Small-scale processing of livestock and agricultural products has historically been a mainstay of Mongolia's industrial sector. With the establishment of the Erdenet copper plant in the late 1970s, metal processing also became an important part of the economy. In 1996, industrial output was estimated at T 239.3 billion, with production of metals accounting for 32.6%; energy production, 19.1%; processed foods, 15.8%; wool and woolen apparel, 11.5%; mineral fuels, 6.8%; chemicals, 6.7%; and other items, 7.5%. Much of the country's industrial activity is concentrated in four centers: Ulaanbaatar, Erdenet, Darhan, and Choybalsan. Industry employed approximately 74,100 persons in 1996.
Mongolia's industrial development has been severely affected by dwindling imports of fuel, spare parts, and equipment formerly obtained from the former USSR and allied trading partners. As a result, total output from the industrial sector generally declined in the early 1990s, falling by 2.5% in 1996. By 1997, the industrial sector had begun to recover, with growth estimated that year at 4.5%. Industrial growth in 2000 was2.4%. Industrial production in Mongolia included about 40 different commodities. As of 2002, the production of food, leather, shoes, glass, and garments were on the decline, while production of copper and molybdenum concentrates, coal mining, and the food and beverage industries were increasing. About 72% of the economy had been privatized by 2000.