The Erdenet copper deposit in Orkhon aimag will be depleted in 25 years. When that time comes, will we have worked out what will happen to the town, the third largest in our country and the home of 100,000 residents? The sooner we come up with a good answer to this question, the lower the probability that the town will join the ranks of so-called “ghost towns” that are created in the wake of mining booms … abandoned when the deposit is depleted.
The Erdenet deposit was first discovered by Czech geologists in 1968 and further developed by Russians in 1971 when they conducted the reserve estimate and commenced the mining process. Since the concentrator was built, the deposit has been mined for 35 years. The mine currently processes a total of 25 million tons of iron ore and produces 500,000 tons of copper concentrate each year. It is based on these figures that the estimate of 25 years was made for when the deposit will be depleted.
While there have been reports that additional explorations are taking place, it is unknown whether another deposit has been found or not.
What is known is that Erdenet Mining Corporation is closely affiliated with the political party that acquired power and became closely affiliated with its associates shortly after the election. Furthermore, just like the formula of certain products, such as Coca-Cola, there is much secrecy surrounding the agreement on the supply of copper concentrate; only the Chief Executive Officer knows the details. The CEO of Erdenet can be regarded as an “uncrowned king” of Mongolia in terms of power, because he is in full control of the agreement terms and conditions such as sales, revenue, terms, debts and payments.
The Erdenet management team is chosen based on political party affiliations rather than on skills and merits. You can see the interrelationship between the power of political parties and the organization structure in Erdenet Mining Corporation and in many other state-owned companies.
Erdenet Mining Corporation employs approximately 6,000 people. If we exclude children and the elderly from the rest of the population of Erdenet, which is 90,000, the city has a workforce of almost 40,000 people. Although that workforce is engaged in industries other than mining, such as carpet manufacturing, animal skin processing, food production, textiles, road construction, building material manufacturing, commerce and services, the town’s economy, including the purchasing power of the entire population, is fully dependent on the operations of Erdenet Mining Corporation and on fluctuations in copper prices.
Orkhon aimag is doing better than others in terms of competitiveness. The true reality of the economic viability of the aimag can only be seen when we take Erdenet Mining Coorporation out of the equation. This aimag has only two soums: Jargalant and Bayan-Undur, the populations of which are 3,094 and 87,273 respectively.
In order to prevent Erdenet city from becoming a ghost town, certain measures need to be taken. Suggestions include establishing a “New Erdenet 2040” fund in which money from mining can be accumulated and later spent to develop the town, such as making Erdenet a regional center in a certain industry or transforming it into a modern, smart city. The fund would be sourced from a certain percentage of the dividends of Erdenet Mining Corporation. If such a fund were created, the state-owned shares of the corporation should be sold to the public on the stock exchange and a certain percentage, maybe 5 percent, of the shares ought to be purchased by the Erdenet local council on an initial public offering. Furthermore, it would be fair to include the Mayor of Erdenet (mayors must be directly elected by the public in Mongolia) and the mayor should be on the board of representatives of the corporation.
We Mongolians have to take responsibility for our public companies and grow them further by converting all our state-owned companies into shareholding companies, selling their shares to the public, taking part in boards of representatives, choosing the CEOs ourselves and providing regular oversight and supervision. This is the best way created by humankind to provide oversight on shareholding companies so far.
If we truly start managing such companies effectively, progress can be made in various areas, including the long-standing case of building another plant to process copper concentrate. With the amount of time that has been lost so far, however, this project will be dependent on the location of the Oyu Tolgoi copper concentrate processing plant.
Erdenet city can be a regional center in industries such as education (mining schools or a branch of a prestigious international university), medicine, banking and finance, light industry, food or building materials. Also, a goal could be set to make Erdenet a junction point of railways and transport, which will have great importance for not only Mongolia but also for trade with other parts of Asia in the future. There are many opportunities to be seized if we make good use of this era in which we have mining revenues and in which revolutionary reforms are taking place in the field of information and communication technology (ICT).
As a result of this ICT revolution we have been witnessing, ordinary cities have become “smart” cities and, more recently, “smart” cities have been turning into “intelligent” cities. Being an intelligent city means that the city is becoming competitive by specializing in its own unique features. For example, Singapore gets its drinking water from its neighbors via pipelines, but they have also developed a unique infrastructure that allows them to collect, store, clean and use rainwater. Many other countries are showing great interest in this achievement of Singapore. On its way to becoming an intelligent city, Singapore is becoming a world center of finance and media. Also, when building a smart or intelligent city, changes are made to reflect the latest urban development trends: developing a city that is both friendly to the residents and to the environment.
What is stopping us from developing Erdenet into a great city that will attract people to move there from Ulaanbaatar?
The people of Erdenet need to start thinking about this, set a vision, write it down and make it the main direction for where the city is headed. If the objectives are set properly and the best efforts are made to realize them, Erdenet could become the best-planned city in Mongolia, one that people want to live in and which is environmentally-friendly. The town could be transformed into an intelligent city that would be a regional center of great importance to the country. Only the people of Erdenet and their will and hard work will determine whether Erdenet becomes a ghost town or a vigorous city.
Translated by B.AMAR
Erdene. 13.05.03