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.
Welcome to the White House, Prime Minister Oyun-Erdene of Mongolia. pic.twitter.com/31ODd5HW6O
— Vice President Kamala Harris (@VP) August 2, 2023
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.
Met with Mongolia’s Prime Minister Oyun-Erdene today to celebrate strong and growing U.S.-Mongolia ties. As strategic Third Neighbors, we will sustain our close partnership for continued prosperity, peace, and security. pic.twitter.com/8zxcvqvltT
— Secretary Antony Blinken (@SecBlinken) August 4, 2023
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.
