Mineral-rich Mongolia grapples with 'resource curse'

Chanting prayers to Tenger, the all-knowing holy sky, Mongolian shamans in fur and feather headdresses protested against a Canadian mining project they say threatens ancient grave sites. "It's for our love for Mongolia, to protect our resources and territory," said Tseyen-Oidoviin Sarantuya, who travelled more than 1,000 kilometres (620 miles) to demonstrate in Ulan Bator's main square against the venture. "I want people to know that Mongolia should remain Mongolian," she said. Beneath Mongolia's expansive, largely empty steppes lie coal, copper, gold, iron ore and other minerals whose worth is estimated at more than $1 trillion -- wealth that could transform the lives of its three million inhabitants. But efforts to extract it have tottered in the face of incessant internal fighting over how much control and profit foreign companies should be allowed, and deep-rooted suspicions of outsiders. Several naturally endowed countries -- such as Venezuela, Myanmar and Nigeria -- are regarded as having failed through corruption, bad governance or economic mismanagement to fully realise or effectively distribute the benefits of their bounties. And Gantumuriin Uyanga, a member of the Great Hural parliament, warned AFP: "Mongolia already faces the resource curse. It is reality now." Her Mongolian National Democratic Party is part of the ruling coalition, but she said spiritual appeals illustrated authorities' failure to spread the wealth. "It seems to me truly unfortunate that people are asking help from the sky because of the poor governance in Mongolia," she said. Four years ago the country led the world in economic growth at 17.5 percent thanks to a minerals boom exemplified by the vast Oyu Tolgoi copper and gold mine in the Gobi desert, controlled by Anglo-Australian resources giant Rio Tinto. But rising resource nationalism and an increasingly stringent business environment have dampened investor enthusiasm, while the global commodity bust makes exploiting them less profitable. In 2014 foreign direct investment into the landlocked country plummeted 74 percent, Mongolian central bank data shows, and economic growth dropped to 7.8 percent. The Asian Development Bank forecasts expansion will plunge by more than half this year, to just 3.0 percent. Julian Dierkes, an expert on Mongolia at the University of British Columbia, said the country was still finding its way in the capricious world of international finance and was simultaneously "the object of desire and scorn for global capitalism". Now authorities are trying to break the logjam. In February, Mongolia's president pardoned three foreign former mining executives who had been jailed for tax evasion in a case that spooked investors. Earlier this month, Prime Minister Chimediin Saikhanbileg -- who can reportedly bench-press 175 kilograms -- announced the government and Rio Tinto had agreed "in principle" to go ahead with Oyu Tolgoi's stalled second phase, saying that making "historic decisions" was his duty. Sam Walsh, Rio Tinto chief executive, told the company's annual meeting last week discussions were continuing. - 'Earth spirits' - Ulan Bator has a national dilemma to contend with. The proud homeland of pan-Asian conqueror Genghis Khan, in more recent centuries Mongolia has frequently been a geopolitical pawn in the power plays of huge neighbours China and Russia, both of which have dominated it in turn. Sodnomiin Tsetsgee, a kindergarten teacher expecting her first child, was among the many who boycotted a controversial text message referendum that backed stalled foreign resources investment ahead of the prime minister's Oyu Tolgoi announcement. "We should use our resources for ourselves," she said. "It's not good that only foreigners benefit from them." Mongolia's nomadic heritage, traditional animistic beliefs and nearly seven decades of communism have given it an enduring sense of the land as common wealth -- private land ownership was only constitutionally recognised after the country's 1990 democratisation. Myagmarjaviin Enkhzaya, vice president of the Institute of Mongol National Shamans, took part in the Ulan Bator protest and says Toronto-based Centerra Gold's plan would harm culturally important graves. The company says the burial sites' locations are known and it will not interfere with them. But Enkhzaya said: "We want people to understand that while you sleep greedy people will be exploiting Mongolian natural resources as well as the mountains we worship. "There will be no land to inherit in future because corrupt politicians are selling it away." At the same time Mongolia's $1.3 trillion in mineral riches are a treasure trove in a country with a gross domestic product of just $12 billion. The result can be conflicting attitudes. Some shamans have turned down lucrative jobs with mining companies out of spiritual concerns, said Amalia Rubin, a researcher at the University of Washington. "There's very much this internal argument between wanting Mongolia to develop and wanting Mongolian people to get the benefits of economic development, with the idea of propitiating the earth spirits and also following traditional Mongolian customs," she said.