Mongolia is fast-tracking development of three rare earth deposits as Western governments and battery makers look for supply outside China, officials in Ulaanbaatar said this week. The country holds the world's second-largest known reserves of rare earth elements.
The Ministry of Mining and Heavy Industry confirmed that environmental and feasibility reviews for the Lugiin Gol, Khalzan Buregtei and Mushgai Khudag deposits will be completed by the end of 2026. Together the three projects could supply roughly 6% of global demand for neodymium and praseodymium by 2030, the ministry said.
Western interest intensifies
The United States, Japan, Korea and the European Union have signed memoranda of understanding with Mongolia covering critical minerals over the past two years. According to the US State Department, Washington committed approximately USD 300 million in technical assistance during the most recent round of bilateral talks.
Korean firms POSCO and LG Energy Solution have visited the Mushgai Khudag site, according to industry filings, while Japan's JOGMEC has agreed to provide geological survey support. No binding offtake agreements have been announced to date.
Logistical hurdles remain
Mongolia is landlocked, and its rail network passes through either Russia or China to reach seaports. The government has discussed building processing capacity domestically to reduce reliance on Chinese refiners, but officials concede that capital and technical know-how remain constraints.
Prime Minister Luvsannamsrai Oyun-Erdene said the country is open to foreign equity participation in processing plants, provided projects deliver value-added activity inside Mongolia. He cited the recently signed agreement with France's Orano on uranium development as a workable template.
The China context
China refines roughly 90% of the world's rare earths and dominates production of magnets used in electric-vehicle motors and wind turbines. Beijing tightened export controls on some rare earth processing technology in 2023 and added further restrictions in late 2025.
Industry analysts at Adamas Intelligence estimate that demand for neodymium-iron-boron magnets will grow at a compound annual rate of 8% through 2030. Mongolia's three projects, if developed on schedule, would not displace Chinese supply but could provide diversification for buyers seeking non-Chinese feedstock.
Investor signals
The Mongolian Stock Exchange's mining-weighted index rose 3.2% on the announcement, reaching its highest level since January. The tugrik strengthened modestly against the US dollar in domestic interbank trading.
Mining accounts for roughly a quarter of Mongolian GDP, with copper from the Oyu Tolgoi mine the largest single contributor. Rare earths currently make a marginal contribution to government revenue, but the sector has been flagged as a priority for the 2027 budget cycle.
Outlook
Officials said construction permits for the most advanced of the three projects could be issued in early 2027, with first concentrate output by 2029. Whether the projects move from feasibility to financed construction will depend largely on whether Western buyers commit to long-term offtake at premium pricing relative to Chinese benchmark prices.