Daily Business News Mongolia

MP Z.Altai: Product share principle is a better option

Q: A working group was established on drafting the Mineral Law of Mongolia (2006). As for you, what is the best alternative?

A: There are many alternatives. Frankly says, there are some things are suspicious. Many movements and demonstrations worked on this draft law before. But, according to my observation, the law says that State ownership is 51%, and then there is another voice is coming up that that ownership can be the Mongolian citizen or business entities. If a wealthy individual owns the deposit, what will do the state? It is hard to reject a person who paid his money. Therefore, there is an issue of what will do with a single company that owns it? (more…)

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MP Kh.Badamsuren: Working group prepared its first draft

The position is to grant the power to the Government to sign the investment agreement on Tavan Tolgoi and Oyu Tolgoi. MP Kh.Badamsuren, Head of the working group of drafting the amendment in the Mineral Law of Mongolia, has his view regarding the current development in mining legislation.

Q: Working group on drafting the amendment in the Mineral Law of Mongolia worked on it for quite long time. What is the result of your group’s work?
MP Kh.Badamsuren: According to the resolution of the Speaker of the State Great Khural, a working group was established and started its work. The working group is paying much attention on drafting the amendment. All in all, the working group presented its first draft to the party groups of the parliament. Basically, party groups principally supported it. But there were many comments during the discussion from MPs. Therefore, the working group will discuss these comments and insert them into the draft law. One thing need to emphasize here is MPs have visionary approach. (more…)

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MP N.Batbayar: 300 million US$ of the Mongolia Development Fund will be placed at commercial banks.

The draft law of placing some fund of the Mongolia Development Fund was initiated by MPs N.Batbayar, R.Amarjargal, G.Batkhuu, Ts.Bayarsaikhan, R.Bud, D.Damba-Ochir, G.Zandanshatar, O.Chuluunbat and proposed to the Speaker of the State Great Khural. Some more clarification was made from the initiator.

Q: What was the main reason of initiating this law?
MP N.Batbayar: World financial crisis is affecting countries of the world and countries are taking various measures to handle it. USA allocated 700 billion US$ and it is equal to its 5% of GDP. As for Mongolia, situation in economy is relatively healthy and potential. Therefore, there is a proposal of placing 300 US$ of the Mongolia Development Bank in commercial banks, if compares with USA, proportionally, it is about 200 million US$ for USA. The income from the windfall tax was divided into three different purposes and 1/3 of it or about 300 million US$ was reserved for the securing the domestic crisis. According to the law, it is kept at the Central Bank. Therefore, in order to support commercial banks and fund them, draft law on granting the right to place it at banks to the Government was proposed. (more…)

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Does Mongolia need a law on conflict of interest?

Recently, lots of articles were published and written about the conflict of interest of the state officials. In other words, people, with conflict of interest, work in the state service. We questioned some well known people regarding this issue and put the following questions:
1.    Do we need to have a law to prevent from the conflict of interest?
2.    Can you name officials with the conflict of interest?
Readers can send their opinion to the following e-mail address of Zuunii Medee newspaper. (more…)

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Appendix 2 of the resolution of the State Great Khural: MAIN PRINCIPLE AND GUIDANCE OF MAKING THE INVESTMENT AGREEMENT ON JOINT EXPLOITATION OF OYU TOLGOI COPPER-GOLD DEPOSIT

MAIN PRINCIPLE AND GUIDANCE OF MAKING THE INVESTMENT AGREEMENT ON JOINT EXPLOITATION OF OYU TOLGOI COPPER-GOLD DEPOSIT
1. The agreement must be built in accordance with the effective law and regulations of Mongolia
2. To study the possibility of inserting the provision to allow the Mongolian side to own up to 50%, but starting from 34% and additional take over for the Mongolian side when the initial investment is compensated.
3. To study the alternatives of making the investment agreement based on the product share principle.
4. To agree upon 34% direct ownership of a stock holding company to the Mongolian side and its investment to be replaced with the taxes, payments, fees, dividend and loan types. (more…)

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Appendix 1 of the resolution of the State Great Khural: MAIN PRINCIPLE AND GUIDANCE OF MAKING THE INVESTMENT AGREEMENT ON JOINT EXPLOITATION OF TAVAN TOLGOI COAL MINE

MAIN PRINCIPLE AND GUIDANCE OF MAKING THE INVESTMENT AGREEMENT ON JOINT EXPLOITATION OF TAVAN TOLGOI COAL MINE
1. The agreement must be built in accordance with the effective law and regulations of Mongolia
2. To study the possibility of securing the Mongolian side ownership in a stock holding company which will be established on Tavan Tolgoi coal mine, not less than 51%.
3. To study the alternatives of making the investment agreement based on the product share principle.
4. To effectively implement the payment of mineral resource exploitation, its calculation and distribution in accordance with the mountain-geological condition and reserve size of the deposit, as stated in the provision 47 of the Mineral Law of Mongolia and to receive the certain portion of the payment of the mineral resource exploitation and taxes in advance. (more…)

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Draft 2. The resolution of the State Great Khural

To adopt main principle and guidance

Considering the current decline of some commodity price and share price of mining companies due to the world financial crisis and tendency of decreasing investment in the mining sector and with the purpose of preventing the risks and problems that can evolve in the future, to unlock the obstacles in realizing and exploiting  strategically important major mining deposits, to initiate the negotiation with the investors in order to form the opportunity and resource to provide their exploitation income to our citizens and accelerate time to sign the investment agreement, hereby the State Great Khural issues this resolution, according to the provision 43.1 of the Law on the State Great Khural of Mongolia, as follows: (more…)

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Draft 1. Resolution of the State Great Khural

To reject draft laws.

According to the provision 22.5 of the law on rule of the State Great Khural of Mongolia and provision 43.1 of the Law on the State Great Khural, The State Great Khural resolves:
1. To reject a draft law to amend the Mineral Law of Mongolia, presented by MP Ts.Damiran and Ch.Avdai and other 13 MPs on March 12 2008 and a draft law to amend the Mineral Law of Mongolia, presented by MP E.Bat-Uul and R.Erdeneburen and other 2 MPs on April 22 2008, with reason of the majority of lawmakers’ term is expired. (more…)

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The Mongolian State will own 34% of Oyu Tolgoi and 51% of Tavan Tolgoi

Yesterday, parliamentary group of MPRP and DemParty discussed the comments and conclusion of the working group of drafting amendment in the Mineral Law of Mongolia. The working group presented two draft alternatives. First alternative is to withdraw two drafts, because of the fact that the most of the lawmakers weren’t re-elected.  The second alternative is not to change the current Mineral Law of Mongolia and to sign in the investment agreement on Tavan Tolgoi and Oyu Tolgoi. (more…)

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S.Oyun: We rely on silver and bronze opportunities

MP S.Oyun, a member of working group of drafting amendment in the Mineral Law of Mongolia, has her words regarding the current issues and mining legislation development.

Q: Working group held several meeting, but it had not that satisfactory results.
MP S.Oyun: We met several times after studying four or five drafts for the Mineral Law of Mongolia, presented since 2006. In year 2006, the Mineral Law of Mongolia has provision that the Government of Mongolia to own up to 34% in strategic deposits. After that there were talks about increasing it to 51%. Also provisions on agreement in dividing product and windfall tax change were added. Meantime, world economy is undergoing the financial crisis and the commodity price is decreasing 2 months in a row. Actually, commodity price is surging, therefore mining business is risky. Members of the working group are discussing seriously about 51% ownership of the Government. (more…)

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