With the economy growing 17.3% in 2011, the numbers show a broad-based expansion, but ultimately the mining sector was and will continue to be Mongolia’s main GDP driver. The country is on the verge of breaking through as the next major resources economy, and is perfectly situated just to the north of perhaps the world’s most resource-hungry economy, China. By late 2012, Mongolia’s landmark mine project was ready for commercial-scale production, but hampered by ongoing debate about government ownership and the royalty rate. Another major site is awaiting government-to-government negotiations on the structuring of an international consortium. Bundled in with that agreement is likely to be a major spending splurge on railroads that could serve to unlock potential at other.

The risks, however, are as prominent as the potential. Mongolia’s partner in the Oyu Tolgoi (OT) project is Rio Tinto, and the two sides are at odds on a regular basis over how the revenue should be split. Continued attempts by the Mongolian government to renegotiate the OT investment agreement, or establish additional taxes contrary to the agreement’s stipulations, are a concern not just for Rio Tinto’s bottom line, but also for the mining sector as a whole, and therefore the economy in general. Mongolia has yet to establish a track record as a bankable partner to foreign investors in long-term projects, or a stable legal environment in which those investors can have a reasonable expectation for how their presence will be governed. Existing as well as potential investors are concerned about the sanctity of contracts and the rule of law.

TEMPORARY PAUSE: The pace of development in the mining sector has slowed for now, as has the mergers and acquisitions activity. A pause in the action suits both the government and foreign investors. For Mongolia’s leadership, experiences in mining so far point to the need for improved legislation that is more detailed and specific if the country is to control its resources to its own satisfaction. There has been a moratorium on new licences since 2010. It officially expired at the end of 2012, but plans to resubmit a slightly altered version of the bill have been announced and the ban is expected to remain in place into 2013.

LEGAL ASPECT: For international investors, Mongolia’s evolving legal environment is creating some political risks and uncertainties. A few high-profile cautionary tales have reduced the appetite for investment, even despite some of the world’s largest untapped mineral deposits. The main example in 2012 was that of South Gobi Resources, a major coal producer owned by Turquoise Hill Resources, formerly a Canadian-owned mining firm that developed OT and was purchased by Rio Tinto in January 2011. Turquoise Hill struck a deal in which Aluminium Corporation of China (Chalco) would buy 58% of the company’s publicly traded shares at $8.28 each, or about $926m.

The deal triggered instant opposition in Mongolia.

Landlocked between Russia and China, geography plays an important role in the country’s economic policy, and its “third neighbour” policy encourages engaging other international partners when possible. Because of a history of conflict between Mongolia and China throughout the centuries, the Mongolian leadership is very concerned about managing Chinese involvement in its economy. It understands that Chinese buyers will comprise the majority of the market for Mongolian minerals. What it did not want this time, officials say, was a situation in which Chinese interests are both the sellers and the buyers of Mongolian minerals.

The South Gobi sale ultimately failed in September 2012, when Chalco acknowledged that government opposition to it was too large to overcome. Long before that though, parliament rushed through a foreign-investment law that is widely considered to be vague, unfavourable and unenforceable (see analysis).

BELLWETHERS: As of late 2012, with uncertainty the prevailing sentiment and new investment on hold, the country’s two flagship mining projects had taken on additional meaning as bellwethers for sector prospects on the whole. Those are OT and Tavan Tolgoi (TT), located in the south-central province of Omnogovi, close to the border with China. The former is a mixed deposit of mostly copper and gold. It put the Mongolian mining sector on the map thanks to its size, and will boost Mongolia’s GDP by more than a third by 2019, according to its website. The mine is set to produce some 450,000 tonnes of copper and 330,000 ounces of gold on an annual basis when production starts.

OT is two-thirds owned by a subsidiary of Rio Tinto and one-third by the state. Three years after signing the initial investment agreement in October 2009, Mongolia is unhappy with its share. Politicians have been exploring ways of taking a bigger slice of this giant pie, and thus far do not seem moved by Rio’s insistence that the country accept the deal it signed and its parliament approved. Failure to do so would raise concerns about political risk in Mongolia. For investors, OT may be a litmus test. For Mongolians, what matters is not whether OT spurs more and better deals in the future, but whether they get what they perceive is their fair share from the project. D. Gankhuyag, the minister of mining has pledged to resign if Mongolia fails to force an amendment to the investment agreement. “The outcome of the OT deal will have a huge impact on any investment coming into the country,’’ Andrew Forster, country manager for Maxam Explosives, told OBG.

The second bellwether project, TT, is important because it too is a very large mine by global standards. It consists of six fields, five of which are controlled by Erdenes Tavan Tolgoi (ETT), a state-owned company. Those five deposits contain 1.836bn tonnes of proven coal reserves, and a resource that could be as large as 7.4bn tonnes once exploration is complete, according to ETT data. The wider benefits of the mine’s development affect everyone in the mining sector. One of the six fields at TT is slated to be developed by an international consortium of state-owned and private sector actors, which will not only kick in capital and expertise, but also help build infrastructure. Moving TT’s coal requires creating major new railroad capacity, which would help this project specifically, as well as supporting countless others where a resource exists and can be mined cheaply, but a path to market is lacking.

As Mongolia envisions it, a TT deal provides sea port access for the coal and facilitates other projects, such as an industrial city in the south-east, additional infrastructure and value-added opportunities within the country. Political uncertainty comes from the government’s control over the project and a history of using early profits for other public business, the complexity in forming a development consortium involving five countries and a change in leadership. In October 2012 B. Enebish resigned as TT CEO and was replaced by Ya. Batsuuri, a former member of parliament and member of the currently-ruling Democratic Party (see analysis).

SIZE AND SCOPE: Though much of the talk is about these major projects that are not yet producing, mining is already the most important economic activity in Mongolia. The sector accounted for 20.2% of GDP in 2011, according to preliminary estimates from the National Statistical Office (NSO), and 89.2% of exports. As of October 2012 there were about 300 active mines, most of them small-scale coal producers for the local market. Mineral deposits in Mongolia come in two categories – strategic deposits, which are the biggest and most impactful (there are currently 15), and all others.

Data from the Mineral Resources Authority of Mongolia (MRAM), the mining regulator, show 1170 mineral deposits, and 8000 overall occurrences. The main minerals are gold, copper, coal, iron and uranium. The country remains relatively unexplored – most activity was by Soviet geologists during the country’s communist period – on a smaller scale there are deposits of molybdenum, fluorspar and rare-earth elements. Just over a quarter of the country has been surveyed to a scale of 1:50,000, which means there is plenty of exploration to go before a top end of the range is found. At minimum, the expectation is that mineral resources underground are worth at least $1trn.

TOP THREE: Among the minerals most important for Mongolia, coal, copper and gold are the trio for which there was the most production at the end of 2012. According to MRAM, known coal reserves amounted to 18.5bn tonnes as of January 1, 2012. Coal currently accounts for 47.2% of exports, according to NSO data. In the domestic market, Mongolia uses it mainly for heating and cooking: 83.1% of domestic consumption in 2011 was in households, according to MRAM data. The secondary use is as feedstock for its combined heat and power plants, and burned in ovens by its off-grid population of herders and urban ger (tent) dwellers. Production comes from mines at Baganuur, Shivee Ovoo, parts of TT, Ovoot Tolgoi and others. Production and exploration figures have risen annually since at least 2003, but the increases in the past two years have been far larger, according to MRAM data. Production and exploration went from 13.3m tonnes and 7.6m tonnes, respectively, in 2009 to 25.2m and 18.2m tonnes in 2010 and then 32.3m and 22.5m tonnes in 2011.

CHINA CONNECTION: For the latter half of 2012 and into 2013, production and export data are expected to drop, in line with reduced expectations for China’s economy. Output fell 6% in August 2012 compared with August 2011, according to World Bank data. Coal is the resource most affected by China’s cooling, as it accounts for 60% of what is considered industrial production in Mongolia. Output of coal fell 17.6% in the period, after a 50.3% drop in July. Thus far, global portfolio investors consider Mongolia an exaggerated play on China – good news for the Chinese economy is likely great news for Mongolia, Mongolian stocks and other market plays, whereas bad news for China is even worse for Mongolia. Beyond TT, major deposits at the production stage include Ukhaa Khudag, owned by Energy Resources and located at TT; and Ovoot Tolgoi, where South Gobi Resources remains in control.

Within ETT’s territory, the West Tsankhi and East Tsankhi fields have been explored more thoroughly, though the remaining three are considered prospective as well. According to an ETT presentation there are 7400 tonnes of resource (potential coal) and 1836 tonnes of proven reserves. That is 71.6% and 68.9%, respectively, of the country’s total known assets in coal as of September 2012. MMC’s deposit contains 861 tonnes of resources and 468 tonnes of proven reserves. Though the country has coal in a range of qualities from hard coking coal to softer coals suitable for electricity production or burning in stoves for heat, TT’s coal beds contain the higher-quality coking coals.

NEW PRODUCTION: Copper now accounts for 20.1% of the total, the NSO tally shows. Known reserves amount to 83.81m tonnes, according to MRAM’s January, 2012 data. Production of copper concentrate in 2011 slumped to 347,400 tonnes, down from 357,100 tonnes in 2010, according to NSO data. The year 2012 will be the last year in which the mine at Erdenet, north-west of Ulaanbaatar, a joint venture between the Russian and Mongolian governments, is the only producer, as new production from OT is expected in early 2013. Erdenet is owned by Erdenes MGL, the government-owned corporation formed to hold government stakes in mining assets. MGL has a 51% stake and Russia a 49% share of Erdenet. There is one more deposit currently considered large enough to be a strategic one, at Tsagaan Suvargna. Mongolyn Alt Corporation has 100% ownership of the site and is developing it.

GOLD: While the coal and copper segments are primed for major expansion, gold production has shrunk severely in Mongolia in recent years. Output has fallen from 15,184 kg in 2008 to 5703 kg in 2011, according to MRAM statistics. Peak activity for gold came in 2005, when the production of 131 miners reached 24,122 kg. By 2008 the number of producers had slumped to 100, the lowest number since 1999. It has since rebounded to 111 in 2011, the MRAM data show. Estimated reserves amount to 221.47 tonnes of placer gold and 2180.94 tonnes of hard-rock ore.

The gold sector has been affected by the combination of several legal changes, including a 2009 law to forbid most alluvial gold mining, and a windfall tax that had applied to gold and copper from 2006 to 2009. It taxed production at 68% when the gold price was above $850 and the copper price when above $2600 a tonne. For Erdenet, the change resulted in an effective tax rate of 106%, according to L. Bolormaa, editor of the Mongolian Mining Journal. Many gold miners and prospectors chose to abandon their projects and leave Mongolia in response. The country pledged to scrap the windfall tax in 2009 as part of the negotiations to move OT from an exploration project to a producing mine. The move was made effective as of January 2011. As of now, the largest productive gold mine is also among the only sources of hard-rock gold in the country: Boroo, a strategic deposit near depletion has been mined by Canada’s Centerra Gold. Most gold-mining activity in Mongolia is on a small scale, and typically alluvial gold extracted from dried-up riverbeds.

SMALLER DEPOSITS: Other minerals mined in Mongolia include fluorspar, salt, tungsten, molybdenum, zinc and iron. The latter was the third-largest export by volume in 2011, at 9.2%of the total. A project at the pre-production stages with particularly large potential is the Selenge deposit, in the north-central part of the country, the licences for which are held by Australia’s Haranga Resources. The exploration target as of September 2012 is 250m-400m tonnes, and the deposits are located close to the country’s one existing railroad line and its few spurs. That makes this one of the few major mine sites in Mongolia for which infrastructure is not a significant constraint. Indeed, according to Steve Potter, the CEO of Wagner Asia Equipment, “Mongolia needs to improve its infrastructure to reach its resource export targets at reasonable costs. Construction and maintenance of roads is lacking in quality.”

Iron-ore production has followed a similar curve to coal in recent years. In 2009 10 producers yielded 1.4m tonnes, and those numbers rose to 14 and 3.2m, respectively, in 2010 and 16 and 5.7m in 2011. Uranium and rare-earth minerals are among other areas of significant potential, although there is no current production.

SECTOR ORGANISATION: For most of Mongolia’s post-communist period, it has been considered an easy place to operate for foreign investors, with few restrictions. Therefore, questions about Mongolia’s suitability as a destination for foreign investment based on the institutions and politicians overseeing the mining sector are relatively new. Once its communist period ended in 1990, the country moved quickly to adopt a democratic system and has been steadily shifting its economy toward a market-oriented and investment-friendly approach. Interest in the mining sector boomed as a result, and terms for mining licences in the early 2000s were considered favourable and fair. The sector is regulated by MRAM, but decisions about mining are increasingly made at the top of Mongolia’s political structure. The new foreign investment law mandates that mining deals worth more than MNT100bn ($70m) receive political approval. A draft of the new Minerals Law, which would replace legislation from 2006, was developed at the cabinet level, with minimal input from civil servants at departmental levels.

PRECEDENT: The first comprehensive mining law, drafted with the help of the World Bank and passed in 1997, allowed for a three-year exploration period and two possible three-year extensions. Mining licences lasted for 30 years, with two possible 20-year extension periods. There was a 5% royalty on export sales, and the requirement that 90% of the workforce at a mine be Mongolian citizens. Ivanhoe Mines arrived in 2000, taking over licences from BHP Billiton that would eventually become OT. Ivanhoe recruited Rio Tinto as a partner and capital source, eventually cutting a funding deal that allowed Rio to buy a controlling stake in Ivanhoe in January 2012. In 2006, however, new laws and a revised tax regime meant new requirements, bureaucratic obstacles and a disincentive to invest. The windfall tax was set at 68% on gold beyond $850 an ounce, and was applied to copper once the price surpassed $2600 a tonne. This made the effective tax rate on the Erdenet copper mine 106%, according to Bolormaa.

STRATEGIC DEPOSITS: The new law also introduced the concept of strategic deposits. For those, the government gets a 50% stake if it has contributed to exploration with public funds, and 34% if not. The government is required to pay a fair market value for its stake. Currently there are 15 strategic deposits, including OT and TT. What defines a strategic deposit is not entirely clear, according to MRAM. Guidelines include the deposit’s potential, economic impact, environmental concerns and local concerns. One quantitative threshold typically applicable is whether the deposit is capable of accounting for more than 5% of total GDP.

These were the first steps in a series of legal changes that, whilst serving purposes for Mongolia as a whole ultimately were taken by the mining community as disincentives to investment. Exploration activity shrank from that point on. Moves to follow included a suspension and cancellation of some gold-mining licences based on environmental concerns. The health of ecosystems is of particular importance because the country’s herders live a nomadic or semi-nomadic lifestyle in which they are entirely dependent on the land.

IMPACT ON GOLD MINING: A new law in 2009 called the Law on the Prohibition of Minerals Exploration in Water Basins and Forested Areas (commonly referred to as the long-name law) led to 1782 licence cancellations, and halted almost all foreign participation, as most of what is currently mined is alluvial gold. Resolution of this issue remains uncertain, according to N. Algaa, executive director of the Mongolian National Mining Association. “The government was going to compensate the miners, but that could be expensive,’’ he said. “Although if the government fines them for environmental damages it could end up getting more back than they give out. And then we hit the courts.’’ Another legislative change has been targeted at uranium miners. There is no current production of uranium today, but Mongolia has eight significant deposits, according to the International Atomic Energy Agency. The key one is Dornod, a deposit that that was productive during the country’s communist period and abandoned by the Soviet and later Russian interests mining it in 1995. A Canadian mining company, Khan Resources, picked up an exploration licence in 2005 as part of a joint venture with the Mongolian government and Atomredmetzoloto (ARMZ), part of the Russian state nuclear agency Rosatom. In 2009, however, Mongolia suspended the licences, passed the Nuclear Energy Law of 2009, which establishes the government’s right to a 51% stake in all uranium deposits, essentially declaring uranium deposits to be legally treated the same as strategic deposits. It later revoked Khan’s licences and announced that Dornod, which may have up to 150,000 tonnes of resources, according to Soviet-era surveys, would be developed with ARMZ as the only foreign partner. Khan alleged that the two parties conspired to squeeze it out, and won a judgment in a Mongolian court that the state has thus far ignored. It took its case to an international arbitration court before the UN’s Commission on International Trade Law, where it is seeking $200m in compensation (see Energy chapter).

Two new laws added restrictions in 2009, but the year also saw the completion of the landmark agreement to develop OT. Signed in October 2009, the deal was negotiated by the government, Ivanhoe Mines (now known as Turquoise Hill) and Rio Tinto, which had been increasing its stake by providing capital to Ivanhoe in a farm-in agreement. It specifies a 66% stake in the mine for Ivanhoe and 34% for the government, with an option after 30 years for the government to increase its stake to 51%. A stipulation with sector-wide impact was the sunsetting of the windfall tax established in 2006 to be effective as of the beginning of 2011.

NO NEW LICENCES: The issuing of new licences was formally stopped in 2010, announced by President Ts. Elbegdorj in response to perceived as corruption in the system, such as civil servants or politicians using their positions to acquire mining licences to sell to foreign interests, mostly Chinese. According to economic research by Gavekal, a Hong Kong-based investment advisor, Chinese control 70% of outstanding licences, having bought many small-scale permits in the 2000s. Through the ownership of the resource as well as the transportation links needed to ship ore to buyers, Gavekal concluded, China’s overall strategy includes the bargaining down of minerals prices using the leverage that ownership of both sides provides.

The government has also been actively cancelling exploration licences because in the past, anyone could get one. Rights to territory were provided regardless of whether the beneficiary was a person or a company. The number of outstanding licences has been cut by more than 50% – as of October 2012 there were 1226 production licences and 2410 exploration licences, according to the MRAM. The amount of Mongolian territory covered by a licence of either kind had dropped from about 44% to 14%, according to MRAM data.

It appears that this won’t change in the near future as in December 2012 C. Unubayar, the senior legal adviser to the president, told the media he had submitted a new version of bill to the speaker of parliament as the former ban expired on December 31, 2012. While Unubayar did not elaborate on what the amends entailed he did say the president is willing to extend the prohibition on issuing new licences in 2013.

ADDING VALUE: The tax regime is structured to encourage more value-added processes before exporting. That is partly to satisfy foreign miners with licences to explore for gold and copper who lost interest because of the windfall tax, but also as a result of efforts to reduce the number of Mongolians sitting on territory and waiting to strike a deal with a company with the capacity to develop it for them. The value of processing in the industry jumped from some $1.5bn in 2009 to $2.63bn in 2010 and $3.06bn in 2011, MRAM statistics show.

Though the moratorium on new licences formally expired on December 31, 2012, it is expected to renewed with some small changes in 2013. Some wonder how far back into the past the new law might reach. According to a July 2012 report on the investment climate in Mongolia by the US Embassy in Ulaanbaatar, “officials at all levels now delay, or openly refuse, to process normal requests for extending or issuing exploration and mining licences. They state that the amendment process renders the current law effectively invalid, because any actions taken under current law might be subject to post facto changes imposed under a new statute.” The report continues, “In certain cases, we have received reliable reports that officials have threatened to revoke currently valid licences under the pretext that current rights would be illegal under the pending legislation.’’ Details of what is in the draft of the Minerals Law to replace the 2006 version are unclear save for a few key points, such as increased protection against environmental damage and holding bidding rounds for new licences instead of offering them on a first-come/ first-served basis. Whether as part of the law or via other means, the tax burden on mining firms is likely to rise, according to research from the Mongolian Mining as of early 2013 one had not been voted on. The state was also pledging to soften the foreign investment law. “The new parliament and the new government will come back to this,’’ deputy minister of economic development, O. Chuluunbat, told OBG. “Changes will be made to be more favourable to foreign investment. This could include lifting the cap on the size of an operation a foreign company can wholly own.’’ In addition to the foreign investment law and what may come in the new minerals law parliament was considering moves that would limit foreigners’ options, such as establishing a system of reserves in which only the state could explore and lengthening the list of mineral deposits considered strategic. MRAM submitted 33 deposits as candidates for parliament to review.

PROGRESS & INCENTIVES: Though government moves have caused concerns about investing in the country, there have also been positive developments. The licensing process, for example, has become more transparent. MRAM now offers a digital version of the mining cadastre, providing investors an instant snapshot of what territory is available, and it is expected to be available online in the near future. In the past this process done manually, with a lag of several days, during which time someone could be tipped off to the interest on land in question and could claim that land, forcing the explorer who requested it to negotiate access. The new system has not been tested yet, however, due to the fact that it became available after the licensing halt. In addition, on January 10, 2013 Parliament announced intentions to establish a standing committee to address concerns and uncertainties regarding legislative changes and the future of the TT agreement.

INCENTIVES: Mongolia is also working on using its tax regime as a way to incentivise miners to place value-added projects in the country instead of exporting raw materials. The country had formally exempted imported mining equipment from a 10% value-added tax, and has since reinstated that exemption only for equipment brought into the country for advanced processing. Providing those incentives may not be enough, however, as China’s tax code adopts a similar incentive structure. Since Mongolia announced plans to do more basic processing of its coking coal output, taxes on washed coal increased in China in comparison to taxes on unwashed, according to research by Gavekal.

WAITING GAME: With so much at stake and several key questions about the nature of the mining sector not yet answerable, many investors appear to be waiting for clarity. Drillers report clients performing only the minimum amount of exploration required in order to hold on to a licence, for example.

As they watch for the outcomes at OT and TT and for the legal regime to become more predictable, another body that has emerged as one to watch is the National Security Council of Mongolia (NSCM), according to the US Embassy in Mongolia. It is headed by the country’s president and also includes its prime minister and speaker of parliament. It was the NSCM that issued the suspension of new licences in 2010, according to the embassy’s investment climate statement for 2012. The body has also cited security concerns in influencing issues such as blasting at mine sites and coal-to-liquids projects, for which it has urged licences be revoked in some cases or granted in others (see Energy chapter). In 2011 the NSCM stated that Mongolia would honour the investment agreement for OT, and rejected the proposed consortium agreement to develop TT.

None of these issues have anything to do with national security, but the NSCM’s role has some benefits for foreign investors. “They are relieved that at least one Mongolian government institution has stepped up to the plate to provide a greater sense of stability and certainty to investors,’’ according to the embassy report. “On the other hand, they question the wisdom and practicality of using a small (unelected) body to enact decisions, which appears to be a highly politicised approach.’’ One limitation of the NSCM’s role is that it lacks constitutional or statutory power to impose its decisions on the parliament.

For those mines in production, typically in the coal sector, the weakness in coal prices loomed as a key short-term concern. Lower coal demand in China had caused production halts at some mines, such as those of Canada’s Prophecy Coal and South Gobi Resources. Many projects at the exploration phase had slowed due to uncertainty over laws and regulations, some of them drilling only as necessary to meet the commitments required to hold exploration licences.

AT YOUR SERVICE: The sheer volume of work available in Mongolia has led to a boom in the mining-services sub-sector, as drilling companies, logistics and vehicles providers and others have piled in to Ulaanbaatar in recent years. MICC data from 2009 showed 33 mining services firms operating in the country, with $154 million in revenue. MICC estimated that of the $13bn in mining investments planned by 2009, $1.3bn would go to mining services, although both figures have undoubtedly increased since then.

Comments from sector figures indicate, however, that with a downturn in the global appetite for commodities, the demand for mining services has slackened. “Due to a slowdown in exploration, demand for drilling services decreased significantly in 2012, which resulted in much lower prices,” said James Polson, the CEO of drilling company AIDD. Drilling prices have dropped 20%, according to Gary Barlow, the director general of Traverse Drilling International. Drilling firms also face challenges related to Mongolia’s frigid climate – subsoil and liquid freezing makes year-round drilling difficult, although not impossible.

The mining services sector is fragmented by nationality along roughly the same lines as the major projects, since foreign miners tend to prefer foreign service providers, while Mongolian companies favour the lower prices offered by local operators. According to Andrew Forster, country manager at Maxam Explosive, “For the larger projects in Mongolia, international explosives companies have an advantage over local companies due to their experience, research and development and established supply chains.”

Many local companies, however, have sought to improve quality to the point where they can compete for international contracts. “Local blasting companies have a clear cost advantage over foreign ones and safety standards now have been increasing up to international requirements, which had been a concern before,” A. Temuulin, the executive director of Blast Company, told OBG. Even foreign companies, meanwhile, mainly rely on local labour for their activities, which saves money and is more sustainable in the long run.

Mining service companies, who experience the limitations of Mongolia’s infrastructure firsthand, report that logistics and equipment costs are the greatest threat to profitability. The trucks provided by logistics operator ZAM ine Services, for example, must be shipped in piecemeal and assembled on site, as they are too heavy for most roads. The vast majority of equipment is imported, and requests for bribes by border guards are commonplace. Some service companies report difficulties getting operating licences, especially when they refuse to pay a bribe to expedite the process.

OUTLOOK: Over the long term the logic of establishing Mongolian mining operations is compelling: only about a quarter of the country is thoroughly explored, and most of what is known comes from outdated knowledge from the Soviet period. That all means decades of work for mining services companies – just not in 2013 or perhaps in the short-term future, with the legal uncertainties overhanging the sector remaining.