The Mongolian government is likely to further defer its IPO for its state-owned Tavan Tolgoi coal project.

Close on the heels of its plan to annul a $250 million coal-supply deal with the Aluminum Corp. of China Ltd.(Chalco), the Mongolian government is further deferring its Initial Public Offering for its state-owned Tavan Tolgoi coal project, a government official has said.

The IPO has been put off several times in the past. Cancellation of the coal-supply deal, which the Mongolian government sees as undervalued, is likely to worsen the distrust between the two countries.

The Mongolian government, elected last June, has resolved to revisit policies that were seen as more favourable to global mining interests and were leading to more dependence on China.

Mean while, industry leaders and investors have cautioned the government over the proposed changes to Mongolia”s laws that require existing miners to share a considerable portion of their projects with local interests. The Business Council of Mongolia, with more than 250 members, said in an open letter that such measures will stall all future investments.

The Council felt that the proposed changes will harm development of Tavan Tolgoi, the nation”s largest coal reserve. State-owned Erdenes-Tavan Tolgoi has an aim to raise $3 billion through an IPO, which has been delayed repeatedly.

An official seeking anonymity, has said that the IPO will not go ahead this year as well.