Policy and politics
The new Government’s mining goals
2016-08-04
The Mongolian Mining Journal. July.2016. 092
A.Enkhbat, Ph.D.
The Mongolian People’s Party (MPP) now has 65 seats in the Parliament, against the Democratic Party’s (DP) 9, and the Mongolian People’s Revolutionary Party’s (MPRP) one. The last seat is held by an independent. This overwhelming majority gives the MPP a free hand in running the country in the next four years. So what is the action plan it wishes to implement?
The MPP has stressed that Mongolia’s development is very much reliant on growth of the mining sector, and has ambitious goals for it, set out in the section ‘Development of Mining’ in its Action Plan. This notes how investment in the sector has fallen drastically and how progress in Tavan Tolgoi and other projects are stalled. It also lists the steps the party wants to take to ease the current bottlenecks. These can be found in the following articles of the Action Plan of the MPP
2.4.1. To export value added products by processing natural resources, and to invite the leading global companies to work in the Mongolian mining sector, in an economically attractive and legally friendly environment.
2.4.2. To create an investment-friendly environment in the mineral sector by setting up a mining policy research centre and a geological database.
2.4.3. To commercially activate the 1072 shares owned by every citizen and to raise their value.
2.4.4. To make it legally mandatory to distribute and utilise mining revenue in a balanced and equitable manner, and to provide for future generations by passing a law on a natural resource fund.
2.4.5. To improve the operation of the State-owned Erdenes Tavan Tolgoi and make sure the revenues from the Tavan Tolgoi, Oyu Tolgoi and Erdenet mines are spent to benefit all citizens in an equitable manner
2.4.6. To ensure that mining companies adhere to environmental laws, strictly observe reclamation standards, and follow norms of transparent and responsible mining.
2.4.7. To keep State involvement in the mining sector at an appropriate level and to follow a policy that would earn more in taxes and royalties.
2.4.8. To implement the directive in 3.1.2 of the State Policy on the Mineral Sector ‘to support legal organization of artisanal miners with improved regulation’.
2.4.9. To have laws whereby gold extracted by artisanal miners would be sold at a price determined by the Mongol Bank.
Since all these goals were part of the DP’s action plan also, there should be no difficulty in their implementation in the next four years. It is also certain that there will be no major opposition from the other political parties and civil society organizations.
The first priority of the MPP government will thus be to make the investment environment more attractive and not to increase the level of direct State participation, maybe even to reduce it. It will be interesting to watch how this gels with the desires of Rio Tinto CEO Jean-Sйbastien Jacques to increase his company’s ownership in Oyu Tolgoi.
As I said, the pre-election Action Plan of the DP was in total agreement with these goals and simply because it now sits in the opposition, there should be no change in its stance. The MPRP has won only one seat, and its Action Plan did not have much on its mining development policy, except to assert that “Mongolian natural resources will be the basis of our people’s happiness”. The lone independent member of Parliament, S. Javkhlan, did not touch on mining in his Action Plan, but he is well known for his opposition to mining and mining-related foreign investment. Still, his non-support for any law proposed by the MPP would have almost no impact. The same holds true of the possible MPP moves on the 1072 shares of Tavan Tolgoi held by citizens.
Thus it all depends on the new government’s own capacity to effectively implement its avowed goals.
The author is adjunct professor at the Mongolian University of Science and Technology