World Bank Approves $9.3 M For Enhanced Mining Sector Development In Mongolia

June 26, 2008

WASHINGTON DC, June 26, 2008 – The World Bank’s Board has just approved an investment credit and grant of US$ 9.3 million for a Mining Sector Technical Assistance Project (MSTA) in Mongolia.  The proposed project is seen as the first phase of a longer-term engagement to support the Government in developing this key sector in the economy.


Mongolia is experiencing a boom in its mining sector, which brings new opportunities as well as major challenges. Mongolia  has a range of potential world-class mineral deposits, and has attracted considerable investment in exploration in recent years. In 2007, mining directly accounted for about 20 percent of real GDP, 56 percent of gross industrial output, 69 percent of exports, and 36 percent of government revenue. 


Mongolia’s mining sector has the potential to contribute significantly to economic growth further, but its successful development will to a large extent depend on the government's ability to establish and maintain a competitive and stable regulatory and fiscal framework, prudently and transparently manage its mineral wealth to the benefit of all of its population, and ensure sound environmental and social governance of the sector.


We are very pleased that we are able to provide support to the Government of Mongolia and its people to enhance the positive outcomes mining sector development which are crucial for Mongolia’s further economic   development“ said Arshad Sayed, Country Manager and Resident Representative, the World Bank in Mongolia. 


The MSTA project is designed to assist the Government to enhance the effectiveness of the government to regulate and manage the mining sector to increase the sector’s contribution to the national budget. It will also assist management the effective distribution of benefit streams and sustain economic growth through commodity price cycles.  On the more technical level the project will work to develop further the regulatory framework for mining, improve the capacity of the Government to effectively monitor regulatory compliance of the mining sector as well as increase the availability of geological data and support programs to mitigate the health and safety risks for artisanal and small-scale miners.


The very focused project development objective for this first phase is to assist the Government to develop further the legal and regulatory framework for the mining sector that meets the needs of government, industry, and civil society.  This includes the operation of Erdenes MGL LLC according to international standards we would expect from a stock exchange listed mining company.” noted by Graeme Hancock, Senior Mining Specialist and TTL for MSTA project , the World Bank.


World Bank will provide the project with 9.3 million from IDA funds, of which $4.2 million is grant and $5.1 million is a credit (interest free soft loan). In addition to the WB assistance other external partners such as GTZ, ADB, EBRD and IFC have also committed technical assistance in the mining sector of Mongolia.


The Project consists of five main components.

  1. Strengthening the Capacity to Manage Mining Sector Revenues in the Ministry of Finance and the General Department of National Taxation.
  2. Improving Regulatory Capacity to Manage Mining Sector Development in the Ministry of Industry and Trade and the Mineral Resources and Petroleum Authority of Mongolia (MRPAM)
  3. Developing the Capacity for Management of State Equity in Erdenes MGL LLC
  4. Project Management in the Ministry of Finance
  5. Infrastructure development strategy to support the Sustainable Development of South-Eastern Mongolia with a multi-stakeholder group comprising both Central Government Ministries and Aimag (Provincial) Governments.

In addition there will be collaboration with the Ministry of Nature and Environment (MoNE), particularly on capacity building for environmental monitoring and the development of the regulatory framework for mineral sector development. 


Project assistance would address a range of issues across the Government agencies, including management of macroeconomic impacts of large mining sector developments, improved minerals sector tax collection and audit capacity; clarification and improvements in minerals sector benefit distribution; and capacity building for management of environmental and social impacts of mining (including artisanal and small-scale mining).

Another core focus of all Project activities will be the development of human resources capacity within Government agencies.


A Project Implementation Unit(PIU) will be established in Ministry of Finance, Mongolia, which has prior experience in implementing World Bank projects and is presently responsible for implementing the Governance Assistance Project.


For more information, please visit:

the Projects website