MINISTRY OF MINING OF MONGOLIA
By Badrakh Yadmaa,
Head of the International Cooperation Division FOR IMMEDIATE RELEASE
January 28, 2015
The Ministry of Mining of Mongolia holds “Transparent Mining” conference every month, headed by the Minister of Mining, to report its activities, and work being implemented in geology and mining sector in Mongolia. Following is the conference newsletter for the month of January.
“Transparent Mining” conference newsletter
Cooperation with municipalities and and central government, NGO’s
and wealth creators is to be emphasized
The Ministry is working to reflect the ideas and suggestions of wealth creators, the professional associations, non-governmental organizations, academic and research institutions in its policy and activities. Accordingly, the management of the Ministry met the representatives from affiliated agencies, professional associations of minerals sector, academic and research institutions, and acquaint with their operations and activities in detail, and exchanged views on how to deal with the challenges faced. The Ministry officials headed by the Mining Minister paid a working visit to Zaamar soum of Tov, and Buregkhangai of Bulgan province. Itinerary included on-site trips and to: security firm “Zaamar Khaan” operating in öliin davaa, Tsagaan chuluut soums of Tov province overseeing the sites where gold mined illegally; Zeregtsee gold mine of “Mongolrostsevetmet” LLC, 2nd dragline of Tuul polygon; Ogoomor village; Ikh tokhoirol gold mine camp of “Ikh tokhoirol” LLC; and reviewed the erection operation of Holland made dragline. Visit to the seabuckthorn seadling project on the biological reclamation of degraded mine land, Khailaast, being executed by “Altan Dornod Mongol” LLC were also included in the trip.
Delegates also visited and reviewed reclaimed mine field, artificial lake, greenhouse/nursery fields of “Monpolimet” LLC, as well as “Mining National Operator” LLC to observe operations and reclamation work. Minister met the management and staff, representatives of artisanal miners to exchange views on current issues.
In the framework of this working tour, the Ministry is working to strengthen the role of the the mining sector to overcome the economic crisis, support and promote the principles of responsible mining enterprises, analyze the current state of artisanal and small-scale mining and develop proposals for further action.
Strategic Designation of Gatsuurt is set by the Mongolian Parliament
Gatsuurt Project, located approximately 35 kilometres from the Boroo Mine, has been designated as a mineral deposit of strategic importance by the Mongolian Parliament.
Certified reserves of 50 tons of gold deposit, and 25 tons of gold reserves effective under certain conditions, meets the criteria for mineral deposit of strategic importance of the project. Minerals Professional Council has proved the Centerra Gold Mongolia’s reserves and resource report of Gatsuurt project in 2013; and the feasibility study in 2014.
Operation of the mine would start mine infrastructure such as road construction, add on about 1,000 jobs, and haul in about MNT660 billion in taxes, fees and charges. State Treasury will increase by the remitted gold to the Central Bank, and stabilize the exchange rate.
The audit done by the professional organizations concluded the special exploitation area does not contain historical and cultural artifiacts and monuments. The Hun era historical sites and graves are located 5.8 km to the southwest (straight line) of the exploitation area. Hun era park memorial of the Mount Noyon is located in three different locations of Sujigt, Zuramt, and Khujirt of this mountain, and belongs to Bornuur and Batsumber soums of Tov province.
Audit done by Institute of History of the Mongolian National Academy of Sciences in 1999 and 2000, as well as Department of Anthropology, Archeology of Mongolian National University in 2005, concluded no findings of Hun era archaeological findings in the exploitation area of "Centerra Gold Mongolia" LLC.
The Ministry of Mining believes that the historical and cultural artifacts and monuments found in the Gatsuurt deposit area should be protected in accordance with the applicable laws and regulations.
Regulatory Compliance for Laws and regulations of
“Law with Long Name” being introduced by Parliamentary groups
“Regulation Act” for “To Prohibit Mineral Exploration And Mining Operations At River Headwaters, Protected Zones Of Water Reservoirs And Forested Areas” law (LLN /Law with long name/ here on) was enacted by the Parliament on July 16, 2009.
The Government issued Decree No.174 in 2011, and No.194 in 2012 to set the boundaries for the regions where the long-named law would apply. Ministry of Environment and Green Development announced 488 exploitation, 845 exploration, and total of 1333 special permits in the said boundary. This equals to about 48 percent of the active special permits.
Regulations Act of LLN law directs that this law is to be implemented within five months upon enacted. It’s been five years since this act was enacted.
Therefore, “Regulation Act of Law To Prohibit Mineral Exploration And Mining Operations At River Headwaters, Protected Zones Of Water Reservoirs And Forested Areas” draft law was submitted to the Parliament, and a working group was formed.
Study done by the Ministry of Environment and Green Development that states that the 2130 hectares of land restricted under this law is already damaged.
In accordance with the regulations stated under the government’s 2010 resolution number 299 the reimbursement of payments are calculated as such:
With the use of information provided by the General Department of Taxation the initial figure for reimbursement is 2,223.93 billion tugrugs (this number is calculated with the operational profits of the entities).
Since the compliance procedure of the said law has expired, it is necessary to make amendments to the law. If the siutation is to continue as is, opportunites will be presented to those who have interest in the illegal mining, posing negative impacts on the environment.
Draft law on “Transparency in the Mineral resources industry”
is discussed by the Parliament
The Ministry of Mining brought forward the draft law on “Transparency in the mineral resources sector” that has successfully passed by the Government and the Economical standing committee discussions, and is now ready for Parliament discussions.
With the formation of favorable legal environment on the transparency of mineral resources sector the following long-term socio-economical advantages are projected:
1. The basis for cooperative administration, cooperative control administration and organizational structures will be enabled by bringing the transparency in the mineral resources industry to advanced international standards.
2. Establishment of information database for the mineral resources industry.
3. The establishment of legal basis to avoid and prevent unreasonable expenses, illegal payment transactions performed by industry enterprises.
4. Build the correct partnership between the state, private sector and the civil society in the mineral resources industry.
5. Public scrutiny, transparency on operational fundamentals and communication between producing companies, state and public organizations will be enabled.
6. The expense reduction of producing companies will enhance profit consequently increasing the tax, revenue and payments to the local government and the country budget.
7. Transparency on industry taxes, payments, revenue spending and allocation will enable the implementation of correct management of mineral resources.
Mineral exploration licenses to be granted online
Starting 26th of this month the mineral exploration license applications are have started granted online.
The Mineral Resource Authority (MRAM) will grant 30 online application numbers and all private entities that have a number will have the opportunity to provide their application and relevant documentation to the MRAM at the allotted time. MRAM’s Cadastre Division will accept the application and that same day will take the coordinates that are being applied for and take it off the overall coordinates of the exploration areas being applied for and inform the public. By doing this any private entities applying for an exploration license will not be applying for an area that is already being applied for. Online numbers will now be provided every other business day (on the first week it will be Monday, Wednesday, Friday and the next week Tuesday and Thursday). With this change being made a private entity that has access to the system for one week will be able to access for two weeks and if they have access for one month then it will grant them access for two months.
Mining Sector Statistics
Commodity prices on the world market in 2014 continued to fall, however, as for Mongolia, volumes of exploitation and export of major types of minerals have increased compared to that of previous year significantly contributing the economy.
The mining sector accounted for 18.7 percent of the GDP, 68.7 percent of the total production of the industrial sector, 21.9 percent of the total budget, 83.0 percent of total exports, respectively. Compared to 2013, the proportion of the total industrial production has risen by 0.5 points, the proportion of the budget by 4.2 points, and the proportion of exports by 1.1 points, respectively.
As for the major types of minerals production volume by the end of 2014:
1.1 million tons of copper concentrate, 4.1 thousand tons of molybdenum concentrate, 24.4 million tons of coal, 11.5 tons of gold and 374.9 thousand tons fluoride. Furthermore, 10.3 million tons of iron ore, 93.2 thousand tons of zinc concentrate and oil production of 7.4 million barrels, or 1.0 million tons.
Production volume of copper concentrate has risen by 277.4 thousand tons or 34.5 percent, molybdenum has risen by 321.9 tons, or 8.6 percent, gold has risen by 2.6 tons or 29.2 percent, fluorite has risen by 136.8 thousand tons or 57.5 percent and oil production has increased by 2.3 million barrels or 44 percent, respectively, compared to that of last year.
In addition, 19.5 million tons of coal, 1.4 million tons of copper concentrate, 4.0 million tons of molybdenum concentrate, 313.9 thousand tons fluorspar, 6.3 million tons of iron ore, 99.4 thousand tons of zinc and 6.9 million barrels of oil or 939.3 thousand tons have all been exported respectively.
In comparison to previous year, coal exports has increased by 1.1 million tons or 6.1 percent, export of gold by 2.4 tons or 31.6 percent, oil exports by 1.6 million barrels or 31.3 percent and copper concentrate by 728.3 thousand tons or 2.1 times, respectively in 2014.
The sector contributed MNT1 trillion 346.3 billion to the state budget in 2014.
Revenue performance of the Minister’s Budget
MRAM has contributed a total of MNT44.6 billion in revenue to the state budget, including MNT41.0 billion in mineral exploration and exploitation permit fees, reimbursement fees of state funded prospecting at MNT1.8 billion, other income of MNT1.8 billion.
Petoleum Authority contributed a total of MNT288.5 billion to the total budget, of which MNT285.6 billion were petroleum revenue, and other revenure accounted for MNT2.9 billion.
Fuel Prices are stable
1.3 million tons of petroleum products were imported in 2014. 90.8 percent were from Russian Federation, of which 63 percent was supplied by the state-owned “Rosneft”. Oil prices declined by 50 percent on the world market. Mongolia, for the past two years, imported fuel with the price calculated on a formula based on the world market prices. Soft loan programs, in the framework of sub-programs to stabilize the petroleum retail prices, as well as the currency rate and tax discounts through forward agreement is being halted in stages.
Excise tax rate for petroleum and diesel fuel is set by the Cabinet meeting (Jan.19.2015) to be as follows: MNT250,000 per tonne for A-80; MNT259,000 for AI-92; MNT265,000 for diesel fuel respectively. Such tax revenue should contribute approximately MNT220 billion to the state budget. Retail prices were stable for more than two years, and is expected to remain so.
“Mineral Resources Industry 2025-II” discussion is to be held
The Ministry of Mining will organize annual “Mineral resources industry-2015-II” discussion on 11th of February 2015.
The discussion, under “Mineral resources - our opportunity” slogan, will consist of four parts including “Impact of the minerals resources industry on the socio-economics of Mongolia”, “Community Relations”, “Major projects in the Geology, Mining and Petroleum sectors”, “Competitiveness of the Industry”.
It is forcasted that about 300 guests and delegates representing ministries and agencies, professional associations and enterprises operating in the mining industry is to take attend the Discussion.
State Fuel reserves
As of 27 Janauary, the state fuel reserve is at 43 days of regular consumption. Hereof, A-80 has 65 days, Ai-92 has 53 days, diesel fuel has 46, and TS-1 jet fuel 15 days.
MINISTRY OF MINING