1. Overview of the human rights and democracy situation: Mongolia is committed to democracy, human rights and the rule of law, being able to look back at three decades of progress in those areas. Mongolia has also demonstrated its commitment to cooperation with international partners in these fields. Implementation of the relevant laws has however encountered challenges. During the reporting period, the reform of the judiciary has remained an important priority, with institutional capacities remaining low but continued positive normative and organisational developments. The public protests of December 2022 have shown the immense public interest in good governance and in fighting widespread corruption. Relevant amendments to the Criminal Code have been adopted, though the anti-corruption laws remain only partially implemented and investigations are perceived by public opinion as politically motivated.

The controversial proposals for new NGO laws were presented in the Parliament's agenda in January 2022, but were withdrawn for further deliberation following concerns expressed by civil society. In 2022, the Commissioner in charge of the National Preventive Measure against Torture within the National Human Rights Commission of Mongolia (NHRCM) was appointed. Mongolian authorities also strive to counter gender-based violence and gender inequality, which remain to be tackled. A new law on labour and sexual harassment entered into force on 1 January 2022. The new Labour Law regulates non-discrimination and introduces a clause on no harassment and violence in the workplace. However, concerns remain related to the lack of data on sexual harassment and on the low number of investigation and prosecutions in this area. Mongolia dropped by around 20 positions in the World Press Freedom index in 2022 (from 68 in 2021 to 90 in 2022 out of 180 States).

2. EU action - key focus areas: As regards protecting and empowering individuals, a major focus of activities in 2022 has been on gender equality and women's rights (including the fight against domestic violence and sexual harassment), the rights of the child, non-discrimination and rule of law. Action took various forms (project work, participation in conferences, social media activities).

During the reporting period, the EU's Budget Support Programme (Main objectives: 1. Promoting Employment; 2. Improving Transparency in Public Finance) provided a platform for supporting the creation of effective, accountable and inclusive institutions. In addition, technical assistance was provided aiming at aligning Mongolian domestic legislation with international labour standards.

In line with the objective of promoting a global system for human rights and democracy, the EU implemented a joint initiative with the United Nations Development Programme (UNDP) on business and human rights in 2022. The EU also supported several projects in favour of civil society (empowerment of young people, strengthening women's participation in community-level decision-making and in economic activities).

3. EU bilateral political engagement: Human rights related topics were officially discussed by the EU and Mongolia in the Human Rights Dialogue that took place on 16 June 2022 in Ulaanbaatar. There was a particular focus on the complete abolition of the death penalty (removed from the Criminal Code, but still mentioned in the Constitution) and on child labour (need to prohibit the use of child jockeys in local horse races). The Human Rights Dialogue was followed by the fourth Meeting of the EU – Mongolia Joint Committee on 17 June 2022. Human rights issues were also discussed (from a GSP+ perspective) during the Trade Subcommittee held on 10 March 2022 by videoconference.

4. EU financial engagement: In 2022, the EU continued implementation of its sector budget support programme to boost employment/TVET reforms and improve transparency in public finances in Mongolia. A tranche of EURO 6,5 million was disbursed in December 2022. An EU supported technical assistance project with UNDP, FAO and, ILO and UNIDO, continued its implementation with focus on transparency and oversight of the budget; employment creation in the non-mining sectors for youth and for persons with disabilities as well as compliance with international labour standards. In 2022, the EU continued to support human rights and democracy through several ongoing projects, carried out with Member States or other partners. The focus included: support to the governments commitment to ratify international human rights conventions; the fight against child labour; stakeholder consultations for possible future support to the reform of the judiciary; human rights due diligence through the business and human rect and civil society empowerment.

5. Multilateral context: In October 2022 the UN Working Group on Arbitrary Detention visited Mongolia. They issued a preliminary finding that the Mongolian justice system had progressed significantly. The Working Group however also found that arrests without a judicial warrant were still the norm rather than the exception, and individuals were routinely interrogated in police custody without the presence of a lawyer. Adequate implementation of the law could not be taken for granted and decisions need to be effectively translated into practice. Courts were short of staff with case overload. A final report on the visit will be presented to the Human Rights Council in September 2023.

The Committee on the Elimination of All forms of Discrimination against women (CEDAW) and the Committee under the International Covenant on Economic, Social and Cultural Rights (ICESCR) also issued reports and concluding observations on Mongolia in 2022. The CEDAW observed that the absence of any court cases of discrimination against women and girls tried under the Criminal Code over the past five years may indicate that the definition of discrimination is too narrow and the burden of proof too heavy. The Committee called on Mongolia to adopt comprehensive anti-discrimination legislation to prohibit all discrimination against women and girls in public and private spheres. The Committee also recommended that Mongolia adopt a comprehensive strategy to eliminate discriminatory stereotypes about women’s roles and responsibilities in the family and society. The ISECR welcomed the legislative, institutional and policy measures taken to increase protection of economic, social and cultural rights in Mongolia, such as the Law on Prevention, Combat, and Reduction of Social and Economic Impacts of COVID-19 (2020), and the National Programme on Reducing Air and Environmental Pollution (2017). In general recommendations focused on the seemingly lack of awareness of the covenant among the authorities and the public.

The People's Bank of China (PBOC), China's central bank, said Tuesday that upon approval by the State Council, it renewed a currency swap agreement for another three years with its Mongolian counterpart, the Bank of Mongolia.

The value of the currency swap totaled 15 billion yuan (about 2.1 billion U.S. dollars), or 7.25 trillion Mongolian tugrik, a statement released by the PBOC said.

The renewal of the agreement will help further deepen financial cooperation between the two countries, promote bilateral economic and trade exchanges, and maintain the stability of the financial market, the statement added.

Sparsely populated and sandwiched between two authoritarian powers, Mongolia is positioning itself as a resource-rich, democratic partner for the U.S. in Asia amid growing competition between Washington and Beijing over the minerals needed to pursue cleaner energy.

That push will be at the heart of a visit by Mongolia's prime minister to Washington this week, as his country attempts to draw itself closer to the West in a bid to diversify its economy without angering its powerful neighbors of Russia and China.

"The visit will be crucial in delivering a different understanding for the U.S. side about our democracy," Prime Minister Oyun-Erdene Luvsannamsrai, speaking through an interpreter, said in an interview ahead of his visit.

During the visit that begins Wednesday, Oyun-Erdene is expected to meet with Vice President Kamala Harris and Secretary of State Antony Blinken. He is also slated to visit the National Aeronautics and Space Administration.

Mongolia's unique geographic positioning and rich mineral reserves are winning it increasing attention on the global stage. The Washington visit is the latest of several high-profile engagements by Oyun-Erdene, who welcomed French President Emmanuel Macron to Mongolia in May and sat down with Chinese leader Xi Jinping in Beijing in June.

Mongolia was long a Communist country closely tied to the Soviet Union. Since transforming into a democracy in 1990, it has kept close links to both Russia and China, and relies on them for imports of electricity, fuel and many other goods. Most of Mongolia's mining production, including significant volumes of copper ore and coal, is sold to the Chinese market.

Courting the U.S. at a time of heightened tensions between Beijing and Washington carries risks for Mongolia, as China has shown itself willing to punish its smaller, landlocked neighbor for perceived slights. After Mongolia in 2016 welcomed a visit by the Dalai Lama—the Tibetan spiritual leader whom China paints as a separatist—Beijing raised fees on Mongolian mining products and caused traffic to back up at an important border crossing.

The risk of shortages of minerals like copper that are used in electric-vehicle batteries, as well as solar and wind energy systems, is helping draw the U.S. and Mongolia closer, with Washington increasingly concerned about China's domination of the raw materials used in clean energy production.

"The global energy transition is ongoing but it's also at risk," Jose W. Fernandez, undersecretary for economic growth, energy, and the environment at the State Department, said at an event hosted in July by the Center for Strategic and International Studies after touring Mongolian mines.

While Mongolia's government says it has tens of millions of metric tons of such minerals in reserve, issues including a lack of infrastructure and corruption have held back foreign investment. In June, the State Department signed an agreement with Mongolia's government to help the country's resource sector attract foreign capital.

The next step, Oyun-Erdene said, would be forming partnerships with more international companies to jointly explore more of the country's mineral resources. He acknowledged that the country's current data might not be trusted by international companies.

"We would like to be more open and transparent to our investors, especially Western partners and including the United States," Oyun-Erdene said, adding that he also has been discussing potential investment in the country with SpaceX founder Elon Musk.

Mongolia approved the use of SpaceX's Starlink satellite-internet service in July. Oyun-Erdene said that he and Musk, who has long envisioned sending humans to Mars, recently discussed establishing training centers in Mongolia because of what the prime minister said were physical similarities between its Gobi Desert and Mars.

SpaceX didn't respond to requests for comment.

Geopolitically, Mongolia is among the developing countries that are treading carefully between the U.S. and its allies on one side and China and Russia on the other, as the war in Ukraine grinds on. Ulaanbaatar has abstained from votes at the United Nations that have condemned the invasion.

As their relations with the West deteriorate, Russia and China are seeking to rewire global power flows in ways ...

The prime minister in the interview called for a ceasefire and the start of negotiations as soon as possible, but said that Russian people should not be blamed for the actions of their government.

"We're incredibly concerned about this tension because the challenges and consequences of this will be not just geopolitical but also economical," he said.

The prime minister's trip to Washington comes as Mongolia returns to economic health following a slowdown during Covid-19. The country's economic growth was just 1.6% in 2021, dragged down by China's pandemic border closures. With the border open again, the economy is on track to grow by around 5.2% in 2023, according to a World Bank report released in April.

The country has had discussions this year with the Asian Development Bank, the World Bank and European Bank for Reconstruction and Development, each of which could offer hundreds of millions of dollars worth of new loans, said Bold Javkhlan, Mongolia's finance minister. The government is planning to use the money it raises for infrastructure projects, said Javkhlan.

Austin Ramzy and Matthew Thomas contributed to this article

STATE DEPARTMENT — Mongolian Prime Minister Oyun-Erdene Luvsannamsrai and Foreign Minister Battsetseg Batmunkh arrive in Washington on Tuesday to start their meetings with Vice President Kamala Harris, Secretary of State Antony Blinken and other senior U.S. officials this week.

“@VP (Vice President Harris) looks forward to welcoming Prime Minister Oyun-Erdene of Mongolia to the White House on August 2. The visit will highlight the strength of the U.S.-Mongolia Strategic Partnership and our ongoing work to deepen political, economic, and cultural ties,” said Harris’ press secretary Kirsten Allen in a message posted to the social media platform X, formerly known as Twitter.

This is the first official visit of a Mongolian prime minister to the United States since 2018.

The visit comes as the two countries are expanding cooperation on regional security and Mongolia’s deposits of rare earth minerals, which are crucial to the manufacture of high-tech items and renewable energy products, such as battery-powered electric vehicles.

In June, the U.S. and Mongolia signed a Memorandum of Understanding (MOU) to strengthen critical mineral supply chains in the Indo-Pacific.

Mongolia is a top global mineral supplier with 80 diverse deposits, including rare earth elements, copper, fluorite, gold, iron, and zinc. Rare earth element reserves in the country make up around 16 percent of the world's total.

Oyu Tolgoi, located in Mongolia's South Gobi region, is one of the largest known copper and gold deposits in the world.

“The U.S., along with many other countries, is eager to ensure a reliable supply of rare earth elements and other critical minerals for energy technologies, defense, and other uses,” said Tom LaTourrette, senior physical scientist of the RAND Corporation.

He suggested a good outcome from the visit would include an agreement between the countries for the U.S. government to move beyond “encouraging” private sector investment to incentivizing it financially, perhaps by including Mongolia as an eligible partner for the clean vehicle credit under the U.S. Inflation Reduction Act.

In May, Mongolia, South Korea and the United States addressed North Korea’s ongoing nuclear weapons development and numerous ballistic missile launches.

“It was the first trilateral meeting that we've had between our three democracies,” U.S. Ambassador to Mongolia Richard Buangan told VOA in a recent interview.

Mongolia is one of the few countries that maintain a close relationship historically with North Korea. Both nations have embassies in each other's capitals.

U.S. officials also told VOA that Mongolia, a landlocked country with 90% of its exports going through China, would benefit from diversifying its economy. Sandwiched in between Russia and the People's Republic of China, officials describe Mongolia as situated in “a geo-politically delicate position.”

Political leaders in Mongolia’s capital, Ulaanbaatar, “very much are following events in Russia,” said Buangan. “We obviously hope that they can continue to play a more constructive role as we seek an end to this conflict [in Ukraine] which Russia has started.”

Driven by a strong desire to maintain stable ties with Russia, Mongolia has opted for “neutrality” and has abstained from United Nations General Assembly resolutions that condemn Russia’s invasion in Ukraine.

The Mongolian delegation’s visit to Washington will focus on meetings with senior U.S. officials as the Congress is in August recess. Prime Minister Luvsannamsrai has no plan to make public remarks at Washington-based think tanks this week, according to diplomats.

A global charm offensive to secure the key minerals needed to replace fossil fuels has drawn U.S. diplomats to a country surrounded by America’s leading adversaries.

Mongolia — nicknamed “Minegolia” by some academics due to its abundant reserves of copper, gold and coal — hosted a handful of American officials on a mission in June to ease the United States’ dependence on China for the natural resources at the heart of several clean energy technologies.

The trip, the second for a senior State Department official this year, sheds light on U.S. efforts to forge pacts with countries that could supply American manufacturers ramping up their industrial production of solar and wind farms, and millions of electric vehicles.

“Mongolia is facing a generational opportunity. And that generational opportunity is a need for us to find critical minerals and rare earths in order to achieve our clean energy goals,” Jose Fernandez, undersecretary of State for economic growth, energy and the environment, who led the overseas trip, said in an interview with POLITICO’s E&E News.

China dominates the global flow of raw or processed minerals, and American officials say the U.S. strategy is meant to diversify supply chains that feed materials and components to the growing number of domestic companies that are manufacturing low-carbon products.

That effort gained urgency after U.S. relations with Beijing abruptly deteriorated a year ago, raising concerns that China could restrict access to minerals as the United States races to exponentially increase production of renewable energy and electric vehicles. It also provides some insight into the Biden administration’s sales pitch: that the United States will give countries a better deal for their resources and do it while hewing to environmental, social and corporate governance principles.

“What we offer is a way for them to do so responsibly, in a way that observes and adheres to ESG principles and that benefits the community,” Fernandez said.

That’s appealing to resource-rich, but financially poor, countries that want to reap the benefits of the current mineral rush to grow their economies. It’s particularly important to Mongolia, which is experiencing major impacts from climate change and faces local opposition to mining projects.

But the United States is in an uphill battle.

It has to convince countries that American companies won’t squeeze their lands and people for resources, and then leave them with an environmental mess. And it wants to encourage them to support regulations that attract private investment, officials say. Tensions around logistics and geopolitics are also at play. In Mongolia, there are no overland routes out of the country that don’t touch China or Russia.

Yet if the United States fails to find new mineral sources, its climate goals are at risk.

Turning over every stone

The International Energy Agency estimates that demand for critical minerals will surge over the next two decades if renewables are ramped up fast enough to meet the goals of the Paris climate agreement.

For lithium, demand is expected to grow 40-fold, followed by graphite and cobalt — all of which are needed to make electric cars. Demand for copper, which Mongolia has in abundance and is used in solar and wind technologies, could rise by more than 40 percent.

“Within a decade, shortages of critical minerals such as lithium, graphite and copper will increase prices and slow the deployment of clean energy technologies,” Fernandez said at an event hosted recently by the Center for Strategic and International Studies.

That coming crunch has put the Biden administration into overdrive. American officials have contacted mineral-producing allies as well as frontier nations like Mongolia to secure raw materials.

Fernandez said Mongolia is an example of what the United States hopes to achieve through the Minerals Security Partnership, an initiative with 14 mostly Western countries to bolster sustainable investment in the mining, processing and recycling of critical minerals. It includes Australia, Canada, Japan, South Korea, India and several European nations. It puts an emphasis on the private sector and works to ease the risk for businesses through diplomatic support and government-backed financing mechanisms like the Export-Import Bank of the United States.

Earlier this year, the partnership announced a set of principles for participating companies and governments that emphasizes transparency, ethical business operations, environmental protection and support to local economies.

Mongolia is just one potential source of raw materials. In the past year, Fernandez has also traveled to South Africa, the Democratic Republic of Congo and Mexico. And in May, he held virtual talks with officials in Argentina to discuss critical minerals projects.

Where Mongolia fits on the priority list isn’t clear. It produces 1.4 percent of the world’s copper and 1 percent of its molybdenum, an element mixed into steel alloys used for solar panels and wind technology, according to the Extractive Industries Transparency Initiative (EITI), a global standard for good governance of oil, gas and minerals.

But much of its mineral wealth remains untapped.

In a troubled neighborhood

Mongolia is one of the most sparsely populated countries on the planet.

Under the feet of its nomadic herders, a potential wealth of minerals has yet to be fully discovered. But large-scale mining projects have faced barriers because of concerns about environmental degradation on the Mongolian steppes, where its people are culturally entwined with the landscape.

Climate change is already leading to more frequent drought and dust storms in Mongolia, and its capital, Ulaanbaatar, suffers from some of the world’s worst air pollution due to the extensive use of coal.

Encompassed by Russia to the north and China to the south, Mongolia has sought to lessen the grip of its neighbors by engaging with countries such as the United States, France and Australia. France reportedly struck a deal to source minerals, including uranium, from Mongolia during a visit in May by French President Emmanuel Macron.

“Mongolia is very keen to maintain economic relationships with countries other than Russia and China in order to keep their hand and their political and economic interests balanced,” said Piper Campbell, who served as U.S. ambassador to Mongolia in the Obama administration.

It’s a delicate balancing act. Roughly a quarter of Mongolia’s economy depends on mining, and nearly 90 percent of its export revenue comes from minerals — most of which go to China, either for processing or to pass through its ports.

“If the Chinese say, ‘We’ll stop buying coal and copper from you,’ Mongolia’s economy stops,” said Amar Adiya, a former Mongolian diplomat who runs Mongolia Weekly, a newsletter for investors.

In the future, some of the minerals could be loaded onto planes and flown out, experts say. But many of those materials would first need to be processed into less bulky products. That would require new investments to build processing facilities — a notoriously polluting business that could spark local resistance.

Some of the minerals could potentially go to South Korea, where they could be processed and exported to the United States and its allies. Fernandez’s visit to Mongolia included a first-ever trilateral meeting with Korea about collaborating on critical mineral supply chains.

For now, American outreach to Mongolia seems to be as focused on maintaining an ally in a region of the world that’s difficult to navigate for Western nations as a full-fledged effort to create the conditions to procure minerals, according to experts.

“Mongolia is clearly geostrategically important given its location between Russia and China, and as a bulwark of democracy and in a somewhat troubled region of the world,” said Campbell, the former ambassador.

The United States is already providing Mongolia with technical assistance to map resources and improve the transparency of the tendering process, Fernandez said. The next step could be to help implement a project.

The Minerals Security Partnership is currently vetting 15 projects on several continents that it could eventually support through a combination of finance, political backing or technical support. That’s down from close to 200 projects just nine months ago, Fernandez said.

He wouldn’t reveal where they are, saying companies want that information kept confidential to protect potential investments. He hopes to be able to announce a project by the end of the year and then “start moving the needle.”

Mongolia, shoehorned between China and Russia, could be a powerhouse supplier of critical minerals for U.S. clean energy projects.

That was one pitch from American officials during a recent visit.

The other sales pitch: The U.S. can give Mongolia a better deal than China or Russia.

Grasslands once trammeled by Genghis Khan’s riders are rich in copper and other minerals needed for large-scale wind and solar power and for bringing millions of electric cars to market.

Senior U.S. officials went to Mongolia last month to forge business and government ties and to ensure ethical standards are established for mining projects. The need to ease global reliance on China for critical minerals looms large over talks with Mongolia and other resource-rich countries, writes Sara Schonhardt.

“Mongolia is facing a generational opportunity, and that generational opportunity is a need for us to find critical minerals and rare earths in order to achieve our clean energy goals,” Jose Fernandez, undersecretary of State for economic growth, energy and the environment, told E&E News.

China dominates the flow of raw and processed minerals that feed the world’s exploding demand for clean energy technology. The U.S. wants to rebuild and diversify the supply chain.

The United States is part of the Minerals Security Partnership — a coalition of mostly Western countries, including Canada, Australia and South Korea, working to secure minerals as demand for batteries and other energy technology ratchets up.

But the initiative isn’t without its critics.

Republicans accuse the White House of overlooking human rights abuses in Congo and other resource-rich developing nations, even as the Biden administration has restricted proposed U.S.-based mines.

What does it all mean for Mongolia — once nicknamed “Minegolia” because of its abundant natural resources?

Communist China extends nearly 3,000 miles along Mongolia’s southern border, controlling access to the global market by land and sea. Strengthening ties to the U.S. and its allies could have repercussions for Mongolia’s well-established trade relationship with China, where most of its copper and coal currently go.

For the West, Mongolia is just one piece of a complex diplomatic puzzle the U.S. and its allies are piecing together to counter China and unlock new sources of minerals.

BY: HEATHER RICHARDS

The U.S. is waging a global charm offensive to obtain the minerals it needs to replace fossil fuels with cleaner energy. Its latest target is a resource-rich country wedged between China and Russia, two U.S. adversaries.

Mongolia — once nicknamed “Minegolia” because of its abundant reserves of copper, gold, coal and rare earths — was visited last month by senior American officials who are trying to unlock new sources of minerals to ease the United States’ dependence on China, the global hub for clean energy technologies.

The trip sheds light on U.S. efforts to forge pacts with countries whose deserts, hillsides and valleys contain minerals that American manufacturers will need to build machinery for industrial solar and wind farms, and millions of electric vehicles.

China dominates the global flow of raw or processed minerals, and American officials say the U.S. strategy is meant to diversify supply chains that feed materials and components to the growing number of domestic companies that are manufacturing low-carbon products.

That effort gained urgency after U.S. relations with Beijing abruptly deteriorated a year ago, raising concerns that China could restrict access to minerals as the U.S. races to exponentially increase production of renewable energy and electric vehicles.

At the center of the Biden administration’s strategy is a sales pitch: The U.S. will give countries a better deal for their resources, officials say.

“Mongolia is facing a generational opportunity. And that generational opportunity is a need for us to find critical minerals and rare earths in order to achieve our clean energy goals,” Jose Fernandez, undersecretary of State for economic growth, energy and the environment, said in an interview with E&E News. “What we offer is a way for them to do so responsibly, in a way that observes and adheres to ESG principles and that benefits the community.”

That’s appealing to resource-rich, but financially poor, countries that want to reap the benefits of the current mineral rush to grow their economies. It’s particularly important to Mongolia, which is experiencing major impacts from climate change and faces local opposition to mining projects.

But the U.S. is in an uphill battle.

It has to convince countries that American companies won’t squeeze their lands and people for resources, and then leave them with an environmental mess. And it wants to encourage them to support regulations that attract private investment, officials say. Tensions around logistics and geopolitics are also at play. In Mongolia, there are no overland routes out of the country that don’t touch China or Russia.

Yet, if the U.S. fails to find new mineral sources, its climate goals are at risk.

The International Energy Agency estimates that demand for critical minerals will surge over the next two decades if renewables are ramped up fast enough to meet the goals of the Paris climate agreement.

For lithium, demand is expected to grow fourtyfold, followed by graphite and cobalt — all of which are needed to make electric cars. Demand for copper, which Mongolia has in abundance and is used in solar and wind technologies, could rise by more than 40 percent.

“Within a decade, shortages of critical minerals such as lithium, graphite and copper will increase prices and slow the deployment of clean energy technologies,” Fernandez said at an event hosted recently by the Center for Strategic and International Studies.

That coming crunch has put the Biden administration into overdrive. American officials have contacted mineral producing allies as well as frontier nations like Mongolia to secure raw materials.

Fernandez said Mongolia is an example of what the U.S. hopes to achieve through the Minerals Security Partnership, an initiative with 14 mostly Western countries to bolster sustainable investment in the mining, processing and recycling of critical minerals. It includes Australia, Canada, Japan, South Korea, India and several European nations.

It puts an emphasis on the private sector and works to ease the risk for businesses through diplomatic support and government-backed financing mechanisms like the U.S. Export-Import Bank. Earlier this year, the partnership announced a set of principles for participating companies and governments that emphasize transparency, ethical business operations, environmental protection and support to local economies.

Mongolia is just one potential source of raw materials. In the past year, Fernandez has also traveled to South Africa, the Democratic Republic of Congo and Mexico. And in May he held virtual talks with officials in Argentina to discuss critical minerals projects.

Where Mongolia fits on the priority list isn’t clear. It produces 1.4 percent of the world’s copper and 1 percent of its molybdenum, a mineral in steel alloys used for solar panels and wind technology, according to the Extractive Industries Transparency Initiative (EITI), a global standard for good governance of oil, gas and minerals.

But much of its mineral wealth remains untapped.

IN A TROUBLED NEIGHBORHOOD

Mongolia is one of the most sparsely populated countries on the planet. Under the feet of its nomadic herders, a potential wealth of minerals has yet to be fully discovered.

But large-scale mining projects have faced barriers from concerns about environmental degradation on the Mongolian steppes, where its people are culturally entwined with the landscape.

Climate change is already leading to more frequent drought and dust storms in Mongolia, and its capital, Ulaanbaatar, suffers from some of the world’s worst air pollution due to the extensive use of coal.

Almost totally encompassed by Russia to the north and China to the south, Mongolia has sought to lessen the grip of its neighbors by engaging with countries such as the U.S., France and Australia. France reportedly struck a deal to source minerals, including uranium, from Mongolia during a visit in May by French President Emmanuel Macron.

“Mongolia is very keen to maintain economic relationships with countries other than Russia and China in order to keep their hand and their political and economic interests balanced,” said Piper Campbell, who served as U.S. ambassador to Mongolia in the Obama administration.

It’s a delicate balancing act.

Roughly a quarter of Mongolia’s economy depends on mining and nearly 90 percent of its export revenue comes from minerals — most of which go to China, either for processing or to pass through its ports

“If the Chinese say ‘We’ll stop buying coal and copper from you,’ Mongolia’s economy stops,” said Amar Adiya, a former Mongolian diplomat who runs Mongolia Weekly, a newsletter for investors.

In the future, some of the minerals could be loaded onto planes and flown out, experts say. But many of those materials would first need to be processed into less bulky products. That would require new investments to build processing facilities — a notoriously polluting business that could spark local resistance.

Some of the minerals could potentially go to South Korea, where they could be processed and exported to the U.S. and its allies. Fernandez’s visit to Mongolia included a first-ever trilateral meeting with Korea about collaborating on critical mineral supply chains.

For now, American outreach to Mongolia seems to be as focused on maintaining an ally in a region of the world that’s difficult to navigate for Western nations as a full-fledged effort to create the conditions to procure minerals, according to experts.

“Mongolia is clearly geostrategically important given its location between Russia and China, and as a bulwark of democracy and in a somewhat troubled region of the world,” said Campbell, the former ambassador.

The U.S. is already providing Mongolia with technical assistance to map resources and improve the transparency of the tendering process, Fernandez said. The next step could be to help implement a project.

The Mineral Security Partnership is currently vetting 15 projects on several continents that it could eventually support through a combination of finance, political backing or technical support.

That’s down from close to 200 projects just nine months ago, Fernandez said.

He wouldn’t reveal where they are, saying companies want that information kept confidential to protect potential investments. He hopes to be able to announce a project by the end of the year and then “start moving the needle.”

ABOUT THE AUTHOR(S)

Sara Schonhardt covers climate and energy developments globally, with a focus on international climate negotiations, finance and how countries are approaching the transition to cleaner economies. Prior to joining E&E News, Sara worked as a reporter for more than a decade across much of Southeast Asia, with stints for The New York Times, Christian Science Monitor and Voice of America. She was a staff reporter for The Wall Street Journal in Indonesia until 2017. Sara has a degree in journalism from Ohio University and a master's degree in international affairs from Columbia University.

Mongolia put on its Sunday best to woo investors at the high-profile Mongolia Economic Forum held on July 9-11, 2023 - but it will take more than a flashy event to overcome lingering challenges to doing business in the country.

The big picture: The government is hungry for foreign investment to fund economic development and reduce dependence on mining. But regulatory uncertainty and inconsistent rule of law have long stifled investors' appetite.

Driving the news: Officials pulled out all the stops at the July forum to highlight Mongolia's potential. They trumpeted forecasts of 6% GDP growth in 2023 and announced new agencies to attract investment.

International executives were promised a more welcoming business environment, with the new Mongolia Investment and Trade Agency acting as a "one-stop shop."

Between the lines: The government's sales pitch only goes so far without meaningful improvement of the on-the-ground realities investors face.

Frequent changes to investment laws and opaque approval processes continue to deter capital inflows.

The Heritage Foundation's 2023 Index of Economic Freedom ranked Mongolia at only 120th worldwide for investment freedom, citing "weak institutional capacity."

Mongolia's global standing in the World Bank's Ease of Doing Business rankings stagnated over the past decade while Asian competitors zoomed ahead.

Yes, but: It's not all talk. Mongolia has notched some incremental wins that could pay dividends.

New initiatives like streamlined business registration and investment promotion agencies are steps in the right direction.

Compliance with international anti-money laundering standards helps boost investor confidence on regulatory quality.

Bottom line: The government's slick packaging shows savvy in courting capital. But to truly unlock Mongolia's potential, officials must go beyond PR and enact deeper reforms.

Lip service to welcoming business rings hollow without stable laws, incentives and institutions that align with global best practices.

For the Economic Forum fanfare to translate into real investment, Mongolia needs sustained commitment to improving its climate for outside capital.

Erdene Resource Development Corp. [ERD-TSX; ERDCF-OTC; ERDN-MSE] reported results of recent exploration at the Dark Horse gold prospect, part of the greater Bayan Khundii gold project. The Dark Horse gold prospect is located approximately 2 km north of the planned Bayan Khundii (BK) open pit in the Khundii minerals district, in southwest Mongolia.

“Since discovery in early 2021, Erdene has defined a 1.5-km mineralized trend at the Dark Horse Mane, including the very-high-grade Dark Horse Mane South deposit at the Bayan Khundii gold project,” said Peter Akerley, president and CEO. “Results from the most recent exploration work open up several new targets for follow up in the 20 km2 greater Dark Horse prospect area that show potential to host high-grade gold mineralization.

“Located just 2 km north of the initial Bayan Khundii open pit, ore from Dark Horse Mane will be incorporated into the feasibility study update, expected to be announced in the coming weeks,” continued Akerley. “Growing resources at Dark Horse will strengthen the already strong economics of the Bayan Khundii gold project.”

Erdene recently completed a shallow drilling and geophysical exploration program across the greater Dark Horse prospect at the Bayan Khundii gold project. The program included an 18-hole scout exploration drilling campaign, totalling 1,040 metres, and a gradient array induced polarization (IP) geophysical survey covering 9 km2 over the core of the greater Dark Horse prospect. The program was primarily designed to test for near-surface oxide-related gold mineralization, similar to the Dark Horse Mane deposit, and to identify targets for follow-up deeper drilling.

The program identified multiple areas of near-surface gold and indicator element anomalism, with 12 holes intersecting anomalous gold (greater than 0.1 g/t gold and up to 5.8 g/t gold) and 16 holes returning indicator element mineralization locally over wide intervals up to 55 metres.

Gold, together with antimony, arsenic and molybdenum geochemical anomalies, are characteristic of the Dark Horse deposit, and were instrumental in the initial discovery of high-grade, near-surface gold mineralization at the Dark Horse Mane. These results suggest gold mineralized hydrothermal fluids, carrying gold and other related elements, affect a wide zone within the greater Dark Horse area.

Highlights: Hole AAD-222 returned 6 mettres of 1.44 g/t gold and 1 metre of 0.41 g/t gold and 1 metre of 0.71 g/t gold. AAD-226 returned 8 metres of- 1.03 g/t gold, including 1 metre of 5.17 g/t gold. Aad-235 returned 10 metres f 0.96 g/t gold, including 1 metre of 5.81 g/t gold.

Erdene Resource Development has interests in three mining licenses and an exploration license in southwest Mongolia, where exploration success has led to the discovery and definition of the Khundii Minerals District.