It is our pleasure to share with you six activities AMEP and its partners will be implementing in FY 2020-21.  The Australian Department of Foreign Affairs and Trade and Mongolian Ministry of Finance approved these activities because they all meet AMEP’s Activity Selection criteria and contribute to creating an enabling environment for investment in  Mongolia’s extractives sector. These activities are:

1. Exploration Licences Reform;
2. Exploration and Reporting Guidelines;
3. Environmental Auditors’ Certification;
4. Royalties on Minor Elements;
5. Improved Public Participation in Environmental Impact Assessments; and
6. Effective Tax Rate Study.

Here are the detailed descriptions for each activity.

Exploration Licences Reform. AMEP is pleased to partner with the Ministry of Mining and Heavy Industry (MMHI) to examine and improve this important aspect of Mongolia’s competitiveness. In particular, AMEP will help the MMHI by introducing international licencing good practices, producing a report on licencing systems in the most relevant Australian jurisdictions and considering the relationship between geo-science data and methods for allocating licences. This work signals to the investment community that Mongolia is serious about reforms to make it more competitive and open for business.

Exploration and Reporting Guidelines. In partnership with the MMHI, AMEP will engage the Center for Mineral Resources, Geo-information and Training of the Mongolian University of Science and Technology to develop methodological guidelines for geologists to standardize exploration techniques and reporting of seven key minerals, namely aluminum ore, lithium-caesium, graphite, rare earth elements, industrial salts, carbonate rocks, and sand and gravel. The widespread use of such standardised reporting of mineral reserves and resources based on these guidelines will contribute to greater efficiency, transparency, and clarity of the reserve and resource registration process.

Environmental Auditors’ Certification. With the support of Ministry of Environment and Tourism (MoET), AMEP will work with the Environmental Auditors’ Association of Mongolia (EAAM) to establish a certification system to assure the professional standards of auditors and a verification system for auditing companies. This will include institutional capacity building for EAAM to administer the certification and verification systems.  AMEP will also develop a pilot competency-based training module for environmental auditors with a focus on applying the new methodology under Resolution A/809 as well as other professional standards and ethics.   This will help EAAM to build the professionalization of the sector and the standards of environmental auditing practice, leading to higher quality audits to comply with legal requirements.  Improved audits help to build public confidence in the industry’s environmental management and can lift overall standards of institutional framework.

Royalties on Minor Elements. In close consultation with the MMHI, Ministry of Finance (MoF), General Department of Taxation (GDT), MRPAM, and Mongolian Customs Office, AMEP will contribute expert advice to a review of the current legal framework that results in royalties being imposed on minor elements in mineral concentrates. AMEP plans to 1) conduct an assessment of international good practice with regards to the treatment of minor elements found in concentrates within royalty regimes; 2) design a revised methodology for the calculation of minor elements; and 3) connect Mongolian officials with counterparts in Australian state government treasury departments for calls or online meetings to discuss the methodology for calculating royalties in practice in Australian jurisdictions. This activity helps clarify conflicts in existing laws and regulations, achieve consensus between MMHI, MoF and GDT and signals to international investment community that Mongolia is prepared to act on reforms to improve its competitiveness.

Improved Public Participation in Environmental Impact Assessments. Under this activity, AMEP will select a pilot soum in consultation with MoET and examine public participation in Detailed Environmental Impact Assessment (DEIA) to determine whether amendments are needed to regulation to improve the process. First, a case study will be done to seek answers to questions, such as how optimally are meetings convened and run; how many people attend and how representative are they; how are views recorded and incorporated into the report/reported back to MoET; is there a proper explanation of the project and process; and are meetings focused on issues relevant to the DEIA? With this work, AMEP plans to develop recommendations for amending the Ministerial decree #A-03 2014 to improve public participation that is believed to establish positive and productive relationships between community, government, and companies at an early stage of project development, and result in better decision making around environmental impacts and their management.

Effective Tax Rate Study is designed to model an optimal tax rate for growing the industry by taking current tax rates, royalties, depreciation allowances, country risk, ownership rules, and local costs into account. Such an undertaking signals to international investors Mongolia’s seriousness to increase its competitiveness. The study will contribute to a broader agenda led by the Government of Mongolia to foster growth and assist in economic recovery after the challenges of COVID 19.