Mongolia: Boom Times Ahead for Some Gobi Desert Villages
Khanbogd, a remote town in southern Mongolia, has no paved roads, electricity only 5 ½ hours a day, and a single restaurant that is closed on Saturdays. But its location, not far from what is about to become the biggest copper mine in the world, means that it is about to undergo a transformation so rapid and expansive that no one -- not mining company officials, outside experts or residents themselves -- can predict what will happen to their quiet hamlet.
The mine, Oyu Tolgoi, is operated by Canadian company Ivanhoe Mines, which is awaiting the Mongolian government's final approval of an investment deal to start full production. Ivanhoe and Mongolia have been in negotiations since 2003, but the process appears to be nearly over: Mongolian government officials have said that everything is in place to sign a deal, and it is expected to happen by the end of September.
Once that happens, Ivanhoe will begin to hire the thousands of workers it will need to build facilities and operate the mine. And Khanbogd, 40 kilometers away and the only village close to Oyu Tolgoi in this remote part of the Gobi desert, will begin its metamorphosis from dusty village to boom town.
Already, many of the town's 1,200 residents work at the mine, mostly in support services like cleaning, food service, laundry and security. And city officials say about 60 families have moved to Khanbogd in the last two years, even without jobs, because village residents get first priority for work at the mine. "People say Khanbogd is so lucky that we have Oyu Tolgoi, but the truth is that Oyu Tolgoi is lucky that our area has so much gold and copper. This town owns that gold and copper," said the Khanbogd's mayor, Dendevsamba.
The population influx will accelerate as the mine starts operations. During the construction phase Oyu Tolgoi will employ up to 5,000 workers, likely temporary Chinese laborers housed in camps near the mine. But Ivanhoe estimates that the mine's permanent workforce will be about 3,000, and they will be drawn mostly from the surrounding area.
What that means for Khanbogd is a matter of much speculation in Mongolia. Mongolians are traditionally nomadic herders, used to moving around to greener pastures, and with thousands of relatively high-paying jobs about to open up at the mine, as well as opportunities to open businesses to serve those workers, there will likely be a massive population movement down to the desert.
Consultants for the Asian Development Bank have projected that the village's population will have upwards of 15,000 residents by 2020. The ADB is working with Ivanhoe and the government of Mongolia to develop public services for Khanbogd and other communities expected to experience mining-related booms.
Many in Ulaanbaatar, Mongolia's capital, believe migration to Khanbogd could be on a much greater scale, and that it could end up as the country's third or fourth largest city. Mongolia's finance minister recently said Khanbogd's population will eventually be "way over 35,000," modest by most standards but virtually a metropolis in sparsely populated Mongolia.
An ADB report on the development project notes that "there are factors which would suggest that the influx in the south Gobi might be higher than would normally be expected," including "the mobility of nomadic Mongolian families [and] the current high levels of unemployment in Mongolia and general economic uncertainty."
Other towns in the south Gobi are likely to gain population too, as Oyu Tolgoi's economic weight, (as well as other, smaller mines also starting operation in the area), attracts other industry to the area. Sainshand, a provincial capital of about 20,000 people, could grow to 150,000 residents, said Badamjunai, Mongolia's minister of food, agriculture and light industry. ADB consultants, however, project Sainshand to grow only to 30,000 over the next 10 years.
The steepest population increase is expected to be in Khanbogd. And while there are concerns about pollution and the depletion of water reserves (copper mining is a water-intensive industry, and water is scarce in the Gobi), the prevailing opinion in Khanbogd is that potential for good jobs outweighs that.
Some locals formed a non-governmental organization, the New Khanbogd Citizens Committee, about four years ago, to represent local residents' interests. The group is largely satisfied with Ivanhoe's actions so far, said Sandgaa, one of the committee's founders and a social worker at the town's high school.
But while Ivanhoe has thus far treated its workers well, there are many complaints about some of the company's subcontractors, Sandgaa said. In particular, the NGO aims many of its complaints at Catering International & Services (CIS), a French company that provides food service, laundry and cleaning for Oyu Tolgoi. Sandgaa alleges that the company has gained a reputation in Khanbogd for not giving its workers proper clothing and equipment to do their jobs, and for providing substandard food. The citizens' committee took the problems up with CIS at the end of 2008, but no amicable resolution has yet been reached, she said. Ivanhoe's vice president for Oyu Tolgoi operations, Sanjdorj Samand, said in an interview that he was unaware of the complaints and believed subcontractors' employees were treated the same as those of Ivanhoe.
Controversy has surrounded the most visible sign of Khanbogd's impending transformation, a new cultural center about a kilometer north of the current village. The center, in the form of an indoor amphitheatre is still unfinished, with a massive pile of sawdust on the floor of what will eventually be used as a stage, wrestling arena and disco. The center's director, Naralgerel, said it will anchor the new Khanbogd. "The new government office will be here," he said, pointing to the northwest, now nothing but dry pastureland, "and the new hospital there" to the south.
The center was built using a $300,000 donation from a government official from Qatar who likes to come with a retinue of family and servants to Khanbogd to spend Ramadan for reasons unrelated to Oyu Tolgoi, said the mayor, Dendevsamba. Dendevsamba said the Qataris, who stay at a ger camp outside the city that he owns, chose Khanbogd because of its natural beauty and its similarity to their native land. But Sandgaa, of the citizens' association, said people don't buy that explanation. "We don't understand why they came here," she said. In addition, Naralgerel has questions about the quality of construction, noting that the cultural center's roof is leaky.
Nevertheless, Naralgerel says he remains optimistic about the town's transformation. "If you ask me if I support Oyu Tolgoi, I'll raise both my hands and both my feet," he affirmed.
Joshua Kucera is a freelance journalist based in Washington, D.C.
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