Seven JBIC “Global South” Projects
A loan to Brazilian metals and mining giant Vale was the first after the 2023 amendment to the JBIC Act expanded eligibility to include resource procurement by overseas subsidiaries of Japanese companies. TAMIYA Shintaro and HATA Hitomi, who were in charge of this agreement, talk about the story behind it.
Pellets are spheres with a diameter of 1 to 3 centimeters made from processed iron ore.
Stable supply of emission-reducing steel raw materials from a major mineral resource supplier
Among the Global South countries that have both an abundant supply of resources and deep connections with Japan is mining powerhouse Brazil. Not only does it have historical ties via its large Japanese diaspora, but Japan has long been involved in development of the country’s resources, ranging from iron ore to lithium.
Vale S.A., an integrated resource development company based in Rio de Janeiro, is 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. The loan sought to secure a stable supply for Japanese companies of Vale’s ground and processed iron ore, known as pellet feed, and the pellets made from it. These low-carbon raw materials for steel 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 project got underway with Vale expressing interest in JBIC financing. But at that time, it fell outside the scope of the JBIC Act, under which loans for resources were limited to direct imports to Japan. However, all that changed with the April 2023 amendment making procurement of resources by Japanese overseas subsidiaries eligible for loans, kickstarting negotiations. “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,” says HATA Hitomi, who was in charge of this agreement at Division 2 of JBIC’s Mining and Metals Finance Department.
Before then, JBIC’s import loans were provided for resources and other strategically important goods imported to Japan. However, in the global operations of Japanese companies there has been an increasing number of cases in recent years in which resources procured overseas are received by Japanese affiliates located overseas, where they are then manufactured into products and marketed. The amendment of the JBIC law has made such cases eligible for loans.
While the bank considered this first import loan project after the legal reform, the background and purpose of the amendment were also carefully explained to Vale. TAMIYA Shintaro, who worked with HATA on this project, even traveled to Brazil twice for negotiations. “Despite the difficulties around the time difference, Vale took careful note of our opinions and thanks to their understanding, we were able to successfully sign the agreement.”
Contributing to the stable supply of crucial mineral resources and to decarbonization, this was also a valuable project from the standpoint of co-creation with the Global South.
Deputy Director, Division 1 and 2
Mining and Metals Finance Department
Energy and Natural Resources Finance Group
TAMIYA Shintaro
Joined the bank in 2016. Engaged in steel- and aluminum-related project structuring, as well as managing existing projects. Graduated from Kyoto University, Faculty of Law.
Division 2
Mining and Metals Finance Department
Energy and Natural Resources Finance Group (at that time)
HATA Hitomi
Joined the bank in 2022. Engaged in operations concerning Brazil, and management and other matters concerning established projects, and is currently assigned to the Strategic Research Department. Graduated from Akita International University.
