GROWING ARTISANAL AND SMALL-SCALE MINING SECTOR DESPITE UPS AND DOWNS

Artisanal and small-scale mining (ASM) sector in Mongolia has experienced numerous ups and downs since the 1990s. The ASM first appeared in Mongolia when unemployment surged due to the transition from a centrally planned to a market economy. The dzud that happened in late 1990s exacerbated the already informal activity. The number of people working in the sector peaked in the 2000s, reaching 100,000 working, primarily in gold mining. At first, the government ignored the sector assuming it would disappear as the economy grew. However, that was not the case. So, the Government finally recognized artisanal mining in 2010 by amending the Minerals Law and paved the way for artisanal miners to operate legally.

Since then, the sector has faced several legal changes, including revisions and suspensions. The ASM Regulation was revised in 2017 making some improvements to address the growing needs of the artisanal miners. However, the environmental damages that ensued after the 2017 change resulted in the Government suspending key clauses of the Regulation such as issuing ASM land permits and concluding new mining contracts.

During this suspension between 2019 and 2022, the sector faced further downturns, but with the help of stakeholders, including the active intervention of the planetGOLD Mongolia project, the ASM regulation was amended and ratified in 2022, providing relief to artisanal miners in Mongolia.

Unfortunately, another potential down cycle has begun. The current draft of the Minerals Law amendment has removed key clauses recognizing the ASM sector. This has alarmed many ASM sector stakeholders, including mining associations and more than 40,000 artisanal miners working in 19 of Mongolia's 21 provinces. 

As a result, in collaboration with the Ministry of Environment and Tourism (MET) of Mongolia, the local governments of Khovd, Gobi-Altai, and Selenge provinces, and the Mongolian ASM National Federation (ASM NF), the planetGOLD Mongolia project has organized ASGM Fora in three project locations in September and October 2023 to discuss the sector condition and implementation of newly approved ASM regulation, as well as the consequences that may arise from the elimination of key clauses recognizing the ASM sector from the Minerals Law. The ASM NF, artisanal miners, representatives from provincial and soum governments, and the Ecological Policy Unit all took part.

The environmental and social impacts of artisanal mining without the ASM clauses in the Minerals Law, and the regional implementation of the ASM regulation since its ratification in 2022, were hot topics at the forums. Furthermore, all participants mentioned that an in-depth comprehension of the ASM regulation is essential for both government officials and artisanal miners to effectively implement the regulation.

Mr. Erdenebat Shoovdor, Head of the Governor Office of Gobi-Altai province: “All relevant government officials, particularly provincial and soum governors, must be aware of the ASM regulation to assist artisanal miners in adhering to the legislation in their activities, which include environmental preservation and tax payment. Understanding the ASM regulation is also necessary for artisanal miners to conduct safe mining practices.”

Mr. N.Delgerdalai, Specialist of the Government office of Selenge province in charge of Environment and Mining Policy: “Artisanal miners who understand the ASM regulation in depth may be in a better position to request that government officials strictly enforce the regulation and give prompt decisions.”

Ms. D.Tuya, artisanal miner and leaderof the "Shijir Khishig" ASGM partnership, Selenge province: "We hope the government sees us through a responsible lens; we always adhere to the regulations and laws, we always pay our income taxes, we always pay social insurance, and we don't use toxic chemicals or overly huge techniques that are harmful to the environment. We wish to keep the key ASM-related clause in the Minerals Law amendment."

Ms. B.Altantuya, Artisanal miner, Board member of “Friendly artisanal miners” ASGM partnership, Darkhan-Uul province: “All artisanal miners strictly adhere all applicable laws and regulations, and we not only rehabilitate the mined areas but also contribute to the local economy.”

Mr. N.Narantugs, President of the ASM National Federation: "Between 2019 and 2022, as the sector struggled with regulatory uncertainty, there was a 300-fold increase in illegal mining crime, 45,286 people participated in unlawful mining, and 15 deaths. As a result, it is critical that we keep the key ASM clauses in the Minerals Law Amendment. If appropriate action is not taken, illegal mining will be the only alternative for artisanal miners, and the catastrophic incidents that occurred between 2019 and 2022 may recur."

Ms. D.Erkhembayar, Specialist of the Government office of Gobi-Altai province in charge of geology and mining: “ASM organizations have rehabilitated 80.65 hectares of land in the Gobi-Altai province applying technical and biological approaches.”

Ms. B.Ariundolgor, Specialist of the Environment and Tourism Department of Khovd province: Providing an appropriate legal framework for artisanal miners has a significant impact on not just preventing illegal mining, but also on ensuring environmental sustainability.

Mr. Altanbagana Bayarsaikhan, planetGOLD Mongolia National Project Manager: In 2015, Mongolia became a party to the Minamata Convention on Mercury, which requires the country to eliminate mercury use in the ASGM sector. A favorable legislative climate supports not just the aim of this convention but also the formalization of the ASM sector.

The small-scale mining sector can be considered a growing sector as it is a player in the gold supply chain, providing livelihoods and economic opportunities. At the same time, there is an opportunity to reduce many of the risks caused by illegal mining through ASM Formalization. Therefore, enhancing formalization of the ASGM sector is critical for fostering long-term, responsible, and ethical practices in thesector. It benefits miners, local communities, and the economy as a whole by establishing a legislative framework that promotes environmental stewardship, safety, and economic progress.

The elimination of the key ASM clauses from the Minerals Law could lead to numerous adverse effects, including an increase in illegal gold trade, a decrease in gold traceability, and a worsening of environmental damage. Furthermore, as was the case in 2019, there is a significant risk that Mongolia may "fall into" the Financial Action Task Force's (FATF) grey list, which has asked Mongolia to make its gold trade more transparent.

We, the planetGOLD Mongolia project, are pleased to have been a contributor to the effort for more formal, professional, and responsible ASM in Mongolia between 2019 to 2022, when the new regulation was being considered and ultimately approved. With this achievement, the planetGOLD Mongolia project will continue to strive for the preservation of ASM regulations as well as the improvement of safer, cleaner, and profitable small-scale gold mining.

The outcomes of the three forums will be communicated with relevant government agencies in as a Recommendation for further consideration.