Konkola Copper Mines (KCM), a mining and metals company in Zambia, has received a US$500m bridge finance facility from Standard Bank that will be used to refinance shareholder loans from Vedanta Resources. The bank has also been mandated to arrange and underwrite a US$700m term loan facility to fund investment that will turn the Zambian copper miner into one of the world's leading copper producers, and provide further impetus for growth in the Zambian economy.
Brad Breetzke, head of mining, energy and infrastructure finance at Standard Bank said, "The funding to KCM is the single largest injection into the Zambian copperbelt ever by a bank. The investment made by Standard Bank is an illustration of our commitment to KCM and the broader copper region in Zambia. Standard Bank has full confidence in KCM management's ability to drive the company's growth towards becoming one of the world's leading copper producers. We are proud to be KCM's and its parent Vedanta's financial partner in this process."
Investments in infrastructure will see KCM produce in excess of 400 000 metric tonnes of copper per year. The production target, aimed to be achieved in 2014, will rank KCM as the largest copper producer in Zambia and one of the top ten globally. This transaction reflects our confidence in the future of the mining industry in Zambia as well as Zambia's future growth prospects.
"In the last five years, real GDP in Zambia has expanded by an average of 6% per annum. Even during the global downturn in 2009 the economy managed to expand by 6.3%, and we expect this trend of robust growth to continue over the next five years. Copper mining is integral to the Zambian economy. Although more than 75% of the labour force works in agriculture, it is copper mining that drives growth. In 2009, 83% of exports were accounted for by copper and cobalt, equating to almost 30% of total GDP, an increase from 77% in 2006," added Breetzke.
Standard Bank has been providing funding and investment support to the mining area of Central Africa for the past decade. Notable transactions in Zambia include acting as Lead Arranger for funding the development of the Kansanshi copper mine in 2003 as well as for the Lumwana copper mine in 2007.
Rajat Kohli, global head of mining and metals at Standard Bank, added, "This landmark financing event further demonstrates our commitment to natural resources and to Africa. With an outstanding track record of success, we are positioned to continue acting as the financial institution of choice to the sector on the continent."