India is expected to sign a preliminary agreement with Mongolia soon in the area of geology and exploration, a senior Indian government official with direct knowledge of the matter said. Landlocked Mongolia is rich in deposits of copper and coking coal, and India is mostly dependent on imports to meet rising demand for the red metal used in power, construction and electrical vehicles as well as coking coal for steelmaking. 

"India's cabinet has approved the MoU (memorandum of understanding) and both countries are expected to sign it soon," the source said, declining to be identified as the deliberations are not yet public. India's federal mines ministry did not respond to a Reuters email seeking comment. Mongolia's Ministry of Mining and Heavy Industry did not immediately respond to a Reuters email seeking comments. 

Companies such as Adani, Hindalco and Vedanta have expressed an interest in sourcing copper from Mongolia, the source said. All three companies did not respond to emails from Reuters seeking comment. 

Both Indian and Mongolian officials are working out supply routes for Indian companies to source copper and coking coal, with India preferring the route from Vladivostok in Russia despite the longer distance, the official said. 

"China is convenient but we prefer the route from Russia," the official said. 

Relations between Asian giants India and China were strained after a deadly military clash on their disputed border in 2020 but have been on the mend since they reached an agreement in October to pull back troops from their last two stand-off points in the western Himalaya mountains. 

Unlike China, India has traditionally maintained close ties with Russia. 

Resource-rich Mongolia can offer superior grades of coking coal, industry officials say. 

In November, India's JSW Steel and state-run Steel Authority of India (SAIL) were in talks with Mongolian authorities to import two shipments of coking coal, Reuters reported.