Gabriel de Lastours
Senior Banker
Mining On Top: Africa – London Summit: Investment Outlook Panel
25th June 2013
© European Bank for Reconstruction and Development 2013 | www.ebrd.com
Key factors for investment decision in Mining
The EBRD experience
2
Table of Contents
1. EBRD and the Mining sector
2. Key external factors for investment decision
3. Case Studies
3
EBRD – Countries of Operations
4
EBRD – Snapshot
� Invested over €79 billion* in more than 3,654 projects since 1991.
� In 2012:
– €7.0 billion invested in 297 projects
– 79% of projects in private sector
– 84% was Debt, 16% Equity
* Data as at 31th December 2012
EBRD Portfolio
5
EBRD – Southern and Eastern Mediterranean
New IFI in the region
• Four new countries of operations in the Southern and Eastern Mediterranean (SEMED): Egypt, Jordan, Morocco and Tunisia
• Officially started lending in 2012
• Target investment of €2.5bn p.a. in SEMED
• Open for business with both private and public operators in mining sector
• Policy dialogue with authorities will be a key component of EBRD engagement in SEMED
• Pipeline currently being built in Mining sector across all four countries
A growing portfolio
A good start
• Net Cumulative Investment of €280 million over 2012 and H12013*
• Total project value of €750 million
*As at 18th June 2013
6
EBRD – Mining
EBRD Natural Resources team
• 25 Bankers in London, Moscow, Kiev, Almaty, Sofia, Ulaan Baatar and Istanbul
• Full-time mining engineer
• EBRD’s first Mining Operations Policy approved in October 2012
Mining projects (1999-2012)
By sub-sectorBy region
Current Natural Resources Portfolio
• EBRD Financing: €4.7 billion
• Total Project value: €23.3 billion
19%
40%19%
11%11%
South EasternEuropeMongolia
Central Asia
Russia
Eastern Europe &Caucasus
35%
28%10%
26% 1%
Coal
Precious metals
Steel making rawmaterialsBase metals
Support Activities
7
Gold
Coal
Precious metals & other
Mining Support &Services
Central Asia & CaucasusCentral & SE Europe Mongolia
Karelsky Okatysh (2004)
SUAL (2004)
Lydian (2009) Tirex (2008)
Russia
GV Gold (2011)
Imperial Mining (2008)
High River Gold (2005)
Buryatzoloto (2001)
Zarafshan (2000)
Centerra Gold (2004, 2010)
Dundee (2013)
Hambledon (2012)
Dundee(2005, 2008, 2010)
Arcelor Mittal Temirtau (2007)
AIDD (2007)Leighton (2010)
Energy Resources (2009, 2010)MAK (2007)
Sadovaya Coal (2011)EPS (2011)Coal Energy (2012)
Mining – Selected Transactions
Altain Khuder (2012) MAK (2012)
8
List of Contents
1. The EBRD and the Natural Resources sector
2. Key external factors for investment decision
3. Case studies
9
Challenges
• Direct or indirect state intervention remains significant in the sector
• Explicit export tariffs and other distortions limit competition in the sector
• Weak institutions and governance in resource-dependent countries
EBRD Operational Priorities
• Focus on supporting private operators, including junior players
• Active policy dialogue to improve reliability, transparency and stability oflegislative and regulatory frameworks
• Transparency: Support implementation of disclosure of payments followingEITI principles and EU and US regulation
Key external factorsSupporting stronger and reliable institutions
10
Challenges
• Structural constraints exist along the mining value chain (transportinfrastructure, processing, suppliers)
• Gaps remain for technology adoption and availability of skilled personnel
• Coverage and depth of environmental, health, safety and social (ESH&S)regulation falls short of best international standards
EBRD Operational Priorities in Mining
• Financing of key transport infrastructure, as well as utilities (power, water)
• Promoting small businesses supplying the mine.
• Support the introduction of modern equipment, best practises
• EBRD assists in implementing the best ESH&S standards, includingIFC/EBRD policy, key EU Directives on Mine Waste, Water, EIA, BAT
Key external factorsSupporting the mining value chain
11
List of Contents
1. The EBRD and the Natural Resources sector
2. Key external factors for investment decision
3. Case studies
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12
Independent mining companySEMED (expected 2013)
• Total Project value: $20 million
• EBRD corporate loan of $15 million
• Independent medium-sized mining companyoperating in a SEMED country of operation
• Financing infrastructure to switch to a direct linkto the electricity national grid
• Financing plant modernisation with the aim ofincreasing production capacity
EBRD value-added
• Supporting medium sized private operator inEBRD country of operation
• Introducing best ESH&S practices
• Introducing compliance with EITI principles andIFRS accounting standards
• Supporting energy efficiency by replacing costlyand polluting diesel power generation
• Encouraging switch to a less subsidised sourceof power
Overview Key Figures
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13
Oyu TolgoiMongolia (expected 2013)
• Total Project value: $22 billion
• EBRD financing includes:
� Up to $400 million A-type loan (15 year)
� Up to $1 billion B-type loan (12 year) in a limited recourse project finance
• World’s largest copper/gold deposit: M&Iresources of 41blb copper and 21Moz gold
• Largest single investment in Mongolian historyand proposed financing would be largest everraised in the country
• Project controlled by Rio Tinto (66%) withGovernment of Mongolia involvement (34%)
EBRD value-added
• Supporting large FDI and greater private sectorparticipation in copper production dominated bystate sector
• Promoting skills transfer from a leadingstrategic investor, through the adoption ofworld-class mining technology
• Setting higher EHSS and transparencystandards, including compliance with EITI
• Supporting backward linkages to suppliers andcontractors in the mining sector and promotingthe development of SMEs
Overview Key Figures
14
Contact
Gabriel de Lastours
Senior BankerNatural ResourcesEuropean Bank for Reconstruction and Development
One Exchange Square, EC2A 2JN, London, United KingdomTel: +44 207 338 7647E-mail: [email protected]
Web: www.ebrd.com
EBRD Mining Operations Policy: www.ebrd.com/downloads/policies/sector/mining-operations-policy.pdf
Gabriel de Lastours
Senior Banker
Mining On Top: Africa – London Summit: Investment Outlook Panel
25th June 2013
© European Bank for Reconstruction and Development 2013 | www.ebrd.com
Key factors for investment decision in Mining
The EBRD experience
2
Table of Contents
1. EBRD and the Mining sector
2. Key external factors for investment decision
3. Case Studies
3
EBRD – Countries of Operations
4
EBRD – Snapshot
� Invested over €79 billion* in more than 3,654 projects since 1991.
� In 2012:
– €7.0 billion invested in 297 projects
– 79% of projects in private sector
– 84% was Debt, 16% Equity
* Data as at 31th December 2012
EBRD Portfolio
5
EBRD – Southern and Eastern Mediterranean
New IFI in the region
• Four new countries of operations in the Southern and Eastern Mediterranean (SEMED): Egypt, Jordan, Morocco and Tunisia
• Officially started lending in 2012
• Target investment of €2.5bn p.a. in SEMED
• Open for business with both private and public operators in mining sector
• Policy dialogue with authorities will be a key component of EBRD engagement in SEMED
• Pipeline currently being built in Mining sector across all four countries
A growing portfolio
A good start
• Net Cumulative Investment of €280 million over 2012 and H12013*
• Total project value of €750 million
*As at 18th June 2013
6
EBRD – Mining
EBRD Natural Resources team
• 25 Bankers in London, Moscow, Kiev, Almaty, Sofia, Ulaan Baatar and Istanbul
• Full-time mining engineer
• EBRD’s first Mining Operations Policy approved in October 2012
Mining projects (1999-2012)
By sub-sectorBy region
Current Natural Resources Portfolio
• EBRD Financing: €4.7 billion
• Total Project value: €23.3 billion
19%
40%19%
11%11%
South EasternEuropeMongolia
Central Asia
Russia
Eastern Europe &Caucasus
35%
28%10%
26% 1%
Coal
Precious metals
Steel making rawmaterialsBase metals
Support Activities
7
Gold
Coal
Precious metals & other
Mining Support &Services
Central Asia & CaucasusCentral & SE Europe Mongolia
Karelsky Okatysh (2004)
SUAL (2004)
Lydian (2009) Tirex (2008)
Russia
GV Gold (2011)
Imperial Mining (2008)
High River Gold (2005)
Buryatzoloto (2001)
Zarafshan (2000)
Centerra Gold (2004, 2010)
Dundee (2013)
Hambledon (2012)
Dundee(2005, 2008, 2010)
Arcelor Mittal Temirtau (2007)
AIDD (2007)Leighton (2010)
Energy Resources (2009, 2010)MAK (2007)
Sadovaya Coal (2011)EPS (2011)Coal Energy (2012)
Mining – Selected Transactions
Altain Khuder (2012) MAK (2012)
8
List of Contents
1. The EBRD and the Natural Resources sector
2. Key external factors for investment decision
3. Case studies
9
Challenges
• Direct or indirect state intervention remains significant in the sector
• Explicit export tariffs and other distortions limit competition in the sector
• Weak institutions and governance in resource-dependent countries
EBRD Operational Priorities
• Focus on supporting private operators, including junior players
• Active policy dialogue to improve reliability, transparency and stability oflegislative and regulatory frameworks
• Transparency: Support implementation of disclosure of payments followingEITI principles and EU and US regulation
Key external factorsSupporting stronger and reliable institutions
10
Challenges
• Structural constraints exist along the mining value chain (transportinfrastructure, processing, suppliers)
• Gaps remain for technology adoption and availability of skilled personnel
• Coverage and depth of environmental, health, safety and social (ESH&S)regulation falls short of best international standards
EBRD Operational Priorities in Mining
• Financing of key transport infrastructure, as well as utilities (power, water)
• Promoting small businesses supplying the mine.
• Support the introduction of modern equipment, best practises
• EBRD assists in implementing the best ESH&S standards, includingIFC/EBRD policy, key EU Directives on Mine Waste, Water, EIA, BAT
Key external factorsSupporting the mining value chain
11
List of Contents
1. The EBRD and the Natural Resources sector
2. Key external factors for investment decision
3. Case studies
To help protect your privacy, PowerPoint has blocked automatic download of this picture.
12
Independent mining companySEMED (expected 2013)
• Total Project value: $20 million
• EBRD corporate loan of $15 million
• Independent medium-sized mining companyoperating in a SEMED country of operation
• Financing infrastructure to switch to a direct linkto the electricity national grid
• Financing plant modernisation with the aim ofincreasing production capacity
EBRD value-added
• Supporting medium sized private operator inEBRD country of operation
• Introducing best ESH&S practices
• Introducing compliance with EITI principles andIFRS accounting standards
• Supporting energy efficiency by replacing costlyand polluting diesel power generation
• Encouraging switch to a less subsidised sourceof power
Overview Key Figures
To help protect your privacy, PowerPoint has blocked automatic download of this picture.
13
Oyu TolgoiMongolia (expected 2013)
• Total Project value: $22 billion
• EBRD financing includes:
� Up to $400 million A-type loan (15 year)
� Up to $1 billion B-type loan (12 year) in a limited recourse project finance
• World’s largest copper/gold deposit: M&Iresources of 41blb copper and 21Moz gold
• Largest single investment in Mongolian historyand proposed financing would be largest everraised in the country
• Project controlled by Rio Tinto (66%) withGovernment of Mongolia involvement (34%)
EBRD value-added
• Supporting large FDI and greater private sectorparticipation in copper production dominated bystate sector
• Promoting skills transfer from a leadingstrategic investor, through the adoption ofworld-class mining technology
• Setting higher EHSS and transparencystandards, including compliance with EITI
• Supporting backward linkages to suppliers andcontractors in the mining sector and promotingthe development of SMEs
Overview Key Figures
14
Contact
Gabriel de Lastours
Senior BankerNatural ResourcesEuropean Bank for Reconstruction and Development
One Exchange Square, EC2A 2JN, London, United KingdomTel: +44 207 338 7647E-mail: [email protected]
Web: www.ebrd.com
EBRD Mining Operations Policy: www.ebrd.com/downloads/policies/sector/mining-operations-policy.pdf
