Procedure for Approval of Mining .

1        Licensing

Mongolia’s constitution states that its mineral resources are the property of the State. The State, as the owner, has the right to grant exploration and mining rights as set forth in the terms and conditions of minerals law. Conducting exploration or mining without a valid license is prohibited.

At the exploration license granting stage, the approval from the Governor of the aimag or the capital city is required.  If the Governor fails to respond within 30 days this shall be deemed as an approval.
Currently, further issuance of exploration licenses has been banned by law until December 31, 2012.

A mining license holder can commence mining activities after it has been accepted by a commission appointed by the Ministry of Mineral Resources and Energy. The mine license holder must demonstrate implementation of the obligations listed in Article 35 of the Mineral Law and prepare the following documents :

·         Certified copy of the mining license

·         Mongolian-law compliant feasibility study and mining plan reviewed by the relevant authority

·         Environmental impact assessment

·         Environmental protection plan

·         Minerals sales agreement and any lease agreement relating to the mining assets

·         Records on establishing and marking the boundary of the mining area

·         Any agreement on land and water usage

Mongolian Law on Subsoil sets basic requirements on the use of subsoil for mining :

·         to use methods to fully, completely and efficiently extract the core and co-existing minerals, as well as other components whose production is feasible

·         not to create overburden and waste exceeding the determined level, not to selectively mine minerals from the rich deposits only

·         to complete final and use surveys, other geological works, as well as geological and mine-surveying activities necessary for use of the deposit and to maintain complete technical documentation

·         to continually account for the remaining reserves, changes in reserves, overburden and wastes

·         not to damage the used deposits as well as any nearby deposits during earthworks, to protect and store the remaining reserves of minerals

·         to record and store unused by-products and overburden containing components whose production is feasible

·         to rationally use and place the extracted gravel, fertile soil and the overburden

·         to ensure safety of employees and the local population, to protect the subsoil, other objects of nature, as well as constructions

·         to approve and implement a plan on prevention of the hazards and liquidation of consequences

·         to rehabilitate the deposit at the end of the use

Each license is subject to cancellation if the applicable license fees are not paid on time or if the holder fails to comply with requirements of the Minerals Law or other relevant laws.

2        Exploration License

The issuance of any further mineral resources exploration licenses has been banned until December 31, 2011 in accordance with a recommendation by the National Security Council initiated by the President and approved by Parliament. It is anticipated that within this period parliament will adopt an amended new Mineral Law.

  Annual fees are payable per hectare of exploration license area as follows:

       Year                                              Annual fee per hectare

Initial term – Year 1                                            US$ 0.10

Initial term – Year 2                                            US$ 0.20

Initial term – Year 3                                            US$ 0.30

First extension (3 years)                                     US$ 1.00 each year

Second extension (3 years)                                US$ 1.50 each year

Exploration license holders must spend the following minimum amounts annually on exploration activities per hectare within the license area :

     Year                                                            Annual amount per hectare

Initial term – Year 1                                            No expenditure required
Initial term –Year 2                                             US$ 0.50
Initial term –Year 3                                             US$ 0.50
First extension (3 years)                                     US$ 1.00 each year
Second extension (3 years)                                US$ 1.50 each year

Mining and Exploration Licensing Steps

3        Operation License

Minerals Law clearly identifies the requirements for requesting a mining area and procedures for granting mining licenses. For the exploration licensed area, only the exploration license holder is entitled to apply for a mining license. Environmental Impact Assessment is one of the requirements. However at this stage a general environmental impact assessment from the Ministry of Nature, Environment and Tourism is acceptable.

The thirty-day notice and response requirements of the 2006 Minerals Law are not applied to the grant of a mining license. However the Mongolian Licensing Law requirements clearly apply it to both exploration licenses and mining licenses.

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 Law on Subsoil in force from 1988, is separate law along with Minerals law