Australia’s export credit agency, Export Finance and Insurance Corporation, has provided a $50 million direct loan to Orica Limited to assist with the construction of an industrial grade ammonium nitrate plant in Indonesia.
As a leading supplier of explosive-related mining services around the world, one of Orica’s main activities is the manufacture and sale of industrial grade ammonium nitrate, a key ingredient in mining explosives.
Demand for ammonium nitrate is driven by the mining industry and Orica currently operates seven plants worldwide.
Indonesia’s large and growing mining sector makes it a strategically important market for Orica. To take advantage of opportunities there, Orica is investing in an ammonium nitrate plant in Bontang, East Kalimantan with PT Kaltim Nitrate Indonesia at a cost of up to US$550 million. The plant is expected to produce 300,000 tonnes of ammonium nitrate each year.
To better match its investment in the plant Orica sought longer-term finance than the commercial bank market could provide. As a result, Orica turned to export credit agencies, including EFIC, for the long-term finance it needed.
EFIC was able to provide a 10-year loan.
“At a time when the commercial market has limited appetite for longer tenor financing, export credit agencies like EFIC were able to meet our particular financing needs in a way that the commercial banks alone could not,” said Orica’s Director of Finance, Noel Meehan.
“Working with EFIC has been a very positive experience – they were very responsive to our timing and commercial requirements and helped us to find a financing solution that suits us both.
“As this project shows, one of EFIC’s strengths is its ability to help make large overseas projects happen by working alongside a range of other financial institutions, both government and private sector,” said EFIC’s Executive Director, Origination and Portfolio Management Peter Field.
Export Finance and Insurance Corporation
Ph: 02 9201 2276