A coal-based chemical industry could be a new direction for Mongolian industry.  Underground coal gasification, a process to convert coal into gas, could provide a new market for Mongolian firms to enter. The technique is applied to resources that are otherwise unprofitable or technically complicated to extract through traditional mining practices. Frontier Securities estimates Mongolia holds 162 billion tons of coal and 100 billion tons of lignite, a key ingredient for the process.

To direct greater diversification of its economy, the Mongolian government is currently encouraging a coal-based chemical development sector. Rising oil prices also present a greater opportunity for demand as well, said Dale Choi, chief market strategist of Frontier Securities.