“Mongolia holds an estimated $1–3 trillion in untapped mineral reserves, including significant deposits of copper, fluorspar, coal, and REEs. The challenge is not access to deposits but the absence of domestic processing capacity. Approximately 88 percent of Mongolian minerals leave the country unprocessed, with the vast majority bound for China. This pattern highlights the primary choke point in global REE supply chains, where limited mid- and downstream capacity creates structural dependence on countries better equipped with the vital infrastructure and technological know-how.”
“Japan has long been Mongolia’s largest bilateral aid donor and became its first Economic Partnership Agreement counterpart in 2016. Tokyo supports Mongolia through soft loans and technical assistance via the Japan International Cooperation Agency (JICA), and in 2022, the two governments upgraded ties to a ‘Special Strategic Partnership for Peace and Security’. The 2022–2031 Action Plan underpinning this partnership explicitly commits both sides to ‘cooperation to ensure a long-term, stable supply of Mongolian copper, REEs, and other mineral resources to Japan, and cooperation to revitalize the supply chain’…”
“Any expansion of Japanese investment in Mongolian mineral processing would face real barriers. Under Mongolia’s Constitution and Land Law, foreign nationals and majority foreign-owned companies cannot freely transfer, collateralize, or sell land-use rights, even though they may obtain such rights, complicating the financing and structuring of large-scale processing facilities. As a landlocked country, Mongolia’s dependence on air and overland routes through China and Russia presents unavoidable logistical constraints, compounded by the risk of economic retaliation or coercion from its largest trading partner if it shifts closer to Japan. In this complex legal and geopolitical landscape, Japan’s existing EPA and JICA frameworks may offer pathways unavailable to purely commercial investors. Converting these institutional advantages into tangible projects, however, will remain a key challenge…”