Mongolia: taking advantage of a copper and gold bonanza

The Gobi resource boom has started.

In the nineteenth largest country on earth a Nomadic herders' way of life prevailed. Much of its 1.56 million sq km is Gobi desert or grassy steppes. Only in the capital Ulan Batur, a city of 1.2m - about the size of Auckland or Dallas - did a modern lifestyle evolve. Yet this isolated, landlocked Northeastern Asian country of 2.8 million people, sandwiched between Russian Siberia and China, was fast to embrace democracy.  After Perestroika altered the political dynamic in most of eastern Europe and central Asia, the Mongolian People's Republic fell in 1990.

Since then the birthplace in 1206 of Ghengis Khan has boomed.  It grew by 18.8% in 2006 and, after a blip dip in 2009, rebounded to hit an estimated 9.8% this year, according to the Australian Department of Foreign Affairs & Trade. In 2012 Mongolia's economy should advance by another 7.1%, estimates the IMF. To assist, a boom in resources: coal, copper, molybdenum, fluorspar, tin, tungsten, and gold.

CNN reports that a "Gobi Desert copper and gold mine - a joint venture with foreign mining conglomerates Ivanhoe and Rio Tinto - is expected to account for one-third of the nation's total economic output by 2020 and boost the average earnings of Mongolia by 60%. The numbers are staggering. The development phase runs to nearly $5 billion. The mine is projected to produce to 450,000 tons of copper and more than 300,000 ounces of gold. Developers claim there's enough here to mine for the next 50 years or more."

It isn't just copper and gold, as coal production is big business. The Tavan Tolgoi coal deposit is "huge" according to Reuters as it reports on privitisation plans for the Mongolian Railway Co (delayed until 2012). The idea is to extend its reach and usage to better access its neighbours and open up new markets. 

"Land-locked Mongolia, which has one of the lowest railway densities in the world, plans to more than triple its rail network to reach Chinese and Russian borders, tapping their ports to build new trade ties with countries such as Japan and South Korea. The government plans to build additional rail lines to link the Tavan Tolgoi deposit to the Chinese border, on top of approved plans to construct an east-west line that would travel through Mongolia's Sainshand to near the Russian border" notes Reuters. 

The herders' traditional way of life is challenged. Some of them will work at the mine, enabling kids to get an education. So Mongolia might be changing forever.

The spectacular scenery, warrior Mongol history, colourful national costumes and distinctive architecture make this a tourist opportunity. Perhaps better seen before the Nomadic people's yak milk-drinking, archery-competing, carpet-weaving and tent-inhabiting existence passes into distant memory.

Meanwhile, the economy booms and increased wealth will inevitably result in improved urban living standards and greater consumerism. Whether it will also mean cultural devastation as high-rise apartments and office skyscrapers blight the landscape, only time will tell. 

But Mongolia is economically vulnerable. Most of its electricity is bought from Russia, and the majority of its exports go to China. Maintaining its economic and political independence must be a balancing act. Perhaps the fact that it has equally powerful neighbours stops either of them from holding sway. India is aware of this and is pressing to firm up ties with Mongolia. Maybe with China in mind, says the Indian Express, joint military exercises will take place between India and Mongola. the paper reports that Indian "Army Chief General VK Singh has left on a three-day visit to Mongolia even as a batch of crack Indian troops will be reaching the country next week. Mongolia, which is landlocked between Russia and China, has referred to India as its ‘third neighbour’."

But does this resources boom mean true benefit or cultural destruction for Mongolia?

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