Mongolia shows foreign policy dominated by mining companies

An important facet of Canadian foreign policy is advancing the interests of mining companies. In Mongolia it’s largely all Global Affairs Canada does.

Canadian ambassador Catherine Ivkoff regularly travels to Canadian-run mines, speaks at international mining conferences, does interviews with mining publications and talks up the sector in various other business and political forums. “We will be working to promote Canadian Green Mining solutions and initiatives in Mongolia”, noted a recent headline based on an interview with Ambassador Ivkoff.

In a recent Canadian Journal of Development Studies article headlined “Mining self-interest? Canadian foreign aid and the extractive sector in Mongolia”, Stephen Brown points out that Canada’s aid in the Central Asian nation is largely designed to advance mining interests. An embassy official told Brown that Canadian aid in the country of 3.5 million is “focused exclusively in the extractive sector” even though the World Bank warned that Mongolia’s economy was excessively reliant on mining. Another Canadian official admitted that “the aid program is designed to help Canadian investment,” largely by influencing the state’s “legal and operating environment.”

An embassy official also told Brown “we’re here because of the mining”. Canadian diplomatic relations with Mongolia were in fact established largely to serve mining interests. In April 2008 Agence France Presse reported, “Canada will establish a new trade mission in Ulaanbaatar, Mongolia, this year to help Canadian companies active in the region’s mining sector.” Three months later the trade mission was expanded to full embassy status. Canadian diplomatic representation in Mongolia was necessary because, according to the parliamentary secretary to the minister of finance Ted Menzies, “there have been some policy issues including taxation, control and investment regulations that have put Canadian companies in the region in an extremely challenging position.”

Beginning in 2005 the Financial Post, the business section of the National Post, began to press Ottawa to increase diplomatic relations with Mongolia. “Ottawa should open a full-fledged embassy with a career diplomat in the capital city of Mongolia, Ulan Bator, immediately,” demanded prominent columnist Diane Francis. In her column Francis quoted Ivanhoe Mining’s chairman Robert Friedland. “The U.S. is here with an embassy,” said Friedland. “Why is Canada ignoring a country that wants close relations and the only truly democratic country in Asia that needs our help? Why is Canada kissing Fidel Castro’s ass in Cuba? It’s hypocrisy.”

Julian Dierkes, a professor at the Institute of Asian Research at UBC, added her voice to calls for greater Canadian diplomatic representation in the most sparsely populated country in the world. “Mongolia is one of the few countries where Canada is the 800 pound gorilla,” Dierkes told the Financial Post in April 2007. “It’s the biggest investor, and everyone looks to Canada for leadership… [but] there’s still no embassy or diplomatic representation, which is really terrible. And so the initial enthusiasm for Canadian involvement in mining has been tempered somewhat by the lack of government involvement in any of this.”

With some 20 Canadian mining companies active in the country, Canada was the second largest investor in Mongolia. Ottawa’s biggest concern was Vancouver-based Ivanhoe, which owned a copper and gold project in the Gobi desert. The multibillion-dollar project, noted the Financial Post, “was the major campaign issue” in Mongolia’s 2008 election. In April 2006 at least 3,000 people marched against foreign mining in Mongolia’s capital, with protesters burning an effigy of Ivanhoe’s Robert Friedland. The ire directed towards Friedland was partly because of comments he made in 2005. Friedland explained his Mongolian venture to an investor’s conference this way: “So we’re coming in from outer space and landing at Oyu Tolgoi … And the nice thing about this: there’s no people around; the land is flat, there’s no tropical jungle; there’s no NGOs. We’re only 70 kilometers from the Chinese border. It does not snow here. You’ve got lots of room for waste dumps.” The company also took heat for loaning $50 million to the government in exchange for tax concessions.

Canada actively lobbied the Mongolian government on behalf of Ivanhoe. A Globe and Mail Report on Business headline described a 2008 trip to Mongolia by trade minister David Emerson: “Emerson to push for Ivanhoe deal in Mongolia.”

In a bid to deter nationalistic resource policies and woo the country’s decision-makers, Ottawa has doled out tens of millions of dollars in aid to Mongolia. The multiyear “Enhancing Resource Management through Institutional Transformation in Mongolia” and “Strengthening Extractive Sector Management in Mongolia” recently concluded. Ottawa put up $27 million for these two initiatives, which underwrote projects between Canadian firms and local community groups.

As part of building support for the extractive sector, Ottawa has paid for Mongolian journalists to attend the Prospectors and Developers Association of Canada (PDAC) conference in Toronto and wooed Mongolian officials at PDAC. During the recent PDAC conference in March there was a Mongolia Day with Canadian officials meeting their Mongolian counterparts.

At the 2017 PDAC convention international trade minister Francois-Philippe Champagne announced the commencement of the Canada–Mongolia Foreign Investment Promotion and Protection Agreement (FIPA). He said, “this agreement provides substantial protections for Canadian investors in Mongolia, where there are already significant Canadian-owned mining assets.” The FIPA is designed to protect Canadian mining firms by giving companies the right to sue the Mongolian government — in a private, investor-friendly, international tribunal — for pursuing policies that interfere with their profit making.

Canadian government activity in Mongolia, proves all Ottawa really cares about in the Central Asian nation is mining companies profits.

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