In the Shadow of an Electrostate: Mongolia’s Coal Export Dependence

One frequent theme I often write about is emerging countries’ dependence on fossil fuel exports. This past week, I had the pleasure of visiting Mongolia to study the country’s coal industry.

Mongolia is an interesting case study because its primary export market for coal is the world’s top electrostate, China. With a population of around 1.4 billion people, there are about 400 Chinese people for every Mongolian. What is more, Mongolia’s other neighbor, Russia, has abundant natural resources. Mongolia exports less than 1% to Russia.

For Mongolia, economic dependence on coal exports to China presents a difficult challenge. As China continues to expand renewables and coal demand peaks, Mongolia will find itself struggling to replace coal export income.

Mongolia is a vast, landlocked country with the lowest population density in the world. Professor Johannes’s visit in July 2025.

1. Coal in Mongolia

Coal is critical to Mongolia’s economy. In 2024, Mongolia produced a total of 98 million tons of coal. While some of the coal is used for domestic purposes, coal exports are an important source of export revenue. In 2024, Mongolia exported 84 million tons of coal, worth USD 8.6 billion.

Replacing coal exports would be hard for Mongolia. Mongolia’s total GDP was only USD 25.8 billion (current prices) in 2024. That means the coal exports were worth one-third of Mongolia’s GDP. Coal was also worth more than one-half of all exports, which stood at USD 15.8 billion in 2024.

Considering the data, it is not an exaggeration to say that Mongolia’s economy is built on coal exports. Without coal exports, the country’s economy would face a contraction and a deep recession.

2. Dependence on China

Mongolia’s economic dependence on coal exports is further compounded by their concentration in China. Mongolia exports 90% of its coal to neighboring China. Most of the exported coal is high-quality, metallurgical coal used in steelmaking.

The reason for this concentration is simple. Mongolia is a vast but sparsely populated and landlocked country. It has only two neighbors, Russia and China. Of the two, Russia is a major coal exporter and only imports tiny quantities of high-grade coking coal, anthracite, and other specialized products. That leaves China as the far more plausible import market.

This dependence is a problem because the outlook for coal demand in China is weak. China has made massive investments in renewable energy to reduce its dependence on polluting