Overview

Resource-rich, democratic and outward-looking, Mongolia is the world's most sparsely populated country, with 3.3 million people spread over an area almost as big as Queensland. Strategically located between Russia to the north and China to the south, landlocked Mongolia is home to rolling grasslands, freshwater lakes, alpine forests, mountain glaciers and vast sand dunes.

Mongolia is a rapidly urbanising country, with 67 per cent of its citizens now living in cities. It is also a relatively young country, with a median age of only 28 years. The majority of Mongolia's population is ethnically Khalkh Mongol, but substantial numbers of Kazakh and Oirat peoples reside in the west of the country. Mongolia is administratively divided into 21 ‘aimag’ (states or provinces) and the capital city of Ulaanbaatar.

Mongolia formally declared its independence in 1911, and then again in 1921 following the Mongolian People's Revolution. As a socialist state for most of the 20th century, its agrarian-based economy was centrally-planned. Following structural reforms and privatisation in the 1990s, Mongolia emerged as a developing democracy with one of the world's fastest-growing economies.

From the mid-1990s, Mongolia has pursued a 'third neighbour' policy which seeks to engage countries with similar views on human rights, democracy and free markets. Engagement with countries, such as Australia, has helped Mongolia to expand its trade, investment, development cooperation and foreign policy contacts beyond its immediate neighbours.

Political Overview

Mongolia held its first democratic elections in 1990, after 70 years of single-party rule. There are two major political parties in the country: the Mongolian People's Party (MPP), which evolved from the communist single-party government, and the Democratic Party (DP) that grew out of Mongolia's 1990 democracy movement.

Executive power in Mongolia is shared between the Parliament and the President. Members of the State Great Khural (Parliament) are elected for a fixed four-year term, while the President serves a single six-year term (on different electoral cycles). The Cabinet is appointed by the Prime Minister. The President is the Commander-in-Chief and holds the power to veto legislation, although this can be overridden by a two-thirds majority in Parliament.

In the eight Parliamentary Elections held since the 1992 Constitution came into effect, power has alternated between the two major parties. The DP formed grand coalition governments in 1996, 2004 and 2012, while the MPP achieved decisive victories in elections held in 1992, 2000, 2008, 2016 and 2020. The next Parliamentary Elections are scheduled for 2024.

Since the 1992 Constitution came into effect, eight Presidential Elections have been held in Mongolia. On 9 June 2021, Ukhnaagiin Khurelsukh (MPP) was elected President with a large majority in the first round of voting. Former President Khaltmaagiin Battulga (DP) had been ruled ineligible to run for a second term following a constitutional ruling. The next Presidential Elections will be held in 2027.

Economic overview

Heavy reliance on the mining sector has linked Mongolia's economic fortunes to global mineral commodity prices. Between 2011 and 2013, Mongolia's GDP grew in double digits before it slowed to 1.2 per cent in 2016 amid a weakening commodity market. The economy picked back up again in 2017, primarily on the back of positive developments in the minerals sector. Growth continued unabated until 2020, when Mongolia's economy contracted by 5.3 per cent due to the impacts of COVID-19.

Agriculture (primarily nomadic pastoralism), once the mainstay of the Mongolian economy, continues to decline as a share of national employment and contribution to GDP. According to the World Bank, in 2019, agriculture comprised approximately 11 per cent of GDP, while industry (including mining) accounted for approximately 39 per cent of GDP and services accounted for 50 per cent of GDP.

Mongolia's mining sector continues to grow strongly, and around 90 per cent of Mongolian exports are related to the mining industry, notably copper, gold and coal. Australian companies are well-placed to assist in developing Mongolia's resources, and there is strong commercial interest and investment potential in Mongolia's minerals and energy sector. The Oyu Tolgoi copper and gold mine alone is expected to account for as much as 33 per cent of Mongolia's GDP once full commercial ore production starts.

Bilateral trade between Australia and Mongolia is modest. Two-way merchandise trade totalled $45.2 million in 2019-20, with Australian exports accounting for the majority of trade ($43.2 million). Australia's major exports to Mongolia included electrical circuits equipment ($5.0 million), hand or machine tools ($3.2 million), civil engineering equipment ($3.2 million), and electrical machinery ($2.8 million). Australia's principal imports from Mongolia in 2019-20 were civil engineering equipment ($1.3 million), pumps ($265,000), textile clothing ($115,000), and specialised machinery ($97,000).

Mongolia possesses numerous assets, including raw materials, sizable livestock and many other sectors with high potential for development (mining, food processing, telecommunications and tourism), but its economy is heavily reliant on foreign capital inflows. Mongolia ranks 81 out of 190 countries in the World Bank's 2020 Ease of Doing Business report. The inflation rate in Mongolia was 5.0 per cent for 2020.

China is Mongolia's largest trading partner, accounting for around 93 per cent of Mongolia's exports (predominantly copper and coal) and approximately 34 per cent of imports in 2018. Increasing numbers of Chinese workers are providing labour in Mongolia.

The Mongolian Government confronts major challenges in managing a growing economy, large-scale foreign investment and the rising expectations of its citizens. While strong economic growth in previous years has helped the country reach lower-middle income status, Mongolia's poverty rate remains relatively high with the World Bank reporting that about 28 per cent of the population still live in poverty (2018). All of these challenges are being exacerbated by COVID-19.

Bilateral Relations

Australia established diplomatic relations with Mongolia on 15 September 1972. Bilateral engagement accelerated markedly following democratic and free-market reforms in Mongolia during the early 1990s. The focus of the bilateral relationship has primarily been on education, development assistance and commercial activities in Mongolia's resources sector. There are also growing people-to-people links and deepening political engagement between Australia and Mongolia.

Mongolia opened an embassy in Canberra in 2008. The Australian Trade and Investment Commission (Austrade) opened a trade office in Ulaanbaatar to serve the needs of Australian business in 2011. The Australian Embassy in Ulaanbaatar was opened in December 2015. 2022 will mark the 50th anniversary of diplomatic relations between Australia and Mongolia.

People-to-People links

People-to-people links between Australia and Mongolia continue to grow strongly. Since 1993-94, over 600 Australian scholarships have been provided to Mongolians to study in Australia. This has created a vibrant alumni network, affectionately known as ‘Mozzies’, many of whom have become influential Mongolian parliamentarians, officials and businesspeople.

Australia has long had a volunteer presence in Mongolia. Since 2011, over 300 Australian volunteers have contributed to Mongolia's development, with around 18 placements alone in 2020. Business is further deepening links between Australia and Mongolia. More than 650 Australians live in Mongolia, with a further 1,000 Australians visiting Mongolia on short-term assignments at any time. Over 50 Australian businesses are engaged in Mongolia, including several large companies operating in the mining sector.

Australia and Mongolia cooperate on many global and regional issues, including in defence and security. Contributing to international peacekeeping and security has been a particular focus of our cooperation. Australians and Mongolians have served together in UN peacekeeping operations including in South Sudan. We have also both deployed on coalition operations in Iraq and Afghanistan, as well as peacekeeping operations in Kosovo and Sierra Leone. Australia and Mongolia hold regular bilateral defence policy talks, and Australia participates in the annual Khaan Quest peacekeeping exercises hosted by Mongolia.

High-level visits

High-level visits between Mongolia and Australia have reinforced ongoing cooperation between the countries. At head-of-state level, then Governor-General Bill Hayden visited Mongolia in 1994 and Mongolia's first democratically elected President, Punsalmaagiin Ochirbat, visited Australia in 1997.

In February 2011, then Prime Minister Gillard welcomed His Excellency Sukhbaatar Batbold, as the first Mongolian Head of Government to visit Australia (Joint Statement by Prime Ministers Gillard and Batbold). His delegation included several Mongolian ministers, parliamentarians and businesspeople. In March 2014, Mongolian Foreign Minister, Luvsanvandan Bold visited Australia, the first Mongolia Foreign Minister to visit Australia since 1993.

Other senior Mongolian visits to Australia include

• January 2020, Chairman of the Great State Khural, Zandanshatar Gombojav, attended the Asia Pacific Parliamentary Forum in Canberra and met with Speaker Tony Smith and Senator Dean Smith.
• March 2019, Deputy Minister for Labour and Social Protection, Sanjaa Mungunchimeg led a delegation to meet with government officials and members of the academic community to learn about Australia's social and human services policies and approaches;
• February 2019, Governor of Nalaikh District, Radnaabazar Choijinsambuu, visited Goulburn to formally establish the Nalaikh-Goulburn sister city relationship, enhancing people-to-people and municipal government links;
• April 2019, Narambaatar Nanzad, Governor for Umnugobi Province, led a health study tour to Victoria, focused on the delivery of health services in remote areas;
• June 2019, the Director of Mineral Resources for the National Geoscience Database of Mongolia, Namsrai Nunkhbileg, and other officials visited as part of ongoing engagement with Australia's geoscience industry and GeoScience Australia;
• August 2019 Batkhuyag Mergee, General Director of Mongolia's Treasury Department, met with Department of Finance and Treasury officials, to understand Australia's approach to government financial management.
• October 2018, the Mongolian Minister for Mining and Heavy Industry, Sumiyabazar Dolgorsuren, led a delegation to the International Mining and Resources Conference (IMARC) in Melbourne, where he met Minister for Resources and Northern Australia, Senator the Hon Matthew Canavan
• October 2017, Dendev Terbishdagva, Chair of the Standing Committee on Economics, and three other MPs met then Foreign Minister Bishop and Ann Sudmalis MP, Chair of the Australia-Mongolia Parliamentary Group, during their visit to Australia for IMARC 2017.
• March 2016, Damba Gankhuyag, State Secretary, Ministry of Foreign Affairs of Mongolia, led a delegation to Australia for High Level Consultations with the Department of Foreign Affairs and Trade.
• May 2013, Mongolian Minister for Mining Davaajav Gankhuyag visited Australia for the Extractive Industries Transparency Initiative Global Conference and the State Secretary of the Ministry of Foreign Affairs, Gombo Tsogtsaikhan, visited Australia to meet with senior Australian Government officials.
• 2011, Mongolian Deputy Prime Minister Miyegombo Enkhbold visited Australia to study our social welfare system.

Australian senior visits to Mongolia

• July 2018, then Minister for International Development and the Pacific, Senator the Hon Concetta Fierravanti-Wells, visited Ulaanbaatar to represent Australia at the Asian Ministerial Conference on Disaster Risk Reduction (AMCDRR), hosted by Mongolia.
• May 2017, Australia's Ambassador for Women and Girls, Dr Sharman Stone, visited Mongolia to highlight Australia's work to improve women's equality and economic empowerment in Mongolia.
• April 2016, the Deputy President of the Senate, Senator Gavin Marshall, attended the Asia Europe Parliamentary Meeting in Mongolia.
• October 2012, then Foreign Minister Bob Carr visited Mongolia to open the Australian Consulate-General in Ulaanbaatar and discuss the bilateral relationship and growing commercial and aid ties.

Australia and Mongolia have also had a number of official inter-parliamentary engagement visits. In September 2012, a delegation of the House of Representatives Regional Australia Committee led by Tony Windsor MP visited Mongolia. In January 2011, Harry Jenkins MP, the then Speaker of the House of Representatives, led a delegation to the Asia Pacific Parliamentary Forum hosted by Mongolia. In 2010, a delegation of Australian Members of Parliament led by Annette Hurley MP visited Mongolia and ten Mongolian State Secretaries visited Australia. In 2009, two delegations from Mongolia led by Members of Parliament visited Australia, and a group of four Australian Members of Parliament from the Australia-Mongolia Parliamentary Group visited Mongolia.