Mining projects expected to boost export revenue by 10 trillion MNT
During the parliamentary plenary session on April 1, Minister of Mining and Heavy Industry G.Yondon reported on the development policy, reforms and measures to be taken in the minerals sector in the future.
The mineral sector currently accounts for 24 percent of the GDP of Mongolia, 67 percent of the industrial sector, 93 percent of exports, and about 30 percent of the state budget revenue, according to the minister.
He said, “Global trends show that we need to determine the future of the mineral sector based on the development of consumptionbased industries. Today, coal consumption, which accounts for the majority of Mongolia’s state budget revenue, is expected to decline due to climate change, air pollution, and increased energy consumption. In the future, the global use of renewable energy and electric vehicles is projected to increase copper consumption by two to three times, the use of rare-earth elements by six to seven times, and the demand for steel is expected to increase by 1.5 times by 2050.”
Minister G.Yondon also highlighted that based on global trends, demands and needs of mineral resources, the sectoral policy has been defined as “exploration-mining-processing-sales-distribution”. Under the policy, the ministry aims to update the relevant legal environment, increase investment, intensify domestic mineral extraction and processing, and produce value-added final products while adhering to the principles of openness and transparency.
Under the “Vision-2050” long-term development policy and the Government Action Plan for 2020 through 2024, geological exploration work is being carried out with public and private investment to determine the geological formation of the territory and prospects for mineral resources, assess mineral resources, and identify mineral deposits required for large infrastructure and industrial development, he informed.
The mining minister further explained, “By steadily increasing funding for geological surveys, we will be able to assess the prospects of mineral exploration and increase opportunities for further exploration. We are working to increase public and private investment and create a favorable legal environment in order to determine the prospects of high-tech raw materials and rare-earth elements and discover new deposits.”
Today, Mongolia mines and processes more than 10 types of mining products such as coal, copper, iron ore, gold, fluorspar and zinc for export. By the end of 2021, the country had extracted 30.1 million tons of coal, 1.3 million tons of copper concentrate, 19 tons of gold, 6,300 tons of molybdenum concentrate, 3.7 million tons of iron concentrate, 118,300 tons of fluorspar, 60,300 tons of fluorspar concentrate, 75,200 tons of zinc concentrate and 9.2 million tons of iron ore.
The Ministry of Mining and Heavy Industry is implementing large-scale projects such as the Oyu Tolgoi underground mine and Tavan Tolgoi complex projects, as well as Tsagaan Suvarga, Zuun Tsagaan Del, Asgat, Bayankhundii and Altantsagaan Ovoo projects. By completing these projects, the export of copper concentrate can be tripled and the export of coal is expected to increase two to three times, G.Yondon emphasized.
The implementation of the projects planned under the Industrial Recovery Policy is projected to produce 1.3 million tons of oil products domestically and reduce imports by 55 to 60 percent. Moreover, the government views that these projects will boost export revenue by about 10 trillion MNT, state budget revenue by 1.2 trillion MNT, grow the national economy by more than 20 percent, and create about 6,500 new jobs.
The ministry is developing bills on minerals, mining products exchange, national wealth fund and heavy industry.
The Minerals Law is planned for revision in line with the 2019 amendments to the Constitution. The ministry is drafting it to eliminate duplications, gaps and violations of laws in the mineral resources sector, bring sector reforms in line with international best practices and establish an accountability system.
The bill addresses issues such as the exploration of natural resources, rational use and processing of industrial methods, environmental protection, coordination between local people, investors and other stakeholders, increasing social and economic benefits, and equitable distribution of natural resources to all citizens.
Minister G.Yondon promised to establish a system of openness, oversight and accountability at all stages of mining operations, and further strengthen regulations based on international best practices, such as increasing public participation and transparency.
Meanwhile, the bill on heavy industry is expected to support enterprises operating in the sector and regulate heavy industrial activities. With the adoption of the bill, the government will be able to support the development of the industry through integrated government policies such as investment taxation and human resources in order to increase export-oriented and value-added production, G.Yondon says. In general, this is likely to facilitate economic growth.
“The main principle of the bill on national wealth fund is to centralize the benefits of subsoil resources, to finance financially efficient projects and programs, and to establish a system to create capital accumulation. Implementation of this law will have a positive impact on budget revenues by ensuring financial market stability, stabilizing the exchange rate, raising Mongolia’s credit rating, improving the governance and profitability of stateowned companies, and providing equal and fair returns to the sector,” the minister noted.
He also mentioned that the implementation of the above-mentioned activities will have a wide range of benefits, such as equal distribution of mineral resources to every citizen, improved investment and business environments, higher value of mining products and faster development of other economic and financial sectors.