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Russian President Signs China-Style Energy Deals With Mongolia

  • Bruce Pannier

Russian President Dmitry Medvedev (left) attends a welcoming ceremony with Mongolian President Tsakhiagiin Elbegdorj in Ulan Bator.

Russian President Dmitry Medvedev (left) attends a welcoming ceremony with Mongolian President Tsakhiagiin Elbegdorj in Ulan Bator.

Russia seems to have learned from China, judging from the deals Russian President Dmitri Medvedev has signed in Mongolia.

Officially, Medvedev is in Mongolia to mark the 70th anniversary of the battle of Khalkhin Gol, when combined Soviet-Mongolian forces repelled a Japanese invasion of Mongolia.

The visit has far more economic significance, however, as Medvedev and new Mongolian President Tsakhiagiin Elbegdorj have signed agreements for mining uranium and constructing electrical power stations that will serve Mongolia, Russia, and China.

Medvedev noted that Russia and Mongolia already have "a good and developing relationship in traditional forms of business and traditional joint venture projects." But the Russian president hailed the "new and interesting projects in the energy sphere: development of the nuclear industry and processing of uranium ore" that were signed in Ulan Bator on August 25.

Medvedev did not mention that Russia's methods of obtaining Mongolian uranium seem to follow the model of Mongolia's other neighbor, China.

Beijing has had much success working out deals with the Central Asian states whereby China forms joint ventures with local companies to extract oil, natural gas, and other resources, while also funding the construction of export routes. In the end, the Central Asians receive access to a steady customer at a very low cost, while China positions itself in a position to receive the lion's share of the resources generated from the new ventures.

'Important Political Signal'

Sergei Kiriyenko, the head of Russia's state nuclear company Rosatom, accompanied Medvedev on his two-day trip to Mongolia, and highlighted the importance of the uranium-ore agreement.

Elbegdorj and Medvedev during a document signing ceremony in Ulan Bator
"Russia is the first country to have signed an agreement with Mongolia on joint uranium operations," Kiriyenko said. "It is an important political signal."

Mongolia has uranium reserves of some 62,000 tons, placing it among the top 15 countries in terms of reserves. But some Russian sources say the figure is twice as much, or even more. And Mongolia -- with no nuclear power plants, no nuclear weapons, and a population of just over 3 million -- doesn't have great need for uranium.

But Russia and Rosatom do, and hope to secure Mongolia's uranium through an arrangement that looks very similar to the deals China is making with the Central Asian states.

Rosatom is forming a join venture with Mongolia to explore and extract the uranium. Russian Railways signed deals in May worth $7 billion to build new railway lines and to repair existing ones to uranium sites to facilitate the transport of uranium ore from remote sites in the Gobi Desert to a processing and enrichment facility in Siberia.

In return, Mongolia not only receives the improvements to its railway and road infrastructure and money for its uranium exports, for also for promises of Rosatom help in building small- and medium-sized nuclear-power plants. Rosatom will also train Mongolian technicians to run the plants.

'Good Cooperation'

Also, the railway lines would connect Mongolian coal deposits such as the one at Tavan Tolgoi, which many believe to be the largest coal deposit in the world, with estimated reserves 6.5 billion tons, to electric power stations in Mongolia. In turn, the electricity generated from these plants can provide electricity to Mongolia, areas in southern Siberia and, according to remarks from Russian Energy Minister Sergei Shmatko earlier this year, be exported to China.

Aside from the deal-making, Medvedev is scheduled to attend a celebration on August 26 marking the victory at Khalkhin Gol. The battle routed the Japanese from Mongolia and also set a precedent for tank warfare that the Red Army would employ again at Kursk in 1943 against the German Army.

Medvedev today noted the significance of the event, saying, "The victory that was achieved by our peoples helped develop the relationship between our countries."

It was not the only mention of Japan during Medvedev's visit. In a sign of changing times, Rosatom's Kiriyenko said of the new uranium deal, "We have good cooperation with Japanese companies; therefore, our projects in Mongolia can be tripartite."

Medvedev also congratulated Elbegdorj on his election and invited him to visit Moscow.

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