The total budget of the project is about $2.9 bln, of which up to $1.79 bln is to be raised as a loan from a syndicate of banks for a term of up to 12 years. Gazprombank, acting as the arranger and financial consultant for the transaction, is also one of the lenders, providing up to $650 mln, and plans to attract foreign financing. The other members of the syndicate are Sberbank (up to $650 mln) and VEB.RF (up to $490 mln). In addition, VEB assumed the role of the loan manager in the syndicate.
As Valery Kazikayev, Chairman of the BMC Board of Directors, noted, “We are raising loans to finance the full work cycle: supply of main equipment for the processing plant, hydrometallurgical production, construction and installation works, including those related to infrastructure setup, as well as supplies of auxiliary equipment and transport.”
Construction work at the site has been underway since the first quarter of 2019. The start of delivery and installation of the main equipment is scheduled for mid-2020, while the commissioning of the Udokan mining and metallurgical plant is slated for 2022. According to Valery Kazikayev, the shareholders initially planned to use the project financing mechanism, while in-house investment in the project covers about 30% of its total cost.
“Thanks to the joint work of the lenders and project initiators, we were able to find the best possible investment solution and structure the financing in order to achieve high loan quality of the transaction. In particular, the financial tools of the Factory will make it possible to receive interest rate subsidies on the loan and actually hedge the project operator against an increase in the key rate of the Central Bank of Russia throughout the entire loan period,” said Alexey Belous, Deputy Chairman of the Gazprombank Management Board.
“The transaction has become the largest project in Russia implemented on terms of the Project Finance Factory, operated by VEB.RF. For all tranches denominated in rubles, including the tranche of partner banks, a state subsidy is to be provided for the entire loan period to offset an increase in the key rate. An additional liquidity cushion is provided by the Factory’s special tool – the B tranche provided by VEB.RF to cover interest expenses during the investment phase and expenditures in case there is an overrun in the project budget,” said First Deputy Chairman of VEB.RF and Management Board member Nikolay Tsekhomsky.
“Implementation of the project is a strategically important task for the industry and the country's economy as a whole. I am confident that it will significantly improve the efficiency of the Russian mining complex, create new jobs and advanced infrastructure. We are pleased to have been able to participate in such an important and unique project for the Russian market and, together with our partners, offer a tailored financial solution that meets the interests of the customer,” said Anatoly Popov, Deputy Chairman of the Sberbank Management Board.
Udokan (Zabaykalsky Krai) is the largest undeveloped copper deposit in Russia and one of the biggest in the world. The project includes the development and construction of the first stage of a mining and metallurgical plant for the production of cathode copper and copper concentrate, an open-pit mine with a capacity of up to 12 mln tons of ore per year and production of up to 125,000 tons of copper per year, as well as setup of the respective infrastructure.
Communications and Marketing Department,
Gazprombank (Joint Stock Company)