Mongolia Royalty Cut Waits on Oyu Tolgoi Talks Over the Entrée Licences
Parliament passed the Minerals Law amendments on October 16. Minister of Industry and Mineral Resources Gongoryn Damdinnyam sells the law as an exploration revival, a way to bring exploration money back to Mongolia.
The sector he wants to revive has thinned out. Minister Damdinnyam counts about 1,100 exploration licences against more than 1,700 mining licences, and says the healthy ratio runs about five to one the other way.
The offer on paper is real, and the royalty line is what explorers read first. The effective royalty burden on Erdenet, the large copper mine with no investment agreement to shield it, runs above 21 percent at current prices, and new projects price themselves against that burden. The new law sets a 5 percent base royalty plus a price-linked surtax capped at 5 percent, roughly half the Erdenet burden.
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