Mongolia to revoke licences

Mongolia's Ministry of Mineral Resources and Energy has revoked a swathe of exploration licences in the country's river basins and forest reserves. The order was approved at a Cabinet meeting on Wednesday, and follows the enactment of a law in July 2009 prohibiting exploration and mining in protected areas (with specific exceptions for deposits of strategic importance).

The revocation of almost 1,800 licences will proceed on a staged basis, starting with 254 alluvial-gold licences. Analysts at Ulaanbaatar-based Frontier Securities estimate that the decision will ultimately affect 20% of the country's iron-ore reserves, 24% of the gold and 74% of the tin reserves.

The decision incorporates the provinces of Selenge, Bulgan, Tuv, Uvurkhangai, Darkhan, Arkhangai, Bayankhongor and Khentii. Frontier says the declaration will include the Bayangol iron-ore mine of Hong Kong-based Iron Mining International Ltd.

The important Boroo gold project of Centerra Gold Inc is apparently not subject to the new law but the Toronto-based company confirmed that four of its other licenses may be revoked. Centerra was warned in March that the licence for its Gatsuurt hardrock gold deposit could be revoked, but it has not so far been listed.

The decision follows an announcement in April by the country's president, Elbegdorj Tsakhia, halting all new mining permits until the passage of a new mining law to prevent attempts to "exert influence on our sovereign policies".

The government says compensation will be considered with regard to licence fees already paid and environmental costs incurred.