The National Statistics Office has released data on the performance of Mongolia’s industrial sector for the first quarter of 2025, revealing a mixed picture of growth and concern. According to the report, the total industrial production increased by 17 percent compared to the same period last year, amounting to an additional 1.1 trillion MNT in output.
This growth was largely driven by significant gains in specific sectors. The mining and quarrying industry expanded by 18.6 percent, while the electricity, gas, steam and ventilation sectors saw an even stronger growth of 27.2 percent. As a result, the total value of industrial production reached 5.5 trillion MNT, an increase primarily attributed to a 27.2 percent rise in metal ore mining and an 11.8 percent increase in coal and lignite mining.
Despite these impressive production figures, the mining sector, particularly coal, faces mounting challenges. Coal remains the country’s most critical export commodity, but sales have declined amid a broader global trade war and falling commodity prices. Although production rose, exports of coal dropped to 17.5 million tons, down 3.3 percent compared to the first quarter of 2024.
One stark example of this disconnect is the situation at Gantsmod port, Mongolia’s main export hub, where the coal loading and unloading areas are now at full capacity. The decline in demand and ongoing price uncertainty have led to a buildup of unsold stockpiles. Mongolia’s benchmark coal price currently stands at approximately 72 USD per ton, which, combined with decreased trading volume, is impacting national revenue.
The impact is evident in the operations of Erdenes Tavan Tolgoi JSC, a key state-owned mining enterprise, which conducted 47 exchange trading sessions in the first quarter. Only 12 sessions were successful, while 35 failed to find buyers or favorable pricing, underscoring the deepening instability in coal trading.
Economists warn that the slowdown in China’s economy, exacerbated by ongoing trade tensions, poses additional risks. As China’s demand softens, Mongolia’s coal and mining exports could face further reductions in both volume and price. These developments threaten to undercut critical sources of foreign exchange earnings, increase exchange rate pressure, and ultimately derail the country’s ambitious economic growth target of seven percent for the year.
The broader impact of falling sales is already visible. While production increased, total sales in the industrial sector dropped to 11.2 trillion MNT, a decrease of 1.1 trillion MNT or 9.3 percent year-on-year. The largest contributor to this decline was the mining and quarrying sector, which saw sales shrink by 1.5 trillion MNT.
