T. MUNKHBAT: INVESTING IN GEOLOGY BRINGS BENEFITS BEYOND MINING

We spoke with T. Munkhbat, Chairman of the Joint Council of Mongolian Geological Associations, about the current state of the geology and exploration sector.

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Could you tell us about the activities of your association? 

In 2020, several organizations in the field of geology together established the Joint Council of Mongolian Geological Associations. Originally, there was only one main body— the Geological Society of Mongolia, founded in 1996. However, over the past two decades, the sector has become increasingly fragmented, with many new associations forming independently. 

Today, around 20 organizations—including the Geological Society of Mongolia, the Mongolian Association of Hydrogeologists, the Mongolian Geophysical Society, the Mongolian Geo-Ecological Association, the Gemstone Association, and the Eastern Mongolian Prospectors’ Association—have united under a single umbrella to form a collective voice for the industry. 

This unification allows us to represent the views and proposals of geological NGOs and professional bodies more effectively to government agencies and policymakers. We also play an active role in shaping regulatory updates initiated by the Mineral Resources and Petroleum Authority, with positive sector-wide influence.

In Mongolia, exploration has historically lagged behind mining operations—a concern acknowledged by the last three sector ministers. How has this imbalance impacted the geology sector, and what steps can be taken to close the exploration gap? 

Ideally, exploration and geological research should lead the way for others. It’s crucial to first investigate and understand our underground resources—what minerals are present and in what quantities—so that future planning and development are grounded in reliable data.

Before launching major industrial projects or new settlements, thorough geological surveys must assess available construction materials. These surveys determine not only the types and quantities of materials but also their sustainability over time. This is why the geology sector must take a proactive role ahead of other industries. 

Subsequent industrial and infrastructure developments rely heavily on geological findings. For instance, areas confirmed to lack significant mineral deposits are typically earmarked for construction, infrastructure projects, industrial facilities, and urban expansion. 

When did exploration begin to fall behind mining in Mongolia? How was the exploration policy implemented before 1990? 

I have worked as a geologist since 1990, and looking back, the government placed significant emphasis on the geological sector before that time. Substantial funding was allocated, and activities carried out according to detailed, well-structured plans. Baseline geological surveys were conducted thoroughly across all 18 aimags (provinces) of Mongolia.

As a result, important deposits of construction materials, gold, coal, copper, lead, and fluorspar—resources essential for the development of provinces, urban centers, and Ulaanbaatar—were discovered and officially registered. Thanks to a centralized and well-organized registration system, several mineral deposits were ready for exploitation by 1990, which significantly supported the country’s economic growth. 

However, while these surveys laid a strong foundation, the data were still insufficient to attract major international investors. Further detailed surveys and exploration were necessary to unlock the full potential of Mongolia’s mineral wealth. 

For example, during the socialist era, the Tavantolgoi coal deposit was discovered. At the time, however, coking coal prices were low and industrial development in neighboring China was limited, so the deposit remained unexploited. 

Although extensive baseline surveys had been conducted, the 1997 Minerals Law became a major turning point, sparking additional exploration efforts on deposits requiring further study. Between 1997 and 2005, investors from countries like Australia and Canada acquired exploration licenses, leading to a significant boost in foreign direct investment. 

These new investors introduced advanced exploration technologies and equipment. They revisited deposits identified during the socialist period, confirming reserves and making discoveries. For instance, coal deposits in the Gobi were reclassified according to the JORC (Australasian Joint Ore Reserves Committee) standard, which improved the accuracy of reserve estimates and attracted international financing.

This classification was officially recognized by global stock exchanges, allowing some Mongolian deposits to be listed and valued internationally. Much of this was driven by investors from these third countries. 

To illustrate, in 2011, South Gobi Sands completed exploration at the Gurvantes deposit and planned to sell the company— listed on the Toronto Stock Exchange—to a Chinese firm. However, this deal was blocked by the Mongolian Parliament and government. Although additional investments—such as in beneficiation and processing facilities— were necessary, the government blocked the transfer to a new investor who was capable of providing them. 

This marked the beginning of a decline in exploration sector investment. Moreover, a presidential decree issued in 2011-2012 banning the issuance of new exploration licenses caused the exploration sector to stagnate—a situation that continues to affect Mongolia today. 

What is the current state of human resources in Mongolia’s geology sector? 

Today, Mongolia’s geology sector continues to rely on a strong foundation built by specialists trained during the socialist era— many of whom studied in Eastern Europe, the former Soviet Union, or graduated from the National University of Mongolia (NUM) and the Polytechnic Institute. These experienced professionals, along with their successors, form the backbone of the sector.

Since Mongolia transitioned to a market economy, institutions such as NUM and the Mongolian University of Science and Technology (MUST) have taken on the primary role of training new geologists. After earning their degrees, graduates typically build their expertise through hands-on fieldwork, gradually strengthening their professional skills. This practical, experience-based development remains a key part of how specialists are trained in our sector.

Over the past decade, there has been a noticeable increase in the number of Mongolian geologists earning bachelor's and master's degrees abroad, which has helped bring in new knowledge and international perspectives. However, the number of graduates is still not sufficient to meet the sector’s growing and evolving needs. 

One of the biggest challenges in the geology sector is its cyclical nature. When the industry slows down, many professionals lose their jobs and are forced to transition into other fields. Later, when activity resumes, there’s often a shortage of experienced personnel to meet demand. Additionally, during downturns, fewer young people choose to study geology, resulting in training gaps and a lack of new specialists entering the workforce. 

The government and the Ministry of Industry and Mineral Resources have announced plans to invest in the geology sector and intensify exploration efforts. What should be prioritized as this initiative begins?

Since the 1990s, government policy toward the geology sector has weakened significantly. There has been no consistent annual investment in exploration, and this disruption continues to the present day. Mongolia’s economy remains heavily reliant on fluctuations in global commodity prices— when prices fall, the economy enters a downturn. This boom-and-bust cycle has persisted for years. 

To achieve stable revenue from mineral exports, diversify the economy, and ensure balanced development across other sectors, consistent support for exploration and increased budget allocations to the geology sector are essential. The absence of such long-term support has contributed to the sector’s decline. 

Another issue is the general lack of public understanding regarding geology, exploration, and mining. This has made it easier for individuals with conflicting interests to spread misinformation, further hindering progress in the sector. It is also a mistake to view investment in geology as something that benefits only the mining industry. In fact, geology provides critical baseline data that supports agriculture, infrastructure, and many aspects of daily life. All of this is grounded in scientific analysis. When a mineral deposit is discovered, detailed studies are conducted to confirm and quantify reserves. If a deposit is found to be economically unviable, that too is scientifically evaluated. Regardless of the outcome, these assessments form the foundation for sound decision-making across multiple sectors. 

What percentage of Mongolia’s total territory has been covered by geological surveys?

Currently, only about 20% of Mongolia’s territory is open for exploration. The remaining 80% is off-limits, as it falls under categories such as strictly protected areas, nature reserves, or special-use zones.

Private companies are not permitted to conduct exploration activities in these protected areas. While some exploration is being carried out in these zones using state budget funding, this raises concerns about efficiency. Conducting geological surveys in protected areas— where development is restricted—using public funds is a clear example of inefficient use of the state budget. 

Since last spring, the Mineral Resources and Petroleum Authority (MRPA) has been announcing exploration areas and inviting companies to invest through a selection process. To what extent are companies taking advantage of this opportunity? 

Since April, the MRPA has been announcing 10 to 20 exploration areas each month, inviting companies to apply and participate in a competitive selection process. 

However, the current system does not permit exploration licenses to be issued based on direct applications. This limitation has further deepened the sector’s stagnation— and by extension, slowed economic growth. In contrast, developed countries have used the application-based licensing method for centuries. 

Unfortunately, many of the exploration areas identified and announced by the National Geological Survey lack proper geological justification and are often not attractive to serious exploration efforts. This is largely because a significant portion of Mongolia’s territory has been designated as restricted or protected land, severely limiting the available options. 

In practice, exploration licenses are frequently acquired by foreign-invested companies with greater financial capacity. Mongolian geologists often end up working for these firms in a supporting role, primarily handling documentation and administrative tasks. On one hand, this system can be seen as transparent and open; however, in reality, it creates more opportunities for foreign companies than for domestic ones. The lack of targeted support for Mongolian enterprises paints a concerning picture for the future of the country’s geology and exploration sector. 

So, are you saying that the previous system of issuing mineral exploration licenses based on direct applications was the better approach? 

Yes. The 1997 Minerals Law included a provision for issuing licenses based on direct applications, and under that system—up until 2006—Mongolia’s geology and exploration sector experienced significant growth. Many new deposits were discovered during that time. 

However, brainwashing about foreign investors devouring Mongolia’s resources began to spread widely. Politicians and civil society organizations significantly contributed to the spread of this misunderstanding. 

At the time, we didn’t anticipate how much damage this would cause. We failed to adequately educate and inform the public about the importance and long-term value of the geology and exploration sector. That lack of public awareness is a major reason the sector is in decline today. 

The 1997 Minerals Law has faced a lot of criticism over the years, but in reality, it played a historic role in developing the sector. Rather than dismantling it, we should have improved and refined the law as the industry evolved. Unfortunately, we weakened a solid legal foundation—and now, we’re stuck in a deadlock with no clear way forward. 

How much funding has the government allocated to the exploration sector this year?

In the 2026 state budget, 42 billion MNT was allocated for geological survey work in Mongolia. However, there are already discussions during the budget amendment process about reducing this amount to just 10 billion MNT.

While budget cuts can be necessary in some areas, cutting investment in exploration poses a serious risk. Without consistent funding, Mongolia’s economy could face collapse within the next 5 to 10 years.

Sustainable economic growth requires year-on-year investment in geological research. When the government consistently supports exploration and builds upon previous work, the resulting geological data significantly boosts the potential for attracting private investment several times over. 

Before investing in a country’s geology and mining sector, companies first assess the quality and recency of its baseline geological data. Up-to-date geological data—as opposed to pre-1990 information—instills greater confidence and attracts more investment. Modern, high-quality geological surveys are critical for making discoveries. Without them, once current reserves are depleted, the country will be left asking: “What’s next?” A crisis becomes inevitable. 

For instance, discovering a large deposit typically requires 10–15 years of exploration. After that, another decade or more is needed for development and infrastructure. In total, bringing a major deposit into production can take 15 to 25 years. This timeline applies to most large mineral projects.

Mongolia’s export income and overall economy currently depend heavily on just a few mining products. When commodity prices rise, the economy grows—but when prices fall, it contracts. What solutions do you see for breaking out of this cycle? 

To ensure stable and sustainable economic development, we need to look beyond the few mineral resources we currently rely on. It is essential to explore and identify reserves of new mineral types and build industries and mining operations around them. For instance, if coal—one of our primary export commodities—drops in price, having alternative export-ready products would help stabilize the economy and support consistent growth. 

To achieve this, we must expand our focus to include a wider range of minerals such as rare earth elements, graphite, polymetals, molybdenum, phosphorite, and bauxite. Diversifying our mineral base is not just an option—it’s a necessity. And this can only happen if we intensify exploration efforts. 

It is also critical that companies that discover new reserves through exploration are legally protected and granted the rights to develop and utilize those deposits. Such legal certainty is essential to attracting further investment and enabling long-term development.

Additionally, geological exploration technologies have advanced significantly, allowing exploration to be conducted in much shorter timeframes than before. However, by limiting exploration activities, Mongolia is also slowing the adoption of these new technologies—missing a crucial opportunity to modernize and grow the sector. 

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 Thank you for your time!