This document summarizes amendments made to Mongolia's Minerals Law in 2014. Key changes include extending the exploration period to 12 years, increasing the maximum acreage for mining licenses from 8% to 20% of Mongolia's land, and requiring preference for Mongolian suppliers, employees, and customers. While some aspects were modified, competitive bidding is still not required for all new licenses and license holders are not required to periodically relinquish exploration areas. The amendments also establish new powers for government agencies related to mining.

2. Amendments to the Minerals Law (2006)
Sebastian Rosholt
4 September 2014

3. Context
• Law on Amendments to the Minerals Law (2014) passed
on 1 July 2014
• Amends the Minerals Law (2006)
• Part of the Government’s 100 day program
• Consistent with State Policy on Minerals adopted in
January 2014
• Proposed amendments December 2012 (withdrawn
February 2013)
• Law on Repeal of the Law on Prohibition of Granting
Exploration Licences – lifts moratorium since 2010 on
issue and transfer of exploration licences
• 106 licences

4. Key changes
• Extends exploration period to 12 years
• Removes pre-mining agreements
• Increases acreage available for mining
from 8% to 20% of Mongolia
• Common minerals no longer regulated
by the Minerals Law
• Preference given to Mongolian suppliers
and customers
• Requirement for competent persons to
prepare and evaluate Feasibility Studies

5. Key things that didn’t change
• Competitive tendering not available for
all new exploration licences
• No requirement to periodically relinquish
exploration licence area
• No restriction on pledges or transfers
(lock-in)
• No changes to the basis for determining
the State's ownership of mineral
deposits
• No process to deal with 106 licences

6. Exploration licences
• Moratorium repealed
• Tender process only where State-funded
exploration work or a licence has
relinquished/revoked
• Maximum period for an EL extended to 12
years (from 9 years)
• Pre-mining agreements abolished
• Maximum size of an EL reduced to
150,000 hectares (from 400,000 hectares)

7. Mining licences
• Additional obligations imposed on mining
licence holders:
• must appoint a full time employee for
environmental rehabilitation and mine
closure;
• must inform MRAM of any suspension or
closure of mine infrastructure or
concentrating plants; and
• must preferentially procure and supply to
and from Mongolians.

8. Preference for Mongolian employees,
suppliers and customers
• Mining licence holders must:
• Ensure 90% of own work force and any sub-
contractor’s work force working at their mine is
comprised of Mongolian nationals.
• Preferentially procure goods and services and hire
subcontractors from business entities which are
registered, and paying taxes, in Mongolia.
• Give priority to Mongolian concentrator plants
when selling extracted, semi-developed and
concentrated products at prevailing market prices.

9. Petroleum law overlap
• Obligation to notify Petroleum Authority
of Mongolia if methane is discovered.
• Permitted to produce Coal Bed Methane
in accordance with the Petroleum Law
(not regulated under the Minerals Law).

10. Dispute resolution
• Rights of recourse for licence holders who
are prevented from exercising their rights
as a result of actions or inactions by civil
servants or State Administrative Agencies
limited to administrative actions and claims
in the administrative courts.
• Administrative Law provides a civil right to
claim damages for loss suffered as a result
of actions of any administrative
organisation or administrative officials.

11. Feasibility studies, work plans and reports
• Feasibility studies
• be submitted within 1 year of ML being granted;
• be prepared by an accredited technical expert;
• state clearly how mineral products will be transported
and how requisite infrastructure will be built; and
• demonstrate the availability of capital required for mine
rehabilitation.
• Work plans and reports – submission dates
• annual exploration work plans - by 15 April
• exploration work report - by 15 February
• a mining plan outlining proposed production parameters
for the following year - by 1 December

12. Revocation of licences
• Grace period of 30 days for the late payment of
annual licence fees
• Late penalty of 0.3% of the annual licence fee (per
day)
• Where a licence is revoked it must be reissued by
tender
• If a court annuals a decision to revoke a licence the
licence term continues
• Similarly, if a special purpose area or reserved area
expires and the area is returned to a licence holder
the term continues

13. Government powers
• Government has additional powers including:
• establishment of a National Geology Office;
• approving contracts to be entered into by licence
holders with local administrative bodies (i.e.
Cooperation Agreements);
• determining co-ordinates of areas available for
EL’s;
• determining boundaries of strategic deposits; and
• granting a new licence over a new licence area as
compensation where the Government has taken a
licence holders other licence on national security
grounds or to undertake a major project.

14. Ministry of Mining
• Ministry of Mining has additional powers
including:
• establishment of a Minerals Professional Council;
• regulate mine and mine processing plant
commissioning;
• regulating mine processing plant operations; and
• approving the composition and supervision of an
external professional association tasked with
advising on and supporting the implementation of
the State Mineral Sector Policy (which was
adopted on 16 January 2014).

15. MRAM
• MRAM functions are to be split between the
newly created National Geology Office and the
existing mining and cadastre departments.
• MRAM has additional duties, including:
• maintaining register of licence holders that are
listed on a stock exchange;
• determining co-ordinates of areas available for
exploration licences; and
• making determinations on the allocation of land
for small scale mining and common minerals.

16. National Geological Office
• Duties include:
• conducting geological, geophysical,
geochemical, hydro geological and geo-
ecological mapping, research and
surveys;
• setting up a Geological Database; and
• maintaining a Register of Minerals

17. Other clarifications
• Common minerals excluded from the operation of the
Minerals Law
• Reimbursement within 1 year of revocation for any licence
holder whose licence is revoked due to overlapping with a
Special Purpose Area
• Verification of the exploration work expenditure by the State
administrative agency is to be based on the conclusions of
exploration specialists and third party audits
• The deposit reports submitted by EL holders in connection
with their application for a ML must be from internationally
recognised organisations appointed by the Minerals
Professional Board.
• Monetary penalties for breach are determined by reference
to the minimum wage -approx US$500 – 5,000 (increased
from US$50 – 1,000)

18. 106 licences
• Regulation on Tendering of 106 Exploration and
Mining Areas for which Licences were Annulled
by Court Decision adopted 4 July 2014
• Licences to be reissued by Competitive Tender
organised by MRAM
• Threshold Value (exploration and geological
work)
• Deposit of 30% of Threshold Value
• No preference for original licence holders
• Compensation for original licence holders?

19. What is next?
• Opening of the Cadastre – when?
• Regulations for tendering processes?
• Further amendments for ‘strategic
deposits’?
• Implementing rules and regulations