Interesting Mining Project out of Vancouver aimed at Domestic Consumption not China

As Ivanhoe Mines/Robert Friedland is slowly pushed out of Mongolia, the commercial relationship between Canada and Mongolia is likely to shrink.

Apart from the Ivanhoe satellites, South Gobi and Entrée Gold, a number of other projects are pushing forward, though many at exploration stages, see listing of non-Mongolian mining companies operating in Mongolia.

One of the Vancouver-based projects that fascinates me is Prophecy Coal’s proposed power plant to be built at its Chandgana coal deposit. Prophecy has just announced that they have signed a “covenant” with the Mongolian Energy Authority and this seems to be a further step in moving this project to reality.

What I find particularly interesting about this project is that it is explicitly not aimed at exporting raw materials to China. While the economic lure of such exports has powered the Mongolian resource boom for some years (and may loom to doom Mongolia to a slowdown if Chinese consumption is indeed slowing down) it has also been at the root of some of the resentment of Chinese commercial dominance in Mongolia that may be at the root of popular anti-Chinese attitudes and also part of the explanation for a recently passed law that sets up a government (bureaucratic or parliamentary depending on size of investment) review of foreign investment.

By contrast, the Prophecy Chandgana project, if it comes to pass as currently envisioned, would fuel a power plant that would feed electricity into Mongolia’s domestic grid. Power needs are significant for industrial and mining activities in Mongolia, but the need for additional power sources away from Ulaanbaatar has become ever greater with the heavier pollution that every winter seems to bring. FDI aimed at domestic consumption, even if it is commodity consumption in the form of electricity, is what makes this project unusual in my eyes.

About Julian Dierkes

Julian Dierkes is a sociologist by training (PhD Princeton Univ) and a Mongolist by choice and passion since around 2005. He teaches in the Master of Public Policy and Global Affairs at the University of British Columbia in Vancouver, Canada. He toots
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