Mongolia turns to digital projects and renewables to diversify from mining dependence

Mongolia is setting up renewable-powered data centers as a way to uplift its citizens, diversifying away from the traditional mining revenue that powered the country for decades.

Temuulen Bayaraa, who heads the Chinggis Khaan fund, says the country is ready to make the leap. Bayaraa told CNBC at the Milken Institute Asia Summit in Singapore that there is massive land with a very favorable climate for activities like hosting data centers.

Zones are being mapped out, including Hunnu City, pitched as a smart and sustainable new urban hub.

Mongolia bets big on green power

The fund was created in April 2024 and already holds about $1.4 billion and it is waiting for government approval on which projects to invest in. The fund was created to use mineral revenue to improve infrastructure and power new industries.

Asia is already in a race to build computing power, as Japan, Singapore and Malaysia are all spending heavily on data centers. Analysts at Goldman Sachs say electricity use from such sites could climb 50% by 2027 and more than double again by 2030.

Future returns of the fund will go into mega-scale renewable projects since Mongolia has vast plains, which give it potential for solar and wind energy projects, according to Bayaraa. The country seeks to be a net energy exporter, feeding Russia and China, its neighbors, and both ties have been upgraded to what the government calls comprehensive strategic partnerships in recent years.

The target for Mongolia is to have renewables produce about 30% of all its electricity by 2030, from the current 18% share. Hope for such a development to meet the target now rests with the new fund, which is poised to give investors more confidence in long-term projects.

Bayaraa admits there are risks. “The fund’s sources are very dependent on commodities,” she said. Prices for coal, copper and uranium swing sharply, and Mongolia’s finances often swing with them. The Chinggis fund is managed by Erdenes Mongol, the state company that holds most mining stakes.

The country is hoping to win back public trust

With many citizens not feeling the benefits of the current mining boom, the country of 3.5 million people feels this fund might be a gateway to better collective living standards.

That anger spilled into the streets of Ulaanbaatar earlier this year, with protests over corruption in the mining sector forcing Prime Minister Oyun-Erdene Luvsannamsrai to quit. Bayaraa is blunt about the mood.

“People didn’t feel like mining contributed to the wealth, betterment of their livelihoods while eroding the natural resources. But now the sovereign wealth fund is positioned in a way to rebuild that trust.”

Bayaraa.

The promise this time is transparency, Bayaraa says the money will be managed and disbursed in a ring-fenced manner to support people, their educational needs, financing, educational, healthcare and housing needs.

Citizens will be able to track the inflows and outflows on a mobile app. “It’s very targeted intervention for expanding middle class, pushing labor market participation,” she added.

To build capacity, Bayaraa hopes members of Mongolia’s diaspora with financial expertise will return home. Their experience in banking and wealth management, she says, could give the fund a much-needed edge.

“For the longest time, Mongolia has been attracting investment into Mongolia. For the first day, we are becoming an investor to contribute to the global agenda,” she said.

The developments in Mongolia come as the data center industry is fast-growing, spurred by demand for AI systems. According to Fortune Business Insights, the global data center market was valued at $242.7 billion last year, as previously reported by Cryptopolitan, and is forecast to grow to $269.7 billion this year and $584.8 billion by 2032.

With this growth, stakeholders are also forced to innovate and look for alternative energy sources to power the rising demand.

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