Mineral-rich Mongolia a minefield for Rio Tinto
Mining has been part of human life for thousands of years. Its effect – social, economic and ecological – is profound.
The pace of mine development has also accelerated in the past number of years, with the search for new resources intensifying as demand for the staples of industrial production and construction, such as iron, aluminium and copper, soar.
It's also, of course, big money. Countries such as landlocked-Mongolia have been dramatically altered by the rush to carve up the earth.
It's only 23 years since there were just 450 cars registered in the massive country. Now the number has risen to the hundreds of thousands, with 35,000 cars alone being registered each year in the capital, Ulan Bator.
Mongolia's pace of economic growth has been frenetic – a breakneck 12.3pc gross domestic product (GDP) growth rate, making it the world's fifth-fastest growing economy.
Global mining giant Rio Tinto is just one of the companies capitalising on Mongolia's estimated $1.3 trillion (€1tn) resource treasure trove. It is spending $6.2bn developing a copper-gold mine there that would represent about 30pc of Mongolia's total GDP once it is operating at full tilt.
But there are already major cracks. The government holds a 34pc stake in the mine and officials complained that Rio Tinto hasn't been transparent about the operation and has structured the project's capital in a way that benefits the miner at the expense of the government.
There are some fears that foreign investors are now shunning the country.
The great divide has also opened up in Ulan Bator, where high-end European fashion retailers such as Louis Vuitton have set up shop. A fifth of the country's three million population make do with less than $1.25 a day.
Global mining firms were on the crest of a wave in recent years as demand for resources soared, driven in no small part by China's rampant growth. But while the industry has been more subdued of late, the search continues for resources.
But those searches don't always go according to plan. Rio Tinto still sees big opportunities in Africa, for example, but it recently suffered a serious misstep there.
Its boss, Tom Albanese, resigned last month after the company wrote down its aluminium and coal mining businesses by a whopping $14bn (€10.4bn).
The bulk of the writedown – about $10bn – related to the company's 2007 purchase of Canadian aluminium producer Alcan for $28bn just before world financial markets went into meltdown.
The remainder of the writedown was in relation to Rio Tinto's coal-mining operations in the east African state of Mozambique. It has had enormous difficulties there with an asset it acquired in 2011 and which only began shipping some coal last year.
"The Rio Tinto board fully acknowledges that a writedown of this scale in relation to the recent Mozambique acquisition is unacceptable," said chairman Jan du Plessis.
"We are also deeply disappointed to have to take a further substantial writedown in our aluminium businesses, albeit in an industry that continues to experience significant adverse changes globally."
Back in Mongolia, meanwhile, as many as 60,000 prospectors are pinning their hopes on mining what they can of the country's resources to help their families. Subsistence mining in Mongolia is a job of last resort, according to Michael Priester, who's been involved in the country for seven years as head of mineral resources at Projekt-Consult, a German corporate and government advisory business.
When extreme cold in the early 2000s killed off livestock, many herders either moved to Ulan Bator to find work or took up shovels to dig for coal, gold, and other minerals, he said.
"It's for people who don't have other economic opportunities," he added. (Additional reporting Bloomberg)