Cement project strengthens trade co-operation
A credit agreement between Kazakhstan’s BTA Bank and the Export-Import Bank of China (China Exim) was signed in October 2008 to finance the construction of a cement plant in the south Kazakhstan region. Under the agreement, a US$43.68mn financing package is being made available to Standard Cement under favourable conditions, making the loan an attractive one in a time when the cost of funding continues to escalate.
The project is Kazakhstan’s first and BTA’s second to be financed within the Chinese government’s preferential buyer’s credit programme for the Shanghai Cooperation Organisation (SCO) member nations. As such, the agreement marks an important step in the development of trade and economic co-operation between Kazakhstan and China.
The productive capacity of the plant, which is to produce Portland cement, the most commonly used type of cement, using the less power-intensive dry-mix process, will be 1 million tonnes per year. The advantage of the dry-mix production method is that it is more environmentally friendly than the traditional wet-mix process.
The project has been recognised to be of strategic importance for Kazakhstan’s economy as it will satisfy the needs of the south of the country and enable export of the product to its Central Asian neighbouring states.
“As the number of projects between BTA and China Exim increases, BTA becomes increasingly well-positioned to close China Exim bank-financed deals in the shortest possible time and on the most favourable terms,” says Timur Sabyrbayev, managing director, member of the board, at BTA. “The amount of the credit agreement is very attractive in terms of the long repayment timeline of six years, with substantial grace period and favourable prising conditions.”
“Co-financing for this project will enhance the understanding and confidence in future cooperation,” says Si Ruilin, concessional loan department, China Exim.
The total amount of the loan represents approximately 80% of the export contract value, with a letter of credit (LC) payment structure.
The project is strongly supported by the Kazakh government as it will contribute to the development of the country’s residential industrial construction programme for 2008 – 10, and will boost the development of infrastructure as well as the oil and gas production sector.
Borrower: BTA Bank
Sub-borrower: Standard Cement
Mandated lead arranger: Export-Import Bank of China
Law firms: Kazakhstan Legal Group and BTA in-house lawyers
Tenor: 6 years
Date signed: October 2008