* Mongolia to choose stock exchange operator in October
* Tavan Tolgoi mine operating license given in October
* Studying establishment of budget stabilization fund
* 2010 GDP to be in 7 to 8 percent growth range
(Adds details, comment, background, byline)
By Daniel Bases
NEW YORK, Sept 20 Mongolian Prime Minister
Sukhbaatariin Batbold said on Monday the London Stock Exchange
is the front-runner in a bid to manage a new local stock
exchange, expected to be up and running by year-end.
"London is the front-runner" to run this exchange, building
it up from scratch," Batbold told reporters on the sidelines of
the United Nations General Assembly meeting.
Mongolia is trying to make the most of its natural resource
wealth. It is one of the last places on earth with huge
untapped mining resources for coal, copper, gold and uranium.
The government's international tender offer for a
management contract for a new stock exchange drew 12 bidders,
with the field now narrowed to four.
Batbold said the four are the London Stock Exchange, NASDAQ
OMX, Deutsche Borse, and the Korean Stock Exchange.
The idea is to have established companies with listings
elsewhere add a dual listing on the Mongolian exchange.
"First, what we would ask from them is to have a dual
listing on the Mongolian stock exchange from those already
listed companies," he said.
"Secondly, there will be (large) state-owned enterprises
through the privatization program. So we will have a quite
serious change in our privatization concept so that state-owned
enterprises, especially the large ones, will go through IPO on
the Mongolian stock exchange and possibly in combination with
international stock exchanges," Batbold said.
Even as the global financial crisis has wrought havoc on
developed economies and put a crimp in generally robust
emerging markets, economic growth will remain strong, Batbold
said, albeit down from the almost 10 percent per year average
growth of the last decade.
"Despite the financial crisis and difficulties we face in
different industries, especially the livestock and others
because of the harsh winters, still we have 7-8 percent growth
of GDP this year. That is quite promising, I think for
Mongolia," he said.
TAPPING THE EARTH
Batbold said the massive Tavan Tolgoi coal mine, a deposit
of approximately 7.5 billion tons, is a "unique deposit." It is
believed to be the world's largest untapped coking coal deposit
and is expected to be capable of producing 50 million tons per
A tender for an operating license will be granted in one
month, but Batbold gave no indication of front-runners.
In addition, he said the government plans to list up to 50
percent of the mine through an initial public offering process,
but with the government maintaining ownership of the assets.
The Tavan Tolgoi mine would be the second big project the
government has embarked upon following the $5 billion Oyu
Tolgoi project, jointly owned by Ivanhoe Mines (IVN.TO) and the
government. The copper mine is expected to be the largest in
the world outside of Chile once operations start in 2013.
Batbold would not give an estimate of revenues from Oyu
With the increase in investment and revenues thrown off
from the mining sector, Mongolia's currency, the tugrug MNT=,
has strengthened against the U.S. dollar since the acute impact
of the global financial crisis has softened.
The tugrug trades at around 1,325 per dollar, according to
Thomson Reuters data. In order to limit the impact of money
flowing in and to start saving for future needs, the government
has submitted a budget stabilization fund law in parliament.
Mongolia, a massive landlocked nation of fewer than 3
million people, is sandwiched between Russia and China. It is
trying to navigate its way in developing its economy while
shedding its historical vulnerability to its two neighbors.
Batbold made a point of "encouraging other friends" to
invest in Mongolia to provide more balanced economic
development and greater sophistication in its industry.
There is concern over China's growing influence in the
economy, as it bought 70 percent of Mongolia's exports last
year. While Beijing relinquished its claim to Mongolia in 1950,
there remains a deep concern that Chinese workers will lead to
increasing immigration into Mongolia for work, especially if
Chinese firms grab a large swath of the mining sector.
Batbold said the current work force at Oyu Tolgoi is 60
percent Mongolian and 40 percent international, mostly Chinese,
because higher-skilled workers from outside Mongolia are needed
to complete construction of the mine.
"We have a certain plan to prepare Mongolian workers
through certain vocational training. Gradually this ratio of
60/40 will be increased up to 90 (percent) and above, within
two to three years," Batbold said.
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(Reporting by Daniel Bases; Editing by Dan Grebler)