Export credit agencies from Japan, Canada and Korea have agreed to finance the expansion of a copper mine and refinery in Chile, lending a total of US$2.5bn alongside a consortium of global banks.

The project financing, finalised on February 16, funds the development of a new mining area and the construction of a copper ore processing plant at the Centinela site in Chile’s Antofagasta region.

The expansion is set to boost output by 140,000 tonnes annually and will elevate the Centinela project into the top 15 copper mines in the world by output once it is completed in 2027, says one of its backers, Marubeni Corporation.

The Japanese Bank for International Corporation (JBIC), Export Development Canada and the Export-Import Bank of Korea are participating ECAs, alongside a group of commercial lenders including Crédit Agricole, KfW Ipex-Bank, Natixis, SMBC and Société Générale.

GTR understands the commercial banks are altogether committing US$750mn, including US$500mn under an ECA-backed tranche. This portion of the senior bank facilities is being covered by a 90% guarantee from Germany’s Euler Hermes.

Sweden’s ECA, EKN, said in July 2023 it had been conducting environmental and social due diligence for the mine expansion and was weighing a raw material guarantee for the Centinela mine project.

However, an EKN spokesperson confirms to GTR that the agency is not involved in the latest deal as there was no offtake agreement with a Swedish buyer.

JBIC is contributing US$950mn towards the overall project financing in a bid to secure long-term supplies of copper concentrate, with Japanese firms offtaking a portion of the increased production.

The ECA-backed transaction also boosts the development of a foreign mine a Japanese company holds an interest in, JBIC says.

“Demand for copper is expected to increase globally as an indispensable metal for electric vehicles as well as renewable energy facilities and equipment,” JBIC says. “Since Japan relies solely on imports for copper concentrates, it is an urgent challenge to secure a long-term, stable supply.”

Run as a joint venture between UK-headquartered Antofagasta and Japanese conglomerate Marubeni, the mine first commenced operations in 2001. In all, the expansion is forecast to cost US$4.4bn.

According to Marubeni, the Centinela mine is dedicated to producing “sustainable copper”.

In late 2022, the mine switched to only using seawater and stopped extracting groundwater for its operations, while the company says 100% of the project’s power is derived from renewable sources.

Copper is set to play a vital role in the energy transition and global manufacturing demand is set to boom in the coming decades.

However in September, McKinsey warned investment in energy transition metals and minerals is lagging well behind the levels needed. As a result, demand for some materials, such as copper, lithium and boron, is likely to far outstrip supply within the next seven years, it said.