Mongolia: A Fast-growing Economy with Unique Mining Opportunities 

Precious Metals
mining companies in mongolia

The country’s underexplored yet mineral-rich landscape and supportive government offer a wealth of opportunities for mining companies.

Mongolia is a resource-rich country that is at a turning point in its history. Having adapted to a democratic system of government and a market economy, the country’s wealth of mineral resources is now paving the way for rapid economic and social development. The nation has shifted away from an economy rooted in agriculture and herding and is turning instead to a fast-growing mining industry, offering unique opportunities for exploration and foreign investment.

Mongolia has been called the last frontier for large-scale mining projects. The unprecedented success of mines such as Oyu Tolgoi, a tier one producer and one of the largest copper-gold deposits in the world, has set the stage for a flourishing precious metals sector. Mongolia’s mineral wealth — primarily coal, copper and gold — has been valued between US$1 trillion and US$3 trillion. The mining industry employs 3.6 percent of the country’s population. At the peak of the country’s mining boom, Mongolia’s total exports surpassed US$1.84 billion.

Supportive trade agreements and international partnerships

In recent years, a number of strides have been made on behalf of the Mongolian government to protect and promote the country’s emerging mining sector. For instance, the China-Mongolia-Russia Economic Corridor (CMREC) is designed to facilitate trade between Mongolia and its neighbours while fast-tracking infrastructure connectivity and regional economic integration. Once completed, the CMREC will position Mongolia as the essential link in newly reinforced trade networks between the East and West, cutting down freight times while introducing new export routes. The Mongolian government itself has invested in railway expansion and the construction of more than 6,000 kilometers of roads.

According to the 2020 World Investment Report published by the United Nations Conference on Trade and Development, Mongolia received more than US$2.4 billion of foreign direct investment in 2019, a marked increase from the year before. Increased attention from foreign investors can be largely attributed to the introduction of foreign policies that have strengthened international relations and bolstered the Mongolian economy.

In 2019, Mongolia’s Third Neighbour Trade Act authorized the duty-free treatment of certain imports from Mongolia to the US, making the US Mongolia’s fifth strategic partner. The Mongolia-US economic partnership agreement aims to increase its workforce and diversify the country’s emerging mining industry. Likewise, the Canada-Mongolia Investment Agreement finalized in 2016 provides greater certainty for Canadian investors. Between 1990 and 2012, Canada was responsible for as much as 8 percent of Mongolia’s total investment inflows.

Over the past 25 years, Mongolia has tripled its 1991 GDP per capita. Between 2017 and 2019, the country’s GDP has grown an average of about 6 percent, but the COVID-19 pandemic led to considerable economic downturn as the country took strict measures to protect the populace. However, experts believe that the country’s baseline economic outlook remains favorable, driven by rising demand for coal and copper from China and ramped-up mining operations. Despite the challenges of 2020, the country is expected to bounce back economically given its wealth of untapped natural resources. Mongolia has established a Sovereign Wealth Fund (SWF) as part of an overall strategy to manage growing revenues from mining exports. The country plans to invest more than US$392 million into a Future Heritage Fund every year.

Tapping into Mongolia’s mining boom

For nearly seven decades, Mongolia’s economy was driven by agriculture. While industrial mining did exist, it wasn’t nearly as prolific or profitable as it is today. In the 1990s, the country transitioned from a Soviet satellite to a free-market democracy, allowing foreign investors to get involved. Following the loss of support from the Soviet Union, Mongolia enacted the Minerals Law in 1997, attracting private investment. In 2002, the Mongolian Ministry of Mining issued nearly 3,000 exploration licenses that spanned almost 30 percent of the country’s territory. By 2011, Mongolia was the fastest-growing economy on the planet. The mining boom brought new wealth to the country, paving the way for economic and social development.

Perhaps the best indicator of Mongolia’s extraordinary potential as an underexplored mining jurisdiction is Oyu Tolgoi, one of the world’s largest known copper and gold deposits. Located in the South Gobi region of Mongolia, Oyu Tolgoi is one of the most modern and sustainable large-scale mining operations in the world. The mine, which is jointly owned by the government of Mongolia, Turquoise Hill Resources (TSX:TRQ) and Rio Tinto (ASX:RIO), began operations in 2011. Its current infrastructure will allow the mine to operate for decades to come. In spite of tensions in the background on moving forward with this extraordinary project, the recent news of renewed negotiations and commitment shows how the government prioritizes Mongolia’s growth as a flourishing mining jurisdiction is to its government.

Exploration companies have taken notice of Mongolia’s vast mineral wealth, much of which remains untouched by modern exploration and extraction methods. Mongolia’s mining potential can be captured by its 6,000 mineral deposits, with more than 80 documented types of minerals, including copper, gold, uranium, coal and many others. Companies like Steppe Gold (TSX:STGO), Kincora Copper (TSXV:KCC) and Erdene Resource Development (TSX:ERD) have turned toward Mongolia’s ample reserves as the focus of their next district-scale projects.

Steppe Gold was the first precious metals development company to participate in the Mongolian government’s Gold-2 Program, a long-term initiative to ensure the sustainable development of the country’s gold sector. The program involves the participation and support of a number of government agencies, including the Ministry of Mining and Heavy Industry, the Ministry of Finance, the Ministry of Environment and Tourism as well as the Central Bank of Mongolia. Steppe has two gold projects: Uudam Khundii and Altan Tsaagan Ovoo (ATO). As of June 2020, Steppe Gold has produced and sold more than 15,300 ounces of gold and nearly 5,000 ounces of silver, generating US$25.3 million. In February 2021, the company’s 100 percent owned ATO gold mine doubled its resource estimate to 2.45 million ounces of gold equivalent.


Mongolia is solidifying its position as a hub of international trade and investment. The recent appointment of Prime Minister Oyun-Erdene reinforces that position, as he has a history of moving forward with initiatives that have modernized the government and made it more transparent. The country’s underexplored yet mineral-rich landscape offers a wealth of opportunities for large-scale exploration, development and sustainable production. These opportunities are further incentivized by a mining-friendly government, recent trade agreements and other supportive policies.

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