Country ... Mongolia
Mining

The Big Dig ... Can Mongolia's mining boom protect national interests and local livelihoods while reaping the economic benefits?

Burgess COMMENTARY
This is a good report, but the big question about the 'value' of this large scale mining investment is really left unaddressed. It is likely that the investors know exactly what is happening, but the people who have been on the other side of the negotiations are, for all practical purposes, entirely in the dark. This is the norm, and is somewhat reminiscent of the way capitalist big business worked in the days of the 'robber barons' in the 19th century. Surely something better should be going on in the 21st century.

My training in engineering, economics and accountancy is very useful, though my methodology and conclusions will never stand up in a court of law. The report suggests that there is a big disconnect between the value arising for investors over the next 20 years and the value destruction associated with the project that may go on for a thousand years. A typical MBA training teaches that the future may be 'discounted' and therefore does not figure in investment thinking, but the reality is that the future is just as important as the present for people who live in a 'place' and do not want to move.

Modernisation can be good ... but it must be done taking all the value flows into account.

Clearly the project analysis that gets done by companies engaged in extractive industries is short term and based on the money profit potential from the perspective of the investing organizations. Rarely anything as rigorous is done with reference to value analysis from the perspective of the place. It should be no surprise that there is a growing anger about inappropriate exploitation in the global mining sector.
Peter Burgess

The Big Dig ... Can Mongolia's mining boom protect national interests and local livelihoods while reaping the economic benefits?

Mongolia is opening one of the world's biggest copper mines, the Oyu Tolgoi.

The project is due to start operations in the next few months and this mine alone will account for 30 percent of Mongolia's entire GDP.

But the Oyu Tolgoi deal between the government and the Australian company Rio Tinto is highly controversial. The government gets just 34 percent, raising suspicions about how much the nation's interests are being protected.

Rio Tinto is also exempt from a windfall profits tax.

And critics say the government is inexperienced in striking deals with foreign mining giants.

For those living around the site, their concerns are more immediate. Located in the South Gobi desert, water is a precious commodity and a source of life for the nomadic herdsmen.

But now the mine has closed off open water sources which it now owns. Instead, it has built a few wells for the locals to survive off. The herders are concerned about surviving the coming winter.

Environmentalists also fear that rapid mining-driven growth has come at the expense of nature and the local way of life.

101 East asks: Is mining changing Mongolia for the better or the worse?

Source: Al Jazeera