Feature Article BRAZIL & CHILE: MINING GIANTS 2
JBIC has a cooperative relationship with Brazilian metals and mining giant Vale that goes back nearly half a century. A loan to Vale was the first after the April 2023 amendment to the JBIC Act expanded eligibility to include cases of resource procurement by overseas subsidiaries of Japanese companies.
Pellets are spheres with a diameter of 1 to 3 centimeters made from processed iron ore.
Close relations with a world-leading resource supplier support raw materials for greener steel to help reduce emissions
Vale S.A. is one of the biggest mining companies based in Brazil and a world-leading supplier of mineral resources. Through initiatives including collaboration since the 1980s centering on iron ore, JBIC has been building a close relationship with the company for nearly half a century. A large-scale loan agreement for USD480 million was signed in March 2024. TAMIYA Shintaro and HATA Hitomi of Division 2, Mining and Metals Finance Department, who were in charge of this agreement, both say, "It was a major project that kept us on our toes for six months once full negotiations were underway.”
Vale's ground and processed iron ore, known as pellet feed, and the pellets made from it, are essential not only for the conventional blast furnace steelmaking process, but also for electric furnace and direct hydrogen reduction steelmaking, which can reduce carbon emissions during production. The loan seeks to ensure a stable supply of these materials from Vale to Japanese companies.
TAMIYA Shintaro
Deputy Director, Division 1 and 2
Mining and Metals Finance Department, Energy and Natural Resources Finance Group, JBIC
Structuring an unprecedented new scheme and tough but fruitful negotiations
Vale expressed interest in JBIC financing but at that time, it fell outside the scope of the JBIC Act, which limited loans for resources that were directly imported to Japan. However, all that changed with the April 2023 amendment of the act, which made procurement of resources by Japanese overseas subsidiaries eligible for loans.
“Vale approached us before the amendment, but it was only after the amendment that actual progress was made in our talks,” explains HATA. “Being the first case after the amendment of the law, there was no precedent to guide us, so we proceeded to examine potential schemes while conferring with relevant departments within the bank.”
HATA Hitomi
Division 2
Mining and Metals Finance Department, Energy and Natural Resources Finance Group, JBIC
While the bank considered this first import loan project after the legal reform, it was also necessary to carefully explain the background and purpose of the amendment to Vale to receive their full understanding of JBIC's requirements. In addition to online meetings, TAMIYA even traveled to Brazil twice for tough negotiations.
“The time difference between Japan and Brazil means our lives are on completely different schedules, limiting the chances for discussions. Since we were aiming to conclude the agreement by March 2024, we were under pressure to work things out quickly and not waste any time. But Vale took careful note of our opinions and thanks to their understanding and close cooperation, we were able to successfully sign the agreement. It was a great pleasure to hear thoughtful words of appreciation from Vale when we had a meeting in Japan after signing the loan agreement.”
An unprecedented first project, the time difference, and tough negotiations with a world-leading company—the agreement was concluded by overcoming numerous obstacles and through teamwork, at times with TAMIYA in Brazil and HATA in Japan. This was a valuable project that not only contributes to the stable supply of mineral resources that are crucial for Japan’s steel industry and its decarbonization, but helps strengthen relations with Vale, which also holds an important place in Japan’s resource strategy.
