Narrative
Full Description
Project narrative
On May 18, 2022, CMOC Brazil — a local subsidiary of China Molybdenum Company Limited (CMOC) in Brazil — signed a 5-year, $600 million bridge loan agreement with a syndicate of 14 Chinese and international lenders. China Construction Bank (Asia) (Record ID#92535), acting as the exclusive coordinator, agent and principal arranger mandated by the bookkeeper. Other lenders included Bank of China (Record ID#92536), Industrial and Commercial Bank of China (Record ID#92537), China Merchants Bank (Record ID#92538), Shanghai Pudong Development Bank (Record ID#92539), Natixis, Societe Generale, ING Bank, HSBC, China CITIC Bank (International) (Record ID#92540) and four other banks not disclosed by CMOC Brazil. The proceeds of the loan are to be used by the borrower to finance the export activities of CMOC Brazil. The loan is secured by (i.e. collateralized against) the borrower's receivables from exports of niobium in connection with CMOC's niobium assets in Brazil. There is also a $100 million ‘accordion feature’ tied to the deal.
Staff comments
1. The exact size of the contributions from China Construction Bank (Asia) Corporation Ltd., Bank of China, Industrial and Commercial Bank of China, China Merchants Bank, Shanghai Pudong Development Bank, and China CITIC Bank (International) are unknown. For the time being, AidData assumes that all 14 members of the lending syndicate contributed equally ($42,857,142) to the $600 million loan. 2. CMOC Brazil is the second largest producer of niobium in the world and the project is supported by CMOC's leading beneficiation technology and its own trading network. 3. Although the transaction is classified as a pre-export financing (PXF) arrangement, it also has a bridging loan element. 4. PXF is backed by ferroniobium products taken by IXM, the world’s third-largest base metals trading company. IXM primarily markets copper, lead, zinc, aluminum, nickel, cobalt and niobium. According to CMOC Brazil, the offtake agreement with IXM will last for up to seven years. It is expected that a large part of the levies will go to production companies in China, but also to other selected companies around the world. IXM is a 100% subsidiary of the CMOC group – an acquisition that was only secured in mid-2019. IXM was previously the metals trading business of commodities trader Louis Dreyfus. CMOC held an indirect 45% stake in the metals trading arm through the NCCL Natural Resources Investment Fund with an initial $466 million in a deal in mid-2018. At this time, Louis Dreyfus Metals becomes IXM. Shortly after, CMOC announced its intention to purchase the remainder of IXM. After a number of regulatory checks, CMOC completed the purchase of the remaining 55% shares from China Anxing Asset Management with a payment of $518 million in mid-2019. 5. One source (https://www.cmoc.com/html/2022/TheGlobalDynamic_0519/30.html) suggests that a bridge loan and a pre-export financing facility was provided to the borrowing institution. This issue warrants further investigation.