Mongolia Starts Share Sale Process for State-Owned Coal Company

Mongolia, whose economy grew the fastest last year, will sell new shares in Baganuur JSC (BAN) coal mining company to raise at least 60 billion tugrik ($46 million) to help fund infrastructure projects.

The government wants to cut its holding to 51 percent from 75 percent by selling new shares, Gunsmaa Namgilsuren, a senior specialist at the privatization department of the State Property Committee, said today by phone from Ulan Bator. It’s now seeking banks to manage the sale, she said.

Mongolia, which became China’s biggest supplier of coking coal in July, is seeking to offer minority stakes in its coal miners to foreign investors to fund roads and power plants that could boost production. Mining companies from Mongolia have raised more than $750 million in share sales abroad in the last two years.

The share sales could more than quadruple once state-run coal miner Erdenes Tavan Tolgoi completes a planned $3 billion listing in Mongolia, London and Hong Kong later this year. The company is targeting output of 3 million metric tons this year, the same as Baganuur’s 2011 production volume.

Mongolia’s state property committee, which is in charge of the tender, set an applications deadline of 6 p.m. local time on April 18, according to a statement on its website. An underwriter is expected to be selected by the end of May, Gunsmaa said.

Baganuur, founded in 1978, has the sixth-largest weighting in the Mongolia Stock Exchange’s benchmark Top 20 Index with a 3.47 percent share. The company needs cash to expand production and upgrade equipment, Gunsmaa said.

The company’s market value in February was 178 billion tugriks, based on a price per share of 9,775 tugriks, BDSec JSC (BDS), Mongolia’s biggest brokerage, said in a report the same month. Baganuur declined 2.7 percent to 7,100 tugriks today in Ulan Bator. Mongolia’s economy grew at 17.3 percent last year, the fastest rate, according to the World Bank.

To contact the reporter on this story: Yuriy Humber in Tokyo at yhumber@bloomberg.net

To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net

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