Strengthening Transparency of the Extractives Industries through EITI Implementation

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The extractive sector is a major part of the economy and main source of economy growth of Mongolia, and in 2019 it represented 23.7% of GDP and earned USD 6.7 billion in exports, some 83.7% of total exports for the year. In 2019, the general government budget revenue amounted to MNT 11.9 trillion, increased by MNT 1.9 trillion or 18.6% from which revenue generated from mineral resource sector amounted to MNT 2.9 trillion, increased by MNT 590.7 billion or 25.4%, as reported by National Statistics Office of Mongolia (NSO).The Government of Mongolia announced the country’s adoption of EITI in 2006 and was admitted as EITI Candidate on 27 September 2007 and after successful Validation against the old EITI Standard of its implementation, the country achieved compliance on 19th October 2010. In follow-up actions, a National EITI Council and a multi-stakeholder group (MSG), comprised of representatives of the government, mining companies, and civil society, were established to implement EITI. The Government’s Action Plan for 2020-24 foresees a strong contribution of the mining sector to post-COVID recovery based on mine expansions, new mines, greenfield mineral processing plant and related infrastructure development, including new power generation and transmission, new rail transportation and water supply pipelines. The governance of the extractive industries has for some time been of public concern as evidenced by perception polling, numerous cases of community level objection to mining, lobbying by foreign investors for greater investment policy stability and consistent implementation of regulations by state agencies and the frequency with which commercial activities linked to mining become mired in dispute, often linked to corruption.The project will provide a grant to finance the implementation of selected activities in the Mongolia EITI Work Plans for 2022 and 2023 that are most closely linked to addressing corrective actions needed to be compliant with the 2019 EITI Standard and wider goals of mainstreaming systematic disclosures through country systems. The project is defined by two components, Component 1 Strengthening participation and collaboration among EITI stakeholders, and Component 2 Preparing for EITI mainstreaming. Component 1 includes actives on stakeholder engagement and outreach at the subnational level, supporting the outreach during validation and improving the gender balance within MEITI oversight and decision making. While Component 2 is focused activities that will lead MEITI towards mainstreaming, including improving data quality, facilitating access to mining sector contracts and enhancing IT systems.The expected results of World Bank support will be meeting the 2019 EITI Standard and achieving: mainstreamed public disclosures using country systems; beneficial ownership disclosures; greater community level voice in the management of mineral wealth; improved investment climate, better access to capital and reduced compliance costs for mining companies; stronger performance of regulators and operators, especially in managing environmental and social impacts; improved license/contract transparency and improved sub-national revenue management. Successful Mongolia EITI implementation in 2022 and 2023 would also reduce reliance on external financial support in subsequent years.