POSCO International (047050.KS) is moving into Mongolia's resource development business, accelerating efforts to expand its global critical mineral supply chain. The company's strategy is to strengthen strategic cooperation from the development stage with Mongolia, a resource-rich nation with abundant reserves of copper, rare earths, and lithium, and to broaden the scope of its procurement of minerals essential to advanced industries.
According to industry sources Wednesday, POSCO International's working-level team visited Mongolia the previous day and signed a memorandum of understanding (MOU) with Erdenes Mongol, a local state-owned mining company, to develop critical mineral production and technology complexes. The two companies are known to have been discussing joint projects and cooperation measures that could be carried out in Mongolia since early this year.
Through this agreement, POSCO International is expected to participate in mining development projects held by Erdenes Mongol and begin its entry into the critical mineral supply chain in earnest. Erdenes Mongol holds 67 mining rights and 17 exploration rights covering copper, coal, and rare earths in the country, and operates a total of eight mines. It also leads the critical mineral exploration projects promoted by the Mongolian government.
Mongolia ranks second and fourth in the world for copper and coal reserves, respectively, and is counted among the world's top 10 resource-rich nations, also abundant in critical minerals such as rare earths and molybdenum. In particular, with global supply chains being realigned around the United States and China, the country is drawing attention as a non-Chinese mineral supplier. However, due to chronic problems such as a lack of smelting infrastructure and processing technology, it has sought cooperation with foreign companies that possess advanced technology. Erdenes Mongol also visited Korea last year to hold an investment briefing.
POSCO International is actively participating in overseas mining development, accelerating its move to secure critical mineral supply chains ahead of competitors. It is currently building a stable supply system through equity investments in mines for materials such as graphite in various countries including Tanzania, or by signing long-term offtake agreements for their output. The agreement with Erdenes Mongol is also analyzed as a strategic decision to expand the critical mineral supply chain into Central Asia.
POSCO International is broadening the scope of its cooperation by also pursuing an energy infrastructure project in Mongolia. In September last year, POSCO International signed an agreement with the city of Ulaanbaatar for a heating supply project utilizing wastewater heat, and is currently conducting a joint feasibility study. After verifying the economic feasibility and technical capabilities, the company is expected to launch the main project on a build-operate-transfer basis as early as the second half of this year.
