Wednesday, May 22, 2024
 
 

Mongolia to expand its economic and trade partnerships

Mongolia has rich mineral resources, including copper and uranium — and much-needed rare earths.

RIO TINTO
The Oyu Tolgoi underground mine is the largest financial undertaking in Mongolia's history and is expected upon completion to produce 450,000 tonnes of copper annually

- Advertisement -

Mongolia, the landlocked mineral-rich country bordered by Russia and China – the world’s two preeminent authoritarian-run nations, is looking to expand its economic, trade, security, and energy partnerships with the United States, Japan, South Korea, and some countries in Europe.

Earlier in August, Mongolian Prime Minister Oyun-Erdene Luvsannamsrain met with US Vice President Kamala Harris, Secretary of State Antony Blinken and Defense Secretary Lloyd Austin in Washington to discuss cooperation on minerals, including copper, and signed an “Open Skies” civil aviation agreement.

“Mongolia has been a reliable friend and democracy in the Indo-Pacific for three decades,” Harris said. “And today, I welcomed Prime Minister Oyun-Erdene to the White House to further our work to promote a free and open region, which benefits American security and prosperity,” the US Vice President added.

Bliken met with Mongolia’s Prime Minister “to celebrate the strong and growing Strategic Third Neighbor Partnership between the United States and Mongolia,” Spokesperson Matthew Miller said.

The two sides pledged to renew and deepen US-Mongolia economic cooperation via a new Economic Cooperation Roadmap. “The Secretary expressed continued support for Mongolia’s efforts to increase economic resilience, bolster energy and food security, promote the digital economy, develop critical mineral resources, and transition to clean energy,” Miller said in a statement.

Blinken also welcomed the signing of an Open Skies agreement between the United States and Mongolia, which will expand the strong economic and commercial partnership, promote people-to-people ties, and create new opportunities for airlines, travel companies, and customers between the two countries, according to the US State Department.

“The leaders discussed the importance of advancing democratic principles and upholding fundamental freedoms, as well as engaging constructively on regional and global security issues of concern,” the statement read.

Mongolia’s mining operations to fuel economic boost

Mining is expected to help Mongolia’s economic recovery as the country, which is known for its harsh and rugged expanses as well as its famed nomadic culture, has rich mineral resources, including copper and uranium — and much-needed rare earths, while also a major exporter of coal.

Mongolia is expanding copper production as the Oyu Tolgoi mine started the major underground phase. The Oyu Tolgoi underground mine is the largest financial undertaking in the country’s history. The underground section of the You Tolgoi mine has now commenced production and should triple the production of copper concentrate.

“This comes at a time when the outlook for the price of copper is very strong due to renewable energy projects, electric vehicle production, and low global inventories of copper,” Chris Weafer, co-founder of Macro Advisory, a Strategic Eurasia Consulting based in Tashkent, Uzbekistan, said in a country snapshot earlier this year.

Financing for the project has come in part from the Rio Tinto Group and an investment agreement between Ivanhoe Mines and the government of Mongolia, but more significant investments are required. Rio Tinto, the project’s operator, intends to invest an additional $3 billion in expanding and upgrading the facility over the next few years.

The European Union recently added copper to its list of strategic minerals, and the US is considering doing the same. Amsterdam-based car manufacturer Stellantis, the maker of Peugeot and Fiat, bought a stake in Argentina’s copper mine to secure a supply of the metal for its EVs. China’s Zijin Mining is investing in copper projects in Africa, Europe, and Latin America to ensure a supply of the metal.

Rare earth metals

Several exploration projects have been approved in recent months with mining group partners from South Korea and Australia. The aim is to get a better understanding of which metals are available in commercial quantities. Currently, the country is estimated to have 31 million tons of rare earth metals and this number is expected to grow with exploration.

British parliamentarian Daniel Kawczynski told NE Global that Mongolia can play a crucial role in reducing the world’s dangerous over-reliance on rare earth metals supplied by Beijing – Chinese supplies account for 63% of the world’s rare earth mining, 85% of rare earth processing, and 92% of rare earth magnet production.

Lithium mining

The Mongolian government has given approval for an exploration and assessment project covering an area of 19,000 hectares to get an estimate of lithium reserves to attract investment for production.

The Urgakh Naran project of ION Energy Limited, a Mongolian lithium brine explorer and developer, has announced that the company resumed water well drilling on 2 March. The project encompasses 19,000 hectares and is in southern Mongolia in Dornogovi Province. Through its wholly-owned subsidiary, ION Mongolia XXK, the company owns 100% of the project. The results of the water well drilling will be announced in the second quarter.

Looking ahead

Mining expansion in Mongolia does present some challenges and risks that must be carefully addressed, including ensuring environmental sustainability, good governance, and effective revenue management.

- Advertisement -

Subscribe to our newsletter

Co-founder / Director of Energy & Climate Policy and Security at NE Global Media

Latest

U.S.-Kazakhstan dialogue on human rights and democratic reforms continues

The United States and Kazakhstan convened the third annual...

Tackling new threats to critical energy infrastructure

The explosions that targeted the Nord Stream pipelines from...

Georgia’s “Foreign Representatives Law” moves forward amid protests

On May 14, Georgia’s parliament approved (84/150) a hotly...

North Macedonia: Sliding back towards the political dark side?

As most analysts predicted after the strong showing of...

Don't miss

U.S.-Kazakhstan dialogue on human rights and democratic reforms continues

The United States and Kazakhstan convened the third annual...

Tackling new threats to critical energy infrastructure

The explosions that targeted the Nord Stream pipelines from...

Georgia’s “Foreign Representatives Law” moves forward amid protests

On May 14, Georgia’s parliament approved (84/150) a hotly...

North Macedonia: Sliding back towards the political dark side?

As most analysts predicted after the strong showing of...

A Green 5+1, regional water issues in Central Asia and previewing next year’s Astana International Forum

Kazakhstan’s Astana International Forum (AIF) has been postponed to 2025, as Astana...

U.S.-Kazakhstan dialogue on human rights and democratic reforms continues

The United States and Kazakhstan convened the third annual U.S.-Kazakhstan High-Level Dialogue on Human Rights and Democratic Reforms on May 20 in Astana, focusing...

Tackling new threats to critical energy infrastructure

The explosions that targeted the Nord Stream pipelines from Russia to Germany in September 2022 and the suspected sabotage of Baltic-connector pipeline, which supplies...

Georgia’s “Foreign Representatives Law” moves forward amid protests

On May 14, Georgia’s parliament approved (84/150) a hotly contested law on “Transparency of Foreign Interests” regulating the amount of aid local civil society...

North Macedonia: Sliding back towards the political dark side?

As most analysts predicted after the strong showing of the nationalist presidential candidate in the first-round presidential elections on April 24, VMRO-DPMNE (Internal Macedonian...

A Green 5+1, regional water issues in Central Asia and previewing next year’s Astana International Forum

Kazakhstan’s Astana International Forum (AIF) has been postponed to 2025, as Astana is diverting financial resources to assist the relief efforts after massive flooding hit several regions....

Navigating the climate challenges for COP29

The impacts of climate change have become more evident as greenhouse gas emissions (GHG) from human activities cause increased heat, drought, floods etc. Changes...

Uzbekistan to mobilize investment in environmental protection, sustainable development

NE Global sat down for an interview, in the Uzbek capital, during the 3rd Tashkent International Investment Forum (TIIF) with Aziz Abdukhakimov, Uzbekistan's Minister of Ecology,...

New wave of U.S. sanctions target Russia’s foreign suppliers and industrial base

On May 1, the U.S. Department of State together with the U.S. Treasury Department unveiled a wide-ranging new list of anti-Russia sanctions covering an...