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Kazakhmys acquires power plant and coal field

Kazakhstan’s Kazakhmys PLC announced that it has signed an agreement with AES Corporation to acquire the Ekibastuz coal-fired power plant and the Maikuben West coal mine in Kazakhstan.

Completion is subject to certain conditions, including obtaining the necessary regulatory approvals from the Government of Kazakhstan.

Ekibastuz is a strategic asset in the Central Asian power market:

It is the largest source of power in Kazakhstan, with nameplate capacity of 4,000 megawatts, in a market increasingly short of power supply

Ekibastuz offers significant growth opportunities with capacity to double output over the next 5 years from current available capacity of 2,250 megwatts.

The captive coal mine at Maikuben provides a secure base of raw material supply, with current output of 3.1 million tons of coal with estimated mine life of about 30 years based on A,B, C1 classification of reserves.

Considerable potential to create commercial opportunities, including strategic partnerships, and off take agreements  

Total payments of up to $1.5 billion, subject to adjustment under a closing mechanism, includes an initial cash consideration of $1,100 million and a deferred cash consideration and other payments of up to $381 million, payable under earnout provisions

Kazakhmys will retain AES on a management service contract up to  December 31, 2010.

Kazakhmys will fund the transaction through a debt facility, which has been announced separately.

Oleg Novachuk, Chief Executive of Kazakhmys said “The acquisition of Ekibastuz and the captive coal mine at Maikuben West is consistent with our strategy of diversifying our portfolio and secures the future of an asset that is of importance to the development of Kazakhmys and the region. It offers considerable opportunities to develop commercial relationships through surplus power generation.” (press release)