Mongolia is rapidly emerging as a key player in the global critical minerals market, strategically navigating its relationships with powerful neighbours while pursuing diversified international partnerships. With the surge in demand for minerals critical to clean energy, electric vehicles (EVs), and advanced technologies, Ulaanbaatar’s “mining diplomacy” has become central to the country’s economic and industrial strategy.
Strategic Mineral Wealth in a Global Context
The global shift toward green technologies has intensified competition for critical raw materials (CRMs). EVs consume six times more mineral inputs than conventional vehicles, while onshore wind farms require nine times the mineral resources compared to gas-fired power plants. Mongolia’s rich mineral deposits—including copper, nickel, molybdenum, cobalt, lithium, rare earth elements, and platinum group metals (PGMs)—have therefore gained heightened strategic importance.
For Europe, which is actively pursuing secure and diversified supply chains under the Critical Raw Materials Act, Mongolia represents a vital opportunity. By aligning its domestic critical minerals strategy with EU priorities, Mongolia can attract foreign investment, technology transfers, and multilateral partnerships while asserting its economic sovereignty.
Mongolia’s Domestic Critical Minerals Framework
Over the years, Mongolia has implemented major reforms to strengthen governance in the mining sector. Updates to the Minerals Law, establishment of a sovereign wealth fund, and the long-term Vision-2050 strategy underscore the government’s ambition to capture greater value from its mineral resources.
State-owned enterprises are being restructured to support this vision. The renaming of “Mongolrostsvetmet” to Erdenes Critical Minerals, along with its expanded mandate in the exploration, extraction, and processing of rare earth elements, reflects Mongolia’s recognition of critical minerals as strategic assets rather than simple export commodities. Mining dominates Mongolia’s economy, contributing around 30% of GDP, 72% of industrial output, 79% of foreign direct investment, and nearly a third of state revenue, creating both economic leverage and dependency.
Mongolia’s official critical minerals list includes molybdenum, manganese, nickel, copper, fluorspar, graphite, rare earth elements, cobalt, lithium, platinum group metals, and tungsten, closely aligning with European priorities for raw materials and supply chain security.
Geopolitical Balancing: China, Russia, and Infrastructure Dependence
Mongolia’s geographic position heavily influences its trade and economic policy. China accounts for 84% of Mongolian exports, primarily coal and copper, and bilateral trade reaches multi-billion-dollar levels. Recent railway infrastructure, including the Gashuunsukhait-Gantsmod corridor, along with Chinese-financed projects, further deepen Mongolia’s economic dependence on its southern neighbour.
Meanwhile, Russia remains equally critical. The proposed Power of Siberia 2 pipeline, transiting Mongolia to deliver natural gas to China, highlights both economic opportunity and geopolitical risk. Mongolia also relies on Russia for most of its fuel and electricity supply, necessitating careful mining diplomacy to balance strategic autonomy with regional dependencies.
The Third Neighbour Policy: Diversifying Global Partnerships
To reduce reliance on China and Russia, Mongolia has implemented the Third Neighbour Policy, cultivating strategic ties with democratic nations beyond its immediate region. The European Union plays a central role in this framework, formalized through the EU-Mongolia Partnership and Cooperation Agreement, aligning naturally with European priorities for critical raw materials and diversified supply chains.
Recent initiatives highlight Mongolia’s proactive diplomacy:
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Memoranda of Understanding with the United States on critical minerals collaboration
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Agreements with France on uranium exploration
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Joint rare earth mineral committees with South Korea
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Interministerial research partnerships with the United Kingdom
Mongolia has hosted trilateral dialogues, such as the first Critical Minerals Dialogue with the US and South Korea, creating multilateral platforms for investment, trade, and technology cooperation. Neutral forums like the Ulaanbaatar Dialogue position Mongolia as a bridge between East and West, combining democratic credentials with mineral wealth to enhance diplomatic leverage.
Opportunities for EU Engagement
Mongolia’s mining diplomacy presents multiple avenues for European involvement:
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Technical assistance to build domestic processing capacity for critical minerals
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Investment frameworks with risk-sharing instruments to encourage European participation
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Multilateral coordination for policy, infrastructure, and supply chain development
The Mongolian government emphasizes its openness to partnerships that respect national sovereignty and development priorities, providing a clear pathway for strategic European engagement through Mongolia’s Third Neighbour Policy.
