Mongolia - Mining

Mongolia was the world's third-largest producer of fluorspar and among the top three producers in Asia and the Pacific of copper and molybdenum. Copper was the top export commodity in 2002 (almost all copper concentrates were exported, mainly to China and Russia), and fluorspar and other nonferrous metals were other top export commodities. Construction, mining (of coal, copper, molybdenum fluorspar, and gold), and oil were Mongolia's top three industries. Geological surveys have uncovered deposits of some 80 minerals, which were largely untapped. Also produced in 2000 were cement, hydrated lime, quicklime, varieties of stone, and silica. Most mining operations were in the eastern and northcentral regions, including the Erdenet copper mining center.

Output in 2000 included, in tons: mine copper (metal content), 125,227; fluorspar (including acid grade and submetallurgical), 198,000, up from 155,000 in 1999 (nearly all was exported to Russia); mine molybdenum, 1,335, down from 1,910 in 1999; gypsum, 25,000; and mine tungsten, 52, up from 27 in 1999. Gold output for 2000 was 11,485 kg, up from 6,976 in 1996. Gold mining increased significantly in the 1990s, and the number of companies engaged in gold mining grew to more than 100; total reserves were estimated to be 2,000 tons gold in 17 regions, the most important being Naran, Tolgoi, and Zamar. No tin was mined in 1999 and 2000, and uranium production ceased after 1997. The Erdenet copper-molybdenum mine, completed in 1981, was developed by the state in cooperation with the former USSR, and was 51% owned by the Mongolian government and 49%, by the Russian government. Clay, gold, gypsum, limestone, molybdenum, salt, sand and gravel, silver, precious stones, and tungsten were mined by small operations.

Mongolia's GDP rose by 3% in 2000, 3.2% in 1999, and4.0% in 1997; it declined by 3.5% in 1998. The mining and quarrying sector accounted for 8.5% of GDP. The value of mineral exports accounted for 40.5% of Mongolia's $466.1 million in total exports. The government encouraged foreign investment and adopted a number of long-term programs to explore for and develop metallic and nonmetallic minerals. Ivanhoe Mines Ltd. estimated that the Oyu Tolgoy had as much as 750 million tons of copper and gold resources; initial drilling had begun. The Tsagaan Suvraga porphyry copper deposit, in southwestern Sayanshand City, in the northern part of the Ulaan-Uul structural-formational zone of the south Gobi mineral belt, contained 240 million tons of sulfide ore at a grade of 0.53% copper and 0.018% molybdenum. The government was looking for investors to develop a 500-million-ton iron ore deposit north of Darkhan City; and construction of the Tsaiminerals' Tumurtiin Ovoo Mine, near Sukhe Bator, began in 2000, and would, after completion in 2004, produce 68,000 tons per year of zinc concentrates for 27 years, to be exported mainly to China.

Parliament-approved guidelines for 2001–2004 would privatize 27 state-owned enterprises and restructure 25 state-owned enterprises and organizations. Copper mining remained state owned. In 1997, the government modified mining laws to increase the land open to exploration to 40%, change policies regarding exploration licenses, and grant tax incentives to promote mining.