Mongolia stands before a shining opportunity

"If the spirits are very angry, we offer good stuff like vodka. The spirits like vodka," said the teacher, Baagii.

Others are simply getting by.

"This is our livelihood. It is our only income. We depend on this," said Medekh, 35, a mother of three who arrives each morning looking to find at least enough for the 44-cent ride home. On a good day, she and two partners split about $18 worth of gold flakes -- no pittance in a nation where government jobs pay about $100 a month.

But the land is suffering.

Some miners burn tires to melt the permafrost. Others use mercury to help release gold from the rock. Many mines, official and unofficial, leave the rivers a polluted maze of gray-brown lagoons.

Tsetsegee Munkhbayar used to herd his animals downstream from Uyanga, until fast-growing mines sapped the rivers that fed his land. In 2001, he banded with other herders to form the Onggi River Movement, which has successfully pressured the government for stricter regulation. He is not a knee-jerk opponent of mining, but is seeking a responsible path forward.

"This is the question of our country's future," said Munkhbayar, whose work earned this year's Goldman Environmental Prize, the world's leading environmental award. "Mining development and Mongolia's development have become inseparable. The question is how we develop it."

Not everyone is so moderate. A year ago, protesters staged a hunger strike and burned effigies of Mongolia's president and Robert Friedland, chairman of Vancouver, Canada-based Ivanhoe Mines, which has the rights to mine the massive Oyu Tolgoi deposit. Within weeks, parliament imposed a 68% windfall tax on high mining profits, sending a chill through the offices of Mongolia's mining powers.

"There is nothing good I can say about it," said Namgar Algaa, executive director of the Mongolian National Mining Assn., who warned that companies might skimp on environmental rehabilitation in order to pay taxes.

Either way, steep taxes do not insulate Mongolians from corruption -- one of the prime ways that resource-rich nations watch their riches disappear. To that end, lawmakers are considering moves toward greater transparency, including a freedom of information act that would expose government spending to greater oversight, a progressive move in a region dogged by secretive former Soviet governments.

Others argue that Mongolia's best defense will be to establish a permanent trust fund of the kind that invests Alaska's oil revenue and shields it from corruption.

Ultimately, Mongolia's future prospects hinge on how the nation prepares for life after gold. For example, growth rates in Malaysia, Indonesia and Mauritius over the last quarter of a century have far outpaced those of rival producing countries, thanks to investments in education and manufacturing.

That strategy just might help Mongolia defy its own folk wisdom. An ominous saying coined long ago warns, "Gold never brings good."