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Energy and Natural Resource Financing for the Sierra Gorda Copper Mine Project in Chile
Supporting Japanese Companies for Overseas Large-Scale Copper Mine Development

  • Region: Latin America and the Caribbean
  • Energy and Natural Resources
  • Overseas Investment Loans
NR/2012-38
August 24, 2012
  1. The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Okuda) signed two loan agreements*1: the one totaling up to 130 million U.S. dollars (JBIC portion) with Sumitomo Corporation (SC) and the other totaling up to 84 million U.S. dollars (JBIC portion) with SC Sierra Gorda Finance BV (SC-SGF), a wholly-owned subsidiary of SC incorporated in the Netherlands. Both loans are cofinanced with private financial institutions.
     
  2. The first loan will support SC, jointly with Sumitomo Metal Mining Co., Ltd., in acquiring equity shares of Sierra Gorda SCM in Chile, which is the project company of the Sierra Gorda Copper Mine Project located in the Antofagasta Region of the country, from KGHM International Ltd. (formerly Quadra FNX Mining Ltd.) in Canada. The second loan will support SC-SGF in providing long-term funds necessary for the development of this mine. In March this year, JBIC also extended a loan to this Project in project financing.*2  
     
  3. Copper is used extensively for various products, including electric cables, electrical and electronic equipment, transport vehicles, and construction materials. Thus, it is an indispensable metal for the Japanese industry. Its demand is expected to rise on the global level with growing demand in infrastructure among emerging economies, especially in China and India, and with increasing 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 the acquisition of equity interests in copper mining firms by Japanese companies.
     
  4. This Project will supply a Japanese domestic smelter with copper concentrates that will meet about 8.6% (equivalent to 110,000 tons in terms of metal content*4) of the annual demand in Japan (1,280,000 tons in terms of metal content at the end of 2010). This Project is highly significant in the sense that it secures a long-term, stable supply of strategically important resources to Japan, and also enables Japanese companies to accumulate experience in overseas copper mine development.
     
  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 projects, and performing its risk-assuming function.
Note
  1. *1 Although JBIC has signed a loan agreement with SC-SGF on August 15, this Press Release was issued after a loan agreement with SC was signed today in order to represent them as a set of agreements for financing the same project.
  2. *2 See Press Release on March 9, 2012.
  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. The product from the process in which chemicals and water are used to separate and increase copper content up to 20-40% is called “copper concentrate”.
  5.  

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