Socioeconomic Benefit Optimization in Mongolia: The Gobi Oyu Development Support Fund

Posted on December 2, 2016

By Kristi Disney Bruckner
IGF Consultant

Field visits are a critical part of the Mining Policy Framework Assessment process because they give IGF analysts the opportunity to meet with key actors and stakeholders and to see first-hand how the sector operates.

IMG_0255While in Mongolia, the assessment team encountered an excellent example of a practical mechanism for maximizing the socioeconomic benefits of mining.

The Gobi Oyu Development Support Fund was established as a result of a cooperation agreement reached between Oyu Tolgoi LLC (OT)—a major copper-gold mine in the Ömnögovi Province—and local communities.

The mine has agreed to contribute USD 5 million annually to the fund for 30 years. The primary objectives of the cooperation agreement are to agree on a basis for a transparent and respectful relationship among the parties, and to promote sustainable socioeconomic development of the Ömnögovi Province.

We were able to tour one of two Gobi Oyu DSF-funded kindergartens which opened April 20, 2016, the first anniversary of signing the cooperation agreement.

Mongolia MPF - school (2)DSF accepts proposals for projects that target health, education, training, employment, support for local business expansion, the environment and preservation of cultural heritage. Applicants must provide a clear governance structure, budget, and timeline for projects that must be implemented within the Ömnögovi Province.

DSF received 47 proposals in 2016 and has agreed to finance four social infrastructure projects and nine sustainable development programs. These include, among others, a health care centre, an animal health service centre, a green house/nursery, a forestry program, a cave protection program and a museum.

The success of the fund relies in part on ongoing outreach to communities in the Ömnögovi Province throughout the year to publicize the availability of funds and explain the application process. DSF also monitors management of awarded grants, to ensure that the funds are well managed and used to achieve tangible and sustainable results.

The proposal review process includes three tiers. First, the executive director conducts an initial review of proposals to ensure that they are complete and meet the fund’s primary criteria. Then, the proposals go to a relationship committee which seeks to make a unanimous decision as to whether the project is suitable. In order to best allocate funds, the relationship committee conducts further research on the proposals, such as consulting with experts when necessary to determine project viability. It prioritizes proposals based on type, timing, potential impacts, community needs, and other appropriate factors. Finally, the prioritized proposals go to the DSF Board, which makes final decisions to approve or reject proposals.

2016-08-24 16.50.24The field visit began about seven weeks after elections in Mongolia led to a shift in government and a new head of state, President Tsakhiagiin Elbegdorj of the Mongolian People’s Party. The timing of the overall assessment provided an opportunity for the new administration to build capacity early in their term.

It included two weeks of meetings with government, company, and civil society stakeholders. Meetings were held in Töv Province, including Mongolia’s capital city Ulaanbaatar, and across the mining-intensive Ömnögovi and Selenge Provinces.

The IGF Mongolia Assessment Team completed the field visit component of their assessment in August 2016. The multidisciplinary field visit team included two attorneys, an economist, and an anthropologist—consultants from the U.S.-based Sustainable Development Strategies Group and Mongolia-based Sustainable Development Research Centre.

The full report will be published in 2017.

Source: http://igfmining.org/socio-economic-benefit-optimization-in-mongolia/