Mongolia Table of Contents

In 1924 Mongolian industry was limited to the Nalayh coal mine, an electric power plant in Ulaanbaatar, and various handicrafts. Gross industrial output (measured in constant 1967 prices), was 300,000 tugriks. Industry developed very slowly in the first two decades of the Mongolian People's Republic, primarily because Mongolia's benefactor, the Soviet Union, provided few resources to invest in industrialization. With Soviet advice, however, Mongolia adopted an industrial strategy that was based on the exploitation of natural resources and agriculture and it has followed this strategy since. The first steps to develop industry began in the 1930s. In 1933 the Union of Artisans was organized. In 1934 the Choybalsan industrial combine, the flagship of Mongolian industry, began operating in Ulaanbaatar. The combine, a joint Mongolian-Soviet company transferred to Mongolian control in 1935, had its own power plant, cloth factories, tanneries, and wool-scouring mill that produced blankets, felt, footwear, leather coats, and soap. Coal production at Nalayh rose in the 1930s, and in 1938 the narrowgauge railroad connecting the mine with the capital's powergenerating station was completed. In 1940 industry accounted for 8.5 percent, and construction for 0.8 percent, of national income. Gross industrial output rose to 124.7 million tugriks.

Industry began to develop substantially after World War II, when Soviet aid increased and Soviet-style central planning was introduced, and, in the 1950s, when Chinese assistance started. Most industrialization occurred in Ulaanbaatar; smaller food combines and livestock-product processing plants were scattered throughout the country. In the 1950s, major projects completed with Soviet assistance included the modernization of the Choybalsan industrial combine; the expansion of production at the Nalayh coal mine; the opening of oil wells in Buyant-Uhaa (Sayn Shand); and the construction of four felt-rolling mills, a water supply plant, and leather-processing factories. Chinese aid was given primarily in the form of construction projects; Chinese laborers built roads, bridges, housing, and a hydroelectric power plant. By 1960 industry and construction accounted for 14.6 percent and 6.7 percent, respectively, of national income. Gross industrial output (in constant 1967 prices) was 676.8 million tugriks.

Industrialization took a big step forward after 1960. Largescale investment by the Soviet Union and other East European countries took place with Mongolia's entry into Comecon in 1962. This assistance enabled Mongolia to diversify industry geographically and sectorally. Major industrial centers were built at Darhan and Choybalsan in the 1960s and at Erdenet and Baga Nuur in the 1970s and the 1980s. After 1970 the scope of industry expanded beyond processing of agricultural products; exploitation of minerals developed on a large scale, and the energy and the construction industries, which supported such development, also grew. In 1970 industry and construction accounted for 22.6 percent and 5.8 percent of national income, respectively; in 1985 they accounted for 32.4 and 4.9 percent of national income, respectively. Gross industrial output (in constant 1967 prices) was 1,733.2 million tugriks in 1970 and 6,244.4 million tugriks in 1985.

In the late 1980s, industry was concentrated in several urban centers. Baga Nuur was a coal-mining and energy production center. Bor Ondor produced fluorite. Choybalsan had a coal mine, a meat-packing plant, a foodstuffs combine, and a wool-scouring mill. Darhan was close to the Sharin Gol coal mine and produced construction materials, foodstuffs, and light industrial products. Erdenet, home of the copper and molybdenum processing combine, also manufactured carpets and processed timber. Hotol was the location of major limestone deposits and a cement production center. Ulaanbaatar, the oldest industrial center, specialized in coal and energy production, food processing, livestock-product processing, and textiles.

Changes in government organizations responsible for industry reflected the regime's efforts to spur industrial development. In 1968 the Ministry of Industry, originally established in 1938, was abolished; the Ministry of Food Industry was transformed into the Ministry of Food and Light Industries. That same year, the Ministry of Geology became the Ministry of Fuel, Power, and Geology. In 1972 the Ministry of Food and Light Industries established industrial producers' associations modeled on Soviet producers' associations. The industrial producers's asociations grouped ministry enterprises according to their specialization in clothing, flour and fodder, footwear, hides and skins, and wool. In 1976 the Ministry of Fuel, Power, and Geology was divided into the Ministry of Fuel and Power Industry and the Ministry of Geology and Mining. In 1986 the Ministry of Construction and Construction Materials Industry and the State Committee for Construction, Architecture, and Technical Control were dissolved, and the State Construction Committee was established. In December 1987, the Ministry of Forestry and Woodworking, the Ministry of Geology and Mining, the Ministry of Fuel and Power Industry, and the Ministry of Food and Light Industries were replaced by the Ministry of Agriculture and Food Industry, the Ministry of Light Industry, and the Ministry of Power, Mining Industry, and Geology. Government organizations also concerned with industry in the late 1980s were the State Construction Committee and the Ministry of Social Economy and Services, formed in 1972 to supervise handicraft production and the artels, or handicraft producers' associations.

The Ministry of Environmental Protection also was formed in 1987 out of the Forestry and Hunting Economy Section of the Ministry of Forestry and Woodworking, the State Land and Water Utilization and Protection Service of the Ministry of Agriculture, and the Main Hydrometeorological Administration of the Council of Ministers; it dealt with industrial pollution. Environmental degradation of the Hovsgol Nuur-Selenge Moron-Lake Baykal ecosystem was a concern of both Mongolian and Soviet authorities. To limit ecological damage, the Ministry of Environmental Protection took steps to close the Hatgal woolscouring mill on Hovsgol Nuur, to end shipping of gas and oil in the summer, and to cease carbon-monoxide-producing motor transportation across the ice during the winter. Plans to open the Urandosh strip mine on the banks of Hovsgol Nuur also were postponed. Other measures to alleviate environmental pollution included closing thermal power stations in Ulaanbaatar and moving industrial facilities outside the city in order to reduce air pollution. Strip mining in Mongolia--particularly at the Baga Nuur, Erdenet, and Sharin Gol mines--had created large slag heaps of concern to environmentalists. Other sources of ecological degradation were the dumping of industrial, agricultural, and household waste into small rivers and lakes.

Light Industry

In the late 1980s, Mongolian light industry included woodworking, textiles, clothing, leather and footwear, printing, and food industries, which, primarily, processed agricultural products, and handicrafts. In 1985 light industry accounted for 74.2 percent of gross industrial output. Woodworking enterprises included woodworking plants and combines, paper plants, prefabricated housing factories, match factories, furniture factories, and handicraft enterprises engaged in the production of ger frames, carts, and barrels. The food industry's meat-packing plants, dairies, distilleries, and flour mills produced canned meat, sausages, lard, soap, milk, butter, beverages, and confectionery products. The textile and clothing industries processed wool and produced woolen cloth, blankets, carpets, knitwear, cashmere sweaters, and school uniforms. The leather and the footwear industries processed hides and skins from sheep, goats, cattle, horses, and camels and produced various leather products, including shoes and coats. The Eighth Plan called for increasing production of various light industries by 17 to 46 percent and for improving labor productivity in these industries by 15 to 33 percent.


Until the late 1960s, mining in Mongolia consisted primarily of coal extraction. In the 1970s, however, joint exploitation of mineral resources by the Soviet Union and other Comecon nations commenced on a large scale. Comecon and joint Mongolian-Soviet geological teams surveyed the country's natural resources and discovered valuable mineral deposits, such as copper, molybdenum, wolfram, fluorite, gold, and tin. Several joint stock companies, such as Mongolsovtsvetmet, Mongolchekhoslovakmetall, and Mongolbolgarmetall, were formed to develop and to exploit these deposits. By the late 1980s, mining was an important sector of the economy, and accounted for 42.6 percent of exports in 1985. Little information was available on mining output.

In 1985 Mongolia mined 6.5 million tons of relatively lowgrade varieties of coal, of which only 225,200 tons, or 3 percent, was exported. Exploited lignite deposits were located at Aduun Chuluu, near Choybalsan; Baga Nuur; Nalayh, near Ulaanbaatar; and Sharin Gol, near Darhan. The Aduun Chuluu coal mine's annual output was 300,000 tons. The Baga Nuur strip mine, developed in the 1980s, produced 2 million tons annually by 1985. The Nalayh coal mine, the country's oldest, produced 800,000 tons annually in the 1980s. The Sharin Gol strip mine, developed in the 1960s, had an annual output of 1.1 million tons in the 1980s. The large Tavan Tolgoy deposit of coking coal remained unexploited because of its remoteness from transportation and industrial centers. The Eighth Plan called for raising coal production to 9 million tons, labor productivity 22 to 24 percent, and the capacity of the Baga Nuur mine.

The copper and molybdenum deposit at Erdenetiyn-ovoo was discovered by Mongolian and Czechoslovak geologists in the mid1960s and was developed with massive Soviet assistance in the 1970s. Erdenet's development required the construction of a branch railroad line from Salhit, near Darhan to Erdenet; a highway from Darhan to Erdenet; a water pipeline from the Selenge Moron; an electric line from the Soviet Union; and factories, housing, and other facilities. A Mongolian-Soviet construction force numbering 14,000 built the Joint Mongolian-Soviet Erdenet Mining and Concentrating Combine, which included a mine, a concentrating plant, a material and technical supply base, a mechanical repair plant, and a high-capacity thermal and electric power plant. The first stage of the Erdenet combine went into operation in 1978, with a planned output of 50,000 tons for 1979. With the completion of the fourth stage in 1981, planned annual production capacity was 16 million tons of concentrate. From 1979 to 1982, Erdenet's output of concentrates amounted to 250,000 tons of copper and 3,400 tons of molybdenum, with concentrates containing 33 percent copper and 50 percent molybdenum. In 1983 the Erdenet combine was completed. During the Eighth Plan, annual capacity was to reach 20 million tons. No information was available on actual output or exports.

Other nonferrous metals exploited by Mongolsovtsvetmet and other joint ventures were fluorite, wolfram, tin, and gold. The Berh, Bor Ondor, Burentsogt, and Har-ayrag fluorite deposits had an annual output of 786,700 tons; fluorite was exported to the Soviet Union, but no figures were available. The Eighth Plan called for expanding fluorite production capacity by an unspecified amount. No figures were available on output or on exports of wolfram, tin, and gold. In the late 1980s, plans to open the Urandosh phosphate strip mine near Hatgal were delayed by concerns for environmental pollution in Hovsgol Nuur. Exploitation of the Burenhaan phosphate deposit still was planned. Further development of Mongolia's other mineral resources was also planned, and the Eighth Plan called for continued cooperation with Comecon countries in geological prospecting and mining.


In the late 1980s, energy in Mongolia was provided primarily by coal-burning thermal and electric power stations. Other energy sources were hydroelectric power, wood, and imported gas and diesel fuel. Mongolia produced its own oil in the 1950s and the 1960s, but reports on oil exploitation ended in 1968. Increased electric power generation, made possible by the expansion of coal mining since the 1960s, powered the rapid development of industry after Mongolia's entry into Comecon. In 1960 when coal production was 618,800 tons, 106.4 million kilowatt-hours of electricity were generated. In 1985 coal production increased to 6.5 million tons, and electricity generation rose to 2.8 billion kilowatthours . Per capita electricity generation increased from 111.7 kilowatt-hours in 1960 to 1,487.3 kilowatt-hours in 1985. In 1985 electric power and thermal energy generation and the fuel industry accounted for 11.3 percent and 4.3 percent, respectively, of gross industrial output.

In the late 1980s, despite the growth in power generation, Mongolia suffered from energy shortages. Electricity shortfalls interrupted the power supply for industries and households in urban areas, and many rural areas lacked electricity. The Eighth Plan called for increasing energy generation, extending rural electrification, and improving the efficiency of the energy industry by economizing on unit fuel consumption and by raising labor productivity. Specifically, the plan called for raising the generation of electric power to between 3.2 billion and 3.4 billion kilowatt-hours and thermal energy to 7.4 million to 7.6 million giga-calories by 1990. Capital investment in the energy industry was to amount to 2.7 billion to 2.9 billion tugriks. Extension of the centralized power supply and rural electrification were to occur by expanding facilities in Ulaanbaatar, by constructing power plants in Baga Nuur and Erdenet, and by building power lines to connect the cities of Arvayheer, Buyant-Uhaa, and Tsetserleg, and more than thirty somons. More remote areas were to install diesel-powered and coal-powered energy generating installations to meet their requirements.


In 1985 the construction sector generated 4.9 percent of national income, and the construction materials industry produced 6.7 percent of gross industrial output. Mongolian statistics indicated that approximately 28,200 workers were involved in construction projects and that 8,500 workers were employed in the manufacture of construction materials in 1985. Mongolian statistics, however, were misleading because they did not include the role of military and foreign labor in the construction sector. The Soviet Union and, to a lesser extent, East European countries and China, played a key role in constructing Mongolia's infrastructure. The Erdenet combine, for example, was built by a 14,000-strong joint Mongolian-Soviet work force that included military construction troops and workers of the Soviet construction company, Medmolibdenstroy. Other Soviet construction companies working in Mongolia included the joint-stock company, Sovmongolpromstroy, which built industrial facilities, and Mongolenergostroy, which constructed electric lines and power stations. In the mid-1980s, Mongolian construction teams undertook 40 percent of construction work; Soviet and other Comecon countries undertook the rest. China provided laborers to help build up Mongolia's transportation and industrial infrastructure in the 1950s, but such aid ceased with the SinoSoviet rift in the 1960s. In addition, in the 1980s Mongolian military construction troops were involved in building many industrial, agricultural, and other facilities.

In the late 1980s, the construction sector was plagued by substandard work, delays in completing projects and in installing equipment, and shortages of labor and building materials. To alleviate these problems, the Eighth Plan called for increasing total construction and installation work by 26 to 29 percent, for raising the work performed by Mongolian construction teams by 42 to 44 percent, and for increasing labor productivity by 20 to 22 percent. Manufacture of construction materials was to increase by 160 to 170 percent, and labor productivity in the construction materials industry, by 36 to 38 percent. Measures to increase construction efficiency were recommended, including channeling capital investments into priority projects; reducing construction times and the amount of incomplete construction; improving coordination among planning, construction, and supply organizations and their clients; creating specialized enterprises for rural construction work; and improving working and social conditions for construction workers in order to reduce labor shortages.

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Source: U.S. Library of Congress