Sinosure key to Sino-Russian mining first

Author: | Published: 9 Feb 2011

China’s export credit insurer has wrapped 95% of the economic and political risk in its first financing of a mining project in Russia.

Sinosure offered its maximum coverage to Hong Kong-listed IRC’s $400 million iron ore project in the Jewish Autonomous Region (EAO region) in Russia’s far east. Its full support was crucial in securing the first Chinese-backed project in the resource rich region.

Historically Sinosure covers up to 50% of commercial risk in limited or non-recourse financings. But it’s now more flexible with this risk and a guarantee from IRC’s majority shareholder Petropavlovsk allowed for nearly full coverage.

Sinosure maintained its recent preference of keeping separate counsel to the banks. But it benefited from input by lender ICBC and its counsel Allen & Overy on Russian mining regulations and its impact on loan terms and the covenant package.

The deal’s lawyers made two points which...