Asgat and Boroo Gold Deposits are to be Excluded from Strategic List

May 27 • Business, Economy, Government, Mining • 611 Views • No Comments on Asgat and Boroo Gold Deposits are to be Excluded from Strategic List

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The present Parliament, of which power is coming to an end, ratified the strategic deposit list for the first time. The term strategic deposit was incorporated in the legislation at the modifications to the Minerals law of 1997. However the current Parliament is very close to destroy the list they passed. It is trying to ratify the draft law on modifications to the Minerals Law passed in 2006.
Last Friday the first discussion of drafts was held, incorporating draft law initiated by 19 MPs including Ts.Damiran and other one, initiated by those such as E.Bat-Uul. It was incorporated in a draft law, initiated by Ts.Damiran and others that state ownership of strategic deposits would be 51 percent and in a one, initiated by E.Bat-Uul and others that investment agreement should be concluded on the basis of product-sharing contracts.

A task group, headed by MP N.Batbayar unified these drafts law. According to the compact draft law, strategic deposits include gold deposit with resources more than 100 tons, copper deposit with resources more than 5 million tons, silver deposit with resources more than 500 million tons and iron deposit with resources more than 150 million tons estimated in accordance with international standards.

With reference to this classification by resources, some of deposits approved by the Parliament as strategic deposits formerly in accordance with classifications by names might be excluded from the list. For example, according to the draft law, Boroo gold will not refer to strategic deposit because the resource of the deposit is estimated 43 tons.

Also Asgat deposit will not qualify for 2000 tons. Therefore it will be excluded as well. Uranium, rare-earth elements and pure quartz deposits that are of special significance to the National Security shall be included in the strategic list without considering resource amount. Also the draft says the state or citizen of Mongolia shall own 51 or more than 51 percent of shares of license bearing company or investment agreement shall be concluded with the investor on the basis of production-sharing contract in case the state of Mongolia co-use the strategic deposits with foreign and domestic investors.

If we make some economic estimation on Oyutolgoi that the state would own 51 percent of the deposit, 81.09 percent of overall income will be generated in the budget. In case of production-sharing contract, 63.64 percent of the income will be in the budget /sharing ratio is 60 for Mongolia and 40 for Ivanhoe). According to former agreements, income to be generated in the state budget would be 75.53 percent while state participation is 34 percent.

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