(Mining.COM, Toronto, 21 November 2024) Troilus Gold (TSX: TLG) continues to receive the financial backing of global export credit agencies (ECAs), this time from Export Development Canada (EDC), to support the development of its copper-gold project in Quebec. On Thursday, the company announced a new letter of intent (LOI) from EDC for up to $300 million. This, together with the LOIs recently signed with the export credit agencies of Germany, Finland and Sweden, brings the total potential funding to $1.3 billion.
Germany
European ECAs reach out to Indian companies, banks
(Economic Times, Delhi, 24 October 2024) The Export Credit Agencies (ECA) of Germany (Euler Hermes), Austria (OeKB) and Switzerland (Swiss Export Risk Insurance SERV), together with the Swiss Business Hub India and Switzerland Global Enterprise, on Thursday reached out to Indian companies, banks and government institutions for opportunities for investment and cooperation.
Deutsche Bank & ECAs finance $3.1 billion Indonesian fossil fuel project
(Risk Net, London, 26 September 2024) Last year, Deutsche Bank was selected as sole hedge co-ordinator and hedge arranger for a landmark $3.1 billion project-financing deal in Indonesia. Deutsche Bank declined to say who the client was, only that it was a processing and petrochemical company that wanted to modernise and expand an oil and gas refinery in the country. The project is part of Jakarta’s strategy for reforming the country’s oil and gas sector. Indonesia’s economy remains heavily dependent on oil and gas, and yet for several years has imported far more of the commodity than it has produced. The $3.1 billion project-financing deal was one of the largest ever done in Indonesia, involving three export credit agencies and 22 commercial lenders.
Critical Minerals Security Partnership may not be enough for Australia
(Australian Strategic Policy Institute, Canberra, 25 September 2024) Fourteen countries this week took what they intended to be a big step in countering China’s dominance of critical minerals supply. But it’s unclear whether the initiative will restore competitiveness of Australian production and investment in the face of massive subsidies offered by China and, in response, the United States. The Minerals Security Partnership, a coalition of 14 countries, including the G7, Australia, India, South Korea, and European Union members, announced plans for a finance network to boost investment in critical metals. The initiative will tap into domestic export credit agencies and development finance institutions to attract private sector capital to produce, extract, process and recycle critical minerals, especially in riskier markets. The partnership seeks to lower investment risks and drive global supply chain resilience by providing guarantees and concessional financing. Australia’s economic prosperity and national security are intrinsically linked to the exploitation of its abundant resources, notably critical minerals. These minerals are the new oil. They’re the building blocks for everything from emerging technology to energy transition. Although Australia has vast reserves, its critical mineral mining and processing are still threatened by the intense subsidy war between the US and China.
Arab oil and gas sector attracted investments worth $406bn over 22 years
(Arab News, Jeddah, 7 August 2024) RIYADH: Arab nations have attracted $406 billion in investments from 356 foreign and regional companies in the oil and gas sector over the past 22 years, according to recent data from the Arab Investment and Export Credit Guarantee Corp., also known as Dhaman. During this period, which spans from January 2003 to May 2024, the region has seen the execution of 610 projects. The US has emerged as the leading investor, with 85 projects representing approximately 14% of the total. In terms of investment costs, Russia has taken the lead, contributing $61.5 billion, which constitutes about 15.2% of the total investment. The Middle East remains the largest holder of proven oil reserves globally. As of 2023, it accounts for approximately 55.5% of the world’s known oil reserves, according to the global statistics platform Statista. However, the region’s share has declined from nearly 63% in 1960 to less than 56% by 2020. Future projections indicate a continued decline in proven oil reserves in the Arab region. In other news Saudi Arabia is investing in a gigantic Red Sea tourism alternative to oil, with a $3.8bn loan raised by the Saudi government-owned Red Sea Development Company. Due for completion in 2030, the so-called ‘giga-project’ will spread across 22 of the 90 islands that form an archipelago off Saudi Arabia’s west coast, as well as inland, and offer 50 hotels with 8,000 hotel rooms. The first ECA green loan in Saudi Arabia was a $258m loan last year that German credit insurer Euler Hermes structured alongside Crédit Agricole CIB and HSBC. The proceeds were for the Ministry of Finance to acquire 842 buses for the new Riyadh public transport network from Daimler’s bus subsidiary in Germany. Another ECA loan covers the purchase of 50 electric vertical take-off and landing (eVTOL) jets from Lilium GmbH under a Saudi Export Import Bank export credit insurance policy supporting Saudi non-oil trade.
US & EU differ over the future of fossil fuel subsidies in OECD talks
(Financial Times, London, 26 March 2024) Second round of discussions ends without significant progress on export credit policies. The world’s richest countries are at odds over ending subsidies for oil and gas development as the US and EU differed over the extent of a ban, according to people familiar with the talks. OECD countries have held a second round of closed-door talks in Paris to debate proposals by the EU and UK to cut off most export credit agency loans and guarantees for oil, gas and coal mining projects, which are the biggest source of international public finance for the sector. This would follow an agreement in 2021 to stop providing such support for coal-fired power. A person familiar with the talks said the US was still assessing the EU’s proposals, with discussions scheduled to continue in June and November. The US Treasury declined to comment. The US, Canada, France, Germany and the UK were among countries that agreed around the UN COP26 climate summit in Glasgow in 2021 to align their public finance institutions with a Paris agreement goal to limit global warming to ideally 1.5C above pre-industrial levels. But this could affect the role of Exim, the US’s credit export agency, which will need to secure fresh funding from the US Congress in 2026, opening it to political scrutiny from Republican lawmakers who are resistant to cutting off finance for oil and gas, and progressive lawmakers critical of the bank’s climate record.
ECAs pile in on European battery gigafactories facility
(Global Trade Review, London, 14 February 2024) Three export credit agencies have thrown their support behind a €4.4bn debt raising for a company building lithium battery gigafactories across Europe, the latest in a string of deals intended to beef up the continent’s renewable energy supply chains. France-based Automotive Cells Company (ACC) says Italian export credit agency (ECA) Sace, Germany’s Euler Hermes and France’s bpifrance have all agreed to support financing provided by a pool of commercial lenders.
Germany offers cheaper export credit support in new climate policy
(Global Trade Review, London, 25 October 2023) Germany has become the latest country to offer more attractive export credit guarantee pricing and conditions for climate-friendly transactions. In a policy scheduled to take effect from November 1, applicants for export credit support from the energy, transport and heavy industry sectors will be graded based on the alignment of their transactions to the Paris Agreement target of keeping global warming under 1.5 degrees Celsius. Export credit guarantees, investment guarantees and untied loans will be cheaper for transactions that support the 1.5 degrees goal. The down payment on local costs will also be waived, government coverage will be boosted from 95% to 98%, and German content will only need to form 30% of the overall transaction. Additionally, a surcharge on local currencies will be removed, meaning the premium paid will remain the same regardless of the currency used. Current pricing and terms will apply to transactions classified as compliant with the global warming limitation target. Those that are not aligned will be refused cover. Overall, the policy aims to make German export credit cover with developed countries climate-neutral by 2045 and with developing countries by 2050. Euler Hermes administers the export credit policy, overseen by Berlin’s climate and economy ministry.
Egypt in talks to secure $2.1 bln loan for 2nd high-speed rail line
(Zawya, Dubai, 11 October 2023) The Egyptian government is currently negotiating with several international financing institutions to secure a $2.1 billion concessional loan for the implementation of the second high-speed rail line, two government officials told Asharq Business. The potential lenders include, the Italian Export Credit Agency and the German state-owned KfW Bank, one source noted. On a related note, five international firms are competing for a deal on supplying 21 trains for the first phase of Alexandria metro project at an estimated cost of up to $400 million, the sources said. The companies are the French Alstom, South Korea’s Hyundai, Spanish CAF, China’s CRRC, and Russian-based Transmashholding.
Who are the major financiers of Brazilian FPSOs?
(BN Americas, Santiago, 7 July 2023) Although the energy transition and ESG issues are gaining traction, many banks and credit export entities keep financing oil and gas undertakings, such as floating production storage and offloading units (FPSOs) ordered by Brazil’s federal oil firm Petrobras. FPSOs are used for the production and processing of hydrocarbons, and for the storage of oil. This situation will not change much as demand for hydrocarbons will remain and a significant portion of oil companies’ decarbonization capital expenses comes from oil and gas revenues. Furthermore, the geopolitical context, with the war in Ukraine and gas supply in Europe, has reignited energy security concerns. Meanwhile, financial products like green and sustainability linked bonds, developed to support companies that do not operate in totally green areas, do not yield higher returns. According to Daniela Davila, a partner at Vieira Rezende law firm, new FPSOs are mainly financed by Asian financial institutions (banks and leasing houses) and export credit agencies from countries such as China, Japan, South Korea and Singapore, where shipyards that build the hulls/modules of the units are located. Some banks, such as BNP Paribas and HSBC, have announced their exit from this industry, while New York-based Nordea has shown less appetite for oil and gas. On the other hand, traditional offshore players like Norway’s DNB or Germany’s Deutsche Bank continue to support the sector. CNOOC and CNODC are also Petrobras’ partners in the Mero field, which will receive the Sepetiba unit this year and Alexandre de Gusmão in 2025. Banks from Japan, like Sumitomo Mitsui Banking Corporation and Japan Bank for International Corporation, often work with Japan’s Modec, which signed several charter contracts of FPSOs under construction with Petrobras and one for Equinor’s Bacalhau field. Among other financial institutions with tradition in FPSO financing are the UK’s Standard Chartered Bank; DBS Bank, United Overseas Bank, Clifford Capital and Oversea-Chinese Banking Corporation from Singapore; China Investment Corporation; Korea Development Bank (South Korea); Maybank and CIMB (Malaysia); Société Générale and Natixis (France); and Mitsubishi UFJ Financial Group (Japan). Export credit agencies in the sector include China’s Sinosure, Nippon Export and Investment Insurance (Japan) and Sace (Italy).
