Is Mongolia A Storehouse of Great Mineral Wealth?

Some investment newsletters say so!
The country is vast-much of it has never been properly surveyed. It is claimed that there might be vast reserves of oil, coal, uranium, lead, zinc, copper, and iron ores.
The population is tiny, and has no indigenous industry-thus, extraction efforts would have to involve substantial foreign investments.
Of course, Mongolia is landlocked-surrounded by Russia and China.
My question: even if Mongolia has the wealth of Croesus under their lands, would China/Russia allow foreign nations in to start mining it?
As oil resource start to shrink, one would think that the major oil companies would be looking hard at places like Mongolia-have they?

Mongolia does likely have a vast amount of mineral wealth. Russia has been mining there for decades; China more recently. One of the largest mining companies currently present there is Ivanhoe, a Canadian country.

It does have some indigenous efforts, but they are generally small scale and lack the finances and technical capacity of the mining giants.

How would Russia/China stop mining in another autonomous nation?

The main issues in Mongolia are if the government will create an investment friendly atmosphere and that so far, there is a lot of speculation on resources with little results. Mongolia is not an easy or accessible place to mine in, meaning the costs are going to be higher for most businesses. That hasn’t stopped investors however; AngloGold and others have been there for years. To my knowledge, copper is the most plentiful resource to be positively identified.

I would imagine they could erect substantial roadblocks to getting product to market, potentially rendering even the most valuable deposits uneconomical.

Technically, that is possible, especially since Mongolia has so few roads. But you are discussing huge, porous borders, violations of international law and the fact that minerals can be moved other ways. Also, you would need to coordinate both Russia and China into doing this simultaneously, which is extremely unlikely to happen.

Considering China is a huge importer of oil and imports primarily from countries like Angola, Saudi Arabia, Russia, Sudan, Iran, Kuwait, Oman, Kazakhstan, Iraq, Libya, UAE, Yemen, Venezuela, etc., I’d say they would be all for oil exploration in Mongolia. The suggestion that they would somehow prevent it flies in the face of basic logic.

As far as how much Mongolia currently produces, I think it is approximately equal to the outpt of Nebraska, which is to say they don’t really produce oil.

why do Russia and China care one way or the other? Why do you (presumably as a foreign national) care?

Any and all resources that are found or will be found in Mongolia are fungible. If the Chinese conquer Mongolia tomorrow and mine all the Mongolian resources purely for their internal consumption, from world market standpoint it will be no different from a Canadian company mining the stuff for export to Europe. At least, as long as there is sufficient spare capacity and liquidity in the market. Basically, all the units of resources that China may get from Mongolia will not have to be bought by China from somewhere else. So Western companies will obtain it from the “somewhere else” by paying the established world market price, which will only get lower if Mongolian mining increases supply of the relevant commodities.

I don’t think that “huge, porous borders” means that China and Russia are going to fail to notice thousands of tonnes of raw material streaming over their roads, railways, and waterways. The only “other way” of removing minerals from a landlocked country seems to be by air, which is hardly going to be economical unless we’re talking about minute quantities of highly valuable stuff.

What is likely is that there are many opportunities to bribe more accommodating officials who would welcome the flow of wealth into their province and beyond. In addition, there are ethnically Mongolian enclaves on both sides of the border, adding to any difficulty in keeping the border closed (unless they want to have Cold War levels of troops).

More importantly, as I mentioned, there is no incentive for both China and Russia to ever cooperate on this issue, or to engage Mongolia on it. Russia has its own large mineral deposits and China is quite focused on Southeast Asia and Africa.

So, is Mongolian mining a good place to invest in? Will it pay off?
The world needs copper-the price has been rising quite impressively.
I also recal that copper was mined in the USA (Vermont and Michigan)-mining operations stopped because cheaper sources were available-might these old mines be reopened?

If investing will pay off is not an answer you’re going to find on a message board, but if you check my first post, I listed out some reasons it may not.

I’m not sure the current status but there has been a big move to set up a comprehensive natural resource plan with a revenue sharing plan for all citizens. The infrastructure (Eg roads) may have started to open up some of the big reserves.

Here’s an outdated overview (quick search didn’t get current news) of the natural resources:

here’s a link for the Mongolia Institute