How the EITI May Become Mongolian

OPEN PIT,OPEN GOVERNANCE: Centerra Gold’s Boroo Open Pit Mine and Mill in Selenge Aimag | Photo: CJ Carter

Words: Christopher Carter and Dulguun Davaanyam // May 21, 2015

Prelude: In 2014 we traveled to Mongolia to research the EITI and to produce a short video documenting the state and future of the EITI initiative in Mongolia. In its production, we were exposed to a cross-section of stakeholders, from policy makers, to miners, to families—from the boardrooms of Ulaanbaatar to the heap leach piles of Boroo Gold. This is a compilation of our written memos and completed film outcomes of our project.


As a former Soviet satellite state, Mongolia has experienced a tremendous transition to free markets and democracy over the past 15 years. Most recently, has been the realization of the country’s vast mineral wealth. In the past decade, foreign investment and mineral development has led to a doubling of the share of extractive industries in Mongolia’s GDP. Yet despite this new wealth, indicators of human development have risen only nominally. We understand today that nations with an abundance of natural extractive resources can experience the so-called “resource curse,” a phenomenon which leads to even less social and economic development outcomes than in resource-limited nations. Meanwhile, excessive dependency on mining can lead to loss of alternative value-added and traditional nomadic economic activities, a phenomenon also known as the “Dutch disease.”


MINERAL RICHES, FOREIGN INTEREST: Researcher Marc McCrum(UBC) visits the Ministry of Mining for EITI dialogues in 2014  | Photo: CJ Carter

To help address and fend off these concerns, since 2004 Mongolia has been participating in the Extractive Industry Transparency Initiative (EITI). The EITI provides a platform for empowering civil society, ensuring a stable atmosphere for foreign investment and quelling the negative implications of extractive development. In the summer of 2014 we travelled to Mongolia to investigate how the EITI is being implemented there and what challenges it faces at it seeks to mediate and mitigate the country’s growing development of its minerals wealth and the potential “curses” and “diseases” such wealth threatens.

When EITI reporting was launched in Mongolia in 2006 mining companies and civil society had little knowledge of or interest in it. However, civil society was quick to recognize the value of the report, using it for instance to protect local people’s rights in the Petro China Dachin Tamsag case, suing the company and successfully securing payments for environmental reclamation. Today the mining sector in Mongolia receives high expectations from citizens interested to know how mining revenues will benefit them.

In its current state the EITI in Mongolia simply reports payments made and received between extractive companies and government bodies. The major question that remains is how the money is being spent in areas such as education, health and other core development needs of Mongolian communities.  While sub-councils are emerging in mining regions, further reporting on how mining revenues are invested in social and community development will assist in making the lived effects and benefits of mineral development more transparent.

Further, the EITI report still presents a complex accounting spreadsheet of payments, reconciliation, donation and discrepancy reporting that does not easily present itself as approachable and useful to the everyday citizen. Here knowledge translation and communicative practice is critical in identifying what stakeholders in civil society desire from the report and mobilizing it into appropriate mediums.


END USER FOCUSED: The implementation of the EITI at the sub-national level and active use of the report by local communities is the next step of the adaptation of the EITI. | Photo: CJ Carter

The development of mineral resources can lead to one of two legacies, either one of corruption and failed governance or one of an empowered civil society and investment of revenues into comprehensive human development. The further successful adaptation and use of the EITI, led by civil society, may ensure the latter.

In the second part of this video, we examine how the EITI, and more specifically the EITI report, can and has had an impact reducing the negative social, cultural, and environmental impacts of mining by empowering civil society and stakeholders with the knowledge the EITI reports represents.