ULAN BATOR, Aug 1 (Reuters) - Foreign direct investment in Mongolia fell 70 percent in the first half of the year, central bank data showed on Friday, with investors wary of the country’s position on the foreign ownership of its resources.
Mineral-rich Mongolia has made it easier for foreign companies to gain majority stakes in mining, finance and other sectors, but protracted disputes with some multi-nationals are putting investors off despite the government’s efforts to resolve them, including changes to controversial legislation aimed at limiting foreign ownership in “strategic sectors”.
The central bank said investment into Mongolia fell a total of $873.2 million from January to June against a year earlier.
Mongolia has sought to attract billions of dollars of foreign capital to transform its remote pastoral economy into a regional mining powerhouse, but giant projects such as the Oyu Tolgoi copper-gold mine and the Tavan Tolgoi coal project have been subject to long delays.
The central bank said that Mongolia’s earnings from coal exports dipped 17 percent in the first half of the year, with volumes down 143 percent over the period.
Over the same period, copper exports rose 144 percent to become the country’s biggest earning commodity over the period, driven by Oyu Tolgoi, a joint venture between the Mongolian government and mining giant Rio Tinto .
Rio Tinto and Mongolia have been at loggerheads over Oyu Tolgoi, with the government complaining that the mine’s development costs have been too high, suspending the project’s underground expansion and delaying as much as $5.1 billion in foreign investment.
The project is also embroiled in a tax dispute with the Mongolian authorities, which is also expected to delay the release of a feasibility study for the mine’s expansion. (Reporting by Terrence Edwards; Editing by David Stanway and Jacqueline Wong)