By Elisabeth Behrmann
SYDNEY -- Representatives of Ivanhoe Mines /zigman2/quotes/207656050/delayed CA:IVN 0.00% Ltd.'s $3 billion Oyu Tolgoi project in Mongolia have held talks with the government there for the past two weeks to forge an investment agreement, but there is no clear timetable for progress, a person familiar with the matter said.
Resources companies have been awaiting a solid investment framework for years to mine Mongolia's copper, gold, coal and uranium. Talks to forge an investment deal dragged particularly after Mongolia's government in 2006 announced it would seek a stake of up to 50% in strategic mining projects, as well as imposing a windfall tax on company profits from copper and gold production.
Mongolia's government is under pressure to move forward on Oyu Tolgoi, after its economy was hit hard by the slump in prices for its main export commodities, copper and coal, which forced it to seek loans from the International Monetary Fund.
Shares of Canada-based Ivanhoe fell 8.4% to $5.59 Wednesday after Bloomberg published an interview with Mongolia's president elect, Tsakhiagiin Elbegdorj, saying he wanted to change the proposed deal with Invanhoe and Rio Tinto /zigman2/quotes/222358280/composite RTP +2.93% PLC, under which the government would take an equity stake in the project.
Mr. Elbegdorj, who was sworn in as president Thursday, suggested that instead of the government buying an equity stake, it should take 50% of the project's profit. He also proposed changes to the windfall tax.
The person familiar with the matter said a parliamentary standing committee two weeks ago submitted to the government its report on the deal, seen as a blueprint for other projects in the mineral-rich but impoverished country. "Since then there have been talks with the government. The investment agreement isn't a presidential issue; it's a parliamentary or governmental issue," the person said.
Under Mongolian law, parliament, called the Hural, passes legislation on matters such as Oyu Tolgoi's investment agreement, while the president holds a veto. In practice, the president rarely vetoes legislation, and can be overruled by a two-thirds parliamentary majority.
Rio Tinto holds a minority stake in Ivanhoe after making an initial $303 million investment in 2006, with an option to increase investment to $2.3 billion for a 46.65% stake.
Separately, a BHP Billiton /zigman2/quotes/208108397/composite BHP -0.10% Ltd. spokeswoman said the company is in the process of closing down its exploration office in Mongolia. The diversified miner opened an office there in 2005, after signing exploration agreements with a number of Western companies in the region.
BHP didn't say why it was closing the office.
Write to Elisabeth Behrmann at Elisabeth.Behrmann@dowjones.com