The Government of Mongolia and France-based nuclear energy company Orano have reached a significant milestone with the announcement of the first-ever ‘Mongolia-France’ uranium project.
With an initial investment of $500 million and a total investment of $1.6 billion, this agreement represents the second-largest foreign direct investment from a ‘third neighbour’, the government says.
The project has the potential, as per the feasibility study, to position Mongolia as the world’s sixth-largest uranium producer, highlighting the country’s prospective role in the global energy market, it says. The agreement also marks a new chapter in Mongolia-France economic relations, emphasising sustainable resource development and enhanced international collaboration.
Mongolia has uranium geological resources of 192,200 t, accounting today for 2% of global supply. The geopolitical significance of uranium as a strategic resource will also complement the expected creation of 1,600 new jobs, the introduction of advanced technologies, and significant financial benefits to both the Mongolian Government and the investor base.
The project will be situated in Dornogobi Province and delivered over three phases:
- 2024 – 2027 (preparatory phase);
- 2028 – 2060 (product manufacturing – with peak production in 2044 of 2.6 Mt); and
- 2060 – 2070 (rehabilitation phase).
The draft agreement underscores a strong commitment to fostering local economic growth and employment. It mandates that at least 60% of subcontractors and a minimum of 40% of the total annual procurement value must involve Mongolian-registered, tax-paying legal entities. This ensures substantial local participation and direct economic benefits to Mongolia.
Additionally, the draft sets clear workforce targets. During the mining operation phase, at least 90% of the project workforce must be Mongolian citizens. Should the number of foreign employees exceed 10% of the total staff, the project company will be required to pay applicable fees for foreign worker positions in accordance with relevant legislation. Similarly, during construction, at least 60% of the workforce must consist of Mongolian citizens.
During the project lifecycle, a range of financial benefits will be realised, including expected total sales revenue of $13.4 billion, representing $4.6 billion added value to the state budget. Based on an average uranium sales price of $75 per pound, the project’s internal rate of return is 19.4%. The project investment payback period is estimated to be 11-13 years. The project will also generate a $44 million in local development funds, the government says.
The Mongolian Government is guaranteed to receive at least 51% of the project’s benefits without any financial obligations. Additionally, the government will hold a 10% preferred equity stake, which grants priority dividends as well asveto rights over key decisions. The government will also have the right to purchase 10% of the production under the same terms as the investor.
Prime Minister of Mongolia, Oyun-Erdene Luvsannamsrai, commented: “This agreement is a significant step forward in boosting inward investment and employment opportunities for the Mongolian people.
“It demonstrates our achievements in supporting economic growth and delivering on our aims set out it in the ‘New Recovery Policy’ and ‘Vision 2050’. Equally, it highlights our commitment to collaboration with our third neighbours. We look forward to further strengthening our strong relations with France.”