Mongolia’s Supreme Court has ruled the government is not allowed to nationalize a 49% stake little-known Mongolian Copper Corp (MCC) owns in a former Russian copper mine.
The Mongolian parliament had voted in February to seize MCC’s holding in Erdenet mine after the legislators’ own probe concluded the $400 million-sale by state-owned Russian holding company Rostec to MCC was unconstitutional. This, because it was agreed without lawmakers’ approval.
Erdenet, which produces 530,000 tonnes of ore annually, is one of Asia’s biggest copper and molybdenum mines and a top tax contributor to Mongolia’s $12bn economy.
Industry sources quoted by Reuters said MCC would now seek compensation through international arbitration as it claims the Mongolian government breached international rules on investors’ rights.
Erdenet, which produces 530,000 tonnes of ore annually, is one of Asia’s biggest copper and molybdenum mines and a top tax contributor to the country’s $12 billion economy.
The Mongolian government, which owns 51% in the mine, has vowed to make things easier for miners and explorers as part of renewed efforts to attract foreign investment.
In May, the landlocked country bordering China and Russia decided to open more than one-fifth of its territory for mining exploration, hoping to shore up its finances following an International Monetary Fund-led bailout.
Since mining accounts for around 25% of Mongolia’s GDP and more than 80%vof exports, experts believe that increasing mining exploration could potentially raise the Asian nation’s GDP and economic security.