Announcement of World Bank Lends Eighty Million Dollars for Nickel Project in Colombia on October 18, 1979

. " OR IMMEDIATE RELEASE , •World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 80/15 October 18, 1979 WORLD BANK LENDS $80 MILLION FOR NICKEL PROJECT IN COLOMBIA The World Bank has approved a loan of $80 million to Cerro Matoso, S.A., of Colombia, for the development of a nickel laterite deposit near the town of Mantel ibano, Department of Cordoba, in northwestern Colombia. The exploitation of the deposit is expected to produce about 20,000 dry metric tons of nickel contained in ferronickel with a grade of 37.5%, for export. The project will include the construction and operation of an open pit mine, single line ore processing facilities, ancillary on-site facilities, a town-site, a river wharf, an access road, a natural gas pipeline, and airstrip improvements. The company plans mining and beneficiation of an annual average of approximately 780,000 dry metric tons of ore, grading about 2.7% nickel. Total cost of the project is estimated at $340 million. • The project's main objective will be to support Colombia's efforts to diversify exports. At full production, expected to be reached around 1985, it would produce about 60,000 metric tons of ferronickel annually. Exports would yield about $200 mil lion in additional export revenues, representing approximately 7% of gross revenues from the country's non-coffee exports in 1985. Cerrc :latoso, S.A. will be responsible for project execution with extensive technical support from Hanna Mining Company (U.S.). Cerro Matoso, S.A. was incorporated in March 1979. Its shareholders are an agency of the Colombian government, a· subsidiary of Hanna Mining Company, and Billiton Overseas Limited, a member of the Royal Dutch Shell Group. Marketing of the project's output would be assured through a long- term take-or-pay contract to be entered into between Cerro Matoso,S.A. and Billiton Metals and Ores International B.V., another member of the Royal Dutch Shell Group. Besides the World Bank loan, additional long-term financing will be provided by the Chase Manhattan Bank ($120 mi 11 ion) and the U.S. Export- Import Bank ($25.6 million). The World Bank loan to Cerro Matoso, S.A., which will have the guarantee of the Republic of Colombia, will be for a period of 14 years, including 4 years of grace, with annual interest at 7.9% . • NOTE: Money figures are expressed in U.S. dollar equivalents. FORM NO. 1121 (5-76) T E C HN I CA L D A T A PROJECT: COUNTRY: TOTAL COST: Cerro Matoso Nickel Colombia $340 million • BANK FINANCING: $80 million for a period of 14 years, including 4 years of grace; interest, 7.9% per annum. OTHER FINANCING: Chase Manhattan Bank, $120 million; U.S. Export-Import Bank, $25.6 million; shareholders' equity: up to $200 million. IMPLEMENTING ORGANIZATION: Cerro Matoso, S.A. Apartado Aereo 6823 Bogota, D.E., Colombia TELEX: 396-041216-CEMSA-CO PROJECT DESCRIPTION: Construction and operation of an open pit mine, single line ore processing facilities, ancillary on-site facilities, a town-site, a river wharf, an access road, a natural gas pipeline, and airstrip improvements. The project is expected to mine and beneficiate 780,000 dry metric tons (DMT) p.a. of ore, grading about 2.7% nickel, to produce • about 20,000 DMT of nickel contained in ferronickel with a grade of 37.5% for expo rt. PROCUREMENT: Equipment and materials financed by the Bank loan will be procured through international competitive bidding, except for about 16 equipment packages and other items to be procured through international shopping, also in conformity with Bank guidelines. Local bidders will be given a margin of preference equal to 15% of the c.i.f. price or the duty applicable to non-exempted importers, whichever is less. CONSULTANTS: Technical and engineering services have been or will be contracted under the project specifications. ECONOMIC RATE OF RETURN: ESTIMATED COMPLETION DATE: 19% 1985 - 0 - •