1. Optimizes Mining’s Contribution to Development

Implement a mining policy that attracts international mining investment by establishing clear mining ownership rights and a transparent legal and regulatory framework.  This would establish a transparent governance process, which in turn would encourage increased domestic and foreign investment in mining.  The result would be greater economic growth and development in Mongolia.

2. Benefits of Profit or Revenue versus State Ownership or Equity

The Government of Mongolia should evaluate the costs and benefits of purchasing an ownership or equity stake in mineral deposits of strategic importance. The ability to foster economic growth and development should be a primary objective in regulating the mining sector. A profit or revenue share with foreign operators is the ideal path that provides benefits to Mongolians and encourages continued investment in Mongolia. In contrast, seeking state ownership or an equity stake reduces government spending on needed in-country programs, deters domestic and foreign investors and means slower economic growth that weakens efforts to alleviate poverty.

3. Establish a Fair Taxation and Royalties Scheme

Implement a mining policy that establishes a system of fair taxation and a scheme to pay royalties that is even-handed and reflects the unique characteristics of the mining industry.  Mining operations are high risk, capital-intensive and are operated in remote locations with a finite life span. An effective taxation policy recognizes the need to balance the incentive to invest with appropriate tax gains and the Government should ensure an equitable sharing of the taxation of mineral resources.  Such schemes like the excessive Windfall Profits Tax supported by the Government will have a negative effect on the development of a meaningful mining sector. It could encourage investors to withdraw from Mongolia, thereby undermining the opportunity Mongolia’s mineral resources provide to increase growth and secure new tax revenues for the government.

4. Establish a Fair Regulatory Framework

Implement a mining policy that establishes a fair regulatory framework that recognizes that the commercial viability of a mining project is dependent upon the regulatory burden imposed on it by the host government. 

5. Provide for Infrastructure Development

The Government of Mongolia should invest in infrastructure development and engage in cost sharing with the prospective investors, as provided for in Investment Agreements. Mining projects are costly and require billions in investment over many years.  A mining prospect’s proximity to roads, railway and a power source has a major impact on the capital costs in the development of a mining project.  Development of infrastructure by the Government with the possible assistance and cooperation of affected mining companies will enable projects to become commercially viable and make a major contribution to economic growth.

6. Transparent Distribution of Benefits

Establish a process that is transparent to a representative cross-section of society including civil society and the private sector that will enable the Government to distribute revenue and royalties from the mining sector in a transparent and accountable manner.  It is important that local communities affected by mining operations see that they benefit directly from such operations.  Failure to do so can result in conflict with the local community, which can affect the commercial viability of the mining project.  A preferred way to achieve this is to have at least a portion of mineral royalties paid directly to local governments.

7. Best Practices on Environmental and Social Issues

Implement international best practices on labor and environment standards by both the Government of Mongolia and mining enterprises.  Policies should ensure protection of the environment, full regard for national labor laws and effective consultation and cooperation with local communities so the mining sector, Government and local communities can work hand-in-hand to achieve economic growth and preserve heritage.

8. Global Competitiveness

Implement policies to achieve global competitiveness in the mining industry.  Like other industries, mining enterprises need to be globally competitive to compete on global markets and to deliver full benefits to national economies and shareholders. Many countries are rich in mineral resources, but fail to benefit fully from them.  We encourage the Government of Mongolia to support and adopt a Minerals Law that achieves global competitiveness in mining and minerals exploration.  Failure to do so will put Mongolia squarely at the bottom with other minerals-rich, but poor, developing and transition economies.

9. Transparency and Accountability in Government

Implement good governance policies that will achieve transparency and accountability in government institutions and policies.  Achieving good governance that fosters the development of public policies that promote transparent government practices and accountability at all political levels will lead to economic growth and development for Mongolia.