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Investment outlook: what investors are looking for - Gabriel de Lastours

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Investment outlook: what investors are looking for …

Investment outlook: what investors are looking for
Speaker: Gabriel de Lastours

Mining On Top: Africa - London Summit
25-26 Jun 2013 | London

Published in: Education, Business, Technology
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  • 1. 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. 2 Table of Contents 1. EBRD and the Mining sector 2. Key external factors for investment decision 3. Case Studies
  • 3. 3 EBRD – Countries of Operations
  • 4. 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. 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. 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 Eastern Europe Mongolia Central Asia Russia Eastern Europe & Caucasus 35% 28% 10% 26% 1% Coal Precious metals Steel making raw materials Base metals Support Activities
  • 7. 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. 8 List of Contents 1. The EBRD and the Natural Resources sector 2. Key external factors for investment decision 3. Case studies
  • 9. 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 of legislative and regulatory frameworks • Transparency: Support implementation of disclosure of payments following EITI principles and EU and US regulation Key external factors Supporting stronger and reliable institutions
  • 10. 10 Challenges • Structural constraints exist along the mining value chain (transport infrastructure, 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, including IFC/EBRD policy, key EU Directives on Mine Waste, Water, EIA, BAT Key external factors Supporting the mining value chain
  • 11. 11 List of Contents 1. The EBRD and the Natural Resources sector 2. Key external factors for investment decision 3. Case studies
  • 12. To help protect your privacy, PowerPoint has blocked automatic download of this picture. 12 Independent mining company SEMED (expected 2013) • Total Project value: $20 million • EBRD corporate loan of $15 million • Independent medium-sized mining company operating in a SEMED country of operation • Financing infrastructure to switch to a direct link to the electricity national grid • Financing plant modernisation with the aim of increasing production capacity EBRD value-added • Supporting medium sized private operator in EBRD country of operation • Introducing best ESH&S practices • Introducing compliance with EITI principles and IFRS accounting standards • Supporting energy efficiency by replacing costly and polluting diesel power generation • Encouraging switch to a less subsidised source of power Overview Key Figures
  • 13. To help protect your privacy, PowerPoint has blocked automatic download of this picture. 13 Oyu Tolgoi Mongolia (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&I resources of 41blb copper and 21Moz gold • Largest single investment in Mongolian history and proposed financing would be largest ever raised in the country • Project controlled by Rio Tinto (66%) with Government of Mongolia involvement (34%) EBRD value-added • Supporting large FDI and greater private sector participation in copper production dominated by state sector • Promoting skills transfer from a leading strategic investor, through the adoption of world-class mining technology • Setting higher EHSS and transparency standards, including compliance with EITI • Supporting backward linkages to suppliers and contractors in the mining sector and promoting the development of SMEs Overview Key Figures
  • 14. 14 Contact Gabriel de Lastours Senior Banker Natural Resources European Bank for Reconstruction and Development One Exchange Square, EC2A 2JN, London, United Kingdom Tel: +44 207 338 7647 E-mail: Delastog@ebrd.com Web: www.ebrd.com EBRD Mining Operations Policy: www.ebrd.com/downloads/policies/sector/mining- operations-policy.pdf
  • 15. 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
  • 16. 2 Table of Contents 1. EBRD and the Mining sector 2. Key external factors for investment decision 3. Case Studies
  • 17. 3 EBRD – Countries of Operations
  • 18. 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
  • 19. 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
  • 20. 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 Eastern Europe Mongolia Central Asia Russia Eastern Europe & Caucasus 35% 28% 10% 26% 1% Coal Precious metals Steel making raw materials Base metals Support Activities
  • 21. 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)
  • 22. 8 List of Contents 1. The EBRD and the Natural Resources sector 2. Key external factors for investment decision 3. Case studies
  • 23. 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 of legislative and regulatory frameworks • Transparency: Support implementation of disclosure of payments following EITI principles and EU and US regulation Key external factors Supporting stronger and reliable institutions
  • 24. 10 Challenges • Structural constraints exist along the mining value chain (transport infrastructure, 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, including IFC/EBRD policy, key EU Directives on Mine Waste, Water, EIA, BAT Key external factors Supporting the mining value chain
  • 25. 11 List of Contents 1. The EBRD and the Natural Resources sector 2. Key external factors for investment decision 3. Case studies
  • 26. To help protect your privacy, PowerPoint has blocked automatic download of this picture. 12 Independent mining company SEMED (expected 2013) • Total Project value: $20 million • EBRD corporate loan of $15 million • Independent medium-sized mining company operating in a SEMED country of operation • Financing infrastructure to switch to a direct link to the electricity national grid • Financing plant modernisation with the aim of increasing production capacity EBRD value-added • Supporting medium sized private operator in EBRD country of operation • Introducing best ESH&S practices • Introducing compliance with EITI principles and IFRS accounting standards • Supporting energy efficiency by replacing costly and polluting diesel power generation • Encouraging switch to a less subsidised source of power Overview Key Figures
  • 27. To help protect your privacy, PowerPoint has blocked automatic download of this picture. 13 Oyu Tolgoi Mongolia (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&I resources of 41blb copper and 21Moz gold • Largest single investment in Mongolian history and proposed financing would be largest ever raised in the country • Project controlled by Rio Tinto (66%) with Government of Mongolia involvement (34%) EBRD value-added • Supporting large FDI and greater private sector participation in copper production dominated by state sector • Promoting skills transfer from a leading strategic investor, through the adoption of world-class mining technology • Setting higher EHSS and transparency standards, including compliance with EITI • Supporting backward linkages to suppliers and contractors in the mining sector and promoting the development of SMEs Overview Key Figures
  • 28. 14 Contact Gabriel de Lastours Senior Banker Natural Resources European Bank for Reconstruction and Development One Exchange Square, EC2A 2JN, London, United Kingdom Tel: +44 207 338 7647 E-mail: Delastog@ebrd.com Web: www.ebrd.com EBRD Mining Operations Policy: www.ebrd.com/downloads/policies/sector/mining- operations-policy.pdf

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