Mendsaikhan Zagdjav: Agreement Reached to Reduce Shareholder Loan Interest Rate After Five Rounds of Negotiations www.montsame.mn

 At the regular session of the Cabinet of Mongolia, Minister of Finance Mendsaikhan Zagdjav presented the outcomes of negotiations with the investor regarding the review and adjustment of the Oyu Tolgoi project's shareholder loan interest rate.

“During the initial stage of negotiations, the parties reached an in-principle agreement to reduce the loan interest rate, which was formalized by a protocol. Official negotiations with the investor commenced in October 2025. Following a total of five rounds of talks with Rio Tinto over this period, we have successfully reached an agreement to lower the shareholder loan interest rate," stated the Minister.

He continued, "The Oyu Tolgoi shareholder loan interest rate has been reduced. As a result, USD 6.2 billion, or MNT 22 trillion, that would have been paid toward the loan will be saved, paving the way for the Mongolian side's economic benefits to increase by USD 2.5 billion, or approximately MNT 8 trillion.

"Furthermore, the review of the Oyu Tolgoi shareholder loan interest rate, which was previously conducted once every seven years, will now take place every three years. The parties also agreed to receive dividends from Oyu Tolgoi this year."

Tax Support to Be Provided to Legal Entities Registered in Virtual Zone www.montsame.mn

At its regular session, the Cabinet of Mongolia approved the "List of Information Technology Products, Works, and Services of Legal Entities Registered in the Virtual Zone to Support Information Technology Production." Minister of Finance Mendsaikhan Zagdjav and Minister of Digital Development, Innovation, and Communications Nomin Chinbat were tasked with organizing and monitoring the implementation of the resolution.

In 2024, the State Great Khural of Mongolia (Parliament) passed the Law on Supporting Information Technology Production. This legislation created a legal framework to foster the digital economy by supporting individuals and legal entities engaged in the IT sector, diversifying their funding sources, and maximizing the economic benefits of IT production. In accordance with a Government resolution, registration requests submitted via the e-business system by over 100 legal entities seeking to join the IT virtual zone have been processed since January 2026.

Under the Law on Corporate Income Tax, these registered entities are eligible for tax relief. Specifically, Article 22.5.4 stipulates a tax exemption on the sales revenue of IT products, works, and services generated by legal entities registered in the virtual zone, as defined in Article 11.1 of the Law on Supporting Information Technology Production. Furthermore, Article 22.6 mandates the Cabinet to formally approve the list of eligible products, works, and services that qualify for this tax exemption.

Countries such as Kazakhstan, Uzbekistan, and the United Arab Emirates currently offer comprehensive tax exemptions to legal entities operating in special IT zones, relieving them of corporate income tax, value-added tax, personal income tax, customs duties, and real estate taxes. Driven by similar policies, Kazakhstan’s total IT sector exports reached USD 1.1 billion in 2025, with the Astana Hub alone accounting for USD 633 million. Kazakhstan aims to boost the hub's export revenue to USD 1 billion in 2026, reported the Media and Public Relations Department of the Parliament of Mongolia.

Mongolia and the Republic of Korea to Reach Agreement on Mutual Recognition of Driver's Licenses www.open.kg

The President of the Republic of Korea will sign an intergovernmental agreement with Mongolia on the mutual recognition and exchange of driver's licenses. This will take place during his state visit to Mongolia, which was organized at the invitation of the president of that country.
Currently, more than 60,000 citizens of Mongolia are in the Republic of Korea, and about 1,400 of them have legal issues, mainly related to traffic accidents and the lack of driver's licenses. To address this issue, the Parliament of Mongolia approved a draft resolution for signing an agreement with Korea.
The agreement will allow citizens of Mongolia to drive cars in Korea using their national licenses for one year. Those who reside in the country for more than 12 months will have the option to exchange their driver's licenses. Thus, Mongolia and the Republic of Korea will establish mutual recognition of driver's licenses, which will simplify life for many citizens.

Mongolia energy workers delay strike for talks www.sxcoal.com

Mongolian energy sector workers have agreed to postpone a planned strike by 48 hours to allow for negotiations, according to the latest reports.

The workers had threatened to launch a nationwide strike from 8 a.m. on June 30 unless their demand for a 30% wage increase was met, following prolonged but unsuccessful talks with the Energy Ministry. Over 6,000 workers from 22 units had pledged to participate.

However, the Mongolian Energy, Geology and Mining Trade Union Federation held further discussions with the ministry and employer representatives, proposing a phased 30% wage increase over 2026 and 2027.

The union decided to delay the strike by 48 hours to allow time for talks. If negotiations fail to reach a deal within that period, the strike will resume at 8 a.m. on July 2.

Rio Tinto agrees new financial terms for $18bn copper mine project www.ft.com

Rio Tinto and Mongolia have agreed new financial terms for the $18bn Oyu Tolgoi copper mine, after surging prices for the metal and mounting political pressure pushed the company into talks.

The London-listed miner has agreed to cut its management fees for the project in the Gobi Desert by 50 per cent and to reduce the interest rate on its multibillion-dollar loan to Mongolia by 2.5 percentage points.

The agreement follows months of negotiation over Mongolia’s single biggest mining project and foreign investment, after officials described earlier terms as “unfair” and claimed the country was “being deceived”.

It also comes as copper prices are near record highs, potentially increasing the future payouts from the mine. It is expected to produce about 500,000 tonnes annually of the red metal, which is in high demand for its role in the energy transition.

Rio Tinto chair Dominic Barton and Katie Jackson, head of copper, met Mongolian Prime Minister Uchral Nyam-Osor on Tuesday in Ulan Bator to sign the deal.

The agreement showed that Mongolia could “protect our financial sovereignty while maintaining a highly lucrative environment for global capital”, the PM said in a statement.

Jackson said the agreement “demonstrates Rio Tinto’s ongoing commitment to the long-term success of Oyu Tolgoi”, adding that the reduced interest rate reflected the lower risk as the project matured. The Mongolian government declined to comment.

The new deal is the latest in many twists and turns for Oyu Tolgoi, which has been under construction for nearly 17 years.

Four years ago, Rio agreed to waive about $2.4bn of the government’s loan as both sides vowed to “reset” the relationship — but that truce has not held, while elections due next year have raised the political stakes.

Two weeks ago protesters successfully disrupted exports from Oyu Tolgoi, forcing it to halt shipments of concentrate leaving the project for nearly a day.  

One issue that has not been resolved is how soon the government will start receiving dividends from Oyu Tolgoi, in which it holds a 34 per cent stake, with Rio owning 66 per cent.

Frequent cost overruns and delays have pushed back the expected start date for dividends from 2017 to around 2037. Rio said it would “bring forward distributions to shareholders”, without committing to a date.  

Ben Davis, analyst at RBC, said the agreement was “just about a net positive” for Rio, though concerns remained about how long it would hold before the government seeks “to take a larger share of the economics”.

“Given how quickly Mongolia politics changes, this remains a very real risk,” he said in a note to clients.

Separately, the Anglo-Australian company is facing a tax probe in Mongolia, where authorities allege it has underpaid about $450mn largely because of accounting differences related to depreciation during the 2021 and 2022 tax years.

That dispute is working its way through the courts.

Rio Tinto's Oyu Tolgoi Reset: Mongolia Pushes for a Bigger Share of Its Mining Wealth www.capitalmarkets.mn

For nearly two decades, the relationship between Mongolia and Rio Tinto has defined the country's investment story. The 2009 Oyu Tolgoi Investment Agreement unlocked one of the world's largest copper-gold deposits and attracted billions of dollars in foreign capital, but it also became one of Mongolia's most politically contentious contracts.

Today, as underground production approaches full ramp-up and copper markets remain structurally attractive, Mongolia has returned to the negotiating table with significantly greater leverage. Unlike previous rounds of discussions that focused primarily on keeping the project moving, the latest negotiations have centered on redistributing long-term economic benefits rather than preserving investment certainty.

Recent negotiations culminated in a new financial agreement between Rio Tinto and the Mongolian government that reduces management fees, lowers shareholder loan interest rates and commits both parties to continue discussions over the unresolved Entrée Resources joint venture licenses. While the agreement removes several long-standing points of friction, the most strategically important issue, the fiscal treatment of the Entrée license areas remains unresolved and will likely determine how much value Mongolia ultimately captures from future underground production.

A New Political Environment
The current negotiations differ fundamentally from those that produced the original Investment Agreement in 2009.

The underground mine is now operational, Oyu Tolgoi is expected to become one of the world's largest copper producers over the coming decade, and higher copper prices have significantly increased the project's long-term economic value. At the same time, Mongolia has become increasingly focused on ensuring strategic mineral assets generate larger domestic economic returns.

Parliamentary Resolution No. 120 formalized this objective by directing the government to renegotiate several aspects of the Oyu Tolgoi framework while providing regular progress reports to Parliament. Rather than reopening the entire Investment Agreement, the government's strategy has been to renegotiate financial terms that directly influence Mongolia's eventual returns from its 34% ownership stake.

Management Fees Become an Early Victory
One of the government's primary objectives was reducing Rio Tinto's management fees.

Mongolian negotiators initially sought a 50% reduction, arguing that management-related charges had steadily increased through various supplementary agreements and materially reduced the project's profitability.

Following months of negotiations, Rio Tinto agreed to halve its management fees. Government officials estimate the change could improve Mongolia's economic share by approximately US$1.5 billion over the life of the project through lower operating costs and the elimination of duplicate charges.

While the reduction appears modest in percentage terms, it is significant because management fees directly reduce distributable profits. Since Mongolia does not expect dividends until well into the project's mature operating phase, lowering operating costs today increases future cash flows available to shareholders.

Lower Financing Costs Improve Long-Term Economics
The second major breakthrough involved shareholder loan financing.

Mongolia's 34% ownership stake has largely been financed through shareholder loans, with interest historically calculated at approximately LIBOR plus 6.5%. Successive project delays, cost overruns and compound interest significantly postponed the timeline for Mongolia to receive dividends.

The revised agreement reduces the shareholder loan interest rate by roughly 2.5-2.6 percentage points to approximately 7.9% while shortening future review periods from seven years to three years. Rio Tinto described the lower rate as reflecting the project's reduced risk profile as underground production advances.

Although Mongolia originally sought substantially lower financing costs, the negotiated reduction still represents one of the most meaningful financial concessions obtained since the project began and improves the long-term economics of the government's equity position.

The Entrée Licenses Remain the Key Outstanding Issue
Despite progress on financial terms, negotiations over the Entrée Resources joint venture remain unresolved.

The dispute centers on the Shivee Tolgoi and Javkhlant mining licenses, which are held through the Entrée/Oyu Tolgoi joint venture and contain strategically important underground mineral resources required for future mine development.

The core disagreement is not geological but fiscal.

Rio Tinto argues these license areas should continue operating under the stabilization provisions contained within the original 2009 Investment Agreement. Under that framework, production would remain subject to the project's stabilized 5% royalty regime.

Mongolian policymakers, however, have explored replacing the state's equity option within these licenses with a higher mineral royalty structure under current legislation. Such an approach would subject future production to a materially higher progressive royalty regime while increasing direct fiscal revenues to the government.

The outcome carries implications well beyond the Entrée licenses themselves. It will establish an important precedent for how Mongolia balances investment stability against evolving expectations for resource nationalism and fiscal participation.

Recognizing the significance of the issue, Parliament has postponed broader discussions regarding copper royalty reforms until negotiations over the Entrée licenses are completed.

The Tax Dispute Has Not Been Resolved
Another issue that continues to complicate relations is Oyu Tolgoi's tax dispute with Mongolian authorities.

Earlier this year, Oyu Tolgoi transferred approximately MNT 1.6 trillion (around US$440 million) to the Mongolian State Treasury following tax assessments covering previous fiscal years. The payment attracted significant public attention and was widely presented as evidence of progress in government negotiations.

However, the legal position remains unchanged.

Rio Tinto and Oyu Tolgoi continue to dispute the assessment and maintain international arbitration proceedings. The payment was made to comply with domestic legal requirements while preserving the company's legal rights during the dispute resolution process.

Consequently, although the transfer provided a political victory for the government, it does not represent final settlement of the underlying tax case. A definitive resolution will depend on ongoing legal proceedings.

A More Assertive Negotiating Strategy
The latest negotiations illustrate a broader shift in Mongolia's approach toward strategic mining assets.

Rather than questioning foreign investment itself, policymakers have increasingly focused on improving the distribution of economic benefits through lower financing costs, reduced operating expenses and potentially higher fiscal participation.

For Rio Tinto, preserving investment stability while maintaining constructive relations with Mongolia has become increasingly important as Oyu Tolgoi approaches peak underground production. The company has therefore shown greater willingness to make financial concessions than in previous negotiation rounds.

Nevertheless, analysts caution that political risks remain elevated. Public pressure for greater national benefits continues to increase, particularly as copper prices strengthen and Oyu Tolgoi moves closer to producing around 500,000 tonnes of copper annually. Recent protests temporarily disrupting concentrate exports demonstrate that mining remains politically sensitive despite the latest agreement.

CMM Insight
The latest agreement represents the most meaningful recalibration of the Oyu Tolgoi partnership since the comprehensive reset reached in 2022. Reductions in management fees and shareholder loan interest rates should improve Mongolia's long-term economic returns while allowing Rio Tinto to preserve operational certainty during the underground mine's critical production ramp-up.

However, the negotiations are not over.

The unresolved treatment of the Entrée Resources licenses remains the most consequential issue still on the table. Beyond determining the fiscal framework for two strategically important mining licenses, the outcome will signal how Mongolia intends to balance contractual stability with growing domestic expectations for a larger share of mineral wealth.

For investors, the recent agreement reduces some near-term political uncertainty but does not eliminate it. As Oyu Tolgoi enters its next phase of production growth, the project's long-term investment case will increasingly depend not only on copper prices and operational execution, but also on whether Mongolia and Rio Tinto can establish a durable fiscal framework that satisfies both shareholder returns and national economic priorities.

Prime Minister Uchral: Government Achieves Historic Breakthrough in Oyu Tolgoi Negotiations www.montsame.mn

On June 30, Prime Minister Uchral Nyam-Osor announced that the Government of Mongolia has achieved a historic breakthrough in the Oyu Tolgoi negotiations ahead of the National Naadam Festival.

First, under the updated agreement, Oyu Tolgoi's management costs have been reduced by USD 2.2 billion (approximately MNT 8 trillion), increasing the Mongolian side's financial return by USD 1.5 billion (around MNT 5 trillion).

On the threshold of the government's first 100 days, the shareholder loan interest rate has been slashed by 2.5 percentage points, dropping from 10.5% to 7.9%. This adjustment saves USD 6.2 billion (MNT 22 trillion) that would have otherwise gone toward loan interest payments, boosting Mongolia's future returns by MNT 8 trillion.

Second, the negotiation window to lower shareholder loan interest rates, which previously opened only once every 7 years, has been shortened to every 3 years.

Third, Mongolia will begin receiving its Oyu Tolgoi dividends this year, moving the timeline up significantly from the previously projected year of 2037.

In total, the negotiations have slashed costs by USD 8.4 billion (over MNT 30 trillion) and increased Mongolia's future direct returns by USD 4 billion (MNT 13 trillion).

"Mongolia's wealth must benefit the Mongolian people. As a democratic and free nation, we will always support foreign investment. We will equally protect the legitimate interests of all investors alongside the rights of our own citizens, and we look forward to continuing our close cooperation," the Prime Minister stated.

State budget recorded a MNT 1 trillion deficit in 2025 www.gogo.mn

On June 30, the Budget Expenditure Oversight Subcommittee of the Parliament met to hold the second reading of the draft parliamentary resolution approving Mongolia's 2025 consolidated budget performance and the Government's 2025 consolidated financial statements.

The report was presented by Minister of Finance Z.Mendsaikhan.

According to the report, the 2025 consolidated budget recorded balanced revenue and grants totaling MNT 30.3 trillion, equivalent to 33.7% of gross domestic product (GDP). Total expenditure and net lending reached MNT 31.3 trillion, or 34.8% of GDP.

As a result, the consolidated budget posted a balanced deficit of MNT 1.03 trillion, equivalent to 1.1% of GDP.

For the state budget alone, balanced revenue and grants totaled MNT 19.0 trillion, achieving 95.9% of the planned target, while total expenditure and net lending amounted to MNT 20.4 trillion, representing 90.5% of the approved budget.

The report also noted that MNT 2.14 trillion, or 73%, of planned domestic investment was allocated to 613 projects and programs during 2025. In addition, MNT 1.87 trillion, or 96%, was invested in 116 projects financed through foreign loans and grants.

Overall, MNT 4.01 trillion was invested in 729 development projects and programs.

As part of these investments, contracts were signed with approximately 1,800 business entities, around 110,000 jobs were sustained, and 490 projects and facilities were completed and commissioned nationwide.

Japan to Supply Diagnostic Equipment to National Cancer Center www.montsame.mn

Minister of Finance of Mongolia Mendsaikhan Zagdjav and Ambassador of Japan to Mongolia Igawahara Masaru signed an Exchange of Notes and a Record of Discussions yesterday for the "Project for the Provision of Diagnostic Equipment to the National Cancer Center." The project is being implemented under the "Economic and Social Development Programme," funded by a non-refundable grant from the Government of Japan.

During the signing ceremony, Minister Mendsaikhan highlighted the year-on-year increase in non-communicable diseases in Mongolia, particularly cancer. He expressed gratitude to the Government of Japan and the Japan International Cooperation Agency (JICA) for stepping in to implement the grant project to help address this pressing issue. The Minister noted his satisfaction that the project will expand the National Cancer Center's diagnostic and treatment capacities, creating vital opportunities for the early detection, diagnosis, and treatment of the disease. He also expressed confidence that the initiative will make a significant contribution to improving the overall quality and accessibility of the country's healthcare services.

Financed by a Japanese government grant of JPY 980 million (MNT 21.9 billion), the project will modernize the technical capacity of the National Cancer Center, Mongolia's specialized national referral hospital for oncology. Under the agreement, the center will be supplied with state-of-the-art medical technology, including CT scanners, X-ray machines, mammography systems, ultrasound diagnostic devices, and patient monitors.

Enkh-Od.G

MIAT - Mongolian Airlines mulls 10 Airbus jets www.ch-aviation.com

MIAT - Mongolian Airlines (OM, Ulaanbaatar) is looking to purchase ten Airbus aircraft, road and transport minister Borkhuu Delgersaikhan told local media during an event on June 25, 2026. The move is part of a multipronged strategy to improve the country's air transport sector.

"As the national carrier, MIAT has decided to acquire ten aircraft. We are taking this step with confidence," Delgersaikhan said. He explained that the airline's heavy reliance on leased aircraft has driven up costs, with nine of its ten aircraft currently under lease.

"While we are transporting both international and domestic passengers, the high lease payments mean the airline is not generating sufficient returns," he added.

The aircraft will be acquired through long-term finance leases or other financing arrangements. Delgersaikhan said the ministry is in talks with two financial institutions, including the Trade and Development Bank of Mongolia, which is prepared to provide financing guarantees, as well as an undisclosed French party.

Describing the acquisition as "a very important milestone" for Mongolia, Delgersaikhan said the government intends to select an Airbus type best suited to MIAT's operational requirements.

MIAT last operated an Airbus aircraft in 2011 when it retired its sole A310-300 after 13 years of service. According to ch-aviation fleets data, the carrier currently operates one B737-8, three B737-800s, one B757-200(PCF), one B767-300ER, two B787-9s, and two CRJ700s.

MIAT, which did not indicate the plans during a recent interview with ch-aviation, did not respond to a request for comment.

By Dirk Andrei Salcedo