Mongolian Parliament adopts mineral resource policy

Document gives hope that Mongolia determined to develop its mining sector

At its January 16 plenary meeting,
Parliament adopted a parliamentary
resolution ‘State Policy on Mineral
Resources’. The document was
adopted following frequent discussion
by three parliaments. During the last
discussion, voting was carried out for
over 300 issues of principle. As a result,
the resolution was approved with the
support of 80 percent of MPs present
at the plenary meeting. MPs and the
sector’s Ministry appreciate that the
document is very significant because
it has determined a State unified
policy on the minerals sector for the
reduce state participation in the sector,
follow a stable legal environment,
and make it transparent. “The State
Policy includes key principles, such
as to be open and transparent, make
legal environment stable as much as
possible and not to classify investors
and not to differentiate them by types
of properties. A policy will be adhered
to develop the sector based on Public
and Private Partnership,” said the
Mining Minister D. Gankhuyag.
“Based on a declaration in the
Constitution of Mongolia saying
“The land, its subsoil, forests, water,
fauna and flora and other natural
resources shall be subject to people’s
power and state protection,” The State
Policy on the minerals sector aims
at ensuring sustainable economic
growth and continually improving
people’s living standards and quality
by means of developing accountable,
mutually beneficial, open and
decent environment-economy-social
balanced extractive and processing
production with modern ecofriendly
techniques, technology and
management relied on its advantages of
underground wealth within the global
sustainable development ideology and
tendency,” reads the document.
“At the end of deliberating for the
past six months, we adopted the policy
document. The draft was very good
work that was drawn up for a longer
period based on the achievements of
world countries. The issue of what time
the policy document was been adopted
is important. Today, foreign investment
is stagnant in Mongolia. Caused by an
instable legal environment, investors
turned away. Moreover, companies
operating in the mining sector started
cutting staff. The policy document
that was adopted at this time must
give confidence to people, not have
any ambiguous meaning and not be
in conflict with other laws. Actually,
it has to give hope that Mongolia is
going to develop its mining sector,
the private sector operating in the
sector is going to be encouraged, and
the government will support with all
related aspects,” said S. Odontuya,
MP and head of the working group for
the policy document.
Some clauses in the draft of the
policy document were controversial,
causing the MPP group and ‘Justice’
coalition group in parliament to take
breaks respectively. For example, the
‘Justice’ coalition made a suggestion
to leave a clause unchanged on
developing state regulations in
registration, permits and control levels
and on bringing state participation to a
decent level in the activity of minerals
exploration and extraction, and to
include a statement in the policy
document reading “Some kinds of
mineral resources and deposits can
be kept in reserve with a purpose
to conform to national security and
natural and ecological balance. The
State shall be responsible for relevant
compensation matters if a deposit was
explored with money of the private
“I am against a policy which aims
to restrict state participation as much as
possible in the mining sector because
there have not yet been national
magnates in this sector. Therefore,
restricting state participation at this
time means foreigners will hold the
policy. In the present situation, the
sector is being protected with foreign
investment; this clause about restricting
state participation must not be there.
The private sector and particular
foreigners do not bear responsibility
before Mongolians to exploit minerals
efficiently and work for prosperity
and goodness of children in the future.
Mongolia’s State must be responsible
for this issue throughout the
generations of its existence. I hold the
position of principle that eluding duty
and restricting state participation in
any issue is wrong. Moreover, mineral
resources have to be exploited under
a specific policy. Certain deposits and
mineral resources have to be passed
to our future generations,” explained
MP S. Uyanga about the coalition’s
However, MPs who do not agree
with the coalition’s proposal were
dominant. “Roughly 70 percent
of Mongolia’s total territory is in
reserve. It means that there has not
been any exploration licenses issued
in these areas. Therefore, putting
the remaining 30 percent of area
into reserve again is not right thing
because 70 percent of the territory is
in reserve. The mining sector needs
to be developed and other sectors
need to be boosted. Mongolia should
be a country without dependence on
the mining sector alone, but from
other developed economic sectors,”
said MP L.Enkh-Amgalan. MP S.
Odontuya replied, “In Provision 13 of
the law on Mineral Resources, there
is a detailed clause on how to make
a deposit in reserve. Adding to the
clause on making a deposit reserve,
the Coalition’s group considered that
if the deposit is explored by private
funding, the State will take the deposit
and give compensation. This is a
clause which may produce negative
results. Therefore, we considered
that the clause is unnecessary to be
included in the policy. If clauses that
have already been included in the
present effective law are re-included
in the policy document, it will make
people hesitate. An issue regarding
inheritance of land to future generation
is a different matter. Soon, a Bill on
Sovereign Wealth Fund will come to
Parliament. According to international
experience, the mining sector is welldeveloped
and income from the sector
is passed to future generations through
the wealth fund. This experience
will be implemented under the law
on Sovereign Wealth Funds. Not
exploiting natural resources at all to
save for future generation is a onelegged
Furthermore, most MPs did not
support another clause saying that
if an environmental NGO sues a
company which caused damage to
nature, wins and recovers losses in
litigation, the company is imposed
a fine, and a certain amount of the
fine shall be given as encouragement
to the NGO. They claimed that the
clause contradicts with many laws and
it is likely to bring negative results,
such as NGOs will pressure mining
“With a purpose to conduct sales
of minerals products at external and
internal markets openly, and in an
optimal and highly efficient way
that meets market principles, to set
the price justly, develop domestic
capital market and regulate exports
with a unified policy, State Policy has
stated to establish a stock exchange of
Mongolian mineral resources and the
stock exchange is to be established
within this year”, said the Mining
For a purpose to intensify the
export of products in the minerals
sector, the policy document includes
the following clauses;
• to implement all possible
ways of cooperation between Public
and Private or/and in international
arena and adhere to mining diplomacy
and win-win principle;
• to bring radioactive
materials, rare earth elements,
subterranean water and some gold,
coal, iron and copper deposits that
are competitive in international and
regional market and have huge reserves
into the classification of deposits with
strategic importance and to conduct
exploration, mining and processing
operations of these deposits with state
• to show policy support to
companies in the first turn, which
exploit eco-friendly and harmless state of-
the-art techniques and technology,
conduct open and accountable mining
operations, and pay great amounts of
tax to state and local budgets;
• to upgrade the procession
of mineral resources and show policy
support for processing industries of
value-added cathode copper, metal
makings, uranium yellowcake, purified
gold, rare earth elements concentrate
and fluorspar;
• to implement projects to
concentrate coal, establish coking and
chemical plants, erect power stations
relied on energy coal deposits, produce
smokeless fuel from brown coal and
liquefied fuel from coal and oil shale
as well as gasify coal to produce good
quality gas; to encourage eco-friendly
and harmless modern techniques,
technology and innovations in
processing plants, and the government
will support processing plants with
taxation, finance and other policies.
Within natural protection and
rehabilitation, some things have been
• exploration and mining
activities have been restricted in
biologically weak regions and
prohibited in natural protection zones,
areas of historical memorial sites as
well as in land with unique geological
• new deposits of coal with
sulfuric content higher than 1.5
percent has been restricted to open,
new deposit of coal with sulfuric
content higher than 3 percent has been
banned to open;
• mining operations have been
restricted in areas where geological
disasters may occur as well as mining
extraction and processing activities
have been temporarily or completely
banned in areas where disasters
actually occurred.
Moreover, a policy will be followed
to use surface water much more in
minerals extraction and processing
activities, re-cycle waste water, and
use grey water for mining activity in
order not to use fresh subterranean
water as much as possible.


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