Mongolia Coal Companies Targeted in M&A Deals

Mongolian coal: attractive target for M&A deals. Mongolia, the holder of one of the world’s largest coal resources and located close to major Asian economies, has become an attractive acquisition destination for the global and regional coal mining groups. Abundant with high quality coal coupled with conducive business environment and proximity to China, South Korea, Japan and India, major consumers of the commodity, this resource rich country is offering lucrative business opportunities for international industry players. Banpu PLC, one of Asia’s leading coal and coal energy providers and Thailand’s biggest coal producer, making a takeover bid for Hunnu Coal, an Australia-listed company with coal assets in Mongolia, is a latest testimony for our earlier prediction of accelerated M&A activity in the Mongolian coal industry. According to our estimates, since 2007, the Mongolian coal industry has experienced 43 M&A deals with the total value of US$1.2bn (announced deals only). Here are some selected transactions:

• Mongolian Mining Corp acquired 100% of QGX Holdings for US$464mn in May this year
• Banpu purchased 12% of Hunnu Coal for US$45mn in March 2011
• Winsway Coking Coal Holdings acquired 50% in Peabody-Polo Resources B.V. for US$35mn in June last year
• Noble Group bought 3.4% of Aspire Mining for US15.9mn in March this year

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