VEB.RF-Supported Central Ring Road Project Phase 4 Begins Operation
An official ceremony took place to mark the opening of regular traffic via CRR-4 (Phase 4 of the Moscow Region’s Central Ring Road), a project completed with the VEB.RF Group’s involvement.
“The development of highway infrastructure is a key area of VEB.RF’s investment. We are pleased that CRR-4 traffic was opened 10 months ahead of schedule. The Central Ring Road and, specifically, the CRR-4 project will relieve the Moscow transport hub of transit freight traffic. In addition, the project will improve transport accessibility in neighbouring agglomerations in the Moscow Region (due to substantially reduced travel time), which is extremely important for people. As a development institution, VEB.RF helped the project to raise subordinated debt capital and became a member of the syndicate of senior lenders, while InfraVEB acquired a stake in the concessionaire and provided equity financing,” VEB.RF Vice-President Vera Aleksandrova said.
CRR-4 promotes cross-border transport through the Western Europe-Western China transport corridor. Connecting the M-7 Volga federal highway to M-4 Don, the 96.5-kilometre road runs in the south-east of the Moscow Region, 50 kilometres from the Moscow Ring Road.
The total project value exceeds 100 billion roubles. Private funding for the project consists of 4.1 billion roubles in subordinated debt for 20 years (junior tranches) and a syndicated loan provided by senior lenders, namely VEB.RF, Gazprombank, Sberbank and the Eurasian Development Bank (EDB), for a total of 35.8 billion roubles for 17 years.
VEB.RF, SberCIB and Ural Mining and Metallurgical Company (UMMC) have signed a syndicated loan agreement to finance the development project for the Korbalikhinskoye polymetallic deposit and rehabilitate the Rubtsovsk concentrator with the aim of increasing its annual capacity to 1.5 million tonnes of ore. The agreement is a continuation of the term sheet signed in early 2020.
The total value of the Korbalikhinskoye project is estimated at 38 billion roubles, including 15.8 billion roubles in syndicated lending through the Project Financing Factory and a further 1.8 billion roubles as a reserve tranche. The lenders provide financing to cover the project’s budget costs, including expenses associated with purchasing equipment and paying for design, construction and installation.
“[The company] is the largest polymetallic ore producer in the region. As the Project Financing Factory’s operator, VEB.RF not only selects investment projects for inclusion in the programme, but also acts as a syndicate member and the syndicate agent. We are definitely optimistic about the sales potential of the project’s product (zinc concentrate) in both the Russian and global markets. Moreover, the project will enable the company to substitute its own sources of feedstock for outside suppliers, including foreign counterparties. Social aspects are fundamentally important to us too, such as the creation of highly qualified jobs,” VEB.RF Deputy Chairman Yuriy Korsun said.
The Korbalikhinskoye project is intended to supply the UMMC Zinc Division with internally sourced feedstock for a long time. Work will also be done on rehabilitating the Rubtsovsk concentrator to step up ore processing.
“We are pleased to participate in financing the development of the country’s largest polymetallic deposit, which will help Russia to continue to be a leader in the non-ferrous metals market, as well as creating new jobs and promoting innovative technology in the mining industry. SberCIB agreed to lend 13.7 billion roubles to UMMC for eight years at a floating interest rate pegged to the Bank of Russia key rate. With the involvement of VEB.RF’s Project Financing Factory, this will allow the customer to have the most favourable terms of financing,” Olga Kharlamova, Vice President, Director of Key Client Lending, Sberbank said.
Located in the Zmeinogorsk District, Altai Territory, the Korbalikhinskoye polymetallic deposit is currently Russia’s largest zinc mine. Its reserves are about 24 million tonnes of ores rich in zinc, copper, lead, gold and silver.
“UMMC views the agreement as a pilot transaction through the Project Financing Factory to see if we can extend this experience to other investment projects, including on a larger scale. I would like to thank the banks for their participation in such a project, long but unique for UMMC. The project financing structure not only enables the syndicate members to use reasonable and borrower-friendly project supervision mechanisms, but also provides very interesting tools to reduce UMMC’s risks. In addition to involving a designated technical consultant, the project includes implementing a comprehensive risk insurance programme and using risk hedging instruments for a deterioration in financial markets,” Andrey Kozitsyn, CEO, UMMC said.
Ural Mining and Metallurgical Company (UMMC) is Russia’s largest producer of copper, zinc, coal, gold and silver, consisting of more than 40 industrial companies based in Russia and other countries.