Mongolia is rapidly emerging as a strategic player in the global critical minerals market, skillfully navigating its relationships with powerful neighbours while seeking to diversify international partnerships. As the global demand for minerals essential to clean energy, electric vehicles, and advanced technologies grows, Ulaanbaatar’s “mining diplomacy” has become central to its economic and geopolitical strategy.
Strategic Mineral Wealth and Global Opportunities
The worldwide shift to green technologies has intensified competition for critical raw materials. Electric vehicles require six times more mineral inputs than conventional cars, while onshore wind farms demand nine times more minerals than gas-fired power plants for equivalent energy output. Mongolia’s abundant mineral deposits—including copper, nickel, molybdenum, cobalt, lithium, rare earth elements, and platinum group metals—have therefore assumed renewed strategic importance.
For Europe, actively pursuing secure and diversified supply chains under the Critical Raw Materials Act, Mongolia represents a significant opportunity. By aligning its domestic mineral strategy with EU priorities, Mongolia can attract investment, facilitate technology transfer, and foster multilateral partnerships while asserting its economic sovereignty and supporting regional stability.
Mongolia’s Domestic Critical Minerals Framework
Mongolia has implemented major reforms to strengthen governance and oversight of its mining sector. Updates to the Minerals Law, establishment of a sovereign wealth fund, and the Vision-2050 strategy emphasize the country’s goal to capture greater value from its mineral resources.
State-owned enterprises are being restructured to support these objectives. The renaming of Mongolrostsvetmet to Erdenes Critical Minerals, along with its expanded mandate in research, exploration, extraction, and processing of rare earth elements, underscores the country’s shift from viewing minerals as simple export commodities to strategic assets. Mining dominates Mongolia’s economy, contributing roughly 30% of GDP, 72% of industrial output, 79% of foreign direct investment, and nearly one-third of state revenue. This economic reliance presents both opportunities and vulnerabilities.
Mongolia’s official critical minerals list now includes molybdenum, manganese, nickel, copper, fluorspar, graphite, rare earth elements, cobalt, lithium, platinum group metals, and tungsten, closely aligning with EU priorities for raw materials and resilient supply chains.
Geopolitical Balancing: China, Russia, and Infrastructure Dependencies
Geography heavily shapes Mongolia’s trade and economic policies. China absorbs the majority of Mongolian exports, predominantly coal and copper, reinforcing a structural dependence that is further entrenched by infrastructure investments such as the Gashuunsukhait-Gantsmod railway corridor and Belt and Road Initiative projects.
Russia remains equally pivotal. Proposed projects like the Power of Siberia 2 pipeline, which would transit Mongolia to deliver Russian natural gas to China, highlight both economic opportunities and geopolitical risks. Mongolia also relies on Russia for a significant portion of its fuel and electricity supplies. This dual dependence requires careful navigation of mining diplomacy, balancing strategic autonomy with critical regional partnerships.
Third Neighbour Policy: Expanding Global Partnerships
To counterbalance influence from China and Russia, Mongolia has pursued the Third Neighbour Policy, cultivating ties with democratic nations beyond its immediate region. The European Union is a central partner in this framework, formalized through the EU-Mongolia Partnership and Cooperation Agreement, which supports collaboration in critical minerals, economic development, and supply chain diversification.
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 for 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 also hosted trilateral dialogues, including the first Critical Minerals Dialogue with the US and South Korea, creating multilateral platforms for investment, trade, and technology transfer. Neutral forums such as the Ulaanbaatar Dialogue further enable Mongolia to act as a bridge between East and West, leveraging both democratic credentials and mineral wealth to enhance diplomatic influence.
Opportunities for EU Engagement
Mongolia’s strategic approach to mining presents multiple avenues for European involvement:
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Technical assistance to develop domestic mineral processing capacity
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Investment frameworks with risk-sharing mechanisms to encourage European participation
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Multilateral coordination on policy, infrastructure, and supply chain development
The Mongolian government emphasizes openness to partnerships that respect national sovereignty and development priorities, providing a clear pathway for strategic European engagement through the Third Neighbour Policy.
Positioning Mongolia as a Strategic Partner
Mongolia’s mining diplomacy represents a sophisticated balancing act, maintaining productive relations with China and Russia while deepening partnerships with democratic allies. As competition for critical minerals intensifies globally, Mongolia has the opportunity to enhance its geopolitical standing, leverage its rich mineral endowment, and negotiate favorable trade agreements.
For European policymakers and businesses, meaningful engagement requires navigating Mongolia’s structural dependencies while supporting its economic sovereignty and democratic development. With the right investment and collaboration frameworks, Mongolia can emerge as a reliable partner in global critical mineral supply chains, contributing to Europe’s green transition and technology-driven growth.
