What ‘lies beneath’ has long had the potential to stir controversy between China and its Mongolian neighbour to the north.
And so it was again last month, when Japan-based Kyodo News reported that an old woman from Dalian (who reckons she’s Genghis Khan’s direct descendant) was also claiming to be a regular visitor to his secret tomb in Sichuan province.
The exact whereabouts of the Mongol warlord’s burial place is one of the great archaeological mysteries. Various Chinese provinces stake (unconfirmed) claims to his final resting place.
But Mongolian nationalists are sensitive to suggestions that Genghis might be interred on Chinese soil, especially after a contretemps a couple of years ago when an official in Erdos caused an uproar by inferring the warlord was Chinese.
Still, it was news of a different kind of excavation that was making the headlines last week.
In two separate deals, sovereign wealth fund China Investment Corporation (CIC) announced it was purchasing stakes in Mongolian natural resource plays; a $500 million minority holding in coal miner SouthGobi Energy Resources, and a proposed $700 million convertible loan deal with iron ore firm Iron Mining International.
Both investments follow a landmark announcement in August in which the Mongolian government confirmed that it would be scrapping a three year old windfall tax (on finds of copper and gold) at the massive Oyu Tolgoi field.
In exchange, foreign investors Ivanhoe Mining and Rio Tinto will commit a further $5 billion of spending, to get the mine into production by 2013. That sum alone is close to the country’s annual GDP.
Mongolia declared itself independent from centuries of Chinese rule after the collapse of the Qing dynasty in 1911. Russian Bolsheviks then supported the formation of a Mongolian Communist Party, leading to formal independence in 1921.
But the price paid was close to seven decades of Soviet influence.
That has left Mongolians more than a little suspicious of interference from their larger neighbours to the north and south.
Their caution has extended to fears of foreign control of the country’s abundant natural resources, which is why the resolution of the Oyu Tolgoi dispute is thought to be so significant. But the CIC deals look like a match made in mineral heaven. The Chinese sovereign wealth fund seems to be switching investment focus from financial institutions towards natural resources. And Mongolia has already unearthed at least 69 of the 111 known mineral elements within its national borders.
Copper, iron ore and coal are all present in vast quantities, so the country is also expected to become Australia’s biggest competitor in delivering to Chinese buyers. Whereas it takes weeks to ship the stuff by boat from Australia, it can be delivered from Mongolia in a matter of days – although admittedly it will require better transport infrastructure. The shorter distances should allow for a cost advantage too.
China has been Mongolia’s leading trading partner for a decade and already accounts for half the foreign investment in the country.
Still, SouthGobi is an Ivanhoe subsidiary. In taking a minority stake in a Canadian firm (albeit with a Mongolian operation) CIC is treading carefully. Elsewhere there have been efforts to talk up a new era of friendship. Xinhua reported late last month that Wu Bangguo, China’s chief legislator, met a visiting Mongolian delegation to Beijing and spoke of “a new starting point”.
So, if it really is to be found in China, Genghis’ grave would probably best remain undisturbed. That would allow CIC to focus more on digging up Mongolia’s other hidden treasure.
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