The European Union (EU) and Mongolia held their annual Joint Committee meeting under the EU-Mongolia Partnership and Cooperation Agreement, in Brussels on 26 July 2023. The meeting was an opportunity for Mongolia and the EU to reaffirm their partnership based on shared values such as democracy, human rights, the rule of law and the respect of the principles of the UN Charter.

The EU remains fully committed to supporting Mongolia’s Third Neighbour Policy and welcomes Mongolia’s long lasting commitment to multilateralism.

Mongolia and the EU share a common interest in promoting green sustainable development in Mongolia, which is a key objective under the EU-Mongolia Multiannual Indicative Programme 2021-2027 and the EU’s Global Gateway. Mongolia is among the five priority countries with whom the EU has signed a Forest Partnership Agreement as a Global Gateway Flagship in the margins of the COP 27 Climate Change Conference in November 2022. Mongolia and the EU agreed on the continued need to combat climate change and protect the environment as well as to support the full implementation of the Paris Agreement and the Sustainable Development Goals SDGs Agenda.

The EU remains fully committed to assist Mongolia in sustainably diversifying its economic and foreign trade structures, as well as to cooperate on improving the Mongolian business environment and maximise the efficiency of Mongolian trade policy tools. Mongolia and the EU are committed to finalise their negotiations of an agreement on the protection of geographical indications, started in 2022.

The EU and Mongolia are examining the possibility of enhancing cooperation on security including peacekeeping.

The EU and Mongolia also discussed regional and global challenges. The EU and Mongolia expressed concern over the suffering of the civilian population and the bombing of civilian infrastructures, and emphasised the need for a comprehensive, just and lasting peace in Ukraine in line with the principles of the Charter of the United Nations. The EU recalled its position clearly expressed in the UNGA resolutions ES-11/1, ES-11/2, ES-11/3, ES-11/4, ES-11/5 and ES-11/6, underscoring the grave violation of the UN Charter and international law. The EU and Mongolia reaffirmed their commitment to the Charter of the United Nations and international law, including the need to respect the sovereignty, political independence and territorial integrity of all nations. It is essential to uphold international law and the multilateral system that safeguards peace and security.

Mongolia and the EU will continue working together to protect and promote human rights. The EU and Mongolia held their annual Human Rights Dialogue on 18 July 2023, which discussed most recent human rights related developments in the EU and Mongolia, the cooperation with UN Human Rights monitoring bodies, their respective approaches on Business and Human Rights, judiciary reforms in Mongolia and the ongoing reform of the EU’s GSP+ Scheme.

Mongolia and the EU held a meeting of the Working Group on Development Cooperation (19 July 2023), in which both parties welcomed the significant progress achieved since last year in the implementation of the Multiannual Indicative Programme for 2021-2027 and of Global Gateway, and also looked ahead towards future challenges and opportunities.

Mongolia and the EU agreed to strengthen their cooperation on green transition, connectivity and digitalisation with the support of the EU’s Global Gateway and Team Europe Initiatives with EU Member States and European Development Banks, creating synergies with Mongolia’s mid-term and long-term development agenda.

Mongolia and the EU agreed to hold their next Joint Committee meeting in 2024 in Ulaanbaatar.

The Joint Committee was co-chaired by Mr. Gunnar Wiegand, Managing Director for Asia and the Pacific at the European External Action Service (EEAS) and Mr Amarsaikhan Sainbuyan, Deputy Prime Minister of Mongolia.

During its regular session on July 26, 2023, the Cabinet made the following decisions:

Funds will be released from the Government's reserve fund for the reconstruction of bridge structures damaged by floods.

Minister of Finance B. Javkhlan approved the release of funds from the Government's reserve fund based on the request submitted by the Special Commission of Bayan-Ulgiy and Selenge aimags to the State Special Commission for immediate reconstruction and elimination of damages caused by dangerous weather phenomena and floods.

On June 10-12 in Bayan-Ulgiy aimag, due to excessive heat, the snow in mountainous areas melted a lot, and the water level of rivers such as Khovd, Sagsai, Bulgan, Buyant, Turgan, Chikhertei, Gantzmod, Tsagaan Gol, Sogoog, and Kharbutny exceedingly increased and reached a dangerous flood level. As a result, 7 wooden bridges and 1 reinforced concrete bridge were affected by floods and destroyed. Therefore, funds will be allocated from the Government Reserve Fund for the restoration of the bridges. Also, the budget for the reconstruction of a 150-meter long bridge over the Kharaa river in Mandal soum of Selenge aimag was resolved.

Due to the continuous rain in the capital, the dam of the Selbe River has burst in some places, and urgent restoration work is ongoing. At today's meeting of the Government, the Special State Commission was tasked to provide weather information to the public at all times to prevent any risk.

Increase access to schools and kindergartens

A working group to ensure the implementation of the Government's 2022 "Measures to improve access to kindergartens in the capital" and 2023 "Measures to be taken to reduce the burden and increase access to general education schools" has been established by the order of the Minister of Education and Science. The working group will study and solve the problem of providing a healthy and safe environment for more than 33 thousand children from 47 schools to avoid studying in 3 shifts in the capital, and enrolling 26.8 thousand children from 27 districts with a high workload to kindergarten.

Minister of Finance B. Javkhlan, Minister of Construction and Urban Development Ts. Davaasuren and Minister of Education and Science L. Enkh-Amgalan were assigned to develop and approve the relevant regulations in accordance with the Law on Construction, and to develop and discuss the Government's resolution to intensify investment work.

The permit will become digital and the law amended

Deputy Prime Minister and the Minister of Economy and Development Ch. Khurelbaatar presented an overview of the process of transitioning the Special Permit Fund into digital form and intensifying the work of connecting it to the integrated system of public services ordered by Government Resolution No. 233 of 2023 to the Cabinet meeting.

Members of the Government and relevant authorities are requested to take measures to improve the systems, to make changes to the relevant laws, laws, regulations, and rules in the context of intensifying the digitization of 85 permits out of the 249 special permits that have not been transferred to the electronic system under Article 8, Section 8.1 of the Law on Permits.

Brief news

- The Draft Law on the Ratification of the "International Convention on the Implementation of Measures Related to Tax Treaties for the Prevention of Tax Base Reduction and Profit Shifting" will be discussed and submitted to the State Great Khural.

- Discussed and supported the draft agreement between the Government of Mongolia and the Government of the Republic of Bulgaria on international road transport of goods and passengers, and decided to issue a decree of the Prime Minister on granting the right to sign the agreement.

- Minister of Health S. Chinzorig was assigned to present the current state of the quality and price of drugs and medical equipment in Mongolia and the measures to be taken in the future. In this regard, Chief Cabinet Secretary D. Amarbayasgalan and Minister of Health S. Chinzorig have been instructed to discuss the procedure for purchasing from foreign manufacturers or international organizations directly and through the organization of this relationship at the Cabinet meeting.

Rio Tinto (ASX, LON: RIO) disappointed investors and analysts alike on Wednesday after revealing it won’t be able to achieve a targeted 15% carbon emissions reduction by 2025, unless it uses carbon offsets.

The world’s second largest miner had originally committed to cut its Scope 1 and Scope 2 emissions, those created directly though its operations and indirectly through energy consumption, by 2030. It later decided to move the deadline forward to 2025 under shareholder pressure.

In a half-year update, Rio said would not be able to meet its self-imposed emissions goal without using carbon offsets. The company attributed the setback to underlying emissions growth tied to “evolving production plans” and other factors, including engineering and construction timelines.

Peers including BHP (ASX, LON: BHP) and Fortescue Metals Group (ASX: FMG) remain so far on track to meet their goals — at least 30% reduction of Scope 1 and 2 emissions by 2030 for BHP and net zero emissions by that year for Fortescue.

Chief executive Jakob Stausholm opened up earlier this year about the targets set by Rio Tinto’s previous executives, saying he “regretted” them. He added at the time that reaching the 2025 and 2030 deadline would require some “hard choices”.

The company’s emissions come mainly from the processing and refining of metals, such as iron ore and aluminum, as it requires very high temperatures and is often powered by coal. Mining only accounts for 20% of Rio’s total emissions.

“The problem is that in the short term, you add cost to a business where you are not really making money,” Stausholm said in an earnings call on Wednesday, referring to a $800 million impairment charge on its Gladstone aluminum refineries in Australia.

Capital will be required to decarbonize the facilities, which are also facing increasing payments for their carbon emissions under Australia’s new carbon credit scheme, he added.

The writedown combined with a period of softer prices for its iron ore shipments impacted Rio Tinto’s numbers for the six months to June 30.

First-half net profit after tax dropped by 43% to $5.1 billion in the period from $8.9 billion in 2022.

Rio still announced a $1.77 per share half-year dividend, which was also lower than market estimations but that is the third-highest interim dividend in the company’s history.

From July 9–11, Kyrgyzstan’s president Sadyr Japarov arrived on an official visit to Mongolia. During talks, the parties discussed deepening relations and cooperation, strengthening mutual political trust and the legal framework of relations, as well as regional and international issues of mutual interest. The main outcome was the signing of the Joint Declaration of Establishing Friendship and Cooperation as well as 10 other cooperation agreements in the trade, environment, security, and cultural spheres. The visit was capped off with the inauguration of the Kyrgyz Embassy in Mongolia on July 11.

There have been several examples of successful social and economic cooperation between the two sides. The outcomes of Japarov’s visit outcomes were similar to the outcomes of numerous previous visits by Kyrgyz and Mongolian leaders that may have fallen short of their stated goals in the economic sphere. However, his visit coincided with growing trade and an organic, bottom-up, people-to-people interaction, giving this effort a higher chance of bringing the two countries closer together.

Long common history and shared culture

Kyrgyzstan and Mongolia have a shared history and culture. Their interaction counts thousands of years. The ancestors of the current day Kyrgyz people originally inhabited the Yenisey River valley in central Siberia as early as 201 BCE and later the Minusinsk Hollow in southern Siberia in the 12th century CE.

Living in these areas meant neighboring and interacting with the Mongol people. The modern-day manifestations of this centuries-old interaction and shared history and culture are the extensive use of yurts and the central role of the horse in Kyrgyz and Mongolian culture, common among nomadic people. Another proof of the past geographic proximity and interaction between them is the lake called Khyargas Nuur (Kyrgyz lake), located in western Mongolia. The country is home to 2,000–3,000 ethnic Kyrgyz people who live in the western province of Bayan Olgii. One of them, Bulany Beisen, serves as a member of Mongolian parliament.

The modern history of cooperation between the two countries dates back to the Soviet Union, when Kyrgyzstan was a part of it and Mongolia was a satellite state. In 1986, the General Secretary of the Central Committee of the Mongolian People's Revolutionary Party, J. Batmunkh, arrived on an official visit to the Kyrgyz Soviet Socialist Republic (SSR). The two sides signed an agreement establishing direct friendly ties. In the same year the two sides signed an agreement on the main areas of cooperation for 1987–1990, aimed at exchanging experiences in the development of mining, agriculture and animal husbandry.

Independent diplomatic relations

The history of cooperation between Mongolia and Kyrgyzstan can be described as slow and steady. In 1991, Kyrgyzstan became independent following the collapse of the Soviet Union and started its transition to democracy. In 1992, the People’s Republic of Mongolia ceased to exist and the country switched from the socialist regime to a democratic one under the name of Mongolia. That same year the two countries established diplomatic relations as sovereign states.

In 1993, Kyrgyzstan’s first president Askar Akayev arrived on an official visit to Mongolia, and the two countries signed several documents that formed the legal basis for relations between them. Among them were the Treaty of Friendly Relations and Cooperation between Mongolia and Kyrgyzstan as well as agreements on economic, cultural, scientific, and environmental cooperation. Akayev visited Mongolia again in 2002. The negotiations ended with similar statements on mutual interest in economic, agricultural, and cultural cooperation.

Despite the ambitious plans, the relations developed slowly and did not yield any major results. In 2012, Mongolia’s former president Elbegdorj Tsakhia visited Kyrgyzstan. The visit somewhat revived bilateral cooperation as the parties reaffirmed the importance of further developing cooperation between the two countries. It was followed up by the opening of the Ulaanbaatar–Bishkek–Istanbul flight that established a direct flight between the two countries for the first time.

In 2014, Mongolia opened a General Consulate in Kyrgyzstan’s capital Bishkek. In 2015, Elbegdorj Tsakhia visited Kyrgyzstan for the second time and stated that the two countries were interested in active trade and economic cooperation. In 2017, Kyrgyzstan’s Ambassador to China, Azamat Usenov, was appointed Ambassador to Mongolia concurrently. In 2019, Mongolia’s former president Khaltmaa Battulga visited Kyrgyzstan and inaugurated Mongolian Embassy in Bishkek.

Growing trade and people-to-people diplomacy

The meager trade turnover between Mongolia and Kyrgyzstan hint at the fact that the cooperation between them has carried a political tone. The high-level meetings and agreements have not yielded any impactful results in the economic sphere. However, there have been positive changes in the last several years.

The trade turnover between the two countries in 2017 was only USD 1.6 million. It has since grown and reached USD 2.756 million in 2022. In the first four months of 2023, the number stands at USD 3.456 million, which is 5.8 times higher than from the same period in 2022. Food items make up most of the trade. These numbers are still meager compared to even the tenth largest trading partner of each country. The trade turnover between Kyrgyzstan and its tenth largest partner, India, is almost USD 118 million. Kyrgyzstan does not appear in Mongolia’s top 10 export or import partners. As optimists might say, there is a lot of room for growth.

Japarov’s visit is expected to continue the positive trend of the last several years. His visit resulted in the agreement that Mongolia will supply meat, meat products and leather to Kyrgyzstan and import fruits and vegetables from Kyrgyzstan. Similar outcomes were reported after Kyrgyzstan’s foreign minister visited Mongolia earlier in May. In this regard, the parties agreed to intensify cooperation between veterinary and quarantine institutions. Exchange of experiences in the mining industry and tourism are two other opportunities that make the most sense, given the countries specificities and strenghts.

Perhaps the more effective driver of interaction between the two countries is the budding car trade between South Korea and Kyrgyzstan, which is taking place with the help of Mongolia. Global Voices spoke to Tolotai, a businessman from Mongolia who facilitates this trade as the middle man. He says that the first time Kyrgyz businessmen came to Mongolia for cars was in 2019. They did so after realizing that such a route exists, and it is cheaper and faster to import cars to Kyrgyzstan from South Korea via Mongolia than from other parts of the world via Georgia and Armenia.

The COVID-19 pandemic put these plans on hold until 2022, when Mongolia finally opened its borders. That is when the car trade finally took off, according to Tolotai, who is one of many local businessmen involved in the trade. Between 100 and 200 cars leave for Kyrgyzstan every month. Some of them are sent off further to Russia, after being registered and receiving number plates in Kyrgyzstan. Russia and Kyrgyzstan are both members of the Eurasian Economic Union, which allows registering a vehicle in one member and driving it freely in all others. The car trade is made possible by Mongolian Kazakhs like Tolotai. Their linguistic and cultural similarity allows them to freely communicate with Kyrgyzstani businessmen.

The outcomes of the past official visits and talks show that the two countries remain friendly toward each other and ready to explore avenues for cooperation. The mutual establishment of embassies promises to speed up bilateral cooperation and take it to the next level. The high-level political engagement is supplemented with people-to-people trade and interaction. Mongolia and Kyrgyzstan’s slow and steady approach to cooperation may soon turn into swift and dynamic.

Kiwi shearers helped more than 100 Mongolian herders sharpen their shearing skills during a five-week visit in several locations across Mongolia earlier this year.

Rabobank agribusiness manager Paul Brough, who helped form the Share Mongolia Programme, said the 12-strong touring party was made up of a mix of Rabobank staff and farmers from Waikato, King Country, Taranaki, Marlborough and South Canterbury regions.

The entire New Zealand group had significant shearing experience, Brough said.

The programme was set up in 2020 to introduce modern shearing techniques and equipment into Mongolia, he said.

Shearing training courses in Mongolia were first trialled last year, with four Mongolian herders recently spending three months in New Zealand to work with shearing gangs, Brough said.

Brough said the team split into three groups and delivered seven five-day training courses to a total of 112 Mongolian herders across seven different provinces in five weeks.

The majority of the herders had little or no experience with machine shears having previously done their shearing with scissors.

After the course most could shave a sheep in around five minutes, much faster than the 25 minutes they were taking when they first used an electric shear.

Brough said course participants in each area have been left with five shearing machines and a grinder so they could put their new skills into practice.

“These are usually left with a local co-op to share amongst the participants as they see fit,” he said.

While delivering the training the New Zealand touring party lived with local herders.

A recent United Nations Industrial Development Organisation report found up to 4000 jobs could be created in Mongolia by machine shearing, and that 9000 tons of Mongolian wool was wasted each year because of limited resources and capacity.

The Mongolian wool industry had huge potential, with some locals who attended the training starting their own businesses.

“Nearly 45% of the 67 million livestock in Mongolia are sheep, estimated to be around 30 million head, with the ability to produce about 30,000 to 35,000 tonnes of wool annually,” he said.

“There is huge scope for improving economic income by sharing the knowledge and expertise of New Zealand farmers with Mongolian herders.

Brough said the Share Mongolia Programme attracted the interest of overseas companies keen to source Mongolian wool.

“We’ve had a few international carpet manufacturers taking an interest. And we’ve also had a pharmaceutical group from Europe get in touch and ask us to help source Mongolian wool,” he said.

The four Mongolian herders who attended training in New Zealand earlier this year acted as interpreters and assistant trainers on the most recent trip, Bough said.

“It was great to see Budee, Baaska, Ama and Khanda again and to have them help with the training,” he said.

“At this stage, they need someone with a bit more experience to guide them through the training, but with a bit more time, the plan is to have them running the courses by themselves.

“The new skills and money they acquired during their trip to New Zealand had a huge impact on their lives and they are now wealthy people by local standards.”

“Two of them have started a commercial shearing business together utilising one of the mobile shearing trailers we set them up with, while the other two are also working as shearers in their local regions.

“They’re all shearing up to 200 sheep a day, as opposed to the 25 sheep a day they were shearing prior to their New Zealand visit, and this makes a massive difference to the income they can generate.”

Brough said there was demand for future training courses that also covered topics like wool handling and animal health practises.

“If we can raise the funding, it’s possible we could have up to 10 herders heading over this way [New Zealand] early next year,” he said.

The training was funded by the United Nations, the New Zealand embassy in Beijing and the Rabobank Community Fund.

Five people were killed in a traffic accident in the southern Mongolian province of Umnugovi on Wednesday evening, the country's Traffic Police Department said Thursday.

The accident occurred when a car crashed into a truck on a paved road in the territory of Khankhongor soum (administrative subdivision) of the province, the police department said, adding that all five people in the car lost their lives immediately at the scene.

The cause of the accident is under investigation, the department said, urging drivers to comply with traffic rules to protect their own and others' lives.

Mongolia’s frontier market and vast mineral reserves represent potentially lucrative opportunities for investors but vulnerability to external economic and financial shocks, ineffective dispute resolution, and lack of input from stakeholders during rulemaking warrant caution. Mongolia imposes few market-access barriers, and investors face few investment restrictions, enjoying mostly unfettered market access. Franchises such as fast food and convenience stores, outperforming expectations, suggest that investors can bring successful international business models to Mongolia. The cashmere-apparel and agricultural sectors also show strong promise. However, investing into politically sensitive sectors, including mining, carry higher risk.

Mongolia attracts investor attention but has trouble converting interest into investment. Unless and until Mongolia embraces a stable business environment that transparently creates and predictably implements laws and regulations, investors will likely find Mongolia too risky and opt for more competitive countries. An essential step to mitigate these risks is for Mongolia to implement the U.S.-Mongolia Agreement on Transparency in Matters Related to International Trade and Investment (known as the Transparency Agreement), which requires a public-comment period before new laws and regulations become final. Mongolia has implemented some of this agreement but is over five years behind full implementation of public-notice commitments. Parliament, however, with its D-Parliament online platform, is leading the way in increasing public engagement and engaging the public in the rulemaking process, offering a model for the government.

Government and parliament continue to address threats to judicial independence by implementing 2019 constitutional amendments and 2020 statutory judicial reforms that have improved transparency and reduced political influence in the appointment and removal of judges. Investors, however, continue to cite long delays in reaching court judgments, followed by similarly long delays in enforcing decisions, as well as reports that administrative inspection bodies, such as the tax authority, sometimes fail to act on politically sensitive decisions or cases involving politically exposed Mongolians. Businesses note substantial and unpredictable regulatory burdens at all levels; and cite an excessively slow tax dispute resolution process as an indirect expropriation risk. Investors are particularly concerned about a tax process that they believe effectively lets officials issue excessive, confiscatory tax assessments to coerce settlements. Finally, the perception that the government favors its own state-owned entities over private sector companies discourages existing investors from expanding, and new investors from coming. More positively, parliament has streamlined procedures for, and reduced the required number of, permits and licenses while the Government has moved delivery of most services onto digital platforms, increasing efficiency of its business registration processes.

COVID-19’s aftermath and Russia’s invasion of Ukraine stressed Mongolia’s economy. In late 2021, Mongolia’s parliament passed its New Recovery Policy, a 10-year development plan to increase national productivity by improving transport logistics, energy production, industrialization, urban and rural infrastructure, and green development. This program depends on restoring market access for mining exports, the primary revenue source. Relaxation of PRC border restrictions in late 2022 has eased bottlenecks along the Mongolia-China border, increasing export revenues and relieving near term fiscal and balance-of-payments risks. Meanwhile, Russia’s unprovoked invasion of Ukraine, prompting unprecedented international sanctions on Russia, continues to contribute to uncertainty about access to critical imports, such as petroleum products, electricity, and such key commodities as wheat and fertilizer.

See the full document on the link https://mn.usembassy.gov/2023-investment-climate.../

Thirteen hundred metres beneath the vast Gobi Desert, the heat, dust and a sense of claustrophobia are unshakeable after a rapid trip down a mine shaft in a freight elevator known as “the cage”.

Yet Ganbat Tuvshinbat, a local mining engineer, grins broadly. “This is the warmest place in Mongolia,” he says of a country where the average temperature is below zero. “Here you can experience summer all year round.”

Tuvshinbat and his employer Rio Tinto, the Anglo-Australian multinational, have reason to smile. Towards the end of this decade, the company plans to produce about half a million tonnes of copper from the Oyu Tolgoi mine each year, enough of the metal to help build 6mn electric vehicles. When the underground mine is fully operational, it will be the fourth biggest copper project in the world — a boon for the Mongolian government, which holds a 34 per cent stake.

Despite setbacks and delays, Oyu Tolgoi — already the biggest foreign investment in the Asian country’s history — is emblematic of what the Mongolian People’s party government sees as its path to prosperity. Luvsannamsrain Oyun-Erdene, Mongolia’s Harvard-educated, reformist prime minister, wants western mining groups to tap the country’s vast deposits of copper, uranium and other critical minerals essential to the world’s fight against climate change.

Much is at stake for the country of 3.4mn people which only emerged from single-party socialist control in the 1990s. If Oyun-Erdene is successful, the developing country will enjoy a years-long resources boom. The government hopes to more than triple gross domestic product from $15bn last year to nearly $50bn by 2030 and halve Mongolia’s poverty rate to 15 per cent in the process.

There is another goal, too. A wave of investment from the west holds the promise of giving Ulaanbaatar a much-wanted buffer against Beijing and Moscow. The landlocked nation is highly dependent on its only two neighbours: China accounts for 84 per cent of Mongolian exports, such as copper and coal, and Russia provides about 30 per cent of its imports, including all its petroleum products.

Mongolia is still trying to safeguard its democracy because we have a very difficult geographical and geopolitical situation,” Oyun-Erdene tells the Financial Times, urging foreign investors to “pay close attention” and understand his country’s particular challenges.

Oyun-Erdene is cognisant of the rare opportunity at hand. Climate commitments are fuelling a historic transition to clean technologies, sparking an intense global race among companies and governments to secure long-term access to minerals. Locations once considered too remote or too risky are now in play.

To win over investors, however, he must convince them that the days of convoluted policymaking and deeply entrenched corruption are over. He also needs to combat fears over mining clashing with the country’s nomadic tradition and criticism from environmentalists. Finally, he must overcome a discouraging lack of modern geological data.

Oyun-Erdene has swiftly set about cleaning house in order to present his country to the western mining industry as a secure investment destination: sweeping constitutional and judicial reforms, a crackdown on graft and an overhaul of the policies and regulations governing the resources industry. “At the moment our main goal is to improve transparency,” he says. “After that, we can discuss investments from abroad and which countries to co-operate with.”

The prime minister is not the first Mongolian leader to have had this vision. The question is: can he be the one to realise it?

Cleaning house

Oyun-Erdene was halfway through his first term in office when he faced his biggest test.

In December 2022, he left the state palace and stepped into sub-zero temperatures to face Mongolia’s biggest public demonstration since the country’s democratic revolution three decades ago. The protest was sparked by the release of official records that confirmed what many citizens gathered at the capital’s Sükhbaatar Square had long suspected: corruption was rife among the country’s state-owned coal industry. Billions of dollars had been stolen, including by members of parliament.

The fury revealed not only the degree of public alarm over endemic graft and abuse of power — it was also a bitter reminder of the broken promises of earlier mining booms.

A month later, speaking in Ulaanbaatar, Richard Buangan, the newly arrived US ambassador, was unsparing when he summed up Mongolia’s prospects: “Capricious, non-transparent, unpredictable and corrupt application of laws and regulations make Mongolia unattractive for investors and challenging for importers and exporters.”

In response to the criticism at home and abroad, and driven by a resolve to avoid taking on international finance loans, Oyun-Erdene has prioritised making Mongolia investable at the heart of his economic agenda.

The prime minister has tapped his right-hand man, justice minister Khishgee Nyambaatar, to spearhead an aggressive anti-corruption campaign. Seventeen people have been extradited to Mongolia to face investigation and the government has asked Interpol to issue red notices for a further 92 individuals.

Oyun-Erdene has also changed the way politicians are elected. Constitutional reforms passed last May increased the number of legislators from 76 to 126 and established a mixed-member proportional system, with 78 constituent members and the remaining elected from party votes.

The new system, which is akin to those in Germany and New Zealand, is intended to increase oversight of the cabinet and provide greater civil society representation.

New rules are also being established for the appointment and dismissal of judges, requirements for public information disclosure and protection for whistleblowers as well as changes to the governance of state-owned enterprises and controls over the financing of political parties.

All of this shows Mongolia is “moving in the right direction”, insists Nyambaatar. “The revelation of previously hidden details, such as licensing procedures, land allocations and concessional loans incited anger and frustration among citizens,” he says. “We have come to the belief that the government should reduce its involvement in numerous business sectors.”

Oyun-Erdene’s plan also hinges on the country’s ability to forge new connections to the outside world. At its closest point, Mongolia is nearly 700km from the ocean. The prime minister points out that transporting goods by air is at least one hundred times more expensive than by sea. Mongolia, he says, is working to secure routes for its exports through China.

Amid concerns that tapping the country’s mineral wealth will leave its finances exposed to commodity price fluctuations, there is also a push to move higher up the value chain: from mining to processing and refining minerals, as well as building solar and wind projects in the Gobi to export power to China.

As he works to make Mongolia attractive to foreign investors, Oyun-Erdene, who faces parliamentary elections in 2024, must also keep the public onside. Equal wealth distribution, he says, is the most crucial part of that equation. To that end, the government is drawing up plans for a sovereign wealth fund to ensure resource revenues are channelled towards health, education and future economic growth.

“We believe that as the revenue coming from the mining sector increases, then the people’s support will also increase,” he adds.

Critical minerals

While many say it is too soon to judge the stickability of the prime minister’s reforms, there are signs that Oyun-Erdene’s message is cutting through.

Hundreds of investors, miners, diplomats and politicians joined in celebrations at Mongolia’s annual Naadam festival on July 10 at the lavish Shangri-La hotel in downtown Ulaanbaatar. Their presence was taken as proof positive of renewed interest in Mongolia’s resources.

Underpinning their attention is the looming global shortage of the resources needed for the world’s transition to cleaner energy systems, including electric vehicles, and the infrastructure needed to harvest wind and solar energy.

The International Energy Agency says that over the past five years, the market size for minerals vital to the energy transition has doubled to $320bn. Yet demand for critical minerals including rare earth elements, lithium and cobalt are expected to surge by as much as 600 per cent over the coming decade. Demand for copper is forecast to double to about 50mn tonnes annually by 2035. And if the world is to reach net zero emissions by 2050, annual investment in nuclear energy will also have to triple to about $125bn over the coming five years, according to the IEA.

Megan Clark, a minerals expert and advisory board chair for the Australian Space Agency, says Mongolia is “extremely well placed” in terms of its mineral endowment. She points to strong copper, uranium and rare earths potential as well as the possibility for “new niche industries” to emerge in high-tech materials processing.

Supporters of nuclear energy are equally bullish about the country’s potential as a long-term supplier to the nuclear power industry. Olivier Thoumyre, a representative for the French group Orana which is developing Mongolia’s first uranium mine, says: “I believe that it is a big source of diversification for Mongolia . . . The global warming situation has triggered, clearly, a new start for nuclear power.”

In presentations to investors about the potential in Mongolia, Rio executives tout a “vast mineral wealth predominantly untouched by modern exploration and extraction methods”, and that only 4 per cent of Mongolia’s landmass — an area similar in size to Alaska — is held under exploration licenses.

In reality, mineral explorers coming to Mongolia are quick to discover reams of Soviet-era land surveys which targeted coal and gold but only at relatively shallow depths. So, while Mongolia is marketed as a rare greenfield opportunity, the lack of exploration data remains a major problem for the industry. Without it, companies have to start from scratch.

To help address this, the European Bank for Reconstruction and Development, with backing from Australia, has in recent years helped establish a national geoscience database for Mongolia. However, that database needs to be filled with new geological surveys. Local industry leaders are quietly lobbying Oyun-Erdene’s administration to spend about $200mn to pay for the modern surveys which they believe are needed to reduce risk and attract private-sector explorers.

Clark, of the Australian Space Agency who also sits on the Rio board, says that Mongolia is not alone in trying to attract investors as countries around the world respond to the increased demand for minerals. Mongolia must ensure its mining-focused officials are properly resourced, she says, adding that agencies responsible for controlling exploration and mining permits should be considered a “vital” national capability.

Mongolia’s potential has been likened to South Korea’s evolution into a technology manufacturing powerhouse. Dominic Barton, the chair of Rio Tinto, notes that in the 1970s South Korea had “very little energy supply . . . no industrial market whatsoever, and very little access to capital.”

“There is every reason and more to believe Mongolia can go through the same transformational change in the next 30 years,” argues Barton, a former senior McKinsey executive and Canadian diplomat in China.

Barton adds that companies, including Rio, also have a responsibility to help Mongolia with that transition from resource extraction to higher-value processing. But there is a wariness about committing to investing in processing in Mongolia. Rio’s investors, he says, want the company to “be careful” about overextending itself beyond its core mining business.

Squeezed by superpowers

Yet as Mongolia reaches out to the west to boost growth, it must also avoid flaring rising geopolitical tensions.

This careful navigation was apparent on June 27, when Oyun-Erdene strode into the Great Hall of the People in Beijing and shook hands with Xi Jinping, China’s president. His visit resulted in agreements to triple the capacity of an increased number of China-Mongolia border crossings and negotiations over access to the port at Tianjin, south-east of the Chinese capital. On the same day, Jose Fernandez, the US under secretary of state for the environment, signed a memorandum of understanding with Mongolia to jointly work on securing a supply chain for critical minerals.

The simultaneous deals with the US and China highlighted the Mongolian leader’s pragmatic approach, diplomats say. This strategy has also included abstaining from voting on UN resolutions on Ukraine.

Leif-Eric Easley, a professor of international studies at Ewha Womans University in Seoul, says that Mongolia’s “best bet” to hedge against Moscow and Beijing is to attract investment. “The key variable for Ulaanbaatar is credible democratic leadership that signals to diplomatic partners and international organisations the genuineness of domestic reforms,” he says.

In Ulaanbaatar, there is a palpable sense of urgency. Three years of trade restrictions along the 4,630km border with China during the pandemic battered the already-fragile Mongolian economy. Then the Russian invasion of Ukraine dashed any hopes of a strong recovery with headline inflation soaring to an average of 15 per cent last year.

The start of underground mining at Oyu Tolgoi in March is expected to help boost Mongolia’s economy to growth of 5.2 per cent this year, up from 4.7 per cent in 2022.

The World Bank has warned Mongolia that fiscal discipline remains essential in the short term. In years to come, however, sustainable growth and resilience to future external shocks will hinge on the results of the government’s reforms. “They need foreign investment,” says one foreign diplomat. “They would prefer it was western.”

Yet Oyu Tolgoi’s own chequered past highlights the rocky road ahead. The copper deposit was considered one of the world’s most exciting minerals discoveries in 2001, but its development has been marred by billions of dollars in cost overruns, years of delays and, at times, a toxic relationship between Ulaanbaatar and Rio, especially under Jean-Sébastien Jacques, the chief executive from 2016 to 2020.

His replacement, Jakob Stausholm, has worked to smooth over tensions, brokering a deal to write off debts of $2.3bn owed by the Mongolian government. Rio took greater control over the operation from Canadian miner Turquoise Hill.

Rio points out that for the past decade, about 10 per cent of the Mongolian government’s revenue has come from Oyu Tolgoi. However, an acute point of tension remains around the timing of a dividend payment from the project, which could still be years away and depends, in part, on the price of copper.

Sukhgerel Dugersuren, director of environmental group Oyu Tolgoi Watch, says that for decades she and others have raised concerns about the mine’s management of toxic waste, the lack of transparent and independent environmental monitoring and the consequences for the local nomadic herders.

“Experts will tell you it is just a dot on the globe. The fact is when you have thousands of dots there are cumulative impacts,” she says of the potential influx of new mines.

Most of the Oyu Tolgoi saga predated Oyun-Erdene’s time in office, but the prime minister says the mine’s problems have underscored the critical importance of transparency and accuracy when it comes to feasibility studies and financing plans. He wants to ensure history does not repeat. “We’ve learnt our lessons,” he says.

Sam Bryan is home from his Mongolian adventure with a new appreciation for the people and culture. The Guardian caught up with him to see how his big trip went.

Fermented horse milk might not be for everyone, but it was just one of the Mongolian experiences Sam Bryan will not forget.

The Ashburton Rabobank agri-business associate and former shearer has recently returned from a three-week stint in the east Asian country as part of the Share Mongolia programme.

The programme aims to arm Mongolian shearers with training and modern equipment, enabling them to shear and farm more economically and sustainably.

Currently, most shearing in Mongolia is done using scissors, a time-consuming method that limits the number of sheep shorn to just thirty per day and makes it difficult for herders to support their families.

Bryan was one of around 13 Rabobank clients and staff who embarked on the trip throughout June and July, sharing their skills and getting thoroughly immersed in Mongolian culture.

Bryan says the group was warmly welcomed by locals who went out of their way to give their guests a taste of authentic Mongolian hospitality.

"The best part about the trip was the people, how well we were looked after and how hospitable they were," Bryan said.

"They put a lot of effort into looking after us and making sure we had a good time."

Bryan spent the first part of his trip in the Ömnögovi province in the south of Mongolia in the Gobi desert doing two full days of shearing, which he described as "the hottest, stickiest and sandiest" shearing experience he has had.

At the end of the second night in the Gobi desert, a visit to a family of herders ended with Bryan adding camel shearing to his repertoire.

"We called into this family on the way home one night and decided to have a go shearing their camels.

"It was pretty easy; we just grabbed them, sat them down, tied them and shore them.

"It's a bit like shearing an alpaca."

The Ömnögovi province suffers from over-grazing, which Bryan says has significantly impacted the grasslands, with around seven kilometres disappearing into desert every year.

Tens of thousands of animals were visible in the valley every morning of his stay, including horses, yaks, cattle, sheep and goats.

By teaching more efficient shearing practices to herders and looking at new markets for the wool, the hope is they can reduce stock numbers and lessen the environmental impact.

"We gathered some of the wool to send back to Europe, with the idea of adding value to the wool they got from running sheep.

"We are hoping that would encourage the herders to run fewer goats and reduce the impact of overgrazing."

The sheep farmed by the herders are Awassi, a fat-tailed, coarse wool breed adapted to the desert conditions.

"In the desert, they have next to nothing to eat, but they do alright because they have a big lump of fat over their tails.

"It sort of acts like a camel's hump; it's the same kind of thing."

Bryan's next part of the trip was to central Mongolia, to the Arkhangai province.

The journey took several hours in the Mongolian vehicle of preference, which, somewhat surprisingly, is a Toyota Prius.

"We travelled on these dirt tracks; they are not even roads – they are more like farm tracks.

"And these Priuses are just amazing; they would go everywhere."

Bryan and his group trained thirty-five herders with mobile shearing trailers and equipment donated from various banks and organisations, including one funded by Rabobank.

In exchange for the training, the herders treated Bryan and the New Zealand group to traditional Mongolian cuisine, including fermented horse milk and a dish similar to a hangi, a Khorhog.

"It's mutton and potatoes, cooked up in a sort of milk can with rocks heated over the fire," Bryan explained.

"It's actually pretty good."

Bryan said the Mongolians have a nose-to-tail approach to cooking and are adept at making do with very little, with horse and mutton being a menu staple.

"They run a lot of horses, milking them in summer and eating them in winter.

"They race them too.

"They are resourceful and a very proud people."

Bryan hopes to return to Mongolia next year to check in with the herders they have trained and ensure maintaining their equipment.

By Claire Inkson