The present year will be a very significant one for the mining industry in Mongolia and for those who have invested, or plan to invest, in it. The State will, for the first time, adopt a detailed and wide ranging policy on the mineral sector. Parliament is then to pass a package of laws on mining to reflect that policy, and also amend some present laws in that light.
All players in the mining sector are paying close attention to the script of the mineral policy as it unfolds in bits and pieces. President Ts.Elbegdorj revealed some proposed provisions in the new Law on Mining when he addressed the State Great Khural on 28 December.
First of all, no fresh exploration licence will be issued until the passage of the new law. The President also thinks mining-related licences should not cover more than 10 per cent of Mongolia’s total territory. This was once as high as 46 per cent. Ts.Elbegdorj’s present proposal to the State Great Khural was that either the law on issuance of new mining licences be amended, or the present ban on it extended. It may be recalled that under the President’s initiative, a temporary ban was imposed in 2010 on issuance of new mining and exploration licences. The ban was later extended until 1 December, 2011.
Right after the new year began, the Standing Committee on Economics discussed the President’s proposal and approved it. The State Great Khural will now debate the law draft.
The President also proposed that henceforth exploration licences will be granted only after open bids. This provision is likely to be included in the new Mining Law.
The President has also directed the Mineral Authority to individually review every license already issued. The most stringent scrutiny is planned to be made in the case of licences granted on territory within 200 kilometers of the international border. This appears to be part of a plan to keep such sensitive areas free of industrial activity.
Another proposal with far reaching consequence is to make it mandatory for the Government of Mongolia and local entities to own 51 per cent of any mining deposit explored with State budget funds. This will apply to Mongolian entities as well as to foreign-invested ones. The concept is totally new. However, no retrospective effect is proposed to be given, so local companies that own the licences of 15 strategic deposits can continue their operation as before. The President also wants to abandon the concept of “strategic deposits” when determining the ownership percentage. He wants the same rules to apply to all mineral deposits. Even if no public money whatsoever is used in exploration, the state will retain no less than 34 per cent of the deposit’s ownership, according to the President.
If the proposals are approved and incorporated in the new Mining Law, conditions will be tougher for foreign investors but will bring better benefit to Mongolians. Plans are being made so that ordinary people can discuss these and other proposed provisions of the new law. Members of the State Great Khural will certainly consider with the utmost care the President’s personal directives when debating the Mineral Policy. It is significant that no less a personage than the Head of the State is taking such initiatives, ensuring that the debate on these issues prior to the 2012 Parliament election will be lively and forceful.
L. Bolormaa