Mongolia heavily relies on natural resource extraction, which constitutes 90% of its exports. In a significant development during a state visit to France in October 2023, Mongolian President Ukhnaa Khurelsukh inked a landmark deal opening doors for a massive $1.7 billion investment by the French government-owned Orano Mining.
This agreement allows Orano to establish Mongolia’s inaugural uranium mining and processing venture. For Mongolia, mining partnerships are not just economic endeavors but also strategic tools for its foreign policy objectives. Uranium, being a pivotal mineral in the global energy landscape, is crucial for powering substantial amounts of reliable and low-carbon nuclear energy. As the world moves towards achieving net-zero emissions, uranium is expected to facilitate an unprecedented expansion of nuclear power generation.
This global transition is propelling Mongolia’s aspiration to emerge as a key player in the uranium market, complementing its already thriving copper export sector. With significant and relatively untapped uranium reserves, Mongolia has garnered attention from global investors, with France’s nuclear industry being its first choice to assist in venturing into the uranium market.
According to the World Nuclear Association, Mongolia boasts approximately 60,500 tonnes of uranium reserves. Despite prior uranium exploration agreements with China, Russia, and the Czech Republic following the closure of the uranium mining town, Mardai, Mongolia has chosen France to undertake uranium extraction for the first time.
For Mongolia, unlocking the potential of its substantial uranium resources offers numerous advantages. It diversifies its mining sector and attracts a broader spectrum of investors, aligning with its third-neighbour foreign policy aimed at bolstering relations beyond China and Russia.
The economic benefits stemming from the Orano agreement are substantial. The government estimates that Ulaanbaatar stands to earn a total of $1 billion in tax revenue over the projected 30-year lifespan of the mine. Additionally, around $47 million will be allocated as payment to Orano for utilizing Mongolia’s mineral resources, as mandated by Mongolia’s Environmental Protection Law.
The project, spearheaded by Badrakh Energy—a collaboration between Orano and Mongolian state-owned enterprise MonAtom—is slated to span 47 years. Preparatory work is scheduled from 2024 to 2027, with uranium production expected from 2028 to 2060, followed by rehabilitation activities from 2061 to 2070.
Claude Imavuen, Chairman of Orano Group, emphasized Mongolia’s geopolitical significance and abundant natural resources, positioning it as a crucial partner for France. For France, uranium from Mongolia isn’t just about resource diversification; it represents a vital new source that could meet future domestic and European Union uranium demands.
France, which derives approximately 70% of its electricity from nuclear energy, has been actively seeking uranium in Mongolia and Central Asia, including Kazakhstan and Uzbekistan. With a projected 27% increase in global uranium demand by 2030, Mongolia aims to position itself strategically as a significant contributor to global climate efforts.
Amidst heightened global competition for critical minerals and the complex geopolitics of the region, Mongolia navigates a delicate path as it seeks partners to support its ambitious economic growth plans. Mongolia’s foreign policy endeavors to become a vital bridge between Europe and Asia, particularly during the global transition towards renewable energy sources.
