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Tavan Tolgoi to use $700mn bond

cash win Chinese market share

MONGOLIA MONGOLIA’S giant Tavan Tolgoi coal mine and (an) uncertain world financial market,”
reportedly intends to raise Mongolian tughrik 2 Gankhuyag was also cited as saying.
trillion ($700mn) through a bond issue as it tries The first tranche of bonds was offered for sale
to build infrastructure needed to replace Aus- in late March. Interest rates of 10% for local cur-
tralia as one of China’s top coal suppliers. rency and 6.8% for dollars applied, respectively.
Gankhuyag Battulga, CEO of state-owned Around $200mn was raised.
Erdenes Tavan Tolgoi JSC, told Reuters on April The bonds are due to mature in two years. The
21 that Mongolia needs to invest in railways to underwriters were BDSec JSC and the Mongo-
take advantage of simmering tensions between lian International Capital Corporation, two local
Beijing and Canberra, which have reduced Aus- investment banks.
tralian coal shipments to zero since December. The second tranche of bonds is due to go up
“The Chinese government introduced a strict for sale in the third quarter, with the company
limit on Australian coal and this provides Mon- saying international investors are welcome and
golian coal exporters a unique opportunity to that it is working to the bond available both on
boost market share,” he was quoted as saying, local and international stock exchanges.
adding that market conditions should shift in In further remarks to Reuters, Gankhuyag
favour of Mongolia. said Tavan Tolgoi would require $3.4bn in invest-
Tavan Tolgoi is located around 240 kilometres ment over 2021-2025 period. Some 70% of that
from the Chinese border. It boasts one of the could be funded from the company’s own cash-
largest coal deposits in the world, but limited flow, he added.
delivery capacity and longstanding financing Also amongt the company’s projects are the
troubles have hindered its development. construction of water pipelines, a coal washing
Part of the project was put up for tender in facility and a 450-megawatt power plant that will
2011 but the winning bid was voided after com- supply electricity to Rio Tinto’s giant Oyu Tolgoi
plaints from Japan and South Korea that the copper-gold mining project.
process was unfair. Attempts by Mongolia to list Around the world, those looking to finance
Tavan Tolgoi on global stock exchanges have also coal projects face increasing difficulties with
been made. lenders lobbied to divest from fossil fuels to cut
“Underwriters warned us that there is a risk of greenhouse gas emissions.™
not reaching our goal with failing coal demand

P8 www. NEWSBASE .com Week 16 21•April•2021