Efficiency Analysis of Mongolian Mining

This paper attempted to measure technical efficiencies and scale efficiencies of Mongolian mining industry by DEA method, and to identify the factors affecting the efficiencies by Tobit regression model. Enterprise level data of 14 mining companies in Mongolia were applied for the analysis over 2008, 2009, and 2010. The average score of overall technical efficiency in Mongolian mining companies over the recent three years was 0.56, which is decomposed into pure technical efficiency 0.78 and scale efficiency 0.72. A majority of mining companies in Mongolia exhibited at least one form of inefficiency except a few large companies. It is also showed most mining companies were operating in the stage of increasing returns to scale. The results suggest that most mining companies in Mongolia can find ways of improving their efficiencies either by investing best technology or increasing their scale. Finally Tobit regression analysis of the efficiency measures implies that the financial structure of mining companies can have significant influence on their ability to attain their efficiencies.