Mongolia says no more mining permits until newlaw
* Halts issuance and transfer ofmineral licenses
By Euan Rocha
TORONTO, April 27 (Reuters) -Mongolia's president has ordered a halt to the issuance and transfer ofmineral exploration licenses until the government can enact a stricterlaw on mining investment.
The directive, issued by PresidentTsakhia Elbegdorj and posted on his website, may rekindle some of theuncertainty that for years surrounded mining investment in an Asiancountry known for its rich mineral deposits.
Last year's passage of a long-awaited lawallowing Rio Tinto and Ivanhoe Mines to proceed with the $5 billion OyuTolgoi copper and gold mine had paved the way for foreign investment inthe mining sector.
However, the president in a new order, noted thatalmost half the exploration license holders neglect their duty toprovide their annual exploration reports, while many are only using thepermits as money-making tools and not investing in any activeexploration.
The freeze on new mining permits will remain inplace, until a new law on mineral licenses is adopted by the government,according to the directive. here
The announcement comes just days after Mongolia'sNuclear Energy Agency (NEA) invalidated the mining and explorationlicenses of two subsidiaries of Canadian exploration company KhanResources Inc, citing violations.
It was not immediately clear howlong it would take to pass a new law, but the directive calls on thegovernment to hold public discussions on the matter in June.
"I order the government to regularly report to meon the status of the implementation and the ways it resolves theissues," said Elbegdorj.
"It is important to urgently developthe law on mineral licenses and have it publicly discussed."
The new directive could hinder Khan Resources'efforts to get its uranium mining and exploration licenses reinstated,as the presidential order also applies to any licenses that have beenrevoked.
In December, Khan rejected an unsolicited bidfrom Russian state uranium miner ARMZ. But earlier this year, it agreedto be bought by a subsidiary of China National Nuclear Corp for C$56.5million.
A number of Canadian-listed companies includingIvanhoe Mines, SouthGobi Energy and Entree Gold Inc have operations inMongolia.
Mongolia, which is potentially sitting on vastamounts of uranium, coking coal, copper and other minerals, has beenactively working on driving growth by boosting foreign investment in themining sector.
Last year, Mongolia finally wrapped up a deal todevelop one of the world's biggest untapped copper and gold deposits,signing off on Rio Tinto and Ivanhoe's $5 billion Oyu Tolgoi project.Mongolia owns a 34 percent stake in the project.
Elbegdorj said that while he remains focused onthe development and protection of natural resources, his directive seeksto ensure that that the people of Mongolia remain the true owners ofthe countries mineral wealth.
At this time, the presidentialdirective apparently won't affect the operations of those companies thathave valid exploration permits. But it is unclear whether thegovernment intends to review the validity of existing permits goingforward.
Mongolia has thus far issued 4,706 valid minerallicenses of which 3,610 are exploration permits and 1,096 are mininglicenses.
The directive noted that most of the permitscurrently held by companies and individuals operating in Mongolia arebeing held in violation of existing laws.
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