China”s imports surged in
August, up no less than 32% on the same month last year. The growth of Chinese
imports and the harnessing of Mongolia”s mineral wealth are closely related. Mongolia
is in the early stages of an unprecedented boom. The economy of this former
Soviet satellite is a mere USD5 billion. In the next decade, though, Mongolia”s
GDP could very easily triple. That”s because this vast central Asian state is
the scene of an astonishing resources “land grab, says a report in The
Telegraph of Britain.

Beneath Mongolia”s surface –
from its mountainous north to the Gobi desert in the south – lies untold
mineral wealth. The country”s reserves of coal, copper, gold and uranium have
lately become the talk of the world”s mining industry. What is happening in
this far-away state, land-locked between Russia and China, provides a vivid
illustration of just how fast the global economic order is being turned on its
head.

A third of Mongolia”s people
are nomadic or semi-nomadic – their lives revolving around horses and other
livestock. Despite that, foreign direct investment has been piling in,
oblivious to global recession and reaching over USD700 million in 2009 with
billions more pledged to come. Much of this FDI since 2003 has been
mining-related, with no less than two-thirds coming from China. American FDI in
the same period accounted for less than 3% of the total. British investment was
a mere 1pc.

China”s growth relies on
commodity imports. If Beijing does let its currency rise more in the coming
months, it won”t be because of US jaw-boning, but in order to obtain resources
from abroad more cheaply. Many of those resources will come from Mongolia –
despite its current lack of development. Much of Mongolia”s coal is the
high-quality “coking” variety vital to steel production. Low
“strip ratios” – the amount of waste that must be moved – means that
it can be produced cheaply, for as little as USD15 per ton.

China is producing 50% of the
world”s steel. That”s one reason Beijing is so interested in Mongolia coal. In
addition, 75% of China”s electricity derives from coal-fired power stations. That”s
why the Chinese government is a cornerstone investor in the company developing a
mine I saw in Mongolia. Beijing has even facilitated the building of a new
border post, kept open around the clock, so importing the mine”s spoils is
subject to minimum delay.