Mining market in Mongolia

Mining is the engine of the Mongolian economy, accounting for:

  • 26% of gross domestic product
  • 75% of foreign direct investment
  • 90% of exports

Mongolia is home to some of the world's largest mining projects (Oyu Tolgoi copper/gold mine, Erdenet copper mine and Tavan Tolgoi coal deposits). The capital expenditure budgets for these projects can rival the GDP of the country itself. After an extended period where no new exploration licences were issued, the Mongolian government signalled its intention to open the mining exploration sector, creating potential opportunities across the mining supply chain.

Key opportunities for Canadian mining suppliers

Green and digital mining solutions

Mongolian mining companies are becoming increasingly cognizant of the environmental impact of their operations and are more open to consider solutions to reduce their carbon footprint, improve energy efficiency, improve water usage, introduce renewable energy to complement existing power requirements, and adopt waste management solutions for mines. Oyu Tolgoi (OT) is Mongolia's largest internationally managed mega project (managed by Rio Tinto). As the focus of the OT project shifts from development to operations and given Rio Tinto's commitment to decarbonize operations, "green mining" and digital solutions will be needed.

Mineral exploration technologies

As Mongolia's mining exploration activities are expected to increase significantly, demand for geological exploration, drilling, and other related services are also expected to increase. The entire life cycle of mines including mine closure is now an integral part of all mining operations, creating a need for sustainable mine closure services and solutions.

Mine site productivity

Industry highlights

Open on restricted basis

Export Development Canada's position

0.2%

Global exploration share

67.8

World Bank Ease of Doing Business score

Copper, gold and coal

lead Mongolia’s mining sector

Can $152.7 million

Mongolia ranks 44th overall in Canadian mining assets abroad

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Canadian companies operating in Mongolia

Mining companies operating in Mongolia are looking to decrease costs and improve productivity and efficiency on mine sites. Opportunities exist for Canadian mining service and supplier companies offering solutions for mine site productivity. In addition, capacity building and training of local employees are major components for improving mine site productivity. This leads to opportunities for companies specializing in safety training and capacity building.

Notable challenges for Canadian mining suppliers in Mongolia

  • General challenges include Mongolia's remoteness, small market size and lack of basic infrastructure, especially outside the capital of Ulaanbaatar.
  • Mongolia is a landlocked country, offering limited options in terms of getting products to market. Most of what Mongolia produces is sold to China. 
  • The Mongolia currency (tögrög) has stabilized over the past year but is still volatile. The Canadian dollar steadily increased against the tögrög over the past few years, making Canadian imports relatively more expensive. In addition, inflation rates in Mongolia are very high, at 10-11% in 2021.
  • Although Mongolia is making efforts to address corruption, it is systematic and companies doing business in Mongolia may face many forms of corruption. Mongolia ranks 111th out of 180 countries according to Transparency International, with a score of 35 (out of 100). 
  • Rio Tinto has significant say in OT procurement matters, often giving preference to Australian suppliers, who are well known to them.

Mongolia business landscape

  • Having a local partner or distributor is key to successfully establishing a relationship and negotiating with local buyers.
  • A recent amendment to Mongolia's mineral law regulating the issuance of new mineral is expected to open the door to mineral exploration opportunities in Mongolia. This amendment put an end to the existing moratorium which came into force a decade ago, and new mineral exploration licences are now granted through the Government of Mongolia's online portal starting April, 2022.
  • Canada is the largest foreign investor in Mongolia and is concentrated in the mining sector.
  • In 2017, Canada and Mongolia signed the Canada-Mongolia Foreign Investment Promotion and Protection Agreement (FIPA). The FIPA will provide Canadian investors operating in Mongolia with a legal framework that will help bring greater predictability and certainty with respect to their investments.
  • Canada's most notable and most well-known investment in Mongolia is in the Oyu Tolgoi copper-gold mine in the South Gobi Desert. Export Development Canada (EDC) provided CAD$1 billion in financing to the Oyu Tolgoi's underground expansion. Since 2016, Oyu Tolgoi purchased more than US$460 million worth of products and services directly and indirectly from Canadian suppliers.

Request a meeting

To learn more about the mining industry in Mongolia, contact James Kim (James.Kim@international.gc.ca), Senior Trade Commissioner, at the Embassy of Canada to Mongolia.

Additional Information

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