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One major development to highlight is the Ministry of Industry and Mineral Resources’ proposed amendments to the Mineral Resources Law. Public consultations on the draft changes were underway nationwide, with the revised legislation submitted to the State Great Khural during the spring session.

Minister of Industry and Mineral Resources J. Damdinyam stated:

“The amendments to the Minerals Law, which will be discussed during the Spring Session starting March 15, 2026, represent the most economically consequential legislation for our nation’s future.”

In this issue, we examine the key problems within the current Mineral Resources Law and what the proposed amendments aim to address.

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Mongolia sits atop some of the world's most significant untapped copper and coal deposits. Yet despite this geological wealth, foreign investment in the mining sector has stalled. The culprit? A fiscal regime that investors increasingly view as unpredictable and uncompetitive.

Public consultations on draft amendments to the Mineral Resources Law are now underway nationwide, with revised legislation slated for submission to the State Great Khural during the spring session. The proposed reforms target four persistent barriers that have dampened investor appetite: excessive royalty rates, double taxation, levies on associated minerals, and inadequate benefit-sharing with mining-affected communities.

Mongolia’s current royalty structure places it among the world’s most expensive mining jurisdictions. Copper faces a base royalty of 5%, but progressive surcharges tied to product type can push effective rates to 22–30%—more than triple comparable regimes in Australia’s Queensland, Western Australia, New South Wales, where copper royalties range from 2.5% to 7.5% depending on the type and average metal prices. 

The proposed amendments would substantially reduce this burden:

This tiered reduction serves a dual purpose: lowering the overall fiscal take while preserving incentives for domestic value-addition. Companies producing refined products in-country would face the lowest rates, aligning fiscal policy with Mongolia’s industrialization objectives.

Under the current regime, exporters may face overlapping royalty obligations on the same mineral output—both as raw ore and as a processed concentrate or final product. This structural flaw increases fiscal pressure and complicates project economics.

The draft amendment addresses this through revised language in Article 47.7: mineral resource royalties “shall not be subject to double taxation” when minerals are exported directly as a product or as value-added concentrates and products.

Many ore bodies contain secondary elements recovered incidentally during extraction of the primary commodity. Under current law, these associated minerals can trigger additional royalty obligations, even when they represent marginal economic value.

The proposed Article 47.20 would exempt such elements from royalty calculations, provided they are associated elements of the primary mineral. 

The amendments propose channeling 20% of total royalty revenues directly to the soum (local district) where the project is located, with an additional 10% allocated to the host aimag (province). This structural commitment to infrastructure, public services, and long-term community development could meaningfully shift local attitudes toward optimistic views and new projects.

Separately, Mongolia has finalized a new framework requiring 60% of economic returns from strategic mineral deposits to flow into its National Sovereign Wealth Fund—ensuring the majority of resource benefits accrue directly to the public.