The COVID-19 pandemic had devastating global and domestic economic and health impacts. While these effects are broadly understood, the impact of COVID-19 on the Mongolian mining sector, a key economic sector, remains unclear. This study attempts to bridge this gap in knowledge by analyzing relevant secondary data, conducting a survey from mining companies as well as simulating possible near-term economic outlooks using a recursive dynamic CGE model.
The study concluded that the slowdown of the Mongolian mining sector was a driving force behind overall economic slowdown during the COVID-19 pandemic. The mining sector was affected by various external and internal shocks including fluctuations in Chinese demand, price shocks and COVID-19 related government restrictions. Most of the surveyed mining companies reported decreases in both sales and production, coupled with numerous labor, production, and transportation issues due to COVID-19 related restrictions. While there were differences depending on the commodity the mining companies produced, most were optimistic about future recovery.
As the study found that post-COVID-19 economic recovery will be closely linked to mining sector recovery, we simulated 3 alternative scenarios of mining sector recovery using an in-house CGE model. Overall, the simulation results highlighted the detrimental economic effect of continued pandemic conditions and the need to diversify the Mongolian economy beyond mining. In light of these findings, the government must balance the consequences of COVID-19 related measures on the mining sector with containing the pandemic.