The Mongolian mining sector boasts one of the world’s leading mineral resources, comprising over 10,000 deposits of more than 80 types of minerals, approximately 10,000 exploration results, and several hundred thousand mineral points. However, not all of Mongolia’s minerals and mineral deposits have been discovered. While the Central and Eastern regions are well-studied, the Western region presents untapped potential for new discoveries of deposits and mineral resources. The mining sector serves as a vital driver of the Mongolian economy, accounting for about 93% of total export products, approximately 58% of foreign direct investment, and 22.8% of gross domestic product. Thus, the development of the mining sector is continually evolving to reflect sectoral needs. The Ministry of Mining and Heavy Industry (MMHI) is the principal state body responsible for the development and implementation of state policies related to the geological and mining sectors. Additionally, the Mineral Resources and Petroleum Authority (MRPA) is the key regulatory body with the authority to grant licenses, make decisions on land allocation for small-scale mining, and manage widely distributed minerals.
Currently, there are a total of 2,557 valid licences issued in the mining sector, with 1,708 of them being mining licences and 849 exploration licences.
If a deposit may impact national security, or national or regional economic and social development, or if it produces (or has the potential to produce) more than 5% of the total annual GDP, it can be classified as a mineral deposit of strategic importance by the Government. For the exploration of a Strategic Deposit where the State has conducted state-funded exploration in conjunction with private entities and determined the proven reserve, the state can participate in up to 50% equity interest. However, in the relevant exploration of a privately financed Strategic Deposit, the State may participate in up to 34% equity interest.
List of strategic deposits
The mining products exchange
The Government of Mongolia aims for transparent and responsible mining, a diverse economic structure, and equitable wealth distribution through the Mining Product Exchange. In this context, the Mining Product Exchange Law was passed in December 2022 to regulate the establishment and operation of the exchange. According to the Mining Product Exchange Law, the Exchange will function as a state-owned enterprise, aiming to manage Mongolia’s mining product trade transparently, establish fair prices, and enhance investment interest in the mining industry by unifying export policies. Moreover, for mining products to be traded on the Exchange, they must meet quality standards, including a warehouse equipped with the necessary storage requirements, a terminal, a transportation logistics centre, and an analysis laboratory.
Electronic License Tendering Procedure
The “Digital Nation” initiative has expanded its reach into the mining industry by digitalising the licence tendering process. The MMHI approved the new regulation on the selection procedure for issuing mining licences on 12 April 2022. Through this selection process, the Government of Mongolia aims to increase the issuance of exploration licences to enhance geological exploration and the number of proven reserves.
- Announcement of the exploration tenement tender on www.tender.gov.mn (not yet fully operational)
- Preparation of necessary documents for submission by participants
- Payment of the base price and submission of documents
- An open and transparent tender process
- Successful participants will receive notification to obtain the tenement.
Legal Framework
The mining sector is the key economic driver of Mongolia; therefore, the primary law governing the sector, the Minerals Law 2006, is amended regularly to reflect the sector’s new developments. The most recent amendment occurred in January 2023, notably revising the exploration tenement tender and the issuing of special licence provisions. Furthermore, a revision of the current Minerals Law is expected to be discussed in Parliament in 2023. Under the Minerals Law, noteworthy provisions state that the mineral resources naturally occurring on and beneath the earth’s surface in Mongolia are the property of the State. Consequently, the State reserves the right to grant exploration and mining rights and licences. Additionally, if a deposit may significantly impact national security, national or regional economic and social development, or produces (or has the potential to produce) more than 5% of the total annual GDP, it can be classified as a mineral deposit of strategic importance (“Strategic Deposits”) by the Government.
Other laws relevant to the mining sector are:
Mongolia has exceptional geological potential for developing mineral resources, presenting unprecedented growth opportunities for copper, base metals, gold, coal, and uranium. However, it is important to note that the extent of Mongolia’s mineral potential has only been partially explored, with geological mapping currently covering just 40% of the country’s vast territory.
