Mongolia's aloofness only hinders itself
- Source: Global Times
- [01:39 November 02 2009]
- Comments
Mongolia's skepticism toward China has gone too far with its plans to bar China from developing the copper and gold mine of Oyu Tolgoi.
Touted as the world largest copper and gold reserve, and just 80 kilometers away from the Chinese border, the gigantic development project will significantly boost the local economy.
An unnamed Mongolian official was quoted by the Sidney Morning Herald as saying that "We have something in our blood about China. It will be very difficult for Chinalco to come into Mongolia."
The largest shareholder of Rio Tinto, Chinalco may be involved in the project by building the roads leading to the mine and supplying electricity and water for the project.
Canadian company Ivanhoe, in which Rio Tinto holds a 19.7 percent stake, signed a deal with the Mongolian government early October to develop Oyu Tolgoi. The Ivanhoe-Rio Tinto consortium together will hold a 66 percent stake in the mine.
Due to its past history and tenuous geographical position between Russia and China, it's understandable that Mongolia looks to balance its relationships with the major powers.
Its diplomatic policy of looking for a "third neighbor" has brought it closer to the US, Japan, South Korea and Europe.
But Mongolia should not forget the economic boom it has derived from trade with China.
China has been Mongolia's largest trading partner for 10 years, receiving over 60 percent of its exports, although the total trade volume between the two countries is a miniscule 0.05 percent of China's total.
Investment from China accounts for half of the FDI its northern neighbor receives from the world.
But busy business exchanges have not brought the closeness they should. Anti-Chinese feeling is still strong in Mongolia, and this is clearly reflected in government policy on natural resources.
China is the closest and largest market of Mongolian mining products, and has an abundant supply of technological staff and advanced machinery equipment that is highly competitive with other countries.
