolia has lost its appeal to the London Court of International Arbitration (LCIA) regarding the arbitration of the 109 million USD loan given to Erdenet Mining Corporation by Standard Bank of South Africa, whose major stakeholder is Industrial and Commercial Bank of China Limited.

Former Head of Erdenet Ch.Ganzorig and Director of Just Group Sh.Batkhuu failed to repay the hefty loan they took out from Standard Bank by putting up the Erdenet mine as collateral. The case began to be heavily publicized after LCIA ruled in favor of Standard Bank. The ruling puts Mongolia’s longstanding cash cow Erdenet Mining Corporation in a tough situation.

In May 2016, the arbitration decided that Erdenet should pay 50.98 million USD to Standard Bank. Although the Mongolian side appealed to this decision, it was denied as it required Erdenet to place the 50.98 million USD with the arbitration court. Reportedly, Standard Bank last year demanded through arbitration that the company pay the interest for the loans and court fees,which amounted to around 44 million USD as of August 2017.

Due to the arbitration ruling in favor of Standard Bank, the foreign accounts of Erdenet were reportedly frozen and making international trade for the company is impossible.

The most recent appeal case took place in July 2018 and was ruled against Erdenet Mining Corporation. MP O.Baasankhuu first reported that Erdenet had lost the case. Ya.Sanjmyatav, the head of the parliamentary working group tasked with investigating the ownership of the 51 percent stake in Erdenet, confirmed that Erdenet had lost the appeal.

The legal fees and the interest of the 50.98 million USD owed by Erdenet to Standard Bank have added up to 172 million USD as of March. The reported interest of the payment is 800 to 900 USD a day. The latest ruling concerns the appeal of the Mongolian side to paying the legal fees of Standard Bank.

“The working group convened and decided to send representatives from law agencies instead of representatives from Parliament. They were sent to monitor the situation. The arbitration decision was not in favor of Erdenet,” said Ya.Sanjmyatav.