Sessions - 2010
Development of Mining Sector

Today 1,170 deposits and 8,000 occurrences of approximately 80 tupes of mineral resources are registered in Mongolia. Since the enactment of the Law on Mineral Resources in 199, it has opened up several new areas for exploration and geological survey work has flourished in Mongolia and in 2007 investment in mining reached its peak of 280 billion MNT.

As of the end of 2009, the number of special licenses to conduct geological surveys (Exploration Licenses) was 3,662. In total 1,928 business entities owned 1,087 special license for exploitation (Mining Licenses) covering close to 30% of total territory in Mongolia. 77.5% of these special license holders are domestic companies and 22.5% are companies with foreign investment .

Mining is Mongolia’s leading export oriented economic sector. Mining policy has thus far focused on introducing advanced technologies to the sector and creating favorable conditions to attract foreign investment. As a result, the mining sector’s share in GDP has reached to 30% in 2009. 65.5% of total industrial products and 88.2% of all exported products come from mining.

127 gold businesses, 44 fluorspar businesses, 28 coal businesses and 224 building industrial minerals businesses are working primarily on extraction and primary processing. Just over 10 businesses such as Erdenet copper /molybdenum factory, Boroo and Olon Ovoot gold factory, “Erdmin” cathode copper factory and “Shim Technology” molybdenum oxide factory are operating in extraction, concentration and processing fields.

Through processing the raw materials that Mongolia excavates, there is an opportunity to provide value added services. As a result, jobs for locals are being created; export is increasing; and revenue for local and state budgets are climbing up.

The Parliament of Mongolia revised the Law of Mineral Resources in 2006 and identified 15 deposits of strategic importance. Out of these deposits, Erdenet, Boroo, Tumurtiin Ovoo, Baganuur, Shivee Ovoo and Nariin Sukhait are currently under exploitation. The deposits of Oyu Tolgoi, Tavan Tolgoi, Tsagaan Suvarga, Asgat, Burenkhaan, Mardai, Dornod, Gurvan Bulag and Tumurtei are not yet being exploited. Implementation of the investment agreement between the Government of Mongolia and Oyu Tolgoi investors in October 2009 will represent the start of exploitation of these major deposits of strategic importance.


a. Enhancing Activities of Mongolia’s Mining Sector

  • To stabilize and refine the existing legal environment, which is characterized by regular changes, contradictory laws and ambiguous definitions;
  • The time from exploration to operation is unnecessarily long due to the poor development of infrastructure;
  • The lack of professional organization to conduct regular research on processing, product demand and environmental impact has caused several mistakes or delays in some of the important state and government decisions. This highlights the general shortage of experience in establishing major project agreements;
  • A highly qualified work force in geology, mining and heavy industry sector is desperately needed to insure the proper evolution of the sector.

b. Developing Complimentary industries of the Mining sector

  • If domestic absorption of the financial opportunities produced by the mining sector is a priority, then Mongolian business entities must be widely involved in project implemention and work to develop the complimentary sectors that have the potential to grow along side the major projects.

c. Making Mining Sector Revenue Transparent and Environmental issues of Mining Industry

  • The lack of transparency within the mining sector and its veiled revenue contribution to national and local budget negatively impacts the reputation of the sector;
  • Currently, mining companies are not required to inform or disclose their financial reports to the public;
  • Mining companies shall join the Exploration Sector Transparency Initiative.

A further research is required to determine in detail the environmental issues around deep processing of mining products. For example:

  • Neutralization of sulfuric acid created by melting of copper and zinc (foil) concentration;
  • Detailed development of environmental assessments around such processes as coking coal and making uranium, as well as the impact of minerals dissolving deep into the earth must also be prioritized.
Published by: 2010-05-08 00:00:00