2025 marks the 70th anniversary of diplomatic relations between India and Mongolia, which were first established on 24th December 1955. Breaking with its ideological allies, India became the first country outside the socialist bloc to establish such relations. Most recently, Indian Prime Minister Narendra Modi met with the Mongolian President Khurelsukh Ukhnaa on the 14th of October at New Delhi’s Hyderabad House. The two countries signed ten pacts for a period of about ten years, signaling a new era of cooperation.
China’s Stranglehold on Rare Earth Elements
The Gobi Desert, which encompasses certain northern parts of China and southern Mongolia, is widely believed to hold huge reserves of lithium, graphite, and REEs or Rare Earth Elements. These are a group of 17 chemical elements which include scandium, yttrium, and lanthanides. These elements, which are abundant in the Earth’s crust, are critical to the production of many modern technologies like cell-phones, televisions, etc. While China holds the largest reserves of these elements at about 44 million tons, Mongolia crucially occupies the second position with 31 million tons according to a 2009 estimation by the US Geological Survey. China has brutally exercised its monopoly over these elements, most recently by placing restrictions on its exports of REEs. Industry leaders in India concede that this restriction impacts the import of components, sub-assemblies, and specific light rare earth magnets which they had been using earlier.
Critically, Electric Vehicle motors require these components for operation. According to Nitin Gadkari, Union Minister Road Transport and Highways, India seeks to attain 30% share of EVs among total vehicles sold by 2030. The nation plans to become the world’s largest EV manufacturer. The solution to China’s chokehold on REEs? According to Bai Chong-En (Dean of the School of Economics and Management at Beijing’s Tsinghua University), India should allow Chinese investment and production of EVs for them to eventually learn and start its own manufacturing. This would make the nation even more reliant on China not just as an exporter of REEs but also as a producer of EV engines.
How India Can Benefit From Mongolia
Here is where the pact between India and Mongolia comes in. At present India is looking at the options of buying coking coal from the Eastern Asian nation. If India has to buy this coal from Mongolia it must be through Tianjin port in China or Vladivostok in Russia. Furthermore, India is spending around $1.7 billion on an oil refinery project in Mongolia and is also looking at strengthening cultural ties. Not only is the pact limited to these areas, but it is also exploring possibilities of cooperation in areas such as energy, critical minerals, rare earths, digital and mining. Mongolia is thereby emerging as a potential and reliable alternative to China in the import of REEs for India.
Prime Minister Modi termed the two nations as “spiritual siblings”. It is time for these “siblings” to come together and take advantage of the globalised world to work together and pose a challenge to China’s monopoly by effective discovery and extraction of REEs. If India strategically uses this partnership, it can hope to achieve its goal to be an EV manufacturing giant by 2030.
(The author is a student at Ashoka University)
