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The Japan Bank for International Cooperation (JBIC) has signed a loan agreement totalling up to US$150mn with Brazil’s Companhia Vale do Rio Doce (CVRD), the world’s largest iron ore supplier. The loan is signed in cooperation with Japanese private banks.

Proceeds will be used to improve CVRD-owned rail and port facilities in order to increase the capacity and efficiency of iron ore transportation. CVRD is planning to increase production in its iron ore mine in the state of Minas Gerais in southern Brazil.

JBIC’s loan is provided under Japan and Brazil’s Joint Program for Revitalisation of Economic Relations. Announced in May 2005, the programme set out increased cooperation between Japan and Brazil in the area of energy and other resources.

Worldwide, the price of iron ore soared by an unprecedented 71.5% in FY 2005. Japan is almost entirely reliant on imports for its iron ore supply – 15% of its imports come from CVRD. An increase in CVRD’s overall iron ore supply through transport infrastructure development will help Japan secure a stable supply of iron ore.

JBIC has held annual consultative meetings with CVRD since signing a cooperation agreement in October 2004. In August 2005, JBIC signed a loan agreement with Alum­nio Brasileiro (Albras), a subsidiary of CVRD, to secure a stable supply of aluminium ingot to Japan.