Bank of China contributes to $5.988 billion syndicated loan to repay debts and meet capital requirements of Las Bambas Copper Project (Linked to Record ID#55426, #98774, #98775, and #55427)

Project narrative

In 2014, Minera Las Bambas S.A.C -- a special purpose vehicle and joint venture of MMG (62.5%), GUOXIN International Investment Group Ltd. (22.5%) and CITIC Metal Co. Ltd. (15%) -- entered into a project facility agreement with the CDB, China Eximbank, ICBC and Bank of China (Sydney Branch) for a syndicated loan worth $5.988 billion. China Development Bank is the leading bank and responsible for about 50% of the loan (captured in Record ID#55426). The co-leading bank, Industrial and Commercial Bank of China, is responsible for about 30% of the loan (captured in Record ID#98775). Bank of China and the Export-Import Bank of China are each responsible for about 10% of the loan (captured in Record ID#98776 and #98774). The proceeds of the loan are to be used by the borrower to repay intragroup loans, and meet the ongoing capital requirements of the Las Bambas project. The loan carries an interest rate set at 6 months LIBOR + 365 basis points (4.461%) and 18-year maturity. The loan is secured by (i.e. collateralized with) share security over the entire share capital of MMG South America Management Co Ltd and each of its subsidiaries including Minera Las Bambas S.A. (“MLB”), a debenture over the assets of MMG South America Management Co Ltd, an assets pledge agreement and production unit mortgage in respect of all of the assets of MLB, assignments of shareholder loans between MMG South America Management Co Ltd and its subsidiaries and security agreements over bank accounts of MLB. Approximately $469.0 million (2018: $699.0 million) of these borrowings are guaranteed on a several basis by China Minmetals Non-ferrous Metals Holding Company Limited (“CMNH”) and China Minmetals Corporation Limited (“CMCL”), Guoxin International Investment Corporation Limited and CITIC Corporation Limited in proportion to the respective shareholdings of MMG SA, Elion Holdings Corporation Limited and Citic Metal Peru Investment Limited in the Las Bambas Joint Venture Group. ICBC also provided a letter of guarantee for the operation of the Las Bambas copper project. There is evidence that this loan has disbursed. As of 2014, the borrower had utilized ("drawn down) $4.119 billion of the $5.988 billion facility. The Las Bambas Project is a world class copper development project located in Peru, in the provinces of Cotabambas and Grau in the districts of Challhuahuacho, Tambobamba and Coyllurqui, province of Cotabambas, and in the district of Progreso, province of Grau, region of Apurímac, 72 km from Cusco. The Las Bambas Project tenements include approximately 35,000 Ha of land, of which less than 10% has been explored for additional resources. The estimated mine life is over 20 years and further exploration could potentially increase this. The Las Bambas Project is within the Andahuaylas-Yauri copper belt, which hosts the Antapaccay and Constancia copper mines. The project was approved by Xstrata plc’s Board in July 2010. Its Environmental and Social Impact Assessment (ESIA) was approved in March 2011. The project’s main construction permit was issued on May 31, 2012. Mass earthworks started on June 1, 2012. The first 50 km of heavy haul road was put into service on September 15, 2012. The first permanent concrete poured (Flotation Area Tower Crane) was poured in August 2012. The project had achieved a 19% completion rate as of October 2012. MMG completed its acquisition of the Las Bambas mine in August 2014. Mine development began in August 2015 and commercial production began on July 1, 2016. The mine has resulted in multiple environmental conflicts between 2015 and 2022. About 15,000 people protested the mine during the early phases of construction, resulting in clashes with police who shot and killed four local people. There were continued protests in 2021-2022, when protestors blockaded the mine and complained that they received few benefits from the mine.