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VEB.RF and SberCIB lend 17.6 bln RUB to implement one of UMMC’s key projects

12/25/2020
VEB.RF and SberCIB lend 17.6 bln RUB to implement one of UMMC’s key projects

VEB.RF, SberCIB and UMMC Group have signed a syndicate facility agreement for the development of the project of the “Korbalikha” Zn-Cu-Pb Mine construction and the Renovation of Rubtsovsk enrichment plant to ramp up the production capacity up to 1.5 mln tons of ore per annum.

The total project cost of the “Korbalikha” Mine construction is about RUB 38 bln, of which RUB 15.8 bln to be financed by syndicate members under the Project Finance Factory (in addition to the reserve tranche RUB 1.8 bln). The raised financing is to be allocated for the needs of the project.

«This is the largest polymetal mine in the region; VEB.RF as an operator of Project Finance Factory not only does select investment projects to add to the program, but also acts the Credit manager being and one of the syndicate members. We do foresee the perspective for zinc concentrate from the project to be traded at the local and global markets. In addition, the project is creating opportunities to replace existing external suppliers of zinc concentrate, including foreign ones. The social aspect is of a crucial importance for us as well, new highly qualified vacancies are to be created», - noted Yuriy Korsun, Deputy Chairman of VEB.RF.

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Korbalikha project is implemented to meet the own resources production needs for UMMC’s Zinc Division. The work coincides with the ongoing renovation of Rubtsovsk enrichment plant, initiated to expand ore processing capacity.

 “We are delighted to participate in the financing of the development of the largest polymetal deposit in the country, which strengthens Russia’s leading position at the non-ferrous market, creates new employment opportunities and supports the development of innovative mining technologies. SberCIB provides the funding at the amount of RUB 13.7 bln for UMMC Group for the term of 8 years on conditions of a “floating” rate based on the Bank of Russia’s key interest rate. This, along with the conditions within the VEB.RF’s Project Finance Factory, will provide the most beneficial terms of financing for the client”, stated Olga Kharlamova, Vice President and Director of the Key Clients Lending Department of Sberbank’s Corporate and Investment Business Block. 

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Currently, “Korbalikha” Zn-Cu-Pb deposit is one of the largest zinc deposits at the development stage in Russia. It is located in the Zmeinogorsk district, Altai Krai. The reserves are estimated at approximately 24 mln tons of ore rich in zinc, copper, lead, gold, and silver.

“UMMC considers the deal as a “pilot” deal under the structure of VEB.RF Project Finance Factory with ongoing plans to expand the received experience in future debt financing of other investment projects, including more ambitious ones. We would like to express our gratitude to the banks participating in this rather long but very special for the UMMC Group project. The project finance structure not only does stipulate good mechanisms of project management control, but also proposes effective interesting instruments of the risk mitigation for UMMC Group. In addition to the involvement of the specialized Technical Advisory, the project will also implement complex risk hedging program (including instruments of hedging the risk exposure to weakening of financial markets)”- commented Andrey Kozitsyn, CEO of JSC “UMMC”.

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Ural Mining and Metallurgical Company is a Russian mining and metallurgical holding, the largest producer of copper, zinc, coal, and precious metals in Russia comprising over 40 operations and factories both in Russia and abroad.