Mongolia is increasingly positioning itself as a key player in the global critical minerals market, navigating complex geopolitical relationships while simultaneously seeking to diversify its international partnerships. This strategic approach, dubbed “mining diplomacy,” is gaining momentum as demand for resources essential to the clean energy transition and advanced technologies continues to surge.
Balancing Regional Integration with Diversification
Mongolia’s geographic location presents both opportunities, and challenges. Bordered by China and Russia, the country has historically maintained strong economic ties with both nations. However, Ulaanbaatar is actively working to broaden its international relationships, particularly with democratic nations in the European Union (EU) and the United States, through its “Third Neighbour Policy.” This balancing act is central to Mongolia’s strategy for maximizing the benefits from its vast mineral wealth.
The global shift towards clean energy is driving unprecedented demand for critical minerals. Electric vehicles, for example, require six times more mineral inputs than conventional cars, and onshore wind plants need nine times more mineral resources than gas-fired power plants to generate comparable energy. This escalating demand has prompted major economies to develop comprehensive critical minerals strategies, such as the EU’s Critical Raw Materials Act, aimed at ensuring industrial resilience and reducing supply chain vulnerabilities.
Formalizing a Critical Minerals Strategy
The Mongolian government recognizes the strategic importance of its mineral resources and is taking steps to capitalize on the growing global demand. These efforts include the development of a formal critical minerals strategy and the ambitious Vision-2050 plan, both designed to increase the value Mongolia derives from its mineral wealth. However, geographic constraints and existing economic dependencies on neighboring countries present significant hurdles.
Tripartite Cooperation: Mongolia, the US, and South Korea
The United States is actively working to strengthen its partnerships with Mongolia and the Republic of Korea to secure critical mineral supply chains. This commitment was highlighted by the first U.S.-Mongolia-Republic of Korea Critical Minerals Dialogue, which aimed to underscore Mongolia’s potential role in meeting global critical mineral needs. Jose W. Fernandez, Under Secretary of State for Economic Growth, Energy, and the Environment, emphasized the increasing importance of critical minerals to both economies, stating, Critical minerals play an increasingly important role in our economies.
He further noted the shared interest in strengthening economies and enhancing their resilience.
South Korea is also significantly increasing its investment and cooperation with Mongolia to secure these vital supply chains. This push was formalized through the Mongolia-Korea Critical Minerals & Mining Investment Forum held on , reflecting Seoul’s broader strategy to diversify its sources of critical minerals amidst global instability and geopolitical tensions.
Addressing Supply Chain Vulnerabilities
The US Department of Energy has identified critical minerals as essential to both national security and economic development. Currently, the United States relies heavily on imports for these minerals, making its supply chains particularly vulnerable to disruption. The Department of Energy specifically notes a lack of certain critical minerals needed for clean energy technologies, such as wind turbine generators, and other key technologies like semiconductors.
Opportunities for European Policymakers and Businesses
Mongolia presents both an opportunity and a strategic opening for European policymakers and businesses. Expanding cooperation through investment, technology transfer, and multilateral dialogue mechanisms could enhance Mongolia’s role in secure, diversified supply chains. Such collaboration could also support Mongolia’s democratic development and economic sovereignty.
Institutional and Legal Reforms
Mongolia has undertaken significant institutional and legal reforms to strengthen the governance of its mineral resources. These reforms are intended to create a more stable and transparent investment environment, attracting foreign capital and expertise to develop its critical mineral deposits.
Looking Ahead
As of , Mongolia continues to navigate the complexities of balancing its relationships with major regional powers while actively seeking to diversify its partnerships. The country’s success in leveraging its mineral wealth will depend on its ability to effectively implement its critical minerals strategy, attract foreign investment, and maintain a stable and transparent regulatory framework. The ongoing collaboration with the United States and South Korea, alongside efforts to engage with European partners, will be crucial in securing its position as a reliable and responsible supplier of critical minerals to the global market.
