Mongolia

EITI Status Meaningful progress

EITI Member Since 2007

Latest Data From 2015

Overview

Mongolia is a leading producer of coking coal, copper, iron ore and crude oil, but exports nine minerals in total. Extractive industries accounted for 16.7% of GDP, 20.1% of government revenue and 88% of total exports in 2015 according to the 2015 EITI Report. The Oyu Tolgoi copper and gold mine is the single largest mining project, which should account for a third of GDP from 2020. Tavan Tolgoi is the world’s largest undeveloped coal mine. Public debates have centred on the environmental impact of mining, areas reserved for conservation and the government’s role in developing large-scale “strategic” deposits. Provinces and districts that host extractive industries have set up subnational EITI councils to improve transparency and public participation in resources management at local levels.

Making it Count

Falling revenues, rising disclosures

Mongolia: The next steppe

Tax and legal framework

The main taxes levied on the mining sector include royalties, corporate income tax, customs duties and licence fees, while the major oil and gas levies are state petroleum receipts from production-sharing agreements, corporate income tax and customs duties. The Mongolian Taxation Authority is the main body responsible for collecting taxes paid to central government, while the Mineral Resources and Petroleum Authority (MRPAM) collects sector levies for mining and oil and gas respectively. Provincial and district governments are responsible for collecting subnational revenues.

Some contracts are disclosed, including one mining investment agreement and 141 company agreements with local authorities. Mongolia launched a dedicated portal for extractives contracts in early 2017.

Mining licences are awarded on a ‘first come first served’ basis, while oil and gas production-sharing agreements (PSAs) are awarded through public tender. The 2010 moratorium on new mining licence awards was lifted in 2014 and there are three remaining oil and gas PSAs open for tender. Mongolia had 25 oil and gas PSAs and 3800 active mining licences in 2015.

Learn more from the MRPAM website.

Beneficial ownership disclosure

Mongolia decided to include a section on beneficial ownership in its 2013 EITI Report. Using a simple questionnaire, the MSG asked for beneficial ownership information from any entity holding 5% or more of a mining or petroleum license. While the survey was voluntary, 215 of the 250 companies that participated in the 2013 EITI Report provided information on their equity-holders. Although some equity holders were natural persons, the report did not confirm whether they were legal or beneficial owners. The results were converted into an interactive infographic on the EITI Mongolia website. The 2014 EITI Report was less successful in providing beneficial ownership data. Thirty of the 236 companies responded to the request. The 2015 EITI Report was more successful, with 51 of the 202 companies reporting, of which 26 disclosed their beneficial ownership. The results were converted into an interactive infographic on the EITI Mongolia website: www.eitimongolia.mn/en/beneficial-owners

EITI Beneficial Ownership roadmap - Mongolia

Mongolia’s 2014 EITI Report reflects our use of the EITI as a platform for reform. As we expand the types of reporting required from companies, we have also been implementing the recommendations of past EITI Reports such as those covering contract transparency. The EITI is most useful where it is used for locally relevant reforms.
Banzragch Delgermaa, senior advisor to the Prime Minister of Mongolia and Secretary of the EITI Mongolia National Council.

Production

Mongolia is a leading producer of mineral commodities such as coal (the world’s 20th largest producer in 2015) and copper, but produces and exports a total of 15 mineral and petroleum commodities including gold, iron ore, zinc, molybdenum, fluorspar, tungsten, silver, tin, gypsum, zeolite, lead and clinker. Mongolia was primarily a copper exporter until 2006, although surging coal exports to China dominated output from 2007 to 2012. Oyu Tolgoi’s ramping up of production since 2013 has led to growing exports of copper concentrate, which offset a slump in coal output. Exploration activity is focused on the North, South and East of the country, with long distances requiring complex associated infrastructure to develop new mines.

Mongolia Investment Banking Group (May 2015), Mongolia Economic and Mining Sector Update

Natural resources

Mongolia has rich deposits of copper, coal, gold, silver, iron ore, zinc, fluorspar, molybdenum, uranium, tin, tungsten, natural gas and petroleum. Abundant mineral reserves are found throughout the country, although only around 30% of Mongolia’s territory has been explored.

Commodity	Reserves	Unit	Significance
Oil	2.4	Billion barrels	While under-explored, Mongolia’s proven reserves are in the east with frontier exploration in the west. Significant reserves of unconventional petroleum (shale gas and shale oil) are also estimated.
Gold	8,243	Metric tons	Alluvial gold - off limits to miners - accounts for over half of reserves, but several larger deposits are in development. Gold is also associated with large copper deposits like Oyu Tolgoi.
Silver	3,493	Metric tons	Despite only one producing mine in the north, there are several other silver deposits spread across the country.
Copper	2042	Million metric tons	Mongolia has the world’s 12th largest copper reserves. Oyu Tolgoi will become the world’s second largest operating copper mine once the underground phase II expansion is completed in 2020.
Coal	31.7	Billion metric tons	Mongolia has the world’s fourth largest coal reserves, thermal and coking coals combined. Tavan Tolgoi is the world’s largest undeveloped coal mine.
Iron	1.65	Billion metric tons	Proven reserves of iron ore are fragmented and spread out nationwide, leading to smaller average deposit sizes and lower operating lives for mines.

Sources: "Section 3.2.1: Mongolia's mineral resources" in 2015 EITI Report, “Chapter 5: Extractive Industries in Mongolia” in 2014 EITI Report, USGS Mongolia Minerals Yearbook 2012.

Falling revenue, rising disclosures

Mongolia’s new government challenged by a vulnerable economy

EITI in Mongolia and beyond

Show me the money! Strengthening EITI implementation in Mongolia

Revenue collection

The latest EITI disclosures (2015) show that Mongolia received USD 618 million from extractive industry taxation. Roughly a quarter of these revenues comes from oil and gas, with the rest from mining, with copper, coal and iron ore as the major commodities. Revenues were mainly collected through royalties (38%), corporate income tax (15%) and state petroleum receipts as per PSAs (11%). The Mining Law was revised in July 2014, with new royalty structures.

IM4DC (August 2015),Resources-to-Cash: a Cautionary Tale from Mongolia

MAD Investment Solutions (November 2013), A Brief Analysis of the Mongolian Economy

Revenue allocation

Provincial and district governments receive 25% of VAT (aside from imports), 5% of mining royalties and 30% of oil and gas royalties through the General Local Development Fund. Provincial governments also play a key role in extractive industries oversight, approving new licence applications for instance. The new Law on Glass Accounts requires full disclosure of expenditures by all levels of government.

Hogan Lovells (January 2015), Mongolia introduces Law on Glass Accounts

Swiss Agency for Development and Cooperation (March 2012), An Analysis of the new Budget Law of Mongolia

Innovations

The EITI encourages multi-stakeholder groups to explore innovative approaches to make the EITI more relevant and useful.

Mongolia’s EITI Reports are very comprehensive, with roughly 1000 companies reporting.
By 2016, all 21 provinces and 14 districts had established tripartite subnational EITI councils.
Reporting entities disclose EITI information through an online reporting system.
An online query tool allows users to visualise legal ownership information on some companies.
The 2015 EITI Report includes information on mining companies’ environmental provisions, information on the government's extractives loans and a detailed overview of the licensing process. It also includes sections on governance of state-owned companies and artisanal and small scale mining.

Implementation

Mongolia was found to have achieved meaningful progress in implementing the EITI Standard. View more information under the Validation section of this page or go to the Board's decision in full.

Previously, Mongolia was compliant under the 2011 Rules.

Mongolia published its 2017 workplan and 2016 annual progress report in December 2016. The key objectives of Mongolia’s EITI implementation include establishing the EITI Report and eReporting system as the most reliable source of information on the extractive industries, with EITI data contributing to public debate, enhance stakeholders’ capacity and mutual trust as well as ensuring the sustainability of the EITI process.

Governance

The Government of Mongolia committed to implement EITI in December 2005 and was admitted as EITI Candidate on 27 September 2007. A Memorandum of Understanding sets out the commitment to EITI implementation by the government, extractive companies and civil society. Resolution no. 80 (2007) establishes the responsibility of government bodies in EITI. A National Council coordinates and monitors implementation of the EITI in Mongolia, chaired by HE Mr Chimedyn Saikhanbileg, Prime Minister of Mongolia, and has 30 members. A Multi-Stakeholder Working Group (MSWG) is in charge of implementing EITI activities, counts 33 members and is chaired by Mrs Banzragchyn Delgermaa, senior advisor to the Prime Mininster. Details on the composition of these groups are available on the Mongolia EITI website. Resolution no. 19 (14 July 2010) commits the government to finance the cost of EITI Reports from fiscal year 2011 onwards through the budget of the Prime Minister’s Department, and directs regional and local governments to disclose all revenues paid by the holders of exploration and exploitation licenses as part of the EITI process. The current Minerals Law of Mongolia (§48.10) requires mining holders to publicly disclose product sales, and taxes and payments paid to the State and local budgets annually. Development of a draft EITI law is in progress.

Timeline

Validation

Mongolia was found to have made meaningful progress in meeting the EITI Standard on 11 January 2017. The country needs to take corrective actions on a number of requirements and will be validated again on 11 January, 2018.

Mongolia's progress by requirement can be found in the scorecard below.

Board decision in full

News item on the Validation result

Country statuses explained

Documentation: Validation Report and initial assessment

Mongolia's progress by requirement

EITI Reports and other key documents

Validation Mongolia 2016 - documentation

Published Date:

January, 2017

Publisher:

Country Officer

skasimova@eiti.org

EITI responsibilities: Provide support and coordinate EITI activities by the Secretariat and through partners in Azerbaijan, Kazakhstan, Kyrgyz Republic, Tajikistan, Mongolia and Ukraine.

Dyveke Rogan

dyveke.rogan

Policy and Regional Director

drogan@eiti.org

EITI responsibilities: Support to EITI implementation and outreach in Asia.

Prior to joining the EITI in 2009, Dyveke worked for Xstrata Nickel in the Dominican Republic and at the Center for Development Studies at the University of Agder.

Overview

News, blogs and more

Mongolia: EITI Validation highlights governance impacts

Falling revenues, rising disclosures

Mongolia: The next steppe

Contract transparency: Mongolia

Managing mining leases in Mongolia

EITI in Mongolia and Beyond

Tax and legal framework

Tax Code

Contracts in Mongolia

License registry

Beneficial ownership disclosure

Production

Natural resources

Revenue collection

Revenue allocation

Innovations

Implementation

Governance

Timeline

Validation

Mongolia's progress by requirement

EITI Reports and other key documents

Contacts

National Coordinator

Shar TSOLMON

International Secretariat

Alex Gordy

Shemshat Kasimova

Dyveke Rogan