Corruption Risk Assessment in Mining Sector of Mongolia

Corruption Risk Assessment in Mining Sector of Mongolia

July 21, 2016

The mining sector plays an important role in the Mongolian economy, and therefore it is critical that the sector be transparent, accountable and corruption-free. The corruption prevention measures will be more effective when corruption risks of the mining sector are studied systematically. Corruption prevention will be more effective if corruption risks of the mining sector are studied systematically.

In response to this necessity, the Independent Research Institute of Mongolia (IRIM) conducted an assessment and identified corruption risks in the four phases of mining: exploration, pre-operation, operation and post-operation phases of the geology and mining sector. The assessment was commissioned by the United Nations Development Programme (UNDP), and used A Practitioner’s Guide for Corruption Risk Mitigation in Extractive Industries (developed by UNDP). Forty-three interviews were conducted with representatives - from ministries, agencies, local authorities, civil society organizations and mining companies - involved in decision-making in the four phases of mining. Also, a desk review of 70 documents was conducted. This assessment did not cover common minerals, uranium, oil and artisanal mining. Also, it did not study licensing issues of mining construction in detail, which are more related to other sectors. Furthermore, corruption risks related to public procurement were not studied in detail, since they apply to all sectors.

This assessment report consists of six chapters, conclusions and appendicies. The first chapter introduces the assessment methodology, and the second chapter outlines the current situation in the mining sector, its contribution to the economy and the legal environment. The third chapter identifies corruption risks in the geological exploration phase and the fourth chapter identifies corruption risks in the pre-operation phase. The fifth chapter deals with corruption risks in the operation phase while the sixth chapter classifies corruption risks in the post-operation phase.  

Brief conclusions, summarizing identified risks and factors contributing to them are included at the end of each of the chapters. A total of 15 corruption risks were identified as a result of the assessment, are summarised in the general conclusions. The assessment team aimed to reflect views of the respondents – ministries, agencies, aimag and soum governors, Citizens Representatives Khurals, CSOs, state and private companies, civil society organisations, industry associations and local citizens-equally; and received comments from all key stakeholders. The assesment team also developed a proposal for a corruption risk mitigation action plan, and submitted it to the Working Group for developing ‘Corruption Risk Mitigation Action Plan’. The Working Group was established by the Resolution of the Minister for Mining No. A/40 of 12 April, 2016.