Summary

Mongolia has one of the world’s fastest-growing economies, but economic growth has been volatile because it relies on the resource sector – coal and copper are the country’s major export items, gold and rare earths are also key exports. Economic growth was 6.8% in 2025, with USD7,300 GDP per capita, but still one quarter of the population lives in poverty. It is a lower-middle-income, developing economy.

Economy and GDP

Mongolia has a large endowment of natural resources which make up the majority of its exports. Mining accounts for roughly 20-25% of GDP and more than 90% of export revenues, making the economy highly sensitive to global commodity prices. Furthermore, this mineral extraction needs imported Russian and Chinese fuel, and this dependence on foreign energy imports is a risk to Mongolia’s sovereignty. Mongolian imports and exports also have to pass through the territory of either China or Russia to reach any other destination in the world, which means the exports are vulnerable to changes in those countries.

Ulaanbaatar, the capital, drives much of the country’s commercial activity as urbanisation has increased rapidly, but traditional livestock herding remains a source of employment and subsistence for a large portion of the population. Food and agriculture are a large part of the Mongolian economy, given Mongolia’s large land area and relatively small population, but agricultural production is at the mercy of harsh winters. Mongolia’s young, educated population can serve as human capital to drive future growth, but the country faces challenges including environmental vulnerability, water scarcity, and infrastructure gaps – especially in the transport and energy sectors.

France is interested in Mongolian uranium to support France’s nuclear energy sector, and in January 2025 the two countries agreed to a $1.6 billion investment to develop Zuuvch-Ovoo uranium mine in a joint mega-project between France’s Orano Group and Mongolia’s state-owned MonAtom Group.

Trade with Australia

Mongolia’s bilateral trade with Australia is modest, but the Mongolian mining sector presents significant opportunities for Australian businesses, particularly in the areas of equipment, services, and training. This is due to Australia being a global leader in mining technology, engineering services, and extractives expertise. Like Mongolia, mining has had a vital role in Australia’s economic development, providing direct and indirect employment, education, and social growth. Mining has long been integral to Australia’s economy, accounting for 10% of jobs, 70% of exports, and about 15% of GDP. Already, Rio Tinto is a major player in the Oyu Tolgoi (OT) project (Rio Tinto owns 66% of OT, Mongolian Government 34%), one of the world's largest copper and gold mines which will contribute 30% of Mongolia’s total GDP). The Australian government provided A$150M in project funding to OT through Export Finance Australia which has resulted in over 400 OT related contracts being awarded to Australian companies. Orica provides blasting solutions and technologies to the mining industry, and Xanadu Mines is involved in exploration and development of copper and gold resources. Our trade relationship benefits Mongolia through technology transfer and capacity building, while providing Australian firms access to a growing resource sector.

Mining in Mongolia, particularly coal mining, presents environmental challenges, including water scarcity, air pollution, and land degradation. Mongolia has also made limited progress on its coal-to-renewable transition. These are areas where Australia’s mining expertise can help. The recently concluded Australia-Mongolia Extractives Program was a major initiative with the Mongolian government, private sector, and civil society to improve climate-resilient and sustainable mining practices, environmental management, and governance in Mongolia’s mining sector.

There are over 60 Australian-affiliated companies operating in Mongolia. Australian companies contribute expertise in areas like engineering, geology, hydrology, and environmental management, as well as providing equipment and consumables to mining projects. Australian companies also contribute to vocational training and higher education in mining-related fields, supporting the development of a skilled workforce in Mongolia. Lastly, Australian companies provide a range of mining services, including geological surveys, mine planning, and environmental management.

Mongolian coal mining actually threatens Australian coal exports to India, as Reuters reported in 2024 that India would begin importing coking coal from Mongolia on a trial basis to diversify imports of the key raw material in steelmaking to reduce its reliance on Australia.

At the request of the Mongolian government, the Australian Centre for International Agricultural Research is also active in Mongolia and uses insights and experience from agricultural policy reform in Australia to assist Mongolia in tackling its own agricultural and economic challenges, including policies affecting agriculture, options for government intervention in agriculture, and impediments to exports.

For further information on Mongolia’s economy, see the resources below:

• Videos
  1. Mongolian economy: Small, but growing fast (CNN, 5m1s)
  2. Mongolia looking to diversify economy beyond mining sector (CNA, 4m41s)
  3. Mongolia: A Rapidly-Growing Economy with a Vibrant Mining Sector (6ix Inc, 57m5s)
• Podcasts
  1. Mining and Industry in Mongolia (Frontier Markets Podcast, 54m10s)
  2. Claiming resources, honouring debts: miners, herders and the land masters of Mongolia (University of Oxford Podcast, 47m17s)
• Articles
  1. Agricultural Policy Development in Mongolia (Australian Centre for International Agricultural Research)
  2. Strengthening incentives for improved grassland management in China and Mongolia (Australian Centre for International Agricultural Research)
  3. Mongolia reaches deal for $1.6 billion uranium mine with France’s Orano (Reuters)
  4. Mongolia Signs Uranium Deal With French Nuclear Giant (The Diplomat)
  5. Mongolian Mining Projects Report 2023 (Australian Trade and Investment Commission)
  6. Extractives (Australia Embassy, Mongolia)
  7. Oyu Tolgoi (Rio Tinto)
  8. The hidden cost of Mongolia’s mining boom (East Asia Forum)
  9. Mining and Domestic Demand Bolster Mongolia’s Economy, According to New World Bank Report (World Bank)
  10. Mongolia Economic Forum (Mongolian Economy)