A/HRC/43/45/Add.2 41. When it comes to the Fund’s management, the Government of Mongolia favours an “arm’s-length” investment approach. The authorities are therefore prohibited from investing in a range of activities, including military, weapons, tobacco and alcohol production.54 While such criteria are relevant in terms of guiding responsible investments, human rights-based criteria should also be considered. 42. A number of tax agreements have been concluded for particular projects, such as the taxation clause included in the investment agreement concluded to develop the Oyu Tolgoi mine in 2009. Tax agreements of this nature have not only deep but also intergenerational implications for the country, from both a fiscal and a human rights point of view. For instance, the Oyu Tolgoi agreement included a 30-year tax stabilization clause, meaning that the tax rate agreed upon in 2009 was frozen and would be unalterable for the following three decades. A resolution was adopted by the parliament in late 2019 aimed at protecting the Mongolian people’s rights and interests in terms of the Oyu Tolgoi deposits. 55 The Independent Expert encourages the Government to consider the findings of the present report in this implementation. 43. It is the Independent Expert’s view that tax stabilization clauses should be looked at from two different angles. First, as inclusive growth is usually explicitly cited as mining project goals, it would be difficult to argue that full private appropriation of profits – produced at the expense of the natural resources of Mongolia – was a socially and politically legitimate approach. Second, from an international law perspective, should certain profits not have been envisaged at the time when the stabilization clause was agreed upon, fundamental changes in circumstances should allow for reconsideration. Circumstances such as unforeseen earnings due to windfall profits could be thus considered, allowing for distribution or redistribution between parties. In addition, such an approach would allow for more inclusive growth and an opportunity for the population to enjoy a greater share of the benefits resulting from the exploitation of natural resources. 44. Various avenues exist to address issues related to the taxation of mineral revenues, including implementing a floating royalty system that would evolve according to the market price. While such a system is currently used with success in a number of mining businesses in Mongolia, it is important to stress that development is not only about shared economic growth, but also about shared losses for society. B. Human rights impact of mining: improving the assessments 45. A range of mining activities of varying scale and nature is being undertaken all over the country. As of 2016, 27,068 hectares of land had been degraded owing to mining activities.56 Mining activities have been associated with serious adverse impacts on human rights, including the right to health, housing, and water and sanitation. 57 46. Since pastureland in Mongolia is public property, when herder families have to relocate, specific challenges may include having to coordinate with local communities and other herder families already using the same land for animal grazing. Furthermore, mining activities can have specific adverse health implications for workers, including cardiovascular and respiratory diseases, 58 and exposure to mercury, whose adverse properties include neurodevelopmental toxicity.59 54 55 56 57 58 59 Law on the Future Heritage Fund, art. 12. “Will the Mongolian Government improve the Oyu Tolgoi agreement?”, DeFacto Gazette, 28 November 2019. National Human Rights Commission of Mongolia, 17th Status Report on Human Rights and Freedoms in Mongolia (Ulaanbaatar, 2018), p. 20. See, for instance, E/C.12/MNG/CO/4, para. 25; and United Nations Development Programme (UNDP) and United Nations Environment Programme, Managing Mining for Sustainable Development: A Sourcebook (Bangkok, UNDP, 2018), p. 32. ILO, “Briefing note: occupational safety and health in mining in Mongolia”, 18 October 2016, p. 4. Nadine Steckling and others, “Mercury exposure in female artisanal small-scale gold miners (ASGM) in Mongolia: an analysis of human biomonitoring (HBM) data from 2008”, Science of the total environment, vol. 409, No. 5 (1 February 2011), p. 995. 9