The Inter-American Development Bank today closed its first Yen denominated transaction and the first one entirely syndicated in the Japanese market, providing a JPY19.6 billion (approximately US$200 million) A/B loan to Usinas Siderúrgicas de Minas Gerais S.A. (USIMINAS) through a consortium of Japanese banks led by Sumitomo Mitsui Banking Corporation.
Usiminas is a major Brazilian steel producer based in Belo Horizonte, Brazil that produces slabs, hot rolled sheets, cold rolled sheets, heavy plates and galvanized steel, and that supplies primarily the local auto industry. Usiminas’ main shareholders is Nippon Usiminas Company Limited (a joint-venture of Japanese companies and majority-owned by Nippon Steel Corporation).
Usiminas plans to use the funds to finance investments in a new power cogeneration plant and related equipment in its new Santana do Paraiso plant in the Brazilian southeastern state of Minas Gerais. The new plant will produce electricity using excess heat and gases originated from the production of the steel, allowing the Belo Horizonte-based company to cut its production costs and reduce carbon emissions.
The financing is being made on a corporate basis via an 8.5-year A-Loan of JPY2.1 billion and 6.5-year B-Loan of JPY 17.5 billion. This will be IDB’s first loan in Yen and will be the first time that the IDB has accessed a purely Japanese group of banks for the B loan.
The transaction will also benefit from the participation of IDB’s Sustainable Energy and Climate Change Initiative team (SECCI) who will assist in the evaluation of the energy efficiency characteristics of the potential suppliers’ proposals.
This is the first phase of a two phase project. After the second phase the new cogeneration plant will supply all of the energy needs for the new Santana do Paraíso plant. These investments will also contribute to the site’s 99% gas recovery and 98% water recycling, setting a new benchmark for these aspects for the industry in Brazil.
These investments promote the Bank’s green energy mandate by contributing to the reduction of emissions, eliminating the requirement to purchase energy from the grid for the new plant, or, alternatively, the requirement to build independent gas/coal-fired power plants in the region.
- Paul Constance