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IFC's proposed US$2.7B refinancing to ease pressure on Vale, Moatize coal mine

The International Finance Corp., the private lending arm of the World Bank, is looking to complete a US$2.7 billion debt refinancing for the Nacala Corridor railway project in Mozambique in the first quarter of 2017, Reuters reported Oct. 7, citing the International Finance Corp.'s principal investment officer for infrastructure and natural resources, Marcel Bruhwiler.

The funding arrangement will help ease balance sheet pressure on Vale SA, which is developing infrastructure for the Moatize coal mine in the African country.

In September, Vale agreed to new terms related to the sale of its coal assets in Mozambique to Mitsui & Co. Ltd., the closing of which is tied to successful completion of project financing.

Vale expects to receive US$768 million upon completion of the Moatize deal as well as related transactions, and up to US$2.7 billion upon closing project financing for the rail infrastructure.

The International Finance Corp. will contribute up to US$200 million for the refinancing deal, Bruhwiler said on the sidelines of a conference in Cape Town, South Africa.

However, the refinancing deal may face delays due to corruption scandals in the country, as well as security issues along the 912-kilometer rail line that links the Moatize mine to the Nacala port.

"Right now there are still many risks which could derail such a big undertaking, not the least it's the macro-economic and security situations," Bruhwiler commented.

According to the report, the International Monetary Fund called for an external probe into Mozambique's public debt in a bid to recover investor confidence after a scandal involving over US$2 billion in secret loans pushed the fund to halt budgetary assistance to the country.