Standard Bank Group has won Project Finance magazine’s 2012 African Mining Deal Of The Year for the USD700m project funding for Konkola Copper Mines Plc. The award recognizes Standard Bank Group’s capabilities and achievements in helping implement KCM’s brownfields expansion project in Zambia’s copper belt to re-establish mining operations, and complete the development of the KonkolaDeep Mining Project.
Once the expansion project is complete, KCM will double its production to 400,000 tonnes of copper per year and extend the mine’s life by 23 years.
KCM was purchased by Vedanta Resources Plc in November 2004 and the fully integrated copper operations include a number of open pit mines, a large underground mine, leaching plant, a state of the art new flash smelter, modernized concentrators, a modernized refinery and a sulphuric acid plant.
In 2011 Standard Bank Group provided a USD500m bridge finance facility to KCM that was guaranteed by parent Vedanta. Standard Bank Group was jointly mandated by KCM in 2012 to arrange its debt funding for the project on a non-recourse basis. The debt funding is split into a USD300m commercial facility with a three-year tenor and a USD400m Export Credit Insurance Corporation-backed facility which has a five-year tenor and demonstrates the evolution of KCM to be able to raise financing in its own right without support from its parent.
Mr Brad Breetzke, Standard Bank Group’s Head of Mining and Metals Finance, said highlights of the deal are that this is the single largest export credit backed underwrite by the Export Credit Insurance Corporation and the deal will result in Konkola Copper Mines becoming one of the top ten copper producers in theworld, as well as one of the lowest-cost producers.
“Innovative risk mitigation techniques were used in this deal in order to reduce the level of country risk while maximising funding into Zambia. The deal size demonstrates the amount of confidence that investors have in Zambia and itsmining sector.”
At the announcement of the prestigious award, Mr Breetzke said the accolade was testament to Standard Bank Group’s expertise in finance for major projects in its specialist areas not only in mining and metals, but oil and gas, and power and infrastructure. In particular, he said, the award highlighted the group’s ability to advise clients on significant cross border deals in both emerging and developed markets. Standard Bank’s in-country team have a solid relationship with KCM and having well established copper trading activities in Zambia gave Standard Bank a competitive advantage to structure and secure the deal.
“Standard Bank is pleased to have won this award for our work in a field that is so important for the revival of the Zambian Copper Belt and in maintaining Africa’s current positive economic growth trajectory,” says Mr Breetzke.
“As a leading financial institution with Africa as its core competence, Standard Bank is well placed and has considerable local and international knowledge and sector expertise to facilitate company and client growth. These included project finance, natural resources and foreign exchange to assist companies with their investments of capital, technology and skills across borders and geographies.”
He said Standard Bank’s strong balance sheet, depth of expertise and on-the ground presence in 18 African markets enable it to continue to lend to projects across key commodity sectors on the continent.
Project Finance magazine’s Deal of the Year Awards recognise the best European and African deals each year. KCM is owned by London-listed VedantaResources and is a junior miner.
Watch a video interview with Brad Breetzke, Standard Bank Group’s Head of Mining and Metals Finance, about this deal.
Source: Standard Bank