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Project Finance for the Caserones Copper Mine in Chile
Financial Support to first 100% Japan-Owned Large-Scale Overseas Copper Mine Development

  • Region: Latin America and the Caribbean
  • Energy and Natural Resources
  • Overseas Investment Loans
  • Project Finance
NR/2011-28 
                   July 26, 2011
  1. The Japan Bank for International Cooperation (JBIC; President & CEO: Hiroshi Watanabe)*1 signed today a loan agreement in the aggregate amount of up to 1.1 billion US dollars with SCM Minera Lumina Copper Chile (MLCC) incorporated in the Republic of Chile.  The loan is provided in project financing*2 co-financed with the Bank of Tokyo-Mitsubishi UFJ, Ltd., Mizuho Corporate Bank, Ltd., Sumitomo Mitsui Banking Corporation and the Hongkong and Shanghai Banking Corporation Limited (Tokyo branch). Nippon Export and Investment Insurance (NEXI) provides a guarantee for the loans provided by co-financiers. Aside from the project finance loan, private financial institutions provide a long-term loan totaling 300 million US dollars, for which Japan Oil, Gas and Metals National Corporation (JOGMEC) provides a guarantee.
     
  2. These loans will be used to finance Caserones Copper Mine Development Project in Chile undertaken by Pan-Pacific Copper Co., Ltd. (PPC; a joint venture of JX Nippon Mining & Metals Corporation and Mitsui Mining & Smelting Co., Ltd.) and Mitsui & Co., Ltd. (Mitsui). Equity shares of the respective companies in MLCC are: 75% for PPC and 25% for Mitsui.
     
  3. Copper is used extensively for various products, including electric cables, electrical and electronic equipment, transport vehicles and construction materials; it is an indispensable metal for Japanese industry. Its demand is expected to rise across the world with growing demand in infrastructure among emerging economies and an increase in sales of hybrid and electric vehicles*3. Since Japan relies solely on imports for copper concentrates from Chile and other countries, it is an urgent challenge to secure a long-term, stable supply of copper resources through an acquisition of equity interests in copper mines by Japanese firms.
     
  4. Copper concentrates produced in this project are expected to be 150,000 tons per year in terms of metal content*4 which will be delivered to PPC and Mitsui and supplied to domestic smelters.  This project is expected to meet about 11% of Japan’s annual demand for copper concentrate.  This is also the first project of Japanese firms with wholly own interests in a large-scale copper mine which undertake its development.  A significance of the project is that it secures a long-term and stable supply of strategically important resources to Japan, enables Japanese firms to accumulate experience in overseas copper mine development and trains mine experts for Japanese firms.
     
  5. JBIC will continue to support the development and acquisition of interests in natural resources that are strategically important for Japan by drawing on its various financial facilities and schemes for structuring a project and performing a risk-assuming function.
Note
  1. *1 JBIC is the international wing of the Japan Finance Corporation (JFC; Governor: Shosaku Yasui).
  2. *2 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.
  3. *3 Hybrid and electric vehicles are said to require two to three times more copper than conventional vehicles.
  4. *4 The amount of copper contained in copper concentrate.  Raw copper ore usually contains 0.2-2% of copper, which is processed with chemicals and water to separate and increase copper content up to 20-40%, and becomes a copper concentrate.

 

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