Z. Gan-Ochir, CEO, replies to questions sent by MMJ:
How does your company see the importance of joining the Voluntary Responsible Mining Code?
Mining is the main lever of Mongolia’s economic development. It accounts for one third of the state budget. If mining stops, not only will 60,000 people become unemployed, but also public services such as schools and hospitals will be seriously inconvenienced. Thus mining cannot be allowed to stop. That being the case, it is crucially important that the extractive industry operates with responsibility. This is why we are happy to be part of the Join for Responsibility initiative. We hope the campaign will go a long way in correctly explaining to the people the role and activities of the mining sector and thus giving it its deserved space in society.
What positive results do you expect from joining the Code?
We have not yet started actual mining and at the moment are busy completing the economic study, environmental impact study and public impact study. Once we start operations we expect to be seen as an example of responsible mining right from the beginning. For this we are also studying the experience of other national companies with whom we shall surely work together in future.
The development of the deposit will start with building roads. Mining can create infrastructure and financial opportunities in a short time. The revenue from mining can be used to develop sectors such as agriculture and the infrastructure that will come up along with the mega projects will serve everybody’s needs. If sectors help one another, the result will benefit the national economy.
We have so many problems such as unemployment, overurbanization and big differences between cities and rural areas. Only responsible mining can help resolve these problems to a certain extent. Of course, a company can achieve high standards only if it follows the same culture and commitment at all levels.
What principles of responsible mining do you follow?
In the exploration phase, we strictly observed domestic and international laws and procedures and fully met our obligations on environmental protection and reclamation. We shall be similarly responsible in the operation phase. An environmental and social study of the area is very important to make a good mine closure development plan. With that in mind, we shall appeal to local citizens for support.
Much less dust is now raised in Umnugovi aimag, after a paved road has been built to transport minerals. We shall transport all our output along a paved road. Our plan is to get the paved road ready before we start extraction.
What will you do to be recognized as a leader in responsible mining?
Several items of infrastructure will be ready before we start construction of the mine. For example, as I said, our coal will not leave the mine head until the paved road is ready. We expect its operational costs to be manageable in the long run. Besides, both local citizens and the local administration are keen that we do this as, apart from the pollution aspect, a paved road will directly help in local development by opening up opportunities for local entrepreneurs and ordinary citizens.
At present estimate, in its first 10 years, the Ovoot Project would pay MNT2.3 trillion in taxes and fees, of which MNT194 billion will go to the budget of Khuvsgul aimag and MNT87 billion to the budget of Tsetserleg soum. This is substantial support for both the aimag and the soum. At present, of all aimags, Khuvsgul receives the most subsidy from the government, but this will end once it starts getting revenue from the project.
Do you find laws and regulations to be obstructing responsible mining?
It cannot be denied that there are certain difficulties. For example, there is no legally mandated time limit for public servants or local assemblies to respond to requests for information and references, leading mining companies and investors to waste much time and money. This can surely be changed.
Also, things are not very specific on the matter of permissions to be obtained from the local community. For example, the local administration may refuse to issue the land permission even after the government has granted a licence to extract. If we are to have responsible mining, all the parties and stakeholders should work in a coordinated manner.
Who are your principal partners in responsible mining? Are they of real help to you?
The local community is our most significant partner, with whom we cooperate the most. A mining project is the catalyst of local development. We contribute to the local budget, buy goods and services locally, thus putting money into people’s pockets, and generally generate much new economic activity in the region. If all this is properly utilised, the economic scene in the soum will be brighter. Both the administration and the citizens of Khuvsgul and Tsetserleg soum understand this well. We are in regular contact with them, and there should be no problem with signing the cooperation agreement on local community development before the start of mining.
Incidentally, such close relations and trust between an investor and the local community show how things have improved in Mongolia. Both our company and the local administration are aware that to progress we must walk in step.