Sun, Apr 26, 2015 - Page 14 News List

Mineral-rich Mongolia grapples with ‘resource curse’

Mongolia sits on an estimated US$1 trillion of minerals, but its growth has fallen sharply from 17.5% four years ago, and many fear mining does not benefit Mongolians and threatens their spiritual heritage

By Kelly Olsen  /  AFP, ULAN BATOR

Shamans in fur and feather headdresses take part in a Feb. 9 protest in Mongolia’s capital, Ulan Bator, against a Canadian mining project they say threatens ancient grave sites.

Photo: AFP

Chanting prayers to Tenger, the all-knowing holy sky, Mongolian shamans in fur and feather headdresses protested against a Canadian mining project they say threatens ancient grave sites.

“It’s for our love for Mongolia, to protect our resources and territory,” said Tseyen-Oidoviin Sarantuya, who traveled more than 1,000km to demonstrate in Ulan Bator’s main square against the venture.

“I want people to know that Mongolia should remain Mongolian,” she said.

Beneath Mongolia’s expansive, largely empty steppes lie coal, copper, gold, iron ore and other minerals whose worth is estimated at more than US$1 trillion — wealth that could transform the lives of its 3 million inhabitants.

However, efforts to extract it have tottered in the face of incessant internal fighting over how much control and profit foreign companies should be allowed, and deep-rooted suspicions of outsiders.

Several naturally endowed countries — such as Venezuela, Myanmar and Nigeria — are regarded as having failed through corruption, bad governance or economic mismanagement to fully realize or effectively distribute the benefits of their bounties.

“Mongolia already faces the resource curse. It is reality now,” said Gantumuriin Uyanga, a member of the State Great Hural Parliament.

Her Mongolian National Democratic Party is part of the ruling coalition, but she said spiritual appeals illustrated authorities’ failure to spread the wealth.

“It seems to me truly unfortunate that people are asking help from the sky because of the poor governance in Mongolia,” she said.

Four years ago, the country led the world in economic growth at 17.5 percent, thanks to a minerals boom exemplified by the vast Oyu Tolgoi copper and gold mine in the Gobi desert, controlled by Anglo-Australian resources giant Rio Tinto.

However, rising resource nationalism and an increasingly stringent business environment have dampened investor enthusiasm, while the global commodity bust makes exploiting them less profitable.

Last year, foreign direct investment into the landlocked country plummeted 74 percent, Mongolian central bank data shows, and economic growth dropped to 7.8 percent.

The Asian Development Bank forecasts expansion will plunge by more than half this year, to just 3 percent.

University of British Columbia Mongolia expert Julian Dierkes said the country was still finding its way in the capricious world of international finance and was simultaneously “the object of desire and scorn for global capitalism.”

Now authorities are trying to break the logjam.

In February, Mongolia’s president pardoned three foreign former mining executives who had been jailed for tax evasion in a case that spooked investors.

Earlier this month, Mongolian Prime Minister Chimediin Saikhanbileg — who can reportedly bench-press 175kg — announced the government and Rio Tinto had agreed “in principle” to go ahead with Oyu Tolgoi’s stalled second phase, saying that making “historic decisions” was his duty.

Rio Tinto chief executive Sam Walsh told the company’s annual meeting last week discussions were continuing.

Ulan Bator has a national dilemma to contend with.

The proud homeland of pan-Asian conqueror Genghis Khan, in more recent centuries, Mongolia has frequently been a geopolitical pawn in the power plays of huge neighbors China and Russia, both of which have dominated it in turn.

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