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IPE special report May 2018

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PensionDanmark extends DKK350m loan to establish Armenian mine

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  • PensionDanmark extends DKK350m loan to establish Armenian mine

DENMARK – PensionDanmark, the DKK139bn (€18.6bn) Danish labour-market pension fund, is investing DKK350m in export credit financing for a mining project in Armenia, as part of a longer-term DKK10bn pledge.

The fund has agreed to make around DKK350m available through the export credit agency (EKF) financing to enable the mining company Teghout CJSC to buy processing equipment from Danish engineering firm FLSmidth.

Including this deal, PensionDanmark said it had now financed export contracts with a combined value of DKK1.6bn.

In the autumn of 2011, it signed a three-year deal with Denmark's EKF to lend DKK10bn to foreign companies placing orders with Danish businesses, with the agency guaranteeing the loans. The agreement contributed to the fund winning the Best European Pension Fund Award at the IPE Awards in Copenhagen last year.

Torben Möger Pedersen, chief executive of PensionDanmark, said the fund's partnership with the EKF achieved two goals.

"On the one hand, the partnership will ensure a return for our members well above the bond rate, and on the other hand it will help make more Danish export orders possible at a time when more traditional financing is difficult," he said.

Teghout CJSC is setting up a copper mine with associated processing facilities in north-western Armenia. The copper will be used in mobile phones and electric cables, among other things.

Production is expected to begin in 2014.

Thomas Schulz, chief executive of FLSmidth, said the contract was strategically important for his company.

"There is stiff competition for customers, so we're delighted to be able to work with EKF and PensionDanmark to secure our customers' financing," he said, adding that the order would not have been possible without a financial support scheme such as this.

The financing agreement is conditional on the mining operations satisfying international environmental and safety requirements. 

BNP Paribas Fortis is acting as structuring bank for the EKF financing facility, PensionDanmark said.

A PensionDanmark spokesman said the pension fund was in continuous dialogue with the EKF about potential new financing deals.

In May 2012, Denmark’s PFA Pension agreed a similar deal with the EKF to provide DKK10bn in export financing

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