Kazakhmys copper giant plans London IPO

Astana, June 2 2004 - Kazakhstan's copper monopoly Kazakhmys said Tuesday it targeted higher refined copper output this year and planned an initial public offering in London within eight to 10 months.

Kazakhmys, which produces more than 90 percent of Kazakhstan's copper and is among the world's top 10, also said it would bid for Russia's giant Udokan copper field, but was ready to offer no more than $100 million for the license.

Kazakhmys, headquartered in Dzhezkazgan in central Kazakhstan, said it plans to produce 425,000 tons of refined copper this year and next, compared to an earlier target of 418,000 tons set for 2004.
Last year's output was 417,400 tons of refined copper.

"We have sufficient reserves to produce 430,000 to 450,000 tons per year, maybe even 500,000 tons of copper in five years," Kazakhmys board chairman and president Vladimir Kim told a presentation at the Moscow Metals Summit.

"We have the lowest costs -- $650 per ton of copper -- and after deducting the cost of byproducts, the price slides to $440 per ton." Kazakhmys sells its copper mainly to the European Union and China.

Kazakhmys, which opened the 100,000-ton-per-year Balkhash zinc smelter last year, said it also planned to produce 70,000 tons of refined zinc this year and 90,000 tons in 2005.

Kazakhstan's zinc output totaled 294,965 tons in 2003.

Kim said the 25 percent IPO would include 12.5 percent owned by one of the company's current shareholders, with another 12.5 percent in new shares. Kazakhmys shares are now traded on the Kazakhstan Stock Exchange, or KASE.

Kazakhmys said its earnings before interest, taxation, depreciation and amortization, or EBITDA, are set to rise to $800 million in 2004 from $385 million last year.

The company's 2005 EBITDA is estimated at $700 million.

Kim said Kazakhmys had no outstanding obligations, but it could also issue eurobonds at any time of its choosing, if need be. He did not elaborate.

Kim said Kazakhmys processes annually over 40 million tons of thin ores with average copper contents of 1 percent. As of Jan. 1, 2004, the company's own copper reserves were worth 30.5 million tons, and Kazakhmys was ready to bid for Russia's mammoth Udokan field, but not at any price.
"We are ready to pay no more than $80 million-$100 million for the license to develop Udokan," Kim said on the sidelines of the metals summit.

A senior Russian metallurgy official said earlier Tuesday that the tender for the field, with estimated reserves of 20 million tons of copper, might be announced by the end of June.

Udokan, in Western Siberia, contains an average of 2.5 percent of copper in its ore and is estimated to account for 58 percent of Russia's total potential reserves.
Kazakhmys is partly owned by South Korean conglomerate Samsung Corp. and its subsidiary Samsung Hong Kong Ltd.