Bank of China Kazakhstan contributes $120 million to syndicated loan for Shalkiya Zinc and Lead Mine Expansion Project

Project narrative

On December 29, 2017, JSC AB Bank of China Kazakhstan, a subsidiary bank of Bank of China (Beijing), and the European Bank for Reconstruction and Development (EBRD) signed a $295 million syndicated loan contract with ShalkiyaZinc Ltd. JSC -- a 100% subsidiary of Kazakhstani state-owned JSC Tau-Ken Samruk, National Mining Company of Kazakhstan to finance the Shalkiya Zinc and Lead Mine Expansion Project. The EBRD was the lead arranger of the loan syndicate; Bank of China Kazakhstan provided $120 million and EBRD provided $175 million, respectively. Under the terms of this syndicated loan agreement, the principal was to be repaid in equal installments every six months beginning on June 20, 2021. The loan was to be fully repaid as of December 20, 2029. Therefore, the loan carried the following borrowing terms: a maturity of 12 years, a grace period of 3.5 years, and an interest rate of LIBOR plus a 2.5 % margin. National Welfare Fund Samruk-Kazyna JSC provided an irrevocable guarantee for the loan. The commission and reservation fees, paid by ShalkiyaZink Ltd. to EBRD in 2017, totaled ₸1,153,624 thousand KZT. The Zinc Mine Reconstruction and Expansion Project sought to expand the mining operations at the existing Shalkiya lead-zinc mine and construct a beneficiation plant at the facility, located in the Zhanakorgan District of Kyzylorda Region. Shalkiya lead-zinc deposit was one of the largest in Kazakhstan and was expected to produce 4 million tons of ore per year. The project intended to to introduce the latest technologies in the field of extraction and production, including a vertical ore hoisting conveyor, to the project. A new concentrating mill, tailing dump, intrasite networks, ore-issuing complex and carrying out mining and capital works at the Shalkiya mine were all included. After completion of the reconstruction and expansion of the mine, it was expected that ShalkiyaZink Ltd. JSC would become the top zinc mining company in Kazakhstan, and one of the world's top zinc mining companies, developing the local economy, offering employment, and inducing development in upstream and downstream industries in Kazakhstan. The Ministry of Energy of Kazakhstan was to provide infrastructure services to faciliate implementation of the project. The EPC contractor responsible for project implementation was German company Engineering Dobersek GmbH. In 2018, construction was scheduled to begin in 2020. As of 2021, the launch of the plant was planned for 2023.