While the preponderance of Absa Corporate and Merchant Bank
resource funding is still in Southern Africa, the challenge is to
increase offshore resource funding, says head of resources Bobby
Jurd.
While the bank has been funding projects in Africa for more than 15
years, the last two years saw increased emphasis on resource
projects in the rest of Africa and other parts of the world, he
notes.
Jurd describes how the bank is proactively aligning itself with
countries that have high mineral wealth potential.
Those countries that are believed to have considerable mineral
prospects are the Democratic Republic of Congo, Angola, Zambia and
Tanzania.
Other countries which are mineral ribuy paper recycling plantch include Zimbabwe, Ghana,
Mali and Burkina Faso.
„The bank assesses sovereign, financial and technical risk of all
projects,“ says Jurd, noting that its policy is not to shy away
from countries where there are interim political problems.
Among the more significant deals that it has made locally this year
are the R160-million funding for the Palabora mine’s underground
expansion; the $187-million funding for the Angquarries riversand in johannesburglo-De Beers
transaction; a R270-million Harmony loan; and a R120-million
Eyesiswe loan to the first substantial empowerment mining project
in South Africa.
In Africa, it has provided funding support at Anglo-Ashanti-owned
Geita as well as provided investment finance for Impala Platinum
when it acquired part of the Zimplats Ngezi operation in
Zimbabwe.
In total, the bank has between 30 and 40 African recost for setting coal crushersources projects
outside of South Africa in the project stage.
Interestingly, of the top ten of the Financial Mail’s market
value-added ranking of South African companies over the last five
years, five are mining companies, namely Anglo American, Anglo
Platinum, Billiton, Implats and De Beers.
All of these have global strategies that the bank is interested in
being a part of as is demonstrated in its support in the fundinaggregates crushers for saleg of
Anglogold’s project in Canada; support in the funding of Billiton’s
$40-million Worsely alumina refinery expansion in Western
Australia; Billiton’s Cerra Matosa nickel refinery expansion in
Colombia; Billiton’s Mozal I project in Mozambique; and potentially
also its Mozal II project.
Jurd notes that the bank has identified what these clients are
looking for in a bank, and found that it is important that legal
documents not be volmobile crusher for big stonesuminous; that the bank has limited recourse to
their balance sheet; that clients have the latitude to reschedule
or restructure their debt should circumstances change; that they
have maximum certainty in the face of possible changes in fiscal
regime; and that they have the flexibility to pursue other avenues
in parallel, such as corporate bonds.
The bank has also identified a trend towards debt funding –
in particular investment banking and project finance – as
mining majors become stretched through consolidation in world
mining, global mergers, acquisition programmes in chrome and
platinum resources, and empowerment-related mining activity in
South Africa.
Another trend that it has noticed is the increased demand for
mining venture capital among smaller projects, especially diamond
and coal projects less than R50-million in value.
It is the company’s intention to increase its participation in this
sector, reveals Jurd.
He notes that the bank is also watching the transition in the South
African gold and coal sectors to a harvest mode.
Gold output has been in decline for several years, and
internationally-traded steamcoal exports will probably reach a
plateau at 85-million tons a year, he explains.
Jurd stresses that it is the seven-person resources division’s aim
to facilitate customised, innovative solutions for clients in a way
that links the corporate and merchant bank products in an optimal
way to the resource client’s needs.