Federative Republic of Brazil / Loan Insurance for Pellet Feed Plant Construction Project
Nippon Export and Investment Insurance
Nippon Export and Investment Insurance (NEXI, Chairman and CEO: Atsuo Kuroda) has decided to provide a loan insurance for a project to construct a pellet feed plant (the Project) by CSN Mineração S.A. (CSN Mineração), an iron ore production and sales subsidiary of a Brazilian steel producer Companhia Siderúrgica Nacional.
The Project is to build a new pellet feed production plant by CSN Mineração, of which ITOCHU Corporation (ITOCHU), JFE Steel Corporation, and Kobe Steel, Ltd. are shareholders among others. The new plant is expected to produce 15 million tons/year of pellet feed*1. NEXI has extended a loan insurance to CSN Mineração for an Iron Ore Plant Upgrading Project in May 2021*2, and this will be the second project for NEXI to support the company. Having minor stake in CSN Mineração, ITOCHU has sent a director to engage in management and will secure long-term offtake right to purchase the pellet feed produced by the plant.
The loan is co-financed by Japan Bank for International Cooperation; BNP Paribas (acting through its Tokyo Branch) (Coordinator); Citibank, N.A., Tokyo Branch (Coordinator); JPMorgan Chase Bank, N.A., Tokyo Branch; Sumitomo Mitsui Trust Bank, Limited, New York Branch; Credit Agricole Corporate and Investment Bank, Tokyo Branch; and Sumitomo Mitsui Banking Corporation, bringing the total co-financing amount to USD 1,400 million. NEXI’s insurance will cover the USD 420 million loan facility provided by the private financial institutions.
Pellet feed is an essential raw material for low-carbon steelmaking in a direct reduction method using an electric furnace, which can reduce CO2 emission compared to using a blast furnace, and therefore securing a stable supply of pellet feed is crucial for steelmakers that aims to achieve decarbonization. The Project promotes the decarbonization of Japanese steel producers through ensuring a stable supply of pellet feed on a long-term basis and is in line with the LEAD Initiative*3 announced in December 2020.
As a governmental financial institution of Japan, NEXI will actively support projects that contribute to securing a steady supply of resources and energy to Japan, and the efforts by Japanese companies to achieve carbon neutrality.
| Insured | BNP Paribas (acting through its Tokyo Branch) (Coordinator); Citibank, N.A., Tokyo Branch (Coordinator); JPMorgan Chase Bank, N.A., Tokyo Branch; Sumitomo Mitsui Trust Bank, Limited, New York Branch; Credit Agricole Corporate and Investment Bank, Tokyo Branch; Sumitomo Mitsui Banking Corporation |
| Insured amount | USD 420 million |
| Tenor | 12 years |
| Covered risks | Political risk: 100%, Credit risk: 97.5% |
Contact: Natural Resources Group, Structured and Trade Finance Insurance Department
Tel: +81-(0)3-3512-7670
- 1 Pellet feed is processed iron ore crushed into particles in size of 0.05 mm or smaller in diameter. It is agglomerated in a pellet plant and fed into a blast furnace or direct-reduction furnace.
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2 NEXI News Release, May 14, 2021.
https://www.nexi.go.jp/en/topics/newsrelease/2021051301.html - 3 In December 2020, NEXI announced the LEAD Initiative to respond to the business environment with and after the COVID-19. This initiative is intended to actively promote the underwriting of projects, with a focus on contributing to global carbon neutrality, solving social issues, and achieving the SDGs. Under this initiative, we aim to underwrite insurance of a total value of JPY 1 trillion by the end of fiscal 2025, while diversifying our funding sources not only from traditional capital providers, but also from institutional investors, etc.