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Tue, 14th Aug 2012 07:17

By Michael Kohn

ULAN BATOR, Aug 10 (Reuters) - Norov Altanhuyag of the Democratic Party (DP) was confirmed as Mongolia's new prime minister on Friday, ending weeks of political uncertainty after the party failed to win enough seats in a June election to form a government on its own.

The transfer of power to the DP has raised hopes of a tougher stance on graft and a friendlier investment climate, after the parliamentary results last month prompted concerns that more power would be handed to politicians who advocate local control of mines.

Former president Nambar Enkhbayar was sentenced to four years in prison for corruption earlier this month. Enkhbayar is the chairman of the Mongolia People's Revolutionary Party (MPRP), which is in favour of nationalising resources and is the second largest party in the new coalition government.

In a note to clients, private equity firm Origo Partners called Altanhuyag's confirmation as the country's 27th prime minister 'a positive development', adding it viewed Enkhbayar's conviction 'a landmark event' for stronger anti-corruption regulatory enforcement.

The DP won 31 of the 76 seats in the June 28 vote, forcing it into a coalition with four smaller parties, including the MPRP. The DP is expected to comprise 75 percent of the new cabinet.

The DP's rise to power will calm investors who had been concerned about the MPRP's nationalistic stance, with Enkhbayar having called for some major mining contracts to be renegotiated with a view to limit foreign ownership.

One of the targets was the massive Oyu Tolgoi copper and gold project, which is set to start production later this year and is 66 percent owned by Rio Tinto and Turquoise Hill Resources, with the remaining stake held by the Mongolian government.









'The newly established government will welcome foreign investment, we will guarantee them a stable legal environment, we will try to fulfil our party agenda,' MP Chimed Saikhanbileg told Reuters in a telephone interview.

Mongolia is gripped by a mining boom that is set to transform its tiny economy, but political uncertainties have threatened to overshadow efforts to attract foreign investment needed to develop mines and build essential infrastructure.



(Writing by Carrie Ho; Editing by Michael Roddy) Keywords: MONGOLIA ELECTIONS/

(+86 21 61041775)(Reuters Messaging: carrie.ho.reuters.com@reuters.net)

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