History is typically difficult to see up close, but it’s possible that resources are sparking a great geo-political reordering on par with the mass discoveries of oil that made the Middle East a rising economic power the mid-20th Century. Witness the country of Mongolia, a geo-political pawn for much of the last hundred years, but now drawing increased interest for its potential resource riches.
A story I found on www.oilprice.com provides the context:
Mongolia’s mining sector has some of the world’s richest deposits of gold and copper, uranium, coal, fluorspar as well as (rare earth elements) REEs such as tantalum, niobium, thorium, yttrium and zircon. According to a 2009 estimation by the U.S. Geological Survey, Mongolia has 31million tons of rare earth reserves, or 16.77 percent of the world’s total, exceeded only by China.
Oh, and coal.
Erdenes, a state firm is overseeing the Tavan Tolgoi (“Five Hills”) massive coal deposit located in the east Tsankhi area of Mongolia’s Gobi desert, estimated to hold over 7.5 billion metric tons of coking coal, essential for making steel, and the currently world’s biggest untapped deposit.
Where’s it gonna go?
Potential suitors include Russian, Chinese, Japanese and South Korean firms, while representatives from 20 global investment banks jetted into sunny [Ulaanbaatar] to make their pitches.
While Mongolia’s economy was traditionally based on herding and agriculture, neighboring China’s rising demand for minerals has underpinned its current mining boom, and Beijing would undoubtedly happily buy virtually all of Tavan Tolgoi’s output.
In terms of geo-politics, resources offer Mongolia an opportunity to recast its uncomfortable relationship as a buffer-state between Russia (dating back to the old Soviet Union) and China, by ushering Japan and South Korea into the picture.
The fact that the U.S. is nowhere mentioned in this article (unless of course you count the resource estimates for Mongolia’s riches, prepared courtesy of the US Geological Survey) speaks volumes.
Interestingly, though, Vice President Joe Biden’s travel itinerary for this month includes a visit to Ulaanbaatar. Might this be an indication that policy makers are finally realizing that resource development will be key to the “Wealth of Nations” in the near future?