A Critical Reflection on Oyu Tolgoi and the Risk of a Resource Trap in Mongolia: Troubling the "Resource Nationalism" Frame

Commonly depicted as one of the final frontiers, Mongolia has gained international notoriety since the turn of the millennium for the discovery of an extensive mineral resource base, estimated to hold over U.S. $1 trillion worth of mineral assets spread over 6000 sites (Campi, 2012). Mineral riches, however, have been shown to be as much a curse as a blessing for economic and social development (Auty, 2001; Humphreys et. al, 2007). Since the discovery of the Oyu Tolgoi copper and gold deposits in 2001, Mongolia has leap-frogged from a fairly low position on the mineral-dependence scale to being widely perceived as ‘especially vulnerable’ (Haglund, 2011) to the resource trap; mineral exports comprised 89.2% of Mongolia’s total exports in 2011, up from 32.5% in 2000 (Mongolian Chamber of Commerce and Industry, 2011). In the case of Mongolia, the lack of a significant industrial base and high levels of poverty in a sparsely populated landlocked country have triggered the red flags of a potential resource trap in both domestic and international development governance circles (Isakova et. al, 2012; World Growth, 2008; Moran, 2013; Reeves, 2011; Barma et al., 2011). This paper will engage with some of the complexity of Mongolia’s emergence as a mineral-exporting economy and the government’s negotiation of a potential resource trap through committing a sufficient portion of mineral rents to economic diversification and public redistribution. While it is impossible and unhelpful to draw any fast conclusions about the long-term implications of an extractive development strategy for Mongolia, this article purposes to trouble the simplistic frame of “resource nationalism” that has been attached to Mongolia’s governance of Oyu Tolgoi.