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Brief facts

Mongolian mining sector has one of the world’s leading mineral resources with more than 10 000 deposits of more than 80 types of minerals, about 10 000 exploration results and a few hundred thousand mineral points. Yet not all of Mongolia’s minerals and mineral deposits have been discovered. Although the Central and the Eastern parts are well studied, the Western part shows untapped potential for new discoveries of deposits and mineral resources. The mining sector is an integral driver of the Mongolian economy. It makes up about 93% of the total exporting products, about 58% of the FDI and 22.8% of the GDP. Thus, the development of the mining sector is ever-evolving reflecting sectoral needs. The Ministry of Mining and Heavy Industry (MMHI) is the main state body responsible for development and implementation of state policies for the development of the geological and mining sectors. The Mineral Resources and Petroleum Authority (MRPA) is also the key regulatory body having an authority to grant licenses, make a decision on the allocation of land for the purpose of small-scale mining and widely distributed minerals.

Currently, there are in total of 2,557 valid licenses issued in the mining sector with 1,708 of them being mining licenses and 849 exploration licenses.

If a deposit may have a potential impact on national security, national or regional economic and social development, or is producing (has the potential to) more than 5% of the total annual GDP, it can be classified as a mineral deposit of strategic importance by the Government. For the exploration of a Strategic Deposit where the State has conducted state funded exploration jointly with private entities and determined the proven reserve, the state can participate in up to 50% equity interest. However, in the relevant exploration of Strategic Deposit privately financed, the State may participate in up to 34% equity interest.

 List of strategic deposits

The mining products exchange

The Government of Mongolia aims for transparent and responsible mining and multiple pillar economic composition and fair distribution of wealth through Mining Product Exchange. Within this scope the Mining Product Exchange Law was passed in December 2022 to govern the establishment and relation of the exchange operation. According to the Mining Product Exchange Law, the Exchange will operate as a state-owned enterprise with the objective to operate Mongolia’s mining product trade with transparency, set fair prices and increase investment interest in mining industry through unifying export policy. Furthermore, for the mining products to be traded in the Exchange they must fulfill quality tests such as a warehouse equipped with the storage requirements of the product, terminal, transportation logistics center and analysis laboratory.

Electronic License Tendering Procedure

The “Digital Nation” initiative has spread its reach to the mining industry by digitalizing the license tendering process. The MMHI has approved the new regulation on selection procedure for issuing mining licenses on 12 April 2022. Through this selection process the Government of Mongolia aims to increase the number of exploration license issuance to boost the geological exploration and number of proven reserves.

  1. Exploration tenement tender announce on (not fully operational yet)
  2. Preparation of required documents for submission by participants
  3. Payment of base price and submission of documents
  4. Open and transparent tender process
  5. Successful participants receive notification to obtain the tenement.

Legal Framework

 The mining sector is the key economic driver of Mongolia, thus the main law governing the sector, Minerals Law 2006, is amended regularly to reflect the new development of the sector. The most recent amendment was made in January 2023 where notably the exploration tenement tender and issuing special license provisions were amended. Furthermore, a revision of the current Minerals Law is expected to be discussed at Parliament in 2023. Under the Minerals Law, noteworthy provisions are that the mineral resources naturally occurring on and under the earth’s surface in Mongolia are the property of the State. Thus, the State reserves the right to grant exploration and mining rights and licenses. Furthermore, if a deposit may have a potential impact on national security, national or regional economic and social development, or is producing (has the potential to) more than 5% of the total annual GDP, it can be classified mineral deposit of strategic importance (“Strategic Deposits”) by the Government.

Other laws relevant to the mining sector are:

Mongolia holds exceptional geological natural potential for the development of mineral resources, offering an unprecedented growth potential for copper, base metals, gold, coal, and uranium. However, it is worth noting that the extent of Mongolia’s mineral potential has only been partially explored, with scale geological mapping currently covering just 40% of the country’s vast territory.

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.

Proven Reserves

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