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  • Writer's pictureAmar Adiya

Mongolia at a Crossroads for its Critical Mineral Future

The October mining conference in Mongolia highlighted both the vast potential and challenging realities facing the country's critical mining industry. With the world moving towards renewable energy and electric mobility, Mongolia has an opportunity to become a leading global supplier of critical minerals like copper and rare earth elements. However, several hurdles remain.

President of Mongolia Ukhnaagiin Khurelsukh rightly called for more in-country processing to add value, generate jobs and tax revenues. But with China's overcapacity nearby, this may not be economically feasible yet.

The government's push for more local benefits from mining, while understandable, should avoid deterring much-needed investment with overly high royalties or local permit delays.

Surging critical mineral demand and rising geopolitical tensions make undiscovered deposits in remote regions like the Gobi or Altai mountain ever more valuable. There are now 5-6 known rare earth deposits in Mongolia, with the one in Khovd province (Khalzan Burgetei) being the most promising.

Mongolian Rare Earths Resource Map
Rare earths resource map (source:

Khalzan Burgetei offers raw material for permanent magnet used in a wide range of applications, from everyday products to life-saving medical devices.

A top priority should be boosting exploration, with only 45% of Mongolia mapped geologically at a 150,000 scale so far. And Mongolia spends $42 million per year, which is tiny for a country with such a global ambition on critical minerals. These numbers show that the country’s potential remains untapped.

But explorers need more transparent and predictable licensing and permitting to unlock this potential. They also desire tax incentives and government subsidies or even co-financing.

Updating the oft-amended mining law this fall could help streamline the complex regulatory regime. Allowing both auctions and first-come licensing would add flexibility. Reducing local government obstruction, while giving communities a share of revenues for local projects, could curb protests. Education on mining's benefits is equally vital.

The proposal on canceling taxing on the transfer of licenses is a welcome sign in the mineral regulation, which was one the biggest deterrents for investors. More clarity on progressive royalties through new mineral law and subsequent regulations is also helpful. But if the royalty rate is too high, it could discourage mining investment and reduce government revenue in the long run.

With China dominating rare earth output, Mongolia should leverage its deposits and geography. But transport routes must avoid over-reliance on Russia and China. Rio Tinto's effort to supply non-Chinese customers by 2030 is promising if delivery kinks can be worked out.

Legendary and controversial miner Robert Friedland's rousing speech highlighted Mongolia's promise but advised respecting investors, shunning resource nationalism and developing domestic expertise. His warnings are timely. With the right policies, Mongolia can mine copiously for a clean energy future while avoiding the resource curse. But leaders must make farsighted choices to seize this moment.

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