Britain can help break China’s stranglehold on one of the largest sources for rare earth materials in the world by setting up an air route out of Mongolia, the country’s prime minister has said.

Rare earths, which are materials used to power drones, electric vehicles and quantum computers, will be the “crude oil of the 21st century”, Oyun-Erdene Luvsannamsrai told The Telegraph.

Western powers are in a race against China, which extracts and refines the majority of rare earths, to secure as much of the precious materials for their own industries.

Mongolia sits between Russia and China but its Harvard-educated, reformist prime minister is keen to develop alliances with the West. Last year, he signed an Open Skies agreement with the US to foster trade.

In order to ship its extensive deposits of rare earths, copper and uranium abroad, Mongolia relies on neighbouring China for access to the port of Tianjin.

The prime minister said Britain, with which Mongolia feels a kinship because “both of our countries have a history of having empires”, could benefit from access to the materials by establishing flight routes in and out of the country.

“We are in the process of studying... what transportation will be used to export those commodities to other countries and also we are looking for possibilities to use air transportation to export critical minerals,” said Mr Oyun-Erdene.

“There are also ways to transport those minerals to the UK, maybe through China [by sea] or maybe through air transportation. We are ready to discuss with major countries, including the United Kingdom, on this issue and further cooperation on how we can transport those minerals.”

Rare earth elements are used in an array of technologies to generate cleaner, renewable energy, including wind turbine magnets and solar cells. They lie at the heart of the transition from fossil fuels to low-carbon energy and will be vital in fighting climate change.

While Mongolia has tapped its reserves of copper and uranium, mining for rare earths remains in its infancy.

“I believe that critical minerals will be the crude oil of the 21st century,” said Mr Oyun-Erdene in an interview at his office in the capital Ulaanbaatar.

“Critical minerals, including copper, will be the most important commodity in the future,” he said.

Mongolia is seen by democratic nations as a potential ally in the struggle for control of the trade.

But the nation’s geography – sandwiched between authoritarian Russia and China, which are both on a diplomatic and military collision course with the West – puts it in a delicate position.

Its economy is dependent on oil and gas imports from Russia, while Beijing buys more than 90 per cent of its exports, including copper, minerals, coal and cashmere.

“We are focusing on having many more pillars in our economy and lessening our dependence on trade, energy and fuel on our two neighbours. In this context we have been cooperating with our western partners, like the United Kingdom, United States, Japan and the Republic of Korea,” said Mr Oyun-Erdene.

Forced to pick sides

But he added that Mongolia did not want to be forced to pick sides wholly, comparing the country’s position in a possible new Cold War to that of “a child that gets stuck between the parents” when they decide to divorce. 

Talks are already underway with the British Government to arrange an official visit to London, when cooperation on critical minerals and potential transport assistance of exports would be raised, he said.

The prime minister held similar talks with the US government last year, when he met with Kamala Harris, the vice president, and Lloyd Austin, the defence secretary. The two countries brokered an “Open Skies” agreement, aimed at boosting direct trade.

The UK has already shown deep interest in cooperating with Ulaanbaatar on developing its critical minerals mining sector and bolstering supply chains.

In October, Nusrat Ghani, the industry minister, visited Mongolia to explore opportunities in surveying and extraction, meeting with senior government officials and with British-Australian multinational Rio Tinto.

The world’s second-largest mining company has invested almost $16 billion (£12.5 billion) in partnership with Mongolia’s government to develop the Oyu Tolgoi mine in the south Gobi desert.

Demand for critical minerals including rare earth elements, lithium and cobalt is expected to surge by as much as 600 per cent over the coming decade, while demand for copper is forecast to double to about 50 million tonnes annually by 2035, reported the Financial Times last year.

Such a dramatic surge promises an economic boom for the country of 3.4 million people, which only emerged from a one-party socialist system in the 1990s. Its government hopes to tap into its natural resources to halve the national poverty rate to 15 per cent by 2030. But despite sitting on a sea of valuable commodities and vast land mass more than six times the size of the UK, Mongolia is in danger of being hamstrung by geopolitical events beyond its control.

Its dependence on Russia for about 30 per cent of its imports, including all its petroleum products, has made it vulnerable to economic shocks and coercion – a risk that has escalated since the start of the Ukraine war.

The democratically elected government faces a tricky balance to maintain cordial ties with Beijing and Moscow while diversifying its economy and pivoting towards other regional and western democracies.

Country’s isolated location 

The conflicts in Ukraine and the Middle East and looming flashpoints over the Korean Peninsula and Taiwan had led the world to a “very frightening” moment where Mongolians no longer felt buffered by the country’s isolated location and historically nomadic lifestyle, he said.

The potential impact of consequential elections this year added to a sense of uncertainty.

“The United Nations and the international community must be swift to call on all nations around the world to resolve these kinds of conflicts through diplomacy, peace talks and negotiations,” he said, urging major powers to pull together to tackle global problems like climate change.

On Ukraine especially, “the US, China, India, the UK must engage closer and make a bold step to find a solution for a ceasefire”, said Mr Oyun-Erdene.

“I fear if the world gets used to this kind of situation where we have ongoing war and we don’t have peace, that this will catalyse the possibility for future wars.”