CNMC provides loan — via accounts receivables financing facility arrangement — for Roan Tailings Reclamation (RTR) Project

On July 1, 2016, La Compagnie De Traitement Des Rejets De Kingamyambo (Metalkol SA), China Nonferrous Mining Corporation Limited (CNMC), China Eximbank, ICBC, and Sinosure signed an EPC contract (worth $654,233,791) and a financing framework agreement for the Roan Tailings Reclamation (RTR) Project. ICBC and China Eximbank subsequently signed an accounts receivables financing facility agreement with CNMC for the Roan Tailings Reclamation (RTR) Project. CNMC, in turn, used the proceeds from the facility to on-lend to Metalkol SA (most likely through a deferred payment agreement) for the Roan Tailings Reclamation (RTR) Project. The borrowing terms of the loan to Metalkol SA are unknown. However, it is known that the loan is backed by a Sinosure credit insurance policy. It is also known that the borrower and project owner — Metalkol SA — pledged all of its assets and some assets of its affiliated companies as sources of collateral. The Roan Tailings Reclamation (RTR) Project is located 26 km west from Kolwezi. It is the comprehensive hydro-metallurgical facility with the target capacity of 70 thousand tonnes of copper per annum (ktpa) and 14 ktpa of cobalt (Phase I) which will then be expanded to 105 ktpa of copper and 21 ktpa of cobalt (Phase II). CNMC was the EPC contractor responsible for project implementation. Construction started in February 2017. The project was originally expected to reach completion within 24 months. It reached full phase 1 production in 2020.

Additional details

1. The Chinese project title is RTR项目. 2. China Eximbank and ICBC likely signed an accounts receivable transfer agreement with CNMC to provide financing for the construction period of the project. In this type of arrangement, the exporter (seller) procures insurance from an insurer and transfers its accounts receivable under the insurance policy to a bank. The bank then grants financing to the exporter (seller) and becomes the insured under the transferred insurance policy. When an insured loss occurs, the insurer pays indemnity to the financing bank pursuant to the insurance policy and the Accounts Receivable Transfer Agreement. 3. In a typical receivables financing agreement (or deferred payment agreement), the company that the project owner in the host country has selected as its engineering, procurement, and construction (EPC) contractor is also a lender to the project owner. The company assigns receivables under its EPC contract with the project owner to one of or more banks. Upon assignment of receivables, the bank or banks will release funds to the company so it can discharge its obligations under the receivables financing agreement as a lender. Receivables financing is also known as accounts receivable financing (finance) or A/R financing (finance) or 应收账款融资 (in Chinese). These other terms are used because the accounts receivable of a company (i.e., unpaid invoices) are being used as collateral to unlock working capital—typically in the form of a bank loan (‘receivables loan’). Sellers often face cash flow problems when their buyers do not make full payment at the due date of the invoice. A receivables financing arrangement addresses this problem by allowing them to sell their outstanding invoices to a bank at a discounted rate. This approach allows the seller to receive the remaining invoice amount before the due date of the invoice. The bank either gets its money back at invoice maturity through the seller (acting as a collecting agent) or directly from the debtor. 4. Several sources refers to the monetary value of the accounts receivable financing facility as $700 million. For the time being, AidData assumes that 85% of the cost of the $654,233,791 EPC contract was financed through the accounts receivables financing facility agreement. This issue warrants further investigation. 5. The precise dates on which the accounts receivables financing facility agreement and the deferred payment/on-lending agreement were signed are unknown. For the time being, AidData relies on the project implementation start date (February 2017) as a proxy for the official commitment date. This issue warrants further investigation.

Number of official sources

5

Number of total sources

13