“We are not talking about two dollars, but about USD2.5 billion. Is this trivial?”

M.Ariunbayar, chairman of the geology and mining department of the Mineral Resources Authority, explains why the Mineral Professional Council returned the feasibility study on the Oyu Tolgoi project to the investors and also why the expected Supreme Court interpretation of certain provisions of the Minerals Law is important.


There seem to be some discrepancies in how the term ‘mining rights’ in the Minerals Law is understood. Is it really the case that while we take this to mean the operational rights, the foreign investors see it as the right to possess the deposit?

According to the Minerals Law of Mongolia and the Constitution of the country, any deposit is the property of the State and, accordingly, is governed by the people. Since a deposit is its property, the State reserves the right to retain possession. It can sell the deposit without losing possession. The Minerals Law says that utilization rights can be given to suitable companies. They can use the deposit commercially, but not claim ownership.

Our Minerals Law is clear on this principle of possession. Foreigners, however, seem to take this permission to utilise and sell the deposit to mean that it becomes their property. Mining rights are not the same as possession rights.

How can the differences in understanding be resolved and a consensus reached?

Frankly speaking, why should there be a difference? It is clearly agreed that “mineral utilization rights shall be given by a special mining license”. Why should this be taken to mean that it is a permission to posses the deposit like a piece of real estate? The permission extends to a right to utilise the mineral and to operations. If exploration has been or is done with private investment and if it is a strategic deposit, then the State will hold 34% equity. If the exploration is done with funding from the State budget, the State’s share of equity ownership goes up to 51%.  The right to exploit the deposit is not affected by this.

Is there need to revise the English version of the Minerals Law?

I think that whatever is in English should be properly explained in English, so that foreign investors understand the provisions without our interpretation.

During negotiations on the Oyu Tolgoi investment agreement, there were disputes over the same provision in the law. Is it true that some Mongolians also had some uncertainty?

There are some issues that are highly politicized. The language in such sensitive areas should be unamuous and not liable to various interpretation. But that will not stop people from understanding the concept the same as someone else but thenmanipulating the words to find an interpretation to suit their own interests.

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