The mining champions of Mongolia, and yet another reminder of what makes our movement powerful

I recently travelled to Mongolia to see first-hand the hard work of PWYP members and their inspiring achievements.

There is a way to go for Mongolia’s mining sector to become truly accountable and benefit all its people. Nevertheless, what I saw on this trip was impressive indeed: a shining example of what committed, effective and organised civil society can do – and will keep doing.

The ninja miners of Nalaikh

Located about 35km from the capital, Ulaan Bataar, a visit to Nalaikh mine brings into focus the singular history of mining in Mongolia, and its critical importance to the country’s trajectory.

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Nalaikh is where Mongolia’s industrial mining was born in the early 1920s, and paved the way for the resource-based economy that accounts for much of Mongolia’s development to date. Coal from Nalaikh fed Mongolia’s (and mainly Ulan Bataar’s) industrialisation, until state-led mining was abandoned in the early 1990s, following the collapse of the Soviet Union. Amid the derelict mine’s increasingly crumbling structures, unemployed miners continued doing what they could to survive.

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These so-called ‘ninja’ miners descended the mine shafts to work with artisanal tools, and still do so today. That activity shows no sign of stopping: two-thirds of Nalaikh’s coal deposits remain, and the ninja miners work in unregulated, unprotected and dire conditions.

On average, 15 to 20 people die in its shafts every year.

PWYP members want mining to work for the many…

Today, artisanal gold mining is much more common than coal. It’s estimated that 80% of the gold purchased by Mongolia’s Central Bank is produced by such small scale mining. And besides supporting these livelihoods, the mining sector (including large-scale industrial mining, which dwarves the artisanal kind) accounted for 20% of Mongolia’s GDP, 18% of government revenue and a staggering 86% of exports in 2016.

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In other words, if Mongolia gets mining right, it could lift the entire population, boost its economy and raise development standards. In the meantime, for example, Mongolia’s health spending relies on international aid for about a third of its budget, and the image of clandestine miners risking their lives in Nalaikh every day stands as an unfortunate symbol of a sector which neglects its people.

Getting mining right, and doing right by the people of Mongolia – that’s exactly what the local Publish What You Pay (PWYP) coalition has been working towards for the past ten years.

And the results are clear to see. Thanks largely to civil society’s push, Mongolia was one of the first countries to commit to the Extractive Industries Transparency Initiative (EITI) in 2006. It is now doing the hard work of implementing the required financial, environmental and social disclosures required by EITI throughout its line ministries.

While the government has yet to take the essential step of making these disclosures mandatory by law, the amount of information generation by its EITI commitment is positive so far: the most recent EITI report covered 230 extractive companies operating in Mongolia, or 98% of the mining sector’s economic output for the country. Companies who fail to report are subject to a fine. This year, more than 20 companies paid the penalty.

…and there is still a way to go

A closer look at how mining contracts are licensed is a good way to understand the current battle lines in Mongolia’s continued struggle to get mining right.

To date, 240 mining contracts have been publicly disclosed – on paper, a promising indicator of transparency – but in practice the licensing process remains plagued with questionable transactions.

PWYP Mongolia actively monitors existing and new licences – these are available on an award-winning database – to identify wrongdoing. Recently, they won a few cases where the license laws were breached, leading to 40 mining license being revoked.

It is no small task to monitor the sale of licenses: there are over 3700 active mining licenses and many more ‘inactive’, making the mining sector highly fragmented and leaving lots of room for shady deals. For that reason, the PWYP coalition is also pushing for stronger legislation on ‘beneficial ownership’ – to gain greater clarity on who really owns, and profits from, mining concessions. Indeed, despite this constellation of licenses and names of companies that hold them, the sector is rumoured to be controlled by only a few dozen powerful families.

All eyes on EITI

Tellingly, civil society pushes for a public registry of beneficial owners have been met by a smear campaign in the elite-controlled media.

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There are even greater concerns on the horizon. In the Ulaanbadrakh region, nuclear power giants Areva are rumoured to be mining for uranium, but the local communities are largely in the dark about such a gigantic undertaking. As Ms. Bor, from the local NGO Bayansharga told me, “local people are already feeling the health impacts of uranium production but the authorities
deny that exploitation has started and there doesn’t seem to be any payments made. We don’t even know if an exploitation contract is being negotiated.”

So while civil society keeps pushing, they come up against the usual mix of economic ‘gold rush’ pressures and clear opponents to transparency, accountability and inclusiveness.

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As the next EITI board meeting begins, my thoughts are with colleagues – in Mongolia and elsewhere – who have so much to gain from its success: for the ninja miners of Nalaikh, for the people of Mongolia who could benefit so much more, and for the better world we could build with greater transparency in the extractive industries and the trillions of dollar it generates.

By their side, we keep pushing.

Who is paying the price? The impact of low commodity prices on citizens in Mongolia

The Mongolian government has asked its citizens to “tighten their belts” amidst a looming economic crisis after registering a sharp drop in state revenues. With almost 90 percent of the Mongolian exports being mineral products, such as copper and coal, the ongoing fall in commodity prices on international markets has dealt a severe blow to the country’s economy. Adding to the matter, Mongolia’s currency has been devalued by almost 20 percent over the past 12 months.

This has led Mongolia to seek economic growth through legal reforms and especially using its most precious capital –natural resources- as a coping mechanism to fight the current economic crisis. Creating the right legal environment to promote economic growth makes logical sense but who is paying the price of such investor- friendly reforms?

The first target of the new investor-friendly policy was the environmental law, a law that Mongolians refer to as The Law with the Long Name, or in actuality The Law on Prohibition of Mineral Exploration and Mining Activities in areas in the Headwaters of Rivers, Protected Water Reservoir Zones and Forested Areas. This law aimed to protect water sources from mining activities by establishing safety zones defined by the Ministry of the Environment and Tourism in cooperation with the Mongolian Environmental Citizen’s Council, and approved by local authorities. These zones were established 200-1000 meters, which is beyond 200 meters limits of safety zone in the Water Law, and therefore protect 30% of the land around rivers and forests in Mongolia. After the law came into force in 2011, 242 mining companies that had been granted mining licenses had to suspend their operations.

With the new amendments, the safety zones are to be reduced to 50-200 meters from the riverbank rather than what was initially defined up in 2012, in effect making them irrelevant. Nobody can control the exact distance between a mining operation and the river. The water sources, a basis for future prosperity in the country, are threatened to be polluted and will likely be destroyed by future extractive operations. The amendments also enable mining operation in the forested areas with the condition to plant 10 or more seedlings for each harvested tree.
These amendments aimed to serve the interests of Canadian-listed mining company Centerra Gold that has not been able to develop its Gatsuurt gold mine due to the proximity to the Gatsuurt River and forested areas. To protect this law a group of civil society activists went on a hunger strike on the central square of Ulaanbaatar in front of the Parliament building. As a result of the 12 days strike, a working group was formed to assess the impact of Centerra’s mining project. But rather than work on bringing the Gatsuurt mine and the law into alignment, the government of Mongolia bypassed its own legal system by declaring Gatsuurt a so-called strategic mine exempt from the law.

While the Government of Mongolia rushed to sign the new contracts with Centerra Gold, another case came up. The negotiations with a three-party consortium, composed of China Shenhua Energy Co Ltd of China, Sumitomo Corporation of Japan, and Energy Resource LLC of Mongolia, as a strategic investor to Tavan Tolgoi – one of the world’s largest, untapped, coal deposit –quickly turned opaque and politicised. A draft agreement didn’t contain any provisions on protecting the interests of local people and the environment, and had no social impact provisions. The agreement looked like it had been drafted by companies without meaningful input from the government or its citizens. After strong public disapproval, the agreement was withdrawn and sent for further review.

Meanwhile, the Parliament is still dragging its feet with the adoption of a draft law on the Future Heritage Fund designed to save a certain percentage of revenues from mineral extraction in foreign assets to benefit future generations. The draft law was submitted to the Parliament on 13 October 2014. Discussions are still on-going and no clear deadline is in sight. As Erdenechimeg Dashdorj from PWYP Mongolia states:

“By the time the Parliament gets its act together and adopts the law, there might not be any revenues from extractive resources left to safeguard the future of our children and grandchildren.”

“These three cases have us wondering: who is paying the price for the governments’ decisions? Is it us citizens rather than private business interests?”, Erdenechimeg adds.

While heavily exploiting a country’s natural resources, do decisions makers really think of the future generations? What would next generations be left with if the country continued with their business as usual approach?

Countries such as Norway have proven that balanced and wise resource management can benefit everyone – citizens and businesses. So to ‘the powers that be’ in Mongolia, PWYP Mongolia asks: “instead of serving business interests, ignoring communities and neglecting the environment, ultimately increasing the resource curse, it is time to reverse this behaviour and serve the nation’s interest?”

Communiqué of PWYP Eurasia meeting

On 27-29 April 2015 representatives of civil society from Albania, Azerbaijan, Germany, Kazakhstan, Kyrgyzstan, Mongolia, Tajikistan and Ukraine gathered in Kyev, Ukraine for the workshop on Ukrainian and Eurasian civil society in the EITI: Common challenges – joint approaches.
Civil society in the region faces similar difficulties in the implementation of EITI, whether that is ensuring that civil society is an effective participant of the multistakeholder group, having to operate in a restrictive environment or a lack of funding opportunities. The need for civil society to have a deeper knowledge of EITI and be better coordinated was expressed, and so this workshop also aimed to strengthen the network of PWYP Eurasia members with a view to promote sharing resources and information.

In order to face these challenges, participants met to not only share their experiences and best practices – in order for national coalitions to improve their own strategies based on shared knowledge – but also to strategise on how they could work together as a region to better implement and use EITI.

To this end, participants identified a series of best practices for benchmarking MSGs, which include the recommendations of holding the meetings in an extractive region outside the capital and the need for consultations with local communities in order to inform citizens about EITI. Participants also pooled their knowledge to map important extractive companies operating in their country, so as to find targets for joint advocacy and areas of common ground. Participants also agreed on a 2015 – 2017 joint action plan to promote and defend EITI implementation in the region.

Civil society organisations in the region are committed to EITI implementation in their respectful countries and share a number of recommendations.

That governments in the region ensure free, full, independent, active and effective participation of civil society in the EITI implementation process. Publish What You Pay members will monitor the situation in various countries and support members that face a deteriorating environment.
That governments embed EITI Standards in their national legal frameworks.
We call on global donor organisations to recognise that Eurasia is a region with much potential that faces many challenges, and to support projects in the region, particularly those related to transparency and accountability in the extractive sector.


We call on all extractive companies to adhere to and respect their EITI obligations in the respective countries of Eurasia. Too many companies are in breach of environmental regulation or fail to disclose their payments.


To call upon other countries in the region such as Georgia, Armenia, Russia, Romania to commit to the principals of transparency and accountability and implement EITI.

All decisions and recommendations are based on the principle that natural resources belong to the citizens and need to be managed responsibly and equitable so that women, men and youth in resource rich countries benefit.

Mongolia

Launched in 2006, PWYP Mongolia has focused its efforts on effective EITI implementation. The coalition also works on legislative processes around the natural resource framework and with communities at the subnational level. It has led campaigns to ensure transparency at all stages of mining production and increase public engagement and debate on natural resource issues. The coalition is currently campaigning for the adoption of an EITI law and a new Mineral Law.

Tuya Choijil

When Mongolia became a capitalist society extraction increased tremendously, especially with the government’s ‘gold program’. But this increase was too widespread and the benefits not clear.

I saw the negative impact on the environment but decided to get involved so that local communities who were hurt by extraction could be heard – especially in order to protect the environment. This campaign provided us an opportunity to be engaged and voice our opinions on different platforms. Publish What You Pay has been one mechanism, but there was also a “citizen’s council” in Mongolia made up of hundreds of different environmental NGOs from all over the country.

Mongolia joined the EITI in 2006, open society foundation and other organisations involved us in various trainings and information sessions. We started to become very informed on the issues of transparency and it really strengthened my belief that I should be part of this movement, so in 2009 our organisation joined PWYP Mongolia.

Testing the PWYP coalition model

The Overseas Development Institute carried out a study testing PWYP’s coalition model. Below is the introduction, click here to read the full report.

Introduction

Since its inception in June 2002, the PWYP campaign coalition has grown from a few UK-based organisations to become a global network of more than 700 organisations in almost 60 countries organised into a fairly loose alliance of affiliated national coalitions. Some of these coalitions share the same PWYP brand and logo, while others have distinct and independent identities. All, however, share the same status of affiliation, without differentiation.

With the growth and evolution of the global campaign has come two particular challenges. Firstly increasing demands on the international secretariat for coordination and support to national coalitions far outstrip its current capacities. Secondly, despite the important achievements of the campaign at the international level, national coalitions continue to face numerous operational challenges, which undermine their effectiveness to advance the advocacy agenda at national level. These problems are to be found at different levels and to differing degrees, though they are present in almost all coalitions in the resource-rich countries.

With this in mind, this study has two primary objectives:

1.     To test the organisational theory of change (“the coordinated, collective actions of a diverse coalition of organisations will be most effective in driving policy change for greater extractive industry transparency”) and assess the extent (and where, why and how) to which this theory has been proven at national level (or not).

2.     To assess the operational difficulties of coalitions and to recommend good practices for how coalitions can best be managed and supported.

The study began with a review of 10 country coalitions, selected in consultation with the International Secretariat: Ghana, Niger, Mongolia, Kyrgyzstan, Nigeria, Chad, Indonesia, Australia, US and UK. Of the ten countries, field trips were conducted in first four while the remaining six were studied remotely through telephone interviews. 

After preliminary analysis of the country reviews, a number of common themes were identified.  These were tested across a wider sample of opinion through a Delphic consultation conducted through two mechanisms at the PWYP conference in Amsterdam in 2012 – an instant vote system of up to 100 delegates within a session at the conference, and distribution of a paper questionnaire to all participants who were then able to answer on paper or online. The survey received 54 responses.

Read the rest of the report.