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Mining & Natural Resources

Despite its recent struggles, mining remains a key sector for Mongolian economy. In order to boost the falling mining revenues, the Government of Mongolia has introduced much anticipated changes to the legal environment governing natural resources in 2014-2015. The requirement of the mandatory government review and approval in foreign investments in Mongolian natural resource businesses (enacted in Law of Mongolia on the Regulation of Foreign Investment in Business Entities Operating in Sectors of Strategic Importance) has been repealed. Consequently, any foreign investment, except for investment by a foreign state-owned entity, is permitted and does not require any Government of Mongolia review and approval (other than the standard licensing requirement applicable to any non-Mongolian investor).

Next, the Parliament has approved so-called “State Minerals Policy” in January 2014. While largely a declarative document, the Policy sets out broad directions and objectives for development of the Mongolian mining. If properly followed and implemented by the Government (such as through development of new mines and passing of new laws and regulations), the Policy has the potential effect of stabilisation of, among others, the legal environment for investment into and development of mines.

The Law on Minerals has been amended twice – in July 2014 and February 2015. Main essence of the amendments is to stabilise legal environment for minerals, to develop mechanism to consider views of investors and professional associations, to extend duration of exploration licenses and to specify minimum requirements for strategic importance deposits that enable the government to hold partial stake in such deposits.

Further according to the Minerals Law, the Mongolian state may hold stake of up to 50% together with a private legal entity in the exploitation of a minerals deposit of so-called “strategic importance”. A minerals deposit of “strategic importance” is when state-funded exploration was conducted to determine reserves. The state’s share percentage is determined by an agreement on exploitation of the deposit considering the amount of investment made by the state. Then, the state may hold up to 34% of the shares of the investment made by a license holder in a mineral deposit of strategic importance where proven reserves were determined through funding sources other than the state budget and the percentage of the state share is determined by an agreement on exploitation of the deposit considering the amount of investment to be made by the state budget.

In addition, the Law on Prohibition of Granting Exploration Licenses of 2011 has been set aside. This has, consequently, enabled granting and/or transfer of exploration special licenses amongst private parties.

Our lawyers provide broad range of legal services, including representing clients in front of arbitral forum and courts, communicating with government organisations, advising and assisting to get relevant licenses and special licenses and to make contracts, issuing legal opinions and due diligence, in accordance with recent legal environment arose from positive changes and reform on state policy and legal environment in mining sector.

Our legal service in mining sector is led by Odmaa Tsevegjav. Previously, Odmaa was a research fellow in the National Legal Institute and then general counsel in a large Mongolian mining developer. Odmaa is a member of the Mongolian Bar Association and is fluent in English.

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