Mongolia eases gold mining regulations to increase transparency and national reserve
During last week’s regular meeting of the government, the cabinet agreed to submit a bill that would ease and increase transparency in gold trading to stop illegal exportation and increase the nation’s gold reserve.
The cabinet agreed that the Law on Taxation for Products that Increase in Value, approved in 2006, has put a lot of tax pressure on gold miners and served as the primary reason behind illegal trading and exportation of gold, and tax evasion by gold mines. The illegal activities around gold mining have resulted in a steep fall in gold deposits at the Central Bank of Mongolia, as well as having a negative impact on the state currency reserves, as all currency in Mongolia is backed by gold reserves.
Studies show that before the law was passed in 2006, 77 tons of gold was mined nationwide. After four years of implementation of the law, gold mining dropped to 48 tons, a drop of 38 percent.
The value of gold has increased steadily for more than a decade and has been rising faster in recent years. Studies show that an ounce of gold was valued at less than 274 USD on the London Stock Exchange at the end of 2000. By the end of 2009, gold prices reached over 1,000 USD per ounce. By the end of 2012, gold prices rose to 1,657.50 USD but settled at around 1,300 – 1,400 USD in 2013.
Although gold prices are relatively high, analysts state that the only reason for a decline in gold
mining in Mongolia is due to the legal environment.
The cabinet concluded that gold mining and trade needs more transparency and efficiency as soon as possible, hence they pledged to petition for a new bill on gold mining with the parliament. According to the cabinet, the draft bill will decrease royalties on gold to 2.5 percent, down from a previous five percent, if sold to the Central Bank or any domestic commercial banks within five years of extraction. A study conducted by a government task force estimates the bill will increase gold production by 20 tons per annum which will drastically boost gold reserves.
The Central Bank of Mongolia was instructed to purchase and export gold, and made responsible for gold registry and estimation, as well as implementing a unified system that would regulate all gold mines to stop illegal gold trading.
Short URL: http://ubpost.mongolnews.mn/?p=5784
The cabinet agreed that the Law on Taxation for Products that Increase in Value, approved in 2006, has put a lot of tax pressure on gold miners and served as the primary reason behind illegal trading and exportation of gold, and tax evasion by gold mines. The illegal activities around gold mining have resulted in a steep fall in gold deposits at the Central Bank of Mongolia, as well as having a negative impact on the state currency reserves, as all currency in Mongolia is backed by gold reserves.
Studies show that before the law was passed in 2006, 77 tons of gold was mined nationwide. After four years of implementation of the law, gold mining dropped to 48 tons, a drop of 38 percent.
The value of gold has increased steadily for more than a decade and has been rising faster in recent years. Studies show that an ounce of gold was valued at less than 274 USD on the London Stock Exchange at the end of 2000. By the end of 2009, gold prices reached over 1,000 USD per ounce. By the end of 2012, gold prices rose to 1,657.50 USD but settled at around 1,300 – 1,400 USD in 2013.
Although gold prices are relatively high, analysts state that the only reason for a decline in gold
mining in Mongolia is due to the legal environment.
The cabinet concluded that gold mining and trade needs more transparency and efficiency as soon as possible, hence they pledged to petition for a new bill on gold mining with the parliament. According to the cabinet, the draft bill will decrease royalties on gold to 2.5 percent, down from a previous five percent, if sold to the Central Bank or any domestic commercial banks within five years of extraction. A study conducted by a government task force estimates the bill will increase gold production by 20 tons per annum which will drastically boost gold reserves.
The Central Bank of Mongolia was instructed to purchase and export gold, and made responsible for gold registry and estimation, as well as implementing a unified system that would regulate all gold mines to stop illegal gold trading.
Short URL: http://ubpost.mongolnews.mn/?p=5784
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