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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)

Aimags

License Types

Total

Mining

Exploration

Central

174

362

536

East Gobi

84

450

534

Selenge

150

289

439

South Gobi

40

381

421

Khentii

70

256

326

Bayankhongor

56

189

245

Dornod

40

201

241

Dundgobi

35

179

214

Gobi-Altai

12

193

205

Sukhbaatar

25

167

192

Ulaanbaatar

122

61

183

Uvs

36

121

157

Bulgan

46

110

156

Khovd

17

130

147

Darkhan-Uul

59

62

121

Khuvsugul

15

95

110

Uverkhangai

27

74

101

Bayan-Ulgii

16

84

100

Arkhangai

21

69

90

Zavkhan

4

86

90

Gobi-Sumber

4

16

20

Orkhon

7

9

16

Total

1060

3584

4644

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

Aimags

License Types

Total (hectares)

Mining

Exploration

South Gobi

      168,997

        9,279,120

        9,448,117

East Gobi

       42,555

        6,864,007

        6,906,562

Gobi-Altai

            949

        5,268,057

        5,269,006

Dornod

       10,062

        2,378,835

        2,388,897

Dundgobi

         5,707

        2,382,930

        2,388,637

Sukhbaatar

         2,242

        2,363,281

        2,365,523

Khovd

         5,077

        2,193,690

        2,198,767

Bayankhongor

       12,168

        1,917,746

        1,929,913

Bulgan

       15,451

        1,447,398

        1,462,849

Central

       49,140

        1,181,574

        1,230,714

Khentii

       12,671

        1,217,906

        1,230,577

Zavkhan

         6,693

        1,109,202

        1,115,895

Uverkhangai

       12,302

        1,072,885

        1,085,187

Arkhangai

         8,707

          908,809

          917,516

Selenge

       28,207

          876,967

          905,174

Uvs

         4,823

          896,678

          901,501

Khuvsugul

         1,421

          895,545

          896,966

Bayan-Ulgii

         4,136

          852,138

          856,274

Gobi-Sumber

         4,470

          186,473

          190,943

Orkhon

         2,685

            47,179

            49,864

Darkhan-Uul

         7,026

            40,457

            47,483

Ulaanbaatar

         9,760

            15,029

            24,789

Total

      415,248

      43,395,907

      43,811,155

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

Indicators

Measurement

Unit

Number

Location

Number of Licenses

Number

1,060

 

Average Area per License

Hectare

377

 

Largest Area per License

Hectare

37,350

South Gobi

Smallest Area per License

Hectare

0.2

Ulaanbaatar

Aimag with Most Licenses

Number

174

Central

Aimag with Fewest Licenses

Number

4

Zavkhan, Gobi Sumber

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

Companies

Type of Minerals

License Areas

(hectares)

Broad

coal

37,350

Energy Resources

coal

24,532

Ouyashiyou

coal

18,858

Mineralplus

fluorite

18,792

Morinluu

coal

18,662

South Gobi Sands

coal

9,308

Ivanhoe Mines Mongolia Inc.

copper

9,046

Bayan Airag Exploration

gold

6,102

Mongolrostsvetmet

gold

121

 

volfram

3,510

 

fluorite

371

 

silver

37

 

coal

13

 

polymetals

621

Baganuur

coal

4,770

Total Land Area

 

37,350

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

Company

Licensed Areas (hectares)

Energy Resources

71,482

Gatsuurt

12,447

Mongolyn Alt MAK

5,782

Baganuur

4,783

Erdenes MGL

4,293

MOENCO

2,655

Jump

2,595

Khoskhas

2,069

Sharyn Gol

1,884

Zaamaryn Ikh Alt

1,727

Kainar

1,567

Monpolimet

1,532

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

Company

Number of Licenses

As of May 2008

As of November 2007

Gatsuurt

24

24

Jump

17

17

Datsan Trade

10

10

Buurgent

7

10

Mongol Gazar

5

5

Khoskhas

5

6

Mongol Alt

3

4

Erdes Holding

4

4

Erhes Mining

4

4

Erel

1

4

Total

80

87

Percentage in Total Gold Licenses

17%

19%

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

Provinces

 

 

Number of Licenses

Change

 

As of May 2008

As of November 2007

Selenge

128

136

-8

Central

98

96

2

Bayankhongor

51

52

-1

Darkhan-Ull

36

35

1

Bulgan

35

28

7

Uverkhangai

25

23

2

Khentii

17

18

-1

Dornod

17

17

0

Arkhangai

14

15

-1

Uvs

14

12

2

Total

435

432

3

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

Soum

Aimag

Areas (hectares)

As of Nov. 2007 (hectares)

Change in hectares

Tsogt Tsetsii

South Gobi

127,764

127,764

0

Bayantsagaan

Central

19,776

20,096

-320

Urgun

East Gobi

19,715

674

19,041

Zaamar

Central

15,786

12,468

3,318

Khanbogd

South Gobi

14,965

14,941

24

Eroo

Selenge

10,863

11,355

-492

Gurvantes

South Gobi

10,600

10,600

0

Buregkhangai

Bulgan

10,195

9,774

421

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

Indicators

Unit

Quantity

Location

Number of Licenses

pcs

3,584

 

Average Land Area per License

hectare

10,045

 

Largest Area under License

hectare

398,781

Bayankhongor

Smallest Area under License

Hectare

1.6

Bayankhongor

Aimag with Largest Number of Licenses

pcs

450

East Gobi

Aimag with Fewest Number of Licenses

pcs

9

Orkhon

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

Company

Licensed Area (hectares)

Ivanhoe Mines, Inc.

2,299,743

Gobi Coal & Energy

2,037,971

Zaraya Holding

1,851,320

South Gobi Sands

1,425,782

Tefis Mining

1,212,728

Asia Gold Mongolia

1,001,131

Batu Mining Mongol

785,791

MBGHL

756,116

Gurvansaikhan

684,058

Bulgan Gold

672,281

Rio Tinto Mongolia

670,627

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

Company

Licensed Area (hectares)

Bulgan Gold

672,281

Sodgazar

548,927

Mogol International

312,864

Ilchit-Erdes

294,256

Argatbul

291,179

Rolling Hills Resources

284,814

ZBAA

263,427

Orgil Gobi

248,508

Adamas Mountain

245,724

United Gold

222,480

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

Soum

Aimag

Area (hectares)

Khanbogd

South Gobi

     1,215,365

Ulaanbadrakh

East Gobi

     1,141,249

Gurvantes

South Gobi

     1,070,602

Nomgon

South Gobi

     1,045,199

Altai

Gobi-Altai

     1,041,789

Manlai

South Gobi

       954,472

Khatanbulag

East Gobi

       907,469

Mandakh

East Gobi

       902,694

Noyon

South Gobi

       840,916

Khankhongor

South Gobi

       813,350

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

Country

Type of License

Total

Mining

Exploration

China

133

322

455

British Virgin Island

16

317

333

Russia

85

71

156

Bagamas

15

88

103

South Korea

15

54

69

Cayman Island

8

49

57

Canada

9

47

56

Japan

11

40

51

Australia

2

45

47

Bermuda

6

25

31

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

Country

Types of License

Total Area (hectares)

Mining

Exploration

British Virgin Island

       43,096

      9,687,026

      9,730,122

China

      117,455

      3,427,690

      3,545,144

Bagamas

         6,535

      1,230,427

      1,236,962

South Korea

         2,006

      1,140,390

      1,142,396

Australia

            284

        853,721

        854,005

Canada

            916

        838,353

        839,269

Russia

       42,632

        716,042

        758,674

Great Britain

            835

        691,432

        692,267

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.

Day

License

Percentage

Monday

1,090

19.64%

Tuesday

1,087

19.58%

Wednesday

977

17.60%

Thursday

1,179

21.24%

Friday

1,059

19.08%

Saturday

131

2.36%

Sunday

28

0.50%

Total

5,551

100.00%

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

Months

License

Percentage

1

507

9.13%

2

382

6.88%

3

458

8.25%

4

546

9.84%

5

479

8.63%

6

383

6.90%

7

343

6.18%

8

461

8.30%

9

481

8.67%

10

547

9.85%

11

472

8.50%

12

492

8.86%

Total

5,551

100.00%

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.

Dates

License Number

Day

9/15/2004

47

3

12/28/2002

37

6

8/29/2006

29

2

10/29/2007

29

1

9/13/2004

27

1

2/13/2006

27

1

11/15/2004

26

1

4/7/2008

26

1

8/3/2004

25

2

1/27/2006

24

5

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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