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Mongolia refuses bow to foreign miners, but allegedly weak on environmental enforcement of domestic

Published by MAC on 2007-12-19

Mongolia refuses bow to foreign miners, but allegedly weak on environmental enforcement of domestic operations

19th December 2007

Mongolia's democratically-elected government continues dare to do what other South-based states have so far shyed away from. In 2006, the government categorised mines that the state played a major role in discovering as "strategic" - reserving for itself the option to acquire a 50% interest in the project.

Last week, it went further - asserting its "moral right" to take full control of a coal venture.

Meanwhile, the Asian Forum for Human Rights Development has addressed Mongolia's newly-appointed Environment Minister, claiming the government is failing to draw up regulations, or apply existing laws, against pollution and its impacts, caused by domestic fimrs.

Mongolia seeks full control of coal mine

By Mure Dickie in Beijing, Financial Times

19th December 2007

Mongolia's new prime minister has said the government has a "moral right" to full control of the $2.4bn Tavan Tolgoi coal project, but has vowed not to abuse the rights of its private developers, according to officials and an industry bulletin.

The government would soon start talks with the local consortium that owns the project in order to reach a deal protecting the interests "of all parties", Sanj Bayar, prime minister, said in a speech last week to the Great Hural, Mongolia's parliament.

The planned takeover of the Tavan Tolgoi project, which has coal reserves estimated at 3.8bn tonnes, comes amid intense frustration among international mining groups about what they say is a lack of clarity about Ulan Bator's intentions for the industry.

Soaring Chinese appetite for energy has sparked intense interest among foreign miners in the coal project, with BHP Billiton and Peabody Energy reportedly discussing potential investment, and China's Shenhua Energy saying last month it hoped to invest in it. Under a Mongolian law passed last year, the government has the right to take a 50 per cent stake in strategically important mining projects that are the result of state-funded prospecting.

In his speech, Mr Bayar said the state's role in discovering the Tavan Tolgoi coal reserves gave it the "moral right" to control of the project.

"The government believes that it would be appropriate for the government to own solely the Tavan Tolgoi project, choose the investor and negotiation on behalf of the Mongolian state," Mr Bayar said, according to a translated transcript by the "Triple C" LLC Bulletin, an industry newsletter.

The state was also given the power to take a minority stake in projects that were purely the result of private prospecting, while a windfall tax was imposed on sales of copper and gold.

International mining executives say they are deeply frustrated with the lack of progress on resources development projects, which have become a hot political issue in poverty-stricken Mongolia.

"There's no question that the investment community is losing patience, as is the mining community, and we all look forward to resolution of these long-delayed issues by the new prime minister," said Howard Balloch, chairman of investment banking firm Mongolia International Capital Corp.

Copyright The Financial Times Limited 2007

Mongolia needs regulation to assess environmental damages

Letter from Asian Forum for Human Rights Development (FORUM-ASIA)

21st December 2007

To: His Excellency G. Shiilegdamba
The Minister of Environment
Ulan-Bator, Mongolia

Your Excellency,

The Asian Forum for Human Rights Development (FORUM-ASIA) congratulates you on your appointment as Mongolia’s Minister of Environment. We also welcome your pledge to immediately tackle the issue of environmental degradation and pollution due to irresponsible business activities.

We would like to bring your attention to the weak implementation of the environmental laws, absence of rules and regulations for calculating damages and bringing the perpetrators of crimes against the environment to justice. In the past two years, many environmental cases that were investigated by the police were rejected by courts or prosecutors because of an absence of specific regulations in the country that could assess environmental damage. Hence the perpetrators of crimes against the environment were not brought to justice and victims were neither compensated nor rehabilitated.

For instance, on 12 November 2007, the criminal case regarding the Mongol Gazar Co.Ltd was rejected by the Prosecutor’s Office of the Ulaanbaatar City as the Prosecutor could not find proper regulations to substantiate the assessment of the damages. The Mongol Gazar Co. Ltd mined 61.9 hectares of land in Bayandun soum of the Dornod province in 2003 and abandoned the location in the same year without conducting any rehabilitation measures.

Ikh Huvchiin Jonon Co. Ltd and Erel Co. Ltd also failed to protect the land from environmental degradation and rehabilitate the victims. But in both cases, the Court and the Prosecutor refused to press charges as there are no specific regulations. It is pertinent to note that many of the victims of environmental pollution and destruction have not received compensation.

The victims of environmental pollution caused by the hazardous chemicals in Khongor soum of the Darkhan-Uul province in Mongolia are also left without remedy or redress. It is reported that in 2007 alone 6,000 people were affected by cyanide and mercury emitted from mining activities.

Articles 7 and 15 of the Environmental Protection Act require the Ministry of Environment to develop regulations to account for environmental damage. We would like to remind you about the pledge of your ministry in 2005 to develop such regulations, which have not yet been fulfilled.

Mongolia is party to the International Covenant on Economic, Social and Cultural Rights, and hence is bound to ensure the right to a healthy environment. We also would like to remind you about the principles of sustainable development and environmental protection embodied in the United Nation’s Declaration on Environment and Development (Rio Declaration 1992).

We strongly urge the Ministry of Environment to formulate necessary regulations and strengthen the legal system to account for the environmental degradation and protect the environment and right to health of the people of Mongolia.

In solidarity,
Anselmo Lee
Executive Director

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