ULAANBAATAR, Mongolia — The government has confirmed that two strategic investors have been shortlisted to build the country's long-planned Integrated Steel Complex, an estimated US$806 million project, moving it a step closer to construction after years of preparation.

The announcement came out of the regular cabinet meeting in Ulaanbaatar on Wednesday, where the Minister of Industry and Mineral Resources, G.Damdinnyam, told colleagues that a sub-working group had now been formed to evaluate the shortlisted bidders' implementation plans, investment structures and business partnership proposals. The identities of the two companies have not yet been made public.

Officials said the government had approached 30 leading steel and metallurgy firms from Sweden, China, South Korea and the United States earlier this year, inviting them to express interest in the project. Of those, five submitted price proposals during a call for investment and cooperation offers that ran from April 10 to May 11. Two of those five have now cleared the preliminary screening and advanced to the second and decisive round of the selection process.

The cabinet also approved a resolution setting out "certain measures to implement the Integrated Steel Complex project," formalising the next steps after a government working group was tasked, under prime ministerial directives, with finalising a feasibility study and organising the tender. The land earmarked for construction has already been designated for special state use, clearing one of the administrative hurdles facing the project.

A flagship industrial project

The steel complex has been years in the making. It sits at the centre of Mongolia's "Vision 2050" development strategy and its "New Reform Policy," both of which prioritise turning the country's vast raw mineral wealth into higher-value, domestically processed goods rather than continuing to export unprocessed ore.

According to tender documentation published by the Ministry of Industry and Mineral Resources, the project is designed to draw on the iron ore reserves of the Darkhan-Selenge region in northern Mongolia to produce at least one million tonnes of finished steel a year — enough, officials say, to meet domestic demand, cut reliance on imports and open up new export capacity.

The complex is planned for a 651-hectare site inside the Darkhan Industrial and Technology Park, in Orkhon soum, Darkhan-Uul province. It will be built around blast furnace technology and is expected to include an iron ore beneficiation plant, facilities for sintering, pelletising, coking and lime preparation, a steel smelting and rolling plant, its own power generation capacity, transport and logistics links, water supply and treatment infrastructure, and supporting office and social facilities.

Three state-linked entities are steering the project. The Ministry of Industry and Mineral Resources is responsible for policy and regulatory oversight; Erdenes Mongol, the state mining holding company that controls a significant share of Mongolia's coal, copper, fluorspar and iron ore reserves, is acting as the primary project owner; and Darkhan Metallurgical Plant, Mongolia's original steelmaker, will supply the core raw material. That plant, first built in 1990 under a Mongolia-Japan cooperation agreement, holds the Khust-Uul, Tumurtei and Tumurtolgoi iron ore deposits, with combined reserves of close to 235 million tonnes of magnetite ore. Additional raw material is expected to be sourced on a long-term basis from the giant Tavan Tolgoi coal deposit in the south Gobi, which will help supply coking coal alongside the limestone and iron ore needed for steelmaking.

Incentives, obligations and technical bar

To attract investors, the government is offering a package of tax and non-tax incentives under Mongolia's investment and industrial park legislation. These include a five-year exemption from customs duties, a four-year deferral of import VAT on construction materials and equipment that cannot be sourced locally, a ten-year exemption from land use fees, reductions of up to 100% on immovable property tax in the plant's early years, concessions on work permit fees for foreign staff, and a zero VAT rate on the complex's final products.

In return, the winning investor will be expected to fully finance the project and take responsibility for every stage of delivery, from feasibility studies and engineering design through construction, commissioning and eventual market supply. The government's tender documents set a demanding technical bar: bidders must show they can process the sulphur- and phosphorus-heavy characteristics of the Darkhan-Selenge ore into internationally compliant steel, deploy proven and largely automated equipment, and build in filtration systems to control carbon dioxide, sulphur dioxide and other emissions. Proposals must also address recycling of industrial waste and by-products, energy- and water-efficient design, and the possibility of running the plant partly on treated wastewater from Darkhan city. Once a contract is signed, the successful investor will be required to commission a plant with at least one million tonnes of annual capacity within 36 months.

Beyond the technical requirements, Mongolian officials say the eventual investor will also be expected to help meet the country's domestic steel needs while producing higher-grade steel for export, create local jobs, and train and upskill Mongolian workers as part of the deal.

Winner expected by October

Speaking at Wednesday's cabinet meeting, Minister Damdinnyam said preparations were now complete to organise the second-stage evaluation, in which the two shortlisted investors' financing plans and partnership proposals will be assessed by the newly formed sub-working group.

The government said a final decision is expected to be presented to a cabinet meeting no later than October 2026, when ministers are due to announce which of the two remaining bidders has won the right to become Mongolia's strategic partner in building the Integrated Steel Complex.