Background to EXIM Support for Critical Minerals
Critical minerals are essential to the global economy and to the technologies powering the clean energy transition – especially in energy storage and the battery supply chain. Without critical mineral inputs, it is not possible to build diverse, secure, and sustainable battery supply chains.
The Export-Import Bank of the United States (EXIM) has provided financing solutions for mining and energy sector transactions for decades and has world-class expertise analyzing technical, legal, and financial risks in the mining and energy sectors.
EXIM’s existing financing solutions can be deployed for critical energy minerals projects – from mines to gigafactories in the U.S. or abroad – at the scale necessary to meet the needs of U.S. companies and promote diverse, secure, and sustainable battery supply chains.
Typical mineral compositions in battery chemistries
Source: Dept of Transportation
EXIM’s China and Transformational Exports Program (CTEP) is a 2019 Congressional mandate to help U.S. exporters facing competition from the People's Republic of China (PRC) and ensure the U.S. continues to lead in the 10 Transformational Export Areas.
Critical minerals projects eligible for consideration under the CTEP mandate may qualify for additional financing flexibilities:
- Extended loan tenors.
- Exceptions from EXIM’s Country Limitation Schedule (CLS), as applicable.
- Extended drawdown.
- Reduced fees.
- Content flexibility.
Critical Minerals Project Requirements
EXIM adheres to the OECD Arrangement on Officially Supported Export Credits (Arrangement). EXIM’s Make More in America (MMIA) initiative is generally applied on terms that are consistent with Arrangement requirements.
EXIM support for critical mineral transactions is subject to compliance with the following:
- EXIM’s Environmental & Social Due Diligence Procedures and Guidelines (ESPGs)
- International Finance Corporation (IFC) Performance Standards
- Any relevant third country (exporter or host country) and internationally accepted safety and performance standards, and other U.S. government policy
EXIM Critical Minerals Financing Products
All EXIM financing products are generally available for the critical minerals sector, including each of the products described below.
Letter of Interest and Preliminary Commitment
A Letter of Interest (LI) is a non-binding indication of EXIM’s general interest in a proposed transaction or project and provides indicative general financing terms that EXIM is prepared to consider based on a limited review of the transaction/project.
EXIM Preliminary Commitments (PCs) are non-binding preliminary offers of financing terms based on a credit evaluation and policy review, then approved by EXIM’s Board of Directors. PCs require more stringent due diligence standards than LIs, but less stringent standards for final commitments.
Engineering Multiplier Program
EXIM’s existing Engineering Multiplier Program (EMP) provides direct loans or guarantees of commercial bank loans for pre-implementation stage technical services for foreign projects. EMP loans have a maximum five-year loan repayment tenor, which may be folded into the long-term financing of covered projects if they proceed with EXIM support with tenors of up to 18 years and 22 years if eligible under the Climate Change Sector Understanding (CCSU).
The EMP is designed to generate additional exports of U.S. goods and services overall (the "multiplier effect"), since the foreign buyer is more likely to procure U.S. equipment and construction services for a project for which U.S. engineers, designers, architects, and/or environmental analysts undertook the feasibility study, design, and other pre-project work. EMP loans finance feasibility studies, pre-construction design, engineering, architectural and environmental services undertaken prior to commencement of the implementation phase of a physical project.
Long-Term Export Credit Products (Buyer Financing)
For critical minerals projects ranging from mines to gigafactories, EXIM offers long-term buyer financing in the form of direct loans from EXIM and EXIM-guaranteed commercial bank loans with repayment terms of up to 18 years after construction and 22 years (if eligible under the CCSU) for new-build or modernization projects.
- Sovereign financing based on the full faith and credit country risk of the relevant country.
- Corporate financing based on the borrowing capacity of a creditworthy borrower (non-sovereign public sector or private sector), as reflected on its balance sheet.
- Structured financing based on a borrower’s creditworthiness and other sources of collateral or security enhancements.
- Project financing based on project cash flows but with sovereign support for certain sectoral risk factors.
EXIM’s long-term buyer financings cover U.S. content (up to 85% of export contract), local costs (up to 40%-50% of export contract), capitalized interest during construction, and, at the Borrower’s discretion, EXIM’s exposure fee. For EXIM-guaranteed loans the interest rate is set by the relevant guaranteed lender. For direct loans, EXIM uses the CIRR (Commercial Interest Reference Rate).
Domestic Finance Products (U.S. Supplier Financing)
EXIM has four domestic finance programs, providing export credit insurance, working capital loan guarantees, supply chain finance, and export facilitation.
- Working Capital Guarantee (WCG), Supply Chain Finance Guarantee (SCFG) and Export Credit Insurance Products
- Working Capital Guarantees support U.S. businesses by making funds available to fulfill international sales orders, turning business inventory and foreign accounts receivable into collateral for EXIM-guaranteed lender who lends to the U.S. exporter.
- Supply Chain Finance Guarantees (SCFG) assist U.S. suppliers of exporters by financing accounts receivable. The SCFGs help increase liquidity in the supply chain by providing suppliers with rapid access to lower cost capital.
- Export Credit Insurance allows U.S. businesses to extend credit to foreign buyers, protect against nonpayment, and improve cash flow by indemnifying political and commercial risks of buyer non-payment and allowing businesses to extend open account terms to customers for up to 360 days. Insured exports also can increase borrowing capacity by assigning foreign receivables to lenders.
- Make More in America (MMIA) Initiative (Support to Domestic Manufacturing)
EXIM’s Make More in America Initiative (MMIA) was developed in response to President Biden’s Executive Order 14017 on American Supply Chains. It provides financing to U.S. businesses looking to build manufacturing capacity for export sales. - MMIA financing is designed to help revitalize American manufacturing, improve the resiliency of critical supply chains, and support U.S. jobs.
- Applicants may access EXIM financing for capital investments to establish or expand domestic manufacturing or infrastructure projects that facilitate U.S. exports.
- MMIA financing is provided at market rates according to the number of U.S. jobs supported by the proposed project, with each job-year unlocking up to nearly $190,000 in financing.
- All EXIM financing must supplement – not compete with – private capital.
- To qualify for critical minerals projects, domestic projects must be able to demonstrate that 15% of production or expected shipments are tied to exports – lower than the normal 25% export nexus required for MMIA.
Minerals Security Partnership
EXIM actively participates in the Minerals Security Partnership (MSP), currently chaired by the U.S. State Department, a multilateral effort aiming to accelerate the development of diverse and sustainable critical energy minerals supply chains through working with host governments and industry to facilitate targeted financial and diplomatic support for strategic projects along the value chain. MSP partners include Australia, Canada, Finland, France, Germany, India, Italy, Japan, Norway, the Republic of Korea, Sweden, the United Kingdom, the United States, and the European Union (represented by the European Commission).
September 2022 – NEW YORK – President and Chair of the Export-Import Bank of the United States (EXIM) Reta Jo Lewis joined Secretary of State Antony Blinken, Under Secretary Jose W. Fernandez, and senior ministers from nearly 20 nations for a multilateral discussion on the new Minerals Security Partnership.
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