Mongolia Considers Changing Laws to Stimulate Mining Investment

Mongolia’s government said it intends to submit two bills to parliament that could stimulate its mining sector and stoke investment.

The first bill would annul a June 2010 law suspending the issue of new exploration licenses, providing opportunities for companies to explore deposits that include coal, copper and gold, according to the government’s website, citing a meeting on April 19. The second would amend guidelines applied to a July 2009 law on rivers and forests, to allow mining in areas previously off-limits due to environmental concerns.

The changes could provide an economic lift to a country where foreign investment fell 54 percent last year and economic growth slipped to 11.7 percent from 12.4 percent in 2012. Investment has been affected by a high-profile spat with Rio Tinto Group over the Oyu Tolgoi copper and gold deposits it shares with the government, as well as laws put in place during the mining boom of 2009 to 2011 to curb environmental damage and corruption.

“The government encouragement of exploration will help with the economic recovery,” said Munkhdul Badral, head of market intelligence firm Cover Mongolia. He added that the lifting of the ban on new exploration won’t have an immediate impact as licensing will need to go through a tender process.

The changes proposed to the law governing rivers and forests access would re-validate mining licenses issued in these areas prior to 2009, as long as companies abide by rules to protect the environment, according to the government.

The earliest the bills could be passed by parliament is mid-May, said Munkhdul, assuming that they don’t get stuck at the committee stage. “That is the best case scenario,” he said. “The laws could get stalled amid heated debates.”

An official at the mining ministry declined to comment.

To contact the reporter on this story: Michael Kohn in Ulaanbaatar at mkohn5@bloomberg.net

To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net Abhay Singh

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