By Marissa J. Smith
With the end of summer and the opening of the State Khural on September 15, the past few weeks have seen statements about economic policy coalescing into patterns.
These culminated this past week in still-new Prime Minister Zandanshatar‘s unveiling of his budget proposal, currently under discussion in the State Khural. A pitch to the public is exemplified in a Facebook post, stating that the budget includes “investment in the EDUCATION SECTOR to be increased by 2 times and the HEALTH SECTOR by 5.5 times,” specifying the construction of schools, kindergartens, dormitories, a cancer research center, and a cardiovascular center. (Meanwhile, a recent podcast episode by The Great State Mural highlights teacher shortages and low teacher pay as major concerns among the Mongolian population.)
However, at the same time, the Mongolian economy faces some major challenges and is being forced to attempt major pivots. As noted by over at Mongolia Weekly, the government is shifting focus from coal to copper. The Mongolian government’s revenues have been bolstered for several years (roughly since around the transition of power from Battulga’s to Khurelsukh’s administrations) on revenues from coal exports to China. As reported by Mining Insight Magazine, prices for Mongolian coal paid by China had fallen off by as much 30% as of fall 2024, and according to a summary presented with the 2026 budget proposal itself, prices had fallen by 40% in the first half of 2025, to the lowest price in the last 15 years.
Recent announcements by the government signaling attempts to increase gains from copper include:
- lowering the interest rate on payments due on Rio Tinto loan
- advertising unexploited ore reserves at Erdenet and plans for a smelter
- placing tax obligations on mine tailings processing operations at Erdenet
While this plan is more cautious than the Fourteen Megaprojects of last year when Oyun-Erdene was still Prime Minister, it does have echoes of that scheme, and opening up new ore reserves and/or constructing a smelter at Erdenet would face many of the same challenges. Mongolia’s late-Soviet-built major infrastructure — from power and transport to essential urban utilities — is only aging and deteriorating. Recent news stories have stated that seventy percent of Mongolia’s infrastructure is past its expiry date. Over the summer, one of Ulaanbaatar’s power plants suffered a major fire, and is apparently still crippled even now going into the winter (reporting from mid-August includes statements that repairs would be finished before November 1). At the start of September, a substation in northern Mongolia failed following a major fire, causing even the Erdenet Mining Corporation to halt operations. In Ulaanbaatar, a US-funded project to help “stem the impact of an impending water crisis” has been safe from the Trump administration’s chainsaw — at least for now.