Posts tagged Mongolia

Mongolian Mines and Investors

After much to and fro over the mining concesssion for Mongolia’s Tavan Tolgoi coal deposit, it may well be that none on the international bidders may success. Terence Edvards for Reuters:

Speaking at a regular meeting of leaders from Mongolia’s private sector on Monday, Graeme Hancock, the chief operating officer of Erdenes-Tavan Tolgoi, suggested that the Mongolian government would not be able to appease the diverse foreign investors hoping to invest in the project.

“In my view, this is a very difficult group to put together into a consortium,” said Hancock. “We’ve got a pretty good chance it will never happen.”

If that were the case, Erdenes-TT was likely to reassume control of the property and lead the western block of the project itself, he said.

For an anthropological view of Mongolian mines and geopolitics, listen to the keynote Uradyn Bulag delivered last month at our conference “The Art of Neighbouring”.

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Copper, Gold, and Water

Josh Tapper (The Star) reports on the Oyu Tolgoi copper and gold mines in Mongolia. Oyu Tolgoi, he writes,

is expected to balloon the Central Asian country’s GDP — an estimated $13.28 billion in 2011 — by more than 30 per cent when it starts full production later this year.

But the economic boon is also, for some, an environmental nightmare as the project will allegedly soak up valuable water resources in the already-arid Gobi. While reports vary, the mine plans to use up to 920 litres of water per second.

This is the Gobi Desert and water is scarce. Yet, Rio Tinto – the majority owner of Ivanhoe who has a 66% stake in the mines – says that there is nothing to worry about. The water used will be taken from a non-replenishable groundwater source, which would only be depleted by 20% over the course of 40 years.

This would create surplus reserves for the local population, a company spokesperson said. The company contends that by using Gunii Hooloi, it will not have to deplete limited surface water reserves used by herders.

Things in Mongolia happen at such a mind-blowing speed that making sense of such claims is very difficult. For sure, this is an issue to keep an eye on.

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Mongolia’s railway dilemma

Mongolia faces a dilemma in which direction to build a new rail link to export coal from its Tavan Tolgoi mines – north to Russia or south to China. Now, the Mongolian government announced a middle way to please both sides. The Moscow Times reports:

Mongolia said it plans to synchronize the openings of two export railways to Russia and China to accelerate coal sales from the Tavan Tolgoi mine, one of the world’s biggest unexploited coal deposits.

It may complete the railways as soon as 2014, Yondon Manlaibayar, director general at Mongolia’s Ministry of Roads, Transport, Construction and Urban Development, said in an interview in Hong Kong.

The consortium headed by Russian Railways is one of the finalists in the bid to develop the western section of Tavan Tolgoi.

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China’s Security Chief Goes on Tour

Hannah Beech reports in TIME on 23 Aug 2011:

Over the past week, as I’ve traveled across Asia, I’ve discovered an unlikely partner in my continental peregrinations: China’s security chief Zhou Yongkang. The senior Chinese envoy’s travels have taken him to Nepal, Laos, Cambodia and Tajikistan. The final stop is Mongolia, where Zhou is expected to head on Tuesday.

Indeed, during the past weeks, there has been so much good news on the strengthening of ties between China and its neighbours. See these: “Senior Chinese official proposes enhanced China-Laos ties“; “Border towns witness China-Mongolia trade boom“; “Mongolian PM sees ‘golden era’ for Mongolia-China ties“; “Senior CPC official meets Cambodian PM, hails longstanding friendship“; “China Tajikistan pledge to deepen pragmatic cooperation“. And Zhou Yongkang (left below, a member of the Standing committee of the Political Bureau of the CPC Central Committee, as well as a secretary of the Commission for Political and Legal Affairs of the CPC Central Committee) was the man to lead the show.

 

Zhou meets Mongolian PM Sukhbaatar Batbold in Ulan Bator, 24 Aug 2011 (Xinhua/Liu Weibing)

Beech’s report continues:
In Zhou’s wake, the narrative has tended to follow the same plot-line: first, China’s state media proclaims “mutually beneficial cooperation” and “longstanding friendship” between Beijing and the local government. Then a raft of trade deals or bequeathing of military goodies is announced. Finally, an undercurrent of unease follows, with regional analysts wondering about China’s growing economic and security might.
Last Saturday, Zhou was in Cambodia, where he met with Prime Minister Hun Sen. In addition to various mining, road-construction and farming deals, China has agreed to supply nearly $200 million in helicopters to Cambodia. Beijing is already the Southeast Asian nation’s largest foreign investor, and Hun Sen, who has quietly evolved into one of Asia’s longest-serving strongmen, has been vociferous in his support of China. His enthusiasm for Chinese largesse stands in marked contrast to his feelings toward Western donors who tend to attach pesky strings like human-rights commitments to their aid. The Phnom Penh Postquoted a local researcher worrying that “Cambodia will become subservient to China.”
Before that in Nepal, Zhou oversaw the signing of more than $50 million in trade and aid. Sandwiched between India and China, Nepal has turned into a kind of proxy ground tussled over by the two Asian giants. The Chinese delegation arrived just days after Nepal’s Prime Minister had resigned. Political dysfunction, though, didn’t stop the caretaker government from trying to profit from what China’s 60-person delegation had to offer. During the Chinese security czar’s stay, members of Nepal’s Tibetan refugee community were warned against expressing any sentiment that might be considered “anti-China.” (Zhou’s previous political duties have included serving on a Beijing committee that deals with Tibet; he helped oversee a crackdown on Tibetan activity in the southwestern Chinese province of Sichuan.)
Zhou’s travels produced some consternation in India, which shares a long border with China and has skirmished with its northern neighbor over the contested boundary. On August 22, the Times of India reported that the Indian Army was considering the creation of a Mountain Strike Corps to counter a Chinese military build-up in Tibet, which borders India. Ultra-light howitzers and light tanks would possibly be stationed along parts of the 4,057-km Line of Actual Control, according to the Times. Despite such tough talk, however, it’s unclear whether India is really willing to commit financial resources to a military expansion.
Luckily for China, the official reaction to Zhou’s visit was far rosier in communist Laos. According to China’s state-run news agency, Xinhua, Laos’ President Choummaly Sayasone announced last week that “China has become a significant force in the international community and is playing a key role in promoting regional and global peaceful development, which reveals the vitality of socialism and greatly encourages the Lao people.” Socialist brotherhood doesn’t get any better than that.
Hmmm it makes me wonder: Why now? Why is Zhou acting like the Santa Clause touring around signing multimillion deals now? And why only Nepal, Laos, Cambodia, Tajikistan and Mongolia? (and not, say, Vietnam, is this meant to make Vietnam feel painful??)
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Mongolia frets as giant coal mine launch looms – M.A.D

Earlier this year, mining rights for the western section of the immense Tavan Tolgoi cole mine in Mongolia’s Gobi Desert were split between a Chinese, a Russian, and a Western consortium. A potential USD 15 billion bid for the mine’s eastern block is scheduled for next year. The well-informed Mongolia-based concultancy M.A.D has published its take on the state of affairs:

At stake is the promise of prosperity for Mongolia’s 2.8 million citizens, many of whom live on the edge of subsistence. The mine’s transformational potential also has implications as a whole for the region, which produces more than half of the world’s steel and aims to wean dependence on primary coking coal supplier Australia. But Mongolians are worried that their two powerful neighbours, China and Russia, will take their resources on the cheap unless key donors Japan and South Korea join the bidding — a point crucial for parliamentary approval later this year.

Which means that the results of the initial bid are anything but final.

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The Washington Post: China, rich with coal, seeks more next door in Mongolia to meet its energy needs

Andrew Higgins for The Washington Post on the coal mining boom and  Mongolia’s Tavan Tolgoi pit (Ömnögovi Province). He argues that the boom is driven by China’s continuing demand for coal. Although the PRC has huge coal reserves itself it still needs to import more to satisfy demand. However, there is competition over access to Mongolian coal:

China and Russia have offered money to help finance Mongolia’s railway-building plans from Tavan Tolgoi. Beijing wants the line to head south and use Chinese-gauge tracks. Moscow wants it to go toward Russia and to use Russian-width track, which is incompatible with China’s network.
For the moment, tangled feelings toward China have trumped linear economic logic. But, predicted Od, the former diplomat in Washington, this will change. China is “like a big vacuum that sucks everything in,” Od said. “We are very lucky.”

Higgins works out the paradox quite nicely. He cites a recent opinion poll on the question what country would the best partner for Mongolia. China came in last. However, at the same time:

There are now more students studying Chinese in Mongolia than Russian, once a lingua franca in what was until 1991 an effective Soviet colony.

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