Mongolia Mining Equipment

Location:

Mongolia

Project number:

46394

Business sector:

Natural resources

Notice type:

Private

Environmental category:

B

Target board date:

29 Oct 2014

Status:

Board Approved

PSD disclosed:

01 Aug 2014

Translated version of this PSD: Mongolian

Project Description

The EBRD is considering providing an A/B loan of up to USD 200 million for the project which brings together two existing clients of the Bank in Mongolia: Leighton LLC in Mongolia as Lessee; and commercial bank Khan Bank as Lessor. The purpose of the proposed transaction is to boost support to the Mongolian mining sector at this stage of the commodities price cycle, and introduce the lease of specialized mining equipment (‘Yellow Goods’) to mining companies in Mongolia. This will be the first major Yellow Goods lease provided in the country.

Transition Impact

The key sources of transition impact for the Project derive from demonstration effect of a new form of financing, setting standards, and market expansion. The Facility will introduce a new form of financing – this will be the first major Yellow Goods lease financing in Mongolia. The financing is especially timely at this stage of the commodities price cycle, to demonstrate continued support to investors in the local mining sectors. Finally the project will contribute to the transfer of knowledge and skills to the local leasing company.

The Client

Khan Bank group, the largest commercial banking group in Mongolia, and Leighton LLC, a wholly owned subsidiary of Leighton Holdings Limited, the world’s largest contract miner.

EBRD Finance

A/B loan of USD 200 million.

Project Cost

Approximately USD 200 million.

Environmental Impact

Category B.  The environmental and social risks associated with mine equipment leasing are site specific and can be readily mitigated via the implementation of an Action Plan which, if required, will be agreed between the client and the Bank on completion of due diligence.  This due diligence is focussing on the EHSS capabilities, and proposed policies and practices of the new Leasing Co and the operations of the lessee, Leighton LLC in Mongolia.  Both Khan Bank and Leighton are known to the Bank from existing transactions and both have robust and effective EHSS risk management structures in place at the corporate level.  Leighton has completed questionnaires on environmental, social and health & safety issues; and provided information on the labour policies that shall be adopted.  The information provided is comprehensive and ESD is currently following-up on a small number of issues which require further clarification to enable the completion of due diligence to be completed.  Due diligence is also seeking confirmation from Khan Bank that their corporate EHSS risk management policies and practices will apply to the operations of the Leasing Co.

Technical Cooperation

TC for capacity building is under consideration.

Company Contact

Khan Bank LLC
Seoul Street – 25, PO Box – 192
Ulaanbaatar – 44, Mongolia
Phone: + 976 11 332333 3044

 

Business opportunities

For business opportunities or procurement, contact the client company.

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