Source:  The Independent                  Date: 27 April, 2011

Mr. Edward Rochette, a hard-bitten American lawyer and a veteran of mineral exploration in 56 countries, pulls up a stool in the Square Grill Pub in central Ulaanbaatar and contemplates Mongolia's 21st century gold rush. The plush bar, with its fancy chairs and finger food, does not feel like an outpost of adventurers seeking their fortunes, but as it fills, the voices ordering the drinks are of Australian mining executives, British financiers and overseas-trained Mongolian consultants. They are here seeking coal, copper and gold – and lots of it.  "This is the place to be," declares Mr. Rochette as he extols the nation's virtues. "This is a frontier town."

Mr. Rochette's view of a land of opportunities is one at odds with those of many in this country, where about half the population lives in gers and makes their living from herding animals. Delicately poised between China and Russia, the buffer state is the size of Western Europe – but with just 3 million people, it is one of the least populated places on Earth. However, Mongolia's fabulous reserves of gold and copper mean that it is on the brink of transformation, potentially making its people extremely rich. The International Monetary Fund expects the Mongolian economy to grow by 9.8 per cent this year – faster than China's.

Mr. Rochette, who has his fingers in many pies in Ulaanbaatar and is, married into one of Mongolia's premier horse breeding families, warms to his theme. "The only possible negatives are that the Government could screw it up, or commodity prices could crater," he says. "But the Government is good, and commodity prices are great."


For 16 years, Mr. Brochette worked with Mr. Robert Friedland, a controversial and charismatic mining financier who is one of the main figures responsible for discovering Mongolia's true natural resources potential. Mr. Friedland has few friends among environmentalists, but his uncanny ability to find rich veins of minerals is legendary and you will not hear a word said against him in The Square.

One of the deals Mr. Brochette worked on for Friedland was the 2002 agreement for the Anglo-Australian miner BHP Billiton to sell its rights in the Oyu Tolgoi copper-gold mine to Ivanhoe for £3 million. Oyu Tolgoi, or Turquoise Hill, is the world's largest mining exploration project – it is bigger than Florida. When development of the mine is finished in a year or two, its output will account for more than 30 percent of Mongolia's economy.

Oyu Tolgoi’s neighbor in the Gobi Desert, Tavan Tolgoi, is the world's second largest coal deposit. Coal production doubled to 25 million tons last year to become Mongolia's top export, and the Government is trying to speed up the mine's development. Mr. Robert Wrixon, the managing director of Haranga Resources, says: "Mongolia is awakening. The industry is about to take off. We are just starting out to help the Mongolians find what they've got."

But the influx of foreign interest has bred resentment. There have been occasional attacks on mixed couples, usually foreign men with Mongolian women, and there are right-wing groups that oppose the arrival of so many foreigners. Much of this is focused on the Chinese, who ran Mongolia as a province until 1921 and a visceral dislike for whom lingers. However, China is set to be the prime customer for Mongolia's resources and is already its largest trading partner. "The resources have to go to China, despite historical antipathies," says Mr. Wrixon. "Mongolia is happy to sell China commodities but is less comfortable about China having majority stakes in resource projects."

Since 1990, Mongolia has had a multi-party parliamentary democracy and – despite some violence after elections in 2008 – has largely been stable. Its Government is keen to transform the boom into meaningful jobs but there is a problem finding enough qualified locals to staff the mines. "The Mongolian Government is trying very hard to make things work," said Mr. Rochette.

The signs of the new wealth are emerging everywhere. "We are pleased that we can become wealthy," says a foreign-educated young man named Bold, speaking in one of Ulaanbaatar's many bars. "We are very proud of our history but there is nothing much for the young people to do these days, so taking part in this is a great opportunity."