Introduction to the Draft Mining Law

Introduction to the Draft Law on
Mining
Dunnaran Baasankhuu
Partner
Amarjargal Batchuluun
Associate
31 March 2017

Contents
 Overview of the current legislation in the mining sector
 Summary of the Draft Mining Law (Draft Law)
 Key changes introduced by the Draft Law

Overview of current
legislation

Overview of the current legislation in the mining sector
 Minerals Law, (2006)
 Common Minerals Law, (2004)
 Nuclear Energy Law, (2009)
 Subsoil Law, (1988)
 Environmental Protection Law, (1995)
 Environmental Impact Assessment Law, (2002)
 The State Policy on Minerals Resources, (2014)
 Action Program of the Government of Mongolia for 2016-2020,
(2016)

Minerals Law, (2006)
Regulates:
 Ownership of minerals
 Licensing for exploration and mining activities (except oil, gas,
radioactive minerals and common minerals)
 Rights and obligations of licence holders
 Conditions to maintain valid licenses
 Licence fees and royalties
 Environmental obligations of licence holders
 Transfer, pledge and revocation of licenses
 Dispute resolution

Common Minerals Law, (2004)
Regulations:
 Licensing for exploration and mining of commonly occurring minerals
(e.g. sand, stone, construction rocks, etc.)
 Powers of the State Authorities
 Conditions to maintain licenses
 Environmental obligations of licence holders

Nuclear Energy Law, (2009)
Regulates:
 Licensing for exploration and mining of radioactive minerals
 Expiration and suspension of licenses
 Deposit development agreements and investment agreements
Regulates:
 Permitted usage of subsoil including exploration, mining and
construction of underground facilities
 Rights and obligations of subsoil users
 Termination of rights to use subsoil
Subsoil Law, (1988)

Environmental Protection Law, (1995)
 Sets out, among others, general obligations of exploration and
mining license holders and compensation for environmental damage
Environmental Impact Assessment Law, (2012)
 Regulates environmental impact assessment for projects and
subsequent reporting obligation of license holders, and use of
natural resources with minimal environmental effect

Stages of the Draft Law
 Approval of the Government Action Plan for 2016-2020
 Concept of the Draft Law approved in January 2017
 Establishment of a working group in January 2017
 Call for submissions

Background of the Draft Law
 The Minerals Law left several issues open or incomplete:
 classification and details of minerals prospecting and exploration
 requirements for feasibility studies for mining works
 requirements for mining drawings
 preparation and commissioning of the mine
 extraction processes
 utilisation of derivative deposits and artisanal mines
 mine rehabilitation processes
 temporary or permanent closure of the mine

Background of the Draft Law (cont’d)
 Key concerns of the Minerals Law:
 vague provisions
 open issues
 unclear requirements
 fails to address OH&S rules
 inadequately addresses links to existing legislation

Purpose of the Draft Law
 Regulate the open issues in the Minerals Law
 Provide one clear approach to issues
 Regulate the mining life cycle
 Address current development trends
 Improve transparency in the mining sector

Structure of the Draft Law
 14 Chapters and 70 Articles
 Chapters 1 to 2: General provisions, definitions, scope of law and
involvement of the State Authorities
 Chapter 3: Geological surveys, prospecting and explorations works
 Chapter 4: Requirement to complete mining feasibility studies and
design works for underground mines
 Chapter 5: Preliminary works before operation of the mine (mineral
concentration and processing)

Structure of the Draft Law (cont’d)
 Chapter 6: Requirements to conduct mining activities
 Chapter 7: Requirements for the concentration and processing of
minerals
 Chapter 8: OH&S regulations
 Chapter 9: Environmental rehabilitation
 Chapter 10: Sale of mining products
 Chapter 11: Closure of the mine
 Chapters 12 to 14: Transparency, management and structure of the
mining sector and dispute resolution

Changes required to other legislation
 Draft Law on Implementing the Mining Law
 Draft Amendment Law on the Law on Breaches
 Draft Amendment Law on the Minerals Law
 Draft Amendment Law on the Environmental Assessment Law
 Draft Amendment Law on Licensing Law
 Draft Amendment Law on State Stamp Duty Law
 Draft Law to revoke the Common Minerals Law

Key changes introduced by
the Draft Law

Key changes introduced by the Draft Law
 Additional licensing requirements
 Classification of mines and mining plants
 Mine and mining plant closure processes
 Merger of licence areas

Additional licensing requirements
 Feasibility study licence
 Design licence
 Retention licence

• Environmental protection unit
• Emergency unit
• Potential favourable conditions
State scope or
large
• Environmental protection employee
• Emergency unit
Regional scope
or medium
• Environmental protection employee
• Simplified mine closure obligations
Local scope or
small
Classification of mines and mine plants

Mine and mining plant closure processes
 A closure plan must be prepared and filed prior to commencement of
mining activities
 Issue of a closure financial guarantee
 Payment to the Mine Closure Risk Fund

Merger of licence areas
 Licence holders may merge their adjacent licence areas
 Upon a merger of licensed areas, the licence holders must conduct
new feasibility studies and prepare closure plans
 The term of the merged licences will expire on the date of the
licence with the latest expiration

Issues with the Draft Law
 Unclear drafting
 Adopts or revises more than 20 rules and regulations
 Additional requirement to obtain a licence for concentration and
procession’
 Strict requirements prior to commissioning the mine and mining plant
 Duplication of provisions in other laws

Introduction to the Draft Mining Law

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