Mongolian premier replaces cabinet members amid instability worries

By Terrence Edwards
ULAN BATOR, Aug 8 (Reuters) - Mongolian Prime Minister
Chimed Saikhanbileg has replaced six members of his cabinet, a
change the president said could hurt an already limping economy
and further deter foreign investors worried about political
stability.
Mongolia has promised to use its vast untapped mineral
reserves to develop its tiny, landlocked economy, but flagship
projects have been delayed and foreign investment deterred by
political disputes and regulatory uncertainties.
Parliament endorsed the prime minister's proposal to remove
the Mongolian People's Party (MPP) from the coalition government
on Friday, meaning the party's six cabinet members lost their
jobs.
Saikhanbileg, a member of the Mongolian Democratic Party,
was appointed last year with a mission to rejuvenate the
flagging economy through foreign investment in the mining
sector, and will retain his position as prime minister.
"(The) vote came after heated debates in the legislature
with 'no love lost' between MPs from major parties," said Dale
Choi, head of the research firm Mongolia Metals & Mining, in an
email to subscribers about the vote to remove the MPP.
The coalition was originally expected to last until July
2016 parliamentary elections and its early dissolution threatens
to disrupt parliamentary decisions on a number of lucrative
mining projects.
The Toronto-listed Centerra Gold Inc . CG.TO is awaiting a
decision from parliament on the stake size the government will
take in the Gatsuurt gold mine it hopes to put into production.
Parliament must also must vote on a proposed investment
agreement with a private consortium led by China's Shenhua
Energy to develop and mine the huge Tavan Tolgoi coal mine.
Mongolia's development plans had already been delayed as a
result of a two-year dispute with global miner Rio Tinto
RIO.AX RIO.L over the expansion of the $6.5 billion Oyu
Tolgoi copper mine, which was finally settled in May.
ID:nL3N0Y95MT
This week, President Tsakhia Elbegdorj, who is also a
Democratic Party member, weighed in with a letter condemning the
proposed plan to remove the MPP, saying it threatened to
"destabilize" the government.
That, in turn, could reflect poorly on the economy, he said.
"It can cause negative impact on society, the economy and
the country's reputation in the international arena," he wrote.