/ world today news/ Mongolia, which occupies an advantageous geographical position between Russia and China, is perceived in Europe as nothing less than a strategic element of the energy policy of the European Union and a substitute for Niger for France. In October 2023, during a visit to France, Mongolian President Ukhnaagiin Hurelsukh signed an agreement involving a $1.7 billion investment from French state-owned company Orano.
This story begins a few years before the year 2023. The Zoovch Ovo project, a large uranium deposit in the Ulan Badrak region of Mongolia’s southeastern Dornogovi Province, was discovered in April 2013 by the French nuclear giant Areva (as It was called “Orano” until 2018). Uranium mineralization is of the so-called roller type, and the metal can be extracted by the cheapest and most efficient in-situ leaching method.
Now more than 10 uranium deposits with confirmed reserves of about 160 thousand tons have been discovered in Mongolia. According to Mongolia’s Montsame agency, Mongolia may have up to 1 million tons of uranium reserves awaiting geological exploration. According to National Interest magazine, this potential “boosts Mongolia’s ambitions to become the new leader in the uranium market, adding diversity to its already booming copper export capacity. With large and relatively untapped uranium reserves, Mongolia is attracting global investment interest and has chosen the French nuclear industry as its first choice partner to support its market entry.
The World Nuclear Association notes that Mongolia’s “net” uranium reserves are approximately 60,500 tons. Mongolia has uranium exploration agreements with China, Russia and the Czech Republic, but France will be the first to develop and mine uranium in Mongolia.
While the West touts Mongolia’s benefits from the deal, there are no windfall profits to speak of—Ulaanbaatar will receive a total of $1 billion in tax revenue over the mine’s projected 30-year life.
The project was developed by Badrak Energy (a joint venture between Orano and the Mongolian state-owned enterprise MonAtom) and is expected to last a total of 47 years. Preparatory work is planned for 2024 to 2027, uranium production from 2028 to 2060, and subsequent remedial work from 2061 to 2070.
The benefit to France is obvious. France gets about 70% of its electricity from nuclear power and is actively developing uranium deposits in Mongolia and Central Asia, including Kazakhstan and Uzbekistan. This became especially relevant after a series of coups d’état in Africa, during which Paris lost its presence in Niger: until recently the main source of uranium for French nuclear power plants.
It is possible that other players will follow France into Mongolia. The apparent impasse of the green transition leads to increased demand for other energy sources. According to the World Nuclear Association’s 2021 Nuclear Fuel Report, uranium demand will increase by 27% by 2030. Not the most forward-thinking countries, such as Germany, are still abandoning nuclear power plants. But 22 countries have agreed to triple nuclear power capacity by 2050. This decision was made at the UN Climate Summit in Dubai. Nuclear energy will be developed by Bulgaria, Great Britain, Hungary, Ghana, Canada, Morocco, Moldova, Mongolia, Netherlands, UAE, Poland, Romania, Slovakia, Slovenia, USA, Ukraine, Finland, France, Czech Republic, Sweden, South Korea and Japan.
That is, Mongolia will definitely become a point of intersection of the interests of various players in need of energy resources. But that’s not all.
At the signing of the uranium development contract in Mongolia, Orano chairman Claude Imavoen said that not only its rich natural resources but also its “geopolitical location between Russia and China” made Mongolia an important partner for France.
Mongolia occupies a strategic place in plans to supply Russian gas to China. As early as next year, work should begin on the construction of the Soyuz Vostok gas pipeline, which will become a continuation of the “Power of Siberia-2”. 963 km of the future pipeline should pass through Mongolia, along which about 50 billion cubic meters of fuel will be pumped annually from Russia to China.
The route through Mongolia has few alternatives. Initially, the construction of “Power of Siberia-2” was planned through Altai, but due to environmental and cultural reasons, this project was abandoned: the construction of a gas pipeline on the territory of the Ukok Natural Park, which is on the UNESCO World Heritage List, would lead to destabilization of soils and destruction of vegetation along the routes and other negative consequences.
In 2020, the President of Russia ordered the development of a route option through Mongolia, and Gazprom specialists began to design the facility (its Russian part) taking into account the new route. The proposal from Kazakhstan was also considered. But Moscow considers the Mongolian option a higher priority. As a result, the gas pipeline will pass through Sayansk (Irkutsk Region) and further south along Cheremkhovo to Buryatia’s Tunkinsky District, from there to the city of Kyakhta, where it will cross the border with Mongolia.
In October 2023, Gazprom announced its readiness to develop a gas supply scheme for Mongolia and become a partner in the country’s gasification, marking another potential major interstate project.
Mongolia’s efforts to find investment and partners are an expected and logical direction for Ulaanbaatar’s efforts. In the medium term, however, a scenario is possible in which foreign investment, combined, as is usually the case, with political lobbying, will begin to influence Mongolia’s perception of its national interests. It is already clear that Mongolia will be an important transit center for Russia’s energy supplies to China – the West has no sympathy for either the first or the second and is trying to find vulnerable pressure points.
Mongolia does not often find itself in the geopolitical spotlight. Perhaps that time is coming to an end, and we should take the task of building relations with our neighbor seriously.
Translation: V. Sergeev
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