Miners hail Mongolian move

       The mining companies Rio Tinto and Ivanhoe yesterday welcomed a decision by Mongolia to scrap a windfall profit tax, removing a key hurdle to a project that could give the impoverished state a huge boost.
       The vote by Mongolian lawmakers on Tuesday to annul the 68% tax from early 2011 is expected to pave the way for the much-delayed exploitation of the vast Oyu Tolgoi copper and gold mine.
       "This is an incredibly important milestone in bringing onstream one of the finest undeveloped copper-gold projects in the world," the chief executive of Anglo-Australian mining giant Rio Tinto,Tom Albanese, said in a statement.
       "It will bring significant socioeconomic benefits for the people of Mongolia."
       The project, which is expected to employ 5,000 people at the mine and thousands more in the supply chain around it, would also benefit the nation in terms of technical capabilities, experts said.
       The GDP per capita of Mongolia -one of the poorest countries in Asia is 164th in the world, just ahead of the Gaza Strip, and is likely to get a significant boost if the Oyu Tolgoi project moves forward.
       "The tax was a big burden on the mining industry, especially on copper and gold, so it was the main obstacle for negotiations over the Oyu Tolgoi copper project," said lawmaker S. Oyun, a former foreign minister.
       "Since the obstacle is no longer there,we hope some of the big projects will go forward, and hopefully the economy will get a boost," she told AFP.
       Parliamentary speaker D. Demberel said the mine,80 kilometres (50 miles)north of the border with China, could last "for about 100 years" and help the economy "grow tremendously", according to the Mongol Messenger newspaper.The mine, one of the richest copper deposits in the world, is expected to yield 450,000 tonnes of copper and 330,000 ounces of gold annually.
       John Macken, president of Canadabased Ivanhoe Mines, a partner of Rio Tinto, called the decision a "significant step."
       "This expression of confidence in Mongolia's future clears the way for finalisation of an agreement with the government for the construction and operation of Ivanhoe's Oyu Tolgoi copper-gold complex," he said.
       Rio Tinto, which owns 9.95% of Ivanhoe but has an option to increase its share to nearly half, said the two companies expected to sign an agreement with the Mongolian government in the near future.
       Following the lawmakers' vote to scrap the tax, Mongolian Finance Minister S.Bayartsogt said the government had plans for alternative ways to generate revenue,the Mongol Messenger reported.The paper quoted the minister as saying that a bill to increase royalty payments would be submitted to parliament during its autumn session."Mongolia will depend on its mining sector for nearly 40 years, and in order to attract investments and expand industrialisation, tax burdens must be reviewed."