By Simon Lewis and David Brunnstrom
WASHINGTON (Reuters) - Mongolia will deepen cooperation with Washington to mine rare earths, the country's Prime Minister L. Oyun-Erdene said on a visit to Washington on Wednesday, but he warned that a "new Cold War" between the U.S. and China would harm the global economy.
Mongolia has extensive deposits of rare earths and copper, which are vital for high tech applications including defense equipment and for President Joe Biden's efforts to electrify the auto market to help stave off climate change.
Oyun-Erdene spoke to Reuters after he met Vice President Kamala Harris on Wednesday and agreed to sign an "Open Skies" civil aviation agreement, among pledges of further economic cooperation.
"We have discussed our potential cooperation in mining rare earths, critical minerals, including copper," said Oyun-Erdene, who spoke through a translator.
Cooperation with the United States, which he called Mongolia's "important strategic third neighbor," on rare earths and critical minerals was already underway, and would be deepened under a memorandum of understanding signed in June between his country's ministry of mining and heavy industry and the U.S. State Department, he said.
Mongolia hopes to have good relations with its neighbor China, which controls most of the world's rare earths deposits, as well as the U.S., but Oyun-Erdene warned that countries like his own, which is landlocked between China and Russia, would suffer if superpower competition boiled over.
"I fear that the new Cold War will be very different and (more) difficult from the first Cold War," he said, pointing to rapid technological change and global problems like climate change. "We cannot bear a new Cold War situation."
He called on major powers to "be more responsible" to avoid "drastic negative effects on many countries around the world, especially the international economy."
Oyun-Erdene said his country was in talks with Tesla (NASDAQ:TSLA) Chief Executive Elon Musk over possible investment and cooperation in the electric vehicle sector and space, but he would not meet the tech billionaire during this visit.
The Mongolian leader said he planned to visit California and meet Musk and other tech industry leaders on a separate trip, the date of which was yet to be decided.
He drew attention to Musk's interest in the planet Mars, which the billionaire has expressed a desire to colonize.
"One interesting topic that I discussed with Mr. Elon Musk is the Gobi Desert of Mongolia, which has a similar environment to Mars, and I urged him to do some research on this," he said.
Oyun-Erdene is due to visit the U.S. space agency NASA during his visit and is also expected to meet Secretary of State Antony Blinken.
He called the United States Mongolia's "guiding Polar Star for our democratic journey" and said his discussions would cover "how we can further enhance our democratic values."
Given its border with U.S. adversary Russia, Mongolia has suffered from the fallout of Russia's invasion of Ukraine last year, including from inflation of goods like explosives for mining, Oyun-Erdene said.
The Biden administration has focused on developing its relationships with countries throughout Asia to counter China's growing might and the so-called "no limits" partnership between Beijing and Moscow.