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2024

BR A ZIL & CHIL E:
MINING GIANTS

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BRAZIL & CHILE: MINING GIANTS

BRAZIL & CHILE:MINING GIANTS

Located on the opposite side of the globe, South America’s Brazil and Chile
may be geographically far from Japan, but they are indispensable partners,
supplying important mineral resources such as iron ore, copper, and lithium.
In this issue’s special feature, the former head of JBIC’s Representative Office in Rio de Janeiro andstaff working on the frontlines to secure mineral resources for Japanese companies explain
the latest developments in Brazil and Chile, their economic relations with Japan,
and their proactive efforts to decarbonize resource development.

Working together for Brazil’s resource-driven economy andJapan’s technology-driven economy
Brazil assumed the G20 presidency for the first time in 2024.
It aims to highlight its presence as a major Global South nation.
Home to a wide variety of mineral resources, representing one of the world’s largest reserves.
There is also growing momentum behind the development of lithium andother resources that are key to decarbonization.
Brazil will host COP30 in 2025 and demonstrate its leadership in climate change response.
This new market could provide business opportunities for Japan and its cutting-edge technologies.

A change of government anda major policy shift inSouth America’s resource-diverse
powerhouse
As a leading nation in both SouthAmerica and the Global South, Brazil isalso in the limelight due to its 2024 G20
presidency. With a population of about
215 million and GDP of some USD2
trillion, the country ranks among theworld’s top 10 economies. Its vast territory boasts a diversity of quality mineral
resources, as well as petroleum, and it
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is the world’s second-largest producer ofbioethanol, following the U.S.
In May 2024, Prime Minister KISHIDA
visited Brazil—the first time in eight years
for a sitting Japanese premier—and hada summit meeting with President Lula.
The two leaders reaffirmed the importance of bilateral relations as strategic
and global partners.
Over the past few years, the Brazilian
economy has faced headwinds such as
soaring power costs and crop failuresdue to a historic drought, and inflated
import prices due to depreciation of theBrazilian real against the U.S. dollar.
However, driven mainly by the mining,
agriculture, livestock, and service industries, real GDP growth was 4.6 percent
in 2021 (lifted by a post-pandemic
rebound), 2.9 percent in 2022, and 2.9
percent in 2023, surpassing pre-pandemic growth rates.
Regarding the recent economic situation in Brazil, ISHIKAWA Noriyuki, whoheaded the JBIC Representative Officein Rio de Janeiro for nearly five years
until April 2024, notes that “Recently
there has been damage from floods

The Casa de Pedra iron mine quarry, a high-quality iron mine located in central Brazil

and storms caused by extreme weather,and there is still some lack of transparency concerning President Lula’s policy
direction, but I think we can say that thesituation is basically steady.”
President Bolsonaro was in power inBrazil when ISHIKAWA took up his postin 2019, but in January 2023, the reinsof government were taken over by anadministration led by President Lula,
who assumed the presidency for thethird time. The Bolsonaro administration advocated for small government,
was very pro-businesses, moved to
privatize state-owned enterprises, andreform social security and reduce government spending in order to cut thebudget deficit. The policies of the current
administration are a complete changeof direction, aiming for a return to big
government, halting privatization plans
and expanding the role of state-owned
companies. In addition, with reducing inequality a top priority, the Lulaadministration is focusing on initiatives
such as reviewing minimum wages,

strengthening social security, and revising spending caps, a sharp policy shift toa willingness to take fiscal stimulus measures. In April 2024, the government also
dropped the goal of achieving a primarybalance surplus by 2025.
“In his address at COP27 (27th session of the Conference of the Parties to
the Framework Convention on Climate
Change) in November 2022, immediately
prior to his inauguration, President Lulastated that ‘Brazil is back’ in the international community’s fight against climatechange. His position of taking the leadin placing importance on environmental
measures was welcomed by the leadersof the West and other countries, and thisbecame the international debut for his
policy of omnidirectional diplomacy.”

held at the municipal theater and a naval
fort, both of which are historical buildings. “Such concerts are a little unusualin that, after bossa nova or Brazilian pop,
Chinese performers play Chinese musicon traditional instruments such as theerhu, or perform Chinese dances in traditional dress.”
As Brazil marks the 50th anniversary of diplomatic relations with China
in 2024, the leaders of both countries
intend to strengthen their strategic partnership as important trading nations.
On the other hand, there is a persistent
wariness in Brazil around a shift toward
China. “That’s why China came up
with the strategy to improve its image
in Brazil using culture and the arts,”
explains ISHIKAWA.

China expanding its presence
and soft power through cultural projects

A long history that built trust in Japan,
and diversification of mineral
resource development

The Lula administration is actively promoting its stance of omnidirectional
diplomacy and is strengthening its ties
with emerging economies. One notablechange is the growing presence of China.
China is Brazil’s largest trading partner,
ranking number one in both imports andexports, and Brazil is China’s largest trading partner in Latin America. Adding tothis momentum is Brazil’s state-owned
oil company Petrobras selling someof its interests in offshore oil fields to
its Chinese counterpart China National
Offshore Oil Corporation (CNOOC), andannouncing a partnership with China
Petrochemical Corp. (Sinopec) in areas
including oil exploration and research.
ISHIKAWA points out that although there
were not that many Chinese expats inthe past, their numbers have increased
in recent years.
“In the past, Asians were rare on thestreets of Rio de Janeiro, but recently
we have been seeing more Chinese.
There is also a large number of Chinesecompanies such as state-owned oilcompany and state-owned bank in thebuilding where the JBIC representative
office is located. I have the impressionthat organizations that used to send justa few representatives have expanded
their staff to 20 to 30 people. At international conferences held in Brazil, there
has been an increase in occasions where
simultaneous interpretation is provided
in Chinese, in addition to English andPortuguese.”
China is also growing more prominent in culture and the arts. For example,
the logos of Chinese companies now
regularly appear as exhibition sponsors
at museums in Rio de Janeiro. And there
are an increasing number of music concerts sponsored by Chinese companies

Brazil has deep historical ties with Japan,
home to the world’s largest Japanesediaspora, said to number more than 3
million. After the first emigration ship
to Brazil, Kasato Maru, crossed thePacific in 1908, many Japanese followed,
employed as farmers on coffee plantations and other farms. In the 1950s, withthe birth of numerous national public-private projects between Japan and Brazil
in fields including steelmaking, aluminum production, and agriculture, more
Japanese companies began expanding
their operations to Brazil. Japan’s contributions to Brazil’s nation-building arealso widely recognized in the country.
“Brazil as a whole is very pro-Japanese, to the point that there is even a
Portuguese phrase, ‘Japonês garantido’(‘Japanese guaranteed,’ which expresses
a high level of trust in Japanese products
and Japanese people). Respect for Japan

Former Chief Representative
JBIC Representative Office in Rio de Janeiro

ISHIKAWA Noriyuki
Joined the then Bank of Tokyo-Mitsubishi in 1999.
After studying and working in Brazil, he joined JBIC
in 2007 where he was engaged in sovereign finance,
equity finance and other facilities at the International
Finance Department III, the Americas Finance
Department, and the Equity Investment Department.
From August 2019 to April 2024, he was the Chief
Representative of the JBIC Representative Office in
Rio de Janeiro.

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BRAZIL & CHILE: MINING GIANTS

is very high, even now,” says ISHIKAWA.
In September 2023, Japan granted
Brazilian citizens visa exemptions for
short-term stays. And Brazil’s visa waiverfor Japanese citizens is also being continued, which is expected to promote
visits between the countries and boost
cultural and economic exchanges.
Since the 1950s, JBIC has been supporting large projects not only in the
resources and energy sector, including
iron ore, deep-sea oil field development,
aluminum, and pulp and paper, butalso in the infrastructure sector, suchas the construction of freight railways,
subways, and expressways. Support
has also been provided for exports andinvestments by Japanese companies
developing business in Brazil in sectors
including manufacturing and service
industries.
“In terms of mineral resources, aslong as the steel industry continues tobe a pillar of Japan’s economy, Brazil willremain a vital supplier of raw materials
for the sector. In recent years, decarbonization of the steelmaking process
in Japan has become an urgent issue,
further increasing Brazil’s importanceas a supplier of high quality and rare,
low-carbon raw materials for steel that
contribute to the reduction of carbon
emissions,” says ISHIKAWA.
For many years, the image of Brazil’s
mineral resource development wasthat its core strategy was a focus oniron ore, but it is now diversifying withinitiatives including active exploration oflithium deposits, centered on the thriving mining industry in the southeasternstate of Minas Gerais. For Japan, as well,
Brazil’s importance is growing from theperspective of strengthening supply

Huge dump truck witha payload capacity of
240 tons, which is usedin the minechain resilience by diversifying supply
sources of critical minerals.

Utilizing Japanese technology in theenvironmental sector
and the obstacle of “Custo Brasil”
Nevertheless, the number of Japanesecompanies in Brazil has been hovering
at about 700 over the past decade, withsluggish growth in new market entries.
ISHIKAWA points out that there areseveral factors behind this: “First, thedeep-rooted issue of so-called ‘Custo
Brasil,’ the costs and inefficiencies ofdoing business in Brazil, which include
the complicated tax system, underdeveloped infrastructure, and labor costs.
It is a high-inflation country, with a policy
interest rate of over 10 percent at the
moment, as well as volatile exchange
rate fluctuations. Japanese companies
have not fully mapped out strategies
on how to position Brazil in their supply
chains. My impression is that there arestill many companies that regard Brazil

Brazil’s ranking in global mineral resource production andshare of reserves (2022)

Brazil has abundant mineral resources,
ranking first in the world in niobium
production, holding an overwhelming share of more than 90 percent
of global reserves. Brazil also ranks
second in the world in production of
tantalite and iron ore, and while itranks ninth in terms of productionof kaolinite, it holds more than 20
percent of the world’s reserves.

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applications developed for its use in sustainable aviation fuel (SAF), which does
not use fossil fuels, business opportunities are being pursued for its use indecarbonizing the aviation industry. A
pilot project has also been launched forthe production of green hydrogen, anext-generation energy source, utilizing
Brazil’s abundant renewable energies.
Centering on Western companies thatare closely watching this region as abase for exports to European market,
there are moves underway to accelerate
alliances with local companies.

as just a source of natural resources andagricultural products.”
Of course, Brazil’s government has
not been sitting idly by. From aroundthe start of OECD accession talks in
2022, it has been working hard on tax
and administrative reforms, amending
the constitution in December 2023 tosimplify the tax system and lighten
tax burdens on corporate activities. As
this amendment had been discussed
repeatedly without progress since the1990s, it was lauded in industrial circles
as a game-changer. This tax reform also
led the S&P Global Ratings agency to
upgrade its credit score on Brazil’s longterm sovereign debt from “BB-” to “BB.”
There are great business opportunities for Japanese companies in the areasof climate change countermeasuresand renewable energy, which the Lulaadministration is focusing on, according
to ISHIKAWA.
“How serious President Lula is about
this can be seen in his role in the Belém
Declaration of August 2023, which was
adopted by the eight countries of the
Amazon region as a common framework
to protect the Amazon rainforest and halt
its destruction.” COP30, which is scheduled to be hosted by Brazil in November
2025, will also be held in Belém, thecapital of the northern state of Pará,where the declaration was signed. When
Prime Minister KISHIDA visited Brazil,
there was a focus on promotion ofcooperation between Japan and Brazil
for comprehensive carbon neutrality as
it relates to the environment, climatechange, and sustainable development,as part of the lead-up to COP30.
Brazil has a history of producing
bioethanol from sugarcane as a national
policy that dates back to the 1970s. In
recent years, production technology forsecond-generation bioethanol madefrom the sugarcane bagasse waste
product has also been established. WithP IC K
UP

Brazil also has high potential in termsof carbon credit (carbon emission rights).
Carbon credits generated by forest conservation and afforestation projects are
already actively traded on the voluntarycarbon market (where companies andindividuals voluntarily purchase carbon
credits to achieve carbon neutrality),making commercialization of forest andenvironmental conservation possible.
Deliberations on a bill to regulate thecarbon credit market are also underway,
and new business opportunities will
emerge in the runup to COP30 next year.

ISHIKAWA also strongly senses thatJapanese companies are gearing up toembark on new activities in this field.
“As we already have an idea of what
we need to do, we are now in the processof discussing the specifics by involving
local partners. Japan and Brazil havea relationship of trust that has been
nurtured for over half a century. How
should Japan’s cutting-edge, innovativetechnologies be deployed to tackle social
issues and the decarbonization shift in
Brazil? JBIC also wishes to take the leadin providing active support here.”

New JBIC support connects
Brazil’s Vale and Japanese companies
for greener steelmaking

JBIC has a cooperative relationship with Brazilian metals and mining giant Valethat goes back nearly half a century. A loan to Vale was the first after
the April 2023 amendment to the JBIC Act expanded eligibility to include
cases of resource procurement by overseas subsidiaries of Japanese companies.

Close relations with a world-leading
resource suppliersupport raw materials for greener steel
to help reduce emissions
Vale S.A. is one of the biggest mining companies based in Brazil and a world-leading
supplier of mineral resources. Throughinitiatives including collaboration since the1980s centering on iron ore, JBIC has beenbuilding a close relationship with the company for nearly half a century. A large-scaleloan agreement for USD480 million was
signed in March 2024. TAMIYA Shintaro
and HATA Hitomi of Division 2, Mining andMetals Finance Department, who were in
charge of this agreement, both say, “It wasa major project that kept us on our toes
for six months once full negotiations were
underway.”
Vale’s ground and processed iron ore,known as pellet feed, and the pellets
made from it, are essential not only for theconventional blast furnace steelmaking
process, but also for electric furnace anddirect hydrogen reduction steelmaking,which can reduce carbon emissions during
production. The loan seeks to ensure astable supply of these materials from Valeto Japanese companies.

Structuring an unprecedented
new scheme and toughbut fruitful negotiations
Vale expressed interest in JBIC financing
but at that time, it fell outside the scopeof the JBIC Act, which limited loans forresources that were directly imported toJapan. However, all that changed with
the April 2023 amendment of the act,
which made procurement of resources byJapanese overseas subsidiaries eligible
for loans. “Vale approached us before
the amendment, but it was only after theamendment that actual progress wasmade in our talks,” explains HATA. “Being
the first case after the amendment of thelaw, there was no precedent to guide us,
so we proceeded to examine potential
schemes while conferring with relevant
departments within the bank.”
While the bank considered this firstimport loan project after the legal reform, it
was also necessary to carefully explain the
background and purpose of the amendment
to Vale to receive their full understanding of
JBIC's requirements. In addition to online
meetings, TAMIYA even traveled to Brazil
twice for tough negotiations. “The time difference between Japan and Brazil means
our lives are on completely different schedules, limiting the chances for discussions.

Pellets are spheres with a diameter of 1
to 3 centimeters made from processediron ore.

Since we were aiming to conclude theagreement by March 2024, we were underpressure to work things out quickly and notwaste any time. But Vale took careful noteof our opinions and thanks to their understanding and close cooperation, we wereable to successfully sign the agreement.
It was a great pleasure to hear thoughtful
words of appreciation from Vale when we
had a meeting in Japan after signing theloan agreement.”
An unprecedented first project, the timedifference, and tough negotiations with aworld-leading company—the agreement
was concluded by overcoming numerous
obstacles and through teamwork, at times
with TAMIYA in Brazil and HATA in Japan.
This was a valuable project that not only
contributes to the stable supply of mineral resources that are crucial for Japan’s
steel industry and its decarbonization, buthelps strengthen relations with Vale, which
also holds an important place in Japan’s
resource strategy.

(From left)

TAMIYA Shintaro
Deputy Director, Division 1 and 2

HATA Hitomi
Division 2
JBIC’s Mining and Metals Finance
Department, Energy and Natural
Resources Finance Group

Press release on this project
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BRAZIL & CHILE: MINING GIANTS

An eco-friendly mine development in Chile,
the world’s largest copper producer
Chile is a “copper powerhouse,” accounting for over 20 percent of the world’s reserves and production.
It is also Japan’s largest copper supplier.
Importance is placed on environmental and social considerations in mine development,with several hundred permits necessary.
In addition to copper, which is indispensable for electrification, development of
new resources associated with decarbonization, such as lithium and hydrogen, is also underway.
JBIC is supporting development of these resourcesin partnership with the government of Chile.

The ore beneficiation plant which crushes ore from the Centinela copper mine in northern Chile, and separates and recovers copper.

Copper is used in a wide range of applications, including power transmission
and wiring, electric vehicles, renewableenergy systems, and semiconductors.
Demand is expected to increase evenmore due to its use in AI and data centers. KATAYAMA Hiroki, SASAKI Kota,
and MORISAKI Momoko of JBIC’s
Mining and Metals Finance Department,
Division 1, explain the importanceof Chile from the aspect of mineral
resources, and the initiatives taken forenvironmental and social considerations
in mine development.

What is the relationshipbetween Japan and Chile in terms ofcopper resources?
MORISAKI: When people hear “Chile,”
wine and foods such as salmon that area part of our daily lives might generally
come to mind, but from the perspectiveof mineral resources, Chile is the world's
leading “copper powerhouse,” holding
more than 20 percent of the world’s
reserves and production. It is also Japan’s
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largest copper supplier, and so in termsof the Japanese government’s resource
diplomacy, it is positioned alongside
Middle East oil-producing countries as a
traditional stable resource supplier. Japan
imports all of its copper concentrate, theraw material used to make copper, meaning a long-term, stable supply is vital;
Chile fulfils that crucial role.

What are the key points
in developing business there?
KATAYAMA: Mine developments are
long-term developments requiring alarge amount of investment, and soa country’s risk profile is extremely
important. In this respect, Chile is an
OECD member regarded as a “developed country in South America” thatis politically and economically stable.
Another very important advantage is thecountry’s emphasis on attracting foreign
investment to drive economic growthand its track record of maintaining abusiness-friendly environment. Evenin the process of formulating the New

Mining Royalty Law, enacted in 2023
to implement a special mining tax, thegovernment held talks with the mining
industry and other stakeholders, reaching an acceptable consensus.
SASAKI: Similar to Brazil and other
Latin American countries, there is an
issue with the time difference since it islocated on the opposite side of the worldfrom Japan. Flying to Chile is also workin itself since it takes about 30 hours
including transit. However, public safety
is good, and depending on the place,
you can basically go out at night without
fear. The people of Chile are very diligent
and appear to have a strong affinity withJapanese work styles compared to other
Latin American countries.

What environmental and social
initiatives are taken in copper minedevelopment?
MORISAKI: One notable feature of Chileis how thorough it is regarding environmental and social stewardship in minedevelopment, with the government

requiring a wide range of permits. I wasable to get a real sense of this when I
visited the country in 2023 for an environmental survey of a new project.
Several hundred permits and approvals
related to the mine development wererequired. In addition to permits for themine development itself, an environmental impact assessment report for
the entire project had to be approved,
and a range of measures were required
to meet the necessary conditions andcommitments.
One example is the protection of vegetation in the developed area. Plants thatcan be transplanted are transplanted, but
this is not possible for some species. In
such cases, seedlings are planted, sometimes as many as 10 times the original
number of plants in the planned area. If
the habitats of certain species of reptiles
or mammals are confirmed, their nests
will also need to be moved to anotherlocation. There are also times whenarchaeologically significant sites areunearthed after mine excavation begins,in which case the plans for the minedevelopment area itself may be changed.
In search of new copper deposits, minedevelopments are taking place on higher
ground and farther into the backwoods.
Lenders need to determine whether the
economic feasibility of a project can be
secured while conducting “responsible
production,” including
construction
safety and environmental impact.
KATAYAMA: Securing water resources isa perennial issue in Chile, and notably,
there are many copper mines in thedesert area in the north of the country,
which has severe water shortages.
Copper mines require large amounts ofwater, raising concerns that divertingfrom rivers and groundwater will disrupt
the supply for local residents and negatively impact the ecosystem. To avoid
this, measures have also been taken inrecent years to use seawater desalination plants to draw water from the sea toinland mine sites. Consideration for local
communities is paramount for developments.

SASAKI:The current Boric administration
is particularly conscious about givingback to the people through resource
development, but Chile is a country thathas long emphasized environmental andsocial stewardship. When doing business in Chile, it is important to keep inmind that even higher levels of environmental and societal consideration may
be required in the future. Meanwhile,at the copper mines, they are trying tobuild sustainable production systems
that take into account the environmentand safety. These include switching to
renewable energy sources, recycling
water, and automating and remotely
operating dump trucks. We will be keeping a close eye on future developments.

Are there any other resources
besides copper that we shouldbe paying attention to?
KATAYAMA: In the mineral sector, thatwould be lithium. Demand is increasing,
especially for use in EVs, and many countries are focused on its acquisition. Chileranks among the top three countries
in the world for both lithium reserves
and production. Under the National
Lithium Strategy, Chile’s governmentis implementing a state-led initiative
to develop it as a strategic commodity.
It has signaled its intention to promote
its development by partnering withoverseas companies with technologies
for direct lithium extraction, which has alower environmental impact and is more
efficient than the conventional lithium
brine extraction method. This presents
opportunities for Japanese companies. In November 2023, JBIC signed a
Memorandum of Understanding (MOU)
with Corporación Nacional del Cobrede Chile (CODELCO), which plays animportant role in the National Lithium
Strategy, with the objective of promoting collaboration between CODELCO
and Japanese companies in the sectorsof critical minerals, such as copper andlithium, and decarbonization, and toaccelerate the structuring of projects.
SASAKI:
From the perspective ofChile, which consists of a long and narrow strip ofland stretching from north to south, has natural conditions in each part of the country that are optimal forrenewable energy. Wind and solar power generation
facilities line the Atacama Desert in the north.

decarbonization, hydrogen is anotherarea where business opportunities forJapanese companies will probably
expand. Chile has abundant renewableenergy sources, with solar power in thenorth and wind power in the south, andits competitiveness ranks among the top
in the world. To make green hydrogen,which is produced using these renewables and has been set as the state’s
next driver of growth, the governmentof Chile released its National Green
Hydrogen Strategy in November 2020.
It aims to establish a production system
for the world’s most affordable greenhydrogen by 2030, and become one of
the world’s leading hydrogen exporters
by 2040.
In response to such trends, JBIC
signed an MOU with Chile’s Ministry ofEnergy in August 2023 to promote thedevelopment of green hydrogen andammonia. I hope that the relationship
JBIC has cultivated with Chile will bestrengthened in these new areas as well,so that we can further support Japanesecompanies in developing their business.

(From right)
Director
Division 1, Mining and Metals Finance Department
Energy and Natural Resources Finance Group, JBICKATAYAMA Hiroki
Division 1, Mining and Metals Finance Department
Energy and Natural Resources Finance Group, JBICMORISAKI Momoko
Deputy Director
Division 1, Mining and Metals Finance Department
Energy Transformation Strategy Office
Energy and Natural Resources Finance Group, JBICSASAKI Kota

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Our People and Their Work
Division 1
Mining and Metals Finance Department
Energy and Natural Resources Finance GroupMATSUNOKI Hayato

JBIC engages in various projects around the world.
Senior JBIC staff on the front line share their thoughts
and stories behind their projects.

Support for Chile’s Quebrada Blanca copper mine development, including improving hygiene

Joined the bank in 2022. Engages
in base metal and battery metal
projects in the Americas and Africa.
Is in charge of Peru and the PacificIsland countries. Graduated fromWaseda University, School of
Political Science and Economics.

Boldly taking on the challenge of supportinga massive project to secure a long-term,
stable supply of copper resources for Japanese industry
JBIC provided additional financing for the development of a world-leading Chilean copper mine in which
Japanese companies have equity stakes. MATSUNOKI Hayato, who led the structuring of the deal, shares his story.

Located at an elevation of 4,400 meters,
the pandemic necessitated additional
funds for mine site safety
The Quebrada Blanca copper mine innorthern Chile takes more than a fulltwo days to reach from Japan. At themine’s lodgings, located at 4,400 meters
above sea level, oxygen tanks sit next
to the beds. MATSUNOKI Hayato of
Division 1, Mining and Metals Finance
Department, recalls, “We were told to
put on a mask when we go to sleep if we
felt unwell.” But this apparently gruelingenvironment piqued the curiosity of
MATSUNOKI, who is “the kind of person
who can enjoy anything.” He explains,“It was a world that could only be seen
through work. I was very emotionallyinvested in this project because it was
my first since joining the bank.”
Japanese companies have a combined 30 percent stake in the minedevelopment, and JBIC has made loans
totaling USD2.09 billion for the project,including project financing of USD900
million in 2019.
While the construction of the project

was underway, the COVID-19 outbreakrequired the development of a morehygienic environment, including infection control measures. Delays causedby the isolation of infected construction
workers and the resulting lost productivity increased costs and thus the required
additional investment. Subsequently,
the Japanese companies with equity
stakes in the project requested support
from JBIC.
Placed in charge of this additional
financing, MATSUNOKI structured aloan agreement totaling USD450 million,
which was signed in March 2023. As the
project’s backers were aiming for themine’s timely completion and the startof production, this loan was provided
in the form of back-financing to the two
Japanese companies with equity stakes.
Since back-financing depends on thecreditworthiness of the financed companies, it has the advantage of shortening
the time needed for the loan agreement
to be signed.
JBIC has a history of providing
support for copper mine development
projects in Chile. But the Quebrada

Blanca, with a mine life of some 27 years
as of 2023 and minable ore reserves ofabout 7 million tons, stands out as along-term, large-scale project for what
will be one of the world’s largest copper
mines when it goes into full operation.
Did MATSUNOKI feel pressure being apart of this as his first project? “Becauseof the size of the loan, there were many
points that needed to be sorted out.
Changes in the global situation alsofrequently affected the project. However,thanks to advice from my manager andother senior colleagues who have extensive business experience, I was able to
do a job that was very rewarding.”

A flurry of internal briefingsand coordination
to quickly structure a major deal
As the Quebrada Blanca copper mine
was a project under construction, a wide
range of matters needed to be finalized.
But because the tight copper supply
made providing funds for the mine’s
construction very urgent, MATSUNOKI
took the lead and put the financing
together for this large-scale project injust five months. Looking back, he says,“Keeping the project’s completion inmind, I reviewed every detail, and also
focused on conducting internal briefingsand coordination.” The project was thensuccessfully completed, and the first
shipment of copper concentrate arrived
in Japan in May 2024.
With its social stability and public
safety, Chile is a strategic partner ofJapan and a nation for which copper
production is an extremely important
industry. Changes in the global situation
can easily lead to large fluctuations incopper prices, and even slight changes
will likely have a significant impact on
a project’s revenues. But despite this,Japanese companies have been playing
a large role in the development and operation of copper mines in Chile. JBIC’s
support as a Japanese policy-based
financial institution will continue to beneeded to secure a long-term, stablesupply of mineral resources.
JBIC’s backing of Japanese companies investing in projects to facilitate
their continued operation—even under
unprecedented circumstances such

Project
Summary

Quebrada Blanca mining site and ore
processing facility

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as COVID-19—is extremely significant
in helping Japan secure and maintain valuable interests. According to
MATSUNOKI, “I believe that this is
unique to JBIC, which is capable oftaking such a proactive approach to supporting its clients, undaunted even by
the difficulties posed by the pandemic.”

Facing the toughest of challenges,
able to do both structuring andmanagement of projects
When it was decided that MATSUNOKI
would handle this project, a seniorcolleague who had joined JBIC from aJapanese megabank made a commentthat had an immediate effect on him.
"The project you have been put in chargeof is of a scale that you might experience
only once, or never in another company.”
This brought home to him the significance of being able to undertake such animportant task.
“At JBIC, you are expected to be an
asset to your department from yourfirst year. Other financial institutions
often separate finance structuring andmanagement, but at JBIC you can be

Electric vehicles require four times more copper thangasoline-powered vehicles.

assigned to both new and ongoing projects. The best part of this is being able
to be continuously involved in a project.”Since his assignment to the department, MATSUNOKI has been clear about
his ambition to take on “highly challenging and complex jobs that have a lot of
tough situations.” Leveraging the experience from this project, he is eagerly
looking forward to getting involved
not only in loans but also in equity
investments and guarantees, as well as
research on markets, and political andeconomic trends. With such grand aspirations, MATSUNOKI will no doubt reacheven greater heights.

In March 2023, loan agreements were signed with Sumitomo Metal Mining Co., Ltd. and Sumitomo Corporation for amounts up to USD625
million (JBIC portion: USD375 million) and USD125 million (JBIC portion: USD75 million), respectively, for development of the Quebrada Blanca
copper mine in the Republic of Chile. Co-financed with private financial institutions, these provided the funds needed to build a hygienic environment and implement other measures that became necessary during the construction period due to the COVID-19 pandemic.

Press release on this project

AUGUST 2024

JBIC TODAY

9and getting firsthand information, andseeing the situation with my own eyes.
As countries radically differ in their way of
doing things and national character, it isimportant to carefully assess the situationin each country.”
In Mexico, Hiroshima Aluminum hasestablished another production basethrough a group company, and made useof financing from JBIC to further grow its
business in the country. The company isalso expanding operations to China andThailand, and KOMATSU says that he“senses potential” when he sees how
young employees have matured throughtheir assignment overseas.

Representative Director & CEO
Hiroshima Aluminum Industry
Co., Ltd.

KOMATSU Rio
After graduating from a
university in the U.S. andworking at a bank where
his assignments included
building an internet banking network, he joined thecompany in 2007. In 2023, hebecame the representative
director & CEO, succeeding his uncle who was thethird-generation head of thecompany.

Hiroshima Aluminum Industry Co., Ltd.

Local factory to key Mazda supplier to Mexico:an aluminum casting maker still taking on new challenges
The frontier spirit that has driven the company since its foundation
gave birth to a sophisticated, versatile casting technology.
The company aims to further evolve both in Japan and abroadin line with shifts in the automotive industry.

The foresight of a century-old company,
from cookware to auto parts
Manufacturing is changing, and so is thefoundry industry, which is now entering aphase of utilizing IT. In his April 2023 inaugural address as the fourth-generation
head of Hiroshima Aluminum Industry,
Representative Director & CEO KOMATSU
Rio announced a policy of focusing on thedevelopment of “light blue personnel,” acombination of the blue-collar workers
at the production sites and white-collar
workers who leverage IT. It is said thatcasting, in which products are made bypouring molten metal into molds, is aform of metalworking that dates backto Before Common Era. The company’s
stance of always looking to the future has
been passed down from generation to
generation since its establishment.
Founded in 1921 as a store that soldhardware and daily utensils, the company
expanded into the casting business after
realizing the lightweight and durable
properties of aluminum, which was
still rare at that time. Using aluminum

10

JBIC TODAY

AUGUST 2024

casting, the company began manufacturing hagama, a cooking pot for rice with abroad brim that makes it easier to placeon the cooking stove.
But when Hiroshima, the company’sbirthplace, was devastated by the atomic
bomb in 1945, everything was lost,
including the life of the founder and theplant. Still, the company maintained its
innovative spirit. As gas stoves spread,the second president and eldest son of
the founder utilized the company’s aluminum casting knowhow to create theMusui ®, a cooking pot which does not
require water and remains popular today.
Hiroshima Aluminum was capable ofhandling all kinds of casting, including
the die-casting method, in which molten
aluminum is injected into a mold andinstantly molded, and sand mold casting,in which the aluminum is poured into amold made of sand. The company’s technological prowess came to the attentionof major automaker Mazda, which is also
based in Hiroshima. Given the progressin motorization and the trend for lighter
weight vehicles, Mazda was searching fora partner that could manufacture aluminum parts. “Our company was hoping
to enter the market for automobile parts,
so you could say that it was lucky timing.
Improving technical capabilities and getting business opportunities go hand in
hand. I heard that the company worked
to meet demands by further raising thelevel of its technological prowess,” says
KOMATSU, recalling the challenger spiritthat has been with the company since thebeginning.

Early establishment of the Vietnam plantand expansion to Mexico with an eye
on the North American market
The third president of the company, whotook over in 1995, expanded operations
further, and broadened its market beyond
Mazda. The company also began tohandle large die-casting; it now manufactures several thousand aluminum parts.
While establishing itself as a Mazda
partner manufacturer of aluminum casting parts for automobiles, the president
at the time also quickly turned his eyes
overseas. Amid increasing globalization,

The plant in Mexico (photo), which was established
as a North American operations base, mainly manufactures large aluminum casting parts. To handle
an increase in demand, a second plant was openedin 2015.

in 2002, the company was ahead of its
industry peers in establishing a die-casting production base in Vietnam. While
steadily building up expertise in overseas
business development, it then expanded
operations to Mexico in 2010, anticipating robust North American automobile
demand.
At that time, KOMATSU was incharge of the department procuring raw
materials, and he made numerous trips
to Mexico in preparation for the launchof the plant there. Though it seemed
difficult at first, when he got to Mexico,
he learned that Japanese competitors
were already operating there. This fired
up his challenger spirit, and he thought,“We can do it, too.” That experience isfueling his actions now: “It made me
keenly aware of the importance of going

Utilizing the aluminum casting technology
developed since the company’s founding, it
manufactures many parts that are vital to theautomobile industry. It is striving to reducethe defect rate and boost production efficiency
through the use of IT at its eight domestic
plants and five overseas subsidiaries.

Loan Summary

Amoeba Management andtechnological innovation
overcome times of change“Casting is an old technology and so oldways remain common in the industry.
Since you couldn’t actually see what
was happening when molten metal was
poured into a mold, the high defect rateof finished products (compared to otherindustries) was widely accepted. But
now, with the use of sensors and simulations, that can be improved. We needto take a broad perspective and change
what we have considered to be normal,
updating our thinking.”
KOMATSU is also focusing onchanging the mindset of each individual
employee. With the goal of having themthink and act like management throughtheir own initiative, in 1996, the company
introduced “Amoeba Management.” Thisis a management method created by
Kyocera’s INAMORI Kazuo, wherein alarge organization is divided into small
autonomous groups and everyone pools
their strengths to achieve goals.

KOMATSU also values dialogue withhis employees. On his regular visits tothe production sites, he makes it a point
to speak with staff on the shop floor
instead of the plant executives. “When I
went to a production site the other day,
I was pretty happy when my employees
spoke about what their goals are,” headmits a little shyly.
The automotive industry is now
entering a period of change with the shift
to electric vehicles. As the need intensifies for lighter automotive parts, andaluminum materials are being replacedby plastic, Hiroshima Aluminum is also
focusing on processing plastic products
and is continuously technologicallyinnovating. “Our accumulated pastexperience is what shows us the future.
Since we can’t just leap into the future, I
believe we have to keep our feet firmly
planted on the ground, and look ahead,
which will point out the direction to take.”
While maintaining a challenging
spirit but also humility, he will steadily
navigate the turbulent currents of thetimes.

Hiroshima Aluminum Industry Co., Ltd.
1921

Founded1945

Plant destroyed by the atomic
bomb

1973

First company certified by Toyo
Kogyo (now Mazda) for quality
assurance

1996

Amoeba Management introduced

2002

HAL Vietnam Co., Ltd. established2010

HAL Aluminum Mexico, S.A. de
C.V. established

2011

Hiroshima Aluminum Industry(Nantong) Co., Ltd. established2013

HAL Aluminum (Thailand) Co.,
Ltd. established2015 CX3_See through 1.5L DE Technology CGIIn November 2023, a loan agreement was signed with Hiroshima Aluminum Industries’ subsidiary in Mexico, HAL
Aluminum Mexico, S.A. de C.V., for a loan up to USD12.6 million (JBIC portion), co-financed with MUFG Bank. Throughsupport for the manufacture and sales of aluminum automobile parts in Mexico, this loan contributes toward maintaining
and improving the international competitiveness of Japanese industry.

AUGUST 2024

JBIC TODAY

11

JBIC History

2008

vol.7

A new organization met an unprecedented global financial crisis
head-on with special emergency measures

The financial crisis of 2008—which originated in the United States—sparked a global recession. The Japan Bankfor International Cooperation (JBIC), which had become the international arm of the Japan Finance Corporation (JFC),
committed itself to dealing with the international financial turmoil.

When the subprime mortgage crisis brought down
major U.S. investmentbank Lehman Brothers,
shockwaves reverberated
around the world.
Photo: Getty Images

Problems in the U.S. housing market
triggered a global recession
There was a sharp rise during theearly 2000s in the U.S. in approvals for
subprime mortgages, those given toborrowers with the lowest credit ratings.
The subprime mortgage sector was also
plagued with issues such as lax risk
assessment.These problems came to thefore in the latter half of 2006 as mortgage
defaults increased and subprime lenders
collapsed one after another. Subprime
problems took Bear Stearns to the brinkin 2008, followed by Lehman Brothers’bankruptcy in September that year.
Being the largest corporate failurein U.S. history, this sent shockwaves
through global markets. Real GDP(adjusted for inflation) in the U.S. contracted 2.5 percent in 2009, with a 0.1
percent fall globally, and a drop of 5.4
percent in Japan. The financial crisis, on
the heels of a prolonged recession, andthe subsequent appreciation of the yen,which led to a decline in exports and theselling of Japanese stocks by foreign
investors, dealt further blows to thedomestic economy. Europe was also hit
hard, with Greece’s debt crisis spreading
to Spain and other countries, causing acrisis in the eurozone.
Around that time, in October 2008,
the Japan Finance Corporation (JFC)
was established through the merger of
JBIC and three domestic public financecorporations. “JBIC” remained the nameof the corporation’s international operations arm, and the new organization
launched its emergency response to
the global financial crisis, known as the“Lehman shock” in Japan.

Special measure fully utilized
for both developed anddeveloping countries
To address the crisis, in December 2008,
the Government of Japan decided on
Immediate Policy Package to Safeguard
People's Daily Lives at the Ministerial
Meeting on Economic Measures. Basedon this policy and the public notice by
the Ministry of Finance, JBIC provided
credit for exporting companies andloans through Japanese companies fortheir operations in developing countries,
as an exceptional temporary measure.
In addition, the Cabinet approved the“Order for Amendment of Part of the
Enforcement Order of the Japan FinanceCorporation Act.” This allowed general
overseas investment loans to be madefor a limited period of time to Japanesecompanies and their overseas subsidiaries and affiliates operating in developed
countries, mainly in the U.S. and Europe,in industries where the fallout from thefinancial crisis could significantly impact
Japan’s international competitiveness.
Furthermore, JBIC implemented
the Leading Investment to Future
Environment (LIFE) Initiative to consider

August 2024 Edition
Published by Press and External Affairs Division, Corporate Planning Department,
Corporate Planning Group, Japan Bank for International Cooperation
4-1, Ohtemachi 1- chome, Chiyoda-ku, Tokyo 100-8144, Japan Tel : +81-3-5218-3100*Any unauthorized reproduction or publication of the images or text in this paper is prohibited.

JBIC Website

Facebooksupporting environmental investments
by the governments and private sectorsof developing countries, centered on
Asia, to the tune of USD5 billion over two
years. JBIC also agreed to provide financial support by guaranteeing Samurai
bonds (yen-denominated foreign bonds)
issued by the Indonesian government.
Through such contributions to the
expansion of investment opportunities
both within and outside Japan, andrevitalization of markets, JBIC devoted
its efforts to responding to disruptions in
the international financial order.

The global financial crisis and
JBIC’s transformation
2008 September Collapse of Lehman Brothers
and the ensuing global
financial crisis.
October

JBIC and three domestic
public financial corporations
merge, establishing the Japan
Finance Corporation (JFC).

December“Immediate Policy Package to
Safeguard People’s Daily Lives”
decided at the Ministerial
Meeting on Economic
Measures.

2009 OctoberStart of Greece’s debt crisis.

2011 March

Great East Japan Earthquake
strikes.

2012 April

JBIC established as a separate
and independent entity from
JFC.

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vegetable oil ink, which
includes soybean oil ink.