World Bank identifies cashmere, renewables and critical minerals as key opportunities to diversify Mongolia’s economy

ULAANBAATAR, October 6, 2026 — Sustainable cashmere processing, solar and wind power, and exploration for minerals needed for the energy transition offer Mongolia its strongest opportunities to diversify an economy heavily dependent on mining and driven by the private sector, according to a new World Bank Group study.

The World Bank Group published its Mongolia Country Private Sector Diagnostic (CPSD) report on September 10. The report was presented at the “Unlocking Private Investment for Mongolia’s Economic Diversification” event in Ulaanbaatar on October 6, which brought together representatives of the government, private sector, investors and development partners.

An economy dependent on mining

Over the past three decades, Mongolia has significantly reduced poverty and tripled its GDP per capita, reaching the upper-middle-income country category in 2024. The government has made private sector-led economic diversification a top priority.

The report says the country’s heavy reliance on exports of a limited range of minerals leaves the economy vulnerable to fluctuations in commodity prices, making it necessary to broaden its economic base through private investment.

Victoria Delmon, the World Bank Group’s Country Manager for Mongolia, highlighted Mongolia’s vast mineral and renewable energy resources and its position as one of the world’s leading cashmere producers. She said that improving the policy environment would allow these resources to deliver greater benefits and create more jobs for Mongolian businesses and local communities.

Cashmere: $150 million and up to 5,000 jobs by 2030

Mongolia supplies approximately 40 percent of the world’s raw cashmere. However, only 20 percent is processed domestically, with most of the rest exported as semi-processed yarn.

The World Bank estimates that processing the raw material into finished products such as garments could increase the value generated from the same volume of cashmere by more than 200 percent.

Improving fibre-quality standards, pricing mechanisms and access to finance could enable the sector to attract up to $150 million in private investment by 2030, create up to 5,000 jobs and support employment in rural areas, the report says.

Solar and wind: $230 million and around 1,700 jobs

Mongolia has technically viable solar energy potential of 700 gigawatts and wind energy potential of 400 gigawatts. This is approximately 300 times greater than current domestic energy consumption. Yet renewable energy accounts for only about 10 percent of total electricity generation.

To capitalise on this potential, the report recommends upgrading the transmission grid, making power-purchase agreements financially reliable for investors, and allowing direct contracts between producers and large industrial consumers.

In addition to the capacity investments planned by the government, these reforms could attract around $230 million in private investment and create approximately 1,700 jobs, according to the World Bank.

Critical minerals exploration: $200–500 million

The third priority area is exploration for critical minerals such as copper, lithium, rare earth elements and graphite. Most of these minerals have yet to be fully surveyed and developed.

Exploration licences have been issued for less than 15 percent of the land legally open to exploration, the report says, citing limited access to geological information and regulatory uncertainty as key reasons.

Removing these obstacles could attract $200–500 million in exploration investment over the medium term and create 700–1,400 jobs, it estimates.

“Investor interest is real, but regulatory uncertainty is keeping many investors on the sidelines,” said Arnaud Dupoizat, Regional Director of the International Finance Corporation’s East Asia Department. He added that implementing the reforms proposed in the report would send a strong signal that Mongolia is open to long-term investment.

Reforms without major budget costs

The CPSD report identifies the regulatory, institutional and market barriers holding back private investment in each sector and prioritises reforms according to how quickly they could be implemented. The proposed measures would not require substantial budget expenditure, the report says.

Key figures

The figures above are estimates of potential investment and employment that could result if the reforms proposed by the World Bank are implemented; they do not guarantee that the investment will materialise.