One of the world's last pristine wilderness is being obliterated by mining. The once vast and undisturbed plains of the Mongolian hinterland are being scarred and mutilated in an attempt to feed its neighbor's voracious appetite for prime materials and minerals.
China's attempt at becoming the world's number one economic powerhouse means that it must seek and obtain prime materials, scarce at home, from whatever source and through whatever means.
Mongolia is a very large country, with a very low population density. Most of its inhabitants, furthermore, were fiercely independent nomads.
This idyllic setting was first eyed by mining giant Rio Tinto a few years ago.
Of course the mining companies did not gain entry into Mongolia without the government's consensus. But what the mineral rich country of Mongolia aims to do, and what the mining interests aim to gain, might put the country's legacy, environment and traditions in jeopardy.
Only one hour south of Ulan Bator, there is a copper mine that is so rich, it could sustain the mining needs of many countries. This kind of riches could make Mongolia wealthy. But what is happening to its once nomadic tribes?
The problem here is that Mongolia is not business savy. In many ways, a great part of its riches is not underground, it is in the unspoiled and unsophisticated way of life. When a country that is a few decades behind the rest of a very quickly advancing world, something gets lost. And what that might be, could be that very advancement the sale of its riches is supposed to guarantee. A few people will get immensely rich, while the poor will stay in their misery, and the land they once roamed, might be ruined forever.
For a typical example of how twisted this mining connubium is, one needs look no further than the fact that MOngolia had to borrow money from Rio Tinto to actually start the mining project in the Gobi Desert that is copper rich.
Some people in the government however, have begun being critical of this mining boom. One of them is the head of the Mining Ministry dept., M.r Otgochuluu. His office windows stares at a settlement of almost one million Mongolians, refugees from rural areas that have had to settle in the capital due to the dual devastating impact of severe weather and mining disruptions.
When Otgochuluu looks out at the sea of gers, the tepee type tents that the nomads have built, he sees a gross inequality playing out. He goes so far as to say that "our deal with Rio Tinto has not been a fair one. Rio Tinto is doing great work in the desert here, but if they want to cheat us when it comes to money, then we can't be friends."
This type of fracture between Rio Tinto and some government officials is telling. Tiffs and disputes arise constantly between the mining giant and the government.
One of the most striking things is how the mining companies view their work in the mining center of the Gobi desert. At a Florida conference years ago, mining tycoon Robert Friedland spoke of the mining operations in Mongolia as "there's no railroad tracks in the way, there are no people in the way, there are no houses in the way. There's no NGOs. [the mine at] Oyu Tolgoi, is a cash flow engine." In other words, there is no one to look or care at what we are doing and it's like taking candy from a child. That's when the Mongolian Ambassador called Rio Tinto. Rio Tinto soon bought out a majority take of Friedland's holdings.
For a while, Mongolia's economy was booming. Its growth rate was a whopping 17%. But in 2012, when a new party took office after the elections, they found to their dismay that the country's treasury was all but empty.
Enter the Rio Tinto loan. What Rio Tinto has done is exceed the original projected cost of 5$ billion dollars, by a good margin. The Rio Tinto managers are being paid too much., among other things. The cost overrides are almost one billion dollars. Since the government of Mongolia signed a deal with Rio Tinto in which they committed to bearing 34% of the mining operation's cost, they are in effect paying Rio tinto more than what they are gaining from the mining operations. The most optimistic projections puts the first profits for Mongolia in the year 2019. But, and that is a gigantic but, Mongolia will not see a share of those profits for another 20 to 30 years according to the Mining MInistry official.
While Rio Tinto defends the indefensible, it also claims to have paid the Mongolian government 1.1 billion in taxes and fees.
This is not the first time Mongolia is raped of its riches. In 2004 a Canadian company went in on the condition that it not pay any taxes or fees for seven years, claiming that the mining operation would be complicated by unusual geological conditions. Four years later, the mining operation was concluded, after all the material had been stripped. The mine in essence had been depleted, with three years' spare time before the tax and fee exemption ran out.
Corruption too, plays its part. What little money is trickling in, is being quickly rerouted among shady officials and even shadier deals.
Just last week, Rio Tinto announced that after stripping a good part of the rich copper mine, it would halt work, citing the government's denial of funding for the mine. If the mining stops, so does the little money the government receives. This is blackmail, in its vilest and purest form.
The tug of war continues. One can only hope that Mongolia's pristine environment will not be irremediably compromised, and that the piecemeal pillage of the country will stop.
Source : Spiegel Online/ 8.09/13
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