Mongolia is likely to sell a stake in its Erdenes Tavan Tolgoi coal-mining company to the public next year, raising more than $3 billion, the nation’s third- ranking government official said.
“Most likely, it’s going to happen next year,” Khurelbaatar Chimed, Minister of Mongolia and Chief of the Cabinet Office, said today in an interview with Bloomberg TV in Hong Kong. Plans haven’t been completed for the initial public offering, which could be worth more than $3 billion, he said.
The sale would be the nation’s biggest IPO, as much as four times the size of Mongolian Mining Corp. (975)’s HK$5.8 billion ($744 million) IPO in Hong Kong last year. The government is striving to boost living standards in the Asian nation where average per capita income is about $2,000 a year and whose entire economy was worth $6.8 billion last year.
Erdenes TT may sell shares simultaneously in London, Hong Kong and Ulaanbaatar, said two people with knowledge of the deal on Aug. 31, who declined to be identified because the information is private. It would be the first company to go public in the three cities at the same time, as Mongolia capitalizes on a mining boom driven by demand from China and India.
The total market capitalization of the Mongolian stock exchange was about 2 trillion tugriks ($1.6 billion) as of July 25, according to data on the bourse’s website. Hong Kong’s exchange, Asia’s third largest, was valued at $2.56 trillion that day.
“The parliament of Mongolia made the decision that 10 percent of the shares will be owned by Mongolian people,” Chimed said. They may sell the stock later if they want, he said.
Mongolia’s coal production doubled last year to 25 million metric tons to become the nation’s top export earner, spurring the government to push through development of mines. The entire Tavan Tolgoi area holds more than 6 billion tons of coal, one of the world’s biggest untapped sources of the mineral, according to Erdenes MGL, the state-controlled owner of the deposit.
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