A USD 1 billion stainless-steel plant in Indonesia has received project financing from the Bank of China and a group of onshore and offshore lenders.

The plant, owned by Shanghai Stock Exchange-listed logistics services company Xiamen Xiangyu, comprises a nickel mine, a 2.5 million metric tonne per year stainless steel smelting plant, a 1,440 MW thermal power project and a 40 million metric tonne multi-functional port.

One of the largest project financings in Asia in 2020, the project has been labelled by the Chinese government as “a classic example of Belt-and-Road Initiative in practice”.

The Belt-and-Road Initiative is a global infrastructure development strategy which was adopted by the Chinese Government in 2013 with the aim of investing in an array of international organisations.

The multi-layered project financing included a dual-currency facility allowing money to be drawn out in both RMB and USD. The facility has also been designed to benefit from coverage by commercial insurance and protection by Beijing-headquartered China state owned insurance company Sinosure.

The group of 11 banks contributing to the financing were onshore-weighted, comprising seven onshore and four offshore lenders. The lenders included Bank of China, China Development Bank, Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, CITIC Bank, China Merchants Bank and Tai Feng Bank.

Pinsent Masons advised the Bank of China on the financing, with lead partner Kanyi Lui highlighting, in a statement, that there is increasing evidence of “more sophisticated financing deals in China due to higher funding costs and increasing regulatory scrutiny”, meaning that “having the right expertise and resource across multiple jurisdictions and throughout the project life cycle” is critical.

According to a press release by stainless steel and special alloy materials company Kaysuns, the stainless steel project, once in operation, will improve infrastructure conditions in Indonesia, provide jobs and promote the country’s economic development.

In March last year, British Steel completed the sale of its United Kingdom and Netherlands assets to Chinese steelmaker Jingye Group.

In November, Celsa Huta Ostrowiec, one of the largest steel producers in Europe, called on Linklaters on its acquisition of processor and seller of reinforcing steel products, Stal-Service.