Mongolia is a geostrategically significant mineral jurisdiction located between two of the world’s most resource rich countries, Russia and China. Positioned on the Central Asian plateau, Mongolia shares geological structures that extend across national borders. In the case of rare earth elements, the presence of the “Bayan Obo” deposit in northern China, widely regarded as the largest known rare earth deposit in the world, suggests that comparable geological systems may also occur within Mongolia. Yet favourable geology alone does not automatically translate into economic outcomes. Structural, technological and institutional constraints have historically limited Mongolia’s ability to convert geological potential into commercially viable development.

Much of what we understand today about rare earth element occurrences in Mongolia originates from Soviet era geological programs that focused primarily on nationwide mapping and regional geological interpretation rather than defining rare earths as a specific economic target. Within this broader scientific work, numerous rare earth related occurrences were recorded and documented across Mongolia. Against this background, the evolution of Mongolia’s rare earth sector can be broadly understood through three successive phases.

State-Funded Geological Mapping and the Recording of REE Occurrences:  Before 1990, geological work in Mongolia was centrally coordinated and state funded, focused on nationwide mapping and the study of stratigraphy, tectonics, and magmatic systems. These surveys identified a number of geologically promising occurrences, including early indications of both light and heavy rare earth elements. The occurrences were documented as part of broader geological investigations, providing an initial scientific foundation for understanding Mongolia’s rare earth potential. However, most findings remained at the occurrence level and were not advanced to economic evaluation or project development.

Democratic Transition, Licensing Reform, and the Rise of Private Exploration:  Following Mongolia’s democratic transition after 1990, market reforms introduced a licensing regime enabling private participation and clearer exploration and exploitation rights as the mining legal framework developed during the 1990s. Companies revisited earlier geological datasets and expanded fieldwork, although most projects remained at preliminary exploration stages. Nevertheless, this period marked a turning point by establishing the legal foundations for modern exploration activity.

Private Exploration Growth and the Challenge of Technological Alignment: Since around 2015, rising global demand has intensified exploration while highlighting that REE development requires alignment between geology and downstream processing, separation, and metallurgical testing. Limited domestic processing capacity makes international validation essential, and regulatory clarity from exploration to mining approval remains a key factor influencing project bankability.

International Estimates and the Real Meaning of Mongolia’s REE Potential: International policy circles and strategic research institutions have long highlighted Mongolia’s rare earth element (REE) endowment as a potentially significant strategic resource. Much of this narrative traces back to a 2009 assessment by the United States Geological Survey (USGS), later cited in UNCTAD reports, which suggested that Mongolia could host approximately 31 million tonnes of rare earth resources. At the time, this estimate represented nearly 16% of globally identified reserves, positioning Mongolia among the more notable rare earth exploration frontiers outside China.

According to Mongolian specialists, however, a consolidation of archived geological materials indicates that currently defined deposits contain approximately 3.1 million tonnes of rare earth oxides (REO). The apparent difference between these figures does not imply a reduction in Mongolia’s geological potential but rather reflects different classification frameworks and reporting methodologies. Importantly, the oxide estimate is largely based on six to seven deposits identified prior to 2015, while many prospective regions remain insufficiently explored and have yet to be evaluated under modern geological, technical, and metallurgical standards.

Strengthening Policy Clarity for Sustainable REE Development: In Mongolia’s current legal environment, the country remains open and broadly positive toward foreign investment in the mining sector. However, the issuance or transfer of new exploration and mining licences for rare earth elements (REEs) is subject to prior consideration by the National Security Council before approval. While this mechanism is intended to safeguard national interests, in practice, the interpretation and application of the process have not been uniform. Licence holders and project developers have conveyed differing explanations to investors, resulting in the absence of a consolidated market understanding

Accordingly, greater clarity regarding the review process, procedural steps, timelines, and evaluation criteria is essential. A more predictable and coherent regulatory framework would enable projects to transition to subsequent stages in a more structured and efficient manner.

Ultimately, future progress will depend not merely on the scale of geological resources but on the integration of exploration results with viable processing technologies, metallurgical validation, market strategy, and appropriately structured investment frameworks supported by experienced professional advisers. When geology, technology, and finance are aligned within a coherent strategic approach, Mongolia’s REE sector has a credible opportunity to advance to the next stage of project development without unnecessary delay.

By Bolormaa Nuurkhuu, B.Sc.

Published Date:2026-03-26