Mongolia, Kazakhstan discuss oil supplies, meat-processing plant in western Mongolia

ASTANA, Oct. 1, 2026 — Mongolia and Kazakhstan have discussed the possibility of supplying crude oil from Kazakhstan to Mongolia, establishing new transport and logistics routes, and building a major meat and meat-products processing plant in western Mongolia as part of efforts to expand bilateral trade and economic ties.

The issues were discussed during a meeting in Astana between Mongolian Deputy Prime Minister N. Nomtoibayar and Kazakhstan’s Minister of Agriculture Aidarbek Saparov. The 10th meeting of the Mongolia-Kazakhstan Intergovernmental Commission was also held, with the two sides discussing expanded cooperation in trade, investment, transport and logistics, and manufacturing.

Potential oil supplies discussed

The meeting included an exchange of views on the possibility of supplying crude oil from Kazakhstan to Mongolia. The Mongolian side also expressed interest in establishing new, shorter transport and logistics routes through Russia and China.

However, there has been no announcement that supplies have begun or that a specific agreement has been signed. The issue remains at the stage of exploring potential cooperation between the two sides.

The issue has drawn attention alongside efforts to diversify fuel supply sources in Mongolia. Kazakhstan is a major oil producer in Central Asia, while the countries’ geographic positions mean that transport routes would need to pass through Russia and China.

According to the Kazakh side, the two countries also discussed transport corridors, reducing logistics costs and developing trade routes through China.

Proposal for meat-processing plant in western Mongolia

Another key focus of the talks was the possibility of building a major meat and meat-products processing plant in western Mongolia.

The Mongolian side believes the plant could target markets with high demand for halal meat. This would create an opportunity to process livestock products and produce higher-value goods, rather than exporting the raw materials only in unprocessed form.

The Kazakh government also identified agricultural raw-material processing, joint manufacturing, machinery production, mining and metallurgy, and logistics as priority areas for cooperation between the two countries.

Target to increase bilateral trade

Trade between Mongolia and Kazakhstan has grown in recent years, but the overall volume remains relatively small.

According to the Mongolian government, the Kazakh side reported that bilateral trade had increased by 7.7 percent to $133 million. Kazakhstan’s Ministry of Trade and Integration, meanwhile, put trade at approximately $77 million for the first eight months of 2026. The figures cover different periods and therefore cannot be directly compared.

Kazakhstan’s Ministry of Agriculture also reported a target of increasing bilateral trade to $500 million. The two sides are focusing on expanding supplies of food and agricultural products, as well as developing processing industries and joint projects.

New mechanism for bringing Kazakh products to Mongolia

A new opportunity for bilateral trade this year is the Interim Trade Agreement between the Eurasian Economic Union (EAEU) and Mongolia.

According to Kazakhstan’s Ministry of Trade and Integration, the agreement entered into force on July 22, 2026, providing preferential terms for 367 tariff categories. Kazakhstan views the agreement as an opportunity to increase exports of agricultural products, machinery, metals and chemical-industry goods.

Preparations are also under way to establish a “Made in Kazakhstan” trading space in Ulaanbaatar, with the aim of regularly showcasing products from Kazakh manufacturers on the Mongolian market.

Trade financing and railway wagons

Efforts have also begun to support bilateral trade through financing mechanisms, in addition to the supply of goods.

Kazakhstan’s Export Credit Agency has approved a $33 million financing limit for Mongolia’s Trade and Development Bank. Within that framework, three deals worth approximately $21 million in total are being arranged to supply railway semi-wagons, according to the Kazakh side.

Kazakhstan also reported that the volume of freight transported by rail between the two countries in the first eight months of 2026 was 16 percent higher than in the same period a year earlier. In 2025, freight transported by road rose 52 percent to 17,300 tonnes.

From raw materials to value-added production

Talks on Mongolia-Kazakhstan cooperation are moving beyond traditional trade toward raw-material processing and joint manufacturing.

The Kazakh side also highlighted the possibility of establishing joint facilities to carry out deep processing of Mongolian wool and hides. The two countries are examining ways to combine Mongolian raw materials with Kazakhstan’s industrial capacity to produce higher-value finished goods.

As a result, oil supplies, a meat-processing plant, wool and hide processing, railway wagons and trade financing may appear to be separate issues, but they are being discussed as part of a broader effort to shift bilateral trade from raw-material sales toward manufacturing, processing, logistics and investment cooperation.

At the conclusion of the 10th meeting of the intergovernmental commission in Astana, the sides agreed to work on increasing trade, establishing joint manufacturing facilities, implementing investment projects, developing transport routes and expanding direct contacts between businesses.