Can Redirecting Billions to Local Hands Avoid the Resource Curse—or Ignite It?

Royalty Overhaul Forces Choice: Immediate Cash for Mining Towns vs. a Sovereign Wealth Safety Net

Mineral royalties, the fees levied on extracted resources, form a vital pillar of Mongolia’s revenues. These royalties, calculated with a base rate and a variable component tied to commodity prices, fuel a perennial debate: Should Mongolia prioritize immediate spending of resource revenues, or safeguard them for future generations? And who should benefit more—the nation as a whole or the communities closest to the mines?

As demands grow for greater local control over mining revenues, the parliament plans to deliberate a transformative proposal. Set for its 2025 spring session, the plan mandates that at least 30% of the Mineral Resource Extraction Tax (MRET or royalties) collected from a given province or sub-province be directly funnelled into that locality’s development fund. This is on top of other taxes in the mineral sector.