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From major to miner
05 May 2011
Multilaterals and ECAs are the lifeblood for small mining projects in the sub-Saharan region. But debt is still costly, terms vary and not all are willing to take African risk. By Sarah Rundell.
The IFC’s recently announced $300 million budget for investment in African mining companies over the next three years is indicative of the essential and increasing role development banks and multilateral agencies have in African mining.
For large, listed, cash-rich operators with established track records, tapping the commercial debt market has become easier since the credit crisis. For smaller or less creditworthy borrowers, or those just wanting to operate in risky African countries, ECA and development bank support is vital in helping access long-term, cheaper finance. As the continent offers up more projects in testing jurisdictions such funding sources will increasingly come to the fore.
Commercial lenders won’t consider Africa risk without multilateral and ECA support, and even then debt is expensive by developed market standards – a measure of the risk involved. For example, AIM-listed mining group Mwana Africa’s Freda Rebecca gold mine, located near Bindura, recently drew on a...
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