Completed Mixed AidData Chinese Aid

Bank of China contributes $90 million to $545 million syndicated loan for Phase 1 of Indonesia Lithium (Morowali Industrial Park) Project (Linked to Record ID#96396)

$90M USD

Funder	Bank of China (BOC)
Recipient Organization	PT Dexin Steel Indonesia
Country	Indonesia
Start Date	Dec 24, 2021
End Date	Mar 09, 2033
Duration	4,093 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`96372`

Grant Description

BOC and ICBC contributions to 545 million USD syndicated loan for Phase 1 of Indonesia Lithium (Morowali Industrial Park) Project On December 24, 2021, PT Dexin Steel Indonesia (德信钢铁 or 德信钢铁有限公司) — a special purpose vehicle and joint venture between Delong Steel Singapore Projects Pte Ltd [45% ownership stake], Shanghai Decent Investment Group Co Ltd [43% ownership stake], and Indonesia Morowali Industrial Park PT [12% ownership stake] — signed a $545 million syndicated loan agreement with a group of Chinese and non-Chinese lenders for Phase 1 of the Indonesia Lithium (Morowali Industrial Park) Project.

Participants in the loan syndicate included Bank of China ($90 million), the Industrial and Commercial Bank of China ($90 million), and China Minsheng Bank ($150 million).

The loan consists of two tranches (facilities): a $500 million amortizing term loan tranche with a 5-year maturity and a $45 million revolving credit facility tranche with a 5-year maturity.

📋 Loan / Grant Terms

💰 Loan Amountare unknown

However, it is known that the facilities are ‘fully secured by the project with customary [project finance] securities.' It is additionally known that Delong Steel issued a corporate repayment guarantee worth 72.22% of the tranches (facilities) and Fujian Tsingtuo Nickel Industry Co. Ltd. issued a corporate repayment guarantee worth 27.78% of the tranches (facilities).

Bank of China's contribution is captured via Record ID#96372 and ICBC's contribution is captured via Record ID#96396.

The purpose of the project is to construct a 3.5 million tons-per-annum (mtpa) integrated steel plant — that operates a blast furnace (BF) and basic oxygen furnace (BOF) — in Morowali Industrial Park (IMIP) in Central Sulawesi. The first blast furnace was put into operation on March 30, 2020.

The second blast furnace was scheduled to be put into operation in May 2020, but due to the Covid-19 pandemic it was ultimately put into operation on February 3, 2021.

With the second blast furnace running, PT Dexin Steel Indonesia has an overall crude steel production capacity of 3.5 million mt/year, feeding re-rolling lines for rebar and wire rod, with capacities of 1 million mt/year and 500,000 mt/year, respectively.

Also, with the second blast furnace online, the steelmaker boasts production of products such as slab, billet, rebar, and wire rod.

The third blast furnace was originally scheduled to be put into operation in December 2022, but in May 2023 was expected to begin operations in August 2023.

Once it is running, the steel plant will boost its total output capacity to an amount that was originally announced to be 6 million mt/year, but has been revised to 7 million mt/year.

📋 Staff Comments

As of 2023, Delong Steel Singapore Projects, a subsidiary of Chinese steelmaker Delong Holdings, has a 60% stake in the venture and Hanwa 10%, a Dexin Steel source said. The rest is owned by Shanghai Decent Investment and IMIP in unknown quantities. See: https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/metals/020521-dexin-steel-indonesia-fires-up-second-blast-furnace-at-morowali. Some sources claim that PT Dexin Steel Indonesia is a joint venture of Delong Steel Ltd (65% ownership stake), Tsingshan Group (25% ownership stake) and Hanwa Group (10% ownership stake). Hanwa Group is a Japanese company.
The Chinese project title is 青山德龙印尼德信项目 or 印尼德信钢铁一期350万吨项目 or 德信钢铁在印尼投资的350万吨钢铁冶炼加工项目.
China Minsheng Bank is a private bank.
More research is needed to determine how Phase 3 (the third blast furnace) was financed.
One of the companies reportedly providing a corporate repayment guarantee - Fujian Tsingtuo Nickel Industry Co. Ltd. (福建青拓镍业有限公司) - is a subsidiary of the Tsingshan Holding Group (青山控股集團有限公司 or 青山控股), either directly or indirectly via Shanghai Decent Investment Group Co Ltd. or Tsingtuo Group.
It is possible that that the two entities that provided corporate repayment guarantees provided a 72.22% guarantee to the first loan facility (tranche) and a 27.78% guarantee to the second loan facility (tranche) - instead of Delong Steel guaranteeing 72.22% of both tranches and Fujian Tsingtuo Nickel Industry Co. Ltd. guaranteeing 27.78% of both tranches. This issue warrants further investigation.

📚 Sources & References

Indonesia Lithium Project (Morowali Industrial Park) - Financing
GROUP INTRODUCTION
COMMISSION IMPLEMENTING REGULATION (EU) 2022/433 of 15 March 2022 imposing definitive countervailing duties on imports of stainless steel cold-rolled flat products originating in India and Indonesia and amending Implementing Regulation (EU) 2021/2012 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of stainless steel cold-rolled flat products originating in India and Indonesia
青拓子公司
Fujian Tsingtuo Nickel Industry Co.
Ltd. plant
Notice about investment to joint venture for steel production in Indonesia
Top Skills Microsoft Office Leadership Public Speaking Certifications Tax Brevet A & B Advocate Profession Special Education Program Advocate Profession Examination Vanesia Hendrika Elvina, delong holdings annual report 2018
CORPORATE GOVERNANCE CASE STUDIES
助力“一带一路” 大成律师为印尼钢铁项目提供融资法律服务
As the world learns to live with coronavirus
S&P Global Commodity Insights reporters and analysts look at short-term impacts and longer-term shifts in supply, demand and prices.
Notice about investment to joint venture in Indonesia
Dexin Steel Morowali plant
China shares steelmaking wisdom via BRI
Indonesian Dexin Steel to launch third blast furnace
Dexin plans to run third blast furnace soon
Indonesia iron and steel's full potential hinges on low-carbon technologies
Dexin Steel Indonesia fires up second blast furnace at Morowali Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.