China Eximbank provides $396.1 million preferential buyer’s credit for El Mutún Steel Complex Project

Project narrative

On December 31, 2017, China Eximbank and the Government Bolivia signed a $396,134,000 preferential buyer’s credit (PBC) agreement [China Eximbank PBC 2017 (31) 457] for the El Mutún Steel Complex Project. The PBC carried the following borrowing terms: an interest rate of 3%, a 15 year maturity, and a 5 year grace period. The loan agreement was officially approved by the Government of Bolivia on January 24, 2018. The borrower was expected to use the proceeds of the PBC to finance approximately 85% of the cost of a $450 million commercial contract between Sinosteel and Mutún Steel Company (Empresa Siderurgica del Mutún (ESM), which was signed in March 2016. The lender made no disbursements in 2017. It made disbursements worth $56,607,450 in 2018, $31,481,314 in 2019, $20,161,857 in 2020, $88,088,764 in 2021, $99,362,568 in 2022, and $31,502,319 in 2023. The borrower made no principal repayments between 2017 and 2022. However, it paid interest and/or fees worth $0 in 2017, $1,980,670 in 2018, $2,069,663 in 2019, an unknown amount in 2020, $4,305,773 in 2021, $6,431,638 in 2022, and $8,974,801 in 2023. The loan’s (principal) amount outstanding was $0 as of December 31, 2017, $56,607,450 as of December 31, 2018, $88,088,764 as of December 31, 2019, $108,250,621 as of December 31, 2020, $196,339,385 as of December 31, 2021, $295,701,953 as of December 31, 2022, and $327,204,273 as of December 31, 2023. The El Mutún Steel Plant Project sought to construct and develop the steelmaking facilities near the El Mutún Ore Mine (19.1903° S, 57.8839° W) in the German Busch Province of Bolivia in the Santa Cruz Department, increasing Bolivia’s steelmaking capabilities. The project consisted of the construction of an iron ore concentration plant (with a capacity of 650,000 metric tons per year), a pelletizing plant, and a direct reduction plant (with a capacity of 250,000 metric tons per year), and a steelworks with a continuous caster and rolling mill (with a capacity of 150,000 metric tons per year). Sinosteel and Mutún Steel Company (Empresa Siderurgica del Mutún (ESM) — a Bolivian state-owned company that explores and mines iron ore, and manufactures steel — were jointly responsible for project implementation. A technical evaluation was completed in April 2017 by a consulting company hired by Sinosteel. However, the implementation of the project was delayed until January 2019 after ESM provided a down payment to Sinosteel following the first disbursement from China Eximbank. Sinosteel began construction on January 29, 2019. The construction was halted in January 2020, and was then 're-routed' in November 2020. As of March 2023, the project had achieved a 69% completion rate, and the plant expected to operate at 100% capacity by 2024. According to CEO Jorge Alvarado Rivas, the assembly of the plant was completed in June 2023. The El Mutún Steel Complex was officially inaugurated on February 24, 2025.