FOR IMMEDIATE RELEASE August 3, 1997
Marianna Ohe 202-565-3200
The Export-Import Bank of the United States (Ex-Im Bank) is providing $425 million in project financing to back exports of goods and services by Newmont Gold Co., Denver, CO, Fluor Daniel Corp., Golden, CO , and other U.S. suppliers to develop the Batu-Hijau Copper-Gold Project, one of the world`s largest copper and gold deposits in Sumbawa, Indonesia.
Overall, Ex-Im Bank`s participation will leverage $1 billion of U.S. procurement supporting over 14,000 American jobs directly (Commerce Department estimate) and thousands more through subsuppliers. Specifically, over 7,000 of these jobs are directly related to Ex-Im Bank`s $425 million limited recourse project financing.
Fluor Daniel, the primary contractor, will provide engineering, procurement and construction services. In addition to mining machinery and equipment provided by Caterpillar Americas Co., Peoria, IL, the project involves numerous small business suppliers and service contractors in 26 states.
Without Ex-Im Bank support, much of this project would have been lost to foreign competitors, said William D. Trammell, Manager-Project Financing, Fluor Daniel.
The Batu-Hijau project, located in a remote and sparsely populated area of Indonesia, involves construction of port facilities, a power plant, roads, telecommunications facilities, and a mine which includes a concentrator, a crushing station and conveyor systems. The sponsors of the project are Newmont and Sumitomo Corp. of Japan. Production from the mine is expected to average 700,000 tons of copper-gold concentrate per year when completed. The concentrate will be sold through long-term contracts to smelters located primarily in Asia. The deposit is estimated to contain approximately 10.6 billion pounds of copper and 12.1 million ounces of gold in proven and probable reserves.
We were delighted with the speed with which Ex-Im Bank came to the table to fulfill the financing strategy of the sponsors, said Newmont Vice President and Treasurer Patricia A. Flanagan.
Barbara A. O`Boyle, Acting Vice President of Ex-Im Bank`s Project Finance Division, said the transaction is the Division`s first mining project in Asia. We are delighted to open the door for U.S. exporters into another sector of the dynamic Indonesian market, she said. Ex-Im Bank already is providing project financing in Indonesia for the Paiton and Jawa power projects and the Cilicap refinery debottlenecking project.
A syndicate of commercial bank lenders led by Chase Manhattan Bank, New York, NY, will provide a $425 million construction loan for the Batu-Hijau project. At project completion, Ex-Im Bank will replace the commercial bank financing with a $425 million loan. The loan will be repaid in 20 semiannual installments starting six months from operational completion, or June 15, 2001, whichever is earlier. Other lenders to the project include the Export-Import Bank of Japan ($500 million) and Kreditanstalt fur Wiederaufbau, Germany`s export credit agency ($75 million).
Limited recourse project financing is a type of private financing in which repayment is based on project revenues, rather than a guarantee of the debt by the host country government. Demand for this type of financing has increased dramatically in recent years as developing countries seek to build infrastructure without adding to their governments` debt. So far in fiscal 1997, Ex-Im Bank has approved $2.1 billion in project financing and anticipates that as much as $500 million of additional business will be authorized this year.
Ex-Im Bank is an independent federal government agency that supports American jobs by financing U.S. exports around the world. In the past five years Ex-Im Bank has authorized $65.6 billion of financing in over 10,000 transactions. Annually, the Bank sustains an estimated 200,000 U.S. jobs directly, and another one million jobs indirectly.