Mongolia Minerals Law Changes May Lead to Lifting of License Ban

By Michael Kohn

Jan. 22 (Bloomberg) -- Changes being considered to
Mongolia’s minerals law are expected to pave the way to the end
of a three and a half year moratorium on new exploration
licenses, according to an official from the Ministry of Mining.
Amendments to the 2006 law under review include creating a
National Geological Survey and forming a Policy Council to
oversee legal changes in the mining sector, said Otgochuluu
Chuluuntseren, director general of the department of strategic
policy and planning at the ministry and part of the group
framing the changes. The amendments haven’t been made public and
should be sent to the government next week for approval, before
going to parliament, he said.
The amended law would build on a minerals policy adopted by
Mongolia’s parliament on Jan. 16 that seeks to limit the state’s
role in mining and create stability in the industry, Otgochuluu
said. The nation is trying to win back investors after direct
foreign investment slumped 50 percent in the 11 months through
November and amid a protracted battle with its biggest investor
Rio Tinto Group.
“The main message is that we are giving more advantages to
the private sector,” he said in a Jan. 20 interview in
Ulaanbaatar. “If there is too much state involvement it’s not
good. Last year was the best lesson.”
In addition to the Policy Council, which would include
domestic and foreign investors, the proposed amendments also
include clarifying defined geological exploration boundaries and
so-called “strategic deposits,” he said.

‘Strategic Deposits’

“We will increase the level of the economic impact to be
recognized as a strategic deposit,” Otgochuluu said. “It is
not our objective to increase the number of strategic
deposits.”
The government is planning to rescind a ban on the sale of
exploration licenses that began in June 2010 once the amendments
are in place, said Otgochuluu. That may stoke new investment as
exploration companies seek to stake claims, he said.
Passage of the amendments may also trigger a resolution to
last year’s cancellation of 106 mining licenses, Otgochuluu
said. Should the changes be approved, the former license holders
will be able to apply to regain their permits and each will be
considered on a case-by-case basis, he said.
“The minerals sector is the main engine to reach
prosperity, but we have some disadvantages, such as extreme
weather conditions,” he said. “So our laws should be more
liberal to stay competitive. Amendments will improve the
investment climate.”

Source:Bloomberg News wire service
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