Increase Area Available, Mining & Exploration to 20% from 8%
Mongolia mining reforms target US$1b investment
PUBLISHED : Friday, 30 May, 2014, 1:10am
Mongolia wants to expand the area available to mining to a fifth of the country and end its dependence on foreign oil by the close of the decade, a senior government official said. The outlook depended on the passage of laws governing mining and energy, vice-minister for mining Erdenebulgan Oyun said last week, adding that both could be signed off by parliament within a month.
The mining plans alone could unlock US$1 billion in developments this year, easing pressure on Mongolia's mineral-dependent economy. As recently as 2011, its economic growth rate was a world-beating 17.5 per cent. That moderated to 11.7 per cent last year, amid a collapse in foreign investment that has continued this year. The government last month embarked on a 100-day programme to improve economic performance through dozens of measures to boost investment and cut imports.
Replacing Mongolia's 1991 Petroleum Law would expand investment opportunities to include different types of contracts between parties, and regulate new energy sources including the nascent oil shale industry.
"The law is outdated and many industries are unregulated," Erdenebulgan said. The new law was based on the "best international petroleum laws from different countries".
Erdenebulgan said the mining law amendments would increase Mongolia's area available to mining and exploration to 20 per cent from around 8 per cent, by lifting a 2010 ban on new licences. The period allowed for exploration would also increase from nine years to 12 years.
Resuming exploration could provide Mongolia with US$1 billion in new investment this year, Erdenebulgan said, in an economy with a gross domestic product of US$10.3 billion in 2012.
Extending the term to 12 years "would be an improvement and potentially a competitive advantage to attract investors back to Mongolia", said Sam Spring, president of Kincora Copper, a Vancouver-based miner with operations in Mongolia.
The amendments "get Mongolia back in the game", Spring said, with the caveat that more needed to be done to make the country competitive. Other than the 12-year extension, Spring said he had not seen anything in the proposed changes "which would help favourably differentiate Mongolia to other jurisdictions"