Mongolia's Mining Two-Step with U.S., China

Source: The Wall Street Journal, James Areddy  (6/17/11)

"The country that once ruled an enormous empire is determined to be no one's patsy."

The Wall Street Journal, James Areddy

On opposite sides of the world this week, Mongolian leaders were illustrating the diplomatic balancing act their country faces as it divvies up a trove of mineral wealth—and the contracts to get it out of the ground.

Mongolia's president, Elbegdorj Tsakhia, was in Washington on Thursday with Barack Obama after a multi-stop visit to the U.S. Hours earlier, the prime minister, Sukhbaatar Batbold, was completing a swing through Asia with a call on China's premier, Wen Jiabao.

Mongolia's land today is as strategically valuable as ever, including for the U.S., which seeks a foothold in the fast-developing region. But these days, Ulan Bator's diplomatic pouch is bursting with commodities that boast a bit more geopolitical heft than goat hair: copper, coal and rare earth minerals.

In the past week, Mongolia opened new consulates in both Hong Kong and San Francisco, illustrating its desire to maintain balance in dealing with the world's two largest economies and attracting their investment.

The president dropped into the Asia Foundation and dined with Michelle Obama, while the Prime Minister talked about investment options with Hong Kong financiers.

The country that ruled an enormous empire under the auspices of legendary leader Genghis Khan 800 years ago is determined to be no one's patsy.

Yet the decisions leaders are weighing about which operators to bring into Mongolian mine development projects are tough ones. Strong bidders hail both from big powers, China, the U.S., Russia, South Korea and Australia.

"This is very delicate work," said Jargalsaikhan D, an Ulan Bator banker and noted commentator.

"Mongolia noted the important role that U.S. companies, with their internationally leading management, technical, safety, environmental, and sustainable mining practices, will play in the development of the country's coal, other mineral resource, infrastructure, agriculture, energy and tourism industries," the joint U.S.-Mongolian statement said.
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