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UNCLAS SECTION 01 OF 08 ULAANBAATAR 000870 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE PASS DOC/FLAVIN/ AND ITA, USTR, USTDA, OPIC, AND EXIMBANK 
STATE FOR EAP/CM, EB/TPP, OES/IHA 
USAID FOR ANE CALISTA DOWNEY 
 
E.O. 12958: N/A 
TAGS: EINV PREL ETRD EMIN ENRG PGOV MG
SUBJECT: Mongolia's New Mining Law: Many Concerns 
 
REF:  Ulaanbaatar 832 
 
Sensitive But Unclassified -- Not for Internet distribution. 
 
Summary and Comment 
------------------- 
 
¶1.  (SBU) Mongolia's new mining severely disrupts an industry that 
will and must be Mongolia's economic engine for many years to come. 
Most worrisome to miners are new provisions for the government to 
take equity stakes in a long list of "strategic" mines, provisions 
that leave unclear how much the state will pay for what it might 
take -- or even whether the state will pay anything at all.  Other 
provisions grant considerable discretion to authorities under murky 
guidelines, a combination fostering corruption and arbitrary 
regulation.  Foreign miners already cite early evidence of these 
problems.  However, the news isn't all bad: tax changes were 
welcomed, and miners can live with other amendments.  This detailed 
report on Mongolia's new mining law is meant to act as a resource 
for USG agencies involved with formulating and executing aspects of 
the US-Mongolia bilateral trade relationship.  End summary and 
comment. 
 
Strategic minerals and GOM participation 
---------------------------------------- 
 
¶2.  (U) Under amendments passed by Mongolia's parliament in July, 
the most important change from the 1997 Minerals Law of Mongolia is 
the creation of the concept of a "strategically important deposit" 
in which the Government of Mongolia has the right to obtain up to a 
50% share of any mine. The amended law, Article 4.1.11, defines 
"mineral deposit of strategic importance" as "a mineral 
concentration where it is possible to maintain production that has a 
potential impact on national security, economic and social 
development of the country at national and regional levels or 
deposits which are producing or have potential of producing above 5% 
of total GDP per year."  Ultimately, the power to determine what is 
or is not a strategic deposit is ultimately vested in the State 
Great Hural (SGH) (see Article 8.1.4). 
 
¶3.  (U) Article 5.1-5.6 describes state-ownership. If a mineral 
deposit is determined to be strategic, the GOM may claim: up to 50% 
if the state has contributed to the exploration of the deposit at 
some point (Note: this means exploration conducted during the 
socialist era primarily by Soviet geologists); or up to 34% if the 
deposit was developed with private funds. 
 
¶4.  (U) State participation (or share) "shall be determined by an 
agreement on exploitation of the deposit considering the amount of 
investment made the state; or, in the case of a privately-explored 
strategic deposit, by agreement between the state and the firm on 
the amount invested by the state. 
 
¶5.  (U) Article 8.1.7 states that the SGH may determine the state 
share using a proposal made by the government (executive branch) or 
on its own initiative using official figures on minerals reserves in 
the integrated state registry. 
 
¶6.  (U) Article 9.1.1-8 lists the GOM's powers regarding state 
ownership.  It provides a list of strategic deposits to the SGH for 
approval; proposes how much the state might claim on such strategic 
deposits; and "resolves matters concerning the investment of 
Mongolia for a joint venture to develop a deposit of strategic 
importance." 
 
(Note: The 1997 law had no concept of "strategic deposits" or state 
equity in mines.) 
 
Comment on State Equity Provisions 
---------------------------------- 
 
¶7. (SBU) It is not explicit in the statute that the state will pay 
for its equity share, though many MPs tell us that was their intent. 
 Across the board, western miners have made clear that while other 
provisions of the law might be onerous and corruption prone, state 
expropriation would drive them away for years to come.  It also is 
unclear that the state would pay what the industry would regard as a 
fair value.  Current best practice places a value on in-ground 
economically recoverable resources at no more than 10% of the total 
mine's value (This is what royalties pay for).  Based on our talks 
 
ULAANBAATA 00000870  002 OF 008 
 
 
with the MPs responsible for this law, we believe they conceive of 
the GOM's contribution of an in situ deposit as if it were smelted 
and ready for industrial purposes, rather than as raw ore that needs 
a whole lot of investment to get it to market -- gold bullion versus 
gold ore, which needs quite a lot of work and investment to turn 
into ingots. 
 
¶8.  (SBU) As set out in the new law, "strategic" is so open-ended 
that any deposit might fit the definition. The GOM has submitted a 
list of forty-nine deposits it claims as strategic; but it remains 
unclear why these forty-nine were chosen, because most of them have 
not been thoroughly explored and all lack basic infrastructure. 
Government sources tell us they used a weighted scale that ascribe 
points to determine each deposit's economic, social, cultural, 
environmental, and regional impacts on Mongolia.  However, no one 
outside the government has apparently seen the criteria, nor has the 
government allowed stakeholders to officially vet this process. 
 
¶9.  (SBU) GOM claims that the process was free of political 
interference are difficult to believe.  For example, Boroo Gold 
Mongolia reported to emboff that politically influential MP and 
business man Su. Batbold (the former Minister of Industry and Trade 
until January) told them that their new gold mining project was on 
the "strategic deposit" list, but that it could be removed if they 
thought its presence would halt their negotiations with the 
government on revising their tax status on current projects.  They 
agreed and their follow-on project was removed from an earlier 
list. 
 
Exploration License Timelines and Local Approval 
--------------------------------------------- --- 
 
¶10. (U) Article 19 lays out an elaborate process for getting an 
exploration license.  Under it, the Mineral Resources and Petroleum 
Authority of Mongolia (MRPAM) has 20 working days to issue its 
approval, followed by a 30 working day approval process for the 
Aimag governor to approve or disapprove of the exploration rights. 
There are two working weeks for MRPAM and two working weeks for the 
provincial governor to comment on the license.  In total, the new 
system will take up to two months.  (Note:  By contrast, the old 
process required and allowed for no more than 20 business days.) 
 
Tender Process for Some Exploration Rights 
------------------------------------------ 
 
¶11. (U) In article 18.2.5, the law lays out a new procedure for 
obtaining exploration rights on land explored with state funds or 
lands where the current holder has forfeited exploration rights. 
MRPAM will tender such exploration rights only to firms technically 
qualified to conduct minerals work. The new tender procedure neither 
requires nor allows for a cash-bid.  Only the technical merits of 
the exploration proposal are now supposed to determine who wins 
exploration rights. The MRPAM staff will have the authority and 
responsibility to assess the merits of proposals to determine who 
wins the tenders.  (Note: The old law awarded exploration rights on 
a "first come, first served" basis, a process that gave little 
discretion to government officials to intervene.) 
 
Comment on the new tender process 
--------------------------------- 
 
¶12. (SBU) The SGH had long been offended that so many tenements were 
licensed to people, mostly Mongolians, who did no exploring.  MPs 
complained to us that that all these people were mere speculators 
intent only on selling their rights to Westerners, Russians, 
Chinese, etc., who would then explore after spending hundreds of 
thousands or even millions of dollars on choice sites.  The SGH 
thought exploration and mining would be more likely to occur if 
licenses went only to mining experts.  However, no evidence from any 
other mining nation proves that this type of limitation produces 
more mining. 
 
¶13. (SBU) The older system, by providing a financial incentive 
through sale of tenements, motivated thousands of Mongolians into 
the mining game to make money by promoting thousands of tenements to 
firms able to mine or more thoroughly explore them.  The most 
obvious victims of the new law are these same Mongolian citizens who 
once profited by speculating on tenements, but are now barred from 
entry.  Ironically, the state is also a victim, because fewer 
tenements will now be presented to well-funded exploration firms. 
 
ULAANBAATA 00000870  003 OF 008 
 
 
The winners are those well financed private western concerns and 
Chinese and Russian state-owned firms able to pay for the expertise 
required under the new law. 
 
¶14. (SBU) The other winners are the MRPAM and Ministry of Industry 
and Trade bureaucrats, who now have broad discretionary authority to 
select who will and will not get tenements.  This new authority 
disturbs miners, who fear this power will be the source of 
corruption and arbitrary decisions by MRPAM.  Evidence suggests that 
local mining guilds will define an expert in Mongolian mining as a 
person who received a degree from a Mongolian institution, such as 
the National University, rather than an internationally recognized 
institution.  While this enforced employment program for Mongolian 
geologists would be an annoyance, the discretionary power MRPAM now 
has is most worrisome.  If the MRPAM rejects experts and mining plan 
as un-qualified, no recourse is spelled out under the new law. 
 
¶15. (SBU) Industry sources report that MRPAM is already interpreting 
its discretion over expertise broadly.  MRPAM is telling firms that 
it will "take into consideration" companies' past exploration 
activities when it comes time to transfer licenses from the 1997 
format to the new law's license format.  The new law sets out a 
procedure in which only the completeness of the application and the 
qualification of the company's technical staff determine if the 
license will be granted, extended, or transfer from the 97 format to 
new regime.  Nothing in the new law provides regulatory or statutory 
justification for revoking current rights based on past behaviour 
that was in accordance with the old law.   Miners criticize the 
arbitrary, improper use to the new law to "expropriate" their 
rights. 
 
¶16. (SBU) Finally, the law has the potential to limit the ability of 
rights holders to seek financing, because it forbids transfer of 
licenses and exploration rights to non-qualified individuals. 
Consequently, a miner will not be able to offer his licenses as 
secured collateral to banks or to any lender lacking the 
professional qualifications to receive these rights if the miner 
defaulted on his debt obligations.  MPs to whom this implication has 
been pointed out have expressed surprise. 
 
"Exclusive" Removed from Exploration Rights Article 
--------------------------------------------- ------ 
 
¶17.  (U) In Article 21.1.1, the SGH removed the Mongol word 
"ontsgoi," which means exclusive in this context, from the new 
article.  The old article read, "To conduct exclusive exploration 
for minerals within the boundaries of an exploration area in 
accordance with this law." The new article reads, "To conduct 
exploration for minerals. . . ." 
 
Comment on Removing "Exclusive" 
------------------------------- 
 
¶18.  (SBU) It is unclear what, if anything, this deletion means. 
However, the deletion would seem to allow the government to 
apportion mineral rights per metal or mineral rather than as a 
whole, which has been the standard practice.  Sources tell us that 
the SGH Speaker Nyamdorj deleted the word from the final draft after 
it had been re-inserted by other MPs, a fact that increases the 
likelihood the deletion is meant to be significant. 
 
Pre-mining Agreement, Exploration Timelines, Fees 
--------------------------------------------- ---- 
 
¶19.  (U) Article 22 now allows for exploration rights to be extended 
up to nine years.  The first period is three years, followed by two 
possible extensions (subject to MRPAM approval) of up three years 
each.  (Note:  The old law allowed only 7 years for exploration, 
after which the firm had to move to mining or give up the claim.) 
 
¶20.  (U) Article 23 allows for a pre-mining license period of three 
years.  This recognizes that nine years may not be enough to go from 
exploration into feasibility and then production on some major 
projects.  Granting of a pre-mining license requires the miner to go 
into commercial production no later than three years after the end 
of the exploration license. 
 
¶21.  (U) Exploration fees (Article 32) have risen: 
-- 1st year goes from US $.05 to US $.10 per hectare 
-- 2nd year goes from US $.10 to .20 per hectare 
 
ULAANBAATA 00000870  004 OF 008 
 
 
-- 3rd year goes from US $.10 to .30 per hectare 
-- 4th-6th years rise from US $.10 to US $1.00 per hectare. 
-- 7th-9th years are US $1.50 per hectare 
 
¶22.  (U) Article 33 imposes a new work performance requirement on 
all exploration right's holders that rises each year and is subject 
to annual verification by MRPAM.  Miners must submit annual report 
to MRPAM, and MRPAM will have the power and right to inspect the 
exploration site to verify that work is being done: 
 
-- 2nd and 3rd years miners must spend no less than US $.50 per 
hectare on exploration 
-- 4th to 6th years miners must spend no less than US $1.00 per 
hectare on exploration 
-- 7th to 9th years miners must spend no less than US $1.50 per 
hectare on exploration 
 
Comment on new timelines and work requirements 
--------------------------------------------- - 
 
¶23. (SBU) Miners approve the new longer exploration license period 
and the pre-mining period, because it gives them more time to 
conduct required feasibility and development work to bring 
complicated mines into operation. There is some concern about the 
time-frame between the expiration or cessation of the exploration 
license and the conversion to a pre-mining license.  Nor are the 
miners comfortable with the lack of clarity regarding how one enters 
such an agreement with the GOM. 
 
¶24. (SBU) Miners grumble about the fee increases but accept them. 
They presume that under normal circumstances they would return 
unpromising areas each year to keep total costs down.  So the GOM 
and SGH's aim to get land into real exploration may be served, 
although this aim could have been achieved by simply raising fees 
and imposing work requirements through regulation rather than by a 
new law.  There is some concern that the MRPAM lacks the capacity to 
verify work requirements. MP Oyun noted that this lack of capacity 
was the reason for not including this provision in the 1997 law, and 
that neither she nor others think MRPAM has increased its ability to 
monitor work plans since 1997.  We agree with this assessment and 
share miners' fears that this requirement will turn into another 
rent-seeking opportunity for MRPAM staff. 
 
Higher mining license fees and investment agreements 
--------------------------------------------- ------- 
 
¶25.  (U) Mining license fees increase for most metals and minerals 
(copper, gold, silver, fluorspar) depending on the metal; the fee is 
now US $15 per hectare. Coal and other common metals (lead) are 
raised to US $5 per hectare fee. 
 
¶26.  (U) Article 29 provides for the crafting of a long term 
investment agreement between the GOM and the mining firm.  The base 
of this agreement is the amount to be invested. These rules apply to 
all actors in the mining sector. 
 
-- If the investment for the first five years is between US $50-100 
million, the state can negotiate a 10-year investment agreement 
-- If the investment for the first five years is between US $100-300 
million, the state can negotiate a 15-year investment agreement. 
-- If the investment for the first five years is over US $300 
million, the state can negotiate a 30-year investment agreement 
 
(Note: Under the old law, companies which invested $15 million could 
conclude a "stability agreement" which exempted them from profit 
taxation for 5 years.  The only Western firm to take advantage of 
this was Boroo Gold, whose 5-year tax free period has one more year 
to run.) 
 
¶27.  (U) The Ministries of Finance, Trade and Industry, and 
Environment shall collectively negotiate agreements between the GOM 
and the mining firm. These agreements will list the conditions that 
a firm needs to provide a stable business environment for mining 
over the term of the agreement.  This includes: regimes for 
taxation; sale of products; income disposal; term of agreement; 
environmental responsibilities; social and industrial impacts; and 
benefits to accrue from mining activity, etc. 
 
¶28.  (U) The license holder must submit a feasibility study and 
investment plans to MRPAM, which submits them to the responsible 
 
ULAANBAATA 00000870  005 OF 008 
 
 
ministries. These ministries have three months to review the 
proposal, send it around the GOM for comments and clarifications and 
send a counter response to the industry. An additional three months 
is allowed for responses, making the process three months in total. 
Mongol Bank is listed as the prime repository of all such 
agreements. 
 
Comment on investment agreements 
-------------------------------- 
 
¶29. (SBU) Most miners argue that the GOM's six month timeline for 
striking a deal is too ambitious given the GOM's lack of experience 
and capacity.  The Ministry of Finance is already hard-pressed by 
the need to negotiate several agreements with China and Russia, not 
to mention the long-delayed Millennium Challenge Account proposals 
-- and now it must embark on negotiating at least two multi-billion 
dollar mining deals (the Ivanhoe/Rio Tinto Oyu Tolgoi copper mine, 
and the Tavan Tolgoi coal mine). Doubts about ministerial capacity 
aside, miners want to know if a mining operation can renew or 
renegotiate its investment agreement upon expiration of the initial 
agreement.  Miners are not pleased that fees have risen and that 
new, undefined burdens have been imposed, but believe that they can 
deal with them. 
 
Environmental Protection key requirement for mining 
--------------------------------------------- ------ 
 
¶30.  (U) Article 2 makes environmental protection a key part of the 
mining legislation.  The new law also makes the mining law and 
environmental provisions listed elsewhere consistent with one 
another.  Articles 39 and 38 explicitly require miners to submit 
environmental protection before licenses issuance. In addition, the 
GOM requires that firms to deposit half of the funds for each mine's 
annual reclamation budget in a bank account in the soum (county) 
where the mining activity occurs.  Failure to deposit funds or 
fulfill environmental obligations can result in license revocation. 
Local authorities are apparently given wide discretion, along with 
the Ministry of Nature and Environment (MNE) and the State Special 
Inspection Agency (SSIA) to assess firms' compliance with 
regulations and statutes. Failure to comply can result in revocation 
or suspension of licenses and mining rights.  The law does allow the 
licensee to go to court against such decisions, but the license will 
be suspended or revoked during that period.  (Note: There were 
environmental requirements in the old law, but they did not occupy 
the key position they do in the new law.) 
 
Comment on environmental provisions 
----------------------------------- 
 
¶31. (SBU) SGH Speaker Nyamdorj pushed the environmental aspect of 
the new law quite aggressively, making extremely emotional appeals 
about stopping the rape of Mongolian land by miners who consistently 
ignore environmental provisions.  However, these ambitious 
provisions are not matched by any training or support to localities 
and agencies expected to enforce the law.  It is not part of this 
law, but the law on environmental impact assessments requires that 
they be done by Mongolian experts, certified locally, who ironically 
enough do not meet the MNE environmental standards on mining 
activities.  The power to revoke and suspend are likely sources of 
corruption, giving officials the opportunity to blackmail miners. 
 
New local employment requirements 
--------------------------------- 
 
¶32.  (U) Article 43.1 states that license holders cannot employ more 
than 10% foreign workers.  If they do exceed the 10% limit, they 
will incur a monthly penalty of 10 times the minimum monthly salary 
as specified in Mongolia law.  Fines are to be paid monthly to local 
governments for distribution into education and health sectors. 
(Note:  This provision is not inconsistent with current labor law 
regarding foreign employees, but was not in the old minerals law. 
The payment of the fee to the locality is new, and the new fee will 
be about $600, versus $80 currently.) 
 
Comment on employment requirements 
---------------------------------- 
 
¶33. (SBU) Western firms do not have anything against this, as they 
prefer to use Mongolians, who usually cost less than expatriate 
employees. This provision is probably aimed at Chinese, Mongolian, 
 
ULAANBAATA 00000870  006 OF 008 
 
 
and Russian firms that would use cheap foreign labor to lower their 
respective costs. 
 
Royalty Rates, Distribution of Revenues to Localities 
--------------------------------------------- -------- 
 
¶34.  (U) Article 47.3.1-2 sets the following rates for royalties in 
Mongolia. 
 
-- Royalties for Domestically sold coal for energy and common 
mineral resources shall equal 2.5% of the sales value of all 
products extracted from the mining claim that sold, shipped for 
sale, or used. 
-- Royalties for all other extracted products (excluding coal) shall 
equal 5% of the sales value of all products extracted from the 
mining claim that sold, shipped for sale, or used. 
 
¶35.  (U) Article 59 specifies that licensing fees shall be deposited 
in the budgets of the provincial capital, soum, and district where 
the activity is taking place, as well as the central budget. 
 
-- 25% to the soum 
-- 25% to province 
-- 50% to the central budget 
 
¶36.  (U) Royalties payments are distributed as follows: 
 
-- 10% to the soum or district 
-- 20% to the province 
-- 70% to the central budget 
 
(Note: Coal royalties remain the same, but rates for all other 
products rise.  Under the old law, the central government took all 
revenues.) 
 
Comment on new royalty provisions 
--------------------------------- 
 
¶37. (SBU) Miners grumble about the higher rates, but accept that the 
5% rate is about mid-range for most jurisdictions.  More important 
is the distribution of revenue to the provinces.  On its face, we 
and other stakeholders agree that a guarantee that the countryside 
will see some monies from mining activities that occur within their 
jurisdictions is a positive step.  However, the presence of the 
article in the mining law may have no legal force on allocations 
from the state budget, as the Ministry of Finance may be able to 
ignore a provision not appearing in the law on state budget, which 
controls allocation of state funds.  If revenues do flow to the 
localities, local administrations are ill equipped to administer 
what in some areas may be huge revenue streams. 
 
New public reporting requirements 
--------------------------------- 
 
¶38.  (U) Articles 48.9 and 48.10 impose the following reporting 
requirements on royalties and sales on mining firms. 
-- A license holder must prepare a quarterly report in a form 
approved by the tax office accounting for the sum of each quarter's 
royalties and an annual report for the entire year's royalties, also 
for submission to the relevant tax office. 
-- A license holder shall annually report to the public the amount 
of their product sales for that year and the amount of taxes and 
payments paid to the central and local budgets. 
 
(Note: The old law required no public disclosure of tax receipts, 
royalty payments, and sales data.) 
 
New tax provisions 
------------------ 
 
¶39.  (U) Articles 61.4, 61.5, and 61.6 discuss revised tax 
provisions. 
 
-- Article 61.4 states that a loss incurred in any tax year may be 
deducted from taxable income during the 2 tax years following the 
year in which loss was incurred. 
 
-- Article 61.5 states that costs incurred in developing industrial 
and social infrastructure shall be depreciated on a straight-line 
basis over the useful lives of the facilities constructed.  All 
 
ULAANBAATA 00000870  007 OF 008 
 
 
costs of maintaining and operating such infrastructure facilities 
shall be expensed in that particular year. 
 
--Article 61.6 states that costs of absolutely necessary maintenance 
incurred in connection with mining operations shall be included in 
the operating costs 
 
(Note:  These tax provisions were essentially in the old law; 
however, the Tax Authority of Mongolia routinely ignored them 
because they were not in the implementing tax legislation.  New tax 
legislation passed last summer has these mining tax provisions.) 
 
Comment on new tax provisions 
----------------------------- 
 
¶39. (SBU) Miners are very pleased with these changes, although they 
would have preferred even more generous provisions in view of high 
costs and long development lead times.  The previous terrible tax 
situation was one major impetus behind tax holidays in stability 
agreements; in turn, such holidays proved a political albatross for 
foreign mining companies, feeding into the argument Mongolians did 
not receive their due from the companies' profits. 
 
Restrictions, Burdens on License Transfer, Pledging 
--------------------------------------------- ------ 
 
¶40.  (U) Article 49 describes the increased documentation required 
to transfer a license.  For instance, the documentation must show 
that both environmental protection and professional qualifications 
concerns are being accounted for.  The phrasing grants authority to 
MRPAM's Chair to refuse a transfer even it complies with the state 
requirements. 
 
¶41.  (U) Article 52 makes clear that a license-exploration or 
otherwise-can only be pledged to a transferee eligible to hold such 
a license. 
 
Comment on increased restrictions on license transfer 
--------------------------------------------- -------- 
 
¶42. (SBU) As with exploration rights, these new requirements to hold 
a license imperil the security and transferability of mineral 
rights.  Strictly read, a holder of rights could not pledge those 
rights as an asset to a bank or other investor who otherwise was not 
eligible to hold a license.  A given bank is unlikely to set up a 
"qualified" mining firm just to receive a pledged license offered as 
collateral. At a stroke the law limits the investment pool that a 
mining firm might tap to finance its mine. 
 
¶43. (SBU) Mining firms also are very wary of the authority granted 
to the MRPAM to approve transfers of existing licenses.  Although 
Ivanhoe has complied with all the new requirements, MRPAM has 
refused to shift Ivanhoe's coal assets from its copper mining 
company to a new entity dedicated to coal mining exclusively. 
Ivanhoe is now murmuring about international legal action to fight 
what it views as expropriation. 
 
Reimbursement for state funded exploration costs 
--------------------------------------------- --- 
 
¶44.  (U) Article 60 requires mining firms to reimburse the state for 
costs incurred to explore deposits on tenements.  These expenses are 
booked and documented in the State integrated registration. Miners 
are to strike repayment agreements with set schedules for repayments 
prior to commence of formal mining operations. If the State is not 
reimbursed, failure to do so will incur a 0.1 % penalty per day on 
the total amount.  If after 30 days payment of fines and the 
principle is not completed, the mining license holder will have his 
rights revoked and the holding tendered by bid.  (Note: The old law 
also contained this provision but without the penalties imposed in 
the new law.) 
 
Comment on reimbursement of state exploration cost 
--------------------------------------------- ----- 
 
¶45. (SBU) This requirement has always irritated miners.  Most 
countries perform such services gratis or with a nominal fee; or 
they do not conduct such explorations at all, seeing this activity 
as more suitable to private enterprise.  The GOM is still having 
trouble extracting itself from functions best left to private firms. 
 
ULAANBAATA 00000870  008 OF 008 
 
 
 Its soviet-era geology in no way matches the current state of the 
art, and it is somewhat galling to miners to have to reimburse the 
GOM for work that does not really determine the nature and quality 
of a given deposit 
 
Minton