AFFECTED FLOWOutflow (subsidised)
ANNOUNCED AS TEMPORARYYes
The revolving loan facility between EDB and ERG is at the amount of US $95 million. The purpose of the facility is to pre-export finance iron ore supplies from one of ERG's enterprises, the Sokolov-Sarbai Mining Production Association (SSGPO, Kazakhstan). In particular, the loan is to finance the enterprise's production expenses, including those for the production of iron ore concentrate and pellets for export.
Mr Dmitry Pankin, Chairman of the Management Board of EDB, has provided further details concerning the deal between EDB and ERG: "The products will be supplied to Russia, to the Magnitogorsk Iron and Steel Works, which is one of the world's top steel producers and processes primarily Kazakh ore from the Sarbaiskoye and Sokolovskoye deposits. The project will help to promote the development of this inter-country production chain."
The provided "at a competitive market rate" loan is to be repaid in November 2020. However, a possibility to extend it for two additional years is also foreseen.
"The agreement will ensure greater stability of SSGPO's operation, as well as guaranteed markets for iron ore products in the longer run. The transaction with such an authoritative international financial institution as EDB helps strengthen ERG's financial standing. The pre-export finance we have received will help to support SSGPO's production load and is an important condition for the fulfillment of its ambitious development strategy," Benedikt Sobotka, Chief Executive Officer of ERG, stated.
The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets and from foreign subsidiaries.
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