PRESENTATION

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