In a hot, concrete hut filled with acetylene fumes, an elderly Mongolian
miner struggles to contain her excitement as she plucks a sizzling inch-long
nugget of gold from a grubby cooling pot and raises it to the light.

Khorloo, 65, and her sons spent the day scrutinizing half a dozen CCTV
screens as workers at the Bornuur gold processing plant whittled 1.2 tonnes of
ore down to 123g of pure gold that could earn the family as much as US$6,000.

Near the plant, separated from Mongolia’s capital, Ulan Bator, by 100km of
rocky pasture and mostly unpaved road, life has remained largely unchanged
since Genghis Khan’s “golden horde” rampaged across Asia nine centuries ago.

However, Khorloo is a member of a new horde of at least 60,000 herders,
farmers and urban unemployed trying to extract the riches buried in the vast
steppe with metal detectors, shovels and home-made smelters.

GREEN PANS

In the past five years, dwindling legal gold supplies and a spike in black
market demand from China have made work much more lucrative for Mongolia’s
“ninja miners” — so named because of the large green pans carried on their
backs that look like turtle shells. For thousands of dirt-poor herders, the
soaring prices alone are enough to justify years of harassment, abuse and hard
labor.

“It took us a week to dig this out,” Khorloo said, holding the nugget. “But
we dug for three years to reach the vein.”

China’s annual gold output reached a record 361 tonnes last year, but demand
continues to outstrip supply. While Beijing doesn’t publish full import
figures, deliveries from Hong Kong hit 428 tonnes last year, three times more
than a year earlier.

Spot international gold prices hit a record high of US$1,920.30 an ounce in
September, as investors bought the metal as a safe haven amid uncertainties
surrounding the eurozone and its debt. The price has fallen back to about
US$1,636, but gold remains at historically high levels after a decade-long
rally.

China has certainly driven the gold rush in Mongolia — from the giant $6
billion Oyu Tolgoi copper-gold project currently being developed by Ivanhoe
Mines and Rio Tinto to the makeshift holes that honeycomb the hills and valleys
of Bornuur.

While the government in Ulan Bator hopes to use growing mineral output to
drag its largely pastoral economy into the 21st century, many lawmakers are
wary about turning Mongolia into “Minegolia” — a choking, resource-dependent
blackspot tearing itself apart to deliver raw materials to China.

However, policies aimed at cutting output to more sustainable levels have
played into the hands of the ninjas and a shadowy network of black market
traders.

Two decades of ninja activity have already nurtured scores of middlemen
linking the underpopulated steppe with the Chinese market. And it hasn’t been
difficult to encourage Mongolia’s struggling crop farmers and once-nomadic
herders to supply them.

‘CHANGERS’

One English word appears regularly in the ninjas’ Mongolian: The “changers”
are a motley group of smugglers who trade black market gold, much of which ends
up in China.

“The changers smuggle it to China — the miners do all the work, but those
who buy the gold make the money,” said Urantsetseg, one of the many female
miners in Zamaar, a gold-producing district south of Ulan Bator.

While all producers are legally obliged to sell their gold to the central
bank, the black market is often a better option. Changers can offer prices
above the official rate, and they can also avoid the 10 percent tax on sales.

“[Workers] are requested to sell everything to the bank, but they are not
really ordered to do so,” said Erdenechimeg Belhkuu, an accountant at Bornuur.

“Some of the supply that goes through our plant is bought officially, but
some goes on to the black market, which sometimes just offers higher prices,”
the accountant said.

Mongolia’s overall trading volume with China has soared in recent years,
primarily in bulk shipments like coal and copper. Mining company officials in
Ulan Bator said it was easy — and virtually untraceable — to smuggle a few
ounces of gold in one of the thousands of coal trucks heading south.

“For buyers, gold is gold,” said Patience Singo of the Sustainable Artisanal
Mining Project run by the Swiss Agency for Development and Cooperation (SDC),
which is trying to help the ninjas clean up their production methods and get
organized.

Since Mongolia abandoned Soviet-style economic planning in 1990, gold miners
large and small have scoured the countryside in search of profit, damaging
water supplies with untreated mercury and leaving dunes of toxic tailings in
their wake.

ENVIRONMENT

Parliament eventually sought to address Mongolia’s laissez-faire mineral
laws, enacting new rules in 2009 that banned mining near rivers and forests and
revoking or suspending hundreds of licences. Official gold output fell from a
record 21.9 tonnes in 2005 to just more than six tonnes in 2010.

However, the reduction in official supplies has driven up prices, providing
incentives for the ninjas to dig away despite growing restrictions on land use.
Data is hard to come by, but ninjas continue to supply at least 7 tonnes a
year, according to non-governmental organizations.

“The policies have — pardon the pun — driven mining underground,” an
executive at a foreign mining firm with interests in Mongolia said.

“You can ban mining and try to protect the environment, but the ninjas don’t
listen. I think the only way you can deal with them is by decriminalizing and
organizing them, but whether this government is capable of that is another
matter,” the executive said.

Mining firms and ninjas forged an uneasy, but often symbiotic relationship.
The companies had to defend themselves against raids from ninja crews,
sometimes using brute force, but they would also track ninja activity for new
discoveries.

Ninjas for their part would gather in their thousands around established
mining sites like Zaamar, home at its peak to more than 40 large-scale mining
companies.

“In 2007, about 10,000 ninjas came to Zaamar and their situation was like
hell, but the government launched a campaign to chase them back to their own
areas. Now we have fewer people, but still they come,” Zaamar Governor Bolormaa
Dorj said.

Since the crackdown on large-scale mining, Mongolia’s ninjas are now
returning to old and abandoned properties and have even started ransacking
tailings dams for gold.

Tsetsgee Munkhbayar, an environmental activist who has fired arrows at
Mongolia’s parliamentary buildings and attacked mining concessions in protest
at the government’s mining policies, said scores of abandoned mines had allowed
the ninjas to thrive.

“The ninjas emerged in empty holes excavated by mining
companies that ran away without rehabilitating the land — if we can’t deal with
the mining companies, we can’t deal with the ninjas,” he said.

Source: By David Stanway  /  Reuters, BORNUUR,
MONGOLIA