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
  • Infrastructures
  • [Project Finance]
  • Overseas Investment Loans

NR/2012-155
March 28, 2013
  1. 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.
     
  2. 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.
     
  3. 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. 
     
  4. 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.
     
  5. 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.
Note
  1. *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. *2 JBIC financially supports Sierra Gorda Copper Mine Project. See Press Release on March 9, 2012 and Press Release on August 24, 2012.  
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