Mongolia's current coal production is approximately 5 million metric tons, which is mostly consumed by domestic power producers. The country is estimated to have potential reserves of 125 billion metric tons.

Many of these reserves have been proven, but remain undeveloped due to a lack of infrastructure. Such reserves include the huge Tavantolgoi deposit in the Gobi, which contains over 5,000 million metric tons of coking and steam coal, but lies more than 400 kilometres from the nearest railway. Several of the country's largest coal mines have been selected for privatisation in the near future. These include the Baga Nuur mine, the largest in the country with a design capacity of more than 6 million metric tons per year. These mines are located along the country's main railway line, and supply coal primarily to power plants in the major cities. Several smaller mines are also slated for privatisation. Mongolia is included in the list of ten world countries, which have great natural wealth and coal resources.

In addition, spar is also extracted in Berkh, Khar Airag, Urgun and Khajuu Ulaan mines. With the start of the transition to a market economy, the industrial sector experienced continuing decline throughout the 1990s, except for modest gains in 1998. The Government declared 2002 to be the year of "Domestic Industry Promotion". Mining, wool, cashmere, skins, hides, meat processing, crops and tourism industries have been determined as priority sectors. Also it has taken measures that resulted in a significant growth of almost 20 percent.

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