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Acron Group, VEB.RF, Gazprombank and Sberbank Agree on Project Terms under Project Finance Factory

Acron, VEB.RF, Gazprombank and Sberbank have reached an agreement on funding the project to develop the world’s largest potassium-magnesium salt deposit in Perm Krai. Acron’s subsidiary, Verkhnekamsk Potash Company, is implementing the project to launch an export-oriented facility at the Talitsky area of the Verkhnekamsk deposit with annual extraction volume of 7.5 million tonnes of ore and mine capacity of 2 million tonnes of KCl per year. VEB.RF will be the arranger for the project.

The total project budget (including VAT and previously incurred expenses) is USD 2.5 billion. Of USD 1.7 billion in investments currently required, USD 869 million to be provided by VEB and USD 802 million to be provided by Gazprombank and Sberbank. A syndicated loan facility will be granted for up to 15 years to finance the completion of construction (sinking) of vertical shafts, mine development, and construction of the processing plant and related infrastructure.

The partner banks and Acron, the project initiator, signed the preliminary terms and conditions of financing at the St. Petersburg International Economic Forum. The document was signed by Chairman of Acron’s Board of Directors Alexander Popov, First Deputy Chairman and Member of VEB.RF’s Management Board Nikolay Tsekhomsky, Deputy Chairman of Gazprombank’s Management Board Alexey Belous, and Sberbank’s Vice President and Director of the Key Account Department Alexey Grenkov.

The project is aimed primarily at expanding exports of non-resource and non-energy goods (potash fertilisers), which is in line with the key provisions of the Russian President’s May Decree.

The project will be financed as a multi-currency syndicated loan facility using the tools provided under a programme called the Project Financing Factory, with targeted tranches and subsidized interest rates. The project is scheduled to reach its design capacity in early 2026.

Alexander Popov noted, “Raising funds for the potash project is a milestone for Acron Group. Construction of the Talitsky mine will provide our production sites with potassium chloride and help complete vertical integration of the complex fertiliser production chain.

“In our experience with other international banks, it has been virtually impossible to arrange classic project financing in Russia. That changed once the Project Finance Factory was introduced. The support tools provided by VEB.RF allowed commercial banks (Gazprombank and Sberbank, the holder of a 40-percent stake in the project company) to arrange non-recourse financing of Acron’s project of up to USD 1.7 billion for up to 15 years. This financing mechanism will allow Acron Group to complete construction of the Talitsky mine while pursuing a number of other investment projects at its production sites in Novgorod, Smolensk and Murmansk regions. The lack of project finance tools has significantly limited Russian companies’ investment abilities. I hope that our arrangement will become a landmark for Russian industry and the solid basis for a variety of new production facilities”.

Nikolai Tsekhomsky emphasized, “The Project Finance Factory programme creates the conditions for mutually beneficial cooperation between commercial banks in arranging financing for capital-intensive projects. The financing mechanism includes a government subsidy to offset the increase in the key rate of Russia’s Central Bank applied to all tranches in roubles, including tranches of partner banks, during the entire loan period. It also provides for an additional tranche by VEB.RF, which can be used to cover additional costs during project implementation and to pay interest at the investment stage, which will allow the borrower to raise funds through classic project financing”.

According to Alexey Belous, “Gazprombank is actively involved in financing projects through the Project Finance Factory. We expect Acron’s project to contribute to the industrial potential of Perm Krai, including the creation of over 2,000 jobs in the region. Gazprombank also stands to gain practical experience in the implementation of such projects”.

Alexey Grenkov commented, “Financing is always a challenge for mining projects, which is why we are extremely pleased that, together with our partners from Gazprombank and VEB, we have managed to find the best available way to finance Acron’s key project. Once implemented, the project will complete the Group’s vertical integration of the three types of feedstock for complex fertilisers, boost the competitiveness of Russian products in the international market, and create new jobs in Perm Krai. We will do our best to make sure that Sberbank’s expertise in financing industrial projects with long payback periods helps Acron achieve its goals. I believe that successful implementation of this challenging large-scale project will contribute to Russia’s economic development”.

The Talitsky area is located on the eastern border of the southern part of the Verkhnekamsk potassium-magnesium salt deposit in Perm Krai. The maximum width of the site is 12.1 km and it is 10.6 km long, with a total area of over 69 km2. Detailed geological exploration of the site took place in 1968. Balance reserves of A+B+C1 categories are equal to 726 million tonnes. The average KCl content in the ore is 31%. In 2008, Verkhnekamsk Potash Company obtained a licence to develop the Talitsky area. The project is aimed at completing Acron Group’s vertical integration by creating a potash raw material base for complex fertiliser production.