Editor-In-Chief ARIUNTUYA.N
The Mongolian Government revised the regulation on mineral license bidding (April 12, 2022) last month, which was made public this month. Currently, exploration licenses are issued by a bidding process only. The tender has been digitalized to automate application processing, license issuance, submission, and reviews by an online platform, and to ensure transparency and openness of the tender review commission decisions. The reform is in line with the digitization policy and the objectives of intensifying explorations.
The goal is to improve the economic turnover of areas with mineral resources by easing licensing process using the online system. Under the rule approved in 2008, the Mineral Resources and Petroleum Authority (MRPAM) has set out 8.4 million hectares of land coordinates by a resolution from the Government of Mongolia. A total of 276 exploration licenses have been issued for 1.2 million hectares in total as a result of biddings for 470 sites on a total area of 2.8 million hectares. On average, about 50 new licenses are issued each year. The new regulation is expected to announce a relatively large area for exploration tenders. 2.8 million hectares of the 8.4 million hectares approved by the government were declared in 2018. The new regulation will allow exploration in the entire area set out before. On the other hand, the digital selection process is creating a possibility for license issuance in larger areas. According to the regulation, “the size of one exploration area in one license must not be less than 25 hectares and not more than 150 thousand hectares”.
The remaining area has not been announced after the coordinates were approved; the number of licensed areas will be roughly 350-400. The Ministry of Mining and Heavy Industry has already announced that it will issue 400-500 exploration licenses, which is in line with this number. These areas were selected by professionals based on the National Geological Survey’s mineral database. They are good sites that can attract investors. This means that companies will be able to choose from these sites and submit applications to the sites of interest. Particularly, the applied area will be announced openly.
For example, If ten companies apply for different sites, those sites will be announced accordingly. Before a very small number of areas were included in one bidding, thus, some tenders did not have a single participant. Policymakers are trying to fix this with the revision.
Another change is the acceptance of licensing for the maximum bid. The evaluation score was changed from 45 in the financial proposal and 55 in the technical proposal to 70:30, giving 70 points in the financial proposal. The lack of funds for geological exploration has been a problem that has emerged in the Mongolian geological exploration sector in recent years. Over the past decade, the policy of curbing exploration licenses has largely left local companies in the geological exploration sector behind, and licenses have been revokСed due to late payment in the last two years.
This change allows for higher prices as an arrangement to take responsibility for the assets. The selection of mineral licenses will be conducted through the online public procurement system, https://www. tender.gov.mn/. It has another tab for license tenders. This system has been used for ten years, with more than 20,000 tenders being announced annually. Its safety has recently been accredited by an international organization. The Ministry of Mining and Heavy Industry explains that it is transparent, open, reduces human errors, avoids subjective evaluation, and ensures fair participation of businesses. Price and other information provided by companies in the tender can be seen transparently and openly. On the other hand, the selection process will be easier for the enterprise. Before that, the preparation, announcement, submission, and selection process took significantly longer. The online system will greatly facilitate this process, which seems slow and complicated for investors. The new regulation shall be effective for exploration license bidding and is set to be announced on May 31, 2022. But the selection has been postponed. During a visit to Umnugovi province in late May, Prime Minister Oyun-Erdene. L complained that living space was shrinking due to mineral licenses.
The selection of licenses was postponed due to the Prime Minister’s directive to address the issue regarding the prioritization of provinces and soums. The first step is to intensify our exploration at a favorable time for the geological exploration industry, which in turn, will create certainty over unpredictability.
Mining Insight Magazine May 2022, №05(006)
