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08.05.2013 Draft National Policy of Minerals Development, Bayar B. & Algaa O.
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PROJECT
GOVERNMENT POLICY TO ADMINISTER MINERALS' INDUSTRY
ONE. GENERAL PROVISION
The Government Policy to administer minerals' sector focuses on providing
economical growth, background of sustainable development, ecological parity and
securing safe and healthy living environment for the public in a way of proper use of
minerals and resources which would be developed and mined by conspicuous and
responsible mining that satisfies environmental, economical and social development
equivalence based on minerals in common sense both as stated as ground and
underground minerals belongs only to the public and is protected by the State
according to the Constitutional Law.
These documentations of policy define the improvements, sophistications and
development directions of guidelines, goals, administration and management system
that is being exercised by the Government onto the minerals' sector. It is implemented
by the modifications of minerals' sector laws and regulations and mid and long-term
programs as well as sub-programs enacted by the Government.
TWO. THE CURRENT ISSUES WITH THE MINERALS' SECTOR AND VITAL
PROBLEMS
The presentation (slide) was prepared on a separate file.
As geology and mining industry is leading a industry in Mongolian economy, the
fundamental documents such as "Set of Policy for National Development based on
Mongolian Intended Millennium Challenge” (2008) and "Concept of Mongolian
National Security" (2010) due reflected the purposes and goals of this industry in regard
of the development of the industry in question.
For example: In the Set Policy for National Development based on Mongolian
Intended Millennium Challenge, it is defined as follows "... to provide an economy that is
permanent and based on knowledge through the intensive development of
industrialization and services based on finely crafted mining and agricultural
equipments of higher level which has exportation orientation and relied upon the private
sector's favours in it.”
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The economical condition of Mongolia by 1990 was, literally, in a severe downturn
and around this time "Minerals Law" had been enacted in 1997 in order to attract foreign
investments. Within the scope of this policy, the major purposes were put such as
attracting foreign investments to discover new deposits, process the newly found
deposits and to give effect of modern technology and technique onto minerals' sector
and at last to get our personnel educated and practiced along the way. These have
been an accomplishment and we see now a certain amount of success after 16 years
from that point.
Giving the national economical reality and situation, there is a need for a
betterment of legislation environment for Minerals' sector to develop a new policy on the
basis of new principles by modifying the basic concepts that have been exercising in the
Minerals' sector in order to give the expectations by the public from the minerals' sector.
THREE. THE PRINCIPLE ADMINISTERED BY THE MINERALS' SECTOR
1. To constantly provide the national minerals' deposit fund ahead of mining sector in
order to develop the sustainable and long-term mining operations.
2. To discover new mineral deposits and carry out geological exploration and
prospecting activities according to the state policy in compliance with regional
development concept and to involve and encourage investments by private sector
onto the above activities.
3. To involve private sector entities into the geological science works and applied
researches, outlines and exploratory undertakings executed by the state budget in
order to define the geological formation, structure and minerals' occurrences in
Mongolian territory and to strengthen and support the result of researches and
above-mentioned activities by private funding.
4. To consider and register minerals like radio-active metals (uranium), earth rare-
elements and deep aquifers as strategically-important elements and to explore,
mine and process them under the state control by maintaining the state ownership
percentage at a proper level.
5. To consolidate and manage state-owned mining houses into one corporate type,
thus creating the explicitly operated share-holding company which enables the
implementation of policy that is open for public.
6. To support mining companies who run major operations by safeguarding human
work forces and environmental issues under strict compliance with the laws and
regulations and finally who pays great amount of due taxes into the state budget
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rather than multiple small mining operations who operates economically inefficient,
environmentally unfriendly and harmful against human health and well-being.
7. To establish a "Treasure fund" out from the certain amount of profits made by
mining industry and to allocate into other sectors as required in compliance with
the state policy.
8. To make a regulation in order to maximize the competency of mining product
quality, processing, supply and pricing based on the regional and domestic market
and exportation demand and regulate minerals related products' sales and
exportation through consolidated policy by establishing stock market based on
international experience for Mongolian originated minerals' products.
9. To retain the investment internally by letting national professional organizations
and enterprises fulfill all the geological activities, mining operations and services
carried out within Mongolian territory via an integrated policy implementation.
10. To remain all the reports and facts of all the stages of geological research, mining
and processing operations done by state and private investments open against the
public or to ensure to present explicitly.
11. To administer a policy that satisfies local involvement, healthy and safety living
environment for the public.
12. To mandatory ensure having the suggestions of key stakeholders before
approving any laws and regulations regarding the minerals' sector and maintain
the principle that keeps the balance of interests from multi-faceted partnerships in
the mining sector.
13. To set up a system where no sudden decision is made by the politicians unless
taking account of critical factors such as high-risk environment in the mining sector
and fluctuation of market prices based on long-term analysis and research by the
experts in the industry.
14. To form up a specialized environment of legislation for the operations of micro-
mines and explorations as well as mining operation of deposits for variety of
widespread goods which would be used for construction materials and to improve
the legislative regulations along the way.
15. To centralize the locations of exploration and mining operations for minerals
deposits from west to south and east in the territory by taking into consideration of
Mongolian geography, forestry, locations of aquifer zones, cropland, industry of
animal husbandry concentration and density of minerals' deposits as well as
mining locations.
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FOUR. THE GOALS AND OBJECTIVES FOR MINERALS' INDUSTRY
а. Geological industry
1. The objective of geological industry is to constantly maximize state treasure funds.
Geological research and feasibility studies will deal with nearby mining sites, by
supporting and intensifying the exploration for deposits to be discovered within the
territory and at the border areas neighboring them in correlation with their
infrastructure and geological topography.
Deposits are entirely studied for potential by-product minerals and a need to
segregate such by-products is introduced.
Geological industry will be given an opportunity to explore and prospect the raw
materials, used for modern technologies, such as crystal, variety of clays, leach
and salt and minerals rock which are highly demanded by internal and external
markets alike.
2. The coordination of geological research and exploration activity with regional
development concept
The geological research will be coordinated together with construction
development of will-be built urbanization in the near future of Mongolia and the
research and geological topography will be intensified in the neighboring areas.
Every year, topography and overall prospecting activity will cover an area not
less than 50,000 square kms in Mongolia and as such the geological research
level will be enhanced qualitatively.
The overall prospect with geological topography 1: 50 000 will be surveyed
according to the following timespan :
40% of the territory through 2012-2016,
50% of the territory through 2016-2020,
60% of the territory through 2020-2030.
5-channeled geophysical aerograph and 1:200 000 scaled gravitational survey
should conduct in an area where new urbanization and infrastructure will be built
and such surveys should continue until 2030 covering up to 50% of the entire
territory of Mongolia.
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Consolidated geo-ecological research will be strengthened nationwide while key
researches will take place in the scope of chosen cities, provinces and even the
smallest entities of administration.
3. In order to maintain better result, to ensure that private sectors are drawn and
involved into the geological research, applied study, topography and prospecting
activities carried out by state budget
To increase the quality level and efficiency geological research, exploration and
prospecting activities leaning on professional engineering crew with proven
geological background by choosing the optimized methods and advanced
technologies suitable for the characteristics of the geological formation in the
given territory.
To further improve geological topography and prospecting activities carried out
by the state budget and, moreover, exploration would start for ore-body
occurrence and/or certain special deposits.
All the information from various research and exploration activities carried out in
Mongolian territory (such as natural gas, minerals, aquifers, geological study and
hydro-geological research etc.) will be integrated in a united database for state
registration. All the information from all the stages of geological research being
carried out by both state and private funding will be accessible to the public.
A various number of effective research projects, in regard of mining industry, will
jointly be implemented together with neighboring and third-party countries while
extending the external relationships with above countries. Private sector
investors who are interested in this very important industry will be supported.
4. Exploration, mining and processing of radio-active metals (uranium), earth-rare
elements will be controlled under state supervision.
Exploration and prospecting activities for radio-active deposits will mostly be
moved to east and south-east part of the country by taking into consideration of
the currently measured level and discovered geological formation in the overall
area of the study.
Exploration and prospecting activities for earth-rare elements' deposit (especially
heavy lanthanide) will be centralized in the western part of the country via the
state and private investments alike.
The mutual interest on the exploration activities for radio-active metals (uranium)
and earth-rare elements will be defined in the process of exploration stage upon
the agreement provisions.
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b. Mining Industry
In mining industry, the objective is to set up a sustainable policy that provides
environmentally friendly, responsible and open mining operation which is harmless
against human well-being, export-oriented and supportive for economical growth and
more importantly complied with international standards in correlation with regional
development mainstream exercised in Mongolia and such operation should include
VAT.
Following the principles for explicit nature of mining operations and development
initiatives of Responsible mining, it needs to develop regulations which will be exercised
at mining operations, mining closures and processing plants during the lifetime of
operation through leading standards and technologies known in the industry.
Economically efficient minerals' deposits and by-products' components shall be
mined and processed completely.
To regulate suitably the mining volume in line with the economy of the country,
industrialization situation, future perspectives of the internal and external markets.
Occupational safety, hygienic standard policies and their implementations in the
mining industry will be raised up to international standards.
During the mining operations, nationwide minerals' deposit movements are
surveyed yearly basis, then the database system to evaluate and estimation for
registration and monitoring will be updated upon the set policy.
The production of goods that would replace importing goods will be supported by
increasing the raw materials resources.
With the modification on monitoring system for mining industry controlled by the
state, the rehabilitation measures which focus on minimizing the minerals' waste and
providing complete exploitation that is environmentally friendly will be taken during the
lifetime of the mine operations.
In line with regional development mainstream policy, the commencement of
production and exploitation of major deposits will be decided accordingly by means of
providing legislative and infrastructural favorable environments for investors in order to
maximize investments.
New type of mining products will be produced based on the minerals' potential
demand of neighboring and other countries in the future, metals' market prices and
different types of applications.
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Legislative environment will be enabled for the owner of the deposit when forming
up the nearby local infrastructure of the deposits in question.
Regulations which will be exercised during mining opening, closing and temporary
productions stops are introduced according to the international standards and ensure
the implementations by the monitoring and supervision systems when a mine closes for
any responsibility lacks.
It supports and maintains the productivity in geological and mining industry by
introducing any successful achievements in the minerals' industry and modern
technique and technologies from abroad in accord with Mongolian mining industry and
its environments.
г. Processing Industry
The following processing plants and facilities will be supported by the state with
proper policies of export methods for increased throughput: copper concentration milling
plant with an increased level of minerals' processing, cathodic copper concentration
leaching plant from low-grade ore, molybdenium in-depth concentration plant, iron-ore
wet treatment concentration plant, metallurgical complex, phosphorite compost
manufacturing plant, uranium deposit concentration plant which extracts yellow-powder
to export, earth-rare elements' mining and processing facility for applications in electric
technology and at last gold refinery plants.
In favor of the coal concentration and processing, the extraction plants for
smokeless combustible from brown-coal, liquid combustible from coal and flammable
shale are promoted. The final product extraction development from coking coal area will
highly be supported.
Modern and harmless technologies for both human health and environmental
factors will be recommended in the processing areas.
The following major activities will take place in Mongolian mining industry after
comparing the mined minerals against the available processing capacities:
To do so, it will be ensured that mining production and processing levels must be
improved according to the planned development stages and policies specified within the
industry.
1. To establish major ferrous-metal processing complex between Darkhan
and Selenge regions
2. Central coking and chemical plant will be introduced via establishing
coking coal concentration plant within Gobi region
3. To establish phosphorus concentrating plant in the destination of
Erdenet-Burenkhaan
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4. To establish copper concentration milling plant in Erdenet city
5. To establish non-ferrous metal concentrating and melting plant in
Choibalsan city
6. To research in detail the possibilities to establish gold-refinery in
Ulaanbaatar city
7. To set up mining processing complex based on the infrastructure located
in Choir-Shainshand area
8. It is suitable to consider building up a new complex for mining processing
using the iron and other minerals' deposits located in western part of the
country.
FOUR. ENVIRONMENT PROTECTION AND REHABILITATION
The objective of environment protection and rehabilitation is to create
requirements which will provide safe and healthy mining operation during and after the
lifetime of a mine. The requirements should fulfill occupational health and safety along
with the retaining ecological parity.
Existing environmental protection system shall be updated into the world-wide
benchmark principle "pollutant shall pay" which is being exercised in the developed
countries.
In the mining industry, surface water shall predominantly be used for mining
operation and the advanced technology to use re-cycled water will be supported.
The standards for environmental protection and rehabilitation shall be updated
according to the contemporary standards and shall be enforced accordingly.
The efficient, leading and environmentally healthier technology will be used for
environmental protection and re-cycling and re-processing of mining waste.
The activities to register destructed mining areas and rehabilitate the mines
abandoned by state-owned enterprises shall be done with the aid of international
organizations and foreign assistance or state-budget.
FIVE. MANAGEMENT OF MINING INDUSTRY,
STRUCTURE AND HUMAN RESOURCES
In the scope of management, Geological department shall be founded according
to the international standards which will develop geological research, to prepare young
generation in national geological background, to discover and unearth the massive
minerals' deposits in the ground, and to apply geological research and services
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scientifically in all respective fields and to secure national competency. The Geological
department will have unified management so that it can ensure accurate and
sustainable management.
The realtionship between geological research and investigation and research
organizations will be sophisticated so that clear estimations will be provided by studying
geological formation, minerals' distribution and topography per regions.
Laboratory analysis, research methodology and investigation technology for
minerals shall be renewed for partial manufacturing technology tests.
Legislative environment shall be provided to perform all steps of geological
researches under the control of professional organization with proper experts in the
industry.
In addition to train highly skilled geological and mining engineers, technical
workers, following professionals in demand such as topographical geologist,
metallurgist, hydro-metallurgist, mining ecologist and mining accountant will be sent to
domestic and abroad universities.
Qualified and professional workers will be trained to specialize at follow-up
schools, industrial centers and technical colleges by the request of companies who
operate in mining and metal processing industry.
Attachments:
Picture of the locations of minerals deposits, infrastructure and regionalization
Policy Results
The following positive results will come out by consistently implementing the policy:
1. With the implementation of influential and major mining projects, the overall
state-budget increases from the income out of minerals' industry so that
"Treasure fund" will be established for the prevention of financial crisis to avoid
economical impact.
2. "Treasure fund" will be allocated to other sectors as required removing the
dependency on the sole mining industry so that "Holland Disease" will be
prevented.
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3. Policy will ensure that minerals' industry will be independent from sudden
turnovers and changes made in political environment.
4. It also clarifies the perspective for development of infrastructure /road and railway
network, power plant and urbanization/ in the country.
5. Mongolian population density will have even distribution so that the excessive
centrality in Ulaanbaatar city could diminish. The income for population will
increase up to 4000-5000 USD within next 5 years. Mongolia will be listed as a
country of average income.
6. Environmental protection activities will be well-arranged.
7. The quality and volume of foreign investment will increase.
8. The concept of the public regarding mining industry will be renewed as the
accessibility to all steps of mining industry increases according to the set policy
and regulations.