Fight for steppe
Parliamentary elections in Mongolia have not given the answer to a question who will operate the country with the world`s largest not mastered coal-fields and copper. It means that fight for Mongolia in which participate China, Russia and the USA, will proceed. And in the conditions of approaching crisis the best chances in this struggle against a prize in $1,3 trln are received by Beijing.
the parliamentary elections which have Taken place on June, 28th in Mongolia in Russia, and in many other countries, remained not noticed by the majority of the population. Against fight in the European championship on football elections in the country with the lowest in the world population density where there lives all 2,8 million person, not even in spite of the fact that the border of Mongolia with Russia makes the most significant event about 3,5 thousand in km and on extent concedes only to borders with Kazakhstan and China.
nevertheless, by recognitions of interlocutors " the Authorities " In the Ministry of Foreign Affairs of the Russian Federation, the Russian management watched closely voting in neighbouring country. Simultaneously the attention of many world capitals has been riveted on events in Mongolia, especially Beijing and Washington. After all on present elections the destiny of the country could dare, which last years has turned to base of scale geopolitical collision (see article " In depth of the Mongolian ores " in " the Authorities " N27 for 2008). Right now in Mongolia interests of China needing raw materials for growth of economy, the USA were crossed, aspiring to limit the Chinese influence in Asia, Russia, trying to strengthen the positions in the Far East, and also the largest mining corporations of the world.
having left an orbit of influence of the USSR after anti-Soviet revolution of 1990, Mongolia long time was on world politics periphery. Clamped between Russia and China the country in which almost half of population lives in capital the Uhlan - Batore, and second half or in small settlements, or wanders in steppe, an external world did not interest almost. To neighbours too had no time for Mongolia. To Russia in 1990 - e there was an active race for power and the property, and in China east seaside provinces and #150 roughly developed; adjoining on Mongolia severo - the West of the Peoples Republic of China was considered as depressive suburb in which Beijing seriously was not engaged. From external players have been actively presented unless the USA which positioned Mongolia as " successful young democracy " also supported local elite grants for work NKO and training at the American universities.
all beginning to change only to the beginning 2000 - h years. In China which has endured decade of rapid growth, structural reforms of government Chzhu Zhuntszi then at Beijing hands have reached an accomplishment of own deaf provinces, and at the same time and developments of closer relations with the adjacent countries have ended. The new president has come to Russia to the power Vladimir Putin who was engaged in restoration of the USSR lost after disintegration of world influence, including by means of contacts to splinters of the Soviet empire. At last, the United States on presidential election were defeated by republican George Bush who has declared advancement of democracy all over the world by one of the main priorities of Washington. And though soon, after acts of terrorism on September, 11th, the USA densely uvjazli in the Near East, relations with Mongolia became more priority (not last role in it the theory of enclosing of China which already then has started to type popularity in Washington has played also).
It is no wonder that before bypassing the Uhlan - Bator the party world leaders have suddenly become constant visitor to Mongolia. In 1999 there for the first time there has arrived the chairman of the Peoples Republic of China Tszjan Zemin, a year later Vladimir Putin, and in 2005 George Bush. And in the beginning 2000 - h it seemed that race for friendship with Mongolia win the USA. So, in 2003 180 Mongolian soldiers have gone to Iraq, and in a year the Mongolian contingent not without support of Washington has been directed to Kosovo.
splash in interest to Mongolia from the largest world players speaks not only a policy, but also economy: the country possesses enormous stocks of copper, coal, gold, uranium and other minerals, and working out most major fields yet has not begun. Thanks to start of the first projects the economy of Mongolia has grown for last decade in 10 times: country gross national product in 2000 made about $1 mlrd, and in 2010 Already an order of $10 mlrd (last year almost $13,3 mlrd). A considerable role in it not so much growth of volumes of extraction, how much boom in the raw markets, dispersed the prices for the basic goods of the Mongolian export both #150 has played; coal and iron ore. By estimates of analysts of investment banks, mineral resources of Mongolia in the present prices can cost about $1,3 bln.
In Mongolia many interesting actives. So, the silver deposit of Asgat located in a frontier zone of Mongolia, Altai and Tuva, has the estimated stocks in 3 thousand tons of silver, and look-ahead about 5 thousand tons. Uranium stocks are one of the world`s largest and make about 1,4 million tons (key deposits Dornod - Ajmak and Gurvan - Bulag). In the country there are also hydrocarbons: total stocks only two deposits, Tamsag and Dornogobi around wilderness Gobi, are estimated in 7 mlrd oil barrels.
the Most interesting actives, certainly, are a coal-field and copper. Largest of them are located in the south of the country. A coal deposit of Tavan - Tolgoj (" Five hills ") is largest of not mastered in the world: its stocks make nearby 6 mlrd coal tons, of them of 40 % coked coal. Nearby, all in 80 km from border from the Peoples Republic of China, one of the world`s largest zolotomednyh deposits and #150 is located; Ojuu - Tolgoj (" the Turquoise hill ") . The estimated stocks 35,8 million tons of copper and almost 12,8 thousand tons of gold (the data of 2010). Now the basic shareholder Ojuu - Tolgoja is avstralo - the British metallurgical giant Rio Tinto whom together with Canadian Ivanhoe Mines (its controlling stock this year has been got by the same Rio Tinto) 66 % of a deposit, other and #150 own; at the government of Mongolia. Rio Tinto has enclosed in Ojuu - Tolgoj over $6 mlrd and intend to start a deposit next year, and by 2018 extraction should leave on a total power 450 thousand tons a year (about 3 % of a present world level of production of copper in the world). Under forecasts, by 2018 copper manufacture on this deposit will give almost 30 % of Mongolian gross national product.
active geological studying of many of these deposits was conducted in Soviet period, but after disintegration of the USSR works have stopped. In 1990 - h years the American, European, Brazilian and Japanese companies, but industrial extraction were connected to research of mineral stocks of the country on the most perspective sites and has not begun. The prices for raw materials did not allow to carry out multi-billion investments which were required for dorazvedki deposits and building of a transport infrastructure for delivery of ore to the world markets. However in the middle of 2000 - h years of the price for metals and coal have gone upwards that is why struggle for the Mongolian resources was entered by the largest world companies: Rio Tinto, avstralo - British BHP Billiton, steelmaking concern ArcelorMittal, britansko - Swiss Xstrata, Brazilian Vale, the American coal company Peabody, Chinese Shenhua and Japanese Mitsui.
Russia also did not stand aside from this race. Ojuu - Tolgoem in the middle of 2000 - h actively were interested years " Rusal " " Norilsk nickel " " Polymetal " and even all-union scientific research institute " Zarubezhgeologija ". In Tavan - Tolgoe applied For a share the alliance of the Russian companies consisting from " Severstal " " Renovy " and " Bazela ". The interest to actives in Mongolia showed and " Rostehnologii " consolidating shares of the Russian Federation in Russian - the Mongolian metallurgical joint ventures " Erdenet " and " Mongolrostsvetmet " (49 % in which belong to the Russian Federation). And after " Rostehnologii " became the partner " metalloinvesta " Alisher Usmanov who has received in the autumn of 2008 the licence for the largest Udokansky copper deposit located in Transbaikalian edge in Russia, interest of a state company to copper actives in Mongolia has only amplified.
but the main locomotive in struggle of Russia for the Mongolian bowels, certainly, there was a president of Open Society of the Russian Railway Vladimir Yakunin.
Vladimir Yakunin was interested for a long time in the Mongolian deposits, but for a control establishment over them it has started active actions only in 2009. Then in May the Uhlan - Bator were visited by Vladimir Putin who has carried on negotiations with the prime minister of Mongolia Sanzhijnom Bajarom. The graduate of faculty of law of the Moscow State University, in 2001 - 2005 working as the ambassador of Mongolia in the Russian Federation, this politician was considered in Moscow as the most friendly in relation to Russia the representative of the Mongolian management. After party negotiations officially declared joint venture creation " infrastructure Development " between the Russian Railway and the Mongolian state companies " Erdenes - MGL " and " Mongolyn tomor zam " (own licences for the basic deposits of Mongolia). The joint venture should be engaged in building of the railways to not mastered deposits in the south of the country, first of all to Ojuu - Tolgoju and Tavan - Tolgoju.
As told then Yakunin to the newspaper " " During negotiations of Bajar has personally promised to Putin to pass the joint venture " infrastructure Development " licences for Tavan - Tolgoj and Ojuu - Tolgoj. Instead of the joint venture should construct a branch line to the Uhlan - the Batorsky railway (UBZHD, on 50 % belongs to the Russian Federation), whence coal should be delivered on the Trans-Siberian Railway in the Russian ports in the Far East and further to Japan and South Korea. Sources " the Authorities " in the government of the Russian Federation, and also close to the Russian Railway never hid, what exactly occupancy of the Trans-Siberian Railway is the main motivating of participation in so difficult project for Yakunin.
besides railway building participation of the joint venture in working out of Tavan - Tolgoja and Ojuu - Tolgoja and #150 was planned; for this purpose it should hold competitions and choose profile partners in development of deposits (it was supposed that as a result " infrastructure Development " will receive 25 % plus 1 action, the investor 75 % a minus 1 action). One of the main conditions of competitions would be to carry the consent of investors ore through Russia.
in exchange for granting " to infrastructure Development " the rights to working out of the Mongolian deposits Russia promised to bring in this joint venture $1,5 billion Besides, as told then Yakunin " to the Businessman " till the end of 2009 it was planned to increase authorised capital stock UBZHD by $250 million, and Russia besides entering of the half was ready to help to finance Mongolia its payment. Thus, the geopolitical project of the Russian Railway in Mongolia would manage to the Russian budget at least in $1,75 billion Thus given sum not definitive expenses. As the head of the Russian Railway spoke, development of the Mongolian deposits would demand not less than $7 mlrd (which include also expenses on railway building).
However, in the Mongolia the project of the Russian Railway which actively lobbied Vladimir Putin and visited after it in the Uhlan - Batore in August, 2009 Dmitry Medvedev, has been conceived cool. The matter is that still in the end of 2008 - go the World bank by request the Uhlan - Batora has conducted research of what of ways of transportation of coal with Tavan - Tolgoja will be cheaper. As it is marked in this report, transportation on the south, towards the Chinese border, will open road on the huge market of the Peoples Republic of China the largest consumer of coal. For this purpose it is necessary to construct less than 100 km of the railway. In China the railway from the West of the country to seaside port Tianjin is already constructed. By calculations of the World bank, all route of transportation of ore to Japan and South Korea through the Chinese port Tianjin will appear twice more cheaply, than through Russia. " Mongolia anyway should build the railway to China. Otherwise she will lose to the Australian competitors and will miss a share in the growing market, the operating partner Hong Kong Eurasia Capital Partners Sergey Men speaks. and to carry coal and copper by the basic market any strange idea ".
Experts notice that China had a set of the internal reasons which motivate the country to be interested in the Mongolian bowels actively. " last years Beijing actively transfers industrial base to the central and western areas of the country, and at the same time tries to close collieries unprofitable and dangerous to miners while, truth, it is not especially successful " specifies Maine. Besides, China surpasses Russia in possibility to build the railways quickly and cheaply. According to living in the Uhlan - Batore Russian mongoloveda Yury Kruchkina, on the average cost of kilometre of the railway at Chineses can make $3 million, whereas at the Russian contractors all $13 million
Vladimir Yakunin searches for reciprocal arguments. So, all last year he declared that in case Mongolia will choose a variant of transportation of ore with Tavan - Tolgoja through the Trans-Siberian Railway, Russia can lower the rate on transportation to such level that the route through the Find can compete to a route through Tianjin. However, it means that the Russian Railway (or finally the Russian budget) should subsidise transportation. And in that case the economic sense of megaprojects on building of the railways in Mongolia becomes definitively not clear: the Russian Railway will carry coal almost to itself at a loss. The Russian companies can largely earn unless on railway podrjadah.
Yakunin`s Second argument which it persistently advanced during all visits to the Uhlan - Bator, consisted that Mongolia should not get to excessive dependence on one consumer of resources China. The geopolitical argument well works in Mongolia, considering old and uneasiest relations of neighbours, Maine agrees. In Mongolia for last two decades sinophobia, podpityvaemaja fear in front of the becoming stronger China and more and more aggressive rhetoric of the Chinese nationalists gains in strength. And in 2000 - e years in the country have appeared also the first ultranationalist organisations which ideology in many respects is based on hatred to Chineses and upholding of the racial and cultural superiority of Mongols (it is especially frequent representatives of these organisations appeal to Genghis Khan times and its fellow-heirs who have subdued China). In the uhlan - Batore operated three rather known nationalist groupings (" Dark blue Mongolia " " All Mongolia " and) which young active workers borrowed external attributes of skinheads, including a swastika, and fights with Chineses arranged the Mongolian national union. Representatives " Dark blue Mongolia " Have come further all and bragged that shave heads to Mongols who will convict of sexual communications with the Chinese men.
however, despite the extremely emotional relation to southern to the neighbour, the Mongolian elite adheres to quite pragmatical position: any world company which will get access to Tavan - Tolgoju or Ojuu - Tolgoju, will insist all the same on export of ore to China. Therefore last years all Mongolian governments (at first Sanzhijna Bajara, and after its resignation from - for illnesses in October, 2009 its heir Suhbaataryna Batbolda, too graduate MGIMO) actively made advances to Moscow, and especially with Vladimir Yakunin, promised access to deposits, but never fixed these promises in documents. The Mongolian officials in conversations with " Inlastju " always asserted that any concrete promises concerning transfer of licences for Tavan - Tolgoj or Ojuu - Tolgoj Bajar, Batbold of Russia did not give they are the Russian officials interpreted words of the Mongolian colleagues how they would like.
As a result Russia has been urged to observe with surprise of how at first in 2009 the licence for Ojuu - Tolgoj, like as the promised Russian Railway, is definitively cunning to alliance Ivanhoe Mines and Rio Tinto (it was found out that the licence was at Canadians some years, but the company discussed with the Uhlan - Batorom of a condition of its definitive registration). And then on Tavan - Tolgoj has been declared the international competition. " on a broader scale - that illusions concerning Ojuu - Tolgoja on a broader scale are inexplicable. That the licence is for a long time at Ivanhoe and to take away it very uneasy, knew all. It was possible to hammer simply in a word " Ojuu - Tolgoj " in Google and for 20 minutes all to learn, tells " the Authorities " The investment banker working in Mongolia. well and about Tavan - Tolgoj it was necessary to look simply at a map, to read the report of the World bank and to draw conclusions. All of us very much were perplexed, when have learnt that your government is ready to spend money for this project ". Interlocutors " the Authorities " in the government of the Russian Federation now recognise that the march - a throw on the Mongolian bowels has been poorly prepared, and complain of absence distinct mongolovedcheskoj examinations. " for example, here children from " Rosatom " went to Mongolia and wanted to look at the new law on foreign investments into strategic branches, and transfer was not. In embassy the majority of diplomats too without the Mongolian language a pier, all and so on - russki talk. And times change " tells a source " the Authorities ".
However in spite of the fact that the Russian claims in Mongolia especially seriously are not conceived, to Chineses and the international companies control over Tavan - Tolgoem to receive while too it was not possible. The matter is that sharp internal political struggle in Mongolia in which the question on destiny of the largest deposits and distribution of incomes of their development is one of key.
the most difficult destiny has comprehended Tavan - Tolgoj. The government of Mongolia some times declared on it the international competitions, named shorts - sheets of applicants, and then cancelled the tender both #150; and all history repeated. Last time it has occurred in July, 2010 when the Great hural has confirmed the program according to which the deposit was divided into two sectors: western and east. The licence for working out of east part company Erdenes - Tavantolgoi will own, 50 % in which remains at the state, and 50 more % will be sold. From them of 10 % will get to citizens of Mongolia (possibly, in the form of preference shares), 10 % will sell at internal auctions, and 30 more % at a stock exchange. The uhlan - Bator has already selected investment banks which will organise placing: Goldman Sachs, Deutsche Bank, BNP Paribas and Macquarie Group. For this package banks expected to gain from $1,5 mlrd to $5 billion Platforms for placing which was transferred time and again and now it is planned on the first quarter 2013, there will be Hong Kong, London and the Uhlan - Bator.
On the western site of a deposit the tender has been declared. The Russian Railway has made an application on it in a consortium with SUEK, group of the South Korean companies led by Korean Resources Corporation, and also Japanese Itochu, Sumitomo, Marubeni and Sojitz. Besides, demands have submitted ArcelorMittal, Vale, Xstrata, Peabody, and also a consortium Chinese Shenhua and Japanese Mitsui. The Mongolian management long delayed the announcement of results of the tender, and in July, 2011 unexpectedly declared that three participants became winners at once: a consortium led by the Russian Railway, Peabody and Shenhua, and Chineses should receive 40 % of a site, and Russians and Americans on 30 %. These results from participants of the tender did not suit anybody, then the Mongolian officials have started to hint at possibility of carrying out of one more auction. " have outwitted itself " concluded then interlocutors " the Authorities " in the government of the Russian Federation.
however after that process has decayed. The matter is that the begun election campaign, marks Kruchkin. The matter is that till January, 2012 Mongolia the extremely unstable coalition from two main political forces and #150 operated; Democratic party of Mongolia (DPM) president Tsahiagijna Elbegdorzha and the Mongolian people party (MNP) prime minister Batbolda. From - for existing systems of controls and counterbalances struggle of these two forces sharply brakes decision-making concerning bowels. So, the largest investment projects with participation of foreigners should confirm parliament, the government and security council led by the president. " we very much hoped that during present campaign in the country there will be one leading political force. Not important, DPM or MNP. The main thing that it there were people who would supervise a situation " tells " the Authorities " one of the western investors in Mongolia.
however it has not occurred. In the Great hural of 76 places: 48 deputies get out in one-mandatory districts, and remained 28 on proportional system. On one-mandatory districts DPM has received 22 places, and MNP 19. On proportional system democrats too have won, having typed 35,3 %, and MNP 31,3 %. 22,3 More % were received by a coalition " Justice " Led by Mongolian it is national - revolutionary party eks - president Nambaryna Enhbajara. " formation of the capable government needs at least 37 places. Independently democrats have not received them, so there will be a next coalition. If it will be possible to agree, for July the coalition will be created, and by the autumn the new design will definitively be issued " Yury Kruchkin predicts.
Thus, it is not excluded that the new government will be engaged in internal race for power and will tighten unequivocal decisions on Tavan - Tolgoju and even Ojuu - Tolgoju (the group of deputies of the Great hural has suggested to reconsider the agreement with Rio Tinto, having considered a share of Mongolia 34 % too small). Besides, the new government should accept the final decision about destiny of accepted recently rigid law on regulation of foreign investments which the Uhlan forbids the foreign companies to sell each other actives in Mongolia without the consent official - Batora (the law has been accepted after Ivanhoe Mines declared intention to sell mining South Gobi to the Chinese aluminium giant Chalco).
Thus, experts mark, the possible paralysis of the power and a tightening of decisions in the long-term plan will work in interests of China. " taking into account a possible second wave of crisis of the price for raw materials can fall, so the authorities of Mongolia for performance of social obligations to the population should search for sources of incomes in start of the big projects, Sergey Men believes. Russia in case of crisis to invest in railway projects, obviously, cannot, the western companies too will be more careful to concern money. To Chineses with their immense resources it on a hand. So, if Mongolia wishes to diversify partners, decisions should be accepted as soon as possible ". At this all it is already obvious, what even in case of transfer of the licence for Tavan - Tolgoj to the international companies the Mongolian coal will go for export first of all to China.