Vale S.A. has reported that the Nacala Logistic Corridor (NLC) companies have signed the binding financing contracts in the form of a project finance, through which NLC will raise US$2.730 billion.
This funding made up of:
The NLC is a railway that will connect the Moatize coal mine to the Nacala port in Mozambique.
In a media release, Vale noted the project finance facility will be repaid in 14 years with the proceeds generated from the tariff related to the coal transportation services and from general cargo services provided by NLC. The tariff was introduced in April 2017 upon the completion of the equity transaction with Mitsui and the subsequent deconsolidation of NLC.
The Nacala project finance completes the investment structure devised to support the ramp-up of the logistic corridor until full capacity utilisation.
The completion of the transaction and the drawdown of the proceeds are subject to usual conditions precedent for a project finance and are expected to happen shortly. The funds received will be mostly paid to Vale to take out part of Vale’s shareholders loans conceded for construction of NLC, but will also be used to support the ramp up of the corridor.
According to Vale, the project finance also demonstrates the institutional maturity and the government support in both Mozambique and Malawi. The authorities at all government levels fully cooperated and enabled all the regulatory, financial and legal frameworks that support the Project Finance, for which Vale and Mitsui are deeply thankful. Vale wishes that the Nacala Project Finance becomes a postcard and a benchmark for the attraction of other large scale investments in both countries.