Saturday, October 07, 2006

Japanese bank supports Turkey's steel industry

The Japan Bank for International Cooperation (JBIC) has signed a loan agreement totalling US$14 million with Borcelik Celik Sanayii Ticaret AS, a steel mill in the Republic of Turkey.

The Japan Bank for International Cooperation (JBIC) has signed aloan agreement totalling US$14 million with Borcelik CelikSanayii Ticaret AS, a steel mill in the Republic of Turkey. Theloan is cofinanced with ABN Amro Bank NV. Borcelik, based inBursa, south of Istanbul, is Turkey1s only private steel mill andthe country's second largest producer of steel sheets.

JBICwill provide a direct loan (buyer's credit) to finance theJapanese export of a complete set of reverse cold millingfacilities to the mill.

The Japanese exporter is ItochuCorporation and the domestic manufacturer is Mitsubishi-HitachiMetals Machinery.

In order to receive such loans, Turkishborrowers usually need to obtain guarantees from the Turkishgovernment or else the loans have to be extended through thegovernment itself.

This loan is the first to be given directly toa borrower, with the guarantee provided by a Turkishprivate-sector commercial bank - in this case, Yapi ve KrediBankasi AS.

Despite a growing domestic demand for steel, Turkeystill depends on imports for steel sheets.

The expansion of thiscold rolling mill will increase steel sheet production, and theadditional output is expected to replace imports.

The Japan Bankfor International Cooperation (JBIC), the result of the mergerbetween the Export-Import Bank of Japan (JEXIM) and the OverseasEconomic Cooperation Fund (OECF), was established on 1 October1999.

With its capital fully subscribed by the JapaneseGovernment, JBIC is the main institution responsible for Japan1sofficial financing overseas.

JBIC has therefore taken over theInternational Financial Operations (IFOs) of the former JEXIM,which contributed to the promotion of Japan1s exports, importsand overseas direct investment while encouraging the activitiesof private financial institutions as well as the stability of theinternational financial order.

JBIC has also taken over theOverseas Economic Cooperation Operations (OECOs) of the formerOECF as a core financial institution to assist developingcountries in their efforts to develop economic and socialinfrastructure and stabilise their economies through theprovision of low-interest and long-term yen loans on the OfficialDevelopment Assistance (ODA) terms.