Norilsk Takes First Yuan Loan as It Seeks Copper Project Funding

GMK Norilsk Nickel PJSC will take its first yuan loan as Russia’s largest miner seeks to diversify its debt and fund a copper project that will supply metal to China.

The company’s board approved the 4.8 billion yuan ($740 million) syndicated loan on Dec. 28, Norilsk said in a Russian regulatory statement on Wednesday. The statement didn’t include the terms of the loan.

The loan may be used to fund construction of the Bystrinsky copper mine in Siberia, near the border of Mongolia and China, Kirill Chuyko, an analyst at BCS Financial Group, said by phone. Norilsk estimated last year that Bystrinsky would cost $1 billion from 2014 to its planned startup in 2017.

The company this year agreed with VTB Bank on project financing and Vnesheconombank’s board agreed to finance the copper project with a yuan loan that was equivalent to $874 million, it said in July. Norilsk hasn’t taken up those options. It sold a 13.3 percent stake in Bystrinsky to Chinese investors for $100 million, the company said Tuesday.

Norilsk had 79 percent of its debt in dollars and the rest in rubles as of end-June. Asian countries accounted for almost a third of Norilsk’s sales in the first half. The producer raised about $1 billion in October, at the time the first benchmark-sized Eurobond out of the country in almost 11 months.

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