Fine Print: Making Mining Contracts Work for Mongolia

Minerals account for almost half of Mongolia's gross domestic product, making extractive sector oversight an important function of the country's government. In recent years, the Natural Resource Governance Institute (NRGI) has worked with Mongolia's leaders to improve transparency in the mining industry and better harness national revenues from copper, gold, coal and other minerals.

That effort continued in March at an NRGI workshop on contract analysis and monitoring with the State Great Hural, or house of parliament, in Ulan Bator, Mongolia's capital. The three-day workshop focused on parliamentary staff, drawing more than 40 key advisors and researchers from various relevant committees.

At a March workshop organized by NRGI and hosted by the Open Society Foundations, parliamentary staff in Mongolia worked on an exercise regarding contract monitoring.

Boldbaatar Byambadorj, secretary general of the Secretariat of the State Great Hural, said in an opening speech that it was the third activity organized by NRGI for parliamentary staff, following a training last year on revenue management and a visit by key parliamentarians and their staff to western Canada to learn how the country has managed its mineral and oil booms and busts. During that visit, they met with tax and public finance officials from British Columbia and Alberta, provincial and federal legislators, leaders of Canada's First Nations (indigenous communities), and representatives from industry who work with mining-affected communities. (Read two first-hand accounts of the study tour here and here.)

NRGI's senior legal analyst Amir Shafaie and Mongolia manager Dorjdari Namkhaijantsan delivered sessions exploring the role of contracts within the legal framework, contract content and key terminology, and methods for analyzing and monitoring different types of legal obligations. These skills are particularly relevant for parliamentary staff in Mongolia because parliament has played an important role on multibillion dollar mining contracts in the sector such as the Oyu Tolgoi and Tavan Tolgoi projects.

“The key role of parliamentarians in most countries is to legislate, but there is also a key oversight role in countries such as Mongolia,” Shafaie said. “Training sessions like this one will equip parliamentary staff with vital information on monitoring mineral agreements and their legal, social, financial and environmental implications. Working with parliamentary staff on these issues is particularly interesting because the content is directly relevant to their work, so there is already a certain level of familiarity and they are willing to get into details.”

As part of the training, Taivankhuu Altangerel, a Mongolian legal expert and senior legal advisor at the International Law Development Organization, highlighted the importance of international investment agreements and the skills to understand them. Without these skills, she said, “it is not possible to estimate whether the government or investor has fulfilled its obligations, or if there were any violations.”

Participants evaluated the workshop highly, praising its well-organized exercise sessions linking learned skills to practice. They represent a growing cohort of public and private sector leaders working to improve resource governance in Mongolia and transform the country's riches for development, despite recent economic setbacks linked with falling commodity prices and other challenges.

Altan-Och Genden, principle officer at the Parliament Research Centre, said the training was directly relevant to his day-to-day work. “Parliamentarians often ask us to evaluate the terms of mining contracts and so the content and discussions will be helpful to our continued work in this area,” he said.

To learn more about Mongolia's governance landscape, see the 2013 Resource Governance Index.

Fidan Bagirova is NRGI's Eurasia senior officer.