Zambia’s largest power utility has mandated Standard Chartered and Banco Espirito Santo (BES) to arrange a US$65mn five-year receivables-backed syndicated facility. The MLAs are just finalising the underwriting group before launching the deal into general syndication.
The funds will be used to finance the sale of electricity to Zambia’s copper mines. The financing follows the signing of a number of power supply agreements between Zesco and various mining companies over the last year.
Zesco has developed close ties with Albidon Zambia, the mining company working on the greenfield Munali Nickel Mine project being developed at the foot of the Munali Hills about 60km from south of Lusaka.
In February, it signed an agreement with Albidon Zambia to supply the total power requirements of 7.5MVA to the project. The electricity will be supplied via a new 25km 33KV line from main supply point in Kafue Town substation to the Munali Hills where it will terminate at a substation at the mine. Construction is estimated to be completed before the end of this year.
This project is estimated to cost US$2.2mn, with Albidon Zambia injecting a capital contribution of US$1.6mn.
As of May 2007, The European Investment Bank and Barclays Capital approved a senior debt finance facility of up to US$60mn for the Munali project. The EIB is contributing US$40mn, while Barclays is providing US$20mn. It carries a tenor of six years.
Albidon also signed financing agreements with the Jinchuan Group Limited of China to provide a US$20mn subordinated debt funding for the project. This was followed by a feasibility study for the construction of a nickel smelter in Zambia to treat concentrates from the Munali project.
Zesco is also said to be on target to finish setting up power supply lines to Lumwana Mine in Solwezi, in the north-western province of Zambia.
The power company had signed a memorandum of understanding with Equinox minerals to design and construct a transmission line to supply power to the mine.