US Export-Import Bank that finances Gina Rinehart, Rio Tinto shuts down

The closure of Ex-Im is a major political victory for congressional Republicans aligned to the party's radical small government Tea Party wing, who campaigned to block the reauthorisation of Ex-Im.

"This is a small step toward renewing a competitive free-market economy and arresting the rise of the progressive welfare state and the cronyism connected to it," said House financial services committee chairman Jeb Hensarling, the Republican who has led the campaign to eliminate Ex-Im.

The Ex-Im Bank, established in 1934 to boost exports in the wake of the Great Depression, is a government export credit agency offering direct loans, loan guarantees and insurance to overseas buyers of US exports where the private sector is unwilling to.

Advocates say it boosts US exports and supports American jobs. It loaned $US27 billion last year, with the vast majority of the funds benefitting major US corporations Boeing, General Electric and Caterpillar.

A spokeswoman for Ex-Im said existing transactions would continue in "full force and effect according to their terms".

However, the government financier will not be allowed to grant new loans, robbing borrowers of a potential financing source.

Mining heiress Ms Rinehart's Hancock Prospecting last year secured a $US694 million loan from Ex-Im, in return for the Roy Hill project purchasing mining and rail equipment from US companies.

Political conservatives and mining competitors in the US have cited the loan to Ms Rinehart, Australia's richest person, to argue taxpayers should not be funding foreign businesses and why Ex-Im should be shut.

A US iron ore miner, Cliffs Natural Resources, recently told a Congress hearing into the future of Ex-Im that the bank's financing of Roy Hill would exacerbate the oversupply of iron ore, lower the price of the steel-making commodity and hurt US producers.

"Hancock Prospecting is owned by Gina Rinehart, one of the richest women in the world and a highly controversial figure in Australia," Cliffs Natural Resources executive Clifford Smith told the US House financial service committee on June 3.

Origin Energy and ConocoPhillips, joint-venture partners in the Australia Pacific LNG coal seam gas project at Gladstone in Queensland, were lent $US2.9 billion by Ex-Im in 2012, as part of an $US8.5 billion loan facility from a syndicate of international banks.

BG Group borrowed $1.8 billion from Ex-Im to fund US services and equipment used in the Queensland Curtis Island LNG project.

Australian satellite company, NewSat, was loaned $US281 million by Ex-Im before filing for bankruptcy in April. Opponents seized on NewSat's failure to argue American taxpayer funds should not be risked via the government lender.

Supporters are hopeful Congress will consider legislation later in July to reopen Ex-Im.

The Obama administration said the bank has financed the sale of more than $US200 billion in US exports over the last six years, supporting over 1.3 million US jobs.

"The Export-Import Bank, or 'Ex-Im', is a critical tool in the bipartisan trade agenda that helps US businesses succeed in global markets and grow their exports," a White House spokesman said.

Mainstream pro-business Republicans, many Democrats and the US Chamber of Commerce have urged for the government financier to be renewed.

"Ex-Im is one of the most important tools at the disposal of US companies to level the playing field for trade finance as they seek to increase exports and create jobs at home," US Chamber of Commerce executive vice president for government affairs Bruce Josten said.

In 2013, Ex-Im authorised a $US500 million direct loan to finance development of Rio's Oyu Tolgoi mine. However, the financing deal lapsed after protracted negotiations between Rio and the Mongolian government.