China Construction Bank contributes $57.708 million to $2.25 billion loan to Qatar Aluminium for the construction of an aluminum smelting and power plant

Project narrative

On August 26, 2007, China Construction Bank (CCB) contributed $57.708 million to a $2.25 billion limited recourse project finance term loan to Qatar Aluminium (Qatalum) for the construction of a new aluminum plant and power plant in Qatar. Qatalum is a joint venture owned by QatarEnergy, a Qatari state-owned company, and the Norwegian Norsk Hydro, which each hold a 50% stake. The loan had an initial fee of 70bps (0.7%), a maturity date of 16.5 years, and was priced at 40bps (0.4%) plus LIBOR before the completion of the aluminum plant, 60bps (0.6%) from completion to 8.5 years post-construction, 70bps (0.7%) from 8.5 years to 11.5 years post-construction, to 85bps (0.85%) after 11.5 years post-construction. Originally, Qatalum anticipated requiring total financing of $3 billion. However, higher than expected equipment prices led to increased costs and reduced ECA funding, as export credit agencies Coface and Hermes pulled out of the export credit facility, reducing it from $600 million to $350 million. In response, the length of the loan was extended to 16.5 years and a 30% balloon payment was added to reduce the semi-annual financial burdens on Qatalum. The lending group contained 31 members. Export Development Canada (EDC) contributed $300 million. Banco Bilbao Vizcaya Argentaria (BBVA), DNB Bank, ING Bank, and Nordea Bank contributed $100 million each. Mizuho Corporate Bank (MHCB) contributed $90 million. HypoVereinsbank (HVB) contributed $75 million. Arab Bank, Arab Banking Corporation (Bank ABC), Arab Petroleum Investments Corporation (APICORP), MUFG Bank, Barclays, BNP Paribas, Calyon, China Construction Bank (CCB), Commerzbank, Doha Bank, Fortis, Goldman Sachs, Gulf International Bank B.S.C. (GIB), Intesa Sanpaolo, German Development Bank (KfW), Mashreqbank, National Australia Bank (NAB), NATIXIS, Royal Bank of Scotland (RBS), Société Générale, Standard Chartered Bank, Sumitomo Mitsui Banking Corporation (SMBC), WestLB, and Woori Bank each contributed $57.708 million. All banks acted as mandated lead arrangers (MLAs). This loan was one of several financial instruments used to finance the construction of the aluminum smelter, which ultimately totaled $4.739 in financing. In addition to the term loan and other debt facilities, the project was financed along a 55:45 debt to equity ratio, resulting in the acquisition of a total $2.1 billion in equity for financiers. $150 million in a letter of credit was contributed by a syndicate consisting of the Europe Arab Bank, Barclays, BBVA, BNP Paribas, Caylon, Commerzbank, DNB Bank, Fortis, GIB, HVB, ING Bank, Intesa Sanpaolo, Mashreqbank, MHCB, NAB, Nordea, RBS, Standard Chartered Bank, SMBC, and WestLB. Finally, $350 million in an export credit facility was contributed by the Norwegian Export Credit Guarantee Agency (GIEK). Construction on the project began on November 19, 2007. The project was completed and inaugurated on December 4, 2010, and reached full production capacity on September 25, 2011. The project, built in the north-eastern part of Qatar's Mesaieed Industrial City, approximately 40 kilometers (24.8 miles) south of Doha, was a combined cycle gas turbine (CCGT) plant consisting of a smelter, casthouse, carbon plant, as well as a dedicated gas fired power plant with a capacity of approximately 1,350 MW, supplied with petroleum by QatarEnergy under a long-term contract. Doosan Enerbility and GE Power were contracted to render engineering procurement construction services for the gas fired power plant. Fata Group and K Home International were contracted to work on the anode baking plant and cast house. Achirodon Construction was contracted for the marine works, Saudi Arabian Trading & Construction for a residential village for the construction workers, ABB for the high-voltage power-rectifier, Solios Carbone on a paste plant, and SNC-Lavalin on a FEED contract for the main buildings. Norsk Hydro provided potline technology, most of the aluminum oxide, and training staff and workers.