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  • Writer's pictureAmar Adiya

What Can Investors Learn From the French-Mongolian Uranium Mining Deal


The ink is barely dry on a landmark French-Mongolian uranium mining deal. After over 20 years of exploratory work in the Gobi desert, France's state-owned Orano has secured rights to begin commercial production around 2028 at the Zuuvch Ovoo site.


The preliminary $1.7 billion pact was sealed on October 12, 2023, during a state visit by Mongolia's president, Ukhnaagiin Khurelsukh, to Paris.



French President Emmanuel Macron and Mongolian President Ukhnaagiin Khurelsukh in Paris, October 12, 2023.
French President Emmanuel Macron and Mongolian President Ukhnaagiin Khurelsukh in Paris, October 12, 2023. Photo credit: Reuters


The French-Mongolian uranium mining deal could make Mongolia the world's seventh-largest uranium producer, meeting around 4% of global demand.


The Orano deal helps to ease its dependence on its superpower neighbors, Russia and China and aligns with the country’s “third neighbor” policy of engaging countries like France.


France spied an opportunity to diversify its own uranium supply. With few options, it currently depends on Niger and Kazakhstan for the majority of its needs.


The Gobi mine will provide a new supply of uranium as France has reversed its policy on reducing nuclear energy generation and is building more nuclear reactors.



Orano drove a hard bargain with Mongolia. Orano offered Mongolia an upfront payment and instant dividends, which satisfied the Mongolian government and secured the pact's political blessing.


Having hosted Mr Khurelsukh royally in Versailles and organizing the Genghis Khan exhibition, the French smoothed and closed the deal.


The uranium windfall will let Mongolia speed up the exploitation of its mineral wealth as the critical mineral and energy supply crunch looms worldwide.


The government of Mongolia can burnish its credentials ahead of the elections next year by promoting better and more profitable deals with investors like the Orano one.


The government of Mongolia argues the deal beats terms foreign firms (i.e. Rio Tinto) have driven before. For example, they point to higher royalties (up to 19% including special and progressive rates) and no debt from owning the equity.


But it is unclear whether the government is still keeping 34% of its stake in the uranium joint venture with Orano. The official statements suggest that the government keeps 10% equity for free (i.e. paid by Orano). The remaining 24% equity or part of it is assumed to be exchanged for higher royalty payments and other immediate cashflow for the government of Mongolia. This could set a precedent for other mining deals with investors in the pipeline.


Critics will watch closely for any devils in the details of the Orano deal and will try to compare it further with Rio Tinto’s Oyu Tolgoi deal although the two cannot be compared apple-to-apple. Some even estimate the Orano deal is 2.7 times better than the Oyu Tolgoi one in terms of benefits to Mongolia.



The French-Mongolian uranium mining deal will need to be ratified by the parliament in Ulaanbaatar in the coming weeks, which is expected to be done with little hindrance partly due to the fact that both the president and the prime minister are backing it.

The French played it strategically by inviting President Khurelsukh to Paris and securing his crucial approval to seal the deal, as he remains in power until 2027 regardless of any government change in 2024.

This contrasts with Rio Tinto, which negotiated the ill-fated Dubai deal with Mongolia's prime minister in 2015, just one year before the 2016 elections.


The French-Mongolian uranium mining cooperation has similarities to the Erdenet mine's history though the context differs in some aspects. In a similar motivation decades earlier, the Soviet Union established the Erdenet copper-molybdenum mine in Mongolia in the 1970s, after Chile's coup d'état shifted its allegiances away from the USSR and created copper supply uncertainties.


In both cases, major powers moved to develop Mongolian mineral reserves to mitigate supply risks when geopolitical shifts disrupted access to vital resources from other nations.

Investors in the mining sector should carefully analyze the potential geopolitical risks when evaluating investments, as shifts in political alignments between nations can impact access to vital mineral reserves and disrupt supply chains.

Beyond uranium, the French offered to assist Mongolia with satellite-based communications technology and lithium exploration. This highlights the wider potential for Franco-Mongolian economic ties.

Moreover, the French put on a major cultural showcase for President Khurelsukh and his delegation by hosting a traditional Mongolian music concert at Versailles and a Genghis Khan (Chinggis Khaan) exhibition.


After pressure from Chinese officials, a French museum canceled a Genghis Khan exhibit in 2020. The museum has now reopened the exhibit with items from Mongolia, replacing the 13th-14th century objects that remain in China.


The above gesture of respect by the French helped win over the Mongolian leaders and likely cement the Orano deal.

The cultural diplomacy and personal touch should be instructive for other foreign investors seeking to expand their business interests in Mongolia.

The visit of French President Macron in May 2023, followed by the visit of the French foreign minister to Mongolia in June, played a significant role in progressing the discussions on uranium mining between France and Mongolia.


Securing buy-in from presidents and the top leadership of both countries via state visits was an effective strategy to close the deal.





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