A massive project of a “copper powerhouse” to secure resources for Japanese industry

Additional financing facilitated a more hygienic environment as a COVID-19 countermeasure

Among the Global South, Chile has recently been attracting attention as a major country in South America, alongside Brazil and Argentina. It is known as a copper powerhouse, accounting for 20 percent of the world’s reserves and production, and is Japan’s largest supplier of the metal.

Japan imports all of its copper concentrate, the raw material used to make copper, meaning a long-term, stable supply is vital. Copper is used in a wide range of applications, including power transmission and wiring, electric vehicles, renewable energy systems, and semiconductors. Demand is expected to increase even more due to its use in AI and data centers. In this sense, Chile is an important partner that has long been providing Japan with a stable supply of resources. Accordingly, Japan has provided it with various forms of support and financing.

The Quebrada Blanca copper mine in northern Chile, located at 4,400 meters above sea level, is a prime example of such support. Japanese companies have a combined 30 percent stake in the mine development, and JBIC has made loans totaling USD2.09 billion for the project, including project financing of USD900 million in 2019.

While the construction of the project was underway, the COVID-19 outbreak required the development of a more hygienic environment, including infection control measures. Delays caused by the isolation of infected construction workers and the resulting lost productivity increased costs. Additional investment was thus required, and the Japanese companies with equity stakes in the project requested support from JBIC.

In response, in March 2023, loan agreements were signed with Sumitomo Metal Mining Co., Ltd. and Sumitomo Corporation for amounts up to USD625 million (JBIC portion: USD375 million) and USD125 million (JBIC portion: USD75 million), respectively, for development of the Quebrada Blanca copper mine. Co-financed with private financial institutions, these funded creation of a hygienic environment and other pandemic countermeasures during the construction period.

MATSUNOKI Hayato of Division 1, Mining and Metals Finance Department, Energy and Natural Resources Finance Group, who was in charge of this additional financing, says, “Because of the size of the loan, there were many points that needed to be sorted out. Changes in the global situation also frequently affected the project. However, thanks to advice from my manager and other senior colleagues who have extensive business experience, I was able to do a job that was very rewarding.”

As the project’s backers were aiming for the mine’s timely completion and the start of production, this loan was provided in the form of back-financing to the two Japanese companies with equity stakes. Since back-financing depends on the creditworthiness of the financed companies, it has the advantage of shortening the time needed for the loan agreement to be signed.

Quebrada Blanca stands out due to its vast reserves in the history of JBIC, which provided support for copper mine development projects in Chile such as the Centinela mine, also located in the north of the country. With a mine life of some 27 years as of 2023, and minable ore reserves of about 7 million tons, this is a long-term, large-scale project for what will be one of the world’s largest copper mines when it goes into full operation.

JBIC is unique in its capability to proactively provide support

As the Quebrada Blanca copper mine was a project under construction, a wide range of matters needed to be finalized. But because the tight copper supply made providing funds for the mine’s construction very urgent, MATSUNOKI took the lead and put the financing together for this large-scale project in just five months. The project was then successfully completed, and the first shipment of copper concentrate arrived in Japan in May 2024.

With its social stability and public safety, Chile is a strategic partner of Japan and a nation for which copper production is an extremely important industry. Changes in the global situation can easily lead to large fluctuations in copper prices, and even slight changes will likely have a significant impact on a project’s revenues. But despite this, Japanese companies have been playing a large role in the development and operation of copper mines in Chile. JBIC’s support as a Japanese policy-based financial institution will continue to be needed to secure a long-term, stable supply of mineral resources.

Mine developments, however, are long-term developments requiring a large amount of investment, and so a country’s risk profile is extremely important. In this respect, Chile is an OECD member regarded as a “developed country in South America” that is, as previously mentioned, politically and economically stable. Another important advantage is the country’s emphasis on attracting foreign investment to drive economic growth and its track record of maintaining a business-friendly environment.

JBIC’s backing of Japanese companies investing in projects to facilitate their continued operation—even under unprecedented circumstances such as COVID-19—is extremely significant in helping Japan secure and maintain valuable interests. According to MATSUNOKI, "I believe that this is unique to JBIC, which is capable of taking such a proactive approach to support its clients, undaunted even by the difficulties posed by the pandemic."

Chile is also attracting attention as a producer of mineral resources other than copper, such as lithium, and JBIC is providing various initiatives to support companies in these areas as well. In this way, JBIC is serving a crucial role in strengthening Japan’s relationship with Chile, a major country of the Global South.

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