Aluminum Corporation of China Overseas Holdings Limited provides $200 million working capital loan to support Toromocho Copper Mine Project in April 2014

Aluminum Corporation of China Overseas Holdings Limited provides $200 million working capital loan to support Toromocho Copper Mine Project in April 2014 In May 2003, Chinalco Mining Corporation International’s subsidiary — Minera Chinalco Peru S.A. (MCP) — was awarded by the Peruvian government the right to develop and extract ore resources in the district of Morococha, Yauli Province, the Republic of Peru through a public bidding (the “Toromocho Copper Mine Project”).

In June 2003, Chinalco Mining Corporation International — a Cayman Islands-registered subsidiary of Aluminum Corporation of China (Chinalco), a Chinese state-owned enterprise (SOE) — signed an assignment agreement under which it was entitled to exercise a purchase option of the mining concessions during a period that could be extended to June 2008.

In May 2008, Chinalco Mining Corporation International exercised its right and signed with Activos Mineros (an entity incorporated by the Peruvian government), in the name of the Peruvian government, the Mining Concessions Transference Agreement of the Toromocho Copper Mine Project (the “Assignment Agreement”).

Under the Assignment Agreement, Activos Mineros transferred to Chinalco Mining Corporation International the title of certain mining concessions, their surface property, buildings, and water usage rights pertaining to the Toromocho Copper Mine Project.

In parallel, between June and August 2007, Chinalco acquired 100% of the shares in the Toromocho Copper Mine Project for CAD 840 million ($789 million) . Canada-based Peru Copper Inc. originally owned 91% of shares, and the remaining 9% were owned by unspecified firms.

Shortly thereafter, all of the mining concessions in Toromocho were transferred to Chinalco's wholly-owned subsidiary, Minera Chinalco Peru S.A. (Chinalco Peru).

Then, on December 1, 2010, China Eximbank and Minera Chinalco Perú S.A. ('Chinalco Peru') — a special purpose vehicle and wholly owned subsidiary of Aluminum Corporation of China Limited (Chinalco) — signed a $2 billion overseas investment loan to finance capital expenditures related to the Toromocho Copper Mine Project (captured via Record ID#36064).

However, its other borrowing terms are unknown.

The parent company, Chinalco, entered into a guarantee agreement with China Eximbank for the entire outstanding amount, accrued interest, penalties, and other expenses arising from the loan from China Eximbank. Chinalco was also required to pay a 1% commission for each drawdown.

This overseas investment loan facility is secured by (i.e., collateralized against) all property, plant, and equipment pertaining to the Toromocho Project if Chinalco’s credibility or financial status deteriorates.

In March 2013, China Eximbank and Chinalco Peru signed a supplementary overseas investment loan (facility) agreement worth $419 million for additional capital expenditures related to the Toromocho Copper Mine Project (captured via Record ID#56098). The loan carried an interest rate of 6-month LIBOR plus 350 basis points.

The other borrowing terms are unknown.

Chinalco Peru was required to pay a 1% commission fee for each drawdown, and this second facility was also guaranteed by the parent company of Chinalco.

The supplementary loan agreement was also collateralized against all property, plant, and equipment pertaining to the Toromocho Mining Project if Chinalco’s credibility or financial status deteriorates. As of 2016, the entirety of the loan facility was drawn down.

Then, in April 2014, Aluminum Corporation of China Overseas Holdings Limited provided a $200 million loan to Chinalco Mining Corporation International (中鋁礦業國際) — a Cayman Islands-registered company and wholly-owned subsidiary of Aluminum Corporation of China (Chinalco) — for general corporate purposes, including but not limited to funding the working capital for the Toromocho Project.

The loan’s final maturity date was June 30, 2016.

In November 2014, Aluminum Corporation of China Overseas Holdings Limited provided another ($350 million) loan to Chinalco Mining Corporation International (中鋁礦業國際) for general corporate purposes, including but not limited to funding the working capital for the Toromocho Project.

Total outstanding debt under the $200 million loan and $350 million loan issued in 2014 was $50 million as of June 30, 2016.

Then, in January 2015, Aluminum Corporation of China Overseas Holdings Limited provided a $1.2 billion loan to Chinalco Mining Corporation International (中鋁礦業國際) for general corporate purposes, including but not limited to funding the working capital for the Toromocho Project. Total outstanding debt under the $1.2 billion loan issued in 2015 was $630 million as of June 30, 2016.

The Toromocho Project is located in central Peru in the core of the Morococha mining district.

It is one of the largest copper mines in the world, and the first greenfield copper mine developed by a Chinese corporation abroad. Upon completion, the project was expected to boost overall copper exports from Peru by 25%.

CCCC Del Peru SAC (subsidiary of China Communications Construction Company, Ltd.) was the contractor responsible for project implementation.

The Environmental Impact Assessment of the Toromocho Copper Mine Project was approved by the Peruvian government in December 2010. Chinalco Peru obtained the construction permit and began work in July 2011. The mines were officially commissioned on December 10, 2013.

However, three months after its inauguration, the operation of the mine was suspended by Peru’s Environment Assessment and Enforcement Agency (OEFA) after it discovered illegal discharge of acid effluents in two nearby lakes.

Chinalco quickly resolved this matter by building improved drainage and explained the incident as a result of unusually heavy rainfall, which caused unexpected acid runoffs. The Toromocho Copper Mine Project began commercial production on June 17, 2015.

The Toromocho Project has implemented environmental measures, including constructing the Kingsmill Tunnel Water Treatment Plant in 2011 to treat wastewater and improve water quality in the Yauli River. Following an acid runoff incident in 2014, Chinalco upgraded the drainage system to prevent future occurrences.

Despite these efforts, concerns persist, such as high levels of silver in children’s blood reported in 2019, indicating potential gaps in environmental risk mitigation. Monitoring and further action are needed to address these ongoing challenges.

To mitigate social risks, Chinalco funded the resettlement of over 4,000 residents to Nueva Morococha, providing improved infrastructure and public services.

However, locals have criticized poor housing conditions, high unemployment, and a lack of economic opportunities in the new settlement.

The shift to capital-intensive open-pit mining displaced many unskilled local workers who previously relied on underground mining, leaving them with precarious, short-term jobs.

While the Dialogue Table was introduced to address community grievances, it has been perceived as ineffective, further straining relations between Chinalco and the affected communities.

Governance measures included the approval of an Environmental Impact Assessment (EIA) in 2010 and its subsequent updates. However, the process lacked transparency and meaningful community participation, sparking criticism.

A significant source of contention is Chinalco's claim to 34 hectares of land in Antigua Morococha, which locals argue was unjustly transferred.

Efforts to challenge the claim in court have failed, exacerbating tensions and highlighting the need for more equitable and transparent governance practices to ensure that local communities benefit from the project.