(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.
Japan
JBIC signs credit line of up to US$3 billion for Adnoc
(The Asset, Hong Kong, 10 July 2024) Japan Bank for International Cooperation (JBIC) has signed a general agreement with Abu Dhabi National Oil Company (Adnoc) to provide a credit line of up to US$3 billion. The Japanese export credit agency will contribute US$$1.8 billion. The proceeds will fund projects related to decarbonization and energy transition to be implemented by Adnoc or its subsidiaries in the United Arab Emirates or internationally. Adnoc, an energy company wholly owned by the Emirate of Abu Dhabi, aims to achieve net zero by 2045. It promotes renewable energy, hydrogen and ammonia as fuel sources, carbon capture and storage (CCS), and other green energy initiatives. According to JBIC, Abu Dhabi has been a stable and important supplier of crude oil to Japan for more than 40 years, and as such, is a strategic partner for Japan’s energy resource strategy. In addition, Abu Dhabi has high potential in the field of decarbonization and energy transition as it has abundant resources for renewable energy and subterranean structures suitable for CCS.
JBIC fires up US$1bn loan for Australian LNG project
(Global Trade Review, London, 4 June 2024) Perth-headquartered Woodside Energy has secured a US$1.45bn loan package from Japan’s export credit agency and a group of private lenders, backing an LNG development off the Australian coast. As part of the deal, the Japan Bank for International Cooperation (JBIC) is providing a US$1bn loan that Woodside will use for its Scarborough Energy Project, which is slated to start delivering LNG by 2026. The facility will ensure a long-term and stable supply of LNG for Japan, says JBIC in a statement.
World Bank Group, NEXI to Bolster Investments in Developing Countries
(IFC, Washington, 28 May 2024) The World Bank Group’s Multilateral Investment Guarantee Agency (MIGA) and International Finance Corporation (IFC) today signed three-year cooperation agreements with Nippon Export and Investment Insurance (NEXI), the official export credit agency of Japan, to promote foreign direct investment in developing countries. The agreements underscore the organizations’ shared commitment to expanding investment opportunities and mitigating risks in developing countries. The cooperation between MIGA and NEXI builds on a 2020 agreement aimed at facilitating Japanese investment in developing countries through co-insurance and reinsurance instruments.
REC Ltd Secures Japanese Green Loan from Italy’s SACE
(GK Today, India, 27 April 2024) REC Ltd, a Maharatna Central Public Sector Enterprise (CPSE) and leading Non-Banking Financial Company (NBFC) under the Ministry of Power, Government of India, has successfully availed a green loan of Japanese Yen (JPY) 60.536 billion (approximately Rs 3,200 crore) to finance eligible green projects in India. The green loan facility benefits from an 80% guarantee by SACE under their innovative Push Strategy programme. It makes SACE’s first JPY-denominated loan transaction and first green loan in India. The loan saw participation from banks across Asia, US and Europe, including Crédit Agricole CIB, Bank of America, Citibank, KfW IPEX-Bank and Sumitomo Mitsui Banking Corporation as Mandated Lead Arrangers. Credit Agricole CIB is acting as the ECA Coordinator, Green Loan Coordinator, Documentation Bank and Facility Agent.
Trafigura bags US$560mn ECA-backed deal to supply gas to Japan
(Global Trade Review, London, 4 April 2024) Global commodity trader Trafigura has secured a US$560mn facility from Japan’s export credit agency and SMBC that will fund the delivery of natural gas to the East Asian country. The transaction, signed on March 27, comprises a US$390mn loan from the Japan Bank for International Cooperation (JBIC) alongside co-financing from SMBC worth approximately US$170mn. The deal, the latest in a spate of export credit agency (ECA)-backed transactions for major commodities traders, will finance the import of liquefied natural gas (LNG) into the Japanese market.
JIBC provides US$3.3 billion to harmful Asian LNG projects
(Friends of the Earth Japan, Tokyo, 26 April 2024) From the straits of the Philippines to the coasts of the United States, Japan’s fossil fuel financing is harming the environment, climate, and communities at a time when the world is reeling from the ever-intensifying heat waves, floods, droughts, and typhoons brought by the climate crisis. While the world must phase out fossil fuels, as affirmed by the outcomes of COP28, Japan continues to funnel billions of dollars to liquefied natural gas (LNG) projects through its public institutions like the Japan Bank for International Cooperation (JBIC). In Southeast Asia alone, JBIC provided USD 3.31 billion to LNG projects that harm communities, derailing the region’s just transition to renewable energy. The Natural Resources Defense Council notes that “Japan stands out as one of the world’s top providers of public finance for gas, and the world’s largest provider of international public finance for LNG export capacity, providing $39.7 billion for projects built from 2012 onwards. Just in the two weeks ahead of Kishida’s meeting with Biden, Japan approved over $2.7 billion in financing for new gas projects, such as the controversial gas field in Australia, Block B gas project in Vietnam, the San Luis Potosi and Salamanca gas plants in Mexico, and financing to import LNG.”
Italian and Japanese ECAs allocate billions for Ukraine
(Interfax & UKRANEWS, Kiev, 19 February 2024) The Italian export credit agency SACE will allocate 1.5 billion euros to support trade and financial operations, in particular, in the field of healthcare and infrastructure. Japan’s NEXI will allocate EUR 1.3 billion to support Japanese investors in Ukraine consisting of two parts: guarantees for Japanese investors, as well as a credit line for the export of Japanese goods for the implementation of Ukraine’s reconstruction projects. The Ukrainian News Agency earlier reported that Ukraine’s reconstruction needs already amount to almost USD 486 billion.
JBIC financing for two gas power projects in Mexico would violate the G7 agreement
(JACSES, Tokyo, 30 January 2024) The Japan Center for a Sustainable Environment and Society notes that two gas-fired combined cycle power projects in Mexico are now under consideration for financing by the Japan Bank for International Cooperation (JBIC). One is in San Luis Potosi and the other one in Salamanca. When Japanese NGOs asked the consistency of these two projects with the agreement reached at G7 Elmau Summit to end new public financing for fossil fuel energy, JBIC did not provide specific rationale on its judgment that the policy of the Mexican government is consistent with the 1.5 degree target. If JBIC provides support, it is highly likely that it constitutes a violation of the G7 agreement, thus JBIC should stop consideration for financing. JBIC placed these two projects on its list of projects under consideration for financing on November 2, 2023.
Texas Gulf Coast communities speak out against Japanese ECA backed LNG development
(Oil Change International, Washington, 28 November 2023) Representatives of Friends of the Earth Japan & Oil Change International traveled to Texas & Louisiana in early November for a week-long tour, organized by Texas Campaign for the Environment, to witness & learn about the impacts of LNG development on local communities. The Japanese government is the largest global financier of LNG export terminals, providing 50% of international public finance, or $39.7 billion, for LNG export capacity built from 2012-2022, as well as projects under construction or expected to be built by 2026. In the Gulf South, Japan’s export credit agencies, the Japan Bank for International Cooperation and Nippon Export and Investment Insurance, provided $3.7 billion in financing for the Freeport LNG terminal & $4.5 billion for Cameron LNG in 2014. The Japanese & Korean governments are also rolling out plans to develop new ammonia & hydrogen production & export facilities globally including in Lake Charles & Corpus Christi. These projects would worsen the climate crisis & subject communities to further exploitation & harm. The proliferation of LNG projects & petrochemical facilities, coupled with regulatory failure to enforce environmental standards, have allowed the fossil fuel industry to severely pollute the air & water without consequence. Residents of Port Arthur & other communities on the Gulf Coast suffer from high rates of cancer, respiratory infections & migraines. Water security is also an issue. Industrial water use is prioritized over the needs of local residents. Despite the serious health and safety concerns with the Freeport LNG terminal, Japan’s export credit insurance agency NEXI is planning to support the expansion of the Cameron LNG terminal located on Calcasieu Lake in Louisiana.
