UK Markets close in 2 hrs 22 mins
  • FTSE 100

    -107.79 (-1.51%)
  • FTSE 250

    -131.62 (-0.58%)
  • AIM

    -8.54 (-0.69%)

    -0.0028 (-0.24%)

    -0.0066 (-0.4753%)

    -991.70 (-3.53%)
  • CMC Crypto 200

    -40.42 (-4.17%)
  • S&P 500

    -1.84 (-0.04%)
  • DOW

    -210.22 (-0.62%)

    -0.61 (-0.86%)

    +2.90 (+0.16%)
  • NIKKEI 225

    -54.25 (-0.19%)

    +242.68 (+0.85%)
  • DAX

    -219.06 (-1.39%)
  • CAC 40

    -77.87 (-1.17%)

Mongolia "text referendum" could help resolve investment impasse

By Terrence Edwards

ULAN BATOR, Feb 3 (Reuters) - Mongolia's prime minister will learn later on Tuesday if a "text message referendum" will deliver the support he needs to move forward with the multibillion dollar expansion of the Oyu Tolgoi copper mine, which has been repeatedly delayed.

Chimed Saikhanbileg, appointed in November, said last week that Mongolia would hold an unprecedented vote via mobile phone text message on whether the cash-strapped nation should introduce further budget cuts or do whatever it takes to get the country's multi-billion dollar mines growing again.

Voting closes at 10 p.m. on Tuesday and the final result will be announced on Wednesday morning.

About 8.8 percent of the country's 3.3 million mobile phone subscribers had responded to the poll by Tuesday afternoon. Media reports said 59 percent had responded in favour of more investment by Monday evening, but a government spokesman said he could not verify the figure.

Mongolia's mineral-dependent economy has been hit by declining global commodity prices, a slowdown in neighbouring China and a series of disputes over the future of key mining projects like the $6.5 billion Oyu Tolgoi copper mine, which is being developed by Rio Tinto (Xetra: 855018 - news) .

Foreign investment fell 74 percent in 2014, according to the latest data from the country's central bank.

The $6.5 billion Oyu Tolgoi project was specifically mentioned in the text message delivered to all mobile phone subscribers asking them to vote. It is one of the world's largest copper deposits and the largest mine in the country.

Rio Tinto, which controls Turquoise Hill Resources (Toronto: IVN.TO - news) , the 66-percent owner of the mine, put plans for the underground second phase of the project on hold in August 2013 because of disagreements with the government over costs.

More recently, the government said the mine owed an extra $30 million in tax, which Rio denies.

"The referendum shows that (the prime minister) is willing to advance the Oyu Tolgoi project further," said Mongolian Investment Banking Group Chief Executive Officer Bilguun Ankhbayar.

Mongolia's parliament raised its debt ceiling to 58.3 percent from 40 percent last month after the decline in foreign investment and a number of sovereign bond sales.

The country introduced budget cuts for 2015 and raised taxes on imports such as fuel. The budget cuts have mostly affected investment into infrastructure, but have stopped at cutting social welfare programmes that provide allowances for mothers, children and students.

"Some criticise that both choices (austerity and investment) are doable," said Bilguun. "It's not as if the government is doing large-scale projects and spending all the money again. They're not mutually exclusive." (Editing by David Stanway)

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting