Phill Hynes reports that the curious case of Khan Resources exposes how Mongolia seized uranium deposits from their Canadian legal owner and transferred them to Russian government control. And with elections imminent, the Mongolian government is now trying to clean up the mess and Mongolia is racing against time to make friends. After years spent reneging on mining deals with the likes of Rio Tinto, the government has suddenly begun to settle its disputes with the promise of compensation and fresh projects.
The reason? It is election time. The Mongolian Prime Minister, has presided over one of the most spectacular nosedives in the world in economic growth ... from 17% five years ago to near zero today. Not all of this is the government fault, of course. More than any other country on Earth, the Mongolian economy relies upon China, with 90% of its exports flowing to its southern neighbor. Sales and prices of its copper, coal and other commodities have crashed with the Chinese slowdown. But many of Mongolia economic troubles are self-inflicted.
The government has sent foreign investors packing with punitive new laws to seize their assets. As a result, giant joint mining projects remain idle. Now, under the weight of disappointment from 3 million increasingly impoverished Mongols, the regime is scrambling to mend bridges to foreign investment. After outing Rio Tinto in its clamor for a bigger slice of copper and gold projects, the government struck a deal in 2015. And after years of contesting international court orders, it has finally agreed this month to settle its long-standing dispute with a small Canadian mining company called Khan Resources.
The Khan story reads like an international espionage thriller, and is perhaps the most enlightening in assessing whether Mongolia really is changing, or just papering over the pre-election cracks. In an adolescent democracy, prone to bouts of nationalism and inherent in tribalism, they still have problems, but read on...
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