Krasnoyarsk Territory’s Chernogorskoye Deposit to Receive Project Financing from VEB.RF and VTB
VEB.RF, VTB and Chernogorskaya Mining Company have signed a syndicated loan agreement for the project to build the first phase of a concentrator for the Chernogorskoye deposit in the Krasnoyarsk Territory.
The project budget totals about 240 billion roubles, with VEB.RF’s and VTB’s commitment of up to 180 billion roubles. The transaction uses the Project Financing Factory (PFF) mechanism, with VEB.RF acting as the operator. The first disbursements are scheduled for as early as February 2022.
Until the loan is repaid, the government will subsidise the borrower to offset any increase in the Bank of Russia’s key rate. In addition, VEB.RF will lend a tranche that can be used to pay interest at the investment stage and cover a possible increase in the project budget.
Yuriy Korsun, Deputy Chairman and member of the Management Board, VEB.RF:
“The Project Financing Factory provides a unique opportunity for borrowers and lenders to hedge their interest rate risks, subsidising them for increases in the key rate. When the key rate reaches 8.5 per cent, all PFF-funded projects can apply for government subsidies in 2022, including the Russian Platinum project. Given the number of ongoing and intended projects, it’s safe to say the Factory is a good mechanism. We see it is highly in demand among investment projects, as some investors asked VEB.RF to provide PFF financing again for their new projects.”
Yuri Soloviev, First Deputy President and Chairman of the Management Board, VTB:
“The goals of VTB’s strategy include support for investment projects of major socio-economic significance for regional; development. The concentrator built for the Chernogorskoye deposit will have an important role in developing the Russian Arctic. The signed documents on long-term financing prove VTB Bank’s leading expertise in large-scale project financing.”
Evgeny Vorobeichik, CEO, Russian Platinum:
“The Chernogorskoye project will lay the foundations for creating Russia’s second-largest palladium and platinum producer. The second phase of the project involves building the infrastructure of the southern part of the Norilsk-1 deposit and its concentrator. We are satisfied with effective cooperation with our financial partners, VEB.RF and VTB, in promoting this large-scale project aimed at contributing the socio-economic development of the Krasnoyarsk Territory, building up the capacity of the Russian mining industry, and consolidating its strategic position in the global platinum-group metals market.”
Chernogorskaya Mining Company is part of the Russian Platinum Group. The Chernogorskoye deposit has productive reserves of 131 million tonnes of ores containing palladium, platinum, rhodium and gold. The designed capacity of the Chernogorskoye deposit concentrator’s first phase is 7 million tonnes of ore per year; end-products are copper and nickel concentrates with a high palladium and platinum content. The project will use best practices in the mining industry.
Moody’s Investors Service (“Moody’s”) has affirmed VEB.RF’s long-term local and foreign currency issuer ratings of Baa3, with the outlook remaining stable.
Moody’s also affirmed VEB.RF’s short-term local and foreign currency issuer ratings of Prime-3. The outlook remains stable.
“Moody’s affirmation of VEB.RF’s long-term issuer ratings at Baa3, in line with the Russian government debt rating, reflects the rating agency’s assumption of full government backing for VEB.RF obligations. Moody’s view derives from a high degree of strategic importance of VEB.RF for Russia's economy,” Moody’s reported.
Moody’s analysts noted VEB.RF’s participation in a large number of big investment projects in Russia, as well as its role in re-channelling the government support to the economy during the pandemic.