Mongolia: increasing transparency year on year

The Prime Minister balanced enthusiasm and realism at the launch of their EITI Report.

Mongolia has possibly the fastest growing mining industries in the world, with new discoveries of copper, gold, coal, uranium and many other types of minerals. Revenues from these have made up almost a quarter of the Mongolian economy over the past five years. The effects of exploration and expansion touch upon the lives of most Mongolian citizens, who are increasingly demanding to be informed and engaged. The Government of Mongolia sees the EITI as a key tool to ensure that its new-found resources are managed transparently.

Prime Minister Altankhuyag noted at the launch of Mongolia’s 2012 EITI Report that although “absolute 100% transparency is not possible,” his government would continue to increase transparency in the mining sector year on year. They have drafted a new EITI law, which mandates publication of EITI data as well as financing to their EITI process.

Mongolia’s 2012 EITI Report was at the launch recognised to be an improvement over previous year’s reports. Firstly, it was more succinct than the 2011 report: roughly 160 vs 1600 pages. Secondly, it discloses detailed information about its extractives sector beyond revenue stream figures, as they will be required to do in order to meet the 2013 EITI Standard. And finally, beyond the EITI requirements, it discloses information about what is being done to mitigate the environmental impact of natural resource extraction.

Mongolia’s EITI hopes that the 2012 EITI report will be a key tool to inform the debate about revenues received from extractives to the state, as well as to local levels of government. Notable highlights from the report include:

  • While in 2011 total payments amounted to KMNT 2,150,734,000 (US $1.73 billion, or 21% of GDP), these decreased to KMNT 1,594,114,641 (US $1.20 billion, or 18% of GDP) in 2012. This constitutes a 26% drop in income in the national currency. This was mostly due to falling commodity prices (copper, coal, oil) from 2011 to 2012.
  • Payments to local governments amounted to KMNT 92,841,103, or US $70m.
  • The Erdenet and the Oyu Tolgoi copper mines together constituted 45% of total revenue. 
  • Oil production increased by 42% from 2011 to 2012 and currently stands at 3.6m barrels / year, with Petro China production responsible for 6.6% of revenue. Oil production is forecast to grow by more than 10% per year.
  • Mongolia has aimed to address more of the concerns citizens have about the environmental aspects of natural resource extraction through its EITI reports. This extended to the 2012 report, which:
    • Disclosed expenses by extractives companies for environmental protection. Companies are required by law to pay an advance for costs for environmental protection into the Environmental Protection Special Fund, special bank accounts held by government (state and aimag). In 2012, 45 companies out of 200 made deposits of MNT 1,413,848,000 (roughly US$ 800,000) to this Fund. Also, possible refunds provided by the state are reported.
    • Made public the findings from the “survey on environmental protection and remediation activities”. These included an indication of technical remediation; top soil remediation; biological remediation; and declared cost of work performed by extractives companies.

By disclosing detailed information about what is being done to remedy the environmental effects of mining, Mongolia EITI hopes to encourage informed discussions about the benefits and challenges with how its natural resources are being managed.

Download Mongolia's 2012 EITI Report

For further information about EITI in Mongolia, visit the country page on the EITI website.