Announcement of 21.8 Million Dollars in Loans for Chilean Coal Production on July 24, 1957

FOR IMMEDIATE RELEASE WOIIL.D • 1818 H STREET, 1t\L N.W., WASHINGTON 25, 0. C. TELEPHONE: EXECUTIVE 3-6360 PRESS RELFASE NO. 490 SUBJECT: $21.8 million in loans for July 24, 1957 Chilean coal production The World Bank today made two loans totaling the equivalent of $21.8 million to increase coal production in Chile. The loans were made to modernize and expand the mining operations of two private Chilean companies which produce ab(")ut three quarters of the coal consumed in Chile. One loan of $12.2 million was made to the Compania Carbonifera y de Fundicion Schwager, and the other, of $9.6 million, was made to the Compa.nia • Ca.rbonifera e Lhd.ustria.l de Lota. The co-borrower in each of the loans was the Corporacion de Fomento de la Produccion, the government agency responsible for promoting economic development in Chile. Grace Nation.al Bank of New York is participating in both loans, without the World Bank's guarantee, to a total of $200,000; this represents $100,000 of the first maturities of each of the loans faJ.ling due in 1962 and 1963. Chilean coal now accounts for about one fourth of the country's total energy supply. The Schwager and Lota companies produce about 80% of all the coal I mined in Chile. The modernization and expansion of their operations is essential if Chile is to continue to produce xoost of its own coal requirements. The pro- jects being carried out With Bank assistance will enable the companies to increase production from the present level of 1.65 million tons to 2.2 million tons by 1964. If Chile had to import this much coaJ., it would cost the equivalent of • $40 million in foreign exchange annually • Both the Schwager a.nd Lota Q,Qmpanies are joint stock corporations whose ownership is widely distributed. Their mines are located on the Bay of Arauco, about 300 miles south of Valparaiso. The mine presently being worked by  j - 2 - • Schwager is nearing the end of its economic life so it is essential that the company open a new mine area if it is to continue operations. Schwager has aJ.ready spent the equivaJ.ent of $5.9 million of its own funds on sinking a new shaft, driving new galleries and on the installation of equipment. The Bank loan will enable the company to proceed with this project. When it is completed Schwager will be able to increase production from the present level of 750,000 tons of coaJ. annually to 1,100,000 tons in 1964. The total cost of developing and equipping the new mine during the period 1957-62 is estimated at the equivalent of $25~7 million. The Bank's loan of $12.2 million will provide most of the foreign exchange requirements during that period and will pay for hoisting equipment, underground haulage and electricaJ. equipment, face and rock-work equipment, and a coal preparation plant. • The Lota. project consists mainly of completing the development of a new mi.ne, the Pique Carlos Cousino, where most of the company's re~e:r·q-es of coal are located. Lota. has already spent the equivalent of about $3.2 million from its own resources to install new equipment and sink two new sha:f'ts. The Bank's loan of $9.6 million will finance the foreign exchange costs of the equipment needed for the improvement and reconstruction o:.f: coal haulage installations, for the construction df a new coal preparation plant with storage and loading facilities :/ for rock-work development. The total cost of the work to be undertaken in the period 1957-1962 is estimated at the equivalent of $15,875,000. When it is completed, the annual production of coal at the Lota mine Will increase from 900,000 tons to 1.1 million tons annually; production costs should be 1 : reduced a.nd sales receipts increased because of the better grade of coaJ. which the improved plant will provide and also because of less breakage of coal with C .. • new handling and haulage equipment • Both loans are for a term of 15 yea.rs and bear interest of the 1% connnission which is allocated to the Bank's Special Reserve. 5-3/4% including Amortization  - 3 - • of the $12.2 million Schwager loan will begin April 15, 1963, and of the $9.6 million Lota loan on October 15, 1962. The loans are guaranteed by the Government of Chile. After having been approved by the Bank's Executive Directors, the loan documents were signed by His Excellency Mariano Puga, Chilean Ambassador in Washington, on behalf' of the Government of Chile, by Sr. Joaquin Figueroa, New York Representative, for Corporacion de Fomento de la Produccion, by Sr. Francis I. Sharman, Manager) for Compania Carbonif'era y a.e Fundicion Schwager, by Sr. Guillermo Videla L., General Manager, for Ccj)lpania ca..r·bonii'era e Industrial de Lota, .a."ld by Mr. W.A.B. Iliff, Vice President, for the World Bank • • i ' ~' i ",._:_ -- -- ..