• 6 hours Trump And Biden: How The Stocks Divvy Up
  • 1 day The Problem With California's Electric Dream
  • 2 days TikTok’s 11th-Hour Reprieve
  • 2 days Wealthy Investors Have Been Fleeing Stocks Since April
  • 3 days Thorium Could Kickstart A New Nuclear Boom
  • 4 days Is A Massive Gold Rally On The Horizon?
  • 4 days Can Tesla Really Produce A $25,000 Self-Driving Electric Car?
  • 5 days Gold Miners Brace For Seasonal Downturn
  • 5 days The Silver Plunge Continues
  • 6 days 7 COVID Vaccine Stocks To Plan Upside Moves
  • 6 days Rhodium Climbs Reaches Record Highs
  • 7 days Tesla Tumbles After Battery Day Fails To Impress
  • 7 days Three Energy ETFs To Watch This Decade
  • 8 days What To Do With $2 Trillion In Suspicious Bank Transactions?
  • 9 days How The Stock Market Predicts Electoral Victory
  • 9 days Tesla's "Battery Day" Could Deal A Blow To Cobalt Miners
  • 10 days New TikTok Deal Hopes To Bypass National Security Concerns
  • 10 days Where Will Gold Go From Here?
  • 11 days COVID-19 Is Fueling A Pastic Waste Crisis
  • 11 days Gold Output Set To Decline
Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

Oilprice.com

Oilprice.com

Writer, OilPrice.com

Information/Articles and Prices on a wide range of commodities: We have assembled a team of experienced writers to provide you with information on Crude Oil,…

Contact Author

  1. Home
  2. Markets
  3. Other

Investors Salivating Over Mongolian Energy Resources

Mongolia - Place Your Bets?

Sometime in the next 12 months, an energy IPO offering in distant Mongolia already has foreign investors salivating.

The darling of the international energy community is coal company Erdenes-Tavan Tolgoi ("Five Hills") Ltd., popularly known as TT, which has yet to begin operations.

To give an idea of the potential foreign interest, analysts believe that the IPO will be handled by Goldman Sachs Group Inc. and Deutsche Bank AG.

What is TT bringing to the market that has caused such interest? A massive deposit located in the east Tsankhi area of the Gobi desert and estimated to hold over 6.4 billion metric tons of coking coal, the world's biggest untapped deposit of its kind.

Mongolia's government is currently selecting an operator for the massive deposit and is expected to be a large, experienced foreign mining company. Heightening investor interest was a successful public offering last fall in the autumn of 2010 by Mongolian Mining Corp., Mongolia's largest privately held domestic producer and exporter of coking coal, whose Ukhaa Khudag (UHG) mine is within the Tavan Tolgoi coal formation in the southern Gobi. Mongolian Mining Corp.'s IPO was floated on the Hong Kong Stock Exchange and raised $651 million.

In contrast, analysts are predicting that the TT IPO could raise as much as $10 billion.

What makes the TT IPO unique is that the Mongolian government has just given each citizen 538 shares in the Erdenes-Tavan Tolgoi IPO. If the IPO hits its anticipated $10 billion, each Mongolian shares would be worth about $360. The government stock giveaway totaled 1.5 billion shares, equal to 10% of TT and reserved another 1.5 billion TT shares for thousands of Mongolian business enterprises. Besides the 20 percent handed out to local enterprises and citizens, the government aims to retain 50 percent of TT, with the remaining 30 percent to be listed on an overseas stock exchange.

The TT stock giveaway is an integral part of a governmental effort to convince its citizens that its decision to pursue large-scale mining in Mongolia will have a direct bearing on their well-being, following several earlier contentious mining deals.

Mongolians complained bitterly about the arrangements surrounding the $6 billion Oyu Tolgoi project, jointly owned by Canada's Ivanhoe Mines , Rio Tinto and the Mongolian government, which will be the world's biggest copper mine outside Chile once full operation starts in 2013.

Underwriting Mongolia's mining boom, two years ago the Ulsyn Ikh Khural (State Great Hural, or Parliament) finally repealed the 68 percent windfall profit tax on foreign mining operations, which came into effect in January, setting the stage for massive foreign investment.

Even Russia has gotten into the act. Earlier this month, Mongolian President Tsakhiagiin Elbegdorj visited Moscow and met with Russian President Dmitrii Medvedev, who commented on rising bilateral trade possibilities, "We need new powerful projects such as nuclear projects or Tavan-Tolgoi, which will promote bilateral cooperation."

Besides coal, copper and gold, Mongolia has massive deposits of other materials the world desires, including uranium and rare earth elements (REEs.) As these deposits are developed, analysts predict the economy will flourish, with the International Monetary Fund predicting that Mongolia's annual economic growth may surge to 23 percent in 2013 as Oyu Tolgoi and other projects begin production.

With energy-hungry China next door, a Mongolian energy or mining investment is looking like one of the global economy's more certain bets, and in the case of TT, one doesn't need the resources of a Goldman Sachs to buy in - yet.

 


Source: http://oilprice.com/Energy/Energy-General/Investors-Salivating-Over-Mongolian-Energy-Resources.html

By. Dr. John C.K. Daly for OilPrice.com. For more information on oil prices and other commodity related topics please visit www.oilprice.com

 

Back to homepage

Leave a comment

Leave a comment