There are 10 events that will take place in 2010, according to Frontier Securities, of Ulaanbaatar, Mongolia, that have great potential to affect future development of Mongolia and its investment environment.
Frontier Securities says the things that should be watched for in 2010 are:
1. Tavan Tolgoi, which promises to be the biggest drama/news maker in 2010:
• Bidding selection postponed until 2010 with the winner to be selected by April.
• Tavan Tolgoi holds an estimated reserve of 6.5 billion tonnes of coking and thermal coal.
• News has been surfacing that Tavan Tolgoi might be divided up.
2. SouthGobi Energy Resources:
• The Toronto-listed Canadian company is one of the largest coal producers in Mongolia. Was 79% owned by Ivanhoe Mines, before HK sale and CIC’s conversion of bonds to shares.
• Hong Kong listing planned for early 2010 and may raise up to US$400 million. Citigroup and Macquarie are the managers.
• Plans to spend US$800 million in 3 years to increase output to China
3. Ivanhoe Mines:
• Oyu Tolgoi was the headline of 2009 and will still be a headline in 2010.
- 3 of 10 Investment Agreement conditions remain.
- US$758 million 2010 construction budget.
- Revised Technical Report to be announced
- Rio Tinto’s exercise of Series A Warrants
• Ivanhoe hires Citigroup and Hatch Corporate Finance, a mining sector specialist, in early January to look at possibilities ‘to further enhance shareholder value’.
- Analysts can’t say what this exactly meant but options include offering new shares or bonds, borrowing money or selling a subsidiary, as well as ‘various corporate transactions’, Reuters reported.
4. Iron Mining International Hong Kong IPO, originally Hong Kong Lung Ming Investment Holdings:
• Owner of Eruu Gol iron ore mine
• US$1 billion is planned to be raised
• US$1 billion already raised - in 2008 $300 million from Temasek and Hopu, in 2009 $700 million from CIC.
5. ‘The Three Mongols’ (Mongol Erdes, Mongol Erchim, Mongol Ded Butets):
• 3 companies proposed by PM Batbold are to consolidate minerals (Mongol Erdes), energy related deposits such as uranium and coal (Mongol Erchim), and infrastructure projects such as roads and railroad (Mongol Ded Butets) in Mongolia and raise funds by IPOs on both international and domestic markets.
• Role models for ‘The Three Mongols’ are Shenhua, Chinalco, Vale.
6. Uranium, full of surprises and drama in 2009, in 2010 government’s intensions should become clear:
• Nuclear Energy Law of 2009 came as a shock to uranium developers in Mongolia, where it states the government will own no less than 51%, for no fee, of uranium deposits discovered with state involvement.
• New law might mean more national investors.
7. Infrastructure developments - the biggest obstacle in Mongolia for investors, infrastructure will be a key topic in 2010:
• Construction of railroads connecting Oyu Tolgoi and Tavan Tolgoi to China.
• Conflict of interest between Russia and China could heat things up.
8. Banking sector - Heavy on bad loans, commercial banks will slow the economy in 2010:
• Total NPLs have increased 4.2 times to 456 billion MNT in November 2009 from the same period of 2008.
• Whereabouts of merger of 2 banks, Savings and Mongol Post Bank, as well as the fate of financially troubled 2 banks, Anod and Zoos (State Bank), will be the main topics of 2010 in Mongolia’s banking sector.
9. Economic growth – copper, gold prices will help but slow growth in bank loans will not:
• 8% GDP growth, according to IMF, and budget deficit of 5% of GDP for 2010
• 2010 should be the beginning of Mongolia’s long-term high growth.
10. Mongolian Stock Market – lacking in liquidity, transparency, and size:
• PM mentioned that Mongolia might consider selling part of the Mongolian Stock Exchange (MSE) to a foreign stock exchange.
• New Securities Law was submitted to parliament by FRC which might be passed in the first quarter of 2010.