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Preparation for steel erection at primary crusher at the Oyu Tolgoi project.

Turquoise Hill Resources Ltd. and its majority shareholder Rio Tinto Ltd. have rejected a request from Mongolia to renegotiate the investment agreement for its Oyu Tolgoi mine, the world's largest undeveloped copper-gold project, the Canadian miner said on Monday.

The Mongolian government's push to review the deal, which was signed in October, 2009, and went into effect in March 2010, adds weight to concerns among foreign investors about rising resource nationalism in the Asian country following a June election.

Mongolia's new mining minister told local media in August that the government should try to raise its stake in Oyu Tolgoi, which will become one of the world's largest copper-gold mines when it reaches full production in 2018.

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Under the current agreement, Mongolia owns 34 per cent of the project, while Turquoise Hill, formerly known as Ivanhoe Mines, holds the remaining 66 per cent.

Mongolia can increase its stake to 50 per cent only after an initial period of 30 years of commercial production.

Construction at Oyu Tolgoi is 97 per cent complete and the mine is expected to reach commercial production in the first half of 2013.

Production at the massive mine could be delayed by Mongolia's efforts to renegotiate the investment agreement, said Mariyam Zhumadil, an analyst with Halyk Finance in Kazakhstan.

"If the government continues to push for revision of the agreement, one of the things investor Rio Tinto could do is delay the commissioning," she said.

Ms. Zhumadil also noted that Mongolia's push to gain more control over its resources could lead to less foreign investment in the country, as smaller miners pull out of the country instead of risking investment deals with a government that is not perceived as mining friendly.

Turquoise Hill, which is controlled by Rio Tinto, said the current agreement benefits all parties and was signed in full compliance with Mongolia's laws, and noted it has already invested nearly $6-billion in the country.

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