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Mongolia and France Forge Uranium Development Agreement: Production Scheduled for 2028-2060

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Highlights

  • Mongolia partners with France’s Orano Mining Group to develop its first uranium mining project in Dornogobi province.
  • The project is expected to produce 2,600 metric tons by 2044.
  • The project promises $13.4 billion in total sales revenue.
  • $4.6 billion is expected to be added to the state budget.
  • Mongolia is guaranteed 51% of project benefits.
  • The strategic agreement ensures a 90% local workforce.
  • Focus on sustainable development.
  • The project diversifies France’s uranium sources.
  • It advances Mongolia’s economic growth.

In a pivotal development for Mongolia’s energy and economic future, the country has reached a preliminary agreement with France’s Orano Mining Group to establish its first-ever uranium mining project in partnership with a Western nation. Valued at $1.6 billion, this project not only signals Mongolia’s entry into the global uranium production market but also deepens its strategic ties with France, a key player in nuclear energy. The agreement, initiated in October 2023 during a high-profile meeting attended by French President Emmanuel Macron and Mongolian President Ukhnaagiin Khürelsükh, is a testament to both nations’ commitment to sustainable development and mutual economic growth. This milestone underscores France’s effort to secure uranium supplies for its nuclear fleet and ambitious expansion plans, as reported (opens in a new tab) by NUCNET on December 30, 2024.

Nation set to become sixth-largest uranium producer

The project, located in the Dornogobi province of southeastern Mongolia, is a monumental step in unlocking the country’s uranium potential. It will progress in three distinct phases: a preparatory phase from 2024 to 2027, a production phase from 2028 to 2060, and a final rehabilitation phase lasting until 2070, according to (opens in a new tab) International Mining on December 28. Production is expected to peak at 2,600 metric tons in 2044, making Mongolia the world’s sixth-largest uranium producer, with substantial contributions to the global energy market.

Mongolia to receive 51% of benefits

The economic implications of the agreement are profound. An initial investment of $500 million, scaling up to $1.6 billion, will bring much-needed foreign direct investment to Mongolia. Prime Minister Oyun-Erdene Luvsannamsrai emphasized the project’s transformative impact on employment and local economic growth, highlighting its alignment with Mongolia’s “New Recovery Policy” and “Vision 2050” per Reuters (opens in a new tab) from December 27. The project will also generate extensive financial benefits, including total sales revenue of $13.4 billion over its lifecycle. With an expected $4.6 billion added to the state budget, the internal rate of return is projected at 19.4%, and the payback period is estimated at 11-13 years. Moreover, local development funds will receive $44 million, fostering regional infrastructure and community programs. To ensure equitable benefits, the Mongolian government will hold a 10% preferred equity stake, providing priority dividends and veto rights. It is also guaranteed to receive at least 51% of the project’s benefits without financial obligations, reflecting a robust commitment to national interests.

Strategic and geopolitical significance

The project not only bolsters Mongolia’s economy but also elevates its geopolitical stature. With 192,200 tons of uranium resources—2% of the global supply—Mongolia is poised to become a critical supplier of strategic metals. France, which currently imports most of its uranium from Niger, Kazakhstan, and Australia, views this partnership as a way to diversify its uranium sources amidst geopolitical uncertainties, particularly following disruptions in Niger. For Mongolia, this agreement signifies a successful collaboration with its “third neighbors” policy, aimed at fostering ties beyond its immediate geographical neighbors, China and Russia. This partnership with France, facilitated by Orano’s 25 years of exploration activities in Mongolia, represents a strategic alignment with global energy security and sustainable resource development.

Commitment to sustainability and 90% of local workers

A cornerstone of the agreement is its focus on sustainability and local empowerment. At least 60% of subcontractors and 40% of the total procurement value must involve Mongolian-registered entities. Furthermore, during mining operations, at least 90% of the workforce will be Mongolian citizens, ensuring the project directly benefits local communities. Advanced technologies introduced through this partnership will further elevate Mongolia’s mining industry standards. The Mongolia-France uranium project is a landmark agreement that promises to reshape Mongolia’s economic landscape and cement its role in the global uranium market. For France, it secures a stable supply of a critical resource essential for its nuclear energy ambitions. As the partnership unfolds, it highlights the potential for collaboration between nations to achieve mutual goals of economic growth, energy security, and sustainable development.

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