Ulan Bator, Mongolia (AP) — Mongolian lawmakers have overwhelmingly approved a plan authorizing the government to raise $1.5 billion to develop the huge Tavan Tolgoi coking coal deposit through an overseas share sale.
The plan approved by parliament calls for selling a 30 percent stake in Erdenes-Tavantolgoi, the state-owned company that will develop the mine in the southern Gobi desert, to foreign investors.
The government is aiming to raise about $1.5 billion from the initial public offering, said Zorigt Dashdorj, Mongolia’s minister of minerals.
Tavan Tolgoi’s more than six billion tons of coal have attracted interest from 10 international mining companies, including China’s Shenhua Energy, a Russian consortium led by Gazprom and Australia’s BHP Billiton.
Plans to open new mines and expand output have stalled, however, as the government struggles to renegotiate the terms of mining concessions with the big foreign miners. The landlocked country of 2.7 million people is trying to retain more of its natural wealth from its huge mineral deposits, including copper, gold and coal.
Late last month, lawmakers approved plans for a rail line linking with Russia to help tap the country’s large coal deposits in the south, a move that could make the poor but mineral-rich nation less dependent on exporting to China.
On top of selling 30 percent of Erdenes-Tavantolgoi in an IPO, the plan approved Wednesday calls for 10 percent of the company to be given to members of the public for free, in the form of ownership vouchers. Another 10 percent would be sold to Mongolian businesses at a nominal price in order to involve them in the development of the giant deposit.
Ownership of the remaining 50 percent of the company will be retained by the government, which is soliciting bids from major mining companies to operate the project and is due to make a decision by this fall.
Despite the strong show of parliamentary support, some civic groups opposed the plan, contending that the public should retain a greater share of the country’s mineral wealth.
"Tavan Tolgoi should be owned and retained by the Mongolian people, a 100 percent not just a 10 percent stake," said Enkhbayar Nambur, a former Mongolian president.
