Mining mania

The famous international relations expert Parag Khanna, who was the first guest on my talk show ‘Defacto’, was the one who wrote that Mongolia would become Minegolia.
He used the Chilean model to explain the importance of good, transparent governance in distributing mining wealth to every family in Mongolia (please go to www.jargaldefacto.com to see the full interview).

Mongolia has already turned into an enormous mine, Minegolia, and everyone’s life is now connected to mining directly or indirectly. The major part of our public budget is constituted by taxes collected from mining companies. Since starting to sell its coal in 2011, Mongolia has managed to produce more income than what it earned annually by exporting copper concentrate for 40 years (Moncoal-ia).

According to statistics by the Ministry of Social Welfare and Labor, a total of 34,100 people, which is 3.3% of our labor force, were employed in the mining sector in 2010. The official information provided by the SDC’s (Swiss Agency for Development and Cooperation) Sustainable Artisanal Mining project and the Mineral Resources Authority, there were 73,000 people mining by hand and 100,000 people were involved in seasonal mining activities with the purpose of increasing their income in 2011.

One tenth of our population is currently mining and most of them are “ninjas” as we call them. They are “working” in 19 of 21 provinces specializing in mining spar in Dundgobi, Dornogobi, Khentii and gold in other provinces. The majority of “ninjas” work in areas abandoned by big mining companies. The SDC has informed that “ninjas” mined 6.5 tonnes of gold last year, which is one third of the total of over 20 tonnes of gold.

Meanwhile, big companies are carrying its coal to China by up to 130 tonnes payload trucks. Coal mined from Tavan Tolgoi is piled up in a place called ‘Tsagaan Khad’ located 20 km inward from Gashuunsukhait port. Only the road from Ukhaakhudag to Tsagaan Khad is paved and trucks coming from other places have to take dirt roads in order to drop off the coal at this site. After customs procedures, the coal is carried to China’s Gants Mod port located beyond Gashuunsukhait port.

Journalists have recently visited Tsagaan Khad, where thousands of trucks unload their freight, and called the dusty site a “disaster zone”. The newly appointed Minister of Nature, Environment and Tourism visited the site last week and brought up the serious issues regarding the condition of Tsagaan Khad.

Tsagaan Khad, the biggest “bottleneck” halting Mongolia’s exports, is the most lively and “dusty” example of how our parliament, government, ministries and agencies are working together, skills and knowledge of our administrative officials and how they are serving Mongolian people.

When making a decision on the biggest and most important exports, a government with normal, uninterrupted operations would have built the infrastructures in the first place, provided healthy conditions for the environment as well as people and started exporting only after constructing the related border infrastructures. It would have been better to have the road built by only one side, the buyer, with a condition to pay back later when income is created.

Currently, ‘Energy Resources’ is the only one of the three companies mining coal from Tavantolgoi that built the 250 km road with its own funds and charges trucks MNT 500,000 once because it sells its coal at border prices. Cars pay a tax of MNT 20,000 to “Energy Resources” company unless it has a “UMU” plate number. “Tavantolgoi” company does not really care about the road or transportation because it sells its coal at the mine. Furthermore, transportation companies make agreements with individuals on their own because they had already got the special license from the government and people are not interested in paying for expensive roads.

It is said that the state-owned ‘Erdenes Tavantolgoi’ company has a plan to build its own road. A trend is likely to be created that companies build their own roads or power stations as Tavantolgoi gets more divided. Even though there are governmental organizations in charge of regulation these relations, they are not doing their job. Mongolians are becoming hungrier as there is more food available.

This level of implementation of our government’s mining management policy altogether with the fact that few ones who ignore the negative environmental outcomes of mining are getting rich while the rest is not benefitting from their natural resources have created a mining phobia among people. It is time that government pursued a general policy for mining development besides looking after every single project. We have to learn from the initiatives and examples of the governments of Canada and Australia on responsible mining, green mining and social responsibilities of a company and improve the laws regarding mining.

Translated by B.AMAR