"The blasting to extract ore has cracked the walls, and ruined some of the frescoes," Xinhua quoted Abbot Shi Renfa of the Manjusri Monastery in the Wutai Mountains, as saying.
"I used to worry greatly that they would also break the Buddha statuettes and the outdoor pagoda made of coloured glaze."
The area is home to rich iron ore deposits and about 10 mines were being developed there, the report said.
China is desperate for energy, metals and other natural resources to feed its rapidly expanding economy, but the ruling Communist Party is also intent on maintaining social stability and cracks down hard on public protests.
It pays particular attention to stability in its ethnic minority regions like Bamei town in the southwestern province of Sichuan, where hundreds of Tibetans rioted in June over the exploitation of Yala Mountain, smashing mining equipment and attacking work teams in an attempt to halt work at the mine.
Residents said at the time that village elders went missing after they tried to petition the government, and they believed they had been arrested.
Thursday's report made no mention of the unrest in Sichuan, but said the decision to ban mining on sacred mountains had been taken in response to a joint letter filed in June by a group of monks in Shanxi to the provincial religious association.
In mid-August, the city and provincial governments announced they would close three mines within the Wutai mountain range and suspend operations of seven others nearby, the report said.
The government was still assessing compensation for the mining companies, it added.