Mongolia Monday- Oyu Tolgoi, The Face Of “Minegolia”; Resource Extraction On An International Scale Comes To Mongolia

Map showing location of both Oyu Tolgoi and the coal mine, Tavan Tolgoi

The world’s largest undeveloped copper deposit, which also turns out to include significant deposits of gold and silver, is located in the Gobi of Mongolia at a site called Oyu Tolgoi, which means “Turquoise Hill”. The story of choosing who will operate the mine and how that was negotiated is a long and convoluted one. The super-short version: Nothing much happened until the Democratic party took power a few years ago. Not long after, a joint venture of two huge mining concerns, Ivanhoe and Rio Tinto, along with the government of Mongolia, was formed and work began.

Why would I blog about this?

Two reasons:

First, it will be a major test of how well Mongolia is able to enforce its environmental laws, since this the first mine to come online since the changeover from communism to democracy. It will be both open pit and underground. The size of the deposits is mind-boggling: (as of 2010) 79 billion pounds (35,833,000 tonnes) of copper, and 45 million ounces (1,275,000,000 grams) of gold. In ten years, over 3 million ounces of silver is expected to be produced. The copper extracted on a yearly basis will account for 3% of the world total.

Mining activity at this site is expected to continue for 45 years and account for 30% or more of Mongolia’s GDP. Mongolia has set up a sovereign wealth fund to handle the anticipated $30 billion in royalties and tax revenue. Once the contracts were signed a little over a year ago, Mongolia received its first check for….$10 million. How will the traditional Mongol land ethic, not to mention environmental and conservation considerations, hold up in the face of this kind of money pouring into the country?

The mine site

Needless to say, this single mine is a total economic game-changer in a country where the current average income is $3200 a year. And this is one mine. There is a huge coking coal deposit, Tavan Tolgoi, also in the Gobi, that will be developed in the not to distant future. There is already a new east-west railway planned to move the coal to the current north-south line, along with many other planned improvements in infrastructure.

Second, I personally know two Mongols who work at Oyu Tolgoi. One was a bird researcher I met on my very first trip to Mongolia in April of 2005 when he was at Ikh Nart during the Earthwatch team. I saw him again my first evening in UB this past July when I was invited to attend the farewell dinner for the most recent Earthwatch team. He had recently become the Environmental Officer at the mine. We’ve been Facebook friends for almost a year.

The second is a guide I’ve had on two of my trips, once in 2006 and again in 2008. He has worked as the Safety Officer for the subcontractor who is sinking the main shaft for, I think, a little over three years. He’s down at the site for a month at a time and must stay within the fence perimeter. Then he comes back home to UB for two weeks. He found me on Facebook a few weeks ago and we had a great “catching up” chat.

Employee housing: gers, of course

The two men have met a couple of times at the mine site, so it’s a small world story. To be continued….

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