Parliament supports bill to accelerate Tavan Tolgoi mine project

As Cabinet put forward a bill to accelerate the Tavan Tolgoi coal mine megaproject to Parliament, the Standing Committee on Economy reviewed the bill on June 22. After the standing committee agreed to support Cabinet’s proposal, Parliament reviewed it on the same day.

The main aims of this proposal are to launch the IPO of Erdenes Tavan Tolgoi (ETT) by offering 30 percent of the company on domestic and foreign stock exchanges through a dual-listing, and implement several infrastructure, road and railway projects through the proceeds.

During the parliamentary session, a number of lawmakers questioned the authors of the bill to make sure the mining project will be effective and beneficial to the nation.

Member of Parliament T.Ayursaikhan criticized the authors of the bill for evaluating the coal deposits at a low price and stated that he did not support the proposal.

The lawmaker said, “What if the project will not bring benefits the government expects to the country. If the project is not implemented correctly, the Parliament that adopted the bill will be criticized by the public, so Parliament should concentrate on improving the bill without making a premature decision.”

Some other lawmakers also asked the authors of the bill to focus on increasing the current estimation of the coal deposit.

Minister of Mining and Heavy Industry D.Sumiyabazar, the author of the bill, stated that a task force made up of experienced officials, experts and economists from the ministries of mining and heavy industry, finance; roads and transport; and energy has anticipated the expected outcomes of the project, which will be carried out under the government’s new proposal, but the task force is still working on further evaluations and their task is still in progress.

The minister noted that mineral economics is different from the perception of economics everybody knows because a mining project depends on a lot of factors, but the government is seeking the most optimal option that will bring the country the maximum benefit by collaborating with international experts and consulting companies, investment banks and other partners.

Lawmaker O.Sodbileg said, “As legislators are not coal traders and experts, we are unable to comment on whether the current evaluation of the coal deposits is realistic or lower than expected.”

He asked Minister D.Sumiyabazar to present Parliament how much he expects to raise through the IPO, and whether it will be sufficient to fund the proposed infrastructure projects.

D.Sumiyabazar noted that the task force will provide lawmakers with the final detailed study for carrying out the government’s proposal to make the project beneficial on June 26.

Kh.Nyambaatar emphasized that as Tavan Tolgoi is under strong influences of politicians, supporting the bill will be of crucial importance to increasing foreign direct investment in the mine, enhancing public transparency, addressing negative impacts of ecosystem alteration in the Mongolian Gobi, and promoting the country’s and regional development.

As legislators unanimously agreed that a country possessing one of the world’s largest coal deposits cannot afford to be poor because of disputes between few politicians fighting over natural resources, they prefer to move forward with the prolonged Tavan Tolgoi project as soon as possible.

Observers believe that the Democratic Party will oppose the proposal as a successful Tavan Tolgoi project will hinder their chances at the 2020 parliamentary election.

The Democratic Party has yet to comment on the Tavan Tolgoi proposal.

Seventy-four percent of the lawmakers in attendance supported further discussion of the bill, which was submitted to the Standing Committee on Economy for preparation for further parliamentary review.