Quick facts

Mongolia has substantial natural resources and minerals, which promise an unprecedented growth potential. Mongolia as a one of the world’s leading mineral resources has over 8,000 occurrences and 80 types of minerals and metals in the 1170 minefield and high prospective for copper, base metals, gold, coal and uranium.

Mining sector is the key driver of the economy

Mongolia is richly endowed with mineral resources and the country is aiming to unlock its mineral wealth by cooperating with our investors.

Mongolia is exporting over 14 types of minerals and China is the single biggest importer. Mongolia has become the largest coking coal exporter (44% as of July 2019) to China, surpassing Australia and Russia.

Substantial proportions of the inward investment has been made in mineral  sector with over 1,777 entities holding 2,861 licenses.

Geological exploration implemented by the state budget

Geological survey have been implemented as a basic data requirement needed to assist in the  development of regional minerals and raw materials, to evaluate proposed mineral resources, to support decision making processes on the issues related to natural and environmental protection, underground wealth use and exploitation.

Forty (40) geologic exploration projects have been implemented in 4 geological fields in Mongolia in 2016.

Ongoing geology projects by government budget

Project type Ongoing Project Will be finished in 2017
1 1:200 000 scale geological map 4
2 1:50 000 scale geological map, general survey 29 16
3 Themed survey 5 2
4 Collaborative project 2 1

 

Project on planning 1: 200 000 scale comprehensive geology mapping of Mongolia

Four (4) NGM-200 projects comprehensive geological mapping have been successfully implemented in 2015, These 4 UGZ-200 complex geological map covered an area  of 287, 924.35 square kilometers which is approximately  18% of total land area of  Mongolia, In addition 100% of the Mongolian territory has been covered by digital geological mapping in 2016-2017. In accordance with the instruction handbook to make “UGZ-200” complex mapping and to prepare the map for publishing, 5 geological maps in 1:200000 scale, for each unit area in Geology, Minerals, Ecology-geology, quadrangle maps and documentations, will be made in comprehensive documentations with supplementary diagrams.

Total of 344 area has been covered NGM-200 project.

Proven Reserves

Minerals Unit Proven reserves  World Rank
Copper million.tn 57.0 Top 10
Coal billion.tn 37.2 Top 10
Iron ore billion.tn 1.2
Gold tn 2,500 Top 10
Zinc million.tn 1.7
Fluorspar million.tn 48.3 Top 10
Uranium thousand.tn 197.0  
Crude oil million.tn 332.6  

Mongolian Government has issued 2771 active licenses which is only 4.7% of the whole territory /by Feb 2020/. It consists of 1673 Mining licenses, 1% of the territory and 1098 Exploration licenses, 3.7% of the territory.

The mining sector accounted for 24% of the country’s GDP, 72% of the gross industrial output, 89% of the total exports and 70% of the foreign direct investment respectively which clearly demonstrates the mining sector’s vast contributions to the socio-economic development of Mongolia.

The Central and Eastern parts of the country is relatively well studied while western part is untapped which we are aiming to unlock its mineral wealth by cooperating with our investors.

Mineral Law

As mining continues to be the driving force of Mongolia’s economy, the legal framework in the mining sector is of vital importance. The most significant piece of legislation in the mining sector is the Minerals Law of 2006 (as amended from time to time).

The Minerals Law was amended on July 1, 2014, bringing a number of positive changes which should eventually help in attracting further investment. The amendments to the Minerals Law will be discussed in greater detail below.

The Minerals Law lays out the framework whereby companies, both domestic and foreign, can obtain exploration and mining licences.

Pursuant to the Minerals Law, a holder of an exploration licence is granted the exclusive right to obtain a mining licence if the holder deems the mineral deposit to be commercially viable.

Exploration licences are granted for an initial term of three years, with the possibility of extending the term for an additional three years three times, with the exception of exploration licences for radioactive minerals. Mining licences are valid for an initial term of 30 years, with the possibility of extending the term for an additional 20 years twice.

The Minerals Law outlines rules concerning what are deemed “strategically important deposits”, and allows the state the ability to acquire certain ownership interests in companies that are exploiting such deposits. If state funding was used during the exploration phase, the state may purchase up to 50% of the shares in a company exploiting the deposit. If no state funding was used, the government still has the right to acquire up to a 34% interest in the company conducting the mining activities.

After a great deal of deliberation and consulting with various stakeholders, the country’s parliament, the State Great Khural, adopted certain amendments to the Minerals Law on July 1, 2014. Many of the amendments to the statute were based on the State Minerals Policy, which was adopted prior to the passage of the amendments to the Minerals Law. The important amendments to the Minerals Law adopted on July 1, 2014 include the following:

  • The amendments to the Minerals Law establish a National Geological Office, which is charged with conducting “geological cartographic, geophysics, geochemical and hydrogeological and geoecological mapping and research on the territory of Mongolia”. (Article 11 of the Minerals Law);
  • The maximum geographical size of an exploration licence was reduced from 400,000 ha to 150,000 ha (Article 17.4 of the Minerals Law);
  • The maximum term for exploration licences (including all possible renewals) was extended from nine years to 12 years, with the exception of exploration licences granted for radioactive materials (Article 21.1.5 of the Minerals Law); and
  • Mining Licence holders are now required to give priority to domestic taxpayers when procuring goods and services (Article 35.9 of the Minerals Law). Also on July 1, 2014, Parliament adopted the Law of Mongolia on the Repeal of the Law on the Prohibition of Granting Exploration Licences.

Until this law was passed, there had been temporary moratoria on the issuance of new exploration licences since 2010, stemming from investigations into corruption at the Minerals Resources Authority of Mongolia.

Repealing the prohibition on the granting of exploration licences is certainly a welcome move for the investment community, as it demonstrates the Mongolian government’s willingness to take steps to encourage economic growth.

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