President Lee Jae-myung paid a state visit to Mongolia on the 9th (local time), held a summit with Mongolian President Ukhnaagiin Khurelsukh, and agreed to strengthen cooperation in critical minerals such as rare earths, drawing attention to Mongolia's mineral potential.
According to the U.S. Geological Survey (USGS) on the 10th, Mongolia is the world's No. 10 resource-rich country. More than 80 types of officially explored and verified minerals have been found in Mongolia, including rare earths, copper, gold and uranium. Its rare earth reserves rank No. 2 in the world after China (about 16%, 31 million tons), and its copper and coal reserves are the world's No. 2 (55 million tons) and No. 4 (175 billion tons), respectively.
Mongolia also has the Oyu Tolgoi mine, one of the largest copper and gold mines in the world. The mine is located in the Gobi Desert in southern Mongolia. The Mongolian Mineral Resources and Petroleum Authority estimates the Oyu Tolgoi mine holds 55 million tons of copper and 15 million tons of gold.
The BBC reported that "the mineral deposits within the Oyu Tolgoi mine are as large as Manhattan, New York, enough to be mined for the next 60 years." The Oyu Tolgoi mine contributes significantly to the economy, accounting for 50% of Mongolia's copper exports.
Mongolia's industrial structure is highly dependent on mining, with the mineral resources industry accounting for 27% of gross domestic product (GDP), 70.9% of industrial output, and 87.2% of total exports (as of '24).
On top of that, the potential of Mongolia's mineral industry remains open. Mongolia's land area is 16 times that of South Korea, and the cited resource reserves in Mongolia are only based on what has been precisely surveyed so far within Mongolia. About 55% of Mongolia's total territory has not been explored.
◇ Abundant rare earth reserves, the "vitamins of advanced industries," but logistics networks needed as a landlocked country
What the government and domestic corporations are watching most closely among Mongolia's mineral resources is rare earths. Contrary to what the English name (Rare Earth Elements) suggests, rare earths are relatively abundant on Earth. However, breaking the chemical bonds that bind rare earths in nature requires more than 100 processing steps and large amounts of strong acids, which is why they are labeled "rare." In addition, permanent magnets containing rare earths are used in electric vehicle motors, wind turbine generators, robots and drones, earning them the nickname "vitamins of advanced industries."
The United States, Japan and Korea are striving to secure rare earths because China accounts for about 59% of rare earth mining and about 90% of refining and processing. China mines rare earths not only at home but also in Myanmar, Australia and the United States for processing. According to the U.S. Geological Survey, from 2020 to 2023, 70% of the rare earth compounds and rare earths imported by the United States were from China. Of the 17 types of rare earths, permanent magnets containing neodymium and dysprosium account for a 94% share of production.
Korea's dependence on Chinese rare earths is high. As of 2024, Korea's import dependence on Chinese rare earths is 79.8%. Looking only at permanent magnets, 90% are from China. Hence a strategic supply chain alliance with Mongolia is necessary. Beyond purchasing mining development rights, it is necessary to build a full life-cycle mineral supply chain in Mongolia, spanning exploration, smelting, processing and recycling.
The government is ramping up resource cooperation with Mongolia. The Ministry of Trade, Industry and Resources decided to upgrade the Korea-Mongolia Rare Metals Cooperation Committee, which had been operated at the Vice Minister level, to the Minister level on the occasion of President Lee's state visit to Mongolia and to hold it in the second half of this year. It also decided to revise the Korea-Mongolia rare metals supply chain cooperation memorandum of understanding (MOU), signed in Feb. 2023, to expand the scope of supply chain cooperation.
The Korea Mine Rehabilitation and Mineral Resources Corporation (KOMIR) is conducting resource development training at the Korea-Mongolia Rare Metals Cooperation Center, which opened last December at the Mongolian capital's Ulaanbaatar University of Science and Technology. As part of bilateral rare metals cooperation projects, the center was selected for the Ministry of Trade, Industry and Resources' grant official development assistance (ODA) program and is being funded with a budget of about 9.8 billion won from 2023 to 2027.
Domestic corporations are also speeding up the expansion of Mongolia's mineral supply chains. POSCO International signed an MOU in June with the Mongolian state-owned mining company Erdenes Mongol to develop a core minerals production and technology complex. POSCO International is expected to participate in mining development projects held by Erdenes Mongol and to begin in earnest its entry into critical mineral supply chains. Erdenes Mongol holds 67 mining rights and 17 exploration rights, including for copper, coal and rare earths in Mongolia. It also operates eight mines.
However, Mongolia's landlocked status is a drawback. To export resources mined in Mongolia, railways and ports in Russia or China must be used. Between 80% and 90% of Mongolia's resource exports are concentrated in China, meaning political risks must also be borne.
Shin Hyun-don, a professor in the Department of Energy and Resources Engineering at Inha University, said, "Beyond the immediate elimination of the 2–5% import tariff previously imposed on Mongolian copper, molybdenum and rare earths, if the government further pursues tariff cuts or elimination, corporations will have an incentive to bring in Mongolian minerals," adding, "If the government opens the way and corporations build mineral processing facilities in Mongolia, it will help secure rare earths and other critical minerals."