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Major changes in licence allocation process

6th of 12, 2017


N.Ariuntuya  

Some basic features of the system of issuing mining licences, in force for the past 20 years, have now been changed. Allocation after application is out, replaced by a selection process. This is a major policy change, and was hurriedly included among amendments to the Minerals Law that were quickly discussed and passed when the State budget 2018 was approved. It has become a regular practice in the past few years to adopt amendments to laws and regulations in the mining sector during the debate on the budget proposals, avoiding any meaningful discussion as MPs are focused on other issues. Details of this year’s changes can be read inside.   

Taking part in the discussion on 2  November, Prime Minister U.Khurelsukh said, “It is time to stop the land trade that regularly follows the grant of a mining licence, triggering public frustration, disrupting justice, and creating chaos. The Government will abandon the wrong method of allocating mining licences on application, which has led to a few companies and individuals owning hundreds of licences which they then ‘transfer’ to others, in what is purely and simply an act of sale avoiding tax payments. We favour a law that makes the allocation of licences transparent, through selection and auction.” Earlier on 23 October, Minister of Mining and Heavy Industry D.Sumyabazar had temporarily suspended the regulations governing the grant of licence, justifying his decision by citing the number of complaints received from citizens on the issue.

Approval of these amendments to the Minerals Law has resulted in sudden and huge changes in the mineral sector, which hosts so many interests and is so important for development. We wait to see what the new method of selection for licence allocation will be and how quickly the grant of licences resumes.

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Until now, two principles have governed grant of mining licences. The first was to determine if the area applied for had been subject to geological and exploration work with money from the State budget or from private sources, while the second was to treat applications on a first-come-first-served basis.

Mongolia passed a Minerals Law in 1994 to lay the foundation of a new legal environment in the mining sector, while a revised law in 1997 was aimed at attracting foreign investment. According to M.Enkhsaikhan, who was Prime Minister then, the idea in 1997 was to give a big push to exploration, and the first-come-first-served method was seen as a good way to expedite matters.