30.04.2014 examining mongolian mining policy and how it could benefit the production and export of...

1

MONGOLIA is OPEN for BUSINESS

• Mining History of Mongolia

• Current situation

• Contribution of Minerals industry to the Mongolian economy

•Opportunities

•State Policy on the Minerals sector

• Recent legal reforms

Conclusion

2

Content

OPEN for BUSINESS MONGOLIA is

Mongolian Mining

Industry has history of

101 years

Stable and

favorable legal

and investment

environment

3

1923 - 1990

1913 - 1921

1991 - Today


ECONOMIC GROWTH

Ministry of Economic Development forecasts Mongolia to continue enjoying double digit growth in the

coming years.

3.9 3.9 3.5 6.9 8.8 10.6 11.7 14.7

6.4%

17.5%

12.4%11.7%

12.9%

5%

7%

9%

11%

13%

15%

17%

19%

0

2

4

6

8

10

12

14

16

2007 2008 2009 2010 2011 2012 2013 2014

GDP, billion USD

GDP growth by percent


GD

P g

row

th b

y p

erc

ent

GD

P, b

illio

n U

SD

Economic development and mining sector

GDP

%

Export Budget FDI

17% 81% 23% 73%

2011

5

2012 2013 2011 2012 2013 2011 2012 2013 2011 2012 2013

17 21 20 89 91 81 20 21 23 78 81 73

CONTRIBUTION OF THE MINING SECTOR (%)


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Investment and production

The production of the mining industry is rapidly growing in the last years due to the investment. Therefore,

the Ministry of Mining supports a policy to promote and encourage investors.


Investm

ent, m

illio

n U

SD

Pro

duction, bill

ion M

NT

Main Minerals Resources (2013) World Rank

Gold (tons)

Zinc (thousand tons)

Iron ore (mln tons)

Crude oil (mln barrel)

Copper (thousand tons)

Coal (mln tons)

Shale oil (bln tons)

2,493

1,740

1,166

2,438

117,000

175,500

788

Top 10

Top 10

Top 10

Uranium (ths tons) U 170

OPPORTUNITIES: Why invest in Mongolia? (1) 1950 deposits and 8150 discoveries are registered in the State inventory of

mineral resources, and 300 of them are under utilization.

The Central and Eastern parts of Mongolia relatively well studied. While western part

of country is untapped, which has a great potential for discovery of new deposits.


Source: World Bank, 2013

RUSSIA $2.118 Trillion

GDP

143.500.000 Population

8th Largest

Economy

KOREA $1.198 Trillion

GDP


15th Largest Economy

JAPAN $5.007 Trillion

GDP


3rd Largest Economy

CHINA $8.939 Trillion

GDP

1.344.130.000 Population

2nd Largest

Economy

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OPPORTUNITIES: Why invest in Mongolia? (2)

MONGOLIA is OPEN for BUSINESS

Railways

$16.0 bln

Highways

$0.46 bln

Oil refinery

$1.20 bln

Copper

Smelter

$2.0 bln

Oil production

$0.8 bln

Coal to Liquids

$2.5 bln

Coal washing

$0.8 bln

Coal to Gas

$30.0 bln

Iron Ore

Cluster

$1.0 bln

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OPPORTUNITIES: Why invest in Mongolia? (3)

Power plant

on Tavantolgoi

coal mine

$ 1.0 Bln

Power plant V

$1.2 bln

Total investment: $ 56.96 Billion


• Activities of special licenses, which issued before the law, shall be continued

under the contract.

• Intensify the explorations of shale oil and crude oil.

• The rights of an issuance of the special license transferred to the province and

local authority;

• The area will be allocated without competitive tender;

• Royalty rate is 2.5%.

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Legal reform:

• Provide sustainable investment environments (stabilize the investment)

• Non- discrimination between foreign and domestic investors. Investment law (2013/10/03)

• Improve the competitiveness and development of the mining sector, encourage

the transparent and responsible mining industry based on private sectors.

State Policy on the Mineral sector (2014/01/16)

• Royalty fee is 2.5%, when gold sells to the Central Bank or commercial banks.

• Current royalty rate will apply when export the Gold.

Amendment in Minerals law (1) (2014/01/24)

• Improved border point management

• Better port regulation allows to accelerate trade and reduce bureaucracy

• No VAT and customs duty until 2018 for the equipment to be used in oil, shale

and coal processing projects.

Law of Mongolia on exemption from Customs Duty and VAT

(2013/06/07)

Law on border ports (2013/12/26)

Law of Mongolia on common – occurrence mineral resources

(2014/01/09)

• Main principles are not to restrict the investors’ right and basic principles of the

Law dated on 2006. Amendment in Minerals law (2)

Petroleum Law

Regulation for long named law*


* Prohibit mineral exploration and mining operations at headwaters of rivers, protected zones of water reservoirs

DIRECTIVE PRINCIPLES OF STATE POLICY

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1. Not to restrict the rights and interests of the participant parties, when

making decisions related to the legal and taxation environment .

2. Support and promote modern and advanced technologies and techniques

harmless to human health and environment.

3. State and private entities must be open, transparent and responsible.

4. Investors must support good corporate governance, bilateral collaboration

and respect the law.

5. State shall provide universal conditions for investors and not to

discriminate on conditions of ownership.

6. If not restricted by law, information sharing on geological research,

prospecting and exploration must be open and transparent to the public.

7. Improve the legislation on occupational health and safety to meet the

international standard requirements.

8. Keep the state involvement in mineral exploration and exploitation

activities at a rational level.


NEEDS TO AMEND THE MINERALS LAW OF MONGOLIA

2. Respond to the investors expectations.

1. Increase investment by restoration of the exploration and prospecting

activities and accumulate the state fund of mineral resources.

3. Eliminate difficulties and challenges to implement Articles of relevant

legislation and court orders.

4. Strengthen the geological sector to meet the international standard

requirements.

5. Improve the mine rehabilitation and mine closure regulation.

6. Improve the relationship and collaboration between the special license

holders, state and local authorities.


CONCLUSION

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1. Democratic country with open market economy.

2. Stable political environment.

3. Great potential of minerals resources.

4. Neighboring with two giant markets.

5. Created a long –term, understandable and stable legal environment in the

mining sector.

6. Favorable tax environment.

7. Have a policy supporting investment.

8. At its starting point of industrial development.

We are warmly welcoming you

to MONGOLIA


30.04.2014 examining mongolian mining policy and how it could benefit the production and export of...

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