Mongolia’s economy is heavily reliant on its mining sector, which contributes significantly to its GDP and exports. However, the government is actively working towards diversifying the economy and attracting foreign investment in other sectors. As a result, there are several promising industries and major trends that businesses and investors can explore in addition to the mining sector. In this regard, we offer insights into these opportunities to help you make informed decisions.
Mongolia is rich in natural resources and has historically attracted significant foreign investment in its mining sector. According to data from the World Bank, the mining sector accounted for approximately 22 percent of Mongolia’s GDP in 2021, and over a staggering 80 percent of the country’s exports. Thus, the importance of mining to the Mongolian economy cannot be overstated, as it has been a key driver of economic growth.
However, this heavy reliance on the mining sector has also made the country vulnerable to fluctuations in global commodity prices, as seen during the recent downturn in the global mining industry itself. In response to this vulnerability, the Mongolian government has been working to diversify its economy and attract foreign investment in other sectors, including agriculture, tourism, and renewable energy.
Despite these efforts, the mining industry still remains the largest contributor to the Mongolian economy. The country is home to several large-scale mining operations, including the Oyu Tolgoi copper and gold mine, which is jointly owned by the Mongolian government and global mining giant Rio Tinto. The mining industry has also attracted investments from other major players worldwide, including Chinese, Canadian, and European ones.
In April 2022, the government launched its so-called Revival Strategy which includes furture plans (Vision 2050) focusing on a revamp of six areas that need “recovery”: port, energy, industrial, urban and rural, green growth, and State productivity.
In this article, we will discuss the mining sector in Mongolia, including its current state and future prospects. We will also explore the top-five industries and investors in the country, with an emphasis on diversification in foreign direct investment (FDI).
Mongolia’s mining sector at a glance
Mongolia has been identified by the International Monetary Fund (IMF) as one of the 29 developing countries that are rich in natural resources, and the exploration of coal and copper deposits is generating a significant amount of extra revenue. Mongolia primarily mines coal, copper, and gold.
There are various gold mines situated approximately 110 kilometers north of Ulaanbaatar, such as the Boroo Gold Mine and Gatsuurt Gold Mine. Additionally, the Khotgor Coal Mine, an open-pit coal mining site, can be found about 120 kilometers west of Ulaangom. Furthermore, there are significant mining projects in the south of Mongolia, particularly in the Ömnögovi Province, including the Tavan Tolgoi coal mine and the Oyu Tolgoi copper mine.
The mining industry is a crucial aspect of Mongolia’s economy and a significant contributor to its growth, comprising 21.6 percent of the nation’s GDP, 57 percent of overall industrial production, and 42 percent of total investments in 2020.
Mongolia’s mining output mainly revolves around copper, gold, coal, and iron, and was responsible for 26 percent of the country’s budget revenue in 2020. Although Mongolia also has a small oil and gas industry, these resources have not been adequately exploited. The average mining production in Mongolia between 2010 and 2023 was 16.09 percent, with a peak of 161.00 percent in April 2021 and the lowest record of -39.60 percent in March 2022.