The Long Name Law Should Go!
September 19 (National Securities) Proposed changes to the "Law to Prohibit Mineral Explorations and Mining Operations at Headwaters of Rivers, Protected Zones of Water Reservoirs and Forested Areas (the 'Long Name Law'), which are being discussed at the extraordinary parliamentary session; have been the cause of protestors actions, including an attempted armed entry of the national Parliament building by several nationalistic group members.
National Securities believes it is necessary for the government to repeal the law, which was approved in 2009, and has restricted any mining activities near rivers, forests and protected areas. In effect it has taken away licenses from many mining companies and left most of them with no compensation for the losses incurred. Mongolia has proven it can repeal ill-thought out and hastily approved laws, having removed the 2006, 68% Windfall Mining Tax in 2009. We believe this can and will occur again for the 'Long Name Law'.
Since the adoption of the law it has done nothing but encourage illegal mining activities by so-called "ninjas" and resulted in a draining of the gold reserves of Mongol Bank from 25 to 2 tons since 2005. Much of the previously transparent gold market has gone under-ground. It has also resulted moreover, in environmental damage that remains after the illegal operators pack-up and leave without repairing mining sites back to legally required standards. This must be changed or much damage will be done to the environment with dire consequences on traditional life and the tourism industry.
Historically, Mongolian gold mining has been conducted in the river basins and forested areas for over 40 years, with technologies that were proven to be safe for the environment. Most of the gold reserves found in Mongolian are placer and hard rock deposits, mostly found in formations near river basins. If the law is to remain un-changed, an estimated 30,000 tons of placer and 90,000 tons of hard rock deposits will remain un-tapped.
Most people are aware that the mining sector will drive Mongolian economic growth and general development, as it accounts for 20% of the GDP, 40% of the budget revenue, 85 % of the total FDI flows and almost 90% of the total industrial exports of the country. Thus, any constructive repealing or fundamental changes to the 'Long Name Law' and introduction of a NEW FDI law, which is also under discussion at this extra-ordinary session of parliament, would be welcome.
These positive changes could include:
1. No differentiation between domestic or foreign investors
2. Laws only be change-able if more than 2/3 of the Parliament Members vote for change
3. No strategic industry classification
4. Foreign investors to be classified only as state and private
5. Give tax exemptions and discounts in order to attract specific types of investment
6. Establishment of an Investment and Business Development Agency to actively promote Mongolia as a FDI location
These are just the first steps that the Mongolian government is (and must) take in order to correct a string of recent policy and legislative mistakes made in the mad rush to appeal to populist interest groups and the reality of political life – elections, that were to elect parliament and the Prime-Minister in June, 2012 and the recent July 2013, Presidential election.
These changes and repealing of the above-mentioned laws could be seen as the catalyst for a change in perception and reality that Mongolia is playing for real and maturing. It may well be looked back upon as the time that politics matured in Mongolia and built a road for long-term, strong growth that can benefit all and not just the ruling elite.
Link to report
Mogi: This is a recommendation memo on the proposed amendment to the "Law with the Long Name", protesting the unfair, biased changes being introduced from the Mongolian National Mining Association, Mongolian Geological Association, Mongolian Industrial Geologists' Association, Mongolian Drillers' Association, Mongolian Steel Producers' Association, and the Mongolian Geophysicists' Association.
National Securities believes it is necessary for the government to repeal the law, which was approved in 2009, and has restricted any mining activities near rivers, forests and protected areas. In effect it has taken away licenses from many mining companies and left most of them with no compensation for the losses incurred. Mongolia has proven it can repeal ill-thought out and hastily approved laws, having removed the 2006, 68% Windfall Mining Tax in 2009. We believe this can and will occur again for the 'Long Name Law'.
Since the adoption of the law it has done nothing but encourage illegal mining activities by so-called "ninjas" and resulted in a draining of the gold reserves of Mongol Bank from 25 to 2 tons since 2005. Much of the previously transparent gold market has gone under-ground. It has also resulted moreover, in environmental damage that remains after the illegal operators pack-up and leave without repairing mining sites back to legally required standards. This must be changed or much damage will be done to the environment with dire consequences on traditional life and the tourism industry.
Historically, Mongolian gold mining has been conducted in the river basins and forested areas for over 40 years, with technologies that were proven to be safe for the environment. Most of the gold reserves found in Mongolian are placer and hard rock deposits, mostly found in formations near river basins. If the law is to remain un-changed, an estimated 30,000 tons of placer and 90,000 tons of hard rock deposits will remain un-tapped.
Most people are aware that the mining sector will drive Mongolian economic growth and general development, as it accounts for 20% of the GDP, 40% of the budget revenue, 85 % of the total FDI flows and almost 90% of the total industrial exports of the country. Thus, any constructive repealing or fundamental changes to the 'Long Name Law' and introduction of a NEW FDI law, which is also under discussion at this extra-ordinary session of parliament, would be welcome.
These positive changes could include:
1. No differentiation between domestic or foreign investors
2. Laws only be change-able if more than 2/3 of the Parliament Members vote for change
3. No strategic industry classification
4. Foreign investors to be classified only as state and private
5. Give tax exemptions and discounts in order to attract specific types of investment
6. Establishment of an Investment and Business Development Agency to actively promote Mongolia as a FDI location
These are just the first steps that the Mongolian government is (and must) take in order to correct a string of recent policy and legislative mistakes made in the mad rush to appeal to populist interest groups and the reality of political life – elections, that were to elect parliament and the Prime-Minister in June, 2012 and the recent July 2013, Presidential election.
These changes and repealing of the above-mentioned laws could be seen as the catalyst for a change in perception and reality that Mongolia is playing for real and maturing. It may well be looked back upon as the time that politics matured in Mongolia and built a road for long-term, strong growth that can benefit all and not just the ruling elite.
Link to report
Mogi: This is a recommendation memo on the proposed amendment to the "Law with the Long Name", protesting the unfair, biased changes being introduced from the Mongolian National Mining Association, Mongolian Geological Association, Mongolian Industrial Geologists' Association, Mongolian Drillers' Association, Mongolian Steel Producers' Association, and the Mongolian Geophysicists' Association.
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