RENEE MONTAGNE, HOST:

This week, we're looking at how a mining boom can transform a nation. Mongolia has huge reserves of copper, coal and gold. These valuable resources could help Mongolia's three million people, a third of whom live in poverty. Mining is also reshaping Mongolia's landscape and nomadic culture, and that's a problem. Camel and goat herders have been suffering through droughts in recent years, and the herders are worried that new mega-mines will siphon off the water. NPR's Frank Langfitt has more.

(SOUNDBITE OF WATER SPLASHING)

FRANK LANGFITT, BYLINE: A herd of camels drinks from a well in the middle of a moonscape of sand and gravel. Water pours down their furry faces as the sun begins to settle on the Gobi. The camels belong to Mijiddorj Ayur. The 76-year-old herder relies on them for meat, wool and milk, and they rely on his hand-pumped well water to survive.

MIJIDDORJ AYUR: (Foreign language spoken)

LANGFITT: When we come to the well, we can see the level of the well water is eight inches lower than it used to be. Mijiddorj - Mongolians go by their first names - wears a golden, double-breasted robe called a deel and a brimmed, felt hat. He says the well water has dropped in the last several years because of lower rainfall. Rising temperatures from climate change have reduced grassland. Now, he sees another potential threat: Oyu Tolgoi. It's a giant mine that needs huge amounts of water to process copper ore. The company's already drilled test wells near where Mijiddorj's camels are drinking.

AYUR: (Through translator) My greatest fear is we won't have water. I don't care about the gold or the copper. I'm just afraid there won't be water.

MONTAGNE: You hear this worry across Mongolia's South Gobi province, a mix of rocky desert and grassland where drought periodically wipes out herds. It's home to thousands of herders and about a million head of livestock. Oyu Tolgoi says it will draw water from a deep aquifer that won't affect wells like Mijiddorj's. But he and other herders are suspicious. They've already felt mining's impact. Herders say mine trucks hit their animals and kick up dust that chokes pastureland. Indeed, almost all the roads here are dirt. Trucks trail plumes of dust so huge, they look like they're on fire. A herder named Chuluunbaatar says he's lost about 40 percent of his pastureland since Oyu Tolgoi built a nearby road a year and a half ago. And he says he's lost many sheep, goats and camels because of it.

CHULUUNBAATAR: (Through translator) Some of them died, because they were exhausted, because there was not enough pasture. Secondly, because there was not enough pasture, I had to kill some of them because they were going to die, anyway.

LANGFITT: Oyu Tolgoi is owned by global mining giants Rio Tinto and Ivanhoe, as well as the Mongolian government. It's offered herders compensation, including simple jobs helping livestock cross roads. Many herders have signed compensation agreements with the mine, but Myagmardorj Mijiddorj, a local government official, says some herders already working for the company complain of coercion.

MYAGMARDORJ MIJIDDORJ: (Through translator) Oyu Tolgoi employs people for maybe $230 a month. When the people are reluctant to sign the contract, they say: You are an employee, and you have to sign it, or there will be measures.

LANGFITT: In other words, Myagmardorj says, they'll be out of a job.

SUUGIE GONCHIGJANTSAN: We never forced them to sign the agreement.

LANGFITT: This is Suugie Gonchigjantsan. She manages community relations for the mine. She denies anyone's been pressured, and says the complaints are a negotiating tactic.

GONCHIGJANTSAN: Some of the individuals really want to get more, more and more.

LANGFITT: The company's compensation is modest. For instance, an affected family could receive a $3,800 scholarship to put a child through college. In its first full year of operation, Oyu Tolgoi could produce about $860 million worth of gold and copper.

Why not give them what they're asking for, and then they'll go away?

GONCHIGJANTSAN: No. There's equity, so it has to be equal.

MARK NEWBY: I'm Mark Newby. I'm principal adviser for water resources at the Oyu Tolgoi project.

LANGFITT: Newby says the company has monitored more than 100 herder wells in the area for years. He says Oyu Tolgoi has found no connection between the herder wells, which go down as far as 30 feet, and the aquifer the mine will draw from, which begins about 150 feet below the surface. At full capacity, the mine will pump about 180 gallons a second from the aquifer. Newby says if herders' wells are affected, Oyu Tolgoi says it will fix the problem.

NEWBY: In the very worst case, it would require the delivery of treated water to the herder. For a typical herd, that would require up to a truckload a day.

LANGFITT: Newby says a bigger challenge may be managing perceptions and helping herders already struggling for water.

NEWBY: The biggest risk we face is that we will be seen to be a land of plenty in a sea of stress.

LANGFITT: Competition for water continues to grow across South Gobi province, which is about the size of Wisconsin. Outside the provincial capital of Dalanzadgad, local officials are in a dispute with Mongolia's central government and a coal mine.

(SOUNDBITE OF WATER FLOWING)

LANGFITT: Munkhjargal Batdorj is one of those local officials. She's standing by a rare body of water in the Gobi. Munkhjargal's wearing a full-length, black leather jacket and matching sunglasses. Many Mongolian women dress like New Yorkers, even apparently in the countryside. Two years ago, local officials designated this area for protection. Last year, the central government reversed the decision and said the coal mine could pump the water from underneath.

MUNKHJARGAL BATDORJ: (Foreign language spoken)

LANGFITT: That's the only fresh water source in this whole area, she says. Munkhjargal says the central government has a stake in the mine, and seems to be just pursuing its own interests.

BATDORJ: (Through translator) The government's probably reversing its own decision because it's just not caring about the people. And I think it's a rotten decision.

LANGFITT: Mining contributes heavily to government budgets here. Residents say officials sometimes use the money to enrich themselves. Rashboud Tumen is a grocer in Dalanzadgad. I bumped into him one morning buying advertising at a TV station. He talked about his fury towards on particular local representative.

RASHBOUD TUMEN: (Through translator) Our local government had a Russian jeep, and he switched that and bought a Toyota Land Cruiser 80. Just a few months later, he decided to switch it into a Land Cruiser 105. The 105 costs $53,000.

LANGFITT: More than 30 percent of Mongolians live on $1.25 a day. Rashboud's voice oozed with contempt.

TUMEN: (Through translator) Animals die in the drought. You could have bought livestock for 10 families. You could have done so much good with that $53,000. What does a Land Cruiser 105 do for local people? Nothing.

LANGFITT: As mines begin to pump more water from the Gobi, herders will be watching their wells and waiting. And as profits continue to pour into mining companies, some people here will continue to wonder what is in it for them. Frank Langfitt, NPR News.

(SOUNDBITE OF MUSIC)

MONTAGNE: Tomorrow, life in a Mongolian mine in the middle of nowhere.

UNIDENTIFIED MAN: I'm on a rotation, just, like, 56 days here, and then 40 days back home. The difficult thing is that you leave, like you're far away from your home, and now I've got, like, a five-month-old baby, and I just, like, need(ph) her so much.

MONTAGNE: That's tomorrow, on MORNING EDITION.

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