LONDON Feb 7 Copper miner Kazakhmys
said on Thursday it was in early stage talks about selling its
stake in a Kazakhstan power station in a deal which could be
worth around $1.6 billion.
The London-listed company said it noted press speculation
regarding its ownership of Ekibastuz GRES-1, the largest power
station in Kazakhstan, and confirmed it had started discussions
about a possible deal to sell its 50 percent holding.
While primarily focused on mining copper and gold, Kazakhmys
also manages four coal-fired power stations which supply around
20 percent of Kazakhstan's power, a part of the business which
generates reasonable returns.
Analysts estimate that Kazakhmys' power division could
account for a quarter of its net profit in 2013, but the
ownership structure of the assets - a joint venture with the
government - has not been without challenges, and the company
could use the cash instead to fund investment in mining, which
"Kazakhmys has entered into discussions regarding the
holding, but these are at an early stage and may or may not lead
to a transaction," said the company, declining to comment on the
possible value of any deal.
Press reports said the talks are being held with Samruk
Energy, a unit of Kazakhstan's sovereign wealth fund, and the
deal has a $1.6 billion price tag. Samruk already owns the other
50 percent of the asset, which it bought from Kazakhmys in 2009.
"If an eventual sale is close to the suggested price,
although negative for earnings, we would view this as a positive
given the beneficial impact on the balance sheet and cash
flows," Credit Suisse said in a note.
The Ekibastuz power station differs from the company's three
other power assets as it sells to third parties, whereas the
others supply Kazakhmys' mines and smelters. The company bought
Ekibastuz for an initial payment of $1.1 billion in 2008, as it
sought to use its cash pile and diversify.