WASHINGTON, D.C., Aug. 29—The International
Finance Corporation (IFC) and Minera Loma de Niquel, C.A. (MLdN) yesterday
signed agreements under which IFC will become a shareholder in MLdN and
furnish a project finance package of US$115 million of the total estimated
US$450 million development cost of MLdN’s nickel deposit 80 km southwest
of Caracas, Venezuela. MLdN will mine and smelt lateritic nickel ore to
produce an annual average 16,000 metric tons of nickel, principally for
export, over the estimated 27-year life of the deposit.
Construction of the mine, smelter, and associated infrastructure, should
be completed by early 2000. The project will be supported by long-term
contracts for electricity and natural gas supply, and for ferro-nickel
offtake. Low-cost energy and large, high quality reserves will contribute
to the mine’s efficiency.
Upon completion of financing, MLdN will be owned indirectly 81.5 percent
by Minorco S.A. of Luxembourg. Venezuela’s Corporación Caracas and Canada’s
Jordex Resources each hold 7.5 percent. IFC will invest US$74.5 million
of its own funds: US$65 million in loan (IFC A-Loan), and will acquire
3.5 percent of MLdN’s equity. A further US$50 million will be funded by
banks participating in an IFC-syndicated B-Loan, jointly arranged by IFC
and Dresdner Bank Luxembourg S.A (Dresdner Bank), which also underwrote
the syndication. Participants in the IFC B-Loan are Dresdner Bank, Credit
Lyonnais S.A., Bayerische Vereinsbank AG (New York Branch), Middenbank
Curacão (a subsidiary of ING Bank N.V.), and Royal Bank of Scotland.
Additional debt financing of US$100 million will be supplied by Kreditanstalt
für Wiederaufbau (KfW), with maturities equivalent to IFC’s loans. KfW’s
funding consists of a US$60 million import loan financing long-term ferro-nickel
supply contracts with German customers, and a US$40 million export loan
financing the purchase of German supplies and services by MLdN.
"This will be the first major base metal greenfield mining investment
by the private sector in Venezuela in many years," explained Philippe
Liétard, Director of IFC’s Oil, Gas, and Mining Department. "We believe
it will help lead to further investments by the international mining community
to assist in the development of Venezuela’s considerable mineral potential."
The IFC financing is tailored to projected MLdN cash flows. The IFC A-
and B- loans have maturities of 13 and 10 years, respectively, reflecting
the long deposit life. The repayment schedule is flexibly structured to
accommodate lower amortization payments, under certain circumstances, in
years of lower average nickel prices, a valuable feature considering the
historical volatility of nickel prices.
MLdN will be operated in an environmentally sound manner. The mine is designed
to be a zero discharge facility. Waste drainage will be recollected for
use as process water, emissions will be tightly controlled, and all particulates
will be collected and pelletized for reprocessing as ore material.
MLdN is the third mining investment IFC has made in partnership with Minorco.
Minorco and IFC are also shareholders in Codemin, a Brazilian ferro-nickel
producer, and in Quellaveco, a Peruvian feasibility-stage copper project.
IFC, a member of the World Bank Group, is the largest multilateral source
of equity and loan financing for private sector projects in the developing
world. IFC has committed over US$1.2 billion to 37 investments in Venezuelan
private industry since its first investment in the country in 1960.