Mongolia's Minerals Sector: Searching for Political Leadership

This quotation could well have appeared in any one of Ulaanbaatar’s recent daily newspapers, but in fact it is attributed to Wen Hsien T’ung K’ao writing during the Sung Dynasty (Collins, 1918), showing that resource expropriation tendencies have existed in Asia for at least a thousand years. It serves not only to place the practice into historical perspective; it also tends to soften one’s reaction to similar statements echoed in today’s media.

This paper attempts to distill personal views developed while playing an active role in Mongolia’s mining sphere for nearly a decade. A number of mining companies are mentioned in the text, and it should be said upfront that any opinions expressed or implied are exclusively those of the author and do not imply endorsement by any other company or individual.

Mongolia is a poorly explored region on China’s doorstep that is known to host world-class deposits of copper and coal. Western companies have made important discoveries that have not yet gone into production. Today Mongolia is at an important crossroad; her mineral sector is in limbo owing to failure of the government to consummate investment agreements and approve development of important mining projects— projects that could add materially to the wealth of the nation.

Government’s inaction is often justi’ed by the vague notion of protecting Mongolia’s resources and assuring that all Mongolians derive maximum bene’t from the extractive industries. We may be pardoned, therefore, not only for asking but actually expecting an official answer to the question. How does this lack of decision-making bene’t the people of Mongolia or those foreign investors willing to gamble on Mongolia’s future with large injections of capital? The simple answer is, of course, that it helps neither.

An unbiased review would almost certainly conclude that few new mining projects in Mongolia actually have bene’ted more than a handful of well-placed individuals, while the general population is subjected to biased government media about the dangers and evils of mining. Since mining on a large scale is new to most of the citizens, they are thus left to wonder, quite rightly, “What is all the fuss about, and why do we need mining anyway?”

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