Mongolia Business and Mongolian Daily Business News

“Mining and geology can’t be separated. But the Government paid much attention on mining sector, ignoring geology one” concluded participants of “The Mongolian Geology and Mineral Forum”. Representatives of 42 companies and scholars attended the Forum, jointly organized by the Ministry of Mineral Resources and Energy, Mineral resource Authority, The Mongolian Mining Geology Association, The Mongolian Geologists’ Association, The National University of Mongolia and Geology School of University of Science. During the forum the legal environment of mining sector was fiercely criticized by the participants. Read the rest of this entry »

MP D.Zagdjav, D.Batbayar proposed draft law on Limited Casino to Speaker D.Demberel. Casino business is soaring around the world and our two neighbours are allowing limited casinos in certain zones and areas. Neighboring regions of our neighbor countries don’t have any casinos or gambling centers, which allows Mongolia to flourish such businesses. Law initiators believe that it will contribute to the Mongolian economy and revenue.

One percent of casino income will be collected into the “Good Will” Foundation, a social welfare fund. The casino is only open to foreign nationals and the Government of Mongolia will own certain part of the casino.

Last Friday, the General Session of the State Great Khural was held and MPs P.Altangerel, S.Byambatsogt, D.Gankhuyag, G.Zandashatar set questions on Tavan Tolgoi from the Prime Minister. Tavan Tolgoi was explored by the budget and its reserve was registered to the Mineral Wealth Council. MPs wanted to receive more detailed information on this issue. But MPs were frustrated with absence of Prime Minister and Minister for Mineral Resources and Energy.

On behalf of the Prime Minister, Mr. Ch.Khurelbaatar, Minister for Cabinet Secretariat, answered to the questions.

Brief background:

Tavan Tolgoi deposit ahs reserve of 6.42 billion tons of coal, 1.8 billion of cocking coal. The deposit was in mining operation in 1967 and mined 9.8 million tons only. Energy Resource and Tavan Tolgoi Companies are mining coal, two companies of Tavan Tolgoi area license holding companies, excluding Erdenes MGL and Daitsukui LLC. The export price is set in accordance with the average price of coal at Shaanxi Province of People’s Republic of China. Read the rest of this entry »

The Parliament started to discuss a draft resolution on guidelines for privatization of state-owned properties in 2010-2012. The novity of the guidelines is a proposal by the Government to trade state-owned shares of shareholding companies through the stock exchange besides traditional ways of privatizations in the coming three years. Also the guideline enables issuance of IPO at the domestic and international markets by companies that need investments through consessional way. Majority of Parliamentarians, who commented with respect to the draft reolution, criticised the erroneous privatization 20 years ago and asked the draft initiators if there is a guaranty that it would not repeat the same mistake. The issue of trading state-owned shares of strategically important mineral deposits through the stock exchange drew attention of the Parliamentarians.

MP N.Ganbyamba: Privatizaion of 1990’s had no effect. No single plant has been built in the last 20 years. The guideline says shareholding companies with stateowned properties are to be formed and their shares will be traded. Aren’t any shareholding companies established today? Read the rest of this entry »

Under the Mongolian Constitution adopted on 26 November 1924, all the land, the wealth contained therein, mineral resources, forests, and water were declared to be the property of the people. This principle was confirmed in Constitution in 1940 and 1960.

The article 10 of Constitution 1960 of The Mongolian People’s Republic provided: ‘The land and its minerals, forest, water and its wealth, state factories, plants, mines, electric power stations, railway, motor vehicle, water, and air transport, highways, means of communication, banks, state agricultural enterprises, and the basic fund in cities and other population centers, raw materials, materials and products of state enterprises, state trade and procurement, enterprises, scientific and cultural institutions, and also the property of all state organizations and institutions shall be state ownership, that is, the wealth of the whole people’. Read the rest of this entry »

The Mongolian Company law not directly stating about protecting minor shareholders but it says the law is regulating and coordinating about through reinvestment of dividend , profit of company future of business mean for interest of shareholders. According the article of 35.1, 35.1.1. To participate in all shareholder meetings and to have votes in the proportion of shares held by such holder on all issues considered at such meetings. Also article 64.4 legalized about basic principle of making decision of company by majority of the votes of shareholders.

The protecting minor share holders is way of making important decisions made at the meeting shall be adopted by an overwhelming majority of votes of the founders. Those are mentioned in articles of 14.1, 26.1, 64.5 as through promote of vote overwhelming majority. But law says overwhelming majority is not voting of majority its vote of meeting of overwhelming majority. Read the rest of this entry »

Mongolia has many risks specially in mining business. Such risks are particularly high in the copper, gold and uranium sectors-There is no legal framework for uranium mining, and the sector is treading water. The same goes for copper and gold “The Government is aware the windfall tax is an impediment for Oyu Tolgoi. It is looking at an alternative tax arrangement, even though this has not been discussed at parliamentary level. Fundamentally, the tax system is quite good, except for the windfall.”The decision to implement the windfall tax is rooted in public discontent over a tax holiday granted to Centerra Gold’s Boroo gold mine, the first significant foreign investment in Mongolia since the late 1970s.

Read the rest of this entry »

-Draft laws and resolutions were presented-

Last Friday, three draft laws and resolutions, developed by MPS and Government, were presented to Speaker Demberel.
MP G.Zandanshatar, N.Batbayar, Ts.Bayarsaikhan, S.Byambatsogt, D.Terbishdavga, U.Enkhtuvshin developed draft law on “Implementing Foreign Investment in strategically important business entities in securing National Security”. Read the rest of this entry »

Many investors think that Nuclear Energy Law is against foreign investment. According to an officials, it clearly stated the Government involvement in the ownership of radioactive minerals, their exploitation and classification and the right of the Government of Mongolia. Holders of exploration licenses of uranium think that state control and ownership is too overwhelming according to the law. For example, according to the Article 1 of the Nuclear Energy Law, exploration and mining licenses of radioactive minerals, issued before the effect of the Nuclear Energy Law, will be registered again within October 15 2009, in accordance with the law provisions. But it is still in doubt that companies which lost their properties can acquire their licenses back, according to the law. Because, this law states that if any licenses are not re-registered, those licenses will be canceled, and investors are against this provision. Read the rest of this entry »

Minister for Finance S.Bayartsogt informed that OT IA signing ceremony will be held on Wednesday September 30 2009. According to his statement “… OT IA preparation work is underwent and its final wording (English, Mongolian) is being made. The final date of IA signature will be on September 30 2009.” After approving the related regulations and proceedings, an official letter of invitation of the Government to visit to Mongolia was sent to the Directors of Ivanhoe Mines and Rio Tinto.

Therefore, John Macken, in charge of legal issues, arrived in Mongolia. Today, Ivanhoe Mines Chairman Robert Friedland is landing in UB. The day of signature is tomorrow, therefore, he is visiting to Mongolia.