Land grabs for rare earth metals continue outside the South American Lithium Triangle
Canadian lithium prospecting expands in Mongolia, as Central Asia is primed for exploitation of the strategic metal
Canadian PoliticsEnvironmentAsiaLatin America and the Caribbean
That’s how much a slice of the Gobi Desert was worth to a Canadian lithium company currently conducting studies on a confirmed lithium brine deposit in the Mongolian desert.
Flying under the radar of Canadian media, Mongolia has long been one of Canada’s closest partners in Asia as a source of strategic metals and minerals, while occupying a fulcrum point between Southeast Asia, Russia and the Middle East. Canada has played a key role in shaping the extractive industry and policy reform in Mongolia, yet this receives minimal scrutiny against the broader background of post-Soviet states that have been carved out over the past decades. Little light is shed on the bleak implications of the increasing demand for lithium, and other strategic resources found across Central Asia that are essential to the energy transition.
Lithium extraction in Mongolia is still in its early stages, but the country is situated at a crossroads of competing interests: Canada has an important stake in Mongolia’s mining sector, and the country is fast becoming a link in the chain of China’s Belt and Road Initiative (BRI) at a time when the Pentagon is promoting a new Cold War against China.
Canadian international development projects in Mongolia have locked the economy into dependency on foreign investment almost exclusively in mining projects, leaving the country plagued by what is known as the “resource-curse”: most of its mining product is exported rather than being processed domestically, thereby producing very little value for the country.
After a Foreign Investment Promotion and Protection Agreement (FIPA) was signed between Canada and Mongolia in 2017, Toronto-based mining company ION Energy Ltd. acquired a licence that same year and has since been expanding its stake in Mongolian lithium assets.
ION’s exploration licences include the Urgakh Naran brine licence in Dornogovi province earlier this February, and the Baavhai Uul Lithium Brine Project in the Sukhbaatar aimag, licensed in 2019; the latter covers roughly 81,000 hectares located about 24 kilometres from the border with China. The company confirmed that the total cost of acquiring Urgakh Naran was around $310,000, but did not respond to a request for clarification on how much they paid for Baavhai Uul.
As ION’s CEO Ali Haji told Canadian Dimension in early March, this prospecting is still in its initial stages. As of October 2020, the company started geophysics surveys to identify drill targets. “It’s still far too early to speculate as to how we will produce the lithium,” Haji explained, “but we do know there is lithium there.”
Haji described how he started looking for lithium in Mongolia while the mining company Steppe Gold was still in its development phase. “We were at the tail end of the last battery metals boom,” he explained, referring to a period in 2015-16 when many lithium companies went public.
Haji also described his company’s partnership with the Mongolian University of Science and Technology (MUST) in Sukhbaatar, and company director Enkhtuvshin Khishigsuren. Khishigsuren is also VP of exploration with Steppe Gold, and runs his own consulting company, Erdenyn Erel LLC through which he had previously been contracted for copper drilling by Vancouver-based company, Altan Rio, between 2012-13.
Since Canadian Dimension reported on ION’s first movements in Mongolia, the mining company has gone public, trading on the TSX since September 28, 2020. That same month, ION was also undergoing a reverse takeover of their shell company Spirit Banner Capital Corp. to raise $2 million for further exploration in the country, and according to BNN Bloomberg, drilling is expected to begin by the end of this year. Apart from the Canadian stock exchange, ION has also taken strides in the US, getting listed on the OTC Markets Group in New York as of January 14, 2021.
This all puts the Canadian company on track to become the first lithium brine miner in Mongolia, as they have been described as positioning themselves to play “a key role in the supply chain,” and “a key player in the clean energy revolution.”
On a global level, ION has been compared to other lithium extraction companies currently active in South America—from Millenial Lithium Corp. and Pure Energy Minerals in Argentina, to Wealth Minerals in Chile. A report provided by Sid Rajeev, Head of Research at Fundamental Research Corp., who are also monitoring ION, provides some context on the geology of the lands now owned by ION. The report confirms that Mongolia’s endorheic basin is “similar to the Lithium Triangle in South America,” and samples collected from dry lakes within ION’s new properties indicate “highly encouraging” lithium deposits. This means a relatively high concentration of lithium and fewer impurities like magnesium, chlorine or boron in the deposits. Referring to the findings from ION’s two Mongolian sites, Haji ventured that the lithium may well be suitable for battery production in the future: “the impurity level is significantly lower, which would allow it to easily convert to a battery-grade carbonate or hydroxide.”
The parallel analysts draw with the South American Lithium Triangle is important. Even as new hard rock discoveries in Peru have signaled the expansion of lithium development across South America, industry publications have been calling attention to the diversification of lithium sources. Central Asian lithium is still a frontier for Western exploration and geological surveying; yet, with some of the most significant and untapped lithium resources in the world, it stands to rival that of the South American sources—from Bolivia’s Uyuni, to Chile’s Atacama desert and Argentina’s Olaroz salt flats.
With about 203,000 confirmed tonnes of lithium, Mongolia’s deposits put it behind Chile and China globally. In comparison, Chile (which has 52 percent of the world’s known lithium reserves) has a confirmed 750,000 tonnes, and China has 320,000 tonnes.
A transcontinental tale
The Mongolian deposits being targeted by the Canadian company are lithium brine, as compared to the hard rock that is found in Australia, the United States and, more recently Peru. Lithium brine accounts for over 60 percent of the world’s known deposits, and is cheaper and less carbon-intensive to extract than hard rock deposits.
When Canadian Dimension spoke with ION’s Haji, he emphasized Mongolia’s reliance on coal and the potential to shift from burning fossil fuels to renewable energy. With most minerals and metals in the country exported for processing, and currently very little domestic manufacturing capacity, he added, “You could potentially build batteries in-country one day as well.”
But questions need to be raised about claims regarding who benefits from and who is left out of this shift toward decarbonization. The dominant narrative around lithium is that it is a strategic resource for a clean energy transition and energy storage. With the advent of what has been called a “new gold rush,” the demand is only set to increase as the shift toward decarbonization accelerates globally.
In South America, many companies involved in lithium exploration are Canadian junior companies. Benjamin Auciello, the coordinator of Earthworks’ Making Clean Energy Clean, Just and Equitable program, explained how lithium companies have been “positioning themselves as green saviours… waging a PR war,” and greenwashing the industry.
Drawing on his experience in Indonesia, Auciello also pointed out that the rhetoric around decarbonization that is behind the lithium industry tends to focus on urban centres at the expense of the ecosystems of rural and peripheral communities. This is evident with the transformation of entire countries like Mongolia into resource colonies for consumers in rich nations. Global capital inevitably draws the divides between those who benefit and those whose labour produces this ‘white gold’—from the Tesla supercharger network that takes American drivers on a scenic interstate journey from the Pacific to the Atlantic, to the Saft batteries that power Singapore’s driverless light-rail system.
The hype around the green revolution is even more questionable considering that Saft, whose marketing touts “net zero goals,” is owned by Total, the French multinational oil and gas giant. Few of these basic questions of how the lithium race ultimately fuels consumerism, intensifies exploitation of rural or poorer communities for the comfort of richer, urban centres, or serves the vested interests of the oil and gas industry have been adequately addressed.
As Auciello noted, the rapid pace at which lithium extraction is developing has long been a concern in South America, where projects have been underway for decades. So as Mongolia now moves from the prospecting and licensing phase, toward extraction under the helm of a Canadian company, the country has yet to see the consequences of the vaunted clean energy revolution fully unfold as it has elsewhere.
Describing the scale of human and environmental rights abuses in connection with lithium development in the South American Lithium Triangle, Auciello emphasized the systemic violation of Indigenous rights, as well as contradictory findings of industry-funded and independent studies on the impact of evaporation on already fragile aquifers.
ION Energy’s lithium sites are located in the Gobi Desert, an ideal spot for the high evaporation rates needed for lithium brine extraction. Yet, one only has to look at the issues plaguing the Atacama, the driest desert in the world, to see the dangers of the lithium industry forging ahead without conclusive studies on the impacts on water and future remediation plans.
Lithium brine is extracted through evaporation, which lowers water levels and creates brackish water. Salt flat extraction, like that in the Atacama, would require creating extraction pools by pumping in water from other sources. By requiring millions of litres of water, this can have devastating effects on the environment by creating water shortages and restricting community access to water. Chemical treatment in the lithium isolation process can result in the pollution of air and water, while changes in the salinity of environments due to brackish water can create cascading effects in the habitation and migration patterns of animals.
Despite decades of lithium development in Chile, it was only last summer that a Chilean judge renewed a call for a long-delayed hydrological study to understand the impact of lithium evaporation on fragile water tables. Another government-commissioned study found that brine evaporation is causing the Atacama to lose an estimated 1,750-1,950 liters per second.
This recalls the absence of hydrological analysis by Rio Tinto’s Oyu Tolgoi copper and gold mine in the South Gobi, a scandal-embroiled project co-owned with Canadian subsidiary Turquoise Hill. Mongolia already has to contend with Oyu Tolgoi restricting access to land and fresh water. As reported in Toward Freedom last year, herders have long been fighting Oyu Tolgoi for land access, as water sources are depleted by the mine. Under additional pressure from contract obligations, the Mongolian government has also fumbled through efforts to dam vital, yet weak, rivers to provide electricity for expanding mines. It is currently unclear how lithium brine extraction will impact Mongolia’s aquifers amid the country’s severe droughts.
When asked about ION’s relationship with local communities and governments, Haji repeatedly emphasized the support of the Mongolian government, citing everything from the potential to shift away from dependence on fossil fuels to the excitement around confirmed lithium deposits. Haji also emphasized a local workforce, including board members and strategic advisors.
But corporate rhetoric about stimulating an emerging economy and creating employment opportunities through the extractive industry is always used to justify self-interested profiteering. In practice, Mongolian land and water access rights are routinely overridden by the private rights of mining companies. Mongolia’s mining industry operates within a corrupt political system plagued by tax evasion. Community consultations for existing Mongolian extractive and hydroelectric projects have been steeped in controversy and deemed inadequate by civil society organizations. At the same time, Canadians know little about the activities of mining companies from Toronto or Vancouver.
Sukhgerel Dugersuren, a prominent Mongolian human rights and environmental activist and head of Oyu Tolgoi Watch, has been reporting on the activities of Rio Tinto and its Canadian subsidiary Turquoise Hill for over a decade, and has monitored the activities of other mining operations like Steppe Gold. She was not familiar with specifically Canadian lithium exploration in the country, but described a pattern in the government’s approval of extractive projects.
“There are many documented cases of consultations when names of deceased were used to increase attendance rates or an attendee list is faked to become an acceptance list,” Sukhgerel told Canadian Dimension. “Rio Tinto at Oyu Tolgoi will proudly show that it had eight rounds of consultations on the Undai River diversion regardless of the fact that they have been ousted all eight times with the community not accepting the proposed diversion. They did divert the river without consent of the community.”
Similarly, in 2019, the Mongolian-based Centre for Human Rights and Development (CHRD) published a report on a fact-finding mission on issues and threats facing human rights defenders and community residents who oppose Mongolian mining projects.
In a section describing the activities of Steppe Gold—with whom ION shares an executive team—the report highlights a lack of due process in the issuing of company licences and land certificates to herders who have camped on what is now Steppe Gold’s property for generations, including hasty approval by local district (Soum) representatives. And despite the company’s claims of community support, protesters against Steppe Gold’s activities have been beaten, detained and intimidated by private security.
Mining companies simply don’t take no for an answer. Despite decades of legal battles, from Rio Tinto’s copper to Steppe Gold, local communities have little say in whether a mine is built or not. If they don’t unanimously accept a mining project—if they don’t want mining to be a part of their future and their lives—the project will still go ahead. A resident of the Binder Soum (district) quoted in the CHRD report warned, “We need to take action for our future generations, we need to preserve our nature for them. We need to make sure that mining does not become an essential part of our livelihood.”
A little known geopolitical hotspot
In the long wake of the collapse of the Soviet Union, much of the western world has concentrated its attention on the European post-Soviet states and the Baltics, while the fragmentation, land grabs and claims on minerals and metals across Central Asia have gone largely without notice—from uranium-rich Kazakhstan to oil-rich Turkmenistan. More recent lithium exploration has included lithium brine extraction in Tajikistan and Uzbekistan’s own aspirations to be a lithium producer despite dismissing the resource’s “commercial impracticability” almost ten years ago.
Canada became involved early on in this key period of Central Asian lithium exploration. Tibet, for example, is home to the Zabuye salt lake and the Dangxiongcuo (DXC) deposits, which were the target of Canadian prospecting. Vancouver-based Sterling Group Ventures Inc. was founded on September 13, 2001 and incorporated in Nevada—a tax haven state commonly used to incorporate mining or investment companies. Described as an “exploration stage company,” Sterling Group has also been identified as a key player in the global phosphate market with its projects in China’s Hunan Province.
But back in the early 2000s, Sterling Group commissioned a geological survey for Tibetan lithium from another B.C.-based company, N.Tribe & Associates Ltd. Published in May 2006—still on the early cusp of more concerted global efforts to prospect for lithium in Asia—the report listed major uses for lithium, including aluminum production, and the manufacture of pharmaceuticals, lubricants and greases, as well as “more recently lithium rechargeable batteries.”
Amid today‘s lithium boom, the mining-dependent Mongolian economy plays a key role within NATO’s larger ambitions to gain a firmer foothold in Central Asia. The lithium deposits that are now being studied by ION and Erdenyn Erel’s Khishigsuren were actually initially identified during prospecting activities in the region conducted by Russia and Mongolia during the Cold War and again in the 90s.
And within this context of the emerging Central Asian lithium market, Mongolia is also being quietly re-militarized as a NATO partner. As previously reported by Canadian Dimension, the privatization of Mongolia’s land has gone hand in hand with the restructuring of the country’s economy and identity from a Soviet satellite state to one of NATO’s “global partners”—including cooperating with NATO on a cyber defence project involving the “rehabilitation and restoration of former military sites in the country.”
Given its vital position between Russia and China—a border it shares with Xinjiang—this encroachment of western mining and military infrastructure on Mongolia has a deeper resonance than just the material interests of natural resources. A short passage in Rashid Khalidi’s Resurrecting Empire emphasizes the symbolism of western governments and militaries weaponizing the memory of centuries-old conflicts, such as Mongolia’s partnership with NATO and its participation in the Iraq War:
Iraqis and others in the Middle East have a strong sense of history: not only do they not forget their experiences with the British occupation; they recall vividly the history of earlier occupations of Baghdad, such as that in 1258 when it was sacked by the Mongols. Bringing even a symbolic contingent of Mongolian soldiers to join the forces of the “Coalition,” as the United States has done, is a perfect example of how to trample on the sensibilities of such people.
The resurgence of lithium exploration in the former Soviet satellite state is part of this cyclical narrative of “rehabilitation” and weaponized symbolism. The strategic role of Mongolia has long been an area of interest for the US military, from the RAND Corporation’s studies of Mongolia spurred by the Soviet-Chinese relationship in the 1960s to research trips sponsored by the California Academy of Sciences to assess the impact of Soviet perestroika in the 80s. “Mongolia is an appealing target for foreign investors in sectors such as mining, nuclear power and technology,” wrote J. Berkshire Miller for the Atlantic Council in 2012. “For Washington, though, security still trumps in Mongolia. The US continues to view Mongolia as a credible partner in an uncertain area filled with truculent neighbors.”
Much like the early years of oil concessions between Saudi Arabia and California that eventually led to the formation of Aramco, or Unocal’s Afghan pipeline project that saw an opportunity in the CIA’s proxy war with the Soviets, lithium development in Mongolia must be seen within this bigger picture of NATO’s interests in Central Asia, and the strategic importance of the metal for the United States.
In early January 2020, the Trudeau and Trump governments finalized a “joint action plan” to reduce reliance on China as a supplier of rare-earth minerals and metals including lithium. The Biden administration has continued in this vein by signing an Executive Order on February 24, 2021, on “Securing America’s critical supply chains”. Canada itself is being billed as an emerging “top player” in the global EV battery market, while the joint agreement emphasizes Canada’s role as a supplier to the US.
While a 1964 RAND Corporation report may have once claimed that “Chinese rather than ‘US imperialism’ is of relevance to [Mongolia’s] foreign policy,” it is in fact US imperialism, abetted by Canadian investment and policy intervention, that is shaping Mongolia’s future.
In an interview with Proactive following ION’s public listing this past September, Haji described the growing importance of battery metals and leveraging the Biden administration’s targets on renewable energy as incentive to trade his company on the US market. A month later, in an interview with BNN Bloomberg, he said “Mongolia is strategically located between Russia and China, with its proximity to China making it a particularly compelling play … Plus, the battery markets of Taiwan, Korea, and Japan are all within ‘earshot.’”
To Canadian Dimension, he remarked that: “the western world would want to ensure that the minerals in that country are not given to either Russia or China.”
“We’re reaching a state in the world where battery metals are as strategic as oil once was,” he said. “So I would see wars being fought over this stuff as we start to sort of progress as humanity.”
Lital Khaikin is an author and journalist based in Tiohtiá:ke (Montréal). She has published articles in Toward Freedom, Warscapes, Briarpatch, and the Media Co-op, and has appeared in literary publications like 3:AM Magazine, Berfrois, Tripwire, and Black Sun Lit’s “Vestiges” journal. She also runs The Green Violin, a slow-burning samizdat-style literary press for the free distribution of literary paraphernalia.