Mongolia Eyes New Jobs Through Cashmere, Clean Energy and Minerals

Mongolia produces roughly 40 percent of the world’s raw cashmere, giving the country a powerful position in the global luxury-fibre market.

Mongolia has transformed its economy over the past three decades, cutting poverty, tripling GDP per person and reaching upper-middle-income status in 2024. The country is now looking beyond growth driven largely by traditional industries, with the government placing private businesses at the centre of plans to attract sustainable investment, raise productivity and create better-paid jobs.

The new Mongolia Country Private Sector Diagnostic, published by the World Bank Group, highlights sustainable cashmere processing, solar and wind power, and critical minerals as three sectors with strong but underused potential. The report says practical changes to regulations, institutions and market conditions could unlock hundreds of millions of dollars in private capital without placing major new costs on the public budget.

Turning Mongolia's Cashmere Into Higher-Value Products

Mongolia produces roughly 40 percent of the world's raw cashmere, giving the country a powerful position in the global luxury-fibre market. Only about 20 percent of that cashmere is processed domestically, and much of it leaves the country as semi-processed fibre instead of finished clothing that commands a far higher price.

Manufacturing garments inside Mongolia could increase the value generated from the same raw material by more than 200 percent. Stronger fibre-quality standards, clearer pricing systems and improved access to finance could help local companies modernise production, build trusted brands and reach more international buyers. According to the report, these reforms could attract around $150 million in private investment and create as many as 5,000 jobs by 2030, including valuable employment opportunities in rural communities.

Victoria Delmon, World Bank Group Country Manager for Mongolia, said the country's mineral resources, renewable energy potential and global standing in cashmere production could deliver greater prosperity when supported by a stronger policy environment. She described the diagnostic as a sector-by-sector guide for policymakers and investors seeking to understand which conditions must change.

Vast Renewable Resources Need a Modern Energy Market

Mongolia has an estimated technical potential of 700 gigawatts of solar power and 400 gigawatts of wind power, an amount equal to nearly 300 times its current domestic energy consumption. Renewable sources still provide only about 10 percent of the country's electricity generation, leaving a striking gap between available natural resources and actual energy production.

Modernising the electricity grid will be essential because new solar and wind projects need reliable infrastructure capable of carrying power across large distances. The report also calls for bankable power purchase agreements and rules allowing renewable generators to sell electricity directly to major industrial users. Combined with capacity investments already planned by the government, these changes could mobilise about $230 million in private investment, create nearly 1,700 jobs and support a cleaner economic growth path.

Clearer Mining Rules Could Unlock Critical Minerals

Mongolia holds significant deposits of copper, lithium, rare earth elements and graphite, all of which are increasingly important for electric vehicles, renewable energy systems, batteries and modern technologies. Less than 15 percent of the land legally available for mineral development is covered by exploration licences, partly because investors face regulatory uncertainty and limited access to reliable public geological information.

Clearer licensing rules, stronger geological data systems and a more predictable investment environment could encourage companies to commit money to responsible exploration. The World Bank Group estimates that these improvements could attract between $200 million and $500 million in exploration investment while supporting 700 to 1,400 new jobs over the medium term.

Arnaud Dupoizat, IFC Division Director for East Asia, said investor interest in Mongolia already exists, yet uncertainty surrounding the rules continues to hold many companies back. Implementing practical reforms across the three priority sectors could show investors that Mongolia is prepared to support stable, long-term business commitments while creating wider benefits for workers, communities and the national economy.