The Industrial and Commercial Bank of China, the country’s largest bank, has agreed to take part in financing a large-scale oil refinery proposed for Kitimat.
Kitimat Clean Ltd., a company owned by Black Press chairman David Black, announced the signing of a memorandum of understanding Thursday. The agreement commits the bank to “be the Chinese financial advisor to Kitimat Clean and cooperate in the financing of the proposed Kitimat refinery and associated pipelines and other elements,” Black said in a statement.
By phone from a town near Shanghai, Black explained to the Sentinel that this deal essentially means that ICBC will become a “lead” bank which will help put together a syndicate of other banks to raise the rest of the money.
“With loans this big no bank does the whole thing,” he said.
Black said that the final details of how much ICBC itself will put up for the project isn’t yet settled.
He also doesn’t expect ICBC to be an equity provider, meaning that they wouldn’t have an ownership stake in any eventual refinery.
Meanwhile the MOU also set out Chinese involvement in the refinery’s construction and engineering.
“Chinese companies will be involved in the engineering and construction of the refinery,” Black said through this week’s release. “Up to 100 per cent of the output from the refinery is planned to be sold to Asian markets, including China and India.”
China, he said, has a lot of expertise building refineries. He said they’re building about two a year.
Black has said that the refinery would mostly be built overseas in pre-fabricated units, and only assembled at the refinery site.
However he still says the majority of the work would be in Canada, noting the needed 6,000 people to construct the project.
He added that majority control of the businesses will remain in Canada.
Liu Yanping, deputy head of corporate banking, and Huang Jifa, deputy head of investment banking at the Chinese bank, said in the statement: “We are very pleased to be working toward a comprehensive agreement to finance a refinery in Canada, which is planning to export refined fuels to China and other Asian countries in the future.”
Black released a Mustel Group poll in February that found three out of four B.C. residents support the idea to refine crude oil in Kitimat rather than export the raw product, diluted bitumen from the Alberta oil sands, by tanker.
Kitimat Mayor Joanne Monaghan gave cautious praise for the news.
“When you have 6,000 jobs to build and up to 3,000 permanent, and you don’t have to ship bitumen down the channel, it’s starting to be a good plus,” she said, emphasizing the word “starting,” saying there’s still plenty of work to be done.