MINERALS LAW OF MONGOLIA

8 July 2006                                                                              Ulaanbaatar

CHAPTER ONE

General Provisions

Article 1. Purpose of the law

          1.1 The purpose of this Law is to regulate relations with respect to prospecting, exploration and mining of minerals, and protection of exploration field and mining area in use in the territory of Mongolia. (This paragraph was amended by the law on 8 Jan 2009)

Article 2. Legislation on minerals

          2.1 Mineral related legislation consists of the Constitution of Mongolia, the Subsoil Law, Land Law, Environmental Protection Law, National Security Law, Investement Law, this Law and other relevant legislation which is consistent with these laws

(This paragraph was amended by the laws on 17 May 2012 and 3 Oct 2013).

            2.2. If an international treaty to which Mongolia is a party provides otherwise, the provisions of the international treaty shall prevail.

Article 3. Scope of this Law

            3.1. This law shall regulate relations with respect to prospecting, exploration and mining of all types of mineral resources except water, petroleum, natural gas, radioactive and common minerals

/This paragraph was amended by the laws on 16 July 2009 on 9 January 2014/

          3.2. Relations with respect to exploitation of minerals by artisanal mining shall be regulated by a regulation and the regulation shall be approved by the Government. /This paragraph was amended by the law on 1 July 2010/

3.3. Relations concerning common mineral exploration and exploitation shall be regulated by a special law (This paragraph was added by the law on 1 July 2014).

Article 4. Definitions of terms

4.1       In this Law the following terms shall have the following meaning:

4.1.1    "mineral" means any usable naturally occurring mineral accumulation that was formed on the surface or in the subsoil as the result of geological evolutionary processes;

4.1.2    "radioactive mineral" means mineral resource concentration contains radioactive isotope of uranium and thorium belongings / This paragraph was added by the law on 16 July 2009/;

4.1.3    "reconnaissance" means a geological study conducted through taking rock sample and sampling, using primary mineral information and taking air mapping without affecting subsoil for the purpose of determining whether there is mineral;

4.1.4    "geological survey to be conducted at expense of the State budget" means geological mapping, thematic survey, geological prospecting and exploration of minerals to be conducted from the State budget;

4.1.5    "mineral prospecting" means a geological survey whose purpose is identifying the existence of mineral accumulation in an area with prospects of mineral resources;

4.1.6    "mineral exploration" means geological and exploration survey conducted on and under the earth's surface for the purpose of detailed identification of the location and quantity of mineral accummulation, and conducting a feasibility study on mining such mineral accumulation;

4.1.7    "mineral mining" means the entire range of activities that include separating and extracting minerals from land surface and subsoil, ore stockpile, waste or tailings, increasing and concentrating the concentration of its usable contents, producing products, marketing those products, and other activities related therewith (This paragraph was amended by the law on 1 July 2014);

4.1.8    "minimum cost of exploration" means a mandatory  minimum expenditure to be spent for exploration work in each year;

4.1.9    "mineral deposit" means mineral accumulation that has been formed on the surface or in the subsoil resulting from geological evolutionary processes, where the quality and proven reserve[1] is economically feasible to mine by industrial methods;

4.1.10  "hard rock mineral deposit" means any mineral accumulation that has been formed as the result of geological evolutionary processes and exists in the same space with its host rock;

4.1.11  "placer mineral deposit" means mineral accumulation that has been separated from its original subsoil location[2] as a result of erosion and mechanical processes and that are located as layers after reformation;

4.1.12  "mineral deposit of strategic importance" means a deposit whose scope[3] may have a potential impact on national security, national or regional economic and social development, or that is producing or has the potential to produce more than 5 (five) percent of total annual Gross Domestic Product.

4.1.13  "special purpose territory" means land taken at the national and local levels by an authorized government entity pursuant to Articles 17, 18 and 20 of the Land Law for special public needs where prospecting, exploration and mining are restricted or prohibited:

4.1.14  "reserve area" means an area previously granted under exploration or mining license which is now taken under State control by decision of a competent authority suspending any prospecting, exploration or mining activities;

4.1.15  "exploration license" means a document granting the right to prospect or conduct exploration as set forth in this Law;

4.1.16  "mining license" means a document granting the right to conduct mining as set forth in this Law;

4.1.17  "exploration area" means the area granted under a license as set forth in Article 4.1.15 of this Law;

4.1.18  "mining area" means the area the area granted under a license as set forth in article 4.1.16. of this Law

(This paragraph was amended by the law on 16 July 2009);

4.1.19  "mining claim" means a part of a geological formation overlapping with a mining area and where mining is to be conducted;

4.1.20  "license fee" means the payment that a license-holder makes as set forth in this Law in order to maintain the license effective;

4.1.21  "license-holder" means a legal person to whom prospecting, exploration or a mining right has been granted or transferred as set forth in this Law;

4.1.22  "legal person" means a company or partnership as set forth in Article 33.1 of the Civil Code of Mongolia.

4.1.23  "artisanal mining" means the activity in the land allocated pursuant to the Article 16.1.11 of Land Law, carried out by the people established as partnership which is not registered pursuant to Article 481.1 of the Civil Code with the purpose of extracting minerals in economically non-profitable deposit with mineral non-productive contents, residual deposit derived in the result of operational and technological waste and in an area with indication;

(This paragraph was added by the law on 1 July 2010 and amended by the laws of 01 July 2014 and 10 Nov 2016 );

4.1.24  ""mineral resource wealth" means an accumulation of a

mineral - the size, form, content, composition or economic importance of which has not been fully assessed

(This paragraph was added by the law on 1 July 2014);

4.1.25  "mineral deposit reserve" means a mineral resource – the size, form, content and mineral composition of which has been determined by exploration work, and which is technically and economically viable to extract (This paragraph was added by the law on 1 July 2014);

4.1.26  "technical expert and specialist" means a nationally and internationally-recognised individual who has been accredited by mining and geological non-government organisations

(This paragraph was added by the law on 1 July 2014).

4.1.27  "a residual deposit" means ore and mineral stockpiles with a certain mineral content, formed during extraction, processing and concentration, which may be economically profitable, when reprocessed.

(This paragraph was added by the law of 10 Nov 2016)

4.1.28  "utilizing a residual deposit" means extracting, processing and concentrating ore and mineral stockpiles specified in Article 4.1.27 of this Law to manufacture and sell value-added products, and other relevant operations.

(This paragraph was added by the law of 10 Nov 2016)

Article 5. Ownership of minerals

5.1.      Mineral resources naturally occurring on and under the earth's surface in Mongolia are the property of the State. 

5.2.      The State, as the owner, has the right to grant prospecting, exploration and mining rights as set forth in the terms and conditions of this Law.

5.3.      The percentage of the State share in a minerals deposit shall be established by an agreement on the exploitation of the mineral deposit where State-funded prospecting exploration was used to determine reserves. The percentage of the State share determined by the agreement may be replaced by royalty for mineral deposits of strategic importance.

(This paragraph was amended by the law on 18 Feb 2015).

5.4.      The State may participate up to 50% jointly with a private legal person in the exploitation of a minerals deposit of strategic importance where State-funded exploration was used to determine proven reserves. The percentage of the State share shall be determined by an agreement on exploitation of the deposit, considering the amount of investment made by the State. The percentage of the State share determined by the agreement may be replaced by royalty for mineral deposits of strategic importance (This paragraph was amended by the law on 8 Jan 2009 and amended by the law on 18 Feb 2015).

5.5.      The State may own up to 34% of the shares of an investment to be made by a license-holder in a mineral deposit of strategic importance where proven reserves were determined through funding sources other than the State budget. The percentage of the State share shall be determined by an agreement on exploitation of the deposit considering the amount of investment made by the State. The percentage of the State share determined by the agreement may be replaced by royalty for mineral deposits of strategic importance (This paragraph was amended on 8 Jan 2009 and by the law on 18 Feb 2015).

5.6.      A legal person holding a mining license for a mineral deposit of strategic importance shall sell no less than 10% of its shares through the Mongolian Stock Exchange.

Article 6. Classification of mineral deposits

6.1.      Mineral deposits are classified as follows:

6.1.1    deposits of strategic importance;

6.1.2    deposits of common minerals;

6.1.3    deposits of conventional minerals.

6.2       Mineral deposits set forth in Article 6.1.1 of this Law shall refer to a deposit which meets the requirements of Article 4.1.12 of this Law (This paragraph was amended by the law on 16 July 2009).

6.3       Abundant sediments and rock concentration that might be used as construction material are considered common mineral deposits.

6.4       All mineral accumulations except as set forth in Articles 6.2 and 6.3 of this Law shall be considered conventional mineral deposits.

Article 7. General requirements of a license-holder, for conducting minerals prospecting, exploration and mining operation

7.1       Mineral exploration and mining licenses shall be granted to a legal person duly formed and operating under the laws of Mongolia, and which is a Mongolian taxpayer, by the way of selection procedure unless this law provides otherwise.

(This paragraph was amended by the law of 10 November 2017)

7.2       A license-holder shall meet the requirements set forth in Article 7.1 of this Law for the entire duration of a valid license.

7.3       Conducting prospecting, exploration or mining without a valid license is prohibited except exploring minerals in artisanal mining. Extraction of natural colored and valuable rocks shall be carried out on a license basis same as simple minerals ((This paragraph was amended by the law on 1 July 2014).

7.4       One license shall be granted to one legal person only.

7.5       annulled by the law on 16 Jan 2014.

7.6       If State Administrative Agency in charge of nuclear energy issues delivered a notice to State Administrative Agency in charge of geological and mining issues in order to conduct a selection to issue a license for radioactive minerals prospecting, exploration and mining in accordance with Law on Nuclear Energy, exploration and mining licenses shall not be issued on the area till the issues are settled (This paragraph was added by the law on 16 July 2009 and annulled by the law on 13 Feb 2015).

CHAPTER TWO

State Regulation in Minerals Sector

Article 8. The full powers of the State Ikh Hural

8.1       The full powers of the State Ikh Hural with respect to mineral issues are as follows:

8.1.1      establish State policy with respect to the development of the geology and mining sectors;

8.1.2      oversee the Government's implementation of legislation on minerals prospecting, exploration and mining;

8.1.3      resolve matters concerning prospecting, exploration and mining of minerals in areas with State special protection;

8.1.4      approve a mineral deposit as a mineral deposit of strategic importance by proposal and exclusion of the Government or on its own initiative (This paragraph was amended by the law on 1 July 2014);

8.1.5      restrict or prohibit prospecting, exploration and mining activities on a particular area, or grants of exploration and mining licenses for certain territories by proposal of the Government at its own initiative;

8.1.6      annulled by the law on 1 July 2014;

8.1.7      determine the State's percentage ownership of mineral deposits of strategic importance as set forth in Articles 5.5 and 5.6 of this Law as proposed by Government or at its own initiative based on the size of the minerals deposit registered in the State Reserve Integrated Registry.

Article 9. The full powers of the Government

9.1 The full powers of the Government with respect to mineral issues are as follows:

9.1.1    ensure implementation of laws and legislation on prospecting and exploration of minerals and mining;

9.1.2    implement State policy with respect to the development of the geology and mining sectors;

9.1.3    resolve matters concerning prospecting, exploration and mining of minerals on State special purpose territory, exclusive of areas under State special protection;

9.1.4    submit proposals to the State Ikh Hural for approval and exclusion of a minerals deposit of strategic importance (This paragraph was amended by the law on 1 July 2014);

9.1.5    submit proposals to the State Ikh Hural for determining the State share percentage in a minerals deposit of strategic importance;

9.1.6    resolve matters concerning the source of investment of Mongolia in a joint venture to develop a mineral deposit of strategic importance;

9.1.7    resolve issues or submit proposals to the State Ikh Hural with regard to setting aside specific areas for reserve or special purpose territory;

9.1.8    participate in mineral prospecting, exploration and mining through a legal entity having State ownership;

9.1.9    establish National Geological Office (This paragraph was added by the law on 1 July 2014);

9.1.10  approve contract template stated in Article 42.1 of this law (This paragraph was added by the law on 1 July 2014);

9.1.11  determine those areas for which exploration licence and the mining licence if not stipulated in 24.1 of this law may be granted by their coordination on the basis of recommendation of the State Central Administrative Authority in charge of geology and mining issues and inform the public (This paragraph was added by the law on 1 July 2014 and amended by the law of 10 November 2017);

9.1.12  determine the geographic extent of mineral deposits of strategic importance (This paragraph was added by the law on 1 July 2014);

9.1.13  grant a licence (with the agreement of the licence holder) for an area of minerals accumulation and found in the result of the geological research carried out by state budget or for an area set out in Article s 19.12 and 26.9 of this law as the compensation for the confiscation of licensed area, where such was necessary for national security reasons, for the implementation of large scale government projects or other state purposes (This paragraph was added by the law on 1 July 2014 and amended by law on 10 Nov 2017).

9.1.14  approve the regulation on the issue of mining licence of residual deposit;

(This paragraph was added by the law on 10 Nov 2016)

9.1.15  approve the regulation on the use of residual deposit and operational requirement thereof.

(This paragraph was added by the law on 10 Nov 2016)

Article 10. Full powers of the State central administrative agency

10.1  The full powers of the State Central Administrative Agency in charge of geology and mining are as follows:

10.1.1  develop and implement State policy with respect to the development of the geology and mining sectors;

10.1.2  upon authorization by the Government, approve of the tender procedures set forth in Article 19.12, 20.1, 24.2, 26.9 and 60.9 of this Law;

(This paragraph was amended by the law of 10 Nov 2017)

10.1.3  ensure enforcement of legislation on minerals and resolutions of the Government with regard to implementation of such legislation;

10.1.4  determine service fee rates for submitting an license application, transferring a license, extending the term of a license, pledging a license, transferring a license pursuant to a pledge, or surrendering all or part of a licensed area, resolving boundary disputes and reviewing exploration work plans, information and reports;

10.1.5  approve the budget for state-funded geological studies and review the results of the same (This paragraph was amended  the law on 1 July 2014);

10.1.6  approve procedures for funding, implementing and assessing results of geological studies to be funded by the State budget;

10.1.7  approve procedures with regard to prospecting, exploration and mining activities, and develop and approve product standards;

10.1.8  oversee operations with respect to the development of strategic deposits;

10.1.9  establish a Minerals Professional Council with professional officers in charge of making conclusion and issuing recommendations on reports of geological studies conducted within the territory of Mongolia and a feasibility study for mineral deposit mining and concentration plants and approve its charter and methodology to calculate experts' salary (This paragraph was amended by  the law on 1 July 2014);.

10.1.10 ensure transparency in mineral exploration, exploitation, production and sales (This paragraph was added by the law on 24 Jan 2014);

10.1.11 approve the procedure for acceptance of mines and mining/concentrating plants into operation (This paragraph was added by the law on 1 July 2014);

10.1.12 approve approving the requirements and operational procedures of concentrating plants (This paragraph was added by the law on 1 July 2014);

10.1.13 establish an ad hoc policy council (in addition to the National Geological Office mentioned above) mandated to provide recommendations and support the implementation of state policy in relation to the mineral sector and ensures equity of representatives of government organizations, investors, professional associations and NGOs and approve its working rule and organizational structure (This paragraph was added by the law on 1 July 2014);

10.1.14 approve the restoration and closing procedures of mines and mining/concentration plants in cooperation with the State Central Administrative Authority in charge of environmental issues (This paragraph was added by the law on 1 July 2014);

10.1.15 approve the regulations governing the geological, mining and mineral resources information database (This paragraph was added by the law on 1 July 2014);

10.1.16 approve a the regulations for the accrediting of geology and mining sector technical experts and specialists by non-governmental organisations (This paragraph was added by the law on 1 July 2014);

10.1.17 approve the classifications of mineral resources and deposit reserves (This paragraph was added by the law on 1 July 2014);

10.1.18 approve the procedures governing the public disclosure of mineral resources, deposit reserves and the results of prospecting work (This paragraph was added by the law on 1 July 2014).

Article 11. The Obligations of the State administrative agency

11.1     The State Administrative Agency in charge of geology and mining issues (hereinafter referred to as "State Administrative Agency" in this law) shall have the following duties:

11.1.1 annulled by the law on 1 July 2014;

11.1.2 annulled by the law on 1 July 2014;

11.1.3 annulled by the law on 1 July 2014;

11.1.4 annulled by the law on 1 July 2014;

11.1.5 to maintain and update the information database with respect to national geological and related mineral resources;

(This paragraph was amended by the law of 10 Nov 2017)

11.1.6 to monitor the plan, reports and the minimum cost of exploration of the exploration license-holder as provided in this Law;

11.1.7 to receive, register and resolve requests regarding mineral reconnaissance;

11.1.8 to provide evaluations and recommendations with respect to technology and equipment used in the mining industry, and implement mining technology policy;

11.1.9 to create a favorable investment environment for the mining sector and provide evaluations with respect to the emerging investment environment;

11.1.10 to conduct research, evaluation and provide recommendations regarding the impact the mining industry has on the social and economic development of Mongolia;

11.1.11 to conduct research on supply and demand and the prices of mining products, and forecast long-term trends;

11.1.12 to submit proposals regarding State policies on particular mining projects and the implementation of those polices;

11.1.13 to organize a tender to issue a license for an area of mineral accumulation as determined through the case State budget funds and provide a recommendation on allocating an area for commom minerals;

(This paragraph was amended by the law on 1 July 2014 and by the law of 10 Nov 2017)

11.1.14 to monitor activities related to exploration and mining licenses;

11.1.15 to provide the public with access to the processes of issuing and reissuing  licenses, license revocation, transfer, pledge and surrender of licenses for the entire or a part of the licensed area (This paragraph was amended by the laws on 16 July 2009 and 13 Feb 2015);

11.1.16 to receive, register and make decisions with respect to applications for minerals exploration and mining licenses selection process;

(This paragraph was amended by the laws on 16 Julyy 2009 and 13 Feb 2015 and 10 Nov 2017)

11.1.17 to maintain the registry of licenses;

11.1.18 to maintain the cartographic registry of licenses;

11.1.19 to issue exploration and mining licenses of minerals other than common minerals (This paragraph was amended by the laws on 16 July 2009, 9 January 2014 and 13 Feb 2015);

11.1.20 to collect application processing and license fees of minerals othen than common minerals (This paragraph was amended by the laws on 16 July 2009, 9 January 2014 and 13 Feb 2015);

11.1.21 to review and resolve boundary disputes between and among license-holders;

11.1.22 to provide interested persons with access to the registry and the cartographic registry license, and to notify relevant government agencies and to publish official notices informing the public of changes to the registries.

11.1.23 to receive an application lodged by Governor of soum or district according to Article 12.1.5 of this Law and to provide recommendations regarding whether restricted or prohibited prospecting, exploration and mining activities on the particular area or taken back for special needs or resources, while entire or a part of the valid licensed area overlapped and to determine land size and boundary (This paragraph was added by the law on 1 Jul 2010);

11.1.24 to maintain a separate register of those licence holders which are listed on a stock exchange (This paragraph was added by the law on 1 July 2014);

11.1.25 to determine and approve the coordinates of areas on which exploration and mining licenses may be issued (This paragraph was added by the law on 1 July 2014 and by the law of 10 Nov 2017).

11.2     The State Administrative Agency Unit in charge of geological issues shall be responsible for issues set forth in Articles 11.1.1-11.1.7, the unit in charge of mining Articles 11.1.8-11.1.12 and the unit in charge of cadastre Articles 11.1.13-11.1.23 (This paragraph was amended by the law on 10 July 2010).

11.3     Professional inspection agency shall implement state control of mineral prospecting, exploration, mining activities and implementation of the Minerals Law of Mongolia and legislation (This paragraph was amended by the lawd on 16 Julyy 2009 and 13 Feb 2015). 

Article 11I . Functions of National Geological Office (This article was added by the law on 1 July 2014)

11I.1. Mongolian National Geological Office  shall undertake the following obligations:

        11I.1.1. to conduct geological cartographic, geophysics, geochemical and hydrogeological and geoecological mapping and research on the territory of Mongolia;

                       11I.1.2. to research patterns of distribution and occurrence of mineral resources and provide an assessment of such resources;

        11I.1.3. to create and expand national geology, mining and mineral resource database and provide interested persons with information other than confidential information;

(This paragraph was amended by the law of 10 Nov 2017)

        11I.1.4.to maintain a national database on geological, mining and mineral resources and record changes in minerals reserves.

Article 12. Full power of local administrative and self-governing agencies

12.1     Local administrative and self governing bodies shall implement the following with regard to mineral issues:

12.1.1  enforce implementation of this Law and regulations of higher administrative bodies in their respective territories;

12.1.2  permit use of the license area for the purposes set forth in the licenses, and halt any violations;

12.1.3  monitor compliance by license-holders of their obligations with respect to environmental reclamation, health and safety regulations for workers and local residents, and the payment of their obligations to the treasuries of local administrative bodies;

12.1.4  adopt resolutions on establishing local special purpose territory as set forth in the grounds and regulations provided by the Land Law.

12.1.5  request State Administrative Agency  to provide recommendation as set forth in Article 11.1.23 of this law regarding the land allocated for designation specified in Article 16.1.11 of Land Law (This paragraph was added by the law on 1 Jul 2010).

Article 13. Reserved areas

13.1     Areas licensed for exploration and mining may be established as reserve areas by a decision of the Government for the following purposes:

13.1.1  to put in order the registry of licenses;

13.1.2  to resolve boundary disputes among license-holders;

13.1.3  to conduct geological mapping, prospecting and exploration of minerals through State budget funding.

13.2     A decision to establish a reserve area as set forth in Article 13.1 of this Law shall be made by official public notice and contain the following information:

13.2.1  the name of the aimag or capital city and soum or district where the reserve area is located;

13.2.2  the coordinates of the reserve area;

13.2.3  the purpose for reserving the area;

13.2.4  the time period the area shall be reserved.

13.3     The State administrative agency shall record the reserve area as set forth in Article 13.1 of this Law in the licensing and cartographic registries.

13.4     A reserve area shall be released for the following reasons:

13.4.1  a decision by the Government to release the reserve area prior to expiration of the original term;

13.4.2  expiration of the term for which the reserve area had been reserved;

13.4.3  after settlement of the circumstances set forth in Articles 13.1.1-13.1.3.

13.5 If the reserved area is released on the grounds set forth in Article 13.4 of this Law, the rights and liabilities of the license-holder shall remain in effect for the period of reservation.

Article 14. Special purpose territory with restrictions and prohibitions on prospecting, exploration and mining activities

14.1  In the event that a competent agency issues a resolution to establish a special purpose territory, a written notice containing the following information shall be delivered to the State administrative agency within ten (10) business days:

            14.1.1. the name of the aimag and soum where the territory is located;

            14.1.2. the coordinates of the land where the special purpose territory is established;

14.1.3. the purpose for which the land has been taken for special purpose;

14.1.4. the time period for which the land shall be used for special purpose.

14.2   The time period shall for special purpose territories shall not be less than five (5) years.

14.3   The State administrative agency shall record the coordinates of the special purpose territory in the exploration license, mining license and cartographic registries.

14.4   If establishment a special purpose territory overlaps entirely or in part with a territory covered by a valid license, and prohibits further exploration or mining in the overlapping area, the authority whose decision it was to establish the special purpose territory shall be obligated to compensate the license-holder within a year (This paragraph was amended by the law on 1 July 2014).

14.5   The amount of the compensation and time for payment set forth in Article 14.1 shall be negotiated and agreed by the authority that decided to establish the special purpose territory and the affected license-holder.  If the parties fail to reach an agreement, the amount of compensation and time for payment shall be determined by the State administrative agency based on conclusion of an authorized independent body.

14.6   The license-holder shall have the right to resume its activities if the compensation is not paid in the time set forth in Article 14.5.

14.7   Disputes related to compensation shall be decided by a court.

14.8   Within one (1) month after the State administrative agency gives public notice of the expiration for special purpose territory, the legal person that previously held the specific area under the exploration of mining license shall, after submitting a request, have an exclusive right to reacquire the exploration or mining license.

14.9   When permits former exploration and mining license holders to continuously use areas vacated under Articles 13.5 and 14.8 of this law, a license term shall be extended by a period kept for special needs and reserve (This paragraph was added by the law on 1 July 2014).

CHAPTER THREE

MINERAL EXPLORATION

Article 15. Reconnaissance

15.1    A legal person may conduct reconnaissance for minerals in in the territory of Mongolia without a license, provided that the legal person notifies the State and local administrative bodies in advance, registers its name and address, the area and its location where it proposes to conduct reconnaissance. (This paragraph was amended by the laws on 8 Jan 2009 and 1 July 2014).

15.2    Disturbing the subsoil while conducting reconnaissance is prohibited and any person proposing to conduct reconnaissance shall obtain permission to enter the land from the landowners, land-possessors or land-users.

Article 16. Geological survey and research work to be conducted with State budget funding

16.1     State-funded geological survey and research work shall be conducted without a license.

16.2     Geological surveys whose purpose is to identify geological setting, mineral distribution and areas with prospects of mineral accumulation shall be conducted using scientific methods and methodologies according to a set schedule.

16.3     Prospecting of minerals with State budget funding shall be conducted in a comprehensive[4] manner.

16.4     Information regarding State-funded exploration shall be maintained in a State database that is open to the public.

16.5     State-funded research work and geological survey may be conducted in special purpose territory, and no fee shall be paid.

16.6     The State administrative central agency in charge of geology and mining shall approve regulations on financing, implementing, monitoring and receiving results of State-funded geological survey as set forth in this Law.

Article 17. Separate the area for the selection of exploration licence area

17.1. In accordance with Article 11.1.25 of this Law, the State Administrative Agency shall give a written notice along with the area map to the Governor of an aimag or the capital city when determining the coordinates of the area.

17.2. Within forty-five (45) days of receiving the notice set forth in Article 17.1, the Governor of the aimag or the capital city shall respond to the State Administrative Agency after consultation with the Citizens` Representatives` Hural of the soum or district and the Presidium of the Citizens` Representatives` Hural of the aimag or district. Failure to respond as set forth in this Article shall be deemed as approval. The Governor of the aimag or capital city may refuse the granting of an exploration license on grounds provided in the laws of Mongolia

17.3. The Government shall approve the coordinates of the area on which exploration license will be issued, based on the approval specified in Article 17.2 and a proposal from the State Administrative Agency in charge of geological and mining issues.

17.4. The State Administrative Agency shall select areas for exploration licenses and make tender announcement to the public thirty (30) days prior to the tender via national daily newspapers and other press and media, within the framework of the coordinates of the area approved by the Government in accordance with Article 17.3 of this Law. 

17.5. The selected area specified in Article 17.4 of this Law shall meet following requirements:

17.5.1. it shall be quadi-lateral in shape and its borders shall be straight lines overlapping with directions along longitude and latitude;

17.5.2. it shall not overlap with a reserve area or a special purpose territory or an area prohibited from exploration and mining

17.5.3. it shall not overlap with an area with a valid license

17.6. The borders of area specified in the application may deviate from straight lines in order to avoid overlapping set forth in Articles 17.5.2 and 17.5.3 where it is a:

17.6.1. national border;

17.6.2. reserve area;

17.6.3. special purpose territory and areas prohibited from exploration and mining;

17.6.4. licensed area granted before this Law became effective having a shape and position other than as provided under this Law

17.6.5. other natural formations such as lakes, ponds that are considered impossible to in the exploration area

17.7. The size of an exploration area of one license shall not be less than twenty-five (25) hectares and shall not exceed one hundred fifty thousand (150 000) hectares.

(This article was amended by the law of 10 Nov 2016)

Article 17. Requirements for obtaining an exploration license

17.1     An applicant for an exploration license must be eligible to hold the license as set forth in Article 7.1 of this Law. Location and coordinates of all corners of a requested exploration area shall be marked in degrees, minutes and seconds on a standard map prepared by the State administrative agency, and the map shall be attached to the application.

17.2       The requested exploration area shall meet the following requirements:

17.2.1    it shall be quadi-lateral in shape and its borders shall be straight lines overlapping with directions along longitude and latitude;

17.2.2    no part of the requested exploration area may overlap with a reserve area or a special purpose territory or prohibited area to exploration and mining (This paragraph was amended by the law on 16 July 2009);

17.2.3    no part of the requested exploration area may overlap with an existing licensed area or the licensed area covered by a pending application.

17.3       In order to avoid overlapping of license areas as set forth in Article 17.2.2 and 17.2.3 of this Law, the borders of the requested area may deviate from straight lines if the area borders with the following:

17.3.1    national borders;

17.3.2    reserve area;

17.3.3    special purpose territory and prohibited area to prospecting and mining (This paragraph was amended by the law on 16 July 2009);

17.3.4    license area granted before this Law became effective having a shape and position other than as provided under this Law;

17.3.5    lakes, ponds and other natural formations that are impossible to include in the exploration area.

17.4     The size of an exploration area shall not be less than twenty-five (25) hectares and shall not exceed one hundred fifty thousand (150 000) hectares (This paragraph was amended by the law on 1 July 2014).

17.5     There is no limit on the number of exploration licenses a legal person may hold.

Article 18. Procedure for submitting an application requesting an exploration license

18.1     An exploration license shall be granted to the first applicant who registers and files an application that meets the requirements of Articles 7.1 and 17.2 of this Law.

18.2     A person set forth in Article 18.1 of this Law shall submit an application to the State administrative agency on the approved form.  The following documents shall be attached to the application:

18.2.1  the applicant's name, mailing address, phone and fax numbers;

18.2.2  a copy of the applicant's State registration certificate, /competent person receiving the documents shall check the documents against the originals and record that the copies are true for free/ if delivered by post, a notarized copy ((This paragraph was amended  the law on 10 Feb 2011);

18.2.3  an area map prepared as set forth in the requirements of Article 17.1 of this Law and the name of the aimag, soum or district where the exploration area is located;

18.2.4  a document showing that the applicant has paid the service fee set forth in Article 10.1.4 of this Law;

18.2.5  information demonstrating that the applicant has a sufficient number of qualified staff conducting the exploration work;

18.2.6  a document proving that the applicant meets the requirements of Article 7.1 of   this Law;

18.2.7  a preliminary plan that includes the type, scope and cost of exploration work to be conducted by the applicant as set forth in Article 20 of this Law.

18.1. The legal entity specified in Article 7.1 of this Law shall submit an application for tender to issue exploration license to the State Administrative Agency as specified in Article 10.1.2 of this Law, and following documents shall be attached:

18.1.1. the applicant's name, postal address, phone and fax numbers and e-mail address;

18.1.2. notarized copy of the applicant's State Registration Certificate;

18.1.3. service fee receipt;

18.1.4. information on adequate professional personnel, technique and equipment and a technical proposal including the type, scope, period and cost of exploration work, environmental protection project and relevant cost, budget and other relevant documents;

18.1.5. Price quotation developed in accordance with the form approved by the State Administrative Agency, which is sealed for delivery;

18.1.6. Taxpayer reference from the Tax Authority of Mongolia;

18.1.7. Other required documents specified in Article 10.1.2 of this Law."

18.2. Immediately following the receipt of an application specified in 18.1 of this Law, the State Administrative Agency shall carry out the following:

18.2.1. register the application in the application registry and record the registration number, date, hour and minute of registration and issue a receipt acknowledging the filing of the application to the applicant

18.2.2. mark the first and last registered application of that day"

(This article was amended by the law of 10 Nov 2017)

Article 19. Registering and processing of the application

19.1  After review of the application set forth in Article 18.2 of this Law the State administrative agency shall carry out the following:

19.1.1  register the application in the application registry and record the number, date, hour and minute of registration on each page attached to the application and issue the applicant a receipt acknowledging the filing of the application;

19.1.2  record the first and last registered application of that day;

19.1.3  immediately following the registration it shall be determined by preliminary screening whether the application and the attached documents meet the requirements specified under Articles 17.1, 17.2 and 18.2 of this Law;

19.1.4  following the preliminary screening set forth in Article 19.1.3 of this Law, it shall be determined whether the requested exploration area overlaps with an area with restrictions or prohibitions on mineral prospecting, exploration or mining, reserve area, special purpose territory, or any area subject to an existing valid license or previously filed pending application for a license.

19.2     After completing the actions set forth in Article 19.1 of this Law within twenty (20) business days after registration of the application, the State administrative agency shall make one of the following decisions:

19.2.1  reject the request and give written notice to the applicant containing the grounds for such decision if the application and attached documents fail to meet the requirements of Articles 17.1, 17.2 and 18.2 of this Law, and record it in the application registration book;

19.2.2  notify the applicant that the requested area is available for issue under an exploration license, if the requested area does not overlap with any part of the areas set forth in Article 19.1.4;

(This article was annulled by the law of 10 Nov 2017)

19.2.3  notify the applicant in writing that the application is rejected, if the requested area overlaps completely or partially with an area with restrictions or prohibitions on mineral prospecting, exploration or mining, special purpose territory, reserve area, or an area subject to an existing valid license, and record the decision in the application registration book;

19.2.4  notify the applicant in writing that the application is rejected, if the requested area overlaps completely with an area already requested in a pending[5] application, and record the decision in the application registration book;

19.2.5  notify the applicant that the exploration license may be granted for the part of the requested area which does not overlap, if the requested area partially overlaps with an area already requested in a pending application. Another application shall be submitted if the applicant wishes to obtain an exploration license for the area.

19.3   The State administrative agency shall give written notice to the Governor of an aimag or the capital city if it contemplates granting a license as set forth in Articles 19.2.2 and 19.2.5 of this Law. An area map prepared as set forth in Article 17.1 of this Law shall be attached to the written notice.

19.4   Within thirty (30) days of receiving the notice set forth in Article 19.3 the Governor of the aimag or the capital city shall respond to the State administrative agency after consultation with the Citizens` Representatives` Hural of the soum or district and the Presidium of the Citizens` Representatives` Hural of the aimag or district. Failure to respond as set forth in this Article shall be deemed as approval.

19.5   The Governor of the aimag or capital city may refuse the granting of an exploration license only on grounds provided in the laws of Mongolia.

19.6   If the Governor of the aimag or capital city supports the decisions set forth in Articles 19.2.2 and 19.2.5 of this Law, the State administrative agency shall make a decision to grant the area under an exploration license and notify the applicant that the license fee for the first year shall be paid within the period set forth in Article 34.1 of this Law.

19.7   If the applicant fails to obtain the license within one (1) month of the decision set forth in Article 19.6 of this Law, or fails to pay the first year's license fee within the period set forth in Article 34.1 of this Law, the State administrative agency shall remove the application from the registry and notify the applicant of this action recording its action in the application registration book.

19.8   Within three (3) business days after the payment is made for the first year's license fee the State administrative agency shall issue an exploration license for a three (3) year period, and record the exploration license and the area in the license and license cartographic registries.

19.9   An exploration license shall contain the date of issuance, the license-holder's name, the coordinates of the area covered by the license and an attachment where all subsequent changes regarding the license shall be recorded.

19.10 Immediately following the grant of an exploration license, the State administrative agency shall notify the State central administrative agency in charge of the environment, governors of the aimag, soum or district where the licensed area is located, State professional inspection agency, and it shall be published by official notice in a daily newspaper.

19.11 The State administrative agency shall return the application and attached documents to the applicant if the decisions set forth in Articles 19.2.1, 19.2.3, 19.2.4, and 19.7 of this Law are made.

19.12 An exploration license for an area with mineral accumulation determined through State-funded geological survey work shall be granted through tender.

Article 20. Granting of an exploration license for the area where the license has been released

20.1     If a license is revoked and terminated on the grounds set forth in Articles 53.1.1, 56.1.3 - 56.1.5 of this Law, the State Administrative Agency shall reissue the license through tender as set forth in the following procedure (modified by the law on 8 Jan 2009 and (This paragraph was amended  the law on 1 July 2014):

20.1.1  select areas set forth in Article 20.1 of this Law will be announced to the public in a daily newspaper thirty (30) days prior to the date that it will accept applications for tender bids.

20.1.2  applicants shall be evaluated according to the procedures set forth in Article 10.1.2 of this Law considering the skills of the applicant's professional staff, and an applicant with highest rating shall be granted the license.

20.1.3  if 2 or more applicants have the same rating, the license shall be granted to the first applicant. The first applicant shall be determined as set forth in the Article 19.1.2 of this Law.

20.2     If an application and attached documents fail to meet the requirements of Article 18.2 of this Law, the application shall be rejected and written notice containing the grounds for such rejection shall be issued to the applicant. This shall be recorded in the application registration book; and the application and documents attached to it shall be returned.

20.3     If no bid is submitted for the tender announced as set forth in Article 20.1 of this Law, the exploration license for this area shall be granted in compliance with the Article 18 and 19 of this Law.

Article 20. Organizing a tender to issue exploration licenses and issuing the license

20.1. The State Administrative Agency shall organize a tender to issue exploration license as specified in Article 10.1.2 of this Law and shall perform one of the following:

20.1.1. evaluate technical proposal and price quotation of the applicant as specified in Article 10.1.2 and inform the possibility of issuing the license to the applicant with the highest rating;

20.1.2. if 2 or more applicants have the same rating, inform the possibility of issuing the license to the applicant who was first to be registered.

20.1.3. if the application and its attached documents fail to meet the requirements in Article 18.1 of this Law, grounds and reasons for ineligibility shall be delivered to the applicant along with the documents attached to the application.

20.2. If no bid is submitted for the tender, announced as set forth in Article 20.1 of this Law, the tender may be announced again.

20.3. If exploration license can be issued in accordance with Articles 20.1.1 and 20.1.2 of this Law, a notice to pay bid price, threshold price difference and the annual fee of the exploration license for the first year within the period specified in Article 34.1 of this Law shall be delivered to the selected applicant.

20.4. If the applicant informed its inability to receive the license within the term specified in Article 34.1 of this Law after the delivery date of the notice as specified in 20.3 of this Law or failed to pay the bid price, threshold price difference and the annual fee for the first year, the State Administrative Agency shall invalidate the notice specified in Article 20.1.1 and 20.1.2 and inform the applicant in writing.

20.5. If the selected legal entity pays the first annual payment within the term specified in Article 34.1 of this Law, the State Administrative Agency shall issue the exploration license within 3 business days and register the exploration license and licensed area in the license and license cartographic registries.

20.6. An exploration license shall contain the date of issuance, the license-holder's name, and coordinates of the area covered by the license and an attachment where all subsequent changes regarding the license shall be recorded.

20.7. Immediately following the grant of an exploration license, the State Administrative Agency shall notify the State Central Administrative Agency in charge of the environment, and the governors of the aimag, soum or district, and Specialized Inspection Agency where the licensed area is located, and it shall be published in a daily newspaper.

(This paragraph was amended by the law of 10 Nov 2017)

Article 21. Rights of exploration license-holders        

21.1 An exploration license-holder shall have the following rights:

21.1.1    to conduct exploration for minerals within the boundaries of an exploration area (This paragraph was amended by the laws on 16 July 2009 and 13 February 2015);

21.1.2    to conduct exploration for radioactive minerals within the boundaries of an exploration area on a basis of a license issued by State Administrative Agency in charge of nuclear energy issues (This paragraph was added by the law on 16 July 2009 and annulled by the law on 13 Feb 2015); 

21.1.3    to obtain a mining license for minerals according to its exclusive right for any part of an exploration area upon fulfilling the terms and conditions of this Law (This paragraph was amended by the laws on 16 July 2009 and 13 Feb 2015);

21.1.4    to transfer the exploration license for minerals under the terms and conditions of this Law, or surrender all or part of the exploration license area with permission and under supervision of the respective authority (This paragraph was amended by the law on 16 July 2009 and 13 Feb 2015);

21.1.5    to obtain three extensions of the term of an exploration license for minerals except radioactive minerals for three (3) years each upon fulfilling the terms and conditions of this Law (This paragraph was amended by the laws on 16 July 2009 and 1 Jan 2014);

21.1.6    to access the exploration area and construct temporary structures with the purpose of conducting exploration work (This paragraph was amended by the law on 16 July 2009);

21.1.7    to pass through the land surrounding the exploration area for the purpose of entering the exploration area (This paragraph was amended by the law on 16 July 2009);

21.1.8    to exercise the rights provided by this Law to entering and pass through the land owned or possessed by other persons as approved by the owner or possessor of the land (This paragraph was amended by the law on 16 July 2009).

Article 22. Extension of the term of an exploration license

22.1     One (1) month prior to the expiration of an exploration license, the license-holder may apply for an extension of the license by submitting an application to the State administrative agency. The following documents shall be attached to the application:

22.1.1  a copy of the exploration license /competent person receiving the documents shall check the documents against the originals and record that the copies are true for free/ if delivered by post, a notarized copy (This paragraph was amended  the law on 10 Feb 2011);

22.1.2  receipts for payments of annual license fees, and service fees and a document proving that the expenditures for exploration work conducted are no less than the minimum cost of exploration;

22.1.3  document proving the renewed approval of the environmental management plan as set forth in Article 40 of this Law (This paragraph was amended by the law on 17 May 2012);

22.1.4  a report on exploration work completed up to the time of application, and documentation its acceptance.

22.2   Within ten (10) business days following the receipt of an application for extension as set forth in Article 22.1 of this Law, the State administrative agency shall review the license-holder's compliance with the terms and conditions and requirements of Articles 7.2 and 31. If there are no violations the license term shall be extended for the period set forth in Article 21.1.5 of this Law, and shall be recorded in the license registry book (This paragraph was amended by the law on 16 July 2009).

22.3     Immediately following the extension of an exploration license, the State administrative agency shall notify the state professional inspection agency and publicize the extension in a daily newspaper.

22.4     The State administrative agency shall refuse the extension of the license if a license-holder fails to meet the requirements of Article 7.2 and 31 of this Law, and will notify the applicant in writing, and record it in the license registry. 

Article 23.  Pre-mining operation

23.1     Pre-mining operation is the period after exploration is completed and the mineral deposit reserve is registered with State registration office where the design packages, feasibility study, mine development and commencement of production occurs.

23.2     The commencement period for the mining of the mineral deposit or mine development period shall not exceed 3 years after expiration of the exploration license.

23.3     Pre-mining operations shall be regulated by a pre-mining agreement concluded between the exploration license-holder and the State administrative agency.

23.4. The license-holder shall pay exploration license fees for the seventh to ninth years of the term as set forth in Article 32.2 of this Law, and within the period set forth in Article 23.2 of this Law.

CHAPTER FOUR

MINERALS MINING

Article 24. Requirements for obtaining a mining license

24.1     Only the exploration license-holder is entitled to apply for a mining license in the exploration licensed area.

24.2     If the exploration license has expired, as set forth in the Article 53.1.1 of this Law, and the exploration license-holder fails to submit an application for a mining license, then the mining license for the area shall be granted through tender. Procedure specified in Articles 18 and 20.1 shall be equally complied, when issuing mining license in cases other than specified in Article 24.1 of this Law.

(This paragraph was amended by the law of 10 Nov 2017)

24.3     The application for a mining license set forth in Articles 24.1 and 24.2 shall contain the coordinates of all corners of the requested mining area in degrees, minutes and seconds on a standard map approved by the State administrative agency, and the map shall be attached to the application.

(This paragraph was amended by the law of 10 Nov 2017)

24.4     The requested mining area shall meet the following requirements:

24.4.1  shall have the shape of a polygon with borders that are straight lines, not less than 500 meters in length, oriented north-south and east-west;

24.4.2  shall not overlap with a reserve area, special purpose territory, prohibited area to exploration and mining or an area under an existing valid license (This paragraph was amended by the law on 16 July 2009);

24.4.3  for salt and common minerals deposit, the area size shall be not less than 100 meter length in each side (This paragraph was amended by the law on 16 July 2009).

24.5     The borders of a mining license area may deviate from straight lines in order to avoid overlapping set forth in Articles 24.4.2 where it is a:

24.5.1  national border;

24.5.2  reserve area;

24.5.3  special purpose territory and prohibited area to exploration and mining (This paragraph was amended by the law on 16 July 2009);

24.5.4  a license area granted before this law because effective having a shape and location that do not conform with the requirements of this Law;

24.5.5  lakes, ponds and other natural formations that may be excluded from the mining area.

Article 25. Procedure for submitting application requesting mining license

          25.1. Using the approved form, an applicant for a mining license shall submit an application as set forth in Article 24.1 and 24.2 of this Law to the State administrative agency. The following documents shall be attached to the application:

(This paragraph was amended by the law of 10 Nov 2017)

                 25.1.1 the applicant's name, mailing address for official postal address, phone and fax numbers, e-mail address and a reference containing the name of the officer authorized to make decisions (This paragraph was amended by the law on 1 July 2014);

                 25.1.2.  a document certifying that the applicant meets the requirements of Article 7.1 of this Law;

                25.1.3. a map of the area prepared as set forth in the requirements of Article 24.3 of this Law. The map shall contain the name of the aimag or capital city and soum or district in which the area is located;

                25.1.4. a document showing that the applicant has paid the service fee set forth in Article 10.1.4 of this Law;

                25.1.5. the Minerals Professional Council's notes on its discussion of the exploration  results, and a decision of the State administrative agency;

                25.1.6. verification of performance of the duties with regard to the environmental management plan during exploration work;

     25.1.7. an evaluation of the environmental impacts;

                25.1.8. a decision by the official or the organization that conducted the tender as set forth in Article 24.2 of this Law for the license areas explored with State budget funding.

Article 26. Registering and processing the application

            26.1. Upon receiving the application as set forth in Article 25.1 of this Law, the State administrative agency shall carry out the following:

                    26.1.1        register the application in the application registry and record the number, date, hour and minute of registration on each page attached, and issue a receipt to the applicant acknowledging the registration of the application;

                     26.1.2       immediately following the registration it shall be determined by preliminary screening whether the application and the attached documents meet the requirements set forth in Articles 24.3, 24.4 and 25.1 of this Law.

           26.2. Following the preliminary screening set forth in Article 26.1.2 of this Law, the following shall be clarified:

                26.2.1.  whether the mining area requested by the exploration license-holder is within the boundaries of its exploration licensed area;

                 26.2.2           whether the requested area overlaps with any reserve area, special purpose territory, prohibited area to exploration and mining or an area already subject to an existing valid license (This paragraph was amended by the law on 16 July 2009);

                26.2.3.           whether the size and evaluation of the mineral reserve estimated by exploration would be sufficient for reclamation of environmental damages that might result from mining activities.

             26.3. Within twenty (20) business days following the registration of an application for a mining license, the State administrative agency shall make one of the following decisions based on the clarifications set forth in Articles 26.1 and 26.2, and will notify the applicant accordingly:

                     26.3.1. reject the request and give written notice to the applicant containing the grounds for such decision if the application and attached documents fail to meet the requirements of Articles 24.3, 24.4 and 25.1 of this Law, and record it in the application registration book.

                      26.3.2      grant the mining license according to the exclusive rights of the applicant where the existing exploration license-holder submits an application for a mining license in the exploration area and pays the first year's license fee as set forth in Article 34.1 of this Law;

                 26.3.3           grant the mining license if it does not overlap with any part of an area with restrictions or prohibitions on prospecting, exploration or mining, reserve area, special purpose territory or any area subject to a valid license, and the applicant pays the first year's license fee on time as set forth in Article 34.1 of this Law;

                   26.3.4         if the requested area overlaps in any way with an area set forth in Article 26.3.3 of this Law the application for the mining license shall be rejected and written notice containing grounds for such rejection shall be issued to the applicant. This shall be recorded in the application registration book;

          26.4. If the applicant who has received a mining license approval notice as set forth in Articles 26.3.2 and 26.3.3 of this Law fails to pay the first year's license fee within the period set forth in Article 34.1 of this Law, the State administrative agency shall remove the application from the application registry, notify the applicant in writing, and record it in the application registration book.  

          26.5. Within three (3) business days following the payment of the license fee for the first year made by applicant as set forth in Articles 26.3.2 and 26.3.3 of this Law, the State administrative agency shall issue a mining license to the applicant for a term of thirty (30) years, and shall register the license and mining area in the license and license cartographic registries.

           26.6. A mining license shall contain the date of issuance, the license-holder's name, address and the coordinates of the corners of the mine area covered by the license and an attachment in which all subsequent changes with respect to the license shall be recorded.

           26.7. Within seven (7) business days following the issuance of a mining license and licence for residual deposit the State administrative agency shall notify the State central administrative agency in charge of the environment, the State administrative agency in charge of taxation and fiscal issues, the Governors of the aimag, soum and district where the licensed area is located and the state professional inspection agency, and publish an official notice in a daily newspaper informing the public of the granting of the license.

(This paragraph was amended by the law of 10 Nov 2016)

            26.8. The State administrative agency shall return the application and attached documents to the applicant if the decisions set forth in Articles 26.3.1, 26.3.4 and 26.4 of this Law are made.

            26.9.     A mining license for the area explored and the reserve determined through State budget funding shall be granted through tender.

26.10. If a license-holder has a third party utilize the residual deposit, an agreement to utilize the residual deposit shall be executed with the third party and the State Administrative Agency in charge of geological and mining issues shall be informed within 14 days.

(This paragraph was added by the law of 10 Nov 2016)

26.11. The State Administrative Agency shall issue a 3-year license to utilize the residual deposit based on the conclusion and decision by the Minerals Council on the agreement specified in 26.10 of this Law and the Feasibility Study to utilize the residual deposit".

(This paragraph was added by the law of 10 Nov 2016)

26.12. Mining licence holder shall register its land use right in the state register of right in accordance with the Law on State Register of Property Right.

 (This paragraph was added by the law of 21 June 2018)

Article 27. Rights and obligations of mining license-holders

          27.1        A mining license-holder shall have[6] the following rights and obligations:

                     27.1.1 the right to use minerals within the mining claim as set forth in the provisions of this Law;/This paragraph was amended by the laws on 16 July 2009 and 13 Feb 2015/

                   27.1.2 the right to use radioactive minerals within the mining claim on the basis of a license issued by state administrative authority in charge of nuclear energy issues; /annulled by the law on 16 July 2009 and annulled by the law on 13 Feb 2015/

             27.1.3 to fulfill obligations set forth in Chapter 6 of this Law;

                 27.1.4 a mining license holder and legal entity authorized to export shall sell mineral products and minerals extracted from the mining claim at international market prices (This paragraph was added by the law on 16 July 2009 and amended by the laws on 1 July 2014 and 13 Feb 2015);

                27.1.5 the right to conduct exploration for minerals within the mining area; /This paragraph was amended by the laws on 16 July 2009 and 13 Feb 2015/

                 27.1.6 the right to transfer and pledge all or part of the mining license as set forth in provisions of this Law; /This paragraph was amended by the laws on 16 July 2009 and 13 Feb 2015/

                   27.1.7 the right to extend the term of the mining license other than radioactive minerals two times for a period of twenty (20) years each depending up on the reserve of the mineral; (This paragraph was added and amended by law on 16 July 2009/

               27.1.8 the right to enter and pass through the mining area, construct necessary structures and use the mining area in order to carry out mining activities;

                 27.1.9 the right to pass through the land adjacent to the mining area;

                 27.1.10 to enter and pass through the land owned or possessed by other persons as approved by the owner or possessor of the land in order to exercise the rights provided by this Law;

                27.1.11 the right to use land and water in compliance with applicable laws.

                  27.1.12. ensure that feasibility studies stated in Article 48.6.1 of this law include detailed information on the transportation of mining products,development of infrastructure and funds required for mine restoration and closure work (This paragraph was added by the law on 1 July 2014);

                  27.1.13. appoint a full time employee responsible for reporting on environmental, restoration and mine closure matters to the State Administrative Authority in charge of geology and mining issues on a regular basis (This paragraph was added by the law on 1 July 2014).

      27.1.14. duly register the right to use land in the state register of right in accordance with the Law on State Register of Property Right.

(This paragraph was added by the law of 21 June 2018)

Article 28. Extension of the term of a mining license

           28.1. Not less than two (2) years prior to the expiration of a mining license, the license-holder may submit an application on the form approved by the State administrative agency for an extension of the mining license. The following documents shall be attached to the application:

                    28.1.1.       a copy of the mining license if delivered by post, a notarized copy /competent person receiving the documents shall check the documents against the originals and record that the copies are true for free / (This paragraph was amended by the law on 10 Feb 2011);

                  28.1.2.         receipts for payments of license fee and service fee;

                  28.1.3.         documentation evidencing the inspection of the implementation of the environmental plan as set forth in Article 39 of this Law.

             28.2. Within fifteen (15) business days following the receipt of an application set forth in Article 28.1 of this Law, the State administrative agency shall verify that the license-holder is eligible to hold the license. If there are no violations, the license term shall be extended for the period set forth in Article 27.1.7 of this Law. The extension shall be recorded in the license registry book and the applicant shall be notified (This paragraph was amended by the law on 16 July 2009).

             28.3. Within seven (7) business days following the decision to extend the mining license, the State administrative agency shall notify the authorities set forth in Article 26.7 of this Law, and publicize the extension in a daily newspaper.

Article 29. annulled by the law on 3 Oct 2013

Article 30. annulled by the law on 3 Oct 2013

CHAPTER FIVE

CONDITIONS FOR MAINTAINING THE ELIGIBILITY TO HOLD EXPLORATION AND MINING LICENSES

Article 31. Maintaining the eligibility to hold a license

31.1.    A license-holder is obliged to comply with the conditions and requirements set forth in Article 32 and 33 of this Law, and failure to comply shall result in revocation of the license pursuant to Article 56 of this Law.

Article 32. License fees

32.1.    The license-holder shall pay license fees annually as set forth in this Law.

32.2.    Exploration license fees shall be payable for each hectare included within the exploration area at the following rates: MNT 145 for the first year, MNT 290 for the second and MNT 435 for the third year of the term of the exploration license; MNT 1450 for each of the fourth to sixth years of the term of the exploration license; MNT 2175 for each of the seventh to ninth years and MNT 7250 for 10-12 year of the term of the exploration license (This paragraph was amended by the laws on 1 July 2014 and 23 Jan 2015).

32.3.   Mining license fee shall be MNT 21750 per hectare of the licensed mining area and for limestone, coal and domestic production minerals, the fee shall be MNT 7250 for each hectare (This paragraph was amended  the law on 9 Jan 2014 and amended by the law on 23 Jan 2015).

Article 33. The minimum cost of exploration and its verification

33.1.    Each year an exploration license-holder shall carry out reconnaissance and exploration work in the license area costing not less than the amounts per hectare specified below:

33.1.1. USD 0.5 for each of the second and third years of the term of the exploration license;

33.1.2. USD 1.00 for each of the fourth to sixth years of the term of the exploration license;

33.1.3. USD 1.50 for each of the seventh to ninth years of the term of the license;

33.1.4. USD 10 for each of the tenth to twelve years of the term of the license (This paragraph was added by the law on 1 July 2014).

33.2.    The exploration work expenditures shall be verified by the State administrative agency based up on an annual geological and exploration work report, and the financial balance sheets of the license-holder.

33.3.    State administrative agency shall conduct worksite inspections to verify actual expenditures, if required.

Article 34. Payment of license fees

34.1.    License fees for the first year shall be paid within ten (10) business days after the license-holder receives the notice set forth in Articles 20.3 19.6, 26.3.2 and 26.3.3 of this Law.

             (This paragraph was amended by the law on 10 Nov 2017)

34.2.    License fees for subsequent years shall be payable annually in advance, on or before the anniversary date of the issuance of the license.

34.3.    The amount of the license fee shall be calculated on the basis of the measurements of the license area as registered in the registry of licenses, and the amount of the fee shall not change for that particular year.

34.4.    The license fee shall be deemed paid upon receipt by the State administrative agency of a document certifying the payment of the fees and the payment date shall be the date of the bank transaction.

34.5.    The Bank of Mongolia's official rate for that day shall be used when calculating costs or expenses when expressed in USD in this Law (This paragraph was amended by the law on 23 Jan 2015).

35.6.   If fails to pay payment specified in Article 34.2 of this law, liquidated damage equal to 0.3 percent of the annual payment amount shall be imposed for each day overdue (This paragraph was added by the law on 1 July 2014).

35.7.    Overdue day specified in Article 34.6 of this law shall be up to 30 days and if exceeded such period, a license shall be revoked in accordance with Article 56 of this law (This paragraph was added by the law on 1 July 2014).

CHAPTER SIX

OBLIGATIONS OF A LICENSE-HOLDER

Article 35. General obligations of a license-holder

35.1.    While carrying out its activities a license-holder shall comply with the general obligations set forth in this Article. Failure to comply with the general obligations will subject the license-holder to the penalties set forth in Article 66.1.4 of this Law.

35.2.    An exploration license-holder shall keep the following documents at the actual site of the exploration work:

35.2.1. copy of the exploration license (This paragraph was amended by the law on 10 Feb 2011);

35.2.2 environmental management plan and report (This paragraph was amended by the law on 17 May 2012);

35.2.3 exploration work plan reviewed by the State administrative agency and state professional inspection agency.

         35.3. A mining license-holder shall keep the following documents at the mine:

35.3.1. copy of the mining license (This paragraph was amended by the law on 10 Feb 2011);

35.3.2. feasibility study on mineral mining and a mining plan reviewed by the relevant organization;

35.3.3. environmental impact assessment;

35.3.4. environmental management plan (This paragraph was amended by the law on 17 May 2012);

35.3.5. property leases and product sales agreements;

35.3.6. records establishing and marking the boundary of the mining area;

35.3.7. agreements on land and water use.

35.4     A mining license-holder shall commence its mining activities after it has been accepted by a commission appointed by the State central administrative agency in charge of geology and mining.

35.5     The mining license-holder shall exhaust all of the mineral reserves. It is prohibited to mine selecting the high grade areas.

35.6      The exploitation license-holder legal entity and artisanal mining gold miner shall turn over its extracted gold within a given financial year (This paragraph was added by the law on 24 Jan 2014).

35.7.   A license holder shall notify the State Administrative Authority in charge of petroleum issues if it discovers methane during coal mining (This paragraph was added by the law on 1 July 2014).

35.8.    A license holder may carry out exploitation under the Petroleum Law if it uses methane set out in Article 35.7 of this law (This paragraph was added by the law on 1 July 2014).

35.9.   A license holder shall give priority to a taxpayer with goods, works or services satisify standard requirements and registerd in Mongolia when procures goods, works or services and hires subcontractors required for its operations (This paragraph was added by the law on 1 July 2014).

35.10.  A mining license holder shall inform the State Administrative Authority in charge of geology and mining isseus  when discontinues its operations due to technical accident, force majeure, court decision or in accordance with the procedure stipulated in Law on Offence Investigation state inspector's act and discontinues mining development ans concentraton production operations due to other reasons.

             (This paragraph was added by the law on 1 July 2014 and by the law of 10 Nov 2017).

35.11.  Extracted, concentrated and semi-produced products shall be given priority at first place to productions operating in the territory of Mongolia  at market price (This paragraph was added by the law on 1 July 2014).

35.12.  A license holder shall inform the State Administrative Authority within 14 days in the event of it changes its address, e-mail, telephone and fax numbers (This paragraph was added by the law on 1 July 2014).

Article 36. Establishing the boundaries and marking the area held under a mining license

36.1.    Within three (3) months following the registration of the mining license in the registry of licenses, the mining license-holder shall, as set forth in Article 26.6 of this Law, establish the boundaries and mark the approved mining area by permanent markers as set forth in the technical requirements specified by the state professional inspection agency. The establishment of the boundaries of the mining area shall be performed by a person authorized by the State administrative agency, who shall file a report with the agency upon completion.

36.2.    A mining license-holder shall preserve the markers and adjust and replace the markers upon reorganization within the area as set forth in decisions of the State administrative agency.

Article 37. Environmental protection

37.1.    Exploration and mining license-holders shall comply with the laws and legislation on environmental protection, and with Articles 38 and 39 of this Law.

37.2.    A license-holder may not commence prospecting and exploration operations without first obtaining written approval from the relevant environmental agency, or commence mining operations without a commission approval as set forth in Article 35.4 of this Law. In case of a dispute arising out of these matters, the complaint may be filed with the state professional inspection agency.

Article 38. Environmental protection obligations of an exploration license-holder

38.1. An exploration license-holder shall have the following obligations regarding environmental protection:       

38.1.1  Within thirty (30) days following the receipt of an exploration license, the exploration license-holder shall prepare an environmental management plan by consulting with the state environmental inspection agency and the Governor of the soum or district where the exploration area is located (This paragraph was amended by the law on 17 May 2012);

38.1.2  The environmental protection plan shall provide measures to ensure that the level of the environment pollution does not exceed the accepted limits, and reclamation of the area by means of backfilling, leveling and cultivation to allow future public use; 

38.1.3  The environmental protection plan shall be delivered to and approved by the Governor of the relevant soum or district where the exploration area is located.

38.1.4 Upon approval of the environmental management plan as set forth in the Article 38.1.3 of this Law, a copy of this plan shall be delivered to the local environmental inspection agency (This paragraph was amended by the law on 17 May 2012);

38.1.5 The license-holder shall record all instances of adverse environmental impacts resulting from the exploration activity in its annual environmental management plan report, and deliver this report to the Governor of the relevant soum or district and the environmental inspection agency (This paragraph was amended by the law on 17 May 2012);

38.1.6  The report set forth in Article 38.1.5 shall contain information on measures taken to protect the environment and proposed amendments to the environmental protection plan directed at preventing the possible impact on the environment of new exploration machinery and technology. All amendments to the environmental protection plan shall be approved by the Governor of the relevant soum or district;

38.1.7 To provide the State and local administrative agency official in charge of monitoring implementation of the laws on environmental protection with an opportunity to enter the exploration area to conduct monitoring activities on the site;

38.1.8 To ensure the discharge of its responsibilities with respect to environmental protection, an exploration license-holder shall deposit funds equal to 50% of its environmental protection budget for that particular year in a special bank account established by the Governor of the relevant soum or district.

38.2.    Within ten (10) days after receiving the environmental protection plan and its proposed amendments, the Governor of the soum or district shall review and approve the plan and return it to the license-holder.

38.3     If a license-holder fails to fully implement the measures provided in the environmental management plan, the Governor of the relevant soum or district shall use the deposit set forth in Article 38.1.8 of this Law to implement these measures, and the license-holder shall provide any additional funds required without dispute (This paragraph was amended by the law on 17 May 2012).

38.4     If the license-holder complies with all of the obligations of the environmental management plan, the deposited funds set forth in Article 38.1.8 of this Law shall be returned to the license-holder (This paragraph was amended by the law on 17 May 2012).

Article 39. Environmental protection obligations of mining license-holders

39.1     A mining license-holder shall have the following obligations with regard to environmental protection:     

39.1.1 an environmental impact assessment and an environmental management plan shall be prepared by a person set forth in Article 24.1 of this Law before obtaining a mining license, and by the person who obtained a mining license through tender (This paragraph was amended by the law on 17 May 2012);

39.1.2 the environmental impact assessment shall identify the possible adverse environmental impacts from the proposed mining operations regarding public and health,  environmental and shall include preventive measures that avoid and minimize such adverse impacts;

39.1.3. the environmental management plan shall contain measures to ensure that mining operations are conducted in the least damaging way to the environment. The plan shall also identify preventive measures to protect air and water, humans, animals and plants from the adverse impacts of mining operations (This paragraph was amended by the law on 17 May 2012);

39.1.4. apart from Article 39.1.3 of this Law, an environmental management plan must include the following (This paragraph was amended by the law on 17 May 2012):

39.1.4.1. storage and control of toxic and potentially toxic substances and materials;

39.1.4.2. protection, utilization and conservation of surface and ground water;

39.1.4.3. construction of tailings dams and ensuring the mine area safety;

39.1.4.4. reclamation measures set forth in Article 38.1.2 of this Law;

35.1.4.5. other measures as may be appropriate for the particular type of mining operation.

39.1.5. The environmental impact assessment and environmental management plan shall be submitted to the State central administrative agency in charge of the environment (This paragraph was amended by the law on 17 May 2012).

39.1.6. Immediately following the approval of the environmental impact assessment and environmental management plan the license-holder shall deliver a copy of the documents to the Governor of the aimag, soum or district and to the local environmental inspection agency of the area where the mineral deposit is located (This paragraph was amended by the law on 17 May 2012).

39.1.7. Mining license-holders shall record all instances of adverse environmental impact resulting from mining activity, prepare and send a copy of its annual report on the implementation of the environment management plan to the State central administrative agency in charge of environment, the Governor of relevant aimag, soum or district and the state professional inspection agency. The report shall contain the following (This paragraph was amended by the law on 17 May 2012):

39.1.7.1. information on measures taken to protect the environment;

39.1.7.2. new machinery and technology utilized;

39.1.7.3. proposed amendments to the environmental impact assessment and environmental management plan with regard to possible adverse impacts on environment due to expansion of mining operations and enhancement of its production capacity (This paragraph was amended by the law on 17 May 2012).

39.1.8. A mining license-holder shall provide officials of local and State administrative bodies in charge of monitoring implementation of legislation on environmental protection with an opportunity to enter the mining claim area, and to conduct inspection activities on the site.

39.1.9. to regulate as provided in Article 9.8 of the Law on Environmental Impact Assessment (This paragraph was amended by the law on 17 May 2012).

39.2.    The State central administrative agency in charge of the environment shall review the documents set forth in Articles 39.1.5 and 39.1.7.3 and notify the license-holder of its decision within thirty (30) days after receiving the documents.

39.3.    If a mining license-holder fails to fully implement the measures of environmental reclamation, the State central administrative agency in charge of the environment shall use the deposited funds set forth in Article 39.1.9 of this Law to implement reclamation work by a specialized organization, and the license-holder shall provide any additional funds required without dispute.

39.4.    If the license-holder complies with all of the obligations of the environmental management plan, the deposited funds set forth in Article 39.1.9 of this Law shall be returned to the license-holder (This paragraph was amended by the law on 17 May 2012).

39.5.    The deposited funds set forth in Article 39.3 of this Law shall be transferred before the commencement of mining operation  of the corresponding year and the State central administrative agency in charge of the environment shall notify the Governor of the relevant soum or district of the transfer (This paragraph was amended by the law on 17 May 2012).

39.6.    If license-holder fails to transfer the deposited funds set forth in Article 39.1.9 of this Law within the period required by Article 39.5 of this Law, the soum or district Governor shall have the right to halt mining activities for the year.

39.7.    In case of a failure to complete reclamation activities for the year, the Governor of the relevant soum or district, and the state professional inspection agency jointly hold the right to prevent the commencement of mining activities for the next year.

39.8.    The procedures of monitoring the transactions of special accounts set forth in Articles 38.1.8 and 39.1.9 shall be approved by the member of the cabinet in charge of the environment.

39.9.    The State central administrative agency in charge of the environment shall require the license-holder to provide amendments to the environmental management plan and environmental impact assessment if new circumstances arise which have adverse impacts on environment due to introduction of new equipment and technology during the valid license term (This paragraph was amended by the law on 17 May 2012).

Article 40. Review of updated environmental impact assessment and management plan (This paragraph was amended by the law on 17 May 2012)

40.1.    Exploration license-holders applying for a license extension shall submit their revised environmental management plan to the Governor of the relevant soum or district for approval prior to the expiration of the exploration license (This paragraph was amended by the law on 17 May 2012).

40.2.    Mining-license holders applying for a license extension shall submit their revised environmental impact assessment and environmental management plan to the State central administrative agency in charge of the environment for approval (This paragraph was amended by the law on 17 May 2012).

40.3.    The assessment and plan set forth in Articles 40.1 and 40.2 of this Law shall be approved as set forth in the Articles 38.2 and 39.2 of this Law.

Article 401. Cultural heritage protection (This article was added by the law on 15 May 2014)

401.1. A license holder shall perform obligations set out in the Law on Cultural Heritage Protectiopn and Articles 402 and 46 of this law.

401.2. It shall be prohibited to prospect, explore and exploit minerals without preliminary research and approval by paleontological, archeological and ethnological professional institutions when carries out the mineral exploration 

Article 402. License holder's obligations with regard to cultural heritage protection

(This article was added by the law on 15 May 2014)

402.1. A license holder shall undertake the following obligations with regard to cultural heritage protection:

 402.1.1.provide government and local administration authority officials and state control inspectors authorized to monitor and oversight implementation of the cultural heritage protection legislation with access to exploration areas and conduct on site inspection;

402.1.2. during mineral prospecting and exploration, ensure safety of discovered cultural heritage and register with cultural heritage registry and information data under the law and transfer such heritage to relevant authority for storage.

Article 41. Compensation for damages to property

41.1.    License-holders shall fully compensate owners and users of private and public residential dwellings, wells, winter animal shelters, other structures, and historic and cultural landmarks for the damages caused by exploration or mining operations, including, if necessary, relocation costs.

Article 42. Relations with local administrative bodies

A license-holder shall work in cooperation with the local administrative bodies and conclude agreements on issues of environmental protection, mine exploitation, infrastructure development and job creation in relation to the mine-site development.

42.2.    A license-holder in cooperation with the local administrative agency may organize a public forum in relation to issues set forth in Article 42.1.

42.3.    The Citizens may elect a representative among them whose obligation is to provide public monitoring on the license-holder's and its environment rehabilitation activities (This paragraph was amended by the law on 16 July 2009).

Article 43. Employment requirements

43.1.    A mining license-holder and their subcontractors are obliged to employ the citizens[7] of Mongolia, and up to ten (10) per cent of the employees may be foreign citizens (This paragraph was amended by the law on 1 July 2014).

43.2.    If the number of foreign citizens employed exceeds the percentage set forth in Article 43.1, the license-holder shall pay ten (10) times Mongolia's[8] minimum wage for each foreign citizen for every month.

43.3.    The payment set forth in Article 43.2 shall be submitted to the budget of the relevant soum or district and shall be disbursed to support in employment, creating new jobs and the educational and health sectors; relevant procedures shall be approved by Citizens' Representatives' Hural of the relevant soum or district.

             (This paragraph was amended by the law on 04 February 2016).

Article 44. Ensuring health and safety standards

44.1.    The license-holder shall carry out activities providing for the safety for citizens of the relevant soum or district, labor safety and hygiene for mine employees as set forth in the applicable laws and regulations.

Article 45. Requirements for closure of a mine

45.1.    In case of mine or concentration plant is closed partially or wholly, a license-holder shall inform the State Central Administrative Authority  at least year before and take preparatory measures pursuant to Article 10.1.14 of this and implement the following measures (This paragraph was amended by the laws on 17 May 2012 and 1 July 2014):

45.1.1.take all necessary measures to ensure safe use of the mine area for public purposes and reclamation of the environment;

45.1.2. take preventive measures if the mine claim is dangerous for public use;

45.1.3. remove all machinery, equipment and other property from the mining area except as permitted by local administrative bodies or the professional inspection agency.

45.2.    Mining license-holders shall prepare a detailed map of an appropriate scale showing dangerous or potentially dangerous areas created by mining operations by placing necessary warnings and markings in the vicinity of the mining claim and shall submit the map to the professional inspection agency and particular soum, bagh, or district Governor.

Article 46. Registration and sale of precious stones and metals

46.1.    A mining license-holder shall request State administrative body in charge of assaying to determine assaying and quality of all extracted precious stones and metals and to register their quantity. /amended by the law on 19 Dec 2008/

46.2.    A list of minerals and precious stones subject to registration a set forth in Article 46.1 of this Law and the procedures for their assay, registration and quality determination shall be approved by the Government.

46.3.    The Bank of Mongolia shall pay international market prices when purchasing precious stones and metals.

46.4.    A mining license-holder may export through the Bank of Mongolia precious stones and extracted metals.

46.5.    If a license-holder extracts a nugget weighing more than 400 grams or which has a peculiar shape though weighing less or a precious stone with rare color and shape, the license-holder is obliged to sell it to the treasury fund of the Bank of Mongolia at a premium rate.

Article 47. Royalties

47.1.    A mining license-holder shall pay royalties to state budget on the sales value of all products extracted from the mining claim that are sold, shipped for sale, or used.

             Legal entity that sold, shipped for sale, or used minerals and anybody sold gold to Bank of Mongolia and authorized commercial bank shall be royalty payer and pay royalties to state budget on the sales value of all types of minerals that is sold, shipped for sale, or used.

            (This paragraph was amended by the law on 23 Dec 2011).

            (This paragraph was amended by the law on 26 March 2019)

            (This paragraph was annulled by the resolution of Contitutional Court dated 30 October 2019)

47.2.    The sales value set forth in Article 47.1 of this Law shall be determined as follows:

47.2.1. for exported products the sales value shall be the average monthly price of the products, or similar products, based on regularly published international market prices, or on recognized principles of international trade;

47.2.2. for products sold or used on the domestic market, the sales value shall be based on the domestic market price for the particular or similar product;

47.2.3. for products sold on international or domestic markets, where it is impossible to determine market prices, the sales value shall be based on the revenue derived from the sale of the product as declared by the license-holder.

47.3. The royalty rates shall be as follows:

47.3.1. royalties for domestically sold coal shall be two and one-half (2.5) per cent of the sales value of all products extracted from the mining claim which are sold, shipped for sale, or used (This paragraph was amended by the law on 23 Dec 2011);

            (This paragraph was annulled by the resolution of Contitutional Court dated 30 October 2019)

47.3.2. minimum royalties other than that set forth in Article 47.3.1 and 47.3.3 of this Law shall be five (5.0) per cent of sale value of product, additional payment of gold  of the sales value of all products extracted from the mining claim that are sold, shipped for sale, or used

for extracted minerals other than gold sold to the Bank of Mongolia and banks authorized by the Bank of Mongolia shall be 0 per cent.

(This paragraph was amended by the laws on 25 Nov 2010 and 24 Jan 2014).

(This paragraph was amended by the law on 26 March 2019)

(This 47.3.2 paragraph (minimum royalties other than that set forth in Article 47.3.1 and 47.3.3 of this Law shall be five (5.0) per cent of sale value of product, additional payment of gold  of the sales value of all products extracted from the mining claim that are sold, shipped for sale, or used

for extracted minerals other than gold sold to the Bank of Mongolia and banks authorized by the Bank of Mongolia shall be 0 per cent) was annulled by the resolution of Contitutional Court dated 30 October 2019)

47.3.3. royalties specified in Article 47.3.2 of this law for gold sold to the Bank of Mongolia and other banks authorized by the Bank of Mongolia shall be 2.5 percent and additional fee set out in Article 47.5 of this law shall be 0 percent (This paragraph was added by the law on 24 Jan 2014 and this provision shall come into force from 24 Jan 2014 and remain valid until 1 Jan 2019).

47.4.    The royalties shall be imposed adding the percent specified in Article 47.3.2 of this Law on the percent specified in Article 47.5 of this Law depending on the product's market rate increase. (This paragraph was added by the law on 25 Nov 2010)

             (This paragraph was annulled by the resolution of Contitutional Court dated 30 October 2019)

47.5      Additional fee set forth in Article 47.4 of this Law shall be set as follows (This paragraph was added by the law on 25 Nov 2010): [insert the table]

             (parts  47.5.11, 47.5.12, 47.5.13 in this paragraph were annulled by the resolution of Contitutional Court dated 30 October 2019)

47.6 The Government shall approve methodology reporting and payment procedure to estimate royalties' percent and to impose fee in accordance with Article 47.3.1, 47.3.2, 47.4 and 47.5 of this Law (This paragraph was added by the law on 25 Nov 2010).

            (This paragraph was amended by the law on 26 March 2019)

47.7   An additional Royalty shall be imposed on any of ore, concentration and product depending on product processing level without being overlapped.

            (This paragraph was added by the law on 25 Nov 2010).

            (This paragraph was aтended by the law on 26 March 2019)

47.8    The Government shall approve requirement, category, estimation basic principle and methodology at ore, concentration and product processing level specified in Article 47.5 of this Law basing on a proposal of State Administrative Agency in charge of geological, mining and financial issues (This paragraph was added by the law on 25 Nov 2010).   

47.9     An exploration license-holder shall pay royalties on minerals extracted during the exploration or surveying purposes which are to be sold only after registering the type and quantity of the mineral with the professional inspection agency.

47.10. A royalty payer shall pay the quarterly royalty for all types of products that are sold, shipped for sale or used in that quarter to the budget before the 20th day of the next quarter.

            Royalty payer set out in article 47.1 of this law and other than that paid gold to Mongol bank and authorized commercial banks shall pay monthly royalty of sold, shipped for sale or used minerals within 20th day of next month, and year end payment within 10th day of February of next year, to the budget. 

(This paragraph was amended by the law on 04 June 2015)

(This paragraph was amended by the law on 26 March 2019)

47.11. A mining license-holder shall submit a quarterly report to the state professional inspection agency that indicates the quantity of products extracted, sold, shipped for sale or used, the total value of the sales, and the basis of the evaluation for that quarter. The mining license-holder shall use a form approved by the state professional inspection agency, and it shall be verified by the license-holder's signature.

            Royalty payer set out in article 47.1 of this law and other than that paid gold to Mongol bank and authorized commercial banks shall submit report on volume, sales value and payment  amount of sold, shipped for sale or used mineralsin in the form approved by government admnistrative body in charge of specialized inspection, royalty payment report, on quarterly basis and at the accumulative basis, in the form approved by government administrative body in charge of tax within 20th day of first month of next quarter and year end report within 10th day of February of next year.

 (This paragraph was amended by the law on 26 March 2019)

47.12. Mongol bank and authorized commercial banks shall withhold royalty at the rate set out article 47.3.2 of this law from the amount of gold sold to them and pay royalty to the state budget.

            (This paragraph was amended by the law on 26 March 2019)

47.13. Mongol bank and authorized commercial banks shall submit payment report and information on the royalty, paid to budget in accordance with article 47.12 of this law, to the government administrative body in charge of tax in its approved form within 20th day of next month.

            (This paragraph was added by the law on 3 Oct 2013).

            (This paragraph was amended by the law on 26 March 2019)

47.14. The Government shall prepare and periodically publish a list of commodity exchange prices and related information, which shall be used for the purpose of calculating the sales value of exported products.

            /Numbering was changed by the law on 26 March 2019/

47.15. As for a taxpayer with tax environment stabilization certificate, minerals royalty shall be imposed by percentage stated in the certificate pursuant to the Investment Law.

            /Numbering was changed by the law on 26 March 2019/

Article 471. Royalties for common minerals (annulled by the law on 16 Jan 2014)

Article 472. Special royalty for mineral deposits of strategic importance

            472.1. In the event that parties agree to transfer the percentage of the state share in a minerals deposit of strategic importance to the other party of the agreement with approval of competent authority, the transferee or mining license holder shall pay special royalty for mineral deposits of strategic importance to state budget in accordance with the procedure set forth in Artilce 47.2 of this law.

            472.2. The Government of Mongolia shall adopt the rate and amount of the special royalty for mineral deposits of strategic importance set forth in Article 472.1 of this law.

            472.3. The amount of special royalty for minerals deposits of strategic importance set forth in provisions 5.3-5.5 of this law shall not exceed 5 per cent depending on the features of the deposit.

(This article was added by the law on 18 Feb 2015)

473  Royalty for the ineral product extracted from residual deposit

473.1. Royalties for products extracted from the residual deposit shall be 2.5% of the sales value of the products and the additional fee specified in Article 47.5 of this Law shall be 0%.

473.2. An additional royalties' fee for gold shall be imposed in accordance with Article 47.4 and 47.5 of this Law, regardless of Article 473.1.

473.3. Sales value specified in Article 473.1 and 473.2 of this Law shall be determined by the principles in Article 47.2 of this Law."

(This article was amended by the law of 10 Nov 2016)

Article 48. Submission of information and reports

48.1.    A exploration license-holder shall accurately prepare the following information and reports on a timely basis, and submit copies to the state professional inspection agency, and State administrative agency, respectively:

48.1.1. an exploration activities plan shall be submitted within thirty (30) days and by 15 April for the following years after the grant of the exploration license (This paragraph was amended by the law on 1 July 2014);

48.1.2. in a form approved by the State Administrative Agency, annual exploration activities reports shall be submitted within 15th of February of the following year ((This paragraph was amended by the law on 1 July 2014);

48.1.3. annual report on safety set forth in Article 44 of this Law shall be submitted by the 20th of January of every year.

48.2.    The report set forth in Article 48.1.2 of this Law shall contain information on the work completed and expenses incurred in reconnaissance, geophysical and geochemical work, drilling and other activities, information on the labor force, and the results of the exploration work. A map indicating the locations where the work was done shall be attached to the report. This map shall be prepared according to the State geodesy system.

48.3.    The exploration license-holder shall develop a report on deposit reserve, prospecting and exploration outcome in consistent with mineral prospectin and exploration procedure, mineral resources and deposit reserve category and provide expert's recommendation and submit them to the State Administrative Agency before the term of the license expires (This paragraph was amended by the law on 1 July 2014).

48.4.    The State administrative agency shall accept the estimate of ore reserves submitted in the final report set forth in Article 48.3 of this Law after receiving an opinion from a qualified expert, and shall include the ore reserves in the national registry of reserves.

48.5.    The State administrative agency shall also have the right to demand information and reports from the license-holder if the information or reports are incomplete.

48.6.    A mining license-holder shall submit the following information and reports to the State administrative agency:

48.6.1. a feasibility study on the development of the deposit developed by competent authority within a year of obtaining a mining license (This paragraph was amended by the law on 1 July 2014);

48.6.2. estimation data on the next year's production and mining work plan, on an approved instruction within 1st of December (This paragraph was amended by the law on 1 July 2014);

48.6.3. mining exploration to upgrade reserve rank shall be carried out on areas coverd by mining license from time to time and work plan, report on activities of the year and exploration outcome report shall be submitted under Article 48.1.2 of this law (This paragraph was amended by the law on 1 July 2014).

48.7.    The report set forth in Article 48.6.3 of this Law shall contain the following:

48.7.1. the number of work days, number of employees, and all agreements and contracts affecting the license-holder's property;

48.7.2. information on implementation of the mining plan, an estimate of changes in reserves, time periods of operation for the mine, a general overview of production facilities, and any expansion or renovation of such facilities;

48.7.3. information on the quantity of ore mined, the quantity of products produced, shipped and sold, the price of the products sold, information with respect to the purchasers, information on investments made during the year, operating expenses, royalty payments and information with respect to the equipment and technology used in the mining operations, and information on other related properties;

48.7.4. a report on safety set forth in Article 44 of this Law.

48.8.    A license-holder shall prepare a report on the implementation of the environmental management plan as set forth in Article 38 and 39 of this Law, and submit it to the relevant authorities (This paragraph was amended by the law on 17 May 2012).

48.9.    A license-holder shall submit a report on royalties as set forth in Article 48.7.3 to the tax office, using its approved form, on the 20th calendar day following the end of the quarter, and a year-end report by January 20 of the following year.

48.10. A license-holder shall report to the public the amount of its product sales for the year and the amount of taxes and payments paid to the State and local budgets during the first (1st) quarter of the following year.

48.11.  The forms set forth in Articles 48.6.2 and 48.6.3 of this Law shall be approved by the head of State administrative agency.

48.12. Specialized expert or authorized legal entity shall develop exploration outcome report set out in Article 48.3 of thisd lw and feasibility study stated in Article 48.6.1 of the same and provide their due diligence reports (This paragraph was added by the law on 1 July 2014).

48.13. A license-holder of the residual deposit shall deliver the next year's production and mining work plan within the term specified in Article 48.6.2 and annual exploration activities report within the term specified in Article 48.1.2, to the State Administrative Agency.

            (This paragraph was added by the law of 10 Nov 2016)

48.14. A license-holder of the residual deposit shall submit the report on royalties specified in Article 48.9 of this Law, to the Tax Office and report relevant information to the public in accordance with Article 48.10 of this Law.

             (This paragraph was added by the law of 10 Nov 2016)

CHAPTER SEVEN

TRANSFER AND PLEDGING MORTGAGE OF LICENSES

Article 49. Transfer of licenses

49.1.    A license-holder may transfer the license in case of a merger pursuant to Civil Law, Company Law and the Partnership Laws and legislation as well a subsidiary or a daughter company may transfer the license to its parent company.

49.2.    An exploration license-holder may transfer its license to another person eligible to hold the license only after providing evidentiary proof that materials and reports on prospecting and exploration work that were sold have been sold as set forth in the applicable laws and regulations, and that taxes have been paid accordingly.

49.3.    A mining license-holder may transfer its license after providing evidentiary proof that the mine together with its machinery, equipment and documents have been sold as set forth in the applicable laws and regulations, and that taxes have been paid accordingly.

49.4.    The transferor of a license shall submit an application in the approved form as set forth in Articles 49.1-49.3 of this Law. The following documents shall be attached to the application:

49.4.1. the license to be transferred;

49.4.2. a document evidencing that the transferee meets all of the requirements set forth in Article 7.1 of this Law;

49.4.3. acknowledgement that the transferee shall accept all the rights and duties that arise pursuant to the license transfer;

49.4.4. reference by the environmental office on reclamation of the area affected by mining, if transferring a mining license;

49.4.5. documentary evidence that the according to deposited funds have been Articles 38.1.8 and 38.1.9 of this Law;

49.4.6. documentary evidence of submission of an exploration work plan and reports to the State administrative agency;

49.4.7. a document showing that the applicant has paid the service fees.

49.4.8.Value calculated in accordance with the methodology specified in Articles 18.8, 30.6 16.14 of the Law on Corporate Income Tax, and explanation and introduction.

(This paragraph was added by the law of 10 Nov 2017)

(This paragraph was amended by the law of 22 March 2019 and it shall become effective from 01 January 2020)

49.5.    Immediately following the receipt of an application set forth in Article 49.4 of this Law, the State administrative agency shall record the application and verify the following:

49.5.1  the application complies with the requirements of this Article;

49.5.2. the license to be transferred is valid;

49.5.3. the license transferee is eligible to hold the license;

49.5.4. the license fees are paid in timely manner;

49.5.5. the exploration expenses have met the minimum costs of exploration set forth in Article 33 of this Law.

49.6.    Within five (5) business days following the receipt of an application for recording the transfer of a license, the State administrative agency shall take one of the following decisions:

49.6.1. record the transfer of the license and make appropriate notations on the license certificate if legal requirement is fully met and tax office certified that respective tax was paid; or

(This paragraph was amended by the law of 10 Nov 2017)

49.6.2. if the application does not comply with Article 49 of this Law, inform the applicant to submit the necessary additional information; or,

49.6.3. if the transferee is not eligible to hold a license, or the license to be transferred is invalid, then the application shall be returned and the applicant shall be notified accordingly.

49.7.    In the event the license-holder is subdivided or segregated according to Civil Law, Company Law and Partnership Law, the license shall be returned to the State administrative agency. This license shall be reissued according to the tender procedure as set forth in Article 10.1.2 of this Law.

49.8.    If the subdivided or segregated legal person has maintained its status to hold the license set forth in Article 7.1 of this Law, this legal person shall have an exclusive right to reacquire the license.

49.9.    A person obtaining a license through transfer shall pay fees and costs set forth in Articles 32.2, 32.3 and 33.1 of this Law at the beginning the next year.

49.10.  In the case were a license dispute is under review by the court, the license shall not be transferred until there is a resolution by the court.

49.11.  The State administrative agency shall notify the state professional inspection agency and the State administrative agency in charge of taxation of the license transfer, and it shall be published in a daily newspaper.

49.12.  If the beneficiary specified in Article 3.1.11 of the Law on State Registration of Legal Entities indirectly transfers the mining license, the license-holder shall submit the documents specified in Article 49.4.8 to the relevant Tax Office within 10 days after a decision is made.

If the beneficiary specified in Article 6.1.48 of the General Taxation Law is changed mining and exploration licence holding legal entities shall submit the documents specified in 49.4.8 of this law to the relevant Tax Office in accordance with 26.10, 26.11, and 26.12 of the General Taxation Law.

(This paragraph was added by the law of 10 Nov 2017)

(This paragraph was amended by the law of 22 March 2019 and it shall become effective from 01 January 2020)

49.13.  Right to use land of the mining licence receiver shall commence when it is registered in the state register of right.

(This paragraph was added by the law of 21 June 2018)

Article 50. Transfer of parts of licensed areas

50.1     License-holders may transfer parts of a licensed area to persons eligible to hold a license as set forth in Article 49 of this Law. In this case the shape, size and orientation of the transferred and retained parts shall comply with the requirements of this Law.

50.2     The transfer of a part of a licensed area shall be recorded with the State administrative agency as set forth in Article 49.6.1 of this Law.

50.3     The application to record the transfer of a part of a licensed area shall contain a description of the land and the information set forth in Articles 17 and 24 of this Law, and it shall also include the application processing fee payment receipt.

50.4     The State administrative agency shall verify and confirm that the transferred area lies entirely within the boundaries of the licensed area covered by the transferor's license.

50.5     The State administrative agency shall implement the registration set forth in Article 50.2 of this Law by the following procedure:

50.5.1  record the location and coordinates of the transferred and retained parts of the licensed area in the licenses and cartographic license registry;

50.5.2  make the appropriate notation to the transferor's license certificate;

50.5.3  issue the transferee a separate exploration and mining license for the area acquired through the transfer.

50.6       The State administrative agency shall notify the state professional inspection agency and the State administrative agency in charge of taxation of the transfer of a part of the licensed area as set forth in Article 50.5 of this Law.

Article 51. Pledges of licenses

51.1.    To provide security for the financing of its investments and operations of a particular project, a license-holder may pledge its licenses to a bank or non-banking financial institution with the related documents, such as, the exploration work results, geological information, feasibility study report and properties which are permitted to be pledged by law. A license alone shall not be a pledge item.

(part 'or to tax office with purpose to collect tax debt from licence holder' was added after 'financial institution' in this paragraph by the law of 22 March 2019 and it shall become effective from 01 January 2020)

51.2.    The license-holder shall submit a copy of the pledge agreement, together with the license certificate and application, to the State administrative agency.

51.3.    After verification that the application to record the license pledge complies with the terms and conditions set forth in this Law, the State administrative agency shall record the license pledge and return the license certificate to the pledgee. The record entry shall include the registration number of the license, the name and address of the holder and the pledgee of the license.

51.4.    Upon termination of the pledge agreement, the license-holder shall submit an application to the State administrative agency together with the following documents:

51.4.1.     a statement signed by the pledgee that the license-holder has fulfilled its obligations under the pledge agreement;

51.4.2.     the pledged license certificate.

51.5.    Upon receipt of the documents set forth in Article 51.4 of this Law, the State administrative agency shall record the termination of the pledge.

51.6.    The pledgee shall not assume the obligations under the license.

51.7.    If the license-holder fails to fulfill its obligations under the pledge agreement and there are grounds for termination of the license as set forth in Articles 22 and 28 of this Law, the State administrative agency shall notify the pledgee that it has the right to propose a transfer of the license to a person eligible to hold the license.

51.8.    The State administrative agency shall notify the pledgee of the license of the expiration of the license fourteen (14) days prior of the expiration date. Within ten (10) days of receiving the notice, the pledgee shall deliver its proposal to transfer the license as set forth in the Article 51.7 of this Law.

Article 52. Transfer of a license pursuant to a pledge agreement

52.1.    In the event the license-holder fails to fulfill its obligations under the pledge agreement, and the pledgee wishes to transfer the license to a person eligible to hold the license, the pledgee as set forth in Article 49 of this Law, shall submit an application to the State administrative agency. The following documents shall be attached to the application:

52.1.1. proposal of the pledgee submitted according to Article 51.7 of this Law;

52.1.2. confirmation by the transferee of the license that it has agreed to accept the documents and properties to be pledged with the license as set forth in Article 51.1 of this Law;

52.1.3. pledged license certificate;

52.1.4. documentation proving the eligibility of the transferee to hold a license as set forth in Article 7.1 of this Law.

52.1.5. confirmation by the transferee of its acceptance of the rights and obligations that attach to the transfer of the license.

52.2.   The State administrative agency shall review the document as set forth in Article 52.1 of this Law, and make a decision to record the transfer of the license.

CHAPTER EIGHT

Termination of exploration and mining licenses

Article 53. Grounds of termination of license

53.1.    A license shall be terminated in the following cases:

53.1.1  expiration of the license term;

53.1.2  surrender by the license-holder of the entire licensed area as set forth in Article 54 of the Law;

53.1.3  revocation of the license by the State administrative agency.

53.2     A license shall be terminated for each part of a licensed area being surrendered by the license-holder.

53.3     Upon termination of the license, the rights and obligations of the license-holder under the license shall cease, except the license-holder's obligations with respect to environmental protection, reclamation and mine closure as set forth in Articles 38, 39 and 45 of this Law, and other obligations pursuant to laws and legislation on environmental protection.

53.4     Upon termination of the license, the license-holder shall return the license certificate to the State administrative agency, and a new license may be issued for the area as set forth in this Law.

53.5     The ownership of buildings and structures, equipment and other property allowed to remain on the exploration or mining area as set forth in Article 45.1.3 of this Law shall be determined according to the provisions of the Civil Code.

53.6     It is prohibited to issue a mining license for a residual deposit in the area with an expired license.

(This paragraph was added by the law of 10 Nov 2016)

Article 54. Surrender the entire licensed area

54.1. A license-holder may voluntarily submit an application for approval of the State administrative agency to surrender the entire license area.

54.2. Evidence that the license-holder has met the obligations under laws, such as the environmental protection law, and reporting and the requirements for mine closure shall be attached to the application.

54.3. Upon receipt of an application, the State administrative agency shall make the appropriate changes to the license and cartographic license registries after verifying that the license-holder has met the requirements as set forth in Article 54.2 of this Law.

54.4.    Upon surrender of the entire licensed area, the license certificate shall be returned to the State administrative agency.

54.5.    The State administrative agency shall notify the relevant authorities of the surrender of the entire licensed area, and it shall be published in a daily newspaper.

54.6.    A license-holder that surrenders the particular licensed area shall not have the right to submit a new application for the same area for a period of two (2) years following the surrender.

Article 55. Surrender of part of the licensed area

55.1.    A license-holder may surrender part of the licensed area as set forth in this Article.

55.2.    A license-holder shall submit an application for surrender of part of the licensed area together with the description of the surrendered part in the form approved by the State administrative agency. In the case of surrender of part of an exploration area, the description of the surrendered area shall meet the requirements of Article 17.2 of this Law and in the case of surrender of part of a mining area the description of the surrendered area shall meet the requirements of Article 24.4 of this Law.

55.3.    The following documents shall be attached to an application for surrender of part of a licensed area:

55.3.1. the license certificate;

55.3.2. documentation from the Governor and environmental inspection agency of the relevant soum or district stating that the license-holder has fulfilled the obligations of environmental protection plan for the surrendered area;

55.3.3. the report as set forth in Articles 48.1.2 and 48.6.3 of this Law.

55.4.    The area retained by the license-holder after surrender of part of the licensed area shall meet the requirements of Articles 17.2 and 24.4 of this Law.

55.5.    If the application for surrender of part of a licensed area meets the requirements of Articles 55.2-55.4 of this Law, the State administrative agency shall register the application and enter appropriate notations on the license certificate and it shall be considered surrendered.

55.6.    The State administrative agency shall notify the relevant bodies of the surrender of a part of a licensed area and it shall be published in a daily newspaper.

55.7.    The surrender of a part of a licensed area shall not entitle the license-holder to a refund or discount of the license fees it already paid.

55.8.    The license-holder shall not have the right to resubmit an application on the same area for two (2) years after surrendering the licensed area.

Article 56. Revocation of licenses

56.1.    The State administrative agency shall revoke a license on the following grounds:

56.1.1. the license-holder has failed to meet the requirements of Articles 7.2 and 31 of this Law;

56.1.2. the license-holder has failed to pay the license fees within the period specified in Article 34.7 of this law (This paragraph was amended by the law on 1 July 2014);

56.1.3. an exploration or a mining area has been designated as resources and special purpose territory or prohibited by the law to explore, and mine on the area as specified Article 13.1.3 of this Law and the license-holder has been fully compensated (This paragraph was amended by the law on 16 July 2009);

56.1.4. the exploration expenditures of the particular year are lower than the minimum cost of exploration set forth in Article 33 of this Law;

56.1.5. the State central administrative agency in charge of the environment has decided, based on a report of the local administrative bodies that the license-holder had failed to fulfill its environmental reclamation duties set out in environmental protection plan or caused harm to environment.

(This paragraph was amended by the law of 02 May 2019)

56.1.6  annulled by the law on 3 Oct 2013.

56.1.7. It is identified that there is cultural heritage in exploration area (This paragraph was added by the law on 15 May 2014).

56.1.8. Provision of the Implementation Law of the Law on the Prohibition of Minerals Exploration and Mining in Headwaters of Rivers, Protected Water Basins Zones and Forested Areas or clause of the agreement concluded in accordance with the beforementioned law has been breached (This paragraph was added by the law on 18 Feb 2015).

56.1.9. If the license is transferred by breaching Article 49.1, 49.2 and 49.3 of this Law;

(This paragraph was added by the law of 10 Nov 2017)

56.1.10. if a license-holder did not report relevant taxes in accordance with the methodology specified in Articles 16.11 and 16.14 18.8, 30.6 of the Law on Corporate Income Tax and Article 49.4.8 of this Law, or intentionally concealed information or the reported false information which is required for the valuation.

(This paragraph was added by the law of 10 Nov 2017)

(This paragraph was amended by the law of 22 March 2019 and it shall become effective from 01 January 2020)

56.1.11. did not provide accurate information to relevant organization in accordance with articles 26.10, 26.11, and 26.12 of Article 11.1.12 and 15.2.10 of the Law on State Registration of Legal Entities and Article 18.1.14 of the General Taxation Law.

(This paragraph was added by the law of 10 Nov 2017)

(This paragraph was amended by the law of 22 March 2019 and it shall become effective from 01 January 2020)

56.2.   Within ten (10) business days following the determination that grounds for license revocation exist, the State administrative agency shall notify the license-holder. The notice shall specifically indicate the grounds for the revocation of the license (This paragraph was amended by the law on 1 July 2014).

56.3.   If the license-holder disagrees with the grounds indicated in the notice as set forth in Article 56.2 of this Law, the license-holder shall submit documentary evidence to the State administrative agency.

56.4.    The State administrative agency shall review the documents as set forth in article 56.3 of this Law, and if it determines that the documentary evidence submitted by the license-holder does not establish invalidity of the grounds for license revocation, the license shall be revoked and the license-holder notified accordingly.

56.5.    As set forth in the Article 56.4 of this Law, the license-holder shall have a right to file a complaint with the court if it disagrees with the decision to revoke its license. The court shall not suspend the revocation decision as set forth in Article 46.1.3 of the Law on Administrative Procedure;

(by the law of 04 February, 2016 the wording 'Article 46.1.3 of the Law on Administrative Procedure' shall be replaced by 'Article 62.1.3 of the Law on Administrative Procedure'' and  it shall become effective from 01 July, 2016)

56.6.    If the license-holder has filed a complaint with the court, no license shall be issued in the license area until a valid court ruling has been made.

56.7.    The State Administrative Agency shall notify the state professional inspection agency if an exploration license is revoked and the State Administrative Agency in charge of taxation and professional inspection agency respectively, if a mining license and licence for residual deposit is revoked, and it shall be published in a daily newspaper.

(This paragraph was amended by the laws on 1 July 2014 and 10 Nov 2016).

56.8.    A license term valitidty shall commence from a date when court decision annulled the license revocation on the basis of Article 56.1 of this law, comes into force (This paragraph was added by the law on 1 July 2014).

CHAPTER NINE

INFORMATION, ROYALTY REVENUE DISTRIBUTION, REIMBURSEMENT AND SPECIFICS OF FINANCE AND ACCOUNTING

Article 57. Access to minerals related information and reports

57.1.    Any interested person shall have access to the licenses and the cartographic licenses registries during office hours in specially designated rooms.

57.2.    The State administrative agency, upon license-holder's request, shall treat reports of exploration work, information with respect to mine operations and feasibility studies prepared by a license-holder as the license-holder's confidential information during the valid period of the license. The license-holder may conclude a confidentiality agreement with the State administrative agency when they hand over information and reports.

57.3.    Information classified as confidential as set forth in Article 57.2 of this Law shall not be disclosed, published or disseminated except pursuant to provisions and procedures established in the Law on State and Official Secrets, the Law on Organization Secrets, and the Law on Personal Secrets.

(This paragraph was (This paragraph was amended  the law of 01 December 2016).

 57.4.   The State central administrative agencies in charge of the environment, and geology and mining shall publicize and disseminate electronic copies of information on environmental impact assessment, environmental management plans and report information about hazardous chemicals and other substances that may negatively affect human health and the environment (This paragraph was amended by the law on 17 May 2012).

Article 58. annulled by the law on 23 Dec 2011

Article 59. annulled by the law on 23 Dec 2011

Article 60. Reimbursement of mineral deposits exploration which was financed from the State budget

60.1.    By agreement, a license-holder who exploits a minerals deposit shall reimburse the exploration expenses to the State budget from the start of mining, where exploration and reserve determination was funded through the State budget and registered in the State's integrated registry.

60.2.    Exploration expenses funded by the State budget shall include expenses of detailed exploration work of any mineral resources, exploration and assessment work done in the licensed area, and the costs incurred at each stage of exploration work.

60.3.    For an economic entity privatized under the Law on State and Local Properties, the exploration expenses to be imposed on the remainder of the reserve shall be calculated by proportionally subtracting the exploration costs funded through the State budget for the extracted reserve.

60.4.    An exploration license shall not be granted for a deposit where the exploration and reserve determination were funded through the State budget and is registered in the State integrated registry.

60.5.    The reimbursement agreement shall include the amount of total reimbursement, the duration, and annual installments.

60.6.    The annual amount of reimbursement shall be determined on the basis of the annual production rate.

60.7.    If the annual reimbursement is not paid on time as set forth in the reimbursement agreement, a penalty of 0.1% of the total amount due shall be imposed for each day the payment is not made.

60.8.    The government shall approve the procedure for reimbursement and the amount of the reimbursement.

60.9.    If the reimbursement and the penalty as set forth in the Articles 60.1 and 60.7 of this Law are not paid within thirty (30) days after the receipt of notice from the State administrative agency, the license shall be revoked and a tender shall be announced.

Article 61. Specifics of mining industry finance and accounting

61.1.    All exploration costs and all expenses incurred in preparing a mine site for production shall be amortized on a straight line basis over a period of five (5) years commencing with the tax year in which mine production commences.

61.2.    The costs of acquisition of a license, either directly or by transfer, shall be amortized on a straight line basis over the term of the license.

61.3.    Fixed assets used in mining operations shall be depreciated on a straight line basis.

61.4.    annulled by the law on 15 Oct 2009

61.5.    All costs incurred in developing industrial and social infrastructure shall be depreciated on a straight line basis over the useful lives of the facilities constructed. All costs of maintaining and operating such infrastructure facilities shall be expensed in that particular year.

61.6.   Repair costs incurred in connection with mining operations shall be included in the operating cost.

61.7.    The State central administrative agency in charge of finance shall adopt regulations implementing Articles 61.1 through 61.6 of this Law.

CHAPTER TEN

Resolution of disputes arising IN CONNECTION WITH licenses

Article 62. Resolution of boundary disputes

62.1.    Boundary disputes between or among license-holders shall be resolved by the State administrative agency.

62.2.    The State administrative agency shall give all parties involved in the dispute an opportunity to present their position and arguments in writing.

62.3.    The State administrative agency shall verify if there is an overlap between disputed areas in the licenses and cartographic licenses registries. If there is an overlap, it shall determine, based up on the original applications and reports of field surveys, whether the coordinates and boundaries of the area were correctly recorded.

62.4.    If, as a result of a field survey, an overlap is confirmed, the State administrative agency shall modify the area covered by the most recently granted license, and eliminate the overlap.

62.5.    The State administrative agency shall have disputed boundaries of a licensed area surveyed and established by an accredited professional geodesic surveyor, and any costs and loss relating thereto shall be paid for by the party shown to be wrong.

62.6.    The State administrative agency shall verify the disputed boundaries, make decisions as to the relevant modifications, and notify the parties to the dispute accordingly.

           62.7.      If the parties to the dispute disagree with the decision of the State administrative agency they may file a complaint with the court.

Article 63. Resolution of disputes between license-holders and land-owner, possessor or user

63.1.    Land access, rights of passage and land-use disputes between or among license-holders and land-owners or land-users, shall be resolved as set forth in the provisions of the Land Law and the Civil Code.

Article 64. Filing of complaints to State bodies

         64.1 Where any actions or failures to act by civil servants or State administrative agencies has prevented the exercise by license-holders of the rights conferred upon them by this Law, the citizens or legal persons may file a complaint with the relevant senior officials, State agencies or  administrative case courts (This paragraph was amended by the law on 1 July 2014).

Article 65. annulled by the law on 3 Oct 2013

CHAPTER ELEVEN

LIABILITIES

Article 66. Liabilities for breach of legislation

66.1.    If a breach of the minerals legislation does not constitute a criminal offence, an authorized state inspector, whilst taking into account the circumstances of the infringement, shall impose the following penalty on the guilty person:

66.1.1. If any person has conducted exploration or mining activities or sold minerals without holding a minerals license, all income or products derived from such activities shall be confiscated by the State, and a fine of an amount 30-50 times the minimum monthly wage shall be imposed on the person (This paragraph was amended by the law on 1 July 2014);

66.1.2. In the case of the untimely submission of statements, plan and mining report set forth in Article 48 of this Law, or the submission of false information and statements, a fine of an amount 10-20 times the minimum monthly wage shall be imposed on the official shall be and a fine of an amount 30-50 times the minimum monthly wage shall be imposed on a legal person (This paragraph was amended by the law on 1 July 2014);

66.1.3. Prevention of a license-holder from exercising rights conferred by this Law, a fine of an amount 5-10 times the minimum monthly wage shall be imposed on an individual, a fine of an amount 10-20 times the minimum monthly wage shall be imposed on an official and  a fine of an amount 30-50 times the minimum monthly wage shall be imposed on a legal person (This paragraph was amended by the law on 1 July 2014);

66.1.4. Failure to comply with general obligations with respect to the conduct of activities under a license as set forth in Article 35 of this Law, a fine of an amount 10-20 times the minimum monthly wage shall be imposed on an official and a fine of an amount 30-50 times the minimum monthly wage shall be imposed on a legal person and compensate damages incurred (This paragraph was amended by the law on 1 July 2014);

66.1.5. Failure of a license-holder to comply with the legitimate requirements imposed by an authorized State inspector regarding the elimination of deficiencies discovered in the course of exploration or mining activities, a fine of an amount 10-20 times the minimum monthly wage shall be imposed on an official and a fine of an amount 30-50 times the minimum monthly wage shall be imposed on a legal person (This paragraph was amended by the law on 1 July 2014);

66.1.6. If an official fails to comply with the regulations with respect to the assaying and registration of precious metals and gemstones, as provided by this Law, a fine of an amount 10-20 times the minimum monthly wage shall be imposed on an official and a fine of an amount 30-50 times the minimum monthly wage shall be imposed on a legal person  (This paragraph was amended by the law on 1 July 2014);

66.1.7. Where a mining license-holder has intentionally reduced the volume or amount of minerals extracted, or has intentionally reduced sales revenue by intentionally reducing the sales price through a fictitious contract, or by selling the product at an unfair price, a fine of an amount 10-20 times the minimum monthly wage shall be imposed on a legal person and the amount that the revenue has been understated shall be paid by the license-holder to the State person (This paragraph was amended by the law on 1 July 2014);

66.1.8. An official who deliberately destroys the primary material, probe and sample from an exploration area, a fine of an amount 10-20 times the minimum monthly wage shall be imposed on an official and a fine of an amount 20-40 times the minimum monthly wage shall be imposed on a legal person (This paragraph was amended by the law on 1 July 2014);

66.1.9  Violation of regulations with respect to the mining by artisanal mining, a fine of an amount 5-10 times the minimum monthly wage shall be imposed on an individual, a fine of an amount 10-20 times the minimum monthly wage shall be imposed on an official and a fine of an amount 30-40 times the minimum monthly wage shall be imposed on a legal person person (This paragraph was amended by the law on 1 July 2014);

66.2.    A court may impose a fine of an amount 10-20 times the minimum monthly wage on any person who intentionally prevents an authorized official from performing his or her duties in the course of an inspection (This paragraph was amended by the law on 1 July 2014).

66.3     Where a license-holder continues to violate the laws with respect to environmental protection, mine operation safety regulations, or the provisions of its environmental protection plan, the exploration and mining activities of the license-holder shall be suspended by an authorized State inspector for up to 2 (two) months, and if the deficiencies are not eliminated within this period, the exploration activities of the license-holder shall be terminated or, in the case of an operating mine, the mine shall be closed.

66.4     If a mining license-holder causes serious damage to the environment, fauna and human health by failure to implement safety rules and a technological regime while using toxic chemicals and substances for its operations, the license shall be revoked as set forth in the Article 56 of this Law, and no license shall be issued for the next 20 years.

66.1. Unless an official who has breached this law is subject to the criminal liability, he or she shall be held liable under the Law on Public Service. 

66.2  An individual, legal person who has breached this law is subject to the liability in accordance with Criminal law or Law on Offence. 

66.3  Where a license-holder has several times violated the relevant  laws and mine operation safety regulations, the reconnaissance, exploration and mining activities of the license-holder shall be suspended for 2 (two) months and if the deficiencies are not eliminated within this period, the license shall be revoked pursuant to Article 56 of this law.

66.4  If a mining license-holder causes serious damage to the environment, fauna and human health by failure to implement laws, safety rules and a technological regime while using toxic chemicals and substances for its operations, the license shall be revoked pursuant to the Article 56 of this Law, and no license shall be issued for the next 20 years.

             /This Article has been (This paragraph was amended by the law of 04 December, 2015 and it shall be effective from 01 September, 2016/

PARLIAMENT SPEAKER    TS. NYAMDORJ

[1] Translation notes: reserves proven to be economically feasible

[2] Translation notes: some translators include the phrase "host rock."

[3] Translation notes: some translators used the word size instead of scope

[4] Translation notes: some translators have use "complete" and "through" manner.

[5] Translation note: pending has also been translated as "previously filed."

[6] Translation notes: some translators used the word "assume" right than "have" rights

[7] Translation notes: some translators have translated  "employ the citizens of Mongolia" as "create jobs for citizens of Mongolia."

[8] Translation notes: some translators have translated this to read only "minimum monthly salary."