RM pointed out something of the alarm bells and their consequences that were sounding inside Mongolia as a result of its current economic boom. Unfortunately, the country has a dreadful reputation for political corruption and that’s inevitably worsened in the light of major financial growth. There’s nothing like the prospect of obtaining big money, quick and easy to draw them out of the woodwork.
And so they come, worryingly at high levels too: even ex-president Enkhbayar was convicted of corruption in 2012, with suspicions about the timeliness of the case (election time) stated at his trial – though notably, no suspicions about the level of his “deviation”, amongst the general populace apparently.
The nature of the warning that RM mentioned was intriguing: that someone in power had thrown up a housing sector moratorium, designed to halt the random, unsupportable building of new houses without planning permission and the overcrowded chaos that inevitably ensued as a result. We talked about someone finally “putting the brakes on” in a bid to add reason and regulation to the expansion – to the free-for-all.
Well, I can’t find anything concrete in that regard, so I’ll have to call the news “unsubstantiated”. However, I did find something on a similar tack. Perhaps this was the real core of the rumour that got warped with its retelling?
It turns out that there was/is indeed a moratorium that came into effect in 2010, but on the granting of new licenses for mining exploration – whilst at the same time, all currently unlicensed land was to be reserved for state exploitation. As a safety measure, parliament approval would be required before the government could remove land from the “reserved” pool. It’s all an attempt to regulate the dispersal of land and mineral resources, particularly of those in danger of exploitation by foreign mining companies. A “get tough” policy was also introduced on currently held licenses, suspending those that countermanded the “Rivers and Water Law” according to Mr D. Zorigt, Minister of Minerals & Energy.
A new draft of Mongolia’s Minerals Law is currently on the table – much to the dismay of businesses that feel the government are taking over the reigns of financial growth and development. For instance, if the amendments became law, as-is, the Mongolian government would automatically have the right to acquire any mining or exploration licenses that were deemed “in transit” between entities. They essentially could walk in and snatch them straight out of the air. Such is the seriousness with which Mongolia intends to retain its mineral wealth.
More indicative still is the current bid to allow existing agreements with foreign mining companies to effectively be “re-written”, granting Mongolia more favourable terms. This unsurprisingly has brought the Mongolian government into direct conflict with Oyu Tolgoi , a subsidiary of Australian mining giant Rio Tinto, already digging deep into the Mongolian desert. The situation, I believe, is still unresolved – perhaps until the bill becomes law, perhaps after?
Either way Mongolia wants to keep a good deal of its land-based wealth at home. Who could blame them? Though, perhaps with the state’s intention of increasing the Mongolian stake to 50% – from 34% – whilst “modifying” the royalty payments agreement (no doubt favourably), then Rio Tinto might?
Next time: Trips and Tales (Part 108) Gobi wanderings #1
[Photo by stealthtractor]