WASHINGTON, July 23, 2024 — The Multilateral Investment Guarantee Agency of the World Bank Group (MIGA) has issued a guarantee to Crédit Agricole Corporate and Investment Bank (Crédit Agricole CIB) covering the risk of Non-Honoring of Financial Obligations by a State-Owned Enterprise (NHFO-SOE), with respect to a $532 million loan to Corporación Nacional del Cobre de Chile (CODELCO). The guarantee of $765 million for a period of 15 years is MIGA’s first NHFO-SOE guarantee issued in Chile.
The guarantee will enable Crédit Agricole CIB to extend a long-term loan that will be used to cover CODELCO’s payment obligations under five renewable energy power purchase agreements (PPAs) with third-party private producers that supply electricity to CODELCO.
The renewable energy PPAs are an integral part of CODELCO’s strategy to decarbonize its electricity supply by transitioning from coal and other fossil fuels to renewable energy sources. The company’s shift not only reduces its carbon footprint but is also a driving force in Chile’s sustainability goals to become carbon-neutral by 2050 by contributing to the diversification and greening of the country's energy sector. 100% of the proceeds of the MIGA-covered loan facilities will be applied toward climate finance activities.
As Chile’s largest state-owned enterprise in the strategic copper mining sector, as well as the largest electricity consumer and most carbon-intensive entity, CODELCO’s transition toward renewable energy is playing a crucial role in the transformation of Chile’s electricity sector by supporting the deployment of new renewable energy into the national grid, cutting greenhouse gas (GHG) emissions through the acceleration of early closure of coal power plants, and improving energy security by reducing reliance on imported fossil fuels. This move is also benefiting CODELCO with more predictable and efficient electricity expenses, while mitigating the risk of costs associated with GHG and fossil fuels.
“MIGA is delighted to support Chile’s and CODELCO’s efforts to decarbonize the economy,” said Hiroshi Matano, MIGA Executive Vice President. “Our engagement demonstrates the World Bank Group’s role in larger economies to help tackle global greenhouse gas emissions, and we are keen to replicate this in other markets.”
"The new transaction contributes to a greener and more sustainable mining sector, reflecting CODELCO's commitment to innovation and environmental responsibility. This focus on sustainability not only enhances our competitiveness but also sets a new standard for the global mining industry. We are delighted to have the support of MIGA and Crédit Agricole CIB in making this a reality," highlighted Rubén Alvarado, CEO of CODELCO.
“With its strong commitments CODELCO is leading the way in the mining industry in the Chile’s transition towards sustainable energy sources and decarbonization. Crédit Agricole CIB is committed to actively supporting the transition and we are very proud to have worked with MIGA and CODELCO to achieve a successful closing of this facility,” said Andre Gazal, Global Head of Export Finance, Crédit Agricole CIB.
About CODELCO
CODELCO is the world’s largest copper producer primarily engaged in the exploration, development and extraction of copper-bearing ores and byproducts, processing ore into refined copper and international trade of refined copper and byproducts. CODELCO is 100% owned by the Republic of Chile and controls approximately 4.7% of the world’s proven and probable copper reserves as defined by the U.S. Geological Survey. In 2023, CODELCO had an estimated 6.4% share of the total world copper production.
About Crédit Agricole Corporate and Investment Bank (Crédit Agricole CIB)
Crédit Agricole CIB is the corporate and investment banking arm of Credit Agricole Group, the 9th largest banking group worldwide in terms of 2023 balance sheet size (The Banker, July 2024). More than 9,500 employees across Europe, the Americas, Asia-Pacific, the Middle East and Africa support the Bank's clients, meeting their financial needs throughout the world. Crédit Agricole CIB offers its large corporate and institutional clients a range of products and services in capital markets activities, investment banking, structured finance, commercial banking and international trade. The Bank is a pioneer in the area of climate finance and is currently a market leader in sustainable finance with a complete offer for all its clients. For more information, please visit www.ca-cib.com.
About World Bank Group Guarantees
Initiated in 2024, World Bank Group Guarantees consolidates all guarantee products and experts from across the World Bank Group institutions at MIGA. It provides a simplified and comprehensive menu of guarantee solutions, enabling clients to select the instrument that best suits their needs. The platform streamlines processes, removes redundancies, and provides greater accessibility by de-risking investments in developing countries. Its goal is to boost the WBG’s annual guarantee issuance to $20 billion by 2030.
For more information about the guarantee platform, please visit: https://www.worldbank.org/wbgguarantees
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Contact:
In Washington: Elizabeth Howton, (202) 458-5922 or ehowton@worldbankgroup.org