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 metric metric tonnes of ore down to 123 grams
of pure gold that could earn the family as much as US$6,000 (S$7,535).

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

But 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.

In the last 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 metric tonnes last year, but
demand continues to outstrip supply.

While Beijing doesn”t publish full import figures, deliveries from Hong Kong
hit 428 metric tonnes in 2011, 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 euro zone and its debt.

The price has fallen back to around 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 US$6
billion (S$7.5 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.

China and the “Changers”

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.

One English word appears regularly in the ninjas” guttural 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 per cent tax on sales.

Workers at Bornuur admitted that some of the gold it processes is not sold
through official channels.

“They 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.”

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.

“Driving mining underground”

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.

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 licenses.

Official gold output dwindled from a record 21.9 metric tonnes in 2005 to
just over six tonnes in 2010.

But 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 seven tonnes
a year, according to NGOs.

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

“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.”

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,” said Bolormaa
Dorj, Zaamar”s governor.

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.

Power in a union

Singo, a Zimbabwean gold mining engineer, has been trying to get ninjas
organized.

The small gold processing centre at Bornuur is a far cry from the giant
industrial gold producers ploughing through Mongolia”s plateau and pasture.

Three years of tailings fill thousands of vegetable sacks stacked up on the
edges of the site, and they still don”t know what to do with them.

But the plant represents progress. It was set up by five miners with the
help of Singo and the SDC and brings a degree of efficiency and mechanization
to the local mining community.

Large stone wheels grind down chunks of rock dug from nearby hills.

A decade ago, cyanide might have been used to dissolve the ore and mercury
would have been added to amalgamate the gold, but the plant uses only water and
gravity, allowing the shiny flecks to roll down a chute before being refined
further.

It was designed to provide a safer channel for the ninjas to sell their
gold, but business has slowed in recent years, with many choosing to take their
chances with the changers rather than the central bank.

“The ninjas won”t stop, but they might stop coming here,” said
Singo.

While there is little sign that ninja activities are slowing, formal
activities are.

The Bornuur plant”s accountant, Erdenechimeg, said it was struggling to
compete with black market prices, and new restrictions on land use were also
limiting the number of new miners coming in.

Singo and the SDC have also helped organize a group of 50 former ninjas in
the district of Zamaar, south of Ulan Bator.

Instead of raiding licensed properties, the miners have signed an agreement
with a local mining firm, the Mundulaan Trade Company, to mine marginal
deposits that big firms cannot handle.

It also allows them to sell directly to the central bank and mine without
being molested by police and security guards.

The government has already accepted that small-scale mining is here to stay
and passed regulations in 2010 allowing “organized” miners to extract
gold on land that has not been restricted or licensed to other miners.

It is a small step.

A few miles away from the project, scores of ninjas pop up like moles from
the trenches and holes that perforate the valleys.

Miners flee into the hills on motorcycles, fearing the approach of police or
thieves.

Deeper into the valley, a dozen ninjas sprawl on the hillside as their
comrades feed clumps of earth into a homemade dry washer.

A day”s mining has produced half a palmful of shiny dust that could earn
them as much as 300,000 tugrik (US$280).

Boldbaatar, a veteran miner in faded army fatigues, said they could earn
much more if they didn”t have to spend so much time hiding or running away.

“We have already been chased off this site today,” he said.
“They don”t really chase us out of duty. They are trying to steal our
gold.”

It has proved nearly impossible to eliminate the ninjas, and experts like
Singo say it would make more sense for the government to “formalize”
them and bring their supplies back on to the official market.

For the ninjas themselves, official recognition would at least earn them
respect.

“Ninja isn”t a good name,” said Boldbaatar. “And the ninja
turtles have an advantage over us. At least they can fly.”

BORNUUR, Mongolia

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