ULAANBAATAR, June 21 (Reuters) – The Mongolian government on
Thursday submitted plans to parliament to list a chunk of the
state-owned company that holds the giant Tavan Tolgoi coal mine.

The potential initial public offering comes as the country
looks to kickstart the long-delayed development of one of the
world’s largest coking coal deposits, with international coal
prices picking up after years in the doldrums.

Mining minister Sumiyabazar Dolgorsuren presented a bill to
parliament proposing the sale of up to 30 percent of the project
on domestic and international stock markets, according to a
notice on Mongolia’s official parliamentary website. The
potential value of an IPO was not mentioned.

The government said in a statement on Wednesday that it
would also speed up plans to build a $1 billion coal-fired power
plant near the mine, as well as a 247-kilometre railway that
would help deliver Tavan Tolgoi’s coal to the Chinese border.

“The government believes that the economic benefits of the
deposit will increase,” it said in the statement.

Tavan Tolgoi, in the Gobi desert about 250 kilometres (155
miles) from the Chinese border, has an estimated 7.4 billion
tonnes of reserves and is considered one of Mongolia’s flagship
mining projects. It is run by state-owned Erdenes Tavan Tolgoi.

However, it has been held back by poor infrastructure and
weak coal prices as well as disputes over the role foreign
investment should play in Mongolia’s economic development.

As early as 2011, Mongolia appointed BNP Paribas, Deutsche
Bank and Goldman Sachs and Macquarie to lead an IPO
for Tavan Tolgoi said to be worth as much as $15 billion, and
previous administrations have discussed a triple listing for the
project in London, Hong Kong and Ulaanbaatar.

Mongolia also allowed international investors to bid to
develop the mine’s western block in 2011, but shelved the plan
amid complaints from Japan and South Korea that the process was
unfair.

In late 2014, a consortium consisting of Mongolia’s Energy
Resources LLC., China’s Shenhua Energy and the
Sumitomo Corporation of Japan was selected to invest $4
billion in the project. However, talks with the government
collapsed in 2016 after a plunge in coal prices.

Some analysts still doubt Mongolia is ready to launch the
IPO.

“I am still not convinced Tavan Tolgoi is moving any time
soon as unresolved major issues still remain, such as funding
for the railway and (coal) washing plant,” said Mogi Badral
Bontoi, head of Cover Mongolia, an Ulaanbaatar-based market
intelligence firm.

“Will the Chinese be involved again? Without resolving these
issues, both on paper and politically the (Tavan Tolgoi) IPO is
still far from reality,” he said.
(Reporting by Michael Kohn
Editing by David Stanway and Joseph Radford)