MONGOLIA EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE (MEITI) MONGOLIA TENTH EITI REPORT 2015 December 2016 TABLE OF CONTENTS ABBREVIATIONS ...................................................................................................................................... 1 Reporting indexation ..................................................................................................................... 1.1.1-2 1 Introduction .................................................................................................................................... 4 1.1 Introduction ............................................................................................................................ 4 1.1.1 Background ..................................................................................................................... 4 1.1.2 Independent Administrator's role................................................................................... 4 1.2 Participants ............................................................................................................................. 5 1.3 Acknowledgements ................................................................................................................. 5 2 Executive Summary ......................................................................................................................... 6 2.1 Sector overview ...................................................................................................................... 6 2.2 EITI participation ..................................................................................................................... 6 2.3 Scope of the report ................................................................................................................. 6 2.4 Total government receipts ...................................................................................................... 7 2.4.1 Government receipts in 2015 from the entire sector ..................................................... 7 2.4.2 Government receipts within the reconciliation scope.................................................... 7 2.4.3 Reconciliation coverage .................................................................................................. 8 2.4.4 Comparison of reconciled government and company flows .......................................... 8 2.5 Completeness and accuracy of data and assurance ............................................................... 8 2.5.1 Government .................................................................................................................... 8 2.5.2 State owned enterprises ................................................................................................. 9 2.5.3 Private companies ......................................................................................................... 11 2.5.4 Summary ....................................................................................................................... 11 2.6 Key findings ........................................................................................................................... 12 2.6.1 Coal sales ....................................................................................................................... 12 2.6.2 Production Sharing Agreement (PSA) and Licence information ................................... 13 2.6.3 Non reporting companies ............................................................................................. 13 3 The Extractive Industries in Mongolia .......................................................................................... 14 3.1 Legal framework and fiscal regime ....................................................................................... 14 3.1.1 Legal framework and fiscal regime (requirement 2.1) ................................................. 14 3.1.2 Action Plan of the Mongolian Government for 2016-2020 .......................................... 24 3.1.3 Fiscal regime ................................................................................................................. 26 3.2 Mining sector ........................................................................................................................ 28 3.2.1 Mongolia’s Mineral Resources ...................................................................................... 28 3.2.2 Deposits of strategic importance .................................................................................. 32 3.2.3 Small-scale mining......................................................................................................... 33 3.2.4 Governance ................................................................................................................... 37 3.2.5 Licensing ........................................................................................................................ 38 3.2.6 Process for award and transfer of minerals licences .................................................... 39 3.2.7 Technical and financial criteria to use for licence allocation ........................................ 44 3.2.8 statistical data of application for licence ...................................................................... 45 3.2.9 Licences awarded or transferred in 2015 (REQUIREMENT 2.2.A.iii) ............................. 46 3.2.10 Licence register ............................................................................................................. 47 3.3 Significant exploration activities (Requirement 3.1) ............................................................ 49 3.3.1 Geological and exploration operations financed fromstate budget ............................. 49 3.3.2 Privately funded exploration activity ............................................................................ 50 3.3.3 Production ..................................................................................................................... 52 3.3.4 Exports .......................................................................................................................... 52 3.4 Oil and gas ............................................................................................................................. 53 3.4.1 Resources ...................................................................................................................... 53 3.4.2 Petroleum Licensing ...................................................................................................... 53 3.4.3 PSA concluded in 2015 (requirement 2.2) .................................................................... 55 3.4.4 Contract publication (requirement 2.4) ........................................................................ 55 3.4.5 Production ..................................................................................................................... 56 3.4.6 Exports .......................................................................................................................... 56 3.5 Economic contribution from the sector ................................................................................ 56 3.5.1 Size of the extractive industries .................................................................................... 56 3.5.2 Total government revenues from the extractive industries ......................................... 56 3.5.3 Exports from the extractive industries ......................................................................... 57 3.5.4 Employment in the extractive industries ...................................................................... 57 3.6 Government institutions ....................................................................................................... 58 3.6.1 Ministry of Mining ......................................................................................................... 58 3.6.2 Mineral Resource Authority .......................................................................................... 58 3.6.3 Petroleum Authority of Mongolia ................................................................................. 59 3.6.4 Ministry of environment, Green Development and Tourism ....................................... 59 3.6.5 Ministry of Labour ......................................................................................................... 59 3.6.6 General Department of Tax Administration ................................................................. 59 3.6.7 Mongolian Customs Office ............................................................................................ 60 3.6.8 Nuclear Energy Commission ......................................................................................... 60 3.6.9 Mongolian National Audit Office ................................................................................. 60 3.6.10 State Property Committee ............................................................................................ 61 3.7 State participation in the extractive sector .......................................................................... 61 3.7.1 State owned enterprises (SOEs) .................................................................................... 61 3.7.2 State participation in the petroleum sector ................................................................. 72 3.7.3 Financial relationship between the government and SOEs .........................................