«Mongolia is a young nation!» «Mongolia has just discovered that it is actually rich!» «Mongolia is in line to become another Kuwait or Saudi Arabia!» These sentences seemed to resurface in conversations with residents of UlaanBaatar during my brief visit last month. The conversations were about Mongolia’s mining wealth, and the booming interest from international governments and multinational corporations.
The common theory, or hope, expressed to me by those working in the mining industry and in government-related jobs was that through the tax income and the infrastructure investments made by these mining companies, the quality of life in Mongolia would improve for everyone. In a city where upwards of 700,000 people have no running water, and pit toilets outside their homes, it is an appealing promise – but will that revenue ever reach them?
As you wander around this capital city, the coldest in the world, you see the tinted windows and super-deluxe model vehicles of government representatives. Little flags flap in the wind between traffic jams: Korean, Chinese, Japanese, and so on. Often, it’s a fully equipped, brand new, shiny SUV with the big UN decal painted on the doors parked around the city centre. Pop into any of the beloved expat cafes and restaurants and you can’t ignore the loud conversations in American, British and Australian accents about who’s been working in what region and what deal is being finalised today. In many parts of the world these conversations might be considered private or too sensitive to be conducted in a public place, but for some reason in UlaanBaatar there’s no shame in talking loud about how well your mining project is going.
Even now, as huge corporate entities such as Rio Tinto, Ivanhoe, and AngloGold run large-scale mining operations in the country, it still struggles to meet the most basic needs of its citizens. For Canada’s Ivanhoe Mines, Mongolia’s south Gobi region offers the world’s largest undeveloped copper and gold reserves in the world, estimated to be worth over $5bn. Together with Rio Tinto, the company has made an agreement with the government to mine in the region, expected to have 60 years left before it is exhausted. According to the fine-print of the agreement, the Mongolian government keeps a 34% stake in the project.
This boom in mineral wealth and exploration has not gone unnoticed by their energy-hungry neighbours to the south. China is investing more than $700m in Mongolia’s energy, mineral and metal reserves to serve Chinese steel companies just over the border. Part of their investment involves building new roads and new rail links between the two nations. In the north, the Russian government talks about its own plans for cross-border mineral and energy sector co-operation with Mongolia.
As backdrop to these unprecedented deals and investments, hundreds of thousands of Mongolians are experiencing one of the worst crises the nation has ever seen. Following a summer of drought and an extremely cold winter, livestock are dying out by the millions. In a nation where one-third of the population live off their animals, survival has meant moving to the capital, UlaanBaatar, in search of work. Settling in the Ger district, a place with little to no infrastructure, they face the long list of obstacles that comes with being poor and unemployed in a city that is unable to meet even the most basic needs of its current residents.
Travel five minutes north of the expat cafes and all the wheeling and dealing, in some of the poorest districts of UlaanBaatar it is payday for anyone that voted for the current government. The parties didn’t promise new schools or economic development or a brighter future like in most political theatre. During election campaigns in Mongolia, parties promise people an exact amount of money. So if you voted for the ruling party you are promised a lump sum of cash, and when they win, you get your money. Where do many unemployed struggling city dwellers invest their money? Vodka. The city has a staggering level of alcoholism that if you walk the streets, you will surely encounter.
These are the two worlds I have seen in my brief time and many encounters in UlaanBaatar. Even as a mere visiting journalist, it is not hard to see the two very different realities that exist here. And in between are those trying to improve the quality of life; to find money, from within and outside the country, to fund community centres in the poorest districts. Every day these organisations provide food, clothing, shelter, daycare, education and counselling for hundreds of thousands of people who would otherwise have little to no other help. Even in the poorest neighbourhoods, residents know all about the promises of the mining industry; they’ve heard all about how Mongolia could be the Kuwait or Saudi Arabia of central Asia. So far, however, no sign of it.
On the day of my departure, as my head was filled with more questions about how Mongolia will handle its newfound wealth, the headline in the local English-language newspaper read as follows: «Mongolia stops new mineral licenses for indefinite period.» The reasons given? Prevalence of bribes, corruption and illegal trading.
Mark Fonseca Rendeiro, a citizen reporter.