Eastern promises: Old traditions join modern life in this resource-rich country

Bounded by Russia to the north and China to the south, Mongolia is a vast country and sparsely populated – larger than Western Europe, but with a population of under 3m people. The country of wind-swept steppes, plains and deserts is famous for its nomadic tradition, still influential despite rapid development. However, stable and democratically-ruled Mongolia is also emerging as a key centre for mining investment, with important mineral reserves and a number of major projects due to enter production soon.

GEOGRAPHY: Mongolia, covering a surface area of 1.56m sq km, is the 19th largest country in the world. The country is entirely land-locked, with land borders that stretch 8220 km. Its geography is characterised by plains, steppes and deserts – notably the Gobi desert in the south of the country – while parts of the north, far west and south-west are more mountainous. The far west hosts the country’s highest peak, the 4374-metre-high Huyten Orgil (Khüiten Peak), which sits astride part of the western frontier where Mongolia, Russia, China and Kazakhstan come together.

The capital, Ulaanbaatar, has a population of around 1.1m according to the 2010 census and is located slightly north-east of the centre of the country. The mountainous northern province of Khövsgöl, named after a lake with the same name, is known for its dynamic population, as well as for being a stronghold of shamanism and related practices.

In the south of the country, the Gobi desert, despite the images of endless sand conjured by the name, is known for its diverse scenery and landscapes, including glaciers, canyons and oases, as well as for hosting the country’s largest mineral deposits.

HISTORY: Present-day Mongolia has been inhabited by modern humans for approximately 40,000 years, with major political systems developing in the first millennium BC. A succession of nomadic tribal confederations, including the Xiongnu, Xianbei, Rouran, Khitans, and Khamag Mongols, ruled over large parts of the steppe between 200 BC and 1200 AD. The Mongols burst onto the global stage, however, with the Eurasian empire established by Chinggis (Genghis) Khan in the 13th century. At its height, Chinggis’ empire stretched from Poland to Vietnam and held over 100m people. Upon his death, however, Chinggis’ territory was divided into four khanates (a political entity ruled by a khan), which gradually crumbled, although one achieved fame as the Yuan Dynasty of Kublai Khan. The Mongols eventually retrenched to their original homelands, and by the late 17th century submitted to the rule of the Chinese Qing dynasty.

The Bogd Khan, Mongolia’s Buddhist spiritual leader, declared the country’s independence in 1911 upon the fall of the Qing dynasty. The new Chinese government, however, still considered “Outer Mongolia” as part of the republic and used the Russian Revolution in October 1919 as a pretext to occupy the territory. Bolshevik Russia supported the formation of a communist Mongolian government and army, which expelled the Chinese forces. The Mongolian People’s Government was declared in 1921, and after the Bogd Khan’s death in 1924, the full independence of the Mongolia’s People’s Republic was declared.

The new republic was strongly influenced by the Soviet Union. The dictator Khorloogiin Choibalsan, who ruled from 1928 to 1952, collectivised livestock, destroyed Buddhist monasteries, and purged tens of thousands of citizens, mainly monks. Mongolia continued to side with Moscow even after the Sino-Soviet split in the 1960s, with tens of thousands of Soviet troops stationed in Mongolia in the 1980s.

With the advent of glasnost and perestroika in the late 1980s, however, the first cracks in Mongolian communism began appearing. Protests and hunger strikes orchestrated by the Mongolian Democratic Union toppled the communist government in 1990. The constitution was amended to allow opposition parties, and multi-party elections were held in the same year. The former state party, the Mongolian People's Revolutionary Party, retained power until 1996, when it lost in elections and peacefully relinquished control. Since then, Mongolia’s young democracy has seen sporadic political crises, but is currently characterised by relatively little violence and a healthy consensus for multiparty politics.

NATIONAL GOVERNMENT: Having ended decades of communist rule in 1990, Mongolia is governed by a mixed presidential-parliamentary system. Candidates for the presidency are nominated by the singlechamber, 76-seat parliament, known as the State Great Khural, and elected by popular vote for a maximum of two four-year terms. The president acts as the head of state and chief of the armed forces and is obliged to appoint as prime minister the candidate presented to him by the parliamentary majority.

The prime minister appoints a cabinet that must be approved by the State Great Khural. Parliamentary elections are also held every four years. While Mongolia has a long legal tradition stretching back to the yasa (written code of law) of Chinggis Khan, the contemporary legal system has been strongly influenced by that of the Soviet Union.

LOCAL GOVERNMENT: Mongolia is administratively divided into 21 regions, known as aimag, with the capital city, Ulaanbaatar, operating as an independent municipality. Each province elects a local khural to parliament and is sub-divided into administrative regions (sums) that have local representative bodies.

POPULATION: The current estimated size of Mongolia’s population is just under 3m (growing at an annual rate of 1.49%), making it the 134th-largest country by population. Its small population, combined with Mongolia’s vast geographical size, makes the country the least densely populated nation in the world.

The country is fairly ethnically homogenous, with approximately 95% of the population being of Mongol origin, around 90% of whom hail from the Khalkha Mongol ethnic group, who speak the Khalkha dialect of Mongol. Other Mongol ethnic groups include the Buriat, Dorvof and Tuvad groups. However, the population has a substantial Turkic ethnic minority of around 5% of the population – most of whom are ethnic Kazakhs – who make up the majority of the population of the western-most province of Bayan-Ulgii.

RELIGION: According to figures from 2004, approximately half of the Mongolian population is Buddhist Lamaist, a sect of Tibetan Buddhism. Most Buddhist temples and monasteries were destroyed under the communist regime, which sought to erase the influence of religion on the population. However, a number of these structures were left standing as examples of traditional Mongolian culture, including the famous Gandantegchinlen monastery in the capital city.

Roughly 40% of Mongolians do not practice any religion, partly of the legacy of the ban on all religious practice that was in place under the former communist regime, which ended in 1990. There is also a Sunni Muslim minority – mostly made up of the Kazakh minority – that comprises around 4% of the population. In addition, small Shamanist and Christian communities exist, with most Christians subscribing to Protestant denominations. The constitution and the government both provide for freedom of worship.

LANGUAGE: Around 90% of Mongolians speak Mongol, most of them using the Khalkha Mongol dialect, which is the official language of Mongolia and which since 1963 has been written in the Cyrillic alphabet due to the strong influence of the Soviet Union. However, the traditional Mongolian alphabet is gradually being reintroduced. Turkic languages – principally Kazakh – are also spoken, mainly in the west of the country. Russian was spoken fairly widely in the past, sustained by the large number of immigrants from the Soviet Union, however, many left following its collapse and the language does not have as wide an influence any longer.

CULTURE & HERITAGE: Nomadism (and in particular nomadic herding of livestock) and Buddhism are two of the most important influences on Mongolian culture. While most Mongolians are now settled into urban areas, a significant number of city-dwellers nonetheless continue to live in gers, traditional round wood and felt tents that were specifically designed for the nomadic lifestyle.

The most popular traditional sport is Mongolian wrestling, known as bukh. Together with horseracing and archery, this is the mainstay of the famous summer festival of Naadam, which is also a major tourist attraction. Epic poetry also remains a significant cultural tradition. Wrestlers at Naadam are honoured by bards, while the nation’s past is famously encapsulated in the epic poem “The Secret History of the Mongols”, which describes the rise of the Mongol Empire under Chinggis Khan in the 13th century.

Mongolian cuisine is influenced by the country’s herding tradition, and thus based largely around meat and milk products. Traditional staple dishes include a variety of mutton dumplings such as buuz (steamed dumplings) as well as khushuur, which are deep fried meat pies. Popular traditional drinks include milk tea and airaig, lightly alcoholic fermented mare’s milk.

CLIMATE: Given the large size of the country, the weather varies significantly. Generally, the climate is an extreme continental one, thanks to its landlocked status and distance from the sea. In Ulaanbaatar – one of the coldest capital cities in the world – the coldest month on average is January, where temperatures fluctuate between a daily average of -32°C and -19°C.

Meanwhile, the temperature peaks in July, alternating between average daily minimums and maximums of 11°C and 22°C. However, temperatures outside of Ulaanbaatar and particularly in the southern desert regions are substantially higher.

In the steppe and desert areas of the country the temperature fluctuates between warm days and cool nights. July is the wettest month, with precipitation averaging roughly 76 mm in the capital.

NATURAL RESOURCES: Agriculture, and particularly herding – around which many of the country’s traditional activities and the semi-nomadic culture is centred – are important contributors to the economy. However, the scale of the activities is primarily focused at the national level. As a result, it is the mining and extracting sector that is emerging as the key driver of both exports and foreign investment.

Mongolia currently has very little to speak of in the way of significant oil or gas reserves. However, the country is an important mining and minerals centre. Many of the country’s deposits are still untapped, and a number of major new projects are due to begin production in the near future. These are expected to significantly increase Mongolia’s status as a producer of minerals. The mining sector currently accounts for 30% of GDP and 32% of government revenue, according to research from Resource Capital.

Much of the output is exported to its rapidly expanding neighbour, China. The country has among the largest copper reserves in the world, with the Oyu Tolgoi reserve thought to be the world’s largest undeveloped copper and gold reserve. Oyu Tolgoi also gives Mongolia the second-largest copper reserves in the world (after Chile). Canada’s Ivanhoe Mines and Rio Tinto are developing the site in partnership with the government, which has a 34% stake in the project. Production at the mine, located in the South Gobi region, is due to begin in 2013.

Tavan Tolgoi, the world’s largest untapped coal reserve, is also a major focus. The government has decided to divide the site in two, keeping 51% to develop on its own and inviting participation from international mining firms for the remainder. Additionally, Mongolia is the world’s third-largest producer of fluorspar, used in iron smelting. Its output accounts for approximately 5.5% of global output.

Mongolian mines produced 25m tonnes of coal in 2010, of which 18m was exported. Mongolia is also believed to have the world’s second-largest reserves of uranium after Australia, with a major prospect set to being production in 2012. The nation also holds significant reserves of tin, molybdenum and tungsten.

A RISING TIDE: Mongolia’s commodities surge is expected to boost the country’s other industries, many of which are small now but should benefit from GDP growth rates as high as 20% annually. The banking sector, for example, is as of yet too small to service the mining sector’s massive capital requirements, but an influx of mining money will provide liquidity through other channels. Anticipated growth areas include mortgages and auto loans.

Mongolia’s industrial base is similarly modest, having seen Soviet-era factories close down in the early years of democracy. Textiles, food and beverages, and basic metals from mining account for more than 80% of industrial output. The former two are primarily agricultural outputs, with cashmere from goats having grown into perhaps the country’s largest industry.

Even as it turns into a mining powerhouse, Mongolia is seeking to preserve its pastoral landscapes, home not only to a distinctive national culture but also to economic potential. The country is seeking to market both its cashmere and its meat products as premium products grown in a sustainable, traditional manner. In terms of more advanced industry, however, Mongolia is banking on a $10bn industrial complex in Sainshand that will take advantage of raw materials from mining sites and still-to-be-built railway links.

Infrastructure development will in fact be key to Mongolia’s attempt at resource-driven growth. As a landlocked country sandwiched between China and Russia, getting commodities and other exports to buyers is time-consuming and expensive. The country’s airport is a holdover from Soviet times, its roads are frequently unpaved, and its railroad network is a mishmash of incompatible Chinese and Russian standards.

Much of the government’s mining-related investment is being funnelled, therefore, into infrastructural improvements. Plans include upgraded roads both within Ulaanbaatar and in the provinces, a new airport, and more than 5000 km of new railways. Such massive investment will not only make the country and its hinterlands more accessible but will also benefit local construction companies and service providers.