The Mongolian Mining Journal /Feb.2022/
The global mining sector feels that it has to make ‘green transition’ more rapidly despite the world economy is suffering difficulties due to the pandemic. Canada is regarded as one of the best players in terms of sustainable mining. MMJ’s B. Tugsbilegt talks to Catherine E. Ivkoff, Ambassador of Canada to Mongolia, about the two countries’ cooperation opportunities in the green mining field and other issues.
Could you please introduce yourself briefly to our readers at the beginning of our interview?
Thank you for inviting me to this interview. I am pleased to talk with you. I arrived in Mongolia in December 2019 to begin my assignment as Ambassador of Canada. I am very honoured to be here. I have been in the Canadian diplomatic service since 2003. My first posting abroad was to the Canadian Embassy in Moscow, Russia, where I served for four years. I also served for three years in the Embassy of Canada in Nursultan, Kazakhstan. I have had shorter assignments with the Canadian embassies in Kabul, Afghanistan, and Kyiv, Ukraine. I have travelled widely in Russia, Central Asia, and all former Soviet Republics. Between these assignments abroad, I worked in the headquarters of Global Affairs Canada in Ottawa. I am a lawyer, and before I joined the diplomatic service, I practiced law in a law firm in my hometown of Toronto. I speak French, German, Russian, Czech, and some Mandarin. I have learned some Mongolian language and I would like to learn more.
It has been quite some time since you arrived to Mongolia for your assignment. Would you like to share your impressions about Mongolia?
Yes, of course. I had never been to Mongolia before I arrived here in 2019, so I was very excited to have the opportunity to get to know this country. Everything has made a huge impression on me. First, of course, are all the wonderful people I have had the privilege to meet here. I have found people in Mongolia to be very hospitable, friendly and open, welcoming, and willing to discuss any important topics. Mongolian society is so active in the democratic space here, in business, arts, culture, and in recreational activities. People in Mongolia have lived very diverse experiences. Many have also studied abroad, including in Canada. My impression is that people in Mongolia from all walks of life are very savvy and dynamic. I believe that Mongolia has tremendous potential for the future, and the most important asset for realizing this potential is the people of Mongolia.
I have had the opportunity to travel in Mongolia and the beautiful and varied geographic regions have also made big impressions on me. I have been to Oyu Tolgoi in the South Gobi, to Khovsgol Lake, to Bayan-Ulgii, Khovd, and Erdenet. All of these trips were wonderful. I hope to go back to all of these places, and also to travel to all of the regions of Mongolia that I have not yet visited. I also see many similarities between Mongolia and Canada. I think these similarities have helped our two countries to form such a strong relationship. Of course we both have climates with four seasons, harsh winters and short summers. This commonality opens up opportunities for trade. But more deeply, Canada and Mongolia share very fundamental values of democracy and respect for human rights and the rule of law, including freedom of expression. These shared values form a very solid foundation, on which we have built our partnership and friendship.
It is understood that the OT project parties have come to a consensus after ending their dispute. How do you see this event and the fact that Rio Tinto has given in?
This consensus is very good news. It finally puts to rest many long standing issues between the parties. I believe that this is a mutually beneficial agreement that allows all parties to work together collaboratively as partners moving forward, for the mutual benefit of all those involved.
As you know, Canada is the largest foreign investor in Mongolia. The majority of that investment has been in the mining sector, and a very large portion of that has been invested in Oyu Tolgoi. As I mentioned earlier, I have visited Oyu Tolgoi myself. That was my very first business trip out of Ulaanbaatar after I started my assignment in Mongolia. There was a very good reason for that. Before arriving here, I had heard many things about Oyu Tolgoi. Knowing the magnitude of Canadian involvement, and the importance of this project for Mongolia, I wanted to see Oyu Tolgoi with my own eyes. I am very glad that I did. I was positively, immensely, impressed, far beyond my expectations. Oyu Tolgoi is a massive and very complex world-class project. Oyu Tolgoi has the potential to bring significant economic benefit to Mongolia and to the people of Mongolia. But what I saw at Oyu Tolgoi goes far beyond this. Just as significantly as the economic benefit, Oyu Tolgoi is bringing great benefits at a personal level to the hundreds of Mongolian citizens who work there, in terms of professional development and career opportunities--very importantly, for women as well as for men. These benefits will have positive impacts far into the future.
The sector players are aware that Canada is currently financing a number of projects in mining and environment in Mongolia. Could you please elaborate your plans for the new year in regards to these projects, their activities and objectives?
Canada has been proud to support Canadian-led projects aimed at improving the transparency and management of the mining sector in Mongolia. Over the past few years we supported two projects in the extractive sector through Canada’s development assistance program: The Strengthening the Extractives Sector in Mongolia (SESMIM) project, which ran from 2016 to 2020, and our flagship MERIT project (the full name is Mongolia: Enhancing Resource Management Through Institutional Transformation) which started in 2016 and will be operational until 2023. Both projects have made, and continue to make, substantial progress on improving the mining environment in Mongolia.
I can elaborate on some of the plans of our MERIT project for this upcoming year. One of the areas MERIT is targeting is mine closure. Back in 2018, SESMIM collaborated with the Ministry of Mining and Heavy Industry (MMHI) to develop the regulation and guidelines for mine closure planning that were approved in September 2019. MERIT is building on this and is now working with the regulators, Erdenes Silver Resources and local governments to develop the first mine closure plan based on the approved regulation and Canadian best practice. The mine closure plan incorporates climate change mitigation practices and promotes stakeholder consultation.
The MERIT project continues to collaborate with the Generalized Agency on Specialized Inspection (GASI), the Ministry of Environment and Tourism (MET) and the Ministry of Mining and Heavy Industry to develop and implement training in Mine Water Resource Monitoring and Mine Reclamation and Closure Monitoring aligned with laws and policies and informed by Canadian best practice. The training and field manuals provide technical guidance for local mine inspectors using practical, field-based monitoring tools and techniques to improve the environmental performance of mining operations.
MERIT has also worked with these partners (GASI, MET and MMHI) to develop on-line training on environmental legislation. The training is available to public servants through MET’s website and ensures that all environmental inspectors have access to the most up-to-date legislation and guidance on how to apply it.
MERIT recently drafted an Occupational Health and Safety Regulation and Guidelines for the Petroleum Sector. The overall goal is to improve worker safety within the petroleum industry. The documents are the subject of public consultation on MMHI’s website until March 9, 2022.
The MERIT project will continue to collaborate with MMHI to organize regional mining conferences that bring government, industry and community leaders together to discuss current issues and legislation. They will continue to support the Women in Mining Conferences that expand knowledge and raise awareness of the valuable contributions women make to the mining sector in Mongolia. MERIT will also work with MMHI to promote mine-life-cycle and petroleum life cycle training programs that are delivered to local government and communities. The training strengthens the capacity of local institutions working in the sector and supports communities to participate in and benefit from local development.
I would also like to take this opportunity to say a few words about Canada’s development program in Mongolia in general, and mention our other ongoing projects. Canada’s development assistance program in Mongolia is guided by Canada’s Feminist International Assistance Policy, and supports Mongolia’s democratic and economic development and the Sustainable Development Vision 2050. Gender equality is front and center in all of Canada’s development assistance projects in Mongolia.
Canada supports two projects in Mongolia that focus specifically in the area of gender equality: the Women’s Economic Empowerment (WEE) project implemented by the Asia Foundation that supports women entrepreneurs and women thinking of starting businesses in Mongolia, and helps Mongolian civil society organizations develop their strategies to promote women’s economic empowerment and introduce policy reforms to improve the business environment for women entrepreneurs; and the Strengthening the Response to Gender-Based Violence in Mongolia project, implemented by the International Development Law Organization (IDLO), that supports the implementation of the 2016 law to fight domestic violence and is aimed at empowering survivors of domestic violence, particularly women and girls, by helping them to access justice, claim their rights, and play an active role in advocating against domestic violence crimes.
Canada’s development assistance in Mongolia also focuses on strengthening governance in the public sector. We support the implementation of the 2017 Law on Civil Service through the Professional and Citizen-centred Civil Service in Mongolia project, implemented by the United Nations Development Program (UNDP).
Since we began our development assistance projects in Mongolia in 2008, Canada has contributed $80 million in bilateral assistance to Mongolia. We are pleased to continue working with our Mongolian partners to meet local needs, contribute to meeting the Sustainable Development Goals, and explore potential new programming in the areas of environmental sustainability combatting climate change.
Recently it is becoming quite challenging to receive the “social license” for projects that are working in mineral resources. Not long ago the Serbian Government has revoked the lithium mine permits as a result of protests by activists of environment which was a shocking decision to Rio Tinto. What is the situation in Canada surrounding the obtaining of social licenses for exploration projects? Canada is regarded as one of the leading countries in the world in terms of developing environmentally friendly mining. Perhaps it might become quite difficult to mine green technology minerals? The green technology minerals price is also increasing quite rapidly?
The sustainable development of the mining sector is a global issue, especially today when people around the world are increasing their awareness of environmental considerations. In Canada, provincial and territorial governments are responsible for regulating mining within their jurisdiction. From the proposal, development, and operational phases through to closure, mining companies must adhere to a number of regulations designed to safeguard the environment and impacted communities. In addition to regulations, the Government of Canada expects Canadian mining companies to respect human rights and all applicable laws, to meet or exceed international standards, to operate transparently in consultation with local communities, and to conduct their activities in a socially and environmentally sustainable manner, whether they are operating in Canada or abroad.
Canada is indeed a world leader in the development of environmentally sustainable mining. Two specific initiatives pioneered in Canada are “Green Mining” and the “Toward Sustainable Mining” standard.
Canada’s “Clean Technology” or “CleanTech” companies are at the forefront of Canadian Green Mining. As part of Canada’s innovative mining supply and services (MSS) ecosystem, CleanTech companies are essential contributors to Canada’s leadership in the sector. Their technologies and services help reduce the environmental impacts of producing the minerals that are critical to our future, including the “green technology minerals” to which you refer. Canada’s CleanTech companies also develop and deliver innovative solutions that address technical, social, and environmental challenges at mine sites, as well as technologies that help mine operators achieve their carbon-reduction targets—both in Canada and abroad.
The Mining Association of Canada developed the Toward Sustainable Mining, or TSM, standard, which is quickly becoming a globally recognized sustainability program that supports mining companies in managing key environmental and social risks. Increasingly, other mining associations, governments, investors, and manufacturers are looking to TSM as a global best practice in sustainable and responsible mining. In recent years, mining associations in Spain, Finland, Norway, Botswana, Argentina, Brazil, Australia and the Philippines have adopted the TSM program. The Embassy of Canada in Mongolia will be working with many partners to promote Canadian Green Mining solutions, as well as advocate for the adoption of programs such as the Toward Sustainable Mining standard in Mongolia.
The pandemic effect on global economy is varying among the countries. A lot of people wish that the pandemic will end this year and that this year will be a much better year. However, most countries are facing such challenges as inflation, increasing debts etc. As for Canada, what kind of policy is your country following to tackle these issues as well as reviving its domestic economy?
I also wish the pandemic will end this year. As you have noted, the pandemic has resulted in economic hardship around the world, including levels of inflation that we are not used to seeing, and has created particular challenges for many sectors of the economy. Among other indicators, leisure and business travel is still far below pre-pandemic levels.
Canada’s first priority was to protect the health and safety of Canadians by supporting efforts to contain and control the spread of COVID, help Canada’s health care system cope with the pandemic, including by supporting frontline healthcare workers, and, like in Mongolia, obtain a high level of vaccination in the population. Canada is continuing to work with partners around the world to ensure fair and equitable access to vaccines.
Recognizing the acute economic impact of the pandemic on Canadians, the Government of Canada moved swiftly to get support out to those in need. The government implemented Canada’s COVID-19 Economic Response Plan to support individuals, families, businesses, communities, and specific sectors of the economy, recognizing that different people, entities and sectors have been impacted by the pandemic in different ways. For individuals and families, programs include the Canada Recovery Sickness Benefit, and the Canada Recovery Caregiving Benefit. Businesses can apply for financial support in areas including wages and hiring, and in rent and property expenses. There are also particular benefits available to qualified self-employed workers. In addition, the government created the Indigenous Community Business Fund to support First Nation, Inuit, and Mйtis community-or collectively-owned businesses. Economic sectors targeted by the Canadian government for specific types of support include tourism, agriculture and agri-food, aquaculture and fisheries, culture, heritage and sport, energy, transportation, aerospace, and infrastructure.
At the same time, the Bank of Canada works with the Government of Canada to monitor Canada’s monetary policy framework and they make an agreement on this every five years, with the objective of promoting the economic and financial well-being of Canadians. Most recently, in December 2021, the Bank and the Government renewed Canada’s flexible inflation-targeting framework for 2022 to 2026. Canada’s monetary policy aims to maintain a low and stable inflation environment. One of the areas of focus of the monetary policy is on price stability. The monetary policy is also aimed at supporting maximum sustainable employment. I am confident that we will get through this difficult time, united.
One of the biggest challenges that the pandemic has created is logistics and transportation related issues. Is Canada facing any troubles caused by the supply chain and how it is solving this? When do you think the problems caused by supply and transportation will be solved fully?
COVID-19 has caused supply chain challenges around the world, and Canada is no exception. Since the outset of the pandemic, the Government of Canada has been engaging regularly with all levels of government and road industry stakeholders, to identify emerging issues and mitigate disruptions.
Vaccination, used in combination with preventative public health measures, is the most effective tool to reduce the risk of COVID-19 for Canadians, and to protect broader public health. This is why the Government of Canada continues to take action to ensure as many Canadians as possible get vaccinated.
Recognizing that Canada’s transportation supply chains have been significantly impacted by the COVID-19 pandemic and recent extreme weather events, on December 13, 2021, the Minister of Transport announced that Transport Canada will host a National Supply Chain Summit in early 2022. The Summit will bring together a broad range of supply chain stakeholders (e.g., industry, shippers, organizations that run critical infrastructure) to discuss challenges, strategies, and next steps that will enable a swift recovery of Canada’s transportation supply chain.
They say that there are always opportunities along with challenges. What are the examples of Canada’s experience in converting its challenges into opportunities to develop its economy?
I think there are many examples of this, both in Canada and in Mongolia. Both of our countries have very resilient, creative, innovative people. One example I’ll focus on here is how, in the face of challenge, we have leveraged communications technology to create new opportunities for Canadian businesses to develop trade links with Mongolia. Before the pandemic, the terms “remote work” and “tele-work” were not part of our everyday vocabulary. But these concepts are now well embedded in our daily lives, and will likely last in one form or another after the pandemic ends.
The global trend, even before the pandemic, was for workers to become more “mobile”, meaning that they could work from a variety of locations. The pandemic accelerated this trend. For Canada, one positive impact is that, using new platforms that have enhanced our ability to work remotely, we have organized virtual trade fairs and trade missions. Since Canada and Mongolia are halfway around the globe from one another, this can make it challenging for some Canadian business people to visit Mongolia in person. But now, with more virtual options that enable us to facilitate contacts between Canadian and Mongolian businesses, it is now very easy for a Canadian business person to “visit” Mongolia virtually. Of course, meeting in person is always better, but technology has allowed us to bridge the challenge posed by the physical divide and create opportunities for businesses to connect more easily. And in many cases, promising virtual connections will lead to follow-up visits in person once international travel conditions allow. We believe that enhanced trade between Canada and Mongolia will benefit both our countries’ economies.
And, reflecting these opportunities, Canada’s information and communication technology sector is one of the economic sectors that grew (by 2.9% in 2020), due to the large amount of innovation currently happening in technology. This sector is well positioned to benefit from the economic recovery as companies accelerate the adoption of many technology solutions and digital infrastructure.
In recent years as a result of the economic recovery programs by governments around the world, stock markets and cryptocurrency markets are expanding at an unprecedented speed. There are emerging players in cryptocurrency in Mongolia as well. What are the regulations on this in Canada? On the other hand, there is a speculation and caution that “the stock market bubble” will erupt which would trigger the next crisis – what is your opinion on this? Do you think we should be worried about this?
Well, I cannot speculate on what global stockmarkets might do in the future. But I can say a few words about the regulation of cryptocurrency in Canada. First, it’s important to note that Canada regulates cryptocurrency as a security (that is, like stocks, bonds, mutual funds, etc). Second, cryptocurrency is not considered legal tender in Canada.
This means that Canada applies the same regulations to cryptocurrency exchanges as it does to securities, requiring the same due diligence, reporting verification, and record keeping. Every cryptocurrency exchange in Canada must register with FinTRAC (Financial Transactions and Reports Analysis Centre of Canada) and must comply with any requirements for market valuation and margin that are applicable.
Although cryptocurrencies have a very short history, Canada has been one of the leaders in acceptance and regulation. For example, Canada was the first country in the world that approved anti-money laundering- (AML) related regulation for crypto service providers. In other words, the cryptocurrency market in Canada is well regulated.
Canada has been working actively in regards to climate initiatives in mining sector and has introduced carbon taxing. At COP26 summit in Glasgow, Canada has pledged to take more actions on climate change. They are predicting that costs which will be driven by these plans will create apprehensive situations for the mining sector, in particular the natural oil sector. Even powerful countries might face the problem of not being able to pay the costs related to climate technology?
Climate change is a global problem that requires a global response. Canada is committed to reducing its emissions by 40-45% below 2005 levels by 2030 and achieving net-zero by 2050, as outlined in the Canadian Net-Zero Emissions Accountability Act, which incorporates these commitments into Canadian law. The Act requires the Government of Canada to set subsequent emissions reduction targets for 2035, 2040 and 2045, at least 10 years in advance of the target year. The Act provides for public participation when setting or amending an emissions reduction target or plan. It also sets requirements on current and future governments to plan, report, and course correct on the path to net-zero emissions. Further, it formalizes the Net-Zero Advisory Body that will provide the Minister of Environment and Climate Change with independent advice on achieving net-zero emissions.
In the coming months, Environment and Climate Change Canada will publish Canada’s emissions reduction plan to achieve the 2030 target. This plan will include an interim greenhouse gas emissions objective for 2026. Provinces and territories, Indigenous Peoples, the Net-Zero Advisory Body and interested persons will have the opportunity to make submissions before the 2030 plan is finalized. The plan will be followed by three progress reports submitted no later than by the end of 2023, 2025 and 2027.
The Government of Canada has invested over $100 billion toward climate action and clean growth since 2015, supporting the development of clean technology solutions to help in the fight against climate change. Canada has a lot to offer Mongolia, and it is our hope to help introduce some of Canada’s innovative solutions in Mongolia. I already spoke about our Green Mining initiative. Now, I will mention two others.
The deployment of Carbon Capture, Utilization, and Storage (CCUS) technology will be an important element in the plan to reduce CO2 emissions in many industrial sectors. Canada has a strong pipeline of CCUS companies with proven solutions. Canada is renowned for efficient public-private partnership (PPP) procurement projects and for expertise in project development, and operational and advisory services.
Canadian firms have developed remarkable technology and service offerings in multiple areas throughout the Waste-to-Energy (WTE) sector. Canada has developed expertise in turning waste from a variety of streams into clean energy, fertilizers, and fuels for industrial and agricultural applications. Due to Canada’s harsh winters, Canadian WTE firms have also developed solutions that are well adapted to harsh environments. I hope that some of these will find beneficial applications in Mongolia.
Through international climate finance investments, Canada helps developing countries build domestic capacity to take climate action, strengthen resiliency and support the transition to clean and low-carbon energy. Canada committed to invest $5.3 billion in international climate finance for developing countries over the next 5 years, doubling its previous contribution of $2.65 billion over the past 5 years. Canada co-developed the Climate Finance Delivery Plan with Germany that provides clarity on when and how developed countries will meet the $100 billion climate finance goal and how the financing will proceed until 2025.
There are various reports and analyses. As for Canada, will natural oil and coal decrease sharply in the future or will Canada keep its current position by introducing ways to decrease the CO2 emission?
Canada joined the Statement on International Public Support for the Clean Energy Transition.
The statement commits to take several actions to align international public support toward the clean energy transition and out of unabated fossil fuels. The Government of Canada will move to cap and reduce pollution from the oil and gas sector to net-zero by 2050.
On November 3, 2021, in collaboration with the COP26 Presidency, Canada and Germany released the Climate Finance Delivery Plan, a process to build trust that developed countries will stand by their commitments and deliver on the USD 100 billion climate finance goal through 2025.
On November 9, 2021, Environment and Climate Change Canada reaffirmed the Government’s support for the High Ambition Coalition and more ambitious actions on climate outlined in the COP26 Leaders’ Statement. The High Ambition Coalition aims to ensure that the 1.5°C goal remains the top priority for climate action globally and that support for adaptation continues to increase. The 1.5°C limit matters for Canada, because Canada is warming at twice the global average.
The Government of Canada will develop a plan to reduce methane emissions across the broader Canadian economy, including to reduce oil and gas methane emissions by at least 75% below 2012 levels by 2030. During COP26, Canada made several commitments and proposed actions that could further reduce greenhouse gas emissions, despite a UN report that indicates that greenhouse gas emissions are set to increase by 13.7% in 2030. Canada is supporting developing countries’ clean energy transition to phase out coal, in line with the Powering Past Coal Alliance.
Transitioning away from fossil fuels and gradually increasing the mix of renewable energy will need to be part of the climate change equation. Canadian companies have demonstrated expertise in renewable energy generation (solar, hydro, waste-to-energy, energy storage, smart grid, wind, and bioenergy), that may have good potential applications in Mongolia.
Let’s bring our discussion back to the bilateral relations. Canada is one of our third neighbors. How would you define the trade relations between the two countries in recent years? What are the challenges that stand in the way to expand the trade relations?
Bilateral trade between Canada and Mongolia is modest, but that means there is great potential to grow. In May 2021 we held the 9th Canada-Mongolia Roundtable where we had a comprehensive discussion about our bilateral relations. We also adopted the Canada-Mongolia Roadmap for Comprehensive Partnership, which charts a path for us to continue to strengthen our bilateral relations, including enhancing our bilateral commercial relationship.
Canadian business involvement in Mongolia has traditionally had a large focus on the mining sector. We must diversify to continue to grow our bilateral commercial relations. Given the attention being placed on the environment and combatting climate change, there is potential to enhance our cooperation in the areas of green mining solutions, green building, renewable energy solutions, and climate smart agriculture. The Embassy of Canada in Mongolia will be working to enhance cooperation in these areas. Our Embassy will also assist Canadian small and medium-sized enterprises (SMEs), including women-owned and indigenous-owned businesses, to better position themselves to export their goods and services to Mongolia. We believe that all of these initiatives will bring mutual benefit to both our countries.
What other sectors Canadian investors are interested in except for the mining sector? We are all aware of the number of Canadian companies working actively in the mining sector. Is Mongolia advancing in terms of attracting more Canadian investors? There are discussions happening to amend the investment law of Mongolia. Would it be a good idea to make everything open in regards to the investment law? Or, do you think there should be some limitations, if you compare it to Canadian experience? Because we are aware that both Canada and Mongolia are dependent on their neighbors.
I think that key elements that any foreign investor looks for in an investment environment abroad include adherence to the rule of law, respect for human rights, including due process, good governance, fairness, and independence of the judiciary. These factors are essential to ensuring a stable and predictable environment for foreign investment.
Countries can also enter into various types of international agreements that promote and protect trade and investment. One such agreement is a Foreign Investment Promotion and Protection Agreement, also commonly referred to as a FIPA. In general, with some exceptions to protect sensitive policy areas, FIPAs ensure that foreign investors receive the same treatment as domestic and other third party foreign investors. Canada and Mongolia signed a FIPA, which entered into force in 2017. This agreement provides Canadian and Mongolian investors with a legal framework that brings greater predictability and certainty with respect to their investments by creating legally binding rights and obligations. The positive investment climate created by the FIPA will pave the way for deeper cooperation in Mongolia’s non-resource based sectors, such as renewable energy, agriculture, and infrastructure.
In regards to the investment, what do you think is Mongolia’s next opportunity? The underground mine development which has become a large impetus will soon come to an end. After that we will eventually need to find other large sources of investment?
Again, having an open, transparent, fair, and predictable environment is key to making any country an attractive place to invest for international investors. As we have seen in Canada, Foreign Direct Investment contributes to economic development, including higher paying jobs locally and increased tax revenue. Given Mongolia’s abundance of resources, Mongolia has the potential to become a renewable energy powerhouse, not only being self-sufficient for its own energy needs, but potentially even becoming a net exporter of energy from clean, renewable sources including wind and solar energy.
Thank you for the conversation.