Project Financing for Cochrane Coal-Fired Power Project in Chile
Supporting First Power Infrastructure Project by Japanese Company in Chile
- Area: Latin America and the Caribbean
- [Project Finance]
- Overseas Investment Loans
- The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Okuda) signed on March 27, a loan agreement totaling up to 500 million U.S. dollars (JBIC portion) with Empresa Electrica Cochrane SpA (EECSA), a subsidiary of Mitsubishi Corporation (MC) in Chile, for the Cochrane Coal-Fired Power Project. The loan, provided in project financing,*1 is cofinanced with Mizuho Corporate Bank, Ltd., The Bank of Tokyo-Mitsubishi UFJ, Ltd., Sumitomo Mitsui Banking Corporation, HSBC Bank USA, N.A. and Korea Finance Corporation, which brings the overall cofinancing amount to 1 billion U.S. dollars. Such cofinancing loans provided by the financial institutions besides JBIC are insured by Nippon Export and Investment Insurance (NEXI) and Korea Trade Insurance Corporation (K-sure). This loan is the first JBIC project financing for an electric power project in the South America region.
- In this project, EECSA will build and operate a coal-fired power plant with a net capacity of 472MW (236 MW × 2) in Mejillones, Antofagasta, Chile, with the electricity generated to be sold to the neighboring Sierra Gorda Copper Mine*2 and local major mining companies.
- This power infrastructure project, in which MC is a participant, will be jointly developed with a subsidiary of AES Corporation, a U.S. company, from construction to operation throughout the project. This is the first power infrastructure project in Chile in which a Japanese company has participated in as an equity provider. Thus it is expected to be a model case for future infrastructure business in Chile by Japanese companies.
- The power demand in Chile’s northern electric power system (SING System) where this project is located is expected to grow by about 5.6% annually through to the year 2025, backed by a robust appetite for electricity consumption due to copper mine development, and it has become crucial to secure a stable supply of electricity for the development. Under these circumstances, through the provision of a stable supply of electricity to Sierra Gorda Copper Mine participated by Sumitomo Metal Mining Co., Ltd. and Sumitomo Corporation, and to other companies, this loan contributes to securing a long-term, stable supply of copper, an important metal resource for Japan.
- JBIC will continue to support the overseas infrastructure business activities of Japanese companies by drawing on its various financial facilities and schemes for structuring projects and performing its risk-assuming functions, and contribute to maintaining and improving the international competitiveness of Japanese industries.
- *1 Project finance is a financing scheme in which repayments are made solely from cash flows generated by the project and secured only on the project assets.
- *2 JBIC financially supports Sierra Gorda Copper Mine Project. See Press Release on March 9, 2012 and Press Release on August 24, 2012.