The Mongolian National Mining Association president outlines concerns about Mongolia's unstable legal environment for mining. Mongolia has had three different mineral laws in less than 20 years and expects a fourth. Recent laws have suspended hundreds of exploration and mining licenses and could require billions in compensation. The nuclear energy and environment protection laws have also faced issues. The president calls for laws to reflect input from industry experts and academics and be based on research. Concerns are also raised about Mongolia's fluctuating tax regime and bureaucratic permitting processes.

1. Mongolian National Mining Association
PRESIDENT: D.DAMBA
DISCOVER MONGOLIA
ULAANBAATAR 2012

3. UNSTABLE LEGAL
ENVIRONMENT
• Three mineral laws in less then 20 years, the
fourth expected!!!
- 1994 Mineral Law
• First of its kind.
- 1997 Mineral Law
• More liberal
- 2006 Mineral Law
• The state participation is dictated (34% stake
mines explored private funding, and 50% share
with government funding)

4. UNSTABLE LEGAL
ENVIRONMENT
• Law to prohibit mineral exploration and mining
operations at head-waters of rivers, protected
zones of water reservoirs and forest area (the
water and forest law) (2009)
– 1391 exploration license, 391 mining licenses
(total 1782) affected
– 254 licenses suspended
– Compensation roughly 4billion USD required
(Annual state budget around 2billion USD)
– Artisanal miners???

5. UNSTABLE LEGAL
ENVIRONMENT
• Nuclear energy law (2009)
 No progress
 Civil societies are protesting and pressing to
stop uranium exploration and mining
• Environment Protection Issue
 More then six hundred NGOs and
environmentalist movements (Active 300
mining operations, half of them are
construction material extractors)

6. • Any mineral resource related laws should
reflect the opinion of professional associations,
sector’s academics
• Laws should be formulated based on research
(positive and negative effects)

7. TAX REGIME
Taxes 2012
Corporate Tax 10% / 25%
(MNT 3 billion)
VAT 10%
Custom's Tax 5%
Progressive royalty 7.5-10%
Up to 30 % on Copper ore

8. TAXES REGIME
• In 2006 – 68% Windfall tax (On gold and
copper)
– Gold sector practically stopped
– Tax avoidance
– Opposite result: decline in tax income
– Gold smuggling
– Abolished from January 1st, 2011

9. TAXES REGIME
• Progressive royalty
– Introduced in 2010
– Effective from January 1st, 2011
• Standard price for export minerals
– Government resolution 88 (in 2007), and 39 (in
2010)
– By international market price
– Calculating the tax of metal concentrate

10. • Zinc, Copper, Lead, Molybdenum, Tin,
Aluminum – London Metal Exchange
• Gold, Silver – Mongol Bank
• Fluorspar – Export price for USA and Russia
• Iron – Contract price between Australia and
Japan
• Tungsten – http://www.bgr.bund.de
• Coal – http://www.coalworld.net
STANDARD PRICE INDEXES

11. BUREAUCRACY
• Permitting system – Registration system
• Autocratic organization – Service
organization
• Law implementers create own regulations,
order, decision – which contradicts the law
itself
• Some of the government services should be
transferred to NGOs

12. PRIVATE SECTOR OPINION
• Any mineral resource related laws should reflect
the opinion of professional associations, sector’s
academics
• Laws should be formulated based on research
(positive and negative effects)
• Now is time for future not the past. How the
revenues, from mining specially from OT, should
be used for the development of the country?
• If the OT investment agreement will be re-
negotiated – the negative impact of it will hit the
Mongolian economy

13. THANK YOU FOR YOUR
ATTENTION
MNMA: Room 501, Geosan building, Ikhsurguuli street, Sukhbaatar
district, Ulaanbaatar, Mongolia.
Tel: +976 11 314877 Fax: +976 11 330032
Webpage: www.miningmongolia.mn