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30 May 2008 - Kazakhmys, the London-listed copper producer, has bought Kazakhstan's biggest power plant, diversifying into the commercial electricity business at a time of growing energy demand in the central Asian country.
The move comes as Kazakhstan launches a drive to attract investment in the neglected electricity sector to prevent looming power shortages.
Kazakhmys will initially pay AES, the US electricity company, $1.1bn to acquire the Gres 1 Ekibastuz power plant and nearby Maikuben coal mine.
An additional cash consideration and other payments of up to $381m, will be subject to various growth targets being met.
The transaction will be funded through an existing debt facility.
Energy demand has surged in Kazakhstan as the country's oil wealth seeps into the economy. The government has pledged to increase electricity prices to encourage investment in the industry.
Kazakhmys, which already generates electricity to fire its copper smelters, had "decided electricity now looks good as a stand alone business," said Oleg Novachuk, the company's chief executive.
Gres 1 was a "slumbering giant", operating at almost half its nameplate capacity, he said.
Kazakhmys plans to invest $700m at the plant in the coming five years to boost output to 4000 MW.
Gres 1 was build in the Soviet era near Ekibastuz , the world's biggest open cast coal mine. It is already connected to the Russian electricity grid, but will eventually feed planned power lines linking north Kazakhstan with the energy deficient south.
AES bought electricity assets in Kazakhstan in the 1990's, but has quarreled with the government about tariff and investment policy.
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