SouthGobi Resources announces that its mining arm, SouthGobi Sands, is facing negotiations with the Mongolian government over a potential stake in the company’s strategic mining deposits.

• 🗞️ Brief: Mongolia currently has 16 officially registered strategic deposits. However, 39 more deposits with confirmed reserves remain unregistered. The government has decided to submit a draft resolution to Parliament to increase the number of strategic deposits to 55. The list has not been updated since 2007.

🤑 Strategically Important

On April 2, SouthGobi’s wholly owned subsidiary, SouthGobi Sands (SGS), received a formal notice from a plenipotentiary representative of the Mongolian government. The letter invited SGS to join talks on determining either the state’s potential ownership interest in SGS, which holds the company’s coal mining licenses, or replacing it with a royalty arrangement.

• ☝🏻 SouthGobi confirmed it began preliminary discussions with the government on April 24. The company stated it intends to cooperate fully and aims to reach a constructive, mutually beneficial agreement.

⚖️ Stake or Royalty

This follows the implementation of Mongolia's National Wealth Fund Law, passed in April 2024, which allows the government to negotiate equity stakes or royalty agreements for deposits designated as strategically important. SGS’s Ovoot Tolgoi Mine and the Soumber Deposit fall under this designation. The company emphasized it will protect its lawful interests while complying with Mongolia’s evolving legal framework.

In summary… SouthGobi now enters a pivotal negotiation process that could reshape its ownership structure in Mongolia. As the government pushes for greater involvement in strategic assets, other companies with similar deposits may soon face the same path, signaling a new phase in Mongolia’s resource governance.