Kazakhmys to borrow $2bn from China Development Bank for copper projects
Wednesday 14 October 2009
Kazakhmys, the Kazakh mining giant, yesterday announced major funding plans, including borrowing $2bn (£1.3bn) in loans, which it hopes will help get some major unfunded copper projects off the ground.
The London-listed group has also agreed to sell a 25 per cent stake in its Ekibastuz power plant, the biggest power plant in Kazakhstan, to the country's state welfare and sovereign wealth fund Samruk-Kazyna for $339m in cash.
According to a statement released to the Stock Exchange yesterday, Samruk-Kazyna and the China Development Bank are the likely loan providers, although it is understood that news of the deal leaked early and that negotiations are still taking place with other options in place.
Unlike its Kazakh rival Eurasian Natural Resources Corporation (ENRC), which last year launched an abortive takeover of Kazakhmys, the company does not have big cash reserves and a number of analysts have questioned the growth strategy.
According to a spokesman for the group, the $2bn loan will help in getting two of the group's major projects off the ground. "The funding will help us develop our Boschekul and Aktogay sites, where a lot of work has already been done, and which we project may potentially add 50 per cent to our production levels."
The Boschekul mine in north- eastern Kazakhstan is the more developed of the two projects and is located close to the Ekibastuz power plant.
The group also said yesterday that it could sell off more of the Ekibastuz plant. It needs 25 per cent of the plant's output for its operations and is understood to be willing to listen to offers.
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