D.Ganbold: Does the Government of Mongolia have budget to compensate over 1000 mining exploration companies?

Sep 21 • Interview, Mining • 570 Views • No Comments on D.Ganbold: Does the Government of Mongolia have budget to compensate over 1000 mining exploration companies?

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D.Ganbold: President of the Mongolian National Mining Association: Does the Government of Mongolia have budget to compensate over 1000 mining exploration companies?

Q: Your presentation at the NAMBC conference was interesting and in the presentation, you made analysis on the amendments in four laws that affected mining industry. What were the main obstacles or advantages of these amendments?

D.Ganbold: There are better and worse provisions in the mining law amendments in relationship with the OT IA. The repeal of WFP (windfall profit) tax is the biggest gain of these changes. Also some laws such as “Law on prohibiting exploration and mining minerals from river source protected water and forest reservoir areas” and “Law on Nuclear Energy” will bring more problems in the future. “Law on Nuclear Energy” breaches many domestic laws and also international laws, agreements, even the Constitution of Mongolia. Upon approval of this law, interest of mining many companies and their investors is under risk. Share is private property. It is regretful that the Government of Mongolia stated to own this property free. Also the law was adopted to divide authorities of state registration and cadastre. These provisions are impossible for the professional operations many disputes are awaiting in relationship with this provision. Also it failed to state the solution to probable disputes.

Q: When drafting these laws, did lawmakers receive comments from you and professionals?

D.Ganbold: As for “Law on prohibiting exploration and mining minerals from river source protected water and forest reservoir areas” and “Law on Nuclear Energy”, we made neither single comments nor a second of time to comment. Minister D.Zorigt is working very closely to mining NGOs and private sector. But as for these laws, they were carved without professional touches or comments.

Q: Lawmakers believe that “Law on prohibiting exploration and mining minerals from river source protected water and forest reservoir areas” will become impetus in the protection of environment. But you see it as negative.

D.Ganbold: It will not protect the environment; actually it will bring negative impacts. When the law was developed, it would affect over 200 licenses, but now this number is increased by 4-5 times. If the exploration licenses of these companies were cancelled accruing to a new law, the Government shall compensate these companies, according to the Mineral Law of Mongolia. But does Government of Mongolia have such a huge amount of money? Let’s take one example, there is a calculation that “Monpolimet” company, which faces the risk of losing its license, spent 50 million US$, also “Erdes Holding” LLC, iron ore mining company, spent 20 million US$, respectively. It is excluding exploration expense. Compensation risk of only two of a thousand would reach over 100 billion MNT.

Actually, exploration expense is the risk of license holding company. But now the Government would pay the payment. Actually, confiscated licensed areas will become the prey of “ninjas”, unofficial name of artisan miners. Wouldn’t it affect the environment?

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