Mongolia


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Mongolia has significant copper, gold, coal, molybdenum, fluorspar, uranium, tin, and tungsten deposits. Minerals accounted for 46 percent of gross domestic product in 2010 and 80 percent of exports in 2007. The economy grew 18 percent in 2011, largely on the strength of commodity exports to China and other nearby countries.


Mongolia's Performance on the Resource Governance Index

Mongolia received a "partial" score of 51, ranking 26th out of 58 countries. A very good Institutional & Legal Setting score was contrasted with Mongolia's poor performance on the Reporting Practices component.

Rank
(out of 58)
Score
(out of 100)
26 Composite Score 51
9 Institutional & Legal Setting 80
Freedom of information law 67
Comprehensive sector legislation 67
EITI participation 100
Independent licensing process 83
Environmental and social impact assessments required 50
Clarity in revenue collection 100
Comprehensive public sector balance 50
SOC financial reports required 100
Fund rules defined in law N/A
Subnational transfer rules defined in law 100
41 Reporting Practices 39
Licensing process 67
Contracts 33
Environmental and social impact assessments 17
Exploration data 83
Production volumes 67
Production value 56
Primary sources of revenue 67
Secondary sources of revenue 50
Subsidies 33
Operating company names 67
Comprehensive SOC reports 0
SOC production data 0
SOC revenue data 0
SOC quasi fiscal activities 0
SOC board of directors 0
Fund rules N/A
Comprehensive fund reports N/A
Subnational transfer rules 100
Comprehensive subnational transfer reports 67
Subnational reporting of transfers 0
37 Safeguards & Quality Controls 49
Checks on licensing process 89
Checks on budgetary process 78
Quality of government reports 58
Government disclosure of conflicts of interest 100
Quality of SOC reports 0
SOC reports audited 0
SOC use of international accounting standards 0
SOC disclosure of conflicts of interest 100
Quality of fund reports N/A
Fund reports audited N/A
Government follows fund rules N/A
Checks on fund spending N/A
Fund disclosure of conflicts of interest N/A
Quality of subnational transfer reports 0
Government follows subnational transfer rules 67
20 Enabling Environment 48
Corruption (TI Corruption Perceptions Index & WGI control of corruption) 31
Open Budget (IBP Index) 78
Accountability & democracy (EIU Democracy Index & WGI voice and accountability) 56
Government effectiveness (WGI) 32
Rule of law (WGI) 41
Satisfactory Weak
Partial Failing
To explore all data and compare
scores, use the RGI Data Tool.

Institutional & Legal Setting (Rank: 9th/58, Score: 80/100) learn more

Mongolia's "satisfactory" score of 80 reflects clear revenue collection mechanisms and a range of reporting requirements that are not always fulfilled in practice.

Mongolia's Mineral Resource Authority regulates the sector and grants licenses on a first come, first served basis in exchange for royalties and taxes. It is independent of the state-owned company Erdenes MGL. The Finance Ministry collects payments from mining companies and places all resource-related revenues in the national treasury.

Environmental impact assessments are required by law prior to the award of any mineral rights. Mongolia adopted a Freedom of Information Act in 2011, but it still is possible for businesses and government agencies to keep some documents confidential. Mongolia has been an Extractive Industries Transparency Initiative (EITI) compliant country since 2010.

Reporting Practices (Rank: 41st/58, Score: 39/100) learn more

With little government data on the national mining company, Mongolia received a "failing" score of 39.

Legislation governing the licensing process is readily accessible, but little information about the mineral deposits to be licensed is made public. Contracts are rarely published and environmental impact assessments are available only for projects already underway.

The Finance Ministry publishes regular information on production volumes, prices, the value of mineral exports, names of companies operating in the country, production data by company, royalties, special taxes, dividends, and license fees. The Mineral Resources and Energy Ministry also publishes information on industry operations, including investment in exploration and development, but does not report revenues. The Mineral Resource Authority publishes information on commodity prices, estimates of investment in exploration and development, the names of companies operating in the country, royalties, and license fees, but without comparative years. Mongolia's 2010 EITI report includes comprehensive information on disaggregated revenue streams.

Safeguards & Quality Controls (Rank: 37th/58, Score: 49/100) learn more

Mongolia received a "weak" score of 49, reflecting a lack of public oversight of the state mining company.

Mongolia's Minerals Law limits the discretion of the Mineral Resource Authority in awarding licenses. Third parties are allowed to appeal licensing decisions. The National Audit Office reviews the government's budget annually. The parliament's Budget Committee reviews the audits within one year but does not separately scrutinize resource-related revenues. Mongolia recently adopted a conflict of interest law requiring government officials with a role in oversight of the mining sector to disclose their financial interest in any extractive activity.

Enabling Environment (Rank: 20th/58, Score: 48/100) learn more

Low global rankings for corruption control and government effectiveness contributed to Mongolia's "weak" score of 48.


State-Owned Companies (Rank: 38th/45, Score: 20/100) learn more

The government established Erdenes MGL to represent the state's interest in strategically important mineral deposits. Almost no information is available on the functioning of the company. It publishes no financial reports, despite a legal obligation to do so.

Subnational Transfers (Rank: 19th/30, Score: 56/100) learn more

According to the Minerals Law, 30 percent of royalty payments and 50 percent of special license fees go to local governments. These transfers are published by the central government, which generally follows the rules of resource revenue sharing. Local governments do not report their receipts.

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