The Global Recession and Uranium?

|Mongolia

The Impact of the Global Economic and Financial Crisis

The global economic and financial crisis from the second half of 2008, which began with subprime loans in the United States, has accelerated the fall in international prices for copper, which is Mongolia’s greatest export commodity. As a result the Mongolian government has asked the IMF (International Monetary Fund) for financial assistance.

Regarding how this came about, according to officials the Mongolian government (the Ministry of Finance) from the outset seems to have tried to get financial assistance (a loan) from China. The Ministry of Foreign Affairs and Trade of Mongolia, however, announced that “the balance with Russia and China would collapse.” Unavoidably it dispatched a mission to the IMF, and when sounding them out about a request for financial assistance, they were confronted with several strict conditions, including the raising of the domestic policy interest rate by the central bank and the containing of the fiscal deficit to 6% or less of GDP in 2009 (from the local newspaper “UB Post”, 9 April 2009).

Regarding how this came about, according to officials the Mongolian government (the Ministry of Finance) from the outset seems to have tried to get financial assistance (a loan) from China. The Ministry of Foreign Affairs and Trade of Mongolia, however, announced that “the balance with Russia and China would collapse.” Unavoidably it dispatched a mission to the IMF, and when sounding them out about a request for financial assistance, they were confronted with several strict conditions, including the raising of the domestic policy interest rate by the central bank and the containing of the fiscal deficit to 6% or less of GDP in 2009 (from the local newspaper “UB Post”, 9 April 2009).

Mongolia’s Prime Minister Bayar has plans to visit Japan at an early date with the aim of expressing gratitude for such assistance from the Japanese government.

Each Country’s Thinking regarding Uranium

In the meantime, the global demand for subterranean resources, when viewed over the long-term, will increase continually. In addition to the development of non–carbon-dioxide-emitting technology, it is believed that the dependence on nuclear energy (the construction of nuclear power plants) will go on increasing rapidly, including emerging countries such as India and China. The uranium mines in Mongolia, which were developed by the Soviet Union for military purposes during the era of former Soviet satellite states, have been shrouded in secrecy since the collapse of the Soviet Union in 1991. (Incidentally, at the Soviet-era Nuclear Research Centre of the National University of Mongolia, which handles the uranium mines, one hears that there are many researchers with more than ten years of experience working therein.)

Today too, the majority of the uranium ore extracted is transported to Russia by rail, and is believed to undergo refining and processing inside Russia. As is well known, among the signatory nations to the Kyoto Protocol the indirect cause of global warming is taken to be carbon dioxide (CO2), and each nation is seeking its reduction. As one clean energy source which does not emit CO2, the interest of the neighboring countries, including Japan, in the uranium lying underground within Mongolia is increasing continually. From official sources, in the case where the Mongolian government has allowed open bids for the purchasing of mining rights at the uranium mines, neighboring countries, such as India, China, and the ROK, are all without exception expected to be bidders (a Canadian firm already holds a portion of the mining rights). To manage these, Russia and Mongolia have both set up respective state-owned enterprises to act as front companies. On 17 March 2009, the state-owned enterprises of both countries, called “Rosatom” on the Russian side and “MonAtom” on the Mongolian side, concluded a nuclear power cooperation agreement to attempt to undertake extraction and production of uranium through a joint venture (from the local newspaper “UB Post”, 19 March 2009). In a related move, Russia’s Prime Minister Putin, with an aim of supporting the development of Mongolia’s agriculture, has promised to provide a loan of US$300 million via the Russian Agricultural Bank (this is all believed to be earmarked for the purchase of Russian agricultural machinery, cereals and fertilizer). Moreover, Mongolia’s President Enkhbayar had already had talks on 22 February 2007 with the “AREVA group”, the French state-owned nuclear power company, regarding the construction and operation of nuclear power plants and uranium extraction in Mongolia, and also had discussions with President Chirac on this matter. (paris@afxnews.com, 22 February 2007).

Within the Mongolian government one hears calls that they ought to give uranium extraction rights to Japan as well, which has been supporting Mongolia’s economic development over many years. If this is realized, then Mongolian uranium will contribute greatly to the development of the energy which will be the bedrock of our nation’s economy.

Meanwhile, Japanese public opinion today is somewhat negative to the expansion of the utilization of nuclear energy. With the visit to Japan of Prime Minister Bayar, slated for June 2009, as a turning point, this area will doubtless become a focus of attention in the future.

[Translated by ERINA]