| Allens was the sole law firm involved in the finalisation of a power export deal which will see China supply power to the private sector in Mongolia. The Oyu Togoi copper gold mine, meaning Turquoise Hill in Mongolian, is Rio Tinto’s flagship Mongolian copper gold mine and this transaction, which was concluded on November 6th, is significant for a number of reasons, one being that it represents the first cross-border supply agreement between China and Mongolia. It also marks the largest economic undertaking in Mongolia’s history.
The approximately US$6 billion project will considerably impact the largely nomadic landscape, and is expected to account for 30 percent of the country’s GDP. For a country that is synonymous with Genghis Khan and which has been steeped in traditional herding of livestock for decades, the land-locked nation is both welcoming and anxious about the mining opportunities on the horizon. The positive changes include a revitalisation of the job sector, taking locals away from nomadic herding and a constant and dependable supply of round the clock electricity for the first time. However, with mineral rich Mongolia increasingly being mined for its deposits, there are many who are concerned about the environmental impact on the landscape. Initial copper production resulting from the Rio Tinto deal will be rolled out within the first six months of 2013, with commercial production to follow three to five months later. A layer of geo-political issues arose in the course of this transaction because the deal involved power trade between the countries, according to Kate Axup of Allens who led the deal, and these added to the deal’s complexities. Axup also stated that the trilingual nature of the deal presented a challenge because English, Mongolian and Chinese were all required to see the deal through to its smooth conclusion. “The deal also involved the construction of infrastructure that will enable future power trade between China and Mongolia,” Axup commented. Mongolia was the fastest growing economy in 2011; it bested India and China and grew at a rate of 17 percent. With the final piece in place, that is, following the conclusion of this last electricity supply agreement, commercial production can commence. Interestingly, this project is expected to double Mongolia’s GDP over the course of the next decade. |
