MINERALS LAW OF MONGOLIA
June
5, 1997
Ulaanbaatar
CHAPTER ONE
General Provisions
Article 1. Purpose of
the law
The purpose of this law
is to regulate relations with respect to exploration, mining and
related activities within the territory of Mongolia.
Article 2. Legislation
on minerals
-
Mineral related
legislation consists of the Constitution of Mongolia, the Subsoil
Law, this law and other relevant legislation which is consistent
with those laws.
-
If an international
treaty to which Mongolia is a signatory is inconsistent with this
law, then the provisions of the international treaty shall prevail.
Article 3. Scope of
this law
This law shall regulate
relations with respect to exploration and mining of all types of
mineral resources except water, petroleum and natural gas.
Article 4. Definitions
In this law the following
terms shall have the following meaning:
-
"mineral"
means any usable naturally occurring mineral concentration that has
been formed on the surface or in the subsoil as the result of
geological evolutionary processes; -
"mining"
means the entire range of activities that include separating and
extracting minerals from the earth, course of water, ore stockpile
or tailings, increasing the concentration of their usable contents,
transforming these usable contents into marketable products, and
marketing and selling those products; -
"mining
license" means the right to conduct mining granted by the
Office of Geological and Mining Cadaster (OGMC) in accordance with
this law; -
"exploration
license" means the right to conduct exploration granted by the
OGMC in accordance with this law; -
“registration of
an application" means the official recording in the register
maintained by the OGMC of applications for exploration or mining
licenses and the transfer of such licenses; -
"license
cartographic register" means the official cartographic register
maintained by the OGMC showing the boundaries of areas subject to
mining and exploration licenses and any changes thereto; -
"prospecting"
means investigation to identify mineral concentration without
disturbing the subsoil through physical observation, rock sampling,
airborne surveys, and reviewing related geological and minerals
information; -
"exploration"
means activities carried out on and under the earth's surface for
the purpose of identifying the existence, location and quantity of
mineral concentration and determining the technical and commercial
feasibility of mining such mineral concentration. Exploration
includes trenching, digging, opening and closing pits, drilling,
removal and assaying of samples, pilot testing, geophysical surveys,
and remote sensing; -
"license fee"
means the payment that a license holder makes as provided in this
law in order to maintain the license effective; -
"license
holder" means the person to whom an exploration or mining
license has been granted or transferred in accordance with this law; -
"reserved area"
means an area which has been rendered temporarily unavailable for
grants of licenses pursuant to Article 7 of this law; -
"special needs
land" means land taken by authorized government entities
pursuant to the Land Law for special public needs where exploration
and mining are restricted or precluded; -
"mining area"
means the area granted under a mining license; -
"mining claim"
means a part of the earth in the form of an inverted pyramid whose
apex is the center of the earth and whose base is a mining area; -
"exploration
area" means the area granted under an exploration license; -
"exploration
claim" means a part of the earth in the form of an inverted
pyramid whose apex is the center of the earth and whose base is an
exploration area. -
“hard rock”
means mineral concentration that has been formed as a result of the
geological evolutionary processes and that is located in the same
subsoil from its creation. /This subparagraph was added by the
Law of December 27, 2001/ -
“plasser” means
mineral concentration that has separated from its first subsoil
location as a result of the depreciation and mechanic processes and
that is located as a separate surface after re-concentration. /This
subparagraph was added by the Law of December 27, 2001/
Article 5. Ownership
of minerals
-
The mineral
resources naturally occurring on and under the earth's surface and
in natural water courses in Mongolia are the property of the
State.
-
The State, as owner
of all mineral resources in Mongolia, has the right to grant
exploration and mining licenses to other persons in accordance with
the terms and conditions of this law.
Article 6. State
regulation
-
The State Ih Hural
shall have full authority with respect to the following matters:
-
establishing a
special regulatory regime for utilizing, storing and transporting
radioactive materials; -
establishing State
policy with respect to geology and mining; -
oversight of the
implementation by the Government of legislation with respect to
exploration and mining; -
deciding whether to
permit mineral exploration and mining on State specially protected
land.
-
The Government shall
have the following rights and duties:
-
enforcing
implementation of legislation with respect to exploration and mining
of minerals; -
implementing State
policy with respect to the development of the geology and mining
sectors; -
granting of
exploration and mining rights on State special needs land, except
State specially protected land; -
establishing and
maintaining an agency responsible for monitoring the mineral
legislation; /This subparagraph was re-edited by the Law of
September 1, 2000/ -
establishing and
maintaining a Geological and Mining Development Agency (GMDA)
responsible for conducting basic geological and mining surveys and
research, and the issuing and registering of licenses.
-
The State central
administrative body in charge of geology and mining shall have the
following rights and duties:
-
to develop and
implement State policy with respect to the development of the
geology and mining sectors; -
to reserve certain
areas for limited periods of time.
-
Local administrative
body shall have the following rights and duties:
-
to organize and
ensure the implementation of this law and regulations of higher
administrative bodies in their respective territories; -
to permit the use of
licensed areas for the purposes specified in the licenses, except
where exploration or mining is prohibited or restricted by
applicable legislation; -
to ensure and
monitor compliance by license holders of their obligations with
respect to environmental protection, health and safety regulations
for workers and local residents, and payment of their obligations to
the treasuries of local administrative bodies. Local administrative
bodies shall also have the right to request from license holders
information and reports with respect to the above matters.
-
The Government may
participate in exploration and mining of mineral resources only
through business entities in which the State holds interests. Such
entities shall have the same rights, and be subject to the same
obligations, as any other person under this law.
-
State administrative
bodies or officials, in their dealings with a holder of a license
issued under this law, may only establish conditions and terms and
request information and reports as authorized by applicable
legislation.
Article 7. Reserved
areas
-
The Government
member in charge of geology and mining may decide to establish
reserved areas for periods of up to three (3) years solely for the
following purposes:
1) to bring order and accuracy to the Register of licenses;
2) to resolve boundary disputes among license holders.
-
Within three (3)
business days following a decision by the Government member to
establish a reserved area, the Government member shall advise the
OGMC of the decision and publish an official public notice
containing the following information:
-
the name of the
aimag or capital city and soum or district where the reserved area
is located; -
the coordinates of
the reserved area; -
the purpose for
which the area has been reserved; -
the time period for
which the area has been reserved.
-
The OGMC shall
record the reserved area in the exploration license register, mining
license register and cartographic register.
-
Reserved areas shall
be released for the following reasons:
-
a decision by the
Government member to release the reserved area prior to expiration
of the original term for specified reasons; or -
expiration of the
term for which the reserved area had been reserved.
Article 8. Special
needs land with restrictions on exploration and mining
-
In the event that
the Government, or a local administration body, establishes a
special needs land in accordance with the Land law, a written notice
containing the following information shall be delivered to the OGMC
within ten (10) business days:
-
the name of the area
where the special needs land is established, the name of the aimag
or capital city and soum or district where the land is located; -
the coordinates of
the land; -
the purpose for
which the land has been taken for special needs; -
the time period for
which the land shall be used for special needs.
-
The OGMC shall
record the coordinates of special needs land in the exploration
license register, mining license register and cartographic register.
-
If a special needs
land overlaps entirely or in part with a territory covered by a
valid license, thus precluding further exploration or mining in such
overlapping area, the State administrative body that decided to
establish the special needs land shall assume an obligation to
compensate the license holder.
-
The amount of such
compensation, and the time for payment, shall be negotiated and
agreed to by the State administrative body that decided to establish
the special needs land and the affected license holder. If the
parties fail to reach agreement, then the amount of compensation and
time for payment shall be determined by a neutral party in
accordance with internationally recognized methods. The license
holder shall have the right to resume its activities if the
compensation is not timely paid in full.
-
Disputes with
respect to compensation shall be decided by a court.
CHAPTER TWO
Legal requirements for
conducting
exploration and mining
Article 9. Prospecting
-
Any individual or
legal entity shall have the right to conduct prospecting for
minerals within the territory of Mongolia, except within special
needs land areas, without a license. However, any person proposing
to conduct prospecting must notify the OGMC and local administrative
body and register its name and address and a description and
location of the area in which it proposes to conduct prospecting.
-
Disturbing the
subsoil while prospecting is prohibited.
-
Any person proposing
to conduct prospecting shall obtain permission of landowners or
land-possessors or land-users to enter their land.
Article
10. Eligibility for holding a license
-
Any Mongolian
citizen, foreign citizen, or legal person shall be entitled to hold
an exploration license (hereinafter referred to as “exploration
license”).
-
A mining license may
only be held by a legal person formed and operating under the laws
of Mongolia.
-
A license may only
be granted to one person .
Article
11. Prohibition on exploration and mining without a license
-
No person shall
conduct exploration for minerals covered by this law within the
territory of Mongolia without a valid license.
-
No person shall
conduct mining of minerals covered by this law within the territory
of Mongolia without a valid mining license.
-
The provisions of
this Article shall not apply to landowners or land-possessors who
utilize common minerals from their land for private and
noncommercial purposes. A list of common minerals that can be mined
without a license shall be approved by the Government.
-
Exploration license
holders shall disclose to the GMIA the quantity and quality of all
minerals recovered as a result of preliminary work done during
exploration activities, and upon approval by the professional
inspection institution, exploration license holders may sell such
minerals for commercial purposes. In such case, the exploration
license holders shall pay royalties and other relevant taxes as if
they were mining license holders. /This paragraph was amended by
the Law of September 1, 2000/
In
all other cases, exploration license holders shall have the right to
sell samples and other products recovered during exploration
activities only after obtaining a mining license or surrendering the
entire exploration claim.
Article 12. Rights of
exploration license holders
An exploration license
holder shall have the following rights:
-
the exclusive right
to conduct exploration for minerals within the boundaries of an
exploration claim in accordance with this law; -
the exclusive right
to obtain a mining license for any part of an exploration area upon
fulfilling the terms and conditions of this law; -
the right to
transfer or pledge all or part of an exploration license in
accordance with the terms and conditions of this law; -
the right to obtain
two extensions of the term of an exploration license for two (2)
years each, upon fulfilling the terms and conditions of this law; -
the right to have
access to, entry on, and transit through, the exploration area and a
right to construct temporary structures necessary for conducting
exploration activities; -
the right of entry
to and transit through the land adjacent to the exploration area for
the purpose of gaining access and entry to the exploration area; -
the right of entry
to and transit through land owned or used by other persons in order
to exercise the rights described in this Article. This right shall
be determined by a contract between the license holder and the
landowner or land-user in accordance with the provisions of the
Civil law.
Article
13. Requirements for obtaining an exploration license
-
A person seeking an
exploration license shall submit an application for the license to
the OGMC in accordance with the requirements of this Article.
-
The applicant must
be eligible to hold an exploration license in accordance with
paragraph 1 of Article 10 of this law.
-
Coordinates of all
corners of a requested exploration area shall be marked in degrees,
minutes and seconds on an official standard map prepared by the OGMC
and the map shall be attached to the application.
-
The requested
exploration area shall meet the following requirements:
-
the borders of the
exploration area must be straight lines oriented north-south and
east-west; -
no part of the
requested exploration area may overlap with a reserved area or a
special needs land area; -
at the time of
submission of the application no part of the requested exploration
area may overlap with an existing licensed area or an area covered
by a previously filed pending application for a license.
-
Notwithstanding the
provisions of this Article, the borders of an exploration area may
deviate from straight lines in order to avoid overlapping with:
-
national borders;
-
a reserved area;
-
a special needs land
area; -
an exploration or
mining license area granted before this law became effective having
a shape and orientation other than as provided under this law; -
lakes, ponds and
other natural geographic features that may be excluded from the
exploration area.
-
The size of an
exploration area shall be not less than twenty-five (25) hectares
and may not exceed four hundred thousand (400 000) hectares.
-
A person may hold
any number of exploration licenses.
Article 14. Granting
an exploration license
-
An exploration
license shall be granted to the first applicant who registers and
files an application for an exploration area in accordance with the
provisions of this law.
-
A person seeking an
exploration license shall submit an application to the OGMC in the
standard form approved by the OGMC. The following documents shall be
attached to the application:
-
the applicant's
name, mailing address for official correspondence, phone and fax
numbers and, in case of foreign citizens or legal persons, the name,
address, phone and fax numbers of the authorized representative of
the applicant in Mongolia; -
in the case of an
individual applicant, a copy of the applicant's passport and, as
applicable, visa; -
in case of a legal
person, a certificate of valid existence and good standing issued by
the jurisdiction under the laws of which the entity was established.
If the certificate is in a foreign language, it must be accompanied
by a translation into Mongolian. -
an exploration area
map prepared in accordance with the requirements of Article 13 of
this law. The map shall contain the name of the aimag or capital
city and soum or district in which the exploration area is located. -
a document showing
that the applicant has paid the application processing fee
established by the Government member in charge of geology and
mining.
-
Any application that
does not meet the requirements of paragraph 2 of this Article shall
not be accepted by the OGMC.
-
Upon the receipt of
a complete application, together with the attachments specified in
paragraph 2 of this Article, the OGMC official responsible for the
application register shall register the application in the
application register, specify the record number, date, hour and
minute of filing on each page, and issue the applicant a receipt
acknowledging the filing of the application and payment of the
applicable fee.
-
At the end of each
business day, the OGMC official responsible for recording
applications shall make a written indication of the last recorded
application in the application register book and sign the page.
-
Immediately
following the recording of the filing of an application, the OGMC
shall determine by a preliminary screening whether the application
meets the requirements specified in paragraphs 2, 3 and
subparagraph 1 and 5 of paragraph 4 and paragraph 6 of Article 13,
and paragraph 2 of this Article.
-
If an application
fails to meet the requirements of paragraph 6 of this Article, the
OGMC shall, within two (2) business days, notify the applicant of
the defects in the application and record the notice in the
application register book, whereupon the application shall be deemed
to be deleted from the application register.
-
As promptly as
possible following the preliminary screening, the OGMC shall
determine whether the requested exploration area overlaps with any
reserved area, special needs land, or any area covered by a
previously issued valid license or previously filed pending
application for a license.
-
Within ten (10)
business days following the registration of an application for an
exploration license, the head of the OGMC shall take one of the
following decisions and notify the applicant accordingly:
1) If the requested area does not overlap with any part of a
reserved area, special needs land, or any area subject to a
valid exploration license, or any area requested in a pending
application for an exploration license filed and registered prior to
the
application, that the requested exploration claim is
granted to the applicant, and the applicant is required to pay
the first year’s license fee within the time period
specified in paragraph 1 of Article 25 of this law.
2) The application is rejected and deemed to be removed from the
register because of a complete or partial overlap with one of
the following areas:
a) a special needs land;
b) a reserved area; or
c) an area subject to a valid license.
3) The application is rejected and deemed to be removed from the
register because of a complete overlap with an area requested in
a pending application for a license filed prior to the
application.
4) If the requested area partially overlaps with an area requested
in a pending
application for a license filed and registered prior to the
application, then an
exploration license may be granted for the part of the
requested area which does not overlap.
-
If an applicant
receives a notice pursuant to subparagraph 4 of paragraph 9 of this
Article, such applicant may, within three (3) business days
following receipt of such notice, divide the available area into
several areas of the shape, location and size as specified in this
law and file a separate additional application for each such area.
Upon registration of each such application with the OGMC, each such
application shall be deemed approved as provided in subparagraph 1
of paragraph 9 of this Article.
-
If an applicant who
has received an exploration license approval notice in accordance
with paragraphs 9 and 10 of this Article fails to pay the first
year’s exploration license fee on a timely basis, the application
shall be removed from the register book and the notice granting the
requested exploration area shall be deemed rescinded.
-
Within three (3)
business days after payment by the applicant of the first year's
exploration license fee, the OGMC shall issue an exploration license
for a period of three (3) years and record the license and the
exploration area in the license register and license cartographic
register.
-
A license
certificate shall contain the date of issuance, the license holder's
name, the coordinates of the area covered by the license, and an
attachment in which all subsequent changes with respect to the
license shall be recorded.
-
Immediately
following the grant of an exploration license, the OGMC shall notify
the GMDA and publish an official notice informing the public of the
granting of the license.
Article 15. Extension
of the term of an exploration license
-
Not less than thirty
(30) days prior to the expiration of an exploration license, the
license holder may apply for an extension of the term of the license
by filing with the OGMC an application for such extension on the
standard form published by the OGMC. The following documents shall
be attached to the application:
-
the exploration
license certificate; -
receipts for license
fee payments made by the license holder; -
a certificate of
inspection evidencing implementation of the license holder's
environmental protection plan in accordance with Article 31 of this
law.
-
Within ten (10)
business days following the receipt of an application for extension,
the OGMC shall verify whether the license holder has complied with
conditions for maintaining its eligibility to hold a license and
shall record this fact in the license register book.
-
Within ten (10)
business days following the receipt of an application for extension,
the OGMC shall extend the term of the exploration license and
record the extension in the license register book. The license that
has been extended shall then be returned to the license holder.
-
Immediately
following the grant of an extension of an exploration license, the
OGMC shall notify the GMDA and publish an official notice informing
the public of the granting of the extension.
Article 16. Rights of
mining license holders
A mining license holder
shall have the following rights:
-
the exclusive right
to engage in mining of minerals within the mining claim in
accordance with the provisions of this law; -
the right to manage
its operations and market its products, subject to compliance with
the requirements of Chapter 4 of this law; -
the right to sell
mineral products from the mining claim at market prices on domestic
and foreign markets, subject to compliance with the requirements of
Chapter 4 of this law; -
the exclusive right
to conduct exploration for minerals within the mining claim; -
the right to
transfer and pledge all or part of the mining license in accordance
with provisions of this law; -
the right to extend
the term of the mining license once for a period of forty (40)
years; -
the right of entry
to and transit through the mining area, use of the mining area, the
right to construct necessary structures, and the right to conduct
other activities related to mining and exploration; -
the right of entry
to and transit through the land adjacent to the mining area; -
the right of entry
to and transit through land owned or used by other persons in order
to exercise the rights described in this Article. This right shall
be determined by a contract between the license holder and the
landowner or land-user in accordance with the provisions of the
Civil law; -
the right to use
water, subject to compliance with applicable laws.
Article 17.
Requirements for obtaining a mining license
-
An applicant for a
mining license must be eligible to hold a mining license in
accordance with paragraph 2 of Article 10 of this law.
-
In the case of areas
covered by a valid exploration license, only the exploration license
holder may apply for a mining license. In other cases, a mining
license shall be granted to the first applicant whose application
meets the requirements under this law and is registered with the
OGMC.
-
The applicant shall
set forth the coordinates of all corners of the requested mining
area in degrees, minutes and seconds on a standard map approved by
the OGMC and attach the map to the application.
-
A requested mining
area shall meet the following requirements:
-
a requested mining
area shall have the shape of a polygon with borders that are
straight lines, not less than 500 meters in length, oriented
north-south and east-west; -
a requested mining
area may not overlap with a reserved area or special needs land; -
at the time of
submission of the application a requested mining area shall not
overlap with an area covered by a valid license or an area requested
in a pending application for a license.
-
The borders of a
mining license area may deviate from straight lines in the case of
borders with following areas:
-
national borders;
-
a reserved area;
-
a special needs land
area; -
a mining license
area granted under the prior minerals law having a shape and
location that do not conform with the requirements of this law and
natural geographic features, such as lakes and ponds, that may be
excluded from the mining area.
Article
18. Procedure for granting a mining license
-
An applicant for a mining license shall submit an application to the
OGMC on the standard form approved by the OGMC. The following
documents shall be attached to the application:
-
the applicant’s name, mailing address for official correspondence,
phone and fax numbers and a certificate containing the name of its
officer authorized to make decisions; -
if the applicant is a business entity, a certificate of valid
existence as a business entity in Mongolia issued by the appropriate
registration agency; -
a map of the area prepared in accordance with the requirements of
paragraph 3 of Article 17 of this law. The map shall contain the
name of the aimag or capital city and soum or district in which the
area is located. -
a document showing that the applicant has paid the application
processing fee established by the Government member in charge of
geology and mining.
-
The OGMC shall
reject any application that fails to meet the requirements set forth
in paragraph 1 of this Article.
-
Upon the receipt of
a complete application, together with the attachments specified in
paragraph 1 of this Article, the OGMC official responsible for the
application register shall register the application in the
application register and specify the record number, date, hour and
minute of filing on each page, and issue the applicant a receipt
acknowledging the filing of the application and payment of the
applicable fee. At the end of each business day, the OGMC official
responsible for recording applications shall make a written
indication of the last recorded application in the application
register book and sign the page.
-
Immediately
following the recording of an application, the OGMC shall determine
by a preliminary screening whether the application and attached
documents meet the requirements specified in paragraph 1 of this
Article and paragraphs 1 and 3 of Article 17. If an application
fails to meet the above-noted requirements, the OGMC shall notify
the applicant of the defects in the application and record the
notice in the application register book, whereupon the application
shall be deemed to be removed from the application register.
-
Within two (2)
business days after the registration of an application for a mining
license, the OGMC shall determine:
-
in the case of an
application submitted by the exploration license holder covering the
requested mining area, whether such area is located entirely within
the boundaries of the area covered by the exploration license; -
whether the requested mining area overlaps with any area already
subject to a valid license or any area that is the subject of a
pending license application; -
whether the requested mining area overlaps with a reserved area or a
special needs land.
-
Within twenty (20) business days following the registration of an
application for a mining license, the head of the OGMC shall take
one of the following decisions and notify the applicant accordingly:
-
in the case of an application submitted by the exploration license
holder covering the requested area, that an exclusive mining license
has been granted to the applicant and require the applicant to
timely pay the applicable fee for the first year of the license as
provided in this law; -
if the requested area does not overlap with any part of a special
needs land with prohibition on mining, or any area subject to a
valid license, or any area requested in a pending application for a
license filed and registered prior to the application, that the
requested mining area is granted and the applicant is required to
pay the applicable fee for the first year of the license as provided
in this law; -
if the requested area overlaps in any way with a special needs land
with prohibition on mining, or any area subject to a valid license,
or any area requested in a pending application for a license filed
and registered prior to the application, that the application is
rejected and deemed to be removed from the register.
-
If the applicant who has received a mining license approval notice
in accordance with subparagraphs 1 and 2 of paragraph 6 of this
Article fails to pay the first year’s license fee on a timely
basis, that the application is rejected and removed from the
application register, and that the decision granting the mining
claim is rescinded.
-
Within three (3) business days following payment of the license fee
for the first year, the OGMC shall issue a mining license to the
applicant for a term of sixty (60) years and shall register the
license and mining area in the license register and license
cartographic register.
-
A license certificate shall contain date of issuance, the name of
the license holder, the coordinates of the granted area, and an
attachment in which all subsequent changes with respect to the
license shall be recorded.
-
Within seven (7) business days following the decision to grant a
mining license, the OGMC shall notify the professional inspection
institution and GMDA and publish an official notice informing the
public of the granting of the license. /This subparagraph was
amended by the Law of September 1, 2000/
Article
19. Extension of the term of a mining license
-
Not less than two (2) years prior to the expiration of a mining
license, the license holder may file an application with the OGMC on
the standard form specified by the OGMC for an extension of the
mining license. The following documents shall be attached to the
application:
-
the mining license certificate;
-
receipts for license fee payments made by the license holder;
-
a certificate of inspection evidencing implementation of the
environmental protection program in accordance with Article 31 of
this law.
-
Upon filing of an application for an extension of a mining license,
the applicant shall pay the processing fee established by the
Government member in charge of geology and mining.
-
Within ten (10) business days following the receipt of an
application for extension of a mining license, the OGMC shall verify
whether the license holder has complied with the conditions for
maintaining its eligibility to hold the license.
-
Within ten (10) business days following the receipt of an
application for extension of a mining license, the OGMC shall record
the application in the application register. The license certificate
that has been extended shall then be returned to the license holder.
-
Within seven (7) business days following the decision to extend the
mining license, the OGMC shall notify the GMDA, publish an official
notice informing the public of the granting of the extension.
Article
20. Stability agreements
-
If a mining license holder undertakes to invest in its mining
project in Mongolia no less than two (2) million US Dollars for the
first five (5) years of the project, and if the mining license
holder submits an application to enter into a stability agreement,
then the Government of Mongolia, acting through the Minister of
Finance, shall enter into such a stability agreement providing
guarantees for a long term stable environment for such mining
license holder.
-
The form of the stability agreement shall be approved by the
Government and shall contain provisions regarding the stability of
tax rates for a definite time period, the right of the license
holder to export and sell its products at international market
prices, a guarantee that the license holder may receive and dispose
of hard currency income derived from such sales, and provisions with
respect to the purpose, amount, and term of the license holder’s
investment.
-
Within twenty (20) business days following the receipt by the
Minister of Finance of the application and draft of the stability
agreement, the Minister shall determine whether or not further
clarification is required. If the Minister determines that no
further clarification is required, the Minister shall enter into the
stability agreement with the applicant.
-
If the amount of the initial investment in the Mongolian mining
project is no less than two (2) million US Dollars, the term of the
stability agreement may be ten (10) years. If such investment is no
less than twenty (20) million US Dollars, the term of the stability
agreement may be fifteen (15) years.
Article
21. Procedure for concluding a stability agreement
-
The license holder interested in concluding a stability agreement
shall submit its application and draft agreement to the Ministry of
Finance. An investment program, specifying the amounts to be
invested within the first five (5) years, and the proposed term of
the project, shall be attached to the application. If further
clarification or amendment is required, the applicant shall be
informed within seven (7) business days.
-
Upon signing the stability agreement by the Minister of Finance,
notice of the terms and conditions of the agreement shall be
delivered to the Mongolbank (Central Bank of Mongolia) and other
relevant authorities.
CHAPTER
THREE
Conditions
for maintaining eligibility to
hold
exploration and mining licenses
Article
22. Maintaining the eligibility to hold exploration and mining
licenses
A
license holder must comply on a timely basis with the conditions set
forth in this Chapter, and failure to comply with any of these
conditions shall constitute grounds for cancellation of the holder's
license pursuant to Article 47 of this law.
Article
23. Maintaining the legal status to hold exploration and mining
licenses
Any
license holder shall at all times during the terms of the license
maintain its legal status to hold the license in accordance with
Article 10 of this law.
Article
24. License fees
-
Holders of exploration and mining licenses shall pay license fees
annually as set forth in this Article.
-
Exploration license fees shall be payable with respect to each
hectare included within the exploration area at the following rates:
-
US$ 0.05 for the first year, and US$ 0.1 for each of the second and
third years of the term of the exploration license; -
US$ 1.00 for each of the fourth and fifth years of the term of the
exploration license; -
US$ 1.50 for each of the sixth and seventh years of the term of the
exploration license.
-
Mining license fees shall be payable with respect to each hectare
included within the mining area at the following rates:
-
US$ 5.00 for each of the first three years of the term of the
license; -
US$ 7.50 for each of the fourth and fifth years of the term of the
license; -
US$ 10.00 for each year of the term of the license commencing from
the sixth year.
Article 25. Payment of license fees
-
License fees for the first year shall be paid within ten (10)
business days after the license holder receives the notice specified
in subparagraph 1 of paragraph 9 of Article 14 and subparagraphs 1
and 2 of paragraph 6 of Article 18 of this law.
-
License fees for subsequent years shall be payable annually in
advance, on or before the anniversary date of the issuance of the
license.
-
The amount of the license fee shall be calculated on the basis of
the measurements of the license area as registered in the register
of licenses of the OGMC and the amount of the fee shall not change
for the particular year.
-
No exploration license fees shall be payable with respect to a
mining area located within an exploration area.
-
The license fee shall be deemed paid upon receipt by the OGMC of
documents certifying the payment of the fees.
-
A license holder shall have an obligation to pay applicable license
fees within the term specified in paragraph 1 of this Article and no
notice or invoice with respect to such fees shall be sent to the
license holder.
CHAPTER
FOUR
Obligations of license holders
while carrying out their activities
Article
26. General obligations of license holders while carrying out their
activities
While
carrying out their activities a license holder shall comply with
general obligations set forth in this Chapter. Failure to comply
with the general obligations set forth in this Chapter will subject
the license holder to the penalties set forth in Chapter 8 of this
law.
Article
27. Establishing the boundaries and marking the area held under a
mining license
-
Within ninety (90) business days following the registration of the
mining license in the register of licenses, the mining license
holder shall establish the boundaries and mark the approved mining
area by permanent markers in accordance with technical requirements
specified by the GMIA. The establishment of the boundaries of the
mining area shall be performed by a professional expert accredited
by the OGMC, who shall file a report with the OGMC upon completion
of the establishment of the boundaries.
-
A mining license holder shall preserve the markers and adjust and
replace the markers upon extension of the license or any
reorganization within the area in accordance with decisions of the
OGMC.
Article 28. Environmental protection
-
An exploration license holder has an obligation to comply with
environmental laws in effect and with the environmental protection
provisions of this law.
-
A license holder may not commence exploration or mining operations
without first obtaining written approvals from relevant
environmental protection authorities pursuant to this law.
Article
29. Environmental protection obligations of exploration license
holders
-
After consultation with the environmental inspection agency and
local administrative bodies, exploration license holders shall
prepare an environmental protection plan within thirty (30) days
following the receipt of an exploration license.
-
The environmental protection plan shall provide for measures to
ensure that pollution of the environment as a result of the
exploration activity does not exceed maximum limits and that the
exploration area will be rehabilitated by means of backfilling,
plugging, and cultivation to allow future utilization of the
disturbed land for public purposes.
-
The environmental protection plan shall be submitted to and approved
by the Governor of the relevant soum or district where the
exploration claim is located. The Governor of the soum or district
shall make a decision with respect to the plan within ten (10)
business days following receipt of the plan, and notify the license
holder of the decision by an official letter.
-
Upon approval of the environmental protection plan, the license
holder shall provide a copy of the plan to the local environmental
inspection organization and professional inspection institution.
/This paragraph was amended by the Law of September 1, 2000/
-
The license holder shall record all instances of adverse
environmental impact resulting from the exploration activity and
submit annual reports with respect to the environmental protection
plan to the Governor of the relevant aimag or capital city and soum
or district. These reports shall contain information on measures
taken to protect the environment and on the possible impact on the
environment of new exploration machinery and technology, and
proposed amendments to the environmental protection plan. All
amendments to the environmental protection plan shall be approved by
the Governor of the relevant soum or district.
-
A license holder shall provide officials in charge of monitoring
implementation of the laws on environmental protection and local
administrative body representatives with an opportunity to enter the
exploration area to conduct monitoring activities on the site.
-
To ensure the discharge of its responsibilities with respect to
environmental protection, an exploration license holder shall
deposit an amount equal to 50 % of its environmental protection
budget in a special bank account established by the Governor of the
relevant soum or district. This deposit shall be refunded to the
license holder upon full implementation of its environmental
protection plan .
-
If a license holder fails to fully implement the measures provided
for in the environmental protection plan, the Governor of the
relevant soum or district shall use the deposit to enable the
license holder to complete these measures, and if the deposit is not
enough to cover the costs of environmental protection and
rehabilitation activities, the license holder shall provide the
required additional funds.
Article
30. Environmental protection obligations of mining license
holders
-
An environmental impact assessment and an environmental protection
plan shall be prepared by a mining license holder in accordance with
applicable laws as soon as possible before or after receiving a
mining license.
-
The environmental impact assessment shall identify the possible
adverse environmental impact from the proposed mining operations on
land, water, air, plant, animal, and human life and shall include
preventive measures to avoid and minimize such adverse impact.
-
The environmental protection plan shall contain measures to ensure
that mining operations are conducted in a least damaging way to the
environment. The plan shall also identify preventive measures to
protect air and water quality, and human, animal and plant life from
the adverse effects of mining operations in accordance with the
regulations adopted by the State central administrative body in
charge of the environment.
-
An environmental protection plan must include measures with the
respect to the following issues:
1) storage and control of toxic and potentially toxic substances and
materials;
2) protection, utilization and conservation of surface water and
groundwater;
3) if necessary, construction, utilization and safekeeping of
tailings dams;
4) other measures as may be appropriate for the particular type of a
mining operation.
-
The environmental protection plan shall also provide for post-mining
rehabilitation measures through backfilling, plugging, and
cultivation to allow future utilization of the disturbed land for
public purposes.
-
The environmental impact assessment and environmental protection
plan shall be submitted to the State central administrative body in
charge of environment and to the Governor of the relevant soum or
district. The State central administrative body in charge of
environment shall review these documents and notify the license
holder of its decision within thirty (30) days after receiving such
documents.
-
Upon approval of the environmental impact assessment and the
environmental protection plan, the license holder shall deliver the
documents to the local environmental monitoring organization where
the mineral deposit is located.
-
Mining license holders shall record all instances of adverse
environmental impact resulting from mining activity, prepare and
send a copy of annual reports on the implementation of the
environment protection plan to the State central administrative body
in charge of environment, the Governor of any relevant aimag or
capital city and soum or district, and the GMIA, respectively. These
reports shall contain information on measures taken to protect the
environment and on the possible impact on the environment of new
machinery and technology, or the expansion of mining operations, and
proposed amendments to the environmental impact assessment and
environmental protection plan .
-
Amendments to the environmental protection plan may be made only
after the State central administrative body in charge of environment
approves the amendments.
-
A mining license holder shall provide local and State central
administrative bodies officials in charge of monitoring
implementation of legislation on environmental protection, an
opportunity to enter the mining claim area and to conduct monitoring
activities on the site.
-
To ensure the discharge of its responsibilities with respect to
environmental protection, a mining license holder shall deposit an
amount equal to 50 % of its environmental protection budget for a
particular year in a special bank account established by the
Governor of the relevant soum or district. This deposit shall be
refunded to the license holder upon full implementation of the
environmental protection plan .
-
If a mining license holder fails to fully implement the measures
provided for in the environmental protection plan, the Governor of
the relevant soum or district shall use the deposit to enable the
license holder to complete these measures, and if the deposit is not
enough to cover the costs of environmental protection and
rehabilitation activities, the license holder shall provide the
required additional funds.
Article
31. Review of environmental protection plan in connection with
extensions of licenses
-
Exploration license holders applying for a license extension shall
submit for approval to the Governor of the relevant soum or
district, prior to the expiration of the exploration license, either
their revised environmental protection plan or a new environmental
protection plan .
-
Mining license holders applying for a license extension shall submit
to the State central administrative body in charge of environment a
new environmental impact assessment and a new environmental
protection plan.
-
The State central administrative body in charge of environment may
require the license holder to amend the environmental impact
assessment and environmental protection plan to reflect impacts from
the use of new machinery or technology or environmental impact not
foreseen in the approved environmental impact assessment or
environmental protection plan .
Article 32. Impact on local buildings and structures
License
holders shall fully compensate owners and users of private and public
residential dwellings, wells, winter huts, other structures, and
historic and cultural landmarks, for damages caused to these
structures by exploration or mining operations, including, if
necessary, relocation costs.
Article
33. Relations with local administrative bodies
-
License holders shall consult and coordinate their activities with
local administrative bodies in connection with environmental
protection, infrastructure development and employment development in
accordance with the provisions of this Article.
-
If a license holder deems it necessary, it may request the local
administrative body to organize a public debate in furtherance of
objectives referred to in paragraph 1 of this Article.
-
A license holder may select and employ a representative from among
the local residents to coordinate all the matters involving the
local administrative body.
Article 34.
Employment requirements
License holders shall
employ citizens of Mongolia in their exploration and mining
operations on a priority basis.
Article 35. Health
and safety standards
In conducting their
operations license holders shall comply with applicable laws so as
not to endanger the health and safety of workers and local residents.
Article 36.
Requirements for closure of a mine
-
Before closure of a
mine, mining license holders shall take preparatory measures
pursuant to regulations of the professional inspection institution
to protect the health and safety of local residents. License
holders shall inform the professional inspection institution by an
official letter that the mine shall be closed in whole or in part,
at least one year prior to any such closure, and the following
measures must be implemented during the preparatory period:
-
to take all
necessary measures to ensure safe use of the mining site and mining
claim for non-mining purposes and to protect the environment; -
to seal safely and
fence off the parts of the mining area that may be dangerous during
the use of the area for other purposes; -
to remove all
machinery, equipment and other property from the mining area except
as permitted by local administrative bodies or the professional
inspection institution. /This paragraph was amended by the Law of
September 1, 2000/
-
Mining license
holders shall prepare a detailed map on an appropriate scale showing
dangerous or potentially dangerous areas created by mining
operations.
Article 37.
Registration and sale of precious stones and metals
-
All precious stones
and metals extracted by mining license holders shall be assayed and
registered by the State assaying agency. Regulations on assaying
and registration of precious stones and metals, and a list of
minerals subject to assaying and registration, shall be published by
the Government.
-
Mongolbank shall pay
world market prices when purchasing precious stones and metals.
-
A mining license
holder shall have a right to export precious stones and metals only
through Mongolbank or authorized commercial banks.
Article 38. Royalties
-
A mining license
holder shall pay royalties to the treasuries of the central and
local administrative bodies on the sales value of all products
extracted from the mining claim that are sold, shipped for sale, or
used. /This paragraph was amended by the Law of December 27,
2001/
-
The sales value
shall be determined as follows:
-
for exported
products, the sales value shall be the average monthly prices of the
products, or similar products, based on regularly published
international market prices or on recognized principles of
international trade; -
for products sold or
used on the domestic market, the sales value shall be based on the
domestic market price for the particular or similar product; -
for products sold on
international or domestic markets, where it is impossible to
determine market prices, the sales value shall be based on the
revenue derived from the sale of the product as declared by the
license holder.
-
Royalties shall be
equal to 2.5 per cent of the sales value of all products extracted
from the mining claim that are sold, shipped for sale, or used.
Royalties shall be
equal to 7.5 per cent of the sales value of gold extracted from the
plasser that are
sold, shipped for sale, or used. /The second sentence of this
paragraph
was added by the Law
of December 27, 2001/
-
The license holder
shall pay royalties with respect to all extracted products that are
sold, shipped for sale or used during a calendar quarter before the
end of the next quarter.
-
The mining license
holder shall submit to the GMIA a quarterly report, in the form
approved by the GMIA and verified by the license holder’s
signature, indicating the quantity of products extracted and sold,
shipped for sale, or used during the relevant quarter, the total
value of the sales, and the basis of evaluation.
-
The Government shall
prepare, and periodically publish a list of commodity exchange
prices and related information, which shall be used for the purpose
of calculating the sales value of exported products.
Article 39. Submission
of information and reports
-
A license holder
shall prepare all information and reports specified in this Article
on a timely and accurate basis and submit copies of the information
and reports to the professional inspection institution and OGMC,
respectively. /This paragraph was amended by the Law of September
1, 2000/
-
An exploration
license holder shall submit the following information and reports:
-
a plan of
exploration activities shall be submitted within thirty (30) days
after the grant of the exploration license; -
annual reports on
exploration activities for the previous year shall be submitted in
the form approved by the Office of Geology within thirty (30) days
after the expiration of the relevant period;
The
report shall contain information on the amount of work completed and
expenses incurred in prospecting, geophysical and geochemical work,
drilling and other activities, information on the labor force, and
the results of the exploration work. A map indicating the places
where the work was done shall be attached to the report.
A copy
of the final report on the results of the exploration work and
original materials shall be submitted at no charge.
The
GMDA shall accept the estimates of the ore reserves submitted in the
report after receiving an opinion from a qualified expert and shall
include the ore reserves into the national register of reserves.
-
the information
reports on safe operations specified in Article 35 of this law.
-
The GMDA shall also
have a right to demand information and reports from the license
holder, even if such information or reports are incomplete.
-
A mining license
holder shall submit the following information and reports:
-
a feasibility study
on the exploitation of the deposit within sixty (60) days after
obtaining the mining license; -
estimated data with
respect to the next year’s production in the form approved by the
Mining Office not later than September of every year; -
a report on
activities of the previous year, in the form approved by the Mining
Office, shall be submitted by February 15 of the following year.
The report must contain the following:
-
number of work days,
number of employees, and all contracts affecting the license
holder’s right of ownership; -
information on
implementation of the mining plan, an estimate of changes in
reserves, time periods of operation of the mine, a general overview
of production facilities and any expansion or renovation of such
facilities; -
information on the
quantity of ore mined, the quantity of products produced, shipped
and sold, the price of the products sold, information with respect
to the purchasers, information on investments made during the year,
operating expenses, royalty payments and information with respect to
the equipment and technology used in mining operations and
information on other related properties.
-
a report on safe
operations as specified in Article 35 of this law.
-
A license holder
shall prepare a report on environmental protection as specified in
Article 30 of this law and submit it to the Governor of any relevant
aimag and soum or district.
CHAPTER
FIVE
Transfer
and mortgage of licenses
Article
40. Transfers of licenses.
-
A license holder may transfer the license to persons eligible to
hold a license by a transfer agreement or through legal processes
such as inheritance, merger of business entities, or bankruptcy. A
transfer of a license shall be recorded with the OGMC in accordance
with the provisions of this Article, and the transfer of a license
shall become effective upon such recording.
-
Either the transferor or the transferee of a license shall submit an
application for the recording of a license transfer to the OGMC, in
the form approved by the OGMC. The application shall contain the
following:
-
the license number, date of issuance, and the name of the license
holder as indicated in the records of the OGMC; -
a copy of the transfer agreement, or a court order with respect to
the bankruptcy of the license holder, a certificate of inheritance
from a deceased license holder, or a certificate of reorganization
of legal entities, or other legally binding documents evidencing a
valid transfer of the license; -
a document evidencing the transferee’s eligibility as specified in
subparagraphs 1 and 2 of Article 10 of this law; -
a confirmation of acceptance by the transferee of all rights and
obligations under the license, in a form approved by the OGMC.
-
An applicant for the recording of a license transfer shall pay the
processing fee established by the Government member in charge of
geology and mining and attach a proof of payment to the application.
-
The OGMC shall immediately deliver to the applicant a document
containing the name of the applicant, the date of the application,
and the type and number of the license to be transferred.
-
Immediately following the receipt of an application for the
recording of the transfer of a license, the OGMC shall record the
application and verify the following:
-
that the application complies with the requirements of this Article;
-
that the license to be transferred is valid;
-
that the license transferee is eligible to hold the license.
-
Within fifteen (15) business days following the receipt of an
application for recording of the transfer of a license, the head of
the OGMC shall take one of the following decisions:
-
record the transfer of the license and make appropriate notations on
the license certificate; or -
inform the applicant of defects in the application and request the
applicant to submit the necessary additional information; or -
if the transferee is not eligible to hold a license, or the license
to be transferred is invalid, then the application shall be returned
and the applicant shall be notified accordingly.
If the OGMC gives the applicant a notice of defects as provided in
this paragraph, the applicant shall, within ten (10) business days
following the receipt of such notice, submit additional information
to the OGMC. Within five (5) business days, the head of the OGMC
shall take a decision as specified either in subparagraphs 1 or 3 of
paragraph 6 of this Article.
-
Following the recording of the transfer of the license, the OGMC
shall notify the professional inspection institution and the GMDA
in writing of the recording of the transfer and, in case of the
transfer of a mining license, it shall also notify the Ministry of
Finance in writing, and shall publish an official notice informing
the public of the license transfer. /This paragraph was amended
by the Law of September 1, 2000/
Article 41. Transfer of parts of licensed areas
-
License holders may transfer parts of a licensed area to persons
eligible to hold a particular type of license by a transfer
agreement. The shape, size and orientation of the transferred and
retained parts shall conform to the requirements of this law. The
transfer of a part of a licensed area shall be recorded with the
OGMC in accordance with the provisions of Article 40 and the
provisions of this Article. The transfer agreement shall become
effective upon such a registration.
-
The application for recording the transfer of a part of a licensed
area shall contain a description of the land. This description shall
contain the information required by this law to be included in the
initial application for a mining license.
-
The applicant shall pay the application processing fee established
by the Government member and include it with the application.
-
The OGMC shall verify and confirm that the transferred area lies
entirely within the boundaries of the licensed area covered by the
transferor's license.
-
Upon each transfer of a part of a licensed area covered by a valid
license to an eligible transferee, the OGMC shall take the following
actions :
-
record the location and coordinates of the transferred and retained
parts of the licensed area in the register of licenses and in the
cartographic license register; -
make appropriate notation in the license certificate of the
transferor; -
issue the transferee a separate license.
Article 42. Pledges of licenses
-
To provide security for the financing of their investments and
operations in Mongolia, license holders may pledge their licenses in
accordance with the provisions of the Civil law. The pledge
agreement shall become effective upon its registration with the OGMC
in accordance with the provisions of Article 40 of this law.
-
The pledgor shall submit a copy of the pledge agreement, together
with the license certificate, to the OGMC. The pledgee is not
required to confirm its acceptance of rights and obligations under
the license.
-
The OGMC shall verify whether the application for recording the
pledge of the license complies with the terms and conditions
specified in this law.
-
Upon verification that the application for recording the pledge of
the license complies with the terms and conditions specified in this
law, the OGMC shall record the pledge of the license and deliver the
license certificate to the pledgee.
-
Upon termination of the pledge agreement, the license holder shall
submit an application to the OGMC together with the following
documents:
-
a statement signed by the pledgee to the effect that the license
holder has fulfilled its obligations under the pledge agreement and
that the pledge has been terminated; -
the pledged license certificate.
Upon receipt of the foregoing documents, the OGMC shall record the
termination of the pledge and return the license certificate to the
license holder.
-
During the period of time in which the license is pledged, the
license may not be transferred to another person unless authorized
in writing by the pledgee or transferred to legal successors of the
exploration license holder.
Article 43. Transfer of a license pursuant to a pledge agreement
-
If the pledgor fails to fulfill its obligations under the pledge
agreement and the pledgee of a license wishes to transfer the
license to a person eligible to hold such a license, the pledgee
may, in conformity with Article 40 of this law and the present
Article, submit an application to the OGMC to transfer the pledged
license.
-
The pledgee shall attach the following documents to its application
for recording the transfer of the license to a person eligible to
hold such a license:
-
a document signed by the pledgor consenting to the transfer of the
license and a statement by the pledgee confirming receipt of the
license; -
a certificate of the pledged license;
-
if the transferee is a person other than the pledgee, the documents
specified in paragraph 2 of Article 40 of this law; -
confirmation by the transferee of its acceptance of rights and
obligations under the license.
CHAPTER SIX
Termination of exploration and mining licenses
Article 44. Termination of licenses
-
A license shall be terminated in the following cases:
-
expiration of the license term;
-
surrender by the license holder of the entire licensed area in
accordance with the provisions of Article 46; or -
revocation of the license by the OGMC.
-
A license shall terminate as to each and every part of a licensed
area being surrendered by the license holder.
-
Upon termination of the license, the rights and obligations of the
license holder under the license shall cease to exist, except the
license holder’s obligations with respect to environmental
restoration and mine closure as provided for in Articles 29 and 30
of this law and other obligations pursuant to legislation on
environmental protection.
-
Upon termination of the license, the license holder shall return the
license certificate to the OGMC, and a new license may be issued for
the area in accordance with the provisions of this law.
-
The ownership of buildings and structures, equipment and other
property allowed to be left on the exploration or mining area in
accordance with subparagraph 3 of paragraph 1 of Article 36 shall be
determined in accordance with the provisions of the Civil law.
Article 45. Surrender of part of the licensed area
-
A license holder may surrender part of the licensed area in
accordance with the provisions of this law.
-
A license holder shall submit to the OGMC an application for
surrender of part of the licensed area together with the
description of the surrendered part in the form approved by the
OGMC. In the case of surrender of part of an exploration area, the
description of the surrendered area shall conform with the
requirements of paragraph 3 of Article 13 of this law. In the case
of surrender of part of a mining area, the description of the
surrendered area shall conform with the requirements of Article 17
of this law.
-
The following documents shall be attached to an application for
surrender of part of a licensed area.
-
the license certificate;
-
a certificate from the Governor of the relevant soum or district
stating that the license holder has complied with the environmental
protection plan for the surrendered area; -
a report described in subparagraph 2 of paragraph 2 of Article 39 of
this law.
-
The area retained by the license holder after surrender of part of
the licensed area shall conform with the requirements of paragraph 4
of Article 17 of this law.
-
Upon receipt of an application for surrender of part of a licensed
area, the OGMC shall register the surrender of part of the licensed
area and make appropriate notations on the license certificate.
-
The surrender of a part of a licensed area becomes effective upon
the registering the application in accordance with paragraph 5 of
this Article.
-
The surrender of a part of a licensed area shall not entitle the
license holder to a refund of license fees previously paid.
Article 46. Surrender of the entire licensed area
-
A license holder may surrender the entire licensed area by
submitting an application, on a form approved by the OGMC, and by
registering the application in accordance with this Article.
-
The following documents shall be attached to the application for
surrender of the entire licensed area:
-
a certificate of full compliance by the license holder with all
environmental protection, mine closure, reporting and other
requirements established by applicable laws; -
if the particular license is pledged, an official document signed by
the pledgee consenting to the surrender.
-
Promptly upon receipt of an application for surrender of the entire
licensed area, and upon verification that the application complies
with the requirements of paragraph 2 of this Article, the OGMC shall
record the surrender in the register of licenses and modify the
cartographic register of mineral licenses accordingly.
-
Upon surrender of the entire licensed area, the license certificate
shall be returned to the OGMC.
-
The OGMC shall notify the relevant authorities of the surrender of
the entire licensed area, and publish an official notice informing
the public of the surrender.
-
A license holder that surrenders a particular licensed area may not
submit a new application for the same area for a period of two years
following the surrender. If the person that surrenders the license
is a legal entity, then this paragraph shall also apply to any third
party that controls more than 50% of the voting rights in that legal
entity or any third party in which such entity controls more than
50% of the voting rights.
Article 47. Revocation of licenses
-
The OGMC shall revoke any license, in accordance with this Article,
if it determines that the license holder does not meet the
requirements for maintaining eligibility to hold a license as
specified in Chapter 3 of this law.
-
The OGMC, pursuant to a decision by the head of the OGMC, shall
revoke a license on the following grounds:
-
that the license holder has lost its eligibility to hold a License
in accordance with this law; or -
that the license holder has failed to pay License Fees specified in
Article 24 of this law in full or did not pay License Fee and
penalty within the time specified in the paragraph 4 of this
article; or /This subparagraph was amended by the Law of January
8, 1999/ -
that an exploration or mining area has been designated as a special
needs land and the license holder has been fully compensated.
-
Immediately upon determining the existence of grounds for revocation
of a license, the OGMC shall notify the license holder, and any
license pledgee, in accordance with the procedures established by
this law. The notice shall specifically indicate the grounds for
revocation of the license.
-
Within thirty (30) days following the receipt of the notice
specified in paragraph 3 of this Article, a license holder, or any
license pledgee who paid the License Fee and the required penalty,
may submit to the OGMC documentary evidence that the grounds for
revocation of the license are not valid. /This subparagraph was
amended by the Law of January 8, 1999/
-
Upon review and analysis of the documentary evidence submitted by
the license holder, if the OGMC agrees that the grounds for
revocation of the license are not valid, it shall withdraw its
notice of revocation and notify the license holder accordingly.
-
If the OGMC determines that the documentary evidence submitted by
the license holder does not establish invalidity of the grounds for
revocation of the license, the head of the OGMC shall revoke the
license and notify the license holder and license pledgee
accordingly.
-
The holder or license pledgee shall have a right to file a complaint
with the court within thirty (30) days following the date of
issuance of the decision.
-
If the license holder or the license pledgee files a complaint with
the court, no license shall be issued with respect the license area
until a valid court ruling has been made.
-
The OGMC shall notify the professional inspection institution and
the GMDA of the revocation of a license, and in case of revocation
of a mining license, the OGMC shall notify the Ministry of Finance,
and publish an official notice informing the public of the
revocation. /This paragraph was amended by the Law of September
1, 2000/
CHAPTER seven
Resolution of disputes arising out of
exploration and mining licenses
Article 48. Resolution of boundary disputes between or among
license holders
-
Boundary disputes between or among license holders shall be resolved
by the OGMC. Any party to a boundary dispute may request the OGMC
to resolve the dispute.
-
The OGMC shall give all parties to the dispute an opportunity to
present their positions and arguments in writing.
-
The OGMC shall verify if there is an overlap between disputed areas
in the register of licenses and the cartographic register of
licenses. If there is an overlap, the OGMC shall determine, based
on the original applications and reports of field surveys, whether
the coordinates and boundaries of the area were correctly recorded.
-
If, as a result of a field survey, an overlap is confirmed, the OGMC
shall modify the area covered by the more recently granted license
and eliminate the overlap.
-
The OGMC shall have disputed boundaries of a licensed area surveyed
and established by an accredited professional geodesic surveyor and
any costs and loss relating thereto shall be paid for by the party
shown to be wrong.
-
The OGMC shall verify the disputed boundaries, make decisions on
relevant modifications, and notify the parties to the dispute
accordingly.
-
If the parties to the dispute disagree with the decision of the
OGMC, they may file a complaint with the court.
Article
49. Resolution of disputes between license holders and land owners
or users
Land
access, rights of passage, and land use disputes between or among
license holders and land owners or land users, shall be resolved in
accordance with the provisions of the Land law, the Civil law and
other relevant laws.
Article 50. Filing of complaints to State administrative bodies
Where any actions or failures to act by civil servants or State
administrative bodies have prevented the exercise by citizens or
legal persons of rights conferred upon them hereunder, such citizens
or legal persons may file a complaint with respect thereto with
relevant senior officials or State administrative bodies or the
courts.
Article 51. Resolution of disputes arising out of a stability
agreement
Any disputes arising out of a stability agreement concluded with the
Government according to Articles 20 and 21 of this law shall be
resolved in accordance with the Arbitration law and international
treaties of Mongolia.
CHAPTER EIGHT
Sanctions
Article 52. Sanctions for breach of legislation
-
If a breach of the minerals legislation does not constitute a
criminal offence, a geological and mining inspector, whilst taking
into account the circumstances of the infringement, shall impose the
following penalty on the guilty person:
-
If any person has conducted exploration or mining activities or sold
minerals without holding a mineral license, all income or products
derived from such activities shall be confiscated by the State and,
a fine in an amount equal to the double of the value of the minerals
in question shall be imposed on such person. In such case, the
amount of the penalty shall not exceed the maximum penalty set forth
in the law on Administrative responsibilities; -
A penalty of from 10,000 to 60,000 togrogs shall be imposed in the
case of the non-timely submission of statements set forth in Article
39 of this law or the submission of false statements; -
Prevention of a license holder from exercising rights conferred by
this law shall give rise to the imposition of fines as follows:
-
with respect to citizens, from 10,000 to 40,000 togrogs;
-
with respect to officials, from 20,000 to 60,000 togrogs;
-
with respect to organizations and legal entities from 100,000 to
250,000 togrogs.
-
Failure of a license holder to comply with obligations with respect
to the conduct of activities under a license as set forth in Chapter
4 of this law shall be fined as follows and, in addition, such
license holder must pay for any damage resulting from such failure:
-
with respect to citizens, from 10,000 to 50,000 togrogs;
-
with respect to officials, from 20,000 to 60,000 togrogs;
-
with respect to organizations and legal entities, from 50,000 to
250,000 togrogs.
-
Failure of a license holder to comply with legitimate requirements
imposed by a geological and mining inspector with respect to the
elimination of deficiencies discovered in the course of exploration
or mining shall be fined as follows:
-
with respect to citizens, from 15,000 to 50,000 togrogs;
-
with respect to officials, from 10,000 to 60,000 togrogs;
-
with respect to organizations and business entities from 50,000 to
250,000 togrogs.
-
Where a license holder continues to violate laws with respect to
environmental protection, mine operation safety regulations, or the
provisions of its environmental protection plan, the exploration
and mining activities of such a holder be suspended for up to 60
days, and if such deficiencies are not eliminated within this
period, the exploration activities of the license holder shall be
terminated or, in the case of an operating mine, the mine shall be
closed.
-
A legal person who has intentionally decreased, or attempted to
decrease, disclosures with respect to sales revenue shall be fined
from 100,000 to 250,000 togrogs and be required to pay any unpaid
royalties due with respect to the shortfall and, in addition, a
penalty equal in amount to such unpaid royalties.
-
Any legal person who has failed to comply with the regulations with
respect the assaying and registration of precious metals and
gemstones as provided by this law shall be fined from 100,000 to
250,000 togrogs.
-
Where a mining license holder has intentionally reduced the volume
or amount of minerals extracted, or has intentionally reduced sales
revenue by intentionally reducing the sales price by entering into a
fictitious contract, or by selling the product at an unfair price,
such license holder shall be fined 100,000 to 250,000 togrogs and
the amount by which the revenue has been understated shall be paid
by such license holder to the State treasury.
-
If the OGMC fails to make a decision within the time limit set forth
in paragraph 9 of Article 14 of this law, it shall pay the applicant
an amount equal to the processing fee for each ten (10) days such
failure continues or, at the request of the applicant, such amount
shall be deducted from the first year's license fee.
-
If the OGMC fails to make a decision within the time limit set forth
in paragraph 6 of Article 17 of this law, it shall pay the applicant
an amount equal to the processing fee for each day such failure
continues or, at the request of the applicant, such amount shall be
deducted from the first year’s license fee.
-
Any other penalties provided for by law.
-
A court may impose a fine of up to 30,000 togrogs on any person who
intentionally prevents an authorized official from performing his or
her duties in the course of an inspection. -
If the license holder did not pay the license fee within the period
specified in the article 25 of this law, a penalty equal to the 0.5%
of the total unpaid amount shall be paid for each expired day. /This
paragraph was added by the Law of January 8, 1999/
CHAPTER NINE
Structure and Composition of Agencies Responsible
for Implementation of Mineral Related Legislation
Article
53. Geological and Mining Inspection Agency
The
state monitoring on the exploration and mining activities shall be
organized and implemented by the professional inspection institution
in the central level, and by the inspection divisions in the local
level. /This article was re-edited by the Law of September 1,
2000/
Article
54. Geological and Mining Development Agency
The
GMDA is the implementing agency of the State central administrative
body in charge of geology and mining activities and includes three
divisions: the Office of Geology, the Mining Office, and the OGMC.
The
GMDA shall carry out its activities independently from the
professional inspection institutions. /This paragraph was amended
by the Law of September 1, 2000/
Article 55. Office of Geological and Mining Cadastre
The OGMC shall have the following functions:
-
to receive, register and make decisions with respect to applications
for licenses; -
to maintain the register of licenses;
-
to maintain the cartographic register of licenses;
-
to issue exploration and mining licenses;
-
to collect and distribute application processing and license fees in
accordance with applicable laws and regulations; -
to receive and register applications for prospecting;
-
to review and resolve boundary disputes between and among license
holders; -
to provide interested persons with access to the register of
licenses and the cartographic register of licenses and to notify
relevant government agencies of changes in these registers, and to
publish official notices informing the public of such changes.
Article 56. Office of Geology
The Office of Geology is responsible for providing the State central
administrative body in charge of geology and mining with information
for the development of policies and programs with respect to geology
and related research, the conducting of such research, and the
following other activities:
-
regional geological and hydro-geological mapping of Mongolia and
related geophysical research; -
research on the patterns of distribution and types of occurrence of
mineral resources within the territory of Mongolia and the
evaluation of such resources; -
geo-ecological research and recommendations with respect to natural
and human factors that may have an impact on the social and economic
development of Mongolia; -
providing interested persons with all available geological and
mining related information, including information provided by
license holders in accordance with this law, except for information
classified as confidential; -
maintaining and up-dating the information fund with respect to
national geological and
related resources.
Article 57. Mining Office
The Mining Office is responsible for providing the State central
administrative body in charge of geology and mining with information
and research on the development of the mining sector and for
conducting of research with respect to the following matters:
-
evaluations and recommendations with respect to technology and
equipment used in the
mining industry, and implementation of mining technology policy;
-
creation of a favorable investment environment for the mining sector
and evaluations and recommendations with respect to the existing
investment environment; -
research, evaluations and recommendations with respect to the impact
the mining industry has on the social and economic development of
Mongolia; -
research on the supply, demand and prices of mining products, and
forecasting of long-term trends; -
development of proposals with respect to State policies with regard
to particular mining projects, and implementation of such a
policies.
CHAPTER TEN
Other Provisions
Article
58. Notification of Interested Persons
-
The State administrative body in charge of the issuance of licenses,
their registration, and the monitoring of activities of license
holders, shall notify relevant persons of its decisions by means of
an official letter.
-
Such notices may be delivered to relevant persons in writing or by
means of an official publication. In the event of a dispute with
respect to the timing of the delivery of the notice, the date of the
official publication shall be deemed to be the date of delivery of
the notice.
Article
59. Payment of fees
With
respect to license fees specified in this law in US dollars, the
official exchange rate for the particular day established by the
Mongolbank shall be used.
Article
60. Access to minerals related information and reports
-
Any interested person shall have a right to have access to the file
of license applications, the register of licenses, and the
cartographic register of licenses during office hours in specially
designated rooms.
-
Reports of exploration work prepared by a license holder,
information with respect to mine operations, and feasibility studies
shall be treated as the license holder’s confidential information.
-
Information classified as confidential shall not be disclosed,
published or disseminated except in accordance with provisions and
procedures established in the Law on State secrets, the Law on
Organization secrets, and the Law on Private secrets. An interested
person shall have a right to have access to minerals related
information not classified as confidential during office hours in
specially designated rooms.
Article 61. Distribution of royalty revenues
All royalty payments shall be deposited in the treasury of the
central and local administrative bodies. /This article was amended
by the Law of December 27, 2001/
Article 62. Use of license fees
All
license fee payments shall be deposited in the State central
treasury.
Article
63. Specifics of mining industry finance and accounting
-
All costs incurred for exploration, and all expenses incurred in
preparing a mine site for production, shall be amortized on a
straight line basis over a period of five (5) years commencing with
the tax year in which production from the mine commences.
-
The costs of acquisition of a license, either directly or by
transfer, shall be amortized on a straight line basis over the term
of the license.
-
Fixed assets used in mining operations shall be depreciated on a
straight line basis over a period of five (5) years.
-
A loss incurred in any tax year may be deducted from taxable income
during the three (3) tax years following the year in which the loss
was incurred.
-
All costs incurred in developing industrial and social
infrastructure shall be depreciated on a straight line basis over
the useful lives of the facilities constructed. All costs of
maintaining and operating such infrastructure facilities shall be
expensed in the year in which such costs are incurred.
-
All maintenance costs in connection with mining operations shall be
expensed in the year in which they are incurred.
-
The Ministry of Finance shall adopt regulations implementing
paragraphs 1 through 6 of this Article.
Article
64. Processing Fees
An
applicant shall pay the specified processing fee when submitting an
application to obtain a license, transfer a license, extend the term
of a license, pledge a license, transfer a license pursuant to a
pledge, or to surrender all or part of a licensed area, and when
requesting the resolution of a boundary dispute.
Article
65. Coming into force of the law
This
Law shall come into force on 1 July 1997.
Chairman
of the State Ih Hural of Mongolia R. Gonchigdorj