President Khurelsukh Ukhnaa and Foreign Minister Battsetseg Batmunkh’s participation at the United Nations General Assembly in New York provided more than an opportunity to reinforce Mongolia’s international profile. It should also encourage Canada to look more strategically at a bilateral relationship whose importance extends well beyond its current level of trade.
The engagement between Foreign Minister Battsetseg and Canada’s Minister of Foreign Affairs, Anita Anand, was diplomatically significant. High-level contacts of this nature maintain political momentum and demonstrate the value both countries attach to a relationship that has developed substantially since diplomatic relations were established in 1973.
For Canada, however, there is a larger question: Where should Mongolia fit within Canada’s Indo-Pacific Strategy?
The answer deserves greater attention.
Mongolia and Canada’s Indo-Pacific Strategy
Canada’s Indo-Pacific Strategy is built around five objectives: promoting peace, resilience and security; expanding trade, investment and supply-chain resilience; investing in people; building a sustainable and green future; and strengthening Canada’s role as an active and engaged Indo-Pacific partner.
Mongolia intersects with virtually every one of these objectives.
Indeed, Canada’s own implementation reporting has identified the elevation of Canada–Mongolia relations to a Comprehensive Partnership in 2023 as an accomplishment under the Indo-Pacific Strategy, which was released in 2022. Canadian Armed Forces personnel have also participated in exercises in Mongolia, including KHAAN QUEST and PACIFIC AIRLIFT RALLY.
Mongolia should therefore be viewed not as peripheral to Canada’s Indo-Pacific engagement, but as a country where several elements of Canadian policy converge.
Strategic Geography
Mongolia occupies one of the world’s most distinctive geopolitical positions: a landlocked democracy situated between Russia and China, with no other land borders.
Geography inevitably influences Mongolia’s economic and foreign-policy choices. China is central to Mongolia’s trade, while Russia remains important to its energy and transportation networks.
Mongolia’s response has been pragmatic. Through its Third Neighbour Policy, it has developed relationships with countries beyond its two geographic neighbours, including Canada, the United States, Japan, South Korea, and European partners.
There is something instructive for Canada in this approach.
Mongolia demonstrates how a smaller country can maintain necessary relationships with powerful neighbours while simultaneously creating diplomatic, economic and security relationships that provide it with greater international options.
Canada has an interest in supporting that diversification.
This should not mean asking Mongolia to choose between Russia and China and its democratic partners. Such an approach would misunderstand both Mongolia’s geography and its foreign policy.
Canada can instead help Mongolia broaden its choices – economically, diplomatically and institutionally.
That is where Mongolia’s Third Neighbour Policy and Canada’s Indo-Pacific Strategy naturally intersect.
From Canadian Investment to Critical Minerals
The economic relationship also has a significant history.
Canada once occupied an exceptional position as a source of foreign investment in Mongolia, driven largely by Toronto-listed Turquoise Hill Resources’ investment in the Oyu Tolgoi copper-gold project.
Oyu Tolgoi illustrates both the scale of Mongolia’s mineral potential and Canada’s historical role in developing it.
Mining accounts for approximately 26 per cent of Mongolia’s GDP, 75 per cent of foreign direct investment, and 90 per cent of exports, according to Canada’s Trade Commissioner Service. Export Development Canada provided C$1 billion in financing for Oyu Tolgoi’s underground expansion, while the project purchased more than US$460 million in products and services directly and indirectly from Canadian suppliers beginning in 2016.
The Canadian investment position subsequently changed following Rio Tinto’s acquisition of the remaining shares of Turquoise Hill in 2022.
Rather than looking backward, Canada should view this as an opportunity to create a new generation of economic engagement.
Critical minerals are increasingly connected to economic security, clean technology, advanced manufacturing, and national security. Canada’s own Critical Minerals Strategy emphasizes both diversification and international partnerships.
Mongolia’s mineral resources, combined with Canadian expertise in mining finance, exploration, engineering, environmental technology, and responsible resource development, provide an obvious area for co-operation.
But our economic relationship should not stop with mining. Agriculture and food security, clean energy, education, artificial intelligence and digital technologies, infrastructure, and professional services all provide opportunities for diversification.
From Partnership to Policy
Canada and Mongolia established a Comprehensive Partnership in 2023. The challenge now is to give it greater practical substance.
Canada should consider identifying Mongolia more explicitly as an important third-neighbour partner within the next phase of its Indo-Pacific engagement.
A Canada–Mongolia Action Plan could establish measurable objectives in critical minerals, trade and investment, clean energy, agriculture, education, defence co-operation, peacekeeping, and people-to-people relations.
Canada should also consider establishing a dedicated Canada–Mongolia Critical Minerals and Investment Dialogue, bringing together governments, financial institutions, mining companies, technology providers, and investors.
There is a security dimension as well. Mongolia has developed a respected international role in UN peacekeeping, while Canada has already expanded its military engagement in the Indo-Pacific. Continued co-operation through exercises such as KHAAN QUEST, peacekeeping training, and Women, Peace and Security initiatives can give the bilateral relationship greater strategic depth.
The meeting between the Canadian and Mongolian foreign ministers in New York was therefore important not because one diplomatic meeting transforms a relationship, but because sustained high-level engagement can generate momentum for practical action.
Mongolia should not be peripheral to Canada’s Indo-Pacific thinking. Its strategic geography, democratic institutions, mineral resources, commitment to multilateralism, and experience navigating relationships with Russia and China give it an importance greater than its population or bilateral trade figures might suggest.
For Canada, deeper engagement with Mongolia would put our Indo-Pacific policy into practice: diversifying economic relationships, strengthening critical-mineral supply chains, supporting resilient partnerships and expanding Canada’s engagement in a strategically important region.
Canada does not need Mongolia to choose sides. Canada should help ensure Mongolia has choices. That would serve Mongolia’s Third Neighbour Policy – and Canada’s national interest.
