The Mongolian experience

Possible Reforms Coming to Mongolian Windfall-Tax Bill

http://www.resourceinvestor.com/pebb...

Currently, when the international gold price is above $500, the Mongolian government collects a 68% tax; the new figure, $650, is in part being addressed to make up for a lack of sales to the country's central bank.

"The amount of gold sold to the Bank of Mongolia has been falling sharply since the law came into force. Last year, 15,232.8 kg of gold was collected at the central bank, but the corresponding figure for the first ten months of 2006 is just 7,710.7 kg," he said.

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Ivanhoe mines is working on an agreement with the Mongolian government.

http://www.mongolia-web.com/content/...

Oyu Tolgoi Agreement Ivanhoe, Gov. Delayed

Parliament member N. Batbayars questioned if the agreement’s exempting Ivanhoe from paying the windfall tax of 68 percent for five years is legal. Hurelbaatar replied that with its 68 percent tax, Mongolia will not be able to attract any investors for the Oyu Tolgoi project. According to Hurelbaatar, calculations using today's copper prices of $797 per ton, Ivanhoe’s tax exemption would be 4 billion dollars. However, according to N. Batbayar, Ivanhoe’s investment in developing Oyu Tolgoi is only $2 billion and he feels their tax exemption violates the law.