Mongolia’s gold sector
Gold is a metal that never loses its value on international markets. Investors retain the value of their assets by buying gold when the rate of foreign currencies fluctuates, particularly the US dollar. The Government of Mongolia approved the Gold-II programme at this time of economic downturn. It is expected to steadily increase gold extraction by 2-3 tonnes per year and to explore 25 tonnes of gold by 2020.
Gold-exploration companies represent 45 percent of the total entities operating in the mining sector. Moreover, the gold industry comprises 2.6 percent of GDP and 9.1 percent of export income according to the National Statistical Office’s 2015 annual report. Representatives from the gold sector held a “Gold-2017” conference in Ulaanbaatar. More than 450 delegates from international and national organisations participated in the conference organised by the Mongolian Mining Exchange. During the conference, about 20 presentations were made by government organisations and private entities, and technology and gold projects were exhibited by 27 companies.
D. Ganbat, Head of the Geology Policy Department of the Ministry of Mining and Heavy Industry, D. Baatartsogt, Chairman of the National Petroleum Authority, and N. Tsogtgerel, advisory board member of the Mongolian Gold Production Association, participated in the conference.
The conference featured three main thematic areas: “The present and future of the Mongolian gold sector”, “Investment and rehabilitation of the gold sector”, and “Technology, extraction, exploration, experience and local communities”.
The tax environment in Mongolia at present is not welcoming. The royalty fee is 2.5 percent and will increase to up to 5 percent in 2019. According to the law, miners have to pay an additional 5 percent royalty fee if the gold rate increases on international markets. Foreign investors are interested to know the implementation date of a government royalty fee policy. Further investment in the gold sector is heavily dependent on the government’s decision on this fee.
The amount of gold traded at the Bank of Mongolia drastically increased in 2014. At the end of 2016, 18.4 tonnes of gold valued at USD $760 million were traded at the bank.