The thrust on reviving mineral exploration has led to a decision to issue special exploration permits on 41.4 million hectares of land, or 26.4% of Mongolian territory. Permits for 31.2 million hectares will be issued under application, while those on the remaining 10.2 million hectares will be decided under the selection process. N.Ariuntuya spoke to B.Baatartsogt, Head of the Mineral Resources and Petroleum Authority, to find out where and how matters stand.
What changes have been made in the process of online issuance of special exploration permits to make it smoother and less controversial? Are you all set to resume? True, there were disputes over the application process and some technical hitches also. We have been working on resolving these, both on the administrative side and the technical. We shall now have the latest software and other technological back-up, with built-in features such as smoother progress, identification of errors and better security from hacking. However, we haven’t yet made the final decision on which software to use and we can’t give you a certain date when we shall resume accepting applications. We plan to involve companies in the testing period which will lead to a final decision.
What about setting new coordinates of special permit areas? We have taken several steps to increase the total area open for application from the previously designated 8.6 million hectares to 10.2 million hectares. We have put in 51,665 coordinates on this new 1.61 million hectares of land approved by the Government under Resolution 37 dated 25 January, 2017, to put into economic circulation deposits with proven reserves based on exploration studies financed by the Government.
Work is going on to identify more areas available for application. The total area thus open was 18.2 million hectares as of 31 December, 2016 and 13 million hectares more have been added until now, making the total 31.2 hectares, a significant increase. This is likely to go up even more when we review areas with complete mapping financed by the Government.
New lands open for application have been announced several times since the beginning of the year. How is the competition for these? What has been the general response from the locals to these announcements? As of now, of the seven areas announced, selection packages have been made for three, and are under assessment in two others, while there is still time for receiving applications for the other two.
There is now more competition than in the past. Of the 33 areas announced in the first three selection packages nine have had winners that contributed MNT5.1 billion to the State budget. In addition to this, four areas are at the assessment stage or waiting for documents submission, which would bring in around MNT7 billion to the budget. We are planning to announce more areas in the second half of the year involving as many companies as possible. The main reason for rising interest among both local and foreign investors initiative is the improvement in market conditions, where the past few years had been marked by a decline in prices.
Foreign investment in exploration has gone down since 2014, leaving mostly local companies in the field. What steps are you taking to revive foreign investment and thus increase competition among those interested? The main thing to do is to review the legal environment and make it stable. Mining investments will bring in returns only after at least 10 years, and a mine may work for a century. Changes in mineral product prices are quite common, and their impact can be reduced and the risks mitigated to a certain extent by building a corpus. However, changes in the legal environment are the biggest risk for investors.
We are taking a number of steps to reduce the number of administrative rules, simplifying procedure, and cut down on bureaucracy. Another most important thing for investors is easy access to clear information on, say, State policy and the tax regime, sector regulations, and the investment environment. Another most important need is availability of geological information. We are working on collecting geological information on Mongolia and making it available for investors.
The Gold-2 programme encourages fresh mining, but will the grant of licences be hampered by the law with the long name and by restrictive provisions in other laws? We are responsible for reviving exploration and attracting investment, but we also have to ensure implementation of the laws of the land. Some laws might have to be amended to make a success of Gold-2. We are at work on identifying such changes in the law with the long name to shift the borders of prohibited areas and to change the coordinates of the affected special permits.
Shall we again have disputes, including on issues of overlap, in the areas under offer? How did the Government resolve with the locals cases when an area was put under local protection after the coordinates had been announced? Local support for Government policy is essential and we must respect local citizens’ views and opinions at the time of taking a decision. That is why we arranged meetings and regional conferences with aimags to properly explain Government policy and to get feedback from citizens. The largest of these meetings was the Central regional conference in Erdenet city held when 95 years of the mining sector was being celebrated. Representatives from both the Ministry of Mining and Heavy Industry and the Mineral Resources and Petroleum Authority attended it and discussed issues under contention with the administrations of aimags and asked locals for their support for the application and selection process.
Mining brings huge investments and creates jobs, both directly benefiting the local area. We believe that our discussions led to the mutual understanding of the locals’ desire to have responsible mining and the need for industry to have the right environment to work. I feel certain that there will be fewer instances of putting notified areas under special protection when we resume the application process.
How do you plan to counter the public perception of mining which continues to be negative, and to improve people’s understanding of how mining is the main pillar of the national economy? This can be done only by providing society with accurate information.
Mining must not be seen only as polluting the water and harming the environment. There are thousands of mining companies and it is unfair to judge the whole industry by the irresponsible ways in which only a few of them operate. We do have many companies that work for proper rehabilitation, as per regulations. Many use eco-friendly technologies. Many take their corporate social responsibility seriously and invest in the local community, run projects that have a positive effect on the community’s life. We have problems in our industry, but we are working hard to improve it.
I agree that there is a lot of work ahead of us in getting closer to the public, making information available and transparent. The Mineral Resources and Petroleum Authority has begun holding regular monthly media conferences, where we provide information on new regulations, key events and future activities. The cadaster system is now online, so all kinds of information related to mineral resources are now accessible without delay.
We have created a new page -- Mineral resources education -- on our website to provide accurate information about the industry and publicise our work to the public.