CAP board approves Mitsubishi financing for desalination plant

- Wednesday, August 3, 2011

CAP board approves Mitsubishi financing for desalination plant

Chilean iron ore and steel group CAP's (BCS: CAP) board approved a partnership with Japanese corporation Mitsubishi for the joint financing of a US$180mn project to build a desalination plant in northern region III, the former said in a filing sent to securities and exchange regulator SVS.

The plant, aimed at processing 200l/s of seawater in an initial phase and supplying industrial-grade water for CAP's Cerro Negro Norte iron ore project, will be financed one-third by equity and two-thirds by loans.

Under the agreement, CAP will contribute 51% of the equity financing, while the remainder will come from Mitsubishi, the company said in the filing.

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CAP's board also approved a shareholders' agreement that will give Mitsubishi a stake in Cleanairtech, the former's subsidiary in charge of developing the desalination plant.

Both companies also agreed to the signing of an MOU to jointly evaluate CAP's renewable power projects in regions III and VIII, CAP said.

Mitsubishi owns a 25% stake in iron ore producer CMP, which is controlled by CAP and is the developer of the US$575mn Cerro Negro Norte project and the US$342mn expansion project at the Los Colorados iron ore operation.

Once the projects are completed, scheduled for 2013, CAP's total iron ore output will increase from the current 11Mt/y to 17Mt/y.

Output could grow to 40Mt/y by investing around US$3bn before the end of this decade, chairman Roberto de Andraca previously said.