Review of “Mongolia`s State Policy on the Minerals Sector (2013-2024)”

State Policy on the Minerals Sector (2013-2024),” a document defining the policy framework for the Mongolian minerals sector in the next decade is expected to be discussed at the upcoming autumn session of the State Great Khural. President Elbegdorj decided earlier this year that Mongolia needs a comprehensive policy framework that would define the country’s priorities and strategies in the minerals sector before discussing a new Minerals Law. The decision was a result of the discussion on the proposed law held at the Citizen’s Hall in February 2013. Mining Minister Gankhuyag introduced a draft of the document to parliament in July 2013. At present, a working group that is preparing the document for parliamentary discussion is receiving comments from interested Parties. The following is a short review of the policy document.

The document has four main sections: rationale, key principles, policy priorities and implementation. In brief, the rationale is defined as developing a mutually beneficial, transparent and responsible mining and mineral processing industry that supports Mongolia’s sustainable economic growth.

The main principles in developing the Mongolian minerals sector are defined as:

  • open and responsible government;
  • rule of law and transparent corporate governance;
  • non-discrimination of investors;
  • open access to geology and geo-science information;
  • better operational and health safety regulations;
  • research and stakeholder consultation based decision-making;

The document defines the main priorities of different phases or segments of the mining industry: legal and policy framework, geological research and geo-science information, mineral extraction, mineral processing, environmental protection and rehabilitation, and mineral resources management.

In the legal and policy framework section two priorities are particularly notable:

  • Supporting artisanal and small-scale miners’ efforts to work legally under cooperative work arrangements;
  • Supporting Extractive Industries Transparency Initiative (EITI) and Responsible Mining Initiative, and improving regulations on social, economic and environmental assessment.

According to the document, developing a national system of comprehensive and up-do-date geological and geo-scientific information and resources that is capable to provide the opportunity to systematically assess and increase Mongolia’s mineral reserve is a top priority. Private sector-led geological surveys and investment will be encouraged along with government-funded geological surveys and exploration.

As for the extractive sector, the following priorities can be highlighted among others:

  • Incorporation of radioactive elements (U, Th), rare earth elements, underground water, and some large deposits of gold, coal, iron and copper that have the potential to compete in the global and regional markets into the Strategically Important Deposits and government involvement in exploration, extraction and processing of such deposits;
  • Supporting companies that use technologies not harmful to the environment and human health, operate in accordance with the principles of transparent and responsible mining, and pay a significant amount of tax to national and local governments;
  • Development of large-scale mineral deposits by creating investor-friendly regulations and infrastructures.

Regarding mineral processing, government will promote mineral processing through tax and fiscal policies and directly supporting enterprises producing value-added products such copper cathode, ironwork, uranium concentrate powder, distilled gold and rare earth concentrations. Projects on coal enriching, coking and chemical plants, power plants at coking coal deposits, Eco-fuel from brown coal, liquefied fuel from coal and shale, and gaseous fuel from coal are also defined as key priorities.

Regarding environmental protection and rehabilitation, among other priorities, Mongolia will change standards for mine development, rehabilitation and closure, and will create mechanisms for engaging local community representatives in mine closure control and monitoring activities.

On the mineral resources management, a number of specific priorities were stated:

  • Selecting managers of state-owned and state-shared mining companies with the involvement of professional associations and civil society;
  • Supporting domestic businesses in the supply chains and procurement of large-scale projects;
  • Establishing “Wealth Fund” as a fiscal stabilization fund and a sovereign wealth fund;
  • Establishing the Mongolian Minerals Exchange;
  • Promoting civil society monitoring;
  • Establishing a national geological agency;
  • Increasing national human resource for the minerals sector;
  • Creating a unified registration directory of entrepreneurs in the mineral sector.

The policy document explains the structure and institutions for its implementation along with potential risks. It mentions the following national programs to be developed as part of policy implementation: “Geological Mapping,” “Coal,” “Iron,” “Fluorspar,” Rare Earth Elements,” “Copper,” “Construction Minerals” and “Legal Framework for the Minerals Sector.”

The document defines the following as the policy outcomes which can be interpreted as a broad projection of the development of the minerals sector:

  • Geological survey and exploration will be conducted in accordance with the policy priorities, increasing the country’s mineral reserves;
  • Mineral reserves will be extracted in a complex and environment-friendly ways
  • The amount and types of value-added, internationally competitive mineral products will be increased;
  • Mineral revenue will be invested in the non-minerals sectors, minimizing Mongolia’s dependence on the minerals sector;
  • Occupational and technological accidents will be decreased;
  • Opportunities for infrastructure development (road networks, power plants, city, and settlements) will be expanded, allowing long-term development planning;
  • As a result of the development of large-scale industrial centres, population migration will be stabilized;
  • An adequate number of professional personnel of the minerals sector will be prepared;
  • Environmental protection, land rehabilitation and long-term monitoring will be implemented in a responsible and planned way;
  • Mineral extraction and processing will be restricted in water catchment areas, river basins, forest zones, agricultural lands, highly nutritious pastures, Gobi oases, and areas near lakes and ponds;
  • A legal framework for ensuring transparency in the mineral sector, and public consultation in developing laws, regulations and large-scale projects will be developed;
  • Minerals will be traded at the Mongolian Minerals Exchange.

In sum, the document provides a broader understanding of the key priorities of the Mongolian minerals sector. It also clarifies some specific priority areas of mineral development and strategies aimed at consolidating and reforming existing policies and regulations. There are, however, several important issues that are not adequately addressed in the document such as ensuring policy stability, clarifying deposits or minerals of strategic importance and the role of government, understanding the cumulative environmental and social impact of mines on mining zones, developing measures to prevent land use or water-related conflicts between formal and informal mining, promoting non-judicial grievance mechanisms in the minerals sector, and requiring the social and economic empowerment of local communities affected by mining. Especially, the document does not mention about prior consultation with and consent from local communities in the area of mineral exploration and extraction, and agreements and formal negotiations with local communities and their representatives. A clear commitment on ensuring community consultation and broad support for any exploration and mining projects needs to be included in the document.

This entry was posted in Democracy, Development, Governance, Mining, Mining, Policy and tagged . Bookmark the permalink.

Leave a Reply

Your email address will not be published.