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Kazakhmys PLC (KAZ)

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Tuesday 05 February, 2008

Kazakhmys PLC

Ekibastuz Plant Acquisition

Kazakhmys PLC
05 February 2008

5 February 2008

    Kazakhmys PLC Announces Acquisition of Kazakhstan's Largest Power Plant
                        and Accompanying Coal Field

Kazakhmys PLC ("Kazakhmys") announces today that it has signed an agreement with
AES Corporation ("AES") 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:

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

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

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

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

    • Total payments of up to US$1.5 billion, subject to adjustment under a
      closing mechanism.

      o  Includes an initial cash consideration of US$1,100 million and a
         deferred cash consideration and other payments of up to US$381 million, 
         payable under earnout provisions

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

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

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."

For further information please contact:

John Smelt, Head of Corporate Communication             Tel: +44 20 7901 7882
                                                        Mob: +44 787 964 2675
Olga Nekrassova, Financial Analyst                      Tel: +44 20 7901 7814
Kazakhmys PLC

David Simonson & Tom Randell (English language)
Leonid Fink & Anastasia Ivanova (Russian language)
Merlin                                                  Tel: +44 20 7653 6620

- ends -

Background and Notes to Editors

Information on the assets and transaction

Ekibastuz, located in northeastern Kazakhstan's Pavlodar Oblast, is the largest
power plant in Kazakhstan with a nameplate capacity of 4,000 MW. Maikuben West
Coal mine, an open cast mine located 65 kilometres from the Ekibastuz power
plant, has an estimated mine life of about 30 years based on A, B, C1
classification of reserves and supplies a sizeable portion, around 20% of the
power plant's fuel requirements, producing over  3.1 million tonnes of coal in

In 2007, the power plant produced 9,434 GWh of electricity. As at 1 January
2008, the plant's current available capacity was 2,250 MW, which is expected to
significantly increase in stages over the next five years to 4,000 MW. This in
turn will allow Kazakhmys to capitalise on the expected growth in electricity
demand in Kazakhstan.

For the year ended 31 December 2006, the revenues, profit before tax, and gross
assets of the combined operations of Ekibastuz GRES-1 and Maikuben West were
US$149 million, US$43 million, and US$222 million, respectively(1).

The capex spend for the three years from 2008 to 2010 inclusive is estimated at
US $650 million.

Under the terms of the agreement, Kazakhmys, through a wholly owned subsidiary
Kazakhmys Power B.V.,  will make an initial cash payment, at closing, of
US$1,100 million, subject to adjustments under a closing mechanism, based on an
enterprise value of US$1,150 million. Closing is expected to take place in Q2
2008, subject to securing all necessary regulatory consents from the Government
of Kazakhstan. In addition, AES has an entitlement to an additional deferred
cash consideration and other payments of up to US$381 million between 2008 and
2010, should certain profitability and performance targets be met. Kazakhmys
will retain AES on a management service contract up to 31 December 2010, with
the existing key management team of AES in Kazakhstan continuing to manage and
operate the power plant and the coal mine. This will assist Kazakhmys in
ensuring business continuity and the execution of the investment programme.


The electricity market in Kazakhstan offers an attractive growth platform to
Kazakhmys given the momentum in the industrial sector in Kazakhstan and the
resulting growth in demand for electricity.

The power sector in Kazakhstan has favourable economic fundamentals and offers
value-enhancing growth opportunities, in turn underlying the attractiveness of
the Acquisition on a standalone basis.  Since gaining independence on 16
December 1991, the Kazakh Government has introduced a series of important
measures resulting in full restructuring of the country's electricity generation
market.  The Government introduced a new regulatory framework, privatised
generation assets and deregulated pricing of the wholesale/retail power market.
Kazakhstan has experienced a rapid recovery of its economy, with a real CAGR in
GDP of c.10% over 2001-2006.  Economic recovery was the key driver for growth in
the electricity sector, with demand increasing by an average of 5.2% per annum
over the same period.  The growth momentum is expected to continue in the medium
term.  The demand for electricity is projected to exceed 6% per annum through
2011 and 3% per annum in the long run, according to the forecast of the Kazakh

Kazakhmys already participates in the power market in Kazakhstan by owning and
operating three power plants with total gross capacity of over 900 MW, which
supply all of the Group's current power needs.

Kazakhmys PLC

Kazakhmys PLC is the largest copper producer in Kazakhstan and one of the
leading copper producers in the world.  Kazakhmys is a fully integrated copper
producer from mining ore through to the production of finished copper cathode
and rod.  The Group produces significant volumes of other metals as by-products,
including zinc, silver and gold.  Existing operations include 20 open pit and
underground mines, 9 concentrators, two copper smelting and refining complexes,
a copper rod plant, a zinc plant and a precious metals refinery.  Production is
backed by a captive power supply and significant rail infrastructure.  Kazakhmys
also owns MKM, a copper products fabrication company in Germany, and has Gold
and Petroleum Divisions with assets in Kazakhstan and Central Asia.  The Group's
strategic aim is to diversify and participate in the development of the
significant natural resource opportunities in Central Asia.

AES Corporation

AES is one of the world's largest global power companies, with 2006 revenues of
US$11.6 billion. With operations in 28 countries on five continents, AES's
generation and distribution facilities have the capacity to serve 100 million
people worldwide. 13 utilities amass annual sales over 73,000 GWh and 117
generation facilities have the capacity to generate approximately 44,000
megawatts. The global workforce of 30,000 people is committed to operational
excellence and meeting the world's growing power needs. To learn more about AES,
please visit or contact AES media relations at [email protected]


(1)Combined aggregated (unconsolidated) numbers based on the AES management
accounts prepared in accordance with the US GAAP.

(2) Ministry of Energy and Mineral Resources of Republic of Kazakhstan
"Development Plan for the Electricity Industry of the Republic of Kazakhstan",

                      This information is provided by RNS
            The company news service from the London Stock Exchange

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