Mongolia shortlists 4 banks for massive coal IPO

Thu Feb 24, 2011 6:11am GMT

* Four banks shortlisted for Tavan Tolgoi IPO

* IPO, Mongolia's largest, planned for H1 2012

* Mongolia set to overtake Australia as China's top coking coal supplier

By David Stanway

ULAN BATOR, Feb 24 (Reuters) - Mongolia has shortlisted BNP Paribas , Deutsche Bank , Goldman Sachs and Macquarie Group to manage the initial public offering (IPO) of Erdenes-Tavan Tolgoi, the world's largest untapped coking coal deposit.

The IPO, which will be Mongolia's biggest, is planned for first half of 2012, Mining Minister Dashdorj Zorigt told reporters on Thursday.

The size of the IPO is still unclear with bankers estimating the offer to be in the range of $1.5-$5 billion. It 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 week to pitch for the deal.

The Mongolian government plans to distribute shares in the company free to all citizens and another chunk to Mongolian corporations, according to officials, bankers and analysts working on the transaction.

Mongolia plans to keep 50 percent of state-owned holding company Erdenes-Tavan Tolgoi, which controls the deposit, located in the South Gobi desert near China's northern border.

The resource rich country, which 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.

Mongolia 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.

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. (Writing Denny Thomas; Editing by Lincoln Feast, sourced:Thomson Reuters)

Tags:Mongolian Government, Russia, China, Australia, raw material