Oct 31, 2019 03:00 AM

Mongolia’s Tavan Tolgoi Ramps Up Work on $1 Billion Hong Kong IPO

Photo: VCG
Photo: VCG

(Bloomberg) --Mongolian state-owned coal miner Erdenes Tavan Tolgoi JSC is ramping up work on a planned Hong Kong initial public offering (IPO) that could raise more than $1 billion, people familiar with the matter said.

The coal miner hired an adviser to oversee preparations for the share sale, including underwriter selection, said the people, who asked not to be identified as the information is private. The company has been interviewing banks seeking a role in the IPO and targets a listing as soon as next year, the people said.

A share sale would mark at least the third effort to raise money to develop the Tavan Tolgoi mine after international partnerships failed in 2011 and 2015. Mongolian lawmakers in 2018 approved a plan to sell as much as 30% of Tavan Tolgoi mine.

IPOs in Hong Kong have raised $20.4 billion this year, down from $32.7 billion during the same period in 2018, according to data compiled by Bloomberg. A listing of Tavan Tolgoi would represent a victory for the Hong Kong bourse after years of seeking to lure big foreign mining companies to list in the city.

Deliberations on the share sale are at an early stage, and details including size and timing may change, the people said. Representatives of Mongolia’s Ministry of Mining and Tavan Tolgoi didn’t immediately respond to requests for comment.

Tavan Tolgoi, which means “five hills,” refers to the original location of the coal ore, according to the company website. The Tavan Tolgoi coal mine, in the Gobi Desert, is the largest coal ore deposit in Mongolia, estimated at more than 6 billion metric tons of coal, more than a third of it high-grade hard coking coal, the website said.

Mongolia has been hopeful of a share sale of Tavan Tolgoi since the country started exporting coal to China in 2011. A $3 billion international share sale plan for 2012 didn’t materialize after Ulaanbaatar changed its plans for investment in the coal mine. An attempt to land a $4 billion investment from a consortium including China Shenhua Energy Co. and Japan’s Sumitomo Corp. fell through in 2015 after parliament stepped in saying it needed to review terms of the deal.

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