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ECAs fill the gap in big-ticket mining
29 July 2010
The fall in the price of commodities and natural resources combined with a dearth of commercial debt has resulted in an increase in multilateral and export credit agencies lending to mining developers. Catherine McGuirk reports.
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[EDC]
[KfK]
[JBIC]
[Kexim]
[CDB]
[Chexim]
The cost of bringing major mining projects online has risen sharply in recent years, and commercial lenders struggle, in a still-constricted credit market, to provide all the capital that mine developers require. “Getting transactions done in the bank market at the moment is nearly impossible,” explains one mining developer, “at least with a manageable number of institutions.”
While some sponsors have opted for an all-equity solution for their developments, as Moly Mines has on its Spinifex Ridge molybdenum project, borrowers have been leaning ever more heavily on multilateral lenders and and export credit agencies (ECAs).
Barbara O’Boyle, vice-president, project and structured finance at US Ex-Im Bank, notes that, “Commercial banks have had to pull back on lending as funding is less readily available, and as a result the ECAs have seen much more activity. We’re much busier when it’s a bad market, but it will change....
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