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LICENSE WATCH #5 Status of Awards of Licenses in Mining as of 9 May 2008 (2008-07-08)

LICENSE WATCH #5 Status of Awards of Licenses in Mining (as of 9 May 2008)

Open Society Forum
23 June 2008

There are 4,644 valid licenses in the mining sector. This issue of License Watch presents a lot of information on types, covered land areas, owners, issuing locations such as aimag and soum of those licenses.

We are grateful to the Mineral Resources and Petroleum Authority of Mongolia for sharing with us its database on license registration.

As of 9 May 2008, there are 4,644 exploration and mining licenses in force in Mongolia . Some licenses covering territories of several soums are registered multiple times, thus making the number up to 5,551. As compared to 4,361 licenses at 2 November 2007, which are cross-registered throughout soums as 5,273, the number during the last 6 months has increased by 283.

Out of the total 4,644 licenses, 22.8 percent or 1,060 are of mining and the remaining 3,584 are of exploration. The mining license number has increased by 44 from 1,016 6 months ago. The land coverage area under license totals to 43,81 million hectares, which constitutes about 28 percent of the territory of Mongolia .

The provincial (aimag) distribution (including Ulaanbaatar ) of these licenses is presented in Table 1. Central, East Gobi, Selenge and South Gobi are the aimags with the highest concentration of licenses, while Gobi-Sumber and Orkhon are found as the aimags with the lowest. In Gobi-Altai, the ratio of mining and exploration licenses is 1 to 16 which is the largest. On average, this ratio stands at 1 to 5. Ulaanbaatar is the only territory where the mining licenses outnumber the exploration at 2 to 1. The issuance of 122 mining licenses at the territory of Ulaanbaatar , the third in number after Central and Selenge aimags, causes a certain concern.

Table 1: Distribution of valid licenses by provinces (aimags)

As Table 2 below shows, South Gobi, East Gobi and Gobi-Altai are the examples of contrast in terms of the size of land areas covered under licenses within the figures of distribution of administrative territories.

Table 2: Distribution of Land Areas under License, by Aimags

Mining Licenses

There are a total of 1,060 mining licenses in force today.

Some indicators related to mining licenses are presented in Table 3 below.

Table 3: Selected Indicators for Mining Licenses

462 or 44 percent of these 1,060 mining licenses are for gold mining. Also dominating are licenses for construction materials, coal, fluorspar and iron. See Chart 1.

Chart 1: Distribution of Licenses by Types of Minerals

Major companies with largest land areas under mining licenses are listed in Table 4 below. From among them, coal mining companies have the largest mining areas.

Table 4: 10 Companies with Largest Land Areas under Mining Licenses

As for the combined total areas under mining licenses, Energy Resources and Gatsuurt are the top among the local companies.

Table 5: Local Companies with Largest Land Areas under Mining Licenses

From among the top local companies with largest numbers of gold mining licenses, Gatsuurt with 24 licenses and Jump with 17 are the leaders. Information on these gold mining companies can be checked with in Table 6. One may notice that during the last 6 months the number of licenses owned by Erel and Buurgent decreased by 3 each respectively.

Table 6: Local Companies with Largest Number of Gold Mining Licenses

The highest concentration of gold output belongs to Selenge, Central, Bayankhongor and Darkhan-Uul provinces. These provinces also lead in terms of number of gold mining licenses. Table 7 presents these figures. 27 and 21 percent of total gold mining licenses in Selenge and Central provinces , respectively, are valid.

Table 7: Provinces with Largest Number of Gold Mining Licenses

In Table 8, we have listed those soums where the mining volume is the highest. The Tsogt Tsetsii Soum in South Gobi has 127,764 hectares of land under mining license which is over 6 times more than that in the next nearest soum. This is related to the Tavan Tolgoi coal deposit where Energy Reources, Daitsuki, Tavan Tolgoi Coal Mine, Morinluu, Broad and some others have licenses. The mining license area in Telmen Soum of East Gobi has increased dramatically as compared to November 2007 due to the award of coal mining license for Har Tolgoi deposit to the Chinese Ouyashiyou Company.

Table 8: Soums with Largest Land Areas under Mining Licenses

Exploration Licenses

Let us analyze those 3,584 exploration licenses that are currently in force.

Table 9 presents some statistics related to exploration licenses.

Table 9: Selected Statistics for Exploration Licenses

An exploration license is usually awarded to a territory with large land areas. Out of 43.8 million hectares of land under all licenses, 43.4 millions belong to exploration licenses. The entity that holds licenses for the largest area is the Geology Department of the Mineral Resources and Petroleum Authority which keeps 55 licenses covering 5.2 million hectares of land area. Ivanhoe Mines and Gobi Coal & Energy are the leading companies in terms of the size of area under exploration licenses having over 2.0 million hectares each. The combined land area held by these two companies is a bit larger than the territory of Selenge province.

Table 10: Companies with Exploration Licenses for Largest Land Areas

From among the local companies having largest land areas under exploration licenses, Bulgan Gold and Sodgazar are the top. The related information is given in Table 11.

Table 11: Local Companies with Exploration Licenses for Largest Land Areas

Khanbogd Soum of South Gobi and Ulaanbadrakh Soum of East Gobi are found to be the soums with the largest land areas under exploration licenses. The first 10 soums in this classification are all from the Gobi region with 6 soums in South Gobi and 3 – in East Gobi .

Table 12: Soums with Largest Land Areas under Exploration Licenses

Countries

Now let us look at companies’ countries of origin that are most active in the mining sector of Mongolia . Companies that hold minerals’ licenses in Mongolia represent 30 countries. Holders of the overwhelming majority, i.e. 3,092, of licenses are companies that are registered in Mongolia . This number constitutes two-thirds of all licenses. Table 13 identifies countries whose companies have the largest numbers of licenses. One can see that China , the British Virgin Island , and the Russian Federation have their registered companies owning the largest number of licenses. It is also noticeable that companies registered in an island country which is considered as a tax “heaven” own about 12 percent of licenses.

Table 13: Foreign Companies with Most Licenses by Country of Registration

As presented above, the total land area covered by licenses is 43.8 million hectares. 49.3 percent of this total belongs to licenses owned by companies registered in Mongolia . The remainder is held by foreign companies. Companies registered in “tax heaven” countries occupy about 27 percent of the total land areas held by countries owning licenses with the largest areas.

Table 14: Country of Origin of Companies with Largest Land Areas under License

Dates of License Issuance

We have looked into what dates the licenses were issued. Within the total 4,644 licenses there are ones that stretch through territories of several soums. Such licenses are registered several times, in each of the soums. Therefore, in this section each registration is taken as a separate license.

Table 15 demonstrates what weekdays the licenses were issued. 21.2 percent of the total licenses were signed on Thursday and 17.6 – on Wednesday. It is interesting to note that 2.36 percent or 131 licenses and 0.5 percent or 28 licenses were issued respectively on Saturday and Sunday.

30.2, 33.1 and 36.7 percent of the licenses were issued in first, second and third decades of a month, respectively, which reveals that the issuance was most active in the last 10 days of a month.

In Table 16, we have presented the monthly distribution of license issuance. In general, the license issuance was fairly equitable throughout all months. However, January, April and October were the months with a comparatively higher issuance while July saw the fewest.

Table 16: Monthly Distribution of License Issuance

Chart 2 presents the yearly distribution of license issuance. Please note that this chart covers only those licenses that are valid at the moment.

Chart 2: Yearly Distribution of License Issuance

The license issuance increased steeply from 2000 and reached its peak during 2004-2006 with annual number from 885 to 986. Though it has subsided slightly since then, the number of licenses issued has totaled to 600 during the first 4 months of 2008.

Table 17 shows what calendar dates the highest number of licenses was issued. Here again we have included only the valid licenses, and revoked and invalid licenses were not considered.

From the Table, on 15 September 2004 the highest number or 47 licenses were issued. It is interesting to note Saturday, 28 December 2002, when 37 licenses were signed.

Others

Chart 3 presents the degree of correlation between the size of aimag territory and the quantity of license. It can be seen that the larger the territory is, the more the license quantity.

Chart 3: Correlation of License Number and the Size of Aimag Territory

In Chart 4, the correlation of quantity of licenses issued in aimags and the population size. A small correlation can be observed that the smaller the population is, the fewer the licenses are issued.

Chart 4: Correlation of License Number and Size of Population in Aimags

We can conclude from the above two charts that aimags with lower population density would have more licenses issued.

Date : 2008-07-07 22:25:21                        

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