Gulf nations interested in critical minerals exploration, says Mongolian Prime Minister

Gulf states want to be part of Mongolia's critical mineral exploration as they look to build supply chains for commodities essential to the energy transition, the country's prime minister has told The National.

Luvsannamsrai Oyun-Erdene visited the UAE, Saudi Arabia, and Bahrain last week to deepen economic ties with the region, particularly in mining, renewable energy and infrastructure.

The landlocked nation between China and Russia has been building diplomatic and economic relationships with countries other than Russia and China, its two biggest trade partners.

“The governments of the Gulf countries have expressed their interest to work with us on geological survey and mapping of critical minerals so that we can co-operate on exploration projects,” Mr Oyun-Erdene said.

“We have abundant resources of minerals. As for the Gulf countries, they have the know-how and the technology, especially in energy.”

Mongolia, a major coking coal and copper exporter primarily to China, aims to expand its exploration of new deposits of critical minerals, including nickel, lithium, and rare earths. The Oyu Tolgoi project, which is majority-owned by mining company Rio Tinto, is expected to become the world's fourth-largest copper mine by output by 2030.

Critical minerals such as copper, lithium, nickel and cobalt are crucial to support the growth of clean energy technology, including wind turbines, power grids and electric vehicles.

The UAE and Saudi Arabia have been exploring or investing in mining projects in Africa and Latin America, regions abundant in critical minerals. They are also prioritising the development of domestic processing capabilities to reduce reliance on foreign suppliers and add value to their economies.

Mr Oyun-Erdene said that the Gulf and Mongolia could also partner on energy transition projects and the construction of satellite cities in Mongolia.

On Saturday, Masdar hosted a Mongolian delegation led by Mr Oyun-Erdene to discuss collaboration on renewable energy, sustainable development, and expertise sharing to strengthen bilateral trade ties, the Abu Dhabi-based clean energy company said in a post on X. The official also met with Abu Dhabi’s sovereign wealth funds.

“It is very important for Mongolia to learn from the best practices and good experiences of these countries … and the Gulf countries have also expressed their interest to co-operate with us on satellite cities,” Mr Oyun-Erdene said.

Mongolia is actively developing satellite cities around its capital, Ulaanbaatar, which is home to about half of the country’s population. A major city is the planned Khushigt Valley project, which will be able to accommodate 150,000 people by 2040, as per local media reports.

Deal with India

Last month, Reuters reported that India is in talks with Mongolia to set up a preliminary pact that will focus on mineral shipments between the two countries. The pact will focus on the transit of minerals such as coal and copper, it said.

“We are in talks with the government of India on exporting coking coal,” Mr Oyun-Erdene said but did not reveal further details.

A rise in global coking coal trade last year was largely driven by Mongolia, which more than doubled its exports during the year to about 54 million tonnes, according to the International Energy Agency.

China is the main buyer of Mongolian coal. A new railway between Talvan Tolgoi in southern Mongolia and Gashuunsukhait-Gantzmod on the Chinese border became operational in late 2022, significantly boosting Mongolia's capacity to export coal to the world’s second-largest economy and top steel manufacturing country.

Mongolia is “very active in terms of foreign policy, and we are co-operating with many countries around the world”, Mr Oyun-Erdene said.

Last year, France and Mongolia signed a $1.7 billion agreement to develop the Zuuvch-Ovoo uranium mine in south-west Mongolia. The project, led by the French nuclear company Orano, aims to secure uranium supplies for France, which is heavily reliant on nuclear power plants, while also contributing to Mongolia's economic growth.

Mr Oyun-Erdene said that both countries would soon finalise an investment agreement, paving the way for construction to begin.

Economic growth

Mongolia’s economy is expected to record strong growth next year, driven by continued expansion of coal and copper mining. Last month, the International Monetary Fund raised its forecast for Mongolia's economic growth next year to 7 per cent from 6 per cent, positioning the country as one of the world's fastest-growing economies.

Mr Oyun-Erdene is confident that Mongolia will be able to “maintain” its economic growth despite a slowdown in China, its largest trading partner.

“In the near future, we are working to open more export border ports to export to China, so I'm confident that this will facilitate more trade between our two countries and increase the size of our products going to China,” he said.

“So, no matter the economic situation in the world and China, we are confident that we can maintain the economic indicators.”