Mining in Gobi Desert

In the vast land where the merchant Marco Polo once traveled to trade with the court of Kublai Khan, a new commerce in precious metals has begun. Foreign companies are moving into Mongolia to prospect for gold. How can the current rulers ensure that the new wealth brings long-term benefits to the population as well as to investors?

In the middle of the Mongolian Gobi desert, a curious scene is taking place. Dozens of men and woman dressed in orange safety clothing and wearing protective helmets are gathered in a circle. In the middle, four monks are chanting prayers and blessings. A few hundred meters away, big trucks are rolling through the sand roads in the background. At a time when Mongolia is flooded with new foreign investments and Western mining companies, such events are part of a process in which the foreign presence is trying to connect with local people. Mongolia’s small population (less than 3 million) lives on a huge area of 1.6 million square meters, sitting above some of the largest gold and copper reserves in the world. Only now, since the country opened up to the global economy and foreign companies, are modern technologies being put in place to extract those riches. At the end of the ceremony, each worker is given the chance to be blessed in person by the Khamba Lama, the highest representative of the Buddhist faith in Mongolia. The location, in the south of the country, just 80 kilometers from the Chinese border, is on the site of the biggest foreign mining concession – as well as the largest financial project – in Mongolia’s history. With over 45 million ounces of gold projected in its reserve, the Oyu Tolgoi project is not only giving a new face to the Mongolian economy, but is also one of the largest gold mining projects in the world, using some of the latest technologies to extract the precious metal from both underground and the surface. The project will account for more than 30% of the Mongolian GDP and will give a unique boost to the local economy. The financing of the project has come in large part from the Rio Tinto Group and a joint investment between Ivanhoe Mining and the government of Mongolia.

As we travel through the giant mining site, the agreement with the local government, whereby the mining company is supposed to employ a minimum of 60% local people, is not very evident. During the construction phase, Oyu Tolgoi (OT) is subcontracting an American engineering company, Fluor, to build the processing plants, shafts and other mass crushers that will be used once the project enters its exploitation phase. As OT is indeed employing a majority of Mongolian nationals, dressed in the orange suits, Fluor went over the border to import additional Chinese labor for the construction. The mine is filled with this migrant work force working 12-hour shifts, 24/7, in order to erect the site in record time. In effect, there are more blue workers (Chinese nationals) than orange workers (Mongolian) throughout the site. The explicit intentions of foreign projects such as OT are certainly good – creating employment, raising the GDP, importing new technologies – but the reality behind this curtain of goodwill is often tarnished. Hundreds of kilometers away, an old Russian car is driving on a dirt road through the desert. The empty landscape seems to stretch to infinity. The car passes behind a low hill and reappears at a small site filled with other old cars, motorbikes and dozens of agitated people in groups of four or five. Digging through the ground, they too are looking for the precious yellow stones that have changed the face of Mongolia, they are the ‘ninja’ miners. Their name is a reference to the shells of the Teenage Mutant Ninja turtles, which highly resemble the green bowls used for panning by illegal miners.

To read the full report, order a copy of the magazine.

Photos and Report by Tim Franco