Chilean Copper Company in Ground-Breaking Joint Venture with Chinese Company

February 22, 2006

Cleary Gottlieb represented long-standing client Corporación Nacional del Cobre de Chile (Codelco), the largest copper producer in the world and a state-owned company of Chile, in its joint venture with China Minmetals Non-Ferrous Metals Co., Ltd. (Minmetals), a state-owned company of China. The transaction is believed to be the first of this nature between Latin American and Chinese companies. The parties entered into definitive documentation in a signing ceremony in the Hall of the People in Beijing on February 22, 2006.

The transaction represents an innovative financing structure for Codelco, in which the company receives a $550 million up-front payment in exchange for agreeing to supply the joint venture with 55,750 tons of copper cathodes per year for fifteen years. Upon delivery of the copper cathodes, Codelco will receive a price balance per ton adjusted for certain changes in inflation and market prices for copper cathodes. In exchange, Minmetals receives a supply of copper cathodes from the joint venture at market prices for fifteen years.

Debt financing is being provided by China Development Bank, the state-owned development bank of China. The debt financing is structured as a project finance without recourse to Codelco. The purchase of the copper supply contract from Codelco is being financed with equity contributions from Codelco and Minmetals of $110 million each and debt financing of $330 million from China Development Bank.