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It Is Unknown Where 15 Billion Paid By Mining Companies

Extracting Industry’s Transparency Initiative project is implemented in 30 countries and in Mongolia it was initiated officially since 2006. The main idea of this initiative is rather simple. Companies in extracting sector shall report to the public its tax and other paymennts to the the government openly. In its turn, the Government shall openly report any tax and other payments from companies in this sector. Since the same transfer is reported from both sides, their balance naturally has to be the same. If the numbers will not match each other, then the reason for descrepancy shall be identified.

Focusing this project on the extracting industry over many nations is related to several grounds. First of all, since subsoil natural resource is the property of the people, its government must represent the interest of its people. Also, this type of resources are exhaustible or not replenished. Hence converting natural resources into financial recourses which in turn will be used for funding important projects for the future will ensure more equal opportunity to share the benefits among different generations. Since the exctracting sector is capital invensive industry with large flow of capital, this sometimes served as basis for corruption for weak government and weapon for rulers to constrain democracy as witnessed by history. Therefore, ensuring of transparency in this sector is of extraordinary importance. .

Recently Ernst & Young  a world famous auditing company issued a preliminary report that compared the report of 38 mining companies that paid the highest amount of tax in 2007 financial year and Government report. The delay of the report is caused by the late submission of report by the Government authorities. Among the 38 companies, only Erdenet mining company paid 12% of total royalties, and 80% of all tax and other payments. In other words, this company pays large majority of tax payments although it exploits only small fraction of the resources. The following table shows the companies that paid the most tax.

Company

Amount of tax and other payments (in Tugriks)

Share of in total tax and other payments %

Erdenet

599,962,591

80.1

Boroo Gold

46,890,199

6.3

Golden East Mongolia

31,473,333

4.2

Tavan Tolgoi

10,864,072

1.5

PetroChina Dachin Tamsag

8,723,500

1.2

Tsairt Minerals

8,432,890

1.1

Other

42,436,362

5.7

 

To conclude generally, the Government cannot state that it received payment of 15 billion tugriks in full paid by the mining companies. It is worth noting that around 11 billion of them is related to the Golden East Mongolia. As for the other payment excluding this company, the Goverment claims that it did not receive 4.3 billion tugriks. It is interesting that 80 % of this missing amount is royalty fee. For example, it is reported that the Government did not receive the payment of 2 billion tugriks for royalty fee claimed as paid by Bold Tumur Eroo Gol LLC.  Moreover, ministries, agencies and aimak government did not report monetary donation worth 100 million tugriks while reported by Boroo Gold as paid. Thenceforth, it is possible to know more about the real contribution of mining sector in the Mongolian economy and many critical problems from the report.

After discussing at the National council, the report shall be published for citizens.

Date : 2009-10-27 08:13:59                        

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