Mongolian Prime MinisterSukhbaatariin Batbold
said Monday the London Stock Exchangeis the front-runner in a bid to manage a
new local stockexchange, expected to be up and running by year-end.

“London is the front-runner” to run
this exchange, buildingit up from scratch,” Batbold told reporters on the
sidelines ofthe United Nations
General Assembly meeting.

Mongolia is trying to make the most of its
natural resourcewealth. It is one of the last places on earth with hugeuntapped
mining resources for coal, copper, gold and uranium.

The government”s international tender offer
for amanagement 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, NASDAQOMX, Deutsche Borse, and the Korean Stock Exchange.

The idea is to have established companies
with listingselsewhere add a dual listing on the Mongolian exchange.

“First, what we would ask from them is
to have a duallisting on the Mongolian stock exchange from those alreadylisted
companies,” he said.

“Secondly, there will be (large)
state-owned enterprisesthrough the privatization program. So we will have a
quiteserious change in our privatization concept so that
state-ownedenterprises, especially the large ones, will go through IPO onthe
Mongolian stock exchange and possibly in combination withinternational stock
exchanges,” Batbold said.

Even as the global financial crisis has
wrought havoc ondeveloped economies and put a crimp in generally robustemerging
markets, economic growth will remain strong, Batbold said, albeit down from the
almost 10 percent per year averagegrowth of the last decade.

“Despite the financial crisis and
difficulties we face indifferent industries, especially the livestock and
othersbecause of the harsh winters, still we have 7-8 percent growthof GDP this
year. That is quite promising, I think forMongolia,” he said.

TAPPING THE EARTH

Batbold said the massive Tavan Tolgoi coal
mine, a depositof approximately 7.5 billion tons, is a “unique
deposit.” It isbelieved to be the world”s largest untapped coking coal
depositand is expected to be capable of producing 50 million tons peryear.

A tender for an operating license will be
granted in onemonth, but Batbold gave no indication of front-runners.

In addition, he said the government plans to
list up to 50percent 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 thegovernment has embarked upon following the $5 billion OyuTolgoi
project, jointly owned by Ivanhoe Mines and thegovernment. The copper mine is
expected to be the largest inthe world outside of Chile once operations start
in 2013.

Batbold would not give an estimate of
revenues from OyuTolgoi.

With the increase in investment and revenues
thrown offfrom the mining sector, Mongolia”s currency, the tugrug ,has
strengthened against the U.S. dollar since the acute impactof the global
financial crisis has softened.

The tugrug trades at around 1,325 per dollar,
according toThomson Reuters data. In order to limit the impact of moneyflowing
in and to start saving for future needs, the governmenthas submitted a budget
stabilization fund law in parliament.

Mongolia, a massive landlocked nation of
fewer than 3million people, is sandwiched between Russia and China. It istrying
to navigate its way in developing its economy
whileshedding its historical vulnerability to its two neighbors.

Batbold made a point of “encouraging
other friends” toinvest in Mongolia to provide more balanced
economicdevelopment and greater sophistication in its industry.

There is concern over China”s growing
influence in theeconomy, as it bought 70 percent of Mongolia”s exports
lastyear. While Beijing relinquished its claim to Mongolia in 1950,there
remains a deep concern that Chinese workers will lead toincreasing immigration
into Mongolia for work, especially ifChinese firms grab a large swath of the
mining sector.

Batbold said the current work force at Oyu
Tolgoi is 60percent Mongolian and 40 percent international, mostly
Chinese,because higher-skilled workers from outside Mongolia are neededto
complete construction of the mine.

“We have a certain plan to prepare
Mongolian workersthrough certain vocational training. Gradually this ratio
of60/40 will be increased up to 90 (percent) and above, withintwo to three
years,” Batbold said.

Source:Reuters