How Mongolia Is Diversifying Its Defense Sector
Introduction
Mongolia, a land‑locked nation sandwiched between China and Russia, has long faced the challenge of securing its borders while maintaining strategic independence. In recent years the country has turned its attention inward, seeking to build a more self‑reliant defense sector that can support modernisation goals and reduce dependence on traditional suppliers. A visible sign of this shift is the opening of a new ammunition factory built in partnership with Turkiye, a NATO member whose defence industry has been expanding across Eurasia. The collaboration marks a turning point for Mongolia’s defence ambitions and signals a broader diversification strategy.
What Happened
In early 2024 a state‑of‑the‑art ammunition plant was inaugurated in the province of Töv, near the capital Ulaanbaatar. The facility, financed with roughly US$10 million in joint investment, is equipped to manufacture small‑arms cartridges, 7.62 mm rounds and medium‑calibre artillery shells. Its first production line became operational within three months of the ceremony, and officials projected an annual output of up to 10 million rounds, enough to meet the Mongolian Armed Forces’ projected needs for the next decade.
The factory is the flagship of a wider defence‑industry partnership signed in 2020 under a Memorandum of Understanding (MOU) between the Mongolian Ministry of Defence and Turkey’s Presidency of Defence Industries. The MOU outlines cooperation in technology transfer, joint training programmes, and the co‑development of additional defence products such as unmanned aerial systems and armored vehicle components. Turkiye’s role has been to provide design blueprints, quality‑control protocols and on‑site technical advisers, while Mongolia supplies land, labour and a growing pool of engineering talent.
Key Details
The ammunition plant’s production capacity of 10 million rounds per year translates into a concrete reduction of Mongolia’s import bill, which previously relied on Russian and Chinese suppliers for over 80 percent of its small‑arms ammunition. By localising this critical supply chain, the Mongolian military can achieve faster resupply times, lower logistical costs, and greater control over stockpiles during emergencies.
Beyond the factory, the Turkiye‑Mongolia partnership includes a series of joint workshops that have already trained more than 150 Mongolian engineers and technicians in modern manufacturing techniques, CNC machining, and ballistic testing. These trainees are now embedded in the plant’s quality‑assurance team, ensuring that the ammunition meets NATO‑compatible standards—a strategic advantage for Mongolia’s participation in international peace‑keeping missions.
Financially, the project is structured as a public‑private partnership. While the Mongolian government contributed land and tax incentives, a Turkish defence contractor holds a 30 percent equity stake, with profit‑sharing arrangements that are expected to generate a modest return on investment after the plant reaches full capacity. The arrangement also includes a clause for future expansion into the production of precision‑guided munitions, contingent on market demand and further technology transfer.
Background
Historically, Mongolia’s defence procurement has been dominated by its two giant neighbours. During the Cold War, Soviet‑made weapons formed the backbone of the armed forces, a legacy that persisted well into the 2000s. After the dissolution of the Soviet Union, China became a major supplier, offering cost‑effective small‑arms and artillery. This reliance left Mongolia vulnerable to geopolitical pressure and limited its ability to modernise independently.
In response, the Mongolian government launched a defence‑industry diversification policy in 2018, earmarking a modest increase in the defence budget each year to fund domestic production and seek new partners beyond the immediate neighbourhood. The policy emphasised technology transfer, local job creation, and alignment with international standards, positioning Mongolia as a potential hub for regional defence manufacturing given its stable political environment and skilled labour force.
Why It Matters
Strategic self‑sufficiency is at the heart of Mongolia’s security calculus. By producing its own ammunition, the country can safeguard its forces against supply disruptions that could arise from diplomatic tensions with either China or Russia. Moreover, meeting NATO‑compatible specifications opens the door for Mongolia to deepen its involvement in multinational exercises such as the “Partnership for Peace” program, enhancing interoperability with allied forces.
Regionally, the Mongolia‑Turkiye collaboration serves as a model for how smaller states can leverage emerging defence markets to diversify their supply chains. Turkiye, eager to expand its export footprint beyond the Middle East and Europe, finds in Mongolia a stable partner with access to Central Asian markets. The partnership therefore contributes to a more multipolar defence ecosystem in Eurasia, reducing the dominance of the traditional great‑power suppliers.
What Happens Next
Looking ahead, Mongolia plans to broaden the scope of its defence‑industry agenda. Feasibility studies are already underway for a second production line that would focus on precision‑guided mortar shells and lightweight anti‑tank weapons. Parallel negotiations with Turkish firms aim to establish a joint venture for the assembly of unmanned aerial vehicles (UAVs), a capability that would significantly enhance Mongolia’s reconnaissance and border‑monitoring capacity.
In addition to hardware, Mongolia intends to deepen its human‑resource development by establishing a Defence Technology Institute in partnership with Turkish universities. The institute would offer degree programmes in aerospace engineering, cyber‑security and systems integration, creating a pipeline of specialists to sustain long‑term industry growth. Continued participation in international defence exhibitions and joint exercises will also help Mongolia showcase its emerging capabilities and attract further investment.
Conclusion
Mongolia’s push to diversify its defence sector, epitomised by the new Turkiye‑backed ammunition factory, reflects a strategic shift toward greater self‑reliance, modernisation, and regional engagement. By securing technology transfer, building domestic production capacity, and fostering skilled labour, Mongolia is laying the groundwork for a more resilient defence posture. The partnership with Turkiye not only supplies immediate capabilities but also opens pathways for future collaboration in advanced weaponry and training. As these initiatives mature, Mongolia is poised to become a modest yet influential player in the evolving security landscape of Central and East Asia.
đź“– See Also
đź“š Sources & Attribution
- âś“ The Diplomat