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Growing Role of Mongolia in Global Supply of Critical Minerals

Mongolia, with its vast reserves of critical minerals, has emerged as an appealing prospect for Western nations aiming to diversify their supply chains and reduce reliance on China.

Mongolia finds itself at a critical juncture, poised to capitalize on the escalating global demand for critical minerals driven by the clean energy transition and technological advancements.

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However, despite its abundant resources, Mongolia grapples with numerous obstacles that impede its ability to fully leverage the potential of its critical minerals and establish a robust foothold in the international market.

Limited infrastructure, insufficient technical expertise and capacity, regulatory frameworks, access to finance and investment, environmental and social considerations, along with geopolitical dynamics, present formidable challenges that demand urgent attention.

The capital-intensive mining industry in Mongolia heavily relies on subsidies to facilitate mineral extraction. However, considering the upcoming election year and the prevailing voter sentiment, it is highly improbable that the Mongolian government will entertain the idea of implementing an investment tax credit specifically for critical mineral exploration or providing subsidies to investors in this sector.

To overcome these obstacles and bolster its position in the critical minerals landscape, Mongolia has taken noteworthy steps forward.

Ulaanbaatar recently signed a Memorandum of Understanding (MOU) with the United States, aiming to foster secure and resilient critical mineral supply chains in the Indo-Pacific region.

This collaboration not only grants Mongolia access to technical support and investments but also aligns with the US’s objective of promoting responsible mining practices.

In a further display of Mongolia’s rising prominence in the global critical minerals market, France’s Foreign Minister, Catherine Colonna, recently visited Ulaanbaatar.

During her visit, she actively advocated for a substantial uranium deal worth 1 billion euros between the French nuclear group Orano and Mongolia.

The attention on Mongolia’s critical minerals doesn’t stop there. Prominent figures like Elon Musk, the CEO of Tesla, have engaged in talks with the Mongolian Prime Minister, exploring potential collaborations. Germany, a powerhouse in the automotive industry, has also expressed interest in Mongolia’s critical minerals.

In another noteworthy development, Mongolia, the United States, and South Korea have formed a trilateral consultative body aimed at stabilizing the supply chain for key minerals. This collaborative effort recognizes the significance of critical minerals, especially in clean energy technologies, and seeks to address potential disruptions and vulnerabilities.

The trilateral partnership will involve knowledge exchange, regular working-level talks, and a forthcoming three-way business-to-business roundtable. These initiatives aim to promote collaboration and enhance the reliability and resilience of the critical minerals supply chain.

Mongolia’s critical minerals are poised to play a vital role in shaping the global supply chain landscape, and as the nation navigates challenges, embraces opportunities, and forges partnerships, it stands on the brink of realizing its full potential. The potential success of the uranium deal with Orano could demonstrate Mongolia’s commitment to be a key player in the global critical minerals supply chain.


Source: Mongolia Weekly

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