WASHINGTON, May 18 (UPI) -- While the Western press has largely fixated on the intense international struggle over the Caspian's hydrocarbon riches, farther east in Mongolia another rivalry is brewing between Russia and competitors for another valuable energy source -- uranium. Moscow has established a commanding lead to develop the country's energy reserves, and its dominance seems likely only to grow with time.
Underscoring the Kremlin's interest, Russian Prime Minister Vladimir Putin arrived in Mongolia on Wednesday for a one-day visit, during which he held talks with Mongolian Prime Minister Sanjaa Bayar, President Nambaryn Enkhbayar and Damdin Demberel, chairman and speaker of the State Great Hural, Mongolia's parliament. During an interview on Russia's Zvezda Television, Putin made his interests explicit, saying, "We are laying big emphasis on the trade and economic area of cooperation, on the complex of issues related to the cooperation in investment, especially now, in the conditions of the global economic and financial crisis. Both Russian and Mongolian partners are oriented toward the soonest launch of joint investment projects in the mining industry. I believe that we will be able to implement the agreements reached earlier in the field of joint extraction and processing of uranium ore. Of course, we were discussing and coordinating further measures to modernize the joint ventures that belong to the golden fund of our cooperation, those that have been successfully operating for many years now."
If journalists were in any doubt as to what "cooperation" most interested Putin, then all doubt was dispelled by his comments during a news conference following the Russian-Mongolian talks when he told journalists, "I believe we will be able to implement our agreements in the field of joint production and processing of uranium ore," adding that Russia and Mongolia are committed to launching joint investment projects in the mining industry "as soon as possible." Later that day, Russian Energy Minister Sergei Shmatko told reporters that Sergei Kiriyenko, the chief of Russian nuclear power corporation Rosatom, had told him that "everything's ready" for signing an agreement on the creation of a joint venture to develop Mongolia's uranium deposits, noting, "The documents are ready to be signed and might involve further steps to develop this business, including the purchase of uranium."
Russian development of Mongolia's nascent massive uranium deposits will not be a one-way street, however. Bayar said during his meeting with Putin, "The two countries agreed to pay more attention in promoting Mongolia's mineral resources sector and its infrastructure, and Mongolia intends to speed up cooperation with Russia in exploitation of nuclear energy for peace purposes." To that end, among the items on the bilateral agenda is discussion of a joint Russian-Mongolian venture for processing nuclear fuel, which Putin said was "a matter of several weeks."
Russia's interest in Mongolia's uranium ore deposits dates back to the early 1980s, predating the 1991 collapse of the Soviet Union, when joint Mongolian-Soviet geological teams prospected for uranium in Mongolia's eastern provinces. The teams concluded that Mongolia currently contains six uranium strata and more than 100 uranium deposits, all virtually untapped. Mongolian geologists currently estimate the country has 60,000 metric tons of uranium reserves, while Russian geologists maintain much higher estimates, calculating Mongolia's recoverable uranium deposits at 120,000-150,000 metric tons.
Mongolian-Russian economic relations nose-dived after the collapse of the Soviet Union, with bilateral trade dropping 80 percent. China stepped into the breach and is currently Mongolia's largest trading partner, absorbing 70 percent of Mongolia's exports. Russia, in second place, nevertheless has an inside advantage, as it provides approximately 90 percent of the country's oil imports and nearly all of its wheat imports.
Putin has long had an interest in reviving relations with Russia's eastern neighbor, first visiting Mongolia in 2000. Since then, Moscow has made a number of overtures to deepen relations, including in 2003 writing off $11 million of Mongolia's Soviet-era debts, 98 percent of the outstanding amount. Bilateral trade subsequently developed quickly, reaching $593 million in 2006, $785 million in 2007 and soaring to $1.3 billion in 2008. Putin's sojourn comes less than two months after Bayar met with him in Moscow, where the Russian prime minister offered a $300 million loan to help support Mongolia's struggling agricultural sector, decimated by several years of drought.
Besides Russia, Japanese, Canadian, Kazakh and French companies have expressed interest in Mongolia's uranium, but Putin's largesse definitively seems to have clinched the deal. Last year, Enkhbayar used the fact that the country's mining law, which has yet to be finalized, was vague about uranium to play for time in negotiations with the various companies, commenting last July, "Mongolia at present has no clear legal guidelines on the extraction of nuclear fuel. Partnership proposals can be seriously discussed only after a proper legal framework is set up."
Left out in the cold by the Russian-Mongolian concord is France's Areva nuclear concern, which three years ago signed a memorandum of understanding concerning Mongolia's Mardai and Sainshand uranium mines. France was unable to clinch the deal, despite Enkhbayar visiting Paris in February 2007. Nor will Russia have to compete with China, as China National Nuclear Corp. recently reported that Inner Mongolia's Ordos Basin has enough uranium to meet China's current demands.
If Russia's diplomatic sleight of hand has deprived foreign companies of an opportunity to extract uranium, Mongolia's mineralogical treasure chest still contains consolation prizes for foreign investors, as the country is rich in significant copper, coal, gold, molybdenum, fluorspar, uranium, tin and tungsten deposits. As for foreign mining concerns that feel unfairly squeezed out in the race to dominate Mongolia's uranium deposits, they might remember that heavily subsidized shipments of wheat and oil and a $300 million loan coupled with debt forgiveness are more easily understood in Central Asia than purely capitalist Western contracts promising future riches, as Mongolians cannot eat or heat their homes with Wall Street derivatives, however many dollar signs litter the future "bottom line."
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