Mongolia shortlists 4 banks for massive coal IPO
* Four banks shortlisted for Tavan Tolgoi IPO
* IPO, Mongolia's largest, planned for H1 2012
* Set to overtake Australia as China's top coking coal supplier
* TT first phase to produce 15 million tonnes annually (Adds quotes, background)
By David Stanway
ULAN BATOR, Feb 24 (Reuters) - Mongolia took a step closer to the initial public offering of the world's largest untapped coking coal deposit on Thursday, shortlisting four global banks to manage the country's biggest ever share sale.
Mining Minister Dashdorj Zorigt told Reuters the sale of shares in state-owned company Erdenes-Tavan Tolgoi would happen no later than first half of 2012. BNP Paribas , Deutsche Bank , Goldman Sachs and Macquarie Group have been shortlised to manage the IPO, Erdenes-Tavan Tolgoi said.
The size of the IPO is still unclear with bankers estimating it will be in the range of $1.5-$5 billion.
The share sale has attracted huge interest from global banks to win the coveted mandate, with some 150 bankers converging on the frozen capital of Ulan Bator earlier this month to pitch for the deal.
"I think it shows the project is quite competitive and that Mongolia as a mining destination is becoming more and more attractive," said Zorigt, when asked about the intense interest from banks.
The Mongolian government plans to distribute shares in the company free to all citizens and another chunk to Mongolian corporations, officials, bankers and analysts working on the transaction say.
15 MILLION ADDITIONAL TONNES
Tavan Tolgoi is the world's largest untapped deposit of coking coal, used by steelmakers, with estimated reserves of 6 billion tonnes.
Mongolia sits on vast quantities of untapped mineral deposits, which analysts say could help it become one of the world's fastest growing economies in the next decade.
Erdenes, the state-owned company in charge of the eastern block of Tavan Tolgoi, plans to keep 50 percent of the project, and will distribute 10 percent of shares to local people, 10 percent to local enterprises and 30 percent in the form of the IPO.
The separate western section is subject to contract bids and 15 global companies having bid for the right to mine the coal, Zorigt said.
No timeframe was given for making a decision on the western section development but Zorigt said willingness to invest in infrastructure would be a crucial point.
The government said earlier this week it will hold a tender in April to construct a 1,000 km (620 mile) railway line connecting Tavan Tolgoi to Russia's east coast to avoid a reliance on selling to China, the world's biggest consumer, which is just 250 km away.
Resource-rich Mongolia lingered in isolation for 70 years as a Soviet satellite state, serving as a sleepy buffer zone between its giant neighbours, Russia and China.
Now the democratic government, in power since the early 1990s, is trying to pull its 3 million citizens out of poverty by exploiting its largely untapped mineral wealth.
Prime Minister Sukhbaatar Batbold has said development of the mine could boost the economy by 15 percent by 2015 and double per capita income.
The first phase of Tavan Tolgoi will add 15 million tonnes of coal per year to Mongolia's total production, eventually rising to 30 million tonnes, said Zorigt.
The country, expected by some analysts to be one of the fastest growing economies of the next decade, is poised to overtake Australia to become China's largest coking coal supplier this year.
It exported 16.6 million tonnes of coal to China in 2010, up nearly three-fold from the preceding year and just 2.5 million tonnes in 2005.
"[Tavan Tolgoi] will take Mongolia to the next level as a coal producer," said Zorigt. "We will become one of the price setting producers in the region." (Writing by Don Durfee; Editing by Lincoln Feast and Neil Fullick)
* IPO, Mongolia's largest, planned for H1 2012
* Set to overtake Australia as China's top coking coal supplier
* TT first phase to produce 15 million tonnes annually (Adds quotes, background)
By David Stanway
ULAN BATOR, Feb 24 (Reuters) - Mongolia took a step closer to the initial public offering of the world's largest untapped coking coal deposit on Thursday, shortlisting four global banks to manage the country's biggest ever share sale.
Mining Minister Dashdorj Zorigt told Reuters the sale of shares in state-owned company Erdenes-Tavan Tolgoi would happen no later than first half of 2012. BNP Paribas , Deutsche Bank , Goldman Sachs and Macquarie Group have been shortlised to manage the IPO, Erdenes-Tavan Tolgoi said.
The size of the IPO is still unclear with bankers estimating it will be in the range of $1.5-$5 billion.
The share sale has attracted huge interest from global banks to win the coveted mandate, with some 150 bankers converging on the frozen capital of Ulan Bator earlier this month to pitch for the deal.
"I think it shows the project is quite competitive and that Mongolia as a mining destination is becoming more and more attractive," said Zorigt, when asked about the intense interest from banks.
The Mongolian government plans to distribute shares in the company free to all citizens and another chunk to Mongolian corporations, officials, bankers and analysts working on the transaction say.
15 MILLION ADDITIONAL TONNES
Tavan Tolgoi is the world's largest untapped deposit of coking coal, used by steelmakers, with estimated reserves of 6 billion tonnes.
Mongolia sits on vast quantities of untapped mineral deposits, which analysts say could help it become one of the world's fastest growing economies in the next decade.
Erdenes, the state-owned company in charge of the eastern block of Tavan Tolgoi, plans to keep 50 percent of the project, and will distribute 10 percent of shares to local people, 10 percent to local enterprises and 30 percent in the form of the IPO.
The separate western section is subject to contract bids and 15 global companies having bid for the right to mine the coal, Zorigt said.
No timeframe was given for making a decision on the western section development but Zorigt said willingness to invest in infrastructure would be a crucial point.
The government said earlier this week it will hold a tender in April to construct a 1,000 km (620 mile) railway line connecting Tavan Tolgoi to Russia's east coast to avoid a reliance on selling to China, the world's biggest consumer, which is just 250 km away.
Resource-rich Mongolia lingered in isolation for 70 years as a Soviet satellite state, serving as a sleepy buffer zone between its giant neighbours, Russia and China.
Now the democratic government, in power since the early 1990s, is trying to pull its 3 million citizens out of poverty by exploiting its largely untapped mineral wealth.
Prime Minister Sukhbaatar Batbold has said development of the mine could boost the economy by 15 percent by 2015 and double per capita income.
The first phase of Tavan Tolgoi will add 15 million tonnes of coal per year to Mongolia's total production, eventually rising to 30 million tonnes, said Zorigt.
The country, expected by some analysts to be one of the fastest growing economies of the next decade, is poised to overtake Australia to become China's largest coking coal supplier this year.
It exported 16.6 million tonnes of coal to China in 2010, up nearly three-fold from the preceding year and just 2.5 million tonnes in 2005.
"[Tavan Tolgoi] will take Mongolia to the next level as a coal producer," said Zorigt. "We will become one of the price setting producers in the region." (Writing by Don Durfee; Editing by Lincoln Feast and Neil Fullick)
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