UPDATE: Mongolia's PM Says Oyu Tolgoi Ownership Change Would Need Government OK

Any change to an existing partnership for the Oyu Tolgoi copper project in Mongolia between the government, Rio Tinto Ltd. (RIO) and Ivanhoe Mines Ltd. (IVN) would government approval, Mongolian Prime Minister Sukhbaatar Batbold said Wednesday.

He didn't directly respond to a reporter's question about whether the government would agree or would consider allowing Chinalco, the Aluminum Corp. of China, to become a partner in Oyu Tolgoi, which is one of the world's largest copper-gold developments.

Chinese investment and cooperation in Mongolia is welcomed in many projects but on this particular project the agreement has been made between the government and the particular investors, he said.

"So that if we have to agree to let any third parties, it has to go through the procedures that should be negotiated with the government of Mongolia," he said during the first visit to Australia by Mongolia's prime minister.

Asked about security of tenure and the stability of mining law in Mongolia, the prime minister said he wants to provide business and investors with a "stable and predictable environment."

The government needs to make some changes to mining regulations in the best interest of the people of Mongolia and investors, he added.

Australia will open a government trade office in Mongolia, strengthening links between the two nations in areas including mining and agriculture, Prime Minister Julia Gillard said.

About 30 Australian mining companies are operating in Mongolia along with other companies, she said.

Four bilateral agreements were signed covering vocational education, cabinet processes, agriculture and science, Gillard said.

-By Ray Brindal, Dow Jones Newswires; 612 62080902; ray.brindal@dowjones.com

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