Draft Minerals Law (New) Mongolia December 5-2012

Mongolian National Mining Association - Draft Minerals Law (New) For Mongolia A... Page 1 of 67

Send comments on this law to the President of Mongolia's office delgermaa@president.mn
This is the draft minerals law proposed as of December 5, 2012.
You should pay particular attention to articles 13, 14, 15, 16, 66 & 90.
DRAFT LAW: "Minerals Law"

http://www.miningmongolia.mn/en/news/local-news/item/407-draft-minerals-law-ne... 14/01/2013


The Office of Presidentlast version: 2012.12.05
Article 1.Purpose of the law
LAW OF MONGOLIA
(Month) (Date), 2012 City of Ulaanbaatar
MINERALS LAW
(Revised)
CHAPTER ONE General provisions
The purpose of this Law is to promote economically viable mining and extractive industries which carry out
prospecting, exploration, mining and processing mineral resources in compatibility with the economic,
social and environmental policies of the State.
Article 2.Scope of the law
This law shall regulate the relations arising from geological reconnaissance, prospecting, exploration,
mining and processing of all types of minerals other than radioactive minerals in the territory of Mongolia.
Article 3.Definitions of terms
The following terms in this law shall have the following meaning:
1. 3.1.1. "Work permission" means any or all of the exploration, mining and processing permissionsas
specified in chapter 8 of this law;
2. 3.1.2. "minerals" means

312. a. any usable mineral concentration which naturally occur either in solid, liquid or gaseous state
that were formed on the surface or in the subsoil as a result from geological evolutionary processes,
except for water, oil and natural gas;
312. b. minerals that have been extracted from the surface or the subsoil as specified in this law;
312. c. minerals that have been processed as specified in this law;
3. 3.1.3. "processing minerals" mean industrial activities directed at increasing the contents and value
of minerals through means such as enriching, melting, purifying, producing products of extracted
minerals other than radioactive minerals as specified by this law;

1
4. 3.1.4. "mining minerals" means industrial extracting, washing and separating activities of minerals
other than radioactive minerals from the earth's surface, subsoil, ore stockpile, waste and natural
water according to the approved Technical and Economical Feasibility Report and work plan;
5. 3.1.5. "mineral deposit" means mineral concentration that has been formed on the surface or in the
subsoil as the result of geological evolutionary processes, located in same site as rock's derived or
separated from it by weathering, erosion and mechanical processes by forming of layers and
bedswhere the quality and proven reserve is economically feasible to mine by industrial methods;
6. 3.1.6. "mineral exploration" means comprehensive activities of geological, geophysical, drilling,
laboratory and hydrogeology works according to proven standards for detailed determining of
formation, quantity, location, composition, concentration quality, geological structure, comprehensive
mining technical condition of mineral resources for secure calculation of resources volume capacity
and making decision about further advisability of mining operation;
7. 3.1.7. mineral prospecting" means comprehensive activities of geological, geophysical, drilling and
laboratory worksaccording to proven standards in an area with prospects of mineral resources for
detailed assessment of location, resources, composition, and to identify geological structure of
minerals and for the purposes of determining to conduct further exploration works;
8. 3.1.8. "infrastructure" means roads, railways, airports, facilities for supply of electricity, heating,
clean water, sewerage conveying system, air, motor vehicle and railway transportation, health,
hygiene, education and related services that are accessible to public utilization;



9. 3.1.9. "rehabilitation" means the comprehensive activities of rehabilitation of the nature and
environment of which the natural state has been changed due to geological and mining activities as
specified in chapter 11 of this law;
3.1.10. "high grading mining" means a mining activity that mined not whole of the reserve and made the
reserve impossible to mine further as a whole of the production reserves which was obtainable and
determined by the Technical and Economical Study Report due to carried out not in accordance with
approved technological procedures;
11. 3.1.11. "area" means the area that is granted by license according to the law, location of which is
determined by corner points, coordinates of which are determined by degrees, minutes and
seconds, and borders of which are surrounded by straight lines along the longtitute and latitude;
12. 3.1.12. "reconnaissance" means a research utilizing primary geological and mineral data for
determining of earth surface and subsoil structure, chemical composition of rocks, their evolution
history, transformation and presence of minerals through taking of rock samples without disturbing
earth surface or subsoil, performing of geochemical, earth and air's geophysical surveys, geological
mapping with all scales and thematic research;
2
3.1.13. "State Administration" means the state administration in charge of geological and mining affairs;
3.1.14. "Central State Administration" means the central state administration in charge of geological and
minerals resources affairs;
3.1.15. "licence" means the right certified by the license to conduct one of or all of the following activities,
minerals prospecting, exploration, mining and processing granted by the State Administrative Authority as
provided by this law
3.1.16. "common minerals" means the plenitudes' of rock, loam, sand and gravel accumulation of moraine
and rock concentrations which could be used as construction materials;
3.1.17. "commercial infrastructure" means road and railway, airport, facilities for supply of electricity,
heating, potable water, sewerage conveying system, air, motor vehicle and railway transportation and
related services that are utilized for mining and industrial purpose;
3.1.18. "industrial waste" means earth, soil that is created due to mining and processing of minerals, and is
proven and permitted by the Technical and Economical Feasibility Report as commercially non-profitable;
3.1.19. "mine and industry tenure" means a part of the land area that was granted under the license, that is
affected by mining and processing activities;
3.1.20. derivative deposit" means earth, soil, rock and enrichment waste that is created due to mining and
processing activities, is potentially commercially effective in specific setting of minerals re-processing;
3.1.21. "radioactive minerals" means minerals accumulation as stipulated in clause [_] of Nuclear Energy
Law of Mongolia;
3.1.22. "occurrences of radioactive minerals with production value content" is stipulated in clause [_] of
Nuclear energy law
3.1.23. "mineral resources" means mineral concentration that has been formed on the surface or in the
subsoil as the result of geological evolutionary processes.
Article 4.Ownership of minerals
1. 4.1. Mineral resources naturally occurring on the surface and in the subsoil in the territory of
Mongoliashall be the property of the State.
2. 4.2. The State, as being the owner,shall have the right to grant prospecting, exploration, mining and
processing license as defined in the terms and conditions of this Law.
3. 4.3. Minerals separated from the soil and subsoil in the course of prospecting, exploration and
mining without a license shall be the property of the State.
4. 4.4. Derivative deposits andindustrial wastes shall be deemed an integral part of the land and the
property of the State in cases not specified by this law.
3



Article 5.Areas prohibited for prospecting, exploration, mining and processing activities
4.1.
Any of prospecting, exploration, mining and processing activities shall be prohibited in the following areas.
1. 4.1.1. National and local special protected areas;

2. 4.1.2. normal protection territory areas with source of flow formation of rivers, and water basins as
specified in the Law on Water;
3. 4.1.3. forest area on protected territory as specified in the Law on Forest;

4. 4.1.4. protected zones specified in the "Law on Railway";

5. 4.1.5. protected zones around high voltage power lines as specified in the "Law on Energy";

6. 4.1.6. protected zones around state or international roads as specified in the "Law on Road";

7. 4.1.7. protected zones specified in the "Law on utilization of the water supply and sewerage
conveying system of the city and township";
8. 4.1.8. protected zones around mineral water specified in the "Law on Mineral Water"

9. 4.1.9. city and village tenure land, and within 5 kilometers from its borders;

Article 6.Prohibition of conducting prospecting, exploration, mining and processing activities without license
6.1 Unless specified in the following, it shall be prohibited to conduct prospecting, exploration, mining and
processing activities without license.
6.1.1 reconnaissance;
6.1.2 mining and processing of common minerals by citizens on their owned land for purposes to use for
own domestic needs and not for profits from sale thereof;
6.2 Unless set forth in this law, it shall be prohibited to separate minerals from the land and its subsoil, to
purify, process, store, transfer, transport, sale, buy and broker minerals extracted without license.
Article 7. Registering of mined and processed products and certificate of origin
1. 7.1 Holders of mining and processing licenses shall have obtained a certificate of origin as defined in
this law for all mined, processed, purchased, sold and reprocessed minerals and mineral products
by them.
2. 7.2 Private person or legal entity manufacturing the goods with use of precious metals and stones
shall have registered the used precious metals and stones using a form approved by State
Administration and attach the documentation proving their origin to the registration form.
4
Article 8. Mineral resources of strategic importance
8.1 8.2 8.3 8.4
Article 9.
9.1 9.2 9.3
9.4
9.5
9.6
Water, oil, gas, radioactive minerals and rare earth elements shall be deemed mineral resources of
strategic importance.



Relations to prospecting, exploration and utilization of water shall be regulated by "Law on Water" in
Mongolia.
Relations to prospecting, exploration, mining and processing of oil and gas shall be regulated by
"Petroleum Law" in Mongolia.
Relations to mining and processing of radioactive minerals and rare earth elements shall be regulated by
"Law on Nuclear Energy" in Mongolia.
Mineral deposits of strategic importance
As specified in this article, deposits of strategic importance shall be 15 deposits listed in Appendix 1 of
2007 in the State Great Hural Resolution No.27.
Borders of each deposit with strategic importance specified in 9.1 of this law shall be determined by Central
State Administration.
No new deposits will be added into the list of deposits with strategic importance but can be excluded from
the list by the State Great Hural upon submission ofopinion bythe Government.
The Government may establish, at its initiative, a Deposit Development Agreement with holders of licenses
in order to set up a special regime for mining, processing and marketing activities of minerals extracted
from deposits of strategic importance.
The State shall be entitled to possess free of charge a certain percentage of shares of legal entity which
holds licenses for mining and processing of deposit with strategic importance. The percentage of the
shares to which the state shall be entitled to possess free of charge shall be determined by Deposit
Development Agreement that has been established in line with this law.
If the Deposit Development Agreement was not established by the Government, mining and processing
activities of this deposit with strategic importance shall be carried out in compliance with the rule in this law.
Article 10 Deposit Development Agreement
10.1 If the Government establishes a Deposit Development Agreement with holder of mining and
processing license for the deposits of strategic importance as specified in Article 9 of this law, the
agreement shall be established in concurrence with the following principles:
1. 10.1.1 The initial term of Deposit Development Agreement shall be equal to the term defined in an
approved Technical and Economical Feasibility Report necessary to earn the return on initial
investments.
2. 10.1.2 Taxes and duties except fees and levies currently imposed by tax laws of

5
Mongolia can be stabilized only for the initial term of Deposits Development Agreement.
3. 10.1.3 Tax or duties shall not be stabilized for any period beyond the initial term of Deposit
Development Agreement.
4. 10.1.4 Deposit Development Agreement shall not regulate any issues concerning exemptions from
taxes, duties, levies and fees; and stabilization of levies and fees.
10.2
10.3
10.4
10.5
10.6
10.7
Article 11
11.1 11.2
11.3 11.4



When the initial term of the Deposit Development Agreement expires the Agreement can be extended one
time for up to 10 years along with necessary changes and amendments concurrent to the conditions of that
time.
Total amounts of minerals to be mined or products to be manufactured within certain period of time may be
determined in Deposit Development Agreement and the changes of determined amounts shall serve the
grounds for making amendment in other terms or conditions as defined in the agreement.
If certain conditions or circumstances which could not have been foreseen at the time of signing of Deposit
Development Agreement arise and any or some of clauses of the agreement cease complying to the
interest of Mongolia or become detrimental to rights and interest of Mongolia initially meant to protect due
to those newly discovered conditions or circumstances, they shall serve grounds for making changes and
amendments to this agreement.
Unless categorized as confidential in the related laws of Mongolia, all parts, clauses, changes and
amendments of Deposit Development Agreement and further collateral agreements shall be open to the
public.
A holder of license who has signed Deposit Development Agreement shall be obliged to provide any
information related to its activities permitted by the license, investments and proprietary nature at the period
of the agreement to the Government upon its request.
The contents and clauses of Deposit Development Agreement to be established with holder of license
shallcomply with this law and other related laws valid at that time.
Reconnaissance
Legal entities may conduct reconnaissance for minerals according to regulation as specified in this law.
Reconnaisance can be carried out in areas prohibited or restricted for prospecting, exploration, mining,
processing activities or in a national or local special purpose territoriesas defined in this law, Law on
Petroleum and Law on Nuclear Energy.
Disturbing the subsoil in the course of conducting reconnaissance shall be prohibited.
Reconnaissance shall be conducted according to scientific methods, methodology, in specific stages and in
a comprehensive manner for the purposes of determining the
6
11.5
11.6
11.7
11.8 11.9
11.10
Article 12
12.1
12.2
12.3
12.4 12.5
12.6
prospective area of geological formation, minerals abundance patterns and concentrations.
If the area of reconnaissance is in the ownership or possession of others, the interested party shall have
obtained the permission to conduct reconnaissance and access the land from the owner and possessor of
the land.
If reconnaissance conducted by state budget funding in an licensed area of prospecting, exploration,
mining and processing a notice of trespassing shall be given to the license holder before entering to the
area.



Interested legal entity to conduct reconnaissance shall submit its request and provide related information of
the area of reconnaissance, its own name, surname, registration number and address of the area and
location to State Administration in advance.
State Administration shall receive such request and register the application in conformity to this law and
grant permission.
The entity which has obtained the permission to conduct reconnaissance shall be obligated to submit
reconnaissance reports, and relevant document copies to the State Administration and such reports and
document shall be stored in the national consolidated geology and minerals data base.
Specific rules for conducting reconnaissance and reception of reconnaissance reports shall be approved by
the Government.
National consolidated geology and minerals data base
The State Administration shall have a national consolidated geology and minerals data base. The national
consolidated geology and minerals data base shall consist of geological database, mineral reserves data
base and petroleum data base.
Information related to earth subsoil formation, earth surface character, geological research information,
primary documentation, samples, exhibition and pictures of earth and soil and report of reserves
determined by prospecting and exploration, and other available information shall be stored in the geological
database.
Complex information related to mineral deposit's production reserves, product's standards, technology,
mine plan and operation report, production tailings, registration of derivative deposits, assessment of
environmental impact, rehabilitation works and other related data shall be stored in mineral reserves
database.
Petroleum data base and information to be stored and procedure and rule for storing the information shall
be determined by Law on Petroleum.
All data compiled into the national consolidated geology and minerals data base except for confidential as
specified in the related laws of Mongolia shall be open for public.
Activities for compiling, registering and extending the data into the national consolidated geology and
minerals data base shall be carried out by State
7
Article 13
13.1
13.2
13.3
13.4
Article 14
14.1
14.2
14.3
14.4
Article 15
15.1 15.2
Administration Authority according to the rule and procedures approved by the Government.
Taking areas into state reserve
Areas wherein the reconnaissance, prospecting, explorationand assessment of minerals resources were
conducted with the fund from state budget may be taken into state reserve for a certain time period upon
the decision of Central State Administration.



Areas with certain concentration of mineral resources wherein the reconnaissance, prospecting, exploration
works were conducted with the finance from private funds may be taken into state reserve upon the
decision of the Government for a certain time period after real expenses for above works have been
reimbursed.
It shall be prohibited to accept an application or organize competitive tender selection procedures for
granting licenses of the areathat has been taken into state reserve.
If the time period of being reserved in state reservation has expired and the time period has not been
extended or authorized Government administrationhas decided to exclude the area from state reserve, the
area shall be granted for license only through a competitive tender selection process.
Taking deposits into state reserve
The Government may take all or part of a deposit for a certain time period into state reserve if the deposit
was explored and its resources were determined with state budget funding.
If the deposit which had been initially explored and resources has been determined by state budget funding
was undergone additional licensed exploration as a result of which its mineral reserves were determined
with increased amount, the Government shall reimburse the real expenses to the license holder upon
taking the deposit into the state reserve.
State Great Khural may issue a decision and take deposits into state reserves that had been explored and
the mineral reserves of which had been determined by finance of private fundsupon reimbursement of real
expenses of the license holder.
If the time period of being reserved in state reservation has ceased and the period was not extended or
authorized Government administration has decided to exclude the deposit from the state reserve, the
license for that deposit holding shall be granted only through a competitive tender selection process.
Taking land granted by license for state or local special use
Land granted by the license for conducting prospecting, exploration or processing may be taken for state or
local special use as specified in Law on Land.
If local self-governing authority has made a proposal to take the land granted by license for the local
special use the local Governor shall submit the proposal to the
8
15.3
15.4 15.5
15.6
15.7 15.8 15.9
Article 16
Government.
If the Government deems the proposal defined in 15.2 of this law as feasible, it shall issue a decision to
take all or part of the land granted by the license for local special use.
The State Great Hural shall issue a decision to take a land granted by the license for state special use
upon proposal made by the Government.
If a special purpose territory overlaps entirely or in part with a territory covered by a valid license,
prohibiting further prospecting, exploration, mining and processing activities in the overlapping area the
Government shall make a decision to compensate the license holder along with the decision specified in
15.3 and 15.4 of this law. The reimbursement shall be paid to the license holder within 3 (three) months
from the date of the issuance of decision.
The license holder shall cease its work on the area from the date on which the decision had been made to
take the land for state or local special use in accordance with 15.3 and 15.4 of this law.
The duration of time for setting the landaside for special use shall not be less than five (5) years.
The State Administrationshall make a public notice within 10 working days after expiry of the duration of
time for setting the land aside for special use.



The State Administrative Authority shall record into the license registry the decisions to take the land
granted by the license for state or local special use and to compensate the license holder.
CHAPTER TWO
State regulation in the mining sector
Authority of the State Great Hural
16.1 The State Great Hural shall exercise the following authority in minerals affairs:
1. 16.1.1 to exclude a deposit from the list of the strategic importance;

2. 16.1.2 to issue a decision to take a deposit explored and determined by private funding into state
reserve and in connection with this, to pay the reimbursement to the license holder;
3. 16.1.3 to issue a decision to take a land granted by license for a state special use;

16.2. Clause 16.1 of this law shall not serve the grounds for restricting, in any way, the authority of the
State Great Huralenshrined by the Constitution of Mongolia and other laws.
Article 17 Authority of the Government
17.1 The Government shall exercise the following authority in minerals affairs:
9
1. 17.1.1 to submit its opinion to exclude a deposit from list of deposits of strategic importance to the
State Great Hural;
2. 17.1.2 to establish a Deposit Development Agreement with holder of license for mining in the deposit
of strategic importance and processing and marketing of minerals as set forth in the law;
3. 17.1.3 if it deems necessary, to require information from the holder of license for the deposit of
strategic importance with regards to licensed mine operation, timely investments according Deposit
Development Agreement and proprietorship;
4. 17.1.4 to issue a decision to take area into state reserves wherein the reconnaissance, prospecting
and exploration works had been carried out by private funding and in connection with this to
determine and pay the reimbursement to the license holder;
5. 17.1.5 to issue a decision to take area into state reserve when the area had been explored and the
reserves had been determined by state budget funding;
6. 17.1.6 to discuss the proposal of local authority to take the land granted by license for the local
special use and to determine and pay the reimbursement to the license holder if the decision was
issued in support of such proposal;
7. 17.1.7 to announce area and tender for granting prospecting, mining, and processing licenses for
areas located in State border zones;
8. 17.1.8 to establish a special regime related to mining, processing and transporting and storage of
specific types of minerals that may cause harm to the public health and environment;
9. 17.1.9 to approve a procedure to set up a national consolidated geology and minerals data base;

17.1.10 to approve a procedure to monitor the transactions of the special account for depositing the
rehabilitation fund;
17.2 17.1 of this law shall not serve the grounds for restricting, in any way, the authority of the Government
enshrined by the Constitution of Mongolia and other laws.
Article 18 Authority of the Central State Administration
18.1 The central state administration in charge of geological and mining affairs shall exercise the following
authority:
1. 18.1.1 to determine borders and corners of all deposits of strategic importance;

2. 18.1.2 to issue a decision to take land into state reserve wherein the reconnaissance, prospecting,
exploration had been financed by state budget;
3. 18.1.3 to approve a procedure for conducting the reconnaissance and submitting and receiving the
reconnaissance reports and other related documentation;


Mongolian National Mining Association - Draft Minerals Law (New) For Mongolia... Page 10 of 67

10
4. 18.1.4 to approve annual plan of reconnaissance, prospecting and exploration works to be funded
by the State budget;
5. 18.1.5 to approve jointly with central financial administration the procedure for funding,
implementing, receiving upon review of outcomes and calculating the funding expenses incurred for
reconnaissance, prospecting, exploration by state funding;
6. 18.1.6 to approve a procedure for evaluation and assessment of the technical equipment and
technology used in the prospecting, exploration, mining and processing activities;
7. 18.1.7 to announce an area which will be granted with license for prospecting, exploration and
mining activities through competitive tender selection procedure;
8. 18.1.8 to approve a procedure for competitive tender selection procedure for granting licenses to
conduct prospecting, exploration and mining activities;
9. 18.1.9 to approve a procedure to determine and demarcate the borders of areas granted by license;

18.1.10 to grant a license for development of Technical and Economical Feasibility Report for mining and
processing and mining and processing architecture design;
18.1.11 to develop and approve mining product standards jointly with central state administration in charge
of standardization and measurement affairs;
18.1.12 to approve standards and procedures for prospecting, exploration, mining and processing
activities;
18.1.13 to make decision on granting, withholding, revoking and renewing the permission for execution of
mining and processing related works, and to make other related decisions;
18.1.14 to develop and approve jointly with the central state administration in charge of nature and
environmental affairs the procedure to receive the results of the rehabilitation work done on environment
and nature affected by exploration, mining and processing activities;
18.1.15 to approve the procedure to register mines and industrial unit for processing and appoint
commission for approval of launching the operation of mines and industrial units;
18.1.16 to approve a procedure for emergency elimination of accidents occurred during reconnaissance,
exploration, mining and processing activities;
18.1.17 to establish a fund for emergency elimination of accidents and approve a procedure for its
functioning;
18.1.18 to approve jointly with the central state administration in charge of labor the procedure for ensuring
the appropriate working condition, salary structure,
11
occupational health and safety, provisions and supplies to workers employed in mining and processing
operations;
18.1.19 to approve the procedure to appoint the members of Professional Council, the rule of operations,
salary and bonus payment to the Council members and calculation of business trip expenses as defined in
this law;
20. 18.1.20 to appoint the members of Professional Council as stated in this law;

21. 18.1.21 to develop and approve the list of precious metals and precious gem

stones to be registered according to this law, the procedure to determine and register their carats jointly
with the central state administration in charge of finance affairs;
18.1.22 to approve a procedure for services for which additional fees shall be paid and determine the
additional fees payable for the services;



18.1.23 to approve a procedure for allocation of professional degrees to workers employed in the
geological and mining sector;
24. 18.1.24 to approve a procedure for categorizing the mineral reserves;

25. 18.1.25 other authority as specified in this law;

18.2 Central state administration in charge of nature and environmental affairs shall exercise the following
authority in minerals affairs:
1. 18.2.1 to approve standards and minimum expenses of rehabilitation of nature and environment
impacted by prospecting, exploration, mining and processing activities;
2. 18.2.2 to develop and approve methodology for determination and assessment of harms and
damages to the nature and environment caused by prospecting, exploration, mining and processing
activities;
3. 18.2.3 to open a special account to deposit the rehabilitation fund, to monitor its transactions, secure
pledges, and reimburse;
4. 18.2.4 to develop and approve the procedure to receive the results of the rehabilitation work on
nature and environment impacted by exploration, mining and processing activities jointly with the
central state administration in charge of geological and mining affairs;
5. 18.2.5 to develop and approve the procedure for conduct of rehabilitation work by the funds accrued
in the rehabilitation expenses fund and by state budget subsidy, and selection of the contractor
through the tender selection process;
6. 18.2.6 to grant the right to conduct rehabilitation work;

7. 18.2.7 to review and make conclusion on the rehabilitation work plan submitted by the license holder
in accordance with this law;
12
8. 18.2.8 to submit specific recommendations to the state administration on the matter of obligating the
license holder with nature and environmental protection obligation;
9. 18.2.9 to determine and validate the borders of the territory specified in 5.1 of this law jointly with
state administration in charge of land relations affairs;
18.2.10 to submit its opinion for areas to be announced for tender selection procedure in accordance with
this law;
18.2.11 to develop a method, a methodology and a procedure for planting ten trees for every cut down tree
and foresting
18.2.12 other authority as specified in this law;
18.3 Central state administration in charge of labor affairs shall exercise the following authority in minerals
affairs:
1. 18.3.1 to approve the procedure to ensure appropriate working condition, salary structure,
occupational health and safety, provisions and supplies to workers employed in mining and
processing operations jointly with state administration in charge of geology and mining affairs;
2. 18.3.2 to monitor the adherence of license holders to the prescribed by this law the quota (ratio) of
domestic and foreign workers;
3. 18.3.3 other rights specified in this law;

18.4 Central state administration in charge of economic development affairs shall exercise the following
authority in mineral affairs.
1. 18.4.1 to develop a comprehensive economic planning scheme on integration of the infrastructure,
electricity and urban planning in developing mining activities nationwide;
2. 18.4.2 to review and issue conclusions on the work plan and Technical and Economical Feasibility
Report of mining and processing license holders, and to issue recommendations to the license
holder on coordination of the prospecting, exploration, mining and processing activities to the
regional and local mining Consolidated plan;



3. 18.4.3 to review and if necessary to issue conclusions, recommendations and guidelines on the
proposal to change the work plan of the license holder as specified in this law;
4. 18.4.4 to submit proposals and comments to the draft of the Local Development Agreement as
specified in this law.
5. 18.4.5 to submit proposals to the tender selection process for granting licenses related to areas,
selection criteria, condition and requirements as specified in this law;
13
Article 19 Authority of the state administration
Rights and obligations of the state administration
19.1 The State Administration in charge of geological and mining affairs (hereinafter referred to as "State
Administration") shall exercise the following authority:
1. 19.1.1 to grant a right to conduct reconnaissance work to legal entities submittedtheir applications
according to this law;
2. 19.1.2 to organize and conduct the competitive tender selection process for granting prospecting,
exploration and mining license specified in this law;
3. 19.1.3 to grant and revoke the right to conduct minerals prospecting, exploration, mining and
processing through application or tender selection procedures specified in this law by a license and
to render other decisions related thereto;
4. 19.1.4 to extend license and issue other decisions related thereto;

5. 19.1.5 to transfer, combine, revoke the license and area granted by the license, and to make other
decisions related thereto;
6. 19.1.6 to resolve border disputes arising between holders of license;

7. 19.1.7 to maintain a consolidatedregistration database of licenses;

8. 19.1.8 to create and maintain the national consolidateddatabase of geology and minerals;

9. 19.1.9 to appoint the members of Professional Councilin consistent with procedures approved by
state central administration and approve the procedure of theProfessional Council's functioning;
19.1.10 to evaluate and assess the technical equipment and technology used in reconnaissance,
prospecting, exploration and processing according to the approved methodology and procedure;
19.1.11 to approve plan of works to be completed according to the reconnaissance, prospecting,
exploration and processing license;
19.1.12 to make a decision on whether to accept the Technical and Economical Feasibility report;
13. 19.1.13 to make a decision on whether performed high grading mining;

14. 19.1.14 to provide advise, guidelines, and conclude technical and technological review in

the course of building mines and industrial unit for processing in relation to the implementation of the rights
and obligations of the of the holder of prospecting, exploration, mining and processing license holder;
19.1.15 to issue certificates of origin for mined, processed, purchased, sold and reprocessed minerals and
mineral products by holders of mining and processing license;
14
19.1.16 to approve the sample form to be filled by private or legal entities used precious metals and stones
for manufacturing of products or purchased them for such purposes;
17. 19.1.17 to grant, revoke, renew work authority and to issue related decisions thereto;

18. 19.1.18 to provide the relevant information other than that categorized as confidential as



specified by this law to interested party;
19.1.19 to make consolidated review on the prospecting, exploration, mining and processingof minerals in
conjunction with the State specialized inspection agency;
19.1.20 other rights specified in this law;
19.2 The state administration in charge of planning shall exercise the following authorities in minerals
affairs:
1. 19.2.1 to develop a comprehensive planning scheme on coordination the infrastructure, electricity
and urban planning in developing mining activities nationwide;
2. 19.2.2 to review and issue conclusions on the work plan and Technical and Economical Feasibility
Report of mining and processing license holders, and to issue recommendations to the license
holder on coordination the prospecting, exploration, mining and processing activities to the regional
and local mining Consolidated plan;
3. 19.2.3 to review and if necessary to issue conclusions, recommendations and guidelines on the
proposal to change the work plan of the license holder as specified in this law;
4. 19.2.4 to submit proposals and comments to the draft of the Local Development Agreement as
specified in this law.
5. 19.2.5 to submit proposals to the tender selection process for granting licenses related to areas,
selection criteria, condition and requirements as specified in this law;
19.3 State administration in charge of land relations affairs shall exercise the following authority.
1. 19.3.1 to submit proposals to the tender selection process for granting licenses related to area,
selection criteria, conditions and requirements;
2. 19.3.2 to issue and update constantly cohesive cadastral maps of Mongolian land owned or
possessed and utilized according to agreements for land possession and utilization and deliver them
according to approved procedures to state administration;
3. 19.3.3 to determine boundaries of areas as specified in article 5.1 of this law jointly with state
administration in charge of nature and environment affairs;
19.4 State administration in charge of special protected places shall exercise the following authority in
mineral affairs.
19.4.1 to conduct research and investigation based on the license holder's notification of the discovery of
archaelogical, paleontological findings and historical and cultural heritagesin
15
the course of prospecting, exploration, mining and processing activities to the local and State
Administration, and to take it into state protection;
2. 19.4.2 to resolve the matter of taking the archeological, paleontological findings, historical and
cultural hertitages as specified in 19.4.1 of this law into maintenance and custody based on the
agreement entered into with individuals and legal entities;
3. 19.4.3 to submit proposals related to areas, selection criteria, condition and requirements of the
tender selection process for granting licenses as specified in this law;
Article 20 Authority of the Local Self-Governing authorities and Local governments
1. 20.1 The local self-governing authority shall exercise the following authorities in minerals affairs:

1. 20.1.1 to prohibit the exploration, mining and processing activities wholly or partially on its land not
granted by license for purposes of maintaining the balance of historical and cultural heritaged and
findings or environmental ecological balance;

2. 20.1.2 to propose to the Government through c entral state adminsitration to take the license area under
exploration, mining and processing activities as specified by this law for local special use;

3. 20.1.3 to discuss and makerelated decision upon receiving the notification of area for announcement of
competitive tender selection submitted by the State Administration as specified in this law;



4. 20.1.4 to enter into Cooperation Agreementwith exploration license holder and the Local Development
Agreement with the mining and processing license holder and to demand from the license holder to
enter into agreement within the time period as specified in this law;

5. 20.1.5 to participate in and cooperate in the work of the Commission to receive the results of the
rehabilitation work;

6. 20.1.6 to make proposal to the rehabilitation work plan of the license holder as specified in this law;

2. 20.2 The local administration shall exercise the following authorities in minerals affairs:

1. 20.2.1 to allow the use of land for the purpose granted by the license within the territory, and to
terminate such use in case of violation;

2. 20.2.2 to monitor the implementation of the license holder of its obligations to protect and conduct
rehabilitation of the environment, protect the public health and depositing fees in the local budget and
obligations pertaining to the Coorperaion and Local Development Agreements;

20.3. It shall be prohibited for the local self-governing authorities and local governments to make the
following demands to the license holder:
16
20.3.1. to demand any investment not specified in the Local Development Agreement;
20.3.2. to demand any donations and assistance and funding for purposes other than - humanitarian
purposes;
20.3.3. to demand fund for financing the political activities;
CHAPTER THREE Licenses
21. Rights granted by licenses
21.1 The license granted by the State Administration through procedures specified by this law shall entitle
the license holder to conduct activities specified in this law upon fulfillment of the conditions and
requirements as defined in this law.
21.2 The license certificate shall be granted to holder upon issuance of the decision to grant such license
by the State Administration.
Article 22. Main conditions for granting of license
1. 22.1 By granting of a license for prospecting, exploration, mining and processing purposes through competitive
tender selection procedure or upon application each of the following criteria shall be assessed thoroughly and
licenses shall be granted to alegal entitywhich has best fulfilled the conditions and requirements specifiedbelow:

1. 22.1.1 Tentative plan of prospecting, exploration, mining and processing activities requested for
authorization by the license;

2. 22.1.2 environmental rehabilitationtentative work plan;

3. 22.1.3 financial possibility and capacity guarantee of implementing the plans specified in 22.1.1 and
22.1.2 of this law;

4. 22.1.4 whether the amount of reserve and evaluation of the deposit determined by the exploration work
and approved by the relevant authority is sufficient to cover the extraction expenses, rehabilitation works
and mine closure expenses;

5. 22.1.5 capacity, experience of the applicant to conduct prospecting, exploration, mining and processing
activities, its professional human resources;

6. 22.1.6 history, current status and further motivation and capacity of implementing laws, rules and
procedures related to geology and mining activities, by citizens and legal entities respectively;

2. 22.2 whether the requesting legal entity, its executive management, members of board of

directors and its equivalent entity have been involved in conducting prospecting, exploration, mining and
geological and mining activities or have been holders of licenses, if so, their past records in fulfilling their
legal obligations as recorded in the speical permission database
17



Article 23.Prospecting license
1. 23.1 Prospecting license will be granted for the areas announced by state administration in charge
of geology and mining affairs only through a competitive tender selection procedure.
2. 23.2 The holder of prospecting special license shall be entitled to carry out mineral prospecting in
licensed area only after having complied with all conditions and requirements as defined in this law.
3. 23.3 Area granted by prospecting license shall be at least 150 ha but no more than 250000 ha.

4. 23.4 If necessary state administration may announce competitive tender selection procedures for
granting of prospecting licenses for smaller areas than postulated in 23.3 of this law.
5. 23.5 Prospecting licenses shall be granted for the period of up to 4 years.

6. 23.6 The Number of prospecting licenses to be granted to one legal entity shall not be more than 5.

7. 23.7 Holder of prospecting license for certain area who has complied the conditions and
requirements of this law has a privileged right to obtaining the exploration license upon its
submission of the application for such license.
Article 24.Exploration license
1. 24.1 Exploration license shall be granted according to following principles:

1. 24.1.1 if holder of a prospecting license meets the conditions and requirements specified by this law and
submits application for an exploration license, the exploration license shall be granted over the area
covered by the prospecting license;

2. 24.1.2 Exploration license for area taken into state reserve or not granted with license can be granted to
economic entity with state ownership and state ownership participation without announcing and
conducting competitive tender selection.

3. 24.1.3 in all other cases except specified in 24.1.1 of this law, exploration license shall be granted
through competitive tender selection procedure over the area announced by state central administration
in charge of geology and mining affairs;

2. 24.2 Upon fulfillment of the conditions and requirements specified by this law, the exploration license
holder shall have the right to conduct prospecting and exploration work on the land covered by the
license.
3. 24.3 The area to be granted by exploration license shall be no less than 25 hectares and no more
than 12 000 hectares.
18
4. 24.4 Exploration license shall be granted only one time for period of up to 5 years.

5. 24.5 The number of exploration licenses to be granted to one legal entity shall not be limited.

6. 24.6 Holder of the exploration license who meets the condition and requirements of this law shall
have privileged right to be granted a mining license for area covered by the exploration license if it
has submitted the application.
Article 25.Mining license
1. 25.1 Mining license shall be granted according to the following principles:

1. 25.1.1 if holder of an exploration license meets the conditions and requirements specified by this law
and submits application for a mining license, the mining license shall be granted over the area covered
by the exploration license;

2. 25.1.2 Mining license for area taken into state reserve or not granted with license can be granted to
economic entity with state ownership and state ownership participation without announcing and
conducting competitive tender selection

3. 25.1.3 in all other cases except specified in article 25.1.1 of this law,mining license shall be granted
through competitive tender selection procedure over the area announced by central stateadministration
in charge of geology and mining affairs;



2. 25.2 Upon fulfillment of the conditions and requirements specified by this law, the mininglicense holder shall
have the right to conduct mining activity on the land covered by the license, in addition to the following rights:

1. 25.2.1 to conduct prospecting and exploration works on the area granted by the license;

2. 25.2.2 to construct mine, other buildings and facilities necessary for the extraction activities on the area
granted by the license;

3. 25.2.3 to construct commercial infrastructure necessary for extraction acitivities on the mine tenure;

4. 25.2.4 to create derivative deposit and industrial wasteapproved by Technical and Economical
Feasibility Report and to separate minerals from the derivative deposit and industrial waste created in
the course of the mine;

5. 25.2.5 to conduct transportation of minerals extracted, and construct buildings and facilities designated
for loading and unloading;

3. 25.3 The area for extraction of salt and other common minerals shall be no less than 100 meters on
each side, the area for extraction of other minerals shall be no less than 500 meters in length on
each side.
4. 25.4 The mining license shall be granted for a period of up to 20 years.

5. 25.5 The number of mining license to be granted to one legal entity shall not be exceeded to five.

19
Article 21. Processing license
1. 26.1. Processing license shall be granted according to the following principles:

26.1.1.processing license can be granted to a interested legal entity who submits application for a
processing license and meets the conditions and requirements specified by this law;
26.1.2. processinglicense may be granted through a competitive tender selection procedure;
2. 26.2. The processinglicense holder shall have the right to conduct processing activity, in addition to
the following rights:
26.2.1. topossess and use land for industrial purpose;
26.2.2.to construct industrial unit for processing and other buildings and facilities necessary for the
processing activities on the area granted by the license;
26.2.3.to construct commercial infrastructure necessary for processing activities and industrial unit
for processing;
26.2.4. to conduct transportation of raw materials and processed products, and construct buildings
and facilities designated for loading and unloading;
3. 26.3. The period of processing license shall be set by the State Administration in consideration of
the Technical and Economical Feasibility Report and the capacity of the industrial unit for
processing.
4. 26.4. The number of processing license to be granted to one legal entity shall not be limited.

5. 26.5. The area granted for industrial purposes according to the processing license shall not overlap
in any way with the land prohibited to conduct prospecting, exploration, mining and processing
activities thereon, and with areas granted by valid licenses.
6. 26.6. In all cases except set forth in 26.7 of this law, issues regarding possession and utilization of
land for industrial purpose shall be regulated by land possession and utilization agreement as
specified in the Land Law of Mongolia.
7. 26.7. If the holder of a mininglicense has applied for a processing license, the processing license
may be granted on the area of extraction license in consideration of the applicant's preferences. In
this case land possession and utilization agreement shall not be required to be made.
27. Validity of the license
1. 27.1. License shall be valid for the entire period initially granted for or within the period extended



thereon.
2. 27.2. The period of the license will cease in the following cases:

20
27.2.1. license holder has returned the licensed area before expiry date as defined in this law;
27.2.2. decision made by related authority to take the licensed area for purpose of special national and
local use and to reserve mineral deposit as set forth in this law;
27.2.3. the period of a license has expired and has not been extended;
27.3. License shall not be revoked on the grounds that are not specified in this law.
Article 28. Period of renewalof license
28.1. Period of the prospecting and exploration licenses shall not be renewed.
28.2. The State Administration may extend the period of the mining license twice, up to 20 years each time
considering the reserve of the deposit.
28.3. The period of extension for processing license shall be determined by the State Administration based
on the Technical and Economical Feasibilty Report of the production activities.
Article 22. Renewal of the license
1. 29.1. State Administration shall notify on the expiration of the license 45 (forty five) days prior to the
actual expiration date to the license holder as per the approved procedure.
2. 29.2. The license holder shall submit its request to renew the period of the license within no less
than 15(fifteen) days before the expiry as provided in this law.
3. 29.3. The State Administration shall refuse to accept requests to renew the licensewhich had not
been submitted within the period as specified in 29.2 of this law.
4. 29.4. If the license holder has submitted its request for renewal of license in the period specified in
29.2 of this law, the license shall remain valid until such time when the state adminsitration shall
issue its decision on whether to renew the period or reject the request.
5. 29.5. The State Administration shall refuse to renew the license period in the following cases.

29.5.1. the license holder did not or does not fully meet the conditions and requirements specified in
Articles22 and 66 of this law;
29.5.2.obligations arising out of the permitted work plan,Technical and Economical Feasibility Report
and approved Work plan have not been performed;
29.5.3. exhaustion of the reserve at the deposit;
6. 29.6. The State Administration shall renew the license period in cases other than specified in 29.5 of
this law.
21
7. 29.7. The renewed period of the license shall be counted from the date of expiry of the initial period
of the license.
8. 29.8. The State Administration may issue the following decision in addition to the extension of the
license.
29.8.1. the renewal of the license to be enforced on fulfillment of certain conditions;
29.8.2. to reduce the area granted by the license in renewing the period;
9. 29.9. If the license holder has not submitted its request for licenserenewal within the period specified
in 29.2 of this law, or, the conditions to refuse renewal of the license have arisen, the State
Administration shall immediately notify other persons the interests of whom are affected by the
license, and which are registered in the license registration.



Article 30 Partial transfer of area granted by mining license
1. 30.1. It shall be prohibited to partially transfer the areas granted by exploration, mining and
processing licenses.
2. 30.2. The license holder may transfer a part of the area granted by a mininglicense to others in the
following cases.
30.2.1. the transferee is a holder of an extraction license; and
30.2.2. the area being transferred geographically borders that of the tranferee;
3. 30.3. The State Administration shall be obligated to notify third parties the interests of which are
being affected by the request to partially transfer the area granted by license in the following cases.
30.3.1.pledge agreement related to the license has been registered in the special permisssion
registration database;
30.3.2. agreement creating non-material property rights, joint ownership of interests, or transfer of
interest percentage has been registered in the license registration database;
4. 30.4. The agreement on transferring part of the area shall be valid upon registration thereof in the
license registration database of the State Administration.
5. 30.5. If the person has not fully met the conditions and requirements specified in 30.1 of this law, the
State Administration shall not register the agreement on transfer of partial area.
6. 30.6. The area transferred shall be registered in with the transferee's area in the cartographic and
license database; a separate license shall not be granted for the area transferred.
7. 30.7. The transferee taking the partial land shall be responsible for re-demarcating the cornerpoints
and border coordinates and reflecting and obtaining the approval for the relevant changes in the
extraction work plan and Technical and Economical Feasibility Report.
22
30.8. With the agreement entering into validity, the following shall occur:
30.8.1. the obligations of the transferor with respect to the transferred area specified by law and imposed
by the license from the State Administration shall be revoked;
30.8.2.the transferee shall be imposed the obligations with regards to the land transferred, specified by
laws and imposed by the state admnistration at the time of issuing the license;
Article 31 Amalgamation of the licensed area
1. 31.1. Areas granted by exploration, prospecting and processing licenses shall not be subject to
amalgamation.
2. 31.2. By notifying the license holder in advance, State Administrationmay issue a decision to
amalgamatetwo or more areas that geographically border each other and granted to the same
person.
22.3 The valid period of time for amalgamated licensed areas shall be defined by period of time of the most
recent license granted as stated in 31.2 of this law.
Article 32. Returning the area wholly or partially
32.1 The holder of the license may submit its request and wholly or partially return the area according to
the procedure approved by the State Administration.
32.2 Proof of rehabilitation obligation performance and certification of completed rehabilitation shall be
attached to the request to wholly or partially return the area.
32.3 The State Administration shall issue one of the following decisions upon review of the proof specified
in 32.2 of this law within 30 (thirty) days since the receipt of the request specified in 32.1 of this law.
1. 32.3.1 based on the certification of rehabilitation work, to receive the area and register it in the
cartographic and license registration database;
2. 32.3.2 if no rehabilitation has been done, or the rehabilitation work was not done appropriately, the
obligation to complete rehabilitation within a set time shall be imposed, or, to receive the land and



have the full compensation for rehabilitation work expenses borne by the license holder and
registration thereof shall be done in the license and cartographic registration database;
32.4 If the decision of the State Administration specified in 37.3.2 of this law has been issued, the
obligations and responsibilities related to the rehabilitation of the nature and environment shall remain valid
after the license holder has wholly returned the area until such time that they are performed.
32.5 In case of partial return of a prospecting area the remaining area shall fulfill the requirements set in
23.3, in case of exploration area, the remaining area shall fulfill the
23
requirements set in 24.3 of this law, and in case of partial return of amining area, the remaining area shall
fulfill the requirements set in 25.3 of this law.
32.6 The State Administration shall notify relevant authorities on the receipt of the whole or partial area and
inform the public.
Article 33.Transfer of license
1. 33.1 It shall be prohibited to transfer a prospecting license.

2. 33.2 It shall be prohibited to transfer exploration license within one year of its initial issuance

and any agreement entered into for its transfer in that period shall be invalid.
33.3 Except for the case specified in 33.1 and 33.2 of this law, the license may only be transferred by
Assignment of rights agreement in accordance with this law and other procedures approved conformity
therewith.
33.4 Holder of the license shall notify State Administration of the intention of the transfer no less than 30
(thirty) days prior to conclusion of the agreement on such transfer.
33.5 A state-owned legal entity that is holding the license for geological and mining activities shall have the
privilidged right to obtain the license on anassignment of rights agreementby the price amount.
33.6 If the transferee has not fully met the conditions and requirements specified in Articles 22 and 66 of
this law the State Administration shall not register the agreement to transfer the license thereto.
33.7 The agreement on transfer of license shall be valid upon registration by the State Administration in the
license registration database.
33.8 If the State Administration has received request to transfer the license, it shall be obliged to inform
third parties the interests of which are affected in the following cases.
1. 33.8.1 pledge agreement related to the license is registered in the license registration database;

2. 33.8.2 agreement to create interests, jointly own interest and transfer the interest percentage on the
non-material property rights created by the license is registered in the license registration database;
33.9 Upon registration of the license transfer agreement by the State Administration, all rights and
obligations of the license holder shall be transferred to the transferee.
34 Article 34 Pledge of license
1. 34.1 The license may be on pledge.

2. 34.2 The holder of the license shall submit its request to register the pledge agreement of the

license to the State Administration in the license registration database.
24
34.3 Upon receipt of the request to register the license pledge agreement, the State Administration shall
notify other persons the interests of which are affected in relation to the license registered previously in the
license registration database.
34.4 The State Administration shall register the request specified in 34.2 of this law within 3 working days in
the license registration database and issue a certification of such registration to the license holder.



34.5 The license holder shall submit its request to remove the license pledge registration from the license
registration database after the termination of the pledge agreement.
34.6 The State Administration shall register the termination of the license pledge agreement in the license
registration database upon the proof of the obligation fulfillment by the pledgee with respect to the
underlying pledge agreement.
34.7 If the license holder has failed to perform its obligation under the agreement, the pledgee shall submit
its request to to the State Administration to .transfer the license to other persons
34.8 If the transferee person suggested by the pledgee does not fully meet the requirements and conditions
defined for a license holder as specified in this law, the State Administration may refuse the request to
transfer the license.
34.9 The pledgee of the license shall not bear any obligations related to the license.
34.10 The State Administration shall not bear any obilgations to ensure the fulfilment of the license pledge
agreement.
35 Article 35 Creating interest in the non-material property rights created by the license
35.1 By issuance, registration and performance of the obligation imposed, the license shall create non-
material property rights for the holder.
35.2 The non-material rights created by the license shall serve as the guarantee to perform rights and
obligation created by the license solely for the holder of the license.
35.3 For the purposes of accessing its fruition, other persons may create interest in the non- material rights
of the license in the following ways.
35.3.1 investing;
35.3.2 co-operating;
35.3.3 completing contract works;
35.4 Agreements creating interest and directed at transferring the interest percentage in the non-material
rights of the license shall be made according to the conditions and requirements approved by the State
Administration and shall become valid upon registration at the State Administration according to this law.
36 Article 36 Revoking of license
25
36.1 The State Administration may revoke the license on the following grounds.
1. 36.1.1 the license holder did not or does not fulfil the conditions and requirements set by Articles 22
and 66 of this law;
2. 36.1.2 relevant state authority has inspected and found that thelicense holder did not or does not
fulfil the obligations under other permissions granted by relavant state administration and has
thereof notified the State Administration to revoke the license;
3. 36.1.3 it has been confirmed by the State Administrationthat the license holder has mined in the high
grade area;
4. 36.1.4 the authorized specialized inspector has submitted conclusion, and recommendations on
revoking the license as specified in 144.3 of this law;
5. 36.1.5 the exploration license holder has not started exploration activities within the period specified
in 93.5.1 of this law since the date of obtaining the Work authority;
6. 36.1.6 the mininglicense holder has not submitted its request to obtain Work authority within 12
(twelve) months since the decision has been issued to grant a mininglicense;
7. 36.1.7 the mininglicense holder has not started extraction works within timeframe stated in 94.5.1 of
this law since the date of issuamce of the Work authority;
8. 36.1.8 the State Administration has revoked the Work authority for a specific period of time in
accordance with 96.1 of this law, and the permission to conduct contracted works have not been
restored for 6 (six) months since the date on which the license was revoked for failure to fulfill the
requirements or perform the imposed obligations or eliminate the violations within the period;



9. 36.1.9 relevant authorities have determined that the activities of license holder may have created the
conditions may have arisen as a result of that are harmful, hazardous to the licensed area,
employees at the site, persons working nearby and citizens and inhabitants living in the
environment;
36.1.10 the license holder has failed to pay the license fees within the specified period as specified in this
law;
36.1.11 if the reimbursement and penalty have not been paid within 30 (thirty) days since the receipt of the
notification by the State Administrationas to fulfilment of the obligations under the agreement to pay
reimbursement in accordance with 110.6 of this law;
36.1.12 if liabilities as specified in 145.2 and 145.3 of this law have been imposed;
36.2 If the State Administrationdeems one of the grounds has emerged in accordance with 36.1 of this law,
the State Administration shall immediately notify the licence holder and, other persons the interests of
whom are affected by the license, and which are registered in the license registration.
36.3 If the license holder does not agree with the grounds specified inthe notification, it shall submit its
clarification with the relevant proof and materials to the State Administrationwithin 30 (thirty) days since the
receipt or date considered as receipt date. If the license holder
26
has not submitted its documents within this period the State Administration shall revoke the license.
36.4 The State Administration shall review the clarification, evidence and materials submitted within 30
(thirty) days and maintain the license valid if it deems such documents are well- grounded.
36.5 If the State Administration deems the clarification, evidence and material submitted by the license
holder as groundless it shall issue a decision to revoke the license within the period specified in 36.4 of this
law.
Article 37. Informing the public
37.1 If the State Administration has issued a decision regarding the announcement of tender for license
granting, receipt of the application for a license, granting a license, extending the license, change in the
size of the area granted by license, and revoking the license, it shall inform the public of the following within
5 working days since the decision has been issued through its own website and the media.
.
1. 37.1.1 the area size, location and type of license specified in the application for license;

2. 37.1.2 if the area size has been changed, the area and location of the area, period of license;

3. 37.1.3 extension period of license if any;

4. 37.1.4 area size, location of area and type of license when the decision was made to revoke or

license holder returned all of the area granted by license;
CHAPTER FOUR
Tender selection to grant license
38 Article 38 Announcement of the area to be granted by tender
1. 38.1. Central State Administration shall announce the area to be granted through tender in the first
week of February every year.
2. 38.2. Central State Administration shall have obtained the proposals of the relevant local self
governing authority in announcing the area to be granted through tender, according to the procedure
specified in article 39 of this law.
3. 38.3. Central State Administration shall have obtained comments of the state agencies in selecting
the area to be granted through tenderfor that particular year according to the article 40 of this law.
4. 38.4. Central State Administration may have obtained proposals from legal entities in selecting the
area to be granted through tenderfor that particular year.
5. 38.5. Central State Administration may announce tender selection processes for the following areas:



38.5.1. areas not granted by license and not applied for any license; 38.5.2. areas released due to
the invalidation of the license;
27
38.5.3. areas released due to the revocation of the license;
38.5.4. areas which have been released due to the return by the license holder; 38.5.5. areas released
from the state and local special use;
38.5.6. for areas released from the state reserve;
6. 38.6. Central State Administration may announce the area to be granted through the tender as
specified in 38.5.2-38.5.6 of this law as integrated or segregated.
7. 38.7. Central State Administration may announce tender for the areas that have been amalgamated
or the same area that has been divided in accordance with 38.5.2-38.5.6 of this law.
8. 38.8. Central State Administration shall not announce tender for the areas on which prospecting,
exploration, mining and processing activities are prohibited, or the areaswhich have been taken for
state reserve or state and local special use.
9. 38.9. Central state administration shall not re-announce tender for the area when conditions as
defined in 59.2 of this law have arisen and in the duration of 90 days during which applicant shall
nominate another entity.
10. 38.10. The area to be announced for tender to grant prospecting exploration, mining and processing
license shall have a tetragon shape the border of which shall be marked by straight lines,
overlapping with the lines of longitude and latitude.
11. 38.11. The parts bordering with the following areas and territories may be non-straight line for
purposes of avoiding the overlapping.
38.11.1. state border;
38.11.2. areas prohibited or limited to conduct prospecting, exploration, mining and processing
activities thereon;
38.11.3. areas taken state reserve and state and local special use;
38.11.4. natural formation such as lakes and ponds considered not possible to be integrated into the
prospecting and exploration area;
Article 39. Obtaining proposal from local self governing authority
1. 39.1. The State Administration shall have obtained the proposals from the relevant local self-
governing authority in announcing the area for tender selection process, according to the procedure
specified in this article.
2. 39.2. The central state administration shall notify the relevant local self-governing authority of areas
to announce the tender in following manner:
39.2.1. to notify the relevant soum or district CitizensRepresentativeKhuralif the area requested by
the license is in one soum or district territory;
28
39.2.2. to notify each soum or district CitizensRepresentativeKhuralif the area requested by the license
overlaps 2 or more soum or districts territories;
3. 39.3. The local self governing authority shall make a decision supporting or rejecting the announcement of area
for tendering within 30 (thirty) days since the date of the receipt of the notification by the state central
administration as specified by 39.2 of this law.

1. 39.3.1. if the decision is to reject the announcement, the grounds for such rejection shall be specified
clearly in the decision;

2. 39.3.2. the local self-governing authority shall submit through certified post its decision to the state
central administration within 21 days as specified in 39.3 of this law;



3. 39.3.3. If the local self-governing authority has not responded to the notification of the state central
administration within the period specified in the law, it shall be deemed that announcement of the area
for tendering has been supported;

4. 39.4. If the relevant local self-governing authority has rejected the state central administrative
authority's proposal to announce area for tendering, the tender selection shall not be announced.
Furthermore, the area shall not beannounced for tendering for the period of 4 years, since the date
of decision of rejection by local self-governing authority.
Article 40. Obtaining comments from state agencies
1. 40.1. Before announcing the tender, Central State Administration shall obtain comments from
following state agencies regarding the area applied for tendering and the license type to be granted
through tender.
40.1.1. Central state administrationin charge of nature and environmental affairs; 40.1.2. Central
state administration in charge of urban planning, and infrastructure; 40.1.3. Central state
administration in charge of land relations;
2. 40.2. Notification on announcing the area to be tendered for mining and processing licenses shall be
submitted to the administrations as specified in 40.1 of this law as well as thecentral state
administration in charge of economic development.
3. 40.3. If state agencies as defined in 40.1 and 40.2 of this law have particular comments regarding
the area applied for tendering, they shall submit its comments to the central state administration
within 21 (twenty one) days following the date of receipt of the notification. In that case state central
administration shall discuss with that particular state agency on comments raised.
Article 41. Announcing the area for tender on land in ownership, possession andutilization by others
41.1. The State Administrationmay announce the area for tender on land owned by citizens, possessed or
utilized by others based on the permission of the land owner and possessor in cases other than those
rejected by the relevant soum or district Governor as specified in the "Law on Allocation of Land to
Mongolian Citizens for Ownership.
29
Article 42. Announcing the area for tender to grant license with the national border zone
42.1. Area for tender and license to grant prospecting, exploration, mining and processing licensewithin the
border zone shall be announced by the decision of the Government.
42.2.
42.3.
Applicant which has met the conditions and requirements as specified in Article 22 and 66.4 of this law
shall be entitled to participate in tendering for the area for license granting within national border zone. .
The Governmentmay imposeexclusive control regime for prospecting, exploration, mining and
processingactivitieswithin the national border zone.
Article 43. Announcing the tender to grant license
1. 43.1. State Administration shall announce the date of the tender to the public through daily
newspapers within 14 (fourteen) days after the announcement of the area for tendering by the state
central administration.
2. 43.2. The announcement on conducting the tender shall contain information as specified in this law
and in the procedure approved by the state administration on the conditions and requirements of the
tender, and shall be deemed invalid if the relevant information is not specified.
43.3 An area where minerals concentration has been detected as a result of reconnaissance and
prospecting works funded by state budget shall be announced for tendering a license only for exploration
activities.
43.4. An area where minerals reserves have been determined as a result of the exploration funded by the
state budget shall be announced for tendering a license only for mining activities.
Article 44. Announcing of the tender to grant exploration and mining license for derivative deposits and
industrial waste



1. 44.1. For the purpose of rehabilitating the environment, the state administration may announce the
tender for exploration and mining license for derivative deposits and industrial wastes on the land
which has been used before the adoption of this law and which has not been licensed during the
adoption of this law.
2. 44.2. In announcing area for tender to grant exploration and mining license in derivative deposits
and industrial waste site as defined in 44.1 of this law, there shall be no requirement to take
comments and proposals as stated in 39, 41.1.2, 41.1.3 of this law.
3. 44.3. Exploration license holder in derivative deposits and industrial waste may have been exempted
from a license fee and mining license holder in derivative deposits and industrial waste may have
been exempted from the mining royalty in line with 44.1 of this law.
Article 45. Obtaining the comments from state agencies
30
Article 46. Objecting the tender announcement
1. 46.1. Any entity shall have the right to object the announcement of the tenderin following manner:

1. 46.1.1. An entity which is making the objection to the announcement of the tender shall submit to state
administration its statement in writing by which the grounds for objection have been clearly noted.

2. 46.1.2. The entity objecting the announcement of the tender shall submit the objection statement within
14(fourteen) days since the central state administration has publicly announced the area for tendering
for license granting by the state central administrative authority.The entity bjecting the announcement of
the tender shall issue the object within

2. 46.2. If the State Administrationis convinced that the objection has been well-grounded, it may not
announce the tender.
3. 46.3. The State Administration shall ensure that objection statement and objection grounds have
been accessible and open to the public and any interested entity until until the final decision shall be
issued whether to grant or reject the request for license.
Article 47. Right to submit the application for participation in tender
47.1. Any entitywhich meets requirements and conditions as defined in this law and thereof eligible to hold
a licenseshall have the right to participate in tender.
Article 48. Receiving the applications for participation in tender
1. 48.1. The starting date of receiving application to participate in tender shall be no less than 30
(thirty) days following the announcement of the tender and the deadline shall be no less than 14
(fourteen) days following the starting date.
2. 48.2. When receiving an application for tender the State Administration shall register the application
and documents attached to the application in the primary application registry, record the number,
date, hour and minute of the registration on each page of the application and attached documents to
the application and issue the notification to the applicant that the application has been registered.
3. 48.3. Any other procedure regarding the application and receiving of the tender applications shall be
regulated by the procedure approved by the central stateadministration.
4. 48.4. List of documents which have to be attached to the applicationshall be announced from time to
time, by the State Administration.
5. 48.5. State Administration shall refuse to accept the application for tender if it does not fully comply
with the conditions and requirements set out by this law and the procedure approved by central state
administration as to submitting the applications for tender participation.
Article 49. Evaluating tender documents
31
1. 49.1. The criteria to evaluate the tender applications shall be announced by state administration beforehand
and the following conditions shall be evaluated at every tender selection.



1. 49.1.1. conditions to grant license specified in articles 22 and 66 of this law;

2. 49.1.2. proposal to voluntarily increase the mining royalty rate;

3. 49.1.3. proposals regarding the conditions to develop the agreements on Cooperation and Local
development set forth in 86.1 and 86.2 of this law;

4. 49.1.4. proposal to voluntarily increase the rate of reimbursement for the exploration expenses, incurred
to the participant to tender for granting mining license for the deposit, where exploration and reserve
determination was funded by the State budget and registered in the national consolidated registration.

2. 49.2. The State Administration shall, upon consideration of the conditions and critera specified in
49.1 of this law, announce the participant which has gained the highest score as a winner of the
tender.
3. 49.3. Participant which has failed to meet the main conditions and requirementsas defined in 49.1.1
of this law shall not be announced as a winner of the tender.
Article 50. Announcing the tender winner
1. 50.1. If the State Administration has selected the winner of the tender process, it shall immediately
inform in written form the winner and the other participants of the tender.
2. 50.2. While informing the other participants which have not been selected in the tender, state
administration shall clearly note the grounds for why they haven't been selected.
3. 50.3. The winner of the tender selection procces shall inform the State Administration in writing of its
acceptance within 14 (fourteen) days since the receipt of the notification as defined in 50.1 of this
law.
50.3.1. State Administration shall notify in writing the following administrations about the selection of the
tender winner: .
50.3.2. local governments and local self governing authority in the territory wherein the area is to be
granted with license;
50.3.3. central state administration in charge of nature and environmental affairs;
50.3.3. state administration in charge of land relations;
50.4. In addition to the administrations as specified in 50.3 of this law, the central state administration in
charge of economic development shall be notified about the winner of tender for granting mining and
processing licenses
32
50.5. The State Administration shall inform the public of the information regarding area granted by license
based on a tender, type of special pmierssion and the winner of such tender within 7 (seven) days since
the date of issuance of such decision.
Article 51. Cases whereby tender winer has not been selected
1. 51.1. The State Administrationy may select none of the participants in the tender on the basis of the
grounds as specified in49.3 of this law.
2. 51.2. In case whereby no winner has been selected in the tender, the State Administration may or
may not re-announce the tender specific to the area
3. 51.3. If the State Administration has deemed impossible to select a winner in the tender in
accordance with 51.1 of this law and has issued a decisionin concurrence with 51.2 of this law, the
participants of the tender shall be immediately notified in writing.
Article 52. Granting license to the tender winner
1. 52.1. If the applicant has fulfilled its obligation as specified in 52.3 of this law State
Administrationshall issue a decision to grant the license and thereof grant a license certificate to the
tender winner after 30 (thirty) days since the date on which the winnerwas publicly announced in
concurrence with this law and according to the following principles:
52.1.1. to grant prospecting license to the winner of the tender for prospecting license; 52.1.2. to
grant exploration license to the winner of the tender for exploration license; 52.1.3. to grant mining


Draft Minerals Law (New) Mongolia December 5-2012

Draft Minerals Law (New) Mongolia December 5-2012

Recomendados

Recomendados

Mais conteúdo relacionado

Destaque

Destaque (6)

Semelhante a Draft Minerals Law (New) Mongolia December 5-2012

Semelhante a Draft Minerals Law (New) Mongolia December 5-2012 (20)

Mais de No to mining in Palawan

Mais de No to mining in Palawan (20)

Draft Minerals Law (New) Mongolia December 5-2012