May 24 – Macquarie and Bank of America-Merrill Lynch have been appointed joint global coordinators and bookrunners for the proposed listing of Mongolian iron ore miner Altain Khuder, a person familiar with the matter told Deal Journal Australia.
Altain Khuder is one of Mongolia’s largest iron-ore miners, which owns the Tayan Nuur iron ore mine in the southwest of the country. The company is planning to raise about US$300 million through a Hong Kong initial public offering (IPO).
Mongolia had been expected to account for several major initial public offerings this year,
But many of the share-sale timetables are slipping as commodity and stocks sink around the world, and partly because lawmakers won’t consider vital legislation needed for some of the biggest share sales ahead of next month’s Great Khural (Mongolian Parliament) election.
The long-awaited US$3 billion listing of state-owned miner Erdenes-Tavan Tolgoi Co., which controls one of the world’s largest coking-coal deposits, was expected in the fourth quarter of this year, with trading in Hong Kong, London and Ulaanbaatar. But earlier this month the timetable was pushed back by at least three months, to early 2013.
Mongolia’s iron-ore exports in the first quarter of 2009 totaled less than 200,000 tons, but have increased more than eight-fold since then to above 1.6 million tons in the fourth quarter of 2011, according to the Mongolian government. Still, Mongolia’s iron ore is mostly of a lower quality compared to deposits in Australia’s Pilbara. Australia exported 279 million tons of iron ore to China in the 12 months that ended June 30, 2011.
But Mongolia has one big advantage over Australia: its proximity to China which accounts for roughly 60 percent of the world’s imports of iron ore used in making steel.
Altain Khuder has produced iron ore from the Tayan Nuur mine around 168 kilometers from Mongolia’s border with China since October 2009 under a 15-year supply agreement with a unit of China’s Baoshan Iron & Steel Co.
Though, investors willing to place bets on Mongolia’s growth as an iron-ore-producing region will need convincing that the country has the infrastructure in place to move growing volumes of commodities, experts say.
However, shares in Altain Khuder could be a tough sell to investors amid signs that political risk in Mongolia may be rising due to coming elections scheduled for June 28.