March 3, 2010
The total number of special mining licenses in Mongolia has reached 4,704, of which 1,091 are for extraction and 3,613 for exploration. The licenses are held by 1,910 companies, 77.8 percent of them domestic, 14.5 percent fully foreign, and 7.7 percent joint companies. M.Ariunbayar, Director of Geology in the Mining Department, answers questions on the sector.
The law prohibiting mining operations near water sources and rivers was passed several months earlier but is yet to be implemented. Is it trie that the Ministry of Mineral and Energy is behind this as it feels the law will affect mining interests, though it is good for the environment?
The law restricts mining in three areas. The work on marking the borders of the prohibited areas is over. This is the responsibility of the Ministry of Nature and Environment so if there has been a request to postpone the implementation it must have come from them. The Ministry for Minerals and Energy did not certainly make any such request. We support the law.
The issue of paying the compensation for cancellation of licenses is still being discussed. This may be as much as MNT300 billion but is applicable only to exploration licenses. The law says a special license will be treated as cancelled only after the compensation is fully paid. It may take 2-3 years to settle the accounts of over 900 companies and they will keep adding to their reimbursable costs in this period.
Imposing such restrictions usually does not work out well. In any case we already had enough laws enforcing protection of nature. The problem is that these are not enforced. The present law will be better after some amendments bring it in tandem with the other existing laws.
Why did the Professional Council on Minerals send back the technical and economic feasibility study to Oyutolgoi LLC?
There were four main reasons as you probably might know. First, the council differed with statement on amount of the reserve; second, there was no clear statement on the water problem; third, the investors do not wish to mine all the ore; and last concerns the two percent royalty to be paid to the original license holder. Officials of Oyutolgoi Llc have reported their views and will answer in greater detail. The council will take a final decision only then.