Tendering for 14 previously revoked exploration license areas announced


Last year, 106 mineral exploration licenses were found to be granted without tendering and were revoked following a court decision. On July 4, in order to compensate losses that former license holders faced, the Government approved Resolution No. 216 and a tendering regulation for granting licenses for the areas revoked. Under the resolution, former license holders and other third parties will be able to submit tender bids for the previously revoked licenses on a competitive tender basis, where an initial re-tendering price will be effectively determined by costs incurred by the former license holders.
On August 22, the Minerals Authority of Mongolia launched tendering for 14 areas, the initial tendering prices of which were confirmed, out of the 106 revoked license areas. Proposals for tender will be received through September 22.
The 14 areas cover 163.5 hectares in six aimags and Ulaanbaatar. There are six areas in Bayankhongor aimag, three in Dornogobi, one stretching through Dundgobi and Umnugobi, and areas in Dundgobi, Umnugobi, Khovd and Ulaanbaatar. Regarding size, the smallest area is 94.4 hectares and the largest is 56,000 hectares. Below is the list of the 14 areas.
Specialists of the Minerals Authority studied the revoked 106 licenses and confirmed that 88 were eligible for tendering. The eliminated licenses either violate the “Long Named Law” or were revoked prior to the court decision due to other violations, such as overdue payments, payment delays and returns.
Former license holders will have a greater advantage in the tender process. More specifically, they won’t have to place any collateral in an account, but they will need to have the funds they previously invested in the area confirmed through receipts and financial documents. Other parties will have to place 30 percent of the initial tendering price in an account to compete.

Financial capacity and experience will affect selection

In addition to paying the initial tendering price, previous experience with geological exploration and the financial capacity to conduct further exploration and obtain the equipment and facilities necessary for exploration work are crucial for bidders. The evaluation commission will evaluate the proposals and rank them. The company with the highest score will be selected and will propose a price for the selected area. If the company fails to place 70 or more percent of its proposed price in an account within 10 days, the opportunity will be transferred to the next company in the ranking.
If a former license holder is not selected, compensation for the funds the company previously invested will be paid. The compensation will not come from the state budget but from the initial tendering price the newly selected license holder paid.
Exploration project costs invested in the 106 areas by former license holders range from 20 million MNT to 400 million MNT per company. These costs will be the initial tendering prices for the areas. Based on former license holders’ financial reports, the Ministry of Mining estimated a total cost of 28 billion MNT. Re-tendering for the remaining 74 areas will be announced after their initial tendering prices are confirmed.
Specialists of the relevant ministry expect considerable improvement in foreign investment due to the granting of minerals licenses. They estimate annual foreign investment of 1 to 1.6 billion USD from granting minerals licenses, including the 106 licenses.

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Posted by on Aug 28 2014. Filed under Business & Economics. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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