Mongolia has reached a significant milestone in its mining sector by signing a preliminary agreement with French state-controlled mining giant Orano for the development of a $1.6 billion uranium mining project. The project, named Zuuvch Ovoo, will be in Dornogovi province, situated in southeastern Mongolia. This agreement, which is still under review by the Mongolian parliament, marks the beginning of what could become one of the country’s most substantial mining endeavors.

The project is set to move forward with its preparatory phase between 2024 and 2027, during which an initial investment of $500 million will be made. The first phase of production is expected to begin in 2028, with peak production projected to reach 2,600 metric tonnes of uranium per year by 2044. This would position Mongolia as a significant player in the global uranium market, particularly in light of growing demand for nuclear fuel.

Mongolian Prime Minister Oyun-Erdene Luvsannamsrai commented on the importance of the agreement, stating that it represents a crucial step forward in boosting inward investment and creating employment opportunities for the people of Mongolia. This sentiment reflects the broader economic impact the project is expected to have, providing significant employment and growth potential for the region.

The deal also underscores the growing importance of Mongolia as a key supplier of critical metals, particularly uranium, to countries like France. Orano, a major uranium producer with operations in Canada, Kazakhstan, and Niger, has been exploring uranium mining opportunities in Mongolia for over two decades. The company’s long-standing presence in Mongolia highlights its commitment to expanding its global footprint, especially as France seeks to secure stable supplies of uranium for its nuclear energy fleet. This is particularly crucial given the challenges Orano faces in Niger, where it is embroiled in a legal dispute over its mining rights following a coup in 2023.

The agreement for the Zuuvch Ovoo project was formalized in October 2023 when Orano and Mongolian state-owned Erdenes Mongol signed a protocol, paving the way for the development of the mine. The protocol was signed in the presence of French President Emmanuel Macron and Mongolian President Ukhnaagiin Khürelsükh which granted Orano exploitation rights alongside a local partner for the mining of uranium in the region.

While Mongolia currently does not operate any nuclear power plants, the country has expressed interest in utilizing small and medium-sized reactors in the future. The development of this uranium mine could help meet both domestic and international energy demands, further strengthening Mongolia's role in the global energy landscape. As the project moves through the parliamentary review process, it is expected to become a cornerstone of Mongolia’s mining industry, potentially transforming the country into a significant exporter of uranium in the coming decades.