GILS Mining: Mongolia

Mining

Mongolia

1. What is the nature and importance of the mining industry in your country? What are the target minerals? Which regions are most active?

The mining sector is a cornerstone of Mongolia’s economy, playing a crucial role in the country's overall economic performance. As of 2024, it contributes approximately 30% to the Gross Domestic Product (GDP), 72% of the industrial sector, 79% of foreign direct investment, 94% of total exports, and 30% of state budget revenues.

The main export minerals include coal, copper, iron, crude oil, and fluorspar (per Statistics 2024).

Several regions are particularly active in mining operations:

• South Gobi (Umnugovi Province)
• East Gobi (Dornogovi Province)
• Dornod Province
• Gobi Altai Province
• Khovd Province
• Orkhon Uul

2. What are the principal laws that regulate the mining industry? What are the principal regulatory bodies that administer those laws? Were there any major amendments in the past year? 

Legislation in the mining industry consists of the following laws of Mongolia:

• Law of Mongolia on Mineral;
• Law of Mongolia on Common Minerals;
• Law of Mongolia on Petroleum;
• Law of Mongolia on Petroleum products;
• Law of Mongolia on Nuclear Energy;
• The Law of Mongolia on Mining Products Exchange.

The principal regulatory bodies overseeing mining operations include the following:

• Ministry of Industry and Mineral Resources (MIMR);
• Ministry of Environment and Climate Change (MECC);
• Mineral Resources and Petroleum Authority (MRPA);
• Governors of the respective soum and aimag where the mining activities are carried out.

Mongolia enacted significant amendments to the Law on Minerals alongside the adoption of the Law on the Sovereign Wealth Fund in April 2024. The present law is the primary legislation in the mineral resources sector and regulates relations with respect to prospecting, exploration, and mining of minerals other than water, oil, natural gas, radioactive, and common minerals.

3. What classification system does the mining industry use for reporting mineral resources and mineral reserves? (How does this system compare to generally recognised international systems such as the CIM Standards (Canada), the JORC Code (Australia) and the SAMREC Code (South Africa)? 

The Classification and Instruction for Mineral Resources and Deposit Reserves, approved by the Minister of Mining, is applied in Mongolia. This classification provides a fundamental framework for accurately assessing mineral resources and deposit reserves in geological exploration reports. The resulting classifications may serve as a basis for investment decisions. Mineral resources and deposit reserves are categorized by geological complexity, ranked according to the extent of geological and exploration research, and further classified based on key factors such as mining technology, beneficiation and processing methods, economic viability, market conditions, legal and regulatory considerations, environmental impact, social implications, and government policies.

4. To what extent does the state control mining rights in your jurisdiction? Can those rights be granted to private parties and to what extent will they have title to minerals in the ground? Are there large areas where the mining rights are held privately or which belong to the owner of the surface rights? Is there a separate legal regime or process for third parties to obtain mining rights in those areas? 

The state has full control over the granting and management of mining rights through a regulated licensing process. These rights do not grant ownership of the minerals in the ground but provide the right for exploration and mining according to the terms of the license. Legal entities holding mining licenses are authorized to extract minerals from the licensed area. Upon extraction, the license holder is entitled to the proceeds from the sale of the minerals, subject to applicable taxes, royalties, and other fees established by the state. There are no large areas where mineral rights are held privately, as all mineral rights are ultimately controlled by the state. However, private landowners are required to negotiate with the state or license holders to allow access to their land for mining purposes, and this typically involves compensation arrangements. Third parties seeking to obtain mining rights must comply with environmental protection laws and meet specific legal requirements outlined in the Law on Minerals.

5. What information and data are publicly available to private parties that wish to engage in exploration and other mining activities? 

The following information is publicly available:

a. List of license holders, area size, and location;
b. Number of active licenses;
c. License status, and issuance/expiration dates;
d. Exploration work reports;
e. Registered mineral resources;
f. Auction and tender announcements;
g. Model agreement (Production Sharing Agreement for Oil).

6. What mining rights may private parties acquire? How are these acquired (eg, first come, first considered; first come, first served; discretionary or competitive bidding)? What obligations does the rights holder have? If exploration or reconnaissance licenses are granted, does such tenure give the holder an automatic or preferential right to acquire a mining license or more senior tenure? What are the requirements to convert to a mining license? 

Private parties may acquire mining and exploration rights based on the competitive bidding process. The right holders are obliged to pay relevant taxes, license fees, fees for the use of water and mineral resources, and other obligations related to environmental protection that are specified in the laws. Only exploration license rights holders are entitled to apply for the mining license in the exploration-licensed areas. The application for a mining license shall contain the coordinates of all corners of the requested mining area in degrees, minutes, and seconds on a standard map approved by the MRPA, and the map shall be attached to the application. Applicants for the mining license shall submit the application according to the approved form, along with the legally required document to the MRPA.

The license holder shall pay exploration license fees annually per hectare included within the exploration area at the following rates:

For the first year	145 MNT or 0.04 USD
For the second year	290 MNT or 0.08 USD
For the third year	435 MNT or 0.12 USD
For each of the 4–6 years	1450 MNT or 0.4 USD
For each of the 7–9 years	2175 MNT or 0.62 USD
For 10–12 years	7250 MNT or 2.07 USD

Each year an exploration license holder shall carry out exploration work in the license area costing not less than the amounts per hectare specified below:

For each of the second and third years of the term of the exploration license	0.5 USD
For each of the fourth to sixth years of the term of the exploration license	1.0 USD
For each of the seventh to ninth years of the term of the license	1.5 USD
For each of the tenth to twelfth years of the term of the license	10 USD

The fee for a mining license is MNT 21,750(or 6.2USD) per hectare of mining area under the license, and 7,250 MNT(app 2USD) per hectare for limestone, coal, and minerals for domestic production.

The payment term of the license fee:

First-year payment	It shall be payable within 10 /ten/ business days after the license (exploration & mining) holder receives the approval notice.
Subsequent years payment	It shall be payable annually in advance, on or before the anniversary date of the issuance of the license. / If the payment is not made within the specified period, liquidated damage equal to 0.3% of the annual payment amount shall be imposed for each day overdue. Such an overdue period will be up to 30 /thirty/ days, after which the license will be revoked./

7. What is the regime for the renewal and transfer of mineral licenses? (Describe the renewal and transfer rights with respect to exploration, reconnaissance, exploitation and mining licenses and the level of government discretion. Is government consent required to transfer a licence or with respect to change of control of the license holder or its parent? What notices, filings or approvals are required in relation to the transfer of mineral rights or mining businesses?)

Exploration licenses:

One month prior to the expiration of an exploration license, the license holder may apply to the MRPA for an extension, accompanied by all legally required documentation. Upon granting the extension, the MRPA shall promptly notify the Taxation Agency and publish a public notice of the extension in a daily newspaper. If the license holder fails to meet the legal requirements, the MRPA shall reject the extension request and issue a written notification to the applicant.

Mining licenses:

Mining licenses are granted for an initial period of 30 years and may be renewed twice, each time for a period of 20 years, subject to compliance with all applicable laws and regulations. Upon receipt of the renewal application and supporting documentation, the MRPA shall review the submission and, if all conditions are met, issue the renewed mining license accordingly.

Mongolia does not currently issue separate reconnaissance licenses.

Transfer of rights:

License holders may transfer their licenses in cases of merger, reorganization, or between subsidiaries and parent companies, as permitted by relevant laws.

Exploration licenses can only be transferred after proving that exploration data and reports have been sold and taxes paid.

Mining licenses require proof that the mine, equipment, and documentation were sold, and taxes were paid.

The transferor must submit a formal application along with several legally required documents to the MRPA. Upon submission of documents, the MRPA shall verify the validity of the license, the eligibility of the transferee, and compliance with legal and financial obligations.

8. What is the typical duration of mining rights? Is there a requirement to relinquish a portion of the mining rights to the government after a certain number of years? (Can mining rights be extended or renewed, and under which conditions? Can mining rights be revoked or cancelled anticipatively by the government, and on which grounds?) 

The exploration license is initially issued for a term of 3 years and it can be extended up to three times, with each extension lasting 3 years. 

The mining license is issued for a term of 30 years and it can be extended for a term of 20 years providing required documents that are specified in the laws. 

The MRPA is entitled to revoke the license upon the following grounds:

a. The license holder submitted a request;
b. Failed to eliminate violations and submit a request for restoration;
c. It was determined by the decision of the competent authority that the license holder caused an adverse impact on public interests, public health, safety, environment, or national security, and caused significant damage;
d. The license holder has violated the conditions and requirements of the license two or more times; 
e. The license and the documents certifying it were sold, gifted, pledged, or transferred in other ways except as provided by law;
f. It was found that counterfeit documents were submitted to obtain the license;
g. If the license holder is a citizen, he/she is considered legally incapable, if the license holder is a legal entity, it is bankrupted or liquidated;
h. State stamp duties are not paid on time;
i. Others prescribed by law.

Under the Law on Minerals, a license holder may relinquish part of the licensed area by applying in compliance with the legal requirements for exploration or mining areas. The application must be accompanied by documents including the license certificate, proof from local authorities that environmental protection obligations have been fulfilled, and specific reports as outlined in the law. The retained area after relinquishment must comply with the size and other requirements, and if the application meets all criteria, the MRPA will register it, making the relinquishment official. The relinquishment will be publicly notified, and the license holder will not be entitled to any refund or discount on the license fees already paid. Furthermore, the license holder cannot reapply for the same area for 2 /two/ years after relinquishing it.

9. Is there any distinction in law or practice between the mining rights that may be acquired by domestic parties and those that may be acquired by foreign parties (eg, is the ownership of mining rights by foreign parties restricted or prohibited in any fashion? is it necessary or desirable for a foreign party to have a domestic partner)?

Per the Law on Minerals, the mining rights shall be granted only to a legal entity duly formed and operating under the laws of Mongolia and a taxpayer legal entity in Mongolia.

Also, it is worth noting that if a foreign state-owned legal entity holds 33% or more of the total issued shares of a Mongolian legal entity operating in the mining sector, the permission must be obtained from the State Central Administrative Body in charge of Investment. Otherwise, there is no discrimination on local and foreign invested companies. 

10. What are the principal business structures used by private parties carrying on mining activities (eg, branches, corporations, partnerships, joint ventures and trusts)?

The exploration and mining activities can be operated based on the licenses granted by the MRPA and only LLCs can apply for and get a specific license. 

11. What duties, royalties and taxes are payable by private parties carrying on mining activities? Are these revenue-based or profit-based? 

Corporate income tax is assessed based on the taxable income and enterprises that utilize mineral resources shall pay royalties, which are subject to variable rates. Additionally, mining license holders are required to pay fees for water and mineral resource usage in accordance with the applicable laws.

12. What is the environmental review and permitting process for a mining project? How long does it normally take to obtain the necessary permits? 

In Mongolia, the environmental review and permitting process for a mining project includes key steps, including an environmental impact assessment, and environmental protection plan. After the environmental impact assessment approval, the applicant may apply for a mining license from the MRPA. In addition, a land use agreement with local authorities must be signed if the mining impacts local communities. It normally takes over 1 /one/ year to obtain the necessary permits. 

13. What is the closure and remediation process for a mining project? What performance bonds, guarantees and other financial assurances are required?

In case of mine or concentration plant is closed partially or wholly, a license holder shall inform the State central administrative body at least a year before, take preparatory measures pursuant to the law, and implement the following measures:

a. take all necessary measures to ensure safe use of the mine area for public purposes and rehabilitation of the environment;

b. take preventive measures if the mining claim is dangerous for public use;

c. remove all machinery, equipment, and other property from the mining area except as permitted by local administrative bodies or an authorized organization for inspection.

Mining license holders shall prepare a detailed map of an appropriate scale showing dangerous or potentially dangerous areas created by mining operations by placing necessary warnings and markings in the vicinity of the mining claim and shall submit the map to an authorized organization for inspection and particular a Governor of soum, bagh or district.

14. What were the biggest mining news events over the past year in your jurisdiction and what were the implications? What are the current trends and developments in your jurisdiction's mining industry (legislation, major cases, significant transactions)?

Firstly, the Orano Group has signed an investment agreement for the development and operation of the Zuuvch-Ovoo uranium mine in Mongolia’s southeastern Dornogovi province. The signing ceremony took place on January 17th in Ulaanbaatar, in the presence of representatives of the Mongolian government, Laurent Saint-Martin, Minister Delegate for Foreign Trade and French Nationals Abroad, Nicolas Maes, Orano CEO, and Xavier Saint Martin Tillet, Senior Executive Vice President of the Group’s Mining Business Unit.

Secondly, the World Mining Conference commenced on March 2 in Toronto, Canada, with the participation of the Mongolian Minister of Industry and Mineral Resources, Ts. Tuvaan, along with representatives from the Mongolian National Mining Association. During the event, Minister Tuvaan announced that Mongolia will begin issuing exploration licenses starting in March 2025. Furthermore, the Government believes that expanding the issuance of exploration licenses across the entire country in the future would be a beneficial step.

Lastly, the exploration activities for the Khalzan Buregtei rare earth element deposit in Khovd province have been successfully completed, and the reserves have been officially confirmed. The project is now entering the preparation phase for the mining stage. The deposit is owned and operated by a domestic company, Mongolian National Rare Earth Corp LLC (MNREC). To support the mining and beneficiation stages, foreign investment, investment funds, and financing from banks are anticipated to be involved.

Authors: Bolormaa Volodya, Khulan Ganbold, Baljir Altangerel