Given that revenue from mining is the mainstay of the Mongolian economy, it is important to create conditions that would help bring more investment in our exploration and extraction sectors, so that in time we have more mineral resources to export. One way to do this is to follow methods and processes consistent with the global best practice when putting a value on mineral deposits and mining operations. Investment in both exploration and extraction will come only when potential investors can be sure that the object of their interest has been reliably valuated, using internationally accepted methods and codes. Apart from bringing foreign investors into Mongolia, this would also help domestic companies place their assets in stock markets, both international and local.
Since 2011, Mongolia has been on track to follow internationally accepted standards of reporting mineral resources and valuation of mineral assets. The MRC Code for the Reporting of Mongolia’s Mineral Resources and Exploration Results was developed in 2014 and registered with the International Committee for Resource Reporting Standards (CRIRSCO), which is responsible for developing globally accepted mineral reporting codes, standards and guidelines. Its member countries, which participate in and contribute to this work, are Australia-Asia (JORC), Brazil (CBRR), Chile (National Committee), Canada (CIM), and the European Union. (PERC), Russia (NAEN), South Africa (SAMREC), USA (SME), India (NACRI), Colombia (CCRR), Kazakhstan (KAZRC), Mongolia (MPIGM), Turkey (UMREK) and Indonesia (KOMBERS-KCMI). The national code followed by each country is given in brackets.
Mongolia does not have an internationally approved code, so it had to either develop its own or totally accept the code used in any other country. We chose to do the former for the valuation of Mongolia’s mineral assets, and decided to call it the MONVAL Code. A working group to do this was established in 2019 and it included representatives of the Financial Regulatory Commission, the Bank of Mongolia, the Ministry of Finance, the Ministry of Mining and Heavy Industry, the Mineral Resources and Petroleum Authority, the General Taxation Authority, the Mongolian Stock Exchange, the Mongolian Geology and Mining Professional Institute, the Mongolian Institute of Certified Appraisers, and the Australia-Mongolia Extractives Program (AMEP). The group finished its work in January this year and a draft MONVAL Code is now ready.
The draft is consistent with the basic principles and requirements set forth in the International Mineral Asset Valuation Standard (IMVAL) template, and is in accordance with the international codes of Australia, Canada, South Africa, and the United States. It now has to be approved by the International Valuation Committee (IMVAL) to gain international acceptance. Before it is submitted for such approval, it has to be tried out in Mongolia and inputs on its practical implementation received from independent professional institutions.
Accordingly, the Mongolian Professional Institute of Geology and Mining, which is a member of CRIRSCO, and the Mongolian Institute of Certified Appraisers, which represents Mongolia at the International Standards on Valuation (IVSC), signed a Memorandum of Understanding on February 5 to establish the MONVAL Committee. Broadly speaking, the first organization represents the operational side of mining, and the second the valuation side, and together they cover the area where the MONVAL Code would be applied.
The Committee will be responsible for disseminating, reviewing and suggesting changes in the Monval Code in accordance with the principles of independence professional ethics and competence. At its inaugural meetig, the Committee decided to develop its structure and working principles. The main goal of the MONVAL Committee is to ensure approval of the MONVAL Code. It will work with the government, as well as with other organizations and institutions.
Ms. P. Saranchimeg, a mineral economist and geologist specialising in mineral project evaluation, has been elected Chairperson of the committee, and B. Enkhbold, Executive Director of the Mongolian Institute of Certified Appraisers, has been elected Deputy Chairman.