RMB leads USD310 million project finance for largest zinc mine in Africa

RMB has been banking Vedanta Limited’s African operations since 2012. Vedanta Limited is a diversified global mining company and a major source of foreign direct investment into South Africa. RMB cemented itself as key banking partner to Black Mountain Mining (BMM), one of Vedanta’s subsidiaries, when the bank provided a project finance facility to fund the development of what is now Africa’s largest zinc mine: the Gamsberg mine. RMB has grown with BMM over a 10-year journey leading to the bank being mandated as the sole Initial Mandated Lead Arranger and Bookrunner for BMM in a recent debt raise. By arranging and funding this expansion, RMB will strengthen South Africa’s contribution to the global critical minerals market.

The challenge

BMM required USD250 million project finance and USD60 million working capital funding for its Gamsberg Phase II Expansion Project. BMM required the funds to facilitate the expansion of their Gamsberg operation. The funding sought was crucial to enabling BMM to ramp up the mining and processing activities and is part of a multi-phase approach to unlocking the incredible potential of this tier 1 asset.

The RMB solution

RMB worked with the BMM to translate its understanding of BMM’s mining, geology, and metallurgy, with the assistance of independent technical engineers, to build and develop a bankable financial model for the transaction and operation.

We drew on our wealth of knowledge on BMM, the SA mining sector and the zinc industry to ensure that the funding package created was competitive. This took into account the rising demand for critical minerals, including zinc. It further allowed us to facilitate the structuring of a bankable debt package and transaction on tight timelines.

In addition to the funding, RMB and the banking syndicate provided risk management solutions to optimise the mine’s exposure to commodity prices, currency and major operating expenses. RMB acted as the hedge co-ordinator for the zinc commodity hedging programme.

RMB ensured that it structured the facility to reflect the brownfields nature of the project expansion, balanced with the remaining ramp-up, with customised terms designed to attract enough appetite from the lending market to fully syndicate the facility. The close relationship with BMM made RMB the only bank that could move in short order to facilitate the syndication of the debt raise. The relationship also ensured that RMB could deliver on the transaction across the capital structure, ensuring a fully funded deal.

Results and benefits

This transaction enables the expansion of the Gamsberg open pit footprint, resulting in the merging of all existing pits into one super-pit, and the construction of the second 4mtpa concentrator plant and associated infrastructure, including a northerly extension to the existing TSF.

Through the expansion, the mine’s zinc output will double from 250ktpa to 500ktpa of zinc mineral-in-concentrate, elevating Gamsberg to one of the five largest zinc mines globally. Zinc, the fourth most used metal in the world, has been identified as a critical mineral by the United States and European Union as it plays a crucial role in both solar and wind technologies.