Mongolian National Mining Association (MNMA) President N.Algaa answers MMJ’s questions on the recently started practice of online issuance of exploration licences.Many in the mining sector are not happy with the whole process and complain of delay and unfair decisions. How do you see the system working?At the moment, 120 online applications are accepted per day, but the problem is that the allocation process is not connected electronically to cadastral registration records. This means that checks on the area over which a licence is sought have to be made manually in each and every case. It naturally takes much time to see if the areas overlap with one another or with an existing licence, or is otherwise ineligible. Usually such checks on applications received on a Monday can be completed only on the Friday of that week and only then is a decision taken.
I don’t know why the two essential components of the decision-making process are not linked. It may be because of a lack of technical expertise, and it may also be to protect cadastral records against hacking. In any case, VPN equipment, and the software which receives applications, cannot connect to the cadastral registration software, and that is why the online allocation system has failed to meet expectations. Several complaints have already been submitted to the Mineral Resource Authority of Mongolia (MRAM).
It is now legally mandatory to get the local government’s approval before a licence is issued. How is this being done?The Law on Minerals allows local governments 30 days to decide on whether they favour the area to be licensed. A meeting of the Citizen Representatives’Khural has to take the decision. Approval should not be withheld except when the area is marked for local special needs. Such marking is possible only under clear regulatory provisions in the Land Law, and we expect local governments to follow the legal provisions, both in letter and spirit. However, more often than not, they are merely vetoing the application, without advancing any reason for their lack of support.
When the Mineral Law was amended in 2006, the MNMA had proposed that the government should allocate a certain number of exploration licences per annum only after clearing them with local governments, but this was not accepted. Now when the Mining Ministry and the MRAM report that the local governments are all too often refusing to approve grant of a licence, I wonder how these governments, without sufficient and skilled manpower, can take such decisions. After all,any natural resource is not local property, it is the state’s.
The protection of local interests is regulated by the Land Law, but today, when mineral exploration and extraction licences are not granted on 75 percent of Mongolian territory, if local governments do not support applications, exploration work will come to a halt.
According to the latest information from the Mining Ministry, there are 1,300 extraction and 1,400 exploration licences. That equality of numbers is not encouraging in the long run. Investors in exploration projects take a high risk, because only one among 1,000 projects will be successful. With 1,400 exploration licences, the average likelihood of discovery of worthwhile depositsis just one. Only extensive exploration will produce reliable data. Mongolians would like licences to be allocated in a clear and transparent manner, but the government cannot do that.
What do MNMA members think of the allocation procedure?To get a number for your submission, you first have to enter the MRAM website, and pay a fee of MNT500,000. You can enter only with VPN equipment such as a flash disk, and this costs MNT280,000. Then you fill an A4 size table, with information like the company’s name, registration number, the soum and the aimag where the area applied for is, etc. Most applicant companies say this takes between 40 seconds and over a minute but one is allowed only 10 seconds.
After discussing things with our members, particularly transnational companies with experience of exploration work, we asked MRAM what the perceived cyber security threat was and if the time to provide the information could not be extended. N.Chinbaatar, of the Cadastral Department there, said the link to the cadastral records cannot be set up as the security threat нs real. His suggestion on the second issue was that the companies hire an IT specialist, who can put in the data faster.
What methods are followed in other countries when exploration licences are issued?We have not made any study but I have heard about how transparent the process is in many countries. Visiting Australia in 2000, I observed that 5 different systems were followed in 5 different states there. These included online allocation, selection through examining documents, and registration of claims of those who had raised their banner in selected areas.
How much money is contributed to the economy by our present system?Whatever the State earns is welcome because no new licence was issued in the past several years, but the actual revenue is negligible in the national context, given that only 120 applications are allowed per day.