China CITIC Bank Corporation contributes to RMB 6.88 billion syndicated loan for the Xiamen Xiangyu Integrated Stainless Steel Plant Project in South Sulawesi

Eight state-owned Chinese banks contribute to RMB 6.88 billion syndicated loan for Xiamen Xiangyu Integrated Stainless Steel Plant Project in Indonesia 2019 In December 2019, PT Obsidian Stainless Steel — a special purpose vehicle and joint venture between China’s state-owned Xiamen Xiangyu Co., Ltd. (51% equity stake) and Jiangsu Delong Nickel Industry Co., Ltd. (49% equity stake) that was legally incorporated in Indonesia — signed an RMB 6.88 billion ($1.06 billion) facility agreement with a group of Chinese state-owned banks for the Xiamen Xiangyu Integrated Stainless Steel Plant Project.

Participants in the loan syndicate included China Development Bank, China Construction Bank, ICBC, Agricultural Bank of China, CITIC Bank, China Merchants Bank, Bank of China, and Tai Fung Bank.

Bank of China served as the mandated lead arranger, financial adviser, onshore and offshore facility agent, and security agent. The facility had a 6.75-year (81-month) maturity.

It was provided in three tranches: an RMB-denominated, Sinosure-backed tranche worth $886 million for the ‘offshore’ lenders that carried an interest rate of 5-year LPR plus an unspecified margin; a dual currency, Ping An Insurance-backed tranche for four ‘onshore’ lenders (Tai Fung Bank, Bank of China Jakarta, Bank of China Singapore and ICBC Indonesia) that carried an interest rate of 5-year LPR plus an unspecified margin; and a dual currency, Ping An Insurance-backed tranche for four ‘onshore’ lenders (Tai Fung Bank, Bank of China Jakarta, Bank of China Singapore and ICBC Indonesia) that carried an interest rate of 6-month LIBOR plus an unspecified margin.

The total cost of the Xiamen Xiangyu Integrated Stainless Steel Plant Project is RMB 13.4 billion and it is being financed according to a debt-to-equity ratio of 51:49.

The purpose of the project is to construct a nickel mine, a 2.5 million metric tons per year stainless steel smelter, a 1,440MW (8X135MW) coal-fired power plant, and a 40 million metric tons multi-functional port in Virtue Dragon Industrial Park in South Sulawesi (exact locational coordinates: -3.827910421, 122.4682708).

Zhongtian Guoneng Power Engineering and Suzhou Thvow Technology. Co., Ltd. are the EPC contractors responsible for project implementation. In September 2017, China’s National Development and Reform Commission approved the project. A contract to build the power plant was also awarded to Zhongtian Guoneng Power Engineering in September 2017.

The contract specified an implementation period from October 2017 to July 31, 2019. Construction of the smelter began on or around October 2019. In April 2020, the smelter's first production line began to operate. Unit 1 was commissioned in April 2021. Unit 8 began operating in June 2021. Unit 9 began operating in January 2022.

However, this project has also become a source of local protest and controversy.

Residents living near the Delong Nickel Smelter began to complain about pollution from coal dust almost immediately after the power station began operations.

The coal dust reportedly blows up to 3 kilometers away from the power station, coating surfaces both indoors and outdoors. Children in the area have also reportedly begun coughing and having difficulty breathing.

Records ID #110688, #92497 and #110274 capture the estimated financial commitments of Bank of China's main branch, Bank of China (Jakarta Branch) and Bank of China (Singapore Branch); Record ID #100758 captures the estimated financial commitment of China Development Bank; Records ID #100759 and #110687 capture the estimated financial commitments of ICBC and ICBC Indonesia; Record ID #100760 captures the estimated financial commitment of China Construction Bank; Record ID #100761 captures the estimated financial commitment of Agricultural Bank of China; Record ID #100762 captures the estimated financial commitment of China CITIC Bank Corporation; and Record ID #100763 captures the estimated financial commitment of China Merchants Bank Co., Ltd.; and Record ID #100764 captures the estimated financial commitment of Tai Fung Bank Limited.