Source: Bloomberg News                          Date: 08 September, 2011

Erdenes Tavan Tolgoi will likely raise USD 3 billion when it goes to the market next year. Plans have not yet finished for the IPO, but it is likely it will go on sale next year, possibly to the Mongolian Stock Exchange (MSE), London Stock Exchange (LSE), and Hong Kong Exchange (HKE).

Mongolia's decision is partly based on its desired to boost living standards. The average income in Mongolia is about USD 2,000 a year. Mongolia's entire economy was worth USD 6.8 billion last year.

The IPO “has a lot of the ingredients that investors would ultimately find attractive,” Peter Arden, a senior research analyst at Ord Minnett, said by telephone from Melbourne. “Although there is still lingering doubt over the sovereign risk there, the project is on the doorstep of China and the emerging market.”

Tavan Tolgoi would be the first company to sell share simultaneously in three different markets. Of the total shares, 10 percent will be owned by Mongolian citizens, who may sell their stock as they choose.

Estimates say that Tavan Tolgoi holds more than 6 billion tons of coal and is one of the world's biggest untapped sources. Last month Credit Suisse Group raised its predicted prices for coking coal by an average of 15 percent from 2014 to 2018, citing “unrelenting” demand. Prices rose to a record USD 330 a ton for three-month contracts in April.