Export Development Canada is joining with large Canadian banks to lend Brazil-based Vale SA $775-million (U.S.) with the aim of adding more Canadian suppliers and services to the mining giant's business.
The financing facility is comprised of $500-million from the country's Crown credit agency, and another $275-million from Royal Bank of Canada, Canadian Imperial Bank of Commerce, and Bank of Nova Scotia.
The money can be used by Vale to fund business activity around the world, and it is earmarked for capital expenditures. The company has multi-billion-dollar plans to fund initiatives such as expanding its iron-ore production and distribution network this year, though it has been working to keep a lid on costs and reduce capex.
Vale has mining operations in four provinces, including the nickel mining operations it bought as part of a high-flying $19-billion deal to acquire Inco Ltd. in 2006, and these ties have helped Canadian suppliers form relationships with the company.
Vale says this acquisition resulted in new relationships with Canadian suppliers, and that the company bought more than $3.8-billion (Canadian) in goods and services from Canadian suppliers in 2012.
But Ottawa-based EDC is now examining where Vale hopes to grow and expand in the future, and how it can help with that. The EDC is focused on both Vale's exploration efforts as well as servicing existing mining throughout the world.
"Vale benefits from a stable and dependable global financier, and they also benefit from the increasing number of Canadian companies that help them grow their global business," Rajesh Sharma, group head of global business development at EDC, said in a statement.
EDC's commitment to Latin America has deepened in recent years. The agency's total business in South and Central America was $5.5-billion last year. Brazil accounted for nearly 40 per cent of that.
EDC recently opened an office in Bogota, Colombia, to work with Canadian firms seeking business opportunities in the country's infrastructure development.
It also has six other offices in the region, including one in Vale's hometown of Rio de Janeiro as well as another in Sao Paulo. Brazil's strength in energy, infrastructure and mining makes the country a good match for the Canadian strengths. Indeed, many Latin American countries have a similar attraction.
When it comes to mining, Canadian industry professionals have experience working in difficult terrain, such as the Canadian North, which can be an advantage to other nations, EDC spokesman Phil Taylor said.
Vale was the first Brazilian company to score EDC backing in 1963, and the two organizations have maintained a relationship through the years with EDC providing funding for many of the miner's expansion initiatives in Canada. In 2010, Vale received $1-billion financing, half of which needed to be used to fund Canadian operations.
Further details on this financing are expected to be released by Vale on April 30 with their quarterly results.