The Government yesterday
decided that a bill to amend the Law on Mineral Resources should be submitted
to Parliament for approval. The draft proposes graduated royalty rates to replace
the 68 percent windfall tax. Minister for Finance S.Bayartsogt explained the
provisions in the draft to media and then answered questions.

The draft was prepared
after considering suggestions from the Mongolian National Mining Association
and entrepreneurs and companies operating in the mining sector. Not all of
these were accepted.

What does the Government want?

The Finance Ministry
studied many types of taxes and then formulated the present draft. There will
be a basic five percent royalty fees on every mineral commodity. This will be raised
by one percent, up to a maximum of 5%, as commodity prices increase. When a ton
of copper ore costs USD 5,000 or less, the royalty payable will be the basic 5
percent. When the price reaches USD 6,000, the royalty will become six percent.
Rising gradually, the royalty will be 10% when prices exceed USD9,000.

As for gold, the basic
rate will apply until price per ounce is below USD 900. It becomes six percent when
the price reaches USD1,000, seven percent at USD1,100, eight percent at USD1,200
and 10 percent if the price exceeds USD1,200.

For zinc it will be 5
percent for below USD 2,000, 6 percent at USD2,500, 7 percent at USD 3,000, 8
percent at USD 3,500 and so on.  

Royalty on molybdenum
will be 6 percent when the price per ton is USD40,000, 7 percent when USD45,000,
8 percent when USD50,000, 9 percent when USD55,000,  and 10 percent when it crosses USD 55,000.

Coal will be in two
groups – raw and processed. In the case of the first, royalty will be 5 percent
when the price is USD 25 per ton, six percent when USD35 per ton, 7 percent when
USD 45, 8 percent when USD 55, 9 percent when USD65 and 10 percent if the
prices exceeds USD65 per ton. As for coked coal, it will be 5 percent for price
below USD100 per ton, 6 percent for USD130, 7 percent for USD160, 8 percent for
USD190, 9 percent for USD210 and 10 percent if the price is above USD 210.

He said the royalty graduation
will not affect the Oyutolgoi mine.