Skip to main content

Featured

The chaos theory of Mongolia

I returned to Mongolia 15 years ago after an absence of 13 years, save for the occasional 2-week leave from work, and that time I spent a semester and a half at a local university drinking endless cups of brown, watery 150 Tugrik instant MaCcoffee at the cafĂ© strangely, or perhaps egotistically, named "In my memory", writing the first and so far the only book that got us into trouble with the local intelligence who apparently had little else to do than to pore through the ramblings of teenagers to catch the tell-tale signs of drug dealery. But I digress. When you visit a country for a short period, be it home or not, you hardly have time to immerse yourself in the spirit of the country and the city and feel the nitty gritty and dirty shiny of it all. So after 13 years, it took me a while to readjust and finally understand what the hometown of my childhood had become.  The most striking, ubiquitous, and inescapable feature was and still, unfortunately, is the traffic. In 2008,...

Ivanhoe Expects to Reach Agreement with Mongolian Government soon

I have been following the Oyu Tolgoi situation quite closely in the news. Here's a snippet which will give you some idea on what has been happening:
Ivanhoe has been negotiating with the Mongolian government to reach a formal agreement on how to develop Oyu Tolgoi since 2003, and those discussions recently sparked protests in the capital, Ulan Bator, by critics who want more mineral-generated wealth to stay in the country. The protests apparently worked: on May 12, the Mongolian parliament approved a surprise windfall-profits tax on foreign miners. The move helped to send Ivanhoe stock into a tailspin; it fell nearly 22% in one day of trading. (ref:canadabusiness.com)
Sums up the situation neatly. The recent developments have been the Mongolian government's decision to own majority stake in all strategic assets on Mongolian soil, which in my opinion is mostly, if not solely, directed at Ivanhoe Mines Ltd. Considering that the copper deposits in Mongolia are possibly the largest untapped copper resource in the world, perhaps it is understandable.

However, the author of the article on canadabusiness.com goes on to say:
His Ivanhoe Mines Ltd., for example, operates in Mongolia, Myanmar and Kazakhstan--countries where, to varying degrees, governments can be oppressive and unstable, civil unrest can break out without warning, contracts can be abandoned with impunity, corruption may run rampant, or all of the above.
For the record, Mongolia does not have an oppressive government. Quite the opposite, the government is a little pre-occupied with the windfalls of an open economy to really bother with oppression. We've tried that during communism and have lost our taste for it. As for civil unrest, we are known, amongst the small audience who bother to read about Mongolia, for our peaceful transition to a democratic system. Peaceful, as in non-violent, but not necessarily smooth economically.

Frankly, I am indignant at Mongolia being bundled with Myanmar so carelessly and with impunity. We have not had a genocide since the communist 1930's, but then again, which country worth its mulla can safely say they had no genocide or cultural atrocities in the 20th century? We are a parliamentary democracy, albeit a dysfunctional form of it. In Myanmar, the military shoot at civilians! In Mongolia, we are never really sure if we elected a government or if it was just a conspiracy of the newscasters. Occasionally we see parliamentary sessions on television, where our MP's sit around uncertainly as if put there for the TV cameras without a script.

Our military is non-existent, though we do manage to scrape together a few dozen soldiers to deploy to Iraq so as to keep up appearances with our new best-friend, the USA.

But I digress.

The Mongolian government is expected to demand a 50% equity stake in Oyu Tolgoi, significantly higher than the previously proposed (by Rio Tinto & Ivanhoe) 34%.
(Source:Bloomberg)

This below will give you some idea on the enormity of Oyu Tolgoi:
Oyu Tolgoi is owned by Canada's Ivanhoe. Rio Tinto Group, the world's third-largest mining company, agreed in 2006 to buy 10 percent of the company and may raise its stake by converting a credit line provided to develop the mine. The project is about 80 kilometers (50 miles) north of Mongolia's border with China...

...The deposit's current estimated metal content is ``a tiny fraction of what is actually there,'' Friedland said. In March, Ivanhoe raised the estimated resource to 78.9 billion pounds of measured, indicated and inferred copper and 45.2 million ounces of gold.
(Source:Bloomberg)
As for the controversies involving Ivanhoe Mining Ltd and the Myanmar junta, there are many news articles which may interest the reader here, here and here.

Popular Posts