Protests erupt after Mongolian herder run over by coal truck as he tries to stop mining convoy driving across prairie land

Outside the closed gates of the Xilingol Mongolian high school, Chinese police watch warily as hundreds of students perform calisthenics in a yard from where the previous day they left to march through the streets. A short drive away, another police unit monitors a middle school that has become a source of concern. On the grasslands, patrol cars block access to a troubled community of herders and miners.

Security forces in Inner Mongolia, an autonomous region of China, are on high alert after the biggest wave of demonstrations in 20 years, sparked by a killing that symbolises the traumatic transition of Mongolia's nomadic grasslands into a mining powerhouse.

On 11 May, a Han Chinese coal-truck driver ran over a 35-year-old Mongolian herder, known as Mergen, as he tried to stop a convoy driving across fenced prairies in Xiwu.

Allegations the killing was deliberate inflamed passions in the indigenous Mongolian community, which has been squeezed out of much of the land over 50 years.

Protests erupted in at least three places. Video clips ( http://www.smhric.org) posted online by overseas supporters show herders being arrested after a face-off with military police in Ujumchin last week. According to overseas groups, crowds also took to the streets in Huveet Shar on Thursday and Shuluun Huh on Friday with banners declaring: "Defend the rights of Mongols" and "Defend the homeland".

The biggest protest was in Xilinhot, where 1,000 students in yellow and blue uniforms marched through the broad streets to the government headquarters on Wednesday.

"This was the largest protest since 1991," said Enghebatu Togochog, director of the US-based Southern Mongolian Human Rights Information Centre, which calls for more autonomy for the region and respect for traditional lifestyles. "There are increasing conflicts between herders and miners as the authorities open up more mines in the grasslands to meet their goal of turning Inner Mongolia into the nation's energy base."

In recent years, Inner Mongolia has become China's leading producer of coal and rare earth elements.

Details of the killing that sparked the protests are sketchy, second-hand and may have been exaggerated by internet rumours and a lack of trust in censored official news. Locals said 35-year-old Mergen was leading about 40 herders who tried to block a convoy of coal trucks from the Tongcheng No 2 colliery. The drivers had reportedly run down fences and intruded on nomads' land to avoid a bumpy road. After a protracted stand-off, the drivers are said to have crashed through the herders, killing Mergen.

One widely cited but unverifiable claim is that the driver boasted he was sufficiently insured to cover the death of a "smelly Mongolian herder".

The author of this report – a Mongolian blogger named Zorigt – wrote: "In order to take a shortcut, these coal-hauling trucks have randomly run over local herders' grazing lands, not only killing numerous heads of livestock but also further damaging the already weakened fragile grassland."

Students place more faith in such blogs than the government version of events. "We are very angry. They killed him on purpose and dragged him along the ground for more than 100 metres. This has made us realise that Mongolian lives are worthless," said a 16-year-old female student from the Xilingol high school. "If this issue is not resolved, there will be more protests."

Many students are from herding families who have been moved into cities as the wide-open pastures are fenced off. The government says such measures are necessary to promote development, prevent overgrazing and protect the fragile grasslands, much of which have turned to desert in recent years. Locals say herders' rights have been violated and the fencing and mining have created bigger environmental problems, including pollution, noise, traffic and dust storms that blow across much of north-east Asia.

The transformation is evident on the flight to Xilinhot. From the air, the grasslands are blotched with sandy areas near farms and the dark smudges of open-cast pits. From the road, the clouds of dust from mines and trucks is visible miles away.

Mergen's death has turned him into a martyr for those who are unhappy with the loss and degradation of land. "He is a hero," said another female student in a yellow uniform. "I don't like to see barriers between Han and Mongols, but sometimes it is necessary to fight for your land."

Anger at the killing is focused on the truckers and the mining firms. It does not appear to have set the two main ethnic groups against one another. Many Han residents said they supported the Mongolian students, whose demonstration was peaceful. Shopkeepers said they provided free food and drink to the marchers. Taxi drivers expressed sympathy for their cause, and a restaurant owner spoke of the need for justice. But others were worried that the situation might deteriorate.

Mongolian activists have called for rolling protests through the region, culminating in a rally in Genghis Khan Square in Hulunbuir on Monday.

The authorities have tried to placate protesters by arresting four men for the killing and damage to grasslands, with a promise of a full investigation and compensation for the bereaved.

Mergen's brother said the family have been given money, but declined to say how much. "I don't want to answer any more questions about this," he said by phone.

Local radio runs frequent bulletins about the police investigation, but there are few details and little transparency. An official at the Xilinhot propaganda department claimed to be unaware of any protests. The phone rang unanswered at other government offices.

Outsiders are unwelcome. The Guardian was blocked on the road into West Ujimchin where Mergen was killed. "Special circumstances. You're not allowed in. It's not safe," said an officer. At 4.30 the next morning, two plainclothes police entered the Guardian's hotel room, woke this correspondent and tried to conduct an interrogation.

Chinese authorities are nervous about signs of unrest in areas with large ethnic minorities, such as Tibet and Xinjiang, which also experience tensions between herders and mining settlers. Inner Mongolia is usually considered less of a security threat because its overseas supporters are less vocal in calling for independence, it does not have a charismatic leader such as the Dalai Lama and its indigenous community has already been numerically overwhelmed by an influx of Han migrants who now comprise 79% of the population.

But there is a heavy security presence, and police are ruthless in quashing dissent. Last December, the region's most famous writer and activist, Hada, was due for release from prison after 15 years. He has not been seen since and is presumed to be under house arrest.

The government's unease – and heavy-handed crackdown on protests and journalists – has also been sharpened by online calls this year for a "jasmine revolution" in China. Unrelated protests over land seizures, pollution and unemployment remain a concern, most recently focused on explosions of homemade bombs at three government offices in Fuzhou.

Mongolia: Inner and outer or southern and northern?

Inner Mongolia – a vast region of steppe grassland and Gobi desert – lies on the Chinese side of a historically shifting border between northern Mongolian nomads and southern Han agriculturalists. Once marked by the Great Wall, this boundary has been pushed hundreds of miles north. Independence activists refer to this area as Southern Mongolia and hope that it can be united with the neighbouring nation of Mongolia – once known as Outer Mongolia. But the demographic trends are in the opposite direction. Centuries of inward migration have given the region a population that is about 80% Han.