Mongolian Copper Corporation (MCC) announced that its 49 percent stake in Erdenet Mining Corporation (EMC) has been officially reinstated by the Government Agency of Intellectual Property and State Registration and issued a renewed certificate of legal entity on December 28.
On December 7 2017, the Supreme Court of Mongolia held the final hearing on the case relating to shareholder’s dispute of EMC and ruled in favor of MCC.
MCC said that the official reinstatement is an important development and commended the current Cabinet for delivering a guidance to the Agency for Policy Coordination and State Property and the Government Agency of Intellectual Property and State Registration, defendants in the case, instructing them to reinstate interest and share ownership of MCC according to the Constitution and other legislations of Mongolia.
“The current government’s action shows critical aspect of rule of law’s system by rescinding the previous government’s decision, which was determined to be illegal by the Supreme Court,” MCC stated.
The final decision on the case, which has lasted over a year, in respect to the shares of and the future of EMC as a public-private partnership company not only demonstrates the rule of law in local businesses but also an important step for Mongolia to maintain its investment friendly status for foreign investors, according to MCC.
“This dispute was not only the case of MCC but also showed that hundreds of foreign and local investors, and thousands of local companies can protect their legal and commercial interests pursuant to the rule of law and by independent judiciary in Mongolia,” it added.
MCC stated that it expects that the majority shareholder, the government, to honor and follow the Company Law of Mongolia by respecting the minority shareholder’s interest and cooperating with MCC to increase efficiency, revenue to the state budget and work together in creating a better work environment for the thousands of employees of EMC.
Erdenet Mining Corporation’s (EMC) net profit increased by 273 billion MNT compared to 2016, following the change in minority ownership. According to EMC officials, change in ownership and management has allowed engineers to be more flexible and undertake reform in the company’s operation.
In 2016, EMC recorded a net profit of 27 billion MNT, while 2017 saw EMC record 273 billion MNT in net profit so far.
EMC was previously a Mongolian-Soviet joint venture, established in 1974, and later transformed into a Mongolian-Russian venture. In 2016, it was announced that the Russian state-owned Rostec would be selling off its 49 percent stake in Erdenet for 390 million USD to MCC, a phantom corporation for one of the largest private banks in Mongolia, the Trade and Development Bank.
In February 2017, Parliament had decided to nationalize the 49 percent stake in EMC due to questions regarding the legitimacy of the purchase. With the overturning of the decision by the Supreme Court, MCC has been officially reinstated as a minority shareholder and will be allowed to appoint members on the board of EMC.