Copper, steel and gold: Mongolia intends to start processing its raw materials. A copper smelter and a steelworks are to be the first to undergo construction. Investments worth billions are on the horizon, according to GTAI.
Mongolia has extensive natural resource reserves but only a limited manufacturing sector, as the Federal Republic of Germany’s foreign trade agency, Germany Trade & Invest (GTAI), notes in its latest country report. The country’s economy relies chiefly on exports of coal, copper ore and copper concentrate to China: around 90 per cent of these exports go to Mongolia’s neighbour. Thanks to high global market prices and robust demand, copper, in particular, has become a major source of foreign exchange income. The rising export revenues have given the Mongolian economy a further boost in recent years.
This gives the government the scope to press ahead not only with infrastructure projects, but also with schemes for the onward processing of raw materials. The aim is to generate more added value within the country and create skilled jobs. In June 2026, a long-planned investment project to build a copper smelter was awarded. Further projects are upcoming in the processing of iron ore, gold and uranium. The associated investments, which run into the billions, could also open up business opportunities for German providers.
Copper smelting expected to boost export earnings
In the tender process for the planned copper smelter, the Chinese group China Nonferrous Metal Industry’s Foreign Engineering and Construction (NFC) was awarded the contract. The group has already carried out numerous similar projects both at home and abroad as an EPC (Engineering, Procurement, Construction) contractor. NFC plans to invest more than 700 million dollars (US$) in Mongolia. The copper required is to come from the deposits of the state-owned mining group Erdenet.
Erdenet states that it controls 38 per cent of Mongolia’s copper reserves. In 2025, the mining group mined more than 40 million tonnes of copper ore and produced up to 600,000 tonnes of copper concentrate. According to the tender documents, the planned copper facilities are set to produce 120,000 tonnes of cathode copper annually. China is likely to remain the most important market; copper is needed there, in particular, for China’s expansion of electric mobility and its energy sector.
Domestically produced steel for the construction boom in Mongolia
The planned steel project has a different focus, since it is intended primarily to serve the domestic market, where Mongolia’s construction boom caused steel consumption to rise to around 1 million tonnes in 2025. According to government estimates, this demand for steel could rise to 1.7 million tonnes by 2030. Mongolia has been largely dependent on imports for steel products up to now.
The government launched the selection process for the project in spring 2026 and an investor is expected to be selected before the end of the year. The steelworks is to be built on the site of the Darkhan Metallurgical Plant (DMP), where the Erdenes Mongol Group is already producing iron ore concentrate and steel products on a limited scale. Iron ore mining at the Khust-Uul mine is to be expanded to supply the planned steelworks.
The investment is estimated at 806 million dollars and with an annual capacity of 1 million tonnes of steel products, including reinforcing steel, steel billets and grinding balls, the plant could meet up to 70 per cent of domestic demand in future. This would reduce dependence on imports and lower costs within the Mongolian construction industry. In addition, the plan is to produce energy out of the waste heat that is generated.
Coal processing could reduce environmental impact
Mongolia exports coal primarily to the steel industry in China. In 2025, a feasibility study for a coal processing plant near the Baganuur mine was completed. Semi-coked coal is to be produced there.
The project will also pursue environmental policy objectives: coal is still used to heat many households, and therefore significantly contributes to air pollution in towns and cities. Erdenes Mongol states that low-smoke briquettes could reduce dust pollution and emissions by up to 80 per cent. The state-owned company, which is one of the mine’s owners, is also the main point of contact for the planned coal chemical complex. Investment costs are estimated at around 190 million dollars.
Source: gtai
