Business Council of Mongolia

The monthly meeting on April 26, attended by 89 members, began with Chairman Laurenz Melchers mentioning several things that have happened since the last meeting such as the visit by former Ambassador Michael Ussery, who has extensive experience in higher education, exploring whether Mongolia is ready for an American University of Mongolia. Executive Director Jim Dwyer said membership now stood at 138, the most recent 5 of whom are Marubeni, Talk Talk English, Mitsubishi, Hunnu Coal, and State Bank of Mongolia. He also reported on the work of the seven working groups, one of which has been renamed the Education Group, involving over 90 volunteers.

The presentation by the visiting Business and Biodiversity Offsets Program (BBOP) team was in two parts. Ms. Kerry ten Kate said their work depends on collaboration between the public and private sectors. Even well-intentioned and extensive restoration after industrial activity, especially mining, leaves “a significant residual impact” on biodiversity. The BBOP believes adherence to a “mitigation hierarchy” can help turn this usually negative net impact into a positive one.

Mr. Ray Victurine said proper restoration, as practiced by Rio Tinto, among others, has shown that developing biodiversity offsets goes beyond legal imperatives. Adoption of best practice principles helps companies reduce operational and project development risks, at the same time forging good relationships with regulators and stakeholders, which can contribute to securing permits and broader social license to operate. The team hopes to persuade the Government of Mongolia to become a partner, and companies to set up pilot projects, as has been successfully done in several other countries.

Mr. D. Damba, President of the Mongolian National Mining Association (MNMA), then provided an update on the mining sector. MNMA is not against regulations and laws as such, but want these to be reasonable and prudent, shorn of negative impacts and helping in “profitable and efficient mining”. MNMA has taken up with the Prime Minister and other authorities various issues that it considers “impractical”, and has protested against Government action in certain cases, as in that of Khan Resources. The Prime Minister has accepted in principle the MNMA stand that the General Tax Authority should not be involved in either developing the methodology of calculating taxes or in the actual determination of tax liabilities. Instead, its role should be restricted to collecting taxes.

Mr. Ben Turnbull, CEO, State Bank of Mongolia, said this new bank, wholly owned by the Government, is ranked 6th in terms of size among the 15 commercial banks in the country. The EBRD and the World Bank have arranged to put in place an ex-pat management team. He made it clear that the new bank is “a bridge bank”, and will be under State ownership only temporarily before being privatized in around three years’ time. In that period it will provide safe and stable banking services to help tide over stressful times for the banking sector.

Mr. Martin Quick, CEO of beleaguered Khan Resources, made a statement when members in the audience were asked to briefly comment on their businesses. He referred to the “abrupt, unilateral, and highly illegal” invalidation of the company’s two licenses on the Dornod uranium fields, and said the company’s Board of Directors was determined to get justice for its shareholders, in Mongolian or international courts, against the expropriation. He sought the full support of the private sector, while acknowledging that companies have their own interests to pursue.