Mongolia has budgeted a dividend it has never received. The 2027 draft budget before the Khural counts ₮3 trillion from Oyu Tolgoi among its revenues, 7.4% of all the revenue it expects, and the finance minister has already told the public how it will be spent: one trillion into citizens’ named accounts in the Savings Fund, two trillion into current spending, pensions for the elderly and pay for civil servants first. The company that is to pay it says the sum is the government’s proposal, to be weighed against year-end results and cash.
An agreement stands behind the line. In September the government and Rio Tinto amended the Oyu Tolgoi shareholders’ agreement for the first time in 17 years, and the dividend on the state’s 34%, held through Erdenes Oyu Tolgoi, that was to start in 2037 now starts in 2027, finance minister Mendsaikhan, who led the negotiating group, said on 24 September. The company’s 2026 accounts come out in 2027, and a joint working group is still to settle how the dividend is calculated.
The budget the Khural began debating the next day is built on it. Revenue of ₮40.7 trillion, 35.3% of GDP, spending of ₮43 trillion, 37.3%, a deficit of ₮2.3 trillion held at 2.0% of GDP: revenue rises by ₮6.5 trillion, of which ₮3.5 trillion comes from state companies’ dividends and ₮3 trillion from Oyu Tolgoi, and of that rise ₮2.9 trillion goes to pensions and ₮2.6 trillion to public-sector pay, by ikon.mn’s account of the first reading.
Oyu Tolgoi’s chief executive, Munkhsukh, listed the three things the company must do before it can distribute anything: work well and be profitable, keep cash flow stable, run the mine safely and efficiently. He named a fourth party to satisfy, the lenders, who would be unhappy to see money that was to repay them paid out as dividends, and said the company would negotiate with them. His counterpart at Erdenes Oyu Tolgoi, Telmuun, called the ₮3 trillion the government’s proposal and the target, with year-end results and cash among the many indicators to be weighed.
The catch sits in a law of April 2024. The National Wealth Fund law routes the dividends attributable to the state’s 34% in strategic deposits into the Savings Fund, one of its three funds beside the Future Heritage Fund and the Development Fund, whose money is recorded in each citizen’s named account and spent on health, education and housing. Article 12 forbids spending the fund’s assets for any other purpose and forbids transfers between the three.
The one-off law the minister announced is the way around it. In his own words the dividend is not stable, permanent budget revenue, and a special law is being drafted so that later budgets are not burdened. Two thirds of a payment the 2024 law sends to the citizens’ accounts would go instead to spending that recurs every year, and the law that is to allow it is the one that calls the payment exceptional.
The company that is to pay it says the sum is the government’s proposal, to be weighed against year-end results and cash.
Mongolia has been here before with coal. The dividend from Erdenes Tavan Tolgoi went into pensions before the copper one was agreed, and the split the finance minister announced follows that precedent, with the 2024 law left to one side. The difference is that coal’s dividend had been paid when it was spent, and copper’s has not.
How such a line behaves under stress, this autumn shows. The 2026 budget revision has been before the Khural since September and this week is still not adopted, with the ruling Mongolian People’s Party promising it by 20 October.
Petrol went up by 500 to 550 tugrik a litre on Monday 12 October because the Russian supply price rose by $190 on last month’s, per tonne by the arithmetic of the pump price, the deputy industry minister said, and the country holds 14 days of AI-92 and 31 days of diesel. A budget that leans on one company’s cash in a year when the pump price moves by hundreds of tugrik a litre depends on two prices Ulaanbaatar does not set, copper and Russian petrol.
Copper decides. Oyu Tolgoi’s revenue for the first eight months of this year ran at $5.5 billion against a plan of $3.6 billion, with copper output above plan, by the company’s own report in September, and revenue is the top of the account, with the cash a dividend comes from at the bottom of it.
The same arithmetic runs the other way in a year when the price falls, and a dividend is the last call on cash after costs, lenders and the mine’s own capital. The law of 2024 was written to keep a line that moves with the copper price out of the recurrent budget.
Five years out, three paths are visible. In the first the dividend arrives at or near ₮3 trillion in 2027 and the one-off law becomes an annual one, each year’s number set by the mine’s cash and each year’s pensions set by it in turn.
On the second path the company’s year-end leaves a smaller sum, the Savings Fund’s trillion is paid and the current spending it was to cover is borrowed, inside a deficit line of 2% of GDP, by a parliament that has been a month late with this year’s revision. The third path has the Khural read its own 2024 law and send the whole share where the law sends it, to the named accounts, and find pensions and pay from taxes.
The third is the one the law prescribes and the one the 2027 draft does not take. Copper is in the ground and the agreement is signed, which is more than Mongolia had a year ago, and the formula is still with a working group. What has not been settled is who sets the number when the copper price leaves the mine and the ministry with different ones, and what a parliament that cannot pass a revision in a month will do with a dividend that arrives smaller than the line it has already spent.
By 2031 the Savings Fund accounts will show whether the first dividend reached the citizens whose names are on them, or passed through the budget on its way to the next one.