Mining has become the most economically important sector in the Mongolian portion of the Amur-Heilong River basin . Ninety-eight percent of Mongolian energy is produced by burning coal from Mongolia ‘s mines. Ores account for 60 percent of the country’s export trade and these also are mined. The mineral resource law of 1997 was reformed and some restrictions were relaxed. As a result many foreign and Mongolian companies began new exploration projects. Before 1997 about 400 mining licenses were issued as compared to over 2,000 today.
The region has rich mineral resources including feldspar, oil, lead, uranium, zinc, gold, and silver. Coal is a key raw material for electricity production. The eastern region has the most diverse deposits of poli-metal, spar, silver, and other kinds of minerals at 349 sites. One hundred of these are confirmed deposits of nine different minerals and rest are potential deposits not yet confirmed. Twenty mining sites of varying sizes have been developed in the Mongolian Amur-Heilong River basin (placer-mining for gold not included). Mineral exploration and exploitation licenses have been approved for approximately 100 areas.
The total uranium reserve of Dornod aimag is estimated at 49,000 tons, or 36 percent of the national total. Russian, Canadian, and American investors expressed interest and bought rights to one old uranium mine 120 kilometers north of Choibalsan where 700,000 tons of ore were extracted in 1989-1995 for processing in Russia.
Aduunchuluun Company coal mine at Choibalsan has an annual capacity of 600,000 tons and now produces 250,000 tons. It was once negotiating sale of 500,000 tons per year to Russian Chitinskaya and Primorsky Provinces. The Bulan site in Khalkhgol soum is thought to hold 29-56 percent of all coal reserves in the region
A total of 597,000 tons of feldspar is mined annually by Bor Undur Mining, which is a joint venture owned by the Mongolia-Russia Monrostsvetnmet Company. Bor Undur operates a gold mine that has capacity to wash 1 million tons of sand per year. It also has open-pit coal mines with annual capacity of 100,000 tons and operates a geological exploration group.
The oil sector in Mongolia is characterized by high risk in exploration. Large investments are required for production. In spite of these obstacles, 22 oil contracts covering 538,000 km2 have been agreed. American, Australian, and Chinese oil companies are now operating six contracts under production sharing agreements. Mongolia began to export oil in 1997 during testing of the exploration wells. Mongolia exported about 30,000 tons of oil between 1999 and 2002. By 2006 all oil concessions in Dornod were purchased by China ‘s Daqing oil company.
Analysts believe that regional economic development from now on will be based on mineral resources. Developing the mining industry and producing products in local factories should help to reduce unemployment and poverty, spur trade and foreign investment. There are already substantial environmental impacts especially evident in gold mining and at big mining sites, they may multiply dramatically as more companies come in the region. Especially alarming are water demands of mining industry, both in Eastern Mongolia and in Gobi Desert. To serve mining needs large-scale water transfer from Kherlen and Onon Rivers was already discussed in Mongolian Parliament.