Japan has extended a US$320mn loan to Chilean copper producer Codelco to secure procurement of molybdenum oxide for Japanese steel companies.

The loan, co-financed by Japanese export credit agency JBIC (US$224mn), and the Bank of Tokyo Mitsubishi (US$96mn), will be used to build a new refinery plant to produce molybdenum destined for the Japanese market.

It will ensure stable procurement of molybdenum oxide, a copper by-product used to enhance the strength and heat resistance of steel, for Japanese companies including JFE Steel Corporation, Nippon Steel Corporation, Sumitomo Metal Industries, Kobe Steel, Nisshin Steel, Nippon Steel and Sumikin Stainless Steel Corporation, Nippon Yakin Kogyo, Daido Steel, and Hitachi Metals. Each of them will sign a long-term offtake contract with Codelco.

According to JBIC, the Chilean firm has provided Japan with molybdenum oxide since the early 1980s, but supply has been affected by growing demand from emerging countries in recent years.

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