Nov. 20 -The Mongolian government dropped a bombshell on the international mining industry by suspending 254 gold mining licenses on Friday.
The Ministry of Minerals and Energy revoked the licenses citing “environmental concerns,” and hinted that others licenses may also follow. The government is providing compensation to investors affected.
The licenses are being revoked under a 2009 law which protects Mongolia’s forests and river basins. Mongolians consider the ground sacred and are reluctant to dig, fearing it may upset the balance of nature. Living close to nature also, as many Mongolians do, means they have an in-built awareness of the environment and are highly sensitive to damaging or polluting the land. Proposed golf courses for example, a lucrative form of investment in nearby China are banned in Mongolia due to concerns over the use of fertilizers and weed killers.
The license issue may have serious repercussions if it spreads beyond gold. Several international mining companies have recently established operations in Mongolia and have gone on to IPOs in Hong Kong and Canada. The government says it will release a full list of companies affected early next week. Analysts warn of the dangers of investing too much in emerging countries such as Mongolia due to the dangers of government U-turns over investment policies.
This is not the first time the government has banned mining companies. Following a deal in which a five year, 100 percent tax break was agreed with one of the large international mining companies for the extraction of coal, the Mongolian government were not amused when a project expected to last for 20 years and produce tax revenues for 15 of them was fully completed in less than five years, leaving the government with an empty mine and no income. International mining companies have not always behaved well in Mongolia, and this, coupled with an emerging regulatory environment, has lead to stresses
source: http://www.2point6billion.com
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