The Dark Side of Mongolia's Mineral Boom

The launch this year of Oyu Tolgoi, the world's largest untapped copper-and-gold mine, has ignited a debate in Mongolia about how to avoid a massive rise in income disparity. While most of the country's wealth accrues in the nation's capital, the vast majority of nomadic herders, who make up a third of Mongolia's population, remain skeptical that they will reap any benefits from this new venture. The herders who live near Oyu Tolgoi in the Gobi Desert say they are getting both the best and worst of the deal.

Australia-based mining giant Rio Tinto is courting Gobi nomads and offering impressive compensation packages -- particularly when compared to national salary averages -- to win over locals. New schools, full-ride scholarships, guaranteed lifetime employment, part-time positions that don't interfere with herding schedules, lump sums of cash, and new sheds and animal pens for each family are just some of the incentives to entice natives to move off ancestral grazing land and make room for the mega-mine.

"Besides herding animals, we do two days of work a week for Oyu Tolgoi," says Erdenejargal, a herder who lives a few miles from the mine's open pit. "It's better to have both jobs."

Most herders in the area have similar arrangements with Oyu Tolgoi. They earn roughly 450,000 Tugrik (about US $330) a month from part-time work at the mine in addition to their herding income. The extra cash is a significant windfall in a country where the current average monthly income hovers around $400. Erdenejargal says most people are glad for the opportunity to work two jobs.

However, these gifts pose an unappetizing choice: either take what is offered, or become displaced and be left with nothing at all. As a result, Gobi herders take the incentives with a heavy dose of pragmatism -- as well as a healthy skepticism of government.

"The only thing we can get out of this are the little candies [Oyu Tolgoi] gives us," said Narantsetseg, a 54-year-old herder who lives near the mine. "Even the government cannot provide us with these things, so it's important for us that Oyu Tolgoi can."

In 2009, a presidential election year, the two main parties -- the Democratic Party and the Mongolian Peoples' Party -- promised cash handouts totaling 1.5 million Tugrik to every citizen as a way to distribute mining wealth among the populace. But later that year, Parliament authorized payments of only 120,000 Tugrik per person because of a shortfall in expected mining revenues. Another round of cash handouts was scheduled to be disbursed in July of 2012, just after parliamentary elections, causing widespread suspicion that the handouts were an attempt to buy votes. Many Mongolians are skeptical that the earlier promises will ever be fulfilled. Still others argue that in a country lacking roads and basic infrastructure in rural areas, the cash handouts are an ineffective use of federal money.

Although many Gobi nomads are grateful for their second jobs and the opportunity to send their children to school -- perhaps to become mining specialists -- they pay for these bright futures with their homeland, lifestyles, and cultural values. Removed from their traditional pastures, they continue to worry about the mine's effect on the land. Most fear for the local water supply , which, in a desert area, is scarce enough without an enormous mine operating at an estimated 204 gallons of water per second. According to several Mongolian NGOs, such as OT Watch, Rio Tinto has not adequately proved the availability of water resources for the 30-to-60-year life cycle of the mine.

Others wonder if the land can survive the effects of increased desertification. Trucks carry construction materials, ore, and workers to and from the mine nearly 24 hours a day over unpaved land, kicking up a perpetual veil of dust over the region. Families in the area have stopped eating animal innards -- a staple of the Mongolian diet -- due to a buildup of dust found inside the animals' respiratory and digestive systems. Some herders wonder if their own bodies are being harmed in the same way from constant inhalation and ingestion of particulate matter.

Meanwhile, nationalists in government are fighting to increase the country's share of the mine from its current 34. Rio Tinto, in turn, has threatened to halt production at Oyu Tolgoi, and the path to an agreement looks rocky. While the majority of the nation wonders if they will ever see a slice of the pie, herders in the Gobi look at the slice they've already been given and wonder if it was worth it.