Mongolia Courts Washington on Critical Minerals but Power Shortages and State Control Can Cloud the Outlook

Mongolia is once again pitching itself as a future supplier of critical minerals to the West, betting that copper, lithium and rare earths can anchor a new phase of industrial development.

The latest diplomatic signal came in February 2026, when Foreign Minister Batmunkhiin Battsetseg traveled to Washington for the Critical Minerals Ministerial hosted by U.S. Secretary of State Marco Rubio, alongside delegations from more than 50 countries.

Mongolian foreign minister Batmunkhiin Battsetseg attends the Inaugural Critical Minerals Ministerial meeting in Washington, DC, on February 4, 2026. (https://asianews.network/)

The trip did not come out of nowhere. Mongolia has been laying the groundwork for years. Ulaanbaatar and Washington elevated ties to a Strategic Partnership in 2019. In June 2023, they signed a memorandum of understanding on critical mineral supply chains, focused on regulatory reform and mobilizing private capital.

That same month, Mongolia hosted the first trilateral Critical Minerals Dialogue with the U.S. and South Korea, aimed at coordinating secure supply chains and sharing geological data. Battsetseg’s Washington appearance builds on that arc, now reinforced by Mongolia’s status as a founding member of President Trump’s Peace Board, a move that has clearly improved Ulaanbaatar’s standing with the White House.

The economic logic remains compelling. Mining generates more than 95% of export revenues and over a quarter of GDP. Coal still dominates that mix. Policymakers see critical minerals as a way to dilute that dependence and align Mongolia’s resource base with Western industrial priorities.

That ambition now has legislative momentum. Industry and Mineral Resources Minister Gongoryn Damdinnyam is pushing the package of amendments to the Minerals Law and the Heavy Industry Law. The framework revives a dual-track licensing system that combines first-come, first-served applications with tenders, and introduces escalating fees on inactive licenses to deter speculative hoarding. The aim is to restart exploration after years in which expiring licenses far outpaced new discoveries.

The government is also reshaping how it captures value. Rather than defaulting to equity stakes, the new regime leans toward royalties that decline as projects move downstream into domestic processing. Officials increasingly point to the Orano uranium agreement as a template: lower state ownership, but predictable fiscal terms and higher royalty flows once production begins. The experience of Oyu Tolgoi, where Mongolia’s 34% stake translated into mounting debt rather than early dividends, still looms large.

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