Amendment Law to the Minerals Law of 2006

On July 1st 2014, after much speculation and wait in the mining and economic sectors, the Mongolian Parliament ("Parliament") has enacted the Amendment Law to the Minerals Law [1] (“Amendment Law”) and makes effective an implementing law and other relevant amendment and cancellation laws on the current laws.

The Amendment Law comes into effect the same day it was enacted; and it is expressly stated not to be effective in a retroactive manner.

The following are the most important additions and changes to the Minerals Law in effect with Amendment Law:

     1. Restoration of issuance of new minerals exploration licenses and certain new

requirements for minerals exploration licenses

  • The Law Banning the Issue of New Minerals Exploration Licenses enacted on December 1st, 2012 has been nullified by a new law. This new law comes into effect on July 1st, 2014 at the same time as the Amendment Law.
  • The minerals exploration license fee of the 10-12th year is US$5 per hectare, further the minimum expenditure of the minerals exploration should be US$10 per hectare covered by the licensed area.
  •  According to the implementing law to the Amendment Law, pre-mining agreements, made under the previously existing Minerals Law, shall remain valid under the contract terms. However, pre-mining agreements must be re-registered with The Minerals Resource Authority ("MRAM") and the license holder must pay the relevant year’s license fee during the pre-mining agreement within six (6) months of the enactment of the Amendment law.

2. License requirements for the exploration of non-ferrous metals and precious stones 

The exploration and collection of non-ferrous metals and precious stones will now require a license similar to that of other common minerals.

  3.  Penalty will be paid for unpaid minerals license fee

The Amendment Law stipulates that for license holders of a minerals license who do not pay the license fees within up to the first 30 days of an overdue payment, there will be a penalty of 0,3% of the minerals license fee. In the event whereby the license fee along with the penalty fee has not been paid within the period of up to 30 days, the minerals license will be revoked.

 4.  Prioritization for local legal entities 

According to the Amendment Law, if a minerals license holder would like to purchase goods, works or services, it is obliged to give priority to legal entities registered in Mongolia that can provide the goods, works or services and meet the necessary standards. Further, a minerals license holder is obliged to give first priority of supply of the mined, concentrated and semi-manufactured products to the manufacturing industry that operates in the territory of Mongolia at a market price.

5.  New implementing regulations

As required by the Amendment Law, the following implementing regulations (procedures) will be passed by the Ministry of Minerals:

-  procedure for commissioning of the mine and mining concentrator;

-  procedure setting forth the requirements for the mining concentrator and operations;

- procedure establishing an ad-hoc council equally representative of investors, professional  associations, NGOs and members of the public to advise and to support the  implementation of the State Minerals Policy[2];

-  procedure of the rehabilitation and closure of a mine and mining concentrator will be established jointly with the Ministry of Nature and Environment;

-  an operational procedure for an informational data base in the fields of geology,   mining and minerals;

-  the procedure for NGO's to authorize specialized professionals and expertsin the field of geology and mining;

-  guidance and classification of minerals resources and deposit reserves; and

- procedure to inform the public the minerals resources, deposit reserve and the results of explorations, through cooperation with NGOs specialized in the fields of geology and mining that are recognized locally and internationally.

6.  Deadlines for periodical reports and plans has been clarified and extended

  • Before the Amendment Law the deadline to issue the plan of exploration work was not clear but now the plan of exploration work must be issued to MRAM and Professional Inspection Authority within the April 15th of that year.
  • After submission of the final report of deposit reserve, exploration result and feasibility study to the MRAM, the MRAM must appoint a specialized professional from the minerals professional council within 30 days. A decision will be made on whether to register the deposit reserve, accept, register in information database with initialmaterials grounded on conclusion made by discussing within 90 days; both the 30 and 90-day requirement clauses are newly introduced.
  •  The period to submit annual report of exploration work to MRAM and the Professional Inspection Authority is now defined as within 15 February 20 of the next year.
  • Before the Amendment Law, the period of eligibility to provide a mandatory feasibility study was within sixty (60) days of obtaining a minerals mining license, now this period has been extended to one (1) year from the date obtaining a minerals mining license.
  • The deadline for a minerals license holder to provide the preceding year's plan of mining work to MRAM has now been extended from within September to within the 1st of December. 

7.   Monetary liability for breach of Minerals Law is increased

The fine stipulated by the Minerals Law was 100,00 - 2,000,000 tugrug for each individual,business entity and officlal in breach of the Minerals Law. Now the fine is increased and is set for up to 5-50 times the minimum wage. Today, the minimum wage amount in Mongolia is 192,000 tugrug or around US$105 per month.

8.    More power vested to the government organizations in charge of minerals matters

  • The right of Government to introduce a new strategic deposit to Parliament for approval was widened by the right of Government to suggest the removal of a strategic deposit to the Parliament for approval;
  • The Government’s power regarding mineral issues is increased and now includes the authority to establish a national geology agency and to maintain the boundaries of deposits with strategic importance;
  • The power of the Ministry of Mining is increased and now includes the authority to enact several new implementing regulations to regulate the mining operation as well as the classification and guidance of mineral resources and deposit reserves; and
  • The MRAM's power is increased and now includes the authority to maintain a registry of information of license holders listed on the Mongolian Stock Exchange and the authority to define the areas open for mineral exploration license by GPS coordinates.

 9.   Specialized professionals and authorized organizations

Specialized professionals and authorized organizations are now authorized to execute an integrated report on the result of exploration work, a feasibility study for a mineral deposit and its due diligence. 

10.  The establishment of a national geology agency 

The national geology agency will be established and the MRAM will assign the following functions to it:

-  function to conduct geological, geophysical, geochemical, hydro-geological, geo-ecological, cartographic, as well as exploration and research within the territory of Mongolia;

-   function to conduct research on patterns of mineral occurrences and minerageny within the territory of Mongolia, and to assess the future prospects of minerals;

-  function to create and support an informational database of geology, mining and minerals, (unless classified as confidential) for interested individuals; and

-   function to maintain an integrated national registry of minerals and to register changes in reserves.


[1]The Minerals Law of Mongolia enacted on July 8, 2006, as amended from time to time.

[2] “State Minerals Policy" was adopted by the Parliament of Mongolia on 16 January, 2014.

For further information, please contact:

Zoljargal Dashnyam                    
Tel+976 332020                       
E-Mail:                                       
zoljargal@
gtsadvocates.mn




nomindari: 10 7 2014