Tony Blair strikes gold in Mongolia

The former prime minister has negotiated a contract to advise the Mongolian government just as the country strikes it rich from a vast copper and gold mine in the Gobi desert.

The Sunday Telegraph can disclose that Mr Blair spent two days in March in Ulaanbataar, Mongolia’s capital, striking the deal with the country’s president and prime minister.

His diplomatic skills will be needed in a country undergoing a rapid economic transformation. The Mongolian government has been in dispute with Rio Tinto, the Anglo-Australian mining conglomerate, over the operation of the country’s biggest mine. Sources have suggested Mr Blair was called in to mediate between the two although Mr Blair and Rio Tinto both denied that last night.

The addition of Mongolia to Mr Blair’s portfolio will bolster the income of Mr Blair’s Government Advisory Practice, which operates as part of Tony Blair Associates, “the umbrella organisation” for Mr Blair’s “commercial operations”.

Sunday Telegraph investigations have shown Mr Blair and a team of consultants are now paid millions of pounds to advise governments in Kazakhstan, Kuwait, Colombia, Brazil and has a deal to work in Albania as well.

It is estimated that Mr Blair, who owns eight homes in the UK, has earned in the region of £50 million since leaving Downing Street in 2007. He makes his money through his consultancy work, speeches and paid posts with JP Morgan, the investment bank, among others. Mr Blair points out a large amount of his money is ploughed back into philanthropic work including two international charities he set up after leaving office.

Mr Blair refuses to reveal the full extent of his government consultancy empire but the deal in oil- and gas-rich Kazakhstan alone is said to be worth as much as £13 million. No figure has ever been confirmed. The Mongolian deal is also likely to be lucrative given that the country is about to cash in on a mining bonanza. The country is now being referred to in some circles as Minegolia.

Mongolia, wedged between Russia and China, has a population of only three million – almost half of whom have abandoned their traditional yurts for life in Ulaanbaatar. But it is three times the size of France and, with a booming mineral-rich economy, is predicted to grow by 15 per cent this year alone.

Mr Blair travelled with his entourage to Ulaanbataar on March 22nd for a two-day visit. He was accompanied on the trip by John Grogan, a former Labour MP for Selby and who is now chairman of the Mongolian-British Chamber of Commerce. During the trip, Mr Blair met with Tsakhia Elbegdorj, the Mongolian president, as well as its prime minister Altankhuyag Norov.

It is understood that a deal was put in place for Mr Blair and his team to provide a consultancy service although it is likely to kick in after elections at the end of this month.

A senior Mongolian official confirmed that Mr Blair had pitched his firm’s services to the government during the visit in March. The official said: “He offered technical assistance to the Cabinet Secretary for his delivery unit concept. That’s from his years as prime minister, a structure to implement policy reforms”.

The official said the matter will be discussed again after June 26, which is the date set for presidential elections. Mr Elbegdorj is expected to win easily.

During his visit Mr Blair told the local media: “This is my first visit to Mongolia, and I hope this visit will not be my last visit to Mongolia. Mongolia has many attractive things. As I served as the PM of Great Britain for ten years I am ready to share my experience and to cooperate with Mongolia.”

Stephan Kriesel, the head of Mr Blair’s Government Advisory Practice, is already preparing for his move to Mongolia. About three months ago, Mr Kriesel joined the internet group 'Expats in Mongolia’ on the social networking site Facebook.

'Expats in Mongolia’ is billed as an 'Online social community for expats in Mongolia’. The administrator of the site Ihab Aziz said it was mainly aimed at sharing interests and news of activities in Mongolia. Mr Aziz said he screens members before admitting them into the group by sending messages to people whose profiles don’t make it clear they live or work in Mongolia.

“I only accept people that have real interests in Mongolia. People who live in the country, people who want to come to the country, and people who want to conduct business here. It’s for people with a general interest,” said Mr Aziz.

Tony Blair Associates posted an advert in The Economist magazine in April seeking recruits to its Government Advisory Practice both in Asia and in South America. “We seek Project leaders and Consultants to join our organisation to work on projects in Asia and Latin America, serving clients at the highest level of government.

“The team will drive strategy, policy and implementation workstreams, by compiling analyses, developing politically feasible recommendations, and working with stakeholders to translate these into action.”

Last night a spokesman for Mr Blair said: “We will be working with the Mongolian Government, helping them deliver their reform programme.”

But the spokesman insisted Mr Blair’s company would not make millions of pounds of profit. The spokesman said: “The cost of the programme is to cover a full time, highly qualified team living and working in the country. It is done on the same basis as the many other consultants that work there.”

One possible item on Mr Blair’s agenda is the Oyu Tolgoi gold and copper mine, in the southern Gobi desert about 350 miles south of the capital.

One of the world’s biggest copper mines, it is two-thirds owned by Turquoise Hill Resources, a company in turn 51 per cent owned by the Anglo-Australian mining conglomerate Rio Tinto, and one third owned by the Mongolian government.

The partners fell out at the beginning of the year over allegedly spiralling costs and the Mongolian government had threatened to take full control of the mine, which has cost at least £4 billion to develop.

The mine, discovered in 2001, is due to begin exporting copper later this month. Reserves are estimated at 27 million pounds of copper and 13 million ounces of gold and when it is fully operational, it will boost the country’s economy by a third.

But in February, President Elbegdorj threatened Rio Tinto’s huge investment. “The time has come for the Mongolian government to take Oyu Tolgoi matters into its own hands,” he said in a televised address to the nation. A few days later, Rio Tinto’s bank accounts were briefly frozen.

On February 14, Rio Tinto’s chief executive Sam Walsh admitted: “I’m concerned by recent political signals within Mongolia calling into question some aspects of the investment agreement. This undermines the partnership we’ve built and the stability on which a project of this size and scale depends.”

Sources had suggest Mr Blair was roped in to help resolve the dispute. Mr Blair has made a career post Downing Street offering himself out as a trouble shooter. Last year, he is reported to have earned a little over £500,000 for work as mediator between commodity traders Glencore, the Qatari prime minister and mining company Xstrata in merger talks that led to the creation of the world’s biggest mining and commodity conglomerate.

A Mongolian source said: “As I understand it, Rio Tinto hired Mr Blair to come in to give a lesson on 'respecting’ contracts.”

A source with knowledge of the mining industry said: “Tony Blair flew to Mongolia to troubleshoot on Rio Tinto’s behalf with the government.”

The day before the trip Robert Court, Rio Tinto’s global head of external affairs, had spoken at a Cambridge University seminar on Mongolia with Mr Grogan where the subject, according to attendees, of Mr Blair’s imminent visit had been raised.

Last week, Mr Court said: “I am going to frustrate you a bit. I would rather check back with other people [before commenting].”

Yesterday, a Rio Tinto spokesman said Mr Blair had not been involved in any mediation or negotiations between the company and the Mongolian government.

Mr Blair’s spokesman also denied any involvement. “We have not been involved in any dispute between Rio Tinto and the Government,” he said in a statement.

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