Rare earths hold new promise for Mongolia

China controlling nearly 95% of rare earth minerals production globally and the possibility of demand exceeding supply in the short to medium term provides a strong incentive for Japanese, U.S. and European investment in Mongolian rare earth mining and the associated export infrastructure links, says a research note prepared by Eurasia Capital. The U.S. Geological Survey stated in 2009 that Mongolia is the second biggest holder of REO (rare earth oxides) reserves in the world after China. The survey estimated that Mongolia has 31 million tons of REO reserves, or 16.77% of the world total, which the World Bank estimated to be worth of over USD10 billion. However, Mongolian geologists and specialists argue that this is an underestimation and further exploration and study are needed. Mongolia possesses more than 5 major REE deposits, 71 occurrences and 246 mineralizations, and of these, the Lugiin Gol, Mushgia Khudag, Khotgor and Khalzan Buregtei deposits hold the most promise at a combined 6.6mn tons of estimated REO reserves.

REEs in Mongolia are still in the early stages of exploration and final reserves for any one deposit have yet to be estimated. REO Co Ltd, a Mongolian company, spent USD3.6 million exploring the Lugiin Gol deposit from 2005-2009, the most invested in any Mongolian REE deposit to date. Developing Mongolia"s most promising REE mines (Mushgia Khudag and Khalzan Buregtei) from exploration to oxide production will require more than USD500 million each, assuming all mines use joint REO processing facilities, costing upwards of USD300 million.