Mongolia: strike at gold mine ends in partial victory

The union had been negotiating for months demanding higher wages, better severance pay, and investigation of potential cyanide leakage into the environment. Workers went on strike on the 26th of May when the company suddenly announced that 50 workers were to be terminated. The company claimed that the demands were “unreasonable” and that the strike was illegal as there was a collective agreement in place.

Over one hundred employees pitched tents outside the gate and blocked the main entrance. Another 200 staged a stay-in strike. The mine manager responded by terminating all food provisions, and workers in turn by blocked internal roads. Meals were sent starting from May 31st, news reports said, though some striking workers went on a hunger strike.

Wage gaps

Many workers were angry at the disparity of wages and conditions between themselves and expat workers brought in by the company. Disclosures on the internet revealed that they received 30 to 40 times more than locals. “Expats are pampered—they even have personal bodyguards when they go out clubbing” one worker said.

The union was demanding 9.4 million USD severance pay in total, less than 1 per cent of the company’s profit, but initially all the company offered was 3 months salary. Management has also been accused of mistreating workers, threatening to fire them and making derogatory comments. The head of Boroo, John Kazakoff was alleged to say that workers would have been herding livestock without Boroo.

Cyanide leak

In addition, recent Mongolian news reports have been alluding to a potential cyanide leakage cover-up from Boroo tails storage where toxic sludge is accumulated. Some workers saw water pumped out of a well and suspect that it was cyanide contaminated groundwater since the well was quickly covered up whenever inspectors were on site.

The general public largely agrees that the Stability Agreement signed in 2000 between Boroo and the Mongolian government has only created conditions favorable to the company, allowing it to evade taxes and produce gold at minimal costs. Much resentment and blaming is being expressed towards government officials, including the current Foreign Affairs Minister, who allegedly owns 5% of the company.

The exact details of the final settlement were not available, though the company stated that it "believes the settlement will not have a material impact on future cash costs."

Mine remains closed

However, the mine will remain closed as the government has suspended the mining license, citing issues related to record-keeping, incorrect land use, and improper operating procedures. Centerra spokesman John Pearson said he did not know whether the inspection agency's visit was related to conditions of the work stoppage.

"I don't know whether that was directly related to the strike or not. Certainly there was a working group formed to inspect the Boroo mine site. So they came and visited and the report came out of that visit," he said.

Mongolian media have reported the government formed the working group to investigate the company after workers accused it of misdeeds. The union has long ago pledged assistance from the government asking to investigate all aspects of the company’s operations with a special focus on company profit allocation and toxic material management.

Some commentators say that the current battle reveals Mongolia’s flawed legal system, lack of technical ability and the need for stricter enforcement. One worker said that inspectors spend more time touring the mine to familiarize themselves with it instead of “doing their homework”, since they have no expertise in this industry. Also, deep-held national resentment toward massive mining sector growth and messy land ownership deals, topped by tense employee/employer relations is emerging.