JBIC Provides Loan for Improving and Strengthening Transport Infrastructure to Meet Increased Iron Ore Production by CVRD Contributing to Stable Supply of Iron Ore to Japan
March 20, 2006
- Japan Bank for International Cooperation (JBIC; Governor: Kyosuke Shinozawa) , in cooperation with Japanese private banks, will sign today a loan agreement totaling up to US$150 million with Companhia Vale do Rio Doce (CVRD), a corporation in the Federative Republic of Brazil.
- CVRD is planning to increase the iron ore production in its iron ore mine in the state of Minas Gerais located in southern part of Brazil. The proceeds of this loan will be used for improving and strengthening rail and port facilities owned and operated by CVRD in order to increase the capacity and efficiency of iron ore transportation.*1 The Joint Program for Revitalization of Economic Relations between Japan and Brazil announced during the visit of President Lula da Silva of Brazil to Japan in May 2005 set out increased cooperation between Japan and Brazil in the area of energy and other resources. This loan is provided as part of concrete cooperative efforts based on this Program.
- The worldwide iron ore market has been tight in recent years, with the price of iron ore soaring by an unprecedented 71.5% in FY 2005. Given the prospect of continued tight supply in the foreseeable future, it is an urgent issue for Japan, which has to rely on imports for almost all iron ore, to secure its stable supply. Japan is importing from CVRD, the world's largest iron ore supplier, about 15% of its total iron ore imports.*2CVRD is thus one of Japan's important sources for purchasing iron ore. An increase in CVRD's overall iron ore supply through its related transport infrastructure development with this loan will help Japan secure a stable supply of iron ore.
- Since signing Cooperation Agreement in October 2004, JBIC has strengthened its relationship with CVRD through holding annual consultative meetings. In August 2005, JBIC also singed a loan agreement with Alumínio Brasileiro S.A. (ALBRAS), a subsidiary of CVRD to secure a stable supply of aluminum ingot to Japan. In its capacity as an official financial institution, JBIC intends to actively provide support for securing a stable supply of important energy and mineral resources to Japan through these efforts.
- *1 The Vitória-Minas Railway that connects the CVRD-owned Itabira Mine and the Tubarão Port on the shore of the Atlantic and the Tubarão Port will be improved and enhanced.
- *2 CVRD sold 231 million tons of iron ore in FY 2004, which accounted for 32% of its total supply in the world.
