07.01.2013, bcm minerals law draft comments detailed analysis, bcm
TRANSCRIPT
No. Article Draft provision Comment Recommendations
1 Purpose of the law
The purpose of this Law is
to promote economically
viable mining and extractive
industries which carry out
prospecting, exploration,
mining and processing
mineral resources in
compatibility with the
economic, social and
environmental policies of
the State.
The purpose to “promote
economically viable” does not
appear to be implemented
throughout this legislation.
"in compatibility with the
economic, social and
environmental policies of the
State" rings of a soviet
character
Give a serious re-think to
what this Draft Law does to
threaten the economic
viability of exploration,
mining and processing in the
minerals sector.
The State needs to give a
serious rethink as to its
overall polices regarding
free market economics and
democratic values vs.
centrally planned economy
an authoritarian State.
2 Scope of the law
This law shall regulate the
relations arising from
geological reconnaissance,
prospecting, exploration,
mining and processing of all
types of minerals other than
radioactive minerals in the
territory of Mongolia.
The Draft Law regulates (1)
reconnaissance, (2) prospecting,
(3) exploration, (4) mining, and
(5) processing.
There is the possibility to
merge and/or exclude
categories. For example, it
is not clear as to why
prospecting and exploration
have been divided into
separate categories.
3 Definitions of terms The
following terms in this law
shall have the following
meaning:
3.1.1 “Work permission“ means
any or all of the exploration,
mining and processing
permissionsas specified in
chapter 8 of this law;
See specific comments in
Chapter 8.
3.1.2 "minerals" means
3.1.2(a) any usable mineral
concentration which
naturally occur either in
solid, liquid or gaseous state
that were formed on the
surface or in the subsoil as a
result from geological
evolutionary processes,
except for water, oil and
natural gas;
CBM is not included within the
Draft Law. It is likely that the
draft petroleum law will include
covers all types of
hydrocarbons including CBM,
tight oil, shale gas, conventional
oil and gas. Similarly, water is
covered under the Water Law.
This could create serious issues
of overlapping licensing. Using
ETT as an example, if CBM is
included under the petroleum
law then another private
company could take out a
license over ETT tomorrow and
then prevent ETT under the
Petroleum law from developing
their coal resources.
Consider whether CBM
better fits under the Draft
Law or in the petroleum law.
If under the petroleum law,
then the laws must
coordinate so as to address
overlapping licensing and
priority rights.
No. Article Draft provision Comment Recommendations
Likewise, does an overlapping
water license, nuclear energy
license or land license pose
such inconsistencies?
3.1.2(b) minerals that have been
extracted from the surface or
the subsoil as specified in
this law;
3.1.2(c) minerals that have been
processed as specified in this
law;
3.1.3 “processing minerals“ mean
industrial activities directed
at increasing the contents
and value of minerals
through means such as
enriching, melting,
purifying, producing
products of extracted
minerals other than
radioactive minerals as
specified by this law;
The definition for processing
minerals and mining minerals
overlap as “washing and
separating” are processing
activities directed to increase
the contents and value of
minerals.
Are we to assume that
“washing and separating”
are “processing” activities.
Clarify.
3.1.4 “mining minerals“ means
industrial extracting,
washing and separating
activities of minerals other
than radioactive minerals
from the earth‟s surface,
subsoil, ore stockpile, waste
and natural water according
to the approved Technical
and Economical Feasibility
Report and work plan;
3.1.5 “mineral deposit“ means
mineral concentration that
has been formed on the
surface or in the subsoil as
the result of geological
evolutionary processes,
located in same site as
rock‟s derived or separated
from it by weathering,
erosion and mechanical
processes by forming of
layers and beds where the
quality and proven reserve is
economically feasible to
mine by industrial methods;
No definition of mineral
reserve/proven reserve.
Need to define proven
reserve.
3.1.6 “mineral exploration“ means
comprehensive activities of
geological, geophysical,
drilling, laboratory and
No. Article Draft provision Comment Recommendations
hydrogeology works
according to proven
standards for detailed
determining of formation,
quantity, location,
composition, concentration
quality, geological structure,
comprehensive mining
technical condition of
mineral resources for secure
calculation of resources
volume capacity and making
decision about further
advisability of mining
operation;
3.1.7 “mineral prospecting“ means
comprehensive activities of
geological, geophysical,
drilling and laboratory
works according to proven
standards in an area with
prospects of mineral
resources for detailed
assessment of location,
resources, composition, and
to identify geological
structure of minerals and for
the purposes of determining
to conduct further
exploration works
3.1.8 “infrastructure” means
roads, railways, airports,
facilities for supply of
electricity, heating, clean
water, sewerage conveying
system, air, motor vehicle
and railway transportation,
health, hygiene, education
and related services that are
accessible to public
utilization;
3.1.9 “rehabilitation” means the
comprehensive activities of
rehabilitation of the nature
and environment of which
the natural state has been
changed due to geological
and mining activities as
specified in chapter 11 of
this law;
3.1.10 “high grading mining”
means a mining activity that
mined not whole of the
Extreme lack of clarity and
potentially un-economic. Need to define reserve. “production reserves” includes uneconomical
No. Article Draft provision Comment Recommendations
reserve and made the reserve
impossible to mine further
as a whole of the production
reserves which was
obtainable and determined
by the Technical and
Economical Study Report
due to carried out not in
accordance with approved
technological procedures;
reserves. Need to create definition based on economic cut-off, which may include influence of commodity price, general tax/economic environment in the country. In other words, it
needs to be commercially
minable and not mandatory
mining of everything. As
such, taxes, labor costs,
metal price, etc. will be a
factor. Further the Technical
and Economical Study
Report may be amended or
changed and is not likely to
be a “fixed” product.
3.1.11 “area” means the area that is
granted by license according
to the law, location of which
is determined by corner
points, coordinates of which
are determined by degrees,
minutes and seconds, and
borders of which are
surrounded by straight lines
along the longitude and
latitude;
3.1.12 “reconnaissance” means a
research utilizing primary
geological and mineral data
for determining of earth
surface and subsoil structure,
chemical composition of
rocks, their evolution
history, transformation and
presence of minerals through
taking of rock samples
without disturbing earth
surface or subsoil,
performing of geochemical,
earth and air‟s geophysical
surveys, geological mapping
with all scales and thematic
research;
3.1.13 “State Administration”
means the state
administration in charge of
geological and mining
affairs;
No. Article Draft provision Comment Recommendations
3.1.14 “Central State
Administration” means the
central state administration
in charge of geological and
minerals resources affairs;
3.1.15 “licence” means the right
certified by the license to
conduct one of or all of the
following activities,
minerals prospecting,
exploration, mining and
processing granted by the
State Administrative
Authority as provided by
this law;
3.1.16 “common minerals” means
the plenitudes‟ of rock,
loam, sand and gravel
accumulation of moraine
and rock concentrations
which could be used as
construction materials;
3.1.17 “commercial infrastructure”
means road and railway,
airport, facilities for supply
of electricity, heating,
potable water, sewerage
conveying system, air, motor
vehicle and railway
transportation and related
services that are utilized for
mining and industrial
purpose;
Under inclusive.
Note, that Mongolian version
refers to “production
infrastructure”
Needs to be expanded to include everything that a Mining Licence holder may require for a mining operation. Items
such as airstrip,
accommodation camp,
offices, waste dumps,
tailings dams, water bores,
roads etc need be captured
by this.
Clarity of translation is
required and expansion of
definition depending on
translation.
3.1.18 “industrial waste” means
earth, soil that is created due
to mining and processing of
minerals, and is proven and
permitted by the Technical
and Economical Feasibility
Report as commercially non-
profitable;
Under Inclusive.
Should include tailings and
perhaps others.
3.1.19 “mine and industry tenure”
means a part of the land area
that was granted under the
license, that is affected by
mining and processing
No. Article Draft provision Comment Recommendations
activities;
3.1.20 “derivative deposit” means
earth, soil, rock and
enrichment waste that is
created due to mining and
processing activities, is
potentially commercially
effective in specific setting
of minerals re-processing;
3.1.21 “radioactive minerals”
means minerals
accumulation as stipulated in
clause [_] of Nuclear Energy
Law of Mongolia;
3.1.22 “occurrences of radioactive
minerals with production
value content” is stipulated
in clause [_] of Nuclear
energy law;
3.1.23 “mineral resources” means
mineral concentration that
has been formed on the
surface or in the subsoil as
the result of geological
evolutionary processes.
No definition for mineral
reserve.
Mineral resources are
potentially valuable,
and for which
reasonable prospects
exist for eventual
economic extraction.
Mineral reserves or
Ore reserves that are
valuable and legally
and economically and
technically feasible to
extract
Include definition for
mineral reserve.
4 Ownership of minerals
4.1 Mineral resources naturally
occurring on the surface and
in the subsoil in the territory
of Mongolia shall be the
property of the State.
4.2 The State, as being the
owner, shall have the right to
grant prospecting,
exploration, mining and
Note: reconnaissance does not
require a licence. However, the
Draft Law does require that the
State Administration grant such
No. Article Draft provision Comment Recommendations
processing license as defined
in the terms and conditions
of this Law.
right to a legal entity
(application) and that a
reconnaissance work plan be
submitted (See Articles 19.1.1
and 19.1.11).
4.3 Minerals separated from the
soil and subsoil in the course
of prospecting, exploration
and mining without a license
shall be the property of the
State.
Assumption that if with a
license then it is the property of
the license holder.
Confirm assumption.
4.4 Derivative deposits and
industrial wastes shall be
deemed an integral part of
the land and the property of
the State in cases not
specified by this law.
Assumption as above that if
with a license then derivative
deposit is the property of the
license holder.
Confirm assumption.
5 Areas prohibited for
prospecting, exploration,
mining and processing
activities
Cross reference Article 11.2
allowing for reconnaissance
5.1 Any of prospecting,
exploration, mining and
processing activities shall be
prohibited in the following
areas.
Should be more along the lines
that prospecting, exploration,
mining and prospecting is permissible but only under exceptional circumstances, and under strict environmental controls. Exceptions would be something that could significantly add to the economy of Mongolia. Should be permitted through an authorisation process.
For example, many deposits in
Canada and equatorial Africa
that would be prohibited under
this Article have been
developed. But strict controls and environmental considerations and reclamation regulation (including reforestation) need to be in place, to offset and reinstate any temporary loss of forest.
Countries like Canada and the
Consider opening this
section up to such activities
if tightly regulated by the
State as this could be very
beneficial to the State. Why
not develop the same
“exclusive control regime”
as set forth in Article 42.3?
No. Article Draft provision Comment Recommendations
UK have Forest Service and
Forestry Commission
respectively with the
responsibility of managing
companies working in forests,
reforesting areas disturbed,
logged or destroyed by fire.
Should be permitted through an
authorisation process.
5.1.1 National and local special
protected areas;
5.1.2 normal protection territory
areas with source of flow
formation of rivers, and
water basins as specified in
the Law on Water;
5.1.3 forest area on protected
territory as specified in the
Law on Forest;
5.1.4 protected zones specified in
the “Law on Railway”;
Railways can be moved so this
is not necessary and reduces
possible discoveries. Should be
permitted through an
authorisation process.
5.1.5 protected zones around high
voltage power lines as
specified in the “Law on
Energy”;
Same issues as 5.1.4 There are
many deposits that are adjacent
to powerlines which can be
moved. This should not be an
issue.
5.1.6 protected zones around state
or international roads as
specified in the “Law on
Road”;
Same issues as 5.1.4
5.1.7 protected zones specified in
the “Law on utilization of
the water supply and
sewerage conveying system
of the city and township”;
5.1.8 protected zones around
mineral water specified in
the “Law on Mineral
Water”;
5.1.9 city and village tenure land,
and within 5 kilometres from
its borders;
Lack of Clarity.
How are the borders of city and
village tenure land to be
determined? What is the
definition of a city or a village?
The 5km limit would prohibit
mining at many existing
projects. When a village gets
Consider rethinking or
clarifying this provision.
No. Article Draft provision Comment Recommendations
built next to a mine what
happens? Can a village be built
next to a successful exploration
project to prevent a mine from
being established?
BorUndur, Erdenet,
MoigiinGol, Baganuur and
Nalaikh would have to be
closed down, or if these towns
existed before discovery of the
deposits these major deposits
benefiting the Mongolian
economy and infrastructure
would not, under the Draft Law,
be able to be developed.
6 Prohibition of conducting
prospecting, exploration,
mining and processing
activities without license
6.1 Unless specified in the
following, it shall be
prohibited to conduct
prospecting, exploration,
mining and processing
activities without license.
Lack of Clarity. What is
permitted and what is not?
What is the purpose of having
6.1.1?
Clarify.
6.1.1 reconnaissance; Note: reconnaissance (as
defined) does not require a
licence. However, the Draft
Law does require that the State
Administration grant such right
to a legal entity (application)
and that a reconnaissance work
plan be submitted (See Articles
19.1.1 and 19.1.11).
6.1.2 mining and processing of
common minerals by
citizens on their owned land
for purposes to use for own
domestic needs and not for
profits from sale thereof;
This limits the mining and
processing of common minerals
to “citizens” on their “owned
land” for purposes to use for
their own “domestic needs”.
What about legal entities? Are
they required to obtain licensing
for similar uses.
Take for example ETT, that will
most likely want to use
construction and aggregate for
the concrete plant (for
construction of the washery or
power plant) or aggregate for
making mine roads? Will this
now be illegal? – needs
Consider expanding the
scope of “who” may use the
common minerals to include
legal entities and non-
citizens and for “what” they
may use them for. Further
consider widening the scope
beyond “owned” land.
No. Article Draft provision Comment Recommendations
clarification in the law.
6.2 Unless set forth in this law,
it shall be prohibited to
separate minerals from the
land and its subsoil, to
purify, process, store,
transfer, transport, sale, buy
and broker minerals
extracted without license.
7 Registering of mined and
processed products and
certificate of origin
7.1 Holders of mining and
processing licenses shall
have obtained a certificate of
origin as defined in this law
for all mined, processed,
purchased, sold and
reprocessed minerals and
mineral products by them.
“Certificate of Origin” is not
defined nor are the costs or
process for obtaining one
developed.
Define “Certificate of
Origin” and provide a
developed framework for
costs and process.
7.2 Private person or legal entity
manufacturing the goods
with use of precious metals
and stones shall have
registered the used precious
metals and stones using a
form approved by State
Administration and attach
the documentation proving
their origin to the
registration form.
Seems to be oddly placed as
this appears to regulate
manufacturers of goods using
precious metals and stones and
not any entity related to
minerals or mining or licensed
under this Draft Law.
Consider placing this
provision under the
jurisdiction of another law.
8 Mineral resources of
strategic importance
8.1 Water, oil, gas, radioactive
minerals and rare earth
elements shall be deemed
mineral resources of
strategic importance.
Assumption that coal, iron ore
and other bulk commodities, as
well as all else, are excluded
from this category.
Can water, oil, gas, radioactive
minerals and rare earth
elements be governed by
Investment Agreements or the
DDA listed below?
Confirm assumptions.
Clarify.
8.2 Relations to prospecting,
exploration and utilization of
water shall be regulated by
“Law on Water” in
Mongolia.
Does the Law on Water give
any deference or priority to
license holders?
Clarify.
8.3 Relations to prospecting,
exploration, mining and
processing of oil and gas
shall be regulated by
“Petroleum Law” in
Is there any distinction between
conventional and
unconventional gasses?
Consider where CBM fits in
Clarify.
No. Article Draft provision Comment Recommendations
Mongolia. (see comment to Article
3.1.2(a))
8.4 Relations to mining and
processing of radioactive
minerals and rare earth
elements shall be regulated
by “Law on Nuclear
Energy” in Mongolia.
9 Mineral deposits of
strategic importance
9.1 As specified in this Article,
deposits of strategic
importance shall be 15
deposits listed in Appendix 1
of 2007 in the State Great
Hural Resolution No.27.
9.2 Borders of each deposit with
strategic importance
specified in 9.1 of this law
shall be determined by
Central State
Administration.
This poses a serious threat to
adjacent license holders.
Can these borders be extended
into adjacent licence areas
either putting at risk that licence
or resulting in a new discovery
being declared to be a part of an
existing Strategic Deposit?
What are the implications for
ownership rights of adjacent
areas?
What is the criteria for selecting
areas/borders for review?
Once determined can these borders be changed at a later date?
Suggest changing “shall be”
to “have been” to protect
existing border delineations.
The process for
determination of these
boundaries needs to be fair
and transparent.
9.3 No new deposits will be
added into the list of
deposits with strategic
importance but can be
excluded from the list by the
State Great Hural upon
submission of opinion by
the Government.
Overall good. The process for the
exclusion of these deposits
needs to be fair and
transparent.
9.4 The Government may
establish, at its initiative, a
Deposit Development
Agreement with holders of
licenses in order to set up a
special regime for mining,
processing and marketing
activities of minerals
extracted from deposits of
Investment Agreements (IA)
now replaced with Deposit
Development Agreements
(DAA) but only for Strategic
Deposits.
The DDAs are only at the
Government initiative and are
less beneficial than IA's were.
A rethink should occur
regarding this Article and
replacing IAs with DDAs in
general (see below
comments).
No. Article Draft provision Comment Recommendations
strategic importance.
Does not provide a transparent
criteria by which the
government may choose to
establish a DDA or not.
This unusually expands into
“marketing activities”.
9.5 The State shall be entitled to
possess free of charge a
certain percentage of shares
of legal entity which holds
licenses for mining and
processing of deposit with
strategic importance. The
percentage of the shares to
which the state shall be
entitled to possess free of
charge shall be determined
by Deposit Development
Agreement that has been
established in line with this
law.
This clause is expropriator and
likely unconstitutional as it
attacks the private property of a
license holder (shares) which
are not the property of the State
like minerals.
State has a (free) right to shares
in entities that own Strategic
Deposits and that there is no
guidance on what percentages
or how they are to be
calculated.
Further the percentage of state
ownership is as agreed in the
DDA, but what happens if the
Government does not initiate a
DDA? Can/will it still claim an
ownership percentage?
Moreover, what if the parties
cannot come to an agreement
while negotiating the DDA (see
below comments).
If the interest held by the state
is a controlling interest that will
adversely effect the interest of
investors to invest the
significant capital required and
equally critically will adversely
effect the bankability of the
project in regards to raising
project finance.
A serious rethink needs to be
done regarding this Article.
9.6 If the Deposit Development
Agreement was not
established by the
Government, mining and
processing activities of this
deposit with strategic
importance shall be carried
out in compliance with the
rule in this law.
Lack of clarity.
Leaves a dagger hanging over
the license holder‟s head in the
absence of more clarity on
closure.
Needs clarity on which
“rule” in “this law” is being
referred to – excl. Art. 9.
Clarify whether there can be
closure for the license holder
by the Government resolving
that they are not going to
conclude a DDA and will
not in the future.
No. Article Draft provision Comment Recommendations
10 Deposit Development
Agreement
Assumption that all other
companies can have an IA and
that DDAs are specific to
Strategic Deposits only. This
affects Investor confidence if no
investment/stability agreements
are available and is likely to
deter international financing.
Generally, the replacement
DDA's are far less substantive
than the IAs and even license
holders over a Strategic Deposit
are likely to reject the notion of
the DDA.
Further, what if the parties
cannot agree on the terms?
There appears to be an utter
lack of dispute mechanism.
This cannot be a contract of
adhesion where the State thugs
its way into the terms its wants.
We assume that the DDA is a
commercial and not an
administrative agreement under
Mongolian Law?
Confirm assumption.
Consider broader DDA
provisions to match with
typical IAs.
Consider a fair and
transparent mechanism for
dispute resolution.
Confirm assumption.
10.1 If the Government
establishes a Deposit
Development Agreement
with holder of mining and
processing license for the
deposits of strategic
importance as specified in
Article 9 of this law, the
agreement shall be
established in concurrence
with the following
principles:
General comments apply.
The following principals do not
seem to be based using a
commercial scale considering
the investors return on
investment, and proportionality
based on investment, efforts
and input, and the
Government‟s requirement to
fully come to the table.
Consider making more
proportional/commercial
based on what each party is
realistically putting into the
development of the project.
10.1.1 The initial term of Deposit
Development Agreement
shall be equal to the term
defined in an approved
Technical and Economical
Feasibility Report necessary
to earn the return on initial
investments.
Term is only equal to length of
time the Technical and
Economic Feasibility Report
(Feasibility Report) sets out is
necessary to earn return on
initial investment. What if the
Feasibility Report is to be
changed or amended as it may
be inaccurate or subject to
modification based on
developing circumstances?
A Feasibility Report is a
Consider why this is linked
to the Feasibility Report and
if that is feasible to fix the
term.
No. Article Draft provision Comment Recommendations
document created at a specific
point in time and is based on a
number of assumptions. There
will be unforeseeable risks and
events which may necessarily
increase the length of the initial
term. Life of Mine timeframe
should be considered.
The initial term should not be
set by reference to the actual
recovery of initial investment as
this is irrelevant to the
operational needs of the mine,
or the required return on
investment levels that would
require investment of
significant capital.
It must be remembered that
investment will not be made
readily by investors, local or
foreign in order to only have
certainty that they can recover
their initial
investment. Commercial
entities, local or foreign, make
investments in order to return a
profit and make a return on
investment, not just to recover
their initial investment.
10.1.2 Taxes and duties except fees
and levies currently imposed
by tax laws of Mongolia can
be stabilized only for the
initial term of Deposits
Development Agreement.
Clarity needed.
Stabilization should not be
limited to the initial term of the
DDA, but should be available
for the duration of the DDA to
provide certainty.
Define fees and levies and
explain why they cannot be
stabilized?
Address why it is limited to
only as imposed in the tax
laws of Mongolia? Address
whether royalties can be
stabilized?
10.1.3 Tax or duties shall not be
stabilized for any period
beyond the initial term of
Deposit Development
Agreement.
So taxes and duties will not be
established beyond the time set
out in the Feasibility Report to
earn return on initial investment
only? Why not? Why is the
door being slammed shut here
and not left to desecration?
It will be much harder for an
investor to proceed with the
development of a project
knowing that they may stand to
Consider amending or
deleting this Article to leave
the door open for longer tax
stabilization.
No. Article Draft provision Comment Recommendations
make little to know profit going
forward. No investor invests
only to recoup their initial
investment or make very little
thereafter.
Further, if taxes and duties go
up making it uneconomical to
mine, then there is a serious
problem.
10.1.4 Deposit Development
Agreement shall not regulate
any issues concerning
exemptions from taxes,
duties, levies and fees; and
stabilization of levies and
fees.
Can these matters be regulated
elsewhere (i.e. an Investment or
Stability Agreement)?
Clarify
10.2 When the initial term of the
Deposit Development
Agreement expires the
Agreement can be extended
one time for up to 10 years
along with necessary
changes and amendments
concurrent to the conditions
of that time.
A one-time extension of “up to”
10 years is not synchronized
with the timeline of a mining
licence set forth in Article 25.4,
which allows 20 years life on a
mining licence. This does not
appear to take into full account
the addition of reserve and the
quantum involved.
Consider amending to take
into account the addition of
reserves and the quantum
involved.
10.3 Total amounts of minerals to
be mined or products to be
manufactured within certain
period of time may be
determined in Deposit
Development Agreement
and the changes of
determined amounts shall
serve the grounds for
making amendment in other
terms or conditions as
defined in the agreement.
If any change is made to the
amount of mineral or products
to be produced (as per the
DDA) then this opens the door
to give the State the right to
renegotiate the terms of the
DDA.
Consider linking the
amounts to be mined and
products to be manufactured
to the mine and processing
plan rather than the DDA to
simplify process and
eliminate over burdening the
license holder with
interaction by the
Government.
Alternatively, consider
deleting this Article.
10.4 If certain conditions or
circumstances which could
not have been foreseen at the
time of signing of Deposit
Development Agreement
arise and any or some of
clauses of the agreement
cease complying to the
interest of Mongolia or
become detrimental to rights
Unacceptable as this utterly
destroys the integrity of the
DDA if the State may, at will,
reopen the DDA. Further, this
does not allow the license
holder to do the same.
The concepts of what is in the
interest of Mongolia or what is
detrimental to Mongolia are too
Consider deleting this
Article.
No. Article Draft provision Comment Recommendations
and interest of Mongolia
initially meant to protect due
to those newly discovered
conditions or circumstances,
they shall serve grounds for
making changes and
amendments to this
agreement.
subjective.
Both 10.3 and 10.4 become
over burdensome for investors
as they only protect the State.
10.5 Unless categorized as
confidential in the related
laws of Mongolia, all parts,
clauses, changes and
amendments of Deposit
Development Agreement
and further collateral
agreements shall be open to
the public.
If the DDA is largely a
commercial agreement, or even
if it is an administrative
agreement, the confidentiality
of the DDA should be left to the
parties to decide.
Further, opening these to the
public could be a tool for either
party to try and use public
pressure to force the other party
into less favourable terms
during negotiations.
Consider adjusting the level
of confidentiality protections
for the parties.
10.6 A holder of license who has
signed Deposit Development
Agreement shall be obliged
to provide any information
related to its activities
permitted by the license,
investments and proprietary
nature at the period of the
agreement to the
Government upon its
request.
This creates an unnecessary and
wide ranging power for State to
request information from a
DDA party.
By the time the DDA is
executed, as in this Article, the
State will already be a
shareholder in the license
holding company which allows
the State to have the right under
the Company law as a
shareholder to access necessary
information.
This clearly should not apply
upstream.
Consider deleting this
Article as this is already
covered in the Company
Law with the State being a
shareholder.
Clarify whether this is
attempting to apply to
upstream companies (the
shareholders and beneficial
shareholders of the license
holder).
10.7 The contents and clauses of
Deposit Development
Agreement to be established
with holder of license shall
comply with this law and
other related laws valid at
that time.
The assumption is that if the
laws do change then the DDA
has the effect of “stabilizing”
the parties as of the date they
signed the DDA.
A more direct statement to that
effect would be comforting as
this Draft Law is a
Parliamentary act, where as the
DDA is held only to the
Government level.
Confirm assumption and
consider making the point of
stabilization more clear.
11 Reconnaissance
11.1 Legal entities may conduct
reconnaissance for minerals
This has been limited only to
legal entities.
Clarify why this is being
limited only to legal entities
No. Article Draft provision Comment Recommendations
according to regulation as
specified in this law.
and not citizens (both
foreign and domestic).
11.2 Reconnaissance can be
carried out in areas
prohibited or restricted for
prospecting, exploration,
mining, processing activities
or in a national or local
special purpose territories as
defined in this law, Law on
Petroleum and Law on
Nuclear Energy.
Reconnaissance can be carried
out in prohibited or restricted
areas.
As noted above in comments
to Article 5, consider
opening the same to
prospecting, exploration,
mining and processing if
regulated by the State.
11.3 Disturbing the subsoil in the
course of conducting
reconnaissance shall be
prohibited.
What does “disturbing the soil”
mean? Undefined, this appears
to contradict Article 11.4 as it is
not possible to scientifically,
determine minerals abundance,
patterns and concentrations
without disturbing the subsoil.
Define what constitutes
“disturbing the soil”.
11.4 Reconnaissance shall be
conducted according to
scientific methods,
methodology, in specific
stages and in a
comprehensive manner for
the purposes of determining
the prospective area of
geological formation,
minerals abundance patterns
and concentrations.
11.5 If the area of reconnaissance
is in the ownership or
possession of others, the
interested party shall have
obtained the permission to
conduct reconnaissance and
access the land from the
owner and possessor of the
land.
Unless physical trespass needs
to occur, no notice or
permission should be needed.
If reconnaissance is by purely
scientific methods (e.g. satellite
imagery, aerial photography,
etc), there should be no need to
obtain permission.
If permission is required, in
what form – an agreement, a
sign off on an application, etc.?
Can the owner/possessor
demand compensation?
What if the land is in the “use”
of another either through land
use or a land lease?
Consider qualifying this
Article to limit when
permission is needed.
Clarify how such permission
is obtained and what if any
limitations exist.
Clarify the scope of who
permission must be obtained
from and what, if any, rights
a land user has to exclude
reconnaissance.
No. Article Draft provision Comment Recommendations
11.6 If reconnaissance conducted
by state budget funding in an
licensed area of prospecting,
exploration, mining and
processing a notice of
trespassing shall be given to
the license holder before
entering to the area.
Is the notice of trespassing
subject to any type of right for
the licence holder to object?
The ability for state ground
reconnaissance to be conducted
in the area of the licence may
have health and safety and
operational implications for
personnel.
This creates overlapping rights
to the license area held by the
license holder and could put the
license holder and the State into
direct competition.
This could create a pretext for
the State to demand an interest
in the license holder by jumping
in front of the license holder‟s
prospecting, exploration,
mining or processing by
snapping an satellite photo and
then claiming State funded
reconnaissance which leads to a
mandatory State interest and a
expropriation under Article 13.1
(see below comments).
Include grounds for the
license holder to object.
Address the overlapping
interest of two parties –
consider, given that the
license holder is already
holding their license, making
the area “exclusive” to the
license holder .
Consider that ex-post facto
State funded reconnaissance
on the license area of a
license holder shall not be
grounds for the State to
demand an interest in the
project or within the license
area.
11.7 Interested legal entity to
conduct reconnaissance shall
submit its request and
provide related information
of the area of
reconnaissance, its own
name, surname, registration
number and address of the
area and location to State
Administration in advance.
Even with Articles 3.1.15 and
6.1.1this become a de facto
licensing requirement.
No process, procedure or timing
indicated. What is the
difference between receiving
permission and receiving a
license under the Draft Law?
Further, if no physical trespass
is involved and the area is not
under licence, then need to
obtain permission should not
exist.
Consider eliminating the
need to obtain permission, in
particular if there is no
indication of a physical
trespass. Clearly indicate
the process, procedure and
timing, as well as exclusivity
and priority rights.
11.8 State Administration shall
receive such request and
Reconnaissance request must be
registered. No process,
Clearly indicate the process,
procedure and timing, as
No. Article Draft provision Comment Recommendations
register the application in
conformity to this law and
grant permission.
procedure or timing indicated.
Further, there is no indication as
to exclusivity give to the legal
entity who has obtained the
permission.
well as exclusivity and
priority rights.
11.9 The entity which has
obtained the permission to
conduct reconnaissance shall
be obligated to submit
reconnaissance reports, and
relevant document copies to
the State Administration and
such reports and document
shall be stored in the
national consolidated
geology and minerals data
base.
This should not be required. It
erodes company IP. There is no
benefit to any company
carrying out reconnaissance, in
particular given their lack of
right to exclusivity and priority
toward a prospecting license.
Consider eliminating the
need to submit such reports.
11.10 Specific rules for conducting
reconnaissance and
reception of reconnaissance
reports shall be approved by
the Government.
Further rules to be imposed by
State.
Clarify.
12 National consolidated
geology and minerals data
base
12.1 The State Administration
shall have a national
consolidated geology and
minerals data base. The
national consolidated
geology and minerals data
base shall consist of
geological database, mineral
reserves data base and
petroleum data base.
Water, oil and natural gas are
excluded from the definition of
“minerals in Article 3.1.2, so it
is unclear why a petroleum data
base is being mentioned here
and not set forth separately in
the Petroleum Law.
Clarify.
12.2 Information related to earth
subsoil formation, earth
surface character, geological
research information,
primary documentation,
samples, exhibition and
pictures of earth and soil and
report of reserves
determined by prospecting
and exploration, and other
available information shall
be stored in the geological
database.
We note the absence of
“reconnaissance”, emphasizing
comments to Article 11 about
the lack of need for
reconnaissance reports to be
submitted.
Consider above comments to
Article 11.
12.3 Complex information related
to mineral deposit‟s
production reserves,
product‟s standards,
Not the wide scope of highly
sensitive information. Please
see comment below on Article
12.5.
No. Article Draft provision Comment Recommendations
technology, mine plan and
operation report, production
tailings, registration of
derivative deposits,
assessment of environmental
impact, rehabilitation works
and other related data shall
be stored in mineral reserves
database.
12.4 Petroleum data base and
information to be stored and
procedure and rule for
storing the information shall
be determined by Law on
Petroleum.
Why is this in the Draft Law? Consider removing as it will
be in the Petroleum Law.
12.5 All data compiled into the
national consolidated
geology and minerals data
base except for confidential
as specified in the related
laws of Mongolia shall be
open for public.
In conjunction with Articles
12.2 and 12.3 this highlights the
greater need for (1)
transparency for obtaining and
openness of this information to
the public and potential license
holders; and (2) confidentiality
during the period, or potential
period, when a license is held
by a license holder.
Otherwise this provides an
unfair advantage to
competition, benefiting from
any companies' exploration
proprietary exploration
techniques and knowledge.
In Canada, for example,
confidentiality of work reports,
varies from Province to
Province from 1 year, 5 years or
until claim (exploration
Licence, concession, tenement)
expires. In the latter case under
the current Minerals Law work
reports would become Public
information after 9 years, under
the proposed Draft Law after 5
years.
Consider the balancing
availability to the public
with confidentiality during
license holding periods.
12.6 Activities for compiling,
registering and extending the
data into the national
consolidated geology and
minerals data base shall be
carried out by State
Administration Authority
according to the rule and
These rules should contain very
clear rules for the balance of
protecting confidentiality and
transparency/openness, as well
as very strict penalties for
violations.
Consider these factors when
developing the rules and
procedures.
No. Article Draft provision Comment Recommendations
procedures approved by the
Government.
13 Taking areas into state
reserve
Major issues with Articles 13-
15 to be considered.
For example, an exploration
company which takes a
portfolio approach and has 10
exploration licences may get
lucky with only one containing
a mineral deposit. Exploration
companies generally lose
money in the hope that one of
their projects succeeds and they
create significant value. Articles
13 – 15 essentially remove any
incentive to risk exploration
capital in Mongolia and is not
consistent with Article 1 which
defines the purpose of the law is
to promote economically viable
mining industries which carry
out “exploration” etc.
Generally, Articles 13-15 lack
process, criteria, basis, time
periods, etc.
Generally, consider a major
rethink of Articles 13 – 15
collectively with the
industry. In the absence of
balance, existing investors
will be chased away and
future investors will be
deterred.
13.1 Areas wherein the
reconnaissance, prospecting,
exploration and assessment
of minerals resources were
conducted with the fund
from state budget may be
taken into state reserve for a
certain time period upon the
decision of Central State
Administration.
Why does this refer to “areas”
whereas Article 14 refers to
“deposits”.
There is not clear definition of
State Reserve.
There is no clarity on the
implications of a company
losing its reserve (area) to state
reserve.
There is no process, procedure
or timing indicated.
There is no percentage of
necessary state budget funding
set out (i.e. is it 1% or 99% of
total funds spent).
As noted in our comments to
Article 11.6, there appears to be
an overlap whereby the State
can conduct reconnaissance on
a prospecting, exploration,
mining and processing license
Clarify.
Define State Reserve.
Make clear the implications.
Make clear the process,
procedure, timing, etc.
Make clear the
percentages/amount of
funding from the State
budget.
Consider and address this
major concern.
No. Article Draft provision Comment Recommendations
holders licensed area. Article
11.6, combined with Article
13.1 creates a pretext for the
State to infringe upon the rights
of the license holder by
conducting reconnaissance and
then expropriating the license
area ex-post facto as a State
reserve (i.e. based on something
as small as a satellite photo?).
13.2 Areas with certain
concentration of mineral
resources wherein the
reconnaissance, prospecting,
exploration works were
conducted with the finance
from private funds may be
taken into state reserve upon
the decision of the
Government for a certain
time period after real/actual
expenses for above works
have been reimbursed.
There is no definition of what
will constitute "actual
expenses" and the assumption is
that “actual expenses” are
limited to sunk costs.
The reimbursement of “actual
expenses” is not adequate
compensation as the license
holder will have suffered an
opportunity cost from not
investing its capital in more
attractive mining locations and
a loss of its expected return on
investment.
Actual expenses are only paid
where there has been no state
funded exploration or resource
determination. The law is silent
as to what constitutes sufficient
State funding (old Russian data,
minimal State mapping, etc.)
and what occurs in the event of
an overlap of State and private
funding.
As above, there is a need to
define a period of time for
which the land may be taken
into a State Reserve.
Define “actual expenses”
Consider the negative impact
on investment if actual
expenses are limited to sunk
costs and not expectations.
Consider what occurs in the
event of an overlap. A black
and white there is or is not
State funding in the absence
of what constitutes State
funding (sliding scale)
presents a major problem.
Make clear the process,
procedure, timing, etc.
13.3 It shall be prohibited to
accept an application or
organize competitive tender
selection procedures for
granting licenses of the area
that has been taken into state
reserve.
If not clarified, possibility for
abuse.
Consider putting a timing
requirement on this so that
an applicant who applies
when there is no intention of
creating a State reserve
cannot be blocked shortly
after its application by an
immediate call to create a
State reserve. For example,
if there is existing State
reserve then prohibited to
accept and application, if an
application is filed then a
No. Article Draft provision Comment Recommendations
State reserve may not later
be implemented or may only
be implemented within
fifteen (15) days of the
application having been
filed. The mere possibility
or whisper of a State reserve
should not serve as a basis to
reject an application.
13.4 If the time period of being
reserved in state reservation
has expired and the time
period has not been extended
or authorized Government
administration has decided
to exclude the area from
state reserve, the area shall
be granted for license only
through a competitive tender
selection process.
Given that the Government can
take any privately funded area
into state reserve and put then
put it out for tender, there
should be a pre-emptive right of
the original license holder or
applicant for a license.
Or, the license should be
suspended during the time of
State reserve and then reinstated
upon the expiration of the
period. We do not see this as a
ground for revocation in Article
36.
Consider creating a
“suspension +
reinstatement”, or pre-
emptive right to the license
holder and/or applicant.
14 Taking deposits into state
reserve
This Article will not encourage,
'promote' investment, by
entities in Mongolia. Which
again per Article 1 is the
purpose of this Draft Law.
Generally, investors will not
like this type of risk and will
discount an IPO value as this
provision would have to be
disclosed in any prospectus. If
after listing the license holder
does something which annoys
the Government, the
Government can arbitrarily take
away a portion of a deposit for
whatever reason it likes and
thereby causing a huge
reduction in the value for the
license holder.
Consider and Clarify
14.1 The Government may take
all or part of a deposit for a
certain time period into state
reserve if the deposit was
explored and its resources
were determined with state
budget funding.
No process, procedure or timing
indicated.
No percentage of necessary
state budget funding is set out,
i.e. is it 1% or 99% of total
funds spent.
This needs to be limited to
Consider and Clarify
No. Article Draft provision Comment Recommendations
within a particular licence area.
As this stands you could lose a
deposit on an adjacent or
nearby licence area if it were
argued that it is a part of the
same deposit.
14.2 If the deposit which had
been initially explored and
resources has been
determined by state budget
funding was undergone
additional licensed
exploration as a result of
which its mineral reserves
were determined with
increased amount, the
Government shall reimburse
the real expenses to the
license holder upon taking
the deposit into the state
reserve.
Phrase "deposit was explored
and its resources were
determined" is very broad.
No specific amount of increased
mineral reserves is set out, i.e.
is it 1% or 99% increase?
Only real expenses will be
reimbursed, i.e. no loss of
profit?
No definition of what will
constitute "real expenses".
Consider and Clarify.
14.3 State Great Khural may
issue a decision and take
deposits into state reserves
that had been explored and
the mineral reserves of
which had been determined
by finance of private funds
upon reimbursement of real
expenses of the license
holder.
Only real expenses will be
reimbursed, i.e. no loss of
profit.
No definition of what will
constitute "real expenses".
This and Article 15.1 should be
removed, without it, it is
unlikely that a private company
will invest in the Mongolian
mining sector.
(According to Article 25.1.2 the
reserved deposit likely goes to
state owned company (SOE)
which is a departure for a clean
and transparent system.
Consider and Clarify.
14.4 If the time period of being
reserved in state reservation
has ceased and the period
was not extended or
authorized Government
administration has decided
to exclude the deposit from
the state reserve, the license
for that deposit holding shall
be granted only through a
competitive tender selection
process.
Given that the Parliament can
take any privately funded
deposit into state reserve and
the Government can put it out
for tender, there should be a
pre-emptive right of the original
license holder or applicant for a
license.
Or, the license should be
suspended during the time of
State reserve and then reinstated
upon the expiration of the
Consider creating a
“suspension +
reinstatement”, or pre-
emptive right to the license
holder and/or applicant.
No. Article Draft provision Comment Recommendations
period. We do not see this as a
ground for revocation in Article
36.
15 Taking land granted by
license for state or local
special use
This entire clause needs to be
struck out or have major
modification. It shows no
respect for existing tenure under
licence.
This law does not take into
account as in most jurisdictions
prior rights of any entity. It is
easily open to abuse and also
contradicts Article 1.
Consider and Clarify.
15.1 Land granted by the license
for conducting prospecting,
exploration or processing
may be taken for state or
local special use as specified
in Law on Land.
This must be decided before
granting a licence (duration will
be more than 5 years according
to Article 15.7.
So land given under licence for
a specific use can later have an
additional tenure placed over
the top of it that would prohibit
the original licenced use?
Consider and Clarify.
15.2 If local self-governing
authority has made a
proposal to take the land
granted by license for the
local special use the local
Governor shall submit the
proposal to the Government.
So land given under licence for
a specific use can later have an
additional tenure placed over
the top of it that would prohibit
the original licenced use?
Contradicts current Land Law –
local Governor does not need to
seek Government‟s approval.
Consider and Clarify.
15.3 If the Government deems the
proposal defined in 15.2 of
this law as feasible, it shall
issue a decision to take all or
part of the land granted by
the license for local special
use.
Contradicts current Land Law –
local Governor does not need to
seek Government‟s approval.
Consider and Clarify.
15.4 The State Great Hural shall
issue a decision to take a
land granted by the license
for state special use upon
proposal made by the
Government.
Contradicts current Land Law –
local Governor does not need to
seek Government or
Parliamentary approval.
Consider and Clarify.
15.5 If a special purpose territory
overlaps entirely or in part
with a territory covered by a
valid license, prohibiting
further prospecting,
exploration, mining and
processing activities in the
Definition of “compensate”
needed. Lost profit, actual
expenses, etc.?
What if there is a dispute
regarding amount
compensated?
Consider and Clarify.
No. Article Draft provision Comment Recommendations
overlapping area the
Government shall make a
decision to compensate the
license holder along with the
decision specified in 15.3
and 15.4 of this law. The
reimbursement shall be paid
to the license holder within 3
(three) months from the date
of the issuance of decision.
Clarification is also required as
to the level of assurance that
reimbursement will actually be
made, how reimbursement will
be calculated and how installed
assets (e.g. processing plant) are
to be dealt with.
15.6 The license holder shall
cease its work on the area
from the date on which the
decision had been made to
take the land for state or
local special use in
accordance with 15.3 and
15.4 of this law.
Clean-up and removal,
reclamation obligations, mine
closure obligations? Will these
costs be arbitrarily deducted
from the amount of
compensation?
Consider and Clarify.
15.7 The duration of time for
setting the land aside for
special use shall not be less
than five (5) years.
What happens after the 5 years?
Is the license back up for grabs?
Is the license “suspended”
during this time, “revoked”
etc.? We do not see this as
“revocation” criteria under
Article 36 (for most of these
articles).
Consider and Clarify.
15.8 The State Administration
shall make a public notice
within 10 working days after
expiry of the duration of
time for setting the land
aside for special use.
15.9 The State Administrative
Authority shall record into
the license registry the
decisions to take the land
granted by the license for
state or local special use and
to compensate the license
holder.
16 Authority of the State
Great Hural
Refer to many other comments
on reimbursement,
expropriation etc. This will
affect authorities and
responsibilities.
16.1 The State Great Hural shall
exercise the following
authority in minerals affairs:
16.1.1 to exclude a deposit from the
list of the strategic
importance;
Parliament can exclude a
deposit from the list of Strategic
Deposits.
16.1.2 to issue a decision to take a
deposit explored and
Parliament can decide to take a
deposit explored and
No. Article Draft provision Comment Recommendations
determined by private
funding into state reserve
and in connection with this,
to pay the reimbursement to
the license holder;
determined by private funding
into state reserve.
This is linked to Article 14.
16.1.3 to issue a decision to take a
land granted by license for a
state special use;
Parliament can decide to take
land granted by licence for state
special use.
This is linked to Article 15.
16.2 Clause 16.1 of this law shall
not serve the grounds for
restricting, in any way, the
authority of the State Great
Hural enshrined by the
Constitution of Mongolia
and other laws.
17 Authority of the
Government
Refer to many other comments
on reimbursement,
expropriation etc. This will
affect authorities and
responsibilities.
17.1 The Government shall
exercise the following
authority in minerals affairs:
17.1.1 to submit its opinion to
exclude a deposit from list
of deposits of strategic
importance to the State
Great Hural;
17.1.2. to establish a Deposit
Development Agreement
with holder of license for
mining in the deposit of
strategic importance and
processing and marketing of
minerals as set forth in the
law;
17.1.3 if it deems necessary, to
require information from the
holder of license for the
deposit of strategic
importance with regards to
licensed mine operation,
timely investments
according Deposit
Development Agreement
and proprietorship;
17.1.4 to issue a decision to take
area into state reserves
wherein the reconnaissance,
prospecting and exploration
works had been carried out
by private funding and in
This is linked to Articles 13.2
and 14.3. Again only 'real'
expenses compensated for.
No. Article Draft provision Comment Recommendations
connection with this to
determine and pay the
reimbursement to the license
holder;
17.1.5 to issue a decision to take
area into state reserve when
the area had been explored
and the reserves had been
determined by state budget
funding;
This is linked to Articles13.1
and 14.1 and 14.2
17.1.6 to discuss the proposal of
local authority to take the
land granted by license for
the local special use and to
determine and pay the
reimbursement to the license
holder if the decision was
issued in support of such
proposal;
Again allows 'local authority' to
expropriate licences for 'special
use' and compensate entity in
an undetermined manner for
such expropriation.
17.1.7 to announce area and tender
for granting prospecting,
mining, and processing
licenses for areas located in
State border zones;
17.1.8 to establish a special regime
related to mining, processing
and transporting and storage
of specific types of minerals
that may cause harm to the
public health and
environment;
Government can establish a
special regime related to
mining, processing and
transportation and storage of
specific types of minerals that
may cause harm to the public
health and environment. Such
minerals are not defined. Note
transportation and storage has
been captured.
17.1.9 to approve a procedure to set
up a national consolidated
geology and minerals data
base;
This is a generally positive
outcome although further
clarification is required as to the
nature of the relevant
procedures.
17.1.10 to approve a procedure to
monitor the transactions of
the special account for
depositing the rehabilitation
fund;
Clarification required as to
nature of procedures.
17.2 17.1 of this law shall not
serve the grounds for
restricting, in any way, the
authority of the Government
enshrined by the
Constitution of Mongolia
and other laws.
No. Article Draft provision Comment Recommendations
18 Authority of the Central
State Administration
Refer to many other comments
on reimbursement,
expropriation etc. This will
affect their authorities and
responsibilities.
18.1 The central state
administration in charge of
geological and mining
affairs shall exercise the
following authority:
18.1.1 to determine borders and
corners of all deposits of
strategic importance;
18.1.2 to issue a decision to take
land into state reserve
wherein the reconnaissance,
prospecting, exploration had
been financed by state
budget;
18.1.3 to approve a procedure for
conducting the
reconnaissance and
submitting and receiving the
reconnaissance reports and
other related documentation;
18.1.4 to approve annual plan of
reconnaissance, prospecting
and exploration works to be
funded by the State budget;
18.1.5 to approve jointly with
central financial
administration the procedure
for funding, implementing,
receiving upon review of
outcomes and calculating the
funding expenses incurred
for reconnaissance,
prospecting, exploration by
state funding;
18.1.6 to approve a procedure for
evaluation and assessment of
the technical equipment and
technology used in the
prospecting, exploration,
mining and processing
activities;
18.1.7 to announce an area which
will be granted with license
for prospecting, exploration
and mining activities
through competitive tender
selection procedure;
18.1.8 to approve a procedure for Assumption that competitive Confirm assumption.
No. Article Draft provision Comment Recommendations
competitive tender selection
procedure for granting
licenses to conduct
prospecting, exploration and
mining activities;
tender will give equal
preference to national
companies and foreign invested
companies.
18.1.9 to approve a procedure to
determine and demarcate the
borders of areas granted by
license;
18.1.10 to grant a license for
development of Technical
and Economical Feasibility
Report for mining and
processing and mining and
processing architecture
design;
Assumption that this license
will be granted giving equal
preference to national
companies and foreign invested
companies.
Confirm assumption.
18.1.11 to develop and approve
mining product standards
jointly with central state
administration in charge of
standardization and
measurement affairs;
18.1.12 to approve standards and
procedures for prospecting,
exploration, mining and
processing activities;
18.1.13 to make decision on
granting, withholding,
revoking and renewing the
permission for execution of
mining and processing
related works, and to make
other related decisions;
18.1.14 to develop and approve
jointly with the central state
administration in charge of
nature and environmental
affairs the procedure to
receive the results of the
rehabilitation work done on
environment and nature
affected by exploration,
mining and processing
activities;
18.1.15 to approve the procedure to
register mines and industrial
unit for processing and
appoint commission for
approval of launching the
operation of mines and
industrial units;
Assumption that the
commission will be appointed
to hold impartial and non-
political objectives.
Confirm assumption.
18.1.16 to approve a procedure for
emergency elimination of
“prospecting” not included. Clarify
No. Article Draft provision Comment Recommendations
accidents occurred during
reconnaissance, exploration,
mining and processing
activities;
18.1.17 to establish a fund for
emergency elimination of
accidents and approve a
procedure for its
functioning;
18.1.18 to approve jointly with the
central state administration
in charge of labour the
procedure for ensuring the
appropriate working
condition, salary structure,
occupational health and
safety, provisions and
supplies to workers
employed in mining and
processing operations;
Assumption that items such as
“salary structure” will not
interfere with the commercial
operations and projections of
the license holder (i.e. no State
mandated salaries other than
minimum wage).
Limited only to “mining and
processing”.
Confirm assumption.
Clarify if reconnaissance,
prospecting, and exploration
are to be included.
18.1.19 to approve the procedure to
appoint the members of
Professional Council, the
rule of operations, salary and
bonus payment to the
Council members and
calculation of business trip
expenses as defined in this
law;
Assumption that the
Professional Council will be
appointed to hold impartial and
non-political objectives.
Confirm assumption.
18.1.20 to appoint the members of
Professional Council as
stated in this law;
18.1.21 to develop and approve the
list of precious metals and
precious gem stones to be
registered according to this
law, the procedure to
determine and register their
carats jointly with the central
state administration in
charge of finance affairs;
18.1.22 to approve a procedure for
services for which additional
fees shall be paid and
determine the additional fees
payable for the services;
Unclear Clarify what “services” and
the extent of “additional fee”
(i.e. actual costs?).
18.1.23 to approve a procedure for
allocation of professional
degrees to workers
employed in the geological
and mining sector;
Assumption that a foreign
professional degree from a
developed nation is sufficient.
Confirm assumption.
18.1.24 to approve a procedure for
categorizing the mineral
Assumption that this will
meeting international standards
Confirm assumption.
No. Article Draft provision Comment Recommendations
reserves;
18.1.25 other authority as specified
in this law;
18.2 Central state administration
in charge of nature and
environmental affairs shall
exercise the following
authority in minerals affairs:
This is a generally positive
outcome.
18.2.1 to approve standards and
minimum expenses of
rehabilitation of nature and
environment impacted by
prospecting, exploration,
mining and processing
activities;
18.2.2 to develop and approve
methodology for
determination and
assessment of harms and
damages to the nature and
environment caused by
prospecting, exploration,
mining and processing
activities;
18.2.3 to open a special account to
deposit the rehabilitation
fund, to monitor its
transactions, secure pledges,
and reimburse;
18.2.4 to develop and approve the
procedure to receive the
results of the rehabilitation
work on nature and
environment impacted by
exploration, mining and
processing activities jointly
with the central state
administration in charge of
geological and mining
affairs;
18.2.5 to develop and approve the
procedure for conduct of
rehabilitation work by the
funds accrued in the
rehabilitation expenses fund
and by state budget subsidy,
and selection of the
contractor through the tender
selection process;
18.2.6 to grant the right to conduct
rehabilitation work;
18.2.7 to review and make
conclusion on the
No. Article Draft provision Comment Recommendations
rehabilitation work plan
submitted by the license
holder in accordance with
this law;
18.2.8 to submit specific
recommendations to the
state administration on the
matter of obligating the
license holder with nature
and environmental
protection obligation;
18.2.9 to determine and validate the
borders of the territory
specified in 5.1 of this law
jointly with state
administration in charge of
land relations affairs;
Prohibited areas with respect to
the Water Law need to be better
defined. For example what is a
river and a floodplain?
Ephemeral streams should not
be included but under certain
interpretations they have been.
This is too broad.
Legislative review for
clarity.
18.2.10 to submit its opinion for
areas to be announced for
tender selection procedure in
accordance with this law;
18.2.11 to develop a method, a
methodology and a
procedure for planting ten
trees for every cut down
tree and foresting;
Bizarre as to why this is
included in this Draft Law as
this could fit within the
reclamation plan. Further, it
would not make sense to plant
trees in areas that can sustain a
very limited number of trees.
Remove from this Draft Law
and regulate separately.
18.2.12 other authority as specified
in this law;
18.3 Central state administration
in charge of labour affairs
shall exercise the following
authority in minerals affairs:
18.3.1 to approve the procedure to
ensure appropriate working
condition, salary structure,
occupational health and
safety, provisions and
supplies to workers
employed in mining and
processing operations jointly
with state administration in
charge of geology and
mining affairs;
Assumption that items such as
“salary structure” will not
interfere with the commercial
operations and projections of
the license holder (i.e. no State
mandated salaries other than
minimum wage).
Limited only to “mining and
processing”.
Confirm assumption.
Clarify if reconnaissance,
prospecting, and exploration
are to be included.
18.3.2 to monitor the adherence of
license holders to the
prescribed by this law the
quota (ratio) of domestic and
foreign workers;
18.3.3 other rights specified in this
No. Article Draft provision Comment Recommendations
law;
18.4 Central state administration
in charge of economic
development affairs shall
exercise the following
authority in mineral affairs.
18.4.1 to develop a comprehensive
economic planning scheme
on integration of the
infrastructure, electricity and
urban planning in
developing mining activities
nationwide;
The use of „infrastructure‟ as
opposed to „commercial
infrastructure‟ implies some
expectation of mining
companies providing what is
effectively „social
infrastructure‟. How will this be
commercialised between the
GOM and the company if no
IA, SA or DDA exists?
If it is an overall plan working
in conjunction with companies
this is good, but if it means
Government dictates to mines
how they must develop
infrastructure etc. It is not
good. This is not clearly
defined.
Clarify the intent and scope.
Modify to limit Government
involvement in the free
market and commercial
affairs of the license holders.
18.4.2 to review and issue
conclusions on the work
plan and Technical and
Economical Feasibility
Report of mining and
processing license holders,
and to issue
recommendations to the
license holder on
coordination of the
prospecting, exploration,
mining and processing
activities to the regional and
local mining Consolidated
plan;
Assumption that “review” and
“recommendations” means that
the Ministry of Economic
Development does not have the
authority to mandate, require or
otherwise approve such reports.
Confirm assumption.
18.4.3 to review and if necessary to
issue conclusions,
recommendations and
guidelines on the proposal to
change the work plan of the
license holder as specified in
this law;
Not clear to what extent the
work plan must be modified
based on “conclusions”.
Clarify.
18.4.4 to submit proposals and
comments to the draft of the
Local Development
Agreement as specified in
this law.
Understood as not being
mandatory.
Clarify.
18.4.5 to submit proposals to the
No. Article Draft provision Comment Recommendations
tender selection process for
granting licenses related to
areas, selection criteria,
condition and requirements
as specified in this law;
19. Authority of the state
administration
Refer to many other comments
on reimbursement,
expropriation etc. This will
affect their authorities and
responsibilities.
19.1 The State Administration in
charge of geological and
mining affairs (hereinafter
referred to as “State
Administration”) shall
exercise the following
authority:
19.1.1 to grant a right to conduct
reconnaissance work to legal
entities submitted their
applications according to
this law;
19.1.2 to organize and conduct the
competitive tender selection
process for granting
prospecting, exploration and
mining license specified in
this law;
19.1.3 to grant and revoke the right
to conduct minerals
prospecting, exploration,
mining and processing
through application or tender
selection procedures
specified in this law by a
license and to render other
decisions related thereto;
19.1.4 to extend license and issue
other decisions related
thereto;
19.1.5 to transfer, combine, revoke
the license and area granted
by the license, and to make
other decisions related
thereto;
19.1.6 to resolve border disputes
arising between holders of
license;
19.1.7 to maintain a consolidated
registration database of
licenses;
19.1.8 to create and maintain the
national consolidated
No. Article Draft provision Comment Recommendations
database of geology and
minerals;
19.1.9 to appoint the members of
Professional Council in
consistent with procedures
approved by state central
administration and approve
the procedure of the
Professional Council‟s
functioning;
19.1.10 to evaluate and assess the
technical equipment and
technology used in
reconnaissance, prospecting,
exploration and processing
according to the approved
methodology and procedure;
No “mining” Clarify.
19.1.11 to approve plan of works to
be completed according to
the reconnaissance,
prospecting, exploration and
processing license;
No “mining” Clarify
19.1.12 to make a decision on
whether to accept the
Technical and Economical
Feasibility report;
19.1.13 to make a decision on
whether performed high
grading mining;
This is an arbitrary decision
based on undefined guidelines.
Before this is enacted there
needs to be clear guidelines as
to what is 'high grade mining",
as this changes with technical
innovation and economics.
Address concerns related to
“high grading”.
19.1.14 to provide advise,
guidelines, and conclude
technical and technological
review in the course of
building mines and
industrial unit for processing
in relation to the
implementation of the rights
and obligations of the of the
holder of prospecting,
exploration, mining and
processing license holder;
19.1.15 to issue certificates of origin
for mined, processed,
purchased, sold and
reprocessed minerals and
mineral products by holders
of mining and processing
license;
19.1.16 to approve the sample form
No. Article Draft provision Comment Recommendations
to be filled by private or
legal entities used precious
metals and stones for
manufacturing of products
or purchased them for such
purposes;
19.1.17 to grant, revoke, renew work
authority and to issue related
decisions thereto;
19.1.18 to provide the relevant
information other than that
categorized as confidential
as specified by this law to
interested party;
19.1.19 to make consolidated review
on the prospecting,
exploration, mining and
processing of minerals in
conjunction with the State
specialized inspection
agency;
19.1.20 other rights specified in this
law;
19.2 The state administration in
charge of planning shall
exercise the following
authorities in minerals
affairs:
19.2.1 to develop a comprehensive
planning scheme on
coordination the
infrastructure, electricity and
urban planning in
developing mining activities
nationwide;
This means that MRAM is
effectively in charge of
coordinating development of
„social‟ infrastructure
development?
The use of „infrastructure‟ as
opposed to „commercial
infrastructure‟ implies some
expectation of mining
companies providing what is
effectively „social
infrastructure‟.
How will this be
commercialised between the
GOM and the company if no
IA, SA or DDA exists?
Clarify.
19.2.2 to review and issue
conclusions on the work
plan and Technical and
Economical Feasibility
Report of mining and
processing license holders,
and to issue
recommendations to the
Same as above.
No. Article Draft provision Comment Recommendations
license holder on
coordination the
prospecting, exploration,
mining and processing
activities to the regional and
local mining Consolidated
plan;
19.2.3 to review and if necessary to
issue conclusions,
recommendations and
guidelines on the proposal to
change the work plan of the
license holder as specified in
this law;
Same as above.
19.2.4 to submit proposals and
comments to the draft of the
Local Development
Agreement as specified in
this law.
Same as above.
19.2.5 to submit proposals to the
tender selection process for
granting licenses related to
areas, selection criteria,
condition and requirements
as specified in this law;
19.3 State administration in
charge of land relations
affairs shall exercise the
following authority.
19.3.1 to submit proposals to the
tender selection process for
granting licenses related to
area, selection criteria,
conditions and requirements;
19.3.2 to issue and update
constantly cohesive cadastral
maps of Mongolian land
owned or possessed and
utilized according to
agreements for land
possession and utilization
and deliver them according
to approved procedures to
state administration;
19.3.3 to determine boundaries of
areas as specified in Article
5.1 of this law jointly with
state administration in
charge of nature and
environment affairs;
No. Article Draft provision Comment Recommendations
19.4 to conduct research and
investigation based on the
license holder‟s notification
of the discovery of
archaeological,
paleontological findings and
historical and cultural
heritages in the course of
prospecting, exploration,
mining and processing
activities to the local and
State Administration, and to
take it into state protection;
19.4.1 to conduct research and
investigation based on the
license holder‟s notification
of the discovery of
archaeological,
paleontological findings and
historical and cultural
heritages in the course of
prospecting, exploration,
mining and processing
activities to the local and
State Administration, and to
take it into state protection;
19.4.2 to resolve the matter of
taking the archaeological,
paleontological findings,
historical and cultural
heritages as specified in
19.4.1 of this law into
maintenance and custody
based on the agreement
entered into with individuals
and legal entities;
19.4.3 to submit proposals related
to areas, selection criteria,
condition and requirements
of the tender selection
process for granting licenses
as specified in this law;
20 Authority of the Local
Self-Governing authorities
and Local governments
This Article gives far reaching
powers to Local Authorities.
20.1 The local self-governing
authority shall exercise the
following authorities in
minerals affairs:
No. Article Draft provision Comment Recommendations
20.1.1 to prohibit the exploration,
mining and processing
activities wholly or partially
on its land not granted by
license for purposes of
maintaining the balance of
historical and cultural
heritage and findings or
environmental ecological
balance;
20.1.2 to propose to the
Government through central
state administration to take
the license area under
exploration, mining and
processing activities as
specified by this law for
local special use;
What challenge can a licence
holder make?
With this Article, Aimag level
down to Bag level governments
could potentially, arbitrarily,
with State Approval,
expropriate Licence area.
Establish measures to ease
investor concerns (i.e. time
limits, substantive and
procedural requirements.).
20.1.3 to discuss and make related
decision upon receiving the
notification of area for
announcement of
competitive tender selection
submitted by the State
Administration as specified
in this law;
20.1.4 to enter into Cooperation
Agreement with exploration
license holder and the Local
Development Agreement
with the mining and
processing license holder
and to demand from the
license holder to enter into
agreement within the time
period as specified in this
law;
This puts a “gun to the head” of
the license holder.
A similar ability of „demand‟
needs to be vested with the
licence holder, otherwise there
is no onus on the local authority
to progress things and respect
the rights of the licence holder.
Create a similar demand
right for the license holder.
20.1.5 to participate in and
cooperate in the work of the
Commission to receive the
results of the rehabilitation
work;
20.1.6 to make proposal to the
rehabilitation work plan of
the license holder as
specified in this law;
20.2 The local administration
shall exercise the following
authorities in minerals
affairs:
No. Article Draft provision Comment Recommendations
20.2.1 to allow the use of land for
the purpose granted by the
license within the territory,
and to terminate such use in
case of violation;
Clarification is required as to
what is meant by 'in case of
violation'?
Who determines that there is a
violation that warrants
termination?
A very minor problem could be
considered to be a violation by
the local administration so there
needs to be a due process of
notice being given and
rectification works being
allowed before any termination
event can be considered.
Is this mandated that they must
allow a license holder to use the
land or is this still subject to
their decision under the Land
Law?
Clarify.
20.2.2 to monitor the
implementation of the
license holder of its
obligations to protect and
conduct rehabilitation of the
environment, protect the
public health and depositing
fees in the local budget and
obligations pertaining to the
Cooperation and Local
Development Agreements;
Does the „depositing of fees‟
extend to royalties and taxes
paid to the GOM or is relating
to the CA or LDA only. Is this
intended to encourage payments
or actual development/building?
20.3 It shall be prohibited for the
local self-governing
authorities and local
governments to make the
following demands to the
license holder:
20.3.1 to demand any investment
not specified in the Local
Development Agreement;
20.3.2 to demand any donations
and assistance and funding
for purposes other than –
humanitarian purposes;
What are “humanitarian
purposes”?
Clarify.
20.3.3 to demand fund for
financing the political
activities;
What are “political activities”? Clarify.
21 Rights granted by licenses The grandfathering provisions
are not defined for all types of
licenses.
No. Article Draft provision Comment Recommendations
21.1 The license granted by the
State Administration through
procedures specified by this
law shall entitle the license
holder to conduct activities
specified in this law upon
fulfillment of the conditions
and requirements as defined
in this law.
Should mention “exclusive
right” over the area and not
subject to overlapping licensing
such as Petroleum, Nuclear
Energy, etc.
Clarify “exclusive right”.
21.2 The license certificate shall
be granted to holder upon
issuance of the decision to
grant such license by the
State Administration.
22 Main conditions for
granting of license
22.1 By granting of a license for
prospecting, exploration,
mining and processing
purposes through
competitive tender selection
procedure or upon
application each of the
following criteria shall be
assessed thoroughly and
licenses shall be granted to a
legal entity which has best
fulfilled the conditions and
requirements specified
below:
Note that a licence will be
granted to a legal entity, but
there is no mention of
Mongolian citizens. Note the
distinction between a legal
entity and a Mongolian citizen,
question is what is the
definition of a legal entity (i.e.
does it include natural persons,
i.e. Mongolian citizens).
Assuming that the translation is
correct and the „or‟ is operative,
this is OK as it allows for
tender OR for direct
application.
This implies that if an entity
requests an area for licence it
has determined to be of merit,
through its own corporate
intelligence and expertise, has
no rights, and can be outbid
arbitrarily by another entity
based on its knowledge of the
other's know abilities.
Clarify.
Confirm assumption
22.1.1 Tentative plan of
prospecting, exploration,
mining and processing
activities requested for
authorization by the license;
22.1.2 environmental rehabilitation
tentative work plan;
No. Article Draft provision Comment Recommendations
22.1.3 financial possibility and
capacity guarantee of
implementing the plans
specified in 22.1.1 and
22.1.2 of this law;
The plans set forth in Article
22.1.1 may be in stages as the
license holder may be in the
process of raising money as
things progress. Many
companies may not outright
have full funding, in particular
if they are listing or doing
private placements.
Clarify that this is taken into
account.
22.1.4 whether the amount of
reserve and evaluation of the
deposit determined by the
exploration work and
approved by the relevant
authority is sufficient to
cover the extraction
expenses, rehabilitation
works and mine closure
expenses;
This may be difficult to
determine given the resource
cycle (fluctuating value).
Further, if taxes, fees, royalties,
etc. are modified upward by the
State, this could have a serious
impact on this criteria.
Produce clear procedures for
making this determination.
22.1.5 capacity, experience of the
applicant to conduct
prospecting, exploration,
mining and processing
activities, its professional
human resources;
It would be necessary to take
into consideration that their
capacity may be crippled by
labor quotas, mandatory local
shareholding, mandatory local
procurement, etc.
Some projects will be tied into
raising financing over time in
order to carry them out as most
companies do not have large
amounts of cash reserves on
hand. Is financial capacity a
criteria?
Will these items be taken
into consideration?
22.1.6 history, current status and
further motivation and
capacity of implementing
laws, rules and procedures
related to geology and
mining activities, by citizens
and legal entities
respectively;
If law, rules and/or procedures
are being disputed by the
license holder in a court or
otherwise, will this be held
against them? Even if the
outcome is not in their favour,
will there be an understanding
that the law suit or objections
were not frivolous by the
license holder?
Is a tax dispute or dispute
against a State inspector enough
to knock a company out of the
running?
Clarify.
No. Article Draft provision Comment Recommendations
22.2 whether the requesting legal
entity, its executive
management, members of
board of directors and its
equivalent entity have been
involved in conducting
prospecting, exploration,
mining and geological and
mining activities or have
been holders of licenses, if
so, their past records in
fulfilling their legal
obligations as recorded in
the special permission
database
Assumption that this is limited
to the “special permission
database”? What does that
mean?
Confirm assumption and
meaning.
23 Prospecting license There is a disjoint between a
legal entity that has conducted
reconnaissance to identify a
valuable prospect and their
priority right to a prospecting
license. This seems to be
counterproductive.
How will this impact existing
license holders? Must they
divide their exploration license
into a prospecting and
exploration phase?
Consider amending this
process to provide some
form of priority right for a
legal entity that conducted
reconnaissance.
Clarify.
23.1 Prospecting license will be
granted for the areas
announced by state
administration in charge of
geology and mining affairs
only through a competitive
tender selection procedure.
This Article does not make
entirely clear whether Article
23.1 is initiated by the license
holder or Government.
23.2 The holder of prospecting
special license shall be
entitled to carry out mineral
prospecting in licensed area
only after having complied
with all conditions and
requirements as defined in
this law.
No. Article Draft provision Comment Recommendations
23.3 Area granted by prospecting
license shall be at least 150
ha but no more than 250000
ha.
The maximum land area values
are max 250000ha for
prospecting, 12000ha for
exploration, and undefined for
Mining and Processing license.
Is the intention of the State to
break up bigger deposits,
develop them slower, or force
them into handing them back so
that the State can put them out
to tender?
Clarify the overall intent of
the areas being listed.
23.4 If necessary state
administration may
announce competitive tender
selection procedures for
granting of prospecting
licenses for smaller areas
than postulated in 23.3 of
this law.
Unclear why this is necessary.
Why not eliminate the floor of
150 listed in 23.3.
Clarify.
23.5 Prospecting licenses shall be
granted for the period of up
to 4 years.
How was a 4 year period
determined?
Clarify.
23.6 The Number of prospecting
licenses to be granted to one
legal entity shall not be more
than 5.
Unclear whether multiple
subsidiaries of a legal entity
count as separate legal entities
or are consolidated.
Clarify.
23.7 Holder of prospecting
license for certain area who
has complied the conditions
and requirements of this law
has a privileged right to
obtaining the exploration
license upon its submission
of the application for such
license.
24 Exploration license
24.1 Exploration license shall be
granted according to
following principles:
24.1.1 if holder of a prospecting
license meets the conditions
and requirements specified
by this law and submits
application for an
exploration license, the
exploration license shall be
granted over the area
covered by the prospecting
license;
See Article 24.3which appears
to contradict this Article.
Clarify.
No. Article Draft provision Comment Recommendations
24.1.2 Exploration license for area
taken into state reserve or
not granted with license can
be granted to economic
entity with state ownership
and state ownership
participation without
announcing and conducting
competitive tender selection.
Combined with Article 13, the
effect of this provision may be
prone to abuse by State entities
and removes the economic
efficiencies inherent in a
competitive tender system.
Suggest deleting this Article.
24.1.3 in all other cases except
specified in 24.1.1 of this
law, exploration license shall
be granted through
competitive tender selection
procedure over the area
announced by state central
administration in charge of
geology and mining affairs;
Highly unlikely that any
commercial enterprise, after
doing all the research, to
highlight an area of interest ,
would want to go through this
process.
Consider.
24.2 Upon fulfillment of the
conditions and requirements
specified by this law, the
exploration license holder
shall have the right to
conduct prospecting and
exploration work on the land
covered by the license.
Assumption that this creates
and automatic right to land?
Confirm assumption.
24.3 The area to be granted by
exploration license shall be
no less than 25 hectares and
no more than 12 000
hectares.
Note this area contradicts
Article 24.1.1 which states that
the area will be the same as
under the prospecting licence
(see Article 23.3, min 150ha
and max 250, 000 ha)(see note
above).
24.4 Exploration license shall be
granted only one time for
period of up to 5 years.
“Up to” 5 years is entirely
insufficient. Where did this
number come from?
In fact, the current nine years is
barley sufficient time to carry
out exploration. On average it
takes sixteen (16) years to find
and discover sufficient
resources to be a deposit of
significance. Oyu Tolgoi is a
prime example. Coal deposits
are the only type that might be
able to fit into this schedule.
Clarify the logic behind the
up to 5 years.
No. Article Draft provision Comment Recommendations
24.5 The number of exploration
licenses to be granted to one
legal entity shall not be
limited.
The assumption would be that if
a company holds unlimited
exploration license but then
may only hold five (5) mining
license, then the company is
permitted to freely sell and
transfer the remainder of its
licenses to other commercial
entities to recoup its investment
and make additional profit.
Confirm assumption.
24.6 Holder of the exploration
license who meets the
condition and requirements
of this law shall have
privileged right to be granted
a mining license for area
covered by the exploration
license if it has submitted
the application.
25 Mining license
25.1 Mining license shall be
granted according to the
following principles:
25.1.1 if holder of an exploration
license meets the conditions
and requirements specified
by this law and submits
application for a mining
license, the mining license
shall be granted over the
area covered by the
exploration license;
As noted above, the area of the
exploration license must be
clarified first.
25.1.2 Mining license for area
taken into state reserve or
not granted with license can
be granted to economic
entity with state ownership
and state ownership
participation without
announcing and conducting
competitive tender selection
Combined with Articles 13 and
14, the effect of this provision
may be prone to abuse by State
entities and removes the
economic efficiencies inherent
in a competitive tender system.
Suggest deleting this Article.
25.1.3 in all other cases except
specified in Article 25.1.1 of
this law, mining license shall
be granted through
competitive tender selection
procedure over the area
announced by central state
administration in charge of
geology and mining affairs;
No. Article Draft provision Comment Recommendations
25.2 Upon fulfillment of the
conditions and requirements
specified by this law, the
mining license holder shall
have the right to conduct
mining activity on the land
covered by the license, in
addition to the following
rights:
Assumption that this implies
automatic land rights?
Confirm assumption.
25.2.1 to conduct prospecting and
exploration works on the
area granted by the license;
25.2.2 to construct mine, other
buildings and facilities
necessary for the extraction
activities on the area granted
by the license;
How does this differ to the
defined term of “commercial
infrastructure” below?
Clarify.
25.2.3 to construct commercial
infrastructure necessary for
extraction activities on the
mine tenure;
25.2.5 to conduct transportation of
minerals extracted, and
construct buildings and
facilities designated for
loading and unloading;
How does this differ to the
defined term of “commercial
infrastructure” above?
25.3 The area for extraction of
salt and other common
minerals shall be no less
than 100 meters on each
side, the area for extraction
of other minerals shall be no
less than 500 meters in
length on each side.
25.4 The mining license shall be
granted for a period of up to
20 years.
“Up to” 20 years is entirely
insufficient. Where did this
number come from?
We note that according to
Article 28.2 that a mining
license may be extended twice
for a period of “up to” 20 years
each time. What if a deposit
has a greater than 60 year
LOM.
Clarify.
25.5 The number of mining
license to be granted to one
legal entity shall not be
exceeded to five.
If applied retroactively or even
going forward this could create
serious complications.
For example, ETT currently
holds 8 licenses. Will they be
required to give up 3?
Clarify.
No. Article Draft provision Comment Recommendations
26 Processing license Separation of mining and
processing licenses may not be
good as it will encourage
government interference in
economic activity (i.e.: divert
all processing to Sainshand).
Also, without a guarantee of a
processing license to the mining
license holder it may be
difficult to raise financing for
integrated projects due to
increased
operational/commercial risk.
If applied retroactively, could
this now prevent ER from using
its wash plant (no licensing)
and force it to divert its
unwashed coal to another
processor?
Address these concerns.
26.1 Processing license shall be
granted according to the
following principles:
26.1.1 processing license can be
granted to a interested legal
entity who submits
application for a processing
license and meets the
conditions and requirements
specified by this law;
26.1.2 processing license may be
granted through a
competitive tender selection
procedure;
Is this correct, “may”? The
assumption is that it does not
have to be tendered if the word
is “may”.
Confirm assumption.
26.2 The processing license
holder shall have the right to
conduct processing activity,
in addition to the following
rights:
No reference to waste disposal.
You can't have processing
without waste.
Clarify.
26.2.1 to possess and use land for
industrial purpose;
Implies that there is an
entitlement to such land. Clarify.
26.2.2 to construct industrial unit
for processing and other
buildings and facilities
necessary for the processing
activities on the area granted
by the license;
How does this differ to the
defined term of “commercial
infrastructure” below?
Clarify.
26.2.3 to construct commercial
infrastructure necessary for
processing activities and
industrial unit for
processing;
Clarify.
No. Article Draft provision Comment Recommendations
26.2.4 to conduct transportation of
raw materials and processed
products, and construct
buildings and facilities
designated for loading and
unloading;
How does this differ to the
defined term of “commercial
infrastructure” above?
Clarify.
26.3 The period of processing
license shall be set by the
State Administration in
consideration of the
Technical and Economical
Feasibility Report and the
capacity of the industrial
unit for processing.
26.4 The number of processing
license to be granted to one
legal entity shall not be
limited.
26.5 The area granted for
industrial purposes
according to the processing
license shall not overlap in
any way with the land
prohibited to conduct
prospecting, exploration,
mining and processing
activities thereon, and with
areas granted by valid
licenses.
26.7 If the holder of a mining
license has applied for a
processing license, the
processing license may be
granted on the area of
extraction license in
consideration of the
applicant‟s preferences. In
this case land possession and
utilization agreement shall
not be required to be made.
What if the mining license
holder will not be processing
but wants to have another
company with a processing
license located on their license
area? Is this permissible?
Clarify.
27 Validity of the license
27.1 License shall be valid for the
entire period initially
granted for or within the
period extended thereon.
27.2 The period of the license
will cease in the following
cases:
27.2.1 license holder has returned
the licensed area before
expiry date as defined in this
law;
No. Article Draft provision Comment Recommendations
27.2.2 decision made by related
authority to take the licensed
area for purpose of special
national and local use and to
reserve mineral deposit as
set forth in this law;
No. Article Draft provision Comment Recommendations
27.2.3 the period of a license has
expired and has not been
extended;
27.3 License shall not be revoked
on the grounds that are not
specified in this law.
28 Period of renewal of
license
28.1 Period of the prospecting
and exploration licenses
shall not be renewed.
28.2 The State Administration
may extend the period of the
mining license twice, up to
20 years each time
considering the reserve of
the deposit.
What happens after 60 years? Clarify.
28.3 The period of extension for
processing license shall be
determined by the State
Administration based on the
Technical and Economical
Feasibility Report of the
production activities.
Extension of a Processing
Licence is subject to the
Feasibility Report.
Important to ensure that
current operating costs/cut-off
rates are considered at the time
of the extension and not from
the original studies.
Consider.
29 Renewal of the license
29.1 State Administration shall
notify on the expiration of
the license 45 (forty five)
days prior to the actual
expiration date to the license
holder as per the approved
procedure.
29.2 The license holder shall
submit its request to renew
the period of the license
within no less than 15
(fifteen) days before the
expiry as provided in this
law.
29.3 The State Administration
shall refuse to accept
requests to renew the license
which had not been
submitted within the period
as specified in 29.2 of this
law.
No. Article Draft provision Comment Recommendations
29.4 If the license holder has
submitted its request for
renewal of license in the
period specified in 29.2 of
this law, the license shall
remain valid until such time
when the state
administration shall issue its
decision on whether to
renew the period or reject
the request.
This should also include all
appeals processes within the
agency and through the
administrative courts to allow
the license holder to continue
with all operations until all
appeals may be exhausted.
Consider extending this time
frame for the entire appeals
process.
29.5 The State Administration
shall refuse to renew the
license period in the
following cases.
29.5.1 the license holder did not or
does not fully meet the
conditions and requirements
specified in Articles 22 and
66 of this law;
29.5.2 obligations arising out of the
permitted work plan,
Technical and Economical
Feasibility Report and
approved Work plan have
not been performed;
To what extent? Taking into
account what factors (strikes,
weather conditions, economic
down turns, etc.).
Clarify.
29.5.3 exhaustion of the reserve at
the deposit;
To what extent? Taking into
account what factors (revised
reserve estimates, strikes,
weather conditions, economic
down turns, etc.).
Clarify.
29.6 The State Administration
shall renew the license
period in cases other than
specified in 29.5 of this law.
29.7 The renewed period of the
license shall be counted
from the date of expiry of
the initial period of the
license.
This makes sense only if the
license holder is able to fully
operate during any appeals
process to a denial. However, it
should also be taken into
consideration that the license
holder will not want to operate
during this time if it involves
making expenditures in the face
of uncertainty.
Clarify.
29.8 The State Administration
may issue the following
decision in addition to the
extension of the license.
No. Article Draft provision Comment Recommendations
29.8.1 the renewal of the license to
be enforced on fulfillment of
certain conditions;
Is there a time frame? Clarify.
29.8.2 to reduce the area granted by
the license in renewing the
period;
There is no criteria set out in
the proposed law on when (or
the extent to which) the area of
a licence may be reduced upon
renewal. This compromises the
tenure security of the licence
and should be clarified further.
Clarify.
29.9 If the license holder has not
submitted its request for
license renewal within the
period specified in 29.2 of
this law, or, the conditions to
refuse renewal of the license
have arisen, the State
Administration shall
immediately notify other
persons the interests of
whom are affected by the
license, and which are
registered in the license
registration.
30. Partial transfer of area
granted by mining license
Can this be in the form of a
sale?
Clarify.
30.1 It shall be prohibited to
partially transfer the areas
granted by exploration,
mining and processing
licenses.
30.2 The license holder may
transfer a part of the area
granted by a mining license
to others in the following
cases.
30.2.1 the transferee is a holder of
an extraction license; and
Extraction licence is not
defined.
Clarify.
30.2.2 the area being transferred
geographically borders that
of the transferee;
30.3 The State Administration
shall be obligated to notify
third parties the interests of
which are being affected by
the request to partially
transfer the area granted by
license in the following
cases.
No. Article Draft provision Comment Recommendations
30.3.1 pledge agreement related to
the license has been
registered in the special
permission registration
database;
30.3.2 agreement creating non-
material property rights,
joint ownership of interests,
or transfer of interest
percentage has been
registered in the license
registration database;
30.4 The agreement on
transferring part of the area
shall be valid upon
registration thereof in the
license registration database
of the State Administration.
30.5 If the person has not fully
met the conditions and
requirements specified in
30.1 of this law, the State
Administration shall not
register the agreement on
transfer of partial area.
30.6 The area transferred shall be
registered in with the
transferee‟s area in the
cartographic and license
database; a separate license
shall not be granted for the
area transferred.
30.7 The transferee taking the
partial land shall be
responsible for re-
demarcating the cornerpoints
and border coordinates and
reflecting and obtaining the
approval for the relevant
changes in the extraction
work plan and Technical and
Economical Feasibility
Report.
30.8 With the agreement entering
into validity, the following
shall occur:
30.8.1 the obligations of the
transferor with respect to the
transferred area specified by
law and imposed by the
license from the State
Administration shall be
revoked;
No. Article Draft provision Comment Recommendations
30.8.2 the transferee shall be
imposed the obligations with
regards to the land
transferred, specified by
laws and imposed by the
state administration at the
time of issuing the license;
What about past/existing
liabilities of the transferor?
Clarify.
31 Amalgamation of the
licensed area
31.1 Areas granted by
exploration, prospecting and
processing licenses shall not
be subject to amalgamation.
Assumption that “mining” areas
can be amalgamated by the
license holder.
Articles 31.1 and 31.2 would
appear to be in direct
contradiction.
Confirm assumption.
Clarify.
31.2 By notifying the license
holder in advance, State
Administration may issue a
decision to amalgamate two
or more areas that
geographically border each
other and granted to the
same person.
What if the license holder does
not want their license areas to
be amalgamated? What is the
process for comment and
dispute resolution? This could
require a license holder to
spend significant amounts of
money and time to re-develop
feasibility studies, exploration
and mining plans, etc. Further,
the license holder many not
have intended to develop a
particular license area (will let
it go upon need to apply for
change in licensing or renewal)
but will now be required to
develop that area – making it
non-feasible/economic. The
assumption would be that they
could still return the particular
area to the State.
If a license holder wants this
can they self-initiate?
Is this for any type of license?
Clarify.
Clarify.
Clarify.
31.3 The valid period of time for
amalgamated licensed areas
shall be defined by period of
time of the most recent
license granted as stated in
31.2 of this law.
No. Article Draft provision Comment Recommendations
32 Returning the area wholly
or partially
32.1 The holder of the license
may submit its request and
wholly or partially return the
area according to the
procedure approved by the
State Administration.
32.2 Proof of rehabilitation
obligation performance and
certification of completed
rehabilitation shall be
attached to the request to
wholly or partially return the
area.
32.3 The State Administration
shall issue one of the
following decisions upon
review of the proof specified
in 32.2 of this law within 30
(thirty) days since the receipt
of the request specified in
32.1 of this law.
32.3.1 based on the certification of
rehabilitation work, to
receive the area and register
it in the cartographic and
license registration database;
32.3.2 if no rehabilitation has been
done, or the rehabilitation
work was not done
appropriately, the obligation
to complete rehabilitation
within a set time shall be
imposed, or, to receive the
land and have the full
compensation for
rehabilitation work expenses
borne by the license holder
and registration thereof shall
be done in the license and
cartographic registration
database;
No. Article Draft provision Comment Recommendations
32.4 If the decision of the State
Administration specified in
37.3.2 of this law has been
issued, the obligations and
responsibilities related to the
rehabilitation of the nature
and environment shall
remain valid after the license
holder has wholly returned
the area until such time that
they are performed.
No. Article Draft provision Comment Recommendations
32.5 In case of partial return of a
prospecting area the
remaining area shall fulfill
the requirements set in 23.3,
in case of exploration area,
the remaining area shall
fulfill the requirements set in
24.3 of this law, and in case
of partial return of a mining
area, the remaining area
shall fulfill the requirements
set in 25.3 of this law.
32.6 The State Administration
shall notify relevant
authorities on the receipt of
the whole or partial area and
inform the public.
33 Transfer of license Can this be in the form of a
sale?
Clarify.
33.1 It shall be prohibited to
transfer a prospecting
license.
What about within an existing
corporate structure of a license
holder?
Clarify.
33.2 It shall be prohibited to
transfer an exploration
license within one year of its
initial issuance and any
agreement entered into for
its transfer in that period
shall be invalid.
It is unclear how this restriction
would impact any farm-in or
similar agreement which may
be entered into as contemplated
by Article 35. Most
jurisdictions draw a distinction
between a farm-in arrangement
and a straight agreement to
transfer. Given the potential
benefit of farm-in agreements in
terms of requiring committed
expenditure and completion of
exploration works,
arrangements of this kind
should be supported and the
prohibition in Article 33.2
should not extend to such
arrangements.
Clarify.
33.3 Except for the case specified
in 33.1 and 33.2 of this law,
the license may only be
transferred by Assignment
of rights agreement in
accordance with this law and
other procedures approved
conformity therewith.
Assumption that this will
trigger a much higher tax rate
compared to a purchase and
sale.
Clarify.
No. Article Draft provision Comment Recommendations
33.4 Holder of the license shall
notify State Administration
of the intention of the
transfer no less than 30
(thirty) days prior to
conclusion of the agreement
on such transfer.
What is the scope of such
notice? Does the State
Administration have the right to
interfere with the commercial
aspects of the transaction? Is
this really an approval?
This is problematic given that
notice must be given “prior to
the conclusion” of an agreement
rather than as a condition
precedent to effectiveness after
the conclusion of an agreement.
As phrased, a commercial party
has an extra 30 days to exit the
transaction rather than being
locked in.
Clarify.
Consider changing from
“prior to the conclusion of
an agreement” to “prior to
the full effectiveness of the
Agreement” or something
similar.
33.5 A state-owned legal entity
that is holding the license for
geological and mining
activities shall have the
privileged right to obtain the
license on an assignment of
rights agreement by the price
amount.
Drafting is unclear, could
possibly seek to impose a right
of first refusal for all
Mongolian SOEs for all
assignments or possibly only
assignments for licences in
which they have an interest.
Unclear what this Article is
trying to achieve.
Clarify.
33.6 If the transferee has not fully
met the conditions and
requirements specified in
Articles 22 and 66 of this
law the State Administration
shall not register the
agreement to transfer the
license thereto.
33.7 The agreement on transfer of
license shall be valid upon
registration by the State
Administration in the license
registration database.
33.8 If the State Administration
has received request to
transfer the license, it shall
be obliged to inform third
parties the interests of which
are affected in the following
cases.
It is unclear what timing or
procedural requirements will be
in place in relation to such
notifications.
Clarify.
No. Article Draft provision Comment Recommendations
33.8.1 pledge agreement related to
the license is registered in
the license registration
database;
33.8.2 agreement to create interests,
jointly own interest and
transfer the interest
percentage on the non-
material property rights
created by the license is
registered in the license
registration database;
33.9 Upon registration of the
license transfer agreement
by the State Administration,
all rights and obligations of
the license holder shall be
transferred to the transferee.
34. Pledge of license Essentially, the pledge is
useless as State Administration
may refuse the transfer to the
lender (or another operator as
may be chosen by the lender).
Security risk for lenders is too
high.
Consider financing
consequences.
34.1 The license may be on
pledge.
Licences may be pledged. This
does not distinguish between
the types of licences that may
be pledged. For example, if a
pledge was enforced over a
prospecting licence or an
exploration licence in the first
year query could they validly be
transferred?
Further, there is no requirement
for the pledge to only be with
banking and non-banking
financials, legal entities or
persons.
Clarify.
Clarify that this is correct.
34.2 The holder of the license
shall submit its request to
register the pledge
agreement of the license to
the State Administration in
the license registration
database.
No. Article Draft provision Comment Recommendations
34.3 Upon receipt of the request
to register the license pledge
agreement, the State
Administration shall notify
other persons the interests of
which are affected in
relation to the license
registered previously in the
license registration database.
Within what time frame? Is this
pre or post notice given the
short time frame in Article 34.4.
Clarify.
34.4 The State Administration
shall register the request
specified in 34.2 of this law
within 3 working days in the
license registration database
and issue a certification of
such registration to the
license holder.
34.5 The license holder shall
submit its request to remove
the license pledge
registration from the license
registration database after
the termination of the pledge
agreement.
34.6 The State Administration
shall register the termination
of the license pledge
agreement in the license
registration database upon
the proof of the obligation
fulfillment by the pledge
with respect to the
underlying pledge
agreement.
How is this accomplished?
Assumption that they will
notify/contact the Pledgee for
consent?
Clarify.
34.7 If the license holder has
failed to perform its
obligation under the
agreement, the pledgee shall
submit its request to the
State Administration to
transfer the license to other
persons.
34.8 If the transferee person
suggested by the pledgee
does not fully meet the
requirements and conditions
defined for a license holder
as specified in this law, the
State Administration may
refuse the request to transfer
the license.
Then what? May they submit
further, tender? What happens
to the license and license area
during this time? How is the
pledgor prevented from an
immediate “grab and carry” or
other hasty actions just prior to
losing their license? Is this left
to the courts?
Clarify.
No. Article Draft provision Comment Recommendations
34.9 The pledgee of the license
shall not bear any
obligations related to the
license.
34.10 The State Administration
shall not bear any
obligations to ensure the
fulfillment of the license
pledge agreement.
No. Article Draft provision Comment Recommendations
35 Creating interest in the
non-material property
rights created by the
license
35.1 By issuance, registration and
performance of the
obligation imposed, the
license shall create non-
material property rights for
the holder.
35.2 The non-material rights
created by the license shall
serve as the guarantee to
perform rights and
obligation created by the
license solely for the holder
of the license.
35.3 For the purposes of
accessing its fruition, other
persons may create interest
in the non-material rights of
the license in the following
ways.
35.3.1 investing;
35.3.2 co-operating;
35.3.3 completing contract works;
35.4 Agreements creating interest
and directed at transferring
the interest percentage in the
non-material rights of the
license shall be made
according to the conditions
and requirements approved
by the State Administration
and shall become valid upon
registration at the State
Administration according to
this law.
Given the potential economic
benefits of encouraging
exploration works through
farm-ins or similar mechanisms
(and the prevalence of such
arrangements among small-
medium sized miners), any
conditions or requirements
should be clearly set out in the
proposed law. In keeping with
the practice of other
jurisdictions, such conditions or
restrictions should be minimal
and retain the freedom of
parties to contract within the
overall framework of the
proposed law (i.e. prescriptive
regulations will discourage
investment and restrict miners
from pursuing alternative
arrangements which facilitate
exploration works).
Consider and clarify.
36 Revoking of license
No. Article Draft provision Comment Recommendations
36.1 The State Administration
may revoke the license on
the following grounds.
We note the language “may” as
opposed to “shall” which
implies discretion is granted to
the State Administration as to
whether or not they want to
revoke.
Clarify that this is the case.
36.1.1 the license holder did not or
does not fulfill the
conditions and requirements
set by Articles 22 and 66 of
this law;
36.1.2 relevant state authority has
inspected and found that the
license holder did not or
does not fulfill the
obligations under other
permissions granted by
relevant state administration
and has thereof notified the
State Administration to
revoke the license;
Licenses can be revoked if
“obligations under other
permissions..” are not fulfilled.
This is too general and could be
interpreted as applying to the
most minor and insignificant
administrative omission.
The scope and substance
needs to be better defined.
36.1.3 it has been confirmed by the
State Administration that the
license holder has mined in
the high grade area;
Unclear what is meant by 'high
grade area'. It is assumed that
this provision is designed to
reinforce Article 69
Further, and as noted elsewhere,
high-grading needs to be
clarified.
Clarify and address scope of
high grading issue.
36.1.4 the authorized specialized
inspector has submitted
conclusion, and
recommendations on
revoking the license as
specified in 144.3 of this
law;
36.1.5 the exploration license
holder has not started
exploration activities within
the period specified in 93.5.1
of this law since the date of
obtaining the Work
authority;
The period is only three (3)
months. This does not take into
account when the “Work
Authority” is granted (during
the winter months and outside
the scope of the exploration
season), nor does it take into
account that economic or
social/labor conditions may
require a delayed start.
Re-think.
No. Article Draft provision Comment Recommendations
36.1.6 the mining license holder
has not submitted its request
to obtain Work authority
within 12 (twelve) months
since the decision has been
issued to grant a mining
license;
This does not take into account
that economic or social/labor
conditions may require a
delayed start. Further, if the
project requires major mine
infrastructure or planning, this
is not feasible. It may not be
within the license holder‟s
control to have the Technical
and Economic Feasibility
Report, Mine Plan,
Rehabilitation work Plan,
Environmental Impact
Assessment, Damage
Assessment, Local
Development Agreement, etc.
completed within this time
frame.
It is our assumption that even
ETT could not meet this
requirement if asked and many
of its license would be revoked.
Re-think.
36.1.7 the mining license holder
has not started extraction
works within timeframe
stated in 94.5.1 of this law
since the date of issuance of
the Work authority;
The period is only twelve (12)
months and does not allow for
sufficient flexibility given all of
the commercial, financing, and
technical requirements to begin
extraction.
Re-think.
36.1.8 the State Administration has
revoked the Work authority
for a specific period of time
in accordance with 96.1 of
this law, and the permission
to conduct contracted works
have not been restored for 6
(six) months since the date
on which the license was
revoked for failure to fulfill
the requirements or perform
the imposed obligations or
eliminate the violations
within the period;
No. Article Draft provision Comment Recommendations
36.1.9 relevant authorities have
determined that the activities
of license holder may have
created the conditions may
have arisen as a result of that
are harmful, hazardous to
the licensed area, employees
at the site, persons working
nearby and citizens and
inhabitants living in the
environment;
Language in this article is
somewhat vague. Clarification
is required as to what would
constitute 'harmful' or
'hazardous'. By virtue of the
very nature of mining
operations, safety hazards can
be identified almost anywhere.
Clarification is also required
around the process used to
determine whether citizens or
inhabitants are impacted,
including rights of review by
the licence holder.
Clarify.
36.1.10 the license holder has failed
to pay the license fees within
the specified period as
specified in this law;
36.1.11 if the reimbursement and
penalty have not been paid
within 30 (thirty) days since
the receipt of the notification
by the State Administration
as to fulfillment of the
obligations under the
agreement to pay
reimbursement in
accordance with 110.6 of
this law;
We assume this is 100.7?
36.1.12 if liabilities as specified in
145.2 and 145.3 of this law
have been imposed;
36.2 If the State Administration
deems one of the grounds
has emerged in accordance
with 36.1 of this law, the
State Administration shall
immediately notify the
license holder and, other
persons the interests of
whom are affected by the
license, and which are
registered in the license
registration.
No. Article Draft provision Comment Recommendations
36.3 If the license holder does not
agree with the grounds
specified in the notification,
it shall submit its
clarification with the
relevant proof and materials
to the State Administration
within 30 (thirty) days since
the receipt or date
considered as receipt date. If
the license holder has not
submitted its documents
within this period the State
Administration shall revoke
the license.
We note that it says “shall”
revoke here as opposed to
“may”. It is not clear whether
this is mandatory or left to the
State Administration‟s
discretion.
If 30 days is not sufficient may
there be an extension?
Clarify.
36.4 The State Administration
shall review the clarification,
evidence and materials
submitted within 30 (thirty)
days and maintain the
license valid if it deems such
documents are well-
grounded.
36.5 If the State Administration
deems the clarification,
evidence and material
submitted by the license
holder as groundless it shall
issue a decision to revoke
the license within the period
specified in 36.4 of this law.
We assume that this decision
can be appealed within the State
Administration and in the
administrative courts and that
the license shall remain valid
during the appeals process.
If 30 days is not sufficient may
there be an extension?
Confirm assumption.
37 Informing the public
37.1 If the State Administration
has issued a decision
regarding the announcement
of tender for license
granting, receipt of the
application for a license,
granting a license, extending
the license, change in the
size of the area granted by
license, and revoking the
license, it shall inform the
public of the following
within 5 working days since
the decision has been issued
through its own website and
the media.
37.1.1 the area size, location and
type of license specified in
the application for license;
No. Article Draft provision Comment Recommendations
37.1.2 if the area size has been
changed, the area and
location of the area, period
of license;
37.1.3 extension period of license if
any;
37.1.4 area size, location of area
and type of license when the
decision was made to revoke
or license holder returned all
of the area granted by
license;
38 Announcement of the area
to be granted by tender
Increased authority of local
government in issuing license
38.1 Central State Administration
shall announce the area to be
granted through tender in the
first week of February every
year.
38.2 Central State Administration
shall have obtained the
proposals of the relevant
local self governing
authority in announcing the
area to be granted through
tender, according to the
procedure specified in
Article 39 of this law.
38.3 Central State Administration
shall have obtained
comments of the state
agencies in selecting the area
to be granted through tender
for that particular year
according to the Article 40
of this law.
38.4 Central State Administration
may have obtained proposals
from legal entities in
selecting the area to be
granted through tender for
that particular year.
When are these proposals due
by?
Clarify?
38.5 Central State Administration
may announce tender
selection processes for the
following areas:
38.5.1 areas not granted by license
and not applied for any
license;
Does this include existing land
licenses?
Clarify?
38.5.2 areas released due to the
invalidation of the license;
38.5.3 areas released due to the
revocation of the license;
No. Article Draft provision Comment Recommendations
38.5.4 areas which have been
released due to the return by
the license holder;
38.5.5 areas released from the state
and local special use;
38.5.6 for areas released from the
state reserve;
38.6 Central State Administration
may announce the area to be
granted through the tender as
specified in 38.5.2-38.5.6 of
this law as integrated or
segregated.
38.7 Central State Administration
may announce tender for
the areas that have been
amalgamated or the same
area that has been divided in
accordance with 38.5.2-
38.5.6 of this law.
38.8 Central State Administration
shall not announce tender for
the areas on which
prospecting, exploration,
mining and processing
activities are prohibited, or
the areas which have been
taken for state reserve or
state and local special use.
38.9 Central state administration
shall not re-announce tender
for the area when conditions
as defined in 59.2 of this law
have arisen and in the
duration of 90 days during
which applicant shall
nominate another entity.
38.10 The area to be announced
for tender to grant
prospecting exploration,
mining and processing
license shall have a tetragon
shape the border of which
shall be marked by straight
lines, overlapping with the
lines of longitude and
latitude.
38.11 The parts bordering with the
following areas and
territories may be non-
straight line for purposes of
avoiding the overlapping.
38.11.1 state border;
No. Article Draft provision Comment Recommendations
38.11.2 areas prohibited or limited to
conduct prospecting,
exploration, mining and
processing activities thereon;
38.11.3 areas taken state reserve and
state and local special use;
38.11.4 natural formation such as
lakes and ponds considered
not possible to be integrated
into the prospecting and
exploration area;
39 Obtaining proposal from
local self governing
authority
Increased authority of local
government in issuing license
39.1 The State Administration
shall have obtained the
proposals from the relevant
local self-governing
authority in announcing the
area for tender selection
process, according to the
procedure specified in this
Article.
By what date must the State
Central Administration notify
them?
Clarify.
39.2 The central state
administration shall notify
the relevant local self-
governing authority of areas
to announce the tender in
following manner:
39.2.1 to notify the relevant soum
or district Citizens
Representative Khural if the
area requested by the license
is in one soum or district
territory;
39.2.2 to notify each soum or
district Citizens
Representative Khural if the
area requested by the license
overlaps 2 or more soum or
districts territories;
39.3 The local self governing
authority shall make a
decision supporting or
rejecting the announcement
of area for tendering within
30 (thirty) days since the
date of the receipt of the
notification by the state
central administration as
specified by 39.2 of this law.
No. Article Draft provision Comment Recommendations
39.3.1 if the decision is to reject the
announcement, the grounds
for such rejection shall be
specified clearly in the
decision;
39.3.2 the local self-governing
authority shall submit
through certified post its
decision to the state central
administration within 21
days as specified in 39.3 of
this law;
39.3.3 If the local self-governing
authority has not responded
to the notification of the
state central administration
within the period specified
in the law, it shall be
deemed that announcement
of the area for tendering has
been supported;
39.4 If the relevant local self-
governing authority has
rejected the state central
administrative authority‟s
proposal to announce area
for tendering, the tender
selection shall not be
announced. Furthermore, the
area shall not be announced
for tendering for the period
of 4 years, since the date of
decision of rejection by local
self-governing authority.
This gives the localities a lot of
power given that “the tender
selection shall not be
announced”. Would it not be
advisable to have the State
Central Administration take this
into consideration but not as a
definitive cancelation?
Effectively, the locality could
halt the national development of
Mongolia. Why not limit this
similar to Article 40?
The four year period also seems
to be extreme. What is the
rationale for this duration?
Consider revising the weight
of the local decision.
Clarify.
40. Obtaining comments from
state agencies
40.1 Before announcing the
tender, Central State
Administration shall obtain
comments from following
state agencies regarding the
area applied for tendering
and the license type to be
granted through tender.
By what date must the State
Central Administration notify
them?
Clarify.
40.1.1 Central state administration
in charge of nature and
environmental affairs;
40.1.2 Central state administration
in charge of urban planning,
and infrastructure;
No. Article Draft provision Comment Recommendations
40.1.3 Central state administration
in charge of land relations;
40.2 Notification on announcing
the area to be tendered for
mining and processing
licenses shall be submitted
to the administrations as
specified in 40.1 of this law
as well as the central state
administration in charge of
economic development.
40.3 If state agencies as defined
in 40.1 and 40.2 of this law
have particular comments
regarding the area applied
for tendering, they shall
submit its comments to the
central state administration
within 21 (twenty one) days
following the date of receipt
of the notification. In that
case state central
administration shall discuss
with that particular state
agency on comments raised.
No. Article Draft provision Comment Recommendations
41 Announcing the area for
tender on land in
ownership, possession and
utilization by others
41.1 The State Administration
may announce the area for
tender on land owned by
citizens, possessed or
utilized by others based on
the permission of the land
owner and possessor in cases
other than those rejected by
the relevant soum or district
Governor as specified in the
“Law on Allocation of Land
to Mongolian Citizens for
Ownership.
What about the permission of
the land “user”?
What are the mechanics to
make this work as the land
owner, possessor and user are
liable for the condition of their
land? What about the
requirements of the Land Law
that the local Governor must
approve any such use as well?
Can the local Governor prevent
this by denying such use? It
would appear that this is
another avenue for the local
Governor to prevent a project.
Clarify.
Clarify.
42 Announcing the area for
tender to grant license
with the national border
zone
42.1 Area for tender and license
to grant prospecting,
exploration, mining and
processing license within the
border zone shall be
announced by the decision
of the Government.
42.2 Applicant which has met the
conditions and requirements
as specified in Article 22
and 66.4 of this law shall be
entitled to participate in
tendering for the area for
license granting within
national border zone.
42.3 The Government may
impose exclusive control
regime for prospecting,
exploration, mining and
processing activities within
the national border zone.
What is meant by “exclusive
control regime”?
Clarify.
43 Announcing the tender to
grant license
No. Article Draft provision Comment Recommendations
43.1 State Administration shall
announce the date of the
tender to the public through
daily newspapers within 14
(fourteen) days after the
announcement of the area
for tendering by the state
central administration.
The time periods in this Article
do not align with those in
Article 46.1.2
Clarify.
43.2 The announcement on
conducting the tender shall
contain information as
specified in this law and in
the procedure approved by
the state administration on
the conditions and
requirements of the tender,
and shall be deemed invalid
if the relevant information is
not specified.
43.3 An area where minerals
concentration has been
detected as a result of
reconnaissance and
prospecting works funded by
state budget shall be
announced for tendering a
license only for exploration
activities.
34.4 An area where minerals
reserves have been
determined as a result of the
exploration funded by the
state budget shall be
announced for tendering a
license only for mining
activities.
44 Announcing of the tender
to grant exploration and
mining license for
derivative deposits and
industrial waste
No. Article Draft provision Comment Recommendations
44.1 For the purpose of
rehabilitating the
environment, the state
administration may
announce the tender for
exploration and mining
license for derivative
deposits and industrial
wastes on the land which has
been used before the
adoption of this law and
which has not been licensed
during the adoption of this
law.
44.2 In announcing area for
tender to grant exploration
and mining license in
derivative deposits and
industrial waste site as
defined in 44.1 of this law,
there shall be no requirement
to take comments and
proposals as stated in 39,
41.1.2, 41.1.3 of this law.
44.3 Exploration license holder in
derivative deposits and
industrial waste may have
been exempted from a
license fee and mining
license holder in derivative
deposits and industrial waste
may have been exempted
from the mining royalty in
line with 44.1 of this law.
45 Obtaining the comments
from state agencies
[Note: no text in draft law]
46 Objecting the tender
announcement
There is no limit on the number
of dispute/objections or a
statute of limitations of sorts.
What information will be
provided to the candidates who
may want to tender and for
them to base their tender on?
Consider imposing
reasonable limits.
Clarify.
46.1 Any entity shall have the
right to object the
announcement of the tender
in following manner:
No. Article Draft provision Comment Recommendations
46.1.1 An entity which is making
the objection to the
announcement of the tender
shall submit to state
administration its statement
in writing by which the
grounds for objection have
been clearly noted.
46.1.2 The entity objecting the
announcement of the tender
shall submit the objection
statement within 14
(fourteen) days since the
central state administration
has publicly announced the
area for tendering for license
granting by the state central
administrative authority. The
entity objecting the
announcement of the tender
shall issue the object within
The time periods in this Article
do not align with those in
Article 43.1.
The sentence is incomplete.
Clarify.
Clarify.
46.2 If the State Administration is
convinced that the objection
has been well-grounded, it
may not announce the
tender.
46.3 The State Administration
shall ensure that objection
statement and objection
grounds have been
accessible and open to the
public and any interested
entity until the final decision
shall be issued whether to
grant or reject the request for
license.
47 Right to submit the
application for
participation in tender
47.1 Any entity which meets
requirements and conditions
as defined in this law and
thereof eligible to hold a
license shall have the right
to participate in tender.
48 Receiving the applications
for participation in tender
No. Article Draft provision Comment Recommendations
48.1 The starting date of
receiving application to
participate in tender shall be
no less than 30 (thirty) days
following the announcement
of the tender and the
deadline shall be no less
than 14 (fourteen) days
following the starting date.
We assume that the tender
documents will not be over
burdensome (requiring
advanced reports,
technical/financial reports and
calculations, etc.) and can
realistically be reviewed,
completed and submitted within
such timeframes.
Confirm assumption by
clarifying the scope of the
tender documents.
48.2 When receiving an
application for tender the
State Administration shall
register the application and
documents attached to the
application in the primary
application registry, record
the number, date, hour and
minute of the registration on
each page of the application
and attached documents to
the application and issue the
notification to the applicant
that the application has been
registered.
48.3 Any other procedure
regarding the application
and receiving of the tender
applications shall be
regulated by the procedure
approved by the central state
administration.
48.4 List of documents which
have to be attached to the
application shall be
announced from time to
time, by the State
Administration.
We assume that the tender
documents will not be over
burdensome (requiring
advanced reports,
technical/financial reports and
calculations, etc.) and can
realistically be reviewed,
completed and submitted within
such timeframes.
Confirm assumption by
clarifying the scope of the
tender documents.
48.5 State Administration shall
refuse to accept the
application for tender if it
does not fully comply with
the conditions and
requirements set out by this
law and the procedure
approved by central state
administration as to
submitting the applications
for tender participation.
49 Evaluating tender
documents
No. Article Draft provision Comment Recommendations
49.1 The criteria to evaluate the
tender applications shall be
announced by state
administration beforehand
and the following conditions
shall be evaluated at every
tender selection.
There are currently no
prescribed periods within which
the State Administration must
make a decision regarding a
tender application. While there
is a need to be flexible to allow
the State Administration
sufficient time to consider such
applications, provisions that set
out general time parameters
would enhance the certainty of
the regime. For example, the
State Administration could be
required to make a decision
within 6 months of tenders
closing with the ability to
extend its consideration for an
additional 3 month period in
particularly complex
circumstances.
We assume that the criteria will
not include any preference to
national entities over foreign
invested entities.
Consider and clarify.
Confirm assumption.
49.1.1 conditions to grant license
specified in Articles 22 and
66 of this law;
49.1.2 proposal to voluntarily
increase the mining royalty
rate;
This could lead to unfair and
anti-competitive practices. It
encourages parties to put
forward un-economic projects
and could lead to projects
starting and then going
insolvent as parties will
overstate their ability to pay
royalties to win tenders – or if
other legislative or technical
changes occur this may become
impossible.
Consider and clarify.
49.1.3 proposals regarding the
conditions to develop the
agreements on Cooperation
and Local development set
forth in 86.1 and 86.2 of this
law;
No. Article Draft provision Comment Recommendations
49.1.4 proposal to voluntarily
increase the rate of
reimbursement for the
exploration expenses,
incurred to the participant to
tender for granting mining
license for the deposit,
where exploration and
reserve determination was
funded by the State budget
and registered in the national
consolidated registration.
49.2 The State Administration
shall, upon consideration of
the conditions and criteria
specified in 49.1 of this law,
announce the participant
which has gained the highest
score as a winner of the
tender.
49.3 Participant which has failed
to meet the main conditions
and requirements as defined
in 49.1.1 of this law shall not
be announced as a winner of
the tender.
50. Announcing the tender
winner
50.1 If the State Administration
has selected the winner of
the tender process, it shall
immediately inform in
written form the winner and
the other participants of the
tender.
50.2 While informing the other
participants which have not
been selected in the tender,
state administration shall
clearly note the grounds for
why they haven‟t been
selected.
50.3 The winner of the tender
selection process shall
inform the State
Administration in writing of
its acceptance within 14
(fourteen) days since the
receipt of the notification as
defined in 50.1 of this law.
No. Article Draft provision Comment Recommendations
50.3.1 local governments and local
self governing authority in
the territory wherein the area
is to be granted with license;
50.3.2 central state administration
in charge of nature and
environmental affairs;
50.3.3 state administration in
charge of land relations;
50.4 In addition to the
administrations as specified
in 50.3 of this law, the
central state administration
in charge of economic
development shall be
notified about the winner of
tender for granting mining
and processing licenses
50.5 The State Administration
shall inform the public of the
information regarding area
granted by license based on
a tender, type of special
permission and the winner of
such tender within 7 (seven)
days since the date of
issuance of such decision.
51 Cases whereby tender
winner has not been
selected
Assumption that if there is no
one bidding or no suitable
candidates then the license area
remains untendered until the
following year.
Confirm assumption.
51.1 The State Administration
may select none of the
participants in the tender on
the basis of the grounds as
specified in49.3 of this law.
51.2 In case whereby no winner
has been selected in the
tender, the State
Administration may or may
not re-announce the tender
specific to the area
51.3 If the State Administration
has deemed impossible to
select a winner in the tender
in accordance with 51.1 of
this law and has issued a
decision in concurrence with
51.2 of this law, the
participants of the tender
shall be immediately
notified in writing.
No. Article Draft provision Comment Recommendations
52 Granting license to the
tender winner
52.1 If the applicant has fulfilled
its obligation as specified in
52.3 of this law State
Administration shall issue a
decision to grant the license
and thereof grant a license
certificate to the tender
winner after 30 (thirty) days
since the date on which the
winner was publicly
announced in concurrence
with this law and according
to the following principles:
52.1.1 to grant prospecting license
to the winner of the tender
for prospecting license;
52.1.2 to grant exploration license
to the winner of the tender
for exploration license;
52.1.3 to grant mining license to
the winner of the tender for
mining license;
52.1.4 to grant processing license to
the winner of the tender for
processing license;
Cross Reference 53.1.3 and
26.1.1. Who determines if a
processing license must be
tendered?
Clarify.
52.2 It shall be prohibited to grant
license for persons other
than the winner of the tender
selection on the area
announced for tender;
52.3 The tender winner shall pay
the initial year license fee
and other fees payable in
advance within the time
specified in Article 85 of
this law and other relevant
laws after the State
Administration has
announced the tender
winner.
No. Article Draft provision Comment Recommendations
52.4 In cases whereby the tender
winner has not notified the
state administration about its
acceptance of the result of
the tender and has not paid
the initial year and other
advance fees within the
specified period, these shall
serve grounds for not
granting the license and
cancelling the tender result.
52.5 The date of issue, name of
holder, size of granted area,
and the cornerpoint
coordinates shall be
recorded on the license
certificate and the license
shall be accompanied with
attachment to reflect the
changes to be made in
relation to the license.
52.6 The State Administration
shall notify the following
agencies about granting the
license within 3 working
days since the license
certificate has been granted
to the license holder and
thereof registered in the
register of licenses.
52.6.1 the related local
government;
52.6.2 state administration in
charge of taxation matters;
52.6.3 specialized inspection
agency;
53 Right to submit an
application for license
53.1.1 a legal entity defined in
24.1.1 of this law to apply
for exploration license;
53.1.2 a legal entity defined in
25.1.1 of this law to apply
for mining license;
53.1.3 a legal entity defined in
26.1.1 of this law to apply
for processing license;
54 Receiving the applications
for license
No. Article Draft provision Comment Recommendations
54.1 Upon receiving the
application for license the
State Administration shall
register the application and
documents attached to the
application in the primary
application registry and
record the number, date,
hour and minute of the
registration on each page of
the application and attached
documents to the application
and issue the notification to
the applicant which confirms
the registration of the
application.
54.2 List of documents which
have to be attached to the
application shall be
approved by the State
Administration.
We assume that the application
will not be over burdensome
(requiring advanced reports,
technical/financial reports and
calculations, etc.).
Confirm assumption by
clarifying the scope of the
application documents.
54.3 The State Administration
shall review the application
if there are grounds to refuse
the acceptance of the
application and thereof
notify the applicant within
10 (ten) days after the date
of receiving an application
and registering it to the
primary application registry.
It is unclear whether this
provision requires all
applications to be decided
within 10 days of receipt.
Clarify.
55 Refusing to accept the
application for license
55.1 The State Administration
shall refuse accepting the
application for license in the
following cases:
55.1.1 Applicant has applied for
exploration license in the
land where the prospecting
license has not been granted
to the applicant;
55.1.2 Applicant has applied for
mining license in the land
where the exploration
license has not been granted
to the applicant;
No. Article Draft provision Comment Recommendations
55.1.3 Entity other than the holder
of the prospecting license
has applied for exploration
license on the area which
had been granted to the
holder of prospecting
license;
55.1.4 Entity other than the holder
of the exploration license
has applied for mining
license on the area which
had been granted to the
holder of exploration
license;
55.1.5 The applicant has applied for
processing license on the
area that overlaps with the
area granted by prospecting,
exploration and mining
licenses.
Clarification of the intent of this
provision is required as the
definitions for mining and
processing overlap (mining
allows for processing, but not
vice versa). For example, is it
intended that 2 licences would
be required (1 for mining and 1
for processing)?
Clarify.
55.1.6 The applicant has applied for
license over the land that
overlaps with an area that
has been announced for
tendering by central state
administration;
55.1.7 The applicant has applied for
license in the area that
overlaps with an area on
which prospecting,
exploration, mining and
processing activities have
been prohibited or which has
been decided to take in state
reserve or the local special
use;
55.1.8 The applicant has applied for
license on the area that has
been prohibited for being
licensed within four years
since it had been applied for
and the local self-governing
authority had rejected to the
proposal by the central state
administration to tender;
No. Article Draft provision Comment Recommendations
55.1.9 The applicant has applied for
license on the mine and
industrial as well as arable
sites closed by the decision
of the State Administration
in accordance with this law;
55.2 The State Administration
shall refuse to accept the
application for license if it
does not fully comply with
the conditions and
requirements as defined in
this law and the procedure to
submit applications for
license approved by State
Administration.
55.3 The State Administration
shall review the application
if there are grounds to refuse
the acceptance of application
in line with 55.1 of this law
within 5 days since the
application was received and
may obtain additional
information and clarification
from the applicant if it
deems that such grounds
may exist.
55.4 The State Administrative
Authority shall request in
writing the application to
provide additional
information and clarification
in line with 55.3 of this law
and in doing so, shall clearly
specify the date within
which (the information was
to be given) the application
should respond to the
request. In that case, the
period as specified in 55.3 of
this law shall be deemed
extended by the date of
response.
55.5 If the applicant has not
submitted the additional
information and clarification
within the specified time, the
State Administration may
refuse to accept the
application.
No. Article Draft provision Comment Recommendations
55.6 The State Administrative
Authority may accept the
applications as specified in
55.1.3 and 55.1.4 of this law
based on the written request
submitted by the holders of
exploration and mining
license on the specific area.
55.7 The State Administration
shall refuse the acceptance
of the application provided
there are grounds for such
refusal in line with this law,
and shall notify the applicant
about the grounds and
reasons for such refusal and
thereof record in the
registration book of licenses.
55.8 If there are no grounds to
refuse acceptance of the
application as specified in
this law, the State
Administration shall accept
the application and notify in
writing the applicant about it
and record in the registration
book of licenses.
No. Article Draft provision Comment Recommendations
56 Prohibiting the transfer of
application for license
56.1 It shall be prohibited to
transfer the application for
license onto the names of
other entities.
57 Submitting the request to
withdraw the application
for license
57.1 If the applicant has
submitted its written request
to withdraw the application
to the State Administration,
the application shall be
deemed as withdrawn.
57.2 The original copies of
application and the
documents attached to the
application shall remain at
the State Administration and
their copies shall be given to
the applicant free of charge.
Assumption that they will be
kept confidential?
Confirm assumption.
58 Deeming possible to grant
license
58.1 Upon acceptance of the
application as set forth in
Article 55.8 of this law, each
requirement listed in Article
22 of this law shall be
evaluated within thirty (30)
days since the date of
acceptance of application.
58.2 Upon evaluation of the
requirements in accordance
with 58.1 of this law, the
State Administration may
submit a request in writing
to the applicant for
additional information and
clarification. In this case the
period within which to
provide this additional
information and clarification
shall be specified clearly.
No. Article Draft provision Comment Recommendations
58.3 The State Administration
shall deem it possible to
grant the license to the entity
which has met the conditions
and requirements as
specified in Article 22 of
this law and shall notify it in
writing to the applicant and
the following
administrations.
58.3.1 Relevant local government
and self-governing authority;
58.3.2 Central state administration
in charge of nature and
environmental affairs;
58.3.3 state administration in
charge of land relations;
58.4 In addition to the authorities
as specified in Article 58.3
of this law, the state
administration in charge of
economic development shall
be notified about granting
the licenses for mining and
processing.
58.5 If the state agencies
specified in 58.3 and 58.4 of
this law have specific
comments and proposals in
response to the notification,
they shall submit them to the
state administration within
14 (fourteen) days since the
date of receipt of the
notification. State
administration shall be
obliged to consult with the
state agencies on their
comments and proposals.
This reopens the door to the
localities and agencies. We
assume that this is merely a
“consultation” and the State
administration can ultimately
make its decision.
Confirm assumption.
No. Article Draft provision Comment Recommendations
59 Deeming impossible to
grant license
59.1 If the applicant has not
fulfilled the conditions and
requirements as specified in
Article 22 of this law the
State Administration shall
deem it impossible to grant
license to the applicant and
shall notify in writing the
applicant within 3 (three)
days since the date on which
the decision has been made.
In doing so, the state
administration shall clearly
specify the grounds for such
decision.
There is no cure period? We suggest adding a limited
cure period.
59.2 If the State Administration
has issued a decision on
being impossible to grant a
license in line with 59.1 of
this law, the applicant shall
be entitled to nominate
another entity which meets
all conditions and
requirements as specified in
this law and submit the
request in writing to grant
license to the state
administration within 90
(ninety) days since the
decision has been issued.
60 Objections to grant a
license
60.1 Any entity shall be entitled
to make objection to
granting a license. In such
case making objection shall
be regulated by the rule and
procedure as defined in
Article 46 of this law.
61 Decision making by State
Administration with
respect to granting or not
granting a license
No. Article Draft provision Comment Recommendations
61.1 The State Administration
shall issue one of the
following decisions within
60 (sixty) days since the date
of accepting the application
for license in accordance
with 55.8 of this law.
As we understand, after the
State Administration has
accepted an application (Article
55.8) it has 30 days to review
whether an applicant meets the
requirements of Article 22 of
the Draft Law (Article 58.1). If
not then the applicant has 90
days to find another suitable
entity to hold the license
(Article 59.2). However,
according to Article 61.1, the
State Administration must make
a decision to grant or refuse to
grant a license within 60 days
of accepting an application as
set forth in Article 55.8. Thus,
even though there is an
additional 30 days for the
applicant to find a replacement,
the State Administration must
decide whether to refuse or
grant.
Assuming that we are
reading this correctly, we
would suggest qualifying
Article 61.1 by stating that
the period shall be extended
for another 30 days if action
is being taken under Article
59.2.
61.1.1 refuse to grant a license;
61.1.2 grant a license.
61.2 If the State Administrative
Authority has made a
decision to grant a license to
the applicant, it shall issue a
license certificate to the
license holder within 3
(three) work days since the
date on which the decision
has been made.
62 Refusal to grant license
62.1 The State Administration
shall refuse to grant license
in the following cases.
62.1.1 When the legal entity has
not met the conditions and
requirements on as specified
in 22 of this law;
Subject to Article 59.2, right? Clarify.
62.1.2 When the entity is other than
the applicant which has been
deemed by the state
administration as being
possible to be granted with
license in line with 58.3 of
this law;
No. Article Draft provision Comment Recommendations
62.1.3 Exploration license shall not
be granted to another entity
on the area licensed to
prospecting unless the
holder of prospecting license
has made such request in
writing;
62.1.4 Mining license shall not be
granted to another entity on
the area licensed to
exploration unless the holder
of exploration license has
made such request in
writing;
62.1.5 Processing license shall not
be granted to another entity
on the area licensed to
mining unless the holder of
mining license has made
such request in writing;
62.1.6 Any area that overlaps with
areas granted by license;
62.1.7 Area for which the
application for license has
been accepted and the state
administration has not made
a decision yet to grant or not
to grant a license;
62.1.8 Areas on which prospecting,
exploration, mining and
processing activities are
prohibited by this law.;
62.1.9 Areas which have been
decided to take in state
reserve or special use;
62.2 Licenses of the prohibited
types of activities shall not
be granted on land on which
such types of geological and
mining activities have been
prohibited.
62.3 Prospecting license shall not
be granted on areas on
which prospecting works
had been carried out and
reports of the prospecting
works had been accepted by
the relevant authority.
This closes the door to any
further prospecting by a
different legal entity that many
need to verify or confirm such
findings and forces a tender for
an exploration license, perhaps
prematurely.
Consider and Clarify.
No. Article Draft provision Comment Recommendations
62.4 Exploration license shall not
be granted on areas on
which exploration works had
been carried out and the
reserves have been
determined in line with this
law.
Similar to above comment. Consider and Clarify.
62.5 Mining license shall not be
granted on areas the reserve
of which has not been
determined in line with this
law.
62.6 If the State Administrative
Authority deems the
objection as specified in
Article 60 of this law is
well-grounded, it may refuse
to grant license.
No. Article Draft provision Comment Recommendations
63 Refusal to accept license
63.1 The applicant or winner of
the tender selection process
may refuse to accept the
license after the decision has
been made to grant license
through application and
tender procedure as
specified in this law.
By when? Is there a deadline?
Article 64 could greatly impact
this if not pre-determined prior
to the tender.
Clarify.
63.2 The entity specified in 63.1
of this law shall submit its
refusal in writing to the State
Administration, and the
State Administration shall
cancel its decision to grant
the license and register such
revoked decision in the
license registration book.
64 Specific conditions and
obligations set license
This Article needs substantial
clarification. Is this the same as
entering into an agreement with
the State? Are these obligations
not covered in their own subject
matter legislation and non-
negotiable/fixed?
Clarify.
64.1.1 rehabilitation, rehabilitation
expenses, its pledges;
64.1.2 environmental protection;
64.1.3 equivalent improvement of
environmental state in the
licensed area or other area,
64.1.4 protection of underground
water;
64.1.5 land management and land
use;
64.1.6 historical and cultural
heritages and common
property, their protection
and treatment;
64.2 The State administrative
agency shall clearly specify
whether conditions and
obligations have been set as
defined in 64.1 of this law
and reflect them in decision
on granting a license.
No. Article Draft provision Comment Recommendations
64.3 The State Administration
may consult with the license
holder in setting the
conditions and obligations
specified in 64.1 and shall
notify in writing the
agencies specified in 58.3
and 58.4 of this law about
the conditions and
obligations that have been
set to the license holder.
64.4 The conditions and
obligations set by the State
Administration on the
matters specified in 64.1 of
this law shall be achievable
and the following issues
shall be clearly specified and
attached to the license.
These conditions should also be
commercially feasible/flexible
and reasonable as well.
What if these conditions and
obligations as “set by the State
Administration” are disputed?
Consider and clarify.
Clarify process of dispute
resolution.
64.4.1 to specify each task related
to the condition and
obligation;
64.4.2 duration of task
implementation;
64.4.3 conditions wherein
obligation deem to have
been fulfilled;
65 Amending the obligation,
conditions and
requirements set by license
65.1 On the basis of reaching a
consensus with the license
holder, the State
Administration may amend,
postpone, revoke or add the
conditions set by the license
on the matters specified in
64.1 of this law.
65.2 The State Administration
shall not be entitled to
negotiate with the license
holder to change the valid
period of license or change
on its own the valid period
of the license.
No. Article Draft provision Comment Recommendations
65.3 If the license holder has
submitted a request to make
amendment to the obligation
and conditions set by the
license in accordance with
65.1 of this law, the State
Administration shall adhere
to the following principles in
reaching agreements with
the license holder.
65.3.1 to protect the nature and
environment in the area
granted by license, and
enhance the activities and
the results of rehabilitation,
65.3.2 to keep the balance of
environment and create and
apply the conditions which
contribute to keeping the
environmental balance,
65.3.3 to improve maintenance and
protection of common
property,
65.3.4 improve conditions for
license holder to implement
planned work and exercise
fully the rights and
obligations according to the
license,
66 Entitlement to hold a
license Article (66) is highly
restrictive.
Unworkable for foreign
publicly listed companies
that cannot control the %
held by Mongolian
shareholders.
Raises numerous issues, for
example, how will private
Mongolian ownership be
financed?
Note the delineation
between share holding
companies and Mongolian
citizens throughout this
Article.
Re-think and clarify.
66.1 A tax paying legal entity that
has been established and has
been operating in conformity
with the legislation of
Mongolia shall be entitled to
hold prospecting,
exploration and processing
licenses on areas outside the
This article creates unnecessary
barriers to entry. Most start-up
mining companies will require
licences to generate profit in
order to pay relevant taxes. Do
you mean registered with the
tax offices (meaning State
Registration Office)?
Re-think and clarify
No. Article Draft provision Comment Recommendations
national border zone.
Further, what is the incentive to
conduct such activities in view
of the limitations on mining?
66.1.1
(is 66.2)
A share holding company
shall be entitled to hold a
mining license when it has
been founded by a citizen of
Mongolia, and not less than
75% of its share capital and
in case of foreign invested
company, not less than 34%
of share amount is owned by
a Mongolian citizen, and
when it has been established
and has been operating in
conformity with the
legislation of Mongolia and
when it has been paying tax
in Mongolia.
Major put-off for investment.
Maximum company ownership
for a foreign invested company
(FIC) is 66%. Note under the
Company Law and
overwhelming majority is
2/3rds or 66.66% and this will
remove substantial control.
Will the 34% be held by
Mongolian citizen in a license
holder subsidiary or does this
provision apply to the listed
company?
What is the definition of
Mongolian citizen, is it
restricted to natural persons?
Serious re-think.
Clarify.
Clarify.
Clarify.
66.1.2
(is 66.3)
A share holding company
shall be entitled to hold a
license to mine at deposits
that have been explored and
the reserves have been
determined by state budget
financing when it has been
founded by a citizen of
Mongolia and not less than
75% of its share capital and
in case of foreign invested
company not less than 51%
of capital share is owned by
a citizen of Mongolia and
when it has been established
and has been operating in
conformity with the
legislation of Mongolia and
when it has been paying tax.
Major put-off for investment.
This means that in the case of
any state funded exploration,
the maximum company
ownership for FIC's is 49%.
Does the state funding include
pre-1991 period?
Serious re-think.
Clarify.
66.1.3
(is 66.4)
A share holding company
shall be entitled to hold
license for prospecting,
exploration, mining and
processing in the areas
outside the national border
zone when it has been
founded by a citizen of
Mongolia and not less than
75% of its share capital and
in case of foreign invested
Major put-off for investment.
Mongolian version refers to
"inside" not "outside" the
border zone.
This means that in the case of
any deposit inside the border
zone, the maximum company
ownership for FIC's is 49%.
Serious Re-think.
Clarify the distinction.
No. Article Draft provision Comment Recommendations
company not less than 51%
of capital share is owned by
a citizen of Mongolia and
when it has been established
and has been operating in
conformity with the
legislation of Mongolia and
when it has been paying tax
.
67 Entity accountable and
liable on behalf of the
license holder
Do you mean “persons” rather
than “entity”?
Clarify.
67.1 The members of executive
management, board of
directors and equivalent
body shall be accountable
and liable by this law on
behalf of the license holder.
See Article 145 also for
liabilities. Need to clarify the
nature and extent of liability.
Is this not already covered in
the Governing Persons under
the Company Law.
Clarify.
Consider removing from this
Draft Law.
68 Compliance of the license
holder’s activities with the
law
68.1 The license holder and the
entity appointed to manage
and lead the prospecting,
exploration, mining and
processing activities as
specified in Article 99 of
this law shall be obligated to
carry out the activities in
compliance with this law
and other relevant laws,
rules and procedures.
69 Prohibition of high
grading mining It should be noted that this article potentially conflicts with modern commercial mining practices. See earlier comments on production reserves vs. economic reserves Art. 3.1.10.
For example, a major coal
miner may want to leave high
ash thermal coal in the ground
as uneconomic to mine. If
some inspector were to come
along and accuse the company
of high grading by not taking all
resources even if not economic
and then cancel their licenses,
this would be unacceptable.
Investors will never believe that
their investment is safe from
Consider and Clarify.
No. Article Draft provision Comment Recommendations
bad decision on the part of State
officials if this is left as is.
69.1 The license holder shall be
obligated to mine the
mineral resources at full
extent and it shall be
prohibited to engage in high
grade mining.
Clarification required as to what
is intended by the phrase 'full
extent'.
Clarify.
69.2 If the condition, which
might apply to selecting
mining of minerals, has been
detected, the state
administration shall appoint
an expert and thereof
suspend a working authority
of the license holder upon
making a decision to appoint
the expert.
Clarification is required as to
the definition of 'high grade
mining' to ensure there is no
ambiguity as to when the State
authority can exercise its rights.
The appointment of a single
expert in these circumstances
may also result in error or be
prone to abuse. It is suggested
that an independent panel
mechanism be adopted.
There should also be a
mechanism in the event that the
license holder disputes the
findings.
Clarify.
Consider and Clarify.
Consider and Clarify.
69.3 State administration shall
determine whether the
license holder has been
selectively mining based on
the conclusion by the expert
within 3 (three) months of
appointment of the expert.
Same issues.
There should be a mechanism
in the event the license holder
disputes the State
Administration‟s determination.
Clarify.
Consider and Clarify.
69.3 Followings shall be
specified in the expert‟s
conclusion.
69.3.1 whether the reserve was
mined selectively;
69.3.2 amount of selectively mined
minerals and its market
value;
69.3.3 amount of minerals that
became unable to be mined
further as a consequence of
high grading mining and its
market value;
69.3.4 amount of compensation
payment imposed to the
license holder;
amount of damages caused
to geology and mine
technical conditions as a
result of high grading
mining
No. Article Draft provision Comment Recommendations
69.4 The amount of
compensation shall be not
less than the market value
sum of minerals, set forth in
69.4.2 and 69.4.3 of this law
respectively.
69.5 A mining license holder
shall be prohibited to
reproduce derivative deposit
and industrial waste that are
not approved by the
Technical and Economical
Feasibility Report.
70 Obligation to mine and
process the minerals at full
extent
Clarification required as to the
meaning of 'full extent'.
Provisions would need to reflect
economic practice.
Clarify.
70.1 A mining license holder
shall be obliged to mine
main and subordinate
minerals at full extent,
determined as a production
reserve.
70.2 A processing license holder
shall be obliged to process
main and subordinate
minerals at full extent.
Clarification required as to the
meaning of „full extent‟ in these
circumstances. For example, it
could mean that
miners/processors have to
extract trace elements or
elements / mineral sizes that are
not economically viable.
Clarify.
70.3 During the mining and
processing period, a license
holder may have a sub-
contractor to mine and
process subordinate
minerals.
70.4 A list of subordinate
minerals shall be defined by
Central State
Administration.
Clarification required as to what
minerals would comprise this
list.
Clarify.
71 Obligation to provide raw
materials
71.1 The mining and processing
license holders shall be
obliged to provide, above
all, the processing plant
operating in the territory of
Mongolia with its mined and
processed main and
subordinate minerals and
raw materials.
Meaning is unclear. Clarify.
71.2 In fulfilling its obligation Clarification required as to Clarify.
No. Article Draft provision Comment Recommendations
specified in 71.1 of this law,
the extraction license holder
shall not be obliged to
discount the price of the raw
materials in any way, or
reduce the price below the
market price or for sales of
raw materials or below the
agreed price with others.
whether this is an absolute
prohibition. If so, it has
implications for long term
supply contracts as such
contracts will often be done at
some discount pricing
mechanism.
72 Obligation to have some
activities executed by
domestic companies
72.1 A license holder shall be
obliged to subcontract
domestic companies to
execute more than 60% of
its main and minor
operations of prospecting,
exploration, mining and
processing.
Although Mongolian domestic
companies may be
commercially competitive in a
number of areas associated with
the mining industry, this article
has the potential to encourage
anti-competitive and fraudulent
conduct. Clarification is also
required as to how the 60%
threshold is to be measured
(e.g. value of works, head count
or otherwise). Domestic
companies are not defined.
Further, this appears to already
be regulated under the Strategic
Entities Foreign Investment
Law to a large extent.
Repercussion of this clause
could render existing contract
mining agreement invalid and
prevent similar future
agreements with foreign
invested companies while at the
same time there are no domestic
contracts of similar capacity.
Likewise, companies note that
if wash plants are needed
domestic companies are not
able to carry out such
construction.
Clarify and consider relaxing
this requirement based on
practical realities based on
expertise as well as
commercially reasonable
terms to the license holder.
We would suggest removing
this from the Draft Law and
in particular a specific
number, as this is already
covered in the Strategic
Entities Foreign Investment
Law by giving priority
rights.
Practically, this Article
creates major complications.
No. Article Draft provision Comment Recommendations
72.2 Companies which were
founded upon a foreign
investment as specified in
the Foreign Investment Law
of Mongolia shall not be
deemed as domestic
companies as specified in
72.1 of this law.
Clarification required in the
extent of foreign investment
required to trigger this
provision. Further guidance
may be obtained through SEFIL
regulations once released.
Consider and Clarify.
72.3 In the event that the license
holder is unable to fulfil its
obligation, set forth in the
Article 72.1 of this law due
to the insufficiency of
companies or failure of
companies to meet the
requirements for completing
the work and if such grounds
are duly proved, the license
holder may have a partial or
full immunity from the
obligation on the basis of
decision by competent
authority.
How is this immunity obtained?
What are the grounds? What
constitutes “duly provded”.
Who will be the competent
authority?
Clarify.
73 Demarcating the borders
of the area granted by
mining and processing
licenses
73.1 Mining and processing
licenses shall have clear and
permanent demarcation
marks that separate the area
from other areas and comply
with the standards approved
by the relevant authority.
73.2 The license holder shall
install permanent
demarcation marks as
specified in this law and
relevant procedure within 3
(three) months since the date
on which mining and
processing license has been
granted and registered by the
State Administration.
73.3 The license holder shall be
obligated to transfer and
install the demarcation
marks within 2 (two) months
since the change in area
border has been registered
by the State Administration.
74 Land possession
permission under the
Largely overlaps with the
jurisdiction and authority of the
Consider deleting most of
this Article and regulating
No. Article Draft provision Comment Recommendations
license Land Law. under the Land Law.
74.1 Within 90 (ninety) days
since mining and processing
license has been granted to
the license holder, a
competent authority shall
resolve the issues with
regard to land possession
and utilization in the
licensed area as per the Land
Law.
Clarification as to how this is
resolved “as per the Land Law”.
Currently a separate tender is
required and land is not
guaranteed. Please address
whether the draft Land Law
will modify this.
Clarification required as to the
relationship between the
definitions of mining and
processing as outlined in Article
55.1.5 and wether both mining
and processing licences are
required.
Clarification is also required as
to the potential conflict with
Article 26.7 which allows for
the holder of a mining licence
that applies for a processing
licence to have the processing
licence granted on the area of
extraction.
Clarify.
Clarify.
Clarify.
74.2 A relevant authority, as
defined in the Land Law
shall issue a certificate of
land possession and
utilization to license holder
within 30 (thirty) days since
the decision was made by
the State Administration to
grant the license.
Is this included in the draft
Land Law as that would be the
appropriate piece of legislation
to regulate land?
Confusion as to the distinction
between 30 days and 90 days in
Article 74.1.
Clarify.
Clarify.
74.3 Certificate of land
possession and utilization
shall be issued for the same
period of time as the license.
Expiry, no extension, return
of the license before the
expiry date and revoking of
the license shall serve
grounds for terminating the
permission of land
possession and utilization.
Clarification required as to how
this provision is intended to
operate in circumstances where
a mining licence or processing
licence are renewed.
Does this comport with the
draft Land Law?
Clarify.
Clarify.
74.4 License holder shall not use
the land allocated under the
license for other purposes
than specified hereunder.
Would this not be as specified
in the land possession/use
contract, Governor‟s resolution,
and certificate?
Clarify.
74.4.1 conducting prospecting,
No. Article Draft provision Comment Recommendations
exploration, mining and
processing activities in
compliance with authorized
rights by the license,
specified in this law;
74.4.2 constructing permanent or
temporary workers‟ camps
and other required facilities
for conducting activities,
specified in 74.4.1 of this
law;
74.4.3 constructing commercial
infrastructure which is
prerequisite for mining
activities in the mine and its
industrial land;
74.4.4 creating derivative deposits
and industrial waste dams;
74.4.5 transporting mined minerals
and produced products as
well as constructing loading
and unloading facilities;
74.5 While possessing and
utilizing the land for
purposes, specified in
Articles 74.4.2-74.4.5 of this
law, the license holder shall
not be exempted from duties
of paying taxes and fees set
forth in other relevant laws;
74.6 In the event that the licensed
area is damaged during
possession and utilization of
the land for purposes,
specified in Articles 74.4.2-
74.4.5 of this law, the
license holder shall be
obliged to compensate the
incurred damages in
conformity with the Land
Law.
The term 'damaged' is
ambiguous. Note that
compensation will applied as
per the Land Law.
We assume that if reclamation
is carried out in accordance
with reclamation plan then there
is no “damage”.
Confirm assumption and
clarify.
74.7 An authorized person,
stipulated in the Land Law
shall place a control on the
state of land possession and
utilization for specified
purposes in 74.4.2-74.4.5 of
this law.
Can they unduly interfere with
the commercial operations of
the license holder?
Clarify.
74.8 The license holder shall
inform following authorities
to enter the licensed area for
installing the demarcation
marks, not less than twenty
Clarification of the rationale of
this provision is required. It
would appear unusual in
circumstances where a granted
licence holder is required to
Clarify.
No. Article Draft provision Comment Recommendations
(20) days prior to the
intended entry.
notify government authorities
of the conduct of authorities
activities.
74.8.1 relevant local government;
74.8.2 state administration in
charge of land relations;
74.8.3 the owner, possessor or user
of land if the land granted by
the license holder is part of
private property or granted
under land possession or use
agreement;
74.9 Land possession, utilization
and entry rights in the
licensed area shall be
preserved for the license
holder in the following
circumstances:
74.9.1 the demarcation marks were
installed as specified in this
law;
74.9.2 within the initial and/or
extended period of the
license;
74.9.3 a decision is pending by the
State administrative agency
regarding the return and
cancellation of the license;
75 Obligation to insurance
75.1 The license holder shall be
obliged to be covered by
mandatory insurance for the
purpose of fulfilling its
liability for reimbursement
of damages to others as a
result of the activities of the
license holder.
Clarification required as to what
constituted 'mandatory
insurance'.
Can this be from an
international insurance
provider?
What is the scope of coverage?
Clarify.
Clarify.
Clarify.
76 Obligation to notify the
decision on issuing the
shares
Article 76 is grossly
unnecessary given that these
types of transactions are already
to be reported under the
Strategic Entities Foreign
Investment Law to the Ministry
of Economic Development and
there is no possible benefit to
also being required to report to
the State Administration.
Consider deleting this entire
Article.
76.1 If the license holder is to
issue shares in international
and domestic markets in
relation to its geological and
mining activities, it shall
The requirement to notify
within 30 days of the relevant
decision being made (as
opposed to the actual issue of
shares) could present disclosure
No. Article Draft provision Comment Recommendations
notify the State
Administration within 30
(thirty) days since such
decision has been made.
or insider trading issues and is
likely to be contrary to the
listing rules of most
jurisdictions.
76.2 The license holder shall be
obliged to inform the state
administration on issuance
of share in the international
and domestic stock market
within 30 (thirty) days after
the registration with stock
market.
76.3 Upon receipt of the
notification, the state
administration shall register
the notification specified in
76.1 of this law, in the
license registration database.
Registration in a public register
of the intention to issue shares
will potentially trigger the same
issues identified in Article 76.1.
76.4 License holder or its
daughter or subsidiary
company overseas and entity
with shared interest with
them shall sell the shares in
concurrence with the
relevant provisions in the
Mongolian Law on
Regulating Foreign
Investment in Economic
Entities operating in
Strategically Important
Sectors” (2012).
77 Obligation of the license
holder to consult the public
What should be the result of
consultation process? How
often?
Clarify.
77.1 The extraction and
processing license holder
shall be obligated to consult
the local citizens on matters
of its activities that may
affect the interests of the
local citizens.
77.2 In informing the local
citizens as specified in 77.1
of this law, the extraction
and processing license
holder shall be obligated to
provide conditions for local
citizens to express their
views and opinions.
78 Obligation to notify about
the discovery of rare
ancient flora, fauna and
historical and cultural
No. Article Draft provision Comment Recommendations
findings
78.1 If rare ancient flora, fauna
and historical, cultural
findings have been
discovered in the course of
prospecting, exploration and
extraction works the license
holder shall be obliged to
cease its activities within the
distance specified in 98.1 of
this law, and set up
protection and immediately
notify the local
administrative authorities
about it.
For how long? Clarify.
79 Obligation to notify about
the exposure of radioactive
minerals
79.1 If exposure of concentration
with content of radioactive
minerals has been
discovered in the course of
prospecting, exploration and
extraction works, the license
holder shall be obliged to
notify the State
Administration within 30
(thirty) days thereof.
79.2 The concentration with
content of radio-active
mineral shall be interpreted
as amount, specified in the
Law on Nuclear Energy.
80 Environmental impact
assessment
80.1 The mining and processing
license holder shall have
environmental impact
assessment made within 3
(three) months since the date
of issuance of decision to
grant a license by the state
administration.
80.2 The environmental impact
assessment shall determine
the potential hazardous
effects of the mining and
processing activities to the
environment and measures
to reduce and eliminate such
risks, and procedures that
must be taken during the
closure of mine and
No. Article Draft provision Comment Recommendations
industrial units.
80.3 Development of
environmental impact
assessment for holders of
more than two mining and
processing licenses on two
or more geographically-
bordered areas or within the
same deposit shall reflect
entire environmental impact,
assessed on the impacted
area.
Clarification is required as to
how this provision would apply
in circumstances where
subsequent contiguous licences
are obtained.
Clarify.
80.4 The conditions, criteria for
evaluation for potential and
occurred damages, and
environmental impact
assessment methodology
shall be regulated by the
relevant laws on nature and
environmental protection
and relevant procedure.
81 The health impact
assessment
81.1 The mining and processing
license holder shall have the
assessment made by
competent organization
covering to determine the
potential hazardous effects
of the mining and processing
activities and measures to
reduce and eliminate such
risks within 3 (three) months
since the decision has been
issued to grant the license.
Clarification required as to what
constitutes a 'competent
organisation'. The obligation to
'eliminate' (not just mitigate or
otherwise reduce) risks is
impractical.
Consider and Clarify.
82 Enabling the working and
living condition of the
employees
82.1 The mining and processing
license holder shall provide
the enabling work condition,
payroll, labour safety and
social issues of its own
employees according to the
regulation approved by the
relevant authority
We note that reconnaissance,
prospecting and exploration are
not covered here and assume
that they are not meant to be
covered.
This has potential to greatly
interfere with the commercial
decisions and management of
the license holder – in particular
if “payroll” and “social issues”
are to be mandated by the State.
83 Obligation to pay land fee
83.1 The license holder shall pay
the land fees by the base
No. Article Draft provision Comment Recommendations
price evaluation percent for
each hectare by the area of
the land granted for
prospecting, exploration,
mining and processing
activities as specified in the
Law on Land Fees.
83.2 If the license holder has not
paid land fees within the
period specified in the Law
on Land Fees, this shall
serve the grounds for
revoking the license.
Would this not be better placed
under Article 36.1 of the Draft
Law? How does this process
work?
Clarify.
84 Obligation to pay the
royalty for use of mineral
resources
The royalty provisions would
not appear to reflect common
practice in other mining
jurisdictions. The provisions
appear to base royalties on pre-
determined values set by the
National Minerals Exchange
rather than actual market values
or values traded. See also
comments in article 71.2.
Serious Re-think.
Consider and clarify.
84.1 The mining and processing
license holder shall be
obliged to pay the royalty
for use of mineral resources
to the state and local budget
according to the principles
as specified in this law.
What is the justification for
both the mining and processing
license holder to pay royalties.
Typically royalties would only
apply to mining license holders.
Clarify.
84.2 The amount of royalty and
the procedure to pay such
royalty and procedure to
distribute the accrued
royalty in the state budget
shall be regulated by a
separate law.
Clarification is required as to
whether this law already exists.
The previous Minerals Law
included provisions defining
such procedures. Assuming a
separate law is to be passed,
what is to occur in
circumstances where the
Mineral Law is passed first and
royalty payment procedures
have not been introduced?
Clarify.
84.3 The mining license holder
shall pay the royalty
according to the following
principles:
This article requires royalties to
be paid on the basis of plans
submitted in Feasibility Study
and the annual mine plan, as
opposed to the volume of
product actually shipped. This
is a fundamental difference to
the existing law (and with
royalty regimes in other mining
jurisdictions) and fails to
account for commodity price
fluctuations. In cases where an
Serious re-think.
No. Article Draft provision Comment Recommendations
entity holds a mining and a
processing license, royalty
should be based on actual
product sold. Current drafting
implies royalty at each
intermediate stage amounting to
effective double taxation.
84.3.1 A mining license holder
shall pay royalty for use of
minerals resources,
estimated on the basis of
main and subordinate
minerals amount registered
in the state reserve
registration in an area, where
mining activity was
conducted and which
included in annual mining
report of that year.
This provision is commercially
impractical. Fails to recognise
general economic principles. A
royalty based on reserve
estimate is somewhat illusory as
there is a fundamental
difference between tonnages
extracted and reserve
estimations based on
exploration results.
Clarify.
84.3.2 In the event that reserve
amount, registered in the
state reserve registration has
not proved during the
mining operation of that
year, the issue shall be
discussed by Professional
Mining Counsel and related
conclusion shall be obtained
prior to the submission of
mining operation plan of the
next year to the State
administrative agency.
Timing between the submission
of the previous mining plan and
the next plan is very close,
effectively limiting the
circumstances in which the
Professional Mining Counsel
can be consulted (to the point of
making it practically
impossible). Conclusion is more
of an opinion. Is there are an
appeal process?
Consider and Clarify.
84.3.3 The State administrative
agency shall change
minerals resources reserve
previously registered in the
state reserve registration on
the name of the license
holder on the basis of
conclusion by the
Professional Mining
Counsel.
84.3.4 For processing license
holder, royalty for use of
mineral resources shall be
estimated from the amount
of ore and concentration as
well as its main and
subordinate minerals
amount, specified in the
purchase contract of raw
material.
Does this mean that, for
example, ETT would have to
pay royalties on their coal
twice? Once for extraction and
a second time for processing?
This is not clear and processors
should not be paying royalties –
only the minerals extractor.
If so, does the processing
license holder only pay
Clarify.
Clarify.
No. Article Draft provision Comment Recommendations
royalties based on actual
volumes in the purchase
contract? Double taxation, see
above 84.3
84.3.5 In the event that amount of
ore and concentration and its
main and subordinate
minerals, estimated as per
Article 84.3.4 of this law has
not proved during the
processing activity, it shall
be informed and registered
to the state administrative
agency prior to the
submission of processing
operation plan of the next
year.
May present same issues as
Article 84.3.2.
Clarify.
84.3.6 Producing technological
(mining and industrial)
waste excessively more than
reflected in the Technical
and Economical Feasibility
Report of mining and
processing activity shall not
serve as a ground for
exemption from royalty for
use of mineral resources.
84.3.7 Mining license holder shall
pay royalty for use of
mineral resources for
derivative deposit and
industrial waste created in
the course of mining.
Need definition of industrial
waste, tailings, dumps. What is
the rationale for applying a
royalty on waste?
This easily could render a
project uneconomic. Usually
royalties are based on the value
of a product – wast has no
value, only cost. For example,
most coal extractors produce
five to ten times as much waste
as they do coal.
Clarify.
There should be no royalty
on waste.
84.3.8 Mining and processing
license holder shall pay
royalty for use of mineral
resources for re-processed
derivative deposit and
industrial waste generated
from its own mining
activity.
Need definition of industrial
waste, tailings, dumps.
Clarify.
84.3.9 Upon being granted a
license, winner of tender
which has claimed to
voluntarily increase the
No. Article Draft provision Comment Recommendations
royalty for resource use shall
pay royalty for mineral
resources, in increased
amount in the course of
validity period of the
license.
84.4 Price of minerals and
products, specified in this
Article payable for mineral
resource use shall be defined
by a cost estimation of
National mineral exchange.
Royalties should be paid on
actual revenue received, not on
an industry average prices.
Prices vary significantly based
on quality. National Mineral
Exchange does not exist!
Consider and clarify.
84.5 Operation of National
mineral exchange shall be
regulated by a separate law.
Clarification is required as to
whether this law already exists
and which government body
will be responsible for oversight
of the exchange and compliance
matters?
Clarify.
85 Obligation to pay the
license fees
85.1 The license holder shall
annually pay the license fees
by the amount and
percentage specified in the
Law on Stamp Duties.
85.2 The size of area registered in
the license registration
database shall be based in
determining the amount of
license fees, and the amount
of fees for the year shall not
be amended.
Clarification is required as to
whether there would be any
refund in circumstances where
the State takes an area (wholly
or partially) back into State
ownership.
Clarify.
85.3 The amount of the
processing license fee shall
be set in consideration of the
capacity of the industrial
unit for processing.
85.4 The license holder shall pay
the license fees in advance
annually in the following
way.
85.4.1 the first year fees of the
license within 10 working
days since the receipt of or
from the day considered the
date of receipt of the
notification from the state
administration as specified
in 58.3 of this law;
85.4.2 the fee of the next year of
the license before the date of
expiry of the first year fees
calculated from the first
No. Article Draft provision Comment Recommendations
issuance or renewal of the
license;
85.5 Return of area partially or
wholly shall not serve the
grounds for reimbursement
of the license fees.
85.6 The date of payment of
license fees shall be
determined by the day of
bank transaction.
86 Establishing agreements There is now no mention of a stability agreement or investment agreement. This has significant ramifications for international companies in order to obtain the assurances required to finance projects and contribute to FDI into Mongolia.
The conflicts between the Draft
Minerals Law LDAs and CA
should and the requirements of
the Conflicts of Interest Law
should be examined as there
could be a very serious impact
on minerals activity if the local
or national administrations
cannot execute plans and
reports.
Further, there is no indication as
to whether this applies to
existing license holders. Will
they now be required to secure
such agreements? If so, by
when? What happens to future
projects of a license holder? Is
there a need to include them in
an agreement now even though
they may not develop for 10-20
years?
Consider retaining IAs and
Stability Agreements.
Consider and Clarify.
Consider and Clarify.
86.1 Establishing the Cooperation
Agreement
86.1.1 Prospecting and exploration
license holder shall establish
a Cooperation Agreement
within 3 (three) months
since the date of issuance
and registration of the
Will the holder of an existing
exploration license be required
to enter into a Cooperation
Agreement?
Clarify.
No. Article Draft provision Comment Recommendations
prospecting and exploration
licenses by state
administration as specified
in this law.
86.1.2 Prospecting and exploration
license holder shall prepare
the draft agreement based on
the template approved by the
central state administration
in charge of financial
matters and submit it to the
self-governing authority of
related soum or district
within a period specified in
this law.
Does the template already
exist? What is the scope of the
CA?
Clarify.
86.1.3 The self-governing authority
of the relevant soum or
district shall establish the
agreement with the license
holder within 15 (fifteen)
days since the date of receipt
of the draft local
development agreement.
What agreement is being
referred to here, the CA (above)
or the LDA (below)? This is
under Article 86.1 so we would
assume that it is the CA and not
the LDA.
What happens if the agreement
is not established within 15
days?
Clarify and confirm
assumption.
Clarify.
86.2 Establishing the Local
Development Agreement
86.2.1 Mining and processing
license holder shall enter
into Local Development
Agreement within 3 (three)
months since the date on
which the decision was
made by the State
Administration as specified
in this law.
Clarification required as to
whether this provision shall
apply to existing licence
holders.
Clarify.
86.2.2 Mining and processing
license holder shall prepare
the draft agreement based on
the template approved by the
central state administration
in charge of financial
matters and submit it to the
aimag or city self-governing
authority within a period
specified in this law.
Clarification required as to
whether the template already
exists.
Clarify.
86.2.3 The aimag or city self-
governing authority shall
enter into agreement with
the license holder within 30
(thirty) days since the date
of receipt of the draft local
development agreement.
Clarification required as to
implications of not establishing
the agreement within 30 days or
if parties act unreasonably?
Consider and Clarify.
No. Article Draft provision Comment Recommendations
86.2.4 The following issues may be
agreed by the Local
Development Agreement:
Clarification required as to
relevant details of such
agreements. For example, there
is little detail on the investment
amounts required and no
reference to relocation of
herders who live in the licence
area.
Consider and Clarify.
86.2.4.1 improve the local public
infrastructure;
86.2.4.2 improve local social
services;
86.2.4.3 support for production and
business of the local
citizens;
86.2.4.4 provide jobs for local
citizens;
86.2.4.5 improve the environment
state;
86.3 Several entities holding
licenses may join to become
one party to the Cooperation
Agreement and Local
Development Agreement in
the following cases:
86.3.1 if the local self-governing
authority made the proposal;
86.3.2 several holders of licenses in
the local area made a joint
request;
86.4 The amount of investment
for the Cooperation
agreement and Local
Development Agreement
shall be no less than the
amount in the proposals on
agreement conditions
attached to the tender
documentation and initial
request for license by the
license holder.
86.5 If the license holder has not
fulfilled the obligations
specified in the Cooperation
Agreement and Local
agreements local self-
governing authority may
submit its proposal to
suspend the Work authority
to the State Administrative
Authority.
This right should be clarified
and limited to particular
obligations which are
significant enough to warrant
such suspension to avoid
irrelevant and vexatious claims.
This appears to duplicate levels
of authority.
Consider and Clarify.
86.6 The duration of the
Cooperation agreement and
No. Article Draft provision Comment Recommendations
Local Development
Agreement shall be specified
by the agreement.
86.7 Parties may make
amendments to the
Cooperation agreement and
Local develop agreement
based on mutual agreement.
86.8 The license holder shall not
bear any obligations or
responsibilities in relation to
the matters not specified in
the agreements.
87 Technical and Economical
Feasibility Report
87.1 The Technical and
Economical Feasibility
Report shall be developed by
an entity with a license
granted by the State
administration, as defined in
18.1.8 of this law.
Incorrect reference to article
18.1.8.
Clarify.
87.2 Technical and Economical
Feasibility Report shall be a
general survey calculating
the extraction and
processing activities, and its
commercial feasibility
within the period of the
license based on the
production reserves
determined as a result of the
exploration work.
87.3 Technical and Economical
Feasibility Report shall
comprise the following types
of documents.
87.3.1 estimation to extract the
reserve;
87.3.2 technical and technological
choice, engineering
solutions for extraction and
processing activities;
87.3.3 calculation of investment
and expenses, financial
analysis;
87.3.4 analysis of economy and
marketing;
87.3.5 strategy analysis and plan of
labor forces;
87.3.6 calculation of damages to
the nature and environment,
methodology and measures
No. Article Draft provision Comment Recommendations
for their mitigation;
87.3.7 calculation of damages to
the public health,
methodology and measures
for their mitigation;
87.3.8 plan for closure of mining
and industrial unit;
87.4 The mining and processing
license holder shall develop
the Technical and
Economical Feasibility
Report for mining and
processing activities within
6 (six) months since the
decision to grant a license
has been made and submit it
to the State Administration
for approval, and the copies
of the feasibility report to
the following state
authorities.
Generally, mining technical and
economic feasibility reports
take a minimum of 12-18
months to complete. The 6
month timeframe is therefore
unrealistic. In most
jurisdictions, feasibility studies
and reports will be prepared
prior to seeking the grant of any
form of mining licence. It is
therefore unusual for a
feasibility report to be prepared
after a mining licence has been
granted, although this may be a
result of the fact that the fixed 5
year term for an exploration
licence also does not give
enough time for a feasibility
report to be prepared. Further
consideration should be given
to how such reports and the
duration of such licences should
be. This Article also appears to
conflict with the timing
requirements for an EIA under
Article 80.1.
Consider and Clarify.
87.4.1 Central state administration
in charge of nature and
environmental matters;
87.4.2 Central state administration
in charge of economic
development
87.4.3 Specialized inspection
agency;
87.5 The authorities specified in
Article 87.4 of this law may
review the Technical and
Economical Feasibility
Report submitted by the
license holder and provide
their recommendations on
amending such Technical
and Economic Feasibility
Report to the State
Administration.
No time limit. Clarify
87.6 The license holder shall It is highly unusual for Consider and Clarify.
No. Article Draft provision Comment Recommendations
amend the Technical and
Economical Feasibility
Report in line with the
recommendations provided
in line with 64.3 of this law.
government authorities to
approve or amend feasibility
reports. It is usually the case
that government approval is
required in relation to work
plans.
87.7 The Professional mining
council shall review the
Technical and Economical
Feasibility Report submitted
by the license holder and
issue its conclusion within 3
(three) months.
Clarification required as to the
date from which the 3 month
period is calculated.
Clarify.
87.8 The State Administration
shall issue a decision to
approve or refuse the
Technical and Economical
Feasibility Report submitted
by the license holder based
on the conclusion of the
Professional mining council
and register thereof such
decision in the license
registration database.
87.9 If the State Administration
has issued a decision
refusing to approve the
Technical and Economical
Feasibility Report based on
the conclusion of the
Professional mining council,
it shall immediately notify
the license holder. The
grounds for refusal to
approve the report shall be
clearly stated in the
notification and the state
administration shall consult
with the license holder on
amending or redeveloping
the Technical and
Economical Feasibility
Report and establish the date
of submission of such
Technical and Economical
Feasibility Report.
88 Work plan
88.1 The license holder shall
conduct activities on the area
granted by the license
according to the following
plans approved by the state
No. Article Draft provision Comment Recommendations
administration.
88.1.1 prospecting work plan by
prospecting license holders;
88.1.2 exploration work plan by
exploration license holders;
88.1.3 extraction work plan by
mining license holders;
88.1.4 production work plan by
processing license holders;
88.2 The prospecting and
exploration license holder
shall annually develop work
plan in accordance with the
approved procedure and
have it approved by the
state administration. The
work plan shall reflect the
amount, types and amount of
expenses of prospecting and
exploration work to be
carried out each year.
Clarification is required as to
the approved procedure and
processes to have a work plan
approved by the state
administration.
Clarify.
88.3 Mining and processing
license holder shall develop
and have obtained the
approval by the state
administration for its work
plan detailing the amount of
extracting and processing
work to be done each year,
economic indicators and
amount of investment and
expenses, in compliance
with the Technical and
Economical Feasibility
Report approved by the State
Administration.
How are work plans to comply
with economic indicators in
feasibility reports in
circumstances where
subsequent market fluctuations
impact commodity prices? It is
suggested that while the work
plan should be consistent, it is
not necessary to strictly
comply. Alternatively, is it
possible that Article 88.11.3 is
intended to cover these
circumstances.
Consider and Clarify.
88.4 The license holder shall
make the workplan in 2
copies and submit them to
the state administration in
charge of mining matters
within the following period:
88.4.1 the first year prospecting and
exploration workplan within
30 (thirty) days since the
decision to grant the license
has been issued and the
workplan for the succeeding
years 3 (three) months
before the commencement
of the prospecting and
exploration work;
88.4.2 the first year mining and The time periods under this Consider and Clarify.
No. Article Draft provision Comment Recommendations
processing plan within 60
(sixty) days since the date
of approval of Technical and
Feasibility Report and the
workplan for the succeeding
years 3 (three) months
before the start of the
calendar year;
article are practically
unreasonable. Licence holders
will be required to develop the
work plan in parallel with the
feasibility study, but will also
require the documentation listed
in articles 88.5.1 to 88.5.4. This
will be in addition to
negotiating and finalising the
Cooperation Agreement and
Local Development Agreement
in tandem.
88.5 The following documents
shall be annexed to the first
year workplan:
88.5.1 the detailed environmental
impact assessment
conducted as specified in
Article 80 of this law;
88.5.2 plan of measures for
reducing the adverse impacts
to public health;
88.5.3 workplan of rehabilitation
work to be conducted in the
licensed area as specified in
115.1 of this law;
88.5.4 Cooperation Agreement or
Local Development
Agreement;
88.6 The holder of the
prospecting and exploration
license shall have obtained
comments from the soum or
district Governor and local
environmental inspector
before it submits the annual
work plan to the State
Administration.
The proposed law does not
include any mechanism for
resolving the situation where
comments from the soum or
district Governor and local
environment inspector are not
provided or not provided in a
timely manner in order to
comply with Article 88.4. A
circuit-breaker mechanism
similar to that in Article 88.9
should therefore be included.
Consider and Clarify.
88.7 The holder of the mining
and processing license shall
submit the rehabilitation
work plan along with the
annual work plan to the
central state administration
in charge of nature and
environmental affairs within
a period specified in 88.4 of
this law.
No. Article Draft provision Comment Recommendations
88.8 The central state
administration in charge of
nature and environmental
affairs shall review the
workplan submitted by the
license holder as specified in
88.7 of this law and provide
its comments and
recommendations to the
state administration within
14 (fourteen) days since the
recept of the plans.
88.9 If the State Administration
in charge of nature and
environmental affairs has
not provided the comments
and recommendations within
the period specified in 88.8
of this law it shall be
deemed as approval of the
plan.
88.10 The State Administration
shall issue the decision
within 14 (fourteen) days
since the date of receipt of
comments and
recommendations from
central state administration
in charge of nature and
environmental affairs.
88.11 The State Administration
shall consider the following
in making the decision
specified in 88.10 of this
law.
88.11.1 Comments and
recommendations as
specified in 88.8 and 88.9 of
this law;
88.11.2 whether the license holder
has obtained other
permissions necessary for
conducting the prospecting,
exploration, mining and
processing activities as
specified by this law and
other law and legislation;
88.11.3 whether the workplan is
achievable and
implementable;
88.12 The state administration may
provide guidelines on
specific matters to the
No. Article Draft provision Comment Recommendations
license holder upon approval
of the plan.
88.13 If the State Administration
has proposed changes to the
plan the license holder shall
change and submit the plan
to the State Administration
and the State Administration
shall review and issue the
decision as specified in 88.3-
88.12 of this law.
89 Minimum expenditure for
prospecting
Art 89 and Art 90: excessive
minimum expenditure
requirements may/will kill
Mongolian junior business.
For example, a 4 year
prospecting license would
require approximately USD 5
million and a 5 year exploration
license would require
approximately USD 90 million.
All per license. These are set at
levels that no Mongolian
company (or the Government
itself) can ever sustain, and in
fact many mineral deposits have
total resource values of less
than the amount required to be
spent on exploration. The only
companies capable of doing this
are a few large international
mining companies. The
Government could rightly be
accused of discriminating
against local companies in
favour of foreigners.
Ultimately, Articles 89 and 90
are so draconian that they will
completely destroy any
exploration activity and cause
the loss of thousands of jobs for
Mongolians in technical and
professional fields as well as
logistics and supply which are
created and sustained by the
mineral exploration industry.
Consider and Clarify.
89.1 The prospecting license
holder shall have specified
prospecting work to be done
each year expenditures no
less than the following for
No. Article Draft provision Comment Recommendations
each hectare of area granted
by the prospecting license:
89.1.1 5 000 MNT per hectare each
year for the first 2 years;
89.1.2 10 000MNT per hectare
each year for the third and
fourth years;
90 Minimum expenditure for
exploration
90.1 The exploration license
holder shall have specified
exploration work to be done
each year expenditures no
less than the following for
each hectare of area granted
by the exploration license:
90.1.1 150 000 MNT per hectare
each year for the first 3
years;
90.1.2 300 000MNT per hectare
each year for the fourth and
fifth years;
91 Variation of the workplan
91.1 The license holder shall
submit its request to vary the
work plan in writing to the
State Administration.
91.2 If the license holder has
submitted a request to vary
the workplan the State
Administration shall notify
the central state
administration in charge of
nature and environmental
affairs and the central state
administration in charge of
economic development
within 5 working days since
the date of receipt of such
request.
91.3 Upon review of the request
specified in 91.1 of this law,
if the variation is required
for the rehabilitation plan
due to changes in the
workplan, the central state
administrative in charge of
nature and environmental
affairs shall submit its
comments and
recommendation related to
such variation to the State
Administration within 21
No. Article Draft provision Comment Recommendations
(twenty one) days since the
date of receipt of such
notification.
91.4 The central state
administration in charge of
economic development shall
review the request submitted
by the mining and
processing license holder
and provide its comment and
recommendation to the State
Administration within 21
(twenty one) days since the
date of receipt of such
notification.
91.5 The State Administrative
Authority shall issue
decision taking into account
of the aforementioned
comments and
recommendations as
specified in 91.3 and 91.4 of
this law within 30 (thirty)
days since the date of receipt
of the request by the license
holders to vary the work
plan and thereof notify the
decision in writing to the
license holder.
91.6 The State Administration
shall adhere to the procedure
specified in 88.3-88.12 of
this law in issuing the
decision specified in 91.5 of
this law.
91.7 The State Administration
shall have the right to
voluntarily initiate the
variation in the workplan
and may incorporate such
changes based on
consultations with the
license holder.
91.8 The conditions and
requirements set for
variation in the workplan
shall be determined by the
procedure of the State
Administration.
92 Work authority
92.1 The license holder shall
conduct works other than
prospecting and
No. Article Draft provision Comment Recommendations
rehabilitation works on the
area granted by the license
based on the Work authority
issued by the State
Administration.
92.2 The Work authority shall be
issued only to license holder.
92.3 The Work authority
authorises the licensee to
carry out work in accordance
with the workplan approved
by the State Administration.
92.4 The Work authority is valid
only for the area as specified
in the work plan.
92.5 The previously granted and
valid Work authority shall
not serve the grounds to be
released from the obligations
due to the variation in
workplan as specified in
Article 91 of this law.
93 Work authority to conduct
exploration
93.1 It shall be prohibited to
conduct or commence
exploration works on the
area granted by the license if
the exploration license
holder has not obtained the
exploration Work authority
from the State
Administrative Authority.
93.2 It shall be prohibited for
exploration license holder to
conduct extraction activities
in any way.
We assume that this does not
apply for for necessary
sampling?
Clarify.
93.3 The State Administration
shall grant the Work
authority to conduct
exploration if the
exploration license holder
has fulfilled each of the
following conditions.
93.3.1 the exploration work plan
has been approved by the
State Administration as
specified in this law;
93.3.2 the rehabilitation workplan
has been approved as
specified in this law;
93.3.3 the pledge for rehabilitation
work expenses has been
No. Article Draft provision Comment Recommendations
deposited in a special
account as specified in
Article 119 of this law;
93.3.4 other permissions necessary
to conduct exploration
activities as specified in this
law and other laws are
obtained;
Very wide open door. Clarify exactly what is
required.
93.3.5 the Cooperation agreement
specified in 86.1 of this law
has been established with the
local self-governing
authority and is in effect;
93.3.6 the mandatory insurance of
license holders specified in
Article 75.1 of this law has
been retained;
93.4 The State Administration
shall grant and register the
Work authority to conduct
exploration based on the
review of whether the
exploration license holder
has fulfilled the conditions
specified in 93.3 of this law.
93.5 The holder of the Work
authority to conduct
exploration shall have the
following obligations.
93.5.1 to start the exploration work
within 3 (three) months
since the date of issuance of
the Work authority;
Many conditions could prevent
this such as when the Work
Authority is granted (winter
months), economics, labor
issues, etc. Yet there is nothing
to suggest an extension.
Consider and Clarify.
93.5.2 to inform the start up of
exploration works through
local media at least 7 (seven)
days before staring the work;
Clarification is required as to
what will constitute 'exploration
works' in this circumstance. For
example, does it encompass
exploration expenditure for
desk-top studies conducted in
an office? Consideration should
also be given to whether the
short time period is feasible
(especially in winter).
Define “local media”. Is this
Aimag, Soum, Bag?
Clarify.
Clarify.
93.5.3 to annually conduct
exploration work of
expenditure per hectare that
is no less than the amount
No. Article Draft provision Comment Recommendations
specified in Article 90 of
this law on the area granted
by the license;
93.5.4 to maintain a copy of the
exploration license,
exploration workplan and
the environmental
rehabilitation plan at the site
of exploration work;
93.5.5 to comply with labor safety
and health requirements
during exploration activities;
93.5.6 to develop the Consolidated
report on the reserve,
prospecting and exploration
results according to the
approved form 1 (one)
month before the expiry of
the license, and have it
approved by state
administration;
What is this? Is the approved
form available?
Clarify.
93.5.7 to register the reserve proven
by the relevant authority at
the State Administrative
Authority, and to submit the
exploration workplan with
the primary materials to the
national consolidated
database on geology and
minerals resources;
Does this mean that the
“relevant authority” may
dispute the reserve?
Clarify.
94 Work authority to conduct
extraction
94.1 It shall be prohibited to
conduct or commence
extraction works on the area
granted by the license if the
mining license holder has
not obtained the Work
authority to conduct
extraction work from the
State Administration.
94.2 The license holder shall
submit its request to the
State Administration for the
Work authority to conduct
extraction works if it has
fulfilled each of the
following conditions.
No. Article Draft provision Comment Recommendations
94.2.1 has obtained the approval for
Technical and Economical
Feasibility Report and
mining work plan as
specified in this law;
94.2.2 has obtained the approval for
rehabilitation work plan as
specified in this law;
94.2.3 has conducted the
environmental impact
assessment as specified in
this law;
94.2.4 has conducted assessment by
authorized organization with
regards calculation of
damages to the public
health, methodology and
measures to reduce the
impact;
94.2.5 has deposited the
rehabilitation fund pledge in
a special account as
specified in Article 119 of
this law;
94.2.6 has deposited the fund for
mine closure in a special
fund as specified in 135.1 of
this law.
94.2.7 has obtained all the
permissions necessary to
conduct extraction activities
as required by this law and
other relevant laws;
Wide open door. Clarify by providing an all
inclusive list.
94.2.8 has entered into Local
Development Agreement as
specified in 86.2 of this law
and such agreement remains
valid;
94.2.9 the mandatory insurance of
license holders specified in
75.1 of this law has been
retained;
94.3 If the mining license holder
has fulfilled the conditions
and criteria specified in 94.2
of this law, the State
Administration shall grant
and register the Work
authority to conduct
extraction works.
94.4 The central state
administration may
determine the limitation to
To what aim? Clarify.
No. Article Draft provision Comment Recommendations
the depth of extraction in the
area when granting the Work
authority to conduct
extraction works.
94.5 The holder of the Work
authority to conduct
exploration works shall have
the following obligations.
Do you mean “extraction”
rather than “exploration”?
Clarify.
94.5.1 to start the extraction work
within 12 (twelve) months
since the Work authority has
been obtained;
This requirement places
unreasonable restrictions of the
ability of licence holders to
respond to changes in
circumstances which mean
extraction work is not possible.
Consider and Clarify.
94.5.2 to have the quality of all the
precious metals and
gemstones extracted proven
by the authority in charge of
quality and carats, and
register the amount;
94.5.3 to have the certificate of
origin obtained from the
State Administration in
order to sell and process
main and subordinate
minerals extracted;
94.5.4 to sell natural gold formation
over 400 grams or lighter
with special defining forms
and shapes, and gemstones
of rare colour and shape to
the Mongolbank state gem
treasury at a discount price;
Clearly translation issues,
Mongolian version says
“premium” not “discount”.
What about “lighter” vs.
“heavier”? Need to clarify.
94.5.5 to conduct mining activities
with as little damage to the
environment as possible, and
to prevent from negative
effects on humans, flora and
fauna;
94.5.6 to keep the level of air
pollution, dust, water
pollution and noise at the
permitted level;
What is the “permitted level”? Clarify.
94.5.7 to ensure that citizens of
Mongolia make up no less
than 90% of the total
employees completing the
works specified in the
approved work plan;
Requirement for 90%
Mongolian work-force may be
unrealistic. Large mining
projects will require thousands
of workers and it may not be
possible to source such labour
domestically in all
circumstances. Similarly,
depending on the nature of the
works, if a small number of
Consider and Clarify.
No. Article Draft provision Comment Recommendations
highly specialised workers are
required, there may be an
insufficient labour pool in
Mongolia to satisfy this
requirement. Consideration
should be given to exceptions to
this requirement (e.g.
exceptions for trainers,
instructors and supervisors).
This requirement will cause
huge delays in existing projects
and future projects for
construction of key
infrastructure.
Based on Articles 94.5.7 and
95.3.5 it appears that this quota
only applies to mining and
processing (as well as the
ability to pay to exceed such
quotas). What then is the quota
for reconnaissance, prospecting
and exploration companies?
Are they stuck at 5% as per
Government Resolution
following other legislation?
Consider and Clarify.
Clarify.
94.5.8 to ensure the labor and
health safety of the
employees at the mine and
of the citizens in the
proximity of the extraction
area;
94.5.9 in the case of accident and
other dangerous situation in
the course of the extraction
activities the license holder
and the management of the
mine shall take the necessary
measures to immediately
eliminate the situation,
render first aid to the
victims, evacuate the people
from the dangerous area and
immediately notify the
relevant authorities of the
situation;
Overlap with the Labor Health
and Safety Law.
Consider striking this Article
94.6 If the license holder has
employed citizens of
Mongolia in numbers less
than that specified in Article
94.5.7 of this law, it shall be
obligated to pay a monthly
“extraction” license holder?
This sets such companies up
from the outset to have to pay
penalties because of a lack of
qualified Mongolian citizen
Clarify.
Consider and Clarify.
No. Article Draft provision Comment Recommendations
amount to the relevant soum
or district budget equal to
the minimum wage amount
multiplied 10 times for each
foreign employee above the
threshold.
employees. Realities should be
understood in Mongolia to
either increase the % of
permissible foreign workers or
relax this payment for
exceeding the quota.
94.7 Except for the case specified
in Article 94.7.1 of this law,
it shall be prohibited for the
mining license holder to
conduct prospecting and
exploration work solely, on
the area granted by the
license.
94.7.1 If the State Administrative
Authority has authorized it
based on the conclusion of
the Professional mining
Council, the mining license
holder may conduct
prospection and exploration
activities solely for a period
of up to 3 years on the area
granted by the license.
95 Work authority to conduct
processing work
95.1 The license holder shall
submit its request to the
State Administration for the
Work authority to conduct
works if the license holder
has fulfilled each of the
following conditions.
95.1.1 the construction of the
industrial unit for processing
has completed and the state
commission has accepted it
for utilization;
95.1.2 has obtained the approval of
the processing work plan
specified in Article 88.3 of
this law;
95.1.3 has conducted
environmental impact
assessment;
95.1.4 has conducted assessment by
authorized organization over
calculation of damages to
the public health,
methodology and measures
to reduce the impact;
95.1.5 has obtained the approval for
the rehabilitation work plan
No. Article Draft provision Comment Recommendations
specified in this law;
95.1.6 has deposited the fund for
mine closure in a special
fund as specified in Article
135.1 of this law.
Problematic in conjunction with
Art. 119.
Clarify.
95.1.7 has obtained all the
permissions necessary to
conduct extraction activities
as required by this law and
other relevant laws;
Why does a “processing”
license holder need to obtain
“extraction” permissions?
Clarify.
95.1.8 the mandatory insurance of
license holders specified in
75.1 of this law has been
retained;
95.1.9 has entered into Local
Development Agreement as
specified in 86.2 of this law
and such agreement remains
valid;
95.2 If the license holder has
fulfilled the conditions and
criteria specified in Article
95.1 of this law, the State
Administration shall grant
and register the Work
authority to conduct
processing works.
95.3 The holder of the Work
authority to conduct
processing works shall have
the following obligations:
95.3.1 to purchase main and
subordinate minerals with
certificate of origin obtained
from the State
Administration;
95.3.2 to have the certificate of
origin for processed
minerals to sell and
reprocess those minerals
obtained from the State
Administration;
95.3.3 to conduct industrial unit for
processing activities with as
little damage to the
environment as possible, and
to prevent from negative
effects on humans, flora and
fauna;
95.3.4 to ensure that citizens of
Mongolia constitute no less
than 90% of the total
employees completing the
This obligation may be difficult
to achieve in practice given
capacity constraints so it would
be preferable to require license
Consider and Clarify.
No. Article Draft provision Comment Recommendations
works specified in the
approved work plan;
holders to use reasonable efforts
to achieve this quota.
95.3.5 to ensure the labor and
health safety of the
employees at the processing
plan and of the citizens in
the proximity of the
processing area;
95.3.6 in the case of accident and
other dangerous situation in
the course of the processing
activities the license holder
and the management of the
mine shall take the necessary
measures to immediately
eliminate the situation,
render first aid to the
victims, evacuate the people
from the dangerous area and
immediately notify the
relevant authorities of the
situation;
Overlaps with the Labor Health
and Safety Law.
Consider deleting this
Article
95.3.7 to strictly adhere to the
processing standards and
procedures;
What standards? Whose? Clarify.
95.4 If the license holder has
employed citizens of
Mongolia in numbers less
than that specified in 95.3.4
of this law, it shall be
obligated to pay a monthly
amount to the relevant soum
or district budget equal to
the minimum wage amount
multiplied 10 times for each
foreign employee above the
threshold.
This sets such companies up
from the outset to have to pay
penalties because of a lack of
qualified Mongolian citizen
employees. Realities should be
understood in Mongolia to
either increase the % of
permissible foreign workers or
relax this payment for
exceeding the quota.
Consider and Clarify.
96 Suspension of the Work
authority to conduct works
96.1 The State Administration
may suspend the Work
authority to conduct works
granted to the license holder
in the following cases.
96.1.1 the license holder has not
submitted the plans, reports,
agreements and other
documents specified by this
law in time, or the
documents do not fulfil, or
fully fulfil the requirements
specified by this law and
other relevant laws and
No. Article Draft provision Comment Recommendations
regulations;
96.1.2 the obligation to pay the fees
imposed by this law and
rules and procedures enacted
in conformity therewith have
not been performed;
96.1.3 the central state
administration in charge of
nature and environmental
matters has submitted a
recommendation to suspend
the Work authority to
conduct works as specified
in Article 119.6 of this law;
96.1.4 the local self-governing
authority has submitted a
recommendation to suspend
the Work authority to
conduct works to the State
Administrative Authority
due to the fact that the
license holder has not
fulfilled its obligations
imposed by Cooperation
agreement and Local
Development Agreement;
What is the process? Is the
license holder permitted to
work until proven otherwise?
What is the dispute mechanism?
Clarify.
96.1.5 if a binding requirement to
suspend the Work authority
to conduct works has been
issued by the state
specialized inspection
inspector as specified in
Article 144.2 of this law;
What is a “binding
requirement”?
Clarify.
96.2 If it deems necessary, the
State Administration may
partially suspend the Work
authority to conduct works
by means of prohibiting
specific activities of the
license holder.
96.3 The State Administration
may extend the period of
suspension or partial
suspension of the Work
authority to conduct works
and total duration of the
suspension and extension
shall not exceed 6 (six)
months.
Grounds to appeal and timing
for administrative court case to
be considered.
Consider and clarify.
96.4 The suspension and partial
suspension of the Work
authority to conduct works
shall not apply to the works
No. Article Draft provision Comment Recommendations
to be completed according to
the rehabilitation work plan
of the license holder.
97 Restoring the Work
authority to conduct works
97.1 The license holder may
submit its request to the
central state administration
and state administration with
regards to restoring the
Work authority to conducts
works along with the
evidence if it deems that the
violations have been
eliminated within the period
of suspension.
Why is the State Central
Administration involved here?
All prior reference for
suspension has been only to the
State Administration.
Clarify.
97.2 If the central state
administration and state
administration deem the
violations eliminated upon
review of the request, it shall
render and register the
decision to restore the Work
authority to conduct works
within 14 (fourteen) days
since the date of receipt of
such request.
Why is the State Central
Administration involved here?
All prior reference for
suspension has been only to the
State Administration.
Who is “it”, which
administration?
What if a decision is render
contrary? What is the dispute
mechanism?
Clarify.
Clarify.
Clarify.
98 Areas limited for
prospecting, exploration,
mining and processing
activities
98.1 It shall be prohibited for the
holder of the Work authority
to conduct works, to conduct
prospecting, exploration,
mining and processing
activities within 100 meters
from each side of the
following objects except for
the case specified in 98.2 of
this law.
98.1.1 spring and winter
settlements of the herder
inhabiting, or house and
apartment dwellings built for
residency prior to the
approval and registration of
the workplan of the license
holder;
Consider what legal right is
granted to such persons (though
likely to be a social issue) under
the Land Law.
Consider and clarify.
98.1.2 findings of rare ancient flora
No. Article Draft provision Comment Recommendations
and fauna, historical and
cultural findings registered
before the approval and
registration of the work plan
of the license holder or
notified to the license holder
by the state administrative
central authority in charge of
specially protected areas;
98.2 The license holder may
conduct activities based on
the permission of the owner
and possessor on the area on
which prospecting,
exploration, mining and
processing activities are
prohibited as specified in
Article 98.1.1 of this law.
98.3 The permission of the owner
or possessor specified in
98.2 of this law shall be
issued in writing in
accordance with the
template approved by the
State Administrative
Authority.
Does this template exist? Clarify.
98.4 The written permission
specified in 98.3 of this law
shall:
98.4.1 have the same validity for
assignees and heirs of
owners and possessors;
98.4.2 the owner or possessor, their
assignees and heirs shall not
have the right to revoke such
permission;
98.5 The owner or possessor may
determine the border and
depth of area within which
to permit prospecting,
exploration, mining and
processing activities in
granting the permission
specified in 98.2 of this law.
98.6 The following activities
shall comprise the
prospecting, exploration,
mining and processing
activities specified in Article
98 of this law.
98.6.1 to affect the soil surface and
conduct excavation by using
mechanical facilities for the
No. Article Draft provision Comment Recommendations
purposes of exploration and
extraction sampling;
98.6.2 assembling, installing and
using facilities, mine
opening designated for
accessing or air conditioning
the underground facility;
98.6.3 to extract and process
minerals using machinery,
and other facilities other
than manual equipment;
98.6.4 transport loads to derivative
deposit, ore stockpile and
mine and production waste,
construct and use facilities,
autoroads and dirtroads
designated to reach them;
98.6.5 create derivative deposits
and ore stockpile;
98.6.6 construct and use dams,
buildings and facilities
designated to store the water
and soil water used for mine
and production waste and
activities;
98.6.7 construct buildings and
facilities designated to store
and reprocess mine and
industrial waste, use
buildings and equipment for
the above purposes;
98.6.8 conduct drilling for any
purposes;
98.7 The 100 meter distance
specified in Article 98.1 of
this law shall be calculated
in the following way.
98.7.1 to calculate the tenure of the
spring, and winter
settlements, housing and
houses built for residency as
0.1 hectare unless otherwise
specified by law and 100
meters each side from such
tenure;
98.7.2 if it is not possible to
determine the tenure land as
specified in Article 98.7.1 of
this law, to measure from 30
meters from each side of the
wall of housing or house
built for residency and 100
meters from such startpoint;
No. Article Draft provision Comment Recommendations
99 Managing and conducting
of prospecting,
exploration, mining and
processing activities
99.1 The license holder may
appoint a person to manage
and conduct the prospecting,
exploration, mining and
processing activities to be
performed at the area
granted by the license under
an agreement.
99.2 The license holder shall be
obliged to notify the relevant
local government and state
administration about the
agreement and appointed
person as specified in 99.1
of this law and register in
the license registration
database within 30 (thirty)
days since the agreement has
been entered.
We assume that this is only a
“notice” and not “approval”
requirement.
Clarify.
99.3 The entity appointed to
manage and conduct the
prospecting, exploration,
mining and processing
activities shall be fully
qualified in terms of
knowledge, skills,
experience and background
to lead and control safe,
mining operation and shall
be fully aware and familiar
with this law and other
relevant laws, rules and
procedures.
What does “fully qualified”
mean? Must one be registered
and permitted in Mongolia?
Clarify.
99.4 The license holder shall be
obligated to fully inform the
entity appointed to manage
the mine and production
activities on obligations
imposed by laws, relevant
rules and procedures.
99.5 The license holder may
appoint oneself to manage
and conduct the mine and
production activities if it
fulfils the criteria specified
in 99.3 of this law.
99.6 The entity appointed to
manage and conduct
geology and mining
No. Article Draft provision Comment Recommendations
activities shall be
responsible for any damages
caused due to its own
activities as specified by law
100 Conducting extraction
work in deposits, of which
exploration work and
proven reserve was funded
by the state budget and
registered in the national
consolidated registration
100.1 The license holder
conducting extraction work
in deposits of which
exploration work and proven
reserve was funded by the
state budget and registered
in the state Consolidated
registration, shall reimburse
the exploration expenses
funded by the state budget
from the day of its extraction
based on the agreement.
Appears that the license holder
will have to give up majority
shareholding AND reimburse
exploration expenses to the
Government? On what basis?
Are records even available for
exploration done in Soviet
times? Where is the date cut-
off?
Confirm and clarify.
100.2 Expenses relating to mineral
deposit detailed prospecting,
prospecting-evaluation
work, geological
cartography expenses for the
area and the expenses
incurred by all stages of
exploration work shall be
included in the state budget
expenses for exploration
work.
100.3 For entities privatized in
accordance with the State
and local property law, the
corresponding expenses to
the used minerals of the
deposit shall be
proportionately deducted
from the total expenses
funded by the state for the
exploration work and the
remaining reserve expenses
shall be reimbursed.
100.4 The total amount, period of
payment, and the annual
payment amount shall be
specified in the
reimbursement agreement.
100.5 The amount of annual
payment shall be determined
No. Article Draft provision Comment Recommendations
based on the number and
amount of products to be
produced in the year.
100.6 If the reimbursement has not
been completed within the
period specified in the
agreement, the holder of the
license shall be notified to
perform its obligations and a
penalty of 0.1 percent of the
total unpaid payment shall
be accrued daily.
100.7 If the reimbursement and
penalty specified by this law
has not been paid within 30
(thirty) days of receipt of
notification to perform the
reimbursement obligation
from the State
Administrative Authority,
the license shall be revoked
and the State Administrative
Authority shall announce a
tender selection on the area
granted by the license.
101 Issuing reports
101.1 The prospecting and
exploration license holder
shall make accurate and
trustful exploration work
reports for that year within
February 10th of the next
year in accordance with the
approved procedure and
submit it to the state
administration and tax
agency.
101.2 1 (one) month prior to the
expiration of the license, a
prospecting or exploration
license holder shall have
integrated report of the
prospecting and exploration
work validated by the
authorized person in
accordance with Article 102
of this law, and submit it
along with the primary
documents to the State
Administration in line with
the approved procedures.
101.2.1 Main and subordinate
minerals, hazardious
No. Article Draft provision Comment Recommendations
mixtures of the minerals,
estimations of their quality,
as well as of quantity of the
reserves must be accurately
defined in the integrated
report of the exploration in
accordance with the
standards.
101.3 State Administration shall
register the proven reserve
and reports of the
exploration specified in
Article 101.2 of this law in
the Consolidated National
databases of geology and
minerals.
101.4 The mining license holder
shall submit the following
reports within the following
period to the State
Administrative Authority:
101.4.1 the basic indicators and
graphic designs of mine
work of the year approved
and specified by the annual
report and survey according
to the procedure approved
by the State Administration
within February 10th of the
subsequent year;
101.4.2 the basic production
indicators of the next year
according to the approved
template within November
10th of each year;
101.5 The following information
shall be provided in the
reports specified in 101.4.1,
101.4.2 of this law.
101.5.1 working days, number of
employees, agreements and
covenants related to the
property of the license
holder;
101.5.2 performance of the mine
work plan, calculation of
reserve mobilization,
duration of mine operation,
schemes, extensions and
reform work of the
production;
No. Article Draft provision Comment Recommendations
101.5.3 extracted ore, amount,
number of products sold and
loaded for sale, sales price,
information on its purchaser,
investmend made in that
year, mining expenses,
royalty for use of minerals
resources and reports on the
equipment and other
property in use
101.6 The mining license holder
shall issue the report
specified in 101.5.3 of this
law according to the
template approved by the tax
authorities in increased
amount and submit it to the
tax authorities within the
20th of the first month of the
next quarter, and the annual
report within the 20th of
January of the next year, and
deliver the receipt of
submission immediately to
the State Administration.
101.7 The processing license
holder shall submit the
following reports within a
period specified below to the
State Administration:
101.7.1 an annual report and basic
calculation of the production
shall be submitted within the
10th of February of the
subsequent year, in
accordance with the
procedures approved by the
State Administration;
101.7.2 the basic calculation of the
production work of the next
year shall be submitted on
the approved template
within the 10th of November
of each year;
101.8 The following information
shall be provided in the
reports specified in Article
101.7.1, 101.7.2 of this law.
101.8.1 working days,
number of employees,
reports on occupational
safety, agreements and
covenants related to the
No. Article Draft provision Comment Recommendations
property of the license
holder;
101.8.2 performance of the
processing work plan,
duration of plant operation, a
scheme of the plant facilities
and expansion and
renovation of such facilities;
101.8.3 processed ore and
concentration, documents of
their origin, contract and
agreements, amount and
number of products sold and
loaded for sale, sales price,
information on its purchaser,
investmend made in that
year, mining expenses,
royalty for use of minerals
resources and reports on the
equipment that has been
utilized and other property in
use;
101.8.4 payment of royalties for
resource use, equipment and
other capital in use;
101.9 The processing license
holder shall issue the report
specified in Article 101.8.3
of this law according to the
template approved by the tax
authorities in increased
amount and submit it to the
tax authorities within the
20th of the first month of the
next quarter, and the annual
report within the 20th of
January of the next year, and
deliver the receipts of
submission immediately to
the State Administration.
101.10 The license holder shall
issue its rehabilitation work
report within February 10th
of the next year and submit
it to the state administrative
central authority in charge of
nature and environment, the
State Administration, tax
authorities and the
specialized inspection
authority.
101.11 The rehabilitation work
report shall include the
No. Article Draft provision Comment Recommendations
performance of
rehabilitation workplan and
the following information.
101.11.1 registration of negative
effects to the nature and
environment caused by
prospecting, exploration,
mining and processing
activities;
101.11.2 measures not specified in the
rehabilitation workplan, but
taken to protect the nature;
101.11.3 potential negative effects on
the nature, related
environmental impact
assessment, and proposed
changes to the rehabilitation
workplan for the next year
due to expansion of
activities and increase in
capacity;
101.12 The license holder shall be
obliged to submit to the
State Administration the
information on the quantity
of the mined, processed, and
sold products in that year,
taxes, duties, fees, levies
paid to the state and local
budget, total amount of
funds spent under the
Cooperation and Local
Development Agreement
within the first quarter of the
next year. The State
Administration shall inform
this information to the public
within 30 (thirty) days since
the date of the receipt.
101.13 The State Administration
shall maintain the
confidentiality of the
information in the reports of
prospecting, exploration,
extraction and processing
activities categorized as
corporate confidential in line
with relevant laws, rules and
procedures throughought the
valid period of the license.
The State Administrative
Authority may enter into
confidentiality agreement
No. Article Draft provision Comment Recommendations
with the license holder if the
license holder has so
requested.
101.14 The template to issue reports
specified in this Article shall
be approved by the State
Administration.
102 Receiving the result of the
prospecting and
exploration work,
validating the reserve of
the deposit
What is a “specialized entity”
Is this a reference to a Qualified
Person (a la N43-101?) Who
determines? On what
basis/qualifications?
Clarify.
102.1 A license holder of
prospecting or exploration
work shall conduct
prospecting or exploration
work under the management
or with the involvement of
specialized entity.
Will this entail a significant
added expense to exploration/
Clarify.
102.2 The estimation of the deposit
reserves that have been
determined as a result of the
exploration work shall be
made by the specialized
entity involved in the
exploration work under this
law.
102.3 A certificate for the
specialized entity shall be
granted to an entity which
meets the terms and
conditions set by the state
central administration in
charge of geology and
mining affairs.
Assumption that this can be a
foreign invested entity?
Confirm assumption.
102.4 For the purpose of reviewing
the accuracies of the
estimation of the reserves
and work report on
prospecting and exploration
activity prepared by the
specialized entity, the state
administrative body may
appoint an independent
professional geology expert.
102.5 The professional,
independent geology expert
may be a national or
international individual or
organization specializing in
geology.
102.6 Based on the opinion by the
No. Article Draft provision Comment Recommendations
independent professional
geology expert appointed by
the State Administration in
respect of the review of the
estimation of reserves and
the report specified in this
law, the Professional
Council on minerals
resources shall discuss the
report on reserves and issue
a decision whether to
register it in the National
consolidated databases of
geology and minerals.
102.7 The specialized geology
entity shall adhere to the
following principles in its
activities:
102.7.1 to participate in the
exploration work on site;
102.7.2 the estimation of reserves
determined by the
exploration work shall be
accurate and based on the
primary documents;
102.7.3 to be responsible for the
accuracy of the conclusion
before the client and other
entities;
102.7.4 to repay or compensate from
own property for any loss
incurred to any person due
to intentionally making of an
error in the estimation;
102.7.5 to have retained professional
liability insurance;
102.7.6 to maintain the
confidentiality of the
business secrets of the client
obtained in the course of
conducting activites, and not
to inform others of such
information unless required
so by law;
102.7 not to use any information
on the clients obtained in the
course of conducting
activities, for personal or
third party interests;
102.8 The license holder shall be
obliged to submit to the
State Administration the
consolidated and validated
No. Article Draft provision Comment Recommendations
exploration work report on
the reserves, reserve
estimates and relevant other
documents and primary
materials within the period
specified in this law.
103 The Professional Council
under the State
Administration
103.1 Professional Council for
Geological Survey,
Professional Council for
Mineral Resources and
Professional Council for
Mining shall be operating
under the State
Administration with the duty
of providing professional
advise in their respective
areas.
103.2 The members of the
Councils shall be specialized
in geology and mining and
have in-depth knowledge,
skills and experience on
mineral exploration, mining
and processing.
103.3 The Professional Council on
minerals resources shall be
comprised of 15 members as
provided below:
103.3.1 from the specialized
departments and divisions of
the relevant Government
agencies-5
103.3.2 from the research
institutions-3
103.3.3 from the professional
associations in geology and
mining-7
103.4 The Professional Council for
Mining shall be comprised
of 15 members as provided
below:
103.4.1 from specialized
departments and divisions of
the relevant Government
agency-6
103.4.2 from research institutions-4
103.4.3 from professional
associations in geology and
mining-5
103.5 Professional Council for
No. Article Draft provision Comment Recommendations
Geology shall be comprised
of 15 members as provided
below.
103.5.1 from specialized
departments and divisions of
the relevant Government
agency-6
103.5.2 from research institutes –4
103.5.3 from professional
associations in geology and
mining – 5
103.6 The members, specified in
Articles 103.3, 103.4 and
103.5 of this law, shall be
appointed by Geology and
Mining Minister for the
period of 3 years based on
the proposals from the
relevant specialized
organizations.
Isn‟t there a potential for a
conflict of interest on the part of
the Government? No
independence/transparency in
process.
Consider and Clarify.
103.7 The professional Councils,
specified in this law, shall
have the charters for their
operation.
103.8 The state administration
shall approve the chart of the
professional councils and the
procedure for appointing and
re-appointing the members
of the councils.
103.9 The Professional Council for
Geology shall exercise the
following rights and duties
in the issues regarding
mapping, and prospecting
and exploration works
funded by state budget:
103.9.1 Determining the area for
mapping and prospecting
and exploration work to
conduct;
103.9.2 Determining the type, size
and budget of the work‟
103.9.3 To discuss and approve the
work performance and
report;
103.9.4 If necessary, to appoint an
expert as specified in this
law;
103.10 The Professional Council for
Mineral Resources shall
exercise the following rights
and duties in the issues
No. Article Draft provision Comment Recommendations
regarding prospecting and
exploration works.
103.10.1 to discuss the report of
prospecting and exploration
work that is not funded by
state budget and issue a
conclusion on whether to
accept such report;
103.10.2 If necessary, to appoint an
expert as specified in this
law;
103.11 The Professional Council for
Mining shall exercise the
following rights and duties
in relation to the mining and
processing issues:
103.11.1 to provide professional
advice and issue an opinion
in relation to issues on
reviewing and modifying of
the Technical and
Economical Feasibility
Report on mining
production, submitted by the
holders of mining or
processing licenses;
103.11.2 to review and issue an
opinion in respect of a
request of a mining license
holder to generate a
derivative deposit and
industrial wastes that has
been received for opinion by
the state administration;
103.11.3 to provide comments and
recommendations, and issue
an opinion in relation to
approving, modifying and
rejecting of work plans of
mining and processing
operations for which, in the
opinion of the State
Administration, a respective
opinion is necessary;
103.11.4 to provide professional
advice and assistance to the
State Administration in
relation to issues of granting
of a Work authority to
conduct the work, for which,
in the opinion of the State
Administrative Authority, a
respective opinion is
No. Article Draft provision Comment Recommendations
necessary.
103.12 If the Professional Council
disagrees with the
conclusion of an authorized
research laboratory in
respect of a sample, ore or a
product that has been
obtained during the
prospecting, exploration,
mining and processing
activities, the Council shall
issue a proposal and an
opinion for the State
Administration to appoint an
expert to take samples and
conduct re-analysis. The
state administration shall
issue a decision to appoint
an expert. The associated
expenses thereof shall be
financed from the budget of
the Council as specified in
Article103.16 of this law.
103.13 If a license holder disagrees
with the opinion of the
expert appointed by the state
administration as specified
in Article 103.10 of this law,
it may choose an
international certified
independent research
laboratory to re-analyze the
sample, ore or the product
that has been obtained
during the prospecting,
exploration, mining and
processing activities. In such
case, the associated expenses
shall be borne by the license
holder. The certified
research laboratory should
be recognized by the state
administration.
No. Article Draft provision Comment Recommendations
103.14 The conclusion of the
international certified
research laboratory shall be
regarded as final. The
license holder shall be
obliged to pay all taxes, fees,
levies and payments in
relation to types and quantity
of deposit reserves, main
and subordinate minerals
that have been determined
by such final conclusion.
The taxes, fees, levies and
payments that have been due
during the unpaid period
shall be paid in accordance
with the percentage and
levels as determined by the
tax office.
103.15 If the state administration
deems as necessary, the
members of the Councils
shall participate in the
operation of the State
Administration to conduct
an on-site examination of the
implementation of the work
plan and of work
performance, and shall issue
proposals, recommendations
and opinions.
103.16 The State Administration
shall issue a decision based
on the opinion of the
Professional Councils.
103.17 The Professional Councils
exercise the following rights
in order to implement its
functions specified in this
law.
103.17.1 to demand and access the
necessary information from
the license holder;
103.17.2 to have the independent
expert and audit conclusion
issued if necessary, and to
consider these conclusions
in considering the matters;
103.18 The Councils shall be
financed by 20% of the
licenses fees paid in the
given year.
103.19 The procedure to pay salary,
No. Article Draft provision Comment Recommendations
bonus and business trip per
diems to the members of the
Professional Councils shall
be approved by the State
Administrative Authority
104 Registration database We did not see an indication of
a registration of State funding
(for exploration and mining).
Clarify if this is to be in the
database and made public.
104.1 The State Administration
shall have a Consolidated
registration database.
104.2 The registration database
shall consist of the license
database and license
cartography database.
104.3 The license and its
cartography shall be
accessible to the public
according to the procedure
approved by the State
Administrative Authority.
104.4 The registration database
may be in the electronic
form.
104.5 The following documents
shall be registered in the
license database:
104.5.1 requests and application
made in relation to the
license;
104.5.2 certificate of license;
104.5.3 applications and requests
made in relation to Work
authority to conduct
activities;
104.5.4 agreement on
reimbursement;
104.5.5 agreement pledging the
license and a decision
releasing the license from
the pledge;
104.5.6 agreement on creating
entitlements to non-material
proprietary interest in a
license, shared entitlements
to such interest or transfer of
such entitlements;
104.5.7 Cooperation Agreement and
Local Development
Agreement;
104.5.8 receipt of depositing the
rehabilitation fund in a
No. Article Draft provision Comment Recommendations
special account;
104.5.9 receipt of depositing the
funds for mining and
industrial unit for processing
closure in a special account;
104.5.10 receipt of payment payable
as specified in this law;
104.5.11 permission in writing issued
by the owner and possessor
specified in Article 98.2 of
this law;
104.5.12 certificate of rehabilitation
work quality;
104.5.13 request to close mine,
industrial unit for
processing;
104.5.14 any other documents
submitted to the State
Administration as specified
in this law;
104.6 The following decisions
issued by the State
Administration shall be
registered in the license
registration database.
104.6.1 refusal to accept the
application for license;
104.6.2 granting a license and
imposition of obligation
when granting license;
104.6.3 refusal to grant license;
104.6.4 return of the application for
license by the request of the
applicant;
104.6.5 renewal of the license, and
reduction of the area granted
by license at the time of
renewal;
104.6.6 any changes to the
obligation imposed by the
license;
104.6.7 refusal to renew license;
104.6.8 transfer or refusal to transfer
the license;
104.6.9 partial transfer of the area
granted by the mining
license;
104.6.10 whole or partial return of the
area granted by license;
104.6.11 re-issuance of license;
104.6.12 revocation of license;
104.6.13 approval of, changes to and
No. Article Draft provision Comment Recommendations
refusal to approve the
prospecting, exploration,
mining and processing work
plan;
104.6.14 granting, refusal to grant,
suspension, partial
suspension and restoration
of Work authority to conduct
works;
104.6.15 decision of the Commission
to accept the results of the
rehabilitation work;
104.6.16 decision of accepting of
mines and industrial unit for
processing for utilization;
104.6.17 decision of the relevant
authority on closing the
mine or industrial unit for
processing wholly or
partially;
104.6.18 conclusion of the
professional authority on
mine and industrial unit for
processing closure, decision
of the relevant authority;
104.6.19 other decisions rendered by
the State Administration as
provided by this law;
104.7 The cartographic database of
licenses shall contain the
following types of
cartography and mapping:
104.7.1 an area map of prospecting
and exploration;
104.7.2 a map of a licensed area and
any modification thereof;
104.7.3 an area map of a mine claim;
104.7.4 an area map of an industrial
unit for processing;
104.7.5 a map of an area on which
the rehabilitation work has
been conducted;
104.7.6 a cadastre map defining the
borders of the area which
prospecting, exploration,
mining and processing
activities are prohibited;
104.7.7 a map of the state and local
special protected and
reserved areas;
104.7.8 a cadastral map defining the
borders of the area granted
No. Article Draft provision Comment Recommendations
to citizens for ownership and
possession that registered in
the state integrated geodetic
and cartographic database.
104.8 If it deems necessary, the
State Administrative
Authority may register court
decision rendered in relation
to the license holder‟s
implementation of rights and
obligations granted by the
license, in the license
registration database.
104.9 All decision and documents
issued in relation to one
license shall be stored in a
portfolio by the order of
issuance of such documents
in the archive.
105 Deeming the registration
as invalid, restoring
registration
105.1 If the documents specified in
this law does not contain the
information specified in this
law and other relevant
procedures approved by the
State Administration, or
does not conform with the
approved template or fails to
fulfill the requirements
provided by law the Head of
the State Administration
may deem its registration as
invalid .
105.2 The State Administration
shall restore the registration
if the submitting entity
compiles the documents as
required and submits it to
the State Administration
within 30 (thirty) days since
the date of the decision on
deeming the registration
invalid as specified in 105.1
of this law
105.3 The State Administration
shall not issue any decisions
in relation to the license
related to the documents,
and the area issued by the
license within the period
specified in Article 105.2 of
No. Article Draft provision Comment Recommendations
this law.
105.4 Typographical mistakes and
mis-input of decisions and
documents other than in
cases of deliberate and
misleading purposes
committed in the course of
registering the decisions and
documents in the registration
database specified in 104.5
and 104.6 of this law shall
not constitute grounds to
revoke the registration.
106 Registering information
about the license holder in
the registration database
106.1 The surnames, names and
registration number of the
member of executive
management, board of
directors and equivalent
entity of the legal entity to
represent the license holder
shall be registered in the
license database.
Why is this here as it must
already be registered with the
State Registration Authority
under the Company Law and
State Registration Law? This
will create one more layer of
unnecessary compliance each
time a person changes position.
Suggest deleting this Article.
106.2 Information regarding the
transfer and changes to the
representing persons
specified in 106.1 of this law
shall be notified and
registered at the State
Administrative Authority
within 10 (ten) days of such
changes by the license
holder or the representing
person itself.
Same comment Suggest deleting this Article
as it repeats obligations
contained in other
legislation.
107 Approving the procedure
related to registration
107.1 The State Administration
shall approve the procedure
to register the decisions and
documents specified in
104.5 and 104.6 of this law
in conformity with this law.
107.2 The State Administration
shall approve the template of
requests, procedure to
receive and review requests
and applications in
conformity with this law.
107.3 The State Administration
shall approve the procedure
to inform the public of the
No. Article Draft provision Comment Recommendations
decisions rendered by the
State Administrative
Authority in conformity with
this law.
108 Legal consequence of
Document registered in the
Registration Database
108.1 If the agreement to transfer
jointly possess rights
conferred by a license or to
transfer percentage of
possession of rights and the
agreement to pledge a
license specified in this law
is registered in the license
registration database in
accordance with procedure
of this law, the State
Administrative Authority
shall have no obligation with
regard to the matters related
to the foregoing agreements
and transfer actvity of a
license.
108.2 Registering documents in
the registration database by
the State Administration
according to this law shall
not be deemed as guarantee
to make an agreement or
contract, to entitle right to
parties to contract and to
transfer rights by contracts
or create an exclusive right.
109 Rectification of
registration errors
109.1 The head of State
Administration‟s unit in
charge of registration may
rectify error in registration
by his/her own initiative or
by request of a license
holder.
109.2 The head of State
Administration‟s unit in
charge of registration shall
develop and issue legal act
with regard to rectification
of a registration error and
shall register such legal act
in the license registration
database.
109.3 If the head of state
No. Article Draft provision Comment Recommendations
administration‟s unit in
charge of registration deems
necessary, he/she shall
rectify errors in registration
by the following ways:
109.3.1 to insert missing datas;
109.3.2 to correct incorrect datas;
and
109.3.3 to remove incorrect and
redundant datas;
109.4 If rectification of registration
errors impacts any rights or
obligations granted to a
license holder by such
license, the head of State
Administration‟s Unit in
charge of registration shall
immediately notify the
license holder and deliver
the legal act with regard to
rectification of registration
errors to the license holder.
109.5 If any person deems the
change in rights and
obligations under a license
to be due to the rectification
of registration errors as
harmful to persons other
than the license holder, the
person whose right has been
violated is entitled to appeal
to court for review of such
legal act with regard to the
rectificiation of registration
error.
110 Determination of the
correctness of documents
to be registered in
registration database
110.1 The documents registered in
registration database shall be
correct and the State
Administration may review
the documents or decisions
specified in this law in order
to determine the correctness
of the foregoing document
and decisions prior to
registration of such
decisions or documents. The
procedure and terms of such
reviewing process shall be
set by state administration.
No. Article Draft provision Comment Recommendations
111 Reference letter
111.1 The head of State
Administration‟s unit in
charge of registration may
provide the reference letter
with regard to registration of
documents and decisions
kept in registration database
to any party interested in
such reference letter. The
reference letter shall be a of
proof whether documents
are correct or not and
whether documents are
registered or not.
111.2 The State Administration
may determine the service
fee for service to provide
reference letter specified in
Article 111.1 of this law and
provide copies of documents
registered in registration
database.
112 Address and record of
special permisson holder
112.1 When contacting with a
license holder in a matter
specified in this law, the
State Administration shall
contact a license holder by
the address and phone
number registered in the
license holder registration
database.
112.2 The license holder shall be
obliged to inform correctly
the State Administration
about its official an current
address, location and phone
number in order to keep the
contact information in the
registration database.
112.3 The State Administration
shall not be responsible for
the consequence arisen from
the failure to receive
notification, correspondence
or documents if the
notification, correspondence
or documents delivered to a
license holder is returned to
the State Administration, if
the State Administration is
No. Article Draft provision Comment Recommendations
not available to contact with
a license holder due to
failure to register official
and current address and
phone number in accordance
with Article 112.2 of this
law and the license holder
did not receive any
notification, correspondence
or document from the State
Administrative Authority.
113 To deem notification,
correspondence or
documents delivered to
recipient
113.1 When the State
Administration submits any
notification, correspondence
or documents to any person
via offiical post, email or
facsimile in accordance with
this law, the notification,
correspondence or
documents shall be deemed
as delivered to receiver in
the following time period:
113.1.1 If the State Administration
delivered the notification,
correspondence or
documents via post, those
shall be deemed delivered
within the specified time
period set in the Law of
Mongolia on Post;
113.1.2 If the State Administration
delivered the notification,
correspondence or
documents via email or
facsimile, those shall be
deemed delivered within the
verified date of facsimile or
email;
113.2 If the State Administration
submits any information and
date via telephone to any
person and record to prove
the telephone conversation
exist, the data and
information shall be deemed
delivered.
114 The mandatory
rehabilitation of
environment affected by
No. Article Draft provision Comment Recommendations
prospecting, exploration,
mining and processing
activities
114.1 The license holder shall be
obliged to rehabilitate land
affected by prospecting,
exploration, mining and
processing activities in
accordance with the
rehabilitation plan.
114.2 The local self governing
authority may agree with the
license holder in agreements
on Cooperation and Local
development about
implementation of
rehabilitation of land and
reciprocal improvement of
environment quality.
114.3 A mining and processing
license holder shall be
mandatory to replant trees in
the foregoing area
irrespective of the
geographic region when
implementing rehabilitation
activity in area affected by
prospecting, exploration,
mining and processing
activities.
This appears to be out of place
as this would regulated as a
practical matter in the plans and
under environmental
legislation.
This may not be practical in all
conditions (e.g. Southern Gobi).
If the intention is to create
environmental offset
obligations this should be
specified and mechanisms
should be in place for the
licence holder to discharge its
obligations by planting or
rehabilitating flora in other
regions. Clarification is
required as to whether the
licence holder is requirement to
replant 'trees' or any type of
suitable vegetation.
Suggest deleing this Article.
Clarify.
114.4 A license holder shall be
obliged to plant 100 trees in
place of each tree that was
cut down in the course of
prospecting, exploration,
mining and processing
activities.
Same comment as above Suggest deleting this Article.
114.5 The central state
administration in charge of
nature and environmental
affairs shall ensure that a
license holder or relevant
authorized organization
No. Article Draft provision Comment Recommendations
mandatorily implements
rehabilitation activity in
accordance with Article 127
of this Law.
114.6 The central state
administration in charge of
environment shall set and
approve the minimum
rehabilitation expenditure
per hectare differentiated by
the territorial regions and
mineral types.
115 Rehabilitation plan
115.1 A license holder shall
implement rehabilitation
activities in accordance with
the rehabilitation plan
approved by the relevant
authority.
115.2 If a mining and processing
license holder agreed with
the local self governing
authority on making
reciprocal improvement of
the environmental quality,
the holder shall specify it in
the rehabilitation plan.
115.3 The rehabilitation work plan
of a prospecting or
exploration license holder
shall be reviewed by a local
environmental inspector of a
relevant soum or district,
and shall be approved by a
division in an aimag or the
capital city in charge of
environmental affairs.
115.4 The rehabilitation work plan
of a mining or processing
license holder shall be
approved by the central state
administration in charge of
nature and environmental
affairs.
116 Reviewing the
rehabilitation plan
Does the rehabilitation plan
cover the entire operation as per
Technical and Economic
Feasibility Report or is it
incremental?
Clarify.
116.1 Prospecting and exploration
license holder shall submit
the rehabilitation plan with
prospecting and exploration
No. Article Draft provision Comment Recommendations
workplan to the local
environmental inspector of a
relevant soum or district.
116.2 Mining and processing
license holder shall submit
the rehabilitation plan with
mining and processing
workplan to the central state
administration in charge of
nature and environmental
affairs in accordance with
88.7 of this law.
116.3 The local environmental
inspector and central state
administration in charge of
nature and environmental
affairs shall assess the
following conditions when
reviewing the rehabilitation
plan:
116.3.1 whether the rehabilitation
plan is in compliance with
that activity plan;
116.3.2 whether the rehabilitation
plan is achievable;
116.3.3 whether the planned
expenditure to be spent for
rehabilitation activity is
sufficient for the actual
expenditure for
rehabilitation;
116.3.4 whether the rehabilitation
activities fulfill the standards
and requirements;
Further clarification required as
to what precise standards and
requirements are being referred
to (i.e. standards and
requirements set in guidelines
released by State administration
in charge of environmental
affairs from time to time).
Clarify.
116.4 The local environmental
inspector shall make one of
the following decisions
within 5 (five) days after the
date of receipt of the
rehabilitation plan.
116.4.1 to approve the rehabilitation
plan;
116.4.2 to return the rehabilitation
plan in order to make certain
changes;
116.4.3 to reject to approve the
rehabilitation plan;
No. Article Draft provision Comment Recommendations
116.5 If the local environmental
inspector has returned the
rehabilitation plan with
certain comments to change
the plan or rejected to
approve the rehabilitation
plan he/she shall notify the
decision to the license holder
with specific statement of
the grounds for such return
or rejection.
117 Approving rehabilitation
plan
117.1 If rehabilitation plan
approved by the local
environmental inspector of a
relevant soum or district
prospecting and exploration
license holder shall submit
the rehabilitation plan to the
division in an aimag or the
capital city in charge of
environmental affairs.
117.2 The central state
administration or the
division in an aimag or the
capital city in charge of
nature and environmental
affairs shall make one of the
following decisions based on
review of circumstances
specified in Article 116.3.1-
116.3.4 of this law within 10
(ten) days after the date of
receipt of the rehabilitation
plan:
117.2.1 to approve the rehabilitation
plan;
117.2.2 to return the rehabilitation
plan in order to make certain
changes;
117.2.3 to reject to approve the
rehabilitation plan;
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117.3 If the central state
administration or the
division in an aimag or the
capital city in charge of
nature and environmental
affairs has approved the
rehabilitation plan, the
decision shall be delivered to
the following entities within
7 (seven) days after the date
of issuance of the decision to
approve the rehabilitation
plan:
117.3.1 the license holder;
117.3.2 State Administrationy;
117.3.3 state specialized inspection
authority;
117.4 If the central state
administration or the
division in an aimag or the
capital city in charge of
nature and envinromental
affairs has returned the
rehabilitation plan with
certain comments with
regard to change the plan in
accordance with Article
117.2.2 of this law, the
decision to return the
rehabilitation plan shall be
notified to State
Administration within a
period specified in Article
117.3 of this law.
117.5 If the state central
administrative authority or
the division in an aimag or
the capital city in charge of
nature and environmental
affairs has returned the
rehabilitation plan with
certain comments to change
the plan to the license
holder, the license holder
shall make proper changes in
the rehabilitation plan and
deliver it within 30 (thirty)
days after the date on which
the decision has been
rendered to return the
rehabilitation plan.
117.6 If the state central
administrative authority or
The grounds for rejection of the
rehabilitation plans should be Consider and Clarify.
No. Article Draft provision Comment Recommendations
the division in an aimag or
the capital city in charge of
nature and envinromental
affairs has deemed it not
possible to approve the
rehabilitation plan based on
the review of factors
specified in Article 116.3 of
this law, it shall reject to
approve the rehabilitation
plan and ,thereof, notify the
license holder and State
Administration within the
time period specified in
Article 117.3 of this law.
The decision to reject
approval of the draft
rehabilitation plan shall
specifically reflect the
grounds for such rejection.
expressly linked to the criteria
to be assessed under Article
116.3.
117.7 If the license holder has not
submitted the rehabilitation
activity report for the
previous year in accordance
with relevant procedures to
the relevant authority, the
central state administration
or the division in an aimag
or the capital city in charge
of environmental affairs may
reject the approval of
rehabilitation plan for the
following year.
117.8 If the license holder
disagrees with the decision
to reject the approval of
rehabilitation plan, the
license holder shall be
entitled to litigate in the
court within 30 (thirty) days
since the date of rendering
the decision to reject the
foregoing plan.
117.9 If the license holder has not
litigated against the decision
to reject the approval of
rehabilitation plan, the
license holder may
redevelop the rehabilitation
activity report once again
and deliver it to the central
state administration or the
division in an aimag or the
No. Article Draft provision Comment Recommendations
capital city in charge of
nature and environmental
affairs within 30 (thirty)
days.
117.10 The central state
administration or the
division in an aimag or the
capital city in charge of
nature and environmental
affairs shall review and
resolve the rehabilitation
plan redeveloped by the
license holder in accordance
with thisArticle of this law.
118 Rehabilitation
Expenditure Estimation
118.1 In order to estimate and
determine the expenditure
for rehabilitation activity for
rehabilitation activity each
year, the license holder shall
have the rehabilitation
expenditure estimation for
rehabilitation activity made.
118.2 The expenditure per hectare
for rehabilitation activity
shall not be less than the
minimum expenditure per
hectare for rehabilitation
activity set and approved by
the central state
administration in charge of
nature and environmental
affairs.
118.3 An entity conducting the
rehabilitation cost estimation
shall comply with the
procedures approved by the
central state administration
in charge of nature and
environmental affairs.
Are these procedures available? Clarify.
118.4 When making the
rehabilitation cost
estimation, the area on
which prospecting,
exploration, mining and
processing activities is to be
completed and the planned
rehabilitation activity for the
foregoing area shall be
assessed and the factors
specified in Article 116.3 of
this law shall be addressed.
No. Article Draft provision Comment Recommendations
118.5 If the central state
administration in charge of
nature and environmental
affairs deems it necessary, it
may require the license
holder to have an audit
organization conduct audit
and issue a conclusion on
the rehabilitation cost
estimation.
We assume that this is a rare
exception to the general rule
that this is not required?
Conform assumption.
118.6 In the case specified in
Article 118.5 of this law, the
audit organization issuing
the conclusion shall deliver
the copy of conclusion to the
State Administration within
3 (three) days following the
issuance of such conclusion.
118.7 The amount of expenditure
shall be reflected in the
rehabilitation plan and
approved by the state central
administrative authority or
the division in an aimag or
the capital city in charge of
nature and environmental
affairs.
119 Expenditure deposit for
rehabilitation activity
119.1 Guarantee for performance
of rehabilitation activity
shall be equal to 100% of
amount of expenditure for
rehabilitation activity of
each year specified in
Article 118 of this law.
What form the guarantee should
be in? Is a bond sufficient? Is it
rolling or cumulative? Does the
bond cover the entire
rehabilitation plan or is it
incremental (see Art. 116).
Clarify.
119.2 A license holder shall place
the expenditure to be spent
for rehabilitation activity for
a year in a special bank
account established by the
state central administrative
authority in charge of nature
and environmental affairs
within 14 (fourteen) days
after approval of the
rehabilitation plan.
119.3 It shall be prohibited to use
the the expenditure deposit
in the special account for
purposes other than the
designated purpose.
119.4 If for specific year the Assumption that if there is a Confirm assumption.
No. Article Draft provision Comment Recommendations
rehabilitation plan of the
prospecting and exploration
license holder has changed
or the rehabilitation
activities have not complied
the standards and
requirements approved by
central state administration
in charge of nature and
environmental affairs, the
division in an aimag or the
capital city in charge of
nature and environmental
affairs may demand
prospecting and exploration
license holder to increase
monetary capital placed or to
be placed in a special
account for the next year.
change in the rehabilitation
activity that would decrease the
amount specified that a portion
of the monetary capital will be
returned within thirty (30) days
of notice (see below article
also)?
119.5 In the cases specified in
119.3 and 119.4 of this law,
the license holder shall
transfer the necessary
additional monetary deposit
to the special bank account
for rehabilitation
expenditure within 30
(thirty) days.
119.6 If the license holder has not
deposited the additional
monetary capital to the
special bank account in
accordance with 119.5 of
this law, the central state
administration or the
division in an aimag or the
capital city in charge of
nature and environmental
affairs shall submit the
proposal to the State
Administration to suspend
the Work authority for the
license holder.
119.7 Transaction of the special
bank account in which to
deposit the rehabilitation
expenditure and monitoring
of the foregoing bank
account shall be regulated by
the procedure approved by
the Government.
Does this procedure exists?
Will this be an interest bearing
account to the benefit of the
license holder?
Clarify.
120 Rehabilitation activity
120.1 The license holder shall
No. Article Draft provision Comment Recommendations
implement rehabilitation
activity in accordance with
the annual rehabilitation
plan and shall be obligated
to reclaim the area granted
under the license in
compliance with the
standards and requirements
approved by central state
administration in charge of
nature and environmental
affairs prior to the expiration
of the license.
120.2 If the license holder has not
completed rehabilitation
activity prior to the
expiration of license term, it
shall be obligated to
complete the rehabilitation
activity at the shortest time
as possible. The central state
administration in charge of
nature and environmental
affairs shall set the specific
time of completing the
rehabilitation activity by
taking into account the
specific features of the
remaining rehabilitation
activity.
120.3 The local self-governing
authority, the state
specialized inspection
agency and the division in
an aimag or capital city in
charge of nature and
environmental affairs shall
jointly monitor the
implementation and
performance of the
rehabilitation plan.
120.4 The expiry of the license
shall not serve grounds for
license holder to be releases
from duties of completing
the rehabilitation work in the
area
121 Committee in charge of
accepting the result of
rehabilitation activity
121.1 The results of a
rehabilitation work of a
license holder shall be
No. Article Draft provision Comment Recommendations
accepted by a Committee
consisting of the
representatives of the local
specialized inspection
offices, the divisions of the
aimag and the capital city in
charge of nature and
environmental affairs and
local citizens, under the
procedures approved by the
state central administrative
authority in charge of nature
and environmental affairs.
122 Accepting the result of
rehabilitation activity
122.1 The committee shall assess
the result of rehabilitation
activity at site of
rehabilitation and issue the
conclusion. The committee
shall submit its conclusion to
the central state
administration in charge of
nature and environmental
affairs.
122.2 The central state
administration in charge of
nature and environmental
affairs shall, , make a
decision as to whether to
accept the results of the
rehabilitation work based on
the opinion of the
Committee under Article
122.1 of this law.
122.3 The cenral state
administration in charge of
nature and environmental
affairs shall be obliged to
deliver, within 3 (three)
days, its decision regarding
whether to accept the results
of the rehabilitation work to
the State Administration and
the license holder,
respectively.
123 Refusing to accept the
rehabilitation activity
result
123.1 If the Committee deems that
rehabilitation work fails to
meet standards approved by
the central state
No. Article Draft provision Comment Recommendations
administration in charge of
nature and environmental
affairs and has not covered
an entire area for
rehabilitation in the given
year, it shall issue
conclusion to reject to accept
the rehabilitation work
results, and set a specific
period of time to re-perform
the rehabilitation. The
Committee must submit its
conclusion to the state
central administrative
authority in charge of nature
and environmental affairs,
the specialized inspection
authority and the State
Administration.
123.2 The central state
administration in charge of
nature and environmental
affairs shall issue decision to
reject the rehabilitation work
results if received the
conclusion specified in
123.1 of this law.
Can the State Central
Administration not have
discretion as whether to reject
or accept if it disagrees with the
decision in Article 123.1? Why
mandate a conclusions/action.
Consider and Clarify.
124 To file compliant against
the decision
124.1 The license holder may file
the complaint to Minister
(Cabinet Member) in charge
of nature and environmental
affairs if it does not agree
with the conclusion of
Committee and decision of
the central state
administration in charge of
nature and environmental
affairs to reject the
acceptance of the
rehabilitation work result.
124.2 The Minister (Cabinet
Member) in charge of nature
and environmental affairs
shall appoint an independent
team of specialized experts
consisting of 15 members as
specified in Article 124.4 of
this law if the license holder
has filed the complaint in
line with 124.1 of this law.
124.3 The members of the
No. Article Draft provision Comment Recommendations
independent, specialized
team shall be specialized in
geo-ecology and
environment and have in-
depth knowledge, skills and
experience.
124.4 The expert team shall be
comprised of 15 members as
provided below:
124.4.1 one person each from the
central state administration
in charge of nature and
environmental affairs and
the specialized inspection
authority, with specialization
in the studies of flora, fauna,
air, water and soil;
124.4.2 from the local self-
governing authority of the
given area - 2;
124.4.3 specialized researchers from
research institutions in geo-
ecological studies - 2;
124.4.4 specialized researchers from
research institutions in
botanical studies - 2;
124.4.5 specialized researchers from
research institutions in water
and soil studies - 2;
124.4.6 specialized researchers of
the research institution on
issues of fauna studies - 2;
124.4.7 representatives from the
local area - 2;
124.4.8 representative from
professional associations and
the legal entity carrying out
the prospecting, exploration,
mining and processing
activities – 1;
124.5 The Cabinet Member in
charge of nature and
environmental affairs shall
appoint the members of the
team specified in 124.4.1,
124.4.3-124.4.6 of this law
on the basis of proposals
made by public and
professional organizations.
124.6 The Cabinet Member in
charge of nature and
environmental affairs shall
appoint the members of the
No. Article Draft provision Comment Recommendations
team specified in Articles
124.4.2, 124.4.7, and
124.4.8 of this law on the
basis of proposals made by
the local self governing
authority and local public
organizations.
124.7 The internal procedures for
electing, appointing and re-
appointing the members of
the experts‟ team and the
functioning of the experts‟
team as well as the
procedures for allocating
incentives and estimating the
expenses of official trips for
the team members shall be
approved by the central
state administration in
charge of nature and
environmental affairs.
124.8 The Cabinet Member in
charge of nature and
environmental affairs shall
issue a decision as to
whether to receive the
results of the rehabilitation
work based on an opinion of
the experts‟ team,
Can the Cabinet Member make
an independent decision or must
this person follow the opinion
of the experts?
Clarify.
125 Certification that land has
been rehabilitated
125.1 If the Committee deems that
the license holder
rehabilitated the land in
compliance with the
standards and requirements
it shall grant the certificate
that the land has been
rehabilitated to the license
holder.
126 Return of the expenditure
for rehabilitation activity
placed in the special
account
No. Article Draft provision Comment Recommendations
125.2 On the basis of the
certificate that the land has
been rehabilitated specified
in Article 125.1 of this law,
the state central
administrative authority in
charge of nature and
environmental affairs shall
return the expenditure for
rehabilitation activity to the
license holder within 14
(fourteen) days.
We assume that this will be the
full return of the payment +
interest.
Confirm assumption.
127 Carrying out the
rehabilitation by the state
central administrative
authority in charge of nature
and environmental affairs
127.1 The central state
administration in charge of
nature and environmental
affairs shall render the
decision to ensure that the
rehabilitation activity would
be performed by another
entity and dispose the
monetary deposit for
expenditure placed in special
account for the foregoing
activity if the area where the
license holder has not
performed rehabilitation or
the pristine nature is affected
as a result of a incomplete
performance of
rehabilitation by license
holder. The central state
administration in charge of
nature and environmental
affairs shall deliver this
decision to the State
Administrative Authority
within 3 (three) days in
order to have the decision
registered in the license
registration database.
127.2 The central state
administration in charge of
nature and environmental
affairs shall issue the
decision specified in Article
127.1 of this law in the
following cases:
127.2.1 if a license holder has not
No. Article Draft provision Comment Recommendations
conducted the rehabilitation
in consistent with the
rehabilitation plan and the
standards under this law;
127.2.2 If the license holder has
failed to perform the
rehabilitation within the
specific period of time set by
the Committee in charge of
reviewing and accepting the
result of rehabilitation;
127.3 If the expenditure for
rehabilitation activity
deposited in the special bank
account by the license holder
is not sufficient to finance
the rehabilitation activity,
the central state
administration in charge of
nature and environmental
affairs shall ensure the
allocation of the necessary
monetary fund from the state
budget and have the
rehabilitation activities
implemented in completion
by the organization
authorized to engage in
rehabilitation activiteis.
127.4 The state administration in
charge of nature and
environmental affairs shall
file the lawsuit against the
responsible license holder.to
get compensation for the
expenditure for
rehabilitation activity funded
by the state budget specified
in Article 127.3 of this law
128 Obligation to inform
public
128.1 The central state
administration in charge of
nature and environmental
affairs and geology and
mining affairs shall inform
the public through electronic
form concerning the the
following information,
documents and decisions
with regard to the
rehabilitation and protection
of environment:
No. Article Draft provision Comment Recommendations
128.1.1 environmental impact
assessment;
128.1.2 rehabilitation plan and
report;
128.1.3 decision to accept the result
of rehabilitation activity
made by the Committee in
charge of reviewing and
accepting the foregoing
result;
128.1.4 any complaint and proposal
with regard to rehabilitation
submitted to the state
organizations and the status
of resolution of those
complaint and proposals;
128.1.5 an information regarding the
usage of chemical toxic and
other chemical substances
that may affect the
environment and public
health;
129 Request for permission to
close the mine and plant
The entire Chapter 13 (Art 129-
139) is a deal killer for some
operators.
Consider and Clarify.
129.1 A mining license holder
shall, in accordance with the
Technical and Economical
Feasibility Report of mining,
submit a request to the
following state authorities,
within not less than 3 years
before the planned closure
date of a mine:
129.1.1 the state administration;
129.1.2 the central state
administration in charge of
nature and environmental
affairs;
129.1.3 the specialized inspection
agency;
129.1.4 the local Government;
129.2 If a processing license
holder planned to close the
plant, it shall be obligated to
submit the request at least 3
(three) year prior to the
planned date for closure of
the plant and deliver the
request to the state
organizations specified in
Articles 129.1.1-129.1.4 of
this law.
No. Article Draft provision Comment Recommendations
129.3 The license holder shall
attach detailed closure plan
of a mine or a plant
approved as specified in this
law, and other related
documents to the request.
129.4 The State Administration
shall register the request for
closure of a mine or a plant
in the license registration.
130 Granting of permission for
closure of mine and plant
130.1 The Professional Mining
Council shall review a
request, a detailed plan and
other related documents
submitted by a license
holder, issue an opinion in
respect of granting of the
permission for closure of a
mine or a plant, and shall
send such opinion to the
State Administration.
130.2 The State Administration,
based on the opinion of the
Professional Mining
Council, shall make a
decision as to whether to
grant the permission for
closure of a mine or a plant.
130.3 If the State Administration
has decided to grant the
permission for closure of a
mine or a plant, it shall
notify the specialized
inspection authority in
writing.
131 Refusing to grant
permission for mine
closure
131.1 If the Professional Mining
Council deems that the
permission cannot be
granted for a mine closure
given that the approved
reserves for production have
not been fully exhausted, the
State Administration may
reject the request on mine
closure of a license holder.
We assume that the approved
reserves for production to be
exhausted are based on
economic factors and not
complete exhaustion.
Confirm assumption.
131.2 If a license holder disagrees
with the decision of the State
Administration specified in
Same comment as above Confirm assumption.
No. Article Draft provision Comment Recommendations
131.1 of this law, the State
Administration shall grant a
permission for the mine
closure on the grounds of
assigning to pay the royalty
fees on the remaining
unused production reserves.
132 Closure plan of mine and
plant
132.1 Mining and processing
license holder must have a
closure plan of a mine or a
processing factory.
132.2 A license holder shall be
obliged to have prepared and
approved closure plan of a
mine or a plant together with
the preparation and approval
of a Technical and
Economical Feasibility
Report of mining or
processing activity.
132.3 A license holder shall adjust
the closure plan of the mine
or the plant once every 3
years and, as specified in
Article 130 of this law,
submit it for discussion to
the Professional Mining
Council, and for approval by
the State Administration.
132.4 A detailed closure plan of a
mine or a plant shall be
prepared 3 years before the
closure of such mine or a
plant and the detailed plan
shall be adjusted every year,
and be submitted for
discussion and approval, as
specified in Article 132.3 of
this law.
132.5 The following conditions
should be included in a
closure plan of a mine or a
plant.
132.5.1 technical indicators of
closure of the mine or the
plant;
132.5.2 measures to be taken in
relation to the environmental
protection and reclamation
during the closure of the
mine or the plant;
No. Article Draft provision Comment Recommendations
132.5.3 any social impact that may
occur as a consequence of
the closure of the mine or
the plant, its evaluation and
measures to be taken in
respect any means to remedy
such impact;
Is the license holder held
responsible for “social impact”
of closure? What is the full
scope of this Article?
Clarify.
132.5.4 financing and relevant
indicators of closure of the
mine or the plant.
132.6 If commercial infrastructure
and facilities constructed
and used for the production
purposes are located outside
of the licensed area, the
issues on the ownership,
usage and possession of such
infrastructure or facilities in
relation to the closure of the
mine or the plant shall be
included in the closure plan.
We assume that this will
primarily be pre-determined
and dictated in the Land
Possession or Use Agreements
under the Land Law, and under
the Civil Code, and be
mimicked in the closure plan.
We would assume the same if
located within the license area.
Confirm assumption.
Confirm assumption.
132.7 The issues related to the
maintenance, protection and
monitoring of the
surroundings of the mine or
the plant after closure as
well as the means of
resolving and regulating of
the financing of such issues
shall be included in the
closure plan.
132.8 The closure plan shall
determine the transfer,
ownership or the purpose of
the usage of the land after
closure of the mine or the
plant. Such issue should
have consulted with a local
self-governing authority.
We assume that the Land
Agreement will pre -
“determine” this.
Confirm assumption.
133 Temporary closure of mine
and plant
133.1 A closure plan shall include
measures to be taken in
respect of a temporary
closure of a mine or a plant.
133.2 In the event of a temporary
closure of a mine or a plant,
a license holder shall send a
notification of temporary
closure of such mine or plant
to the State Administration
and the specialized
inspection agency.
No. Article Draft provision Comment Recommendations
133.3 The notification on a
temporary closure of a mine
or a plant shall clearly
indicate a reason and a
duration for temporary
closure of such mine or
plant.
133.4 The specialized inspection
agency shall, within 7
(seven) days upon receiving
such notification, inspect the
reasons and conditions for
temporary closure of the
mine or the plant, and
monitor the temporary
closure process.
Does the Specialized Inspection
Agency have any authority to
veto the temporary closure or
only “inspect” and report on
such reasons?
Clarify.
133.5 A temporary closure of the
mine or the plant shall not
cause either to decrease the
amount of the expenditure
deposit for closure activity
specified in this law or
exempt from the obligation
to place the expenditure
deposit in the special
account.
133.6 A planned halt indicated in
the mining or processing
work plan shall not be
considered as a temporary
closure.
134 The obligations of license
holder during the mine
closure
134.1 As specified in this law, a
license holder shall
commence the preparation
for a mine closure from a
date of receiving the
permission on the closure of
a mine or a plant from the
state administrative body.
134.2 The license holder has the
following obligations during
the mine closure period:
134.2.1 to fully control the mine
closure activities, to ensure
the labour safety operation
and to implement all the
regulation and procedures
related to the foregoing;
134.2.2 to adhere with relevant
regulation with regard to
No. Article Draft provision Comment Recommendations
closure of tunnel and
entrance of mine;
134.2.3 to take measures to prevents
the penatration of water used
in the mine site and
contaminated by chemicals
to the subsoil, groundwater
or water in the surface;
134.2.4 to remove all things used in
mine such as mining
equipment, techniques, road,
construction, ditch, trench,
communication line and pipe
shall be removed from the
area granted under a special
permisson unless agreed
otherwise;
134.2.5 to close all the entrance of
open pit in order to prevent
illegal extraction activity in
the particular area after the
closure of mine;
134.2.6 to prevent fire disaster and
water accumulation;
134.2.7 to bury all the valley and
hole which has been created
as a result of open pit mining
and to take measures to
improve the charesteristic of
environment through
creating artificial lake and
pond;
This requirement it largely
acknowledged as economically
impossible and therefore not
required in other jurisdictions.
Consider and clarify.
134.2.8 to plant trees and plants in
the area affected by
extraction activity or that has
been agreed to be improved
by exchange under this law;
This appears to be unusual as
directly included in the Draft
Law and would be better placed
in the plans as negotiated with
the Ministry of Environment.
Consider deleting this
Article.
134.2.9 if the deep and subsoil water
revealed in surface of land,
to build a ditch and trench in
order to use the foregoing
water for watering purpose;
134.2.10 to reclaim the hydrology
system if the hydrology
system had changed during
the extraction;
134.2.11 to control and review quality
of ground and subsoil water
from the mine and to take
measures to purify the
polluted water;
134.2.12 to take measure to make the
area granter under a license
No. Article Draft provision Comment Recommendations
and mining claim field
usable for public tenure
lands, pasture or agricultural
lands after the closure of
mine;
134.2.13 to take measures to ensure
the possibility of workers to
be recruited in the other
mine project or mine after
the closure of mine;
To what extent? What is the
scope of this Article –
recruitment, advertisement, re-
training?
Clarify.
134.3 A license holder shall place
the necessary expenditure
deposit for the mine or plant
closure in the special
account under Article 135 of
this law.
134.4 The expiry of the valid date
of mining and processing
license shall not serve the
grounds to release from
duties related to closure of
mine and plants and post
closure review and
assessment.
134.5 closure in the special
account under Article 135 of
this law.
135 Expenditure deposit for
closure of a mine or a
plant.
135.1 Before obtaining the work
authority to conduct the
relevant work a license
holder shall place the
expenditure deposit for
closure of a mine or a plant
in a monetary form in the
special account, in order to
provide assurance to conduct
the closure of such mine or
plant at an area of the
mining or processing work,
as required in accordance
with the approved plan.
This requirement is onerous and
may deter investment in the
minerals sector for significantly
large mines because it ties up a
significant amount of capital for
the life of the project. Such
sums of money will likely need
to be financed and borrowed, at
cost to the project, and this will
deter projects, and furthermore
banks will not necessarily be
willing to lend such sums at the
start of a project.
It would be preferable to permit
license holders to provide
security in respect of their mine
closure requirements (i.e.
performance bonds). Another
alternative is to establish a
Government fund which
collects annual contributions
from license holders based on a
Consider and clarify.
No. Article Draft provision Comment Recommendations
license holder's total expected
mine closure expenditure (for
example, as was recently
introduced in Western
Australia). However
establishing a fund of this kind
will require careful planning
and implementation. Another
option could be a progressive
deposit into escrow over the
mine life.
For example, we cannot image
ETT being able to put up
hundreds of millions of dollars
for an obligation likely to be
over 60 years in the future and
at the same time have enough
money to develop and operate.
135.2 The license holder shall set
the amount of the
expenditure deposit for
closure of a mine or a plant
taking into account the
following conditions:
135.2.1 Technical and Economical
Feasibility Report of a mine
or a plant;
135.2.2 a detailed environmental
impact assessment;
135.2.3 an impact assessment on
public health and society;
135.2.4 a size of an area affected by
the mine or the plant;
135.2.5 a future risk assessment;
135.2.6 other grounds specified in
the law;
135.3 An area specified in Article
135.2.4 of this law must be
determined as covering both
a size of a mine claim, an
area beyond the licensed
area and its border which
has been adversely
influenced by a mining or
processing activity.
135.4 The amount of expenditure
deposit for closure of a mine
or a plant must be fully
sufficient for financing the
work or activity to be
implemented under the
Same comment as 135.1. Clarify.
No. Article Draft provision Comment Recommendations
approved plan as specified in
this law.
135.5 The amount of expenditure
deposit for closure of a mine
or a plant placed in the
special account by a license
holder shall be updated and
increased by the
Professional Mining Council
once every 5 years taking
into consideration changes
in the amount of closure
costs and inflation. The
Professional Mining Council
shall not reduce the closure
costs placed in the special
account by the license holder
and shall not return it to the
license holder on the
grounds other than those as
specified in in Article 138 of
this law .
Does the license holder have a
say in this or is it upon demand
of the Professional Mining
Council?
Clarify.
136 Decision on closure of a
mine or a plant
136.1 The State Administration,
the specialized inspection
agency, the central state l
administration in charge of
nature and environmental
affairs and the local
Government authority shall
appoint a joint Committee
for the closure process of a
mine or a plant.
136.2 The Committee shall
monitor the closure process
of a mine or a plant and
issue an opinion regarding
the closure of such mine or
plant as required.
136.3 Prior to the issuance of
decision on closure of a
mine and plant, the license
holder shall be obliged to
submit to the State
Administration. the schemes,
Technical and Economical
Feasibility Report and all
other documents related to
the closure of the mine or
the plant.
136.4 The State Administration,,
based on an opinion
No. Article Draft provision Comment Recommendations
specified in Article 136.2 of
this law, shall issue a
decision on the closure of a
mine or a plant and register
it with the license
registration database.
137 Monitoring after closure
137.1 A license holder shall be
obliged to carry out the
monitoring at own expenses
for a specific period after the
closure of a mine or a plant.
If mine or plant is closed and
rehabilitated, in most
jurisdictions, responsibility and
liability passes back to the
State.
Consider and Clarify
137.2 A duration of monitoring
after closure shall be
determined by the State
Administration taking into
consideration the scope of
the activity of a mine or a
plant, a state of
environmental disturbance,
safety conditions, possible
future risks and a time frame
for clearing up of the
adverse impacts.
This is very open ended. Suggest adding a maximum
amount of time “no greater
than” or “up to”.
138 Returning of expenditure
deposit
138.1 Where a period for
monitoring has been
finished, and no risks have
occurred in respect of the
closure during such period,
and where the land has been
transferred for the
subsequent use and an issue
on protecting from possible
risks has been resolved, up
to 90 percent of the closure
expenditure deposit accrued
in the special account can be
returned.
Depending on the monitoring
period, the expenditure deposit
could be held for a very lengthy
period of time. Is this interest
bearing?
No refund mechanism/criteria is
specified.
What is meant by “land has
been transferred for the
subsequent use”? Does this
mean transferred back to the
State or the State transferring to
another party to use? If the
latter, what if nobody wants the
land?
Why is the language “up to” 90
percent used? Why does it say
“can” be returned and not
“shall” be returned?
Consider and Clarify.
Clarify.
Clarify.
Clarify.
139 Contingency fund for
closure of a mine or a plant
139.1 After refunding of the
closure expenditure deposit
Note 10% of closure deposit
will be retained against possible
Consider and Clarify.
No. Article Draft provision Comment Recommendations
specified in 138.1 of this
law, 10 percent of the
expenditure deposit for
closure of a mine or a plant
that has been placed in the
special account, shall be
transferred into the
Contingency fund of closure
of mines and plants for
protection from possible
risks that may occur in the
closed areas in the future.
future risk, despite monitoring
period being concluded.
Effectively this is yet another
tax.
139.2 The operation of the special
account for expenditure
deposit for closure of mines
and plants, and the closure
Contingency fund shall be
regulated by a separate law.
Does this law exist? Clarify.
140 Inspection
140.1 In the necessary
circumstances, the state
specialized inspection
agency may appoint the
inspector who is authorized
to conduct inspection in the
activity of a license holder.
140.2 The inspector who appointed
in accordance with this law
has the following mandates:
140.2.1 to enter the area granted
under a license, mine,
factory and mining claim
area and other constructions
related to mining claim area
where the license holder
conducts its activity under a
license within working hour
without any obstacles;
There are health and safety
issues, as well as other issues
that should be considered. It
would be more appropriate to
require the State Inspector to
provide at least 48 hours written
notice of arrival and then carve
out except in “emergency
situations” such as is done in
Article 140.3, industrial
accident, etc.
Consider and Clarify.
140.2.2 to carry out an investigation,
examination or survey in the
buildings, facilities,
equipment, goods and
materials specified in Article
140.2.1;
During an investigation, how
much “interference” can a State
Inspector have?
Consider and Clarify.
140.2.3 to seize the evidence related
to an activity which is
possible to violate this law,
other relevant legislation and
regulations;
Does this include documentary
inspection and review and
seizure? CR 144.1.3.
Clarify.
140.2.4 to ask questions from a
relevant person, and to
No. Article Draft provision Comment Recommendations
require to provide an
explanation;
140.2.5 to take samples for analysis
when an additional analysis
is deemed as necessary;
140.2.6 to take picture and make
record in order to strengthen
the evidence of violation;
140.2.7 other rights specified in law;
140.3 If the authorized inspector
deems it necessary to inspect
and immediately take
measures to cease the
activity of license holder
which has caused serious
damage to the environment,
the inspector is authorized to
enter the premises at any
time of the day.
140.4 The license holder or any
other related person shall be
obliged to render assistance
to the inspection and
cooperate with the state
inspector.
To what extent? We assume
that the State Inspector must
pay his/her own costs.
Confirm assumption.
140.5 A license holder must not,
without reasonable excuse,
obstruct a state inspector in
the exercise of powers or
refuse to cooperate
140.6 Upon entry into the area and
construction and facilities
for the purpose of exercising
his or her mandate conferred
by this law, the authorized
state inspector appointed
under this law shall be
obliged to provide the
identification card of the
state inspector, appointment
for inspection and other
documents authorizing him
to conduct such inspection,
and to explain to a relevant
person of the rights and
duties specified in this law.
140.7 If the authorized inspector
did not implement his/her
obligation specified in 140.6
of this law, entity may refuse
to perform the demand made
by the foregoing inspector.
141 To document the
No. Article Draft provision Comment Recommendations
inspection by the
authorized inspector
141.1 Where an authorized state
inspector has, for the
purpose of the inspection
under this law, entered the
area and the premises
specified in Article 140.2.1.
of this law, and carried out
an inspection, he shall issue
a document on such entry
into the foregoing area and
construction, and give one
copy of the document to a
license holder or his
authorized person.
141.2 The document specified in
Article 141.1 of this law
shall be in written form and
contain the following
information:
141.2.1 name and identification
number of inspector and
number of appointment;
141.2.2 entering and exiting date and
time;
141.2.3 purpose of entrance;
141.2.4 work has been done and
description of activity
conducted during inspection;
141.2.5 brief conclusion regarding
potential violation which
observed during inspection;
141.2.6 a reference of any
photograph or record taken
during inspection, and ways
of access to such photograph
or record by the license
holder or his authorized
person;
141.2.7 a contact information and
phone number of inspector
and foregoing information of
his senior management
person;
141.2.8 procedures for reviewing
and filling a compliant in
respect of the conclusion
made at the inspection site
by the state inspector;
142 Forfeiture of the property
and return the forfeitured
property
No. Article Draft provision Comment Recommendations
142.1 If the inspector seizes any
item for the purpose of
taking samples for analysis,
the inspector shall document
a file which clearly indicates
the name, type, quantity and
value of seized items and
provide one copy of such
file to the license holder or
its authorized person.
142.2 The state specialized
inspection agency shall
return the seized property to
the owners or possessors of
the those property except for
those as specified in the
following:
142.2.1 if seized property may be a
proof of violation of the law
or relevant rules and
procedures;
142.2.2 if a decision has been made
that the seized property in
the state revenue due to an
owner or possessor of such
property is unknown;
142.2.3 If the seized properties are
things that should be
destructed in accordance
with law and court decision;
142.2.4 If the seized properties have
been used up as samples,
and thereof, being
impossible to return;
142.3 The state specialized
inspection agency may
sanitize and detoxicate the
seized properties and in this
case it may decide to claim
the relevant expenses for
sanitization and detoxication
of the properties from the
owner and possessor the
foregoing things.
143 Confiscated as state
revenue
143.1 The state specialized
inspection agency shall
make decision to take the
confiscated property as the
state revenue in the
following cases:
143.1.1 if the owner and possessor
No. Article Draft provision Comment Recommendations
of the seized properties are
unknown;
143.1.2 property items, mined
minerals, products, and any
income derived from such
items, that have been
generated as a result of a
prospecting, exploration,
mining and processing
activities without a license;
143.1.3 if the seized properties are
things prohibited to extract,
store, transport and sell
according to the laws of
Mongolia or the things
prohibited to be return to its
owner and possessor;
144 Other rights of the
authorized inspector
144.1 The authorized inspector
shall have the following
mandates, in addition to
those specified in Article
140 of this law:
144.1.1 If it is necessary for the
inspection, to take
translation assistant from
particular person who is
under inspection without any
charge;
144.1.2 to require and receive
explanation and reference
from the relevant authority
during the inspection;
144.1.3 to make copies of documents
when necessary;
144.2 If the authorized state
inspector has found, during
inspection work, that an
activity of a license holder
has been in violation of the
legislation, and that such act
may become a ground to
suspend the Work authority
to conduct the work
specified in this law, the
inspector shall issue an
opinion and submit an
official notice to suspend the
Work authority to the State
Administration.
144.3 If the authorized state
inspector has found, during
Clarification required as to what
will constitute a 'serious
Consider and Clarify.
No. Article Draft provision Comment Recommendations
an inspection work, that an
activity of a license holder
has been in a serious
violation of the legislation,
and that such act may
become a ground to revoke
the license under this law,
the inspector shall issue an
opinion and submit a
proposal to revoke the
license to the State
Administration.
violation'.
Consideration should also be
given to requirements for
remediation of violations before
revocation. Due process.
145 Liabilities for breach of
legislation.
These provisions include very
little protection for licence
holders and the only relevant
provision is article 145.1.26
which protects against third
parties who obstruct the
performance of authorised
activities. However the fine is
disproportionate to the potential
damage which may be incurred.
For example, the cost of
standby for a single drill rig for
a 24 hour period is
approximately 6.85 million
MNT.
Consider and Clarify.
145.1 If a breach of the minerals
legislation does not
constitute a criminal offence,
an authorized state inspector,
whilst taking into account
the circumstances of the
infringement, shall impose
the following penalty on the
guilty person:
145.1.1 If any person has conducted
mineral prospecting,
exploration, mining and
processing activities without
holding a license, all
incomes or products derived
from foregoing activities
shall be confiscated and a
fine equal to minimum wage
multiplied by 5-10 times
shall be imposed on an
individual, or a fine equal to
minimum wage multiplied
by 25 – 100 times shall be
imposed on a legal entity.
145.1.2 If any person purifies,
No. Article Draft provision Comment Recommendations
processes, transfers,
transports, stores, sells,
purchases, mediates
minerals that have been
mined illegally, a fine equal
to minimum wage multiplied
by 5 – 10 times shall be
imposed to an individual and
a fine equal to minimum
wage multiplied by 50 – 75
times shall be imposed to an
legal entity;
145.1.3 For conducting mineral
prospecting, exploration,
mining and processing
activities on the territory on
where the prospecting,
exploration, mining and
processing activities has
been prohibited or restricted,
the relevant incomes derived
from such activity shall be
confiscated, and a fine equal
to minimum wage multiplied
by 5 – 10 times shall be
imposed to an individual
person and a fine equal to
minimum wage multiplied
by 25 – 100 times shall be
imposed to a legal entity;
145.1.4 If a license holder has failed
to comply with the
obligation to exhaust the
main and subordinate
minerals determined as the
production reserves during
extraction of a deposit, any
loss resulting from such
failure shall be
recompensated and a fine
equal to minimum wage
multiplied by 50 – 100 times
shall be imposed;
Clarity needed as to exhaustion
of the main and subordinate
minerals determined as the
production reserves.
Clarify.
145.1.5 If a license holder has
conducted high grading
mining shall be compensated
in accordance with this law
and a fine equal to minimum
wage multiplied by 100-250
times shall be imposed;
Clarification on “high grading”. Clarify.
145.1.6 If a license holder, who has
concluded a Deposit
development agreement has
Would this not be regulated by
the Company Law given that
the Government will be a
Clarify and consider
removing.
No. Article Draft provision Comment Recommendations
failed to fulfill his duty to
provide, upon a Government
request, any information
related to an activity
undertaken in respect of the
license as well as to
investment and ownerships
during the term of such
agreement, a fine equal to
minimum wage multiplied
by 25-50 times shall be
imposed;
shareholder under the DDA?
145.1.7 If a person, who has right to
conduct reconnaissance, has
disturbed the subsoil, the
reclamation expenditure for
the affected area shall be
compensated, and a fine
equal to minimum wage
multiplied by 5 – 10 times
shall be imposed;
Clarity needed on “disturbed
the subsoil.”
Clarify.
145.1.8 If a person failed to fulfill
the obligation to submit the
reconnaissance, prospecting
or exploration report and
copies of relevant
documents to the State
Administrative Authority in
accordance with this law and
to ensure registration of the
foregoing report and
document in the
Consolidated database of
National geology and
minerals, shall have
submitted the foregoing
report and document by that
particular person and a fine
equal to minimum wage
multiplied by 3 – 5 times
shall be imposed to an
individual and a fine equal
to minimum wage multiplied
by 10 – 15 times shall be
imposed to a legal entity;
145.1.9 If a license holder creates
derivative deposit and
industrial waste without
permission of the State
Administrative Authority, a
fine equal to minimum wage
multiplied by 50 – 100 times
or a fine equal to 15% of
No. Article Draft provision Comment Recommendations
revenue derived during the
creation of derivate deposit
and industrial waste shall be
imposed;
145.1.10 If a mining license holder
has carried out prospecting
on and exploration activity
solely, on the area granted
by the license a fine equal to
the minimum wage
multiplied by 25-50 times
shall be imposed;
145.1.11 If a license holder has
commenced a work or
carried out an activity
without the Work authority
to conduct such work or
activity from the State
Administrative Authority,
the incomes derived from
such work or activity shall
be confiscated, and a fine
equal to the minimum wage
multiplied by 100-150 times
shall be imposed;
145.1.12 If a exploration license
holder has carried out
extraction activities in any
way the revenue shall be
confiscated and a fine equal
to the minimum wage
multiplied by 100-150 times
shall be imposed;
145.1.13 If a license holder or its
authorized person has, in
any way, obstructed the
authorized state inspector
specified in this law to
exercise his rights or refused
unreasonably to cooperate, a
fine equal to the minimum
wage multiplied by 30-50
times shall be imposed shall
be imposed;
145.1.14 If a license holder has failed
to submit the information,
report or work plan on time
within the periods as
specified in this law, or has
submitted false information,
report or plan,
misrepresentation, a fine
equal to 20 % of the incomes
No. Article Draft provision Comment Recommendations
accrued during the given
reporting period shall be
imposed;
145.1.15 If the license holder has
failed to inform the decision
to issue shares to the State
Administrative Authority as
specified in this law a fine
equal to minimum wage
multiplied by 50-100 times
shall be imposed;
This is regulated under the
Strategic Entities Foreign
Investment Law and should be
under the Jurisdiction of the
Ministry of Economic
Development and not the State
Administrative Authority. This
imposes an additional fine
outside the scope of this
legislation. Overregulation.
Recommend deleting this
Article.
145.1.16 If the license holder has
failed to perform its
obligation to consult and
inform the public with
accurate information a fine
equal to the minimum wage
multiplied by 50-100 shall
be imposed;
145.1.17 If a specialized person in
geology or an independent
expert, specified in Article
102 of this law, has failed to
fulfill an obligation to issue
an integrated report and
estimations on the results of
the prospecting and
exploration work, truly and
accurately, or has
deliberately issued false
information, report,
estimation or opinion,
misrepresentation, a fine
equal to minimum wage
multiplied by 100-200 times
shall be imposed;
145.1.18 For a failure to comply with
the regulations in respect of
assaying and registering of
precious metals and
gemstones, a fine equal to
25% of the total value of
such precious metals and
gemstones that should have
been registered shall be
imposed;
145.1.19 If a license holder has failed
to fulfill an obligation to
sell, at a premium rate, to the
treasury fund of
Mongolbank, a nugget,
No. Article Draft provision Comment Recommendations
which weighs more than 400
grams, or which has a
peculiar shape though
weighing less, or a precious
stone with a rare color and
shape, a fine equal to 50% of
the value of such items shall
be imposed;
145.1.20 If a license holder has
suppressed the quantity of
the mined minerals, and has
concluded a deceitful
contract for such purpose, or
has intentionally understated
the sales revenue by selling
such minerals at an
unreasonably low price, the
amount of the minerals
extracted and the price
difference shall be
calculated and repaid into
the state budget, the fine
equal to 50 percent of the
amount of revenue accrued
during this period shall be
imposed.
145.1.21 If a mining and processing
license holder has failed to
fulfill or has intentionally
avoided to fulfill an
obligation to supply raw
materials to domestic
processing plants, a fine
equal to the minimum wage
multiplied by 400-450 shall
be imposed;
145.1.22 If a license holder has failed
to fulfill its obligation to
have executed its main and
minor operations of
prospecting, exploration,
mining and processing by
domestic companies in a
proper percentages as
specified in this law, a fine
equal to minimum wage
multiplied by 250-300 times
shall be imposed;
145.1.23 If a license holder has failed
to submit the notification as
specified in Article 101.12
of this law, a fine a fine
equal to minimum wage
No. Article Draft provision Comment Recommendations
multiplied by 20-50 times
shall be imposed;
145.1.24 If a sample, assay and
primary materials
accumulated by the course
of exploration have been lost
or destroyed, such items
shall be re-compiled, and a
fine equal to minimum wage
multiplied by 50-100 times
shall be imposed;
145.1.25 If a license holder has
experienced an illegal
interference in exercising his
rights under the legislation, a
fine equal to the minimum
wage multiplied by 5-10
times to an individual, equal
to the minimum wage
multiplied by 25-50 times to
a legal entity shall be
imposed;
Drafting unclear assume the
fine will be levied against the
person/company creating the
interference.
Further, this should be greatly
expanded to include the costs of
shut-down, temporary closure,
lost profits, actual losses, etc.
For example, if a State
Inspector or Striking Labor
Force, or Protests create and
illegal suspension or shutdown,
the license holder should be
fully compensated for all
damages. This is done in Article
145.1.34 and should also be
done here.
Clarify.
Consider and Clarify.
145.1.26 If the State Administrative
Authority has failed to fulfill
an obligation to issue a
public notice in respect of
the information required
under this law for
publicizing in accordance
with the approved
procedures, a fine equal to
minimum wage multiplied
by 5-10 times shall be
imposed to the responsible
person;
145.1.27 If a responsible person has
failed to fulfill an obligation
to notify other persons
whose rights are affected in
respect of the license that
has already been registered
in the license registration
database under this law, a
fine equal to minimum wage
multiplied by 5-10 times
shall be imposed;
No. Article Draft provision Comment Recommendations
145.1.28 If the license holder has
failed to install area
demarcation marks, or
transfer the installed
demarcation marks as
specified in this law, a fine
equal to minimum wage
multiplied by 5-10 times
shall be imposed;
145.1.29 If the license holder, or the
management of the mine or
processing plant have failed
to inform of the accident
occurred and arising of other
dangerous conditions
occurred during the course
of prospecting, exploration,
mining and processing
activities according to the
procedure specified in this
law, failed to take necessary
measure to eliminate the
conditions, or failed to
perform its obligation to
render first aid to the victims
and evacuate people from
the danger zone, a fine equal
to minimum wage multiplied
by 50-100 times to
individual, and a fine equal
to minimum wage multiplied
by 200-250 times shall be
imposed to legal entity;
145.1.30 If the license holder has used
chemical toxic substances,
concoctions in its activities
without permission, or has
used hazardious chemical
toxic substances,
concoctions prohibited by
law, or has not complied
with the technological
regime, rules and procedure
to handle such chemical
toxic substances and
concoctions, the damages
incurred shall be
recompensated and a fine
equal to the amount of the
minimum wage multiplied
by 250-300 times shall be
imposed;
145.1.31 If a license holder has failed
No. Article Draft provision Comment Recommendations
to comply its obligation to
maintain the pollution of air,
water and soil, as well as
dust and noise at permissible
levels, a fine equal to
minimum wage multiplied
by 50-100 times shall be
imposed;
145.1.32 If the license holder has
failed to inform the relevant
authority of the discovery of
historically and culturally
valuable findings during the
prospecting, exploration,
mining and processing
activities as provided by this
law, and such cultural and
historical, rare findings have
been destroyed due to failure
to restrict its activities within
the specified distance, the
damages incurred shall be
compensated and a fine
equal to the minimum wage
multiplied by 150-200 times
shall be imposed;
145.1.33 If a license holder has failed
to inform to or has
concealed from the State
Administrative Authority of
finding a mineral occurrence
with a radioactive
production content during
the prospecting, exploration,
mining and processing
activities as required in this
law, a fine equal to
minimum wage multiplied
by 100-150 times shall be
imposed;
145.1.34 If a person appointed to
manage the prospecting,
exploration, mining and
processing activities has
failed to fulfill an obligation
under this law thereby
causing any loss in such
activity, a compensation
must be paid for the loss and
a fine equal to minimum
wage multiplied by 100-150
times to an individual, and a
fine equal to minimum wage
No. Article Draft provision Comment Recommendations
multiplied by 200-250 times
to a legal entity shall be
imposed;
145.1.35 If a responsible official has
breached the procedure
specified in this law in
relation to entering of data in
the license registration
database, by entering wrong
data or omitting a data,
which has caused a loss to a
relevant person, a
compensation must be paid
for the loss, and a fine equal
to minimum wage multiplied
by 3-5 times shall be
imposed;
Does this include a breach of
confidentiality?
Clarify.
145.1.36 If a person authorized to
conduct an evaluation of the
rehabilitation expenses has
violated the procedures
under this law by providing
wrong or unrealistic
evaluation of the
rehabilitation expenditures,
the authorization of such
person to conduct the
evaluation shall be revoked
and, a fine equal to
minimum wage multiplied
by 100-150 times shall be
imposed;
145.1.37 If a person who has license
to develop a Technical and
Economical Study Report
has violated relevant law and
procedures in respect of the
preparation of Technical and
Economical Study Report by
providing wrong or
unrealistic estimations of
such study, the respective
authorization shall be
revoked, and a fine equal to
minimum wage multiplied
by 200-250 times shall be
imposed;
No. Article Draft provision Comment Recommendations
145.1.38 If a license holder has failed
to fulfill an obligation
specified by this law in
respect of the closure of a
mine or a plant, a fine equal
to minimum wage multiplied
by 50-100 times shall be
imposed or if any loss
incurred due to such failure
a compensation must be paid
for the loss, a fine equal to
minimum wage multiplied
by 100-150 times shall be
imposed;
145.2 If the license holder has
committed the violation
specified by this law
repeatedly, or, the violation
specified in this law has
been committed despite
having been imposed
administrative measures
twice previously the license
shall be revoked and the the
legal entity, founded or
shared by members of the
legal entity holding the
license and its executive
management, board of
directors and the equivalent
entity and its members shall
not be granted any other
prospecting, exploration,
mining and processing
license for 5 years of such
revocation.
Even for minor infringements?
This will be extreme. How
about repeated “serious
violations” in which case the
license holder has received two
or more administrative
sanctions for such violations
and has not cured, or something
to that effect? Further, it makes
no sense to punish the
shareholders, board or others in
aggregate for decision that may
not be in their day-to-day
control. We suggest that only
the person who has committed
the offense face the possible 5
year bar if this remains.
Consider and Clarify.
145.3 If a license holder has
violated this law and the
court has rendered a decision
to impose criminal liability,
the license shall be revoked
and any loss incurred must
be compensated and the
legal entity, founded or
shared by members of the
legal entity holding the
license and its executive
management, board of
directors and the equivalent
entity and its members shall
not be granted any other
prospecting, exploration,
mining and processing
This must be better developed
as isolated events of individuals
which are determined by a court
to be criminal (i.e. fraud in
filing a minor application,
misappropriation of funds, etc.)
should not lead to the
revocation of a license and
liability of by the company.
This will serve as a great
disincentive for a license holder
to report a crime and prosecute
one of its employees if it could
lead to the revocation of their
license and 20 year bar.
Perhaps more proportional, only
the person who has committed
Consider and Clarify.
No. Article Draft provision Comment Recommendations
license for 20 years of such
revocation.
the crime should be barred for
20 years.