Even months after Erdenes Mongol announced that it had finished work on the draft law on the wealth fund, the document remains elusive. It is not in the public domain, and every professional I asked said they had no clue where it could be seen. Some even ventured to wonder, and only half in jest, if the only persons who know what it contains are the members of the working group established to prepare it. Yet a year and a half ago, the media played it big that this group, chaired by the head of the Cabinet Secretariat, L. Oyun-Erdene, had finalized the draft. The then Director of Erdenes Mongol, P. Gankhuu, announced that he would submit it to Parliament soon, and that is the last we heard about the draft.

First, let us be clear about how much money we are talking about. Our economic size is $13 billion, and 30 percent of this comes from the mining sector. We have less than MNT1 trillion in the Future Heritage Fund, and the draft budget for 2021 estimates that another MNT1.2 trillion would go there. If the average fresh accumulation in it is MNT1 trillion every year, in 2030 the fund will have MNT10 trillion or $3.5 billion at today’s rate.  Now the government wants another and a new wealth fund, made up with profits from operating strategically important deposits. What it means is that part of the revenue from mining will go into the proposed fund and the other part to the Future Heritage Fund. We do not know how the revenue would be shared, but if it is a 50:50 split, then the Future Heritage Fund and the new fund will each get an estimated $1.7 billion.

The Government is in a commendable hurry to fulfil the MPP’s election promise that banks would not be allowed to charge more than 1 percent per month as interest on their loans. But how effective would this be in reactivating an economy crippled by the pandemic and, more important, can this one step in isolation do much to heal a seriously fractured financial system? Folllowing Parliament’s adoption in August of a policy to reduce the interest rate on bank loans --  to 12% initially and then according to the situation over the next four years -- the Ministry of Finance, Mongolbank and the Financial Regulatory Commission are jointly working on putting flesh on the basic idea to ensure the best results for all stakeholders. As of now, six amendments to the present law governing the issue are planned to be submitted to Parliament for approval in its fall session. 

Arguably the most important feature of the draft budget for 2021, awaiting approval by Parliament at the time of writing this, is its commitment to observing fiscal discipline, something that was made impossible this year by the pandemic. The budget deficit this year is expected to be 12.5 percent of GDP, much higher than allowed by law, but the 2021 draft puts it at 5.1 percent, which is under the permissible limit. In absolute terms, the deficit in 2021 would be MNT2.6 trillion less than this year’s. This has been achieved mainly by reducing expenditure by 4.3 percent from the 2020 level and by raising revenue, both in accordance with the Fiscal Framework Statement 2021, passed on 28 August, 2020. 

The Oyu Tolgoi Technical Report 2020, uploaded on the company’s website on 28 August, sees extraction at the open pit mine – Oyut -- and at the underground mine -- Hugo North Lift 1 – ending in 2051, six years earlier than what was indicated in the 2016 report, bringing expected gross revenue from sale of concentrate down to $69.4 billion from $82.8 billion. The extraction schedule in the new report incorporates the effects of the change in the underground mine design but does not take into account the impact of the pandemic on production.  Work on developing the underground mine has not stopped despite the pandemic, though it goes on at a slower pace, especially in Shaft 3 and 4 construction. In the meantime, Turquoise Hill published a revised OT feasibility study in July and followed this up with the updated Technical Report.

The news of how one herder was shot dead by another in Tsogttsetsii soum, Umnugovi aimag during a dispute on whose livestock had claim to a water source shocked Mongolians into the awareness that scarcity of water could make a killer of a peaceful man. This was in 2019, and in April the next year, Tsetsii Movement, This concern over scarcity of water marked the first Gobi Water – Green Development Research and Innovation Forum held in Dalanzadgad, Umnugovi aimag on September 10. As researchers and members of the aimag parliament talked at the Forum about how depletion of water resources in the Gobi has led to drying up of wells for livestock and a drop in the underground water level for human use, I found in my later interaction with ordinary people that they were glad to get a chance to articulate their concerns and suggest solutions. It is now for those who take decisions and make policy to take note of these.

A. Temuujin is Manager of a project unit set up last year to improve the legal environment for exploration, mining and extraction of rare earth elements and to assess their economic efficiency. In this interview he tells E.Odjargal what the unit has been doing and what we might see in the coming days.  Given the global demand for them, Mongolia can expect sizable foreign investment in its rare earth elements deposits. How can we use this opportunity?  Today, we are in the age of the fourth industrial revolution, and rare earth elements or REE are crucial to keeping our society running smoothly as they are used in many devices that people use every day such as computer hard drives, DVDs, rechargeable batteries, cell phones, catalytic converters, magnets, fluorescent lighting and also in things that will be used more and more in the coming days, such as electric car engines, solar panels, and wind turbines.

The refrain in the Gobi now is “Bring the water”.  So much has been said for so long about the mega project to pipe water to them from distant rivers that the people wonder how long they have to wait for the dream to come true.  With more and more mining, but not solely because of this, underground water reserves are being depleted fast, a matter of national concern but felt more acutely by the people living in the Gobi. They appreciate the importance of mining, but not if -- as experts have been warning -- the Gobi would start facing acute water shortage as early as 2025, and the situation could become catastrophic in just a few years. All Mongolians have a stake to avert such an eventuality and the demand has been growing that there should be a new national water policy that treats all water related issues on a scientific basis. In other words, there should be proper “water governance”. The term is new but the idea behind it is old.

Discover Mongolia-2019 Minerals and Mining Business Summit. September 27, 2019 Shangri La Hotel, Ulaanbaatar, Mongolia

9th Coal Mongolia 2019 International Coal Trade, Investment Conference and Exhibition, September 5-6th, 2019, Ulaanbaatar

It was heartening to see at the latest PDAC (The Prospectors and Developers Association of Canada) convention how Mongolia commanded the attention of many of the 25,843 attendees from more than 130 countries at the world’s premier annual mineral exploration and mining event, held in Toronto from March 3 to 6. 

Photo by R.Delger /MMJ/