Will This Time Be Different for Mongolia's Tavan Tolgoi?

Mongolia once again stands at a familiar crossroads, trying to unlock the immense potential of its mineral wealth, particularly the vast coal reserves of Tavan Tolgoi, which are critical to the country’s export revenues.

The government is making another push for international expertise at Erdenes Tavan Tolgoi (ETT), the state-owned company overseeing one of the world’s largest coking coal deposits. This time, the Prime Minister’s promise is to usher in a new era of transparency and efficiency, calling for international management and advocating for a reduced state role in the economy—a key feature of his latest four-year action plan.

However, Mongolia’s quest for foreign involvement at ETT is far from new. The rush for access to Tavan Tolgoi’s vast coal reserves began as early as 2012, with international players—particularly from China and the West—jostling for a piece of the pie. That chapter, marked by political missteps, policy backtracking, and distrust, casts a long shadow over the government’s current attempts to make Tavan Tolgoi a success.

While Tavan Tolgoi’s allure remains strong, it’s impossible to ignore the baggage of past failures. The abrupt cancellation of ETT’s $1 billion IPO in 2020, citing "political distortions," is a recent reminder of the unpredictable nature of Mongolia’s mining sector. Investors burned by shifting policies and sudden reversals are understandably wary. And while the government talks up its liberalization goals, its simultaneous push for up to 50% state ownership in private mining ventures that hold so-called “strategic mining deposits” raises questions about whether Mongolia is truly ready to step back from economic intervention.

This complex legacy means that potential investors and international managers will be looking for concrete actions, not just polished rhetoric. The resolution passed on September 25, 2024, which tasked Cabinet’s Chief Secretary Uchral with overhauling ETT’s corporate governance, is a step in the right direction. But talk alone won’t rebuild the trust that has been eroded over the years. Delivering on promises of reform will require more than buzzwords about transparency and good governance.

To convince investors that this time will be different, the Mongolian government needs to acknowledge its past missteps with brutal honesty. This means addressing why previous attempts to attract foreign expertise failed and how they plan to prevent a repeat of those failures. Transparency, after all, isn’t just a box to be ticked—it’s the key to winning back investor confidence.

New management contracts should be drafted with international legal oversight to ensure their integrity and enforceability, especially given Mongolia’s turbulent political climate. Robust dispute resolution mechanisms will be essential, insulating foreign partners from the domestic volatility that has plagued past ventures. Moreover, any international hires should have direct access to stakeholders—not just within ETT but across Mongolia’s broader mining sector. This includes engaging with independent experts and those who’ve previously encountered the challenges of working in Mongolia, particularly at Tavan Tolgoi.

International organizations will no doubt be part of the process, but their involvement needs to go beyond surface-level approval. Simply attaching a respected name to the project won’t be enough to calm investor nerves; those organizations must play a meaningful role in shaping governance and ensuring oversight.

Prime Minister Oyun-Erdene’s vision for Tavan Tolgoi won’t succeed on the strength of talent alone. Even if Mongolia attracts the best international managers, their success depends on creating an environment in which they can operate effectively. The old habits of sudden policy shifts and bureaucratic bottlenecks must be replaced with a consistent and transparent regulatory framework.

It’s easy for governments to draft bold policy documents full of promises. What’s harder—and more crucial—is following through with consistent, concrete actions that address the underlying concerns investors have had for over a decade. The only way Mongolia’s gamble on transparency will pay off is if it commits to real, sustained reform.

This time around, investors won’t be lured by glowing promises of a new era. They’ll need to see tangible evidence that Mongolia has learned from its past mistakes and is ready to support foreign partners in an environment of stability, fairness, and transparency. Anything less, and history is bound to repeat itself.