Rich in natural resources, Mongolia has historically attracted significant foreign investment to its mining sector. Producing primarily coal, copper and gold, the mining industry is a crucial aspect of Mongolia’s economy and a significant contributor to its economic growth. With this growth, however, has come a heavy reliance on the mining sector and a range of environmental, social and economic challenges that the country has never had to grapple with.
The International Mining and Resources Conference (IMARC), to be held in Sydney from 31 October – 2 November, will see talks from Mongolia’s largest mining companies and associations on the benefits and challenges of operating locally and opportunities on the table to connect and collaborate with Australian and global industry partners and investors.
Before the 1990’s, agriculture played a key role in the economy of Mongolia, however, the mining sector has now overtaken it as the largest local revenue generating industry. Mining makes up 93% of the total exporting products, 58% of the Foreign Direct Investment, 30% of the national budget and 23% of the Gross Domestic Product. This rapid expansion of the industry is associated with Mongolia’s exceptional geological natural prospect for the development of mineral resources, offering unprecedented growth potential for copper, gold, coal, iron, petroleum, tungsten, uranium, zinc and rare earth minerals. Currently, over 10,000 deposits of more than 80 types of minerals have been discovered in Mongolia.
Rio Tinto, together with the Government of Mongolia, is successfully implementing the Oyu Tolgoi project in the South Gobi region of Mongolia, which is one of the largest copper deposits in the world. The joint project is expected to produce half a million tonnes of copper annually by 2030, becoming the fourth largest mine in the world in terms of production volume. The development has placed Mongolia as a leading global producer of copper, a critical material for most forms of renewable energy.
Foreign investment outlook
His Excellency Mr Davaasuren Damdinsuren, Ambassador of Mongolia to Australia said that the number of foreign companies interested in Mongolia has increased significantly in recent years. This is due to the country’s extensive mineral deposits and the opportunity to capitalise on an underutilised market. As a result, countries including Australia, Canada, China, South Korea, and the United Kingdom have made significant investments in Mongolia’s mining sector.
“The majority of Chinese companies are investing in the coal sector, while Canadian firms are concentrating more on copper and gold projects. Australian companies have been active in the production of coal bed methane gas from coal seams, whereas the extraction of uranium oxide from the world-class Zuuvch Ovoo project is being carried out in collaboration with French mining company, Orano Mining Group.”
Mongolia (MMHI) and Mongolian National Mining Association organise an annual ‘Mining Week’ to outline the important steps and tasks for further development of the industry and to address potential challenges. The most recent event held in Ulaanbaatar in October 2023 brought together over 300 investors from 20 countries.
Mr Davaasuren said, “the Government of Mongolia attaches high importance to comprehensive reform aimed at legal and institutional improvements to create a favourable investment environment and protection of investors’ rights. We want to be a trustworthy, reliable, long-term partner and for this purpose, the Government of Mongolia has re-established the Agency for Foreign Investment and Trade under the Ministry for Economic Development.”
The relationship between Australia and Mongolia
Mr Davaasuren said the Government of Mongolia attaches a great importance to enhancing bilateral trade and investment collaboration with Australia.
In 2022, Australia and Mongolia celebrated the 50th anniversary of diplomatic relations, one that has been built on mutual trust and shared interests, with mining a cornerstone to this.
An estimated 60 Australian-affiliated companies (including many ASX-listed companies) are active in the Mongolian mining sector. Australian companies operating in this sector have been recognised for bringing high quality investments, technology, skills and experience to Mongolia’s mining operations, and most importantly, vital foreign direct investment.
Katie Smith, Australian Ambassador to Mongolia, said she was positive about the future of the Australia-Mongolia partnership in the mining sector and beyond, particularly as Australian companies bring world-class technology, skills development and strong safeguards to it.
“The Australian Embassy, the Australian Trade Commission, and the Australian Chamber of Commerce in Mongolia cooperate closely and can provide support to Australian companies in Mongolia, or those who are interested in exploring these opportunities. There are not just more opportunities for Australian miners to come to Mongolia, there are also prospects for labour mobility as the Mongolian mining workforce expands its skills.”
Energy transition is a key area for future partnership between Mongolia and Australia, and the implementation of the latest technology to assist the Mongolian Government and private sector in their transition from thermal to coal renewables has the potential to benefit the country’s economy, energy, extractives, environment and public health sectors for decades to come.
“Mongolia can leverage its significant coal reserves to support its expansion of renewable energy while ensuring energy security. The Australian Government and private sector can share their technology and best practices to support this transition. For example, promotion of Australia’s coal seam gas technology is one of the prospective ways of using Mongolia’s vast coal deposits to produce alternative energy,” Ms Smith says.
The Australian Government has been partnering with the Mongolian Government to implement the Australia Mongolia Extractives Program (AMEP), a development cooperation program, since 2015. AMEP works to improve the competitiveness of the extractives sector through governance and transparency, streamlined financial and tax regimes, value addition of mineral reserves, improved data access and transparency as well as sharing best practice in technology and approaches.
“AMEP has supported over 50 activities in its nine years of operation in Mongolia and has collaborated with over 100 key partners representing government, industry, and civil society. Programs like AMEP contribute to building strong bilateral relations between our nations.”
“AMEP has also produced many expert level reports, assessments and roadmaps which have introduced best practices and strengthened capacity of our partners from Government, civil society, and industry. At the same time, AMEP supported Mongolia’s Ministry of Mining and Heavy Industry (MMHI) and other stakeholders to adopt the responsible mining framework. Most recently, it worked to increase local community awareness of geology and mining in several counties of Mongolia and supported Mongolia’s mining companies to improve their understanding of environmental, social, and corporate governance,” Ms Smith says.
The Australian Government has also been running the Australia Awards Scholarships program in Mongolia for 30 years, which has provided opportunities for Mongolians to undertake tertiary studies in world-class Australian universities. Over 50 graduates from the program have studied areas related to mining, and many are contributing to the sector in Mongolia today.
Looking towards the future
Mongolia has vast mineral resources and a rapidly developing mining industry, meaning there is growing demand for innovative technology solutions to ensure safety, environmental protection, organisation, and the energy supply needed to power it.
There are certain challenges impacting the sector, like limited capital, a lack of infrastructure, a land-locked geographical location and policy uncertainties. The Government of Mongolia is prioritising the mitigation of these challenges by improving the legal environment and building necessary infrastructure.
Ms Smith notes that Australian companies have brought expertise and technology in relation to environmental management, as well as innovative approaches to community engagement, mine design and mine safety. She notes we will see more potential and interest in ‘big data’ analytics, machine learning applications and artificial intelligence.
Exploration is also an area that is gaining momentum in Mongolia under its current leadership, and Australian knowledge is being utilised to strengthen geological data and feasibility studies.
“Australia’s mining industry has been active for more than 200 years, and given Australia and Mongolia share characteristics of a vast territory with a scattered population, there is ample opportunity for cooperation in this area,” Ms Smith says.
Mongolia at IMARC 2023
The Government of Mongolia Ministry of Mining and Heavy Industry will host the Mongolia session at the Global Opportunities Theatre at IMARC on 31 October from 14:00 – 15:30, which will cover:
IMARC Event Director Paul Phelan says it is significant to have Mongolia so strongly represented at this year’s event. He says delegates can look forward to a detailed view of Mongolia’s mining industry and current trends and opportunities for business and investment.
“This will be a fantastic and rare opportunity to showcase the relationship between Australia and Mongolia and the way they’re working together to address global challenges like the energy transition, and the advanced and latest technology that’s needed to assist with this.”
Mr Phelan also said IMARC continues to be the number one platform within Australia for international delegations to converge about exploration, mining and METS opportunities.
The Country Pavilions and Programs at IMARC 2023 will include 21 featured Government Partners, including Canada, Germany, Ecuador, Chile, Saudi Arabia, and South Korea to name a few.
About The International Mining and Resources Conference (IMARC)
IMARC, Collaborating on trends in mining, investment and innovation towards a sustainable future. The International Mining and Resources Conference (IMARC) is where the most influential people in the mining industry come together, delivering ideas, inspiration and serving as a meeting ground for industry leaders. As Australia’s largest mining event, it brings together over 8,500 decision makers, mining leaders, policy makers, investors, commodity buyers, technical experts, innovators, and educators from more than 120 countries for three days of learning, deal-making and unparalleled networking. IMARC is developed in collaboration with its founding partners the Victorian State Government, Austmine, AusIMM and Mines and Money, and held with the support of its Host Partner, the NSW Government.
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