Oyu Tolgoi the copper and gold mine, co-owned by Vancouver-based Ivanhoe Mines Ltd. and the Mongolian government, is expected to balloon the Central Asian country’s GDP — an estimated $13.28 billion in 2011 — by more than 30 per cent when it starts full production later this year.
But the economic boon is also, for some, an environmental nightmare as the project will allegedly soak up valuable water resources in the already-arid Gobi. While reports vary, the mine plans to use up to 920 litres of water per second.
Dugersuren Sukhgerel, executive director of local NGO Oyu Tolgoi Watch, said lack of water is the “No. 1 issue” in the region.
“There are very few who are happy with the mine’s presence,” Sukhgerel said in an email to theStar. “The mine and its infrastructure corridor has taken away the best pasture land from the local community.”
Oyu Tolgoi, roughly 80 kilometres north of Mongolia’s southern border with China, is expected to be one of the world’s largest copper mines, with about 250 kilometres of mining tunnels. It’s the centrepiece of Mongolia’s booming mining industry — dubbed “Minegolia” — that has fuelled an otherwise minor economy in recent years.
The country’s economy grew an estimated 17 per cent in 2011, compared with 6.4 per cent in 2010, galvanized by a robust minerals trade with China, which gets more than 90 per cent of Mongolia’s exports.
Ivanhoe, majority owned by British-Australian mining giant Rio Tinto, owns 66 per cent of Oyu Tolgoi; the Mongolian government holds a 34 per cent stake. Rio Tinto oversees operations at the site.
By late 2011, more than $3 billion had been invested in Oyu Tolgoi, a sum expected to increase to roughly $6 billion in 2013, according to the mine’s website.
Oyu Tolgoi is to produce an estimated 1.2 billion pounds of copper annually over the first 10 years. The yearly output will also include 650,000 ounces of gold and 3 million ounces of silver.
Gold, silver and copper mined at Oyu Tolgoi will be used in 4,700 medals for the 2012 London Olympics and Paralympics.
For the nomadic herders who roam the region, roughly 600 kilometres south of the capital Ulanbaatar, water scarcity means constant relocation as they search for sustenance for their livestock. “(Herders) are forced to think about leaving their traditional nomadic lifestyle and look for other ways to earn a living,” Sukhgerel said.
But relocation is not always tenable, even for nomads, according to a 2011 United States Agency of International Development report.
“(Oyu Tolgoi) does not understand the dynamics of herding and the need to follow the livestock to adequate pasture and water sources,” the report said. “It is economically and psychologically difficult for herder families to move from their traditional land.”
Rio Tinto, however, maintains the mine will have “zero impact” on local water sources, pledging to use a nonreplenishable groundwater aquifer, called Gunii Hooloi, which can reportedly support the mine for roughly 40 years using less than 20 per cent of its capacity. This would create surplus reserves for the local population, a company spokesperson said. The company contends that by using Gunii Hooloi, it will not have to deplete limited surface water reserves used by herders.
“Oyu Tolgoi is making a huge effort on a number of fronts not to take any of the water from the existing supplies,” spokesperson Illtud Harri said, adding that the mine has conducted environmental assessments in the region since 2003.
Harri said Oyu Tolgoi will employ a 90 per cent Mongolian workforce and inject wealth into the local economy, including the nearby settlement Khanbogd, whose residents sometimes sell water to needy mine workers. But the social costs to herders remain to be seen.
“It’s very difficult for people to weigh what the value of those benefits are going to be, over the short term, over the loss of the lifestyle they’ve had,” said Catherine Coumans, Asia Pacific program coordinator at MiningWatch Canada, which in the past has filed environmental complaints against Oyu Tolgoi with the Organization for Economic Cooperation and Development.