Mining Mongolia
Mining Mongolia Investors waiting for solid legal framework The Mongolian National Mining Association (MNMA) hosted the sixth international mining conference "Discovery Mongolia-2008' in Ulaanbaatar from November 6-7. The conference attracted about 800 delegates from 15 countries. Organizers pointed out that participant numbers had decreased this year, an indicator that investors were losing interest. Main concerns raised by potential mining sector investors relate to the policy directions the new Mongolian Government would introduce in the sector; whether its Minerals Law would be amended or not and, if so, what such amendments would be in this tough time when mining companies' share prices were falling due to the ongoing global financial crisis. Many at the conference clearly felt that an unstable legal framework would possibly lead to investors' withdrawing. They voiced their concern as to how Mongolia would resolve the two controversial issues, namely, windfall profit tax and State ownership of strategically important deposits. MNMA President D.Ganbold said. "Investors" main expectation is a stable and solid legal framework in the mining sector. Mining is risky in itself because of highly fluctuating mining product prices and investors therefore focus on the stability of legal frameworks as a major factor for good planning and calculation of long-term efficiencies, as well as financial benefits. As yet, despite lengthy but unsuccessful debate we have still to decide on whether or not to revise the Minerals Law to meet requirements to create a solid legal framework for Mongolia's mining activities. Finalization has been too long awaited by interested investors." Investors suggested that delaying the Mineral Law amendment and immediately starting to develop large mining projects could be beneficial for both Mongolia and investors. The Minerals Law of Mongolia, approved in 1997 was amended in 2006, but Parliament had again debated revision of the Law last spring. Its May discussions ended, however, without approval of a new law as lawmakers views differed on some issues. This has created unclear legal conditions. According to the proposed Bill discussed by Parliament last spring, an article therein stated that, where the State or Mongolian Government uses a strategically important mineral deposit in partnership with foreign and/or domestic investors, the State would retain a stake of 51 percent or ' more in the company holding the special mining permit for that deposit, but this article met with investors' displeasure and raised doubts. The current Parliament would soon resume discussion of the Bill. Conference participants warned that approval of the 51 percent State ownership would result in a high probability of no investment from big investors. The conference aimed to provide accurate information on Mongolia's mining sector, help domestic mining companies to find foreign partners, introduce some anticipated projects on specific deposits to investors and provide opportunities for investors to meet decision-makers and officials in charge of State policies and decisions. During the conference, investors had a chance to meet officials at the 'Government Hour' meeting attended by Minister of Minerals and Energy, D. Zorigt; Chairman of MRPAM, J. Bilegsaikhan, and mining experts from ministries and agencies. They briefed the meeting on Government policy in the sector and answered questions from investors. Underlining the heightened evidence of declining interest trends in mining investment. Minerals and Energy Minister, D. Zorigt confirmed the intention of Mongolia's Government to create new partnerships in the mining sector. For instance, he said the Government would promote industrialization within the framework of a new partnership policy and would focus on creating a solid legal environment for the sector in order to reduce risks investors may face in developing strategically important mineral deposits. When participants asked about the 68 percent windfall profit tax, he explained that Government's proposal to change the tax had been submitted to Parliament and no definite decision had so far been made in this regard. The conference agenda allowed discussion on several other issues, in addition to participants' delivery of reports on nature rehabilitation, the world financial crisis, outlook in the mining sector, infrastructure development in the sector, recent trends in world gold mining production, etc. Besides these, several exhibitors, including mining and other companies servicing the mining industry, showed their products and service operations at the conference venue. B. Ooluun THE MONGOL MESSENGER |
