The corporate capture of Mongolia
Why a mineral-rich country is struggling to benefit from its own resources
Oyu Tolgoi mining complex © Abhi Singh
Welcome to Mongolia, one of the most sparsely populated countries in the world. Sandwiched between the superpowers of China and Russia, it is home to just over 3 million people – many of whom live as nomadic herders in a vast desert-steppe landscape.
The story that unfolds here is not a unique story. In fact it seems very normal; business-as-usual. It is the story of a country that is told it needs to develop. That it needs to let investors in, put the interest of business first, before the interest of its people. Because: are they not the same?
It is also the story of multinationals, international financial institutions and powerful countries teaming up together to, basically, take what they want. To outwit, outnumber and outpower a people, a country to go for the bargain, leaving the other party bereft of their resources, their clean air and clean water in the name of development.
For generations, Mongolian herders have gone about their business leaving some of the richest mineral resources on the planet laying undisturbed beneath their feet. Although gold may have been collected from stream beds here as early as the eleventh century, when Genghis Khan still held sway, Mongolians are brought up not to dislocate the soil. There was a long-standing resistance among nomadic Mongolians towards extractive mining activities that transgress the communal use of the earth and its resources.
However, when one of the world’s largest known copper and gold deposits was unearthed in 2001 beneath Oyu Tolgoi – a sacred site in the middle of the Gobi Desert – grand promises were made that this could solve Mongolia’s financial woes. The mine’s president boasted in 2011 that more than half of the mine’s output would go to the Mongolian state and that the project would benefit all Mongolians, including future generations.
This was welcome news indeed in a country that had been struggling economically since the fall of the Soviet Union. Food had been rationed and as many as one million people were living in poverty. Mining was feted by the World Bank, the International Monetary Fund (IMF) and others as the best way of turning around the country’s fortunes.
Watch this short film about the effects of mining, created by Jonah Kessel for the New York Times in 2012:
Sadly, the promise of untold riches has not materialised for the people of Mongolia, as this story will show.
UN figures show that average poverty in Mongolia increased from 21% in 2014 to 29.6% in 2018.
We present the turbulent development of the Oyu Tolgoi Mine in four chapters, each of which shows a different angle but make up one story. An interactive timeline gives an overview of the developments and major events. If you are interested in a particular angle, please select the corresponding section from the list below:
Start with this section if you want to know more about the development of the mine, the corporate structure of the mining company, and the growing debt burden of Mongolia. Continue reading…
As Mongolia undergoes economic restructuring, leaked embassy documents show how behind the scenes large mining companies and the US Embassy force Mongolia into an unfavourable mining deal. Read more…
In this section we explain how tax is avoided and Mongolians miss out on millions of dollars. Discover more…
The fourth and final section of the story looks at the loss of sovereignty, and the role of trade agreements in that process. It ends with a number of important recommendations in support for more democratic control over natural resources. Read more….
The timeline section shows you an overview of the most important events between the democratic revolution of 1990 and the record profits reported by mining company Rio Tinto in 2020. Check out the timeline of events…
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