Big report in the American media: the promise of nuclear energy brings the West to Mongolia

Time Magazine's report on Charlie Campbell on May 14, 2024

Revered by the Mongolian poet Durdin Danzanravza as the gateway to the heavenly kingdom of Shambhala, the Gobi Desert was transformed from a center of spiritual energy to a center of fossil fuels in the 20th century. Hares and donkeys live alongside rusty oil pumps on windswept sand dunes, and endless trucks laden with coal ash carry coal to the Chinese border. Now the Gobi is on the verge of another cycle, which supporters of the Gobi believe will contribute to the future of the global energy landscape.

In October, France's state-owned nuclear company Olano signed a $1.7 billion deal to mine and process uranium from the Zuuvci-Aubao uranium mine. Mongolia's first uranium mine is expected to produce about 2,750 tonnes of uranium per annum over three decades, accounting for about 4% of global production; It is currently one of the top 10 undeveloped mineral deposits in the world.

Olivier Tumir, senior vice president of Orano, said: "This deposit is far from unique. Mongolia has great potential...... Enter the uranium market at the right time, because we know that the demand will increase". Mongolia has the world's second-largest uranium reserves and is expected to make the landlocked country of 3.5 million people an important player in the global renewable energy transition.

Catalyzed by the war in Ukraine and Europe's desire to wean itself off cheap Russian gas, clean nuclear energy that generates electricity by splitting uranium or plutonium atoms is booming. This enthusiasm must overcome deep fears about reactor meltdowns (such as Chernobyl in 1986 and Fukushima in 2011), the disposal of nuclear waste, and the possibility that nuclear power plants could be the target of war or terrorism. However, the historical death toll in the seventy-year history of the civilian nuclear industry is only a few thousand. At the same time, air pollution from burning fossil fuels kills an estimated 5 million people each year.

Today, nuclear power plants are being explored in countries ranging from Romania and Saudi Arabia to Bangladesh and Indonesia. The EU has included nuclear power plants in its list of "green" investments, which can be financed by the EU's own green bonds, as the carbon footprint of the energy produced by nuclear power plants is even a quarter of that of solar energy. At COP28, more than 20 countries on four continents called for a triple of global nuclear power generation capacity by 2050. Even Germany, which shut down most of its 17 reactors after the Fukushima accident, is now openly considering developing small modular reactors. "Today, we may be facing more of a capacity issue than a public acceptance issue," Tumir said.

In the first six months of 2023, Russia's shipments of enriched uranium to 92 commercial nuclear reactors in the United States more than doubled to $695.5 million, despite the severe sanctions imposed on oil and gas by Vladimir Putin's chosen war. On May 13, U.S. President Joe Biden signed legislation to limit this supply, though experts predict that it will take at least five years of significant investment in the U.S. to break its dependence on Russian uranium.

In this regard, it would help if Mongolia could travel lightly. Mongolia may be an adolescent, manic democracy, but the country squeezed between Russia and China, whose capital, Ulaanbaatar, literally means "red hero," is unlikely to easily shake off its historical and geopolitical baggage. Since democratization in 1990, Mongolia has established ties with Western countries through a "third-neighbor policy", of which the Orano agreement is a prime example. But in this new era of crisis-ridden great-power competition, a country that relies on Beijing for 90 percent of its trade and Moscow for 90 percent of its gas and oil imports must tread carefully. Ken de Graaf, former vice president of the North America-Mongolia Business Council, said: "Russia considers Mongolia's mines to be in fact their assets, because Soviet money is invested in them."

Whether it's indium for flat-screen TVs, rhenium for jet engines, or gallium for smartphones, Mongolia illustrates the geopolitical, environmental, and economic challenges facing mineral-rich countries to benefit from emerging technologies. Since the mining sector already accounts for a quarter of GDP and 90 per cent of exports, Mongolia hopes that this generation will be able to extract better energy than the previous one. The country is still plagued by endemic poverty, and the air here is the worst-smelling on the planet due to its reliance on coal for heat and electricity. Respiratory illnesses have nearly tripled in Ulaanbaatar – the world's most polluted capital – over the past decade, with pneumonia being the second leading cause of death among young children today. In Ulaanbaatar's heavily polluted winters, miscarriages are 3.5 times more common than in relatively sunny summers.

A third of Mongolia's population is nomadic and has a strong sense of protection of their ancestral lands, who worship the eternal blue sky and consider even a shallow ditch to be a shameful desecration of Mother Earth. The challenge for the Mongolian government is how to safely harness the benefits of the resource boom while mitigating the backlash at home and abroad.

Mongolian Prime Minister Oyun Erden Lufsanamslai told Time magazine: "I am confident that we will successfully cooperate with Orano. But it is important that we gain public recognition so that the project can have legitimacy among the Mongolian people."

Olano has set up a local joint venture, Badrach Energy, to operate the Zuufchi-Aobao project with Erden Mongolia LLC, a state-owned Mongolian mining company. Olano began exploring the Gobi as early as 1997, discovered its first uranium deposit in 2006, and obtained a mining permit in 2016. Subsequently, the company established a pilot program to demonstrate feasibility, producing 11 tonnes of uranium over 18 months in 2021 and 2022. The pilot project will still be staffed by key personnel, although the site is likely to be used to train 800 permanent employees across the mine, which is expected to take three to four years to build.

Zuufci-Obao's neighbors are almost all nomadic people who live in yurts, also known as yurts – domed felt tents made of lattice wood with dung-burning stoves in the middle. The Mongols built the yurt facing south to meet the light; They can easily transport the yurt with a camel to the grazing place and then rebuild it within an hour. The temperature in the Gobi Desert plummets to minus 40 degrees Fahrenheit in winter and soars to 113 degrees Fahrenheit in summer. Despite the fact that there are now solar-powered TVs, refrigerators and Wi-Fi, yurts are built in a tradition that has been around for thousands of years.

When Olano first set up camp nearby, herders were skeptical because alarmist posts on social media falsely believed that uranium radiation would cause livestock to mutate. Toxic waste is a problem that nuclear power plants have to deal with, but when raw uranium is mined, workers are exposed to far less radiation than hospital radiologists do. The staff would be chased away by angry locals who threw animal carcasses at the mine, and in one case even Molotov cocktails. Mongolia's first coronavirus infection was a visiting Orano employee from France, which also sparked demonstrations.

But a slow but steady rollout program has quelled concerns. Olano has pledged $1 million annually to community projects near Zuoufci-Obao. In 2023, the Zuuvci-Aobao test site hosted 670 visitors – herders, students and NGOs – to whom the company worked hard to explain the mining process. "There were a lot of rumors of animal deaths at the beginning," said the herder's wife, Tsevelma Narantogtur, who played with her three-year-old son, Ilmunbileg, by the yurt, proudly displaying his Spider-Man pajamas. "But it's been years and nothing has happened"

To be sure, there are many examples of so-called progress in history, but its true harm did not become apparent until decades later. There are also many examples of progress-seekers causing damage to those who live in sync with the planet.

However, Zuuvch-Ovo is far from a traditional mine. The uranium deposit is located about 2 to 5 miles below the surface and is sandwiched between two thick layers of clay. This unique geographical location makes in-situ recovery (ISR) possible, in which acidified water is pumped deep into the deposit through narrow vertical pipes during leaching. The acid dissolves uranium and is then recovered at the surface through a network of outlet pipes. The uranium is then removed and processed into yellowcake, which is a low-grade uranium with a texture like coffee grounds. Eventually, the yellowcake can be concentrated into fuel rods.

Theoretically, this is a "closed loop" process, where vital groundwater is completely enclosed and free from possible contamination. In addition, there are no notched quarries, tunnels, excavators, noise, dust or choking diesel emissions. As Olano likes to say, the only evidence of this "mine without a mine" is a network of stout pipes poking out of the desert surface through which camels and horses can travel as before. While mining operations spread across about 35 acres of concession area, only a small portion of the production facilities and staff housing were fenced off.

Despite this, the project has been controversial. In 2018, French prosecutors began investigating the alleged bribery of a Mongolian public official by Orano involving a third-party consulting firm. The French anti-nuclear network "Sortirdu Nucléaire" criticized the use of large amounts of acid in the leaching process. In 2018, a group of Mongolian citizens filed a complaint against Badrah Energy, citing a spike in malformation rates and cancer and miscarriage rates in nearby livestock. In response, Olano noted that independent monitoring by the Mongolian Academy of Sciences has found no significant impact on water, soil, air or vegetation.

However, this did not stop traders and hostile herders from using the mine to drive down the prices of local animals. Munkhsuuri Dambadarjaa, a 41-year-old herder, grazes his 1,500 head of cattle, horses, sheep, goats and camels near Zuuvch-Ovoo. "But if that's the case, how are we still alive?"

Nuclear power, and the mining projects needed to fuel it, are always vilified. However, the growing problem of the Gobi winter has inadvertently become a propaganda tool. In the harsh winter months, herders bring their livestock to the plant's doorstep and ask if they can take shelter inside. Enkhturga Ganturga, Orano's manager of sustainability and community affairs, said: "We have to say no, this is an industrial facility. "But it shows that acceptance has completely changed.

Herders have been battling the "snow disaster" for a long time. "Snow storms" are severe winters that come after a summer drought and cause widespread livestock deaths. But global warming has exacerbated this phenomenon. The average temperature in Mongolia is already 2 degrees Celsius higher than at the beginning of the 20th century, much higher than the global average, which means that the weather is drier, sandstorms are more frequent, and pastures are scarcer, unable to provide livestock with the necessary fat to survive longer winters. This year's blizzards were particularly severe, affecting more than 90 percent of the country and killing more than 4.7 million livestock as their pastures were buried by snow and ice. At least 2,250 pastoralist families have lost more than 70 percent of their livestock. When Time magazine visited Zuufchi-Aobao in February, the nearby land was littered with frozen gazelles and cows with their tongues stuck out and hideous faces. Frequent freezing disasters have taught rural Mongolians an irrefutable truth for urban dwellers: the climate crisis is deadly, and clean energy is essential to mitigate its damage.

Considering Mongolia's abundance of clean energy, the addiction to coal is particularly perverse. Last year, coal accounted for more than half of Mongolia's total export earnings of US$15.2 billion, so there is hope that future mining projects will improve rather than harm the quality of life. Orano said only 12 megawatts (MW) of electricity will be needed for Zuuvch-Ovoo's operations, of which 5 MW will be generated by harnessing heat generated by the on-site sulphuric acid plant. The company said the remaining 7 megawatts of electricity could come from nearby wind farms. Mark Melard, CEO of Badrach Energy, said: "Olano is in the business of producing decarbonized energy, so we need to be consistent".

In addition to underground uranium mines, the Gobi also has huge potential for solar and wind energy. Back in 2011, SoftBank CEO Masayoshi Son even proposed an Asian supergrid that would connect China, Japan, South Korea and, as far south as Singapore, with solar and wind farms covering the Gobi. Although these ambitious plans have been put on hold, Mongolia remains committed to becoming a net-zero emissions economy by 2050 and wants to set international standards for responsible resource development. Orchlon Enkhtsetseg, a former mining executive, now founded renewable energy startup URECA. "So how do we develop policies now to make Mongolia the most economically competitive place to buy renewable energy?

However, competition also brings challenges. Orano holds 90% of the shares of the French government, and Thoumyre insists that Zuuvch-Ovoo "will certainly contribute to Europe's energy security". But Mongolia's uranium needs to be processed at one of a dozen enrichment facilities around the world, with the most recent facilities in Russia and China. Even if Orano wanted to ship from elsewhere, Mongolia's geographical location dictated that Chinese ports had to be used. Oroqen-Erdeni insisted that "our two close neighbors will not interfere in our internal affairs". But few believe that if Western relations with Moscow and Beijing continue to deteriorate, Mongolia will be immune to pressure. Enkhtzeg asked sharply: "When is it not geopolitics when it comes to resources and energy?"

Recent experience has also made mining a contentious topic in Mongolia's domestic politics, especially as the parliamentary elections in June approach. "Resource development is probably the biggest dilemma facing our country," said Amalgin Nimekhbayar, an adviser to the chairman of the opposition Mongolian Democratic Party. At the beginning of this century, with soaring commodity prices, Mongolia was once the world's fastest-growing economy and earned a reputation as the "Land of Minerals". Prospectors from North America and Europe drank single malt whisky at upscale nightclubs in Ulaanbaatar. But the mineral boom was short-lived, and in 2017 Mongolia applied for a $5.5 billion bailout from the International Monetary Fund.

Mongolia has large deposits of gold, copper, phosphorus, zinc, lithium, as well as coal and uranium. Oyun-Erdene said that "not repeating the mistakes of the past" is the driving force behind Mongolia's development. "It's important to take it step by step." Mongolia had squandered from the previous mining boom and that future revenues would be "deposited in sovereign wealth funds to diversify the economy by expanding other sectors such as agriculture and tourism," Oyun-Erdeni said.

Past blunders have also meant that Olano's joint venture has come under intense scrutiny. Orano owns 90 percent of Badrach Energy, 10 percent of which is owned by Mongolia, reducing state liability, but that this small share will be "preferred shares" that will receive dividends and "guarantee that more than 50 percent of the mine's global interests will be owned by the Mongolian people," Tumir said. Meleard estimates that Mongolia's share will exceed $2 billion over the entire project cycle. In October of this year, Olano signed an agreement with Erdens Mongolia LLC at the Elysee Palace in Paris, in the presence of French President Emmanuel Macron and Mongolian President Ukhnaakin Khurilsukh. However, despite this support, the investment agreement has stalled, as the two heads of the relevant working groups have been reassigned to other positions. "We almost had to start from scratch," Meleard sighed wearily. "Maybe we'll have more opportunities after the election. It's quite difficult to read."

To date, Orano has invested $250 million in its Mongolian operations without making a single penny. Since 2006, the company has launched more than 300 projects, including new community centres for pastoralists and the planting of 20,000 native sea buckthorn shrubs to combat desertification. In the nearest town, Ulaanbadrach, in the last year alone, Orano helped renovate hospitals, conference halls, museums and schools, which employ 226 students between the ages of 8 and 14. In 2016, Olano purchased 14 computers for the school, which are about to be replaced for the third time. The principal, who toured a dozen spotless classrooms flanked by trophies and Bart Simpson's crayons, asked the neatly dressed children if they had heard of Olano. "Yes, it bought a minibus!" One student shouted. "Whiteboard!" Another student said. "And books!" The third student said. This teacher used our visit to make an impassioned presentation about why her students needed tablets too.

In the Gobi, Orano is almost a state within a state; When the local governor needs something, he does not go to the central government, which is strapped for money, but directly to the mines. Time magazine saw a petition from the Mongolian military asking Orano to pay for repairs to the border fence. The seemingly steady flow of cash has created a sense of dependence and, perhaps inevitably, resentment.

The herdsman's wife, Saranjele Caiji, complained: "The French are misers, while the Chinese mines give more." She sits in her brightly painted yurt next to a large pot of boiled beef bones as she uses a knife to remove the cartilage from the femur. What she complained about was that Olano donated to the government's emergency fund to provide hay during the blizzard, rather than handing out cash. "You should give the money directly to the herdsmen!"

You might think that the owner of a multibillion-dollar mining company would travel by private jet or helicopter, but Melliard takes a Soviet-era train every few weeks, trekking for 10 hours between the Gobi cities of Sainsand and Ulaanbaatar, chatting with Time magazine on the train. He did not hesitate to do his duty, but his frustration was palpable. In contrast, Orano entered Kazakhstan in the same year as the Mongolian company and sold uranium ore on the international market in 2005. Today, Orano extracts as much uranium from its mines in Kazakhstan in one day as it did during the entire 18-month operation of the pilot project in Mongolia. Since Olano did not obtain an export license, even the uranium was still packed in 120 black barrels inside a container in Zuufci-Owo.

Meleard admits that if Orano had been a private enterprise rather than a state-owned enterprise, it would have abandoned Mongolia long ago.

He shrugged and said, "It's been 27 years, only expenses. "It's been a long time. As our train left Sainshand station, he lamented, "This delay is unique to Mongolia".

Behind us, the cosmic gates of Denzan Ravza and the ethereal promises of Shambhala fade into the darkness. But the prospect of a better tomorrow bursting out of the Gobi feels very real and imminent – as long as it is safe today in the first place.