OTTAWA – A Canadian mining company wants the us government to suspend millions of dollars in foreign help to Mongolia until the Asian country will pay for using the firm’s uranium mine and passing on towards the Russians.
The request, made Tuesday, comes exactly one year after a trade tribunal told Mongolia to give Toronto-based Khan Resources Inc. more than $100 million in compensation for that lost uranium mine, and is the most recent gambit in a long-running dispute sparked by Cold War-era geopolitics.
It also coincides with a major mining convention in Toronto in a few days, where Mongolian officials intend to pitch their country like a great place for mining companies from Canada and the world to take a position.
Mongolia receives about $4 million in aid each year following the previous Conservative government designated it certainly one of 25 “countries of focus” for foreign help with 2014. A significant focus is building the Mongolian government’s ability to manage the country’s mining sector, where Canada may be the second-largest investor after China.
Mongolia’s ambassador to Canada, Radnaabazar Altangerel, said within an interview Wednesday that Canada’s assistance continues to be vitally important in helping his country manage its rich reserves of copper, gold and coal, as well as develop its agricultural sector and improve the healthcare system.
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But those aid dollars have grown to be a target for Khan president Grant Edey, that has been fighting for compensation since the Mongolian government all but seized his company’s Dornod uranium mine within the northeast of the country in 2009, and gave it to some Russian state-owned company.
“Why may be the government of Canada continuing to invest and prioritize Mongolia for foreign aid?” Edey said in an interview. “They kicked us out. And expropriation without compensation is against international law. Why should we promote bad actors?”
Several experts and industry insiders said Khan was essentially caught in the middle when Moscow, which in fact had heavily supported Mongolia during Soviet times, contacted some favours and pressured Ulaanbataar to secure use of key natural resource reserves. Those included the Dornod mine.
In response, Khan took Mongolia to arbitration. On March 3, 2015, a three-person panel ruled in favour of the organization and ordered Mongolia to pay for US$100 million in compensation. However the government hasn’t paid up. Instead, it’s appealed the ruling in France.
Altangerel admitted his government made a “mistake” in how it treated Khan, and said it will compensate the organization when a money is negotiated. “The government of Mongolia is attempting to show the page and find a good solution,” he explained. “We realize it isn’t a good example for Canada.”
‘The (federal) government should show some leadership and fully stand up for Canadian business’
But the ambassador said the dispute doesn’t reflect how Mongolia generally treats mining companies. He noted Mongolia received a global award a week ago for transparency in its resources sector, and Export Development Canada recently approved a $1-billion loan to assist fund a significant mine expansion.
“We have not repeated the same mistake,” Altangerel said, pointing to the fact other Canadian information mill doing good business in his country. “Our legislative framework is among the best and most favourable legislative frameworks in the world. And we wish to show and explain that Mongolia is open for business.”
Altangerel said the two sides will attempt to hammer out a settlement on the margins of the Prospectors and Developers Association of Canada’s mining convention in Toronto next week, where Mongolia’s finance minister will host a unique session designed to attract new foreign investment towards the country.
Global Affairs Canada spokeswoman Diana Khaddaj said within an email the government has had “every opportunity to urge the Mongolian government to adhere to the arbitration ruling.” Including raising the issue directly with Mongolia’s pm and many senior ministers, she said.
But Edey, who was confident the ruling will be upheld in France, said his company hasn’t seen a dime despite twelve months of negotiations and previous offers to pay up. That’s the reason he’s calling on the us government to step up the pressure and consider other avenues, for example withholding aid dollars.
“They’ve been stalling,” he said of the Mongolian government. “The (federal) government should show some leadership and fully stand up for Canadian business instead of making (Mongolia) a rustic of focus.”
lberthiaume@postmedia.com
Twitter.com/leeberthiaume
