Project ID: 56098

China Eximbank provides supplementary $419 million USD overseas investment loan to Chinalco for capital expenditures related to the Toromocho Copper Mine Project (Linked to #36064)

Commitment amount

$ 407126323.6

Constant 2017 USD

Summary

Funding agency [Type]

Export-Import Bank of China [State-owned Policy Bank]

Recipient

Peru

Sector

Industry, mining, construction (Code: 320)

Flow type

Loan

Concessional

No

Category

Intent

Commercial (The next section lists the possible statuses.)

Commercial

Development

Representational

Mixed

Financial Flow Classification

OOF-like (The next section lists the possible statuses.)

Official Development Assistance

Other Official Flows

Vague (Official Finance)

Flows categorized based on OECD-DAC guidelines

Project lifecycle

Status

Completion (The next section lists the possible statuses.)

Pledge

Commitment

Implementation

Completion

Suspended

Cancelled

Milestones

Commitment year

2013

Geography

Description

Between June and August 2007, Aluminum Corporation of China (Chinalco) acquired 100% of the shares in the Toromocho Copper Mine Project for about 840 million Canadian dollars. Canada-based Peru Copper Inc. originally owned 91% of shares and the remaining 9% were owned by unspecified firms. Shortly thereafter, all of the mining concessions in Toromocho were transferred over to Chinalco's wholly-owned subsidiary, Minera Chinalco Peru S.A. (Chinalco Peru). This project is located in central Peru in the core of the Morococha mining district.Then, on 1 December 2010, China Eximbank provided a $2 billion USD overseas investment loan to Chinalco Peru for financing capital expenditures related to the Toromocho Copper Mine Project (see 'Chinalco Annual Report 2013,', p. 43) (see Project #36064). This loan carried a 2.308% interest rate (6-month LIBOR plus 185 basis points) but the other borrowing terms are unknown. The parent company Chinalco entered into a guarantee agreement with Eximbank for the entire outstanding amount, accrued interest, penalties and other expenses arising from the loan from Eximbank. Chinalco was also required to pay a 1% commission for each drawdown. This overseas investment loan facility is secured by all property, plant and equipment pertaining to the Toromocho Project if Chinalco’s credibility or financial status deteriorates (see 'Chinalco Annual Report 2013,', p. 105).In March 2013, China Eximbank signed a supplmentary overseas investment loan agreement providing $419 million USD to Chinalco Peru also for capital expenditures related to the Toromocho Copper Mine Project in the Junín Region of Peru (see 'PROPOSED PRIVITAZATION,' p. 120) (captured in Project #56098). The loan carried an 3.948% interest rate (6-month LIBOR of 0.448 % plus 350 basis points) per annum. The other borrowing terms are unknown. Chinalco Peru was required to pay a 1% commission fee for each drawdown and this second facility was also guaranteed by the parent company of Chinalco. Moreover, this supplementary loan agreement was also collateralized by all property, plant and equipment pertaining to the Toromocho Mining Project if Chinalco’s credibility or financial status deteriorates (see 'Chinalco Annual Report 2013,', p. 105). As of 2016, the entirety of this loan facility was drawn down. Chinalco aimed to increase annual production to 250,000 tonnes of fine copper and silver and molybdenum byproducts. The mines, located 140 kilometers east of Lima, are expected to produce 210,000 metric tons of copper annually by 2012, making it the country's largest mining project and boosting overall copper exports from the South American country by 25%. Chinalco's CEO Xiao Yaqing said the mine's 1.5 billion tons in reserves could make it productive for 30 years.The Environmental Impact Assessment of the Toromocho Copper Mine Project was approved by the Peruvian government in December 2010. Chinalco Peru obtained the construction permit and began work in July 2011. The mines were officially commissioned on December 10, 2013. The Toromocho Copper Mine Project began commercial production on June 17, 2015.

Additional details

AidData calculated the interest rate as follows: 0.448% (average 6-month LIBOR in March 2013) + 3.5% (350 basis points) = 3.948%

Number of official sources

5

Number of unofficial sources

0

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Details

Cofinanced

No

Receiving agencies [Type]

Aluminum Corporation of China (CHINALCO) [State-owned Company]

Implementing agencies [Type]

Aluminum Corporation of China (CHINALCO) [State-owned Company]

Loan type

Non-Concessional

Interest rate

3.948%

Gurarantee provided

No

Insurance provided

No

Collateralized/securitized

Yes

Collateral

All property, plant, and equipment pertaining to the Toromocho Project