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Ulaanbaatar, Mongolia

Mongolia

Status
Satisfactory progress
Joined
27 September 2007
Latest validation
2019
Latest data from
2019
Visit the country website

Overview and role of the EITI

The mining sector is a major part of Mongolia’s economy and an important source of economic growth, representing 21.6% of the country’s GDP, 57% of total industrial production and 42% of total investments in 2020. Mining production is mainly centred around gold, copper, coal and iron, and accounted for 26% of the national budget revenue in 2020. Mongolia also has a small oil and gas sector however these resources remain largely underdeveloped.

The government receives a significant portion of its income from extractive companies, and also participates directly in extractive activities through shares in mining companies, especially the wholly-owned Erdenes Mongol LLC and its subsidiaries. 

Mongolia is using the EITI to strengthen accountability, governance and public understanding of the extractive sector, notably through ensuring accessible, regular disclosure of information on the sector. It has also used the EITI platform to promote contract disclosure.

Economic contribution of the extractive industries

30.9%
to government revenues
89.3%
to exports
21.6%
to GDP
5.35%
to employment
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Download country data

Download open data on government and company revenues, revenues by revenue stream and indicator, summary data and more.


Innovations and policy reforms

  • Mongolia EITI drafted a law to address issues relating to the public availability of beneficial ownership information, contracts and corruption risks in the extractives sector, which it sees as important to support a sustainable and stable financial and institutional framework for complying with global transparency standards.
  • Mongolia EITI is working to produce a study to identify the needs for building the capacity of subnational EITI councils in the country’s provinces (aimags) and to develop a subnational work plan to implement recommendations from the study. 
  • In 2020, the Ministry of Mining and Heavy Industry (MMHI), together with the Open Society Forum and Center for Legislation and Policy Research, commissioned and published a preliminary survey report on legal requirements for minerals sector transparency. 
  • The environmental impacts of mining are at the centre of public debate in Mongolia. EITI reporting enables public oversight of the different types of environmental payments made by extractive companies, which totalled 3.18% (USD 37 million) of total extractive revenues in 2018.
  • In 2017, the Open Society Forum (Mongolia), in cooperation with the government and EITI Mongolia, launched an online contracts portal in order to meet the EITI’s requirement on contract transparency. As of October 2021, a total of 827 contracts were disclosed through the portal.

"Our mission is to contribute to good governance in the extractive sector of Mongolia and increase the sector’s benefits, therefore we support a multi-stakeholder cooperation with all relevant programmes and projects.”

Shar Tsolomon National Coordinator, Mongolia EITI

Extractive sector data

Revenue collection

Level of detail 2

Revenue distribution

2019
Standardised revenue types

Top paying companies

2019

Extractive sector management

License and contracts

Mining exploration and exploitation licenses are granted through a tendering process and issued by the Cadastre Division of the Mineral Resource and Petroleum Authority of Mongolia (MRPAM). The Ministry of Mining and Heavy Industry (MMHI) and MRPAM are also involved in the process for awarding petroleum exploration and exploitation licenses.

MRPAM’s cadastre website has published information of more than 2,500 valid licenses. EITI Mongolia also publishes minerals license information on its website.

The government has taken actions to improve contracts disclosure by repealing the confidentiality clause in model petroleum product sharing agreements. In 2017, the Open Society Forum (Mongolia), in cooperation with the MMHI and EITI Mongolia, launched an online contracts portal. However, some larger contracts are not yet publicly available.

Beneficial ownership

In 2017, the government approved a National Anti-Corruption programme (Resolution No. 114), which provides for a plan to disclose beneficial owners in accordance with the EITI Standards. The government has adopted beneficial ownership reforms in various laws including the Law on State Registration of Legal Entities (2018 amendment), the Law on Minerals, and the Law on Combating Money Laundering and Terrorist Financing. 

EITI Mongolia publishes some beneficial ownership information through EITI Reports and on its website, however disclosures are not comprehensive.  

In 2021, Mongolia became a participating country in Opening Extractives, a global five-year programme delivered by the EITI and Open Ownership to improve the availability and use of beneficial ownership data.

Revenue distribution

Most government extractive revenues flow to the national budget. Effective from 2020, 50% of mining tax revenues are allocated to the General Local Development Fund (GLDF) and further distributed through earmarking and local community development funds. In addition, VAT and 5% of royalties from mining, as well as 30% VAT and 10% to 30% of royalties from petroleum, are allocated to the GLDF.

The General Local Development Fund provides administrative units with their own needs-based investment options and programmes, which are endorsed and approved by local communities. In 2020, a total of 172.6 billion MNT was allocated to the fund, of 165.7 billion MNT was further allocated to the local development funds of provinces (aimags) and the capital city commensurate to population size, distance, territorial size and local development index.


EITI implementation

Governance

Mongolia EITI is administered by the Mongolia Multi-Stakeholder Group (MSG), also known as the National Council.  The MSG is chaired by the Minister of Mining and Heavy Industry. It is comprised of representatives from government, industry and civil society. 

Mongolia also has an EITI Working Group (MSWG), a coordinating body that meets at least once every quarter. The MSWG is headed by the Senior Adviser to the Prime Minister of Mongolia and consists of 33 members from government, companies and civil society.

Validation

Mongolia was found to have made satisfactory progress in implementing the 2016 EITI Standard in February 2018, following its second Validation. Mongolia has fully addressed of the corrective actions identified in its previous Validation. Its subsequent Validation commenced in January 2022.

Scorecard

Latest Validation: 23 October 2019
Year

Assessment of EITI requirements

  • Not met
  • Partly met
  • Mostly met
  • Fully met
  • Exceeded
Scorecard by requirement View more Assessment View more

Overall Progress

MSG oversight

1.1Government engagement

There are regular, public statements of support from the government. A senior individual has been appointed to lead on the implementation of the EITI, and senior government officials are represented on the MSWG and National Council. Government has provided funding to implementation. However, the lack of full government participation in outreach and dissemination events and the recurrent gaps in funding for EITI implementation are a concern.

1.2Industry engagement

Companies are actively and effectively engaged in the design, implementation, monitoring and evaluation of the EITI process. Industry representatives are taking part in outreach and efforts to promote public debate especially on regional level. The Minerals Law and model Production-Sharing Contract provide an enabling environment for company participation in the EITI and there do not appear to be any legal obstacles preventing company participation.

1.3Civil society engagement

Civil society are fully, actively and effectively engaged in the design, implementation, monitoring and evaluation of the EITI process. Stakeholders are taking part in outreach and efforts to promote public debate especially on regional level. There is an enabling environment for civil society participation in the EITI.

1.4MSG governance

Each constituency publicly codified its MSWG membership nominations procedures in January 2018. The lack of safeguards in the MSWG’s decision-making has been resolved through revisions to the MSWG’s ToR in November 2017. Attendance at MSWG meetings has improved over 2017 and the MSWG ensured strong quorum rules in its revised ToR. There is growing constituency coordination on key issues ahead of MSWG meetings.

1.5Work plan

The MSWG has been formed and includes self-appointed representatives from each stakeholder group with no suggestion of interference or coercion. Although the mechanism for civil society nominations on the MSWG restricts selection of members outside the PWYP and MECC coalitions, there is no evidence that non-member NGOs that would have liked to participate have been constrained from doing so. The ToR for the MSWG addresses the requirements of the EITI Standard, but stakeholders have highlighted certain deviations in practice, particularly related to voting. Certain MSWG decisions appear to be passed despite objections of one of the stakeholder groups, for instance in relation to data quality assurance procedures. Attendance of MSWG members is also inconsistent, with delegation of attendance to different representatives being common. these weaknesses have affected EITI implementation and contributed to inconsistent multi-stakeholder oversight of the technical aspects of EITI reporting, in particular with respect to data quality.

Licenses and contracts

2.1Legal framework

The 2014 EITI Report address the relevant laws, regulations and fiscal regime.

2.2License allocations

The 2016 EITI Report discloses which mining, oil, and gas licenses were awarded and transferred during the year, highlighting any non-trivial deviations from the applicable legal and regulatory framework governing license awards and transfers. The extensive work on assessing deviations in practice constitutes a good example of increasing awareness of how criteria are assessed during the allocation process.

2.3License register

The 2016 EITI Report provides guidance on accessing license coordinates in the oil and gas sector. Having made efforts to secure dates of applications for licenses held by material companies, he MSWG disclosed dates of application for 251 of the 661 mining licenses and eight of the 11 PSAs held by material companies in the 2016 EITI Report. It has been transparent about obstacles hindering disclosure of dates of application for licenses awarded under the previous system and included activities in its 2018 work plan to secure remaining dates of application.

2.4Policy on contract disclosure

The 2014 EITI Report clarifies government contract disclosure policy and provides a review of actual disclosure practice. There has been follow up by the MSWG to develop a contracts portal, amend the model oil and gas PSAs to remove confidentiality clauses and to disclose all PSAs.

2.5Beneficial ownership

Not assessed

The MSWG has considered beneficial ownership disclosure in detail at several MSWG meetings and has conducted initial work on disclosure of legal ownership information (which includes some beneficial ownership disclosures) in the 2013 and 2014 EITI Reports.

2.6State participation

The 2016 EITI Report clearly defines a set of nine SOEs making material payments to government and describes their statutory financial relations with the state, including loans and guarantees, as well as non-trivial deviations in the year under review.

Monitoring production

3.1Exploration data

The 2014 EITI Report includes a detailed description of the extractive industries, including informal activities, and of significant exploration activities.

3.2Production data

The 2014 EITI Report includes volumes of production in mining and crude oil. While the location of mining production is provided for only some mining licenses, it is possible to reconstitute the location of production using the EITIM data portal.

3.3Export data

The 2014 EITI Report includes volumes of production in mining and crude oil. While the location of mining production is provided for only some mining licenses, it is possible to reconstitute the location of production using the EITIM data portal.

Revenue collection

4.1Comprehensiveness

The MSWG has agreed a definition of materiality and materiality thresholds. Although the IA does not provide an assessment of the comprehensiveness of the 2014 EITI Report, it is possible for readers to assess the materiality of omissions and reach conclusions about the overall comprehensiveness of the EITI Report.

4.2In-kind revenues

Not applicable

The 2014 EITI Report states that the two producing oil and gas PSA operators commercialise the state’s share of in-kind revenues (Profit Oil). There are no in-kind revenues in mining. The value of cash proceeds from the sale of the state’s Profit Oil is provided.

4.3Barter agreements

Not applicable

The 2014 EITI Report details infrastructure provisions and notes that no barters exist.

4.4Transportation revenues

The MSWG has considered whether government receives transportation revenues in the mining sector and disclosed revenues collected by Erdenes Mongol, even if a materiality threshold for such revenues is not explicit (it is only implied as 0). The MSWG does not seem to have considered the existence of transportation revenues in oil and gas however although we understand that no SOEs (under the EITI Standard’s definition) collected transportation revenues.

4.5SOE transactions

The 2016 EITI Report clearly distinguishes SOE-specific transactions from other types of payments from SOEs (e.g. common taxes). Dividends from SOEs were below the MSWG’s materiality threshold for selecting revenue streams and were thus unilaterally disclosed.

4.8Data timeliness

The eReporting system has had a significant impact on timeliness of reporting and reconciliation of payments now takes place within 12 months of the end of the fiscal year under review.

4.7Disaggregation

While the 2014 EITI Report does not present all data disaggregated by revenue stream and by company, the EITIM data portal provides access to this level of disaggregated information.

4.9Data quality

The 2016 EITI Report provides a detailed description of the approach to ensuring the reliability of reconciled data, including review of audit and assurance procedures and practices, a description of the assurance procedures and an assessment of the materiality of non-complying entities. The report includes a clear statement by the IA of the comprehensiveness and reliability of the reconciled data.

4.6Direct subnational payments

The MSWG has considered subnational direct payments, disclosed and reconciled them in the 2014 EITI Report, disaggregated by payment stream. However, there is confusion between SOEs’ “subnational direct payments” and “subnational transfers”.

Revenue allocation

5.2Subnational transfers

The 2016 EITI Report provides the detailed formulas for calculating GLDF transfers to LDFs of aimags as well as direct royalty transfers by the Ministry of Finance to LDFs of aimags. The values of planned subnational transfers according to the formula and actual 2016 transfers are provided for both aimags, the direct recipients of subnational transfers, and for soums, who receive transfers from aimags. While the discrepancies between planned and realised transfers are only explained in general, the disaggregation of data by aimag and soum allows for traceability of extractives revenues at the subnational level.

5.1Distribution of revenues

The 2014 EITI Report discloses how revenues are allocated.

5.3Revenue management and expenditures

Not assessed

The 2014 EITI Report discloses the management of earmarked revenues.

Socio-economic contribution

6.1Mandatory social expenditures

The 2016 EITI Report provides a clear differentiation between mandatory and voluntary social expenditures, distinguished from other types of payments such as quasi-fiscal expenditures by SOEs. The results of the MSWG’s reconciliation of mandatory social expenditures are provided, disaggregated between cash and in-kind (with the nature and value of in-kind expenditures provided) and highlighting the identity of the few non-government beneficiaries. The 2016 EITI Report included material voluntary social expenditures.

6.2Quasi-fiscal expenditures

The 2016 EITI Report describes the MSWG’s definition of quasi-fiscal expenditures (consistent with the EITI Standard’s), its assessment of their materiality and reporting of SOEs’ unilateral disclosures of material quasi-fiscal expenditures in 2016.

6.3Economic contribution

The 2014 EITI Report expands on previous EITI Reports’ description of the contribution to the economy. It includes, in absolute and relative terms, the size of the extractive industries, their contribution to government revenue, exports and employment.

Outcomes and impact

7.4Outcomes and impact of implementation

The 2017 annual progress report provides a summary of the MSWG’s follow-up on past recommendations from Validation and EITI Reports, as well as a narrative account of efforts to strengthen implementation and general observations on the impact of EITI implementation. Stakeholders were given an opportunity to provide input to drafting the annual progress report.

7.1Public debate

The MSWG has sought to ensure the EITI Report is comprehensible, accessible and actively promoted, particularly through aimag and soum level reports. EITI information has generated public debate, particularly at the subnational level.

7.2Data accessibility

Not assessed

EITI data is accessible, references international classifications, machine-readable and actively disseminated through the eReporting website.

7.3Follow up on recommendations

Recommendations of EITI Reports are followed up on by the MSWG, even if they are not consistently implemented.


Key documents


Contacts