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VEB.RF in syndicate with partner banks ready to manage funding of the second stage of Udokan deposit development

VEB.RF in syndicate with partner banks ready to manage funding of the second stage of Udokan deposit development
VEB.RF, Gazprombank, Sberbank, and Udokan Copper, a part of the USM diversified holding company (founder and principal shareholder – A.B. Usmanov), have signed a cooperation agreement to fund the second stage of the Udokan copper deposit development.
The signing ceremony was held at the VEB.RF site at the St. Petersburg International Economic Forum.
According to preliminary estimates, the investment in the project will amount to about USD 4 bln. The final parameters will be determined in the course of further project appraisal. The project is planned to be implemented as part of the Project Finance Factory operated by VEB.RF.
The second stage of the Udokan deposit development implies the processing of approximately 24 mln tons of ore per year, in addition to 12 mln tons to be processed at the first stage.
Udokan, with copper reserves of over 26 mln tons, is the largest copper deposit in Russia and the fourth-largest globally, with an average copper grade of 1.0%, according to the JORC Code (Australian-Asian Code of Reporting on Exploration Results, Resources, and Ore Reserves). Upon the project's completion, a mining and metallurgical plant will be commissioned to manufacture cathode copper and sulfide concentrate; the production output is projected at 125,000 tons per year.
Udokan mining and metallurgical plant coming on stream shall provide more than 2,000 new jobs net of related industries and more than RUB 750 bln of additional tax revenue to the budgets of all levels during the first 25 years of operation.
Valery Kazikaev, Chairman of the Board of Directors of Udokan Copper, “The development of Udokan, a deposit of enormous scale, unique in mineral composition complexity, could not start for 70 years since its discovery. We managed to map out a unique technological plan for its development. Today we are successfully building the plant under harsh conditions of permafrost in high-altitude environments. The project investment reached almost USD 1.8 bln, including one billion earlier invested by the shareholders. Confidence in the successful implementation of the project, as well as the government’s investment efforts in the Far East, allowed us to start designing the second stage”.
Nikolai Tsekhomsky, First Deputy Chairman, VEB.RF, Executive Board Member, “We are currently starting to organize financing for the second stage of Udokan development. Taking into account the first stage of the deposit’s development, this project will become one of the most capital-intensive projects financed with the participation of VEB.RF, and the largest implemented under the Project Financing Factory program. This program helps to raise solid investment into the country’s economy through the involvement of commercial banks. Besides, the Factory helps investors and lenders to reduce project risks. The launch of the second stage of Udokan deposit development will spur the development of the Trans-Baikal Territory. In particular, the project operator is implementing a program of integrated development of the territory aimed to establish high standards of living for both Udokan Copper employees and residents of the region.”
Aleksei Belous, Deputy Chairman of Gazprombank’s Management Board, “Gazprombank has traditionally played an important role in the development of industrial production and processing of non-ferrous metals in modern Russia. Together with our partners, we are turning a new page in the history of the large project important for Eastern Siberia and the Far East. I am convinced that the further development of the project will be a follow-up to successful cooperation and give an impetus to the economy of Trans-Baikal Territory. VEB.RF's Project Financing Factory has proven its effectiveness, and the participants of the Udokan-1 project proved their professionalism. Against this backdrop, we proceed to Udokan-2.”
Olga Kharlamova, Sber Vice President, Director of the Key Client Lending Department, “The development of the Udokan copper deposit is crucial for the development of the Russian mining industry. Sber considers the project’s initiator, USM Group, a reliable and responsible partner and is glad to join the financing of projects important for national development. The bank is already lending for the first stage of the project under the syndicated loan agreement and plans to join the financing of the second stage. The implementation of such a large-scale project will reinforce the company’s standing in the Russian and global copper markets.”




03 June 2021