Kazakhmys to sell stake in Kazakh power plant

Wednesday, October 14, 2009
ALMATY, Kazakhstan – Kazakhstan's top copper producer, Kazakhmys, announced Tuesday that it is selling a 25 percent stake in the energy-rich nation's largest power plant to a state holding company for $339 million.
Ekibastuz, a coal-fired power plant with current available capacity of about 2,250 megawatts, is seen as key to enabling Central Asia's largest economy to meet its growing energy demand in the coming years.
Samruk-Kazyna's acquisition of the stake in the plant further expands the state-owned conglomerate's role in the former Soviet nation's economy. The vast holding currently encompasses some of the country's largest enterprises, including oil and gas company Kazmunaigas and national airline Air Astana.
'Ekibastuz is a key strategic asset in Kazakhstan and this agreement will assist its long-term development and return to full capacity,' Kazakhmys chief executive Oleg Novachuk said in a statement.
The transaction will help boost the value of Ekibastuz by ensuring a closer relationship between the Bogatyr mine, which is jointly owned by Samruk-Energy and supplies around four-fifths of the plant's coal needs, the company said.
'Samruk-Kazyna is an excellent partner for us in Ekibastuz and we are pleased to be formalizing the relationship,' Novachuk said.
Payment for the stake will be made in cash, mainly to be used by Kazakhmys to pay off its debts, the company said.
London-listed Kazakhmys says it will retain management control over the plant after completion of the transaction. The deal still requires regulatory approval before it can be formally completed.
Kazakhmys bought Ekibastuz and the Maikuben West coal mine in Kazakhstan from Arlington, Va.-based AES Corp. in May 2008 for $1.1 billion and additional deferred payments of around $380 million.
Kazakhstan inaugurated a vast electricity grid last month linking the country's north, where Ekibastuz is located, to power-starved industrial southern regions.
Ekibastuz is eventually expected to reach its original design capacity of 4,000 megawatts and will play a key role in allowing Kazakhstan to become self-sufficient for electricity by drawing on excess power produced in the north.
In a separate statement Tuesday, Kazakhmys said it is in discussions with the China Development Bank and Samruk-Kazyna over a possible loan of around $2 billion.
The company said the funds would be used to finance the development of major growth projects.