New securities law in Mongolia cleans path for Tavan Tolgoi IPO

01 June 2013 | 12:48 Code : 21733 Geoscience events
Mongolia’s Parliament passed Friday a long-awaited securities law that paves the way fo....

Mongolia’s Parliament passed Friday a long-awaited securities law that paves the way for the government to launch a $3 billion initial public offering for the state-owned Tavan Tolgoi, the world’s largest coal deposit.The new rule, reports The Wall Street Journal, will take effect on Jan. 1 2014, allowing companies to be simultaneously listed on domestic and foreign bourses. For that reason, it can be the solution cash-strapped state-owned developer, Erdenes Tavan Tolgoi (E-TT), has been looking for years.The state-owned miner of the coveted Tavan Tolgoi project has been planning to list the eastern Tsankhi block of the Tavan Tolgoi project for a long time, but the fundraising has been constantly postponed.Located in the South Gobi desert Tavan Tolgoi – mined since the 60s – is home to the world’s largest high-quality coking coal deposit used in steelmaking, but management of the resource has been characterized by bureaucratic bungling.In January the cash-strapped company suspended all coal exports to neighbouring China from Tavan Tolgoi which boasts a 7 billion tonne total resource a in a wrangle over pricing.The country last year stopped all talks with international miners on developing the West Tsankhi, which on its own holds 1.2 billion tonnes.Mongolia’s National Security Council rejected a development deal struck with US giant Peabody Energy, Shenhua and a Russian-Mongolian consortium mid-September 2011, just two months after they were announced as winners.In January E-TT’s chief executive, Batsuuri Yaichil, told Reuters that the company was under severe financial strain, and that Mongolia would delay the long-awaited international IPO for Tavan Tolgoi’s eastern block until the market improved, likely sometime in 2014.Mongolia is walking a diplomatic tightrope with Tavan Tolgoi. Aside from closer ties with China, it wants to use the project to strengthen its long-time political and cultural links with Russia and —at the same time— make room for the US as a geopolitical balancer in Asia.


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