The worlds 19th largest country has one International Airport, 32% of the population below poverty line and a per capita GDP of $2100. Mongolia is a country bordering China in the south and Russia in the North. More than 30% of its 3 million population, is enganed in subsistence herding! Half of its population are among the world’s poorest. The country has scarcicty of arable land but has large deposits of minerals. However this country is on the verge of becoming second Dubai of prosperous Asia!
Recently Mongolia’s parliament passed a landmark package of laws to open its huge mining reserves to big foreign investment firms. Oyu Tolgoi in the Gobi Desert, near China’s border, will be the hub of Gold and Copper mining projects. Previously Canada’s Ivanhoe and Australia’s Rio Tinto faced governmental restrictions and delays since 2003 but now it can go ahead smoothly. This move could make this country one of the fastest growing in terms of GDP. The government has allowed responsible foreign firms to mine the reserves along with scrapping of the 68% windfall profits tax enforced in 2006. On top of these benefits, the firms can import 60% of the required construction manpower.
It is estimated that the life of these mines will be around 40 years with average production of 1 billion pounds of copper and 330000 ounces of gold per year! Mongolia will be in the fasttrack very soon.
At what cost?
Usually such huge and mega developments neglect the environmental hazards by focusing on the benefits for the shareholders rather than the stakeholders. Shell faced some of these problems in Nigeria in the 1990s. This was a major setback for what was known as the best company to work for. Shell was accused of unethical practices in dealing with the local environment and culture of Nigeria. Shell attracted worldwide attention for their involvement in the unfair trial and execution of the writer Ken Saro-Wiwa and 8 other Ogoni people of Nigeria.
What about Mongolia?
The new agreement will allow company only if they create and maintain a stable operational environment. Inspite of such agreements one should not forget that 30% of its population is engaged in herding and they have a unique culture.
Will this Rags to Riches story lead to another unethical case?
Rogues
