Australian taxpayers will lend $110 million to BHP Billiton and Rio Tinto to expand a mine in Chile.

The two hugely profitable companies will receive the government loan through the federal government’s Export Finance and Insurance Corporation (EFIC).

The EFIC is technically a government body, but operates with a considerable degree of autonomy and is exempt from freedom of information laws. As such, the terms of the loan are unclear and the interest rate has not been revealed.

EFIC will give $US100 million to a holding company called Minera Escondida Limitada, which is involved in operating the Escondida copper mine in Chile.

The expansion is being backed by a number of international groups, and will reportedly cost well over $3 billion.

Minera Escondida Limitada is 57.5 per cent owned by BHP and 30 per cent owned by Rio, with Japanese companies Mitsubishi and Nippon Mining sharing the remaining the remaining 12.5 per cent.
EFIC spokesperson Peter Field said the idea was that BHP and Rio would try to secure export contracts for about eighty companies in Australia.

“From our perspective this is all about Australian jobs,” he said.

“Our funding is very much tied to the incremental provision of exports from Australians.”

“This has opened up an opportunity to these 80 Australian companies to pitch their wares and they have all now been contracted to provide their inputs.”

The decision has been slammed from various directions including by the Productivity Commission, which recently criticised EFIC for handing money to big multinational companies rather than smaller exporters.

Greens senator Lee Rhiannon said the decision was out-of-sync with the federal government’s supposed stance.

“The Prime Minister says the age of entitlement is over but this handout is going to BHP and Rio, two companies that should not be getting any handouts at all,” she said.

“EFIC is exempt from freedom of information and environmental protection laws but government money is being used to assist this copper mine. People should be able to find out how this agency operates.”

Trade Minister Andrew Robb said the decision was made by EFIC’s commercial account, not the government, but it was not a handout.

“This is certainly no hand-out. EFIC operates independent of government within an established commercial framework supporting viable companies where there is a financial gap in the market,” he said.

“Eighty per cent of EFIC loans are provided to SMEs [small and medium enterprises]. Any loans that may benefit larger companies are only provided if they lead to a significant number of Australian SMEs gaining access to export opportunities that would not otherwise eventuate.”

BHP paid close to $US9 billion in tax to Australian state and federal governments last year, while Rio Tinto paid around $US5.7 billion.