Mongolians, on the brink of abundant mineral wealth accumulation  find themselves torn between doing it with the multinational giants of global mining, and going it alone.

Mongolia’s deal with global major Rio Tinto, to exploit the massive Oyu Tolgoi deposit of copper, gold and silver is at last about to begin operation. The promise of wealth for all, to be shared by all three million Mongolians of independent Mongolia, could be about to happen.

Or the resource curse could strike yet again, the mine goes ahead, ore is extracted, and the money vanishes. Mongolia is caught between giants, not only between the enclosing Russian and Chinese giants who constitute the country’s borders, but also between the giant multinational miners and Chinese state owned smelters and metal users.

Landlocked Mongolia has no choice but to sell to the Chinese. The world’s factory is in China, and demand for raw materials, despite China’s slowdown, remains insatiable. Russia, despite Putin’s theatrics, is a shadow of the former USSR, in no way a significant customer for Mongolia’s minerals. Freighting the minerals to a (Chinese) port for export overseas is uneconomic. China is the preordained customer, a buyer keenly aware of its opportunity to be the price setter. That much is inevitable.

Far less inevitable, in Mongolian eyes, is that a global mining giant is necessary to get the ore out of the ground, processed, and onto the market. How hard can it be, they ask, to dig it up and send it off?

This is where it starts to get painful, where a national yearning for not only income but also the dignity of doing it for oneself, collides with the way the global commodities trade works. Mongolia, from the President down, is slowly coming to terms with the fact that even the digging is complex, and each stage after that is more complex still. The resource nationalist dream of self-reliance is especially dreamlike when it comes to the upfront capital expenditure cost of setting up the mining operation, the concentrator and perhaps a smelter, investing billions years before the cash flow begins.

This is where the game is tilted to favour the major players, who  can readily raise money from the markets, if they don’t have sufficient accumulated profits to finance it themselves. The sovereign state of Mongolia, by comparison, appears on the radar of international investors as an unknown, a political risk, a potential borrower of uncertain provenance, with no track record of generating suitable rates of return on investment.

So Mongolia, protesting still that it didn’t ought to be this way, reluctantly agrees to honour its agreement with Rio Tinto, and the mine at last starts production in 2013.


What Tibetans would give to have such problems! From a Tibetan perspective, Mongolians may be agonising over the collision between resource nationalist yearnings and market realities, but they do have choices, and they will benefit even if the deal isn’t quite as good as many had hoped. Tibetans can only dream of having choice. At a time when devout Tibet Buddhists can be shot in the head without warning, for celebrating the birthday of the Dalai Lama, the idea of choosing whether or not to mine seems an unimaginable luxury.

Tibet and Mongolia are similar in many ways, sharing not only a common heartfelt devotion to the same religion, but also a rich patrimony of minerals beneath their wide landlocked homelands. Tibet, like Mongolia, is about to be mined intensively, for the same minerals, and the same Chinese users.

But there the parallels end. Tibetans have no say as to whether or how their minerals are mined, or who does the mining, or who benefits. The global multinationals are conspicuously absent from Tibet, partly because they understand the political risk, but primarily because China’s state owned (SOE) mining giants want it for themselves. These are corporations answerable only to the Communist Party, which retains direct control of appointing the SOE bosses.

Any Tibetan who dared to suggest, perhaps on a weibo blogpost, that local communities should have a say in whether mining goes ahead, or should receive royalties from the mine, would be immediately censored, or accused of “splittism”, a serious criminal charge leading to a long gaol sentence.

But would Tibetans really want to have to choose between leaving minerals in the ground, and mining? Surely we all know Tibetans never mined anything, and in fact spent more time saving worms from spade and plough than any other activity?

That’s the Shangri-la myth, the gospel according to Brad Pitt’s starring role in the 1997 hit, Seven Years in Tibet. This grand romance insists the saintly and wise Tibetans ensured their precious unobtainium remained unobtainable. In reality, Tibetans, and their neighbours, have long known of their mineral riches, and did mine with care, highly selectively, for iron link chain bridges across raging rivers, and for exquisite Buddha statues. Tibetans made their choices over many centuries, to mine on a modest scale.

Now the scale has escalated, and any assertion of a right to choose is criminalised. China’s geologists now estimate there is at least 20 million tonnes of recoverable copper in southern Tibet, perhaps as much as 80 million tonnes. That could keep big mines operating for decades, and further discoveries seem likely, as geologists worldwide come to Tibet to figure out how the collision of the Indian and Eurasian tectonic plates led to concentrations of copper and gold in subterranean molten magma chambers.

Global science and China’s state capitalism have arrived, to exploit Tibet intensively, while silencing the Tibetans more effectively than any of the African societies where China is also hungrily mining. Choice is gone, a major underlying cause of the wave of protest suicides by Tibetans taking utmost care, even in extremis, to harm no-one but themselves to ensure they have a fleeting voice.

Under such circumstances, speculation as to whether a free Tibet would mine its resources, of its own volition, is idle.

Yet Mongolia’s yearnings are suggestive. When the Tibetans turned the minds of the Mongolian invaders centuries ago, the Mongols turned to Buddhism with a sincerity equal to that of the Tibetans. If Mongolia is now mining, it is not because it has forgotten Buddhism.

The paradox is that the shared histories of Mongolia and Tibet, brought under the Manchu Qing conquerors of China by yet another nomadic invasion, diverged sharply only in the 20th century. Until then, Mongolia was as firmly within China’s control as Tibet, actually much more so, since Chinese moneylenders ruined Mongolian aristocrats and farmers alike, while having little hold on Tibet. In the 20th century much of Mongolia broke free and was protected, by its close relationship with the USSR, from being swallowed again. What China called Outer Mongolia was and is free, although Inner Mongolia remains a province of China.

Tibet a century ago similarly considered itself free, but never had a powerful protector, and fell to the Communist Party’s Peoples Liberation Army in the 1950s. The result is that Oyu Tolgoi, only 80kms outside China’s borders, in independent Mongolia, may yet make Mongolia’s fortune; while the similar deposits of Yulong, Gyama, Chulong and Shetongmon, in Tibet, may enrich only China’s SOEs and bring ecological disaster to the great rivers of Asia, on whose headwaters they sit.


More on this in Spoiling Tibet: China and Resource Nationalism on the Roof of the World, out in September 2013.





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