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Forging alliances: South Korea’s resource strategy with Mongolia

Nestled just 2000 kilometers away from South Korea, resource-rich Mongolia emerges as a promising ally in Seoul’s ongoing quest to diversify its mineral supply chains, particularly for rare earths. This potential partnership gains traction as South Korea extends official development assistance (ODA) to Mongolia to bolster its extractive capabilities.

As a member of the US-led Minerals Security Partnership, South Korea’s engagement in resource extraction in Mongolia could bolster the efforts of democracies to broaden critical materials supply chains. However, Seoul’s ability to leverage these ties hinges on its capacity to delineate its supply chain strategies from broader alignment with the United States.

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With a notable dependency on China for rare earth metal imports, South Korea perceives this vulnerability in critical resources as a potential national security threat. This concern is exacerbated by occasional references in South Korean policy discourse to China’s inclination to weaponize rare earth exports. Beijing’s past actions, such as restricting rare earth exports during a diplomatic spat with Japan in 2011, have propelled South Korea to explore deeper partnerships with Mongolia.

In July 2023, South Korea’s Vice Foreign Minister Lee Do-hoon engaged in discussions with the Mongolian government in Ulaanbaatar, emphasizing collaboration in critical mineral resources. Subsequently, an agreement was reached for South Korea to provide ODA to Mongolia for the development of its extractive capabilities, culminating in the establishment of the Korea–Mongolia Rare Metals Cooperation Committee.

Seoul anticipates that providing ODA to Mongolia will foster the export of goods derived from extracted materials to South Korea, thereby enhancing bilateral trade. This aligns with the observed increase in Mongolian exports to South Korea in recent years, predominantly consisting of mining sector goods like coal.

While South Korea’s provision of ODA for Mongolia’s natural resource industries may appear strategic, it constitutes only a fraction of its overall development aid to Ulaanbaatar, averaging US$53 million annually from 2018 to 2024. Therefore, Seoul can frame its involvement in Mongolia’s extractive industries as part of a broader development strategy aimed at bolstering Mongolia’s economy and society.

Moreover, beyond mineral resources, Mongolia and South Korea share complementary interests in fields like Information and Communication Technology (ICT) and smart city development. South Korea’s expertise in these areas positions it well to assist Mongolia’s economic advancement and urban planning endeavors.

By integrating assistance in extractive processes into a comprehensive development strategy, South Korea can tailor its approach to Mongolia while expanding market access. This strategy not only benefits South Korea but also allows Seoul to emphasize its developmental intentions over geopolitical motives.

While South Korea’s engagement with Mongolia may raise eyebrows in Beijing, framing cooperation within a broader development narrative could mitigate concerns and foster goodwill. By positioning itself as a supportive partner to Mongolia, South Korea navigates the geopolitical landscape while advancing its strategic interests and fostering regional stability.

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