Author Archives: christophercarter

Youth and the Future of Sustainable Mining in Mongolia

Garth Thomson // July 30 ,2014

As a country with a plethora of natural resources and a relatively small population to support with this endowment, Mongolia is in a unique position as it looks to the future. If the development of these resources is managed effectively, there is the potential to for them to lift the country into an era of prosperity, realizing transformative development potential rarely seen in a post-soviet state.

Photo: Christopher J. Carter

But how will these resources be managed effectively? How can Mongolia ensure that the benefits from future mining projects reach all Mongolians; moving the country forward without leaving anyone behind? One needs only a brief glance around the world to see nations with enough natural resources to provide a good life to all, but routinely squander them through mismanagement and corruption. Clearly, Mongolia is need of expertise to ensure the mistakes of other nations are not repeated. But where will the expertise to exploit the nation’s competitive advantage come from in a developing country only 20 years removed from socialism?

Photo: Christopher J. Carter

During our visit, I found a striking characteristic of the Mongolian people to be their unwavering independence. The nation has a long and proud history, and I found this pride reflected both in the attitude of everyday people I encountered, and the government’s stance on resource policy. The Mongolian government knows it needs foreign investment to develop its resources. Yet, they seem intent on setting their own course on mining policy, ignoring the exaltations of observers. Chinggis would be proud.

This independent streak threatens potential investment in Mongolia, prompting observers to characterize the action as biting the hand that feeds. In addition to scaring off foreign companies, the lack of reform can be also seen to reinforce old ways of doing business. This sentiment was reflected in conversations with expat mining professionals in country. Soviet leftovers like corruption and cronyism did not appear to be as rare as we had hoped, and color the mining industry in a negative light for Mongolians in a time of growing inequality.

Photo: Christopher J. Carter

So can Mongolia move forward into a modern mining powerhouse? If it can, it will happen internally, through its youth. Mongolia’s population is overwhelmingly young and increasingly urban. This key demographic appears to be increasingly influenced not by old friend Russia, or old enemy China, but by other industrialized countries – some with rich mining histories of their own. Several times I met young Mongolians, well educated, articulate in multiple languages, and enthusiastic about being part of Mongolia’s transformation. Many of these young people had been educated or worked throughout the developed world, and have returned home armed with skills vital to driving economic development. In addition to providing technical skills and expertise, this generation can also bring home new attitudes to old problems like governance, corruption, and wealth distribution. If these attitudes take root, they can be a transformative part of the nation’s future.

Trip Roundup and Final Materials

2014 Asia Pacific Policy Project Owrking Team with the Ambassador of Canada to Mongolia Photo: Christopher J. Carter

The 2014 Asia Pacific Policy Project Working Team with the Ambassador of Canada to Mongolia Photo: Christopher J. Carter

Alexandre Bastien // June 17 ,2014

The experience of going to Mongolia was a wonderful opportunity to understand better this complex reality. Our group has been working for months on the way to improve transparency. However, seeing Ulaan Baator with all its contrast underline the importance to promote transparency.

The city is indeed booming. The Blue Sky tower in front of the central square demonstrates this will to make the capital as modern as possible. Nevertheless, walking in the outskirt of the city illustrates the benefits’ limits of the mining exploitation. Mongolia is a huge country with a small population. Thus, we all wish that it will follow Norway’s path and be able to raise the living condition of its whole population.

The Boroo gold Mine in 150km north of the nations capital was one of the first major international and today is active participant in EITI reporting.
Photo: Christopher J. Carter

Mongolia is a complex country with different reality but still with attaching people. Its mining resource could be an important tool to turn this nation into one of the richest in Asia. However, the path to success is not clear and Mongolia will have to find it own recipe for success.

Mongolia EITI Infographic

Completed Materials as PDF Files

Presentation Slides (Mongolian Version)

Pamphlet (Mongolian Version)

The First Steppe Leads to the Next

Ian McDonald // May 23, 2014

As the class that started this project winds down, we can look back and reflect upon the progress we’ve made in our goals as the project moves to the next phase.

We started with the idea of examining the mechanisms of government transparency in the extractive industries and how it relates to human development in Mongolia. We began with a thorough examination of the Extractive Industries Transparency Initiative (EITI) as each member of the class performed a case study on the EITI an its operations in various countries. As the goal of the project is to provide policy recommendations to groups working in Mongolia to address the issues of corruption and improving human development, we had these parameters in mind as we performed our case studies.

As work went on with the case studies, we thought about how to address these needs specifically as they relate to Mongolia. Who better to ask than the people this work would directly influence? The class developed a survey for NGOs working in Mongolia to provide feedback, and the results were very helpful in determining the types of information we needed to extract from the case studies.

Comparing the individual studies to the EITI in Mongolia, we put the results of the survey to work and began the process of producing meaningful, actionable policy recommendations. The work is best summarized through the brochure the research team put together and of course through the information available in other posts on this blog.

Overall the first phase of the project was an instructive time during which the team progressed well toward the completion of its goals. The next phase begins later this month, with students from the program in Mongolia to give presentations as well as the creation of a documentary film. We all look forward to seeing the results of our work and have confidence that we’re helping Mongolians in their efforts to thwart corruption in government and improve human development.

Mining Stakeholders of Mongolia

In order to be designated as “EITI compliant”, countries are required to assemble both a national council and a multi-stakeholder group of members representing government, civil society and companies in Mongolia’s extraction industry.

Mongolia’s EITI National Council, chaired by the Prime Minister of Mongolia is responsible for the coordination and monitoring of the EITI. Company and professional association members are selected and dismissed by the President of the Mongolian National Mining Association.

The country’s EITI Multi-Stakeholder Working Group (MSWG) is led by the senior-advisor to the Prime Minister. The group is responsible for the oversight of EITI implementation in Mongolia and the development of the country’s EITI work plan and report. It creates EITI-related policy and recommendations for continued improvement of reporting practices. The group meets on a regular basis to discuss issues relating to the EITI including payments reported by the government and companies, the auditing process and measures to expand EITI participation among companies and civil society in Mongolia.

Within Mongolia’s EITI National Council and MSWG, there are 20 individuals representing extraction industry companies operating in Mongolia. New members are selected every three years. Iterations of the Council and Working Group have been formed in 2006, 2009 and most recently in 2012.

Companies and Professional Associations currently serving on the National Council include:

-Mongolian Coal Association
-Mongolian National Mining Association
-Energy Resource LLC
-Erdnet Mining Corporation LLC
-Mongolrostsvetmet LLC
-Mongolyn Alt Mak LLC

-Monpolimet LLC
-Oyu Tolgoi LLC
-Petrochina Dachin Tamsag LLC
-Urmun Uul LLC

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Companies and Professional Associations currently serving on the MSWG include:

-Mongolian National Mining Association

-Mongolian Geology Association
-Baganuur JSO
-Bold Tumur Yuruu Gol LLC
-Boroo Gold LLC
-Erdene Mongol LLC

-Erdes Holding LLC

-Erdenes TT JSC
-Oyu Tolgoi LLC
-PetroChina Dachin Tamsag LLC

The companies included in the National Council and MSWG are among the largest operating in Mongolia and represent interests in mineral, oil and gas extraction and exploration activities. In 2012, all were included in the 200 selected to have their reported payments reconciled with revenues reported by the government. Of them, Erdenet Mining Corporation LLC, Oyu Tolgoi LLC, Energy Resource LLC, Petro China Dachin Tamsag LLC, and Mongolyn Alk Mak LLC were the top five companies with the highest reported payments to the government. Combined together, they comprised nearly 65% of all reported payments in the reconciliation process. Expanded to the top ten companies, which represent over 80% of reported payments, seven are National Council and MSWG company representatives (top five as well as Erdenes TT JSC and Bold Tumur Yuruu Gol LLC).

Sample profiles of participating companies:

Oyu Tolgoi LLC

Since its launch in 2002, Rio Tinto has expressly supported the EITI, which aims to strengthen governance by improving transparency and accountability in the extractive sector. Oyu Tolgoi’s commitment is the latest in a series of social and environmental commitments carried forward by mine operator Rio Tinto, which is a member of the Extractive Industries Transparency Initiative, and gets an A+ Rating on the Global Reporting Initiative.

Boroo gold LLC

Centerra Gold Inc., which owns Boroo Gold, has become a Supporting Company of the Extractive Industries Transparency Initiative, an international non-profit organization launched in 2002 at the World Summit for Sustainable Development in South Africa. It is a coalition of governments, companies, civil society, investors and international organizations. Centerra has played an active role in promoting the EITI in the Mongolia. The mines operated by the company have been among the first to sign on to the initiative, provide EITI reports and help improve EITI infrastructure in their respective countries.

10 Questions Every Mongolian Should Ask

Alex Wang and Bayanzul Davaasuren // March 31st 2014

Over the past week our working groups have analyzed sections of the 2011 Mongolia EITI Reconciliation document. While a dense and data extensive document, a few key points emerged as critical questions everyone in Mongolia should be asking about mining and transparency as reported in EITI efforts.

1. Who are the participants and stakeholders of the EITI report and what sort of working relationship do they have with each other?

2. How many exploitation licenses were issued/revoked and where were they located?

3. How much and in which ways does the government receive payments from companies in exploitation industry?

4. How do extractive companies function and complete a mandated responsibility of environmental protection and reclamation？

5. How many revenue discrepancies are found in a single fiscal year and how does accounting work to adjust for these differences?

6. Which paths exist for local Mongolians exist to influence the implementation of EITI report and multi-stakeholder working group? At Sum Level? Sub Council Level?

7. Why should citizens care about the EITI report and how they can benefit from and use it?

8. What is performance of local administrations and companies in reporting? Did they really treat EITI report seriously？

9. What recommendations and implementations were given in previous EITI reports and which recommendations are still difficult to execute?

10. Which kind of the mechanism(legal or otherwise) already exists to encourage EITI participation of companies and local administrations in Mongolia?