(For related story click on [ID:nSP18173]) July 2 (Reuters) - Five people were killed in a riot in Mongolia's capital sparked by discontent over alleged fraud in a weekend election, dampening hopes for a period of stable government to develop the mining sector and tackle inflation. Here are some details on what is at stake in the giant grassland nation that lies between Russia and China. * How to develop huge deposits of copper, gold, and coal in the south central Gobi Desert was a key campaign issue in Sunday's election. * Both main parties, the ruling Mongolian People's Revolutionary Party (MPRP) and the opposition Democratic Party, say they support amendments to the Minerals Law and a draft investment agreement that would give the government an ownership stake in foreign-invested mining projects. * But a period of unstable, coalition governance in the last parliament prevented the conclusion of the billion-dollar foreign investment deals, frustrating internationals. * The biggest project at stake is at Oyu Tolgoi, also known as Turquoise Hill. About 80 km (50 miles) north of the Chinese border, it is backed by Ivanhoe Mines <IVN.TO> of Canada and Rio Tinto <RIO.AX> <RIO.L>. * Tipped to produce an average of 440,000 tons of copper and 320,000 ounces of gold per year, Olu Tolgoi would be one of the world's largest copper mines at capacity. Production had been forecast to commence in mid-2008. * The firms pounded out a draft investment agreement that would give the government a 34 per cent stake in Oyu Tolgoi last June. The deal was withdrawn in late December after the appointment of Prime Minister Sanjaagiin Bayar, who took office following the forced resignation of Miyeegombiin Enkhbold. * The two companies propose to spend up to $3 billion developing the field. Rio paid $303 million for a 10 percent stake in Ivanhoe in 2006. It has said it could invest up to $1.5 billion, under defined conditions, when the deal is approved. * Ivanhoe stock surged 9 percent on Monday, on expectations that the MPRP was heading to election victory. * The mining sector, Mongolia's largest industry, was little-explored before 1990, when the country was still a satellite state of the Soviet Union. Exports to neighbour China, its top export destination, helped fuel growth rates of almost 10 percent last year. * But surging profits, especially for foreign firms, are a sensitive issue in the country, where more than 10 percent of the population still live on less than $1 a day according to the United Nations. Sources: Reuters, Alertnet (http://www.alertnet.org/db/cp/mongolia.htm), Ivanhoe Mines (http://www.ivanhoe-mines.com/s/TurquoiseHill.asp) (Writing by Gillian Murdoch, Beijing Editorial Reference Unit; editing by Jonathan Hopfner)
A soldier stands outside the Mongolian People's Revolutionary Party (MPRP) building during clashes between protestors and police in Ulan Bator, Mongolia, July 1, 2008. Five people were killed and more than ...
