Mongolia to pay $70 million owed to Canada’s Khan Resources
The government of Mongolia is ready to pay $70 million to Canada’s Khan Resources (TSX:KRI) for revoking a uranium mining licence, putting an end to seven years of negotiations and legal battles that scared investors away from the country once considered a top mining destination.
Speaking under condition of anonymity, a government source told Reuters that Prime Minister Chimed Saikhanbileg will be taking further measures soon to improve Mongolia’s relationships and tarnished reputation.
Mongolia’s foreign direct investment tumbled to $195.1 million last year from $4.45 billion in 2012, as a result of series of long-standing disputes and a drop in commodity prices.
The move comes just weeks after the Asian country launched a new program aimed to attract a fresh wave of mining exploration.
It also comes on the heels of Rio Tinto’s decision to resume work on a $5.3 billion expansion of the Oyu Tolgoi copper mine, following a three-year delay due to disputes with the Mongolian government.
Khan had pursued the claim after Mongolia nationalized its Dornod uranium deposit. Initially, the Toronto-based company sought $326 million in compensation for having its mining licenses cancelled by Mongolia and given to Russian producer ARMZ, but the tribunal lowered the payout to $100 million, including interest and costs, based on previous offers made for the asset.
At a meeting during a major mining conference in Toronto in March, the parts finally settled on a payment of $70 million.
Mongolia’s foreign direct investment tumbled to $195.1 million last year from $4.45 billion in 2012. A series of long-standing disputes and a drop in commodity prices also slowed the country’s growth to 2.3%, compared with 17% in 2011.