Архив за месяц: Сентябрь 2010

Mongolian government highlights two gold mining companies polluting Orkhon

According to Montsame Agency, at recent cabinet meeting, a director of the General agency for Specialized Inspection Ya.Sodbayar spoke about results of inspection made into the Orkhon river’s pollution.
The inspection has revealed that the pollution of the river has reached a III-IV level, the last one to a level of highest polluted. Mr Sodbayar has added that the «Altan Dornod Mongol» and «Mongol gazar» mining companies are digging in search for gold in the valley of the Oli, Shiirt, Ulaan Chuluut, Olziit teel streams that feed the Orkhon river in Tsenkher soum, Arkhangai aimag. These companies, having special lisences, have not managed to run any recovery works.
The cabinet has decided to consider this problem again and to issue a resolution.

Three weeks earlier http://english.news.mn reported that following a recent 15-day visit to the area by a working group jointly constituted by the State Professional Inspection Agency and the Ministry of Nature, Environment, and Tourism, all gold mining companies in the Orkhon river basin have been asked to temporarily suspend extraction work. The team  found the river to be heavily polluted and also discovered that many of the companies active near several streams and rivers that flow into the Orkhon and now blamed for causing substantial surface water pollution have been operating without proper permission.

Among the major offenders are companies like Mongol Gazar, Keonarda, Altan Yondoo, Etots, Domogt Sudar, Urnult Sudar and Kenalkhap. The violations by Mongol Gazar have been found to be so widespread that the local government has been asked to review these to see if the company’s license should not be altogether canceled. There are strong demands from the people for heavy penalties to be imposed on the deliberately careless companies. Things are really messy given that one of two highlighted «major» polluters of Selenge River basin — Altan Dornod Mongol Russian-controlled  company, whose head is S.B. Paushok- Russian businessman, who has taken the Mongolian Government to an international arbitration court on the windfall profits tax issue, is already facing charges of tax evasion, and is now likely to be accused of benefiting from fraudulent bank transactions.

Minister Gansukh: we are concentrating on the Orkhon-Gobi water transfer project

Mongolian Minster of Nature, Environment and Tourism gave an interview, likely in order to assure  potential investors that all environmental issues related to South Gobi development are under control . However many of his answers are indirect and ambiguous.  Immediately after the interview we quote World Bank report from 2009, clearly indicating that there is enough groundwater and no immediate need to build water transfer pipelines.

Below excerpts from the  interview  to E.Saikhantuya for www.mongolianminingjournal.com:

Does the Gobi region actually have the water needed for the mining construction projects? What does the feasibility study of Tavan Tolgoi have to say on this?

The feasibility study calculates that 416.6l/s or 36,000 cubic meters of water will be needed for the project. This will come from the Balgas Ulaan lake where 15 wells will be drilled and through a pipeline of over 70 km in length and 600 mm in diameter. There will be three stations to pump the water. However, this figure is likely to change in the design stage when the extent of the demand will be clearer.

Does it mean that a new feasibility study could give different estimates of the water reserve?

That is quite possible. Since the project is to be implemented in a region where water is scarce, our Ministry will have to choose technology that will keep water consumption low and recycle the used water.

Let me explain about the feasibility study. There are four companies with mining licences in the coal deposit. The licence on the biggest part is owned by the State-owned Erdenes MGL. Since Parliament has given total control of the deposit to the State, Erdenes MGL will be responsible for the feasibility study. Once the study is approved, our Ministry will be requested to do the environmental impact evaluation. We plan to employ professional organizations for the job. The water consumption volume will be determined by the Hydrology and Technology Council and must be approved by me as the Environment Minister.

The preliminary feasibility study recommends further exploration for water. Does this mean that the water reserve is not sufficient for large scale production?

We all know that the Southern Gobi region has limited water reserve.  A study of the Balgas Ulaan Lake in 1987-1988 in connection with Tavan Tolgoi determined that the water reserve there stood at 453 l/s. Later in 2007-2008 Khangad Exploration LLC conducted exploration for the Baruun Naran coal deposit and its results showed that it could use150.84 l/s or 13,032.92  cubic metres per day. These studies  have to be reviewed and discrepancies reconciled, with more exploration undertaken of nearer sources.

Is there any other water reserve in the Gobi region besides the lake and the depression?

Water has been found near the TT deposit in Nariin zag, Zairmagtai, and Tavan Aldiin Gobi of Bayan Ovoo soum of Umnugobi aimag, in Borzon Gobi or Khurmen Tsagaan of  Nomgon soum, and in Guramsan and Bugt Gobi of Khurmen soum. The total underground water reserve in all these deposits has been estimated at 219,701.0 cubic meters per day. A hydro geological exploration by Energy Resources made a preliminary estimate of 53,000 l/s or 4,579.2 cubic m per day reserves in Naimant valley of Tsogtsetsii soum, some 200-250 km from the TT deposit, It will require a lot of money and work to bring the water from there.

Aren’t there any restrictions on using underground water for mining in the Gobi region? Will such depletion of the precious resource not ruin the ecosystem?

We cannot allow any drastic changes in the Gobi ecosystem. All mines in the Gobi region have to send detailed annual reports on the state of the underground water reserve to the local administration, the aimag’s environment department and the Environment Ministry. If these reports reveal any dramatic change in the water level and its quality, mining operation will be suspended and the situation studied by an independent research organization. Anyone found guilty of having violated regulations will be penalised. Our regulatory mechanism is competent but they are to be extended further.

At the time of the negotiations for the OT investment agreement the Mineral Council warned against excessive and imprudent water consumption in mining. How true will this be in the present case?

That concern was clearly reflected in the OT agreement. The investors referred to potential reserves they had explored. The water department assessed their claims and found them acceptable. I approved this. The situation now is that the underground water of Gunii Khoiloo can be used until 2018 and other water sources should be found by then. The water consumption during production will be strictly monitored.

There are fears that construction of the railway will destroy animal habitat and will lead to large scale wildlife migration, especially of antelope. Are you thinking of  relocating species, particularly those rare, prior to the project?

Both TT and OT deposit regions harbour several species in the Red List such as the wild horse, the black-tailed antelope and others. Active exploration and transportation activities in the last few years have seen many of these animals move to Khatanbulag soum of Dornogobi aimag, and to Nomgon, Bayan-Ovoo and Gurvantes soums of Umnugobi aimag. Unfortunately, animals cannot be made to follow a migration road we  offer. We are now studying the experience of other countries. The road and railway projects will be planned so that they do not obstruct pasture switching, and normal migratory movement. Also, whatever is built should be kept low enough so that animals can cross them easily. The Ministry will soon recommend the standards in accordance with the environmental impact assessment.

I recently saw plants and flowers growing in the sand in Umnugobi. Is there any incentive for individuals working on green plantations there?

Water is the problem to encouraging vegetation in the Gobi. A scheme to supply clean water to the region is very important. Our Ministry and the Finance Ministry now jointly follow a scheme in which the State purchases trees that are more than three years old from individuals or business entities. In 2008, MNT13.9 million was spent on buying trees grown in 43 hectares. In 2009, both figures rose, and MNT26.4 million went to buy trees grown in 77.2 hectares, mostly by individuals.

What happened to the Kherlen-Gobi project that used to be discussed to help stop desertification and also provide water for mining?

At the moment, we are concentrating on the Orkhon-Gobi project to meet drinking water needs in particular. Let us see how it works out. Depending on the results, we can take up similar projects with the Kherlen and other rivers.

What about harvesting rain and flood water?

The national water program recently passed by Parliament calls for building ponds to collect flood water, install containers for rain water and take other measures to store the water from melting glaciers. We have studied the practices in Turkey, Korea, Japan and the US. I found Turkey’s example the most impressive. It has solved many problems simultaneously by creating water reserves. The stored water is used to produce energy, in agriculture and industry, and the facilities prevent flooding and also create new areas for tourism.

Our water program includes plans to dig ponds to collect rain water, to seed clouds, to install ground generators to increase precipitation and help refill the reserves.

What is this requirement for licence holders to place a certain amount in a reclamation fund before beginning work?

It is not there at present. Now mining operation starts, and then the Ministry approves the amount of money to be spent annually on environmental protection and reclamation. We follow Article 39.1.9 in the minerals law and demand that 50% of this amount is placed by the miner in a special account of the State fund for later use. If the money is not needed in a year, it remains in the account and can be given to another company doing the  reclamation work. The Oyu Tolgoi project will be following this procedure but for Tavan Tolgoi we shall work on mechanisms to place an advance reclamation guarantee amount  in a special fund, prepare rules governing how it is to be spent,  and enforcing compulsory reclamation. The Oyu Tolgoi agreement calls for prior determination of reclamation costs in the event of closure, and of this being placed in advance in a special fund. This will be seen in Tavan Tolgoi also.

Once production starts in the Gobi, the population will grow there, threatening the environment. How do you plan to make sure the area does not suffer the fate of Ulaanbaatar?

This is an important question. Some areas in the Gobi, especially Tsogtsetssii and Khanbogd soums near Tavan Tolgoi and Oyu Tolgoi,  have already changed dramatically and are growing into towns. We do not want settlements to be dependent solely on mines. The inevitable closure of mines some day must not affect the life of the people drastically. Proper planning would keep the supply of pure water and energy separate from the needs of the mine. We shall not allow another Ulaanbaatar to come up in the Gobi, and will insist on green facilities in no less than 40% of the total territory.


World Bank study  has shown that 

-A high estimate of demand for water resources in Southern Mongolia is 350,000 m3/day,

while  a low estimate of the underground water potential is 500,000 m3/day….

Is Minister L.Gansukh familiar with those conclusions? Given likely environmental damage and huge expenses  is it still worthwhile to «see how Orkhon-Gobi water transfer works out» ?





Highly transboundary damage from gold mining

Mongolian NGO»Onon-Ulz river» reported at www.Nomadgreen.org:

River Onon, outflows from the Han Hentii mountain range. It’s a fairly large river which is a source of Amur River and flows into Pacific Ocean. Onon River runs through the territory of six soums in Khentii and Dornod aimag and its water is used by about 40,000 people and 700,000 livestock.

River Onon has been polluted in the beginning of this July and it is still unclear and light green colored.

The result of a recent investigation shows that Ashinga River flowing from Russia is polluted and the river water is pouring into Onon River. This investigation was conducted by Bat-erdene (Member of Parliament), Otgontsetseg ( leader of NGO «Onon-Ulz river» ), Darkhantor (chairman of environmental agency of Khentii aimag), Sukhbat (water expert of Water Authority Agency of Government Implementation Agency) and local communities and army people, which covered the border between the two countries.

This river has been polluted by disastrous mining activity by «Baldzha»Company in the district of Kyra  in the Zabaikalsky Province. We have taken sample from polluted section and delivered it to special institution. The water quality (grade, pollution) will be analyzed, and then its result will be delivered to such institution to take suitable measurements.

The border water pollution problem will be solved by contact between the two governments and my NGO has called for the attention and response from the Ministry of Nature Environment and Tourism of Mongolia.


 RwB looked for additional information and discovered that the Head of «Baldzha»gold-mining Company Leonid Gurevich has been just included into the list «Best People of Russia» and has impressive list of regalia given by the state and Orthodox Church. This evoked criticism of local inhabitants of Kyrinsky district, who point out on the web-site that many rivers are harmed by activities of the «Baldzha» and Ashinga is just the last example of environmental damage.

At the same time «New Buriatia» newspaper published an article on «Mongolian Golden Rush», which leads to poisoning of transboundary Selenga (Selenge) River. Pollution from mining in Mongolia is registered as it reaches Russia, and local people now often catch fish with obvious pathological changes: with large gills or without scales. According to Mongolian Prof. Parvasuren there is an outburst in pathological diseases in newborn babies and domestic cattle in gold-mining regions of Mongolia.

As gold price reaches record high on world’s markets, this has a heavy toll on rivers and all living beings using them.

Mongolia-Turkey: river diversion alliance

Extremely worrying news came from Turkey, where assistance is sought by Mongolia to implement questionable Orkhon — Gobi water transfer project in the headwaters of Selenge River — tributary to Baikal Lake.  Water is demanded by Oyu-Tolgoi and other major mining operations, although the World Bank investigation has shown that local groundwater resources may be sufficient for their needs. Originally Kherlen river water transfer to Gobi was planned in parallel to this one and was getting technical and financial  support from  Chinese companies. Both projects are part of National Water Programme, that includes dozens of hydro power plants and many environmentally and socially questionable water infrastructure. Report of www.cumhuriyet.com says:

Mongolian Environment Minister Luimed Ganskhuk visited Turkish Environment and Forestry Minister Veysel Eroglu Thursday to receive technical assistance for «the Orkhon-Gobi Multipurpose Irrigation Pipeline project».

Water transfer projects in Mongolia

Map — courtesy of  Mongolia Water Center

Speaking to reporters before the private meeting in Istanbul, Eroglu said under the project construction of a dam over the Orkhon river was planned in order to generate electricity and supply water to the mining facilities in Southern Mongolia, irrigation systems as well as drinking water networks.

Eroglu said Mongolia requested technical assistance from Turkey and Turkish experts prepared a preliminary study for the $600 million project. He said experts would now make a feasibility study for the construction of the dam, the hydro power plant and the pipeline, with the build-operate-transfer model.

In his part, Mongolian Environment Minister Ganskhuk said that they were carrying talks with Turkish officials to see if the project could be funded by the Turkish International Cooperation and Development Agency (TIKA). He said they were looking to take decision in the Turkish-Mongolian Joint Economic Council for the signing of an agreement between the environment ministries of the two countries for the implementation of the feasibility report.

Information from http://www.cumhuriyet.com Sept 17, 2010

New depelopments on mining vs. rivers conflict in Mongolia

As we learned today, Munkhbayar and 3 other members of the United Movements of Rivers and Lakes are not arrested, but are under investigation by police after they damaged equipment in an attempt to stop  illegal gold mining at Tunkhel Village. 

According to our mining experts  the focus of the first action likely was Gatsuurt property which is being developed by Centerra Gold’s Boroo Gold Company  with significant impacts on water and terrestrial environment. According to the letter from the United Movements of Rivers and Lakes the head of this company has been  lobbying against the new water protecting law.

According to UB Post  newspaper G.Dashdemberel, executive director of the United Movements of Rivers and Lakes, stated to press that they have started «law enforcement» measures, and may continue similar action in the near future. And just several days after this publication another illegal gold-mining quarry, this time developed by a Chinese company  was stopped by 50 activists.  This time, activists have stopped heavy machinery and taken away keys from tractor engines. Gold mining took place near Burkhan Khaldun mountain in Umundergel somon of Khentey Aimag. 2300 meter high Burkhan Khaldun is a sared mountain, one of suggested burial sites of Genghis Khan, and earlier this year president Ts.Elbegdorj promised to make an effort to list it as UNESCO world Heritage site.

The  UMMRL’s decision to enforce law by their own means followed fruitless meeting of the Cabinet on August 18, which did not endorse fully prepared spatial plan for water-protection zones, prescribed by the  new law. Government’s procrastination is a result of active lobbying from mining and related business, both domestic and international, who state that due to ever changing rules Mongolia has a hostile environment for investment.

Rivers without Boundaries

Interview by Mongolian NGO: Our struggle is to protect our environment and land

J.Nyamdavaa, Head of  NGO»Protect the Security of Mongolia», which is allied with the Ongi River movement gave an interview to www.news.mn The four persons held in Selenge aimag on Sunday for shooting at equipment belonging to Puraam gold mine were brought to Ulaanbaatar on Wednesday for further investigation.  The four arrested people include the head of the Ongi River movement. The charges against them are damaging property and using firearms.The four detained persons are said to belong to your NGO. Why did they shoot at mining equipment at two places?
Yes, before shooting at Puraam’s equipment they fired shots at Boroo Gold’s machinery. That company did not call the police. It was our movement’s notice to Boroo Gold to stop illegal mining in river source areas. We had earlier written to them but they did not reply, so we had to take this step.

Where is this Boroo Gold mine?
Puraam and Boroo Gold have license over 168 sq hectare square in Noyon Uul of Mandal soum in Selenge aimag.  The company has built a 50-km paved road to transport the ore.

What did the company’s security people and workers do when your people started to shoot?
They did not rake any action. Two members shot at machinery but the officials are silent still. We think they do not wish to draw public attention to their illegal mining plans. After the shooting, the Canadian President of the company signed an agreement to build a maternity clinic.

Did you demand money on the morning of the day of shooting?
Certainly not. We only want enforcement of the law for environmental protection. We have written to the Government and have not received a reply in two months. The Director of the company has said they will conduct mining for seven years.

Why did you use firearms? Could you not protest in a peaceful way?
People have criticized our choice but, tell me, what could we hope to achieve through peaceful means like meetings and demonstrations in streets?

But shooting is an illegal form of protest and could have resulted in casualties.
The country’s land has been much damaged by gold miners’ greed and abuse of power. Water has been contaminated, plants and animals have suffered. Our struggle is to protect our environment and land. If the Government does not take measures we shall continue to fight.
Also I can tell you our men did not escape to the mountains and the police did not surround the area before reaching them. I cannot reveal more now, but we shall have more to say as investigations proceed.

A letter from United Movement of Mongolian Rivers and Lakes

Dear All,

Greetings from the United Movement of Mongolian Rivers and Lakes! We would like to inform you our brief update since May of this year.

Until last May, you all had received information about enforcement process for the new law on the prohibition of mineral exploration at headwaters of rivers, protected zones of water reservoirs and forest areas of 2009.

Also members of the UMMRL developed the law to amend to the law on Environmental Protection. Five amendments had amended on Articles 3, 4 and 32 of the law. (Environmental NGOs and citizens shall claim to court, to supervise the public monitor for environmental laws and regulations, to demand to eliminate breaches and to inform organization authorized to make decisions). On July 08, 2010 this law was passed by the Mongolian Parliament.

The law which was passed on July 16, 2009, imposes the following restrictions on exploration and mining rights:

-Revokes licenses to explore or mine any and all mineral resources within an area no less than 200 meters from a water resource.

-Requires the government to compensate rights holders for exploration expenses already incurred or revenue lost from actual mining operations.

-Empowers local officials to determine the actual areas which can be mined. In effect, the local official can extend the 200 meter minimum at his discretion.

Between last April and June, the officials of the Water Agency and representatives of environmental NGOs as well as local citizens worked together to establish boundaries of protected zones of water reservoirs in every place of the country. Basically, the boundaries had already established between 200 and 5000 meters. But the law on the prohibition of mineral exploration at headwaters of rivers, protected zones of water reservoirs and forest areas was not enforced until now. Because Mongolian Government did not impose regulation of the boundaries, the law has not yet enforced.

There were some protests and conflicts between mining companies and local citizens happened in several places such as Darvi soum of Gobi-Altai province, in Umnugobi soum of Uvs province, in Khyargas soum of Uvs province, in Jargalan soum of Gobi-Altai province, in Airag soum of Dorno-Gobi province, and at River Khug of Khuvsgul province. These clashes occurred because of illegal mining operations, local residents and herders are facing to lacks of drinking water and livestock pastures.

Approximately 1.2 year has already passed since passing of the new law. On behalf of the United Movement of Mongolian Rivers and Lakes, we have submitted the official documents to the President, Prime Minister and Parliament Speaker with request to meet with us and enforce the law. This request includes 9 official documents addressed to S.Batbold, Prime Minister, 6 official documents addressed to Ts.Elbegdorj, Mongolian President as well as to D.Demberel, Speaker of the Parliament.

Therefore, On Sep 2, the UMMRL was announced that we will implement the law by force of local citizens if the Mongolian Government could not implement the law. Until now, the UMMRL hasn’t received any responses from them. In order to stop illegal mining operations,  four men including Ts.Munkhbayar (Head of Onggi River Movement), G.Bayaraa (Head of Khuder River Movement) with two members shot at heavy mining machineries and techniques for «Puraam» and «Centerra Gold» companies located in Tunkhel village of Selenge province.

Last June, some NGO members and environmental scientists visited to site of the «Boroo Gold» company. During the visit, Mr. John Cazakov, director of «Boroo Gold» company said «Mining Association and mining companies are trying to pass a new law which will stand against the law on prohibition of mineral exploration at headwaters of rivers, protected zones of water reservoirs and forested areas of 2009. We have lobby group in the Parliament and hope that law will be passed very soon.»

Activities of «Puraam» and «Centerra Gold» companies are illegal; their licenses should be revoked within the law. Basically, about 2800 mining licenses have to be revoked.

Best regards,


China and Russia drive Mongolia to join the mining elite ?

Recent article in Daily Telegraph by Liam Halligan  presented below  is so naive and optimistic that we consider that it purposefully challenges common perception of our part of the world….We are not so sure that over-reliance on Russia and China  will bring huge benefits to Mongolian people and Mongolian nature, given low standards of environmental and social accountability in both countries.

Mongolia is in the early stages of an unprecedented boom. The economy of this former Soviet satellite is a mere $5bn (?3.2bn) — less than Jersey. In the next decade, though, Mongolia’s GDP could very easily triple. That’s because this vast central Asian state is the scene of an astonishing resources «land grab».

Beneath Mongolia’s surface — from its mountainous north to the Gobi desert in the south — lies untold mineral wealth. The country’s reserves of coal, copper, gold and uranium have lately become the talk of the world’s mining industry.

Bringing you news from Ulaanbataar, Mongolia’s surreal capital, seems strange I admit — given the historic importance of financial events in the West. But what’s happening in this far-away state, land-locked between Russia and China, provides a vivid illustration of just how fast the global economic order is being turned on its head.

A third of Mongolia’s people are nomadic or semi-nomadic — their lives revolving around horses and other livestock. Despite that, foreign direct investment has been piling in, oblivious to global recession and reaching over $700m in 2009 with billions more pledged to come. Much of this FDI since 2003 has been mining-related, with no less than two-thirds coming from China. American FDI in the same period accounted for less than 3pc of the total. British investment was a mere 1pc.

China’s recent import spike has been driven by its thirst for raw materials — as Beijing has launched infrastructure projects in Western and Central China to keep the economy booming. What the wider world saw was that fast import growth meant China’s trade surplus fell to $20bn in August, down from $29bn the month before.

Beijing allowed the yuan to appreciate by a relatively large 0.5pc last week, taking the total increase to 1pc against the dollar since China abandoned its dollar-peg in June.  If Beijing does let its currency rise more in the coming months, it won’t be because of US jaw-boning, but in order to obtain resources from abroad more cheaply.

Many of those resources will come from Mongolia — despite its current lack of development. The mine I visited, with its 200m tonnes of coal reserves, is just 145km from the Chinese border. Much of Mongolia’s coal is the high-quality «coking» variety vital to steel production. Low «strip ratios» — the amount of waste that must be moved — means that it can be produced cheaply, for as little as $15 per tonne.

China’s coal reserves, in contrast, are generally low-quality and much dearer to mine. Yet the People’s Republic, in the midst of the fastest industrial revolution in human history, is producing 50pc of the world’s steel. That’s one reason Beijing is so interested in Mongolia coal. In addition, 75pc of China’s electricity derives from coal-fired power stations.

The extent of China’s investment in Mongolia — and across the whole of Central Asia — is truly mind-boggling. Whether it’s Mongolian coal and copper mines, or Kazakh oil fields, Chinese money is being sunk into every country in this resource-rich region. Beijing holds major stakes in gas fields in both Turkmenistan and Uzbekistan, for instance. Pipelines have been built going all the way back to China, a metallic version of the ancient Silk Road.

This investment is partly driven by China’s paranoia — given its huge yet still escalating need for energy and other mineral resources. But as Western governments print money and prepare to inflate away their debts, China has also become determined to invest its war chest of $2,000bn-plus reserves in tangible, rather than paper assets.

Central Asia, the crucial link between the East and West of the Eurasian continent, has long been intertwined with Chinese history. Now, as I witnessed in Mongolia, this mysterious region is finally being opened up to the outside world — in large part by Chinese money looking to secure increasingly scarce resources while diversifying away from an ailing Western world.

The central Asian mega-trend, though, aside from Chinese investment, is the development of relations between China and Russia. Enemies for much of the Cold War, these two regional giants are now building serious commercial ties across their 4,300km border.

Chinese oil imports are set to reach 12.5m barrels per day by 2020, up from 4m last year. Russia, meanwhile, wants to diversify away from Western markets, not only when selling its abundant oil, but its even more abundant gas.

Based on hydrocarbons, minerals and manufactured goods, Russia’s total trade with China is now around $60bn a year, up more than five-fold since 2003. While suspicions between the two powers remain, both sides are increasingly recognizing the potential to exploit the natural economic synergies that exist between them.

Neither China nor Russia sees central Asia as its exclusive back-yard. Returning from Mongolia — a place where Moscow’s influence is now being combined with Beijing’s cash — it seems to me that the two countries are treading carefully. Working together, they could transform this far-flung region from a collection of fragile buffer states into a transit corridor based on trade in energy and minerals and, ultimately, a whole range of goods. Slowly, but surely, that is starting to happen.

While I don’t believe that Western interests will be deliberately excluded from this emerging Russia-China link-up, unlike in previous rounds of the central Asian «Great Game», they most certainly won’t be in charge. As if to make the point, Beijing and Moscow last week agreed to launch ruble-yuan trading by the end of 2010, an important step towards settling their growing bi-lateral trade in national currencies — and, pointedly, not in dollars. You can see a lot from a hilltop in Mongolia — as long as you’re prepared to look.

CNN on overgrazing: High cost of cashmere on Mongolia plains

In Mongoia  goat population is significantly contributing to erosion of pastureland , but demand for cashmere encouraging herders to increase their goat stocks

According to U.N. Development Program estimates, 90 percent of Mongolia is fragile dry-land; land under increasing threat from desertification. Part of the reason for this is thought to be global warming, but in Mongolia’s case another significant factor is the rise of the global cashmere industry.Mongolia is the world’s second largest producer of Kashmir goat’s wool behind only China with 20 percent of the world market.

Mongolian herders have found that cashmere is by far the most profitable source of income available to them.

They can make 50,000 tugrik a kilogram ($37) in a country where 35 percent of the population still lives below the poverty line. Because of this, herders have been turning more and more of their attention to increasing their goat population.

A sharp drop in global cashmere prices last year encouraged herders like Bayanmunkh to increase the size of their herds to compensate.

Before last winter’s harsh conditions decimated herds, goats accounted for almost half of the country’s estimated 44 million livestock, a record high.

The sheer number of animals grazing is putting a considerable strain on the limited pastureland. Goats are much more voracious eaters than other livestock, and consume the root of the grass thereby stopping it from growing altogether.

«Every year an adult goat molts about 300 to 400 grams of raw, greasy cashmere,» says Andrei Marin, a doctoral student writing a thesis on climate-change adaptation at the University of Bergen in Norway. «It is therefore one of the very few constants in herders’ lives and their economy.»

Marin also suggests that goats are more efficient at securing food from low-productivity sites and are more likely to give birth to triplets and twins, thus helping herders recover faster in the aftermath of harsh winters like this last one.

In 2005, USAID released a report which concluded: «The herding sector [in Mongolia] may well have surpassed the total herd size that can be sustained by Mongolia’s pasturelands and its herds may already be causing desertification.»

With livestock numbers increasing since then, the problem has only intensified, with previously green pastureland being swallowed by the sand, though not all see the Increasing goat population as key.

«There are, to my knowledge, no studies that show goats have a more negative effect on pastures than other livestock,» says Marin.

Others, however, put the blame firmly on the rising proportion of goats.

«The growing number of goats has been a major reason behind [the decline in quality of Mongolian pastureland],» said David Sheehy, of the U.S.-based International Center for the Advancement of Pastoral Systems, in a World Bank report published late last year, «but there is also the general problem of too many livestock and the added impact of climate warming.»

Following the return of free market capitalism, the size of the country’s livestock population has grown dramatically — almost doubling from approximately 23 million in 1993 to 44 million before this last winter. While policies to counter pastureland degradation have been implemented it is proving tough to limit the impact of overgrazing.

«The threats of land degradation, and consequent desertification, are becoming a serious obstacle to the growth of Mongolia,» says Shoko Noda, deputy resident representative of the UNDP. «This last winter was caused by a combination of global warming but also an unsustainable number of animals.»

But with demand for cashmere still high, and shop after shop in the capital of Ulan Bator selling Mongolian cashmere products, it will be hard to persuade herders to limit their involvement in the lucrative business.

«It is about moving from quantity to quality of animals, but that is very difficult,» says Noda. «We have tried to discuss this with government, but it sounds as if we are trying to limit the earning potential of herders, who are also voters.»

So far, little has been done to persuade herders to rein in their herds, though they themselves are seeing the impact of the overgrazing as increasing amounts of pastureland is eaten up by the desert.

«For the moment there is enough pasture, but it is getting harder,» says Ariunzaya, as he sits beside a small lake. His own animals, 600 goats and 800 sheep, drink nearby. «More and more people are coming here because the land is getting worse elsewhere,» he says.

Like the majority of herders, Ariunzaya earns most of his money from the cashmere trade. He sells around 150 kilograms of cashmere a year, earning about $7,600 from this, a sizable sum in Mongolia, but he is unsure how long that can last.

«When I first arrived in this small area in 1996 there were just five families — now there are 35. In 1995 there were about 3,000 goat and sheep, now that number is about 15,000. I am not sure how many more it can support.»

Tov Aimag. 2010. By Kit Gillet for CNN

Fraser Institute questions Mongolian mining policies

An article by UB Post shows how industry tries to prevent Mongolian Government from changing previously established rules and policies. It relates to various cases from favoring Russians over Canadians in Dornod uranium deal to establishing water-protection zones, which should invalidate more than 2000 mining licenses.

Mongolia is seen as the world’s least attractive jurisdiction for mineral exploration and development, according to the survey released today by the Fraser Institute, Canada’s leading public policy think-tank. The updated survey of international mining executives was conducted between June 1 and June 30.

This Fraser Institute’s Survey is based on the opinions of mining executives representing 429 mineral exploration and development companies on the investment climate of 51 jurisdictions around the world. The update was conducted following the global recovery in commodity prices and the introduction of new regulatory hurdles and taxation in many jurisdictions.

The results of this updated survey make one point abundantly clear: governments that change mining policies in mid-stream without consulting the industry risk driving away investment, said Fred McMahon of the Fraser Institute. «In order to attract mining investment, jurisdictions must uphold the rule of law and respect negotiated contracts and property rights. Jurisdictions that fail to do so can not compete successfully on a global scale,» he added.
Overall, the top 10 jurisdictions are Alberta, Finland, Quebec, Yukon, Saskatchewan, Chile, Newfoundland and Labrador, Botswana, Alaska, and Nevada. The bottom 10 scores went to Mongolia, Ecuador, Kazakhstan, Bolivia, Venezuela, Zimbabwe, Russia, Colorado, Indonesia, and Tasmania.