Australia’s export credit agency, Export Finance and Insurance Corporation (EFIC) , has provided to Orica Limited (Orica) a 10-year, A$50 million direct loan to assist with Orica’s investment in the construction of an industrial grade ammonium nitrate plant in Indonesia by PT Kaltim Nitrate 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 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 long-term finance.
“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.
“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.