May 25 2005
Magnesium International Limited (MIL) is pleased to announce that ThyssenKrupp Metallurgie (TKM), its offtake partner for the Egyptian smelter project (EMAG) has announced its intention to become a minority shareholder in the project.The following text was released by TKM late last week. “ThyssenKrupp Metallurgie GmbH (TK Met), the raw material trading and distribution unit of ThyssenKrupp have announced their intention to become a minority shareholder of the EMAG magnesium project at Port Sohkna, Egypt.
Under the terms of a long-term marketing agreement, TK Met will purchase 100% of the smelter's output for on-sale to the automotive industry and others. The high quality magnesium alloy market is growing strongly as auto manufacturers seek lightweight solutions to comply with increasingly stringent greenhouse gas emission and fuel consumption regulations.
The decision is still subject to board approval.”
There are currently two investors in EMAG - MIL and its Egyptian partner Amiral - who are providing the funding for the current Bankable Feasibility Study stage of the project. TKM’s investment will be made when the project reaches Financial Close, expected during the fourth quarter 2005. TKM will be a direct investor in the project. It is still intended that MIL will hold at least 60% of the equity in the project. This minimum level of MIL’s equity investment was determined anticipating other direct investors like TKM in the project.
TKM already has a unique 15 year Sales and Marketing Agreement with MIL which allows for a minimum pricing mechanism. This ensures repayment of senior debt principal and interest, thereby adding to the security of the project for lending banks. TKM will be providing all elements of the worldwide sales team for the project, warehousing and other benefits.
In welcoming the announcement, Mr Gordon Galt, MIL’s Managing Director, said:
“This latest announcement of ThyssenKrupp’s equity intentions is welcomed by both MIL and Amiral and expresses TKM’s further confidence in the project.”
For more information on magnesium, click here.