PARTICIPATION IN MINING RELATED DECISION MAKING REPORT Project: Give people a voice! Strengthen public participation in mining Investment planning to ensure the health of people, livestock and the environment of Mongolia. Client: WWF (Mongolia) Contractor: Green Focus Contract No. EIDH/2015-369-258 funded under European Instrument for Democracy and Human Rights (EIDHR) - Country-Based Support Schemes (CBSS), Mongolia Disclaimer This document is issued for the party which commissioned it and for the specific purposes connected with the above-captioned project only. It should not be relied upon by any other party or used for any other purpose. Neither the authors nor the client accept responsibility for the consequences of this document being relied upon by any other party, or being used for any other purpose, or containing any error or omission which is due to an error or omission in data supplied to us by other parties This document contains confidential information and proprietary intellectual property. It should not be shown to other parties without consent from the authors and from the party which commissioned it. PARTICIPATION IN MINING RELATED DECISION MAKING TABLE OF CONTENTS Executive Summary 4 Abbreviations 6 Mongolian Terminology 8 Definitions 8 Acknowlegements 11 Project Team 11 Goals and Objectives 12 Methodology 13 1. Introduction 15 2. The Development of Mongolia’s Mining Sector 16 3. International Initiatives and Benchmarks 19 4. Implementing International Standards in Mongolia 21 5. The Challenges of Public Participation in EIA Processes. 23 a. Persistent Poor Practices in Community Engagement in Mining Projects. 24 b. Emerging Good Practice for Community Engagement in Mining Projects. 26 6. Political and Legal Framework 31 a. Mining Policies and Laws of Mongolia. 31 b. Environmental Policies and Laws of Mongolia 33 7. Environmental and Social Impacts of Mining in Mongolia. 36 2 PARTICIPATION IN MINING RELATED DECISION MAKING PARTICIPATION IN MINING RELATED DECISION MAKING 8. Legal Procedures for Obtaining Mining Licenses in Mongolia. 40 a. Mineral resources exploration and mining activities. 40 9. The Rights, Responsibilities and Roles of Stakeholders in Mining Activities in Mongolia 44 10. Case Studies 49 a. Khentii Aimag 49 I. Mining in Khentii 50 II. Local Community Attitudes to Mining. 50 b. Uvs Aimag 51 I. Mining in Uvs 52 II. Local Community Attitudes to Mining. 54 11. Study Findings 55 a. Citizens Participation in EIA process 55 Batshireet and Binder soums of Khentii aimag 55 Bukhmurun soum of Uvs aimag 56 b. Participation of the Local Government and Community Batshireet and Binder soums of the Khentii aimag 57 Bukhmurun soum of Uvs aimag 58 c. Compensation and Relocation. 58 d. Information Transparency 59 e. Mine closure and Rehabilitation 61 12. References 79 14. Appendices 82 PARTICIPATION IN MINING RELATED DECISION MAKING 3 PARTICIPATION IN MINING RELATED DECISION MAKING EXECUTIVE SUMMARY If mineral exploitation is conducted responsibly the mining sector can make significant contributions to poverty reduction and sustainable development in Mongolia. If it is conducted irresponsibly it can lead to corruption, conflict, civil unrest and environmental degradation. The challenge is to put the systems and standards in place to ensure that the former objectives are achieved. These systems must ensure that mineral wealth is exploited using the best available environmental and social safeguards, ensuring rights are protected and the equitable distribution of the benefits that accrue. Resource rich countries, such as Mongolia, have a great opportunity to harness their natural resource wealth for the benefit of all of the people in the country. This is an opportunity no government will ignore, although a strong anti-mining lobby exists Although often seemingly in conflict with mining developments, it is not incompatible for WWF, a conservation organization, to support the development of a well governed minerals sector. Conservation organizations will not achieve their conservation goals in a situation where mining activities are poorly managed. A successfully managed minerals sector will ensure that the benefits of mining outweigh the costs. Governments will ensure that mining only occurs where it is acceptable. They will ensure it will not take place in areas that are too ecologically or culturally sensitive or where potential negative impacts on human welfare and ecological integrity cannot be reliably predicted so that they can be effectively managed. In some cases, when weighed up against other opportunities, mining projects may be rejected. Such decisions about mineral exploitation cannot be made by a small sector of society. Everyone has the right to engage in such decision-making. This is the subject of this report. Its objective is to encourage mining decisions to be made in a transparent and inclusive way. The geographic focus of the report is in two aimags - Khentii and Uvs- where livestock communities are dominant, communities that are often marginalized and always vulnerable. The report provides an introduction to numerous international initiatives that have been developed to help improve the performance of the mining sector and the participation of citizens in its decision-making. These provide a benchmark against which Mongolia’s current performance can be gauged. Many of these initiatives are involved in Mongolia as a pilot case for the implementation of their Guidelines and in some of them Mongolia is an international leader. 4 EXECUTIVE SUMMARY PARTICIPATION IN MINING RELATED DECISION MAKING Following a history of mining activity and legislation in Mongolia, details are provided about Mongolia’s current legislation and the phases and regulations associated with obtaining mining and exploration licenses, although mindful that Mongolia is going through a major review of its minerals legislation at this time (2017). From an international perspective, some of the most commonly observed challenges regarding Environmental Impact Assessment procedures and public participation in these processes are highlighted. The rights and responsibilities of stakeholders to participate in mining decision-making and their roles are explained. The participation of community administrations, citizens, civil society organizations and license holders are also covered. The legal obstacles are identified and issues that are not currently regulated by law are identified. However, given the failure in most resource rich countries to sufficiently implement their laws the report attempts to provide a diagnosis of the Mongolian situation with particular reference to Environmental Impact assessment (EIA), cooperation agreements, compensation, involuntary resettlement, information provision and transparency etc. Some recommendations are provided for improving cooperation between local community, local administration and license holders. Specific attention is given to the assigned study areas and their associated mines of Khotgor, Bukhmurun, Uvs aimag and Gutain Davaa, Batshireet, Khentii aimag. THE AARHUS CONVENTION “The right to live in a healthy environment as well as the duty to protect it for present and future generations requires that “citizens must have access to information, be entitled to participate in decision-making and have access to justice in environmental matters” (www.unece.org/pp/documements) EXECUTIVE SUMMARY 5 PARTICIPATION IN MINING RELATED DECISION MAKING ABBREVIATIONS/ACRONYMS ADB Asian Development Bank ASM Artisanal and Small-scale Mining (also known as ‘ninja’ mining in Mongolia) CAO Clients Advisor Ombudsman (Office of the CAO of the IFC) CAP Community Action/Agreement Plan COMMDEV Community Development Initiative of the IFC. CRH (Mongolian) Citizens Representative Hural. CSO Civil Society Organisation CSR Corporate Social Responsibility DEIA (Mongolian) Detailed Environmental Impact Assessment EB Equator Banks EBRD European Bank for Reconstruction and Development. EHS World Bank Group’s Environmental, Health and Safety Guidelines EIA Environmental Impact Assessment. EMP Environmental Management Plan. EIR Environmental Impact Report (or sometimes called Statement) ESIA Environmental and Social Impact Assessment (aka EIA). EITI Extractive Industries Transparency Initiative. ESS Environmental and Social Safeguard Policies. ETA (Mongolian) Environment and Tourism Agency FDI Foreign Direct investment GEIA (Mongolian) General Environmental Impact Assessment. GoM Government of Mongolia HSE Health, Safety & Environment IAIA International Association for Impact Assessment ICMM International Council on Mining and Metals. IAPs Interested and Affected Parties. 6 ABBREVIATIONS PARTICIPATION IN MINING RELATED DECISION MAKING IFC International Finance Corporation, the Private sector section of the World Bank Group. IFIs International Financial Institutions IGF The Inter-Governmental Forum on Mining, Minerals and Metals and Sustainable Development. LEP (Mongolian) Law on Environmental Protection. MET (Mongolian) Ministry of Environment and Tourism MEITI (Mongolian) Extractive Industries Initiative MLM Mineral Law of Mongolia. MoM (Mongolian) Ministry of Mining MRAM Mineral Resources Authority of Mongolia MRPAM Mineral Resources and Petroleum Authority of Mongolia MSISTAP (Mongolian) Mining Sector Institutional Strengthening Technical Assistance Project NRGI The Natural Resources Governance Initiative. PPP Plans, Policies, and Programmes PS Performance Standards. SEA Strategic Environmental Assessment SESA