Mongolia set to list vast mineral assets in London

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The Independent Online

Mongolia, home to potentially some of the world's largest mineral deposits, is set to float some of its state-owned mining assets after receiving proposals from a number of bourses, including the London Stock Exchange (LSE).

The country has attracted a wave of international interest in recent months after Rio Tinto and the Canadian mining group Ivanhoe signed a deal with the government in Ulan Bator to develop part of the Oyu Tolgoi copper mine last October. The agreement could make the copper and gold resource worth up to $3bn (£2bn), with any listing allowing more overseas companies to take shares in the project.

The Mongolian administration is in talks with a number of stock exchanges, and while London is home to a host of major international mining companies, the Hong Kong bourse is also in developed negotiations. Last year, the huge Russian aluminium group Rusal, controlled by the oligarch Oleg Deripaska, chose an initial public offering in Hong Kong despite competition from London. Lawrence Fok, the chief marketing officer of Hong Kong Exchanges and Clearing, said yesterday he had met Mongolian mining company officials.

A spokesman for the LSE refused to confirm that it had held talks with the Mongolians, but said the exchange had business development interests in the republic bordering China and Russia.

Despite seeing little exploration, Mongolia is believed to be rich in valuable minerals. Last year, estimates of its uranium resources were raised by 69 per cent to 62,000 tonnes, an overseas miners and governments have bgun making overtures to the government of Prime Minister Sükhbaataryn Batbold. Last year, Russia's Prime Minister Vladimir Putin made a state visit to his neighbour and former ally, cementing an agreement to develop stronger ties on uranium exploration.

Mongolia's proximity to China is also likely to prove attractive to major mining investors. The Rio Tinto chief executive, Tom Albanese, highlighted the advantage of being close to the Chinese border as a key reason behind its investment in Mongolia last year.

"While the size and grade of the existing Oyu Tolgoi ore reserves and mineral resources are already first class, we are excited by significant exploration upside that still remains," he said. "We believe that, in time, Oyu Tolgoi has great potential to become a world class mining district.

"Furthermore, its proximity to the Chinese market, which will continue to drive world demand for raw materials long into the future, makes Oyu Tolgoi a truly world class opportunity."

With trading volumes of just $100,000 a day, Mongolian companies struggle to attract significant backing in their home market. As well as the LSE and the Hong Kong exchange, Nasdaq is also understood to have spoken to Mongolian officials.

The Ulan Bator government is also hoping to attract investment for the Talvan Tolgoi coal mine. After the deal with Rio Tinto and Ivanhoe, a number of miners held talks about the Talvan Tolgoi project before negotiations were brought to an end by the government. Analysts say the project could be worth as much as $2bn.

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