Current Trends and Opportunities in Mongolia: Mining Sector and Vision 2050

Posted by Written by Giulia Interesse Reading Time: 10 minutes

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.

Despite the obvious economic challenges that arose as a consequence of the COVID-19 pandemic, experts predict that Mongolia’s economic outlook remains favorable due to the rising demand for coal and copper from China and increased mining operations. The country has a wealth of untapped natural resources and has established a Sovereign Wealth Fund (SWF) to manage growing revenues from mining exports. Mongolia plans to invest over US$392 million into a Future Heritage Fund every year as part of its overall economic growth strategy.

Top investors in Mongolia’s mining sector

While it should be noted that while Chinese investment is significant in Mongolia’s mining sector, it is not the only investor. Mongolia has been seeking to diversify its sources of investment to reduce its dependence on China.

The Mongolian government has also been actively promoting foreign investment in other sectors, such as tourism and agriculture.


Japan is one of the largest investors in Mongolia, with a significant presence in the mining sector. Japanese companies, such as Sumitomo Metal Mining and Mitsui & Co, have been involved in the development of copper and gold mines in the country. These companies have invested billions of dollars in Mongolia’s mining industry, contributing to the sector’s growth and creating job opportunities for locals.

Besides mining, Japanese investors have also been involved in other sectors of the economy. In 2011, Japan and Mongolia signed a memorandum of cooperation in the field of energy, then updated in 2015 and 2018, with the aim to promote the development of renewable energy in Mongolia. Japanese investors have also been active in infrastructure development, particularly in the transportation sector.

South Korea

South Korea has been investing in Mongolia’s mining sector, as well as in infrastructure development. Korean companies, such as SK Telecom and LG, have been involved in the development of Mongolia’s 5G network and the construction of a gas-fired power plant in Ulaanbaatar.

South Korea has also been involved in the development of the Oyu Tolgoi copper-gold mine, one of the largest mining projects in Mongolia. South Korean banks, including Kookmin Bank and Woori Bank, have provided financing for the project.

The European Union

The European Union has provided development assistance to Mongolia, and it has also invested in the country’s mining sector. The EU has been involved in projects to improve the regulatory environment and governance in the mining industry, as well as in infrastructure development.

In 2019, the EU announced a new program to support sustainable mining in Mongolia. The program aims to promote responsible mining practices, improve the regulatory environment, and support the development of local communities affected by mining activities.

United States

The United States has invested in Mongolia’s mining sector, particularly in the development of coal mines. Peabody Energy, one of the world’s largest coal companies, has been involved in the development of the Tavan Tolgoi coal mine in Mongolia. The US has also provided assistance in other areas, such as education and public health.

In 2020, the US government announced a US$350 million financing package to support infrastructure development in Mongolia. The package includes funding for the construction of a new airport in Khushig Valley, which is expected to boost tourism and trade in the region.


Canada has invested in Mongolia’s mining sector, particularly in the development of the Oyu Tolgoi copper-gold mine. Canadian companies, such as Turquoise Hill Resources and Rio Tinto, have been involved in the development of the mine, which is expected to produce more than 500,000 tons of copper per year.

Besides mining, Canadian investors have also been involved in other sectors of the economy. In 2017, Canada and Mongolia signed a memorandum of understanding to promote cooperation in the fields of agriculture, energy, and mining.

New trends and opportunities for foreign investors in Mongolia’s mining sector

Go green and digital

To reduce the environmental impact of mining operations, Mongolian mining companies are increasingly considering green and digital solutions. This includes implementing measures to improve energy efficiency, reduce carbon emissions, and adopt waste management solutions. The country’s largest mining project, Oyu Tolgoi, managed by Rio Tinto, has committed to decarbonizing its operations, which will require the adoption of green and digital solutions.

Mineral exploration

As mineral exploration activities are expected to increase in Mongolia, there will be a growing demand for services related to geological exploration, drilling, and other related activities. This demand creates an opportunity for companies specializing in mineral exploration technologies. Additionally, there is a need for sustainable mine closure solutions, as the entire life cycle of mines is now considered an integral part of all mining operations.

Improvement of mining sites

Mining companies in Mongolia are also seeking to improve productivity and efficiency on mine sites while reducing costs. Canadian mining service and supplier companies have opportunities to offer solutions for mining site productivity. Additionally, there is a need for capacity building and training of local employees, which presents opportunities for companies specializing in safety training and capacity building.

The regulatory environment and government policies

The Mongolian government has implemented policies to encourage foreign investment in the country’s economy. The government has passed several laws and regulations to improve transparency and governance in the mining industry, such as the amended 2017 Minerals Law and the ‘Vision 2050’ Long-Term Development Policy

The government has also taken significant steps to safeguard and advance the country’s developing mining sector. The China-Mongolia-Russia Economic Corridor (CMREC) is an initiative aimed at promoting trade between Mongolia and its neighbors and enhancing infrastructure connectivity and regional economic integration. When completed, the CMREC will place Mongolia as a crucial link in newly strengthened trade networks between the East and West, introducing new export routes and reducing freight times. The Mongolian government has also invested in the expansion of railways and the building of more than 6,000 kilometers of roads.

According to the 2022 World Investment Report from the United Nations Conference on Trade and Development, Mongolia received more than US$2.6 billion of FDI in 2021, a notable increase from the previous year.

Other promising sectors in Mongolia’s economy

Despite experiencing a 4.4 percent decline in growth due to the impact of the COVID-19 pandemic, Mongolia’s economy regained momentum in the following two years, reaching a 2.2 percent growth in 2022. Experts estimate the country will gain a 4.5 percent growth by the end of 2023.

Besides the mining sector, Mongolia’s economy also depends on promising sectors, such as agriculture, construction, services, and manufacturing.


The agriculture sector in Mongolia is a crucial contributor to the country’s economy, accounting for around 10 percent of its GDP and providing employment for nearly a third of the population. Despite having vast tracts of fertile land and abundant water resources, the sector faces significant challenges such as limited market access, climate change, and insufficient infrastructure. However, the government has introduced various policies to encourage the sector’s growth, including subsidies and credit for farmers and investments in irrigation systems.

Livestock farming dominates the sector, making up around 90 percent of its total output. Mongolia has one of the largest livestock populations globally, with over 66 million livestock, and is renowned for its traditional nomadic herding practices still prevalent in rural areas.


Mongolia’s construction sector has been rapidly growing in response to the demand for infrastructure and housing development. In 2021, the size of the construction market in Mongolia was assessed at US$2.2 billion. It is predicted to experience an Average Annual Growth Rate (AAGR) of over 4 percent between the years 2023 to 2026.

In addition, the government has implemented several policies to encourage the growth of the sector, such as the country’s Investment Law, which provides tax incentives for construction projects.


The service sector in Mongolia is relatively small, accounting for approximately 20 percent of the GDP. However, it has been growing in recent years, with the government identifying tourism as a potential growth area for the sector.

Mongolia’s unique culture and natural landscapes offer significant opportunities for tourism development. According to the World Travel and Tourism Council, the Mongolian tourism sector’s direct contribution to GDP has grown by 5.5 percent per year until 2029.


The manufacturing sector in Mongolia is relatively small, accounting for approximately 5 percent of the GDP. In 2021, the country’s manufacturing output saw a rise of 5.25 percent compared to the previous year, reaching a total of US$1.09 billion.

Diversification of FDI in Mongolia

The diversification of FDI is a critical component of Mongolia’s long-term economic strategy. Diversifying the sources and types of FDI will help the country achieve sustainable growth and reduce its reliance on the mining sector, which currently accounts for a significant portion of FDI.

Diversifying FDI sources and sectors is crucial for Mongolia’s economic growth and stability. The over-reliance on the mining sector has made the country vulnerable to external shocks, such as fluctuations in commodity prices and the COVID-19 pandemic. Diversification would reduce the risk of economic instability and ensure that Mongolia is better able to weather economic downturns.

Moreover, diversifying FDI would allow Mongolia to leverage its other strengths and competitive advantages. For instance, Mongolia has abundant renewable energy resources, vast agricultural land, and a rich cultural heritage that could attract investment in the tourism industry.

The current state of FDI in Mongolia

Mongolia has been successful in attracting FDI in recent years, with FDI inflows reaching a record high of USD 2.3 billion in 2019. The mining sector continues to be the primary recipient of FDI, accounting for over 80 percent of the total FDI in 2020. China is the largest investor in Mongolia, followed by Canada, Russia, and the United States.

The concentration of FDI in the mining sector has led to a significant impact on the country’s economy, with the mining industry accounting for 22 percent of Mongolia’s GDP in 2021. The mining sector’s reliance on a few key commodities, such as coal and copper, also poses risks to the country’s economic stability in the long run.

Furthermore, the COVID-19 pandemic has had a severe impact on Mongolia’s economy, with FDI inflows dropping by 41 percent in 2020 compared to the previous year. The decline in FDI has highlighted the need for Mongolia to diversify its FDI sources and sectors to mitigate the effects of external shocks on the economy.

Sectors with potential for FDI

Mongolia has several sectors other than mining that have the potential for attracting FDI. These sectors include agriculture, tourism, and renewable energy.

Agriculture is a significant sector for Mongolia, contributing around 14 percent to the country’s GDP. Mongolia has vast tracts of fertile land and an ideal climate for livestock and crop production, making it an attractive destination for investment in agriculture.

Tourism is another sector with tremendous potential for FDI. Up to 2019, tourism played a significant role in boosting Mongolia’s economy, representing 7.2 percent of its GDP, 6.8 percent of its total exports, and 7.6 percent of its total employment, making it the most prosperous year in this industry. However, in 2020, the COVID-19 pandemic caused tourism to decline dramatically.

Mongolia has a unique cultural heritage and stunning natural landscapes, making it a popular destination for eco-tourism, adventure tourism, and cultural tourism. The government has been investing in developing infrastructure and promoting the sector, creating opportunities for foreign investors.

Renewable energy holds significant potential for FDI as well. Mongolia has abundant wind, solar, and geothermal resources that could be harnessed to meet the country’s energy needs and even exported to neighboring countries. The government has introduced policies and incentives to attract investment in renewable energy, creating a favorable environment for foreign investors.

Government efforts to attract diversified investment

The Mongolian government has implemented several policies and initiatives to promote the diversification of FDI and attract investment in sectors other than mining. These policies include tax incentives, investment promotion, and the establishment of special economic zones.

Tax incentives are one of the most effective ways to attract FDI. The Mongolian government has introduced tax exemptions and reductions for investors in priority sectors such as agriculture, renewable energy, and tourism. The government has also reduced the corporate income tax rate from 25 percent to 10 percent for small and medium-sized enterprises (SMEs) operating in the non-mining sector.

Investment promotion is another strategy used by the government to attract FDI. The government has established the Investment Agency of Mongolia to promote investment opportunities in the country and provide support and guidance to investors. The government has also participated in international investment forums and roadshows to showcase investment opportunities in Mongolia.

The government has also established special economic zones (SEZs) to promote investment in specific sectors. For example, the Sainshand Industrial Park is a special economic zone focused on developing renewable energy, light industry, and logistics.

Despite these policies, diversification of FDI remains a challenge for Mongolia. The mining sector continues to dominate FDI inflows, and the non-mining sectors face several challenges, such as inadequate infrastructure, lack of skilled labor, and limited access to financing.


In summary, Mongolia’s economy and mining sector hold immense potential for investors looking to leverage the country’s abundant mineral resources and rapidly growing economy. Although there are some obstacles, such as political instability and infrastructure limitations, the government’s dedication to encouraging foreign investment and enhancing the investment environment, combined with the nation’s ample natural resources and strategic position, make it an appealing investment destination.

About Us

China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at

Dezan Shira & Associates has offices in VietnamIndonesiaSingaporeUnited StatesGermanyItalyIndia, and Russia, in addition to our trade research facilities along the Belt & Road Initiative. We also have partner firms assisting foreign investors in The PhilippinesMalaysiaThailandBangladesh.