South Korea is expanding cooperation with Mongolia on rare earths and other critical minerals, but its effort to diversify supply chains away from China could encounter another form of China-related risk as Beijing deepens its own mineral ties with Mongolia.

The concern comes as South Korea-Mongolia cooperation takes shape, China and Mongolia strengthen their transportation and mineral supply networks and South Korean companies increase participation in U.S.-led supply chains designed to reduce reliance on China.

According to China's Foreign Ministry and other sources, China and Mongolia have recently moved to expand cooperation on critical minerals while strengthening transportation infrastructure to support the trade.

Chinese Foreign Minister Wang Yi visited Mongolia in June and agreed to expand existing cooperation on mineral resources while making critical minerals a new area of bilateral cooperation.

The two countries are also pursuing additional rail and border-crossing connections following a second cross-border railway now under construction.

China's moves are drawing attention because South Korea has identified Mongolia as an important partner in diversifying its critical mineral supply chains.

Mongolia this month also began work on legislation to support heavy industry as it seeks to move beyond exports of raw ore and expand into mineral processing and refining.

That means China is widening its cooperation with Mongolia at the same time South Korea and Mongolia are seeking to expand joint development of critical minerals.

Some analysts in China have linked South Korea-Mongolia cooperation to U.S.-led efforts to create supply chains less dependent on China.

The Chinese academic journal International Forum in March cited the Korea-Mongolia Rare Metals Cooperation Center and the U.S.-South Korea-Mongolia Critical Minerals Dialogue as examples of South Korea's efforts to "de-risk" its supply chains from China.

The analysis viewed U.S.-China competition and South Korea's desire to reduce its dependence on China as factors behind Seoul's efforts to strengthen cooperation with resource-rich countries.

That perception also overlaps with growing South Korean corporate investment in the United States.

Korea Zinc is pursuing a $7.4 billion integrated critical minerals smelter in Tennessee with support from the U.S. government and has explicitly described the project as part of an "Ex-China" supply chain strategy.

POSCO International and LS are also working to establish rare-earth separation, refining and permanent-magnet production networks in the United States.

Washington has similarly linked mineral cooperation with South Korea and Mongolia to its broader supply-chain strategy.

When the State Department launched the trilateral U.S.-South Korea-Mongolia Critical Minerals Dialogue in 2023, it described the initiative as part of an effort to build secure and resilient global supply chains.

Analysts have said Mongolia's mineral resources could be combined with South Korea's processing capabilities and connected to supply chains serving the United States and its allies.

China has publicly objected to U.S.-led efforts to establish critical mineral supply chains that exclude or reduce reliance on Chinese suppliers.

Beijing has said it opposes what it calls exclusive supply chains and the politicization of economic and trade issues in response to efforts to reduce dependence on Chinese rare earths and other critical minerals.

If South Korea-Mongolia cooperation becomes closely tied to U.S. supply chains and prompts a diplomatic or trade response from China, projects ranging from mineral development and processing to stable access to Mongolian resources could face disruptions.

In that scenario, South Korea's effort to diversify away from China could itself remain vulnerable to Chinese influence.

The South Korean government's publicly announced plans with Mongolia, however, have focused primarily on securing minerals and expanding supply chains.

A Comprehensive Economic Partnership Agreement reached in principle last month calls for immediate elimination of tariffs on copper, molybdenum, rare earths and other products after the agreement takes effect and establishes a formal framework for energy and mineral cooperation. The agreement in principle was announced in July.

Specific measures to address possible diplomatic or trade risks involving China have not been publicly outlined.

"On the surface, this is South Korea-Mongolia mineral cooperation, but in practice it is closer to cooperation among South Korea, the United States and Mongolia," a mineral industry official said.

"Because Mongolian minerals could eventually enter U.S. supply chains through South Korea, the possibility of Chinese intervention also needs to be considered," the official said.

The official added that Seoul should assess potential Chinese responses before projects become more concrete and prepare diplomatic and trade measures accordingly.

Published Date:2026-08-26