Legislation aids mining ventures

Mongolia’s resource sector is expected to benefit from a series of amendments to the country’s investment laws.

The legislation was enacted following an international investors conference sponsored jointly by the World Bank and the Mongolian government. The 2-day event, which focused on the mining and oil and gas sectors, was held in this city in early June. The 329 delegates in attendance represented 167 companies from 24 countries.

The legislative changes included:

* a 25% reduction in corporate income tax rates to 30% from 40%; * an 80% reduction in maximum royalty taxes to 2.5% from 12.5%; * the elimination of most duties on imports of materials and services for projects;

* the right to export gold, as long as the transactions are recorded with the Mongolian Central Bank; and

* the establishment of a Mineral Authority to serve the mining industry exclusively, including the setup of a Cadastral Office to issue mineral exploration licences and mining permits on a first-Come/first-serve basis; a maximum licence area of 4,000 sq. km; a 3-year exploration licence, with two 2-year renewals on request; and a 60-year mining lease, with an additional 40-year renewal.

Also, mining and exploration licences are to be considered assets of the holder and are fully transferable;

The revised laws came within two weeks of a recent presidential election that saw Natsagiin Bagabandi of the Mongolian People’s Revolutionary Party elected, largely on a platform of anti-inflation and job creation.

Commenting on the revised mining laws, Edward Kennedy, chairman of Mongolia Gold Resources (MGR-V), said: “There are no better [mining] conditions in the world.” Kennedy made his first foray into Mongolia five years ago at a time when there were no established mining laws.