Waad al-Shamal moves nearer to financial close

20 May 2014

Deal anticipated to close within first half of this year

A $5bn project financing to support Saudi Arabian Mining Company’s (Maaden’s) phosphate mining development is expected to be closed within the first half of the year, say industry sources.

Commitments from international and regional banks were submitted towards the end of last year.

Lenders are expected to meet in Saudi Arabia in late May to discuss documentation and get an update on the mining project. “Things are moving ahead, there’s certainly no delay on the banks’ part,” says a source.

The debt carries a 17-year tenor and has been split between the kingdom’s Public Investment Fund (PIF), which is a shareholder in Maaden, a loan from the Saudi Industrial Development Fund and a commercial bank portion.

Lenders on the commercial tranche include Japanese banks Sumitomo Mitsui Banking Corporation and Bank of Tokyo-Mitsubishi, European lenders BNP Paribas and HSBC, Export Development Canada (EDC), German development bank KfW and South Korea’s Export-Import Bank of Korea (Kexim).

Several local banks are also participating in a Saudi riyal portion of the commercial bank tranche. HSBC is financial adviser on the scheme.

The funds will be used to develop the Waad al-Shamal phosphates city, which is being built at Umm Waal, on the kingdom’s northern border with Jordan. Maaden will own 60 per cent of the project along with the US’ Mosaic, which will hold 25 per cent, and Saudi Basic Industries Corporation (Sabic), which will hold the remainder.

Maaden announced on 15 May that it intends to do a rights issue of SR5.6bn ($1.5bn), with the plan to use the capital increase to expand the company’s phosphate and gold operations as well as to fund its aluminium project.

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