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

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, while British investment was a mere 1%.

China”s
recent import spike has been driven by its thirst for raw materials, and 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,
in the midst of the fastest industrial revolution in human history, 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 the mine I saw. 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.