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Tracing SLO in the Mongolian Mining Sector

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The Palgrave Handbook of Social License to Operate and Energy Transitions

Part of the book series: Palgrave Studies in Energy Transitions ((PSET))

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Abstract

Although a social license to operate (SLO) has been a prerequisite for mineral development, the method to obtain and keep it has always been an issue. It is only achievable with a tailored approach since different community needs exist due to each country and community’s geographical, political, and historical context. Nevertheless, it is meaningful to conduct case studies to accumulate the best practices globally. This chapter traces SLO in the Mongolian mining sector, attempting to analyze its relationship with sustainable development and government involvement. The analysis found that the role of the government should not be underestimated in achieving SLO. Mongolia has introduced a law that obliges companies to conclude a Local Level Agreement (LLA) with the local governments when they develop mineral projects. Along with other schemes, the government is engaged in resolving issues between businesses and the community from a local development perspective. It can be suggested that SLO should not be left between the community and the corporation, but rather that active involvement from the government perspective would drive the evolution of SLO and lead to sustainable development in the country.

The opinions expressed are solely those of the author. In no case should they be considered or construed as representing an official position of the affiliation.

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Notes

  1. 1.

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  2. 2.

    For more on SDGs, generally See UN (Department of Economic and Social Affairs), ‘The 17 Goals’. https://sdgs.un.org/goals

  3. 3.

    For more information on MDGs, generally see UN, ‘News on Millennium Development Goals’. https://www.un.org/millenniumgoals/

  4. 4.

    Swedish Environmental Protection Agency (Naturvårdsverket) and UNDP, ‘Extracting Good Practices: A Guide for Governments and Partners to Integrate Environment and Human Rights into the Governance of the Mining Sector’ (UNDP 2018), pp 177. https://www.undp.org/publications/guide-governments-and-partners-integrate-environment-and-human-rights-governance-mining-sector#

  5. 5.

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  6. 6.

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  7. 7.

    UNDP, WEF, CCSI and SDSN (n 6).

  8. 8.

    Gavin Bridge, ‘Contested Terrain: Mining and the Environment’ (2004) 29 Annu Rev Environ Resour 205–259.

  9. 9.

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  10. 10.

    Prno and Slocombe (n 1) 346.

  11. 11.

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  13. 13.

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  14. 14.

    Kristi Disney Bruckner, ‘Community Development Agreements in Mining Projects’ (2016) 44 (3) Denv J Intl L Poly 413–427, 422.

  15. 15.

    Bocoum et al. (n 9) 5.

  16. 16.

    John R Owen and Deanna Kemp, ‘Social licence and mining: A critical perspective’ (2013) 38(1) Resour Policy 29–35.

  17. 17.

    Claire White and Aidan Davy (eds), ‘Community Development Toolkit’ (International Council on Mining and Metals, July 2012), pp 220, 23. https://www.icmm.com/website/publications/pdfs/social-and-economic-development/4080.pdf. Accessed 1 Aug 2019.

  18. 18.

    Aaron Padilla, Emery Brusset, Lisbet Kugler, Sunrita Sarkar, Tania Barron, Salil Tripathi, ‘Community Development and Local Conflict: A Resource Document for Practitioners in the Extractive Sector’ (CommDev 2008) at 22. https://static1.squarespace.com/static/5bb24d3c9b8fe8421e87bbb6/t/5c292a37f950b760dd52630d/1546201661271/Community-Development-and-Local-Conflict.pdf

  19. 19.

    Bocoum et al. (n 9) 5.

  20. 20.

    Heffron et al. (n 1) 2.

  21. 21.

    White and Davy (n 17) 23.

  22. 22.

    ICMM, ‘Role of Mining in National Economies: Mining Contribution Index 2018 (4th Edition)’ (29 Oct 2018). https://www.icmm.com/website/publications/pdfs/social-performance/2018/research_mci-4.pdf

  23. 23.

    Meralis Plaza-Toledo, ‘The Mineral Industry of Mongolia’ in USGS, Minerals Yearbook (Volume III. – Area Reports: International (USGS 2015).

  24. 24.

    Barbara Lewis, ‘As Copper Booms, Miners Take Hunt to Mongolian Dunes’ (Reuters, 13 March 2018). https://www.reuters.com/article/us-mongolia-mining-insight-idUSKCN1GP0LC

  25. 25.

    SICA and Growth Finance Audit, ‘Mongolia EITI Seventeenth Reconciliation Report 2022’ (commissioned by Ministry of Mining and Heavy Industry, the Extractive Industries Transparency Initiative EITI | Working Group, 2023), pp 148, 57. https://eiti.org/documents/mongolia-2022-eiti-report. Accessed 14 Apr 2024.

  26. 26.

    SICA and Growth Finance Audit (n 25) 68–69.

  27. 27.

    ibid. 72.

  28. 28.

    Takahiro Ozaki and Hiroki Takakura, ‘Introduction: Environmental Disaster in Mongolian Modern History’ (2022) 11(1) J Contemp East Asia Stud 1–21, 12.

  29. 29.

    Economic Research Institute (ERI), ‘Impact of Mining on Local Livelihood and Social Licensing’ (ERI 2020), pp 36, 8. http://www.eri.mn/download/rqpblv14. Accessed 22 Aug 2023.

  30. 30.

    See Dulam Bumochir, The State, Popular Mobilisation and Gold Mining in Mongolia: Shaping ‘Neoliberal’ Policies (UCL Press 2020) xx 159.

  31. 31.

    Bumochir (n 30) 51.

  32. 32.

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  33. 33.

    ‘USAID, ‘Mongolia Strategic Framework – Jan 2023–Jan 2028’ (USAID 2023), pp 28, 7. https://www.usaid.gov/sites/default/files/2023-04/2023%20Mongolia%20Strategic%20Framework.pdf. Accessed 27 Jul 2023; Bumochir (n 31) 21, 26.

  34. 34.

    Sternberg and Ahearn (n 5) 4.

  35. 35.

    State Great Khural, ‘State Minerals Policy 2014–2025’ (Res no 18, 16 Jan 2014). https://www.mongolianminingjournal.com/a/54797. Accessed 23 Apr 2024; Kristi Disney Bruckner and Luke Danielson, ‘IGF Mining Policy Framework Assessment: Mongolia’ (IISD, June 2017), pp 68, 7. https://www.iisd.org/sites/default/files/publications/mongolia-mining-policy-framework-assessment-en.pdf. Accessed 15 Jan 2019.

  36. 36.

    State Great Khural, ‘Mongolia Sustainable Development Vision 2030’ (Res no 19, 5 Feb 2014) pp 53, Appendix at 11. https://sdg.1212.mn/EN/Home/SDV. Accessed 23 Apr 2024.

  37. 37.

    Mongolia Sustainable Development Vision 2030 (n 37) Appendix at 18.

  38. 38.

    Government of Mongolia and UNDP, ‘Mapping the SDGs against Mongolia’s National Development Plans and Policies’ (UNDP 2021), pp 39, 3. https://www.undp.org/publications/mapping-sdgs-against-mongolias-national-development-plans-and-policies. Accessed 25 Dec 2023.

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  40. 40.

    UN Mongolia (n 39) 39.

  41. 41.

    ibid. 37.

  42. 42.

    Amarsanaa Batbold, ‘Law and Policy on Mineral Resources in Mongolia: Seeking Inescapable Stability’ in Mitsuo Matsushita and Thomas J Schoenbaum (eds), Emerging Issues in Sustainable Development: International Trade Law and Policy Relating to Natural Resources, Energy, and the Environment (Springer 2016) 41–57, 43; CIA (US), ‘Mongolia’ (The World Factbook, 29 Jan 2019). https://www.cia.gov/library/publications/the-world-factbook/geos/mg.html

  43. 43.

    SICA and Growth Finance Audit (n 25) 40.

  44. 44.

    Morris Rossabi, ‘Mongolia: Transmogrification of a Communist Party’ (2009) 82(2) Pac Aff 231–250.

  45. 45.

    Constitution of Mongolia of 13 Jan 1992.

  46. 46.

    Tumenbayar Nyamaa, ‘Land Privatization Option for Mongolia’ (Constituting the Commons: Crafting Sustainable Commons in the New Millennium, the Eighth Biennial Conference of the International Association for the Study of Common Property, Bloomington, Indiana, 31 May–4 June 2000), pp 32, 2. https://dlc.dlib.indiana.edu/dlc/bitstream/handle/10535/133/tumenbayarn041100.pdf?sequence=1

  47. 47.

    Jeffrey Reeves, ‘Resources, Sovereignty, and Governance: Can Mongolia Avoid the “Resource Curse”?’ (2011) 19(2) AJPS 170–185.

  48. 48.

    Byambajav Dalaibuyan, ‘Negotiating the Coexistence of Mining and Pastoralism in Mongolia’ (2022) 11(1) J Contemp East Asia Stud 46–63, 46, 50.

  49. 49.

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    OECD, ‘Anti-Corruption Reforms in Mongolia. Joint First and Second Rounds of Monitoring of the Istanbul Anti-Corruption Action Plan’ (9 Oct 2015), pp 141. https://www.oecd.org/corruption/anti-bribery/Mongolia-Round-3-Monitoring-Report-ENG.pdf

  51. 51.

    Byambajav Dalaibuyan, ‘Mining, “Social License” and Local-Level Agreements in Mongolia’ (Proceedings from the International Conference on Perspectives on the Development of Energy and Mineral Resources Hawaii, Mongolia and Germany, Honolulu, Dec 2015), pp 17, 5. https://www.researchgate.net/profile/Byambajav_Dalaibuyan2/publication/303062239_Mining_social_license_and_local_level_agreements_in_Mongolia/links/5736795e08ae298602e0a7f7.pdf; Byambajav Dalaibuyan, ‘Local Level Agreements in Mongolia’s Resource Sector: Lessons Learned and the Way Forward’ (Natural Resource Governance Institute, November 2017) Briefing, pp 12. https://resourcegovernance.org/sites/default/files/documents/nrgi-mongolia-agreement-briefing-english.pdf

  52. 52.

    The Minerals Law of Mongolia (Amended Law) 2006.

  53. 53.

    However, it was repealed in 2009 and demolished in 2011 due to opposition from mining companies. Publish What You Pay pointed out that the windfall tax scheme was poorly designed. See Frian Aarsnes and Olav Lundstøl, ‘The Case for Windfall Taxes: A Guide to Optimal Resource Taxation’ (Publish What You Pay 2013). https://www.publishwhatyoupay.no/sites/all/files/Download%20-%20English_4.pdf

  54. 54.

    Mongolian Law to prohibit mineral exploration and mining operations at headwaters of rivers, protected zones of water reservoirs and forested areas (16 July 2009). http://www.fao.org/faolex/results/details/en/c/LEX-FAOC169787

  55. 55.

    Andrew Bauer, Ragchaasuren Galindev, Munkh-Orgil Lkhagvajav, David Mihalyi, and Nomuuntugs Tuvaan ‘Fiscal Sustainability in Mongolia’ (Natural Resource Governance Institute, Nov 2017), pp 32. https://resourcegovernance.org/sites/default/files/documents/fiscal-sustainability-in-mongolia.pdf

  56. 56.

    Batbold (n 42) 43; CIA (n 43).

  57. 57.

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  58. 58.

    The Constitution of Mongolia (n 45).

  59. 59.

    ERI (n 29) 11.

  60. 60.

    The translation of the Law of Mongolia on Minerals (2016) available at http://www.eisourcebook.org/cms/February%202016/Mongolia%20Law%20on%20Minerals_Articles%201-14_Translation_Eng_Eegii.pdf

  61. 61.

    Minerals Law of Mongolia (n 61) Art 19.

  62. 62.

    ibid. Art 42.

  63. 63.

    Rio Tinto, ‘Policies and Standards’ (www.riotinto.com). https://www.riotinto.com/en/sustainability/policies. Accessed 21 Apr 2024.

  64. 64.

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  65. 65.

    The Cooperation Agreement of April 2015 is available at https://www.ot.mn/media/ot/content/Agreements/1._Cooperetion_Agreement.pdf

  66. 66.

    Rio Tinto (n 12) 49.

  67. 67.

    Khanbogd Soum, Manlai Soum, Bayan-Ovoo Soum and Dalanzadgad Soum.

  68. 68.

    The Cooperation Agreement (n 65) Art 8.

  69. 69.

    ibid. Art 4 and Sched 9.

  70. 70.

    Rio Tinto (n 12) 82.

  71. 71.

    Oyu Tolgoi LLC, ‘Oyu Tolgoi Q4 2023 Performance Results’ (www.ot.mn) Press Release. http://www.ot.mn/post/17261/. Accessed 21 Apr 2024.

  72. 72.

    Marieke E Meesters and Jelle H Behagel, ‘The Social Licence to Operate: Ambiguities and the Neutralization of Harm in Mongolia’ (2017) 53 Resour Policy 274–282, 278–279.

  73. 73.

    Troy Sternberg, Ariell Ahearn and Fiona McConnell, ‘From Conflict to a Community Development Agreement: A South Gobi Solution’ (2020) 55(3) Community Dev J 533–538, 535.

  74. 74.

    Dalaibuyan (n 48) 58.

  75. 75.

    Compliance Advisor Ombudsman (CAO), ‘CAO Dispute Resolution Conclusion Report – Oyu Tolgoi 01 & 02/Southern Gobi’ (May 2020), pp 10, 4. https://www.cao-ombudsman.org/cases/mongolia-oyu-tolgoi-02khanbogd. Accessed 22 Apr 2024.

  76. 76.

    Meesters and Behagel (n 72) 281.

  77. 77.

    ibid.; Owen and Kemp (n 16) 30.

  78. 78.

    Dwight G Newman, ‘Be Careful What You Wish For: Why Some Versions of “Social Licence” Are Unlicensed and May Be Anti-Social’ (Macdonald-Laurier Institute, Nov 2014) SSRN id 2619824, pp 9, 3; Nwapi (n 1) 358.

  79. 79.

    Owen and Kemp (n 16) 33–34.

  80. 80.

    Disney Bruckner and Danielson (n 35) 26.

  81. 81.

    Dalaibuyan, ‘Local Level…’ (n 51) 5.

  82. 82.

    Sergei Diakov, Samand Sanjdorj and Galsan Jamsrandorj, Discovery of Oyu Tolgoi: A Case Study of Mineral and Geological Exploration (Elsevier 2019) xix 251.

  83. 83.

    Holly R Barcus, ‘Contested Space, Contested Livelihoods: A Review of Mongolia’s Pastureland Management and Land-Tenure Reform’ (2018) 108(1) Geogr Rev 138–157.

  84. 84.

    ICMM and EITI shares this concern in their joint briefing. See ICMM and EITI, ‘The Critical Minerals Rush - Why Is Contract Transparency so Important?’ (Oct 2023). https://www.icmm.com/website/publications/pdfs/mining-metals/2023/briefing_critical-minerals-rush.pdf?cb=66711. Accessed 16 Apr 2024.

  85. 85.

    Sternberg and Ahearn (n 5) 8.

  86. 86.

    EITI, ‘Mongolia’. https://eiti.org/mongolia. Mongolia commenced the validation process in 2016 and validated in 2018. See also EITI, ‘Mongolia Validation 2018’ (21 Jan 2018). https://eiti.org/document/mongolia-validation-2018

  87. 87.

    Dalaibuyan, ‘Local Level…’ (n 51) 3.

  88. 88.

    Ana M Esteves, Gabriela Factor, Frank Vanclay, Nora Götzmann and Sergio Moreira, ‘Adapting Social Impact Assessment to Address a Project’s Human Rights Impacts and Risks’ (2017) 67 Environ Imp Assess Rev 73–87.

  89. 89.

    Sternberg and Ahearn (n 5) 5.

  90. 90.

    Natural Resource Governance Institute, ‘Natural Resource Charter’ (2nd edn, (Natural Resource Governance Institute 2014), pp 39, Precept 2 at p 10–11. https://resourcegovernance.org/sites/default/files/documents/nrcj1193_natural_resource_charter_19.6.14.pdf. Accessed 23 Apr 2024.

  91. 91.

    USAID (n 33) 15–17.

  92. 92.

    Michael Hitch and George Barakos, ‘Virtuous Natural Resource Development: The Evolution and Adaptation of Social Licence in the Mining Sector’ (2021) 8(2) Extr Ind Soc article 100902, 2–3.

  93. 93.

    ERI (n 29) 6; Dalaibuyan (n 48) 59.

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Authors and Affiliations

  1. Japan Organization for Metals and Energy Security, Minato-ku, Tokyo, Japan

    Marina Yamamoto

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  1. Marina Yamamoto
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Correspondence to Marina Yamamoto .

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Editors and Affiliations

  1. Lecturer in Energy and Environmental Law, School of Law, University of Stirling, Stirling, UK

    Geoffrey Wood

  2. Dept. of Asian and International Studies, City University of Hong Kong, Kowloon, Hong Kong, China

    Jędrzej Górski

  3. Research Fellow, SEI Headquarters – Energy & Industry Transition Team, Linnégatan, Stockholms Län, Sweden

    Gokce Mete

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Yamamoto, M. (2024). Tracing SLO in the Mongolian Mining Sector. In: Wood, G., Górski, J., Mete, G. (eds) The Palgrave Handbook of Social License to Operate and Energy Transitions. Palgrave Studies in Energy Transitions. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-74725-1_35-1

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