The village of Tunkhel is leading the development of a more responsible artisanal gold mining sector in Mongolia

Tunkhel is a village located in the Selenge province, 150 km north of Mongolia’s capital Ulaanbaatar with a population of approximately 3,042 people. Tunkhel was established by loggers working in the timber industry back in the 1960s and is surrounded by a thick forest which makes up 80% of the village’s land.

Being entirely dependent on the timber industry, the local economy was vulnerable when Mongolia went through a political and economic transition in the early 1990s. Transition from a centrally planned economy to a market economy resulted in the closure of many state-owned timber factories which forced the local community to look for alternative sources of income. A lack of employment opportunities prompted people to begin mining nearby alluvial gold mining sites dominantly belonging to a formal mining company. This was the inception of artisanal and small-scale gold mining (ASGM) in Tunkhel village.

Hard-rock ASGM operations informally began in Tunkhel around 2007 at Bulag mining site which is currently recognized as a formal artisanal and small-scale mining concession and operation. The formalization process was a lengthy undertaking for the local community, but Bulag mining site successfully achieved formal status in 2019. Prior to formalization, Tunkhel miners faced many challenges including negative stigma, legal penalties, criminal threats, financial hardships, disputes with the large-scale mining company and other issues related to being informal.

The ASGM community in Tunkhel is organized under a non-governmental organization named Baatar Vangiin Khishig (BVK). Since its establishment in 2010, BVK has worked tirelessly to unite the miners into structured partnerships and advocated for formalization by attaining land permits and establishing agreements with the local government to allow the miners to formally operate. Today, BVK has 186 members divided into 15 mining partnerships with 22 women and 152 men miners. BVK is proud of its achievement of operating with no mining accidents in the last ten years and hopes to maintain this record even longer by instilling ‘responsible mining’ practices amongst its members. They have built fences around their mining sites to stop illegal miners and regularly backfill old shafts to prevent any accidents. In addition to directly serving the interest of its members, BVK’s actions benefit families and relatives of its members and local enterprises. When the Tunkhel mining operation is active and stable, people notice significant changes in the local economy with shops and services fully operational and increased sales of goods.

Ms. Myagmarsuren Dalii, 58, Executive Director of BVK stated, “I am determined to formalize this mining area in order not to be ravaged by illegal miners and to benefit the local miners and economy as well as to protect the environment by proper mining and regular rehabilitation.” Ms. Myagmarsuren is a Tunkhel native who is a professional food technologist and she spent her younger days working at the food factory in the Soum center. Ms. Myagmarsuren and her husband participated in artisanal mining in the early 2000s as an income opportunity after losing their jobs during the economic transition. She remembers that artisanal and small-scale mining started with rudimentary tools such as shovels and grub-axes in the early 2000s. She recalls how she would provide assistance to her husband by handling the pulleys to haul the buckets full of ore back to the surface of the mining site. Ms. Myagmarsuren was elected as an Executive Director of BVK three years ago as a result of her commitment to formalize the mining site, to improve the daily operations and to support the mining community. Today, she is a full-time manager working regularly at the mining site to oversee the operations of different partnerships. She knows all BVK members on a first-name basis and is well respected by her fellow miners.

For the last decade, Tunkhel miners have been utilizing a processing plant in the neighbouring province to extract gold from their ores. Since Tunkhel miners do not have their own processing systems, they must transport their ore great distances and are at the mercy of the gold recovery rates of the third-party processing plant that is not configured in their favour. Low gold recovery is problematic because it means lower income for miners, but also because miners may be tempted to take and reprocess tailings containing residual gold using mercury amalgamation by themselves. Mercury use is illegal in Mongolia and if apprehended, individuals may face a punishment of up to 8 years in prison. Furthermore, the processing plant requires miners to sell the gold processed at their facility at a set price determined by the process plant operator. Generally, these prices are 10% to 20% lower than the market price, which is a large discount. Unbelievably, this is a better alternative than processing their ore by themselves and selling their gold to local middlemen who typically offer a 40% discounted rate from the market price.

Therefore, the current thinking of the mining community is that an improved gold processing technology centre in the village would have numerous benefits: (i) they would be able to increase their productivity and recovery rate by not having to transport ore and by using superior and trusted technology under their own oversight; (ii) they would sell their gold through a formal supply chain at higher prices; (iii) they could reduce the temptation to use mercury significantly. In short, miners' income would increase through better gold prices directly sold to the official buyer and spending less for transportation.  Ms. Myagmarsuren hopes that the high-recovery mercury-free processing facility would offer opportunities to all local ASGM communities and discourage clandestine use of mercury.

The processing plant to be piloted by the Global Environment Facility-supported planetGOLD Mongolia project would support the Tunkhel miners’ aspirations of having a local plant that increases the gold recovery rates through environmentally sound, mercury-free technologies. Through these better practices and increased capacities, the miners in Tunkhel will accelerate professionalizing their mining operations and thereby encourage other ASGM communities throughout the country to follow in their footsteps.

About the planetGOLD project

The GEF-supported planetGOLD program of the ASGM sector has been designed to address the key issues linked to continued mercury use and to provide sustainable development opportunities for the communities involved. The planetGOLD Mongolia project is executed by the Artisanal Gold Council in partnership with the Ministry of Environment and Tourism of Mongolia.

The objective of this project is to contribute towards the elimination of mercury in the ASGM sector by applying a supply chain approach from the miners to refiners. The project has four components. UN Environment is implementing Components (i) formalization, (ii) finance and market access, and (iv) knowledge management, while UNIDO is responsible for Component (iii) technology transfer.  

The planetGOLD Mongolia project is expected to demonstrate:

• Government incentives to formalize the ASGM sector in Mongolia are increasingly adopted by miners;
• National government guiding the creation of an ASGM fund to allow miners to invest in mercury-free technologies and access responsible gold markets; miners are able to sell their gold directly via a transparent supply chain;
• Reduced mercury release by the ASGM sector;
• ASGM communities and government agreeing on an approach to reach all ASGM communities.

Mongolia banned the use of mercury in 2008. The Government of Mongolia ratified the Minamata Convention in 2015.