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Revision of Environmental Laws in Mongolia and its impact on the mining sector

08 October 2012

On 17 May 2012, the Parliament of Mongolia adopted a comprehensive revision of Mongolian environmental laws. The adoption of these laws will have consequences for companies operating in mining sector.

The mining sector plays an important role in the economy of Mongolia and accounted for over 28% of GDP, 30% of government revenues, and over 84% of export earnings in 2011. It is thought that it will become the major force of economic growth for the development of Mongolia in coming years. However, the increasing level of mining activities also raises, among others, issues of environmental protection and restoration. Although a comprehensive Mongolian environmental regulatory regime existed, and the Minerals Law covers licence holders' obligations towards the environment, the government did not consider it to be adequate in practice. Attempts had been made to resolve this issue on a piecemeal basis by adopting several measures in last few years, such as increasing water abstraction fees, imposing stricter environmental obligations on mining license holders and requiring the deposit of environmental restoration "bonds". Further, in July 2009, Parliament adopted the Law on Prohibition of Mineral Exploration and Mining Activities in areas in the Headwaters of Rivers, Protected Water Reservoir Zones and Forested Areas to address environmental concerns.

The new environmental legislation replaces 18 environmental laws with 8 laws and introduces 2 entirely new laws. The purpose of the review was to reduce duplication and improve the quality of regulation, ensure responsible, environmentally-friendly and sustainable development, improve economic efficiency, introduce international standards in environmental auditing and the "polluter pays" principle, increase public participation in environmental decision-making, and secure funds for environmental protection.

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