A Japanese insurer has agreed to guarantee loans for the Vietnamese mining group Vinacomin to produce alumina, in exchange for a regular supply of the substance.
Japan-based Citibank, the creditor, said an access to the supply of alumina played an important role in the decision of the Nippon Export and Investment Insurance company (NEXI) to guarantee the loan.
Yumoto Yohei, the bank's director of Export and Agency Finance, said the loan agreement will assure a stable supply of the substance for the Japanese trading company Marubeni, allowing it to produce aluminium, which many industries use widely
State-run Vinacomin inked a deal on November 15 with Citibank Vietnam, a branch of Citibank, to borrow US$300 million to step up its Tan Rai plant's operation, currently in the pilot stage.
The deal constitutes the largest-ever loan to be taken out by the mining group, thesaigontimes.vn cited Citibank Vietnam as saying.
The loan is due in 13 years and has been jointly guaranteed by Vietnam's Finance Ministry and NEXI.
Marubeni had negotiated with Vinacomin about exchanges involving alumina since 2011, local news media reported.
China-based Chalco, the world's second-largest aluminium producer, has also been eyeing Vinacomin's supply of the substance since that time.
The $700 million plant, located in the Central Highlands province of Lam Dong, is set to officially start alumina production by the start of next year with a targeted capacity of 600,000 tons per year.
Operations at Vietnam's first bauxite mining and alumina producing plant has been postponed three times since the second quarter of last year.
Vinacomin is developing another alumina plant in the Central Highlands' Dak Nong province, which is expected to launch operations in 2014.
Like us on Facebook and scroll down to share your comment