Uranium Shakedown: Mongolia and Russia Conspired Investors

Here is what you need to know about the Uranium Shakedown and How Mongolia and Russia conspired against western investors. This is a case of Khan Resources, which depicts how Mongolia captured uranium deposits from their rightful legal Canadian owner and transferred them to the control of Russian Government.

Russia's Prime Minister Vladimir Putin meets President of Mongolia Tsakhiagiin Elbegdorj
Russia’s Prime Minister Vladimir Putin meets President of Mongolia Tsakhiagiin Elbegdorj

And, as election day approaches, the Mongolian government is working to resolve this issue..

Table of Contents

Downfall of the Mongolia Economy

After years of failing to fulfill mining agreements with companies like Rio Tinto, the Mongolian government has suddenly begun settling down its conflicts with the promise of compensation and new projects.

The reason behind this is upcoming Elections. If you think America’s Democrats have a difficult time justifying their record, consider Chimed Saikhanbileg. Mongolia’s Prime Minister has presided over one of the world’s most dramatic falls in economic growth, from 17% five years ago to nearly zero currently.

Mongolian Government Entirely Responsible?

Of course, the government is not entirely responsible to be blamed for this. The main concern is that Mongolia’s economy is its dependence on China. Mongolia is more dependent on China than any other country on the planet. 90% of its exports go through the southern neighbor to China. With China’s slump, sales and prices for copper, coal, and other commodities have decreased.

However, many of Mongolia’s economic problems are self-inflicted. The government has sent global investors running with severely restrictive new rules that will take their assets. As a result, big collaborative mining projects stood to be idle.

Mongolia is under the weight of disappointment from 3 million increasingly poor Mongols. So, the administration is now scrambling to patch up its ties for international investment.

After blocking out Rio Tinto in its bid for a larger share of copper and gold projects, the government secured an agreement in 2015.

The story of Khan Resources

A decade ago, everything was going well for Khan Resources. Khan Resources is a relatively small mining company in Mongolia, recognized in international mining circles as the country of opportunity.

Khan Resources received exploratory rights to mine uranium in Dornod, Mongolia’s easternmost aimag, or locations. Its 2005 licenses were extended for another three years in 2008. In 2007, Khan issued a feasibility study that revealed a significant uranium deposit, with a projected annual production rate of 2.9 million pounds of U3O8 and a mine life of more than 15 years.

Until the following year, when everything changed. Mongolia approved a new Nuclear Energy Law which identified uranium as a “strategic mineral,”. Under this law, government has control over Strategic minerals. And as Uranium is classified under the same head, this law gave the government retroactive control over all existing and prospective investment deals.

Russia’s Involvement

This should have raised red flags in Vancouver, the global mining industry’s juvenile democracy, which is prone to fits of nationalism and tribalism. Companies like as Khan Resources had every cause to be concerned about the new law’s ambiguity. They didn’t just have to keep an eye on the Mongolian administration.

Only months before the bill was passed, the national media disclosed that the country was being “courted” (really, targeted) by its uranium-hungry northern neighbor and creditor, Russia.

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[Image Credits: TheMoscowTimes]