Mongolia aims to develop its metal industry

Copper, steel and gold: Mongolia plans to start processing its raw materials. A copper smelter and a steelworks are set to kick things off. According to GTAI, investments running into the billions are on the horizon.

Mongolia possesses extensive mineral reserves but has only a limited processing industry, 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 primarily on exports of coal, copper ore and copper concentrate to China. Around 90 per cent of exports go to the neighbouring country. Copper, in particular, has become a major source of foreign exchange thanks to high world market prices and robust demand. Rising export revenues have given the Mongolian economy an additional boost in recent years.
This gives the government the scope to press ahead not only with infrastructure projects but also with initiatives for the further processing of raw materials. The aim is to create more added value within the country and to generate skilled jobs. In June 2026, a long-planned investment project for the construction of a copper smelter was awarded. Further projects are emerging in the processing of iron ore, gold and uranium. The associated investments, running into the billions, could also open up business opportunities for German suppliers.

Copper smelter set 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) emerged as the successful bidder. The company has already carried out numerous similar projects 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 be sourced from the deposits of the state-owned mining group Erdenet.
According to the company, Erdenet controls 38 per cent of Mongolia’s copper reserves. In 2025, the 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 complex is set to produce 120,000 tonnes of cathode copper annually. China is likely to be the most important sales market once again, where copper is needed in particular for the expansion of electric mobility and the energy sector.

Domestic steel for the construction boom in Mongolia

The planned steel project, which is primarily intended to serve the domestic market, is a different matter. The construction boom saw steel consumption rise to around 1 million tonnes in 2025. According to government estimates, demand could grow to 1.7 million tonnes by 2030. To date, Mongolia has been largely reliant on imports for steel products.
In the spring of 2026, the government launched the selection process for the project. An investor is to be selected before the end of the year. The steelworks is to be built on the site of the Darkhan Metallurgical Plant (DMP). The Erdenes Mongol Group already produces iron ore concentrate and steel products there on a limited scale. To supply the planned steelworks, iron ore mining at the Khust-Uul mine is to be expanded.
The investment is estimated at 806 million dollars. With an annual capacity of 1 million tonnes of steel products, including reinforcing steel, steel billets and grinding balls, the plant could in future meet up to 70 per cent of domestic demand. This would reduce dependence on imports and lower costs for the Mongolian construction industry. In addition, the waste heat generated is to be utilised for energy.

Coal processing could reduce environmental impact

Mongolia exports coal primarily to the steel industry in China. In 2025, a feasibility study was completed for a coal processing plant near the Baganuur mine. The plant is intended to produce semi-coked coal.
The project also pursues environmental policy objectives. Many households continue to heat their homes with coal, thereby contributing significantly to air pollution in cities. According to Erdenes Mongol, low-smoke briquettes could reduce dust and emissions by up to 80 per cent. The state-owned enterprise, which is one of the mine’s owners, is also regarded as the key point of contact for the planned coal chemical complex. The investment costs are estimated at around 190 million dollars.
Source: gtai